Oracle 2012 Annual Report Download - page 129

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ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2012
(2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product
development, information technology, marketing and partner programs and corporate and general and administrative expenses.
Additionally, the margins do not reflect inventory fair value adjustments, amortization of intangible assets, acquisition related and other
expenses, restructuring expenses or stock-based compensation.
The following table reconciles total operating segment revenues to total revenues as well as total operating
segment margin to income before provision for income taxes:
Year Ended May 31,
(in millions) 2012 2011 2010
Total revenues for operating segments ......................... $ 37,221 $ 35,850 $ 27,034
New software licenses revenues(1) ............................. (22) — —
Software license updates and product support revenues(1) .......... (48) (80) (86)
Hardware systems support revenues(1) .......................... (30) (148) (128)
Total revenues ........................................ $ 37,121 $ 35,622 $ 26,820
Total margin for operating segments ........................... $ 23,439 $ 22,129 $ 17,286
New software licenses revenues(1) ............................. (22) — —
Software license updates and product support revenues(1) .......... (48) (80) (86)
Hardware systems support revenues(1) .......................... (30) (148) (128)
Hardware systems products expenses(2) ......................... — — (29)
Product development and information technology expenses ........ (4,630) (4,778) (3,479)
Marketing and partner program expenses ....................... (581) (601) (503)
Corporate and general and administrative expenses ............... (945) (800) (755)
Amortization of intangible assets ............................. (2,430) (2,428) (1,973)
Acquisition related and other ................................. (56) (208) (154)
Restructuring ............................................. (295) (487) (622)
Stock-based compensation .................................. (626) (500) (421)
Interest expense ........................................... (766) (808) (754)
Other, net ................................................ (48) 120 (139)
Income before provision for income taxes .................. $ 12,962 $ 11,411 $ 8,243
(1) New software licenses revenues for management reporting included revenues related to cloud software subscription contracts that would have
otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated
statements of operations in the amount of $22 million for fiscal 2012. Software license updates and product support revenues for management
reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as
independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $48 million, $80
million and $86 million for fiscal 2012, 2011 and 2010, respectively. In addition, we did not recognize hardware systems support revenues
related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the
amounts of $30 million, $148 million and $128 million for fiscal 2012, 2011 and 2010, respectively.
(2) Represents the effects of fair value adjustments to our inventories acquired from Sun that were sold to customers in fiscal 2010. Business
combination accounting rules require us to account for inventories assumed from our acquisitions at their fair values. The amount
included in hardware systems products expenses above is intended to adjust these expenses to the hardware systems products expenses
that would have been otherwise recorded by Sun as an independent entity upon the sale of these inventories. If we assume inventories in
future acquisitions, we will be required to assess their fair values, which may result in fair value adjustments to those inventories.
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