Oracle 2010 Annual Report Download - page 95

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2011
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
We develop, manufacture, market, distribute and service database and middleware software; applications software; and hardware systems, consisting primarily of
computer server and storage products. Our products are built on industry standards and are engineered to work together or independently within existing
customer information technology (IT), including private and public cloud computing, environments.
Database and middleware software is generally used for the secure storage, retrieval and manipulation of all forms of software-based data, and for developing
and deploying applications on the internet and on corporate intranets. Applications software is generally used to automate business processes and to provide
business intelligence. We also offer software license updates and product support contracts that provide our customers with rights to unspecified product
upgrades and maintenance releases issued during the support period, as well as technical support assistance.
On January 26, 2010, we completed our acquisition of Sun Microsystems, Inc. (Sun), a provider of hardware systems, software and services, by means of a
merger of one of our wholly owned subsidiaries with and into Sun such that Sun became a wholly owned subsidiary of Oracle. As a result of our acquisition of
Sun, we entered into a new hardware systems business. Our hardware systems business consists of two operating segments: (1) hardware systems products,
which consists primarily of computer server and storage product offerings, and (2) hardware systems support, which provides customers with unspecified
software updates for the software components that are essential to the functionality of our hardware systems and storage products and can include product
repairs, maintenance services and technical support services. In addition, we enhanced our existing software and services businesses with additional offerings
from Sun. Our acquisition of Sun has added a significant amount of revenues and expenses to our results of operations in comparison to our historical operating
results.
Basis of Financial Statements
The consolidated financial statements include our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling interest positions of
certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle’s stockholders for all
periods presented. The noncontrolling interests in our net income were not significant to our consolidated results for the periods presented and therefore have
been included as a component of non-operating income (expense), net in our consolidated statements of operations. Intercompany transactions and balances have
been eliminated. Certain other prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total
revenues, operating income or net income. General and administrative expenses as presented in our consolidated statements of operations for fiscal 2011 included
a benefit of $120 million related to the recovery of legal costs that reduced our expenses in this period.
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial
Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable
guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require us to make certain estimates, judgments and
assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time
that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities
as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material
differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the
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Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠