Oracle 2015 Annual Report Download - page 29

Table of Contents
products or changes in customer demand, our revenues could decrease. The increase in open source software distribution may also cause us to change our pricing
models.
Our international sales and operations subject us to additional risks that can adversely affect our operating results. We derive a substantial portion of our
revenues from, and have significant operations, outside of the United States. Our international operations include software and hardware development,
manufacturing, assembly, cloud operations, sales, customer support, consulting and other services and shared administrative service centers.
Compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions.
These laws and regulations include U.S. laws and local laws which include data privacy requirements, labor relations laws, tax laws, anti-competition regulations,
prohibitions on payments to governmental officials, import and trade restrictions and export requirements. Violations of these laws and regulations could result in
fines, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could result in prohibitions
on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions and could also materially damage our
reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Compliance with these
laws requires a significant amount of management attention and effort, which may divert management’s attention from running our business operations and could
harm our ability to grow our business, or may increase our expenses as we engage specialized or other additional resources to assist us with our compliance efforts.
Our success depends, in part, on our ability to anticipate these risks and manage these difficulties. We monitor our operations and investigate allegations of
improprieties relating to transactions and the way in which such transactions are recorded. Where circumstances warrant, we provide information and report our
findings to government authorities, but no assurance can be given that action will not be taken by such authorities.
We are also subject to a variety of other risks and challenges in managing an organization operating in various countries, including those related to:
• general economic conditions in each country or region;
• fluctuations in currency exchange rates and related impacts to customer demand and our operating results;
• difficulties in transferring funds from or converting currencies in certain countries such as Venezuela that have led to a devaluation of our net assets, in
particular our cash assets, in that country’s currency;
• regulatory changes, including government austerity measures in certain countries that we may not be able to sufficiently plan for or avoid that may
unexpectedly impair bank deposits or other cash assets that we hold in these countries or that impose additional taxes that we may be required to pay in
these countries;
• political unrest, terrorism and the potential for other hostilities, including those in Ukraine, Syria, and Iraq;
• common local business behaviors that are in direct conflict with our business ethics, practices and conduct policies;
• natural disasters;
• the effects of climate change (such as sea level rise, drought, flooding, wildfires and increased storm sensitivity);
• longer payment cycles and difficulties in collecting accounts receivable;
• overlapping tax regimes;
• our ability to repatriate funds held by our foreign subsidiaries to the United States at favorable tax rates;
• public health risks, particularly in areas in which we have significant operations; and
• reduced protection for intellectual property rights in some countries.
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