Oracle 2009 Annual Report Download - page 202

NOTES PAYABLE AND OTHER BORROWINGS
NOTES PAYABLE AND OTHER BORROWINGS
(USD $)
12 Months Ended
05/31/2010
NOTES PAYABLE AND OTHER BORROWINGS 8. NOTES PAYABLE AND OTHER BORROWINGS
Notes payable and other borrowings consisted of the following:
(Dollars in millions) May 31,
2010
May 31,
2009
Floating rate senior notes due May 2010 $ — $ 1,000
Commercial paper notes (effective interest rate of 0.28%) 881 —
5.00% senior notes due January 2011, net of discount of $1 and $3 as of
May 31, 2010 and 2009, respectively
2,249 2,247
4.95% senior notes due April 2013 1,250 1,250
3.75% senior notes due July 2014, net of fair value adjustment of $33(1) 1,533 —
5.25% senior notes due January 2016, net of discount of $6 and $7 as of
May 31, 2010 and 2009, respectively
1,994 1,993
5.75% senior notes due April 2018, net of discount of $1 as of May 31, 2010
and 2009
2,499 2,499
5.00% senior notes due July 2019, net of discount of $6 as of May 31, 2010 1,744 —
6.50% senior notes due April 2038, net of discount of $2 as of May 31, 2010
and 2009
1,248 1,248
6.125% senior notes due July 2039, net of discount of $8 as of May 31, 2010 1,242 —
Capital leases 15 1
Total borrowings $ 14,655 $ 10,238
Notes payable, current and other current borrowings $ 3,145 $ 1,001
Notes payable, non-current and other non-current borrowings $ 11,510 $ 9,237
(1) Refer to Note 11 for a description of our accounting for fair value hedges
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 2019 (2019 Notes) and $1.25 billion of
6.125% notes due July 2039 (2039 Notes). We issued these senior notes for general corporate purposes
and for our acquisition of Sun and acquisition related expenses.
In April 2008, we issued $5.0 billion of fixed rate senior notes, of which $1.25 billion of 4.95% senior
notes is due April 2013 (2013 Notes), $2.5 billion of 5.75% senior notes is due April 2018 (2018 Notes),
and $1.25 billion of 6.50% senior notes is due April 2038 (2038 Notes). We issued these senior notes to
finance the acquisition of BEA and for general corporate purposes.
In May 2007, we issued $2.0 billion of floating rate senior notes, of which $1.0 billion was due and paid in
May 2009 and $1.0 billion was due and paid in May 2010. We had also entered into certain variable to
fixed interest rate swap agreements related to these senior notes, which settled as of the same dates the
notes were repaid (see Note 11).
In January 2006, we issued $5.75 billion of senior notes, of which $2.25 billion of 5.00% senior notes due
2011 (2011 Notes) and $2.0 billion of 5.25% senior notes due 2016 (2016 Notes and together with the
2011 Notes, Original Senior Notes) remained outstanding as of May 31, 2010 and 2009. In June 2006, we
completed a registered exchange offer with substantially identical terms to the Original Senior Notes.
The effective interest yields of the 2011 Notes, 2013 Notes, 2014 Notes, 2016 Notes, 2018 Notes, 2019
Notes, 2038 Notes and 2039 Notes (collectively, the Senior Notes) at May 31, 2010 were 5.08%, 4.96%,
3.75%, 5.32%, 5.76%, 5.05%, 6.52% and 6.19%, respectively. Interest is payable semi-annually for the
Senior Notes. In September 2009, we entered into interest rate swap agreements that have the economic
effect of modifying the fixed interest obligations associated with the 2014 Notes so that the interest
payable on these notes effectively became variable (1.44% at May 31, 2010; see Note 11 for additional
information). All of the Senior Notes may be redeemed at any time, subject to payment of a make-whole
premium.
The Senior Notes rank pari passu with the Commercial Paper Notes (defined below) that we have issued,
any other notes we may issue in the future pursuant to the CP Program described below and all existing
and future senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries
of Oracle Corporation will be effectively senior to the Senior Notes and our Commercial Paper Notes.
Separately, shortly after the closing of our acquisition of Sun we repaid, in full, $700 million of Sun's
legacy convertible notes in the third quarter of fiscal 2010.
We were in compliance with all debt-related covenants at May 31, 2010. Future principal payments for all
of our borrowings, including borrowings pursuant to our CP Program described below, at May 31, 2010
were as follows: $3.1 billion in fiscal 2011, none in fiscal 2012, $1.3 billion in fiscal 2013, none in fiscal
2014, $1.5 billion in fiscal 2015 and $8.8 billion thereafter.
Commercial Paper Program & Commercial Paper Notes
We entered into a commercial paper program in February 2006 (amended in May 2008) via dealer
agreements with Banc of America Securities LLC and JP Morgan Securities, Inc. and an Issuing and
Paying Agency Agreement entered into in February 2006 with JPMorgan Chase Bank, National
Association (CP Program). On May 11, 2010, we reduced the overall capacity of our CP Program from
$5.0 billion to $3.0 billion after our March 17, 2009 $2.0 billion 364-day revolving credit agreement
terminated pursuant to its terms (see additional discussion below).
During fiscal 2010, 2009 and 2008, we issued $2.8 billion, none and $1.2 billion of unsecured short-term
commercial paper notes (Commercial Paper Notes), respectively, pursuant to the CP Program, which
allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement
exemption from the registration requirements under federal and state securities laws. As of May 31, 2010,
we had $881 million of Commercial Paper Notes outstanding at a weighted average yield, including
issuance costs, of 0.28% that mature at various dates through July 15, 2010 (none outstanding as of May
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℠