Oracle 2012 Annual Report Download - page 69

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On a constant currency basis, our services expenses increased during fiscal 2011 primarily due to additional
employee related expenses associated with a full fiscal year of expense contributions from Sun and higher third-
party contractor expenses that supported our increase in revenues.
Excluding the effect of currency rate fluctuations, total services margin and total margin as a percentage of
revenues increased during fiscal 2011 as our total services revenues increased at a faster rate than our total
services expenses.
Research and Development Expenses: Research and development expenses consist primarily of personnel
related expenditures. We intend to continue to invest significantly in our research and development efforts
because, in our judgment, they are essential to maintaining our competitive position.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2012 Actual Constant 2011 Actual Constant 2010
Research and development(1) .......... $ 4,228 -1% -1% $ 4,288 39% 38% $ 3,082
Stock-based compensation ........... 295 28% 28% 231 35% 35% 172
Total expenses ................. $ 4,523 0% 1% $ 4,519 39% 38% $ 3,254
% of Total Revenues ............... 12% 13% 12%
(1) Excluding stock-based compensation
Fiscal 2012 Compared to Fiscal 2011: On a constant currency basis, total research and development expenses
increased slightly during fiscal 2012 primarily as a result of an increase in employee related expenses such as
salaries, benefits and stock-based compensation from increased headcount, which was partially offset by a
decrease in variable compensation expenses and a decrease in certain legal costs.
Fiscal 2011 Compared to Fiscal 2010: On a constant currency basis, total research and development expenses
increased during fiscal 2011 primarily due to the impact of Sun’s contributions to our expenses for the full fiscal
year, including additional employee related expenses such as salaries, variable compensation, benefits and stock-
based compensation from increased headcount.
General and Administrative Expenses: General and administrative expenses primarily consist of personnel
related expenditures for information technology, finance, legal and human resources support functions.
Year Ended May 31,
Percent Change Percent Change
(Dollars in millions) 2012 Actual Constant 2011 Actual Constant 2010
General and administrative(1) .............. $ 964 17% 17% $ 825 6% 4% $ 779
Stock-based compensation ................ 162 12% 12% 145 10% 10% 132
Total expenses ..................... $1,126 16% 16% $ 970 6% 5% $ 911
% of Total Revenues .................... 3% 3% 3%
(1) Excluding stock-based compensation
Fiscal 2012 Compared to Fiscal 2011: On a constant currency basis, total general and administrative expenses
increased in fiscal 2012 primarily as a result of a fiscal 2011 $120 million benefit from the recovery of certain
legal costs, which reduced our expenses in fiscal 2011.
Fiscal 2011 Compared to Fiscal 2010: On a constant currency basis, total general and administrative expenses
increased during fiscal 2011 due to the impact of Sun’s contributions to our expenses for the full fiscal year,
primarily additional employee related expenses, which were partially offset by the recovery of legal costs noted
above.
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