| Condensed Consolidated Balance Sheets (Unaudited) (USD $) | ||
| In Millions | Aug. 31, 2009
| May. 31, 2009
|
| Current assets: | ||
| Cash and cash equivalents | $16,098 | $8,995 |
| Marketable securities | 4,467 | 3,629 |
| Trade receivables, net of allowances of $245 and $270 as of August 31, 2009 and May 31, 2009 | 2,584 | 4,430 |
| Deferred tax assets | 710 | 661 |
| Prepaid expenses and other current assets | 586 | 866 |
| Total current assets | 24,445 | 18,581 |
| Non-current assets: | ||
| Property, net | 1,924 | 1,922 |
| Intangible assets: software support agreements and related relationships, net | 3,280 | 3,411 |
| Intangible assets: other, net | 3,606 | 3,858 |
| Goodwill | 18,867 | 18,842 |
| Other assets | 876 | 802 |
| Total non-current assets | 28,553 | 28,835 |
| Total assets | 52,998 | 47,416 |
| Current liabilities: | ||
| Notes payable, current and other current borrowings | 1,001 | 1,001 |
| Accounts payable | 260 | 271 |
| Accrued compensation and related benefits | 1,033 | 1,409 |
| Deferred revenues | 5,283 | 4,592 |
| Other current liabilities | 1,583 | 1,876 |
| Total current liabilities | 9,160 | 9,149 |
| Non-current liabilities: | ||
| Notes payable and other non-current borrowings | 13,723 | 9,237 |
| Income taxes payable | 2,485 | 2,423 |
| Deferred tax liabilities | 465 | 480 |
| Other non-current liabilities | 678 | 682 |
| Total non-current liabilities | 17,351 | 12,822 |
| Oracle Corporation stockholders' equity: | ||
| Preferred stock, $0.01 par value-authorized: 1.0 shares; outstanding: none | 0 | 0 |
| Common stock, $0.01 par value and additional paid in capital-authorized: 11,000 shares; outstanding: 5,012 shares as of August 31, 2009 and 5,005 shares as of May 31, 2009 | 13,319 | 12,980 |
| Retained earnings | 12,563 | 11,894 |
| Accumulated other comprehensive income | 261 | 216 |
| Total Oracle Corporation stockholders' equity | 26,143 | 25,090 |
| Noncontrolling interests | 344 | 355 |
| Total equity | 26,487 | 25,445 |
| Total liabilities and equity | $52,998 | $47,416 |
| Condensed Consolidated Balance Sheets Parenthetical (Unaudited) (USD $) | ||
| In Millions | Aug. 31, 2009
| May. 31, 2009
|
| Allowance for doubtful accounts receivable | $245 | $270 |
| Preferred stock par or stated value per share | 0.01 | 0.01 |
| Preferred stock shares authorized | 1 | 1 |
| Preferred stock shares outstanding | 0 | 0 |
| Common stock par or stated value per share | 0.01 | 0.01 |
| Common stock shares authorized | 11,000 | 11,000 |
| Common stock shares outstanding | 5,012 | 5,005 |
| Condensed Consolidated Statements of Operations (Unaudited) (USD $) | ||
| In Millions | 3 Months Ended
Aug. 31, 2009 | 3 Months Ended
Aug. 31, 2008 |
| Revenues: | ||
| New software licenses | $1,028 | $1,237 |
| Software license updates and product support revenue | 3,117 | 2,935 |
| Software revenues | 4,145 | 4,172 |
| Services | 909 | 1,159 |
| Total revenues | 5,054 | 5,331 |
| Operating Expenses: | ||
| Sales and marketing | 960 | 1,112 |
| Software license updates and product support costs | 226 | 282 |
| Cost of services | 782 | 1,026 |
| Research and development | 660 | 708 |
| General and administrative | 201 | 206 |
| Amortization of intangible assets | 431 | 413 |
| Acquisition related and other | 6 | 49 |
| Restructuring | 48 | 14 |
| Total operating expenses | 3,314 | 3,810 |
| Operating income | 1,740 | 1,521 |
| Interest expense | (179) | (159) |
| Non-operating income, net | 1 | 82 |
| Income before provision for income taxes | 1,562 | 1,444 |
| Provision for income taxes | 438 | 367 |
| Net income | $1,124 | $1,077 |
| Earnings per share: | ||
| Earnings per share, basic | 0.22 | 0.21 |
| Earnings per share, diluted | 0.22 | 0.21 |
| Weighted average common shares outstanding: | ||
| Weighted average common shares outstanding, basic | 5,009 | 5,152 |
| Weighted average common shares outstanding, diluted | 5,063 | 5,235 |
| Dividends declared per common share | 0.05 | 0 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
| In Millions | 3 Months Ended
Aug. 31, 2009 | 3 Months Ended
Aug. 31, 2008 |
| Cash Flows From Operating Activities: | ||
| Net income | $1,124 | $1,077 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 61 | 64 |
| Amortization of intangible assets | 431 | 413 |
| Deferred income taxes | (75) | (53) |
| Stock-based compensation | 84 | 91 |
| Tax benefits on the exercise of stock options | 51 | 101 |
| Excess tax benefits on the exercise of stock options, operating activities | (30) | (65) |
| Other, net | 40 | 19 |
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||
| Decrease in trade receivables, net | 1,870 | 1,812 |
| Decrease in prepaid expenses and other assets | 251 | 397 |
| Decrease in accounts payable and other liabilities | (642) | (906) |
| Decrease in income taxes payable | (9) | (361) |
| Increase in deferred revenues | 582 | 651 |
| Net cash provided by operating activities | 3,738 | 3,240 |
| Cash Flows From Investing Activities: | ||
| Purchases of marketable securities and other investments | (2,760) | (3,188) |
| Proceeds from maturities and sales of marketable securities and other investments | 1,947 | 1,420 |
| Acquisitions, net of cash acquired | (79) | (395) |
| Capital expenditures | (55) | (323) |
| Net cash used for investing activities | (947) | (2,486) |
| Cash Flows From Financing Activities: | ||
| Payments for repurchases of common stock | (244) | (500) |
| Proceeds from issuances of common stock | 247 | 280 |
| Payment of dividends to stockholders | (251) | 0 |
| Proceeds from borrowings, net of issuance costs | 4,461 | 0 |
| Repayments of borrowings | 0 | (4) |
| Excess tax benefits on the exercise of stock options, financing activities | 30 | 65 |
| Distributions to noncontrolling interests | (34) | (30) |
| Net cash provided by (used for) financing activities | 4,209 | (189) |
| Effect of exchange rate changes on cash and cash equivalents | 103 | (274) |
| Net increase in cash and cash equivalents | 7,103 | 291 |
| Cash and cash equivalents at beginning of period | 8,995 | 8,262 |
| Cash and cash equivalents at end of period | 16,098 | 8,553 |
| Non-cash investing and financing transactions: | ||
| Decrease in unsettled repurchases of common stock | ($1) | $0 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | |
| 3 Months Ended
Aug. 31, 2009 | |
| Notes to Condensed Consolidated Financial Statements [Abstract] | |
| BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | 1.BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS Basis of Presentation. We have prepared the condensed consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009. We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for our fiscal year ending May 31, 2010. In the first quarter of fiscal 2010, we adopted certain new accounting pronouncements that affected our significant accounting policies, including Financial Accounting Standards Board (FASB) Statement No. 141 (revised 2007), Business Combinations and related Staff Positions. We disclosed our accounting policies for these new pronouncements in Note 1 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009. There have been no other significant changes to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009. As a result of our fiscal 2010 adoption of FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, we retrospectively classified noncontrolling interest positions of certain of our consolidated entities as a separate component of consolidated equity from the equity attributable to Oracles stockholders for all periods presented. The noncontrolling interests in our net income were not significant to our consolidated results for the periods presented and therefore have been included as a component of non-operating income, net in our condensed consolidated statements of operations. Certain other prior year balances have been reclassified to conform to the current years presentation. Such reclassifications did not affect total revenues, operating income or net income. In accordance with FASB StatementNo. 165, Subsequent Events, we evaluated subsequent events through the date and time our condensed consolidated financial statements were issued on September21, 2009. Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, stock-based compensation expenses, integration related professiona |
| ACQUISITIONS | 2. ACQUISITIONS Proposed Acquisition of Sun Microsystems, Inc. and Other Proposed Acquisitions On April 19, 2009, we entered into an Agreement and Plan of Merger (Merger Agreement) with Sun Microsystems, Inc. (Sun), a provider of enterprise computing systems, software and services. Pursuant to the Merger Agreement, our wholly owned subsidiary will merge with and into Sun and Sun will become a wholly owned subsidiary of Oracle. Upon the consummation of the merger, each share of Sun common stock will be converted into the right to receive $9.50 in cash. In addition, options to acquire Sun common stock, Sun restricted stock unit awards and other equity-based awards denominated in shares of Sun common stock outstanding immediately prior to the consummation of the merger will generally be converted into options, restricted stock unit awards or other equity-based awards, as the case may be, denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement.The estimated total purchase price of Sun is approximately $7.4billion. The Merger Agreement contains certain termination rights for both Sun and Oracle and further provides that, upon termination of the Merger Agreement under certain circumstances, Sun may be obligated to pay Oracle a termination fee of $260million. Completion of this transaction is subject to customary closing conditions, including regulatory clearance under the applicable antitrust laws of the European Commission and other jurisdictions. Separately, in the first quarter of fiscal 2010, we agreed to acquire certain other companies for amounts that are not material to our business. We expect these transactions to close in the second quarter of fiscal 2010. Fiscal 2010 Acquisitions During the first quarter of fiscal 2010, we acquired several companies and purchased certain technology and development assets to expand our product offerings. These acquisitions were not significant individually or in the aggregate. We have accounted for these acquisitions in accordance with Statement 141(R). We have included the financial results of these companies in our consolidated results from their respective acquisition dates. The preliminary purchase price allocations for each of these acquisitions were based upon a preliminary valuation and our estimates and assumptions for certain of these acquisitions are subject to change as we obtain additional information for our estimates during the measurement period. The primary areas of those purchase price allocations that are not yet finalized relate to identifiable intangible assets, certain legal matters, income and non-income based taxes and residual goodwill. Fiscal 2009 Acquisitions During fiscal 2009, we acquired several companies and purchased certain technology and development assets to expand our product offerings. These acquisitions were not individually significant. We have included the financial results of these companies in our consolidated results from their respective acquisition dates. In the aggregate, the total purchase price for these acquisitions was approximately $1.2 billion, which consisted of approximately $1.2 |
| FAIR VALUE MEASUREMENTS | 3. FAIR VALUE MEASUREMENTS We perform fair value measurements in accordance with the guidance provided by FASB Statement No. 157, Fair Value Measurements and certain related FASB Staff Positions. Statement 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Statement 157 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Statement157 establishes three levels of inputs that may be used to measure fair value: Level 1: quoted prices in active markets for identical assets or liabilities; Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and Liabilities Measured at Fair Value on a Recurring Basis Our assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments (Level 1 and 2 inputs are defined above): August 31, 2009 . May 31, 2009 . Fair Value Measurements Using Input Types Fair Value Measurements Using Input Types (in millions) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Money market funds $ 2,146 $ $ 2,146 $ 467 $ $ 467 U.S. Treasury, U.S. government and U.S. government agency debt securities 3,830 3,830 4,078 4,078 Commercial paper debt securities 1,872 1,872 1,365 1,365 Corporate debt securities and other 2,439 2,439 1,335 1,335 Total assets $ 5,976 $ 4,311 $ 10,287 $ 4,545 $ 2,700 $ 7,245 Liabilities: Derivative financial instrument liabilities $ $ 29 $ 29 $ $ 35 $ 35 Total liabilities $ $ 29 $ 29 $ $ 35 $ 35 Our valuation techniques used to measure the fair values of our money market funds and U.S. Treasury, U.S. governm |
| INTANGIBLE ASSETS AND GOODWILL | 4. INTANGIBLE ASSETS AND GOODWILL The changes in intangible assets for fiscal 2010 and the net book value of intangible assets at August 31, 2009 and May 31, 2009 were as follows: Intangible Assets, Gross . Accumulated Amortization . Intangible Assets, Net . Weighted May 31, August 31, May 31, August 31, May 31, August 31, Average (Dollars in millions) 2009 Additions 2009 2009 Expense 2009 2009 2009 Useful Life Software support agreements and related relationships $ 5,012 $ 8 $ 5,020 $ (1,601) $ (139) $ (1,740) $ 3,411 $ 3,280 9 years Developed technology 3,844 28 3,872 (1,925) (179) (2,104) 1,919 1,768 5 years Core technology 1,502 5 1,507 (687) (65) (752) 815 755 6 years Customer relationships 1,284 5 1,289 (320) (39) (359) 964 930 8 years Trademarks 273 2 275 (113) (9) (122) 160 153 7 years Total $ 11,915 $ 48 $ 11,963 $ (4,646) $ (431) $ (5,077) $ 7,269 $ 6886 Total amortization expense related to our intangible assets was $431 million and $413 million for the three months ended August 31, 2009 and 2008, respectively. Estimated future amortization expense related to our intangible assets was $1.2 billion for the remainder of fiscal 2010, $1.4 billion in fiscal 2011, $1.2 billion in fiscal 2012, $1.1 billion in fiscal 2013, $890 million in fiscal 2014, $703 million in fiscal 2015 and $372 million thereafter. The changes in the carrying amount of goodwill, which is generally not deductible for tax purposes, by operating segment for the three months ended August 31, 2009 were as follows: (in millions) New Software Licenses Software License Updates and Product Support Services Total Balances as of May 31, 2009 $ 5,716 $ 11,334 $ 1,792 $ 18,842 Goodwill from acquisitions 22 17 2 41 Goodwill adjustments(1) (6) (6) (4) (16) Balances as of August 31, 2009 $ 5,732 $ 11,345 $ 1,790 $ 18,867 (1) Pursuant to our business combinations accounting policy, we record goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement or purchase price allocation period (which can be up to one year from date of acquisition). All of our goodwill adjustments recorded during fiscal 2010 relate to acquisitions that were consummated prior to fiscal 2010. |
| NOTES PAYABLE AND OTHER BORROWINGS | 5. NOTES PAYABLE AND OTHER BORROWINGS In July 2009, we issued $4.5 billion of fixed rate senior notes comprised of $1.5 billion of 3.750% notes due July 2014 (2014 Notes), $1.75 billion of 5.000% notes due July 2019 (2019 Notes) and $1.25 billion of 6.125% notes due July 2039 (2039 Notes and, together with 2014 Notes and 2019 Notes, the Senior Notes). We issued the Senior Notes for general corporate purposes and future acquisitions, including our proposed acquisition of Sun and acquisition related expenses. The effective interest yields of the 2014 Notes, 2019 Notes and 2039 Notes at August 31, 2009 were 3.750%, 5.056% and 6.188%, respectively. On September 1, 2009 we entered into interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with the 2014 Notes so that the interest payable on these notes effectively became variable (see Note 8 for additional information). The Senior Notes rank pari passu with any commercial paper notes that we may issue pursuant to our commercial paper program (see Note 7 of Notes to Consolidated Financial Statements included in our fiscal 2009 Annual Report on Form 10-K for further information on our commercial paper program) and all existing and future senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of Oracle Corporation will be effectively senior to the Senior Notes. We were in compliance with all debt-related covenants at August 31, 2009. Future principal payments of our borrowings at August 31, 2009 were as follows: $1.0 billion in fiscal 2010, $2.25 billion in fiscal 2011, none in fiscal 2012, $1.25 billion in fiscal 2013, none in fiscal 2014, $1.5 billion in fiscal 2015 and $8.75 billion thereafter. There have been no other significant changes in our notes payable and other borrowing arrangements that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009. |
| RESTRUCTURING ACTIVITIES | 6. RESTRUCTURING ACTIVITIES Fiscal 2009 Oracle Restructuring Plan During the third quarter of fiscal 2009, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our Oracle-based operations (the 2009 Plan). Our management amended the 2009 Plan in the first quarter of fiscal 2010 to reflect additional actions that we expect to take over the course of fiscal 2010. The total estimated restructuring costs associated with the 2009 Plan are $441 million and will be recorded to the restructuring expense line item within our consolidated statements of operations as they are recognized. In the first quarter of fiscal 2010, we recorded $48 million of restructuring expenses in connection with the 2009 Plan. We expect to incur the majority of the approximately $300 million that is remaining during fiscal 2010. Any changes to the estimates of executing the 2009 Plan will be reflected in our future results of operations. Acquisition Related Restructuring Plans Adopted Prior to Fiscal 2010 During the fourth quarter of fiscal 2008 and third quarter of fiscal 2006, our management approved, committed to and initiated plans to restructure certain pre-acquisition operations of BEA Systems, Inc. (BEA Restructuring Plan) and Siebel Systems, Inc. (Siebel Restructuring Plan), respectively. Our management initiated these plans in connection with our acquisitions of these companies in order to improve the cost efficiencies in our operations. These plans were initiated and approved prior to our adoption of Statement 141(R). Costs related to these restructuring plans were originally recognized as liabilities assumed in each of the respective business combinations and included in the allocation of the cost to acquire these companies and, accordingly, have resulted in an increase to goodwill. Our restructuring expenses may change as our management executes the approved plans. Future decreases to the estimates of executing these acquisition related restructuring plans will be recorded as an adjustment to goodwill indefinitely. Increases to the estimates of the acquisition related restructuring plans will be recorded to operating expenses. The total restructuring costs associated with exiting activities of BEA were $208 million, consisting of severance, excess facilities obligations through fiscal 2017, as well as other restructuring costs. The total restructuring costs associated with exiting activities of Siebel were $588 million, consisting of severance, excess facilities obligations through fiscal 2022, and other restructuring costs. Summary of All Plans (in millions) Accrued May 31, 2009(2) Three Months Ended August 31, 2009 Accrued Aug. 31, 2009 (2) Total Costs Accrued to Date Total Expected Program Costs Initial Costs(3) Adj. to Cost(4) Cash Payments Others(5) Fiscal 2009 Oracle Restructuring Plan New software licenses $ 12 $ 20 $ 4 $ (15) $ (1) $ 20 $ 53 $ 162 Software license updates and product support 2 (1) 1 |
| DEFERRED REVENUES | 7. DEFERRED REVENUES Deferred revenues consisted of the following: (in millions) August31, 2009 May31, 2009 Software license updates and product support $ 4,840 $ 4,158 Services 245 243 New software licenses 198 191 Deferred revenues, current 5,283 4,592 Deferred revenues, non-current (in other non-current liabilities) 175 204 Total deferred revenues $ 5,458 $ 4,796 Deferred software license updates and product support revenues represent customer payments made in advance for annual support contracts. Software license updates and product support contracts are typically billed on a per annum basis in advance and revenues are recognized ratably over the support periods. Deferred service revenues include prepayments for consulting, On Demand and education services. Revenue for these services is recognized as the services are performed. Deferred new software license revenues typically result from undelivered products or specified enhancements, customer specific acceptance provisions or software license transactions that cannot be segmented from consulting services, or certain extended payment term arrangements. In connection with the purchase price allocations related to our acquisitions, we have estimated the fair values of the support obligations assumed. The estimated fair values of the support obligations assumed were determined using a cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to fulfilling the obligations plus a normal profit margin. The sum of the costs and operating profit approximates, in theory, the amount that we would be required to pay a third party to assume the support obligations. These fair value adjustments reduce the revenues recognized over the support contract term of our acquired contracts and, as a result, we did not recognize software license updates and product support revenues related to support contracts assumed from our acquisitions in the amount of $9 million and $91 million which would have been otherwise recorded by our acquired businesses as independent entities, for the three months ended August 31, 2009 and 2008, respectively. |
| DERIVATIVE FINANCIAL INSTRUMENTS | 8. DERIVATIVE FINANCIAL INSTRUMENTS On December 1, 2008, we adopted FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement 133. The adoption of Statement 161 had no impact on our consolidated financial position or results of operations and only required additional financial statement disclosures. We have applied the requirements of Statement 161 on a prospective basis. Accordingly, disclosures related to interim periods prior to the date of adoption have not been presented. Interest Rate Swap Agreements Cash Flow Hedges We use an interest rate swap agreement to manage the economic effect of variable interest obligations associated with our senior notes due May 2010 (Floating Rate Notes) so that the interest payable on the Floating Rate Notes effectively became fixed at a rate of 4.59%, thereby reducing the impact of future interest rate changes on our future interest expense. The critical terms of the interest rate swap agreement and the Floating Rate Notes match, including the notional amounts, interest rate reset dates, maturity dates and underlying market indices. Accordingly, we have designated this swap agreement as a qualifying hedging instrument and are accounting for it as a cash flow hedge pursuant to FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The unrealized losses on this interest rate swap agreement are included in accumulated other comprehensive income and the corresponding fair value payables are included in other current liabilities in our consolidated balance sheet. The periodic interest settlements, which occur at the same interval as the Floating Rate Notes, are recorded as interest expense. Fair Value Hedges On September 1, 2009 we entered into interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with the 2014 Notes so that the interest payable on these notes effectively will become variable based on LIBOR. The critical terms of the interest rate swap agreements and the 2014 Notes match, including the notional amounts and maturity dates. Accordingly, we have designated these swap agreements as qualifying hedging instruments and are accounting for them as fair value hedges pursuant to Statement 133. These transactions are characterized as fair value hedges for financial accounting purposes because they protect us against changes in the fair value of our fixed rate borrowings due to benchmark interest rate movements. The changes in fair value of these interest rate swap agreements will be recognized as interest expense in our consolidated statements of operations with the corresponding amount included in other assets or other non-current liabilities in our consolidated balance sheets. The amount of net gain (loss) attributable to the risk being hedged will be recognized as interest expense in our consolidated statement of operations with the corresponding amount included in notes payable and other non-current borrowings. The periodic interest settlements, which occur at the same interval as the 2014 Notes, will be recorded as interest ex |
| STOCKHOLDERS' EQUITY | 9.STOCKHOLDERS EQUITY Stock Repurchases Our Board of Directors has approved a program for us to repurchase shares of our common stock. On October 20, 2008, we announced that our Board of Directors approved the expansion of our repurchase program by $8.0 billion and as of August 31, 2009, approximately $6.0 billion was available for share repurchases pursuant to our stock repurchase program. We repurchased approximately 11.4 million shares for $243 million during the three months ended August 31, 2009 (including approximately 0.5 million shares for $11 million that were repurchased but not settled at August 31, 2009) and approximately 22.7 million shares for $500 million during the three months ended August 31, 2008 (including 1.1 million shares for $24 million that were repurchased but not settled at August 31, 2008) under the applicable repurchase programs authorized. Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchase of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time. Dividends on Common Stock In the first quarter of fiscal 2010, our Board of Directors declared a cash dividend of $0.05 per share of our outstanding common stock, which we paid during the same period. In September 2009, our Board of Directors declared a quarterly cash dividend of $0.05 per share of outstanding common stock payable on November 4, 2009 to stockholders of record as of the close of business on October 14, 2009. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. Stock-Based Compensation Expense and Valuation of Awards Stock-based compensation is included in the following operating expense line items in our condensed consolidated statements of operations: Three Months Ended August 31, (in millions) 2009 2008 Sales and marketing $ 16 $ 19 Software license updates and product support 4 3 Cost of services 3 3 Research and development 32 37 General and administrative 29 24 Acquisition related and other - 5 Total stock-based compensation $ 84 $ 91 We estimate the fair value of our share-based payments using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including stock price volatility. Changes in the input assumptions can materially affect the fair value estimates and ultimately h |
| INCOME TAXES | 10.INCOME TAXES The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to state taxes and earnings considered as indefinitely reinvested in foreign operations. Our effective tax rate was 28.0% and 25.4% for the three months ended August 31, 2009 and 2008, respectively. Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2007. Our U.S. federal and, with some exceptions, our state income tax returns have been examined for all years prior to fiscal 2000, and we are no longer subject to audit for those periods. Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting unrecognized tax benefits. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 1998. We believe that we have adequately provided for any reasonably foreseeable outcomes related to our tax audits and that any settlement will not have a material adverse effect on our consolidated financial position or results of operations; however, there can be no assurances as to the actual outcomes. We previously negotiated three unilateral Advance Pricing Agreements with the U.S. Internal Revenue Service (IRS) that cover many of our intercompany transfer pricing issues and preclude the IRS from making a transfer pricing adjustment within the scope of these agreements. These agreements are effective for fiscal years through May 31, 2006. We have submitted to the IRS a request for renewal of this Advance Pricing Agreement for the years ending May 31, 2007 through May 31, 2011. However, these agreements do not cover all elements of our transfer pricing and do not bind tax authorities outside the United States. We have finalized one bilateral Advance Pricing Agreement, which was effective for the years ending May 31, 2002 through May 31, 2006 and we have submitted a renewal for the years ending May 31, 2007 through May 31, 2011. There can be no guarantee that such negotiations will result in an agreement. We concluded an additional bilateral agreement to cover the period from June 1, 2001 through January 25, 2008. |
| SEGMENT INFORMATION | 11.SEGMENT INFORMATION FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We are organized geographically and by line of business. While our Chief Executive Officer evaluates results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. We have two businesses, software and services, which are further divided into five operating segments. Our software business is comprised of two operating segments: (1) new software licenses and (2) software license updates and product support. Our services business is comprised of three operating segments: (1) consulting, (2) On Demand and (3) education. The new software licenses line of business is engaged in the licensing of database and middleware software as well as applications software. Database and middleware software includes database management software, application server software, business intelligence software, identification and access management software, content management software, portal and user interaction software, Service-Oriented Architecture and business process management software, data integration software and development tools. Applications software provides enterprise information that enables companies to manage their business cycles and provide intelligence in functional areas such as customer relationship management, financials, human resources, maintenance management, manufacturing, marketing, order fulfillment, product lifecycle management, enterprise project portfolio management, enterprise performance management, procurement, sales, services, enterprise resource planning and supply chain planning. The software license updates and product support line of business provides customers with rights to unspecified software product upgrades and maintenance releases, internet access to technical content, as well as internet and telephone access to technical support personnel during the support period. In addition, the software license updates and product support line of business offers customers Oracle Unbreakable Linux Support, which provides enterprise level support for the Linux operating system, and also offers support for Oracle VM server virtualization software. The consulting line of business provides services to customers in business strategy and analysis, business process simplification, solutions integration and the implementation, enhancement and upgrade of our database, middleware and applications software. On Demand includes Oracle On Demand and Advanced Customer Services. Oracle On Demand provides multi-featured software and hardware management and maintenance services for customers that deploy |
| EARNINGS PER SHARE | 12.EARNINGS PER SHARE Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock awards and shares issuable under the employee stock purchase plan using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended August 31, (in millions except per share data) 2009 2008 Net income $ 1,124 $ 1,077 Weighted average common shares outstanding 5,009 5,152 Dilutive effect of employee stock plans 54 83 Dilutive weighted average common shares outstanding 5,063 5,235 Basic earnings per share $ 0.22 $ 0.21 Diluted earnings per share $ 0.22 $ 0.21 Shares subject to anti-dilutive stock options excluded from calculation(1) 201 143 (1) These weighted shares relate to anti-dilutive stock options as calculated using the treasury stock method (described above) and could be dilutive in the future. |
| LEGAL PROCEEDINGS | 13.LEGAL PROCEEDINGS Securities Class Action Stockholder class actions were filed in the United States District Court for the Northern District of California against us and our Chief Executive Officer on and after March 9, 2001. Between March 2002 and March 2003, the court dismissed plaintiffs consolidated complaint, first amended complaint and a revised second amended complaint. The last dismissal was with prejudice. On September 1, 2004, the United States Court of Appeals for the Ninth Circuit reversed the dismissal order and remanded the case for further proceedings. The revised second amended complaint named our Chief Executive Officer, our then Chief Financial Officer (who currently is Chairman of our Board of Directors) and a former Executive Vice President as defendants. This complaint was brought on behalf of purchasers of our stock during the period from December 14, 2000 through March 1, 2001. Plaintiffs alleged that the defendants made false and misleading statements about our actual and expected financial performance and the performance of certain of our applications products, while certain individual defendants were selling Oracle stock in violation of federal securities laws. Plaintiffs further alleged that certain individual defendants sold Oracle stock while in possession of material non-public information. Plaintiffs also allege that the defendants engaged in accounting violations. On July 26, 2007, defendants filed a motion for summary judgment, and plaintiffs filed a motion for partial summary judgment against all defendants and a motion for summary judgment against our Chief Executive Officer. On August 7, 2007, plaintiffs filed amended versions of these motions. On October 5, 2007, plaintiffs filed a motion seeking a default judgment against defendants or various other sanctions because of defendants alleged destruction of evidence. A hearing on all these motions was held on December 20, 2007. On April 7, 2008, the case was reassigned to a new judge. On June 27, 2008, the court ordered supplemental briefing on plaintiffs sanctions motion. On September 2, 2008, the court issued an order denying plaintiffs motion for partial summary judgment against all defendants. The order also denied in part and granted in part plaintiffs motion for sanctions. The court denied plaintiffs request that judgment be entered in plaintiffs favor due to the alleged destruction of evidence, and the court found that no sanctions were appropriate for several categories of evidence. The court found that sanctions in the form of adverse inferences were appropriate for two categories of evidence: e-mails from our Chief Executive Officers account, and materials that had been created in connection with a book regarding our Chief Executive Officer. The court then denied defendants motion for summary judgment and plaintiffs motion for summary judgment against our Chief Executive Officer and directed the parties to revise and re-file these motions to clearly specify the precise contours of the adverse inferences that should be drawn, and to take these inferences into account with regard to the propriety of summary judgment. The court also dire |
| Document Information | |
| 3 Months Ended
Aug. 31, 2009 | |
| Document Information [Line Items] | |
| Document Type | 10-Q |
| Document Period End Date | 2009-08-31 |
| Amendment Flag | false |
| Amendment Description | N.A. |
| Entity Information (USD $) | |||
| Share data in Millions | 3 Months Ended
Aug. 31, 2009 | Sep. 16, 2009
| Nov. 28, 2008
|
| Entity Information [Line Items] | |||
| Entity Registrant Name | Oracle Corporation | ||
| Entity Central Index Key | 0001341439 | ||
| Current Fiscal Year End Date | --05-31 | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Public Float | $61,831,796,000 | ||
| Entity Common Stock, Shares Outstanding | 5,013 |
