Oracle 2009 Annual Report Download - page 60

Table of Contents
Software License Updates and Product Support: Software license updates grant customers rights to unspecified software product upgrades and maintenance
releases issued during the support period. Product support includes internet access to technical content as well as internet and telephone access to technical
support personnel in our global support centers. Expenses associated with our software license updates and product support line of business include the cost of
providing the support services, largely personnel related expenses, and the amortization of our intangible assets associated with software support contracts and
customer relationships obtained from acquisitions.
Year Ended May 31,
2010
Percent Change
2009
Percent Change
2008
(Dollars in millions) Actual Constant Actual Constant
Software License Updates and Product Support Revenues:
Americas $ 7,100 10% 9% $ 6,462 16% 18% $ 5,587
EMEA 4,304 12% 12% 3,850 10% 21% 3,503
Asia Pacific 1,688 17% 9% 1,442 17% 20% 1,238
Total revenues 13,092 11% 10% 11,754 14% 19% 10,328
Expenses:
Software license updates and product support(1) 1,046 -3% -4% 1,075 9% 14% 987
Stock-based compensation 17 29% 29% 13 35% 35% 10
Amortization of intangible assets(2) 839 0% 0% 841 41% 41% 596
Total expenses 1,902 -1% -2% 1,929 21% 24% 1,593
Total Margin $ 11,190 14% 12% $ 9,825 12% 18% $ 8,735
Total Margin % 85% 84% 85%
% Revenues by Geography:
Americas 54% 55% 54%
EMEA 33% 33% 34%
Asia Pacific 13% 12% 12%
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
Fiscal 2010 Compared to Fiscal 2009: Excluding the effect of currency rate fluctuations, software license updates and product support revenues increased in
fiscal 2010 as a result of new software licenses sold (with substantially all customers electing to purchase support contracts) during the trailing 4-quarter period,
the renewal of substantially all of the customer base eligible for renewal in the current fiscal year and incremental revenues from recent acquisitions. Excluding
the effect of currency rate fluctuations, the Americas contributed 49%, EMEA contributed 39% and Asia Pacific contributed 12% to the increase in software
license updates and product support revenues.
In reported currency, software license updates and product support revenues in fiscal 2010 included incremental revenues of $88 million from Sun and $56
million from our other recently acquired companies. As a result of our acquisitions, we recorded adjustments to reduce assumed support obligations to their
estimated fair values at the acquisition dates. Due to our application of business combination accounting rules, software license updates and product support
revenues related to support contracts in the amounts of $86 million, $243 million and $179 million that would have been otherwise recorded by our acquired
businesses as independent entities were not recognized in fiscal 2010, fiscal 2009 and fiscal 2008, respectively. Historically, substantially all of our customers,
including customers from acquired companies, renew their software support contracts when such contracts are eligible for renewal. To the extent these
underlying support contracts are renewed, we will recognize the revenues for the full value of these contracts over the support periods, the substantial majority of
which are one year in duration.
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠