DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION (USD $) | 12 Months Ended | ||
31-May-14 | Jun. 19, 2014 | Nov. 30, 2013 | |
Document and Entity Information [Abstract] | ' | ' | ' |
Document Type | '10-K | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 31-May-14 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Trading Symbol | 'ORCL | ' | ' |
Entity Registrant Name | 'Oracle Corporation | ' | ' |
Entity Central Index Key | '0001341439 | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Current Fiscal Year End Date | '--05-31 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Common Stock, Shares Outstanding (in shares) | ' | 4,454,889,000 | ' |
Entity Public Float (in dollars) | ' | ' | $118,156,172,000 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | 31-May-14 | 31-May-13 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $17,769 | $14,613 |
Marketable securities | 21,050 | 17,603 |
Trade receivables, net of allowances for doubtful accounts of $306 and $296 as of May 31, 2014 and 2013, respectively | 6,087 | 6,049 |
Inventories | 189 | 240 |
Deferred tax assets | 914 | 974 |
Prepaid expenses and other current assets | 2,129 | 2,213 |
Total current assets | 48,138 | 41,692 |
Non-current assets: | ' | ' |
Property, plant and equipment, net | 3,061 | 3,053 |
Intangible assets, net | 6,137 | 6,640 |
Goodwill | 29,652 | 27,343 |
Deferred tax assets | 837 | 766 |
Other assets | 2,519 | 2,318 |
Total non-current assets | 42,206 | 40,120 |
Total assets | 90,344 | 81,812 |
Current liabilities: | ' | ' |
Notes payable, current and other current borrowings | 1,508 | ' |
Accounts payable | 471 | 419 |
Accrued compensation and related benefits | 1,940 | 1,851 |
Income taxes payable | 416 | 911 |
Deferred revenues | 7,269 | 7,118 |
Other current liabilities | 2,785 | 2,573 |
Total current liabilities | 14,389 | 12,872 |
Non-current liabilities: | ' | ' |
Notes payable and other non-current borrowings | 22,667 | 18,494 |
Income taxes payable | 4,184 | 3,899 |
Other non-current liabilities | 1,657 | 1,402 |
Total non-current liabilities | 28,508 | 23,795 |
Commitments and contingencies | ' | ' |
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: 4,464 shares and 4,646 shares as of May 31, 2014 and 2013, respectively | 21,077 | 18,893 |
Retained earnings | 25,965 | 25,854 |
Accumulated other comprehensive loss | -164 | -99 |
Total Oracle Corporation stockholders' equity | 46,878 | 44,648 |
Noncontrolling interests | 569 | 497 |
Total equity | 47,447 | 45,145 |
Total liabilities and equity | $90,344 | $81,812 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICAL (USD $) | 31-May-14 | 31-May-13 |
In Millions, except Per Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ' | ' |
Allowance for doubtful accounts receivable | $306 | $296 |
Preferred stock par value per share | $0.01 | $0.01 |
Preferred stock shares authorized | 1 | 1 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value per share | $0.01 | $0.01 |
Common stock shares authorized | 11,000 | 11,000 |
Common stock shares outstanding | 4,464 | 4,646 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Software and cloud revenues: | ' | ' | ' | |||
New software licenses | $9,416 | $9,411 | $9,451 | |||
Cloud software-as-a-service and platform-as-a-service | 1,121 | 910 | 455 | |||
Cloud infrastructure-as-a-service | 456 | 457 | 444 | |||
Software license updates and product support | 18,206 | 17,142 | 16,210 | |||
Software and cloud revenues | 29,199 | 27,920 | 26,560 | |||
Hardware systems revenues: | ' | ' | ' | |||
Hardware systems products | 2,976 | 3,033 | 3,827 | |||
Hardware systems support | 2,396 | 2,313 | 2,475 | |||
Hardware systems revenues | 5,372 | 5,346 | 6,302 | |||
Services revenues | 3,704 | 3,914 | 4,259 | |||
Total revenues | 38,275 | 37,180 | 37,121 | |||
Operating expenses: | ' | ' | ' | |||
Sales and marketing | 7,567 | [1] | 7,062 | [1] | 6,990 | [1] |
Cloud software-as-a-service and platform-as-a-service | 455 | [1] | 327 | [1] | 209 | [1] |
Cloud infrastructure-as-a-service | 308 | 304 | 289 | |||
Software license updates and product support | 1,162 | [1] | 1,175 | [1] | 1,226 | [1] |
Hardware systems products | 1,521 | [1] | 1,501 | [1] | 1,843 | [1] |
Hardware systems support | 836 | [1] | 890 | [1] | 1,046 | [1] |
Services | 2,954 | [1] | 3,182 | [1] | 3,382 | [1] |
Research and development | 5,151 | 4,850 | 4,523 | |||
General and administrative | 1,038 | 1,072 | 1,126 | |||
Amortization of intangible assets | 2,300 | 2,385 | 2,430 | |||
Acquisition related and other | 41 | -604 | 56 | |||
Restructuring | 183 | 352 | 295 | |||
Total operating expenses | 23,516 | 22,496 | 23,415 | |||
Operating income | 14,759 | 14,684 | 13,706 | |||
Interest expense | -914 | -797 | -766 | |||
Non-operating (expense) income, net | -141 | 11 | 22 | |||
Income before provision for income taxes | 13,704 | 13,898 | 12,962 | |||
Provision for income taxes | 2,749 | 2,973 | 2,981 | |||
Net income | $10,955 | $10,925 | $9,981 | |||
Earnings per share: | ' | ' | ' | |||
Basic (in dollars per share) | $2.42 | $2.29 | $1.99 | |||
Diluted (in dollars per share) | $2.38 | $2.26 | $1.96 | |||
Weighted average common shares outstanding: | ' | ' | ' | |||
Basic (in shares) | 4,528 | 4,769 | 5,015 | |||
Diluted (in shares) | 4,604 | 4,844 | 5,095 | |||
Dividends declared per common share (in dollars per share) | $0.48 | $0.30 | $0.24 | |||
[1] | Exclusive of amortization of intangible assets, which is shown separately. |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Net income | $10,955 | $10,925 | $9,981 |
Other comprehensive loss, net of tax: | ' | ' | ' |
Total other comprehensive loss, net | -75 | -260 | -458 |
Portion attributable to Parent [Member] | ' | ' | ' |
Net income | 10,955 | 10,925 | 9,981 |
Other comprehensive loss, net of tax: | ' | ' | ' |
Net foreign currency translation losses | -78 | -123 | -398 |
Net unrealized gains (losses) on defined benefit plans | 23 | -68 | -102 |
Net unrealized (losses) gains on marketable securities | -15 | -20 | 70 |
Net unrealized gains on cash flow hedges | 5 | ' | ' |
Total other comprehensive loss, net | -65 | -211 | -430 |
Comprehensive income | $10,890 | $10,714 | $9,551 |
CONSOLIDATED_STATEMENTS_OF_EQU
CONSOLIDATED STATEMENTS OF EQUITY (USD $) | Total | Common Stock and Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Oracle Corporation Stockholders' Equity | Noncontrolling Interests |
In Millions | ||||||
Balances at May. 31, 2011 | $40,245 | $16,653 | $22,581 | $542 | $39,776 | $469 |
Common stock issued under stock-based compensation plans | 622 | 622 | ' | ' | 622 | ' |
Common stock issued under stock purchase plans | 111 | 111 | ' | ' | 111 | ' |
Assumption of stock-based compensation plan awards in connection with acquisitions | 29 | 29 | ' | ' | 29 | ' |
Stock-based compensation | 659 | 659 | ' | ' | 659 | ' |
Repurchase of common stock | -5,968 | -698 | -5,270 | ' | -5,968 | ' |
Cash dividends declared | -1,205 | ' | -1,205 | ' | -1,205 | ' |
Tax benefit from stock plans | 113 | 113 | ' | ' | 113 | ' |
Other, net | 2 | ' | ' | ' | ' | 2 |
Distributions to noncontrolling interests | -163 | ' | ' | ' | ' | -163 |
Other comprehensive loss, net | -458 | ' | ' | -430 | -430 | -28 |
Net income | 10,100 | ' | 9,981 | ' | 9,981 | 119 |
Balances at May. 31, 2012 | 44,087 | 17,489 | 26,087 | 112 | 43,688 | 399 |
Common stock issued under stock-based compensation plans | 1,417 | 1,417 | ' | ' | 1,417 | ' |
Common stock issued under stock purchase plans | 110 | 110 | ' | ' | 110 | ' |
Assumption of stock-based compensation plan awards in connection with acquisitions | 15 | 15 | ' | ' | 15 | ' |
Stock-based compensation | 755 | 755 | ' | ' | 755 | ' |
Repurchase of common stock | -10,994 | -1,269 | -9,725 | ' | -10,994 | ' |
Cash dividends declared | -1,433 | ' | -1,433 | ' | -1,433 | ' |
Tax benefit from stock plans | 257 | 257 | ' | ' | 257 | ' |
Other, net | 185 | 119 | ' | ' | 119 | 66 |
Distributions to noncontrolling interests | -31 | ' | ' | ' | ' | -31 |
Other comprehensive loss, net | -260 | ' | ' | -211 | -211 | -49 |
Net income | 11,037 | ' | 10,925 | ' | 10,925 | 112 |
Balances at May. 31, 2013 | 45,145 | 18,893 | 25,854 | -99 | 44,648 | 497 |
Common stock issued under stock-based compensation plans | 2,026 | 2,026 | ' | ' | 2,026 | ' |
Common stock issued under stock purchase plans | 109 | 109 | ' | ' | 109 | ' |
Assumption of stock-based compensation plan awards in connection with acquisitions | 148 | 148 | ' | ' | 148 | ' |
Stock-based compensation | 805 | 805 | ' | ' | 805 | ' |
Repurchase of common stock | -9,798 | -1,160 | -8,638 | ' | -9,798 | ' |
Cash dividends declared | -2,178 | ' | -2,178 | ' | -2,178 | ' |
Tax benefit from stock plans | 254 | 254 | ' | ' | 254 | ' |
Other, net | -14 | 2 | -28 | ' | -26 | 12 |
Distributions to noncontrolling interests | -28 | ' | ' | ' | ' | -28 |
Other comprehensive loss, net | -75 | ' | ' | -65 | -65 | -10 |
Net income | 11,053 | ' | 10,955 | ' | 10,955 | 98 |
Balances at May. 31, 2014 | $47,447 | $21,077 | $25,965 | ($164) | $46,878 | $569 |
CONSOLIDATED_STATEMENTS_OF_EQU1
CONSOLIDATED STATEMENTS OF EQUITY PARENTHETICAL (USD $) | 12 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Equity: | ' | ' | ' |
Beginning common stock shares outstanding | 4,646 | 4,905 | 5,068 |
Common stock issued under stock-based compensation plans | 95 | 84 | 40 |
Common stock issued under stock purchase plans | 3 | 3 | 4 |
Repurchase of common stock | -280.4 | -346.1 | -207.3 |
Ending common stock shares outstanding | 4,464 | 4,646 | 4,905 |
Dividends declared per common share (in dollars per share) | $0.48 | $0.30 | $0.24 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Cash Flows From Operating Activities: | ' | ' | ' |
Net income | $10,955 | $10,925 | $9,981 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Depreciation | 608 | 546 | 486 |
Amortization of intangible assets | 2,300 | 2,385 | 2,430 |
Allowances for doubtful accounts receivable | 122 | 118 | 92 |
Deferred income taxes | -248 | -117 | 9 |
Stock-based compensation | 805 | 755 | 659 |
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 480 | 410 | 182 |
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | -250 | -241 | -97 |
Other, net | 311 | 155 | 84 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ' | ' | ' |
Decrease (increase) in trade receivables | 24 | 267 | -8 |
Decrease (increase) in inventories | 57 | -66 | 150 |
Increase in prepaid expenses and other assets | -143 | -555 | -51 |
Increase (decrease) in accounts payable and other liabilities | 48 | -541 | -720 |
(Decrease) increase in income taxes payable | -320 | 35 | 54 |
Increase in deferred revenues | 172 | 148 | 492 |
Net cash provided by operating activities | 14,921 | 14,224 | 13,743 |
Cash Flows From Investing Activities: | ' | ' | ' |
Purchases of marketable securities and other investments | -32,316 | -32,160 | -38,625 |
Proceeds from maturities and sales of marketable securities and other investments | 28,845 | 30,159 | 35,594 |
Acquisitions, net of cash acquired | -3,488 | -3,305 | -4,702 |
Capital expenditures | -580 | -650 | -648 |
Net cash used for investing activities | -7,539 | -5,956 | -8,381 |
Cash Flows From Financing Activities: | ' | ' | ' |
Payments for repurchases of common stock | -9,813 | -11,021 | -5,856 |
Proceeds from issuances of common stock | 2,135 | 1,527 | 733 |
Payments of dividends to stockholders | -2,178 | -1,433 | -1,205 |
Proceeds from borrowings, net of issuance costs | 5,566 | 4,974 | 1,700 |
Repayments of borrowings | ' | -2,950 | -1,405 |
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 250 | 241 | 97 |
Distributions to noncontrolling interests | -28 | -31 | -163 |
Other, net | ' | 193 | ' |
Net cash used for financing activities | -4,068 | -8,500 | -6,099 |
Effect of exchange rate changes on cash and cash equivalents | -158 | -110 | -471 |
Net increase (decrease) in cash and cash equivalents | 3,156 | -342 | -1,208 |
Cash and cash equivalents at beginning of period | 14,613 | 14,955 | 16,163 |
Cash and cash equivalents at end of period | 17,769 | 14,613 | 14,955 |
Non-cash investing and financing transactions: | ' | ' | ' |
Fair value of stock options and restricted stock-based awards assumed in connection with acquisitions | 148 | 15 | 29 |
Fair value of contingent consideration payable in connection with acquisition | ' | ' | 346 |
(Decrease) increase in unsettled repurchases of common stock | -15 | -27 | 112 |
Increase in unsettled purchases of marketable securities | 78 | ' | ' |
Supplemental schedule of cash flow data: | ' | ' | ' |
Cash paid for income taxes | 2,841 | 2,644 | 2,731 |
Cash paid for interest | $827 | $781 | $737 |
ORGANIZATION_AND_SIGNIFICANT_A
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Organization and Significant Accounting Policies [Abstract] | ' | |||||||||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Oracle Corporation develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems—including computer server, storage and networking products—and related services that are engineered to work together in cloud-based and on-premise information technology (IT) environments. We offer our customers the option to purchase our software and hardware systems products and related services to manage their own cloud-based or on-premise IT environments, or to deploy our Oracle Cloud offerings, which are a comprehensive set of cloud service offerings including cloud software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) that we manage, host and support. Customers that purchase our software products may elect to purchase software license updates and product support contracts, which provide our customers with rights to unspecified product upgrades and maintenance releases issued during the support period as well as technical support assistance. Customers that purchase our hardware products may elect to purchase hardware systems support contracts, which provide customers with software updates for software components that are essential to the functionality of our server, storage and networking products, such as Oracle Solaris and certain other software products, and can include product repairs, maintenance services, and technical support services. We also offer customers a broad set of services offerings including consulting services, advanced customer support services and education services. | ||||||||||
Oracle Corporation conducts business globally and was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977. | ||||||||||
Basis of Financial Statements | ||||||||||
The consolidated financial statements included our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle’s 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 (expense) income, net in our consolidated statements of operations. Intercompany transactions and balances have been eliminated. | ||||||||||
We have reclassified certain revenues and expenses to conform to the current period’s presentation for all periods presented in our consolidated statements of operations. All such reclassifications did not affect our consolidated total revenues, consolidated operating income or consolidated net income. | ||||||||||
During the fourth quarter of fiscal 2014, we added an operating segment, cloud infrastructure-as-a-service, as a result of a reorganization of financial information presented to our chief operating decision maker for operational decision and resource allocation purposes. We concluded this operating segment is a reporting unit for goodwill allocation and impairment assessment purposes. | ||||||||||
Acquisition related and other expenses as presented in our consolidated statement of operations for fiscal 2013 included a change in fair value of contingent consideration payable, which resulted in a net benefit of $387 million in fiscal 2013 (see Note 2 of Notes to Consolidated Financial Statements below), and a $306 million benefit that we recorded in fiscal 2013 related to certain litigation (see Note 18 of Notes to Consolidated Financial Statements below). | ||||||||||
Use of Estimates | ||||||||||
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. | ||||||||||
Revenue Recognition | ||||||||||
Our sources of revenues include: (1) software and cloud revenues, including new software licenses revenues earned from granting licenses to use our software products; cloud SaaS and PaaS revenues generated from fees for granting customers access to a broad range of our software and related support offerings on a subscription basis in a secure, standards-based cloud computing environment; cloud IaaS revenues generated from fees for deployment and management offerings for our software and hardware and related IT infrastructure generally on a subscription basis; and software license updates and product support revenues; (2) hardware systems revenues, which include the sale of hardware systems products including computer servers, storage products, networking and data center fabric products, and hardware systems support revenues; and (3) services, which includes software and hardware related services including consulting, advanced customer support and education revenues. Revenues generally are recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. | ||||||||||
Revenue Recognition for Software Products and Software Related Services (Software Elements) | ||||||||||
New software licenses revenues primarily represent fees earned from granting customers licenses to use our database, middleware and application software and exclude cloud SaaS and PaaS revenues and revenues derived from software license updates, which are included in software license updates and product support revenues. The basis for our new software licenses revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. We exercise judgment and use estimates in connection with the determination of the amount of software and software related services revenues to be recognized in each accounting period. | ||||||||||
For software license arrangements that do not require significant modification or customization of the underlying software, we recognize new software licenses revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met, are recognized when those conditions are subsequently met. | ||||||||||
Substantially all of our software license arrangements do not include acceptance provisions. However, if acceptance provisions exist as part of public policy, for example, in agreements with government entities where acceptance periods are required by law, or within previously executed terms and conditions that are referenced in the current agreement and are short-term in nature, we generally recognize revenues upon delivery provided the acceptance terms are perfunctory and all other revenue recognition criteria have been met. If acceptance provisions are not perfunctory (for example, acceptance provisions that are long-term in nature or are not included as standard terms of an arrangement), revenues are recognized upon the earlier of receipt of written customer acceptance or expiration of the acceptance period. | ||||||||||
The vast majority of our software license arrangements include software license updates and product support contracts, which are entered into at the customer’s option and are recognized ratably over the term of the arrangement, typically one year. Software license updates provide customers with rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period. Product support includes internet access to technical content, as well as internet and telephone access to technical support personnel. Software license updates and product support contracts are generally priced as a percentage of the net new software licenses fees. Substantially all of our customers renew their software license updates and product support contracts annually. | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Software Products and Software Related Services (Software Arrangements) | ||||||||||
We often enter into arrangements with customers that purchase both software related products and software related services from us at the same time, or within close proximity of one another (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, software license updates and product support contracts and other software related services whereby software license delivery is followed by the subsequent or contemporaneous delivery of the other elements. For those software related multiple-element arrangements, we have applied the residual method to determine the amount of new software license revenues to be recognized pursuant to ASC 985-605. Under the residual method, if fair value exists for undelivered elements in a multiple-element arrangement, such fair value of the undelivered elements is deferred with the remaining portion of the arrangement consideration generally recognized upon delivery of the software license. We allocate the fair value of each element of a software related multiple-element arrangement based upon its fair value as determined by our vendor specific objective evidence (VSOE—described further below), with any remaining amount allocated to the software license. | ||||||||||
Revenue Recognition for Cloud SaaS, PaaS and IaaS Offerings, Hardware Systems Products, Hardware Systems Support and Related Services (Nonsoftware Elements) | ||||||||||
Our revenue recognition policy for nonsoftware deliverables including cloud SaaS, PaaS and IaaS offerings, hardware systems products and hardware systems related services is based upon the accounting guidance contained in ASC 605-25, Revenue Recognition, Multiple-Element Arrangements, and we exercise judgment and use estimates in connection with the determination of the amount of cloud SaaS, PaaS and IaaS revenues, hardware systems products revenues and hardware related services revenues to be recognized in each accounting period. | ||||||||||
Revenues from the sales of our nonsoftware elements are recognized when: (1) persuasive evidence of an arrangement exists; (2) we deliver the products and passage of the title to the buyer occurs; (3) the sale price is fixed or determinable; and (4) collection is reasonably assured. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met. When applicable, we reduce revenues for estimated returns or certain other incentive programs where we have the ability to sufficiently estimate the effects of these items. Where an arrangement is subject to acceptance criteria and the acceptance provisions are not perfunctory (for example, acceptance provisions that are long-term in nature or are not included as standard terms of an arrangement), revenues are recognized upon the earlier of receipt of written customer acceptance or expiration of the acceptance period. | ||||||||||
Our cloud SaaS and PaaS offerings generally provide customers access to certain of our software within a cloud-based IT environment that we manage, host and support and offer to customers on a subscription basis. Revenues for our cloud SaaS and PaaS offerings are generally recognized ratably over the contract term commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. | ||||||||||
Our cloud IaaS offerings provide deployment and management offerings for our software and hardware and related IT infrastructure including comprehensive software and hardware management and maintenance services arrangements for customer IT infrastructure for a stated term that is hosted at our data center facilities, select partner data centers or physically on-premise at customer facilities generally for a term-based fee; and virtual machine instances that are subscription-based and designed for computing and reliable and secure object storage. Revenues for these cloud IaaS offerings are generally recognized ratably over the contract term commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. Our cloud IaaS offerings also include our Oracle Engineered Systems hardware and related support that are deployed on-premise in our customers’ data centers for a monthly fee and provide for the purchase of additional capacity on demand. Our revenue recognition policy for these on-premise offerings is in accordance with ASC 605 and ASC 840, Leases, and substantially all of these offerings are accounted for as operating leases as our contracts are structured so that the term of the arrangement is less than 75% of the economic life of the equipment and the present value of the minimum fixed payments are less than 90% of the fair market value of the equipment at the inception of the arrangement. Our evaluation of useful life is based on our historical product development cycles and our historical customer hardware upgrade cycles. Capacity on demand is a contingent payment and is therefore excluded from our assessment of the net present value of fixed payments. Revenue for capacity on demand is recognized in the period our customers access additional capacity provided all other revenue recognition criteria have been met. | ||||||||||
Revenues from the sale of hardware systems products represent amounts earned primarily from the sale of computer servers, storage, and networking products, including the sales of our Oracle Engineered Systems. | ||||||||||
Our hardware systems support offerings generally provide customers with software updates for the software components that are essential to the functionality of our server and storage products and can also include product repairs, maintenance services and technical support services. Hardware systems support contracts are generally priced as a percentage of the net hardware systems products fees. Hardware systems support contracts are entered into at the customer’s option and are recognized ratably over the contractual term of the arrangements, which are typically one year. | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Cloud SaaS, PaaS and IaaS Offerings, Hardware Systems Products, Hardware Systems Support and Related Services (Nonsoftware Arrangements) | ||||||||||
We enter into arrangements with customers that purchase both nonsoftware related products and services from us at the same time, or within close proximity of one another (referred to as nonsoftware multiple-element arrangements). Each element within a nonsoftware multiple-element arrangement is accounted for as a separate unit of accounting provided the following criteria are met: the delivered products or services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by us. We consider a deliverable to have standalone value if the product or service is sold separately by us or another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a general right of return relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. For those units of accounting that include more than one deliverable but are treated as a single unit of accounting, we generally recognize revenues over the delivery period or in the case of our cloud offerings, generally over the estimated customer relationship period. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenue to the respective revenue line items within our consolidated statements of operations based on a rational and consistent methodology utilizing our best estimate of relative selling prices of such elements. | ||||||||||
For our nonsoftware multiple-element arrangements, we allocate revenue to each element based on a selling price hierarchy at the arrangement’s inception. The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE are available (a description as to how we determine VSOE, TPE and ESP is provided below). If a tangible hardware systems product includes software, we determine whether the tangible hardware systems product and the software work together to deliver the product’s essential functionality and, if so, the entire product is treated as a nonsoftware deliverable. The total arrangement consideration is allocated to each separate unit of accounting for each of the nonsoftware deliverables using the relative selling prices of each unit based on the aforementioned selling price hierarchy. We limit the amount of revenue recognized for delivered elements to an amount that is not contingent upon future delivery of additional products or services or meeting of any specified performance conditions. | ||||||||||
When possible, we establish VSOE of selling price for deliverables in software and nonsoftware multiple-element arrangements using the price charged for a deliverable when sold separately and for software license updates and product support and hardware systems support, based on the renewal rates offered to customers. TPE is established by evaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated customers. If we are unable to determine the selling price because VSOE or TPE does not exist, we determine ESP for the purposes of allocating the arrangement by reviewing historical transactions, including transactions whereby the deliverable was sold on a standalone basis and considering several other external and internal factors including, but not limited to, pricing practices including discounting, margin objectives, competition, contractually stated prices, the geographies in which we offer our products and services, the type of customer (i.e., distributor, value added reseller, government agency and direct end user, among others) and the stage of the product lifecycle. The determination of ESP is made through consultation with and approval by our management, taking into consideration our pricing model and go-to-market strategy. As our, or our competitors’, pricing and go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to our determination of VSOE, TPE and ESP. As a result, our future revenue recognition for multiple-element arrangements could differ materially from our results in the current period. Selling prices are analyzed on an annual basis or more frequently if we experience significant changes in our selling prices. | ||||||||||
Revenue Recognition Policies Applicable to both Software and Nonsoftware Elements | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Arrangements with Software and Nonsoftware Elements | ||||||||||
We also enter into multiple-element arrangements that may include a combination of our various software related and nonsoftware related products and services offerings including new software licenses, software license updates and product support, cloud SaaS, PaaS and IaaS offerings, hardware systems products, hardware systems support, consulting, advanced customer support services and education. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the nonsoftware elements. We then further allocate consideration within the software group to the respective elements within that group following the guidance in ASC 985-605 and our policies as described above. After the arrangement consideration has been allocated to the elements, we account for each respective element in the arrangement as described above. | ||||||||||
Other Revenue Recognition Policies Applicable to Software and Nonsoftware Elements | ||||||||||
Many of our software arrangements include consulting implementation services sold separately under consulting engagement contracts and are included as a part of our services business. Consulting revenues from these arrangements are generally accounted for separately from new software licenses revenues because the arrangements qualify as services transactions as defined in ASC 985-605. The more significant factors considered in determining whether the revenues should be accounted for separately include the nature of services (i.e., consideration of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance criteria on the realizability of the software license fee. Revenues for consulting services are generally recognized as the services are performed. If there is a significant uncertainty about the project completion or receipt of payment for the consulting services, revenues are deferred until the uncertainty is sufficiently resolved. We estimate the proportional performance on contracts with fixed or “not to exceed” fees on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If we do not have a sufficient basis to measure progress towards completion, revenues are recognized when we receive final acceptance from the customer that the services have been completed. When total cost estimates exceed revenues, we accrue for the estimated losses immediately using cost estimates that are based upon an average fully burdened daily rate applicable to the consulting organization delivering the services. The complexity of the estimation process and factors relating to the assumptions, risks and uncertainties inherent with the application of the proportional performance method of accounting affects the amounts of revenues and related expenses reported in our consolidated financial statements. A number of internal and external factors can affect our estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. | ||||||||||
Our advanced customer support services are offered as standalone arrangements or as a part of arrangements to customers buying other software and non-software products and services. We offer these advanced support services, both on-premise and remote, to Oracle customers to enable increased performance and higher availability of their products and services. Depending upon the nature of the arrangement, revenues from these services are recognized as the services are performed or ratably over the term of the service period, which is generally one year or less. | ||||||||||
Education revenues are also a part of our services business and include instructor-led, media-based and internet-based training in the use of our software and hardware products. Education revenues are recognized as the classes or other education offerings are delivered. | ||||||||||
If an arrangement contains multiple elements and does not qualify for separate accounting for the product and service transactions, then new software licenses revenues and/or hardware systems products revenues, including the costs of hardware systems products, are generally recognized together with the services based on contract accounting using either the percentage-of-completion or completed-contract method. Contract accounting is applied to any bundled software and cloud, hardware systems and services arrangements: (1) that include milestones or customer specific acceptance criteria that may affect collection of the software license or hardware systems product fees; (2) where consulting services include significant modification or customization of the software or hardware systems product or are of a specialized nature and generally performed only by Oracle; (3) where significant consulting services are provided for in the software license contract or hardware systems product contract without additional charge or are substantially discounted; or (4) where the software license or hardware systems product payment is tied to the performance of consulting services. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenues to software and nonsoftware elements based on a rational and consistent methodology utilizing our best estimate of the relative selling price of such elements. | ||||||||||
We also evaluate arrangements with governmental entities containing “fiscal funding” or “termination for convenience” provisions, when such provisions are required by law, to determine the probability of possible cancellation. We consider multiple factors, including the history with the customer in similar transactions, the “essential use” of the software or hardware systems products and the planning, budgeting and approval processes undertaken by the governmental entity. If we determine upon execution of these arrangements that the likelihood of cancellation is remote, we then recognize revenues once all of the criteria described above have been met. If such a determination cannot be made, revenues are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity. | ||||||||||
We assess whether fees are fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirements are met. Our standard payment terms are net 30 days. However, payment terms may vary based on the country in which the agreement is executed. Payments that are due within six months are generally deemed to be fixed or determinable based on our successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition. | ||||||||||
While most of our arrangements for sales within our businesses include short-term payment terms, we have a standard practice of providing long-term financing to creditworthy customers primarily through our financing division. Since fiscal 1989, when our financing division was formed, we have established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date. Provided all other revenue recognition criteria have been met, we recognize new software licenses revenues and hardware systems products revenues for these arrangements upon delivery, net of any payment discounts from financing transactions. We have generally sold receivables financed through our financing division on a non-recourse basis to third party financing institutions within 90 days of the contracts’ dates of execution and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in ASC 860, Transfers and Servicing, as we are considered to have surrendered control of these financing receivables. During fiscal 2014, 2013 and 2012, $2.0 billion, $2.2 billion and $1.6 billion of our financing receivables were sold to financial institutions, respectively. | ||||||||||
In addition, we enter into arrangements with leasing companies for the sale of our hardware systems products. These leasing companies, in turn, lease our products to end-users. The leasing companies generally have no recourse to us in the event of default by the end-user and we recognize revenue upon delivery, if all other revenue recognition criteria have been met. | ||||||||||
Our customers include several of our suppliers and occasionally, we have purchased goods or services for our operations from these vendors at or about the same time that we have sold our products to these same companies (Concurrent Transactions). Software license agreements or sales of hardware systems that occur within a three-month time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we acquire goods or services from a customer, we negotiate the purchase separately from any sales transaction, at terms we consider to be at arm’s length and settle the purchase in cash. We recognize revenues from Concurrent Transactions if all of our revenue recognition criteria are met and the goods and services acquired are necessary for our current operations. | ||||||||||
Business Combinations | ||||||||||
We apply the provisions of ASC 805, Business Combinations, in the accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. | ||||||||||
Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as one-time termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations, and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in our consolidated statement of operations in the period in which the liability is incurred. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ materially from actual results. This may require us to revise our initial estimates which may materially affect our results of operations and financial position in the period the revision is made. | ||||||||||
For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. | ||||||||||
In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. | ||||||||||
Marketable and Non-Marketable Securities | ||||||||||
In accordance with ASC 320, Investments—Debt and Equity Securities, and based on our intentions regarding these instruments, we classify substantially all of our marketable debt and equity securities as available-for-sale. Marketable debt and equity securities are reported at fair value, with all unrealized gains (losses) reflected net of tax in stockholders’ equity on our consolidated balance sheets, and as a line item in our consolidated statements of comprehensive income. If we determine that an investment has an other than temporary decline in fair value, we recognize the investment loss in non-operating (expense) income, net in the accompanying consolidated statements of operations. We periodically evaluate our investments to determine if impairment charges are required. Substantially all of our marketable debt and equity investments are classified as current based on the nature of the investments and their availability for use in current operations. | ||||||||||
We hold investments in certain non-marketable equity securities in which we do not have a controlling interest or significant influence. These equity securities are recorded at cost and included in other assets in the accompanying consolidated balance sheets. If based on the terms of our ownership of these non-marketable securities, we determine that we exercise significant influence on the entity to which these non-marketable securities relate, we apply the requirements of ASC 323, Investments—Equity Method and Joint Ventures, to account for such investments. Our non-marketable securities are subject to periodic impairment reviews. | ||||||||||
Fair Value of Financial Instruments | ||||||||||
We apply the provisions of ASC 820, Fair Value Measurement (ASC 820), to our assets and liabilities that we are required to measure at fair value pursuant to other accounting standards, including our investments in marketable debt and equity securities and our derivative financial instruments. | ||||||||||
The additional disclosures regarding our fair value measurements are included in Note 4. | ||||||||||
Allowances for Doubtful Accounts | ||||||||||
We record allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the geographic region that the receivable was recorded in and current economic trends. We write-off a receivable and charge it against its recorded allowance when we have exhausted our collection efforts without success. | ||||||||||
Concentrations of Credit Risk | ||||||||||
Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution. Investment policies have been implemented that limit purchases of marketable debt securities to investment grade securities. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2014, 2013 or 2012. | ||||||||||
Inventories | ||||||||||
Inventories are stated at the lower of cost or market value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. We evaluate our ending inventories for estimated excess quantities and obsolescence. This evaluation includes analysis of sales levels by product and projections of future demand within specific time horizons (generally six to nine months). Inventories in excess of future demand are written down and charged to hardware systems products expenses. In addition, we assess the impact of changing technology to our inventories and we write down inventories that are considered obsolete. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. | ||||||||||
Other Receivables | ||||||||||
Other receivables represent value-added tax and sales tax receivables associated with the sale of our products and services to third parties. Other receivables are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $906 million and $826 million at May 31, 2014 and 2013, respectively. | ||||||||||
Deferred Sales Commissions | ||||||||||
We defer sales commission expenses associated with our cloud SaaS, PaaS and IaaS offerings, and recognize the related expenses over the non-cancelable term of the related contracts, which are typically one to three years. Amortization of deferred sales commissions is included as a component of sales and marketing expense in our consolidated statements of operations. | ||||||||||
Property, Plant and Equipment | ||||||||||
Property, plant and equipment are stated at the lower of cost or realizable value, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the assets, which range from one to fifty years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the lease terms, as appropriate. Property, plant and equipment are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize any significant property impairment charges in fiscal 2014, 2013 or 2012. | ||||||||||
Goodwill, Intangible Assets and Impairment Assessments | ||||||||||
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives, which generally range from one to ten years. Each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. | ||||||||||
The carrying amounts of these assets are periodically reviewed for impairment (at least annually for goodwill and indefinite lived intangible assets) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. According to ASC 350, Intangibles—Goodwill and Other, we can opt to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or we can directly perform the two step impairment test. Based on our qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, the two step impairment test will be performed. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. Recoverability of finite lived intangible assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. Recoverability of indefinite lived intangible assets is measured by comparison of the carrying amount of the asset to its fair value. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. We did not recognize any goodwill or intangible asset impairment charges in fiscal 2014, 2013 or 2012. | ||||||||||
Derivative Financial Instruments | ||||||||||
During fiscal 2014, 2013 and 2012, we used derivative and non-derivative financial instruments to manage foreign currency and interest rate risks (see Note 11 below for additional information). We account for these instruments in accordance with ASC 815, Derivatives and Hedging (ASC 815), which requires that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value as of the reporting date. ASC 815 also requires that changes in our derivatives’ fair values be recognized in earnings, unless specific hedge accounting and documentation criteria are met (i.e., the instruments are accounted for as hedges). | ||||||||||
The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For a derivative instrument designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change. The loss or gain attributable to the risk being hedged is recognized in earnings with an offset recorded to the item for which the risk is being hedged. For a derivative instrument designated as a cash flow hedge, each reporting period we record the change in fair value on the effective portion to accumulated other comprehensive loss in our consolidated balance sheets and an amount is reclassified out of accumulated other comprehensive loss into earnings to offset the earnings impact that is attributable to the risk being hedged. For the non-derivative financial instrument designated as a net investment hedge of our investments in certain of our international subsidiaries, the change on account of remeasurement of the effective portion for each reporting period is recorded to accumulated other comprehensive loss in our consolidated balance sheets. | ||||||||||
We perform the effectiveness testing of our aforementioned designated hedges on a quarterly basis and the changes in ineffective portions, if any, are recognized immediately in earnings. | ||||||||||
Legal Contingencies | ||||||||||
We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant matter and assess our potential financial exposure. For legal and other contingencies that are not a part of a business combination or related to income taxes, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. A description of our accounting policies associated with contingencies assumed as a part of a business combination is provided under “Business Combinations” above. | ||||||||||
Shipping and Handling Costs | ||||||||||
Our shipping and handling costs for hardware systems products sales are included in hardware systems products expenses for all periods presented. | ||||||||||
Foreign Currency | ||||||||||
We transact business in various foreign currencies. In general, the functional currency of a foreign operation is the local country’s currency. Consequently, revenues and expenses of operations outside the United States are translated into U.S. Dollars using weighted average exchange rates while assets and liabilities of operations outside the United States are translated into U.S. Dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying consolidated balance sheets and related periodic movements are summarized as a line item in our consolidated statements of comprehensive income. Net foreign exchange transaction losses included in non-operating (expense) income, net in the accompanying consolidated statements of operations were $375 million, $162 million and $105 million in fiscal 2014, 2013 and 2012, respectively. | ||||||||||
Stock-Based Compensation | ||||||||||
We account for share-based payments, including grants of employee stock options, restricted stock-based awards and purchases under employee stock purchase plans, in accordance with ASC 718, Compensation-Stock Compensation, which requires that share-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values and the estimated number of shares we ultimately expect will vest. We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. | ||||||||||
We record deferred tax assets for stock-based compensation plan awards that result in deductions on our income tax returns based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which we will receive a tax deduction. | ||||||||||
Advertising | ||||||||||
All advertising costs are expensed as incurred. Advertising expenses, which are included within sales and marketing expenses, were $79 million, $85 million and $79 million in fiscal 2014, 2013 and 2012, respectively. | ||||||||||
Research and Development and Software Development Costs | ||||||||||
All research and development costs are expensed as incurred. | ||||||||||
Software development costs required to be capitalized under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, and under ASC 350-40, Internal-Use Software, were not material to our consolidated financial statements in fiscal 2014, 2013 and 2012. | ||||||||||
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 professional services, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation included in acquisition related and other expenses resulted from unvested options and restricted stock-based awards assumed from acquisitions whereby vesting was accelerated upon termination of the employees pursuant to the original terms of those options and restricted stock-based awards. | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Transitional and other employee related costs | $ | 27 | $ | 27 | $ | 25 | ||||
Stock-based compensation | 10 | 33 | 33 | |||||||
Professional fees and other, net | 20 | -276 | 13 | |||||||
Business combination adjustments, net | -16 | -388 | -15 | |||||||
Total acquisition related and other expenses | $ | 41 | $ | -604 | $ | 56 | ||||
Included in acquisition related and other expenses for fiscal 2013 were changes in estimates for contingent consideration payable, which reduced acquisition related and other expenses by $387 million during fiscal 2013 (see Note 2 for additional information). Acquisition related and other expenses for fiscal 2013 also included a benefit of $306 million related to certain litigation (see Note 18 for additional information), which reduced our acquisition related and other expenses in this period. | ||||||||||
Non-Operating (Expense) Income, net | ||||||||||
Non-operating (expense) income, net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling interests in the net profits of our majority-owned subsidiaries (Oracle Financial Services Software Limited and Oracle Japan) and net other income (losses), including net realized gains and losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading. | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Interest income | $ | 263 | $ | 237 | $ | 231 | ||||
Foreign currency losses, net | -375 | -162 | -105 | |||||||
Noncontrolling interests in income | -98 | -112 | -119 | |||||||
Other income, net | 69 | 48 | 15 | |||||||
Total non-operating (expense) income, net | $ | -141 | $ | 11 | $ | 22 | ||||
Included in our non-operating (expense) income, net for fiscal 2014 are foreign currency remeasurement losses of $213 million. These remeasurement losses were related to the remeasurement of certain assets and liabilities of our Venezuelan subsidiary. The Venezuelan economy has been determined to be “highly inflationary” in accordance with ASC 830, Foreign Currency Matters. As a result, we report all net monetary assets related to our Venezuelan subsidiary in U.S. Dollars with the associated impacts of periodic changes of Bolivar Fuerte (“VEF”) to U.S. Dollar exchange rates in our statements of operations for each respective reporting period. During fiscal 2014, the Venezuelan government issued new exchange agreements that allow for certain foreign currency transactions, which previously were subject to Venezuela’s official Bolivar Fuerte (“VEF”) to U.S. Dollar exchange rate (the “Official Rate”), to be subject to conversion at rates established at the Venezuelan government’s auction-based exchange rate programs, the Complementary System for Foreign Currency Administration (“SICAD”) rates. These SICAD rates were lower than the Official Rate that we had used historically to report the VEF based transactions and net monetary assets of our Venezuelan subsidiary. To determine which of the various VEF rates to use during fiscal 2014, we evaluated our individual facts and circumstances taking into consideration our legal ability to convert VEF at or to settle VEF based transactions using the SICAD rates, amongst other factors. We concluded that using the SICAD rates was the most appropriate for our reporting of our Venezuelan subsidiary’s VEF based transactions and net monetary assets in U.S. Dollars, which resulted in the fiscal 2014 remeasurement losses referenced above. During fiscal 2013, we also incurred a foreign currency remeasurement loss of $64 million related to our Venezuelan subsidiary due to the devaluation of the VEF official exchange rate by the Venezuelan government. Future devaluations of the Venezuelan currency are not expected to have a significant impact on our consolidated financial statements. As a large portion of our consolidated operations are international, we could experience additional foreign currency volatility and incur additional remeasurement losses in the future, the amounts and timing of which are unknown. | ||||||||||
Income Taxes | ||||||||||
We account for income taxes in accordance with ASC 740, Income Taxes. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. | ||||||||||
A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations. | ||||||||||
A description of our accounting policies associated with tax related contingencies and valuation allowances assumed as a part of a business combination is provided under “Business Combinations” above. | ||||||||||
Recent Accounting Pronouncements | ||||||||||
Share-Based Payments with Performance Targets: In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation—Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. We are currently evaluating the impact of our pending adoption on ASU 2014-12 on our consolidated financial statements. | ||||||||||
Revenue Recognition: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements. | ||||||||||
Reporting Discontinued Operations: In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08), to change the criteria for determining which disposals can be presented as discontinued operations and enhanced the related disclosure requirements. ASU 2014-08 is effective for us on a prospective basis in our first quarter of fiscal 2016 with early adoption permitted for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued. We are currently evaluating the impact of our pending adoption of ASU 2014-08 on our consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended | ||||||
31-May-14 | |||||||
Acquisitions [Abstract] | ' | ||||||
ACQUISITIONS | ' | ||||||
2. ACQUISITIONS | |||||||
Proposed Acquisitions of MICROS Systems, Inc. and Others | |||||||
On June 22, 2014, we entered into an Agreement and Plan of Merger (Merger Agreement) with MICROS Systems, Inc. (MICROS), a provider of integrated software, hardware and services solutions to the hospitality and retail industries. Pursuant to the Merger Agreement, we will commence a tender offer for the outstanding shares and shares generally representing vested equity incentive awards of MICROS (collectively, MICROS Shares). MICROS shareholders will have the right to tender their MICROS Shares to Oracle in exchange for $68.00 per share in cash upon consummation of the tender offer. The tender offer will commence no later than ten (10) business days from June 22, 2014. After completion of the tender offer and subject to certain limited conditions, MICROS will merge with and into a wholly-owned subsidiary of Oracle. In addition, unvested equity awards to acquire MICROS common stock that are outstanding immediately prior to the conclusion of the merger will generally be converted into equity awards denominated in shares of our common stock based on formulas contained in the Merger Agreement. The estimated total purchase price for MICROS is approximately $5.3 billion. This transaction is conditioned upon (i) at least a majority of the MICROS Shares being validly tendered to Oracle, (ii) regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the applicable merger control laws of the European Commission and other jurisdictions, and (iv) certain other customary closing conditions. | |||||||
We also have entered into certain other agreements to acquire other companies and expect these proposed acquisitions to close during the first quarter of fiscal 2015. | |||||||
Fiscal 2014 Acquisitions | |||||||
Acquisition of Responsys, Inc. | |||||||
On February 6, 2014, we completed our acquisition of Responsys, Inc. (Responsys), a provider of enterprise-scale cloud-based business-to-consumer marketing software. We have included the financial results of Responsys in our consolidated financial statements from the date of acquisition. The total preliminary purchase price for Responsys was approximately $1.6 billion, which consisted of approximately $1.4 billion in cash and $147 million for the fair value of stock options and restricted stock-based awards assumed. We have preliminarily recorded $35 million of net tangible liabilities, related primarily to deferred tax liabilities, $580 million of identifiable intangible assets, and $14 million of in-process research and development, based on their estimated fair values, and $1.0 billion of residual goodwill. | |||||||
Other Fiscal 2014 Acquisitions | |||||||
During fiscal 2014, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not individually significant. We have included the financial results of these companies in our consolidated financial statements from their respective acquisition dates and the results from each of these companies were not individually material to our consolidated financial statements. In the aggregate, the total preliminary purchase price for these acquisitions was approximately $2.3 billion, which consisted primarily of cash consideration, and we preliminarily recorded $213 million of net tangible liabilities, related primarily to deferred tax liabilities, $1.1 billion of identifiable intangible assets, and $99 million of in-process research and development, based on their estimated fair values, and $1.3 billion of residual goodwill. | |||||||
The preliminary fair value estimates for the assets acquired and liabilities assumed for our acquisitions completed during fiscal 2014 were based upon preliminary calculations and valuations and our estimates and assumptions for each of these acquisitions are subject to change as we obtain additional information for our estimates during the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of those preliminary estimates that were not yet finalized related to certain tangible assets and liabilities acquired, identifiable intangible assets, certain legal matters and income and non-income based taxes. | |||||||
Fiscal 2013 Acquisitions | |||||||
Acquisition of Acme Packet, Inc. | |||||||
On March 28, 2013, we completed our acquisition of Acme Packet, Inc. (Acme Packet), a provider of session border control technology. We have included the financial results of Acme Packet in our consolidated financial statements from the date of acquisition. The total purchase price for Acme Packet was approximately $2.1 billion, which consisted of approximately $2.1 billion in cash and $12 million for the fair value of stock options and restricted stock-based awards assumed. We have recorded $247 million of net tangible assets, $525 million of identifiable intangible assets, and $45 million of in-process research and development, based on their estimated fair values, and $1.3 billion of residual goodwill. | |||||||
Acquisition of Eloqua, Inc. | |||||||
On February 8, 2013, we completed our acquisition of Eloqua, Inc. (Eloqua), a provider of cloud-based marketing automation and revenue performance management software. We have included the financial results of Eloqua in our consolidated financial statements from the date of acquisition. The total purchase price for Eloqua was approximately $935 million, which consisted of approximately $933 million in cash and $2 million for the fair value of stock options assumed. We have recorded $1 million of net tangible assets and $327 million of identifiable intangible assets, based on their estimated fair values, and $607 million of residual goodwill. | |||||||
Other Fiscal 2013 Acquisitions | |||||||
During fiscal 2013, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate. | |||||||
Fiscal 2012 Acquisitions | |||||||
Acquisition of Taleo Corporation | |||||||
On April 5, 2012, we completed our acquisition of Taleo Corporation (Taleo), a provider of cloud-based talent management solutions. We have included the financial results of Taleo in our consolidated financial statements from the date of acquisition. The total purchase price for Taleo was approximately $2.0 billion, which consisted of approximately $2.0 billion in cash and $10 million for the fair value of stock options and restricted stock-based awards assumed. We recorded $1.1 billion of identifiable intangible assets and $244 million of net tangible liabilities related primarily to deferred tax liabilities and customer performance obligations that were assumed as a part of this acquisition, based on their estimated fair values, and $1.1 billion of residual goodwill. | |||||||
Acquisition of RightNow Technologies, Inc. | |||||||
On January 25, 2012, we completed our acquisition of RightNow Technologies, Inc. (RightNow), a provider of cloud-based customer service. We have included the financial results of RightNow in our consolidated financial statements from the date of acquisition. The total purchase price for RightNow was approximately $1.5 billion, which consisted of approximately $1.5 billion in cash and $14 million for the fair value of stock options and restricted stock-based awards assumed. We recorded $697 million of identifiable intangible assets and $259 million of net tangible liabilities related primarily to customer performance obligations, convertible debt and deferred tax liabilities that were assumed as a part of this acquisition, based on their estimated fair values, and $1.1 billion of residual goodwill. | |||||||
Acquisition of Pillar Data Systems, Inc. | |||||||
On July 18, 2011, we acquired Pillar Data Systems, Inc. (Pillar Data), a provider of enterprise storage systems solutions. Prior to the acquisition, Pillar Data was directly and indirectly majority-owned and controlled by Lawrence J. Ellison, our Chief Executive Officer, director and largest stockholder. Pursuant to the agreement and plan of merger dated as of June 29, 2011 (Pillar Data Merger Agreement), we acquired all of the issued and outstanding equity interests of Pillar Data from the stockholders in exchange for rights to receive contingent cash consideration (Earn-Out), if any, pursuant to an Earn-Out calculation. An affiliate of Mr. Ellison has a preference right to receive the first approximately $565 million of the Earn-Out, if any, and rights to 55% of any amount of the Earn-Out that exceeds $565 million. | |||||||
The Earn-Out will be calculated with respect to a three-year period that commenced with our second quarter of fiscal 2012 and will conclude with our first quarter of fiscal 2015 (Earn-Out Period). The Earn-Out will be an amount (if positive) calculated based on the product of (i) the difference between (x) future revenues generated from the sale of certain Pillar Data products during Oracle’s last four full fiscal quarters during the Earn-Out Period minus (y) certain losses associated with certain Pillar Data products incurred over the entire Earn-Out Period, multiplied by (ii) three. Our obligation to pay the Earn-Out will be subject to reduction as a result of our right to set-off the amount of any indemnification claims we may have under the Pillar Data Merger Agreement. We do not expect the amount of the Earn-Out or its potential impact will be material to our results of operations or financial position. | |||||||
We have included the financial results of Pillar Data in our consolidated financial statements from the date of acquisition. These results were not material to our consolidated financial statements. The estimated fair value of the liability for contingent consideration as of the acquisition date, representing the purchase price payable for our acquisition of Pillar Data, was approximately $346 million and was included in other non-current liabilities in our consolidated balance sheet. Our liability for contingent consideration payable is subject to change until the liability is settled with the related impact recorded to our consolidated statements of operations as acquisition related and other expenses. In connection with our acquisition of Pillar Data, we recorded $142 million of identifiable intangible assets and $16 million of net tangible liabilities, based on their estimated fair values, and $220 million of residual goodwill. As of May 31, 2014 and 2013, we estimated the fair value of the Earn-Out liability to be zero. We recorded a net benefit to acquisition related and other expenses of $387 million in fiscal 2013 to reduce the Earn-Out liability to zero primarily as a result of a change in our estimate of year three revenues related to our acquisition of Pillar Data and the related impact to the liability calculation in accordance with the Earn-Out formula as noted above. | |||||||
In June 2014, Mr. Ellison agreed to pay to Oracle 95% of all amounts, if any, that are paid to him under the Earn-Out (see Note 18 below for additional information). | |||||||
Other Fiscal 2012 Acquisitions | |||||||
During fiscal 2012, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not individually significant. We have included the financial results of these companies in our consolidated financial statements from their respective acquisition dates and the results from each of these companies were not individually material to our consolidated financial statements. In the aggregate, the total purchase price for these acquisitions was approximately $1.6 billion, which consisted of approximately $1.6 billion in cash and $5 million for the fair value of stock options assumed. We recorded $540 million of identifiable intangible assets and $29 million of net tangible assets, based on their estimated fair values, and $1.1 billion of residual goodwill. | |||||||
Unaudited Pro Forma Financial Information | |||||||
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle, Responsys, Acme Packet, Eloqua and certain other companies that we acquired since the beginning of fiscal 2013 (which were considered significant for the purposes of unaudited pro forma financial information disclosure) as though the companies were combined as of the beginning of fiscal 2013. The pro forma financial information for all periods presented also included the business combination accounting effects resulting from these acquisitions including our amortization charges from acquired intangible assets (certain of which were preliminary), stock-based compensation charges for unvested stock options and restricted stock-based awards assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal 2013. The pro forma financial information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2013. | |||||||
The unaudited pro forma financial information for fiscal 2014 combined the historical results of Oracle for fiscal 2014, the historical results of Responsys for the nine months ended September 30, 2013 (adjusted due to differences in reporting periods and considering the date we acquired Responsys), the historical results of certain other companies that we acquired since the beginning of fiscal 2014 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. | |||||||
The unaudited pro forma financial information for fiscal 2013 combined the historical results of Oracle for fiscal 2013, the historical results of Responsys for the twelve months ended June 30, 2013 (due to differences in reporting periods), the historical results of Acme Packet for the year ended December 31, 2012 (adjusted due to differences in reporting periods and considering the date we acquired Acme Packet), the historical results of Eloqua for the nine months ended September 30, 2012 (adjusted due to differences in reporting periods and considering the date we acquired Eloqua), the historical results of certain other companies that we acquired since the beginning of fiscal 2013 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows for fiscal 2014 and 2013: | |||||||
Year Ended May 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Total revenues | $ | 38,486 | $ | 38,258 | |||
Net income | $ | 10,826 | $ | 10,676 | |||
Basic earnings per share | $ | 2.39 | $ | 2.24 | |||
Diluted earnings per share | $ | 2.35 | $ | 2.20 | |||
CASH_CASH_EQUIVALENTS_AND_MARK
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | 12 Months Ended | ||||||
31-May-14 | |||||||
Cash, Cash Equivalents and Marketable Securities [Abstract] | ' | ||||||
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | ' | ||||||
3. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | |||||||
Cash and cash equivalents primarily consist of deposits held at major banks, Tier-1 commercial paper and other securities with original maturities of 90 days or less. Marketable securities primarily consist of time deposits held at major banks, Tier-1 commercial paper, corporate notes and certain other securities. | |||||||
The amortized principal amounts of our cash, cash equivalents and marketable securities approximated their fair values at May 31, 2014 and 2013. We use the specific identification method to determine any realized gains or losses from the sale of our marketable securities classified as available-for-sale. Such realized gains and losses were insignificant for fiscal 2014, 2013 and 2012. The following table summarizes the components of our cash equivalents and marketable securities held, substantially all of which were classified as available-for-sale: | |||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Commercial paper debt securities | $ | 7,969 | $ | 14,043 | |||
Corporate debt securities and other | 16,657 | 4,935 | |||||
Total investments | $ | 24,626 | $ | 18,978 | |||
Investments classified as cash equivalents | $ | 3,576 | $ | 1,375 | |||
Investments classified as marketable securities | $ | 21,050 | $ | 17,603 | |||
As of May 31, 2014 and 2013, approximately 45% and 91%, respectively, of our marketable securities investments mature within one year and 55% and 9%, respectively, mature within one to four years. Our investment portfolio is subject to market risk due to changes in interest rates. As described above, we limit purchases of marketable debt securities to investment grade securities and also limit the amount of credit exposure to any one issuer. As stated in our investment policy, we are averse to principal loss and seek to preserve our invested funds by limiting default risk and market risk. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended | |||||||||||||||||||
31-May-14 | ||||||||||||||||||||
Fair Value Measurements [Abstract] | ' | |||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||||||||
4. FAIR VALUE MEASUREMENTS | ||||||||||||||||||||
We perform fair value measurements in accordance with ASC 820. ASC 820 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 their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance. | ||||||||||||||||||||
ASC 820 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. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 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 values of the assets or liabilities. | |||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | ||||||||||||||||||||
Our assets measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following (Level 1 and 2 inputs are defined above): | ||||||||||||||||||||
31-May-14 | 31-May-13 | |||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||||||
Using Input Types | Using Input Types | |||||||||||||||||||
(in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||
Assets: | ||||||||||||||||||||
Commercial paper debt securities | $ | — | $ | 7,969 | $ | 7,969 | $ | — | $ | 14,043 | $ | 14,043 | ||||||||
Corporate debt securities and other | 119 | 16,538 | 16,657 | 246 | 4,689 | 4,935 | ||||||||||||||
Derivative financial instruments | — | 97 | 97 | — | 41 | 41 | ||||||||||||||
Total assets | $ | 119 | $ | 24,604 | $ | 24,723 | $ | 246 | $ | 18,773 | $ | 19,019 | ||||||||
Our valuation techniques used to measure the fair values of our marketable securities that were classified as Level 1 in the table above were derived from quoted market prices and active markets for these instruments exist. Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above, the counterparties to which have high credit ratings, were derived from the following: non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data including LIBOR-based yield curves, among others. | ||||||||||||||||||||
Based on the trading prices of our $24.2 billion and $18.5 billion of borrowings, which consisted of senior notes that were outstanding as of May 31, 2014 and 2013, respectively, the estimated fair values of our borrowings using Level 2 inputs at May 31, 2014 and 2013 were $26.4 billion and $20.7 billion, respectively. |
INVENTORIES
INVENTORIES | 12 Months Ended | ||||||
31-May-14 | |||||||
Inventories [Abstract] | ' | ||||||
INVENTORIES | ' | ||||||
5. INVENTORIES | |||||||
Inventories consisted of the following: | |||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Raw materials | $ | 74 | $ | 114 | |||
Work-in-process | 28 | 31 | |||||
Finished goods | 87 | 95 | |||||
Total | $ | 189 | $ | 240 | |||
PROPERTY_PLANT_AND_EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
PROPERTY, PLANT AND EQUIPMENT | ' | ||||||||
6. PROPERTY, PLANT AND EQUIPMENT | |||||||||
Property, plant and equipment, net consisted of the following: | |||||||||
Estimated Useful Life | May 31, | ||||||||
(Dollars in millions) | 2014 | 2013 | |||||||
Computer, network, machinery and equipment | 1-5 years | $ | 2,468 | $ | 2,138 | ||||
Buildings and improvements | 1-50 years | 2,582 | 2,477 | ||||||
Furniture, fixtures and other | 3-10 years | 531 | 481 | ||||||
Land | — | 632 | 632 | ||||||
Construction in progress | — | 26 | 28 | ||||||
Total property, plant and equipment | 1-50 years | 6,239 | 5,756 | ||||||
Accumulated depreciation | (3,178) | (2,703) | |||||||
Total property, plant and equipment, net | $ | 3,061 | $ | 3,053 | |||||
INTANGIBLE_ASSETS_AND_GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended | |||||||||||||||||||||||||||||||||||
31-May-14 | ||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill [Abstract] | ' | |||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | ' | |||||||||||||||||||||||||||||||||||
7. INTANGIBLE ASSETS AND GOODWILL | ||||||||||||||||||||||||||||||||||||
The changes in intangible assets for fiscal 2014 and the net book value of intangible assets at May 31, 2014 and 2013 were as follows: | ||||||||||||||||||||||||||||||||||||
Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | Weighted | |||||||||||||||||||||||||||||||||
(Dollars in millions) | May 31, | Additions | Retirements | May 31, | May 31, | Expense | Retirements | May 31, | May 31, | May 31, | Average | |||||||||||||||||||||||||
2013 | 2014 | 2013 | 2014 | 2013 | 2014 | Useful Life(1) | ||||||||||||||||||||||||||||||
Software support agreements and related relationships | $ | 5,298 | $ | — | $ | -80 | $ | 5,218 | $ | -3,912 | $ | -571 | $ | 80 | $ | -4,403 | $ | 1,386 | $ | 815 | N.A. | |||||||||||||||
Hardware systems support agreements and related relationships | 817 | 152 | — | 969 | -387 | -143 | — | -530 | 430 | 439 | 9 years | |||||||||||||||||||||||||
Developed technology | 7,466 | 928 | -4,007 | 4,387 | -5,477 | -706 | 4,007 | -2,176 | 1,989 | 2,211 | 7 years | |||||||||||||||||||||||||
Core technology | 2,579 | — | -962 | 1,617 | -1,938 | -318 | 962 | -1,294 | 641 | 323 | N.A. | |||||||||||||||||||||||||
Customer relationships and contract backlog | 2,435 | 131 | -512 | 2,054 | -1,637 | -334 | 512 | -1,459 | 798 | 595 | 4 years | |||||||||||||||||||||||||
SaaS and PaaS agreements and related relationships and other | 1,227 | 562 | — | 1,789 | -155 | -150 | — | -305 | 1,072 | 1,484 | 10 years | |||||||||||||||||||||||||
Trademarks | 635 | 39 | -158 | 516 | -356 | -78 | 158 | -276 | 279 | 240 | 10 years | |||||||||||||||||||||||||
Total intangible assets subject to amortization | 20,457 | 1,812 | -5,719 | 16,550 | -13,862 | -2,300 | 5,719 | -10,443 | 6,595 | 6,107 | 8 years | |||||||||||||||||||||||||
In-process research and development, net | 45 | -15 | — | 30 | — | — | — | — | 45 | 30 | N.A. | |||||||||||||||||||||||||
Total intangible assets, net | $ | 20,502 | $ | 1,797 | $ | -5,719 | $ | 16,580 | $ | -13,862 | $ | -2,300 | $ | 5,719 | $ | -10,443 | $ | 6,640 | $ | 6,137 | ||||||||||||||||
__________ | ||||||||||||||||||||||||||||||||||||
-1 | Represents weighted average useful lives of intangible assets acquired during fiscal 2014. | |||||||||||||||||||||||||||||||||||
Total amortization expense related to our intangible assets was $2.3 billion in fiscal 2014 and $2.4 billion in each of fiscal 2013 and 2012. As of May 31, 2014, estimated future amortization expenses related to intangible assets were as follows (in millions): | ||||||||||||||||||||||||||||||||||||
Fiscal 2015 | $ | 1,934 | ||||||||||||||||||||||||||||||||||
Fiscal 2016 | 1,337 | |||||||||||||||||||||||||||||||||||
Fiscal 2017 | 741 | |||||||||||||||||||||||||||||||||||
Fiscal 2018 | 607 | |||||||||||||||||||||||||||||||||||
Fiscal 2019 | 508 | |||||||||||||||||||||||||||||||||||
Thereafter | 980 | |||||||||||||||||||||||||||||||||||
Total intangible assets subject to amortization | 6,107 | |||||||||||||||||||||||||||||||||||
In-process research and development | 30 | |||||||||||||||||||||||||||||||||||
Total intangible assets, net | $ | 6,137 | ||||||||||||||||||||||||||||||||||
The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, for our operating segments for fiscal 2014 and 2013 were as follows: | ||||||||||||||||||||||||||||||||||||
(Dollars in millions) | New Software Licenses and Cloud Software Subscriptions | Software License Updates and Product Support | Hardware Systems Support | Other(3) | Total | |||||||||||||||||||||||||||||||
Balances as of May 31, 2012 | $ | 7,367 | $ | 12,479 | $ | 1,193 | $ | 4,080 | $ | 25,119 | ||||||||||||||||||||||||||
Allocation of goodwill(1) | 2,346 | — | — | (2,346) | — | |||||||||||||||||||||||||||||||
Goodwill from acquisitions | 933 | 27 | 62 | 1,341 | 2,363 | |||||||||||||||||||||||||||||||
Goodwill adjustments(2) | (113) | (32) | 4 | 2 | (139) | |||||||||||||||||||||||||||||||
Balances as of May 31, 2013 | 10,533 | 12,474 | 1,259 | 3,077 | 27,343 | |||||||||||||||||||||||||||||||
Allocation of goodwill(1) | 875 | — | 380 | -1,255 | — | |||||||||||||||||||||||||||||||
Goodwill from acquisitions | 1,721 | 4 | 436 | 134 | 2,295 | |||||||||||||||||||||||||||||||
Goodwill adjustments(2) | 10 | -6 | 7 | 3 | 14 | |||||||||||||||||||||||||||||||
Balances as of May 31, 2014 | $ | 13,139 | $ | 12,472 | $ | 2,082 | $ | 1,959 | $ | 29,652 | ||||||||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||||||||
-1 | Represents the allocation of goodwill to our operating segments upon completion of our intangible asset valuations. | |||||||||||||||||||||||||||||||||||
-2 | Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period (up to one year from the date of an acquisition). Goodwill adjustments were not significant to our previously reported operating results or financial position. | |||||||||||||||||||||||||||||||||||
-3 | Represents goodwill allocated to our other operating segments and goodwill to be allocated to our operating segments upon completion of our intangible asset valuations, if any. | |||||||||||||||||||||||||||||||||||
. |
NOTES_PAYABLE_AND_OTHER_BORROW
NOTES PAYABLE AND OTHER BORROWINGS | 12 Months Ended | ||||||
31-May-14 | |||||||
Notes Payable and Other Borrowings [Abstract] | ' | ||||||
NOTES PAYABLE AND OTHER BORROWINGS | ' | ||||||
8. NOTES PAYABLE AND OTHER BORROWINGS | |||||||
Notes payable and other borrowings consisted of the following: | |||||||
May 31, | May 31, | ||||||
(Dollars in millions) | 2014 | 2013 | |||||
3.75% senior notes due July 2014, net of fair value adjustments of $8 and $41 as of May 31, 2014 and 2013, respectively(1) | $ | 1,508 | $ | 1,541 | |||
5.25% senior notes due January 2016, net of discount of $2 and $3 as of May 31, 2014 and 2013, respectively | 1,998 | 1,997 | |||||
1.20% senior notes due October 2017, net of discount of $3 each as of May 31, 2014 and 2013 | 2,497 | 2,497 | |||||
5.75% senior notes due April 2018, net of discount of $1 as of May 31, 2013 | 2,500 | 2,499 | |||||
Floating rate senior notes due January 2019 | 500 | — | |||||
2.375% senior notes due January 2019, net of fair value adjustment of $15 and discount of $5 as of May 31, 2014(1) | 1,510 | — | |||||
5.00% senior notes due July 2019, net of discount of $3 and $4 as of May 31, 2014 and 2013, respectively | 1,747 | 1,746 | |||||
3.875% senior notes due July 2020, net of discount of $1 and $2 as of May 31, 2014 and 2013, respectively | 999 | 998 | |||||
2.25% senior notes due January 2021, net of discount of $9 as of May 31, 2014(2) | 1,691 | — | |||||
2.50% senior notes due October 2022, net of discount of $2 each as of May 31, 2014 and 2013 | 2,498 | 2,498 | |||||
3.625% senior notes due July 2023, net of discount of $8 as of May 31, 2014 | 992 | — | |||||
3.125% senior notes due July 2025, net of discount of $3 as of May 31, 2014(2) | 1,017 | — | |||||
6.50% senior notes due April 2038, net of discount of $2 each as of May 31, 2014 and 2013 | 1,248 | 1,248 | |||||
6.125% senior notes due July 2039, net of discount of $7 each as of May 31, 2014 and 2013 | 1,243 | 1,243 | |||||
5.375% senior notes due July 2040, net of discount of $23 and $24 as of May 31, 2014 and 2013, respectively | 2,227 | 2,226 | |||||
Capital leases | — | 1 | |||||
Total borrowings | $ | 24,175 | $ | 18,494 | |||
Notes payable, current and other current borrowings | $ | 1,508 | $ | — | |||
Notes payable, non-current and other non-current borrowings | $ | 22,667 | $ | 18,494 | |||
__________ | |||||||
-1 | Refer to Note 11 for a description of our accounting for fair value hedges. | ||||||
-2 | Euro based notes valued at May 31, 2014 foreign exchange rates (see further discussion below). | ||||||
Senior Notes and Other | |||||||
In July 2013, we issued €2.0 billion ($2.7 billion as of May 31, 2014) of fixed rate senior notes comprised of €1.25 billion of 2.25% notes due January 2021 (2021 Notes) and €750 million of 3.125% notes due July 2025 (2025 Notes, and together with the 2021 Notes, the Euro Notes). The Euro Notes are registered and trade on the New York Stock Exchange. We issued the Euro Notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and future acquisitions. | |||||||
In connection with the issuance of the 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% (see Note 11 for additional information). Further, we designated the 2025 Notes as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in stockholders’ equity caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar. Refer to Note 11 for additional information. | |||||||
In July 2013, we also issued $3.0 billion of senior notes comprised of $500 million of floating rate notes due January 2019 (2019 Floating Rate Notes), $1.5 billion of 2.375% notes due January 2019 (January 2019 Notes) and $1.0 billion of 3.625% notes due July 2023 (2023 Notes). The 2019 Floating Rate Notes bear interest at a floating rate equal to three-month LIBOR plus 0.58% (0.81% as of May 31, 2014) with interest payable quarterly. We issued these senior notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and future acquisitions. | |||||||
In October 2012, we issued $5.0 billion of fixed rate senior notes comprised of $2.5 billion of 1.20% notes due October 2017 (2017 Notes) and $2.5 billion of 2.50% notes due October 2022 (2022 Notes). | |||||||
In July 2010, we issued $3.25 billion of fixed rate senior notes comprised of $1.0 billion of 3.875% notes due July 2020 (2020 Notes) and $2.25 billion of 5.375% notes due July 2040 (2040 Notes, and together with the 2020 Notes, the Original Senior Notes). As part of the offering of the Original Senior Notes, we entered into a registration rights agreement with the initial purchasers for the benefit of the holders of the Original Senior Notes in which we agreed to file with the SEC a registration statement with respect to senior notes identical in all material respects to the Original Senior Notes within fourteen months after the issue date of the Original Senior Notes and on December 16, 2011 we completed a registered offer to exchange the Original Senior Notes for new freely tradable notes having terms substantially identical to the Original Senior Notes. An aggregate of $994 million principal amount of the 2020 Notes and an aggregate of $2.24 billion principal amount of the 2040 Notes were tendered and exchanged in the offer. | |||||||
In July 2009, we issued $4.5 billion of fixed rate senior notes comprised of $1.5 billion of 3.75% notes due July 2014 (2014 Notes), $1.75 billion of 5.00% notes due July 2019 (July 2019 Notes) and $1.25 billion of 6.125% notes due July 2039 (2039 Notes). | |||||||
In April 2008, we issued $5.0 billion of fixed rate senior notes, of which $1.25 billion of 4.95% senior notes was due and paid in April 2013, and $2.5 billion of 5.75% senior notes due April 2018 (2018 Notes) and $1.25 billion of 6.50% senior notes due April 2038 (2038 Notes) remained outstanding as of May 31, 2014. | |||||||
In January 2006, we issued $5.75 billion of senior notes, of which $2.25 billion of 5.00% senior notes was due and paid in January 2011 and $2.0 billion of 5.25% senior notes due January 2016 (2016 Notes) remained outstanding as of May 31, 2014. | |||||||
The effective interest yields of the 2014 Notes, 2016 Notes, 2017 Notes, 2018 Notes, January 2019 Notes, July 2019 Notes, 2020 Notes, 2022 Notes, 2023 Notes, 2025 Notes, 2038 Notes, 2039 Notes and 2040 Notes (collectively and together with the 2021 Notes, the Senior Notes) at May 31, 2014 were 3.75%, 5.32%, 1.24%, 5.76%, 2.44%, 5.05%, 3.93%, 2.51%, 3.73%, 3.17%, 6.52%, 6.19% and 5.45%, respectively. In July 2013, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with the January 2019 Notes so that the interest payable on these notes effectively became variable (0.88% at May 31, 2014; see Note 11 for additional information). In September 2009, we entered into certain 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 (1.29% at May 31, 2014; see Note 11 for additional information). The effective interest yield of the 2021 Notes was 2.33% (3.53% after the economic effects of the cross-currency swap agreements described above and in Note 11). Interest is payable semi-annually for the Senior Notes except for the 2021 Notes and 2025 Notes for which interest is payable annually. We may redeem some or all of the Senior Notes of each series at any time, subject to payment of an applicable make-whole premium. The 2019 Floating Rate Notes may not be redeemed prior to their maturity. | |||||||
The Senior Notes and the 2019 Floating Rate Notes rank pari passu with any other notes we may issue in the future pursuant to our commercial paper program (see additional discussion regarding our commercial paper program below) and all existing and future unsecured senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the Senior Notes and the 2019 Floating Rate Notes and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at May 31, 2014. | |||||||
In the third quarter of fiscal 2012, shortly after the closing of our acquisition of RightNow, we repaid, in full, $255 million of RightNow’s legacy convertible notes. | |||||||
Future principal payments for all of our borrowings at May 31, 2014 were as follows (in millions): | |||||||
Fiscal 2015 | $ | 1,500 | |||||
Fiscal 2016 | 2,000 | ||||||
Fiscal 2017 | — | ||||||
Fiscal 2018 | 5,000 | ||||||
Fiscal 2019 | 2,000 | ||||||
Thereafter | 13,620 | ||||||
Total | $ | 24,120 | |||||
Commercial Paper Program and Commercial Paper Notes | |||||||
On April 22, 2013, pursuant to our existing $3.0 billion commercial paper program which allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws, we entered into new dealer agreements with various banks and a new Issuing and Paying Agency Agreement with JP Morgan Chase Bank, N.A. As of May 31, 2014 and 2013, we did not have any outstanding commercial paper notes. We intend to back-stop any commercial paper notes that we may issue in the future with the 2013 Credit Agreement (see additional details below). | |||||||
Revolving Credit Agreements | |||||||
In April 2013, we entered into a $3.0 billion Revolving Credit Agreement with Wells Fargo Bank, N.A., Bank of America, N.A., BNP Paribas, JPMorgan Chase Bank, N.A. and certain other lenders (the 2013 Credit Agreement). The 2013 Credit Agreement provides for an unsecured 5-year revolving credit facility to be used for general corporate purposes including back-stopping any commercial paper notes that we may issue. Subject to certain conditions stated in the 2013 Credit Agreement, we may borrow, prepay and re-borrow amounts under the 2013 Credit Agreement at any time during the term of the 2013 Credit Agreement. Interest under the 2013 Credit Agreement is based on either (a) a LIBOR-based formula or (b) the Base Rate formula, each as set forth in the 2013 Credit Agreement. Any amounts drawn pursuant to the 2013 Credit Agreement are due on April 20, 2018. No amounts were outstanding pursuant to the 2013 Credit Agreement as of May 31, 2014 and 2013. | |||||||
The 2013 Credit Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that our total net debt to total capitalization ratio not exceed 45% on a consolidated basis. If any of the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the 2013 Credit Agreement may be declared immediately due and payable and the 2013 Credit Agreement may be terminated. We were in compliance with the 2013 Credit Agreement's covenants as of May 31, 2014. | |||||||
On May 29, 2012, we borrowed $1.7 billion pursuant to a revolving credit agreement with JPMorgan Chase Bank, N.A., as initial lender and administrative agent; and J.P. Morgan Securities, LLC, as sole lead arranger and sole bookrunner (the 2012 Credit Agreement). During fiscal 2013, we repaid the $1.7 billion and the 2012 Credit Agreement expired pursuant to its terms. | |||||||
On May 27, 2011, we entered into two revolving credit agreements with BNP Paribas, as initial lender and administrative agent, and BNP Paribas Securities Corp., as sole lead arranger and sole bookrunner (the 2011 Credit Agreements), and borrowed $1.15 billion pursuant to these agreements. During fiscal 2012, we repaid the $1.15 billion and the 2011 Credit Agreements expired pursuant to their terms. |
RESTRUCTURING_ACTIVITIES
RESTRUCTURING ACTIVITIES | 12 Months Ended | ||||||||||||||||||||||||
31-May-14 | |||||||||||||||||||||||||
Restructuring Activities [Abstract] | ' | ||||||||||||||||||||||||
RESTRUCTURING ACTIVITIES | ' | ||||||||||||||||||||||||
9. RESTRUCTURING ACTIVITIES | |||||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan | |||||||||||||||||||||||||
During the first quarter of fiscal 2013, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations (the 2013 Restructuring Plan). Our management subsequently amended the 2013 Restructuring Plan in the third quarter of fiscal 2013 and in the first quarter of fiscal 2014 to reflect additional actions that we expect to take. The total estimated restructuring costs associated with the 2013 Restructuring Plan are $705 million and will be recorded to the restructuring expense line item within our consolidated statements of operations as they are incurred. We recorded $174 million and $325 million of restructuring expenses in connection with the 2013 Restructuring Plan in fiscal 2014 and 2013, respectively, and we expect to incur the majority of the estimated remaining $206 million through the end of fiscal 2015. Any changes to the estimates of executing the 2013 Restructuring Plan will be reflected in our future results of operations. | |||||||||||||||||||||||||
Sun Restructuring Plan | |||||||||||||||||||||||||
During the third quarter of fiscal 2010, our management approved, committed to and initiated a plan to restructure our operations due to our acquisition of Sun Microsystems, Inc. (the Sun Restructuring Plan) in order to improve the cost efficiencies in our merged operations. Restructuring costs associated with the Sun Restructuring Plan were recorded to the restructuring expense line item within our consolidated statements of operations as they were recognized. We recorded $215 million of net restructuring expenses in connection with the Sun Restructuring Plan in fiscal 2012. The execution of the Sun Restructuring Plan was substantially complete as of the end of fiscal 2012. | |||||||||||||||||||||||||
Summary of All Plans | |||||||||||||||||||||||||
Fiscal 2014 Activity | |||||||||||||||||||||||||
Year Ended May 31, 2014 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial Costs(3) | Adj. to Cost(4) | Cash Payments | Others(5) | Accrued | Total Costs Accrued to Date | Total Expected Program Costs | |||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2013(2) | 2014(2) | ||||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 16 | $ | 57 | $ | -8 | $ | -55 | $ | 2 | $ | 12 | $ | 126 | $ | 158 | |||||||||
Software license updates and product support | 1 | 11 | — | -10 | 3 | 5 | 18 | 24 | |||||||||||||||||
Hardware systems business | 24 | 48 | -3 | -52 | 1 | 18 | 139 | 238 | |||||||||||||||||
Services | 18 | 39 | -7 | -39 | — | 11 | 99 | 166 | |||||||||||||||||
General and administrative and other | 12 | 42 | -5 | -39 | 5 | 15 | 117 | 119 | |||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | 71 | $ | 197 | $ | -23 | $ | -195 | $ | 11 | $ | 61 | $ | 499 | $ | 705 | |||||||||
Total other restructuring plans(6) | $ | 179 | $ | 24 | $ | -15 | $ | -58 | $ | -22 | $ | 108 | |||||||||||||
Total restructuring plans | $ | 250 | $ | 221 | $ | -38 | $ | -253 | $ | -11 | $ | 169 | |||||||||||||
Fiscal 2013 Activity | |||||||||||||||||||||||||
Year Ended May 31, 2013 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial | Adj. to | Cash | Others(5) | Accrued | |||||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2012 | Costs(3) | Cost(4) | Payments | 2013(2) | |||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | — | $ | 85 | $ | -8 | $ | -60 | $ | -1 | $ | 16 | |||||||||||||
Software license updates and product support | — | 13 | -6 | -11 | 5 | 1 | |||||||||||||||||||
Hardware systems business | — | 99 | -5 | -68 | -2 | 24 | |||||||||||||||||||
Services | — | 72 | -5 | -50 | 1 | 18 | |||||||||||||||||||
General and administrative and other | — | 81 | -1 | -52 | -16 | 12 | |||||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | — | $ | 350 | $ | -25 | $ | -241 | $ | -13 | $ | 71 | |||||||||||||
Total other restructuring plans(6) | $ | 337 | $ | 53 | $ | -26 | $ | -185 | $ | — | $ | 179 | |||||||||||||
Total restructuring plans | $ | 337 | $ | 403 | $ | -51 | $ | -426 | $ | (13) | $ | 250 | |||||||||||||
Fiscal 2012 Activity | |||||||||||||||||||||||||
Year Ended May 31, 2012 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial | Adj. to | Cash | Others(5) | Accrued | |||||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2011 | Costs(3) | Cost(4) | Payments | 2012 | |||||||||||||||||||||
Sun Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 14 | $ | 46 | $ | -8 | $ | -41 | $ | -2 | $ | 9 | |||||||||||||
Software license updates and product support | 19 | 31 | -2 | -35 | -1 | 12 | |||||||||||||||||||
Hardware systems business | 10 | 34 | 1 | -33 | — | 12 | |||||||||||||||||||
Services | 9 | 32 | -2 | -25 | -2 | 12 | |||||||||||||||||||
General and administrative and other | 100 | 92 | -9 | -129 | -1 | 53 | |||||||||||||||||||
Total Sun Restructuring | $ | 152 | $ | 235 | $ | -20 | $ | -263 | $ | -6 | $ | 98 | |||||||||||||
Total other restructuring plans(6) | $ | 297 | $ | 65 | $ | 15 | $ | -122 | $ | -16 | $ | 239 | |||||||||||||
Total restructuring plans | $ | 449 | $ | 300 | $ | -5 | $ | -385 | $ | -22 | $ | 337 | |||||||||||||
__________ | |||||||||||||||||||||||||
-1 | Restructuring costs recorded for individual line items primarily related to employee severance costs except for general and administrative and other, which also included $46 million and $23 million recorded during fiscal 2013 and 2012, respectively, for facilities related restructuring, contract termination and other costs. | ||||||||||||||||||||||||
-2 | The balances at May 31, 2014 and 2013 included $100 million and $160 million, respectively, recorded in other current liabilities, and $69 million and $90 million, respectively, recorded in other non-current liabilities. | ||||||||||||||||||||||||
-3 | Costs recorded for the respective restructuring plans during the current period presented. | ||||||||||||||||||||||||
-4 | All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments. | ||||||||||||||||||||||||
-5 | Represents foreign currency translation and certain other adjustments. | ||||||||||||||||||||||||
-6 | Other restructuring plans presented in the table above included condensed information for other Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. | ||||||||||||||||||||||||
DEFERRED_REVENUES
DEFERRED REVENUES | 12 Months Ended | ||||||
31-May-14 | |||||||
Deferred Revenues [Abstract] | ' | ||||||
DEFERRED REVENUES | ' | ||||||
10. DEFERRED REVENUES | |||||||
Deferred revenues consisted of the following: | |||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Software license updates and product support | $ | 5,909 | $ | 5,705 | |||
Hardware systems support and other | 664 | 706 | |||||
Services | 364 | 355 | |||||
Cloud SaaS, PaaS and IaaS | 248 | 223 | |||||
New software licenses | 84 | 129 | |||||
Deferred revenues, current | 7,269 | 7,118 | |||||
Deferred revenues, non-current (in other non-current liabilities) | 404 | 312 | |||||
Total deferred revenues | $ | 7,673 | $ | 7,430 | |||
Deferred software license updates and product support revenues and deferred hardware systems support revenues represent customer payments made in advance for support contracts that are typically billed on a per annum basis in advance with corresponding revenues being recognized ratably over the support periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred cloud SaaS, PaaS and IaaS revenues typically result from our cloud-based offerings that are typically billed in advance and recognized over the corresponding contractual term. Deferred new software licenses revenues typically result from undelivered products or specified enhancements, customer specific acceptance provisions, customer payments made in advance for time-based license arrangements and software license transactions that cannot be segmented from undelivered consulting or other services. | |||||||
In connection with our acquisitions, we have estimated the fair values of the cloud SaaS and PaaS, software license updates and product support, and hardware systems support obligations, amongst others, assumed from our acquired companies. We generally have estimated the fair values of these obligations assumed using a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related 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 these acquired obligations. These aforementioned fair value adjustments recorded for obligations assumed from our acquisitions reduced the cloud SaaS and PaaS, software license updates and product support and hardware systems support deferred revenues balances that we recorded as liabilities from these acquisitions and also reduced the resulting revenues that we recognized or will recognize over the terms of the acquired obligations during the post-combination periods. |
DERIVATIVE_FINANCIAL_INSTRUMEN
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||||
31-May-14 | |||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | ||||||||||||||
11. DERIVATIVE FINANCIAL INSTRUMENTS | |||||||||||||||
Fair Value Hedges—Interest Rate Swap Agreements | |||||||||||||||
In July 2013, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with our January 2019 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. In September 2009, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with our 2014 Notes so that the interest payable on these notes effectively became variable based on LIBOR. The critical terms of the interest rate swap agreements and the January 2019 Notes and 2014 Notes that the interest rate swap agreements pertain to match, including the notional amounts and maturity dates. | |||||||||||||||
We have designated the aforementioned interest rate swap agreements as qualifying hedging instruments and are accounting for them as fair value hedges pursuant to ASC 815. These transactions are characterized as fair value hedges for financial accounting purposes because they protect us against changes in the fair values of certain of our fixed rate borrowings due to benchmark interest rate movements. The changes in fair values of these interest rate swap agreements are recognized as interest expense in our consolidated statements of operations with the corresponding amounts included in prepaid expenses and other current assets or other current liabilities for the 2014 Notes, and other assets or other non-current liabilities for the January 2019 Notes in our consolidated balance sheets. The amount of net gain (loss) attributable to the risk being hedged is recognized as interest expense in our consolidated statements of operations with the corresponding amount included in notes payable, current and other current borrowings for the 2014 Notes, and notes payable and other non-current borrowings for the January 2019 Notes. The periodic interest settlements for the interest rate swap agreements for the 2014 Notes and January 2019 Notes are recorded as interest expense. | |||||||||||||||
We do not use any interest rate swap agreements for trading purposes. | |||||||||||||||
Cash Flow Hedges—Cross Currency Swap Agreements | |||||||||||||||
In connection with the issuance of the 2021 Notes, we entered into certain cross-currency swap agreements to manage the related foreign currency exchange risk by effectively converting the fixed-rate, Euro denominated 2021 Notes, including the annual interest payments and the payment of principal at maturity, to fixed-rate, U.S. Dollar denominated debt. The economic effect of the swap agreements was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the 2021 Notes by fixing the principal amount of the 2021 Notes at $1.6 billion with a fixed annual interest rate of 3.53%. We have designated these cross-currency swap agreements as qualifying hedging instruments and are accounting for these as cash flow hedges pursuant to ASC 815. The critical terms of the cross-currency swap agreements correspond to the 2021 Notes, including the annual interest payments being hedged, and the cross-currency swap agreements mature at the same time as the 2021 Notes. | |||||||||||||||
We used the hypothetical derivative method to measure the effectiveness of our cross-currency swap agreements. The fair values of these cross-currency swap agreements are recognized as other assets or other non-current liabilities in our consolidated balance sheets. The effective portions of the changes in fair values of these cross-currency swap agreements are reported in accumulated other comprehensive loss in our consolidated balance sheets and an amount is reclassified out of accumulated other comprehensive loss into non-operating (expense) income, net in the same period that the carrying value of the Euro denominated 2021 Notes is remeasured and the interest expense is recognized. The ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, is recorded immediately to non-operating (expense) income, net. We evaluate the effectiveness of our cross-currency swap agreements on a quarterly basis. We did not record any ineffectiveness during fiscal 2014. | |||||||||||||||
We do not use any cross-currency swap agreements for trading purposes. | |||||||||||||||
Net Investment Hedge—Foreign Currency Borrowings | |||||||||||||||
In July 2013, we designated our Euro denominated 2025 Notes as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in stockholders’ equity caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar. | |||||||||||||||
We used the spot method to measure the effectiveness of our net investment hedge. Under this method, for each reporting period, the change in the carrying value of the Euro denominated 2025 Notes due to remeasurement of the effective portion is reported in accumulated other comprehensive loss on our consolidated balance sheet and the remaining change in the carrying value of the ineffective portion, if any, is recognized in non-operating (expense) income, net in our consolidated statements of operations. We evaluate the effectiveness of our net investment hedge at the beginning of every quarter. We did not record any ineffectiveness during fiscal 2014. | |||||||||||||||
Foreign Currency Forward Contracts Not Designated as Hedges | |||||||||||||||
We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. We may suspend this program from time to time. Our foreign currency exposures typically arise from intercompany sublicense fees, intercompany loans and other intercompany transactions that are generally expected to be cash settled in the near term. Our foreign currency forward contracts are generally short-term in duration. Our ultimate realized gain or loss with respect to currency fluctuations will generally depend on the size and type of cross-currency exposures that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized and unrealized gains or losses on foreign currency forward contracts to offset these exposures and other factors. | |||||||||||||||
We neither use these foreign currency forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to ASC 815. Accordingly, we recorded the fair values of these contracts as of the end of our reporting period to our consolidated balance sheet with changes in fair values recorded to our consolidated statement of operations. The balance sheet classification for the fair values of these forward contracts is prepaid expenses and other current assets for a net unrealized gain position and other current liabilities for a net unrealized loss position. The statement of operations classification for changes in fair values of these forward contracts is non-operating (expense) income, net, for both realized and unrealized gains and losses. | |||||||||||||||
As of May 31, 2014 and 2013, respectively, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies were $3.6 billion and $3.0 billion, respectively, and the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were $2.0 billion and $1.1 billion, respectively. The fair values of our outstanding foreign currency forward contracts were nominal at May 31, 2014 and 2013. | |||||||||||||||
Included in our non-operating (expense) income, net were $(69) million, $(64) million and $43 million of net (losses) gains related to these forward contracts for the years ended May 31, 2014, 2013 and 2012, respectively. | |||||||||||||||
The effects of derivative and non-derivative instruments designated as hedges on our consolidated financial statements were as follows as of or for each of the respective periods presented below (amounts presented exclude any income tax effects): | |||||||||||||||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets | |||||||||||||||
31-May-14 | 31-May-13 | ||||||||||||||
(in millions) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Interest rate swap agreements designated as fair value hedges | Other assets | $ | 15 | Not applicable | $ | — | |||||||||
Interest rate swap agreements designated as fair value hedges | Prepaid expenses and | $ | 8 | Other assets | $ | 41 | |||||||||
other current assets | |||||||||||||||
Cross-currency swap agreements designated as cash flow hedges | Other assets | $ | 74 | Not applicable | $ | — | |||||||||
Foreign currency borrowings designated as net investment hedge | Notes payable and other | $ | (1,116) | Not applicable | $ | — | |||||||||
non-current borrowings | |||||||||||||||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) | |||||||||||||||
Amount of Gain (Loss) Recognized in Accumulated OCL (Effective Portion) | Location and Amount of Gain | ||||||||||||||
Reclassified from Accumulated OCL | |||||||||||||||
into Income (Effective Portion) | |||||||||||||||
(in millions) | Year Ended | Year Ended | |||||||||||||
31-May-14 | 31-May-14 | ||||||||||||||
Cross-currency swap agreements designated as cash flow hedges | $ | 74 | Non-operating (expense) income, net | $ | 69 | ||||||||||
Foreign currency borrowings designated as net investment hedge | $ | (34) | Not applicable | $ | — | ||||||||||
Location and Amount of Loss | Location and Amount of Gain on | ||||||||||||||
Recognized in Income on Derivative | Hedged Item Recognized in Income | ||||||||||||||
Attributable to Risk Being Hedged | |||||||||||||||
Year Ended | Year Ended | ||||||||||||||
May 31, | May 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Interest rate swap agreements designated as fair value hedges | Interest expense | $ | (18) | $ | (28) | Interest expense | $ | 18 | $ | 28 | |||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | |||
31-May-14 | ||||
Commitments and Contingencies [Abstract] | ' | |||
COMMITMENTS AND CONTINGENCIES | ' | |||
12. COMMITMENTS AND CONTINGENCIES | ||||
Lease Commitments | ||||
We lease certain facilities, furniture and equipment under operating leases. As of May 31, 2014, future minimum annual operating lease payments and future minimum payments to be received from non-cancelable subleases were as follows: | ||||
(in millions) | ||||
Fiscal 2015 | $ | 373 | ||
Fiscal 2016 | 304 | |||
Fiscal 2017 | 230 | |||
Fiscal 2018 | 168 | |||
Fiscal 2019 | 120 | |||
Thereafter | 203 | |||
Future minimum operating lease payments | 1,398 | |||
Less: minimum payments to be received from non-cancelable subleases | -63 | |||
Total future minimum operating lease payments, net | $ | 1,335 | ||
Lease commitments included future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities, as discussed in Note 9. We have approximately $112 million in facility obligations, net of estimated sublease income and other costs, in accrued restructuring for these locations in our consolidated balance sheet at May 31, 2014. | ||||
Rent expense was $278 million, $313 million and $329 million for fiscal 2014, 2013 and 2012, respectively, net of sublease income of approximately $55 million, $69 million and $89 million, respectively. Certain lease agreements contain renewal options providing for extensions of the lease terms. | ||||
Unconditional Obligations | ||||
In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers, which are 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 components for our hardware systems 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 amounts below. 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 below as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a meaningful way. | ||||
As of May 31, 2014, our unconditional purchase and certain other obligations were as follows (in millions): | ||||
Fiscal 2015 | $ | 469 | ||
Fiscal 2016 | 28 | |||
Fiscal 2017 | 12 | |||
Fiscal 2018 | 1 | |||
Fiscal 2019 | — | |||
Thereafter | — | |||
Total | $ | 510 | ||
We have a commitment to acquire certain companies for cash consideration that we expect to pay upon the closing of these acquisitions. As described in Note 8 and Note 11 above, as of May 31, 2014 we have notes payable and other borrowings outstanding of $24.2 billion that mature at various future dates and derivative financial instruments outstanding that we leverage to manage certain risks and exposures. | ||||
Guarantees | ||||
Our software and hardware systems product sales agreements generally include certain provisions for indemnifying customers against liabilities if our products infringe a third party’s intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any material liabilities related to such obligations in our consolidated financial statements. Certain of our product sales agreements also include provisions indemnifying customers against liabilities in the event we breach confidentiality or service level requirements. It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. | ||||
Our software license and hardware systems products agreements also generally include a warranty that our products will substantially operate as described in the applicable program documentation for a period of one year after delivery. We also warrant that services we perform will be provided in a manner consistent with industry standards for a period of 90 days from performance of the service. | ||||
We occasionally are required, for various reasons, to enter into financial guarantees with third parties in the ordinary course of our business including, among others, guarantees related to foreign exchange trades, taxes, import licenses and letters of credit on behalf of parties with whom we conduct business. Such agreements have not had a material effect on our results of operations, financial position or cash flows. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||
31-May-14 | |||||||
Stockholders' Equity [Abstract] | ' | ||||||
STOCKHOLDERS' EQUITY | ' | ||||||
13. STOCKHOLDERS’ EQUITY | |||||||
Stock Repurchases | |||||||
Our Board of Directors has approved a program for us to repurchase shares of our common stock. On June 20, 2013, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $12.0 billion. Approximately $4.3 billion remained available for stock repurchases as of May 31, 2014, pursuant to our stock repurchase program. We repurchased 280.4 million shares for $9.8 billion (including 2.2 million shares for $94 million that were repurchased but not settled), 346.1 million shares for $11.0 billion and 207.3 million shares for $6.0 billion in fiscal 2014, 2013 and 2012, respectively, under the stock repurchase program. | |||||||
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 | |||||||
During fiscal 2014, 2013 and 2012, our Board of Directors declared cash dividends of $0.48, $0.30 and $0.24 per share of our outstanding common stock, respectively, which we paid during the same period. | |||||||
In June 2014, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our outstanding common stock payable on July 30, 2014 to stockholders of record as of the close of business on July 9, 2014. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. | |||||||
Accumulated Other Comprehensive Loss | |||||||
The following table summarizes, as of each balance sheet date, the components of our accumulated other comprehensive loss, net of income taxes: | |||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Foreign currency translation losses and other, net | $ | (81) | $ | (3) | |||
Unrealized losses on defined benefit plans, net | (153) | (176) | |||||
Unrealized gains on marketable securities, net | 65 | 80 | |||||
Unrealized gains on cash flow hedges, net | 5 | — | |||||
Total accumulated other comprehensive loss | $ | (164) | $ | (99) | |||
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
Employee Benefit Plans [Abstract] | ' | ||||||||||||
EMPLOYEE BENEFIT PLANS | ' | ||||||||||||
14. EMPLOYEE BENEFIT PLANS | |||||||||||||
Stock-based Compensation Plans | |||||||||||||
Stock Option Plans | |||||||||||||
In fiscal 2001, we adopted the 2000 Long-Term Equity Incentive Plan, which provides for the issuance of non-qualified stock options and incentive stock options, as well as stock purchase rights, stock appreciation rights, and long-term performance awards, including restricted stock-based awards, to our eligible employees, officers and directors who are also employees or consultants, independent consultants and advisers. In fiscal 2011, our stockholders, upon the recommendation of our Board of Directors, approved the adoption of the Amended and Restated 2000 Long-Term Equity Incentive Plan (the 2000 Plan), which extended the termination date of the 2000 Plan by ten years and increased the number of authorized shares of stock that may be issued by 388,313,015 shares. In fiscal 2014, our stockholders, upon the recommendation of our Board of Directors, approved a further increase in the number of authorized shares of stock that may be issued under the 2000 Plan by 305,000,000 shares. Under the terms of the 2000 Plan, options to purchase common stock are granted at not less than fair market value, become exercisable as established by the Board (generally 25% annually over four years under our current practice) and generally expire no more than ten years from the date of grant. As of May 31, 2014, options to purchase 448 million shares of common stock were outstanding under the 2000 Plan, of which 183 million were vested. As of May 31, 2014, approximately 495 million shares of common stock were available for future awards under the 2000 Plan. To date, we have not issued any stock purchase rights, stock appreciation rights, restricted stock-based awards or long-term performance awards under the 2000 Plan. | |||||||||||||
In fiscal 1993, the Board adopted the 1993 Directors’ Stock Option Plan (the Directors’ Plan), which provides for the issuance of non-qualified stock options to non-employee directors. The Directors’ Plan has from time to time been amended and restated. Under the terms of the Directors’ Plan, options to purchase 10 million shares of common stock were reserved for issuance (including a fiscal 2013 amendment to increase the number of shares of our common stock reserved for issuance by 2 million shares), options are granted at not less than fair market value, become exercisable over four years and expire no more than ten years from the date of grant. The Directors’ Plan provides for automatic grants of options to each non-employee director upon first becoming a director and thereafter on an annual basis, as well as automatic nondiscretionary grants for chairing or vice chairing certain Board committees. The Board will determine the particular terms of any such stock awards at the time of grant, but the terms will be consistent with those of options granted under the Directors’ Plan with respect to vesting or forfeiture schedules and treatment on termination of status as a director. As of May 31, 2014, options to purchase approximately 3 million shares of common stock were outstanding under the 1993 Directors’ Plan, of which approximately 2 million were vested. As of May 31, 2014, approximately 2 million shares were available for future option awards under this plan. | |||||||||||||
In connection with certain of our acquisitions, we assumed certain outstanding stock options and other restricted stock-based awards of each acquiree’s respective stock plans. These stock options and other restricted stock-based awards generally retain all of the rights, terms and conditions of the respective plans under which they were originally granted. As of May 31, 2014, stock options to purchase 11 million shares of common stock and 1 million shares of restricted stock-based awards were outstanding under these plans. | |||||||||||||
The following table summarizes stock option activity for our last three fiscal years ended May 31, 2014: | |||||||||||||
Options Outstanding | |||||||||||||
(in millions, except exercise price) | Shares Under Option | Weighted Average Exercise Price | |||||||||||
Balance, May 31, 2011 | 354 | $ | 19.53 | ||||||||||
Granted | 112 | $ | 32.05 | ||||||||||
Assumed | 8 | $ | 12.17 | ||||||||||
Exercised | (39) | $ | 16.61 | ||||||||||
Canceled | (13) | $ | 29.31 | ||||||||||
Balance, May 31, 2012 | 422 | $ | 22.66 | ||||||||||
Granted | 119 | $ | 29.9 | ||||||||||
Assumed | 9 | $ | 32.52 | ||||||||||
Exercised | (83) | $ | 17.38 | ||||||||||
Canceled | (20) | $ | 28.94 | ||||||||||
Balance, May 31, 2013 | 447 | $ | 25.48 | ||||||||||
Granted | 131 | $ | 31.02 | ||||||||||
Assumed | 5 | $ | 9.02 | ||||||||||
Exercised | (95) | $ | 21.51 | ||||||||||
Canceled | (26) | $ | 30.6 | ||||||||||
Balance, May 31, 2014 | 462 | $ | 27.37 | ||||||||||
Options outstanding that have vested and that are expected to vest as of May 31, 2014 were as follows: | |||||||||||||
Outstanding Options | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | In-the-Money Options as of May 31, 2014 | Aggregate Intrinsic Value(1) | |||||||||
(in millions) | (in years) | (in millions) | (in millions) | ||||||||||
Vested | 192 | $ | 23.44 | 5.12 | 190 | $ | 3,608 | ||||||
Expected to vest(2) | 241 | $ | 30.07 | 8.19 | 241 | 2,885 | |||||||
Total | 433 | $ | 27.13 | 6.83 | 431 | $ | 6,493 | ||||||
__________ | |||||||||||||
(1) | The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2014 of $42.02 and the exercise prices for all “in-the-money” options outstanding, excluding tax effects. | ||||||||||||
(2) | The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2014 was approximately $1.2 billion and is expected to be recognized over a weighted average period of 2.51 years. Approximately 29 million shares outstanding as of May 31, 2014 were not expected to vest. | ||||||||||||
Stock-Based Compensation Expense and Valuation of Stock Options | |||||||||||||
Stock-based compensation is included in the following operating expense line items in our consolidated statements of operations: | |||||||||||||
Year Ended May 31, | |||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||
Sales and marketing | $ | 165 | $ | 137 | $ | 115 | |||||||
Cloud software-as-a-service and platform-as-a-service | 8 | 10 | 7 | ||||||||||
Cloud infrastructure-as-a-service | 4 | 8 | 6 | ||||||||||
Software license updates and product support | 22 | 20 | 18 | ||||||||||
Hardware systems products | 5 | 3 | 1 | ||||||||||
Hardware systems support | 6 | 5 | 5 | ||||||||||
Services | 29 | 23 | 17 | ||||||||||
Research and development | 385 | 352 | 295 | ||||||||||
General and administrative | 171 | 164 | 162 | ||||||||||
Acquisition related and other | 10 | 33 | 33 | ||||||||||
Total stock-based compensation | 805 | 755 | 659 | ||||||||||
Estimated income tax benefit included in provision for income taxes | -260 | -243 | -216 | ||||||||||
Total stock-based compensation, net of estimated income tax benefit | $ | 545 | $ | 512 | $ | 443 | |||||||
We estimate the fair values of our share-based payments using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair values of stock options. 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 how much we recognize as stock-based compensation expense. The fair values of our stock options were estimated at the grant dates or at the acquisition dates for options assumed in a business combination. The weighted average input assumptions used and resulting fair values of our stock options were as follows for fiscal 2014, 2013 and 2012: | |||||||||||||
Year Ended May 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected life (in years) | 4.9 | 5.0 | 5.1 | ||||||||||
Risk-free interest rate | 1.30% | 0.70% | 1.60% | ||||||||||
Volatility | 27% | 31% | 30% | ||||||||||
Dividend yield | 1.50% | 0.80% | 0.80% | ||||||||||
Weighted-average fair value per share | $ | 7.47 | $ | 7.99 | $ | 9.30 | |||||||
The expected life input is based on historical exercise patterns and post-vesting termination behavior, the risk-free interest rate input is based on U.S. Treasury instruments, the annualized dividend yield input is based on the per share dividend declared by our Board of Directors and the volatility input is calculated based on the implied volatility of our publicly traded options. | |||||||||||||
Tax Benefits from Exercise of Stock Options and Vesting of Restricted Stock-Based Awards | |||||||||||||
Total cash received as a result of option exercises was approximately $2.0 billion, $1.4 billion and $622 million for fiscal 2014, 2013 and 2012, respectively. The aggregate intrinsic value of options exercised and vesting of restricted stock-based awards was $1.5 billion, $1.3 billion and $587 million for fiscal 2014, 2013 and 2012, respectively. In connection with these exercises and vesting of restricted stock-based awards, the tax benefits realized by us were $480 million, $410 million and $182 million for fiscal 2014, 2013 and 2012, respectively. Of the total tax benefits received, we classified excess tax benefits from stock-based compensation of $250 million, $241 million and $97 million as cash flows from financing activities rather than cash flows from operating activities for fiscal 2014, 2013 and 2012, respectively. | |||||||||||||
Employee Stock Purchase Plan | |||||||||||||
We have an Employee Stock Purchase Plan (Purchase Plan) that allows employees to purchase shares of common stock at a price per share that is 95% of the fair market value of Oracle stock as of the end of the semi-annual option period. As of May 31, 2014, 60 million shares were reserved for future issuances under the Purchase Plan. We issued 3 million shares under the Purchase Plan in each of fiscal 2014 and 2013 and 4 million shares in fiscal 2012. | |||||||||||||
Defined Contribution and Other Postretirement Plans | |||||||||||||
We offer various defined contribution plans for our U.S. and non-U.S. employees. Total defined contribution plan expense was $357 million, $353 million and $344 million for fiscal 2014, 2013 and 2012, respectively. The number of plan participants in our benefit plans has generally increased in recent years primarily as a result of additional eligible employees from our acquisitions. | |||||||||||||
In the United States, regular employees can participate in the Oracle Corporation 401(k) Savings and Investment Plan (Oracle 401(k) Plan). Participants can generally contribute up to 40% of their eligible compensation on a per-pay-period basis as defined by the Oracle 401(k) Plan document or by the section 402(g) limit as defined by the United States Internal Revenue Service (IRS). We match a portion of employee contributions, currently 50% up to 6% of compensation each pay period, subject to maximum aggregate matching amounts. Our contributions to the Oracle 401(k) Plan, net of forfeitures, were $134 million, $129 million and $125 million in fiscal 2014, 2013 and 2012, respectively. | |||||||||||||
We also offer non-qualified deferred compensation plans to certain key employees whereby they may defer a portion of their annual base and/or variable compensation until retirement or a date specified by the employee in accordance with the plans. Deferred compensation plan assets and liabilities were each approximately $367 million as of May 31, 2014 and were each approximately $320 million as of May 31, 2013 and were presented in other assets and other non-current liabilities in the accompanying consolidated balance sheets. | |||||||||||||
We sponsor certain defined benefit pension plans that are offered primarily by certain of our foreign subsidiaries. Many of these plans were assumed through our acquisitions or are required by local regulatory requirements. We may deposit funds for these plans with insurance companies, third party trustees, or into government-managed accounts consistent with local regulatory requirements, as applicable. Our total defined benefit plan pension expenses were $64 million, $81 million and $55 million for fiscal 2014, 2013 and 2012, respectively. The aggregate projected benefit obligation and aggregate net liability (funded status) of our defined benefit plans as of May 31, 2014 was $853 million and $436 million, respectively, and as of May 31, 2013 was $734 million and $364 million, respectively. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Income Taxes [Abstract] | ' | |||||||||
INCOME TAXES | ' | |||||||||
15. INCOME TAXES | ||||||||||
The following is a geographical breakdown of income before the provision for income taxes: | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Domestic | $ | 5,397 | $ | 6,614 | $ | 6,284 | ||||
Foreign | 8,307 | 7,284 | 6,678 | |||||||
Income before provision for income taxes | $ | 13,704 | $ | 13,898 | $ | 12,962 | ||||
The provision for income taxes consisted of the following: | ||||||||||
Year Ended May 31, | ||||||||||
(Dollars in millions) | 2014 | 2013 | 2012 | |||||||
Current provision: | ||||||||||
Federal | $ | 1,613 | $ | 1,720 | $ | 1,611 | ||||
State | 337 | 254 | 257 | |||||||
Foreign | 1,047 | 1,116 | 1,104 | |||||||
Total current provision | $ | 2,997 | $ | 3,090 | $ | 2,972 | ||||
Deferred (benefit) provision: | ||||||||||
Federal | $ | -68 | $ | (179) | $ | 267 | ||||
State | -100 | 82 | 14 | |||||||
Foreign | -80 | (20) | (272) | |||||||
Total deferred (benefit) provision | $ | -248 | $ | (117) | $ | 9 | ||||
Total provision for income taxes | $ | 2,749 | $ | 2,973 | $ | 2,981 | ||||
Effective income tax rate | 20.10% | 21.40% | 23.00% | |||||||
The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Tax provision at statutory rate | $ | 4,796 | $ | 4,865 | $ | 4,537 | ||||
Foreign earnings at other than United States rates | (1,790) | (1,637) | (1,474) | |||||||
State tax expense, net of federal benefit | 154 | 299 | 171 | |||||||
Settlements and releases from judicial decisions and statute expirations, net | (168) | (144) | (132) | |||||||
Domestic production activity deduction | (174) | (155) | (178) | |||||||
Other, net | (69) | (255) | 57 | |||||||
Total provision for income taxes | $ | 2,749 | $ | 2,973 | $ | 2,981 | ||||
The components of our deferred tax liabilities and assets were as follows: | ||||||||||
May 31, | ||||||||||
(in millions) | 2014 | 2013 | ||||||||
Deferred tax liabilities: | ||||||||||
Unrealized gain on stock | $ | -130 | $ | (130) | ||||||
Acquired intangible assets | -1,804 | (1,795) | ||||||||
Unremitted earnings | -510 | (249) | ||||||||
Total deferred tax liabilities | $ | -2,444 | $ | (2,174) | ||||||
Deferred tax assets: | ||||||||||
Accruals and allowances | $ | 440 | $ | 481 | ||||||
Employee compensation and benefits | 1,062 | 997 | ||||||||
Differences in timing of revenue recognition | 210 | 158 | ||||||||
Depreciation and amortization | 243 | 243 | ||||||||
Tax credit and net operating loss carryforwards | 2,810 | 2,706 | ||||||||
Other | 96 | 44 | ||||||||
Total deferred tax assets | $ | 4,861 | $ | 4,629 | ||||||
Valuation allowance | $ | -1,053 | $ | (999) | ||||||
Net deferred tax assets | $ | 1,364 | $ | 1,456 | ||||||
Recorded as: | ||||||||||
Current deferred tax assets | $ | 914 | $ | 974 | ||||||
Non-current deferred tax assets | 837 | 766 | ||||||||
Current deferred tax liabilities (in other current liabilities) | -129 | (111) | ||||||||
Non-current deferred tax liabilities (in other non-current liabilities) | -258 | (173) | ||||||||
Net deferred tax assets | $ | 1,364 | $ | 1,456 | ||||||
We provide for United States income taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries unless they are considered indefinitely reinvested outside the United States. During the third quarter of fiscal 2012, we increased the number of foreign subsidiaries in countries with lower statutory rates than the United States, the earnings of which we consider to be indefinitely reinvested outside the United States. If these subsidiaries generate sufficient earnings in the future, our provision for income taxes may continue to be favorably affected to a meaningful extent, although any such favorable effects could be significantly reduced under a variety of circumstances. At May 31, 2014, the amount of temporary differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which United States income taxes have not been provided was approximately $32.4 billion and $6.9 billion, respectively. If these undistributed earnings were repatriated to the United States, or if the other outside basis differences were recognized in a taxable transaction, they would generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise taxable transaction. At May 31, 2014, assuming a full utilization of the foreign tax credits, the potential net deferred tax liability associated with these temporary differences of undistributed earnings and other outside basis temporary differences would be approximately $10.0 billion and $2.2 billion, respectively. | ||||||||||
Our net deferred tax assets were $1.4 billion and $1.5 billion as of May 31, 2014 and 2013, respectively. We believe it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change. | ||||||||||
The valuation allowance was $1.1 billion and $999 million at May 31, 2014 and 2013, respectively. Substantially all of the valuation allowances as of May 31, 2014 and 2013 relate to tax assets established in purchase accounting. Any subsequent reduction of that portion of the valuation allowance and the recognition of the associated tax benefits associated with our acquisitions will be recorded to our provision for income taxes subsequent to our final determination of the valuation allowance or the conclusion of the measurement period (as defined above), whichever comes first. | ||||||||||
At May 31, 2014, we had federal net operating loss carryforwards of approximately $1.0 billion. These losses expire in various years between fiscal 2016 and fiscal 2033, and are subject to limitations on their utilization. We had state net operating loss carryforwards of approximately $2.8 billion at May 31, 2014, which expire between fiscal 2015 and fiscal 2033, and are subject to limitations on their utilization. We had total foreign net operating loss carryforwards of approximately $1.8 billion at May 31, 2014, which are subject to limitations on their utilization. Approximately $1.7 billion of these foreign net operating losses are not currently subject to expiration dates. The remainder of the foreign net operating losses, approximately $143 million, expire between fiscal 2015 and fiscal 2034. We had tax credit carryforwards of approximately $1.1 billion at May 31, 2014, which are subject to limitations on their utilization. Approximately $614 million of these tax credit carryforwards are not currently subject to expiration dates. The remainder of the tax credit carryforwards, approximately $478 million, expire in various years between fiscal 2015 and fiscal 2033. | ||||||||||
We classify our unrecognized tax benefits as either current or non-current income taxes payable in the accompanying consolidated balance sheets. The aggregate changes in the balance of our gross unrecognized tax benefits, including acquisitions, were as follows: | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Gross unrecognized tax benefits as of June 1 | $ | 3,601 | $ | 3,276 | $ | 3,160 | ||||
Increases related to tax positions from prior fiscal years | 94 | 279 | 99 | |||||||
Decreases related to tax positions from prior fiscal years | (116) | (125) | (169) | |||||||
Increases related to tax positions taken during current fiscal year | 307 | 312 | 522 | |||||||
Settlements with tax authorities | (2) | (71) | (187) | |||||||
Lapses of statutes of limitation | (53) | (71) | (84) | |||||||
Other, net | 7 | 1 | (65) | |||||||
Total gross unrecognized tax benefits as of May 31 | $ | 3,838 | $ | 3,601 | $ | 3,276 | ||||
As of May 31, 2014, $2.6 billion of unrecognized benefits would affect our effective tax rate if recognized. We recognized interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations of $24 million, $31 million and $46 million during fiscal 2014, 2013 and 2012, respectively. Interest and penalties accrued as of May 31, 2014 and 2013 were $693 million and $666 million, 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 2013. Many issues are at an advanced stage in the examination process, the most significant of which include the deductibility of certain royalty payments, transfer pricing, extraterritorial income exemptions, domestic production activity, foreign tax credits, and research and development credits taken. Other issues are related to years with expiring statutes of limitation. With all of these domestic audit issues considered in the aggregate, we believe it was reasonably possible that, as of May 31, 2014, the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months by as much as $460 million ($364 million net of offsetting tax benefits). Our U.S. federal and, with some exceptions, our state income tax returns have been examined for all years prior to fiscal 2003 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 our unrecognized tax benefits. We believe it was reasonably possible that, as of May 31, 2014, the gross unrecognized tax benefits, could decrease (whether by payment, release, or a combination of both) by as much as $190 million ($142 million net of offsetting tax benefits) in the next 12 months, related primarily to transfer pricing. Other issues are related to years with expiring statutes of limitation. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 1997. | ||||||||||
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 possible outcomes. | ||||||||||
We previously negotiated three successive unilateral Advance Pricing Agreements with the 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 were effective for fiscal years through May 31, 2006. We have reached final agreement with the IRS for renewal of this Advance Pricing Agreement for the years ending May 31, 2007 through May 31, 2013. However, these agreements do not cover substantial elements of our transfer pricing and do not bind tax authorities outside the United States. We have finalized bilateral Advance Pricing Agreements, which are effective for the years ending May 31, 2004 through May 31, 2006 and May 31, 2007 through May 31, 2013. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||||
31-May-14 | |||||||||||||||||||
Segment Information [Abstract] | ' | ||||||||||||||||||
SEGMENT INFORMATION | ' | ||||||||||||||||||
16. SEGMENT INFORMATION | |||||||||||||||||||
ASC 280, Segment Reporting, 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. | |||||||||||||||||||
During the fourth quarter of fiscal 2014, we added a reportable segment, cloud infrastructure-as-a-service, as a result of the reorganization of financial information presented to our chief operating decision maker for operational decision and resource allocation purposes. As a result, we reclassified certain revenues and expenses for all periods presented within this note to conform to the current presentation. | |||||||||||||||||||
We have three businesses—software and cloud, hardware systems and services—which are further divided into certain operating segments. Our software and cloud business is comprised of three operating segments: (1) new software licenses and cloud software subscriptions, which includes our cloud SaaS and PaaS offerings, (2) cloud infrastructure-as-a-service and (3) software license updates and product support. Our hardware systems business is comprised of two operating segments: (1) hardware systems products and (2) hardware systems support. All other operating segments are combined under our services business. | |||||||||||||||||||
The new software licenses and cloud software subscriptions line of business is engaged in the licensing of our database and middleware software, as well as our application software, and providing access to a broad range of our software through Oracle Cloud SaaS and PaaS offerings on a subscription basis via a cloud-based IT environment that we manage, host and support. | |||||||||||||||||||
The cloud infrastructure-as-a-service line of business provides deployment and management offerings for our software and hardware and related IT infrastructure including virtual machine instances that are subscription-based and designed for computing and reliable and secure object storage; Oracle Engineered Systems hardware and related support that are deployed in our customers’ data centers for a monthly fee; and comprehensive software and hardware management and maintenance services for customer IT infrastructure for a fee for a stated term that is hosted at our data center facilities, select partner data centers or physically on-premise at customer facilities. | |||||||||||||||||||
The software license updates and product support line of business provides customers with rights to software product upgrades and maintenance releases, patches released, internet access to technical content, as well as internet and telephone access to technical support personnel during the support period. | |||||||||||||||||||
The hardware systems products line of business consists primarily of servers, storage, networking, virtualization software, operating systems including the Oracle Solaris Operating System and management software to support diverse IT environments, including cloud computing environments. As a part of this line of business, we offer our Oracle Engineered Systems, including Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, Oracle Exalytics In-Memory Machine, Oracle SuperCluster, Oracle Database Appliance, and Oracle Big Data Appliance, which are the core building blocks for Oracle's data center and cloud computing products and services. | |||||||||||||||||||
Our hardware systems support line of business provides customers with software updates for the software components that are essential to the functionality of our server and storage products, such as Oracle Solaris and certain other software products, and can include product repairs, maintenance services and technical support services. | |||||||||||||||||||
Our services business is comprised of the remainder of our operating segments and offers consulting, advanced customer support services and education services. Our consulting line of business primarily provides services to customers in business and IT strategy alignment, enterprise architecture planning and design, initial product implementation and integration and ongoing product enhancements and upgrades. Advanced customer support provides support services, both on-premise and remote, to our customers to enable increased performance and higher availability of their products and services. Education services provide training to customers, partners and employees as a part of our mission of accelerating the adoption and use of our software and hardware products and to create opportunities to grow our product revenues. | |||||||||||||||||||
We do not track our assets by operating segments. Consequently, it is not practical to show assets by operating segment. | |||||||||||||||||||
The following table presents summary results for each of our three businesses and for the operating segments of our software and hardware systems businesses: | |||||||||||||||||||
Year Ended May 31, | |||||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||||
New software licenses and cloud software subscriptions: | |||||||||||||||||||
Revenues(1) | $ | 10,542 | $ | 10,350 | $ | 9,910 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service expenses | 437 | 313 | 199 | ||||||||||||||||
Sales and distribution expenses | 5,666 | 5,227 | 5,018 | ||||||||||||||||
Margin(2) | $ | 4,439 | $ | 4,810 | $ | 4,693 | |||||||||||||
Cloud infrastructure-as-a-service: | |||||||||||||||||||
Revenues | $ | 491 | $ | 491 | $ | 483 | |||||||||||||
Cloud infrastructure-as-a-service expenses | 310 | 300 | 288 | ||||||||||||||||
Sales and distribution expenses | 62 | 61 | 72 | ||||||||||||||||
Margin(2) | $ | 119 | $ | 130 | $ | 123 | |||||||||||||
Software license updates and product support: | |||||||||||||||||||
Revenues(1) | $ | 18,209 | $ | 17,156 | $ | 16,258 | |||||||||||||
Software license updates and product support expenses | 1,111 | 1,120 | 1,159 | ||||||||||||||||
Margin(2) | $ | 17,098 | $ | 16,036 | $ | 15,099 | |||||||||||||
Total software and cloud business: | |||||||||||||||||||
Revenues(1) | $ | 29,242 | $ | 27,997 | $ | 26,651 | |||||||||||||
Expenses | 7,586 | 7,021 | 6,736 | ||||||||||||||||
Margin(2) | $ | 21,656 | $ | 20,976 | $ | 19,915 | |||||||||||||
Hardware systems products: | |||||||||||||||||||
Revenues | $ | 2,976 | $ | 3,033 | $ | 3,827 | |||||||||||||
Hardware systems products expenses | 1,516 | 1,498 | 1,841 | ||||||||||||||||
Sales and distribution expenses | 940 | 885 | 1,050 | ||||||||||||||||
Margin(2) | $ | 520 | $ | 650 | $ | 936 | |||||||||||||
Hardware systems support: | |||||||||||||||||||
Revenues(1) | $ | 2,407 | $ | 2,327 | $ | 2,505 | |||||||||||||
Hardware systems support expenses | 802 | 857 | 1,006 | ||||||||||||||||
Margin(2) | $ | 1,605 | $ | 1,470 | $ | 1,499 | |||||||||||||
Total hardware systems business: | |||||||||||||||||||
Revenues(1) | $ | 5,383 | $ | 5,360 | $ | 6,332 | |||||||||||||
Expenses | 3,258 | 3,240 | 3,897 | ||||||||||||||||
Margin(2) | $ | 2,125 | $ | 2,120 | $ | 2,435 | |||||||||||||
Total services business: | |||||||||||||||||||
Revenues(1) | $ | 3,681 | $ | 3,896 | $ | 4,238 | |||||||||||||
Services expenses | 2,815 | 3,047 | 3,248 | ||||||||||||||||
Margin(2) | $ | 866 | $ | 849 | $ | 990 | |||||||||||||
Totals: | |||||||||||||||||||
Revenues(1) | $ | 38,306 | $ | 37,253 | $ | 37,221 | |||||||||||||
Expenses | 13,659 | 13,308 | 13,881 | ||||||||||||||||
Margin(2) | $ | 24,647 | $ | 23,945 | $ | 23,340 | |||||||||||||
__________ | |||||||||||||||||||
-1 | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total revenues. Our new software license, cloud IaaS and services revenues for management reporting also differ from amounts reported per our consolidated statements of operations for the periods presented due to certain insignificant reclassifications between these lines for management reporting purposes. | ||||||||||||||||||
-2 | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net. | ||||||||||||||||||
The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before provision for income taxes: | |||||||||||||||||||
Year Ended May 31, | |||||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||||
Total revenues for operating segments | $ | 38,306 | $ | 37,253 | $ | 37,221 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -17 | -45 | -22 | ||||||||||||||||
Software license updates and product support revenues(1) | -3 | -14 | -48 | ||||||||||||||||
Hardware systems support revenues(1) | -11 | -14 | -30 | ||||||||||||||||
Total revenues | $ | 38,275 | $ | 37,180 | $ | 37,121 | |||||||||||||
Total margin for operating segments | $ | 24,647 | $ | 23,945 | $ | 23,340 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -17 | -45 | -22 | ||||||||||||||||
Software license updates and product support revenues(1) | -3 | -14 | -48 | ||||||||||||||||
Hardware systems support revenues(1) | -11 | -14 | -30 | ||||||||||||||||
Product development | -4,590 | -4,321 | -4,050 | ||||||||||||||||
Marketing and partner program expenses | -564 | -591 | -581 | ||||||||||||||||
Corporate, general and administrative and information technology expenses | -1,384 | -1,421 | -1,496 | ||||||||||||||||
Amortization of intangible assets | -2,300 | -2,385 | -2,430 | ||||||||||||||||
Acquisition related and other | -41 | 604 | -56 | ||||||||||||||||
Restructuring | -183 | -352 | -295 | ||||||||||||||||
Stock-based compensation | -795 | -722 | -626 | ||||||||||||||||
Interest expense | -914 | -797 | -766 | ||||||||||||||||
Non-operating (expense) income, net | -141 | 11 | 22 | ||||||||||||||||
Income before provision for income taxes | $ | 13,704 | $ | 13,898 | $ | 12,962 | |||||||||||||
__________ | |||||||||||||||||||
-1 | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments. | ||||||||||||||||||
Geographic Information | |||||||||||||||||||
Disclosed in the table below is geographic information for each country that comprised greater than three percent of our total revenues for any of fiscal 2014, 2013 or 2012. | |||||||||||||||||||
As of and for the Year Ended May 31, | |||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(in millions) | Revenues | Long Lived Assets(1) | Revenues | Long Lived Assets(1) | Revenues | Long Lived Assets(1) | |||||||||||||
United States | $ | 16,809 | $ | 2,993 | $ | 16,003 | $ | 2,921 | $ | 15,767 | $ | 2,468 | |||||||
United Kingdom | 2,309 | 236 | 2,165 | 203 | 2,302 | 171 | |||||||||||||
Japan | 1,558 | 414 | 1,770 | 428 | 1,865 | 550 | |||||||||||||
Germany | 1,483 | 35 | 1,308 | 44 | 1,484 | 47 | |||||||||||||
Canada | 1,190 | 31 | 1,232 | 34 | 1,234 | 37 | |||||||||||||
France | 1,148 | 28 | 1,054 | 17 | 1,162 | 16 | |||||||||||||
Australia | 994 | 63 | 1,084 | 54 | 1,163 | 38 | |||||||||||||
Other countries | 12,784 | 816 | 12,564 | 814 | 12,144 | 741 | |||||||||||||
Total | $ | 38,275 | $ | 4,616 | $ | 37,180 | $ | 4,515 | $ | 37,121 | $ | 4,068 | |||||||
__________ | |||||||||||||||||||
(1) | Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. | ||||||||||||||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Earnings Per Share [Abstract] | ' | |||||||||
EARNINGS PER SHARE | ' | |||||||||
17. 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 options, restricted stock-based 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: | ||||||||||
Year Ended May 31, | ||||||||||
(in millions, except per share data) | 2014 | 2013 | 2012 | |||||||
Net income | $ | 10,955 | $ | 10,925 | $ | 9,981 | ||||
Weighted average common shares outstanding | 4,528 | 4,769 | 5,015 | |||||||
Dilutive effect of employee stock plans | 76 | 75 | 80 | |||||||
Dilutive weighted average common shares outstanding | 4,604 | 4,844 | 5,095 | |||||||
Basic earnings per share | $ | 2.42 | $ | 2.29 | $ | 1.99 | ||||
Diluted earnings per share | $ | 2.38 | $ | 2.26 | $ | 1.96 | ||||
Shares subject to anti-dilutive stock options and restricted | ||||||||||
stock-based awards excluded from calculation(1) | 76 | 208 | 110 | |||||||
__________ | ||||||||||
(1) | These weighted shares relate to anti-dilutive stock options and restricted stock-based awards as calculated using the treasury stock method and could be dilutive in the future. See Note 14 for information regarding the exercise prices of our outstanding, unexercised options. | |||||||||
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
31-May-14 | |
Legal Proceedings [Abstract] | ' |
LEGAL PROCEEDINGS | ' |
18. LEGAL PROCEEDINGS | |
SAP Intellectual Property Litigation | |
On March 22, 2007, Oracle Corporation, Oracle USA, Inc. and Oracle International Corporation (collectively, Oracle) filed a complaint in the United States District Court for the Northern District of California against SAP AG, its wholly-owned subsidiary, SAP America, Inc., and its wholly-owned subsidiary, TomorrowNow, Inc., (the SAP Subsidiary, and collectively, the SAP Defendants) alleging that SAP unlawfully accessed Oracle’s Customer Connection support website and improperly took and used Oracle’s intellectual property. | |
Trial commenced on November 1, 2010 on the issue of damages, as SAP had stipulated to liability. The jury awarded Oracle $1.3 billion. On September 1, 2011, the court granted the SAP Defendants’ motion for judgment as a matter of law and for a new trial. The court vacated the $1.3 billion award and held that Oracle could either accept a reduced amount or remittitur of $272 million or proceed to a new trial. On February 6, 2012, Oracle rejected the remittitur and requested a new trial. | |
On August 2, 2012, Oracle and the SAP Defendants stipulated to a judgment of $306 million against the SAP Defendants, in lieu of having a second jury trial, while preserving both parties’ rights to appeal prior court orders. We recorded a $306 million non-current receivable, included in other assets, in our consolidated balance sheet and we recognized a corresponding benefit to our results of operations for the first quarter of fiscal 2013. Previously during trial we received payment of $120 million in attorneys' fees from SAP under a stipulation, and we recorded this payment upon receipt as a benefit to our results of operations during the second quarter of fiscal 2011. On August 3, 2012, the court entered the judgment and vacated the date set for the new trial. Oracle filed a Notice of Appeal on August 31, 2012, and the SAP Defendants filed a notice of appeal on September 14, 2012. The SAP Defendants subsequently dismissed their appeal. Oracle’s appeal has been fully briefed. The appellate court heard oral argument on May 13, 2014. The court has not yet ruled on this appeal. | |
Hewlett-Packard Company Litigation | |
On June 15, 2011, Hewlett-Packard Company (“HP”) filed a complaint in the California Superior Court, County of Santa Clara against Oracle Corporation alleging numerous causes of action including breach of contract, breach of the covenant of good faith and fair dealing, defamation, intentional interference with prospective economic advantage, and violation of the California Unfair Business Practices Act. The complaint alleged that when Oracle announced on March 22 and 23, 2011 that it would no longer develop future versions of its software to run on HP’s Itanium-based servers, it breached a settlement agreement signed on September 20, 2010 between HP and Mark Hurd (the “Hurd Settlement Agreement”), who was both HP’s former chief executive officer and chairman of HP’s board of directors. HP sought a judicial declaration of the parties’ rights and obligations under the Hurd Settlement Agreement, and other equitable and monetary relief. | |
Oracle answered the complaint and filed a cross-complaint, which was amended on December 2, 2011. The amended cross-complaint alleged claims including violation of the Lanham Act. Oracle alleged that HP had secretly agreed to pay Intel to continue to develop and manufacture the Itanium microprocessor, and had misrepresented to customers that the Itanium microprocessor had a long roadmap, among other claims. Oracle sought equitable rescission of the Hurd Settlement Agreement, and other equitable and monetary relief. | |
The court bifurcated the trial and tried HP’s causes of action for declaratory relief and promissory estoppel without a jury in June 2012. The court issued a final statement of decision on August 28, 2012, finding that the Hurd Settlement Agreement required Oracle to continue to develop certain of its software products for use on HP’s Itanium-based servers and to port such products at no cost to HP for as long as HP sells those servers. Oracle has announced that it is appealing this decision. The issues of breach, HP’s performance, causation and damages, HP’s tort claims, and Oracle’s cross-claims will all be tried before a jury. As of April 8, 2013, the trial is stayed pending Oracle’s appeal of the court’s denial of its anti-SLAPP motion, which is fully briefed, although oral argument has not yet been scheduled. We cannot currently estimate a reasonably possible range of loss for this action. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it. | |
Derivative Litigations and Related Action | |
On September 30, 2011, a stockholder derivative lawsuit was filed in the Delaware Court of Chancery and a second stockholder was permitted to intervene as a plaintiff on November 15, 2011. At an August 22, 2012, hearing, the court dismissed certain claims but permitted certain claims for breach of fiduciary duty to proceed. On May 3, 2013, plaintiffs filed an amended complaint. The derivative suit is brought by two alleged stockholders of Oracle, purportedly on Oracle’s behalf, against one former director and all but two of our current directors, including against our Chief Executive Officer as an alleged controlling stockholder. Plaintiffs allege that Oracle’s directors breached their fiduciary duties in agreeing to purchase Pillar Data Systems, Inc. at an excessive price. Oracle’s acquisition of Pillar is structured as an earn out, under which Oracle is scheduled to make a single payment, if any, by November 30, 2014, to Pillar’s former shareholders based on an agreed-upon Earn-Out formula. Plaintiffs seek declaratory relief, rescission of the Pillar Data transaction, damages, disgorgement of our Chief Executive Officer’s alleged profits, disgorgement of all compensation earned by defendants as a result of their service on Oracle’s Board or any committee of the Board, and an award of attorneys’ fees and costs. | |
On June 13, 2014, plaintiffs and defendants filed a Stipulation and Agreement of Compromise, Settlement and Release, under which our Chief Executive Officer agreed to pay to Oracle 95% of any and all amounts, if any, that are paid to him under the Pillar earn out. Oracle will pay plaintiffs’ attorneys’ fees and costs, which will not exceed $15 million. The settlement is subject to approval by the Delaware Chancery Court, which has scheduled a fairness hearing for August 12, 2014, at 10:00 a.m., Eastern Time. | |
While the outcome of the derivative litigation cannot be predicted with certainty, we do not believe that the outcome will result in losses that are materially in excess of amounts already recognized, if any. | |
Other Litigation | |
We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any. |
VALUATION_AND_QUALIFYING_ACCOU
VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | |||||||||||||||
31-May-14 | ||||||||||||||||
Valuation and Qualifying Accounts [Abstract] | ' | |||||||||||||||
Valuation and Qualifying Accounts | ' | |||||||||||||||
SCHEDULE II | ||||||||||||||||
ORACLE CORPORATION | ||||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||||
(in millions) | Beginning Balance | Additions Charged | Write-offs | Translation Adjustments and | Ending Balance | |||||||||||
to Operations or Other Accounts | Other | |||||||||||||||
Allowances for Doubtful Trade Receivables | ||||||||||||||||
Year Ended: | ||||||||||||||||
31-May-12 | $ | 372 | $ | 92 | $ | -107 | $ | -34 | $ | 323 | ||||||
31-May-13 | $ | 323 | $ | 118 | $ | -167 | $ | 22 | $ | 296 | ||||||
31-May-14 | $ | 296 | $ | 122 | $ | -120 | $ | 8 | $ | 306 | ||||||
ORGANIZATION_AND_SIGNIFICANT_A1
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policy) | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Organization and Significant Accounting Policies [Abstract] | ' | |||||||||
Nature of Operations | ' | |||||||||
Oracle Corporation develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems—including computer server, storage and networking products—and related services that are engineered to work together in cloud-based and on-premise information technology (IT) environments. We offer our customers the option to purchase our software and hardware systems products and related services to manage their own cloud-based or on-premise IT environments, or to deploy our Oracle Cloud offerings, which are a comprehensive set of cloud service offerings including cloud software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) that we manage, host and support. Customers that purchase our software products may elect to purchase software license updates and product support contracts, which provide our customers with rights to unspecified product upgrades and maintenance releases issued during the support period as well as technical support assistance. Customers that purchase our hardware products may elect to purchase hardware systems support contracts, which provide customers with software updates for software components that are essential to the functionality of our server, storage and networking products, such as Oracle Solaris and certain other software products, and can include product repairs, maintenance services, and technical support services. We also offer customers a broad set of services offerings including consulting services, advanced customer support services and education services. | ||||||||||
Oracle Corporation conducts business globally and was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977. | ||||||||||
Basis of Financial Statements | ' | |||||||||
Basis of Financial Statements | ||||||||||
The consolidated financial statements included our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle’s 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 (expense) income, net in our consolidated statements of operations. Intercompany transactions and balances have been eliminated. | ||||||||||
We have reclassified certain revenues and expenses to conform to the current period’s presentation for all periods presented in our consolidated statements of operations. All such reclassifications did not affect our consolidated total revenues, consolidated operating income or consolidated net income. | ||||||||||
During the fourth quarter of fiscal 2014, we added an operating segment, cloud infrastructure-as-a-service, as a result of a reorganization of financial information presented to our chief operating decision maker for operational decision and resource allocation purposes. We concluded this operating segment is a reporting unit for goodwill allocation and impairment assessment purposes. | ||||||||||
Acquisition related and other expenses as presented in our consolidated statement of operations for fiscal 2013 included a change in fair value of contingent consideration payable, which resulted in a net benefit of $387 million in fiscal 2013 (see Note 2 of Notes to Consolidated Financial Statements below), and a $306 million benefit that we recorded in fiscal 2013 related to certain litigation (see Note 18 of Notes to Consolidated Financial Statements below). | ||||||||||
Use of Estimates | ' | |||||||||
Use of Estimates | ||||||||||
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission (SEC). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. | ||||||||||
Revenue Recognition | ' | |||||||||
Revenue Recognition | ||||||||||
Our sources of revenues include: (1) software and cloud revenues, including new software licenses revenues earned from granting licenses to use our software products; cloud SaaS and PaaS revenues generated from fees for granting customers access to a broad range of our software and related support offerings on a subscription basis in a secure, standards-based cloud computing environment; cloud IaaS revenues generated from fees for deployment and management offerings for our software and hardware and related IT infrastructure generally on a subscription basis; and software license updates and product support revenues; (2) hardware systems revenues, which include the sale of hardware systems products including computer servers, storage products, networking and data center fabric products, and hardware systems support revenues; and (3) services, which includes software and hardware related services including consulting, advanced customer support and education revenues. Revenues generally are recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. | ||||||||||
Revenue Recognition for Software Products and Software Related Services (Software Elements) | ||||||||||
New software licenses revenues primarily represent fees earned from granting customers licenses to use our database, middleware and application software and exclude cloud SaaS and PaaS revenues and revenues derived from software license updates, which are included in software license updates and product support revenues. The basis for our new software licenses revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. We exercise judgment and use estimates in connection with the determination of the amount of software and software related services revenues to be recognized in each accounting period. | ||||||||||
For software license arrangements that do not require significant modification or customization of the underlying software, we recognize new software licenses revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met, are recognized when those conditions are subsequently met. | ||||||||||
Substantially all of our software license arrangements do not include acceptance provisions. However, if acceptance provisions exist as part of public policy, for example, in agreements with government entities where acceptance periods are required by law, or within previously executed terms and conditions that are referenced in the current agreement and are short-term in nature, we generally recognize revenues upon delivery provided the acceptance terms are perfunctory and all other revenue recognition criteria have been met. If acceptance provisions are not perfunctory (for example, acceptance provisions that are long-term in nature or are not included as standard terms of an arrangement), revenues are recognized upon the earlier of receipt of written customer acceptance or expiration of the acceptance period. | ||||||||||
The vast majority of our software license arrangements include software license updates and product support contracts, which are entered into at the customer’s option and are recognized ratably over the term of the arrangement, typically one year. Software license updates provide customers with rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period. Product support includes internet access to technical content, as well as internet and telephone access to technical support personnel. Software license updates and product support contracts are generally priced as a percentage of the net new software licenses fees. Substantially all of our customers renew their software license updates and product support contracts annually. | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Software Products and Software Related Services (Software Arrangements) | ||||||||||
We often enter into arrangements with customers that purchase both software related products and software related services from us at the same time, or within close proximity of one another (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, software license updates and product support contracts and other software related services whereby software license delivery is followed by the subsequent or contemporaneous delivery of the other elements. For those software related multiple-element arrangements, we have applied the residual method to determine the amount of new software license revenues to be recognized pursuant to ASC 985-605. Under the residual method, if fair value exists for undelivered elements in a multiple-element arrangement, such fair value of the undelivered elements is deferred with the remaining portion of the arrangement consideration generally recognized upon delivery of the software license. We allocate the fair value of each element of a software related multiple-element arrangement based upon its fair value as determined by our vendor specific objective evidence (VSOE—described further below), with any remaining amount allocated to the software license. | ||||||||||
Revenue Recognition for Cloud SaaS, PaaS and IaaS Offerings, Hardware Systems Products, Hardware Systems Support and Related Services (Nonsoftware Elements) | ||||||||||
Our revenue recognition policy for nonsoftware deliverables including cloud SaaS, PaaS and IaaS offerings, hardware systems products and hardware systems related services is based upon the accounting guidance contained in ASC 605-25, Revenue Recognition, Multiple-Element Arrangements, and we exercise judgment and use estimates in connection with the determination of the amount of cloud SaaS, PaaS and IaaS revenues, hardware systems products revenues and hardware related services revenues to be recognized in each accounting period. | ||||||||||
Revenues from the sales of our nonsoftware elements are recognized when: (1) persuasive evidence of an arrangement exists; (2) we deliver the products and passage of the title to the buyer occurs; (3) the sale price is fixed or determinable; and (4) collection is reasonably assured. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met. When applicable, we reduce revenues for estimated returns or certain other incentive programs where we have the ability to sufficiently estimate the effects of these items. Where an arrangement is subject to acceptance criteria and the acceptance provisions are not perfunctory (for example, acceptance provisions that are long-term in nature or are not included as standard terms of an arrangement), revenues are recognized upon the earlier of receipt of written customer acceptance or expiration of the acceptance period. | ||||||||||
Our cloud SaaS and PaaS offerings generally provide customers access to certain of our software within a cloud-based IT environment that we manage, host and support and offer to customers on a subscription basis. Revenues for our cloud SaaS and PaaS offerings are generally recognized ratably over the contract term commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. | ||||||||||
Our cloud IaaS offerings provide deployment and management offerings for our software and hardware and related IT infrastructure including comprehensive software and hardware management and maintenance services arrangements for customer IT infrastructure for a stated term that is hosted at our data center facilities, select partner data centers or physically on-premise at customer facilities generally for a term-based fee; and virtual machine instances that are subscription-based and designed for computing and reliable and secure object storage. Revenues for these cloud IaaS offerings are generally recognized ratably over the contract term commencing with the date the service is made available to customers and all other revenue recognition criteria have been satisfied. Our cloud IaaS offerings also include our Oracle Engineered Systems hardware and related support that are deployed on-premise in our customers’ data centers for a monthly fee and provide for the purchase of additional capacity on demand. Our revenue recognition policy for these on-premise offerings is in accordance with ASC 605 and ASC 840, Leases, and substantially all of these offerings are accounted for as operating leases as our contracts are structured so that the term of the arrangement is less than 75% of the economic life of the equipment and the present value of the minimum fixed payments are less than 90% of the fair market value of the equipment at the inception of the arrangement. Our evaluation of useful life is based on our historical product development cycles and our historical customer hardware upgrade cycles. Capacity on demand is a contingent payment and is therefore excluded from our assessment of the net present value of fixed payments. Revenue for capacity on demand is recognized in the period our customers access additional capacity provided all other revenue recognition criteria have been met. | ||||||||||
Revenues from the sale of hardware systems products represent amounts earned primarily from the sale of computer servers, storage, and networking products, including the sales of our Oracle Engineered Systems. | ||||||||||
Our hardware systems support offerings generally provide customers with software updates for the software components that are essential to the functionality of our server and storage products and can also include product repairs, maintenance services and technical support services. Hardware systems support contracts are generally priced as a percentage of the net hardware systems products fees. Hardware systems support contracts are entered into at the customer’s option and are recognized ratably over the contractual term of the arrangements, which are typically one year. | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Cloud SaaS, PaaS and IaaS Offerings, Hardware Systems Products, Hardware Systems Support and Related Services (Nonsoftware Arrangements) | ||||||||||
We enter into arrangements with customers that purchase both nonsoftware related products and services from us at the same time, or within close proximity of one another (referred to as nonsoftware multiple-element arrangements). Each element within a nonsoftware multiple-element arrangement is accounted for as a separate unit of accounting provided the following criteria are met: the delivered products or services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by us. We consider a deliverable to have standalone value if the product or service is sold separately by us or another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a general right of return relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. For those units of accounting that include more than one deliverable but are treated as a single unit of accounting, we generally recognize revenues over the delivery period or in the case of our cloud offerings, generally over the estimated customer relationship period. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenue to the respective revenue line items within our consolidated statements of operations based on a rational and consistent methodology utilizing our best estimate of relative selling prices of such elements. | ||||||||||
For our nonsoftware multiple-element arrangements, we allocate revenue to each element based on a selling price hierarchy at the arrangement’s inception. The selling price for each element is based upon the following selling price hierarchy: VSOE if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE are available (a description as to how we determine VSOE, TPE and ESP is provided below). If a tangible hardware systems product includes software, we determine whether the tangible hardware systems product and the software work together to deliver the product’s essential functionality and, if so, the entire product is treated as a nonsoftware deliverable. The total arrangement consideration is allocated to each separate unit of accounting for each of the nonsoftware deliverables using the relative selling prices of each unit based on the aforementioned selling price hierarchy. We limit the amount of revenue recognized for delivered elements to an amount that is not contingent upon future delivery of additional products or services or meeting of any specified performance conditions. | ||||||||||
When possible, we establish VSOE of selling price for deliverables in software and nonsoftware multiple-element arrangements using the price charged for a deliverable when sold separately and for software license updates and product support and hardware systems support, based on the renewal rates offered to customers. TPE is established by evaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated customers. If we are unable to determine the selling price because VSOE or TPE does not exist, we determine ESP for the purposes of allocating the arrangement by reviewing historical transactions, including transactions whereby the deliverable was sold on a standalone basis and considering several other external and internal factors including, but not limited to, pricing practices including discounting, margin objectives, competition, contractually stated prices, the geographies in which we offer our products and services, the type of customer (i.e., distributor, value added reseller, government agency and direct end user, among others) and the stage of the product lifecycle. The determination of ESP is made through consultation with and approval by our management, taking into consideration our pricing model and go-to-market strategy. As our, or our competitors’, pricing and go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to our determination of VSOE, TPE and ESP. As a result, our future revenue recognition for multiple-element arrangements could differ materially from our results in the current period. Selling prices are analyzed on an annual basis or more frequently if we experience significant changes in our selling prices. | ||||||||||
Revenue Recognition Policies Applicable to both Software and Nonsoftware Elements | ||||||||||
Revenue Recognition for Multiple-Element Arrangements—Arrangements with Software and Nonsoftware Elements | ||||||||||
We also enter into multiple-element arrangements that may include a combination of our various software related and nonsoftware related products and services offerings including new software licenses, software license updates and product support, cloud SaaS, PaaS and IaaS offerings, hardware systems products, hardware systems support, consulting, advanced customer support services and education. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the nonsoftware elements. We then further allocate consideration within the software group to the respective elements within that group following the guidance in ASC 985-605 and our policies as described above. After the arrangement consideration has been allocated to the elements, we account for each respective element in the arrangement as described above. | ||||||||||
Other Revenue Recognition Policies Applicable to Software and Nonsoftware Elements | ||||||||||
Many of our software arrangements include consulting implementation services sold separately under consulting engagement contracts and are included as a part of our services business. Consulting revenues from these arrangements are generally accounted for separately from new software licenses revenues because the arrangements qualify as services transactions as defined in ASC 985-605. The more significant factors considered in determining whether the revenues should be accounted for separately include the nature of services (i.e., consideration of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance criteria on the realizability of the software license fee. Revenues for consulting services are generally recognized as the services are performed. If there is a significant uncertainty about the project completion or receipt of payment for the consulting services, revenues are deferred until the uncertainty is sufficiently resolved. We estimate the proportional performance on contracts with fixed or “not to exceed” fees on a monthly basis utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If we do not have a sufficient basis to measure progress towards completion, revenues are recognized when we receive final acceptance from the customer that the services have been completed. When total cost estimates exceed revenues, we accrue for the estimated losses immediately using cost estimates that are based upon an average fully burdened daily rate applicable to the consulting organization delivering the services. The complexity of the estimation process and factors relating to the assumptions, risks and uncertainties inherent with the application of the proportional performance method of accounting affects the amounts of revenues and related expenses reported in our consolidated financial statements. A number of internal and external factors can affect our estimates, including labor rates, utilization and efficiency variances and specification and testing requirement changes. | ||||||||||
Our advanced customer support services are offered as standalone arrangements or as a part of arrangements to customers buying other software and non-software products and services. We offer these advanced support services, both on-premise and remote, to Oracle customers to enable increased performance and higher availability of their products and services. Depending upon the nature of the arrangement, revenues from these services are recognized as the services are performed or ratably over the term of the service period, which is generally one year or less. | ||||||||||
Education revenues are also a part of our services business and include instructor-led, media-based and internet-based training in the use of our software and hardware products. Education revenues are recognized as the classes or other education offerings are delivered. | ||||||||||
If an arrangement contains multiple elements and does not qualify for separate accounting for the product and service transactions, then new software licenses revenues and/or hardware systems products revenues, including the costs of hardware systems products, are generally recognized together with the services based on contract accounting using either the percentage-of-completion or completed-contract method. Contract accounting is applied to any bundled software and cloud, hardware systems and services arrangements: (1) that include milestones or customer specific acceptance criteria that may affect collection of the software license or hardware systems product fees; (2) where consulting services include significant modification or customization of the software or hardware systems product or are of a specialized nature and generally performed only by Oracle; (3) where significant consulting services are provided for in the software license contract or hardware systems product contract without additional charge or are substantially discounted; or (4) where the software license or hardware systems product payment is tied to the performance of consulting services. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenues to software and nonsoftware elements based on a rational and consistent methodology utilizing our best estimate of the relative selling price of such elements. | ||||||||||
We also evaluate arrangements with governmental entities containing “fiscal funding” or “termination for convenience” provisions, when such provisions are required by law, to determine the probability of possible cancellation. We consider multiple factors, including the history with the customer in similar transactions, the “essential use” of the software or hardware systems products and the planning, budgeting and approval processes undertaken by the governmental entity. If we determine upon execution of these arrangements that the likelihood of cancellation is remote, we then recognize revenues once all of the criteria described above have been met. If such a determination cannot be made, revenues are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity. | ||||||||||
We assess whether fees are fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirements are met. Our standard payment terms are net 30 days. However, payment terms may vary based on the country in which the agreement is executed. Payments that are due within six months are generally deemed to be fixed or determinable based on our successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition. | ||||||||||
While most of our arrangements for sales within our businesses include short-term payment terms, we have a standard practice of providing long-term financing to creditworthy customers primarily through our financing division. Since fiscal 1989, when our financing division was formed, we have established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date. Provided all other revenue recognition criteria have been met, we recognize new software licenses revenues and hardware systems products revenues for these arrangements upon delivery, net of any payment discounts from financing transactions. We have generally sold receivables financed through our financing division on a non-recourse basis to third party financing institutions within 90 days of the contracts’ dates of execution and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in ASC 860, Transfers and Servicing, as we are considered to have surrendered control of these financing receivables. During fiscal 2014, 2013 and 2012, $2.0 billion, $2.2 billion and $1.6 billion of our financing receivables were sold to financial institutions, respectively. | ||||||||||
In addition, we enter into arrangements with leasing companies for the sale of our hardware systems products. These leasing companies, in turn, lease our products to end-users. The leasing companies generally have no recourse to us in the event of default by the end-user and we recognize revenue upon delivery, if all other revenue recognition criteria have been met. | ||||||||||
Our customers include several of our suppliers and occasionally, we have purchased goods or services for our operations from these vendors at or about the same time that we have sold our products to these same companies (Concurrent Transactions). Software license agreements or sales of hardware systems that occur within a three-month time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we acquire goods or services from a customer, we negotiate the purchase separately from any sales transaction, at terms we consider to be at arm’s length and settle the purchase in cash. We recognize revenues from Concurrent Transactions if all of our revenue recognition criteria are met and the goods and services acquired are necessary for our current operations. | ||||||||||
Business Combinations | ' | |||||||||
Business Combinations | ||||||||||
We apply the provisions of ASC 805, Business Combinations, in the accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. | ||||||||||
Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as one-time termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations, and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in our consolidated statement of operations in the period in which the liability is incurred. When estimating the fair value of facility restructuring activities, assumptions are applied regarding estimated sub-lease payments to be received, which can differ materially from actual results. This may require us to revise our initial estimates which may materially affect our results of operations and financial position in the period the revision is made. | ||||||||||
For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been incurred at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. | ||||||||||
In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. | ||||||||||
Marketable and Non-Marketable Securities | ' | |||||||||
Marketable and Non-Marketable Securities | ||||||||||
In accordance with ASC 320, Investments—Debt and Equity Securities, and based on our intentions regarding these instruments, we classify substantially all of our marketable debt and equity securities as available-for-sale. Marketable debt and equity securities are reported at fair value, with all unrealized gains (losses) reflected net of tax in stockholders’ equity on our consolidated balance sheets, and as a line item in our consolidated statements of comprehensive income. If we determine that an investment has an other than temporary decline in fair value, we recognize the investment loss in non-operating (expense) income, net in the accompanying consolidated statements of operations. We periodically evaluate our investments to determine if impairment charges are required. Substantially all of our marketable debt and equity investments are classified as current based on the nature of the investments and their availability for use in current operations. | ||||||||||
We hold investments in certain non-marketable equity securities in which we do not have a controlling interest or significant influence. These equity securities are recorded at cost and included in other assets in the accompanying consolidated balance sheets. If based on the terms of our ownership of these non-marketable securities, we determine that we exercise significant influence on the entity to which these non-marketable securities relate, we apply the requirements of ASC 323, Investments—Equity Method and Joint Ventures, to account for such investments. Our non-marketable securities are subject to periodic impairment reviews. | ||||||||||
Fair Value of Financial Instruments | ' | |||||||||
Fair Value of Financial Instruments | ||||||||||
We apply the provisions of ASC 820, Fair Value Measurement (ASC 820), to our assets and liabilities that we are required to measure at fair value pursuant to other accounting standards, including our investments in marketable debt and equity securities and our derivative financial instruments. | ||||||||||
The additional disclosures regarding our fair value measurements are included in Note 4. | ||||||||||
Allowances for Doubtful Accounts | ' | |||||||||
Allowances for Doubtful Accounts | ||||||||||
We record allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the geographic region that the receivable was recorded in and current economic trends. We write-off a receivable and charge it against its recorded allowance when we have exhausted our collection efforts without success. | ||||||||||
Concentrations of Credit Risk | ' | |||||||||
Concentrations of Credit Risk | ||||||||||
Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution. Investment policies have been implemented that limit purchases of marketable debt securities to investment grade securities. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2014, 2013 or 2012. | ||||||||||
Inventories | ' | |||||||||
Inventories | ||||||||||
Inventories are stated at the lower of cost or market value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. We evaluate our ending inventories for estimated excess quantities and obsolescence. This evaluation includes analysis of sales levels by product and projections of future demand within specific time horizons (generally six to nine months). Inventories in excess of future demand are written down and charged to hardware systems products expenses. In addition, we assess the impact of changing technology to our inventories and we write down inventories that are considered obsolete. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. | ||||||||||
Other Receivables | ' | |||||||||
Other Receivables | ||||||||||
Other receivables represent value-added tax and sales tax receivables associated with the sale of our products and services to third parties. Other receivables are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $906 million and $826 million at May 31, 2014 and 2013, respectively. | ||||||||||
Deferred Sales Commissions | ' | |||||||||
Deferred Sales Commissions | ||||||||||
We defer sales commission expenses associated with our cloud SaaS, PaaS and IaaS offerings, and recognize the related expenses over the non-cancelable term of the related contracts, which are typically one to three years. Amortization of deferred sales commissions is included as a component of sales and marketing expense in our consolidated statements of operations. | ||||||||||
Property, Plant and Equipment | ' | |||||||||
Property, Plant and Equipment | ||||||||||
Property, plant and equipment are stated at the lower of cost or realizable value, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the assets, which range from one to fifty years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the lease terms, as appropriate. Property, plant and equipment are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize any significant property impairment charges in fiscal 2014, 2013 or 2012. | ||||||||||
Goodwill, Intangible Assets and Impairment Assessments | ' | |||||||||
Goodwill, Intangible Assets and Impairment Assessments | ||||||||||
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives, which generally range from one to ten years. Each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. | ||||||||||
The carrying amounts of these assets are periodically reviewed for impairment (at least annually for goodwill and indefinite lived intangible assets) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. According to ASC 350, Intangibles—Goodwill and Other, we can opt to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or we can directly perform the two step impairment test. Based on our qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not (i.e., a likelihood of more than 50 percent) to be less than its carrying amount, the two step impairment test will be performed. In the first step, we compare the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we would record an impairment loss equal to the difference. Recoverability of finite lived intangible assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. Recoverability of indefinite lived intangible assets is measured by comparison of the carrying amount of the asset to its fair value. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. We did not recognize any goodwill or intangible asset impairment charges in fiscal 2014, 2013 or 2012. | ||||||||||
Derivative Financial Instruments | ' | |||||||||
Derivative Financial Instruments | ||||||||||
During fiscal 2014, 2013 and 2012, we used derivative and non-derivative financial instruments to manage foreign currency and interest rate risks (see Note 11 below for additional information). We account for these instruments in accordance with ASC 815, Derivatives and Hedging (ASC 815), which requires that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at its fair value as of the reporting date. ASC 815 also requires that changes in our derivatives’ fair values be recognized in earnings, unless specific hedge accounting and documentation criteria are met (i.e., the instruments are accounted for as hedges). | ||||||||||
The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For a derivative instrument designated as a fair value hedge, the gain or loss is recognized in earnings in the period of change. The loss or gain attributable to the risk being hedged is recognized in earnings with an offset recorded to the item for which the risk is being hedged. For a derivative instrument designated as a cash flow hedge, each reporting period we record the change in fair value on the effective portion to accumulated other comprehensive loss in our consolidated balance sheets and an amount is reclassified out of accumulated other comprehensive loss into earnings to offset the earnings impact that is attributable to the risk being hedged. For the non-derivative financial instrument designated as a net investment hedge of our investments in certain of our international subsidiaries, the change on account of remeasurement of the effective portion for each reporting period is recorded to accumulated other comprehensive loss in our consolidated balance sheets. | ||||||||||
We perform the effectiveness testing of our aforementioned designated hedges on a quarterly basis and the changes in ineffective portions, if any, are recognized immediately in earnings. | ||||||||||
Legal Contingencies | ' | |||||||||
Legal Contingencies | ||||||||||
We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant matter and assess our potential financial exposure. For legal and other contingencies that are not a part of a business combination or related to income taxes, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. A description of our accounting policies associated with contingencies assumed as a part of a business combination is provided under “Business Combinations” above. | ||||||||||
Shipping and Handling Costs | ' | |||||||||
Shipping and Handling Costs | ||||||||||
Our shipping and handling costs for hardware systems products sales are included in hardware systems products expenses for all periods presented. | ||||||||||
Foreign Currency | ' | |||||||||
Foreign Currency | ||||||||||
We transact business in various foreign currencies. In general, the functional currency of a foreign operation is the local country’s currency. Consequently, revenues and expenses of operations outside the United States are translated into U.S. Dollars using weighted average exchange rates while assets and liabilities of operations outside the United States are translated into U.S. Dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying consolidated balance sheets and related periodic movements are summarized as a line item in our consolidated statements of comprehensive income. Net foreign exchange transaction losses included in non-operating (expense) income, net in the accompanying consolidated statements of operations were $375 million, $162 million and $105 million in fiscal 2014, 2013 and 2012, respectively. | ||||||||||
Stock-Based Compensation | ' | |||||||||
Stock-Based Compensation | ||||||||||
We account for share-based payments, including grants of employee stock options, restricted stock-based awards and purchases under employee stock purchase plans, in accordance with ASC 718, Compensation-Stock Compensation, which requires that share-based payments (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values and the estimated number of shares we ultimately expect will vest. We recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. | ||||||||||
We record deferred tax assets for stock-based compensation plan awards that result in deductions on our income tax returns based on the amount of stock-based compensation recognized and the statutory tax rate in the jurisdiction in which we will receive a tax deduction. | ||||||||||
Advertising | ' | |||||||||
Advertising | ||||||||||
All advertising costs are expensed as incurred. Advertising expenses, which are included within sales and marketing expenses, were $79 million, $85 million and $79 million in fiscal 2014, 2013 and 2012, respectively. | ||||||||||
Research and Development and Software Development Costs | ' | |||||||||
Research and Development and Software Development Costs | ||||||||||
All research and development costs are expensed as incurred. | ||||||||||
Software development costs required to be capitalized under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, and under ASC 350-40, Internal-Use Software, were not material to our consolidated financial statements in fiscal 2014, 2013 and 2012. | ||||||||||
Acquisition Related and Other Expenses | ' | |||||||||
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 professional services, certain business combination adjustments including adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation included in acquisition related and other expenses resulted from unvested options and restricted stock-based awards assumed from acquisitions whereby vesting was accelerated upon termination of the employees pursuant to the original terms of those options and restricted stock-based awards. | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Transitional and other employee related costs | $ | 27 | $ | 27 | $ | 25 | ||||
Stock-based compensation | 10 | 33 | 33 | |||||||
Professional fees and other, net | 20 | -276 | 13 | |||||||
Business combination adjustments, net | -16 | -388 | -15 | |||||||
Total acquisition related and other expenses | $ | 41 | $ | -604 | $ | 56 | ||||
Included in acquisition related and other expenses for fiscal 2013 were changes in estimates for contingent consideration payable, which reduced acquisition related and other expenses by $387 million during fiscal 2013 (see Note 2 for additional information). Acquisition related and other expenses for fiscal 2013 also included a benefit of $306 million related to certain litigation (see Note 18 for additional information), which reduced our acquisition related and other expenses in this period. | ||||||||||
Non-Operating (Expense) Income, net | ' | |||||||||
Non-Operating (Expense) Income, net | ||||||||||
Non-operating (expense) income, net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling interests in the net profits of our majority-owned subsidiaries (Oracle Financial Services Software Limited and Oracle Japan) and net other income (losses), including net realized gains and losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading. | ||||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Interest income | $ | 263 | $ | 237 | $ | 231 | ||||
Foreign currency (losses) gains, net | -375 | -162 | -105 | |||||||
Noncontrolling interests in income | -98 | -112 | -119 | |||||||
Other income, net | 69 | 48 | 15 | |||||||
Total non-operating (expense) income, net | $ | -141 | $ | 11 | $ | 22 | ||||
Included in our non-operating (expense) income, net for fiscal 2014 are foreign currency remeasurement losses of $213 million. These remeasurement losses were related to the remeasurement of certain assets and liabilities of our Venezuelan subsidiary. The Venezuelan economy has been determined to be “highly inflationary” in accordance with ASC 830, Foreign Currency Matters. As a result, we report all net monetary assets related to our Venezuelan subsidiary in U.S. Dollars with the associated impacts of periodic changes of Bolivar Fuerte (“VEF”) to U.S. Dollar exchange rates in our statements of operations for each respective reporting period. During fiscal 2014, the Venezuelan government issued new exchange agreements that allow for certain foreign currency transactions, which previously were subject to Venezuela’s official Bolivar Fuerte (“VEF”) to U.S. Dollar exchange rate (the “Official Rate”), to be subject to conversion at rates established at the Venezuelan government’s auction-based exchange rate programs, the Complementary System for Foreign Currency Administration (“SICAD”) rates. These SICAD rates were lower than the Official Rate that we had used historically to report the VEF based transactions and net monetary assets of our Venezuelan subsidiary. To determine which of the various VEF rates to use during fiscal 2014, we evaluated our individual facts and circumstances taking into consideration our legal ability to convert VEF at or to settle VEF based transactions using the SICAD rates, amongst other factors. We concluded that using the SICAD rates was the most appropriate for our reporting of our Venezuelan subsidiary’s VEF based transactions and net monetary assets in U.S. Dollars, which resulted in the fiscal 2014 remeasurement losses referenced above. During fiscal 2013, we also incurred a foreign currency remeasurement loss of $64 million related to our Venezuelan subsidiary due to the devaluation of the VEF official exchange rate by the Venezuelan government. Future devaluations of the Venezuelan currency are not expected to have a significant impact on our consolidated financial statements. As a large portion of our consolidated operations are international, we could experience additional foreign currency volatility and incur additional remeasurement losses in the future, the amounts and timing of which are unknown. | ||||||||||
Income Taxes | ' | |||||||||
Income Taxes | ||||||||||
We account for income taxes in accordance with ASC 740, Income Taxes. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. | ||||||||||
A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations. | ||||||||||
A description of our accounting policies associated with tax related contingencies and valuation allowances assumed as a part of a business combination is provided under “Business Combinations” above. | ||||||||||
Recent Accounting Pronouncements | ' | |||||||||
Recent Accounting Pronouncements | ||||||||||
Share-Based Payments with Performance Targets: In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASU 2014-12). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation—Stock Compensation, as it relates to such awards. ASU 2014-12 is effective for us in our first quarter of fiscal 2017 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. We are currently evaluating the impact of our pending adoption on ASU 2014-12 on our consolidated financial statements. | ||||||||||
Revenue Recognition: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements. | ||||||||||
Reporting Discontinued Operations: In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08), to change the criteria for determining which disposals can be presented as discontinued operations and enhanced the related disclosure requirements. ASU 2014-08 is effective for us on a prospective basis in our first quarter of fiscal 2016 with early adoption permitted for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued. We are currently evaluating the impact of our pending adoption of ASU 2014-08 on our consolidated financial statements. |
ORGANIZATION_AND_SIGNIFICANT_A2
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Organization and Significant Accounting Policies [Abstract] | ' | |||||||||
Acquisition Related and Other Expenses | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Transitional and other employee related costs | $ | 27 | $ | 27 | $ | 25 | ||||
Stock-based compensation | 10 | 33 | 33 | |||||||
Professional fees and other, net | 20 | -276 | 13 | |||||||
Business combination adjustments, net | -16 | -388 | -15 | |||||||
Total acquisition related and other expenses | $ | 41 | $ | -604 | $ | 56 | ||||
Non-Operating (Expense) Income, net | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Interest income | $ | 263 | $ | 237 | $ | 231 | ||||
Foreign currency losses, net | -375 | -162 | -105 | |||||||
Noncontrolling interests in income | -98 | -112 | -119 | |||||||
Other income, net | 69 | 48 | 15 | |||||||
Total non-operating (expense) income, net | $ | -141 | $ | 11 | $ | |||||
22 | ||||||||||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Acquisitions [Abstract] | ' | ||||||
Unaudited Pro Forma Financial Information | ' | ||||||
Year Ended May 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Total revenues | $ | 38,486 | $ | 38,258 | |||
Net income | $ | 10,826 | $ | 10,676 | |||
Basic earnings per share | $ | 2.39 | $ | 2.24 | |||
Diluted earnings per share | $ | 2.35 | $ | 2.20 | |||
CASH_CASH_EQUIVALENTS_AND_MARK1
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Cash, Cash Equivalents and Marketable Securities [Abstract] | ' | ||||||
Cash, Cash Equivalents and Marketable Securities | ' | ||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Commercial paper debt securities | $ | 7,969 | $ | 14,043 | |||
Corporate debt securities and other | 16,657 | 4,935 | |||||
Total investments | $ | 24,626 | $ | 18,978 | |||
Investments classified as cash equivalents | $ | 3,576 | $ | 1,375 | |||
Investments classified as marketable securities | $ | 21,050 | $ | 17,603 | |||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended | ||||||||||||||||||
31-May-14 | |||||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | ' | ||||||||||||||||||
31-May-14 | 31-May-13 | ||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | ||||||||||||||||||
Using Input Types | Using Input Types | ||||||||||||||||||
(in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||
Assets: | |||||||||||||||||||
Commercial paper debt securities | $ | — | $ | 7,969 | $ | 7,969 | $ | — | $ | 14,043 | $ | 14,043 | |||||||
Corporate debt securities and other | 119 | 16,538 | 16,657 | 246 | 4,689 | 4,935 | |||||||||||||
Derivative financial instruments | — | 97 | 97 | — | 41 | 41 | |||||||||||||
Total assets | $ | 119 | $ | 24,604 | $ | 24,723 | $ | 246 | $ | 18,773 | $ | 19,019 | |||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Inventories [Abstract] | ' | ||||||
Inventories | ' | ||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Raw materials | $ | 74 | $ | 114 | |||
Work-in-process | 28 | 31 | |||||
Finished goods | 87 | 95 | |||||
Total | $ | 189 | $ | 240 | |||
PROPERTY_PLANT_AND_EQUIPMENT_T
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
Estimated Useful Life | May 31, | ||||||||
(Dollars in millions) | 2014 | 2013 | |||||||
Computer, network, machinery and equipment | 1-5 years | $ | 2,468 | $ | 2,138 | ||||
Buildings and improvements | 1-50 years | 2,582 | 2,477 | ||||||
Furniture, fixtures and other | 3-10 years | 531 | 481 | ||||||
Land | — | 632 | 632 | ||||||
Construction in progress | — | 26 | 28 | ||||||
Total property, plant and equipment | 1-50 years | 6,239 | 5,756 | ||||||
Accumulated depreciation | -3,178 | (2,703) | |||||||
Total property, plant and equipment, net | $ | 3,061 | $ | 3,053 | |||||
INTANGIBLE_ASSETS_AND_GOODWILL1
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||
31-May-14 | |||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill [Abstract] | ' | ||||||||||||||||||||||||||||||||||
Intangible Assets | ' | ||||||||||||||||||||||||||||||||||
Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | Weighted | ||||||||||||||||||||||||||||||||
(Dollars in millions) | May 31, | Additions | Retirements | May 31, | May 31, | Expense | Retirements | May 31, | May 31, | May 31, | Average | ||||||||||||||||||||||||
2013 | 2014 | 2013 | 2014 | 2013 | 2014 | Useful Life(1) | |||||||||||||||||||||||||||||
Software support agreements and related relationships | $ | 5,298 | $ | — | $ | -80 | $ | 5,218 | $ | -3,912 | $ | -571 | $ | 80 | $ | -4,403 | $ | 1,386 | $ | 815 | N.A. | ||||||||||||||
Hardware systems support agreements and related relationships | 817 | 152 | — | 969 | -387 | -143 | — | -530 | 430 | 439 | 9 years | ||||||||||||||||||||||||
Developed technology | 7,466 | 928 | -4,007 | 4,387 | -5,477 | -706 | 4,007 | -2,176 | 1,989 | 2,211 | 7 years | ||||||||||||||||||||||||
Core technology | 2,579 | — | -962 | 1,617 | -1,938 | -318 | 962 | -1,294 | 641 | 323 | N.A. | ||||||||||||||||||||||||
Customer relationships and contract backlog | 2,435 | 131 | -512 | 2,054 | -1,637 | -334 | 512 | -1,459 | 798 | 595 | 4 years | ||||||||||||||||||||||||
SaaS and PaaS agreements and related relationships and other | 1,227 | 562 | — | 1,789 | -155 | -150 | — | -305 | 1,072 | 1,484 | 10 years | ||||||||||||||||||||||||
Trademarks | 635 | 39 | -158 | 516 | -356 | -78 | 158 | -276 | 279 | 240 | 10 years | ||||||||||||||||||||||||
Total intangible assets subject to amortization | 20,457 | 1,812 | -5,719 | 16,550 | -13,862 | -2,300 | 5,719 | -10,443 | 6,595 | 6,107 | 8 years | ||||||||||||||||||||||||
In-process research and development, net | 45 | -15 | — | 30 | — | — | — | — | 45 | 30 | N.A. | ||||||||||||||||||||||||
Total intangible assets, net | $ | 20,502 | $ | 1,797 | $ | -5,719 | $ | 16,580 | $ | -13,862 | $ | -2,300 | $ | 5,719 | $ | -10,443 | $ | 6,640 | $ | 6,137 | |||||||||||||||
-1 | Represents weighted average useful lives of intangible assets acquired during fiscal 2014. | ||||||||||||||||||||||||||||||||||
Estimated Future Amortization Expenses Related to Intangible Assets | ' | ||||||||||||||||||||||||||||||||||
Fiscal 2015 | $ | 1,934 | |||||||||||||||||||||||||||||||||
Fiscal 2016 | 1,337 | ||||||||||||||||||||||||||||||||||
Fiscal 2017 | 741 | ||||||||||||||||||||||||||||||||||
Fiscal 2018 | 607 | ||||||||||||||||||||||||||||||||||
Fiscal 2019 | 508 | ||||||||||||||||||||||||||||||||||
Thereafter | 980 | ||||||||||||||||||||||||||||||||||
Total intangible assets subject to amortization | 6,107 | ||||||||||||||||||||||||||||||||||
In-process research and development | 30 | ||||||||||||||||||||||||||||||||||
Total intangible assets, net | $ | 6,137 | |||||||||||||||||||||||||||||||||
Goodwill | ' | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | New Software Licenses and Cloud Software Subscriptions | Software License Updates and Product Support | Hardware Systems Support | Other(3) | Total | ||||||||||||||||||||||||||||||
Balances as of May 31, 2012 | $ | 7,367 | $ | 12,479 | $ | 1,193 | $ | 4,080 | $ | 25,119 | |||||||||||||||||||||||||
Allocation of goodwill(1) | 2,346 | — | — | -2,346 | — | ||||||||||||||||||||||||||||||
Goodwill from acquisitions | 933 | 27 | 62 | 1,341 | 2,363 | ||||||||||||||||||||||||||||||
Goodwill adjustments(2) | (113) | (32) | 4 | 2 | (139) | ||||||||||||||||||||||||||||||
Balances as of May 31, 2013 | 10,533 | 12,474 | 1,259 | 3,077 | 27,343 | ||||||||||||||||||||||||||||||
Allocation of goodwill(1) | 875 | — | 380 | -1,255 | — | ||||||||||||||||||||||||||||||
Goodwill from acquisitions | 1,721 | 4 | 436 | 134 | 2,295 | ||||||||||||||||||||||||||||||
Goodwill adjustments(2) | 10 | -6 | 7 | 3 | 14 | ||||||||||||||||||||||||||||||
Balances as of May 31, 2014 | $ | 13,139 | $ | 12,472 | $ | 2,082 | $ | 1,959 | $ | 29,652 | |||||||||||||||||||||||||
-1 | Represents the allocation of goodwill to our operating segments upon completion of our intangible asset valuations. | ||||||||||||||||||||||||||||||||||
-2 | Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period (up to one year from the date of an acquisition). Goodwill adjustments were not significant to our previously reported operating results or financial position. | ||||||||||||||||||||||||||||||||||
-3 | Represents goodwill allocated to our other operating segments and goodwill to be allocated to our operating segments upon completion of our intangible asset valuations, if any. | ||||||||||||||||||||||||||||||||||
NOTES_PAYABLE_AND_OTHER_BORROW1
NOTES PAYABLE AND OTHER BORROWINGS (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Notes Payable and Other Borrowings [Abstract] | ' | ||||||
Notes Payable and Other Borrowings | ' | ||||||
May 31, | May 31, | ||||||
(Dollars in millions) | 2014 | 2013 | |||||
3.75% senior notes due July 2014, net of fair value adjustments of $8 and $41 as of May 31, 2014 and 2013, respectively(1) | $ | 1,508 | $ | 1,541 | |||
5.25% senior notes due January 2016, net of discount of $2 and $3 as of May 31, 2014 and 2013, respectively | 1,998 | 1,997 | |||||
1.20% senior notes due October 2017, net of discount of $3 each as of May 31, 2014 and 2013 | 2,497 | 2,497 | |||||
5.75% senior notes due April 2018, net of discount of $1 as of May 31, 2013 | 2,500 | 2,499 | |||||
Floating rate senior notes due January 2019 | 500 | — | |||||
2.375% senior notes due January 2019, net of fair value adjustment of $15 and discount of $5 as of May 31, 2014(1) | 1,510 | — | |||||
5.00% senior notes due July 2019, net of discount of $3 and $4 as of May 31, 2014 and 2013, respectively | 1,747 | 1,746 | |||||
3.875% senior notes due July 2020, net of discount of $1 and $2 as of May 31, 2014 and 2013, respectively | 999 | 998 | |||||
2.25% senior notes due January 2021, net of discount of $9 as of May 31, 2014(2) | 1,691 | — | |||||
2.50% senior notes due October 2022, net of discount of $2 each as of May 31, 2014 and 2013 | 2,498 | 2,498 | |||||
3.625% senior notes due July 2023, net of discount of $8 as of May 31, 2014 | 992 | — | |||||
3.125% senior notes due July 2025, net of discount of $3 as of May 31, 2014(2) | 1,017 | — | |||||
6.50% senior notes due April 2038, net of discount of $2 each as of May 31, 2014 and 2013 | 1,248 | 1,248 | |||||
6.125% senior notes due July 2039, net of discount of $7 each as of May 31, 2014 and 2013 | 1,243 | 1,243 | |||||
5.375% senior notes due July 2040, net of discount of $23 and $24 as of May 31, 2014 and 2013, respectively | 2,227 | 2,226 | |||||
Capital leases | — | 1 | |||||
Total borrowings | $ | 24,175 | $ | 18,494 | |||
Notes payable, current and other current borrowings | $ | 1,508 | $ | — | |||
Notes payable, non-current and other non-current borrowings | $ | 22,667 | $ | 18,494 | |||
-1 | Refer to Note 11 for a description of our accounting for fair value hedges. | ||||||
-2 | Euro based notes valued at May 31, 2014 foreign exchange rates (see further discussion below) | ||||||
Future Principal Payments for all Borrowings | ' | ||||||
Fiscal 2015 | $ | 1,500 | |||||
Fiscal 2016 | 2,000 | ||||||
Fiscal 2017 | — | ||||||
Fiscal 2018 | 5,000 | ||||||
Fiscal 2019 | 2,000 | ||||||
Thereafter | 13,620 | ||||||
Total | $ | 24,120 | |||||
RESTRUCTURING_ACTIVITIES_Table
RESTRUCTURING ACTIVITIES (Tables) | 12 Months Ended | ||||||||||||||||||||||||
31-May-14 | |||||||||||||||||||||||||
Restructuring Activities [Abstract] | ' | ||||||||||||||||||||||||
Summary of All Plans | ' | ||||||||||||||||||||||||
Fiscal 2014 Activity | Year Ended May 31, 2014 | ||||||||||||||||||||||||
(in millions) | Accrued | Initial | Adj. to | Cash Payments | Others(5) | Accrued | Total Costs Accrued to Date | Total Expected Program Costs | |||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2013(2) | Costs(3) | Cost(4) | 2014(2) | ||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 16 | $ | 57 | $ | -8 | $ | -55 | $ | 2 | $ | 12 | $ | 126 | $ | 158 | |||||||||
Software license updates and product support | 1 | 11 | — | -10 | 3 | 5 | 18 | 24 | |||||||||||||||||
Hardware systems business | 24 | 48 | -3 | -52 | 1 | 18 | 139 | 238 | |||||||||||||||||
Services | 18 | 39 | -7 | -39 | — | 11 | 99 | 166 | |||||||||||||||||
General and administrative and other | 12 | 42 | -5 | -39 | 5 | 15 | 117 | 119 | |||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | 71 | $ | 197 | $ | -23 | $ | -195 | $ | 11 | $ | 61 | $ | 499 | $ | 705 | |||||||||
Total other restructuring plans(6) | $ | 179 | $ | 24 | $ | -15 | $ | -58 | $ | -22 | $ | 108 | |||||||||||||
Total restructuring plans | $ | 250 | $ | 221 | $ | -38 | $ | -253 | $ | -11 | $ | 169 | |||||||||||||
Fiscal 2013 Activity | |||||||||||||||||||||||||
Year Ended May 31, 2013 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial | Adj. to | Cash Payments | Others(5) | Accrued | |||||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2012 | Costs(3) | Cost(4) | 2013(2) | ||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | — | $ | 85 | $ | -8 | $ | -60 | $ | -1 | $ | 16 | |||||||||||||
Software license updates and product support | — | 13 | -6 | -11 | 5 | 1 | |||||||||||||||||||
Hardware systems business | — | 99 | -5 | -68 | -2 | 24 | |||||||||||||||||||
Services | — | 72 | -5 | -50 | 1 | 18 | |||||||||||||||||||
General and administrative and other | — | 81 | -1 | -52 | -16 | 12 | |||||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | — | $ | 350 | $ | -25 | $ | -241 | $ | -13 | $ | 71 | |||||||||||||
Total other restructuring plans(6) | $ | 337 | $ | 53 | $ | -26 | $ | -185 | $ | — | $ | 179 | |||||||||||||
Total restructuring plans | $ | 337 | $ | 403 | $ | -51 | $ | -426 | $ | -13 | $ | 250 | |||||||||||||
Fiscal 2012 Activity | |||||||||||||||||||||||||
Year Ended May 31, 2012 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial | Adj. to | Cash Payments | Others(5) | Accrued | |||||||||||||||||||
May 31, | May 31, | ||||||||||||||||||||||||
2011 | Costs(3) | Cost(4) | 2012 | ||||||||||||||||||||||
Sun Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 14 | $ | 46 | $ | -8 | $ | -41 | $ | -2 | $ | 9 | |||||||||||||
Software license updates and product support | 19 | 31 | -2 | -35 | -1 | 12 | |||||||||||||||||||
Hardware systems business | 10 | 34 | 1 | -33 | — | 12 | |||||||||||||||||||
Services | 9 | 32 | -2 | -25 | -2 | 12 | |||||||||||||||||||
General and administrative and other | 100 | 92 | -9 | -129 | -1 | 53 | |||||||||||||||||||
Total Sun Restructuring | $ | 152 | $ | 235 | $ | -20 | $ | -263 | $ | -6 | $ | 98 | |||||||||||||
Total other restructuring plans(6) | $ | 297 | $ | 65 | $ | 15 | $ | -122 | $ | -16 | $ | 239 | |||||||||||||
Total restructuring plans | $ | 449 | $ | 300 | $ | -5 | $ | -385 | $ | -22 | $ | 337 | |||||||||||||
-1 | Restructuring costs recorded for individual line items primarily related to employee severance costs except for general and administrative and other, which also included $46 million and $23 million recorded during fiscal 2013 and 2012, respectively, for facilities related restructuring, contract termination and other costs. | ||||||||||||||||||||||||
-2 | The balances at May 31, 2014 and 2013 included $100 million and $160 million, respectively, recorded in other current liabilities, and $69 million and $90 million, respectively, recorded in other non-current liabilities. | ||||||||||||||||||||||||
-3 | Costs recorded for the respective restructuring plans during the current period presented. | ||||||||||||||||||||||||
-4 | All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments. | ||||||||||||||||||||||||
-5 | Represents foreign currency translation and certain other adjustments. | ||||||||||||||||||||||||
-6 | Other restructuring plans presented in the table above included condensed information for other Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. | ||||||||||||||||||||||||
DEFERRED_REVENUES_Tables
DEFERRED REVENUES (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Deferred Revenues [Abstract] | ' | ||||||
Deferred Revenues | ' | ||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Software license updates and product support | $ | 5,909 | $ | 5,705 | |||
Hardware systems support and other | 664 | 706 | |||||
Services | 364 | 355 | |||||
Cloud SaaS, PaaS and IaaS | 248 | 223 | |||||
New software licenses | 84 | 129 | |||||
Deferred revenues, current | 7,269 | 7,118 | |||||
Deferred revenues, non-current (in other non-current liabilities) | 404 | 312 | |||||
Total deferred revenues | $ | 7,673 | $ | 7,430 | |||
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||
31-May-14 | |||||||||||||||
Derivative Instrument Detail [Abstract] | ' | ||||||||||||||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets | ' | ||||||||||||||
31-May-14 | 31-May-13 | ||||||||||||||
(in millions) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Interest rate swap agreements designated as fair value hedges | Other assets | $ | 15 | Not applicable | $ | — | |||||||||
Interest rate swap agreements designated as fair value hedges | Prepaid expenses and | $ | 8 | Other assets | $ | 41 | |||||||||
other current assets | |||||||||||||||
Cross-currency swap agreements designated as cash flow hedges | Other assets | $ | 74 | Not applicable | $ | — | |||||||||
Foreign currency borrowings designated as net investment hedge | Notes payable and other | $ | (1,116) | Not applicable | $ | — | |||||||||
non-current borrowings | |||||||||||||||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) | ' | ||||||||||||||
Amount of Gain (Loss) Recognized in Accumulated OCL (Effective Portion) | Location and Amount of Gain | ||||||||||||||
Reclassified from Accumulated OCL | |||||||||||||||
into Income (Effective Portion) | |||||||||||||||
(in millions) | Year Ended | Year Ended | |||||||||||||
31-May-14 | 31-May-14 | ||||||||||||||
Cross-currency swap agreements designated as | |||||||||||||||
cash flow hedges | $ | 74 | Non-operating (expense) income, net | $ | 69 | ||||||||||
Foreign currency borrowings designated as net | |||||||||||||||
investment hedge | $ | (34) | Not applicable | $ | — | ||||||||||
Location and Amount of Loss | Location and Amount of Gain on | ||||||||||||||
Recognized in Income on Derivative | Hedged Item Recognized in Income | ||||||||||||||
Attributable to Risk Being Hedged | |||||||||||||||
Year Ended | Year Ended | ||||||||||||||
May 31, | May 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Interest rate swap agreements designated as fair value hedges | Interest expense | $ | (18) | $ | (28) | Interest expense | $ | 18 | $ | 28 | |||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | |||
31-May-14 | ||||
Commitments and Contingencies [Abstract] | ' | |||
Lease Commitments | ' | |||
(in millions) | ||||
Fiscal 2015 | $ | 373 | ||
Fiscal 2016 | 304 | |||
Fiscal 2017 | 230 | |||
Fiscal 2018 | 168 | |||
Fiscal 2019 | 120 | |||
Thereafter | 203 | |||
Future minimum operating lease payments | 1,398 | |||
Less: minimum payments to be received from non-cancelable subleases | -63 | |||
Total future minimum operating lease payments, net | $ | 1,335 | ||
Unconditional Purchase and Certain Other Obligations | ' | |||
Fiscal 2015 | $ | 469 | ||
Fiscal 2016 | 28 | |||
Fiscal 2017 | 12 | |||
Fiscal 2018 | 1 | |||
Fiscal 2019 | — | |||
Thereafter | — | |||
Total | $ | 510 | ||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDER'S EQUITY (Tables) | 12 Months Ended | ||||||
31-May-14 | |||||||
Stockholders' Equity [Abstract] | ' | ||||||
Accumulated Other Comprehensive Loss | ' | ||||||
May 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Foreign currency translation losses and other, net | $ | -81 | $ | -3 | |||
Unrealized losses on defined benefit plans, net | -153 | (176) | |||||
Unrealized gains on marketable securities, net | 65 | 80 | |||||
Unrealized gains on cash flow hedges, net | 5 | — | |||||
Total accumulated other comprehensive loss | $ | -164 | $ | (99) | |||
EMPLOYEE_BENEFIT_PLANS_Tables
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
Stock-Based Compensation Plans [Abstract] | ' | ||||||||||||
Summary of Stock Option Activity | ' | ||||||||||||
Options Outstanding | |||||||||||||
(in millions, except exercise price) | Shares Under Option | Weighted Average Exercise Price | |||||||||||
Balance, May 31, 2011 | 354 | $ | 19.53 | ||||||||||
Granted | 112 | $ | 32.05 | ||||||||||
Assumed | 8 | $ | 12.17 | ||||||||||
Exercised | -39 | $ | 16.61 | ||||||||||
Canceled | -13 | $ | 29.31 | ||||||||||
Balance, May 31, 2012 | 422 | $ | 22.66 | ||||||||||
Granted | 119 | $ | 29.9 | ||||||||||
Assumed | 9 | $ | 32.52 | ||||||||||
Exercised | -83 | $ | 17.38 | ||||||||||
Canceled | -20 | $ | 28.94 | ||||||||||
Balance, May 31, 2013 | 447 | $ | 25.48 | ||||||||||
Granted | 131 | $ | 31.02 | ||||||||||
Assumed | 5 | $ | 9.02 | ||||||||||
Exercised | (95) | $ | 21.51 | ||||||||||
Canceled | (26) | $ | 30.6 | ||||||||||
Balance, May 31, 2014 | 462 | $ | 27.37 | ||||||||||
Outstanding Options | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | In-the-Money Options as of May 31, 2014 | Aggregate Intrinsic Value(1) | |||||||||
(in millions) | (in years) | (in millions) | (in millions) | ||||||||||
Vested | 192 | $ | 23.44 | 5.12 | 190 | $ | 3,608 | ||||||
Expected to vest(2) | 241 | $ | 30.07 | 8.19 | 241 | 2,885 | |||||||
Total | 433 | $ | 27.13 | 6.83 | 431 | $ | 6,493 | ||||||
(1) | The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2014 of $42.02 and the exercise prices for all “in-the-money” options outstanding, excluding tax effects. | ||||||||||||
(2) | The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2014 was approximately $1.2 billion and is expected to be recognized over a weighted average period of 2.51 years. Approximately 29 million shares outstanding as of May 31, 2014 were not expected to vest. | ||||||||||||
Stock-Based Compensation Expense | ' | ||||||||||||
Year Ended May 31, | |||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||
Sales and marketing | $ | 165 | $ | 137 | $ | 115 | |||||||
Cloud software-as-a-service and platform-as-a-service | 8 | 10 | 7 | ||||||||||
Cloud infrastructure-as-a-service | 4 | 8 | 6 | ||||||||||
Software license updates and product support | 22 | 20 | 18 | ||||||||||
Hardware systems products | 5 | 3 | 1 | ||||||||||
Hardware systems support | 6 | 5 | 5 | ||||||||||
Services | 29 | 23 | 17 | ||||||||||
Research and development | 385 | 352 | 295 | ||||||||||
General and administrative | 171 | 164 | 162 | ||||||||||
Acquisition related and other | 10 | 33 | 33 | ||||||||||
Total stock-based compensation | 805 | 755 | 659 | ||||||||||
Estimated income tax benefit included in provision for income taxes | -260 | -243 | -216 | ||||||||||
Total stock-based compensation, net of estimated income tax benefit | $ | 545 | $ | 512 | $ | 443 | |||||||
Valuation of Stock Options | ' | ||||||||||||
Year Ended May 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected life (in years) | 4.9 | 5.0 | 5.1 | ||||||||||
Risk-free interest rate | 1.30% | 0.70% | 1.60% | ||||||||||
Volatility | 27% | 31% | 30% | ||||||||||
Dividend yield | 1.50% | 0.80% | 0.80% | ||||||||||
Weighted-average fair value per share | $ | 7.47 | $ | 7.99 | $ | 9.30 | |||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Income Taxes [Abstract] | ' | |||||||||
Geographical Breakdown of Income Before Provision for Income Taxes | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Domestic | $ | 5,397 | $ | 6,614 | $ | 6,284 | ||||
Foreign | 8,307 | 7,284 | 6,678 | |||||||
Income before provision for income taxes | $ | 13,704 | $ | 13,898 | $ | 12,962 | ||||
Components of Provision for Income Taxes | ' | |||||||||
Year Ended May 31, | ||||||||||
(Dollars in millions) | 2014 | 2013 | 2012 | |||||||
Current provision: | ||||||||||
Federal | $ | 1,613 | $ | 1,720 | $ | 1,611 | ||||
State | 337 | 254 | 257 | |||||||
Foreign | 1,047 | 1,116 | 1,104 | |||||||
Total current provision | $ | 2,997 | $ | 3,090 | $ | 2,972 | ||||
Deferred (benefit) provision: | ||||||||||
Federal | $ | -68 | $ | (179) | $ | 267 | ||||
State | -100 | 82 | 14 | |||||||
Foreign | -80 | (20) | (272) | |||||||
Total deferred (benefit) provision | $ | -248 | $ | (117) | $ | 9 | ||||
Total provision for income taxes | $ | 2,749 | $ | 2,973 | $ | 2,981 | ||||
Effective income tax rate | 20.10% | 21.40% | 23.00% | |||||||
Reconciliation of Differences Between Federal Statutory Tax Rate and Effective Tax Rate | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Tax provision at statutory rate | $ | 4,796 | $ | 4,865 | $ | 4,537 | ||||
Foreign earnings at other than United States rates | -1,790 | (1,637) | (1,474) | |||||||
State tax expense, net of federal benefit | 154 | 299 | 171 | |||||||
Settlements and releases from judicial decisions and statute expirations, net | -168 | (144) | (132) | |||||||
Domestic production activity deduction | -174 | (155) | (178) | |||||||
Other, net | -69 | (255) | 57 | |||||||
Total provision for income taxes | $ | 2,749 | $ | 2,973 | $ | 2,981 | ||||
Components of Deferred Tax Liabilities and Assets | ' | |||||||||
May 31, | ||||||||||
(in millions) | 2014 | 2013 | ||||||||
Deferred tax liabilities: | ||||||||||
Unrealized gain on stock | $ | (130) | $ | (130) | ||||||
Acquired intangible assets | (1,804) | (1,795) | ||||||||
Unremitted earnings | (510) | (249) | ||||||||
Total deferred tax liabilities | $ | (2,444) | $ | (2,174) | ||||||
Deferred tax assets: | ||||||||||
Accruals and allowances | $ | 440 | $ | 481 | ||||||
Employee compensation and benefits | 1,062 | 997 | ||||||||
Differences in timing of revenue recognition | 210 | 158 | ||||||||
Depreciation and amortization | 243 | 243 | ||||||||
Tax credit and net operating loss carryforwards | 2,810 | 2,706 | ||||||||
Other | 96 | 44 | ||||||||
Total deferred tax assets | $ | 4,861 | $ | 4,629 | ||||||
Valuation allowance | $ | (1,053) | $ | (999) | ||||||
Net deferred tax assets | $ | 1,364 | $ | 1,456 | ||||||
Recorded as: | ||||||||||
Current deferred tax assets | $ | 914 | $ | 974 | ||||||
Non-current deferred tax assets | 837 | 766 | ||||||||
Current deferred tax liabilities (in other current liabilities) | (129) | (111) | ||||||||
Non-current deferred tax liabilities (in other non-current liabilities) | (258) | (173) | ||||||||
Net deferred tax assets | $ | 1,364 | $ | 1,456 | ||||||
Gross Unrecognized Tax Benefits, Including Acquisitions | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions) | 2014 | 2013 | 2012 | |||||||
Gross unrecognized tax benefits as of June 1 | $ | 3,601 | $ | 3,276 | $ | 3,160 | ||||
Increases related to tax positions from prior fiscal years | 94 | 279 | 99 | |||||||
Decreases related to tax positions from prior fiscal years | (116) | (125) | (169) | |||||||
Increases related to tax positions taken during current fiscal year | 307 | 312 | 522 | |||||||
Settlements with tax authorities | (2) | (71) | (187) | |||||||
Lapses of statutes of limitation | (53) | (71) | (84) | |||||||
Other, net | 7 | 1 | (65) | |||||||
Total gross unrecognized tax benefits as of May 31 | $ | 3,838 | $ | 3,601 | $ | 3,276 | ||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||||
31-May-14 | |||||||||||||||||||
Segment Information [Abstract] | ' | ||||||||||||||||||
Summary of Businesses and Operating Segments Results | ' | ||||||||||||||||||
Year Ended May 31, | |||||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||||
New software licenses and cloud software subscriptions: | |||||||||||||||||||
Revenues(1) | $ | 10,542 | $ | 10,350 | $ | 9,910 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service expenses | 437 | 313 | 199 | ||||||||||||||||
Sales and distribution expenses | 5,666 | 5,227 | 5,018 | ||||||||||||||||
Margin(2) | $ | 4,439 | $ | 4,810 | $ | 4,693 | |||||||||||||
Cloud infrastructure-as-a-service: | |||||||||||||||||||
Revenues | $ | 491 | $ | 491 | $ | 483 | |||||||||||||
Cloud infrastructure-as-a-service expenses | 310 | 300 | 288 | ||||||||||||||||
Sales and distribution expenses | 62 | 61 | 72 | ||||||||||||||||
Margin(2) | $ | 119 | $ | 130 | $ | 123 | |||||||||||||
Software license updates and product support: | |||||||||||||||||||
Revenues(1) | $ | 18,209 | $ | 17,156 | $ | 16,258 | |||||||||||||
Software license updates and product support expenses | 1,111 | 1,120 | 1,159 | ||||||||||||||||
Margin(2) | $ | 17,098 | $ | 16,036 | $ | 15,099 | |||||||||||||
Total software and cloud business: | |||||||||||||||||||
Revenues(1) | $ | 29,242 | $ | 27,997 | $ | 26,651 | |||||||||||||
Expenses | 7,586 | 7,021 | 6,736 | ||||||||||||||||
Margin(2) | $ | 21,656 | $ | 20,976 | $ | 19,915 | |||||||||||||
Hardware systems products: | |||||||||||||||||||
Revenues | $ | 2,976 | $ | 3,033 | $ | 3,827 | |||||||||||||
Hardware systems products expenses | 1,516 | 1,498 | 1,841 | ||||||||||||||||
Sales and distribution expenses | 940 | 885 | 1,050 | ||||||||||||||||
Margin(2) | $ | 520 | $ | 650 | $ | 936 | |||||||||||||
Hardware systems support: | |||||||||||||||||||
Revenues(1) | $ | 2,407 | $ | 2,327 | $ | 2,505 | |||||||||||||
Hardware systems support expenses | 802 | 857 | 1,006 | ||||||||||||||||
Margin(2) | $ | 1,605 | $ | 1,470 | $ | 1,499 | |||||||||||||
Total hardware systems business: | |||||||||||||||||||
Revenues(1) | $ | 5,383 | $ | 5,360 | $ | 6,332 | |||||||||||||
Expenses | 3,258 | 3,240 | 3,897 | ||||||||||||||||
Margin(2) | $ | 2,125 | $ | 2,120 | $ | 2,435 | |||||||||||||
Total services business: | |||||||||||||||||||
Revenues(1) | $ | 3,681 | $ | 3,896 | $ | 4,238 | |||||||||||||
Services expenses | 2,815 | 3,047 | 3,248 | ||||||||||||||||
Margin(2) | $ | 866 | $ | 849 | $ | 990 | |||||||||||||
Totals: | |||||||||||||||||||
Revenues(1) | $ | 38,306 | $ | 37,253 | $ | 37,221 | |||||||||||||
Expenses | 13,659 | 13,308 | 13,881 | ||||||||||||||||
Margin(2) | $ | 24,647 | $ | 23,945 | $ | 23,340 | |||||||||||||
-1 | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total revenues. Our new software license, cloud IaaS and services revenues for management reporting also differ from amounts reported per our consolidated statements of operations for the periods presented due to certain insignificant reclassifications between these lines for management reporting purposes. | ||||||||||||||||||
-2 | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net. | ||||||||||||||||||
Reconciliation of Total Operating Segment Revenues to Total Revenues | ' | ||||||||||||||||||
Year Ended May 31, | |||||||||||||||||||
(in millions) | 2014 | 2013 | 2012 | ||||||||||||||||
Total revenues for operating segments | $ | 38,306 | $ | 37,253 | $ | 37,221 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -17 | -45 | -22 | ||||||||||||||||
Software license updates and product support revenues(1) | -3 | -14 | (48) | ||||||||||||||||
Hardware systems support revenues(1) | -11 | -14 | (30) | ||||||||||||||||
Total revenues | $ | 38,275 | $ | 37,180 | $ | 37,121 | |||||||||||||
Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes | ' | ||||||||||||||||||
Total margin for operating segments | $ | 24,647 | $ | 23,945 | $ | 23,340 | |||||||||||||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -17 | -45 | -22 | ||||||||||||||||
Software license updates and product support revenues(1) | -3 | -14 | (48) | ||||||||||||||||
Hardware systems support revenues(1) | -11 | -14 | (30) | ||||||||||||||||
Product development | -4,590 | -4,321 | -4,050 | ||||||||||||||||
Marketing and partner program expenses | -564 | -591 | -581 | ||||||||||||||||
Corporate, general and administrative and information technology expenses | -1,384 | -1,421 | -1,496 | ||||||||||||||||
Amortization of intangible assets | -2,300 | -2,385 | -2,430 | ||||||||||||||||
Acquisition related and other | -41 | 604 | -56 | ||||||||||||||||
Restructuring | -183 | -352 | -295 | ||||||||||||||||
Stock-based compensation | -795 | -722 | -626 | ||||||||||||||||
Interest expense | -914 | -797 | -766 | ||||||||||||||||
Non-operating (expense) income, net | -141 | 11 | 22 | ||||||||||||||||
Income before provision for income taxes | $ | 13,704 | $ | 13,898 | $ | 12,962 | |||||||||||||
-1 | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments. | ||||||||||||||||||
Geographic Information | ' | ||||||||||||||||||
As of and for the Year Ended May 31, | |||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||
(in millions) | Revenues | Long Lived Assets(1) | Revenues | Long Lived Assets(1) | Revenues | Long Lived Assets(1) | |||||||||||||
United States | $ | 16,809 | $ | 2,993 | $ | 16,003 | $ | 2,921 | $ | 15,767 | $ | 2,468 | |||||||
United Kingdom | 2,309 | 236 | 2,165 | 203 | 2,302 | 171 | |||||||||||||
Japan | 1,558 | 414 | 1,770 | 428 | 1,865 | 550 | |||||||||||||
Germany | 1,483 | 35 | 1,308 | 44 | 1,484 | 47 | |||||||||||||
Canada | 1,190 | 31 | 1,232 | 34 | 1,234 | 37 | |||||||||||||
France | 1,148 | 28 | 1,054 | 17 | 1,162 | 16 | |||||||||||||
Australia | 994 | 63 | 1,084 | 54 | 1,163 | 38 | |||||||||||||
Other countries | 12,784 | 816 | 12,564 | 814 | 12,144 | 741 | |||||||||||||
Total | $ | 38,275 | $ | 4,616 | $ | 37,180 | $ | 4,515 | $ | 37,121 | $ | 4,068 | |||||||
(1) | Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. | ||||||||||||||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 12 Months Ended | |||||||||
31-May-14 | ||||||||||
Earnings Per Share [Abstract] | ' | |||||||||
Earnings Per Share | ' | |||||||||
Year Ended May 31, | ||||||||||
(in millions, except per share data) | 2014 | 2013 | 2012 | |||||||
Net income | $ | 10,955 | $ | 10,925 | $ | 9,981 | ||||
Weighted average common shares outstanding | 4,528 | 4,769 | 5,015 | |||||||
Dilutive effect of employee stock plans | 76 | 75 | 80 | |||||||
Dilutive weighted average common shares outstanding | 4,604 | 4,844 | 5,095 | |||||||
Basic earnings per share | $ | 2.42 | $ | 2.29 | $ | 1.99 | ||||
Diluted earnings per share | $ | 2.38 | $ | 2.26 | $ | 1.96 | ||||
Shares subject to anti-dilutive stock options and restricted | ||||||||||
stock-based awards excluded from calculation(1) | 76 | 208 | 110 | |||||||
(1) | These weighted shares relate to anti-dilutive stock options and restricted stock-based awards as calculated using the treasury stock method and could be dilutive in the future. See Note 14 for information regarding the exercise prices of our outstanding, unexercised options. | |||||||||
ORGANIZATION_AND_SIGNIFICANT_A3
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Aug. 31, 2012 | 31-May-14 | 31-May-13 | 31-May-12 |
Acquisition Related and Other Expenses [Abstract] | ' | ' | ' | ' |
Transitional and other employee related costs | ' | $27 | $27 | $25 |
Stock-based compensation | ' | 10 | 33 | 33 |
Professional fees and other, net | ' | 20 | -276 | 13 |
Business combination adjustments, net | ' | -16 | -388 | -15 |
Total acquisition related and other expenses | ' | 41 | -604 | 56 |
Change in fair value of contingent consideration payable | ' | ' | 387 | ' |
Benefit related to certain litigation | 306 | ' | 306 | ' |
Advertising [Abstract] | ' | ' | ' | ' |
Advertising expenses | ' | 79 | 85 | 79 |
Basis of Financial Statements Abstract | ' | ' | ' | ' |
Change in fair value of contingent consideration payable | ' | ' | 387 | ' |
Benefit related to certain litigation | 306 | ' | 306 | ' |
Foreign Currency [Abstract] | ' | ' | ' | ' |
Net foreign exchange transaction losses included in non-operating (expense) income, net | ' | 375 | 162 | 105 |
Goodwill, Intangible Assets and Impairment Assessments [Abstract] | ' | ' | ' | ' |
Goodwill and Intangible Assets Impairment | ' | 0 | 0 | 0 |
Non-Operating (Expense) Income, net [Abstract] | ' | ' | ' | ' |
Interest income | ' | 263 | 237 | 231 |
Foreign currency losses, net | ' | -375 | -162 | -105 |
Noncontrolling interests in income | ' | -98 | -112 | -119 |
Other income, net | ' | 69 | 48 | 15 |
Total non-operating (expense) income, net | ' | -141 | 11 | 22 |
Foreign currency remeasurement loss resulting from the recent devaluation of the Venezuelan currency | ' | 213 | 64 | ' |
Other Receivables [Narrative] [Abstract] | ' | ' | ' | ' |
Other receivables included in prepaid expenses and other current assets | ' | 906 | 826 | ' |
Sales of Financing Receivables [Narrative] [Abstract] | ' | ' | ' | ' |
Sales of financing receivables | ' | $2,000 | $2,200 | $1,600 |
ORGANIZATION_AND_SIGNIFICANT_A4
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Narrative (Details) | 12 Months Ended |
31-May-14 | |
Concentrations of Credit Risk [Abstract] | ' |
Customer Concentrations | 'No single customer accounted for 10% or more of our total revenues in fiscal 2014, 2013 or 2012. |
Property, Plant and Equipment (Impairment Assessments) [Abstract] | ' |
Impairment of Property, Plant and Equipment | 'We did not recognize any significant property impairment charges in fiscal 2014, 2013 or 2012. |
Research and Development and Software Development Costs [Abstract] | ' |
Research and Development and Software Development Costs | 'Software development costs required to be capitalized under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, and under ASC 350-40, Internal-Use Software, were not material to our consolidated financial statements in fiscal 2014, 2013 and 2012. |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | Mar. 31, 2013 | 31-May-14 | Mar. 28, 2013 | Feb. 28, 2013 | 31-May-14 | Feb. 08, 2013 | Feb. 28, 2014 | 31-May-14 | Feb. 06, 2014 | 31-May-14 | Apr. 30, 2012 | 31-May-14 | Apr. 05, 2012 | Jan. 31, 2012 | 31-May-14 | Jan. 25, 2012 | 31-May-14 | 31-May-13 | Jul. 18, 2011 | 31-May-14 | 31-May-12 | Jun. 23, 2014 |
Acme Packet, Inc. [Member] | Acme Packet, Inc. [Member] | Acme Packet, Inc. [Member] | Eloqua, Inc. [Member] | Eloqua, Inc. [Member] | Eloqua, Inc. [Member] | Responsys, Inc. [Member] | Responsys, Inc. [Member] | Responsys, Inc. [Member] | Other Fiscal 2013 Acquisitions [Member] | Taleo Corporation [Member] | Taleo Corporation [Member] | Taleo Corporation [Member] | RightNow Technologies, Inc. [Member] | RightNow Technologies, Inc. [Member] | RightNow Technologies, Inc. [Member] | Pillar Data Systems, Inc. [Member] | Pillar Data Systems, Inc. [Member] | Pillar Data Systems, Inc. [Member] | Other Fiscal 2014 Acquisitions [Member] | Other Fiscal 2012 Acquisitions [Member] | MICROS Systems, Inc. [Member] | ||||
Acquisitions [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition completion date | ' | ' | ' | ' | 28-Mar-13 | ' | ' | 8-Feb-13 | ' | ' | 6-Feb-14 | ' | ' | ' | 5-Apr-12 | ' | ' | 25-Jan-12 | ' | 18-Jul-11 | ' | ' | ' | ' | ' |
Merger agreement date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 29-Jun-11 | ' | ' | ' | ' | ' |
Total purchase price | ' | ' | ' | $2,100 | ' | ' | $935 | ' | ' | $1,600 | ' | ' | ' | $2,000 | ' | ' | $1,500 | ' | ' | ' | ' | ' | $2,300 | $1,600 | ' |
Purchase price payable consisting of estimated fair value of the liability for contingent consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 346 | ' | ' | ' |
Cash portion of purchase price | ' | ' | ' | 2,100 | ' | ' | 933 | ' | ' | 1,400 | ' | ' | ' | 2,000 | ' | ' | 1,500 | ' | ' | ' | ' | ' | 2,300 | 1,600 | ' |
Fair value of stock options and restricted stock-based awards assumed | ' | ' | ' | 12 | ' | ' | 2 | ' | ' | 147 | ' | ' | ' | 10 | ' | ' | 14 | ' | ' | ' | ' | ' | ' | 5 | ' |
Identifiable intangible assets recorded | ' | ' | ' | ' | ' | 525 | ' | ' | 327 | ' | ' | 580 | ' | ' | ' | 1,100 | ' | ' | 697 | ' | ' | 142 | 1,100 | 540 | ' |
In-process research and development recorded | ' | ' | ' | 45 | ' | ' | ' | ' | ' | 14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 99 | ' | ' |
Net tangible assets (liabilities) assumed | ' | ' | ' | ' | ' | 247 | ' | ' | 1 | ' | ' | -35 | ' | ' | ' | -244 | ' | ' | -259 | ' | ' | -16 | -213 | 29 | ' |
Goodwill | 29,652 | 27,343 | 25,119 | ' | ' | 1,300 | ' | ' | 607 | ' | ' | 1,000 | ' | ' | ' | 1,100 | ' | ' | 1,100 | ' | ' | 220 | 1,300 | 1,100 | ' |
Estimated fair value of the Earn-Out Liability | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' |
Amount of Earn-Out that an affiliate of Mr. Ellison has the first preference right to receive | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 565 | ' | ' | ' |
Percentage right that an affiliate of Mr. Ellison has over any amount of the Earn-Out that exceeds $565 million | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 55.00% | ' | ' | ' |
Description of Earn-Out | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'The Earn-Out will be calculated with respect to a three-year period that commenced with our second quarter of fiscal 2012 and will conclude with our first quarter of fiscal 2015 (Earn-Out Period). The Earn-Out will be an amount (if positive) calculated based on the product of (i) the difference between (x) future revenues generated from the sale of certain Pillar Data products during Oraclebs last four full fiscal quarters during the Earn-Out Period minus (y) certain losses associated with certain Pillar Data products incurred over the entire Earn-Out Period, multiplied by (ii) three. Our obligation to pay the Earn-Out will be subject to reduction as a result of our right to set-off the amount of any indemnification claims we may have under the Pillar Data Merger Agreement. We do not expect the amount of the Earn-Out or its potential impact will be material to our results of operations or financial position. | ' | ' | ' | ' | ' |
Net benefit to acquistion related and other expenses | ' | 387 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 387 | ' | ' | ' | ' |
Materiality of acquisitions individually or in the aggregate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'These acquisitions were not significant individually or in the aggregate. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated total purchase price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,300 |
Amount to be paid in cash per share of common stock upon the consummation of the merger (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $68 |
Acquisitions Proforma [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | 38,486 | 38,258 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $10,826 | $10,676 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic earnings per share (in dollars per share) | $2.39 | $2.24 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Diluted earnings per share (in dollars per share) | $2.35 | $2.20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
CASH_CASH_EQUIVALENTS_AND_MARK2
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 |
Cash, Cash Equivalents and Marketable Securities [Abstract] | ' | ' |
Commercial paper debt securities | $7,969 | $14,043 |
Corporate debt securities and other | 16,657 | 4,935 |
Total investments | 24,626 | 18,978 |
Investments classified as cash equivalents | 3,576 | 1,375 |
Investments classified as marketable securities | $21,050 | $17,603 |
Maturity of marketable security investments | 'As of May 31, 2014 and 2013, approximately 45% and 91%, respectively, of our marketable securities investments mature within one year and 55% and 9%, respectively, mature within one to four years. | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 31-May-14 | 31-May-13 |
In Millions, unless otherwise specified | ||
Assets [Abstract] | ' | ' |
Commercial paper debt securities | $7,969 | $14,043 |
Corporate debt securities and other | 16,657 | 4,935 |
Derivative financial instruments | 97 | 41 |
Total assets | 24,723 | 19,019 |
Liabilities [Abstract] | ' | ' |
Total debt | 24,200 | 18,500 |
Fair Value Measurements Using Input Types Level 1 [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Corporate debt securities and other | 119 | 246 |
Total assets | 119 | 246 |
Fair Value Measurements Using Input Types Level 2 [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Commercial paper debt securities | 7,969 | 14,043 |
Corporate debt securities and other | 16,538 | 4,689 |
Derivative financial instruments | 97 | 41 |
Total assets | 24,604 | 18,773 |
Liabilities [Abstract] | ' | ' |
Total debt fair value | $26,400 | $20,700 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | 31-May-14 | 31-May-13 |
In Millions, unless otherwise specified | ||
Inventories [Abstract] | ' | ' |
Raw materials | $74 | $114 |
Work-in-process | 28 | 31 |
Finished goods | 87 | 95 |
Total | $189 | $240 |
PROPERTY_PLANT_AND_EQUIPMENT_D
PROPERTY, PLANT AND EQUIPMENT (Details) (USD $) | 31-May-14 | 31-May-13 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 | 31-May-14 |
In Millions, unless otherwise specified | Minimum | Maximum | Computer, network, machinery and equipment | Computer, network, machinery and equipment | Buildings and improvements | Buildings and improvements | Furniture, fixtures and other | Furniture, fixtures and other | ||
Minimum | Maximum | Minimum | Maximum | Minimum | Maximum | |||||
Property, Plant And Equipment [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated Useful Lives | ' | ' | '1 year | '50 years | '1 year | '5 years | '1 year | '50 years | '3 years | '10 years |
Property, Plant and Equipment, Net [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Computer, network, machinery and equipment | $2,468 | $2,138 | ' | ' | ' | ' | ' | ' | ' | ' |
Buildings and improvements | 2,582 | 2,477 | ' | ' | ' | ' | ' | ' | ' | ' |
Furniture, fixtures and other | 531 | 481 | ' | ' | ' | ' | ' | ' | ' | ' |
Land | 632 | 632 | ' | ' | ' | ' | ' | ' | ' | ' |
Construction in progress | 26 | 28 | ' | ' | ' | ' | ' | ' | ' | ' |
Total property, plant and equipment | 6,239 | 5,756 | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated depreciation | -3,178 | -2,703 | ' | ' | ' | ' | ' | ' | ' | ' |
Total property, plant and equipment, net | $3,061 | $3,053 | ' | ' | ' | ' | ' | ' | ' | ' |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | $16,580 | $20,502 | ' | |
In-process research and development | 30 | ' | ' | |
Additions | 1,797 | ' | ' | |
Retirements | -5,719 | ' | ' | |
Accumulated Amortization | -10,443 | -13,862 | ' | |
Expense | -2,300 | -2,385 | -2,430 | |
Retirements | 5,719 | ' | ' | |
Intangible assets subject to amortization | 6,107 | ' | ' | |
Total intangible assets, net | 6,137 | 6,640 | ' | |
Intangible assets subject to amortization [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 16,550 | 20,457 | ' | |
Additions | 1,812 | ' | ' | |
Retirements | -5,719 | ' | ' | |
Accumulated Amortization | -10,443 | -13,862 | ' | |
Expense | -2,300 | ' | ' | |
Retirements | 5,719 | ' | ' | |
Intangible assets subject to amortization | 6,107 | 6,595 | ' | |
Weighted Average Useful Life (in years) | '8 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Software support agreements and related relationships [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 5,218 | 5,298 | ' | |
Retirements | -80 | ' | ' | |
Accumulated Amortization | -4,403 | -3,912 | ' | |
Expense | -571 | ' | ' | |
Retirements | 80 | ' | ' | |
Intangible assets subject to amortization | 815 | 1,386 | ' | |
Intangible assets subject to amortization [Member] | Hardware systems support agreements and related relationships [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 969 | 817 | ' | |
Additions | 152 | ' | ' | |
Accumulated Amortization | -530 | -387 | ' | |
Expense | -143 | ' | ' | |
Intangible assets subject to amortization | 439 | 430 | ' | |
Weighted Average Useful Life (in years) | '9 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Developed technology [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 4,387 | 7,466 | ' | |
Additions | 928 | ' | ' | |
Retirements | -4,007 | ' | ' | |
Accumulated Amortization | -2,176 | -5,477 | ' | |
Expense | -706 | ' | ' | |
Retirements | 4,007 | ' | ' | |
Intangible assets subject to amortization | 2,211 | 1,989 | ' | |
Weighted Average Useful Life (in years) | '7 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Core technology [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 1,617 | 2,579 | ' | |
Retirements | -962 | ' | ' | |
Accumulated Amortization | -1,294 | -1,938 | ' | |
Expense | -318 | ' | ' | |
Retirements | 962 | ' | ' | |
Intangible assets subject to amortization | 323 | 641 | ' | |
Intangible assets subject to amortization [Member] | Customer relationships and contract backlog [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 2,054 | 2,435 | ' | |
Additions | 131 | ' | ' | |
Retirements | -512 | ' | ' | |
Accumulated Amortization | -1,459 | -1,637 | ' | |
Expense | -334 | ' | ' | |
Retirements | 512 | ' | ' | |
Intangible assets subject to amortization | 595 | 798 | ' | |
Weighted Average Useful Life (in years) | '4 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | SaaS and PaaS agreements and related relationships and other [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 1,789 | 1,227 | ' | |
Additions | 562 | ' | ' | |
Accumulated Amortization | -305 | -155 | ' | |
Expense | -150 | ' | ' | |
Intangible assets subject to amortization | 1,484 | 1,072 | ' | |
Weighted Average Useful Life (in years) | '10 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Trademarks [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 516 | 635 | ' | |
Additions | 39 | ' | ' | |
Retirements | -158 | ' | ' | |
Accumulated Amortization | -276 | -356 | ' | |
Expense | -78 | ' | ' | |
Retirements | 158 | ' | ' | |
Intangible assets subject to amortization | 240 | 279 | ' | |
Weighted Average Useful Life (in years) | '10 years | [1] | ' | ' |
In-process research and development [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
In-process research and development | 30 | 45 | ' | |
Additions | ($15) | ' | ' | |
[1] | Represents weighted average useful lives of intangible assets acquired during fiscal 2014. |
INTANGIBLE_ASSETS_AMORTIZATION
INTANGIBLE ASSETS AMORTIZATION (Details) (USD $) | 31-May-14 | 31-May-13 |
In Millions, unless otherwise specified | ||
Intangible assets estimated future amortization expense [Abstract] | ' | ' |
Fiscal 2015 | $1,934 | ' |
Fiscal 2016 | 1,337 | ' |
Fiscal 2017 | 741 | ' |
Fiscal 2018 | 607 | ' |
Fiscal 2019 | 508 | ' |
Thereafter | 980 | ' |
Total intangible assets subject to amortization | 6,107 | ' |
In-process research and development | 30 | ' |
Total intangible assets, net | $6,137 | $6,640 |
GOODWILL_Details
GOODWILL (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | ||
Goodwill [Line Items] | ' | ' | ||
Balances at period start | $27,343 | $25,119 | ||
Goodwill from acquisitions | 2,295 | 2,363 | ||
Goodwill adjustments | 14 | [1] | -139 | [1] |
Balances at period end | 29,652 | 27,343 | ||
New Software Licenses and Cloud Software Subscriptions [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Balances at period start | 10,533 | 7,367 | ||
Allocation of goodwill | 875 | [2] | 2,346 | [2] |
Goodwill from acquisitions | 1,721 | 933 | ||
Goodwill adjustments | 10 | [1] | -113 | [1] |
Balances at period end | 13,139 | 10,533 | ||
Software License Updates and Product Support [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Balances at period start | 12,474 | 12,479 | ||
Goodwill from acquisitions | 4 | 27 | ||
Goodwill adjustments | -6 | [1] | -32 | [1] |
Balances at period end | 12,472 | 12,474 | ||
Hardware Systems Support [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Balances at period start | 1,259 | 1,193 | ||
Allocation of goodwill | 380 | [2] | ' | |
Goodwill from acquisitions | 436 | 62 | ||
Goodwill adjustments | 7 | [1] | 4 | [1] |
Balances at period end | 2,082 | 1,259 | ||
Other [Member] | ' | ' | ||
Goodwill [Line Items] | ' | ' | ||
Balances at period start | 3,077 | [3] | 4,080 | [3] |
Allocation of goodwill | -1,255 | [2],[3] | -2,346 | [2],[3] |
Goodwill from acquisitions | 134 | [3] | 1,341 | [3] |
Goodwill adjustments | 3 | [1],[3] | 2 | [1],[3] |
Balances at period end | $1,959 | [3] | $3,077 | [3] |
[1] | Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effect on goodwill of changes to net assets acquired during the measurement period (up to one year from the date of an acquisition). Goodwill adjustments were not significant to our previously reported operating results or financial position. | |||
[2] | Represents the allocation of goodwill to our operating segments upon completion of our intangible asset valuations. | |||
[3] | Represents goodwill allocated to our other operating segments and goodwill to be allocated to our operating segments upon completion of our intangible asset valuations, if any. |
NOTES_PAYABLE_AND_OTHER_BORROW2
NOTES PAYABLE AND OTHER BORROWINGS (Details) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Capital leases | ' | $1 | ||
Total borrowings | 24,175 | 18,494 | ||
Notes payable, current and other current borrowings | 1,508 | ' | ||
Notes payable, non-current and other non-current borrowings | 22,667 | 18,494 | ||
Fair value adjustments | 97 | 41 | ||
3.75% senior notes due July 2014 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,508 | [1] | 1,541 | [1] |
Stated interest rate percentage | 3.75% | ' | ||
Maturity date | 8-Jul-14 | ' | ||
Fair value adjustments | 8 | [1] | 41 | [1] |
5.25% senior notes due January 2016 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,998 | 1,997 | ||
Stated interest rate percentage | 5.25% | ' | ||
Maturity date | 15-Jan-16 | ' | ||
Unamortized discount on debt issued | 2 | 3 | ||
1.20% senior notes due October 2017 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 2,497 | 2,497 | ||
Stated interest rate percentage | 1.20% | ' | ||
Maturity date | 15-Oct-17 | ' | ||
Unamortized discount on debt issued | 3 | 3 | ||
5.75% senior notes due April 2018 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 2,500 | 2,499 | ||
Stated interest rate percentage | 5.75% | ' | ||
Maturity date | 15-Apr-18 | ' | ||
Unamortized discount on debt issued | ' | 1 | ||
Floating rate senior notes due January 2019 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 500 | ' | ||
Maturity date | 15-Jan-19 | ' | ||
2.375% senior notes due January 2019 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,510 | [1] | ' | |
Stated interest rate percentage | 2.38% | ' | ||
Maturity date | 15-Jan-19 | ' | ||
Fair value adjustments | 15 | [1] | ' | |
Unamortized discount on debt issued | 5 | ' | ||
5.00% senior notes due July 2019 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,747 | 1,746 | ||
Stated interest rate percentage | 5.00% | ' | ||
Maturity date | 8-Jul-19 | ' | ||
Unamortized discount on debt issued | 3 | 4 | ||
3.875% senior notes due July 2020 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 999 | 998 | ||
Stated interest rate percentage | 3.88% | ' | ||
Maturity date | 15-Jul-20 | ' | ||
Unamortized discount on debt issued | 1 | 2 | ||
2.25% senior notes due January 2021 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,691 | [2] | ' | |
Stated interest rate percentage | 2.25% | ' | ||
Maturity date | 10-Jan-21 | ' | ||
Unamortized discount on debt issued | 9 | [2] | ' | |
2.50% senior notes due October 2022 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 2,498 | 2,498 | ||
Stated interest rate percentage | 2.50% | ' | ||
Maturity date | 15-Oct-22 | ' | ||
Unamortized discount on debt issued | 2 | 2 | ||
3.625% senior notes due July 2023 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 992 | ' | ||
Stated interest rate percentage | 3.63% | ' | ||
Maturity date | 15-Jul-23 | ' | ||
Unamortized discount on debt issued | 8 | ' | ||
3.125% senior notes due July 2025 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,017 | [2] | ' | |
Stated interest rate percentage | 3.13% | ' | ||
Maturity date | 10-Jul-25 | ' | ||
Unamortized discount on debt issued | 3 | [2] | ' | |
6.50% senior notes due April 2038 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,248 | 1,248 | ||
Stated interest rate percentage | 6.50% | ' | ||
Maturity date | 15-Apr-38 | ' | ||
Unamortized discount on debt issued | 2 | 2 | ||
6.125% senior notes due July 2039 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 1,243 | 1,243 | ||
Stated interest rate percentage | 6.13% | ' | ||
Maturity date | 8-Jul-39 | ' | ||
Unamortized discount on debt issued | 7 | 7 | ||
5.375% senior notes due July 2040 [Member] | ' | ' | ||
Notes Payable Other Borrowings [Line Items] | ' | ' | ||
Senior notes | 2,227 | 2,226 | ||
Stated interest rate percentage | 5.38% | ' | ||
Maturity date | 15-Jul-40 | ' | ||
Unamortized discount on debt issued | $23 | $24 | ||
[1] | Refer to Note 11 for a description of our accounting for fair value hedges. | |||
[2] | Euro based notes valued at May 31, 2014 foreign exchange rates (see further discussion below) |
NOTES_PAYABLE_AND_OTHER_BORROW3
NOTES PAYABLE AND OTHER BORROWINGS Narrative (Details) | 12 Months Ended |
31-May-14 | |
Notes Payable and Other Borrowings (Narrative) [Abstract] | ' |
Debt-related covenants | 'We were in compliance with all debt-related covenants as of May 31, 2014. We were in compliance with the 2013 Credit Agreement's covenants as of May 31, 2014. |
Revolving Credit Agreement | 'In April 2013, we entered into a $3.0 billion Revolving Credit Agreement with Wells Fargo Bank, N.A., Bank of America, N.A., BNP Paribas, JPMorgan Chase Bank, N.A. and certain other lenders (the 2013 Credit Agreement). The 2013 Credit Agreement provides for an unsecured 5-year revolving credit facility to be used for general corporate purposes including back-stopping any commercial paper notes that we may issue. Subject to certain conditions stated in the 2013 Credit Agreement, we may borrow, prepay and re-borrow amounts under the 2013 Credit Agreement at any time during the term of the 2013 Credit Agreement. Interest under the 2013 Credit Agreement is based on either (a) a LIBOR-based formula or (b) the Base Rate formula, each as set forth in the 2013 Credit Agreement. Any amounts drawn pursuant to the 2013 Credit Agreement are due on April 20, 2018. No amounts were outstanding pursuant to the 2013 Credit Agreement as of May 31, 2014 and 2013. The 2013 Credit Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that our total net debt to total capitalization ratio not exceed 45% on a consolidated basis. If any of the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the 2013 Credit Agreement may be declared immediately due and payable and the 2013 Credit Agreement may be terminated. On May 29, 2012, we borrowed $1.7 billion pursuant to a revolving credit agreement with JPMorgan Chase Bank, N.A., as initial lender and administrative agent; and J.P. Morgan Securities, LLC, as sole lead arranger and sole bookrunner (the 2012 Credit Agreement). During fiscal 2013, we repaid the $1.7 billion and the 2012 Credit Agreement expired pursuant to its terms. On May 27, 2011, we entered into two revolving credit agreements with BNP Paribas, as initial lender and administrative agent, and BNP Paribas Securities Corp., as sole lead arranger and sole bookrunner (the 2011 Credit Agreements), and borrowed $1.15 billion pursuant to these agreements. During fiscal 2012, we repaid the $1.15 billion and the 2011 Credit Agreements expired pursuant to their terms. |
NOTES_PAYABLE_AND_OTHER_BORROW4
NOTES PAYABLE AND OTHER BORROWINGS Table (Details) | 31-May-14 | Jul. 16, 2013 | Jul. 10, 2013 | 31-May-13 | Oct. 25, 2012 | Jul. 12, 2010 | Jul. 08, 2009 | Apr. 09, 2008 | Jan. 13, 2006 | 31-May-14 | 31-May-13 | 31-May-14 | 31-May-13 | 31-May-12 | 31-May-14 | 31-May-12 | 31-May-11 |
In Millions, unless otherwise specified | USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | 2013 Credit Agreement [Member] | 2013 Credit Agreement [Member] | 2012 Credit Agreement [Member] | 2012 Credit Agreement [Member] | 2012 Credit Agreement [Member] | 2011 Credit Agreement [Member] | 2011 Credit Agreement [Member] | 2011 Credit Agreement [Member] |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||||
Commercial Paper Program and Commercial Paper Notes (Narrative) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commercial paper capacity | $3,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding commercial paper | 0 | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal Payments for All Borrowings [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fiscal 2015 | 1,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fiscal 2016 | 2,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fiscal 2017 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fiscal 2018 | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fiscal 2019 | 2,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Thereafter | 13,620 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | 24,120 | 3,000 | 2,000 | ' | 5,000 | 3,250 | 4,500 | 5,000 | 5,750 | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving Credit Agreements [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving credit agreement initiation date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 22-Apr-13 | ' | ' | ' | ' | ' | ' | ' |
Revolving credit agreement capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000 | ' | ' | ' | ' | ' | ' | ' |
Revolving credit agreement due date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20-Apr-18 | ' | ' | ' | ' | ' | ' | ' |
Revolving credit agreement amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' |
Maximum total net debt to total capitalization ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.45 | ' | ' | ' | ' | ' | ' | ' |
Revolving credit agreement issuance date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 29-May-12 | ' | ' | 27-May-11 | ' | ' |
Revolving credit agreement amount borrowed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,700 | ' | ' | 1,150 |
Repayments of credit agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,700 | ' | ' | $1,150 | ' |
NOTES_PAYABLE_AND_OTHER_BORROW5
NOTES PAYABLE AND OTHER BORROWINGS Narrative Continued (Details) | 31-May-14 | Jul. 16, 2013 | Jul. 10, 2013 | Oct. 25, 2012 | Jul. 12, 2010 | Jul. 08, 2009 | Apr. 09, 2008 | Jan. 13, 2006 | 31-May-14 | Jul. 10, 2013 | 31-May-14 | Jul. 10, 2013 | 31-May-14 | 31-May-14 | Jul. 16, 2013 | 31-May-14 | Jul. 16, 2013 | 31-May-14 | Jul. 16, 2013 | 31-May-14 | Oct. 25, 2012 | 31-May-14 | Oct. 25, 2012 | Apr. 30, 2013 | 31-May-14 | Apr. 09, 2008 | 31-May-14 | Dec. 16, 2011 | Jul. 12, 2010 | 31-May-14 | Dec. 16, 2011 | Jul. 12, 2010 | Jan. 31, 2011 | 31-May-14 | Jan. 13, 2006 | 31-May-14 | Jul. 08, 2009 | 31-May-14 | Jul. 08, 2009 | 31-May-14 | Jul. 08, 2009 | 31-May-14 | Apr. 09, 2008 | 31-May-14 | Apr. 09, 2008 | 31-May-14 | Jan. 13, 2006 | Feb. 28, 2012 |
In Millions, unless otherwise specified | USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | 2.25% senior notes due January 2021 [Member] | 2.25% senior notes due January 2021 [Member] | 3.125% senior notes due July 2025 [Member] | 3.125% senior notes due July 2025 [Member] | Euro Notes [Member] | Floating rate senior notes due January 2019 [Member] | Floating rate senior notes due January 2019 [Member] | 2.375% senior notes due January 2019 [Member] | 2.375% senior notes due January 2019 [Member] | 3.625% senior notes due July 2023 [Member] | 3.625% senior notes due July 2023 [Member] | 1.20% senior notes due October 2017 [Member] | 1.20% senior notes due October 2017 [Member] | 2.50% senior notes due October 2022 [Member] | 2.50% senior notes due October 2022 [Member] | 4.95% senior notes due April 2013 [Member] | 4.95% senior notes due April 2013 [Member] | 4.95% senior notes due April 2013 [Member] | 3.875% senior notes due July 2020 [Member] | 3.875% senior notes due July 2020 [Member] | 3.875% senior notes due July 2020 [Member] | 5.375% senior notes due July 2040 [Member] | 5.375% senior notes due July 2040 [Member] | 5.375% senior notes due July 2040 [Member] | 5.00% senior notes matured January 2011 [Member] | 5.00% senior notes matured January 2011 [Member] | 5.00% senior notes matured January 2011 [Member] | 3.75% senior notes due July 2014 [Member] | 3.75% senior notes due July 2014 [Member] | 5.00% senior notes due July 2019 [Member] | 5.00% senior notes due July 2019 [Member] | 6.125% senior notes due July 2039 [Member] | 6.125% senior notes due July 2039 [Member] | 5.75% senior notes due April 2018 [Member] | 5.75% senior notes due April 2018 [Member] | 6.50% senior notes due April 2038 [Member] | 6.50% senior notes due April 2038 [Member] | 5.25% senior notes due January 2016 [Member] | 5.25% senior notes due January 2016 [Member] | RightNow legacy convertible notes [Member] |
USD ($) | EUR (€) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||||||||||||||||||||||
Senior Notes and Other [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total debt issued | $24,120 | $3,000 | € 2,000 | $5,000 | $3,250 | $4,500 | $5,000 | $5,750 | ' | € 1,250 | ' | € 750 | $2,700 | ' | $500 | ' | $1,500 | ' | $1,000 | ' | $2,500 | ' | $2,500 | ' | ' | $1,250 | ' | ' | $1,000 | ' | ' | $2,250 | ' | ' | $2,250 | ' | $1,500 | ' | $1,750 | ' | $1,250 | ' | $2,500 | ' | $1,250 | ' | $2,000 | ' |
Senior notes issuance date | ' | ' | ' | ' | ' | ' | ' | ' | 10-Jul-13 | ' | 10-Jul-13 | ' | ' | 16-Jul-13 | ' | 16-Jul-13 | ' | 16-Jul-13 | ' | 25-Oct-12 | ' | 25-Oct-12 | ' | ' | 9-Apr-08 | ' | 12-Jul-10 | ' | ' | 12-Jul-10 | ' | ' | ' | 13-Jan-06 | ' | 8-Jul-09 | ' | 8-Jul-09 | ' | 8-Jul-09 | ' | 9-Apr-08 | ' | 9-Apr-08 | ' | 13-Jan-06 | ' | ' |
Repayment of borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,250 | ' | ' | ' | ' | ' | ' | ' | ' | 2,250 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate principal amount tendered and exchanged under the completed registered offer to exchange | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 994 | ' | ' | 2,240 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stated interest rate percentage | ' | ' | ' | ' | ' | ' | ' | ' | 2.25% | ' | 3.13% | ' | ' | ' | ' | 2.38% | ' | 3.63% | ' | 1.20% | ' | 2.50% | ' | ' | 4.95% | ' | 3.88% | ' | ' | 5.38% | ' | ' | ' | 5.00% | ' | 3.75% | ' | 5.00% | ' | 6.13% | ' | 5.75% | ' | 6.50% | ' | 5.25% | ' | ' |
Maturity date | ' | ' | ' | ' | ' | ' | ' | ' | 10-Jan-21 | ' | 10-Jul-25 | ' | ' | 15-Jan-19 | ' | 15-Jan-19 | ' | 15-Jul-23 | ' | 15-Oct-17 | ' | 15-Oct-22 | ' | ' | ' | ' | 15-Jul-20 | ' | ' | 15-Jul-40 | ' | ' | ' | ' | ' | 8-Jul-14 | ' | 8-Jul-19 | ' | 8-Jul-39 | ' | 15-Apr-18 | ' | 15-Apr-38 | ' | 15-Jan-16 | ' | ' |
Senior notes effective interest yield percentage | ' | ' | ' | ' | ' | ' | ' | ' | 2.33% | ' | 3.17% | ' | ' | 0.81% | ' | 2.44% | ' | 3.73% | ' | 1.24% | ' | 2.51% | ' | ' | ' | ' | 3.93% | ' | ' | 5.45% | ' | ' | ' | ' | ' | 3.75% | ' | 5.05% | ' | 6.19% | ' | 5.76% | ' | 6.52% | ' | 5.32% | ' | ' |
Debt instrument LIBOR rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.58% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual interest rate after the economic effect of the interest rate swaps | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.88% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.29% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Annual interest rate for the 2.25% notes due January 2021 after the economic effect of the cross-currency swaps | ' | ' | ' | ' | ' | ' | ' | ' | 3.53% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Senior notes fixed principal amount | ' | ' | ' | ' | ' | ' | ' | ' | 1,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repayments of assumed legacy convertible notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $255 |
RESTRUCTURING_ACTIVITIES_Detai
RESTRUCTURING ACTIVITIES (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | $250 | [1] | $337 | $449 | ||
Initial Costs | 221 | [2] | 403 | [2] | 300 | [2] |
Adjustments to Cost | -38 | [3] | -51 | [3] | -5 | [3] |
Cash Payments | -253 | -426 | -385 | |||
Others | -11 | [4] | -13 | [4] | -22 | [4] |
Accrued at period end | 169 | [1] | 250 | [1] | 337 | |
Restructuring Expenses | 183 | 352 | 295 | |||
Fiscal 2013 Oracle Restructuring [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 71 | [5] | ' | ' | ||
Initial Costs | 197 | [2],[5] | 350 | [2],[5] | ' | |
Adjustments to Cost | -23 | [3],[5] | -25 | [3],[5] | ' | |
Cash Payments | -195 | [5] | -241 | [5] | ' | |
Others | 11 | [4],[5] | -13 | [4],[5] | ' | |
Accrued at period end | 61 | [5] | 71 | [5] | ' | |
Total Costs Accrued to Date | 499 | [5] | ' | ' | ||
Total Expected Program Costs | 705 | [5] | ' | ' | ||
Restructuring Expenses | 174 | 325 | ' | |||
Remaining Expenses to Incur | 206 | ' | ' | |||
Fiscal 2013 Oracle Restructuring Plan, expected completion date | 31-May-15 | ' | ' | |||
Fiscal 2013 Oracle Restructuring [Member] | New software licenses and cloud software subscriptions [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 16 | [5] | ' | ' | ||
Initial Costs | 57 | [2],[5] | 85 | [2],[5] | ' | |
Adjustments to Cost | -8 | [3],[5] | -8 | [3],[5] | ' | |
Cash Payments | -55 | [5] | -60 | [5] | ' | |
Others | 2 | [4],[5] | -1 | [4],[5] | ' | |
Accrued at period end | 12 | [5] | 16 | [5] | ' | |
Total Costs Accrued to Date | 126 | [5] | ' | ' | ||
Total Expected Program Costs | 158 | [5] | ' | ' | ||
Fiscal 2013 Oracle Restructuring [Member] | Software license updates and product support [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 1 | [5] | ' | ' | ||
Initial Costs | 11 | [2],[5] | 13 | [2],[5] | ' | |
Adjustments to Cost | ' | -6 | [3],[5] | ' | ||
Cash Payments | -10 | [5] | -11 | [5] | ' | |
Others | 3 | [4],[5] | 5 | [4],[5] | ' | |
Accrued at period end | 5 | [5] | 1 | [5] | ' | |
Total Costs Accrued to Date | 18 | [5] | ' | ' | ||
Total Expected Program Costs | 24 | [5] | ' | ' | ||
Fiscal 2013 Oracle Restructuring [Member] | Hardware systems business [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 24 | [5] | ' | ' | ||
Initial Costs | 48 | [2],[5] | 99 | [2],[5] | ' | |
Adjustments to Cost | -3 | [3],[5] | -5 | [3],[5] | ' | |
Cash Payments | -52 | [5] | -68 | [5] | ' | |
Others | 1 | [4],[5] | -2 | [4],[5] | ' | |
Accrued at period end | 18 | [5] | 24 | [5] | ' | |
Total Costs Accrued to Date | 139 | [5] | ' | ' | ||
Total Expected Program Costs | 238 | [5] | ' | ' | ||
Fiscal 2013 Oracle Restructuring [Member] | Services [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 18 | [5] | ' | ' | ||
Initial Costs | 39 | [2],[5] | 72 | [2],[5] | ' | |
Adjustments to Cost | -7 | [3],[5] | -5 | [3],[5] | ' | |
Cash Payments | -39 | [5] | -50 | [5] | ' | |
Others | ' | 1 | [4],[5] | ' | ||
Accrued at period end | 11 | [5] | 18 | [5] | ' | |
Total Costs Accrued to Date | 99 | [5] | ' | ' | ||
Total Expected Program Costs | 166 | [5] | ' | ' | ||
Fiscal 2013 Oracle Restructuring [Member] | General and administrative and other [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 12 | [5] | ' | ' | ||
Initial Costs | 42 | [2],[5] | 81 | [2],[5] | ' | |
Adjustments to Cost | -5 | [3],[5] | -1 | [3],[5] | ' | |
Cash Payments | -39 | [5] | -52 | [5] | ' | |
Others | 5 | [4],[5] | -16 | [4],[5] | ' | |
Accrued at period end | 15 | [5] | 12 | [5] | ' | |
Total Costs Accrued to Date | 117 | [5] | ' | ' | ||
Total Expected Program Costs | 119 | [5] | ' | ' | ||
Sun Restructuring Plan [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 152 | [5] | ||
Initial Costs | ' | ' | 235 | [2],[5] | ||
Adjustments to Cost | ' | ' | -20 | [3],[5] | ||
Cash Payments | ' | ' | -263 | [5] | ||
Others | ' | ' | -6 | [4],[5] | ||
Accrued at period end | ' | ' | 98 | [5] | ||
Restructuring Expenses | ' | ' | 215 | |||
Sun Restructuring Plan [Member] | New software licenses and cloud software subscriptions [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 14 | [5] | ||
Initial Costs | ' | ' | 46 | [2],[5] | ||
Adjustments to Cost | ' | ' | -8 | [3],[5] | ||
Cash Payments | ' | ' | -41 | [5] | ||
Others | ' | ' | -2 | [4],[5] | ||
Accrued at period end | ' | ' | 9 | [5] | ||
Sun Restructuring Plan [Member] | Software license updates and product support [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 19 | [5] | ||
Initial Costs | ' | ' | 31 | [2],[5] | ||
Adjustments to Cost | ' | ' | -2 | [3],[5] | ||
Cash Payments | ' | ' | -35 | [5] | ||
Others | ' | ' | -1 | [4],[5] | ||
Accrued at period end | ' | ' | 12 | [5] | ||
Sun Restructuring Plan [Member] | Hardware systems business [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 10 | [5] | ||
Initial Costs | ' | ' | 34 | [2],[5] | ||
Adjustments to Cost | ' | ' | 1 | [3],[5] | ||
Cash Payments | ' | ' | -33 | [5] | ||
Accrued at period end | ' | ' | 12 | [5] | ||
Sun Restructuring Plan [Member] | Services [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 9 | [5] | ||
Initial Costs | ' | ' | 32 | [2],[5] | ||
Adjustments to Cost | ' | ' | -2 | [3],[5] | ||
Cash Payments | ' | ' | -25 | [5] | ||
Others | ' | ' | -2 | [4],[5] | ||
Accrued at period end | ' | ' | 12 | [5] | ||
Sun Restructuring Plan [Member] | General and administrative and other [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 100 | [5] | ||
Initial Costs | ' | ' | 92 | [2],[5] | ||
Adjustments to Cost | ' | ' | -9 | [3],[5] | ||
Cash Payments | ' | ' | -129 | [5] | ||
Others | ' | ' | -1 | [4],[5] | ||
Accrued at period end | ' | ' | 53 | [5] | ||
Other Restructuring Plans [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | ' | ' | 297 | [6] | ||
Initial Costs | ' | ' | 65 | [2],[6] | ||
Adjustments to Cost | ' | ' | 15 | [3],[6] | ||
Cash Payments | ' | ' | -122 | [6] | ||
Others | ' | ' | -16 | [4],[6] | ||
Accrued at period end | ' | ' | 239 | [6] | ||
Other Restructuring Plans [Member] | ' | ' | ' | |||
Restructuring reserve [Line Items] | ' | ' | ' | |||
Accrued at period start | 179 | [6] | 337 | [6] | ' | |
Initial Costs | 24 | [2],[6] | 53 | [2],[6] | ' | |
Adjustments to Cost | -15 | [3],[6] | -26 | [3],[6] | ' | |
Cash Payments | -58 | [6] | -185 | [6] | ' | |
Others | -22 | [4],[6] | ' | ' | ||
Accrued at period end | $108 | [6] | $179 | [6] | ' | |
[1] | The balances at May 31, 2014 and 2013 included $100 million and $160 million, respectively, recorded in other current liabilities, and $69 million and $90 million, respectively, recorded in other non-current liabilities. | |||||
[2] | Costs recorded for the respective restructuring plans during the current period presented. | |||||
[3] | All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments. | |||||
[4] | Represents foreign currency translation and certain other adjustments. | |||||
[5] | Restructuring costs recorded for individual line items primarily related to employee severance costs except for general and administrative and other, which also included $46 million and $23 million recorded during fiscal 2013 and 2012, respectively, for facilities related restructuring, contract termination and other costs. | |||||
[6] | Other restructuring plans presented in the table above included condensed information for other Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. |
RESTRUCTURING_ACTIVITIES_Narra
RESTRUCTURING ACTIVITIES Narrative (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Restructuring activities [Narrative] [Abstract] | ' | ' | ' |
Status of Sun Restructuring Plan | 'The execution of the Sun restructuring Plan was substantially complete as of the end of fiscal 2012. | ' | ' |
Total Restructuring Liabilities [Abstract] | ' | ' | ' |
Facilities related restructuring, contract termination and other costs | ' | $46 | $23 |
Accrued restructuring liabilities, current (in other current liabilities) | 100 | 160 | ' |
Accrued restructuring liabilities, non-current (in other non-current liabilities) | $69 | $90 | ' |
DEFERRED_REVENUES_Details
DEFERRED REVENUES (Details) (USD $) | 31-May-14 | 31-May-13 |
In Millions, unless otherwise specified | ||
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | $7,269 | $7,118 |
Deferred revenues, non-current (in other non-current liabilities) | 404 | 312 |
Total deferred revenues | 7,673 | 7,430 |
Software license updates and product support [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 5,909 | 5,705 |
Hardware systems support and other [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 664 | 706 |
Services [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 364 | 355 |
Cloud SaaS, PaaS and IaaS [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 248 | 223 |
New software licenses [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | $84 | $129 |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | ' | ' | ' |
Net (losses) gains related to forward contracts | ($69) | ($64) | $43 |
Foreign Currency Forward Contracts Not Designated as Hedges [Member] | Forward contracts held to purchase U.S. Dollars [Member] | ' | ' | ' |
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | ' | ' | ' |
Notional amounts of forward contracts | 3,600 | 3,000 | ' |
Foreign Currency Forward Contracts Not Designated as Hedges [Member] | Forward contracts held to sell U.S. Dollars [Member] | ' | ' | ' |
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | ' | ' | ' |
Notional amounts of forward contracts | $2,000 | $1,100 | ' |
DERIVATIVES_FINANCIAL_INSTRUME
DERIVATIVES FINANCIAL INSTRUMENTS Narrative (Details) | 12 Months Ended |
31-May-14 | |
Cash Flow Hedges (Narrative) [Abstract] | ' |
Description of cash flow hedges | 'In connection with the issuance of the 2021 Notes, we entered into certain cross-currency swap agreements to manage the related foreign currency exchange risk by effectively converting the fixed-rate, Euro denominated 2021 Notes, including the annual interest payments and the payment of principal at maturity, to fixed-rate, U.S. Dollar denominated debt. The economic effect of the swap agreements was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the 2021 Notes by fixing the principal amount of the 2021 Notes at $1.6 billion with a fixed annual interest rate of 3.53%. We have designated these cross-currency swap agreements as qualifying hedging instruments and are accounting for these as cash flow hedges pursuant to ASC 815. The critical terms of the cross-currency swap agreements correspond to the 2021 Notes, including the annual interest payments being hedged, and the cross-currency swap agreements mature at the same time as the 2021 Notes. We do not use any cross-currency swap agreements for trading purposes. |
Foreign Currency Forward Contracts Not Designated as Hedges [Abstract] | ' |
Description of foreign currency forward contracts not designated as hedges | 'We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. We may suspend this program from time to time. Our foreign currency exposures typically arise from intercompany sublicense fees, intercompany loans and other intercompany transactions that are generally expected to be cash settled in the near term. We neither use these foreign currency forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to ASC 815. The fair values of our foreign currency contracts were nominal at May 31, 2014 and 2013. |
Interest Rate Swap Agreements (Narrative) [Abstract] | ' |
Description of fair value hedges | 'In July 2013, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with our January 2019 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. In September 2009, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with our 2014 Notes so that the interest payable on these notes effectively became variable based on LIBOR. The critical terms of the interest rate swap agreements and the January 2019 Notes and 2014 Notes that the interest rate swap agreements pertain to match, including the notional amounts and maturity dates. We do not use any interest rate swap agreements for trading purposes. |
Net Investment Hedges (Narrative) [Abstract] | ' |
Description of net investment hedge | 'In July 2013, we designated our Euro denominated 2025 Notes as a net investment hedge of our investments in certain of our international subsidiaries that use the Euro as their functional currency in order to reduce the volatility in stockholdersb equity caused by the changes in foreign currency exchange rates of the Euro with respect to the U.S. Dollar. |
DERIVATIVES_FINANCIAL_INSTRUME1
DERIVATIVES FINANCIAL INSTRUMENTS (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Fair value, assets | $97 | $41 |
2.25% senior notes due January 2021 [Member] | ' | ' |
Senior Notes and Other [Line Items] | ' | ' |
Senior notes fixed principal amount | 1,600 | ' |
Annual interest rate for the 2.25% notes due January 2021 after the economic effect of the cross-currency swaps | 3.53% | ' |
Interest rate swap agreements [Member] | Interest expense [Member] | ' | ' |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) [Abstract] | ' | ' |
Amount of Loss Recognized in Income on Derivative | -18 | -28 |
Amount of Gain on Hedged Item Recognized in Income Attributable to Risk Being Hedged | 18 | 28 |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | ' | ' |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) [Abstract] | ' | ' |
Amount of Gain (Loss) Recognized in Accumulated OCL on Derivative (Effective Portion) | 74 | ' |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | 2.25% senior notes due January 2021 [Member] | ' | ' |
Senior Notes and Other [Line Items] | ' | ' |
Senior notes fixed principal amount | 1,600 | ' |
Annual interest rate for the 2.25% notes due January 2021 after the economic effect of the cross-currency swaps | 3.53% | ' |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | Non-operating (expense) income, net [Member] | ' | ' |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) [Abstract] | ' | ' |
Amount of Gain Reclassified from Accumulated OCL into Income (Effective Portion) | 69 | ' |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | Other assets [Member] | ' | ' |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Fair value, assets | 74 | ' |
Net investment hedge [Member] | Foreign currency borrowings [Member] | ' | ' |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) [Abstract] | ' | ' |
Amount of Gain (Loss) Recognized in Accumulated OCL on Derivative (Effective Portion) | -34 | ' |
Net investment hedge [Member] | Foreign currency borrowings [Member] | Notes payable and other non-current borrowings [Member] | ' | ' |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Fair value, debt | -1,116 | ' |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Other assets [Member] | ' | ' |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Fair value, assets | 15 | 41 |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Prepaid expenses and other current assets [Member] | ' | ' |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Fair value, assets | $8 | ' |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Guarantees [Abstract] | ' | ' | ' |
Financial impact of guarantees | 'Such agreements have not had a material effect on our results of operations, financial position or cash flows. | ' | ' |
Lease Commitments [Abstract] | ' | ' | ' |
Fiscal 2015 | $373 | ' | ' |
Fiscal 2016 | 304 | ' | ' |
Fiscal 2017 | 230 | ' | ' |
Fiscal 2018 | 168 | ' | ' |
Fiscal 2019 | 120 | ' | ' |
Thereafter | 203 | ' | ' |
Future minimum operating lease payments | 1,398 | ' | ' |
Less: minimum payments to be received from non-cancelable subleases | -63 | ' | ' |
Total future minimum operating leases payments, net | 1,335 | ' | ' |
Facility obligations net of estimated sub-lease income and other costs, in accrued restructuring | 112 | ' | ' |
Rent expense, net of sublease income | 278 | 313 | 329 |
Sublease income | 55 | 69 | 89 |
Unconditional Obligations [Abstract] | ' | ' | ' |
Fiscal 2015 | 469 | ' | ' |
Fiscal 2016 | 28 | ' | ' |
Fiscal 2017 | 12 | ' | ' |
Fiscal 2018 | 1 | ' | ' |
Total | 510 | ' | ' |
Notes payable and other borrowings outstanding | $24,175 | $18,494 | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 1 Months Ended | 12 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Jun. 30, 2013 | 31-May-14 | 31-May-13 | 31-May-12 | Jun. 19, 2014 |
Accumulated Other Comprehensive Loss [Abstract] | ' | ' | ' | ' | ' |
Foreign currency translation losses and other, net | ' | ($81) | ($3) | ' | ' |
Unrealized losses on defined benefit plan, net | ' | -153 | -176 | ' | ' |
Unrealized gains on marketable securities, net | ' | 65 | 80 | ' | ' |
Unrealized gains on cash flow hedges, net | ' | 5 | ' | ' | ' |
Total accumulated other comprehensive loss | ' | -164 | -99 | ' | ' |
Dividends on Common Stock [Abstract] | ' | ' | ' | ' | ' |
Dividends per share, declared and paid (in dollars per share) | ' | $0.48 | $0.30 | $0.24 | ' |
Dividends declared per share outstanding common stock (in dollars per share) | ' | ' | ' | ' | $0.12 |
Dividend payable date | ' | 30-Jul-14 | ' | ' | ' |
Dividend record date | ' | 9-Jul-14 | ' | ' | ' |
Stock Repurchases (Narrative) [Abstract] | ' | ' | ' | ' | ' |
Approved expansion of stock repurchase program | 12,000 | ' | ' | ' | ' |
Amount available for future repurchases | ' | 4,300 | ' | ' | ' |
Repurchases of common stock (in shares) | ' | 280.4 | 346.1 | 207.3 | ' |
Repurchased amount | ' | 9,798 | 10,994 | 5,968 | ' |
Repurchased shares that were not settled (in shares) | ' | 2.2 | ' | ' | ' |
Repurchased amount that was not settled | ' | $94 | ' | ' | ' |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 12 Months Ended | ||||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | ||
Defined Contribution Plan Disclosure [Line Items] | ' | ' | ' | ||
Defined contribution plan expense | $357 | $353 | $344 | ||
Deferred compensation plan assets | 367 | 320 | ' | ||
Deferred compensation plan liabilities | 367 | 320 | ' | ||
Total defined benefit plan pension expense | 64 | 81 | 55 | ||
Aggregate projected benefit obligation | 853 | 734 | ' | ||
Aggregate net liability (funded status) | 436 | 364 | ' | ||
Employee Stock Purchase Plan [Line Items] | ' | ' | ' | ||
Common stock issued under stock purchase plans | 3 | 3 | 4 | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 805 | 755 | 659 | ||
Estimated income tax benefit included in provision for income taxes | -260 | -243 | -216 | ||
Total stock-based compensation, net of estimated income tax benefit | 545 | 512 | 443 | ||
Shares Under Option [Abstract] | ' | ' | ' | ||
Beginning balance | 447 | 422 | 354 | ||
Granted | 131 | 119 | 112 | ||
Assumed | 5 | 9 | 8 | ||
Exercised | -95 | -83 | -39 | ||
Canceled | -26 | -20 | -13 | ||
Ending balance | 462 | 447 | 422 | ||
Vested | 192 | ' | ' | ||
Expected to vest | 241 | [1] | ' | ' | |
Total | 433 | ' | ' | ||
Weighted Average Exercise Price [Abstract] | ' | ' | ' | ||
Beginning balance | $25.48 | $22.66 | $19.53 | ||
Granted | $31.02 | $29.90 | $32.05 | ||
Assumed | $9.02 | $32.52 | $12.17 | ||
Exercised | $21.51 | $17.38 | $16.61 | ||
Canceled | $30.60 | $28.94 | $29.31 | ||
Ending balance | $27.37 | $25.48 | $22.66 | ||
Vested | $23.44 | ' | ' | ||
Expected to vest | $30.07 | [1] | ' | ' | |
Total | $27.13 | ' | ' | ||
Weighted Average Remaining Contractual Term (in years) | ' | ' | ' | ||
Vested | ' | '5 years 1 month | ' | ||
Expected to vest | ' | '8 years 2 months | [1] | ' | |
Total | ' | '6 years 10 months | ' | ||
In-the-Money Options as of May 31, 2014 (in millions) | ' | ' | ' | ||
Vested | 190 | ' | ' | ||
Expected to vest | 241 | [1] | ' | ' | |
Total | 431 | ' | ' | ||
Aggregate Intrinsic Value (in millions) | ' | ' | ' | ||
Vested | 3,608 | [2] | ' | ' | |
Expected to vest | 2,885 | [1],[2] | ' | ' | |
Total | 6,493 | [2] | ' | ' | |
Closing stock price | $42.02 | ' | ' | ||
Unrecognized compensation expense for shares expected to vest | 1,200 | ' | ' | ||
Weighted average recognition period of unrecognized compensation expense for shares expected to vest | ' | '2 years 6 months | ' | ||
Shares not expected to vest | 29 | ' | ' | ||
Tax Benefits from Exercise of Stock Options and Vesting of Restricted Stock-Based Awards [Abstract] | ' | ' | ' | ||
Total cash received as a result of option exercises | 2,000 | 1,400 | 622 | ||
Aggregate intrinsic value of options exercised and vesting of restricted stock-based awards | 1,500 | 1,300 | 587 | ||
Tax benefits realized in connection with the exercises of stock options and vesting of restricted stock-based awards | 480 | 410 | 182 | ||
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 250 | 241 | 97 | ||
Weighted Average Input Assumptions Used and Resulting Fair Values [Abstract] | ' | ' | ' | ||
Expected life (in years) | '4 years 11 months | '5 years 0 months | '5 years 1 month | ||
Risk-free interest rate | 1.30% | 0.70% | 1.60% | ||
Volatility | 27.00% | 31.00% | 30.00% | ||
Dividend yield | 1.50% | 0.80% | 0.80% | ||
Weighted-average fair value per share | $7.47 | $7.99 | $9.30 | ||
Sales and marketing [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 165 | 137 | 115 | ||
Cloud software-as-a-service and platform-as-a-service [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 8 | 10 | 7 | ||
Cloud infrastructure-as-a-service [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 4 | 8 | 6 | ||
Software license updates and product support [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 22 | 20 | 18 | ||
Hardware systems products [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 5 | 3 | 1 | ||
Hardware systems support [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 6 | 5 | 5 | ||
Services [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 29 | 23 | 17 | ||
Research and development [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 385 | 352 | 295 | ||
General and administrative [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 171 | 164 | 162 | ||
Acquisition related and other [Member] | ' | ' | ' | ||
Stock-based Compensation Expense [Line Items] | ' | ' | ' | ||
Total stock-based compensation | 10 | 33 | 33 | ||
Employee Stock Purchase Plan [Member] | ' | ' | ' | ||
Employee Stock Purchase Plan [Line Items] | ' | ' | ' | ||
Stock purchase price as a percentage of the fair market value on the purchase date | 95.00% | ' | ' | ||
Shares reserved for future issuances under the Purchase Plan | 60 | ' | ' | ||
United States [Member] | ' | ' | ' | ||
Defined Contribution Plan Disclosure [Line Items] | ' | ' | ' | ||
Defined contribution plan expense | $134 | $129 | $125 | ||
Oracle 401(K) Plan employee contribution maximum rate | 40.00% | ' | ' | ||
Oracle 401(K) employer contribution match rate | 50.00% | ' | ' | ||
Oracle 401(K) employer maximum match on employee contribution each pay period | 6.00% | ' | ' | ||
[1] | The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2014 was approximately $1.2 billion and is expected to be recognized over a weighted average period of 2.51 years. Approximately 29 million shares outstanding as of May 31, 2014 were not expected to vest. | ||||
[2] | The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2014 of $42.02 and the exercise prices for all "in-the-money" options outstanding, excluding tax effects. |
EMPLOYEE_BENEFIT_PLANS_Continu
EMPLOYEE BENEFIT PLANS Continued (Details) | 31-May-14 | 31-May-13 | 31-May-12 | 31-May-11 | 31-May-14 | Oct. 31, 2013 | Oct. 06, 2010 | 31-May-14 | Nov. 07, 2012 | 31-May-14 |
In Millions, unless otherwise specified | 2000 Plan [Member] | 2000 Plan [Member] | 2000 Plan [Member] | Directors' Plan [Member] | Directors' Plan [Member] | Acquired plans [Member] | ||||
Stock-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in number of authorized shares of stock that may be issued | ' | ' | ' | ' | ' | 305 | 388 | ' | 2 | ' |
Options outstanding | 462 | 447 | 422 | 354 | 448 | ' | ' | 3 | ' | 11 |
Options outstanding vested | ' | ' | ' | ' | 183 | ' | ' | 2 | ' | ' |
Shares of common stock available for future awards | ' | ' | ' | ' | 495 | ' | ' | 2 | ' | ' |
Options reserved for issuance under the Directors' Plan | ' | ' | ' | ' | ' | ' | ' | 10 | ' | ' |
Restricted stock-based awards outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Components of Deferred Tax Assets [Abstract] | ' | ' | ' |
Accruals and allowances | $440 | $481 | ' |
Employee compensation and benefits | 1,062 | 997 | ' |
Differences in timing of revenue recognition | 210 | 158 | ' |
Depreciation and amortization | 243 | 243 | ' |
Tax credit and net operating loss carryforwards | 2,810 | 2,706 | ' |
Other | 96 | 44 | ' |
Total deferred tax assets | 4,861 | 4,629 | ' |
Valuation allowance | -1,053 | -999 | ' |
Net deferred tax assets | 1,364 | 1,456 | ' |
Components of Deferred Tax Liabilities [Abstract] | ' | ' | ' |
Unrealized gain on stock | -130 | -130 | ' |
Acquired intangible assets | -1,804 | -1,795 | ' |
Unremitted earnings | -510 | -249 | ' |
Total deferred tax liabilities | -2,444 | -2,174 | ' |
Geographical Breakdown of Income Before Provision for Income Taxes [Abstract] | ' | ' | ' |
Domestic | 5,397 | 6,614 | 6,284 |
Foreign | 8,307 | 7,284 | 6,678 |
Income before provision for income taxes | 13,704 | 13,898 | 12,962 |
Gross Unrecognized Tax Benefits Including Acquisitions [Abstract] | ' | ' | ' |
Gross unrecognized tax benefits as of June 1 | 3,601 | 3,276 | 3,160 |
Increases related to tax positions from prior fiscal years | 94 | 279 | 99 |
Decreases related to tax positions from prior fiscal years | -116 | -125 | -169 |
Increases related to tax positions taken during current fiscal year | 307 | 312 | 522 |
Settlements with tax authorities | -2 | -71 | -187 |
Lapses of statutes of limitation | -53 | -71 | -84 |
Other, net | 7 | 1 | -65 |
Total gross unrecognized tax benefits as of May 31 | 3,838 | 3,601 | 3,276 |
Provision for Income Taxes [Abstract] | ' | ' | ' |
Federal | 1,613 | 1,720 | 1,611 |
State | 337 | 254 | 257 |
Foreign | 1,047 | 1,116 | 1,104 |
Total current provision | 2,997 | 3,090 | 2,972 |
Federal | -68 | -179 | 267 |
State | -100 | 82 | 14 |
Foreign | -80 | -20 | -272 |
Total deferred (benefit) provision | -248 | -117 | 9 |
Total provision for income taxes | $2,749 | $2,973 | $2,981 |
Effective income tax rate | 20.10% | 21.40% | 23.00% |
INCOME_TAXES_Continued_Details
INCOME TAXES Continued (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Deferred Tax Assets And Liabilities As Recorded [Abstract] | ' | ' | ' |
Current deferred tax assets | $914 | $974 | ' |
Non-current deferred tax assets | 837 | 766 | ' |
Current deferred tax liabilities (in other current liabilities) | -129 | -111 | ' |
Non-current deferred tax liabilities (in other non-current liabilities) | -258 | -173 | ' |
Net deferred tax assets | 1,364 | 1,456 | ' |
Reconciliation of Differences Between Amount Computed by Applying Federal Statutory Rate to our Income Before Provision for Income Taxes and Provision for Income Taxes [Abstract] | ' | ' | ' |
Tax provision at statutory rate | 4,796 | 4,865 | 4,537 |
Foreign earnings at other than United States rates | -1,790 | -1,637 | -1,474 |
State tax expense, net of federal benefit | 154 | 299 | 171 |
Settlements and releases from judicial decisions and statute expirations, net | -168 | -144 | -132 |
Domestic production activity deduction | -174 | -155 | -178 |
Other, net | -69 | -255 | 57 |
Total provision for income taxes | $2,749 | $2,973 | $2,981 |
INCOME_TAXES_Narrative_Details
INCOME TAXES Narrative (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Deferred Tax Assets and Liabilities (Narrative) [Abstract] | ' | ' | ' |
Temporary differences related to undistributed foreign earnings | $32,400 | ' | ' |
Other outside basis temporary differences of investments in foreign subsidiaries | 6,900 | ' | ' |
Potential net deferred tax liability associated with these undistributed foreign earnings | 10,000 | ' | ' |
Potential net deferred tax liability related to other outside basis temporary differences | 2,200 | ' | ' |
Net deferred tax assets | 1,364 | 1,456 | ' |
Valuation allowance | 1,053 | 999 | ' |
Income Tax Examinations [Abstract] | ' | ' | ' |
Income tax examinations | 'Our U.S. federal and, with some exceptions, our state income tax returns have been examined for all years prior to fiscal 2003 and we are no longer subject to audit for those periods. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 1997. | ' | ' |
Tax Credit Carryforward [Line Items] | ' | ' | ' |
Tax credit carryforwards subject to limitation on utilization | 1,100 | ' | ' |
Tax credit carryforwards not subject to expiration dates | 614 | ' | ' |
Tax credit carryforwards subject to expiration dates | 478 | ' | ' |
Tax credit carryforward expiration dates | 'between fiscal 2015 and fiscal 2033 | ' | ' |
Unrecognized Tax Benefits (Narrative) [Abstract] | ' | ' | ' |
Unrecognized tax benefits that would affect our effective tax rate, if recognized | 2,600 | ' | ' |
Interest and penalties related to uncertain tax positions recognized in our provision for income taxes | 24 | 31 | 46 |
Interest and penalties related to uncertain tax positions accrued | 693 | 666 | ' |
Reasonably possible decrease in the next 12 months in gross unrecognized tax benefits related to domestic audits | 460 | ' | ' |
Reasonably possible decrease in the next 12 months in gross unrecognized tax benefits related to domestic audits, net of offsetting tax benefits | 364 | ' | ' |
Reasonably possible decrease in the next 12 months in gross unrecognized tax benefits related to foreign audits | 190 | ' | ' |
Reasonably possible decrease in gross unrecognized tax benefits related to foreign audits, net of offsetting tax benefits | 142 | ' | ' |
Federal [Member] | ' | ' | ' |
Operating loss carryforwards [Line Items] | ' | ' | ' |
Net operating loss carryforwards | 1,000 | ' | ' |
Operating loss carryforwards expiration date | 'between ficsal 2016 and fiscal 2033 | ' | ' |
State [Member] | ' | ' | ' |
Operating loss carryforwards [Line Items] | ' | ' | ' |
Net operating loss carryforwards | 2,800 | ' | ' |
Operating loss carryforwards expiration date | 'between fiscal 2015 and fiscal 2033 | ' | ' |
Foreign [Member] | ' | ' | ' |
Operating loss carryforwards [Line Items] | ' | ' | ' |
Net operating loss carryforwards | 1,800 | ' | ' |
Foreign net operating loss carryforwards not subject to expiration | 1,700 | ' | ' |
Foreign net operating loss carryforwards subject to expiration | $143 | ' | ' |
Operating loss carryforwards expiration date | 'between fiscal 2015 and fiscal 2034 | ' | ' |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Revenues Included for Management Reporting Not Recognized in Consolidated Statements of Operations (Narrative) [Abstract] | ' | ' | ' | |||
Cloud software-as-a-service and platform-as-a-service revenues | $17 | [1] | $45 | [1] | $22 | [1] |
Software license updates and product support revenues | 3 | [1] | 14 | [1] | 48 | [1] |
Hardware systems support revenues | 11 | [1] | 14 | [1] | 30 | [1] |
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 38,275 | 37,180 | 37,121 | |||
Margin | 24,647 | 23,945 | 23,340 | |||
New software licenses and cloud software subscriptions [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 10,542 | [2] | 10,350 | [2] | 9,910 | [2] |
Cloud software-as-a-service and platform-as-a-service expenses | 437 | 313 | 199 | |||
Sales and distribution expenses | 5,666 | 5,227 | 5,018 | |||
Margin | 4,439 | [3] | 4,810 | [3] | 4,693 | [3] |
Cloud infrastructure-as-a-service [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 491 | [2] | 491 | [2] | 483 | [2] |
Cloud infrastructure-as-a-service expenses | 310 | 300 | 288 | |||
Sales and distribution expenses | 62 | 61 | 72 | |||
Margin | 119 | [3] | 130 | [3] | 123 | [3] |
Software license updates and product support [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 18,209 | [2] | 17,156 | [2] | 16,258 | [2] |
Software license updates and product support expenses | 1,111 | 1,120 | 1,159 | |||
Margin | 17,098 | [3] | 16,036 | [3] | 15,099 | [3] |
Total software and cloud business [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 29,242 | [2] | 27,997 | [2] | 26,651 | [2] |
Expenses | 7,586 | 7,021 | 6,736 | |||
Margin | 21,656 | [3] | 20,976 | [3] | 19,915 | [3] |
Hardware systems products [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 2,976 | 3,033 | 3,827 | |||
Hardware systems products expenses | 1,516 | 1,498 | 1,841 | |||
Sales and distribution expenses | 940 | 885 | 1,050 | |||
Margin | 520 | [3] | 650 | [3] | 936 | [3] |
Hardware systems support [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 2,407 | [2] | 2,327 | [2] | 2,505 | [2] |
Hardware systems support expenses | 802 | 857 | 1,006 | |||
Margin | 1,605 | [3] | 1,470 | [3] | 1,499 | [3] |
Total hardware systems business [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 5,383 | [2] | 5,360 | [2] | 6,332 | [2] |
Expenses | 3,258 | 3,240 | 3,897 | |||
Margin | 2,125 | [3] | 2,120 | [3] | 2,435 | [3] |
Total services business [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 3,681 | [2] | 3,896 | [2] | 4,238 | [2] |
Services expenses | 2,815 | 3,047 | 3,248 | |||
Margin | 866 | [3] | 849 | [3] | 990 | [3] |
Total for operating segments [Member] | ' | ' | ' | |||
Segment reporting information [Line Items] | ' | ' | ' | |||
Revenues | 38,306 | 37,253 | 37,221 | |||
Expenses | 13,659 | 13,308 | 13,881 | |||
Margin | $24,647 | [3] | $23,945 | [3] | $23,340 | [3] |
[1] | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments. | |||||
[2] | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total revenues. Our new software license, cloud IaaS and services revenues for management reporting also differ from amounts reported per our consolidated statements of operations for the periods presented due to certain insignificant reclassifications between these lines for management reporting purposes. | |||||
[3] | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net. |
SEGMENT_INFORMATION_RECONCILIA
SEGMENT INFORMATION RECONCILIATION (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ' | ' | ' | |||
Total margin for operating segments | $24,647 | $23,945 | $23,340 | |||
Cloud software-as-a-service and platform-as-a-service revenues | -17 | [1] | -45 | [1] | -22 | [1] |
Software license updates and product support revenues | -3 | [1] | -14 | [1] | -48 | [1] |
Hardware systems support revenues | -11 | [1] | -14 | [1] | -30 | [1] |
Product development | -4,590 | -4,321 | -4,050 | |||
Marketing and partner program expenses | -564 | -591 | -581 | |||
Corporate, general and administrative and information technology expenses | -1,384 | -1,421 | -1,496 | |||
Amortization of intangible assets | -2,300 | -2,385 | -2,430 | |||
Acquisition related and other | -41 | 604 | -56 | |||
Restructuring | -183 | -352 | -295 | |||
Stock-based compensation | -795 | -722 | -626 | |||
Interest expense | -914 | -797 | -766 | |||
Non-operating (expense) income, net | -141 | 11 | 22 | |||
Income before provision for income taxes | 13,704 | 13,898 | 12,962 | |||
Reconciliation of Total Operating Segment Revenues to Total Revenues [Line Items] | ' | ' | ' | |||
Cloud software-as-a-service and platform-as-a-service revenues | -17 | [1] | -45 | [1] | -22 | [1] |
Software license updates and product support revenues | -3 | [1] | -14 | [1] | -48 | [1] |
Hardware systems support revenues | -11 | [1] | -14 | [1] | -30 | [1] |
Total revenues | 38,275 | 37,180 | 37,121 | |||
Total for operating segments [Member] | ' | ' | ' | |||
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ' | ' | ' | |||
Total margin for operating segments | 24,647 | [2] | 23,945 | [2] | 23,340 | [2] |
Reconciliation of Total Operating Segment Revenues to Total Revenues [Line Items] | ' | ' | ' | |||
Total revenues | $38,306 | $37,253 | $37,221 | |||
[1] | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $17 million, $45 million and $22 million for fiscal 2014, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying consolidated statements of operations in the amounts of $3 million, $14 million and $48 million for fiscal 2014, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $11 million, $14 million and $30 million for fiscal 2014, 2013 and 2012, respectively. See Note 10 for an explanation of these adjustments. | |||||
[2] | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net. |
SEGMENT_INFORMATION_Continued_
SEGMENT INFORMATION Continued (Details) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | $38,275 | $37,180 | $37,121 | |||
Long Lived Assets | 4,616 | [1] | 4,515 | [1] | 4,068 | [1] |
United States [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 16,809 | 16,003 | 15,767 | |||
Long Lived Assets | 2,993 | [1] | 2,921 | [1] | 2,468 | [1] |
United Kingdom [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 2,309 | 2,165 | 2,302 | |||
Long Lived Assets | 236 | [1] | 203 | [1] | 171 | [1] |
Japan [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 1,558 | 1,770 | 1,865 | |||
Long Lived Assets | 414 | [1] | 428 | [1] | 550 | [1] |
Germany [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 1,483 | 1,308 | 1,484 | |||
Long Lived Assets | 35 | [1] | 44 | [1] | 47 | [1] |
Canada [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 1,190 | 1,232 | 1,234 | |||
Long Lived Assets | 31 | [1] | 34 | [1] | 37 | [1] |
France [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 1,148 | 1,054 | 1,162 | |||
Long Lived Assets | 28 | [1] | 17 | [1] | 16 | [1] |
Australia [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 994 | 1,084 | 1,163 | |||
Long Lived Assets | 63 | [1] | 54 | [1] | 38 | [1] |
Other countries [Member] | ' | ' | ' | |||
Revenues from external customers and long lived assets [Line Items] | ' | ' | ' | |||
Revenues | 12,784 | 12,564 | 12,144 | |||
Long Lived Assets | $816 | [1] | $814 | [1] | $741 | [1] |
[1] | Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 12 Months Ended | |||||
In Millions, except Per Share data, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 | |||
Computation of Basic and Diluted Earnings Per Share [Abstract] | ' | ' | ' | |||
Net income | $10,955 | $10,925 | $9,981 | |||
Weighted average common shares outstanding | 4,528 | 4,769 | 5,015 | |||
Dilutive effect of employee stock plans | 76 | 75 | 80 | |||
Dilutive weighted average common shares outstanding | 4,604 | 4,844 | 5,095 | |||
Basic earnings per share | $2.42 | $2.29 | $1.99 | |||
Diluted earnings per share | $2.38 | $2.26 | $1.96 | |||
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation | 76 | [1] | 208 | [1] | 110 | [1] |
[1] | These weighted shares relate to anti-dilutive stock options and restricted stock-based awards as calculated using the treasury stock method and could be dilutive in the future. See Note 14 for information regarding the exercise prices of our outstanding, unexercised options. |
LEGAL_PROCEEDINGS_Details
LEGAL PROCEEDINGS (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||
In Millions, unless otherwise specified | Aug. 31, 2012 | Nov. 30, 2010 | 31-May-14 | 31-May-13 | 31-May-11 | Jun. 13, 2014 | Sep. 01, 2011 |
Derivative Litigations and Related Action (Narrative) [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Derivative litigations and related action | ' | ' | 'While the outcome of the derivative litigation cannot be predicted with certainty, we do not believe that the outcome will result in losses that are materially in excess of amounts already recognized, if any | ' | ' | ' | ' |
Maximum amount of Plaintiffs' and attorneys' fees and costs that Oracle will pay | ' | ' | ' | ' | ' | $15 | ' |
Percentage that our Chief Executive Officer agreed to pay to Oracle of any and all amounts, if any, that are paid to him under the Pillar Data earn out | ' | ' | ' | ' | ' | 95.00% | ' |
Hewlett Packard Company Litigation (Narrative) [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Hewlett Packard Company litigation inestimable loss | ' | ' | 'We cannot currently estimate a reasonably possible range of loss for this action. | ' | ' | ' | ' |
Other Litigation (Narrative) [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Other litigation | ' | ' | 'We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any. | ' | ' | ' | ' |
SAP Intellectual Property Litigation (Narrative) [Abstract] | ' | ' | ' | ' | ' | ' | ' |
Jury award from SAP intellectual property litigation | ' | ' | ' | ' | 1,300 | ' | ' |
Court ordered judgment vacating jury award from SAP intellectual property litigation | ' | ' | ' | ' | ' | ' | 1,300 |
Court held maximum amount of damages sustainable by the proof presented at trial and Oracle may accept as a remittitur | ' | ' | ' | ' | ' | ' | 272 |
Benefit related to certain litigation | 306 | ' | ' | 306 | ' | ' | ' |
Recovery Legal Costs | ' | $120 | ' | ' | ' | ' | ' |
VALUATION_AND_QUALIFYING_ACCOU1
VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | 31-May-14 | 31-May-13 | 31-May-12 |
Allowances for Doubtful Trade Receivables [Abstract] | ' | ' | ' |
Beginning Balance | $296 | $323 | $372 |
Additions Charged to Operations or Other Accounts | 122 | 118 | 92 |
Write-offs | -120 | -167 | -107 |
Translation Adjustments and Other | 8 | 22 | -34 |
Ending Balance | $306 | $296 | $323 |