Oracle 2010 Annual Report Download - page 260

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DERIVATIVES FINANCIAL INSTRUMENTS Narrative (Details)
DERIVATIVES FINANCIAL INSTRUMENTS Narrative
(Details) (USD $)
12 Months Ended
05/31/2011
Description of foreign currency forward contracts not designated as hedges We transact business in various foreign currencies and have
established a program that primarily utilizes foreign currency forward
contracts to offset the risks associated with the effects of certain
foreign currency exposures. Under this program, our strategy is to
enter into foreign currency forward contracts so that increases or
decreases in our foreign currency exposures are offset by gains or
losses on the foreign currency forward contracts in order to mitigate
the risks and volatility associated with our foreign currency
transactions. We may suspend this program from time to time and
did so during the fourth quarter of fiscal 2010 until resuming the
program in the second quarter of fiscal 2011. We neither use these
foreign currency forward contracts for trading purposes nor do we
designate these forward contracts as hedging instruments pursuant to
ASC 815. The net unrealized losses of our outstanding foreign
currency forward contracts were nominal at May 31, 2011. As of
May 31, 2010, we had a nominal amount of foreign currency forward
contracts outstanding.
Description of fair value hedges In September 2009, we entered into interest rate swap agreements
that have the economic effect of modifying the fixed interest
obligations associated with our 3.75% senior notes due July 2014
(2014 Notes) so that the interest payable on these notes effectively
became variable based on LIBOR. The critical terms of the interest
rate swap agreements and the 2014 Notes match, including the
notional amounts and maturity dates. We do not use any interest rate
swap agreements for trading purposes.
Description of net investment hedges We entered into these net investment hedges for the majority of fiscal
2010. We suspended this program during our fourth quarter of fiscal
2010 and, as of May 31, 2011, we have no contracts of this nature
outstanding.
Description of cash flow hedges Upon repayment of the Floating Rate Notes in May 2010, we settled
the interest rate swap agreements associated with the Floating Rate
Notes and no other arrangements were outstanding as of May 31,
2011.
Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠