Oracle 2009 Annual Report Download - page 75

Table of Contents
our consolidated financial position, results of operations and cash flows. The following is a summary of our contractual obligations as of May 31, 2010:
Year Ending May 31,
(Dollars in millions) Total 2011 2012 2013 2014 2015 Thereafter
Principal payments on short-term borrowings and long-term debt(1) $ 14,630 $ 3,130 $ — $ 1,250 $ — $ 1,500 $ 8,750
Capital leases(2) 15 15 — — — — —
Interest payments on short-term borrowings and long-term debt(1) 7,543 691 578 578 516 505 4,675
Operating leases(3) 1,697 511 376 257 157 103 293
Purchase obligations(4) 742 684 27 19 6 3 3
Funding commitments(5) 3 3 — — — — —
Total contractual obligations $ 24,630 $ 5,034 $ 981 $ 2,104 $ 679 $ 2,111 $ 13,721
(1) Our borrowings (excluding capital leases) consist of the following as of May 31, 2010:
Principal Balance
Commercial paper notes (effective interest rate of 0.28%) $ 881
5.00% senior notes due January 2011, net of discount of $1 2,249
4.95% senior notes due April 2013 1,250
3.75% senior notes due July 2014, net of fair value adjustment of $33 1,533
5.25% senior notes due January 2016, net of discount of $6 1,994
5.75% senior notes due April 2018, net of discount of $1 2,499
5.00% senior notes due July 2019, net of discount of $6 1,744
6.50% senior notes due April 2038, net of discount of $2 1,248
6.125% senior notes due July 2039, net of discount of $8 1,242
Total borrowings $ 14,640
We have entered into certain interest rate swap agreements related to our July 2014 senior notes that have the economic effect of modifying the fixed interest obligations associated
with these senior notes so that the interest obligations effectively became variable pursuant to 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, and are subject to change in future periods. The changes in fair value of our debt associated with the interest rate risk that we are hedging
pursuant to these agreements are included in notes payable and other non-current borrowings in our consolidated balance sheet and have been included in the above table of
borrowings.
(2) Represents remaining payments under capital leases, substantially all of which were assumed from our acquisitions.
(3) Primarily represents leases of facilities and includes future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities. We
have approximately $386 million in facility obligations, net of estimated sublease income, accrued restructuring for these locations in our consolidated balance sheet at May 31, 2010.
(4) Represents amounts associated with agreements that are enforceable, legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or
variable price provisions; and the approximate timing of the payment. As a result of our acquisition of Sun, we utilize several external manufacturers to manufacture sub-assemblies for our
products and to perform final assembly and testing of finished products. We also obtain individual components for our products from a variety of individual suppliers based on projected
demand information. Such purchase commitments are based on our forecasted component and manufacturing requirements and typically provide for fulfillment within agreed upon
lead-times and/or commercially standard lead-times for the particular part or product and have been included in the amount presented in the above contractual obligations table. Routine
arrangements for other materials and goods that are not related to our external manufacturers and certain other suppliers and that are entered into in the ordinary course of business are not
included in this amount as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a meaningful way.
(5) Represents the maximum additional capital we may need to contribute toward our venture fund investments, which are payable upon demand.
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Source: ORACLE CORP, 10-K, July 01, 2010 Powered by Morningstar® Document Research℠