Oracle 2012 Annual Report Download - page 108

ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2012
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Our assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components,
consisted of the following (Level 1, 2 and 3 inputs are defined above):
May 31, 2012 May 31, 2011
Fair Value Fair Value
Measurements Measurements
Using Input Types Using Input Types
(in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Total
Assets:
Money market funds ................................................ $ 25 $ — $ — $ 25 $ 3,362 $ — $ 3,362
U.S. Treasury, U.S. government and U.S. government agency debt securities . . . 100 — — 100 1,150 — 1,150
Commercial paper debt securities ...................................... — 13,954 — 13,954 — 11,884 11,884
Corporate debt securities and other .................................... 229 1,983 — 2,212 106 1,885 1,991
Derivative financial instruments ....................................... — 69 — 69 — 69 69
Total assets ..................................................... $ 354 $16,006 $ — $ 16,360 $ 4,618 $ 13,838 $ 18,456
Liabilities:
Contingent consideration payable ...................................... $ — $ — $ 387 $ 387 $ — $ — $ —
Our valuation techniques used to measure the fair values of our money market funds, U.S. Treasury, U.S.
government and U.S. government agency debt securities and certain other marketable securities that were
classified as Level 1 in the table above were derived from quoted market prices as substantially all of these
instruments have maturity dates, if any, within two years from our date of purchase and active markets for these
instruments exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the
table above, all of which mature within two years and the counterparties to which have high credit ratings, were
derived from the following: non-binding market consensus prices that are corroborated by observable market
data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques,
with all significant inputs derived from or corroborated by observable market data including LIBOR-based yield
curves, among others. Our valuation techniques and Level 3 inputs used to estimate the fair value of contingent
consideration payable in connection with our acquisition of Pillar Data are described in Note 2.
Based on the trading prices of our $16.5 billion and $15.9 billion of borrowings, which consisted of senior notes
and certain other borrowings that were outstanding at May 31, 2012 and 2011, respectively, the estimated fair
values of our borrowings using Level 2 inputs at May 31, 2012 and May 31, 2011 were $19.3 billion and $17.4
billion, respectively.
5. INVENTORIES
Inventories consisted of the following:
May 31,
(in millions) 2012 2011
Raw materials ............................................................. $ 45 $ 94
Work-in-process ........................................................... 20 17
Finished goods ............................................................. 93 192
Total ................................................................ $ 158 $ 303
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