Oracle 2009 Annual Report Download

Download and view the complete annual report

Please find the complete 2009 Oracle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 224

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224

Morningstar® Document Research℠
FORM 10-K
ORACLE CORP - ORCL
Filed: July 01, 2010 (period: May 31, 2010)
Annual report with a comprehensive overview of the company

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K ORACLE CORP - ORCL Filed: July 01, 2010 (period: May 31, 2010) Annual report with a comprehensive overview of the company

  • Page 2
    ... No.) 54-2185193 (Address of principal executive offices) (Registrant's telephone number, including area code) 500 Oracle Parkway Redwood City, California (Zip Code) 94065 (650) 506-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on...

  • Page 3
    Documents Incorporated by Reference: Portions of the registrant's definitive proxy statement relating to its 2010 annual stockholders' meeting are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Source: ORACLE CORP, 10-K, July 01, 2010 Powered by ...

  • Page 4
    ... Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data...

  • Page 5
    ... new software licenses or hardware systems products or purchase or renew support contracts. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws...

  • Page 6
    ...total revenues, respectively, in fiscal 2008. See Note 16 of Notes to Consolidated Financial Statements for additional information related to our operating segments. Software Business Our software business consists of our new software licenses segment and software license updates and product support...

  • Page 7
    ... to address specific customer requirements in the areas of performance and scalability, high availability, data security and compliance, data warehousing, information management and systems management. Examples of these options include: • Oracle Real Application Clusters, which is designed to...

  • Page 8
    ... as part of our acquisition of Sun, is one of the world's most popular open source databases that is designed to offer developers a simple to use, horizontally-scalable database often used to power high-volume applications such as websites and web-based applications; • Oracle TimesTen In-Memory...

  • Page 9
    ...and suites, including the following functional areas: • Application Server and Application Grid; • Service-Oriented Architecture and Business Process Management; • Data Migration and Integration; • Business Intelligence; • Identity and Access Management; • Content Management; • Portals...

  • Page 10
    ...Office integration including support for Excel, Word, and PowerPoint; and mobile analytics for mobile and smart phones. Identity and Access Management Oracle's Identity and Access Management products are designed to enable customers to manage internal and external users, secure corporate information...

  • Page 11
    ... software license revenues in both fiscal 2010 and 2009 and 32% of new software license revenues in fiscal 2008. Central to our applications strategy is our Applications Unlimited program, which is our commitment to offer customers that purchase software license updates and product support contracts...

  • Page 12
    ..., purchasing, accounts receivable and payable, general ledger, cash and treasury management, travel and expense management, human resources, payroll, benefits, and talent management. Our ERP applications combine business functionality with innovative technologies such as self-service applications to...

  • Page 13
    ... during the term of the support period. Product support includes internet and telephone access to technical support personnel located in our global support centers, as well as internet access to technical content through "My Oracle Support". Software license updates and product support contracts are...

  • Page 14
    ... architectures. Our NEP-certified Sun Netra systems are designed to meet the specialized needs of NEPs. Storage Our broad range of storage products are designed to securely manage, protect, archive and restore customers' mission critical data assets and consist of tape, disk, hardware-related...

  • Page 15
    ... therefore provide us with a competitive advantage. On Demand revenues represented 3% of total revenues in each of fiscal 2010, 2009 and 2008. Education We provide training to customers, partners and employees as a part of our mission of accelerating the adoption and use of our software and hardware...

  • Page 16
    ... information, technical services, marketing and sales support, the Oracle Partner Network program extends our market reach by providing our partners with the resources they need to be successful in delivering solutions to customers globally. Prior to our acquisition of Sun, the majority of Sun...

  • Page 17
    ... property rights in certain circumstances. Internal development allows us to maintain technical control over the design and development of our products. We have a number of United States and foreign patents 13 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 18
    ...www.oracle.com/investor as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information posted on our web site is not incorporated into this Annual Report. Executive Officers of the Registrant Our executive officers are listed below. Name...

  • Page 19
    ... Executive Vice President, Europe, Middle East and Africa (EMEA) Sales and Consulting since December 2008. He served as Senior Vice President, Europe Applications from June 2006 until November 2008. He served as Senior Vice President, Oracle Customer Relationship Management EMEA from January 2006...

  • Page 20
    ... stock price. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their IT budgets or be unable to fund software, hardware systems or services purchases...

  • Page 21
    ... our revenue growth and profitability. These factors generally have the strongest effect on our sales of new software licenses, hardware systems products, hardware systems support and related services and, to a lesser extent, also may affect our renewal rates for software license updates and...

  • Page 22
    ..., and may continue to report, lower operating margins as a percentage of revenues, and our profit margin levels prior to our acquisition of Sun may not be sustainable. • We face a greater risk of potential write-downs and impairments of inventory, higher warranty expenses than we had historically...

  • Page 23
    ... new competitive products, add new functionality, acquire competitive products, reduce prices or form strategic alliances with other companies. Vendors that offer BPO or SaaS solutions may persuade our customers not to purchase our products. We may also face increasing competition from open source...

  • Page 24
    ... the financial and strategic goals that were contemplated at the time of a transaction. In recent years, we have invested billions of dollars to acquire a number of companies, products, services and technologies. An active acquisition program is an important element of our overall corporate strategy...

  • Page 25
    ... to U.S. generally accepted accounting principles, including arrangements that we assume from an acquisition; and • to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders may be diluted and earnings per share may decrease...

  • Page 26
    ... to exert full control or obtain financial and other information on a timely basis. We may experience foreign currency gains and losses. We conduct a significant number of transactions in currencies other than the U.S. Dollar. Changes in the value of major foreign currencies, particularly the Euro...

  • Page 27
    ... agreements with them. We expect the number of such claims will increase as: • we continue to acquire companies and expand into new businesses; • the number of products and competitors in our industry segments grows; 23 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 28
    ... may affect our employee retention efforts and increase our expenses in an effort to offer a competitive compensation program. Our compensation program includes stock options, which are an important tool in attracting and retaining employees in our industry. If our stock price performs poorly, it...

  • Page 29
    ...will be accounted for as expenses that will decrease our net income and earnings per share for the periods in which those costs are incurred. Charges to our operating results in any given period could differ substantially from other periods based on the timing and size of our future acquisitions and...

  • Page 30
    ..., Oracle On Demand and other outsourcing services, support and consulting services, on our products and networks and any security flaws, if exploited, could affect our ability to conduct internal business operations. End users, who rely on our software products and services for applications that...

  • Page 31
    ... Pricing Agreement for the years ending May 31, 2007 through May 31, 2011. However, these agreements do not cover all elements of our transfer pricing and do not bind tax authorities outside the United States. We have finalized two bilateral Advance Pricing Agreements, one of which was effective...

  • Page 32
    ... drop in our stock price could also expose us to the risk of securities class actions lawsuits, which could result in substantial costs and divert management's attention and resources, which could adversely affect our business. 28 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar...

  • Page 33
    ... 3. Legal Proceedings The material set forth in Note 18 of Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K is incorporated herein by reference. Item 4. (Removed and Reserved) 29 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 34
    ... record and payment dates are subject to the final determination of our Board of Directors. For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report. Stock Repurchase Programs Our Board of Directors has approved a program for us to repurchase shares of our...

  • Page 35
    Table of Contents Stock Performance Graph and Cumulative Total Return The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Index, the Dow Jones U.S. Software Index and the S&P Information Technology Index for each of the...

  • Page 36
    ... since their respective dates of acquisition and have contributed to our growth in revenues, income and earnings per share. As of and for the Year Ended May 31, 2009 2008 2007 (in millions, except per share amounts) Consolidated Statements of Operations Data: Total revenues Operating income Net...

  • Page 37
    ...80% of our total revenues in fiscal 2010, 2009 and 2008, respectively, is comprised of two operating segments: (1) new software licenses and (2) software license updates and product support. On a constant currency basis, we expect that our software business' total revenues generally will continue to...

  • Page 38
    ... fixed in the short term. However, our new software license segment's margins have been and will continue to be affected by the amortization of intangible assets associated with companies that we have acquired, including Sun. Software License Updates and Product Support: Customers that purchase...

  • Page 39
    ... the amortization of intangible assets associated with our acquisition of Sun. In addition, business combination accounting rules require us to record acquired inventories at fair value, which generally will result in an unfavorable short-term impact to our expenses and operating margins as we sell...

  • Page 40
    ...us with a competitive advantage. While we have grown the base of customers that purchase certain of our On Demand services through our organic growth and the acquisition of Sun, we continue to focus on managing our expenses to increase our margins and margins as a percentage of our revenues. We have...

  • Page 41
    ... management's judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed the below critical accounting policies and related disclosures with the Finance and Audit Committee of the Board of Directors. 37 Source: ORACLE CORP...

  • Page 42
    ... as part of public policy, for example, in agreements with government entities where acceptance periods are required by law, or within previously executed terms and conditions that are referenced in the current agreement and are short-term in nature, we generally recognize revenues upon delivery...

  • Page 43
    ... term of the arrangements. Revenue Recognition for Multiple-Element Arrangements-Hardware Systems Products and Hardware Systems Related Services (Nonsoftware Arrangements) In the third quarter of fiscal 2010, we early adopted the provisions of Accounting Standards Update No. 2009-13, Revenue...

  • Page 44
    ... of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance 40 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 45
    ... of revenues and related expenses reported in our consolidated financial statements. A number of internal and external factors can affect our estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. On Demand is comprised of Oracle On...

  • Page 46
    ... asset is amortized over its estimated useful life, or abandoned, at which time the intangible asset is expensed (prior to fiscal 2010, in-process research and development was expensed as of the acquisition date); 42 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 47
    ... with income taxes were generally included as a part of the purchase price allocation indefinitely). Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets, support obligations...

  • Page 48
    ... comprised of employee severance costs, costs of consolidating duplicate facilities and contract termination costs. Restructuring expenses are based upon plans that have been committed to by our management, but may be refined in subsequent periods. As noted above, we account for costs to exit...

  • Page 49
    ... in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the period when the tax returns are filed and the global tax implications are known, which can materially impact our effective tax rate. The amount of income tax we pay is subject...

  • Page 50
    ... payments to employees, including grants of employee stock awards and purchases under employee stock purchase plans in accordance with ASC 718, Compensation-Stock Compensation, which requires that share-based payments (to the extent they are compensatory) be recognized in our consolidated statements...

  • Page 51
    ... rates of employee groups by seniority of job classification. Our expected dividend rate is based upon an annualized dividend yield based on the per share dividend declared by our Board of Directors. The aforementioned inputs entered into the option valuation model we use to fair value our stock...

  • Page 52
    ... 2010 results using the fiscal 2009 exchange rate and indicate, in this example, no change in revenues during the period. In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency. 48 Source: ORACLE CORP, 10-K, July...

  • Page 53
    ... Oracle-based operations including expense reductions in our services business, reductions in bad debt expenses due to improved collections and reductions to travel expenses due to cost management initiatives. 49 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research...

  • Page 54
    ...acquisition of BEA. On a constant currency basis, new software license revenues contributed 5% to the growth in total revenues, software license updates and product support revenues contributed 92% and services revenues contributed 3%. Excluding the effect of currency rate fluctuations, the Americas...

  • Page 55
    Table of Contents (1) In connection with purchase price allocations related to our acquisitions, we have estimated the fair values of the software support and hardware systems support obligations assumed. Due to our application of business combination accounting rules, we did not recognize software...

  • Page 56
    Table of Contents (6) Stock-based compensation is included in the following operating expense line items of our consolidated statements of operations (in millions): Year ended May 31, 2009 $ 67 13 - - 12 155 93 340 15 $ 355 Sales and marketing Software license updates and product support Hardware ...

  • Page 57
    ... of stock-based compensation and amortization of intangible assets. Refer to footnotes (1), (2), (3) and (6) above for additional discussion related to these excluded items. Represents management's estimated allocation of Sun's direct revenues and expenses contributions to our software and services...

  • Page 58
    ... program costs and amortization of intangible assets. Year Ended May 31, 2009 (Dollars in millions) 2010 New Software License Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Sales and marketing Stock-based compensation (2) Amortization of intangible assets Total expenses...

  • Page 59
    ... of cost management initiatives. Excluding the effect of favorable foreign currency rate fluctuations of 4 percentage points, new software license margin and margin as a percentage of revenues increased as our revenues increased at a faster rate than our expenses. Fiscal 2009 Compared to Fiscal 2008...

  • Page 60
    ... from acquisitions. Year Ended May 31, 2009 (Dollars in millions) 2010 Software License Updates and Product Support Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Software license updates and product support Stock-based compensation (2) Amortization of intangible assets Total...

  • Page 61
    ... assumed from Sun. Excluding the effect of currency rate fluctuations, total software license updates and product support margin and margin as a percentage of total revenues increased as our total revenues grew while our total expenses declined. Fiscal 2009 Compared to Fiscal 2008: The growth...

  • Page 62
    ... Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Hardware systems products (1) Sales and marketing Stock-based compensation (2) Amortization of intangible assets Total expenses Total Margin Total Margin % % Revenues by Geography: Americas EMEA Asia Pacific (1) (2) * 2010 2009...

  • Page 63
    ... Sun acquisition. Year Ended May 31, Percent Change Actual Constant (Dollars in millions) Hardware Systems Support Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Hardware systems support Stock-based compensation (2) Amortization of intangible assets Total expenses Total Margin...

  • Page 64
    ... of personnel related expenditures. Year Ended May 31, 2009 (Dollars in millions) 2010 Consulting Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Services Stock-based compensation (2) Amortization of intangible assets Total expenses Total Margin Total Margin % % Revenues by...

  • Page 65
    ... and facilities costs. Year Ended May 31, 2009 (Dollars in millions) 2010 On Demand Revenues: Americas EMEA Asia Pacific Total revenues Expenses: (1) Services Stock-based compensation (2) Amortization of intangible assets Total expenses Total Margin Total Margin % % Revenues by Geography...

  • Page 66
    ... partially offset by additional expenses, primarily employee related, from our acquisition of Sun. On a constant currency basis, education margin decreased due to our revenue decrease, while margin as a percentage of revenues increased due to expense reductions. Fiscal 2009 Compared to Fiscal 2008...

  • Page 67
    ... Compared to Fiscal 2009: On a constant currency basis, total general and administrative expenses increased during fiscal 2010 due to additional employee related and professional services expenses resulting from our acquisition of Sun, and higher stock-based compensation expenses primarily resulting...

  • Page 68
    ...for acquisitions pursuant to previous accounting rules, primarily direct transaction costs such as professional services fees. Year Ended May 31, Percent Change Percent Change 2009 Actual Constant Actual Constant (Dollars in millions) 2010 2008 Transitional and other employee related costs Stock...

  • Page 69
    ... of Sun. Fiscal 2009 Compared to Fiscal 2008: On a constant currency basis, acquisition related and other expenses decreased due to lower stock-based compensation expenses in fiscal 2009 caused primarily by the timing of stock option accelerations for certain former Hyperion and BEA employees that...

  • Page 70
    ... Change Percent Change 2009 Actual Constant Actual Constant (Dollars in millions) 2010 2008 Provision for income taxes Effective tax rate $ 2,108 25.6% 66 -6% -9% $ 2,241 28.6% -3% 6% $ 2,313 29.5% Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 71
    ... reported using a constant currency rate as of May 31, 2009. Our increase in cash, cash equivalents and marketable securities balances were partially offset by $5.6 billion of net cash used for our acquisition of Sun and 67 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 72
    ... reported using a constant currency rate. Our cash, cash equivalents and marketable securities balances were also partially offset by cash used for our acquisitions, the repayment of $1.0 billion of senior notes in May 2009, the repurchases of our common stock (see discussion above), and the payment...

  • Page 73
    ... notes for general corporate purposes and to finance a portion of the purchase price for our acquisition of Sun. In September 2009, we entered into certain interest rate swap agreements related to our 2014 Notes that have the economic effect of modifying the fixed interest obligations associated...

  • Page 74
    ...364-Day Revolving Credit Agreement dated March 17, 2009, among Oracle; the lenders named therein; Wachovia Bank, National Association, as administrative agent; BNP Paribas as syndication agent; the documentation agents named therein; and Wachovia Capital Markets, LLC, and BNP Paribas Securities Corp...

  • Page 75
    ...a LIBOR-based index. Interest payments on borrowings presented in the contractual obligations table above have been estimated using an interest rate of 1.44%, which represented our effective interest rate as of May 31, 2010 after consideration of these fixed to variable interest rate swap agreements...

  • Page 76
    ... material to investors. Selected Quarterly Financial Data Quarterly revenues, expenses and operating income have historically been affected by a variety of seasonal factors, including sales force incentive compensation plans. In addition, our European operations generally provide lower revenues in...

  • Page 77
    ... ongoing business. In recent years, our stock repurchase program has more than offset the dilutive effect of our stock-based compensation program; however, we may reduce the level of our stock repurchases in the future as we may use our available cash for acquisitions, to pay dividends, to repay or...

  • Page 78
    Table of Contents The Compensation Committee of the Board of Directors reviews and approves the organization-wide stock option grants to selected employees, all stock option grants to executive officers and any individual stock option grants in excess of 100,000 shares. A separate Plan Committee, ...

  • Page 79
    ...2009, we entered into certain fixed to variable interest rate swap agreements to manage the interest rate and related debt fair value exposures associated with our $1.5 billion of senior notes due July 2014 (2014 Notes) so that the interest payable on the 2014 Notes effectively became variable based...

  • Page 80
    ... to what we would have reported using a constant currency rate as of May 31, 2009. As reported in our consolidated statements of cash flows, the estimated effect of exchange rate changes on our reported cash and cash equivalents balances in U.S. Dollars for fiscal 2010, 2009 and 2008 was a (decrease...

  • Page 81
    ...and the effect of the controls on the information generated for use in this Annual Report on Form 10-K. In the course of the controls evaluation, we reviewed data errors or control problems identified and 77 Financial Statements and Supplementary Data Changes In and Disagreements with Accountants on...

  • Page 82
    ... financial reporting, our internal control over financial reporting, subsequent to the date of acquisition, includes certain additional internal controls relating to Sun. Based on the results of our evaluation, our management concluded that our internal control over financial reporting was effective...

  • Page 83
    ... with policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected. Item 9B. None. 79 Other Information Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 84
    ... to be contained in our 2010 Proxy Statement under the sections entitled "Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation-Equity Compensation Plan Information". Item 13. Certain Relationships and Related Transactions, and Director Independence The...

  • Page 85
    ... Commission. Incorporated by Reference Filing Exhibit Date Exhibit No. Exhibit Description Form File No Filed By Filed Herewith 2.01 Agreement and Plan of Merger, dated April 19, 2009, among Oracle Corporation, Sun Microsystems, Inc. and Soda Acquisition Corporation Amended and Restated...

  • Page 86
    ...of Contents Exhibit No. File No Incorporated by Reference Filing Exhibit Date Filed By Filed Herewith Exhibit Description Form 10.02* Oracle Corporation Employee Stock Purchase Plan (1992), as amended and restated as of October 1, 2009 10.03* Oracle Corporation Amended and Restated 1993 Directors...

  • Page 87
    ... to Change of Control Agreement executed by Sun Microsystems, Inc. and certain of Sun's executive officers 12.01 21.01 23.01 31.01 31.02 32.01 Consolidated Ratio of Earnings to Fixed Charges Subsidiaries of the Registrant Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm...

  • Page 88
    ...2008, (v) Notes to Consolidated Financial Statements, tagged as blocks of text and (vi) Financial Statement Schedule II, tagged as a block of text. X * Indicates management contract or compensatory plan or arrangement. 84 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 89
    ... Contents REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Oracle Corporation We have audited the accompanying consolidated balance sheets of Oracle Corporation as of May 31, 2010 and 2009, and the related consolidated statements...

  • Page 90
    ... Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Oracle America, Inc. (formerly known as Sun Microsystems, Inc.), which is included in the May 31, 2010 consolidated financial statements...

  • Page 91
    ... per share data) Current assets: Cash and cash equivalents Marketable securities Trade receivables, net of allowances for doubtful accounts of $305 and $270 as of May 31, 2010 and 2009, respectively Inventories Deferred tax assets Prepaid expenses and other current assets Total current assets Non...

  • Page 92
    Table of Contents ORACLE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended May 31, 2010, 2009 and 2008 Year Ended May 31, 2009 (in millions, except per share data) Revenues: New software licenses Software license updates and product support Software revenues Hardware systems ...

  • Page 93
    Table of Contents ORACLE CORPORATION CONSOLIDATED STATEMENTS OF EQUITY For the Years Ended May 31, 2010, 2009 and 2008 Common Stock and Additional Paid in Capital Number Comprehensive (in millions) Balances as of May 31, 2007 Common stock issued under stock-based compensation plans Common stock ...

  • Page 94
    ...value of stock options and restricted stock-based awards assumed in connection with acquisitions Decrease in unsettled repurchases of common stock Supplemental schedule of cash flow data: Cash paid for income taxes Cash paid for interest See notes to consolidated financial statements. 90 2010 2008...

  • Page 95
    ..., maintenance services and technical support services. We also offer software and non-software related services including consulting, On Demand, and education. Basis of Financial Statements The consolidated financial statements include our accounts and the accounts of our wholly- and majority-owned...

  • Page 96
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 Revenue Recognition for Software Products and Software Related Services (Software Elements) New software license revenues represent fees earned from granting customers licenses to use our ...

  • Page 97
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 based upon the accounting guidance contained in ASC 605, Revenue Recognition, and we exercise judgment and use estimates in connection with the determination of the amount of hardware systems ...

  • Page 98
    ...revenues from these arrangements are generally accounted for separately from new software license revenues because the arrangements qualify as services transactions as defined in ASC 985-605. The more significant factors 94 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 99
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 considered in determining whether the revenues should be accounted for separately include the nature of services (i.e. consideration of whether the services are essential to the functionality ...

  • Page 100
    ... to these same companies (Concurrent Transactions). Software license agreements or sales of hardware systems that occur within a three-month time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we...

  • Page 101
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 As a result of adopting the revised accounting guidance provided for by ASC 805 as of the beginning of fiscal 2010, certain of our policies differ when accounting for acquisitions in fiscal ...

  • Page 102
    ...credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2010, 2009 or 2008. Inventories...

  • Page 103
    ...the fair value of the impaired asset. We did not recognize any goodwill or intangible asset impairment charges in fiscal 2010, 2009 or 2008. Derivative Financial Instruments During fiscal 2010, 2009 and 2008, we used derivative financial instruments to manage foreign currency and interest rate risks...

  • Page 104
    ... (expenses), net in our consolidated statements of operations and were $(148) million, $(55) million and $40 million in fiscal 2010, 2009 and 2008, respectively. Stock-Based Compensation We account for share-based payments, including grants of employee stock options and restricted stock-based awards...

  • Page 105
    ... consolidated financial statements in fiscal 2010, 2009 or 2008. Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, stock-based compensation expenses, integration related professional services...

  • Page 106
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading. Year Ended May 31, 2009 (in ...

  • Page 107
    ... combinations accounting policy, the total purchase price for Sun was allocated to the preliminary net tangible and intangible assets based upon their preliminary fair values as of January 26, 2010 as 103 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 108
    ... the acquisition date during the measurement period. Our preliminary purchase price allocation for Sun is as follows: (in millions) Cash, cash equivalents and marketable securities Trade receivables Inventories Goodwill Intangible assets In-process research and development Other assets Deferred tax...

  • Page 109
    ... of BEA stock options and restricted stock-based awards assumed and $10 million for acquisition related transaction costs. In allocating the purchase price based on estimated fair values, we recorded approximately $4.5 billion of goodwill, $3.3 billion of identifiable intangible assets, $733 million...

  • Page 110
    ... reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows for fiscal 2010 and 2009: Year Ended May 31, 2010 2009 (in millions, except per share data) Total revenues...

  • Page 111
    ... 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 values of the assets or liabilities. 107 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 112
    ...one year from our date of purchase and active markets for these instruments exist. Our valuation techniques used to measure the fair values of all other instruments listed in the table above, generally all of which mature within one year and the counterparties to which have high credit ratings, were...

  • Page 113
    ... May 31, 2010 May 31, 2009 Accumulated Amortization Expense May 31, 2010 Intangible Assets, Net May 31, 2009 May 31, 2010 Weighted Average Useful Life Software support agreements and related relationships $ Hardware systems support agreements and related relationships Developed technology Core...

  • Page 114
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, by operating segment for fiscal 2010 and 2009 were as follows: Software License Updates and ...

  • Page 115
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 Senior Notes and Other In July 2009, we issued $4.5 billion of fixed rate senior notes comprised of $1.5 billion of 3.75% notes due July 2014 (2014 Notes), $1.75 billion of 5.00% notes due July...

  • Page 116
    ...364-Day Revolving Credit Agreement dated March 17, 2009, among Oracle; the lenders named therein; Wachovia Bank, National Association, as administrative agent; BNP Paribas as syndication agent; the documentation agents named therein; and Wachovia Capital Markets, LLC, and BNP Paribas Securities Corp...

  • Page 117
    ... Cost(4) Payments Total Costs Accrued to Date Total Expected Program Costs (in millions) Sun Restructuring Plan New software licenses Software license updates and product support Hardware systems business Services (1) General and administrative and other Total Sun Restructuring Fiscal 2009 Oracle...

  • Page 118
    ... all increases in costs are generally recorded to operating expenses in the period of adjustment with decreases in the costs of our Oracle-based plans and the Sun Restructuring Plan being recorded to operating expenses and decreases in costs of our acquisition related plans adopted prior to fiscal...

  • Page 119
    ... specific acceptance provisions or transactions that cannot be segmented from consulting services. In connection with the purchase price allocations related to our acquisitions, we have estimated the fair values of the support obligations assumed. The estimated fair values of the support obligations...

  • Page 120
    ... of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 Net Investment Hedges Periodically, we hedge net assets of certain of our international subsidiaries using foreign currency forward contracts to offset the translation and economic exposures related...

  • Page 121
    ... not designated as hedges: Foreign currency forward contracts Location and Amount of Gain (Loss) Recognized in Income on Derivative Year Ended May 31, 2010 2009 Non-operating income (expense), net $ (35) $ 3 117 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 122
    ... that we expect to pay upon the closing of these acquisitions. As described in Note 8, we have notes payable and other borrowings outstanding of $14.7 billion that mature at various future dates. 118 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 123
    ... exchange trades, taxes, import licenses and letters of credit on behalf of parties we conduct business with. Such agreements have not had a material effect on our results of operations, financial position or cash flows. 13. STOCKHOLDERS' EQUITY Stock Repurchases Our Board of Directors has approved...

  • Page 124
    ... Compensation Committee of the Board. Under the terms of the Directors' Plan, options to purchase 8 million shares of common stock were reserved for issuance, options are granted at not less than fair market value, become exercisable over four years, and expire no more than ten years from the date...

  • Page 125
    ... calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2010 of $22.57 and the exercise prices for all in-the-money options outstanding, excluding tax effects. The unrecognized compensation expense calculated under the fair value method for shares...

  • Page 126
    ...: Year Ended May 31, 2009 (in millions) Sales and marketing Software license updates and product support Hardware systems products Hardware systems support Services Research and development General and administrative Acquisition related and other Total stock-based compensation Estimated income tax...

  • Page 127
    ... Plan (Oracle 401(k) Plan). Participants can generally contribute up to 40% of their eligible compensation on a per- pay-period basis as defined by the plan document or by the section 402(g) limit as defined by the United States Internal Revenue Service (IRS). We match a portion of employee...

  • Page 128
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 The provision for income taxes consisted of the following: Year Ended May 31, 2009 (Dollars in millions) Current provision: Federal State Foreign Total current provision Deferred benefit: ...

  • Page 129
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 The components of our deferred tax liabilities and assets were as follows: May 31, 2010 2009 (in millions) Deferred tax liabilities: Unrealized gain on stock Unremitted earnings of foreign ...

  • Page 130
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 valuation allowance relates to tax assets established in purchase accounting. Any subsequent reduction of that portion of the valuation allowance and the recognition of the associated tax ...

  • Page 131
    ..., application server software, business intelligence software, identification and access management software, content management software, portal and user interaction software, Service-Oriented Architecture and business process management software, data integration software and development tools...

  • Page 132
    Table of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 The software license updates and product support line of business provides customers with rights to unspecified software product upgrades and maintenance releases, internet access to technical ...

  • Page 133
    ... of Contents ORACLE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) May 31, 2010 The following table presents a summary of our businesses' and operating segments' results: Year Ended May 31, 2009 (in millions) New software licenses: (1) Revenues Sales and distribution expenses...

  • Page 134
    ...intangible assets, acquisition related and other expenses, restructuring costs, or stock-based compensation. (2) The following table reconciles operating segment revenues to total revenues as well as operating segment margin to income before provision for income taxes: Year Ended May 31, 2009 (in...

  • Page 135
    ..., plus the dilutive effect of outstanding stock options and restricted stock-based awards and shares issuable under the employee stock purchase plan using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share: Year Ended May 31, 2009 (in...

  • Page 136
    .... The revised second amended complaint named our Chief Executive Officer, our then Chief Financial Officer (who currently is Chairman of our Board of Directors) and a former Executive Vice President as defendants. This complaint was brought on behalf of purchasers of our stock during the period from...

  • Page 137
    ... accessed Oracle's Customer Connection support website and improperly took and used Oracle's intellectual property, including software code and knowledge management solutions. The complaint seeks unspecified damages and preliminary and permanent injunctive relief. On June 1, 2007, Oracle filed...

  • Page 138
    ...TomorrowNow then used to create fixes and updates, to service customers and to train employees. The Second Amended Complaint also alleges that these practices may have extended to other Oracle products, including Siebel products. On October 8, 2008, Oracle filed a Third Amended Complaint pursuant to...

  • Page 139
    ... Adjustments and Other Ending Balance Trade Receivable Allowances Year Ended: May 31, 2008 May 31, 2009 May 31, 2010 $ $ $ 306 303 270 135 164 118 143 (182) (128) (92) 15 (23) (16) $ 303 $ 270 $ 305 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 140
    Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORACLE CORPORATION Date: June 30, 2010 By: /s/ LAWRENCE ...

  • Page 141
    136 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 142
    ... of Contents ORACLE CORPORATION INDEX OF EXHIBITS Incorporated by Reference Filing Exhibit Date Exhibit No. Exhibit Description Form File No Filed By Filed Herewith 2.01 Agreement and Plan of Merger, dated April 19, 2009, among Oracle Corporation, Sun Microsystems, Inc. and Soda Acquisition...

  • Page 143
    Table of Contents Exhibit No. File No Incorporated by Reference Filing Exhibit Date Filed By Filed Herewith Exhibit Description Form 10.03* Oracle Corporation Amended and Restated 1993 Directors' Stock Plan, as amended and restated on July 13, 2009 10.04* The 1991 Long-Term Equity Incentive Plan,...

  • Page 144
    ... Contents Exhibit No. File No Incorporated by Reference Filing Exhibit Date Filed By Filed Herewith Exhibit Description Form 10.18 $3,000,000,000 5-Year Revolving Credit Agreement dated as of March 15, 2006, among Oracle Corporation and the lenders and agents named therein $2,000,000,000 364-Day...

  • Page 145
    Table of Contents Exhibit No. File No Incorporated by Reference Filing Exhibit Date Filed By Filed Herewith Exhibit Description Form 101 Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of May 31, 2010 and 2009, (ii) Consolidated Statements of ...

  • Page 146
    ...authorizes the grant of options under a non-423 plan which do not qualify under Section 423 of the Code pursuant to rules, procedures or sub-plans adopted by the Company designed to achieve desired tax or other objectives in particular locations outside the United States. The term "Plan" used herein...

  • Page 147
    ...the Board whose employees are eligible to participate in the Plan for purposes of the grant of options that do not qualify under Section 423 of the Code pursuant to rules, procedures or sub-plans adopted by the Board designed to achieve desired tax or other objectives in particular locations outside...

  • Page 148
    ... his or her rights to purchase stock under all employee stock purchase plans of Oracle and its Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market value of such stock (determined at the time such option is granted) for each calendar year in which such...

  • Page 149
    Board) and filing it no later than the first day of an applicable Offering Period (or such earlier time as may be set by the Company's employee stock services department for administrative purposes) with (i) the Company's employee stock services department for eligible Employees employed by Oracle ...

  • Page 150
    ... market value of a share of the Common Stock on the Exercise Date. The fair market value of Common Stock on a given date shall be the closing price from the previous day's trading on the Nasdaq National Market. 5 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research...

  • Page 151
    ... of the number of shares subject to the option to each Employee affected thereby and, at the discretion of the Board, shall terminate or reduce payroll deductions before the Exercise Date if the Board has 6 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 152
    ...); any amounts remaining in his or her payroll deduction account shall be used to purchase stock on the next Exercise Date. Paid leaves of absence shall have no effect an Employee's participation in the Plan. 7 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 153
    ... Employees are permitted to participate in the Plan except to the extent limited by Subsection (b) of this Section 12. All references in this Plan to the Board shall mean the committee(s) appointed by the Board, if any. 8 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 154
    ...of the Code pursuant to rules, procedures or sub-plans adopted by the Board designed to achieve desired tax or other objectives in particular locations outside the United States as described in Section 23 herein. 9 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research...

  • Page 155
    ... laws rules) of the State of California. 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET SALE (a) Subject to any required action by the stockholders of Oracle, the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and...

  • Page 156
    ...other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of...

  • Page 157
    ... trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, withholding procedures and delivery of shares which vary with local requirements. 12 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 158
    (b) The Board may also adopt rules, procedures or sub-plans applicable to particular Participating Subsidiaries or Participating Affiliates or locations, which sub-plans may be designed to be outside the scope of Code Section 423. The rules of such sub-plans may take precedence over other provisions...

  • Page 159
    ...for income taxes. The term "fixed charges" means the amounts resulting from the following: (a) our interest expensed, plus (b) our estimate of the interest component of rent expense. (2) We do not report any shares of preferred stock outstanding in our consolidated financial statements because our...

  • Page 160
    ... Oracle Credit Corporation Oracle Education Foundation Oracle International Corporation Oracle International Distribution, Inc. Oracle International Technology Corporation Oracle Siebel Scholars Foundation Sun Microsystems International, Inc. Sun Microsystems LLC Sun Microsystems Management Services...

  • Page 161
    ... Oracle OTC Holdings General Partnership Oracle OTC Holdings LLC Oracle Systems Corporation Oracle Taiwan LLC Orchestream USA, Inc. Pine Acquisition Corporation Plumtree Software, Inc. Q-Layer, Corp. RSIB, Inc. Siebel Helpline.com, Inc. Siebel Systems Holdings, LLC Siebel Systems International...

  • Page 162
    ... Stratford Acquisition Corporation Sun Microsystems Exchange, Inc. Sun Microsystems Global Financial Services, LLC The Theory Center, Inc. Strategic Processing Corporation Monaco Acquisition Corporation Lodestar Corporation RogersGrant LLP nquire Software, Inc. Stellent, Inc. Delphi Asset Management...

  • Page 163
    International Subsidiaries Place of Incorporation Oracle Argentina, S.A. Sun Microsystems de Argentina, S.A. A.C.N.# 075-333596 BEA Systems Pty Ltd. edocs Asia-Pacific Pty Limited Eontec Australia Pty Limited G-Log Pty Ltd. Haley (Australia) Pty. Limited Hyperion Solutions Australia Pty. Ltd. IQMS...

  • Page 164
    ... Company Oracle Numetrix Company Star Acquisition ULC Steltor Corporation Steltor General Partnership Steltor Inc. Sun Microsystems (B.C.) ULC WebGain (Nova Scotia) Company WebGain Canada Inc. BEA CrossGain International BEA International (fka BEA Cayman Holding III) Oracle International Holding...

  • Page 165
    ... Center, Beijing, Ltd. PeopleSoft (Beijing) Software Co. Ltd. StorageTek (China) Services Company Limited Sun Microsystems (China) Co. Limited Sun Microsystems Consulting Limited Sun Microsystems Products, Limited Oracle Colombia Limitada Sun Microsystems de Colombia, S.A. Oracle CR SSC, S.A. Oracle...

  • Page 166
    International Subsidiaries Place of Incorporation innotek GmbH Oracle Deutschland GmbH PeopleSoft Unterstützungskasse GmbH Sun Microsystems GmbH Oracle Financial Services Software S.A. Oracle Hellas, S.A. Sun Microsystems (Hellas) S.A. BEA Systems Hong Kong Ltd. Hyperion Solutions (Hong Kong) Ltd...

  • Page 167
    ... (Ireland) Limited Sun Microsystems Ireland Limited BEA Systems Middle East Ltd. Convergin Israel Ltd. Oracle Demantra R&D Center Israel Ltd. Oracle HyperRoll Ltd. Oracle Primavera Ltd. Oracle Software Systems Israel Limited India India India India India India India Indonesia Ireland Ireland...

  • Page 168
    ... Oracle Information Systems (Japan) K.K. Sun Microsystems Global Finance K.K. Sun Microsystems K.K. Oracle Consulting Kazakhstan LLP Oracle Korea, Ltd. Sun Microsystems Korea, Limited Oracle CAPAC Finance S.a.r.l. Oracle Finance S.a.r.l. PeopleSoft Luxembourg S.a.r.l. SPL Acquisition S.a.r.l. Sun...

  • Page 169
    ... B.V. Sun Microsystems Europe Properties B.V. Sun Microsystems Global Services B.V. Sun Microsystems International B.V. Sun Microsystems International Holding B.V. Sun Microsystems (Middle East) B.V. Sun Microsystems Nederland B.V. Sun Microsystems Scotland B.V. Tinoway Nederland B.V. Oracle Holding...

  • Page 170
    ... Software Pte. Ltd. Hyperion Solutions Asia Pte. Ltd. Mantas Singapore Pte. Ltd. Oracle Corporation Singapore Pte. Ltd. Oracle Financial Services Consulting Pte. Ltd. Oracle Financial Services Software Pte. Ltd. Oracle Singapore Holdings Pte. Ltd. Sun Microsystems Pte. Ltd. Oracle Slovensko spol...

  • Page 171
    International Subsidiaries Place of Incorporation Sun Microsystems Ukraine LLC PeopleSoft Middle East FZ-LLC Siebel Systems Middle East FZ-LLC Acsera Limited Advanced Visual Technology Advanced Visual Technology Americas Haley (Europe) Mantas Limited MySQL UK Ltd. Oracle Corporation Nominees ...

  • Page 172
    ...Statements: Form S-3 Form S-8 333-166643 333-164734 Sun Microsystems, Inc. 2007 Omnibus Incentive Plan, Sun Microsystems, Inc. 1990 Long-Term Equity Incentive Plan, Sun Microsystems, Inc. Equity Compensation Acquisition Plan, Sun Microsystems, Inc. 1988 Directors' Stock Option Plan, Sun Microsystems...

  • Page 173
    ..., Options Granted Outside of Sales.com, Inc. 1999 Equity Incentive Plan, SalesRepsOnline.com, Inc. 2000 Stock Option/Stock Issuance Plan, Scopus Technology, Inc. 1991 Stock Option Plan, Scopus Technology, Inc. 1995 Director Option Plan Oracle Corporation Amended and Restated 2000 Long-Term Equity...

  • Page 174
    ... Stock Option Plan, Oracle Corporation 1993 Deferred Compensation Plan, Oracle Corporation 401(k) Savings and Investment Plan of our reports dated June 30, 2010, with respect to the consolidated financial statements and schedule of Oracle Corporation, and the effectiveness of internal control...

  • Page 175
    ...'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Finance and Audit Committee of the registrant's board of directors (or persons performing the equivalent functions): a) all...

  • Page 176
    ...'s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the Finance and Audit Committee of the registrant's board of directors (or persons performing the equivalent functions): a) all...

  • Page 177
    ... of the Securities Exchange Act of 1934; and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Oracle Corporation. By: /s/ LAWRENCE J. ELLISON Lawrence J. Ellison Chief Executive Officer and Director By: /s/ JEFF...

  • Page 178
    ... doubtful accounts of $305 and $270 as of May 31, 2010 and 2009, respectively Inventories Deferred tax assets Prepaid expenses and other current assets Total current assets Non-current assets: Property, plant and equipment, net Intangible assets: software support agreements and related relationships...

  • Page 179
    ...CONSOLIDATED BALANCE SHEETS PARENTHETICAL (USD $) (in Millions) except Per Share Data 05/31/2010 05/31/2009 Statement line items Allowance for doubtful accounts receivable Preferred stock par or stated value per share Preferred stock shares authorized Preferred stock shares outstanding Common stock...

  • Page 180
    ... revenues Total revenues Operating Expenses: Sales and marketing Software license updates and product support costs Hardware systems products costs Hardware systems support costs Services costs Research and development General and administrative Amortization of intangible assets Acquisition related...

  • Page 181
    ... at beginning of period Cash and cash equivalents at end of period Non-cash investing and financing transactions: Fair value of stock options and restricted stock-based awards assumed in connection with acquisitions Source: ORACLE CORP, 10-K, July 01, 2010 100 1 240 (992) 874 (1,004) 7,220...

  • Page 182
    Decrease in unsettled repurchases of common stock Supplemental schedule of cash flow data: Cash paid for income taxes Cash paid for interest 0 (12) (23) 2,488 $ 652 2,170 $ 627 1,687 $ 347 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 183
    ... stock issued under stock-based compensation plans Common stock issued under stock purchase plans Assumption of stock-based compensation plan awards in connection with acquisitions Stock-based compensation in consolidated statements of equity Repurchase of common stock Tax benefit from stock plans...

  • Page 184
    ...in consolidated statements of equity Comprehensive income Ending balances at 2010-05-31 (6) 6,135 5,923 $0 0 0 0 $ 14,648 0 6,135 0 $ 16,146 (6) 0 0 $4 (6) 6,135 0 $ 30,798 0 95 0 (6) 6,230 0 $ 401 $ 31,199 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research...

  • Page 185
    ... CONSOLIDATED STATEMENTS OF EQUITY PARENTHETICAL (USD $) 12 Months Ended 05/31/2010 12 Months Ended 05/31/2009 12 Months Ended 05/31/2008 Common Stock and Additional Paid in Capital Beginning common stock shares outstanding Common stock issued under stock-based compensation plans (shares...

  • Page 186
    ..., maintenance services and technical support services. We also offer software and non-software related services including consulting, On Demand, and education. Basis of Financial Statements The consolidated financial statements include our accounts and the accounts of our wholly- and majority-owned...

  • Page 187
    ... as part of public policy, for example, in agreements with government entities where acceptance periods are required by law, or within previously executed terms and conditions that are referenced in the current agreement and are short-term in nature, we generally recognize revenues upon delivery...

  • Page 188
    ... and are included as a part of our services business. Consulting revenues from these arrangements are generally accounted for separately from new software license revenues because the arrangements qualify as Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 189
    ... of revenues and related expenses reported in our consolidated financial statements. A number of internal and external factors can affect our estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. On Demand is comprised of Oracle On...

  • Page 190
    ... to these same companies (Concurrent Transactions). Software license agreements or sales of hardware systems that occur within a three-month time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we...

  • Page 191
    ...credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2010, 2009 or 2008. Inventories...

  • Page 192
    ... (expenses), net in our consolidated statements of operations and were $(148) million, $(55) million and $40 million in fiscal 2010, 2009 and 2008, respectively. Stock-Based Compensation We account for share-based payments, including grants of employee stock options and restricted stock-based awards...

  • Page 193
    ... consolidated financial statements in fiscal 2010, 2009 or 2008. Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, stock-based compensation expenses, integration related professional services...

  • Page 194
    ... adoption of this standards update on our consolidated financial statements. Transfers of Financial Assets: In June 2009, the FASB issued and subsequently codified Accounting Standards Update No. 2009-16, Transfers and Servicing (Topic 860)-Accounting for Transfers of Financial Assets (ASU 2009...

  • Page 195
    ... for income tax purposes. Valuations of Intangible Assets Acquired The following table sets forth the components of intangible assets acquired in connection with the Sun acquisition: (Dollars in millions) Fair Value Hardware systems support agreements and related $ 771 7 years relationships...

  • Page 196
    ... of BEA stock options and restricted stock-based awards assumed and $10 million for acquisition related transaction costs. In allocating the purchase price based on estimated fair values, we recorded approximately $4.5 billion of goodwill, $3.3 billion of identifiable intangible assets, $733 million...

  • Page 197
    ...fiscal 2010, 2009 and 2008. The following table summarizes the components of our cash equivalents and marketable securities held, substantially all of which were classified as available-for-sale: (in millions) Money market funds $ 2,423 $ 467 U.S. Treasury, U.S. government and U.S. government 3,010...

  • Page 198
    ... rates we could obtain for other borrowings with similar terms at those dates, the estimated fair values of our borrowings at May 31, 2010 and May 31, 2009 were $15.90 billion and $10.79 billion, respectively. Total Total Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 199
    ... INVENTORIES 5.INVENTORIES Inventories consisted of the following as of May 31, 2010 (insignificant as of May 31, 2009): (in millions) May 31, 2010 Raw materials Work-in-process Finished goods Total 95 43 121 $ 259 $ Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 200
    ... Total property, plant and equipment, net 1-5 years $ 1-50 years 3-10 years - 5 years - 1-50 years $ 1,400 1,995 406 757 3 87 4,648 $ 1,213 1,579 388 515 5 126 3,826 (1,885) (1,904) 2,763 $ 1,922 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 201
    ... licenses operating segment. Goodwill adjustments for acquisitions consummated since the beginning of fiscal 2010 were generally balance sheet related with insignificant effects to our previously reported operating results. Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 202
    ... 31, 2009). We back-stop these notes with our revolving credit agreement and therefore, as of May 31, 2010, we consider that we have $2.1 billion of capacity remaining under our reduced CP Program. Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠Refer to Note...

  • Page 203
    ...364-Day Revolving Credit Agreement dated March 17, 2009, among Oracle; the lenders named therein; Wachovia Bank, National Association, as administrative agent; BNP Paribas as syndication agent; the documentation agents named therein; and Wachovia Capital Markets, LLC, and BNP Paribas Securities Corp...

  • Page 204
    ... Expected Program Costs Sun Restructuring Plan New software licenses Software license updates and product support Hardware systems business Services General and administrative and (1) other Total Sun Restructuring Fiscal 2009 Oracle Restructuring Plan New software licenses Software license updates...

  • Page 205
    ... all increases in costs are generally recorded to operating expenses in the period of adjustment with decreases in the costs of our Oracle-based plans and the Sun Restructuring Plan being recorded to operating expenses and decreases in costs of our acquisition related plans adopted prior to fiscal...

  • Page 206
    ... specific acceptance provisions or transactions that cannot be segmented from consulting services. In connection with the purchase price allocations related to our acquisitions, we have estimated the fair values of the support obligations assumed. The estimated fair values of the support obligations...

  • Page 207
    ... the Floating Rate Notes were recorded as interest expense. Net Investment Hedges Periodically, we hedge net assets of certain of our international subsidiaries using foreign currency forward contracts to offset the translation and economic exposures related to our foreign currency-based investments...

  • Page 208
    ...: Foreign currency forward contracts $ 33 Interest expense $ Location and Amount of Gain (Loss) Recognized in Income on Derivative Year Ended May 31, 2010 2009 Non-operating income (expense), net $ (35) $ 3 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 209
    ..., taxes, import licenses and letters of credit on behalf of parties we conduct business with. Such agreements have not had a material effect on our results of operations, financial position or cash flows. (in millions) Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 210
    ...for acquisitions and dividend payments, our debt repayment obligations or repurchase of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program...

  • Page 211
    ... Compensation Committee of the Board. Under the terms of the Directors' Plan, options to purchase 8 million shares of common stock were reserved for issuance, options are granted at not less than fair market value, become exercisable over four years, and expire no more than ten years from the date...

  • Page 212
    ... Plan (Oracle 401(k) Plan). Participants can generally contribute up to 40% of their eligible compensation on a per- pay-period basis as defined by the plan document or by the section 402(g) limit as defined by the United States Internal Revenue Service (IRS). We match a portion of employee...

  • Page 213
    ... operating loss carryforwards, and tax credit carryforwards. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change. Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠2009

  • Page 214
    ... Pricing Agreement for the years ending May 31, 2007 through May 31, 2011. However, these agreements do not cover all elements of our transfer pricing and do not bind tax authorities outside the United States. We have finalized two bilateral Advance Pricing Agreements, one of which was effective...

  • Page 215
    ..., application server software, business intelligence software, identification and access management software, content management software, portal and user interaction software, Service-Oriented Architecture and business process management software, data integration software and development tools...

  • Page 216
    ... partner programs, and corporate and general and administrative expenses incurred in support of the lines of business. Additionally, the margins do not reflect the amortization of intangible assets, acquisition related and other expenses, restructuring costs, or stock-based compensation. Year Ended...

  • Page 217
    ... shares relate to anti-dilutive stock options and restricted stock-based awards as calculated using the treasury stock method (described above) and could be dilutive in the future. See Note 14 for information regarding the exercise prices of our outstanding, unexercised options. Source: ORACLE CORP...

  • Page 218
    ... accessed Oracle's Customer Connection support website and improperly took and used Oracle's intellectual property, including software code and knowledge management solutions. The complaint seeks unspecified damages and preliminary and permanent injunctive relief. On June 1, 2007, Oracle filed...

  • Page 219
    ...TomorrowNow then used to create fixes and updates, to service customers and to train employees. The Second Amended Complaint also alleges that these practices may have extended to other Oracle products, including Siebel products. On October 8, 2008, Oracle filed a Third Amended Complaint pursuant to...

  • Page 220
    ...2009 May 31, $ 2010 Beginning Additions Write-offs Translation Ending Adjustments Balance Balance Charged and to Other Operations or Other Accounts 306 303 270 164 118 143 (182) (128) (92) 15 $ (23)$ (16)$ 303 270 305 Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document...

  • Page 221
    Document Information Document Information (USD $) 12 Months Ended 05/31/2010 Document Type Document Period End Date Amendment Flag 10-K 2010-05-31 false Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 222
    ...30/2009 Entity Registrant Name Entity Central Index Key Current Fiscal Year End Date Entity Well-known Seasoned Issuer Entity Voluntary Filers Entity Current Reporting Status Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Year Focus Document Fiscal...

  • Page 223
    Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„

  • Page 224
    _____ Created by Morningstar® Document Researchâ„ http://documentresearch.morningstar.com Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Researchâ„