Oracle 2013 Annual Report Download - page 62

Table of Contents
Fiscal 2014 Compared to Fiscal 2013: Excluding the effect of unfavorable currency rate fluctuations, software license updates and product
support revenues increased by 7% in fiscal 2014 as a result of new software licenses sold with substantially all of these customers electing to
purchase software support contracts during the trailing 4-quarter period, and the renewal of substantially all of the software support customer
base eligible for renewal during the trailing 4-quarter period. Excluding the effect of currency rate fluctuations, the Americas contributed 55%,
EMEA contributed 30% and Asia Pacific contributed 15% to the increase in software license updates and product support revenues.
As a result of our acquisitions, we recorded adjustments to reduce assumed software support obligations to their estimated fair values at the
acquisition dates. Due to our application of business combination accounting rules, software license updates and product support revenues
related to software support contracts in the amounts of $3 million, $14 million and $48 million that would have been otherwise recorded by our
acquired businesses as independent entities were not recognized in fiscal 2014, 2013 and 2012, respectively. Historically, substantially all of our
customers, including customers from acquired companies, renew their software support contracts when such contracts are eligible for renewal.
To the extent these underlying support contracts are renewed, we will recognize the revenues for the full values of these contracts over the
support periods, the substantial majority of which are one year in duration.
Excluding the effect of favorable foreign currency rate fluctuations, total software license updates and product support expenses during fiscal
2014 decreased slightly due to a modest decrease in headcount and a decrease in amortization of intangible assets. Margin and margin as a
percentage of revenues increased during fiscal 2014 as our total revenues for this segment increased while our total expenses slightly decreased.
Fiscal 2013 Compared to Fiscal 2012: Excluding the effect of currency rate fluctuations, software license updates and product support
revenues increased in fiscal 2013 for similar reasons as those noted above for our fiscal 2014 revenues increase and due to incremental revenues
from recent acquisitions. Excluding the effect of currency rate fluctuations, the Americas contributed 56%, EMEA contributed 29% and Asia
Pacific contributed 15% to the increase in software license updates and product support revenues.
As described above, the amounts of software license updates and product support revenues that we recognized in fiscal 2013 and fiscal 2012
were affected by business combination accounting rules.
58
Year Ended May 31,
Percent Change
Percent Change
(Dollars in millions)
2014
Actual
Constant
2013
Actual
Constant
2012
Software License Updates and Product Support Revenues:
Americas
$
9,858
6%
7%
$
9,322
7%
8%
$
8,672
EMEA
5,906
10%
7%
5,363
3%
7%
5,194
Asia Pacific
2,442
-
1%
8%
2,457
5%
9%
2,344
Total revenues
18,206
6%
7%
17,142
6%
8%
16,210
Expenses:
Software license updates and product support
1,140
-
1%
0%
1,155
-
4%
-
2%
1,208
Stock
-
based compensation
22
10%
10%
20
12%
12%
18
Amortization of intangible assets
801
-
4%
-
4%
836
-
3%
-
3%
863
Total expenses
1,963
-
2%
-
1%
2,011
-
4%
-
2%
2,089
Total Margin
$
16,243
7%
8%
$
15,131
7%
10%
$
14,121
Total Margin %
89%
88%
87%
% Revenues by Geography:
Americas
54%
55%
54%
EMEA
33%
31%
32%
Asia Pacific
13%
14%
14%
Excluding stock
-
based compensation
Included as a component of
‘
Amortization of Intangible Assets
’
in our consolidated statements of operations
(1)
(2)
(1)
(2)