Oracle 2010 Annual Report Download - page 121

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2011
Rent expense was $406 million, $318 million and $293 million for fiscal 2011, 2010 and 2009, respectively, net of sublease income of approximately $85
million, $73 million and $69 million, respectively. Certain lease agreements contain renewal options providing for an extension of the lease term.
Unconditional Obligations
In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers, which are 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. We utilize several external manufacturers to manufacture sub-assemblies for our hardware products and to perform final assembly and testing of
finished hardware products. We also obtain individual components for our hardware systems 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 amounts below. 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 the amounts below as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to
quantify in a meaningful way.
As of May 31, 2011, our unconditional purchase and certain other obligations were as follows (in millions):
Fiscal 2012 $453
Fiscal 2013 15
Fiscal 2014 7
Fiscal 2015 3
Fiscal 2016 3
Total $481
As described in Note 2, we also have a commitment to acquire certain companies for cash consideration that we expect to pay upon the closing of these
acquisitions. As described in Note 8, we have notes payable and other borrowings outstanding of $15.9 billion that mature at various future dates.
Guarantees
Our software and hardware systems product sales agreements generally include certain provisions for indemnifying customers against liabilities if our products
infringe a third party’s intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any
material liabilities related to such obligations in our consolidated financial statements. Certain of our product sales agreements also include provisions
indemnifying customers against liabilities in the event we breach confidentiality or service level requirements. It is not possible to determine the maximum
potential amount under these indemnification agreements due to our limited and infrequent history of prior indemnification claims and the unique facts and
circumstances involved in each particular agreement.
Our software license and hardware systems products agreements also generally include a warranty that our products will substantially operate as described in the
applicable program documentation for a period of one year after delivery. We also warrant that services we perform will be provided in a manner consistent with
industry standards for a period of 90 days from performance of the service.
We occasionally are required, for various reasons, to enter into financial guarantees with third parties in the ordinary course of our business including, among
others, guarantees related to foreign exchange trades, taxes, import licenses and letters of credit on behalf of parties with whom we conduct business. Such
agreements have not had a material effect on our results of operations, financial position or cash flows.
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Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠