Oracle 2008 Annual Report Download - page 99

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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2009
insignificant for fiscal 2009, 2008 and 2007. The following table summarizes the components of our cash
equivalents and marketable securities held, substantially all of which were classified as available-for-sale:
May 31,
(in millions) 2009 2008
Money market funds $ 467 $ 1,058
U.S. Treasury, U.S. government and U.S. government agency debt securities 4,078 1,159
Commercial paper, corporate debt securities and other 2,700 3,069
Total investments $ 7,245 $ 5,286
Investments classified as cash equivalents $ 3,616 $ 2,505
Investments classified as marketable securities $ 3,629 $ 2,781
Substantially all of our marketable security investments held as of May 31, 2009 mature within one year. Our
investment portfolio is subject to market risk due to changes in interest rates. We place our investments with
high credit quality issuers as described above and, by policy, limit the amount of credit exposure to any one
issuer. As stated in our investment policy, we are averse to principal loss and seek to preserve our invested
funds by limiting default risk, market risk and reinvestment risk.
4. FAIR VALUE MEASUREMENTS
On June 1, 2008, we adopted FASB Statement No. 157, Fair Value Measurements and subsequently adopted
certain related FASB Staff Positions. The adoption of Statement 157 and related positions did not have a
material impact on our consolidated financial statements. Statement 157 defines fair value as the price that
would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities
required to be recorded at fair value, we consider the principal or most advantageous market in which we
would transact and consider assumptions that market participants would use when pricing the asset or
liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
Statement 157 also establishes a fair value hierarchy that requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s
categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. Statement 157 establishes three levels of inputs that may be used to measure fair
value:
• Level 1: quoted prices in active markets for identical assets or liabilities;
• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted
prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or
liabilities in markets that are not active, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities; or
• Level 3: unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.
91
Source: ORACLE CORP, 10-K, June 29, 2009 Powered by Morningstar® Document Research℠