Oracle 2013 Annual Report Download - page 75

Table of Contents
We have entered into certain interest rate swap agreements related to our 3.75% senior notes due July 2014 (2014 Notes) and our 2019 Notes that have the economic effect of modifying
the fixed interest obligations associated with these senior notes so that the interest obligations effectively became variable pursuant to a LIBOR-based index. Interest payments on the
2014 Notes and 2019 Notes presented in the contractual obligations table above have been estimated using interest rates of 1.29% and 0.88%, respectively, which represented our
effective interest rates for these senior notes as of May 31, 2014 after consideration of these fixed to variable interest rate swap agreements, and are subject to change in future periods.
The changes in fair values of our debt associated with the interest rate risks that we are hedging pursuant to these agreements were included in notes payable and other current borrowings
for the 2014 Notes and notes payable and other non-current borrowings for the 2019 Notes in our consolidated balance sheet and have been included in the above table of total
borrowings as of May 31, 2014.
Our floating rate senior notes due January 2019 bore interest at a rate of 0.81% as of May 31, 2014 and interest payments on these notes presented in the contractual obligations table
above have been estimated using this rate.
The 2021 Notes and the 2025 Notes are denominated in Euro. In connection with the issuance of the 2021 Notes, we entered into certain cross-currency swap agreements that have the
economic effect of converting our fixed rate, Euro denominated debt, including annual interest payments and the payment of principal at maturity, to a fixed rate, U.S. Dollar
denominated debt of $1.6 billion with a fixed annual interest rate of 3.53%. Principal and interest payments for the 2021 Notes presented in the contractual obligations table above were
calculated based on the terms of the aforementioned cross-currency swap agreements. Principal and interest payments for the 2025 Notes presented in the contractual obligations table
above were estimated using foreign currency exchange rates as of May 31, 2014.
71
Year Ending May 31,
(Dollars in millions)
Total
2015
2016
2017
2018
2019
Thereafter
Principal payments on borrowings
$
24,120
$
1,500
$
2,000
$
—
$
5,000
$
2,000
$
13,620
Interest payments on borrowings
10,390
883
873
768
752
592
6,522
Operating leases
1,398
373
304
230
168
120
203
Purchase obligations and other
510
469
28
12
1
—
—
Total contractual obligations
$
36,418
$
3,225
$
3,205
$
1,010
$
5,921
$
2,712
$
20,345
Our total borrowings consisted of the following as of May 31, 2014 (dollars in millions):
Amount
3.75% senior notes due July 2014, net of fair value adjustment of $8
$
1,508
5.25% senior notes due January 2016, net of discount of $2
1,998
1.20% senior notes due October 2017, net of discount of $3
2,497
5.75% senior notes due April 2018
2,500
Floating rate senior notes due January 2019
500
2.375% senior notes due January 2019, net of fair value adjustment of $15 and discount of $5
1,510
5.00% senior notes due July 2019, net of discount of $3
1,747
3.875% senior notes due July 2020, net of discount of $1
999
2.25% senior notes due January 2021, net of discount of $9
1,691
2.50% senior notes due October 2022, net of discount of $2
2,498
3.625% senior notes due July 2023, net of discount of $8
992
3.125% senior notes due July 2025, net of discount of $3
1,017
6.50% senior notes due April 2038, net of discount of $2
1,248
6.125% senior notes due July 2039, net of discount of $7
1,243
5.375% senior notes due July 2040, net of discount of $23
2,227
Total borrowings
$
24,175
Primarily represents leases of facilities and includes future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities. We
have approximately $112 million in facility obligations, net of estimated sublease income, for certain vacated locations in accrued restructuring in our consolidated balance sheet at
May 31, 2014.
Primarily represents amounts associated with agreements that are enforceable, legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum
or variable price provisions; and the approximate timing of the payment. We utilize several external manufacturers to manufacture sub-assemblies for our hardware products and to
perform final assembly and testing of finished hardware products. We also obtain individual hardware components for our products from a variety of individual suppliers based on
projected demand information. Such purchase commitments are based on our forecasted component and manufacturing requirements and typically provide for fulfillment within agreed
upon lead-times and/or commercially standard lead-times for the particular part or product and have been included in the amount presented in the above contractual obligations table.
Routine arrangements for other materials and goods that are not related to our external manufacturers and certain other suppliers and that are entered into in the ordinary course of
business are not included in the amounts presented above as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a
meaningful way.
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