Oracle 2011 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 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

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
91