Oracle 2015 Annual Report Download - page 37

Table of Contents
There are risks associated with our outstanding and future indebtedness. As of May 31, 2016, we had an aggregate of $43.9 billion of outstanding
indebtedness that will mature between calendar year 2016 and calendar year 2055 and we may incur additional indebtedness in the future. Our ability to pay
interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such
debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these risks successfully.
We may also need to refinance a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of
any refinancing may not be as favorable as the terms of our existing debt. Furthermore, if prevailing interest rates or other factors at the time of refinancing result in
higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. Should we incur future increases in interest
expense, our ability to utilize certain of our foreign tax credits to reduce our U.S. federal income tax could be limited, which could unfavorably affect our provision
for income taxes and effective tax rate. In addition, changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt
and equity securities and increase the interest amounts we pay on certain outstanding or future debt. These risks could adversely affect our financial condition and
results of operations.
Environmental and other related laws and regulations subject us to a number of risks and could result in significant liabilities and costs. Some of our cloud
and hardware operations are subject to state, federal and international laws governing protection of the environment, proper handling and disposal of materials used
for these products, human health and safety, the use of certain chemical substances and the labor practices of suppliers. We endeavor to comply with these
environmental and other laws, yet compliance with these environmental and other laws could increase our product design, development, procurement,
manufacturing, delivery, cloud operations and administration costs, limit our ability to manage excess and obsolete non-compliant inventory, change our sales
activities, or otherwise impact future financial results of our cloud and hardware businesses. Any violation of these laws can subject us to significant liability,
including fines, penalties and possible prohibition of sales of our products and services into one or more states or countries and result in a material adverse effect on
the financial condition or results of operations of our cloud and hardware businesses.
The U.S. Securities and Exchange Commission has adopted disclosure requirements for companies that use certain “conflict minerals” (commonly referred to as
tantalum, tin, tungsten and gold) in their products. Our supply chain is multi-tiered, global and highly complex. As a provider of hardware end products, we are
several steps removed from the mining and smelting or refining of any conflict minerals in our supply chain. Accordingly, our ability to determine with certainty
the origin and chain of custody of conflict minerals is limited. Our relationships with customers and suppliers could suffer if we are unable to describe our products
as “conflict-free.” We may also face increased costs in complying with conflict minerals disclosure requirements.
A significant portion of our hardware revenues come from international sales. Environmental legislation, such as the EU Directive on Restriction of Hazardous
Substances (RoHS), the EU Waste Electrical and Electronic Equipment Directive (WEEE Directive) and China’s regulation on Management Methods for
Controlling Pollution Caused by Electronic Information Products, may increase our cost of doing business internationally and impact our hardware revenues from
the EU, China and other countries with similar environmental legislation as we endeavor to comply with and implement these requirements. The cumulative impact
of international environmental legislation could be significant.
Our stock price could become more volatile and your investment could lose value. All of the factors discussed in this section could affect our stock price. The
timing of announcements in the public market regarding new products, product enhancements or technological advances by our competitors or us and any
announcements by us of acquisitions, major transactions, or management changes could also affect our stock price. Changes in the amounts and frequency of share
repurchases or dividends could adversely affect our stock price. Our stock price is subject to speculation in the press and the analyst community, changes in
recommendations or earnings estimates by financial analysts, changes in investors’ or analysts’ valuation measures for our stock, our credit ratings and market
trends unrelated to our performance. A significant drop in our stock price could also expose us to the risk of securities class actions lawsuits, which could result in
substantial costs and divert management’s attention and resources, which could adversely affect our business.
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