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Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2014
Oracle Corporation develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud
infrastructure, hardware systems—including computer server, storage and networking products—
and related services that are engineered to work
together in cloud-based and on-premise information technology (IT) environments. We offer our customers the option to purchase our software
and hardware systems products and related services to manage their own cloud-based or on-premise IT environments, or to deploy our Oracle
Cloud offerings, which are a comprehensive set of cloud service offerings including cloud software-as-a-service (SaaS), platform-as-a-service
(PaaS) and infrastructure-as-a-service (IaaS) that we manage, host and support. Customers that purchase our software products may elect to
purchase software license updates and product support contracts, which provide our customers with rights to unspecified product upgrades and
maintenance releases issued during the support period as well as technical support assistance. Customers that purchase our hardware products
may elect to purchase hardware systems support contracts, which provide customers with software updates for software components that are
essential to the functionality of our server, storage and networking products, such as Oracle Solaris and certain other software products, and can
include product repairs, maintenance services, and technical support services. We also offer customers a broad set of services offerings including
consulting services, advanced customer support services and education services.
Oracle Corporation conducts business globally and was incorporated in 2005 as a Delaware corporation and is the successor to operations
originally begun in June 1977.
Basis of Financial Statements
The consolidated financial statements included our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling
interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable
to Oracle’s stockholders for all periods presented. The noncontrolling interests in our net income were not significant to our consolidated results
for the periods presented and therefore have been included as a component of non-operating (expense) income, net in our consolidated
statements of operations. Intercompany transactions and balances have been eliminated.
We have reclassified certain revenues and expenses to conform to the current period’s presentation for all periods presented in our consolidated
statements of operations. All such reclassifications did not affect our consolidated total revenues, consolidated operating income or consolidated
net income.
During the fourth quarter of fiscal 2014, we added an operating segment, cloud infrastructure-as-a-service, as a result of a reorganization of
financial information presented to our chief operating decision maker for operational decision and resource allocation purposes. We concluded
this operating segment is a reporting unit for goodwill allocation and impairment assessment purposes.
Acquisition related and other expenses as presented in our consolidated statement of operations for fiscal 2013 included a change in fair value of
contingent consideration payable, which resulted in a net benefit of $387 million in fiscal 2013 (see Note 2 of Notes to Consolidated Financial
Statements below), and a $306 million benefit that we recorded in fiscal 2013 related to certain litigation (see Note 18 of Notes to Consolidated
Financial Statements below).
Use of Estimates
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the
Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins
and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require us to make
certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable
based upon information available to us at the time that these estimates, judgments and
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1.
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES