Oracle 2010 Annual Report Download - page 64

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Table of Contents
Hardware Systems Support: Our hardware systems support offerings provide customers with software updates for the software components that are essential
to the functionality of our hardware systems and can include product repairs, maintenance services, and technical support services. Expenses associated with our
hardware systems support operating segment include the cost of materials used to repair customer products, the cost of providing support services, largely
personnel related expenses, and the amortization of our intangible assets associated with hardware systems support contracts and customer relationships obtained
from the Sun acquisition.
Year Ended May 31,
2011
Percent Change
2010
Percent Change
2009
(Dollars in millions) Actual Constant Actual Constant
Hardware Systems Support Revenues:
Americas $ 1,103 267% 263% $ 301 * * $
EMEA 1,004 195% 186% 340 * *
Asia Pacific 455 217% 196% 143 * *
Total revenues 2,562 227% 218% 784 * *
Expenses:
Hardware systems support(1) 1,254 198% 189% 421 * *
Stock-based compensation 5 124% 124% 2 * *
Amortization of intangible assets(2) 298 202% 202% 98 * *
Total expenses 1,557 199% 191% 521 * *
Total Margin $ 1,005 283% 274% $ 263 * * $
Total Margin % 39% 34% *
% Revenues by Geography:
Americas 43% 38% *
EMEA 39% 43% *
Asia Pacific 18% 19% *
(1) Excluding stock-based compensation
(2) Included as a component of ‘Amortization of Intangible Assets’ in our consolidated statements of operations
* Not meaningful
Fiscal 2011 Compared to Fiscal 2010: The increases in hardware systems support revenues and expenses in fiscal 2011 were primarily attributable to the
impact of Sun’s contributions to our operating results for the full fiscal 2011 period as compared to fiscal 2010. As a result of our acquisition of Sun, we recorded
adjustments to reduce assumed hardware systems support obligations to their estimated fair values at the acquisition date. Due to our application of business
combination accounting rules, hardware systems support revenues related to support contracts in the amounts of $148 million and $128 million that would have
been otherwise recorded by Sun as an independent entity were not recognized in fiscal 2011 and fiscal 2010, respectively. To the extent these underlying support
contracts are renewed, we will recognize the revenues for the full value of these contracts over the future support periods.
Excluding the effect of currency rate fluctuations, total hardware systems support margin and margin as a percentage of total revenues increased as our total
revenues increased at a faster rate than our total expenses.
Services
Services consist of consulting, Cloud Services and education.
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Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research