Oracle 2014 Annual Report Download - page 78

Table of Contents
As of May 31, 2015, we had $4.8 billion of gross unrecognized income tax benefits, including related interest and penalties, recorded on our
consolidated balance sheet and all such obligations have been excluded from the table above due to the uncertainty as to when they might be
settled. We cannot make a reasonably reliable estimate of the period in which the remainder of our unrecognized income tax benefits will be
settled or released with the relevant tax authorities, although we believe it is reasonably possible that certain of these liabilities could be settled
or released during fiscal 2016.
We believe that our current cash, cash equivalents and marketable securities and cash generated from operations will be sufficient to meet our
working capital, capital expenditures and contractual obligation requirements. In addition, we believe we could fund any future acquisitions,
dividend payments and repurchases of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash
generated from operations, additional borrowings or from the issuance of additional securities.
Off-Balance Sheet Arrangements: We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that is material to investors.
Selected Quarterly Financial Data
Quarterly revenues, expenses and operating income have historically been affected by a variety of seasonal factors, including sales force
incentive compensation plans. In addition, our European operations generally provide lower revenues in our first fiscal quarter because of the
reduced economic activity in Europe during the summer. These seasonal factors are common in the high technology industry. These factors have
caused a decrease in our first quarter revenues as compared to revenues in the immediately preceding fourth quarter, which historically has been
our highest revenue quarter within a particular fiscal year. Similarly, the operating income of our business is affected by seasonal factors in a
consistent manner as our revenues (in particular, our new software licenses and cloud software subscriptions segment) as certain expenses within
our cost structure are relatively fixed in the short-term. We expect these trends to continue in fiscal 2016.
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Our 2.25% senior notes due January 2021 (January 2021 Notes) and our 3.125% senior notes due July 2025 (July 2025 Notes) are denominated in Euro. In connection with the issuance
of the January 2021 Notes, we entered into certain cross-currency swap agreements that have the economic effect of converting our fixed rate, Euro denominated debt, including annual
interest payments and the payment of principal at maturity, to a fixed rate, U.S. Dollar denominated debt of $1.6 billion with a fixed annual interest rate of 3.53%. Principal and interest
payments for the January 2021 Notes presented in the contractual obligations table above were calculated based on the terms of the aforementioned cross-currency swap agreements.
Principal and interest payments for the July 2025 Notes presented in the contractual obligations table above were estimated using foreign currency exchange rates as of May 31, 2015.
Primarily represents leases of facilities and includes future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities. We
have approximately $61 million in facility obligations, net of estimated sublease income, for certain vacated locations in accrued restructuring on our consolidated balance sheet at
May 31, 2015.
Primarily represents amounts associated with agreements that are enforceable, legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum
or variable price provisions; and the approximate timing of the payment. We utilize several external manufacturers to manufacture sub-assemblies for our hardware products and to
perform final assembly and testing of finished hardware products. We also obtain individual hardware components for our products from a variety of individual suppliers based on
projected demand information. Such purchase commitments are based on our forecasted component and manufacturing requirements and typically provide for fulfillment within agreed
upon lead-times and/or commercially standard lead-times for the particular part or product and have been included in the amount presented in the above contractual obligations table.
Routine arrangements for other materials and goods that are not related to our external manufacturers and certain other suppliers and that are entered into in the ordinary course of
business are not included in the amounts presented above as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a
meaningful way.
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