Oracle 2009 Annual Report Download - page 134

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2010
(1) Operating segment revenues differ from the external reporting classifications due to certain software license products that are classified as service revenues for management reporting
purposes. Software license updates and product support revenues for management reporting included $86 million, $243 million and $179 million of revenues that we did not recognize in
the accompanying consolidated statements of operations in fiscal 2010, 2009 and 2008, respectively. In addition, we did not recognize hardware systems support revenues related to
hardware systems support contracts that would have otherwise been recorded by Sun as an independent entity, in the amount of $128 million in fiscal 2010. See Note 10 for an explanation
of these adjustments and the following table for a reconciliation of operating segment revenues to total revenues.
(2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, information technology, marketing and
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.
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,
(in millions) 2010 2009 2008
Total revenues for reportable segments $ 27,034 $ 23,495 $ 22,609
Software license updates and product support revenues(1) (86) (243) (179)
Hardware systems support revenues(1) (128) — —
Total revenues $ 26,820 $ 23,252 $ 22,430
Total margin for reportable segments $ 17,286 $ 14,943 $ 13,839
Software license updates and product support revenues(1) (86) (243) (179)
Hardware systems support revenues(1) (128) — —
Hardware systems products expenses(2) (29) — —
Product development and information technology expenses (3,479) (2,984) (3,012)
Marketing and partner program expenses (503) (439) (460)
Corporate and general and administrative expenses (755) (634) (677)
Amortization of intangible assets (1,973) (1,713) (1,212)
Acquisition related and other (154) (117) (124)
Restructuring (622) (117) (41)
Stock-based compensation (421) (340) (257)
Interest expense (754) (630) (394)
Non-operating income (expense), net (139) 108 351
Income before provision for income taxes $ 8,243 $ 7,834 $ 7,834
(1) Software license updates and product support revenues for management reporting include $86 million, $243 million and $179 million of revenues that we did not recognize in the
accompanying condensed consolidated statements of operations for fiscal 2010, 2009 and 2008, respectively. In addition, we did not recognize hardware systems support revenues related
to hardware systems support contracts that would have otherwise been recorded by Sun as an independent entity, in the amount of $128 million for fiscal 2010. See Note 10 for an
explanation of these adjustments and this table for a reconciliation of operating segment revenues to total revenues.
(2) Represents the effects of fair value adjustments to our inventories acquired from Sun that were sold to customers in the periods presented. Business combination accounting rules require us
to account for inventories assumed from our acquisitions at their fair values. The amount included in hardware systems products expenses above is intended to adjust these expenses to the
hardware systems products expenses that would have been otherwise recorded by Sun as a standalone entity upon the sale of these inventories. If we assume inventories in future
acquisitions, we will be required to assess their fair values, which may result in fair value adjustments to those inventories.
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠