Oracle 2008 Annual Report Download - page 89

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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
Upon our adoption of Statement 141(R), should the initial accounting for a business combination be
incomplete by the end of a reporting period that falls within the measurement period, we will report the
provisional amounts for such items in our consolidated financial statements. During the measurement period,
we will adjust the provisional amounts recognized at the acquisition date to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if known, would have affected the
measurement of the amounts recognized as of that date and we will record those adjustments to our
consolidated financial statements. Those measurement period adjustments that we determine to be significant
will be applied retrospectively to comparative information in our consolidated financial statements, including
adjustments to depreciation, amortization, or other income effects recognized in the initial accounting.
Our adoption of Statement 141(R) in fiscal 2010 will change how we account for the aforementioned areas in
comparison to how these areas are currently accounted for pursuant to Statement 141 and related accounting
guidance. Our accounting for deferred tax asset valuation allowances and uncertain tax position liabilities,
restructuring liabilities and costs incurred to effect an acquisition will generally result in the recording of
expense to our operations as these expenses are incurred. This contrasts with how we account for these items
pursuant to Statement 141 and related accounting guidance in fiscal 2009 and prior periods, which generally
require that these items be included as a part of the purchase price allocation for the business combination and
generally do not impact our expenses or results of operations. As a result, we expect that we will incur
additional restructuring, income tax and acquisition related and other expenses for any prospective
acquisitions that we consummate, including our proposed acquisition of Sun (see Note 2). The amount, timing
and frequency of such expenses are difficult to predict and could materially affect our results of operations
and financial position. Additionally, we expect that changes in estimates of deferred tax asset valuation
allowances and uncertain tax position liabilities assumed in an acquisition that occurred prior to the adoption
of Statement 141(R) will be accounted for as a current period income tax expense if we do not believe any
new information obtained after the acquisition date about facts and circumstances existed as of the acquisition
date or was not identified within the measurement period.
Marketable and Non-Marketable Securities
In accordance with FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities, and based on our intentions regarding these instruments, we classify substantially all of our
marketable debt and equity securities as available-for-sale. Marketable debt and equity securities are reported
at fair value, with all unrealized gains (losses) reflected net of tax in stockholders’ equity. If we determine that
an investment has an other than temporary decline in fair value, we recognize the investment loss in
non-operating income, net in the accompanying consolidated statements of operations. We periodically
evaluate our investments to determine if impairment charges are required.
We hold investments in certain non-marketable equity securities in which we do not have a controlling
interest or significant influence. These equity securities are recorded at cost and included in other assets in the
accompanying consolidated balance sheets. Our non-marketable securities are subject to periodic impairment
reviews and we had nominal impairment losses related to non-marketable equity securities and other
investments in fiscal 2009, 2008 and 2007.
Fair Value of Financial Instruments
We apply the provisions of FASB Statement No. 157, Fair Value Measurements, and related FASB Staff
Positions (described below) to our financial instruments that we are required to carry at fair value pursuant to
other accounting standards, including our marketable debt and equity securities and our derivative financial
instruments. We have not applied the fair value option to those financial instruments that we are not required
to carry at fair value pursuant to other accounting standards, including our senior notes outstanding.
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠