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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
statements of operations based on their fair values and the estimated number of shares we ultimately expect
will vest. In addition, we have applied certain of the provisions of the SEC’s Staff Accounting
Bulletin No. 107 (Topic 14), as amended, in our accounting for Statement 123(R). We recognize stock-based
compensation expense on a straight-line basis over the service period of the award, which is generally four
years. The fair value of the unvested portion of share-based payments granted prior to June 1, 2006 (our
adoption date of Statement 123(R)) is recognized using the accelerated expense attribution method, net of
estimated forfeitures.
We record deferred tax assets for stock-based awards that result in deductions on our income tax returns
based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in
which we will receive a tax deduction.
Advertising
All advertising costs are expensed as incurred. Advertising expenses, which are included within sales and
marketing expenses, were $71 million, $81 million and $91 million in fiscal 2009, 2008 and 2007,
respectively.
Research and Development
All research and development costs are expensed as incurred. Costs eligible for capitalization under FASB
Statement No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed, were not material to our consolidated financial statements in fiscal 2009, 2008 and 2007,
respectively.
Acquisition Related and Other Expenses
Acquisition related and other expenses consist of in-process research and development expenses, personnel
related costs for transitional and other employees, stock-based compensation expenses, integration related
professional services, certain business combination adjustments after the purchase price allocation period has
ended, and certain other operating expenses (income), net. Stock-based compensation included in acquisition
related and other expenses resulted from unvested options assumed from acquisitions where vesting was
accelerated upon termination of the employees pursuant to the original terms of those options.
Year Ended May 31,
(in millions) 2009 2008 2007
In-process research and development $ 10 $ 24 $ 151
Transitional and other employee related costs 45 32 24
Stock-based compensation 15 112 9
Professional fees and other, net 25 7 8
Business combination adjustments 22 6 (52)
Gain on sale of property — (57) —
Total acquisition related and other expenses $ 117 $ 124 $ 140
In fiscal 2008, we sold certain of our land and buildings for $153 million in cash. Concurrent with the sale,
we leased the property back from the buyer for a period of up to three years. We have accounted for this
transaction in accordance with FASB Statement No. 28, Accounting for Sales with Leasebacks, FASB
Statement No. 66, Accounting for Sales of Real Estate, and FASB Statement No. 98, Accounting for Leases,
et al. We deferred $19 million of the gain on the sale representing the present value of the operating lease
commitment and recognized a gain of approximately $57 million for fiscal 2008. The deferred portion of the
gain will be recognized as a reduction of rent expense over the operating lease term.
In fiscal 2007, acquisition related and other expenses included a benefit related to the settlement of a lawsuit
filed against PeopleSoft, Inc. on behalf of the U.S. government. This lawsuit was filed in October 2003, prior
to our
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Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠