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ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2011
Performing Step 2 of the Goodwill Impairment Test: In December 2010, the FASB issued Accounting
Standards Update No. 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units
with Zero or Negative Carrying Amounts (Topic 350)—Intangibles—Goodwill and Other (ASU 2010-28). ASU
2010-28 amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero
or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely
than not that a goodwill impairment exists. We will adopt ASU 2010-28 in fiscal 2012 and any impairment to be
recorded upon adoption will be recognized as an adjustment to our beginning retained earnings. We will adopt
ASU 2010-28 in fiscal 2012 and do not believe it will have a material impact on our consolidated financial
statements.
Milestone Method of Revenue Recognition: In April 2010, the FASB issued Accounting Standards Update
No. 2010-17, Revenue Recognition—Milestone Method (Topic 605)—Revenue Recognition (ASU 2010-17).
ASU 2010-17 provides guidance on defining the milestone and determining when the use of the milestone
method of revenue recognition for research or development transactions is appropriate. It provides criteria for
evaluating if the milestone is substantive and clarifies that a vendor can recognize consideration that is contingent
upon achievement of a milestone as revenue in the period in which the milestone is achieved, if the milestone
meets all the criteria to be considered substantive. ASU 2010-17 is effective for us in our first quarter of fiscal
2012 and should be applied prospectively. Early adoption is permitted. If we were to adopt ASU 2010-17 prior to
the first quarter of fiscal 2012, we must apply it retrospectively to the beginning of the fiscal year of adoption and
to all interim periods presented. We will adopt ASU 2010-17 in fiscal 2012 and do not believe it will have a
material impact on our consolidated financial statements.
Disclosure Requirements Related to Fair Value Measurements: In January 2010, the FASB issued
Accounting Standards Update No. 2010-06, Improving Disclosures about Fair Value Measurements (Topic
820)—Fair Value Measurements and Disclosures (ASU 2010-06), to add additional disclosures about the
different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, and the
activity in Level 3 fair value measurements. Certain provisions of this update will be effective for us in fiscal
2012 and we and do not believe these provisions will have a material impact on our consolidated financial
statements.
2. ACQUISITIONS
Fiscal 2011 Acquisitions
On January 5, 2011, we completed our acquisition of Art Technology Group, Inc. (ATG), a provider of
eCommerce software and related on demand commerce optimization applications. We have included the
financial results of ATG in our consolidated financial statements from the date of acquisition. The total
preliminary purchase price for ATG was approximately $1.0 billion, which consisted of approximately $990
million in cash and $16 million for the fair value of stock options and restricted stock-based awards assumed. In
allocating the total preliminary purchase price for ATG based on estimated fair values, we preliminarily recorded
$549 million of goodwill, $404 million of identifiable intangible assets and $53 million of net tangible assets.
On August 11, 2010, we completed our acquisition of Phase Forward Incorporated (Phase Forward), a provider
of applications for life sciences companies and healthcare providers. We have included the financial results of
Phase Forward in our consolidated financial statements from the date of acquisition. The total preliminary
purchase price for Phase Forward was approximately $736 million, which consisted of approximately $735
million in cash and $1 million for the fair value of restricted stock-based awards assumed. In allocating the total
preliminary purchase price for Phase Forward based on estimated fair values, we preliminarily recorded $355
million of goodwill, $370 million of identifiable intangible assets, $20 million of in-process research and
development and $9 million of net tangible liabilities (resulting primarily from deferred tax liabilities assumed as
a part of this transaction).
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