Oracle 2011 Annual Report Download - page 119

ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2011
Rent expense was $406 million, $318 million and $293 million for fiscal 2011, 2010 and 2009, respectively, net
of sublease income of approximately $85 million, $73 million and $69 million, respectively. Certain lease
agreements contain renewal options providing for an extension of the lease term.
Unconditional Obligations
In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers,
which are agreements that are enforceable, legally binding and specify terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the
payment. We utilize several external manufacturers to manufacture sub-assemblies for our hardware products
and to perform final assembly and testing of finished hardware products. We also obtain individual components
for our hardware systems 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 amounts below. 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 the amounts below 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, our unconditional purchase and certain other obligations were as follows (in millions):
Fiscal 2012 ........................................................................ $ 453
Fiscal 2013 ........................................................................ 15
Fiscal 2014 ........................................................................ 7
Fiscal 2015 ........................................................................ 3
Fiscal 2016 ........................................................................ 3
Total ......................................................................... $ 481
As described in Note 2, we also have a commitment to acquire certain companies for cash consideration that we
expect to pay upon the closing of these acquisitions. As described in Note 8, we have notes payable and other
borrowings outstanding of $15.9 billion that mature at various future dates.
Guarantees
Our software and hardware systems product sales agreements generally include certain provisions for
indemnifying customers against liabilities if our products infringe a third party’s intellectual property rights. To
date, we have not incurred any material costs as a result of such indemnifications and have not accrued any
material liabilities related to such obligations in our consolidated financial statements. Certain of our product
sales agreements also include provisions indemnifying customers against liabilities in the event we breach
confidentiality or service level requirements. It is not possible to determine the maximum potential amount under
these indemnification agreements due to our limited and infrequent history of prior indemnification claims and
the unique facts and circumstances involved in each particular agreement.
Our software license and hardware systems products agreements also generally include a warranty that our
products will substantially operate as described in the applicable program documentation for a period of one year
after delivery. We also warrant that services we perform will be provided in a manner consistent with industry
standards for a period of 90 days from performance of the service.
We occasionally are required, for various reasons, to enter into financial guarantees with third parties in the
ordinary course of our business including, among others, guarantees related to foreign exchange trades, taxes,
import licenses and letters of credit on behalf of parties with whom we conduct business. Such agreements have
not had a material effect on our results of operations, financial position or cash flows.
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