Oracle 2014 Annual Report Download - page 74

Table of Contents
Liquidity and Capital Resources
Working capital: The increase in working capital as of May 31, 2015 in comparison to May 31, 2014 was primarily due to our issuance of
$20.0 billion of long-term senior notes during fiscal 2015, the favorable impact to our net current assets resulting from our net income during
fiscal 2015, and, to a lesser extent, cash proceeds from stock option exercises. These working capital increases were partially offset by $6.2
billion of net cash used for our acquisitions of MICROS and others, $8.1 billion of cash used for repurchases of our common stock, the
reclassification of $2.0 billion of senior notes due January 2016 from long-term to current, and $2.3 billion of cash used to pay dividends to our
stockholders, all of which occurred during fiscal 2015. Our working capital may be impacted by some or all of the aforementioned factors in
future periods, the amounts and timing of which are variable.
The increase in working capital as of May 31, 2014 in comparison to May 31, 2013 was primarily due to our issuance of €2.0 billion and $3.0
billion of long-term senior notes in July 2013, the favorable impact to our net current assets resulting from our net income during fiscal 2014,
and, to a lesser extent, cash proceeds from stock option exercises. These working capital increases were partially offset by the reclassification of
$1.5 billion of senior notes due July 2014 from long-
term to current, $9.8 billion of cash used for repurchases of our common stock, cash used to
pay dividends to our stockholders, and cash used for acquisitions.
Cash, cash equivalents and marketable securities: Cash and cash equivalents primarily consist of deposits held at major banks, Tier-1
commercial paper and other securities with original maturities of 90 days or less. Marketable securities primarily consist of time deposits held at
major banks, Tier-1 commercial paper, corporate notes and certain other securities. The increase in cash, cash equivalents and marketable
securities at May 31, 2015 in comparison to May 31, 2014 was due to an increase in cash generated from our operating activities, our issuance of
$20.0 billion of senior notes in fiscal 2015, and to a lesser extent, cash proceeds from stock option exercises. These increases were partially
offset by $6.2 billion of net cash paid for our acquisitions of MICROS and others, $8.1 billion of repurchases of our common stock, the
repayment of $1.5 billion of senior notes and $2.3 billion used for the payment of cash dividends to our stockholders. Cash, cash equivalents and
marketable securities included $42.7 billion held by our foreign subsidiaries as of May 31, 2015. We consider $38.0 billion of our undistributed
earnings as indefinitely reinvested in our foreign operations outside the United States. These undistributed earnings would be subject to U.S.
income tax if repatriated to the United States. Assuming a full utilization of the foreign tax credits, the potential deferred tax liability associated
with these undistributed earnings would be approximately $11.8 billion as of May 31, 2015 should the amounts be repatriated to the United
States. The amount of cash, cash equivalents and marketable securities that we report in U.S. Dollars for a significant portion of the cash, cash
equivalents and marketable securities balances held by our foreign subsidiaries is subject to translation adjustments caused by changes in foreign
currency exchange rates as of the end of each respective reporting period (the offset to which is substantially recorded to accumulated other
comprehensive loss in our consolidated balance sheets and is also presented as a line item in our consolidated statements of comprehensive
income included elsewhere in this Annual Report). As the U.S. Dollar generally strengthened against certain major international currencies
during fiscal 2015, the amount of cash, cash equivalents and marketable securities that we reported in U.S. Dollars for these subsidiaries
decreased on a net basis as of May 31, 2015 relative to what we would have reported using constant currency rates from our May 31, 2014
balance sheet date.
The increase in cash, cash equivalents and marketable securities at May 31, 2014 in comparison to May 31, 2013 was due to an increase in cash
generated from our operating activities, our issuance of €2.0 billion and $3.0 billion of senior notes in July 2013, and to a lesser extent, cash
proceeds from stock option exercises. These increases were partially offset by $9.8 billion of repurchases of our common stock, $3.5 billion of
net cash paid for acquisitions and $2.2 billion used for the payment of cash dividends to our stockholders. Additionally, our reported cash, cash
equivalents and marketable securities balances as of May 31, 2014 decreased on a net basis in comparison to May 31, 2013 due to the modest
strengthening of the U.S. Dollar in comparison to certain major international currencies during fiscal 2014.
70
As of May 31,
(Dollars in millions)
2015
Change
2014
Change
2013
Working capital
$
47,892
42%
$
33,739
17%
$
28,813
Cash, cash equivalents and marketable securities
$
54,368
40%
$
38,819
20%
$
32,216