Oracle 2011 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2011 Oracle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

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,
Percent Change Percent Change
(Dollars in millions) 2011 Actual Constant 2010 Actual Constant 2009
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.
60