Oracle 2010 Annual Report Download - page 216

Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs for transitional and
certain other employees, stock-based compensation expenses, integration related professional
services, certain business combination adjustments after the measurement period or purchase
price allocation period has ended, and certain other operating expenses, net. Stock-based
compensation included in acquisition related and other expenses resulted from unvested
options and restricted stock-based awards assumed from acquisitions whereby vesting was
accelerated upon termination of the employees pursuant to the original terms of those options
and restricted stock-based awards. As a result of our adoption of the FASB’s revised
accounting guidance for business combinations as of the beginning of fiscal 2010, certain
acquisition related and other expenses are now recorded as expenses in our statements of
operations that would previously have been included as a part of the consideration transferred
and capitalized as a part of the accounting for our acquisitions pursuant to previous
accounting rules, primarily direct transaction costs such as professional services fees.
Year Ended May 31,
(in millions) 2011 2010 2009
Transitional and other employee related costs $ 129 $ 66 $ 45
Stock-based compensation 10 15 15
Professional fees and other, net 66 68 35
Business combination adjustments, net 3 5 22
Total acquisition related and other expenses $ 208 $ 154 $ 117
Non-Operating Income (Expense), net Non-operating income (expense), net consists primarily of interest income, net foreign
currency exchange gains (losses), the noncontrolling interests in the net profits of our
majority-owned subsidiaries (Oracle Financial Services Software Limited and Oracle Japan),
and net other income (losses), including net realized gains and losses related to all of our
investments and net unrealized gains and losses related to the small portion of our investment
portfolio that we classify as trading.
Year Ended May 31,
(in millions) 2011 2010 2009
Interest income $ 163 $ 122 $ 279
Foreign currency gains (losses), net 11 (148 ) (55 )
Noncontrolling interests in income (97 ) (95 ) (84 )
Other income, net 109 56 3
Total non-operating income (expense), net $ 186 $ (65 ) $ 143
Included in our non-operating income (expense), net for fiscal 2010 was a foreign currency
remeasurement loss of $81 million resulting from the designation of our Venezuelan
subsidiary as “highly inflationary” in accordance with ASC 830, Foreign Currency Matters,
and subsequent devaluation of the Venezuelan currency by the Venezuelan government.
Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes. Deferred income
taxes are recorded for the expected tax consequences of temporary differences between the
tax bases of assets and liabilities for financial reporting purposes and amounts recognized for
income tax purposes. We record a valuation allowance to reduce our deferred tax assets to the
amount of future tax benefit that is more likely than not to be realized.
A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of
uncertain tax positions taken or expected to be taken in a tax return. The first step is to
determine if the weight of available evidence indicates that it is more likely than not that the
tax position will be sustained in an audit, including resolution of any related appeals or
litigation processes. The second step is to measure the tax benefit as the largest amount that is
more than 50% likely to be realized upon ultimate settlement. We recognize interest and
penalties related to uncertain tax positions in our provision for income taxes line of our
consolidated statements of operations.
A description of our accounting policies associated with tax related contingencies and
valuation allowances assumed as a part of a business combination is provided under
“Business Combinations” above.
Recent Accounting Pronouncements Presentation of Comprehensive Income: In June 2011, the FASB issued Accounting
Standards Update No. 2011-05, Comprehensive Income (Topic 220)—Presentation of
Comprehensive Income (ASU 2011-05), to require an entity to present the total of
Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠