Oracle 2014 Annual Report Download - page 66

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Table of Contents
Excluding the effects of favorable foreign currency rate fluctuations, total software license updates and product support expenses increased
during fiscal 2015 due to higher employee related expenses and facilities costs associated with increased headcount that was primarily
attributable to our recent acquisitions, and also increased due to higher bad debt expenses. These fiscal 2015 expense increases were partially
offset by fiscal 2015 expense decreases related to lower statutory obligation expenses in the jurisdictions in which we operate and lower
amortization of intangible assets.
In constant currency, total margin and margin as a percentage of revenues for this segment increased during fiscal 2015 as our total revenues for
this segment increased at a faster rate than our total expenses for this segment, each during fiscal 2015 and in comparison to fiscal 2014.
Fiscal 2014 Compared to Fiscal 2013: Excluding the effects of unfavorable currency rate fluctuations, software license updates and product
support revenues increased in fiscal 2014 for reasons similar to those noted above for our fiscal 2015 revenues increase. Excluding the effects of
currency rate fluctuations, the Americas contributed 55%, EMEA contributed 30% and Asia Pacific contributed 15% to the increase in software
license updates and product support revenues during fiscal 2014.
As described above, the amounts of software license updates and product support revenues that we recognized in fiscal 2014 and 2013 were
affected by business combination accounting rules.
Excluding the effects of favorable foreign currency rate fluctuations, total software license updates and product support expenses during fiscal
2014 decreased slightly due to a modest decrease in headcount and a decrease in amortization of intangible assets. Total margin and total margin
as a percentage of revenues increased during fiscal 2014 as our total revenues for this segment increased while our total expenses slightly
decreased, each during fiscal 2014 and in comparison to fiscal 2013.
Hardware Systems Business
Our hardware systems business consists of our hardware systems products segment and hardware systems support segment.
Hardware Systems Products:
Hardware systems products revenues are primarily generated from the sales of our Oracle Engineered Systems,
computer server, storage, networking, workstations and related devices and industry specific hardware products. We market and sell our
hardware systems products through our direct sales force and indirect channels such as independent distributors and value added resellers.
Operating expenses associated with our hardware systems products include the cost of hardware systems products, which consists of expenses
for materials and labor used to produce these products by our internal manufacturing operations or by third party manufacturers, warranty
expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and obsolete.
Operating expenses associated with our hardware systems products also include sales and marketing expenses, which are largely personnel
related and include variable compensation earned by our sales force for the sales of our hardware products, and amortization of intangible assets.
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