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Table of Contents
57
systems support contracts assumed will not be recognized during fiscal 2016 that would have otherwise been recognized by certain acquired companies as independent entities due to the
application of the aforementioned business combination accounting rules. To the extent customers renew these contracts with us, we expect to recognize revenues for the full contracts’
values over the respective contracts
’
renewal periods.
Represents the amortization of intangible assets substantially all of which were acquired in connection with our acquisitions. As of May 31, 2015, estimated future amortization expenses
related to intangible assets were as follows (in millions):
Fiscal 2016
$
1,624
Fiscal 2017
995
Fiscal 2018
848
Fiscal 2019
742
Fiscal 2020
598
Thereafter
1,599
Total intangible assets, net
$
6,406
Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, stock-based compensation expenses, integration related
professional services, certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Included in
acquisition related and other expenses for fiscal 2015 was a goodwill impairment loss of $186 million (refer to Note 7 of Notes to Consolidated Financial Statements included elsewhere
in this Annual Report for additional information). Included in acquisition related and other expenses for fiscal 2015 and 2013 were benefits of $53 million and $306 million, respectively,
related to certain litigation (refer to Note 18 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information). Also included in
acquisition related and other expenses for fiscal 2013 were changes in estimates for contingent consideration payable, which reduced acquisition related and other expenses by $387
million during fiscal 2013 (refer to Note 2 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information).
The significant majority of restructuring expenses during fiscal 2015 primarily related to employee severance in connection with our Fiscal 2015 Oracle Restructuring Plan (2015
Restructuring Plan) and our Fiscal 2013 Oracle Restructuring Plan (2013 Restructuring Plan). Restructuring expenses during fiscal 2014 and 2013 primarily related to costs incurred
pursuant to our 2013 Restructuring Plan. Additional information regarding certain of our restructuring plans is provided in Note 9 of Notes to Consolidated Financial Statements included
elsewhere in this Annual Report.
Stock
-
based compensation was included in the following operating expense line items of our consolidated statements of operations (in millions):
Year Ended May 31,
2015
2014
2013
Sales and marketing
$
180
$
165
$
137
Cloud software as a service and platform as a service
10
8
10
Cloud infrastructure as a service
5
4
8
Software license updates and product support
21
22
20
Hardware systems products
6
5
3
Hardware systems support
6
6
5
Services
30
29
23
Research and development
522
385
352
General and administrative
148
171
164
Subtotal
928
795
722
Acquisition related and other
5
10
33
Total stock
-
based compensation
$
933
$
805
$
755
Stock-based compensation included in acquisition related and other expenses resulted from unvested stock options and restricted stock-based awards assumed from acquisitions whose
vesting was accelerated upon termination of the employees pursuant to the terms of those stock options and restricted stock
-
based awards.
The income tax effects presented were calculated as if the above described charges were not included in our results of operations for each of the respective periods presented. Income tax
effects for fiscal 2015, 2014 and 2013 were calculated based on the applicable jurisdictional tax rates applied to the items within the table above and resulted in effective tax rates of
23.6%, 22.5% and 23.0%, respectively, instead of 22.6%, 20.1% and 21.4%, respectively, which represented our effective tax rates as derived per our consolidated statements of
operations, due to the net tax effects of acquisition related items, primarily the tax effects of amortization of intangible assets.
(2)
(3)
(4)
(5)
(6)