Oracle 2010 Annual Report Download - page 76

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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.
As of May 31, 2011, we have $3.8 billion of gross unrecognized tax benefits, including related interest and penalties, recorded on our consolidated balance sheet
and all such obligations have been excluded from the table above due to the uncertainty as to when they might be settled. We have reached certain settlement
agreements with relevant taxing authorities to pay approximately $96 million of these liabilities. Although it remains unclear as to when payments pursuant to
these agreements will be made, some or all may be made in fiscal 2012. We cannot make a reasonably reliable estimate of the period in which the remainder of
our unrecognized tax benefits will be settled or released with the relevant tax authorities, although we believe it is reasonably possible that certain of these
liabilities could be settled or released during fiscal 2012.
Subsequent to fiscal 2011, we agreed to acquire certain companies for amounts that are not material to our business. We expect to close such acquisitions within
the next twelve months.
We believe that our current cash, cash equivalents and marketable securities and cash generated from operations will be sufficient to meet our working capital,
capital expenditures and contractual obligation requirements. In addition, we believe we could fund any future acquisitions, dividend payments and repurchases
of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or
from the issuance of additional securities.
Off-Balance Sheet Arrangements: We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are
material to investors.
Selected Quarterly Financial Data
Quarterly revenues, expenses and operating income have historically been affected by a variety of seasonal factors, including sales force incentive compensation
plans. In addition, our European operations generally provide lower revenues in our first fiscal quarter because of the reduced economic activity in Europe during
the summer. These seasonal factors are common in the high technology industry. These factors have caused a decrease in our first quarter revenues as compared
to revenues in the immediately preceding fourth quarter, which historically has been our highest revenue quarter within a particular fiscal year. Similarly, the
operating income of our business is affected by seasonal factors in a consistent manner as our revenues (in particular, our new software license and hardware
systems products) as certain expenses within our cost structure are relatively fixed in the short-term. We expect these trends to continue in fiscal 2012. Our
quarterly revenues, expenses and operating income were also impacted in the periods presented in the table below by our acquisition of Sun during the third
quarter of fiscal 2010, which added a significant amount of revenues and expenses to our results of operations in comparison to our historical operating results.
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Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠