Oracle 2009 Annual Report Download - page 131

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2010
Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting our unrecognized tax benefits. We believe it was
reasonably possible that, as of May 31, 2010, the gross unrecognized tax benefits, could decrease (whether by payment, release, or a combination of both) by as
much as $187 million ($53 million net of offsetting tax benefits) in the next 12 months, related primarily to transfer pricing and a technical matter of corporate
restructuring, which would be affected by the possible passage of favorable legislation. With some exceptions, we are generally no longer subject to tax
examinations in non-U.S. jurisdictions for years prior to fiscal 1998.
We believe that we have adequately provided for any reasonably foreseeable outcomes related to our tax audits and that any settlement will not have a material
adverse effect on our consolidated financial position or results of operations. However, there can be no assurances as to the possible outcomes.
We previously negotiated three successive unilateral Advance Pricing Agreements with the IRS that cover many of our intercompany transfer pricing issues and
preclude the IRS from making a transfer pricing adjustment within the scope of the agreements. These agreements are effective for fiscal years through May 31,
2006. We have submitted to the IRS a request for another renewal of this Advance 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 for the years ending May 31, 2002 through May 31, 2006 and we have submitted a request for
a renewal of this agreement for the years ending May 31, 2007 through May 31, 2011. There can be no guarantee that such negotiations will result in an
agreement. The additional bilateral agreement covers the period from June 1, 2001 through January 25, 2008.
16. SEGMENT INFORMATION
ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an
enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in
deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We are organized
geographically and by line of business. While our Chief Executive Officer evaluates results in a number of different ways, the line of business management
structure is the primary basis for which the allocation of resources and financial results are assessed. As a result of our acquisition of Sun, we entered into a new
hardware systems business with two operating segments as described further below. We have three businesses—software, hardware systems and
services—which are further divided into seven operating segments. Our software business is comprised of two operating segments: (1) new software licenses and
(2) software license updates and product support. Our hardware systems business is comprised of two operating segments: (1) hardware systems products and
(2) hardware systems support. Our services business is comprised of three operating segments: (1) consulting, (2) On Demand and (3) education.
The new software licenses line of business is engaged in the licensing of database and middleware software as well as our applications software. Database and
middleware software includes database management software, 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. As a result of our acquisition of Sun, we acquired certain software technologies that expanded and enhanced our
existing database and middleware software product offerings, including Java, which is a global software development platform used in a wide range of
computers, networks and devices. Applications software provides enterprise information that enables companies to manage their business cycles and provide
intelligence in functional areas such as customer relationship management, financials, human resources, maintenance management, manufacturing, marketing,
order fulfillment, product lifecycle management, enterprise project portfolio management, enterprise performance management, procurement, sales, services,
enterprise resource planning and supply chain planning.
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠