Oracle 2014 Annual Report Download - page 60

Table of Contents
software and cloud business was substantially attributable to growth in our software license updates and product support revenues and, to a lesser
extent, growth in our cloud SaaS and PaaS revenues due to incremental revenues from our acquisitions. The constant currency revenue growth in
our hardware business was due to an increase in our hardware systems support revenues due substantially to incremental revenues from our
acquisitions and due to increases in our hardware revenues attributable to our Oracle Engineered Systems. On a constant currency basis, the
Americas contributed 61%, EMEA contributed 30% and Asia Pacific contributed 9% to our total revenues growth during fiscal 2014.
Total constant currency operating expenses increased during fiscal 2014 primarily due to an increase in sales and marketing and research and
development expenses resulting from increased headcount, increased sales-based variable compensation expenses due to revenues growth, and
increased cloud SaaS and PaaS expenses to support the increase in our cloud SaaS and PaaS revenues. These expense increases in fiscal 2014
were partially offset by lower constant currency expenses in fiscal 2014 from our hardware systems support and services segments due to
decreased headcount, lower restructuring expenses, and lower intangible assets amortization. In fiscal 2013, we recognized a $387 million
acquisition related benefit related to changes in estimates for contingent consideration payable (refer to Note 2 of Notes to Consolidated
Financial Statements included elsewhere in this Annual Report for additional information) and a $306 million benefit relating to certain litigation
(refer to Note 18 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information), both of
which decreased our acquisition related and other expenses during this period.
Excluding the effects of foreign currency rate fluctuations, our operating margin increased during fiscal 2014 due to our revenues growth, while
our operating margin as a percentage of revenues was flat.
Supplemental Disclosure Related to Certain Charges
To supplement our consolidated financial information, we believe the following information is helpful to an overall understanding of our past
financial performance and prospects for the future. You should review the introduction under “Impact of Acquisitions” (above) for a discussion
of the inherent limitations in comparing pre- and post-acquisition information.
Our operating results included the following business combination accounting adjustments and expenses related to acquisitions, as well as
certain other significant expense and income items:
56
Year Ended May 31,
(in millions)
2015
2014
2013
Cloud software as a service and platform as a service deferred revenues
$
12
$
17
$
45
Software license updates and product support deferred revenues
11
3
14
Hardware systems support deferred revenues
4
11
14
Amortization of intangible assets
2,149
2,300
2,385
Acquisition related and other
211
41
(604
)
Restructuring
207
183
352
Stock
-
based compensation
928
795
722
Income tax effects
(971
)
(1,091
)
(896
)
$
2,551
$
2,259
$
2,032
In connection with our acquisitions, we have estimated the fair values of the cloud SaaS and PaaS subscriptions, software support and hardware systems support obligations assumed. Due
to our application of business combination accounting rules, we did not recognize cloud SaaS and PaaS revenues related to subscription contracts that would have otherwise been
recorded by the acquired businesses as independent entities in the amounts of $12 million, $17 million and $45 million in fiscal 2015, 2014 and 2013, respectively. We also did not
recognize software license updates and product support revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent
entities in the amounts of $11 million, $3 million and $14 million in fiscal 2015, 2014 and 2013, respectively. In addition, we did not recognize hardware systems support revenues
related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $4 million, $11 million and
$14 million in fiscal 2015, 2014 and 2013, respectively.
Approximately $4 million of estimated cloud SaaS and PaaS revenues related to contracts assumed will not be recognized during fiscal 2016 that would have otherwise been recognized
as revenues by the acquired businesses as independent entities due to the application of the aforementioned business combination accounting rules. Approximately $2 million of estimated
software license updates and product support revenues related to software support contracts assumed will not be recognized during fiscal 2016 that would have otherwise been recognized
as revenues by the acquired businesses as independent entities due to the application of the aforementioned business combination accounting rules. Approximately $1 million of estimated
hardware systems support revenues related to hardware
(1)
(1)
(1)
(2)
(3)(5)
(4)
(5)
(6)
(1)