Oracle 2015 Annual Report Download - page 76

Table of Contents
Contractual Obligations: The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations
and commitments. Changes in our business needs, cancellation provisions, changing interest rates and other factors may result in actual payments differing from
these estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant
assumptions used in preparing this information within the context of our consolidated financial position, results of operations and cash flows. The following is a
summary of certain of our contractual obligations as of May 31, 2016:
Year Ending May 31,
(Dollars in millions) Total 2017 2018 2019 2020 2021 Thereafter
Principal payments on borrowings $ 44,241 $ 3,750 $ 6,000 $ 2,000 $ 4,500 $ 2,655 $ 25,336
Interest payments on borrowings 19,756 1,337 1,315 1,154 1,083 1,010 13,857
Operating leases 1,238 328 273 211 152 110 164
Purchase obligations and other 894 574 153 91 68 8 —
Total contractual obligations $ 66,129 $ 5,989 $ 7,741 $ 3,456 $ 5,803 $ 3,783 $ 39,357
Represents the principal balances and interest payments to be paid in connection with our senior notes and other borrowings outstanding as of May 31, 2016 after considering:
• certain interest rate swap agreements for certain series of senior notes that have the economic effect of modifying the fixed-interest obligations associated with these senior notes so that they effectively
became variable pursuant to a LIBOR-based index. Interest payments on these senior notes have been presented in the table above after consideration of these fixed to variable interest rate swap
agreements and are subject to change in future periods;
• interest payments on our floating-rate senior notes that are based upon the interest rates applicable to the senior notes as of May 31, 2016 and are subject to change in future periods; and
• certain cross-currency swap agreements for a series of our Euro denominated senior notes 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 with a fixed annual interest rate. Principal and interest payments for these senior notes were calculated
and presented in the table above based on the terms of these cross-currency swap agreements. Principal and interest payments for our other Euro-denominated senior notes presented in the contractual
obligations table above were estimated using foreign currency exchange rates as of May 31, 2016 and are subject to change in future periods.
Refer to Note 8 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report for additional information related to our notes payable and other borrowings and related derivative
agreements.
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
$54 million in facility obligations, net of estimated sublease income, for certain vacated locations in accrued restructuring on our consolidated balance sheet at May 31, 2016.
Primarily represents amounts associated with agreements that are enforceable and 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.
In June 2016, we acquired certain companies to expand our cloud industry solutions offerings. These acquisitions were not individually significant. In the
aggregate, the estimated total preliminary purchase price was $1.3 billion.
As of May 31, 2016, we had $5.3 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 contractual obligations 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 2017.
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