Oracle 2014 Annual Report Download - page 36

Table of Contents
Substantially all of these costs will be accounted for as expenses that will decrease our net income and earnings per share for the periods in
which those costs are incurred. For example, we recognized a goodwill impairment loss in the fourth quarter of fiscal 2015 relating to our
hardware systems reporting unit. Charges to our operating results in any given period could differ substantially from other periods based on the
timing and size of our future acquisitions and the extent of integration activities. A more detailed discussion of our accounting for business
combinations and other items is presented in the “Critical Accounting Policies and Estimates” section of Management’
s Discussion and Analysis
of Financial Condition and Results of Operations (Item 7).
There are risks associated with our outstanding and future indebtedness. As of May 31, 2015, we had an aggregate of $42.0 billion of
outstanding indebtedness that will mature between calendar year 2016 and calendar year 2055 and we may incur additional indebtedness in the
future. Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations,
generate sufficient cash flows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able
to manage any of these risks successfully.
We may also need to refinance a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt
or that the terms of any refinancing may not be as favorable as the terms of our existing debt. Furthermore, if prevailing interest rates or other
factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness
would increase. Should we incur future increases in interest expense, our ability to utilize certain of our foreign tax credits to reduce our U.S.
federal income tax could be limited, which could unfavorably affect our provision for income taxes and effective tax rate. In addition, changes
by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity securities and increase the
interest amounts we pay on outstanding or future debt. These risks could adversely affect our financial condition and results of operations.
Environmental and other related laws and regulations subject us to a number of risks and could result in significant liabilities and costs.
Some of our cloud and hardware systems operations are subject to state, federal and international laws governing protection of the environment,
proper handling and disposal of materials used for these products, human health and safety, the use of certain chemical substances and the labor
practices of suppliers. We endeavor to comply with these environmental and other laws, yet compliance with these environmental and other laws
could increase our product design, development, procurement, manufacturing, delivery and administration costs, limit our ability to manage
excess and obsolete non-compliant inventory, change our sales activities, or otherwise impact future financial results of our cloud and hardware
systems businesses. Any violation of these laws can subject us to significant liability, including fines, penalties and possible prohibition of sales
of our products and services into one or more states or countries and result in a material adverse effect on the financial condition or results of
operations of our cloud and hardware systems businesses.
The U.S. Securities and Exchange Commission has adopted disclosure requirements for companies that use certain “conflict
minerals” (commonly referred to as tantalum, tin, tungsten and gold) in their products. Our supply chain is multi-tiered, global and highly
complex. As a provider of hardware systems end products, we are several steps removed from the mining and smelting or refining of any conflict
minerals in our supply chain. Accordingly, our ability to determine with certainty the origin and chain of custody of conflict minerals is limited.
Our relationships with customers and suppliers could suffer if we are unable to describe our products as “conflict-free.” We may also face
increased costs in complying with conflict minerals disclosure requirements.
A significant portion of our hardware systems revenues come from international sales. Environmental legislation, such as the EU Directive on
Restriction of Hazardous Substances (RoHS), the EU Waste Electrical and Electronic Equipment Directive (WEEE Directive) and China’s
regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products, may increase our cost of doing
business internationally and impact our hardware systems revenues from the EU, China and other countries with similar environmental
legislation as we endeavor to comply with and implement these requirements. The cumulative impact of international environmental legislation
could be significant.
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charges to our operating results due to expenses incurred to effect the acquisition; and
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charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.