DOCUMENT_AND_ENTITY_INFORMATIO
DOCUMENT AND ENTITY INFORMATION | 3 Months Ended | |
Aug. 31, 2014 | Sep. 16, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Aug-14 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Fiscal Year Focus | '2015 | ' |
Trading Symbol | 'ORCL | ' |
Entity Registrant Name | 'Oracle Corporation | ' |
Entity Central Index Key | '0001341439 | ' |
Current Fiscal Year End Date | '--05-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding (in shares) | ' | 4,431,304,000 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $24,179 | $17,769 |
Marketable securities | 27,437 | 21,050 |
Trade receivables, net of allowances for doubtful accounts of $296 and $306 as of August 31, 2014 and May 31, 2014, respectively | 3,551 | 6,087 |
Inventories | 179 | 189 |
Deferred tax assets | 833 | 914 |
Prepaid expenses and other current assets | 2,015 | 2,129 |
Total current assets | 58,194 | 48,138 |
Non-current assets: | ' | ' |
Property, plant and equipment, net | 3,086 | 3,061 |
Intangible assets, net | 5,605 | 6,137 |
Goodwill | 29,707 | 29,652 |
Deferred tax assets | 916 | 837 |
Other assets | 2,218 | 2,519 |
Total non-current assets | 41,532 | 42,206 |
Total assets | 99,726 | 90,344 |
Current liabilities: | ' | ' |
Notes payable, current and other current borrowings | ' | 1,508 |
Accounts payable | 423 | 471 |
Accrued compensation and related benefits | 1,491 | 1,940 |
Income taxes payable | 425 | 416 |
Deferred revenues | 8,939 | 7,269 |
Other current liabilities | 2,099 | 2,785 |
Total current liabilities | 13,377 | 14,389 |
Non-current liabilities: | ' | ' |
Notes payable and other non-current borrowings | 32,567 | 22,667 |
Income taxes payable | 4,148 | 4,184 |
Other non-current liabilities | 1,703 | 1,657 |
Total non-current liabilities | 38,418 | 28,508 |
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: 4,438 shares and 4,464 shares as of August 31, 2014 and May 31, 2014, respectively | 21,709 | 21,077 |
Retained earnings | 25,838 | 25,965 |
Accumulated other comprehensive loss | -193 | -164 |
Total Oracle Corporation stockholders' equity | 47,354 | 46,878 |
Noncontrolling interests | 577 | 569 |
Total equity | 47,931 | 47,447 |
Total liabilities and equity | $99,726 | $90,344 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, except Per Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheets | ' | ' |
Allowance for doubtful accounts receivable | $296 | $306 |
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 | 4,438 | 4,464 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | ||
Software and cloud revenues: | ' | ' | ||
New software licenses | $1,370 | $1,399 | ||
Cloud software-as-a-service and platform-as-a-service | 337 | 254 | ||
Cloud infrastructure-as-a-service | 138 | 109 | ||
Software license updates and product support | 4,731 | 4,431 | ||
Software and cloud revenues | 6,576 | 6,193 | ||
Hardware systems revenues: | ' | ' | ||
Hardware systems products | 578 | 669 | ||
Hardware systems support | 587 | 592 | ||
Hardware systems revenues | 1,165 | 1,261 | ||
Services revenues | 855 | 918 | ||
Total revenues | 8,596 | 8,372 | ||
Operating expenses: | ' | ' | ||
Sales and marketing | 1,706 | [1] | 1,620 | [1] |
Cloud software-as-a-service and platform-as-a-service | 149 | [1] | 102 | [1] |
Cloud infrastructure-as-a-service | 79 | 72 | ||
Software license updates and product support | 272 | [1] | 288 | [1] |
Hardware systems products | 298 | [1] | 330 | [1] |
Hardware systems support | 192 | [1] | 209 | [1] |
Services | 691 | [1] | 720 | [1] |
Research and development | 1,329 | 1,237 | ||
General and administrative | 276 | 260 | ||
Amortization of intangible assets | 547 | 595 | ||
Acquisition related and other | 25 | 10 | ||
Restructuring | 69 | 56 | ||
Total operating expenses | 5,633 | 5,499 | ||
Operating income | 2,963 | 2,873 | ||
Interest expense | -261 | -217 | ||
Non-operating income, net | 16 | 7 | ||
Income before provision for income taxes | 2,718 | 2,663 | ||
Provision for income taxes | 534 | 472 | ||
Net income | $2,184 | $2,191 | ||
Earnings per share: | ' | ' | ||
Basic (in dollars per share) | $0.49 | $0.48 | ||
Diluted (in dollars per share) | $0.48 | $0.47 | ||
Weighted average common shares outstanding: | ' | ' | ||
Basic (in shares) | 4,451 | 4,608 | ||
Diluted (in shares) | 4,548 | 4,674 | ||
Dividends declared per common share (in dollars per share) | $0.12 | $0.12 | ||
[1] | Exclusive of amortization of intangible assets, which is shown separately. |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 |
Net income | $2,184 | $2,191 |
Portion Attributable to Parent [Member] | ' | ' |
Net income | 2,184 | 2,191 |
Other comprehensive loss, net of tax: | ' | ' |
Net foreign currency translation losses | -83 | -187 |
Net unrealized gains on defined benefit plans | 3 | 3 |
Net unrealized gains (losses) on marketable securities | 16 | -29 |
Net unrealized gains (losses) on cash flow hedges | 35 | -32 |
Total other comprehensive loss, net | -29 | -245 |
Comprehensive income | $2,155 | $1,946 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $2,184 | $2,191 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation | 160 | 150 |
Amortization of intangible assets | 547 | 595 |
Deferred income taxes | -68 | -101 |
Stock-based compensation | 215 | 200 |
Tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 96 | 67 |
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | -51 | -40 |
Other, net | 46 | 17 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ' | ' |
Decrease in trade receivables, net | 2,506 | 2,707 |
Decrease in inventories | 10 | 5 |
Decrease in prepaid expenses and other assets | 275 | 366 |
Decrease in accounts payable and other liabilities | -1,088 | -994 |
Increase (decrease) in income taxes payable | 80 | -313 |
Increase in deferred revenues | 1,816 | 1,442 |
Net cash provided by operating activities | 6,728 | 6,292 |
Cash flows from investing activities: | ' | ' |
Purchases of marketable securities and other investments | -10,340 | -8,549 |
Proceeds from maturities and sales of marketable securities and other investments | 3,878 | 6,515 |
Acquisitions, net of cash acquired | -37 | -1,314 |
Capital expenditures | -201 | -153 |
Net cash used for investing activities | -6,700 | -3,501 |
Cash flows from financing activities: | ' | ' |
Payments for repurchases of common stock | -2,000 | -2,968 |
Proceeds from issuances of common stock | 588 | 285 |
Payments of dividends to stockholders | -537 | -554 |
Proceeds from borrowings, net of issuance costs | 9,945 | 5,566 |
Repayments of borrowings | -1,500 | ' |
Excess tax benefits on the exercise of stock options and vesting of restricted stock-based awards | 51 | 40 |
Distributions to noncontrolling interests | -27 | -28 |
Net cash provided by financing activities | 6,520 | 2,341 |
Effect of exchange rate changes on cash and cash equivalents | -138 | -81 |
Net increase in cash and cash equivalents | 6,410 | 5,051 |
Cash and cash equivalents at beginning of period | 17,769 | 14,613 |
Cash and cash equivalents at end of period | 24,179 | 19,664 |
Non-cash investing and financing transactions: | ' | ' |
Increase in unsettled repurchases of common stock | ' | 30 |
Decrease in unsettled investment purchases | ($78) | ' |
BASIS_OF_PRESENTATION_AND_RECE
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Basis of Presentation and Recent Accounting Pronouncements [Abstract] | ' | ||||||
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | ' | ||||||
1. BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | |||||||
Basis of Presentation | |||||||
We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014. | |||||||
We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for our fiscal year ending May 31, 2015. | |||||||
There have been no significant changes in our reported financial position or results of operations and cash flows as a result of the adoption of new accounting pronouncements or to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014 that have had a significant impact on our consolidated financial statements or notes thereto. | |||||||
Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications did not affect our consolidated total revenues, consolidated operating income or consolidated net income. | |||||||
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. | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Transitional and other employee related costs | $ | 9 | $ | 6 | |||
Stock-based compensation | 3 | 2 | |||||
Professional fees and other, net | 13 | 3 | |||||
Business combination adjustments, net | — | -1 | |||||
Total acquisition related and other expenses | $ | 25 | $ | 10 | |||
Non-Operating Income, net | |||||||
Non-operating 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 (primarily 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. | |||||||
(in millions) | Three Months Ended | ||||||
August 31, | |||||||
2014 | 2013 | ||||||
Interest income | $ | 89 | $ | 57 | |||
Foreign currency losses, net | -41 | -35 | |||||
Noncontrolling interests in income | -46 | -17 | |||||
Other income, net | 14 | 2 | |||||
Total non-operating income, net | $ | 16 | $ | 7 | |||
Sales of Financing Receivables | |||||||
We offer certain of our customers the option to acquire our software products, hardware systems products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. During the three months ended August 31, 2014 and 2013, $724 million and $828 million of financing receivables were sold to financial institutions, respectively. | |||||||
Recent Accounting Pronouncements | |||||||
Disclosure of Going Concern Uncertainties: In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for us in our fourth quarter of fiscal 2017 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on our consolidated financial statements will be material. | |||||||
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 Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation (ASC 718), 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 are 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 to enhance 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 | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Acquisitions [Abstract] | ' | ||||||
ACQUISITIONS | ' | ||||||
2. ACQUISITIONS | |||||||
Acquisition of MICROS Systems, Inc. | |||||||
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. On July 3, 2014, pursuant to the Merger Agreement, we commenced a tender offer to purchase all of the issued and outstanding shares of common stock of MICROS at a purchase price of $68.00 per share, net to the seller in cash, without interest thereon, based upon the terms and subject to the conditions set forth in the Merger Agreement. On September 3, 2014, pursuant to the terms of the tender offer, we accepted and paid for approximately 80% of the outstanding shares of MICROS common stock tendered in the offer for approximately $4.1 billion in cash. We provided for a subsequent offering period through September 5, 2014 at the same purchase price of $68.00 per share and we accepted an additional 7% of MICROS common stock tendered through this date for approximately $330 million. On September 8, 2014, we effectuated the merger of MICROS with and into a wholly-owned subsidiary of Oracle pursuant to the terms of the Merger Agreement and applicable Maryland law and MICROS became an indirect, wholly-owned subsidiary of Oracle. Pursuant to the merger, shares of MICROS common stock that were outstanding and not acquired by us were converted into, and cancelled in exchange for, the right to receive $68.00 per share in cash. The unvested equity awards to acquire MICROS common stock that were outstanding immediately prior to the conclusion of the merger were converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. The initial allocation of the purchase price for the acquisition of MICROS is pending the completion of various analyses and finalization of estimates. Accordingly, such disclosures related to this business combination could not be made at the time these financial statements were issued. | |||||||
Other Fiscal 2015 Acquisitions | |||||||
During the first quarter of fiscal 2015, we acquired certain other companies primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate. We also have entered into certain other non-material agreements to acquire other companies and expect these proposed acquisitions to close during the second 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 $39 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 purchase price for these acquisitions was approximately $2.3 billion, which consisted primarily of cash consideration, and we recorded$243 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 initial purchase price calculation and related accounting for certain of our fiscal 2014 acquisitions is preliminary. The preliminary fair value estimates for the assets acquired and liabilities assumed for certain of our acquisitions completed during fiscal 2014 were based upon preliminary calculations and valuations and our estimates and assumptions for certain 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. | |||||||
Contingent Consideration Related to the Acquisition of Pillar Data Systems, Inc. | |||||||
In fiscal 2012, we acquired Pillar Data Systems, Inc. (Pillar Data), a provider of enterprise storage systems solutions. 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. The Earn-Out period ended at the end of our first quarter of fiscal 2015 and no amounts are expected to be paid or payable to Pillar Data’s former stockholders, including Lawrence J. Ellison, Oracle’s Chief Technology Officer, Chairman of the Board and largest stockholder. | |||||||
Unaudited Pro Forma Financial Information | |||||||
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle and certain other companies that we acquired since the beginning of fiscal 2014 (which were considered relevant for the purposes of unaudited pro forma financial information disclosure) as though the companies were combined as of the beginning of fiscal 2014. 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 2014. 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 2014. | |||||||
The unaudited pro forma financial information for the three months ended August 31, 2014 included only the historical results of Oracle for the three months ended August 31, 2014. The historical results of certain other companies that we acquired since the beginning of fiscal 2015 were not material to the unaudited pro forma financial information presented 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 the three months ended August 31, 2013 combined the historical results of Oracle for the three months ended August 31, 2013, 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. | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Total revenues | $ | 8,596 | $ | 8,459 | |||
Net income | $ | 2,184 | $ | 2,131 | |||
Basic earnings per share | $ | 0.49 | $ | 0.46 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.46 | |||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | ||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | ||||||||||||||||||
3. FAIR VALUE MEASUREMENTS | |||||||||||||||||||
We perform fair value measurements in accordance with ASC 820, Fair Value Measurement. 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 and Liabilities Measured at Fair Value on a Recurring Basis | |||||||||||||||||||
Our assets and liabilities measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following (Level 1 and 2 inputs are defined above): | |||||||||||||||||||
31-Aug-14 | 31-May-14 | ||||||||||||||||||
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: | |||||||||||||||||||
U.S. Treasury securities | $ | 476 | $ | — | $ | 476 | $ | — | $ | — | $ | — | |||||||
Commercial paper debt securities | — | 12,164 | 12,164 | — | 7,969 | 7,969 | |||||||||||||
Corporate debt securities and other | 158 | 20,032 | 20,190 | 119 | 16,538 | 16,657 | |||||||||||||
Derivative financial instruments | — | 67 | 67 | — | 97 | 97 | |||||||||||||
Total assets | $ | 634 | $ | 32,263 | $ | 32,897 | $ | 119 | $ | 24,604 | $ | 24,723 | |||||||
Liabilities: | |||||||||||||||||||
Derivative financial instruments | $ | — | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | |||||||
Our marketable securities investments consisted of Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. As of August 31, 2014 and May 31, 2014, approximately 50% and 45%, respectively, of our marketable securities investments mature within one year and 50% and 55%, respectively, mature within one to four years. 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 $32.6 billion and $24.2 billion of borrowings, which consisted of senior notes that were outstanding as of August 31, 2014 and May 31, 2014, respectively, the estimated fair values of our borrowings using Level 2 inputs at August 31, 2014 and May 31, 2014 were $35.1 billion and $26.4 billion, respectively. |
INVENTORIES
INVENTORIES | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Inventories [Abstract] | ' | ||||||
INVENTORIES | ' | ||||||
4. INVENTORIES | |||||||
Inventories consisted of the following: | |||||||
(in millions) | August 31, | May 31, | |||||
2014 | 2014 | ||||||
Raw materials | $ | 72 | $ | 74 | |||
Work-in-progress | 23 | 28 | |||||
Finished goods | 84 | 87 | |||||
Total | $ | 179 | $ | 189 | |||
INTANGIBLE_ASSETS_AND_GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended | |||||||||||||||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||||||||||||||
Intangible Assets and Goodwill [Abstract] | ' | |||||||||||||||||||||||||||||
INTANGIBLE ASSETS AND GOODWILL | ' | |||||||||||||||||||||||||||||
5. INTANGIBLE ASSETS AND GOODWILL | ||||||||||||||||||||||||||||||
The changes in intangible assets for fiscal 2015 and the net book value of intangible assets at August 31, 2014 and May 31, 2014 were as follows: | ||||||||||||||||||||||||||||||
Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | Weighted | |||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||||
Useful | ||||||||||||||||||||||||||||||
(Dollars in millions) | May 31, | Additions | August 31, | May 31, | Expense | August 31, | May 31, | August 31, | Life(1) | |||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||||||||||
Software support agreements and related relationships | $ | 5,218 | $ | — | $ | 5,218 | $ | -4,403 | $ | -139 | $ | -4,542 | $ | 815 | $ | 676 | N.A. | |||||||||||||
Hardware systems support agreements and related relationships | 969 | — | 969 | -530 | -35 | -565 | 439 | 404 | N.A. | |||||||||||||||||||||
Developed technology | 4,387 | 25 | 4,412 | -2,176 | -167 | -2,343 | 2,211 | 2,069 | 3 years | |||||||||||||||||||||
Core technology | 1,617 | — | 1,617 | -1,294 | -61 | -1,355 | 323 | 262 | N.A. | |||||||||||||||||||||
Customer relationships and contract backlog | 2,054 | 1 | 2,055 | -1,459 | -72 | -1,531 | 595 | 524 | 1 year | |||||||||||||||||||||
SaaS and PaaS agreements and related relationships and other | 1,789 | 4 | 1,793 | -305 | -48 | -353 | 1,484 | 1,440 | 3 years | |||||||||||||||||||||
Trademarks | 516 | — | 516 | -276 | -25 | -301 | 240 | 215 | N.A. | |||||||||||||||||||||
Total intangible assets subject to amortization | 16,550 | 30 | 16,580 | -10,443 | -547 | -10,990 | 6,107 | 5,590 | 3 years | |||||||||||||||||||||
In-process research and development, net | 30 | -15 | 15 | — | — | — | 30 | 15 | N.A. | |||||||||||||||||||||
Total intangible assets, net | $ | 16,580 | $ | 15 | $ | 16,595 | $ | -10,443 | $ | -547 | $ | -10,990 | $ | 6,137 | $ | 5,605 | ||||||||||||||
__________ | ||||||||||||||||||||||||||||||
-1 | Represents weighted average useful lives of intangible assets acquired during fiscal 2015. | |||||||||||||||||||||||||||||
Total amortization expense related to our intangible assets was $547 million and $595 million for the three months ended August 31, 2014 and 2013, respectively. As of August 31, 2014, estimated future amortization expenses related to intangible assets were as follows (in millions): | ||||||||||||||||||||||||||||||
Remainder of Fiscal 2015 | $ | 1,395 | ||||||||||||||||||||||||||||
Fiscal 2016 | 1,345 | |||||||||||||||||||||||||||||
Fiscal 2017 | 749 | |||||||||||||||||||||||||||||
Fiscal 2018 | 611 | |||||||||||||||||||||||||||||
Fiscal 2019 | 511 | |||||||||||||||||||||||||||||
Fiscal 2020 | 387 | |||||||||||||||||||||||||||||
Thereafter | 592 | |||||||||||||||||||||||||||||
Total intangible assets subject to amortization | 5,590 | |||||||||||||||||||||||||||||
In-process research and development | 15 | |||||||||||||||||||||||||||||
Total intangible assets, net | $ | 5,605 | ||||||||||||||||||||||||||||
The changes in the carrying amounts of goodwill, which is generally not deductible for tax purposes, for our operating segments for the three months ended August 31, 2014 were as follows: | ||||||||||||||||||||||||||||||
(in millions) | New Software | Software | Hardware Systems Support | Other(2) | Total | |||||||||||||||||||||||||
Licenses and | Licenses | |||||||||||||||||||||||||||||
Cloud | Updates and | |||||||||||||||||||||||||||||
Software | Product | |||||||||||||||||||||||||||||
Subscriptions | Support | |||||||||||||||||||||||||||||
Balances as of May 31, 2014 | $ | 13,139 | $ | 12,472 | $ | 2,082 | $ | 1,959 | $ | 29,652 | ||||||||||||||||||||
Goodwill from acquisitions | 15 | — | — | 7 | 22 | |||||||||||||||||||||||||
Goodwill adjustments(1) | 13 | — | 19 | 1 | 33 | |||||||||||||||||||||||||
Balances as of August 31, 2014 | $ | 13,167 | $ | 12,472 | $ | 2,101 | $ | 1,967 | $ | 29,707 | ||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
-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 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 | 3 Months Ended |
Aug. 31, 2014 | |
Notes Payable and Other Borrowings [Abstract] | ' |
NOTES PAYABLE AND OTHER BORROWINGS | ' |
6. NOTES PAYABLE AND OTHER BORROWINGS | |
Senior Notes | |
In July 2014, we issued $10.0 billion of senior notes comprised of $1.0 billion of floating rate notes due July 2017 (2017 Notes), $750 million of floating rate notes due October 2019 (2019 Floating Rate Notes), $2.0 billion of 2.25% notes due October 2019 (2019 Notes), $1.5 billion of 2.80% notes due July 2021 (2021 Notes), $2.0 billion of 3.40% notes due July 2024 (2024 Notes), $1.75 billion of 4.30% notes due July 2034 (2034 Notes) and $1.0 billion of 4.50% notes due July 2044 (2044 Notes and, together with the 2017 Notes, 2019 Floating Rate Notes, 2019 Notes, 2021 Notes, 2024 Notes and 2034 Notes, the Senior Notes). The floating rate notes bear interest at a floating rate equal to three-month LIBOR plus 0.20% for the 2017 Notes and 0.51% for the 2019 Floating Rate Notes (0.43% and 0.74% as of August 31, 2014, respectively) with interest payable quarterly. We issued the Senior Notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock, our acquisition of MICROS in September 2014 and future acquisitions, and repayment of indebtedness. | |
The effective interest yields of the 2019 Notes, 2021 Notes, 2024 Notes, 2034 Notes and 2044 Notes (collectively, the Fixed Rate Senior Notes) at August 31, 2014 were 2.27%, 2.82%, 3.43%, 4.30% and 4.50%, respectively, and interest is payable semi-annually. In July 2014, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with the 2019 Notes and 2021 Notes so that the interest payable on these notes effectively became variable based on LIBOR (0.72% and 0.87%, respectively, at August 31, 2014; see Note 9 for additional information). We may redeem some or all of the Fixed Rate Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. The 2017 Notes and 2019 Floating Rate Notes may not be redeemed prior to their maturity. | |
The Senior Notes rank pari passu with any other notes we may issue in the future pursuant to our commercial paper program and all existing and future unsecured senior indebtedness of Oracle Corporation (see Note 8 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014 for further information on our commercial paper program and other borrowings). All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the Senior Notes and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at August 31, 2014. | |
In July 2014, our 3.75% senior notes due July 2014 (2014 Notes) for $1.5 billion matured and were repaid, and we settled the fixed to variable interest rate swap agreements associated with such fixed rate senior notes. | |
There have been no other significant changes in our notes payable or other borrowing arrangements that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014. |
RESTRUCTURING_ACTIVITIES
RESTRUCTURING ACTIVITIES | 3 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||
Restructuring Activities [Abstract] | ' | ||||||||||||||||||||||||
RESTRUCTURING ACTIVITIES | ' | ||||||||||||||||||||||||
7. 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 $80 million of restructuring expenses in connection with the 2013 Restructuring Plan in the first quarter of fiscal 2015 and we expect to incur the majority of the estimated remaining $126 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. | |||||||||||||||||||||||||
Summary of All Plans | |||||||||||||||||||||||||
Three Months Ended August 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, | August 31, | ||||||||||||||||||||||||
2014(2) | 2014(2) | ||||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 12 | $ | 22 | $ | -1 | $ | -18 | $ | — | $ | 15 | $ | 147 | $ | 158 | |||||||||
Software license updates and product support | 5 | 4 | — | -2 | — | 7 | 22 | 34 | |||||||||||||||||
Hardware systems business | 18 | 28 | -1 | -16 | -1 | 28 | 166 | 208 | |||||||||||||||||
Services | 11 | 20 | — | -17 | — | 14 | 119 | 166 | |||||||||||||||||
General and administrative and other | 15 | 9 | -1 | -9 | -2 | 12 | 125 | 139 | |||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | 61 | $ | 83 | $ | -3 | $ | -62 | $ | -3 | $ | 76 | $ | 579 | $ | 705 | |||||||||
Total other restructuring plans(6) | $ | 108 | $ | 1 | $ | -12 | $ | -11 | $ | 1 | $ | 87 | |||||||||||||
Total restructuring plans | $ | 169 | $ | 84 | $ | -15 | $ | -73 | $ | -2 | $ | 163 | |||||||||||||
_________ | |||||||||||||||||||||||||
-1 | Restructuring costs recorded for individual line items primarily related to employee severance costs. | ||||||||||||||||||||||||
-2 | The balances at August 31, 2014 and May 31, 2014 included $112 million and $100 million, respectively, recorded in other current liabilities, and $51 million and $69 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 period presented but for which the current impact to our consolidated statements of operations was not significant. | ||||||||||||||||||||||||
DEFERRED_REVENUES
DEFERRED REVENUES | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Deferred Revenues [Abstract] | ' | ||||||
DEFERRED REVENUES | ' | ||||||
8. DEFERRED REVENUES | |||||||
Deferred revenues consisted of the following: | |||||||
August 31, | May 31, | ||||||
(in millions) | 2014 | 2014 | |||||
Software license updates and product support | $ | 7,498 | $ | 5,909 | |||
Hardware systems support and other | 738 | 664 | |||||
Services | 376 | 364 | |||||
Cloud SaaS, PaaS and IaaS | 249 | 248 | |||||
New software licenses | 78 | 84 | |||||
Deferred revenues, current | 8,939 | 7,269 | |||||
Deferred revenues, non-current (in other non-current liabilities) | 464 | 404 | |||||
Total deferred revenues | $ | 9,403 | $ | 7,673 | |||
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 software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) revenues generally 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 separated 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, among 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 | 3 Months Ended | ||||||||||||||
Aug. 31, 2014 | |||||||||||||||
Derivative Financial Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | ||||||||||||||
9. DERIVATIVE FINANCIAL INSTRUMENTS | |||||||||||||||
Fair Value Hedges—Interest Rate Swap Agreements | |||||||||||||||
In July 2014, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with our 2019 Notes and 2021 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. 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 $1.5 billion of 2.375% senior notes due January 2019 (January 2019 Notes) so that the interest payable on these senior notes effectively became variable based on LIBOR. The critical terms of the interest rate swap agreements and the 2019 Notes, 2021 Notes and the January 2019 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, Derivatives and Hedging (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 other assets or other non-current liabilities 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 and other non-current borrowings. The periodic interest settlements for the interest rate swap agreements for the 2019 Notes, 2021 Notes and the January 2019 Notes are recorded as interest expense and are included as a part of cash flows from operating activities. | |||||||||||||||
In July 2014, we settled the fixed to variable interest rate swap agreements associated with the 2014 Notes. 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 our €1.25 billion of 2.25% senior notes due January 2021 (January 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 January 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 January 2021 Notes by fixing the principal amount of the January 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 January 2021 Notes, including the annual interest payments being hedged, and the cross-currency swap agreements mature at the same time as the January 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 income, net in the same period that the carrying value of the Euro denominated January 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 income, net. We evaluate the effectiveness of our cross-currency swap agreements on a quarterly basis. We did not record any ineffectiveness for the three months ended August 31, 2014. The cash flows related to the cross-currency swap agreements that pertain to the periodic interest settlements are classified as operating activities and the cash flows that pertain to the principal balance are classified as financing activities. | |||||||||||||||
We do not use any cross-currency swap agreements for trading purposes. | |||||||||||||||
Net Investment Hedge—Foreign Currency Borrowings | |||||||||||||||
In July 2013, we designated our €750 million of 3.125% senior notes due July 2025 (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 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 for the three months ended August 31, 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. 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 (refer to Note 11 of Notes to Consolidated Financial Statements as included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2014 for additional information regarding these contracts). As of August 31, 2014 and May 31, 2014, respectively, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies were $2.9 billion and $3.6 billion, respectively, and the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were $1.4 billion and $2.0 billion, respectively. The fair values of our outstanding foreign currency forward contracts were nominal at August 31, 2014 and May 31, 2014. Included in our non-operating income, net were $(31) million and $68 million of net (losses) gains related to these forward contracts for the three months ended August 31, 2014 and 2013, respectively. The cash flows related to these foreign currency contracts are classified as operating activities. | |||||||||||||||
The effects of derivative and non-derivative instruments designated as hedges on certain of 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 Condensed Consolidated Balance Sheets | |||||||||||||||
31-Aug-14 | 31-May-14 | ||||||||||||||
(in millions) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Interest rate swap agreements designated as fair value hedges | Other assets | $ | 10 | Other assets | $ | 15 | |||||||||
Interest rate swap agreements designated as fair value hedges | Not applicable | $ | — | Prepaid expenses and other | $ | 8 | |||||||||
current assets | |||||||||||||||
Interest rate swap agreements designated as fair value hedges | Other non-current liabilities | $ | -3 | Not applicable | $ | — | |||||||||
Cross-currency swap agreements designated as cash flow hedges | Other assets | $ | 57 | Other assets | $ | 74 | |||||||||
Foreign currency borrowings designated as net investment hedge | Notes payable and other | $ | -1,127 | Notes payable and other | $ | -1,116 | |||||||||
non-current borrowings | non-current borrowings | ||||||||||||||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) | |||||||||||||||
Amount of (Loss) Gain | Location and Amount of (Loss) Gain | ||||||||||||||
Recognized in Accumulated OCL (Effective Portion) | Reclassified from Accumulated OCL | ||||||||||||||
into Income (Effective Portion) | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
August 31, | August 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Cross-currency swap agreements designated as cash flow hedges | $ | -17 | $ | 2 | Non-operating (expense) income, net | $ | -52 | $ | 34 | ||||||
Foreign currency borrowings designated as net investment hedge | $ | 32 | $ | -13 | 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 | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
August 31, | August 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Interest rate swap agreements designated as fair value hedges | Interest expense | $ | -16 | $ | -23 | Interest expense | $ | 16 | $ | 23 | |||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Stockholders' Equity [Abstract] | ' | ||||||
STOCKHOLDERS' EQUITY | ' | ||||||
10. STOCKHOLDERS’ EQUITY | |||||||
Stock Repurchases | |||||||
Our Board of Directors has approved a program for us to repurchase shares of our common stock. On September 18, 2014, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $13.0 billion. Approximately $2.3 billion remained available for stock repurchases as of August 31, 2014, pursuant to our stock repurchase program prior to the additional amount authorized in September 2014. We repurchased 48.8 million shares for $2.0 billion during the three months ended August 31, 2014 (including 2.3 million shares for $94 million that were repurchased but not settled) and 92.8 million shares for $3.0 billion during the three months ended August 31, 2013 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 | |||||||
In the first quarter of fiscal 2015, our Board of Directors declared a cash dividend of $0.12 per share of our outstanding common stock, which we paid during the same period. | |||||||
In September 2014, our Board of Directors declared a quarterly cash dividend of $0.12 per share of our outstanding common stock payable on October 29, 2014 to stockholders of record as of the close of business on October 8, 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. | |||||||
Stock-Based Compensation Expense and Valuations of Stock Awards | |||||||
During the first quarter of fiscal 2015, we issued 30 million stock options and 22 million restricted stock-based awards, which primarily included awards issued as a part of our annual stock-based award process and awards from companies that we have acquired, that were subject to service-based vesting restrictions. Included in the aforementioned restricted stock-based award total were 3 million of performance-based restricted stock units (PSUs) that vest upon the attainment of certain performance metrics and service-based vesting. Based upon actual attainment relative to the “target” performance metric, certain participants have the ability to be issued up to 150% of the target number of PSUs originally granted, or to be issued no PSUs at all. For each share granted as a restricted stock-based award under our 2000 Long-Term Equity Incentive Plan, an equivalent of 2.5 shares is deducted from our pool of available stock awards. Our stock option and restricted stock-based award issuances were partially offset by forfeitures and cancellations of 6 million shares during the first quarter of fiscal 2015. | |||||||
We estimated the fair values of our stock options 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. We recognize stock-based compensation expense on a straight-line basis over the service period of the stock option, which is generally four years. 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 the three months ended August 31, 2014 and 2013: | |||||||
Three Months Ended | |||||||
August 31, | |||||||
2014 | 2013 | ||||||
Expected life (in years) | 5.2 | 5.1 | |||||
Risk-free interest rate | 1.7% | 1.4% | |||||
Volatility | 23% | 27% | |||||
Dividend yield | 1.2% | 1.6% | |||||
Weighted-average fair value per share | $ | 8.69 | $ | 6.63 | |||
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. | |||||||
We estimated the fair values of our restricted-stock based awards that are solely subject to service-based vesting requirements based upon their intrinsic values as of the grant dates. We recognize expense for these service-based awards on a straight-line basis over the service period of these awards, which is generally four years. | |||||||
The fair values of our PSUs were also measured at their intrinsic values as of the grant date. The vesting conditions and related terms of our PSUs were communicated to each participating employee as of the grant date and include attainment metrics that are defined, fixed, and based upon consistent U.S. GAAP metrics or internal metrics that are defined, fixed and consistently determined, and that require the employee to render service. Therefore, these awards meet the performance-based award classification criteria as defined within ASC 718. The performance conditions of the PSUs affect the number of PSUs that will ultimately vest and be issued to the grantee based upon a “target” that is subject to certain attainment maximums, with the possibility that none will vest if applicable performance conditions are not met. As the performance conditions to evaluate attainment of each tranche for each participant are independent of the performance conditions for the other tranches, we recognize stock-based compensation expense for our PSUs on a straight-line basis over the service period for each separately vesting tranche, which is generally twelve months. | |||||||
Stock-based compensation is included in the following operating expense line items in our condensed consolidated statements of operations: | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Sales and marketing | $ | 43 | $ | 39 | |||
Cloud software-as-a-service and platform-as-a-service | 2 | 2 | |||||
Cloud infrastructure-as-a-service | 1 | 1 | |||||
Software license updates and product support | 5 | 6 | |||||
Hardware systems products | 1 | 2 | |||||
Hardware systems support | 1 | 3 | |||||
Services | 6 | 6 | |||||
Research and development | 108 | 97 | |||||
General and administrative | 45 | 42 | |||||
Acquisition related and other | 3 | 2 | |||||
Total stock-based compensation | $ | 215 | $ | 200 | |||
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Aug. 31, 2014 | |
Income Taxes [Abstract] | ' |
INCOME TAXES | ' |
11. INCOME TAXES | |
The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to certain earnings considered as indefinitely reinvested in foreign operations, state taxes, the U.S. research and development tax credit, acquisition related settlements with tax authorities and the U.S. domestic production activity deduction. Our effective tax rate was 19.7% and 17.7% for the three months ended August 31, 2014 and 2013, respectively. | |
Our net deferred tax assets were $1.4 billion as of both August 31, 2014 and May 31, 2014. 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. | |
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. 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. 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. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Segment Information [Abstract] | ' | ||||||
SEGMENT INFORMATION | ' | ||||||
12. 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 makers are our Chief Executive Officers. We are organized geographically and by line of business. While our Chief Executive Officers evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. | |||||||
We have 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 our Oracle Exadata Database Machine, among others. | |||||||
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 cloud and hardware systems businesses: | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
New software licenses and cloud software subscriptions: | |||||||
Revenues(1) | $ | 1,707 | $ | 1,653 | |||
Cloud software-as-a-service and platform-as-a-service expenses | 143 | 95 | |||||
Sales and distribution expenses | 1,279 | 1,178 | |||||
Margin(2) | $ | 285 | $ | 380 | |||
Cloud infrastructure-as-a-service: | |||||||
Revenues | $ | 138 | $ | 109 | |||
Cloud infrastructure-as-a-service expenses | 76 | 67 | |||||
Sales and distribution expenses | 18 | 20 | |||||
Margin(2) | $ | 44 | $ | 22 | |||
Software license updates and product support: | |||||||
Revenues(1) | $ | 4,731 | $ | 4,432 | |||
Software license updates and product support expenses | 257 | 276 | |||||
Margin(2) | $ | 4,474 | $ | 4,156 | |||
Total software and cloud business: | |||||||
Revenues(1) | $ | 6,576 | $ | 6,194 | |||
Expenses | 1,773 | 1,636 | |||||
Margin(2) | $ | 4,803 | $ | 4,558 | |||
Hardware systems products: | |||||||
Revenues | $ | 578 | $ | 669 | |||
Hardware systems products expenses | 297 | 329 | |||||
Sales and distribution expenses | 201 | 217 | |||||
Margin(2) | $ | 80 | $ | 123 | |||
Hardware systems support: | |||||||
Revenues(1) | $ | 588 | $ | 597 | |||
Hardware systems support expenses | 184 | 201 | |||||
Margin(2) | $ | 404 | $ | 396 | |||
Total hardware systems business: | |||||||
Revenues(1) | $ | 1,166 | $ | 1,266 | |||
Expenses | 682 | 747 | |||||
Margin(2) | $ | 484 | $ | 519 | |||
Total services business: | |||||||
Revenues(1) | $ | 857 | $ | 921 | |||
Services expenses | 665 | 687 | |||||
Margin(2) | $ | 192 | $ | 234 | |||
Totals: | |||||||
Revenues(1) | $ | 8,599 | $ | 8,381 | |||
Expenses | 3,120 | 3,070 | |||||
Margin(2) | $ | 5,479 | $ | 5,311 | |||
__________ | |||||||
-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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August, 31 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 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 income (expense), 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: | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Total revenues for operating segments | $ | 8,599 | $ | 8,381 | |||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -2 | -3 | |||||
Software license updates and product support revenues(1) | — | -1 | |||||
Hardware systems support revenues(1) | -1 | -5 | |||||
Total revenues | $ | 8,596 | $ | 8,372 | |||
Total margin for operating segments | $ | 5,479 | $ | 5,311 | |||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -2 | -3 | |||||
Software license updates and product support revenues(1) | — | -1 | |||||
Hardware systems support revenues(1) | -1 | -5 | |||||
Product development | -1,174 | -1,094 | |||||
Marketing and partner program expenses | -119 | -131 | |||||
Corporate, general and administrative and information technology expenses | -367 | -345 | |||||
Amortization of intangible assets | -547 | -595 | |||||
Acquisition related and other | -25 | -10 | |||||
Restructuring | -69 | -56 | |||||
Stock-based compensation | -212 | -198 | |||||
Interest expense | -261 | -217 | |||||
Non-operating income, net | 16 | 7 | |||||
Income before provision for income taxes | $ | 2,718 | $ | 2,663 | |||
__________ | |||||||
-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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August 31, 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 for an explanation of these adjustments. | ||||||
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
EARNINGS PER SHARE | ' | ||||||
13. 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: | |||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Net income | $ | 2,184 | $ | 2,191 | |||
Weighted average common shares outstanding | 4,451 | 4,608 | |||||
Dilutive effect of employee stock plans | 97 | 66 | |||||
Dilutive weighted average common shares outstanding | 4,548 | 4,674 | |||||
Basic earnings per share | $ | 0.49 | $ | 0.48 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.47 | |||
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation(1) | 26 | 289 | |||||
__________ | |||||||
-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. | ||||||
LEGAL_PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Aug. 31, 2014 | |
Legal Proceedings [Abstract] | ' |
LEGAL PROCEEDINGS | ' |
14. 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 receivable 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. The appellate court heard oral argument on May 13, 2014, and on August 29, 2014, issued an order affirming the district court's grant of judgment as a matter of law but vacated the district court's ruling selecting $272 million as the remittitur amount. The appellate court remanded for a new trial, with instructions to condition any new trial on Oracle's rejection of a $356.7 million remittitur. | |
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 then 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 then 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 then 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 agreed to pay plaintiffs’ attorneys’ fees and costs, not to exceed $15 million. At an August 12, 2014, hearing, the Delaware Chancery Court approved the settlement, and awarded $15 million in plaintiffs’ attorneys’ fees and costs, which Oracle later paid. On the same day, the court entered a Final Order and Judgment approving the settlement. These derivative actions are now concluded. | |
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. |
ACCOUNTING_POLICIES_Policy
ACCOUNTING POLICIES (Policy) | 3 Months Ended |
Aug. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
Disclosure of Going Concern Uncertainties: In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern(ASU-2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for us in our fourth quarter of fiscal 2017 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on our consolidated financial statements will be material. | |
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 Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation (ASC 718), 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 are 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 to enhance 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. |
BASIS_OF_PRESENTATION_AND_RECE1
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Basis of Presentation and Recent Accounting Pronouncements [Abstract] | ' | ||||||
Acquisition Related and Other Expenses | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Transitional and other employee related costs | $ | 9 | $ | 6 | |||
Stock-based compensation | 3 | 2 | |||||
Professional fees and other, net | 13 | 3 | |||||
Business combination adjustments, net | — | -1 | |||||
Total acquisition related and other expenses | $ | 25 | $ | 10 | |||
Non-Operating Income, net | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Interest income | $ | 89 | $ | 57 | |||
Foreign currency losses, net | -41 | -35 | |||||
Noncontrolling interests in income | -46 | -17 | |||||
Other income, net | 14 | 2 | |||||
Total non-operating income, net | $ | 16 | $ | 7 | |||
ACQUISITIONS_Tables
ACQUISITIONS (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Acquisitions [Abstract] | ' | ||||||
Unaudited Pro Forma Financial Information | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Total revenues | $ | 8,596 | $ | 8,459 | |||
Net income | $ | 2,184 | $ | 2,131 | |||
Basic earnings per share | $ | 0.49 | $ | 0.46 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.46 | |||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | |||||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||||
Fair Value Measurements [Abstract] | ' | |||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | |||||||||||||||||||
31-Aug-14 | 31-May-14 | |||||||||||||||||||
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: | ||||||||||||||||||||
U.S. Treasury securities | $ | 476 | $ | — | $ | 476 | $ | — | $ | — | $ | — | ||||||||
Commercial paper debt securities | — | 12,164 | 12,164 | — | 7,969 | 7,969 | ||||||||||||||
Corporate debt securities and other | 158 | 20,032 | 20,190 | 119 | 16,538 | 16,657 | ||||||||||||||
Derivative financial instruments | — | 67 | 67 | — | 97 | 97 | ||||||||||||||
Total assets | $ | 634 | $ | 32,263 | $ | 32,897 | $ | 119 | $ | 24,604 | $ | 24,723 | ||||||||
Liabilities: | ||||||||||||||||||||
Derivative financial instruments | $ | — | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | ||||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Inventories [Abstract] | ' | ||||||
Inventories | ' | ||||||
(in millions) | August 31, | May 31, | |||||
2014 | 2014 | ||||||
Raw materials | $ | 72 | $ | 74 | |||
Work-in-process | 23 | 28 | |||||
Finished goods | 84 | 87 | |||||
Total | $ | 179 | $ | 189 | |||
INTANGIBLE_ASSETS_AND_GOODWILL1
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||||||||||||||
Intangible Assets and Goodwill [Abstract] | ' | |||||||||||||||||||||||||||||
Intangible Assets | ' | |||||||||||||||||||||||||||||
Intangible Assets, Gross | Accumulated Amortization | Intangible Assets, Net | Weighted | |||||||||||||||||||||||||||
Average | ||||||||||||||||||||||||||||||
(Dollars in millions) | May 31, | Additions | August 31, | May 31, | Expense | August 31, | May 31, | August 31, | Useful Life(1) | |||||||||||||||||||||
2014 | 2014 | 2014 | 2014 | 2014 | 2014 | |||||||||||||||||||||||||
Software support agreements and related relationships | $ | 5,218 | $ | — | $ | 5,218 | $ | -4,403 | $ | -139 | $ | -4,542 | $ | 815 | $ | 676 | N.A. | |||||||||||||
Hardware systems support agreements and related relationships | 969 | — | 969 | -530 | -35 | -565 | 439 | 404 | N.A. | |||||||||||||||||||||
Developed technology | 4,387 | 25 | 4,412 | -2,176 | -167 | -2,343 | 2,211 | 2,069 | 3 years | |||||||||||||||||||||
Core technology | 1,617 | — | 1,617 | -1,294 | -61 | -1,355 | 323 | 262 | N.A. | |||||||||||||||||||||
Customer relationships and contract backlog | 2,054 | 1 | 2,055 | -1,459 | -72 | -1,531 | 595 | 524 | 1 year | |||||||||||||||||||||
SaaS and PaaS agreements and related relationships and other | 1,789 | 4 | 1,793 | -305 | -48 | -353 | 1,484 | 1,440 | 3 years | |||||||||||||||||||||
Trademarks | 516 | — | 516 | -276 | -25 | -301 | 240 | 215 | N.A. | |||||||||||||||||||||
Total intangible assets subject to amortization | 16,550 | 30 | 16,580 | -10,443 | -547 | -10,990 | 6,107 | 5,590 | 3 years | |||||||||||||||||||||
In-process research and development, net | 30 | -15 | 15 | — | — | — | 30 | 15 | N.A. | |||||||||||||||||||||
Total intangible assets, net | $ | 16,580 | $ | 15 | $ | 16,595 | $ | -10,443 | $ | -547 | $ | -10,990 | $ | 6,137 | $ | 5,605 | ||||||||||||||
__________ | ||||||||||||||||||||||||||||||
-1 | Represents weighted average useful lives of intangible assets acquired during fiscal 2015. | |||||||||||||||||||||||||||||
Estimated Future Amortization Expenses Related to Intangible Assets | ' | |||||||||||||||||||||||||||||
Remainder of Fiscal 2015 | $ | 1,395 | ||||||||||||||||||||||||||||
Fiscal 2016 | 1,345 | |||||||||||||||||||||||||||||
Fiscal 2017 | 749 | |||||||||||||||||||||||||||||
Fiscal 2018 | 611 | |||||||||||||||||||||||||||||
Fiscal 2019 | 511 | |||||||||||||||||||||||||||||
Fiscal 2020 | 387 | |||||||||||||||||||||||||||||
Thereafter | 592 | |||||||||||||||||||||||||||||
Total intangible assets subject to amortization | 5,590 | |||||||||||||||||||||||||||||
In-process research and development | 15 | |||||||||||||||||||||||||||||
Total intangible assets, net | $ | 5,605 | ||||||||||||||||||||||||||||
Goodwill | ' | |||||||||||||||||||||||||||||
(in millions) | New Software | Software | Hardware Systems Support | Other(2) | Total | |||||||||||||||||||||||||
Licenses and | License | |||||||||||||||||||||||||||||
Cloud | Updates and | |||||||||||||||||||||||||||||
Software | Product | |||||||||||||||||||||||||||||
Subscriptions | Support | |||||||||||||||||||||||||||||
Balances as of May 31, 2014 | $ | 13,139 | $ | 12,472 | $ | 2,082 | $ | 1,959 | $ | 29,652 | ||||||||||||||||||||
Goodwill from acquisitions | 15 | — | — | 7 | 22 | |||||||||||||||||||||||||
Goodwill adjustments(1) | 13 | — | 19 | 1 | 33 | |||||||||||||||||||||||||
Balances as of August 31, 2014 | $ | 13,167 | $ | 12,472 | $ | 2,101 | $ | 1,967 | $ | 29,707 | ||||||||||||||||||||
__________ | ||||||||||||||||||||||||||||||
-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 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. | |||||||||||||||||||||||||||||
RESTRUCTURING_ACTIVITIES_Table
RESTRUCTURING ACTIVITIES (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Aug. 31, 2014 | |||||||||||||||||||||||||
Restructuring Activities [Abstract] | ' | ||||||||||||||||||||||||
Summary of All Plans | ' | ||||||||||||||||||||||||
Three Months Ended August 31, 2014 | |||||||||||||||||||||||||
(in millions) | Accrued | Initial Costs(3) | Adj. to | Cash | Others(5) | Accrued | Total Costs Accrued to Date | Total Expected Program Costs | |||||||||||||||||
May 31, | Cost(4) | Payments | August 31, | ||||||||||||||||||||||
2014(2) | 2014(2) | ||||||||||||||||||||||||
Fiscal 2013 Oracle Restructuring Plan(1) | |||||||||||||||||||||||||
New software licenses and cloud software subscriptions | $ | 12 | $ | 22 | $ | -1 | $ | -18 | $ | — | $ | 15 | $ | 147 | $ | 158 | |||||||||
Software license updates and product support | 5 | 4 | — | -2 | — | 7 | 22 | 34 | |||||||||||||||||
Hardware systems business | 18 | 28 | -1 | -16 | -1 | 28 | 166 | 208 | |||||||||||||||||
Services | 11 | 20 | — | -17 | — | 14 | 119 | 166 | |||||||||||||||||
General and administrative and other | 15 | 9 | -1 | -9 | -2 | 12 | 125 | 139 | |||||||||||||||||
Total Fiscal 2013 Oracle Restructuring Plan | $ | 61 | $ | 83 | $ | -3 | $ | -62 | $ | -3 | $ | 76 | $ | 579 | $ | 705 | |||||||||
Total other restructuring plans(6) | $ | 108 | $ | 1 | $ | -12 | $ | -11 | $ | 1 | $ | 87 | |||||||||||||
Total restructuring plans | $ | 169 | $ | 84 | $ | -15 | $ | -73 | $ | -2 | $ | 163 | |||||||||||||
_________ | |||||||||||||||||||||||||
-1 | Restructuring costs recorded for individual line items primarily related to employee severance costs. | ||||||||||||||||||||||||
-2 | The balances at August 31, 2014 and May 31, 2014 included $112 million and $100 million, respectively, recorded in other current liabilities, and $51 million and $69 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 period presented but for which the current impact to our consolidated statements of operations was not significant. | ||||||||||||||||||||||||
DEFERRED_REVENUES_Tables
DEFERRED REVENUES (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Deferred Revenues [Abstract] | ' | ||||||
Deferred Revenues | ' | ||||||
August 31, | May 31, | ||||||
(in millions) | 2014 | 2014 | |||||
Software license updates and product support | $ | 7,498 | $ | 5,909 | |||
Hardware systems support and other | 738 | 664 | |||||
Services | 376 | 364 | |||||
Cloud SaaS, PaaS and IaaS | 249 | 248 | |||||
New software licenses | 78 | 84 | |||||
Deferred revenues, current | 8,939 | 7,269 | |||||
Deferred revenues, non-current (in other non-current liabilities) | 464 | 404 | |||||
Total deferred revenues | $ | 9,403 | $ | 7,673 | |||
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||
Aug. 31, 2014 | |||||||||||||||
Derivative Instrument Detail [Abstract] | ' | ||||||||||||||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets | ' | ||||||||||||||
31-Aug-14 | 31-May-14 | ||||||||||||||
(in millions) | Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||||
Interest rate swap agreements designated as fair value hedges | Other assets | $ | 10 | Other assets | $ | 15 | |||||||||
Interest rate swap agreements designated as fair value hedges | Not applicable | $ | — | Prepaid expenses and other | $ | 8 | |||||||||
current assets | |||||||||||||||
Interest rate swap agreements designated as fair value hedges | Other non-current liabilities | $ | -3 | Not applicable | $ | — | |||||||||
Cross-currency swap agreements designated as cash flow hedges | Other assets | $ | 57 | Other assets | $ | 74 | |||||||||
Foreign currency borrowings designated as net investment hedge | Notes payable and other | $ | -1,127 | Notes payable and other | $ | -1,116 | |||||||||
non-current borrowings | non-current borrowings | ||||||||||||||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) | ' | ||||||||||||||
Amount of (Loss) Gain | Location and Amount of (Loss) Gain | ||||||||||||||
Recognized in Accumulated OCL (Effective Portion) | Reclassified from Accumulated OCL | ||||||||||||||
into Income (Effective Portion) | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
August 31, | August 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Cross-currency swap agreements designated as cash flow hedges | $ | -17 | $ | 2 | Non-operating (expense) income, net | $ | -52 | $ | 34 | ||||||
Foreign currency borrowings designated as net investment hedge | $ | 32 | $ | -13 | 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 | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
August 31, | August 31, | ||||||||||||||
(in millions) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Interest rate swap agreements designated as fair value hedges | Interest expense | $ | -16 | $ | -23 | Interest expense | $ | 16 | $ | 23 | |||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDER'S EQUITY (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Stockholders' Equity [Abstract] | ' | ||||||
Valuation of Stock Options | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
2014 | 2013 | ||||||
Expected life (in years) | 5.2 | 5.1 | |||||
Risk-free interest rate | 1.7% | 1.4% | |||||
Volatility | 23% | 27% | |||||
Dividend yield | 1.2% | 1.6% | |||||
Weighted-average fair value per share | $ | 8.69 | $ | 6.63 | |||
Stock-Based Compensation Expense | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Sales and marketing | $ | 43 | $ | 39 | |||
Cloud software-as-a-service and platform-as-a-service | 2 | 2 | |||||
Cloud infrastructure-as-a-service | 1 | 1 | |||||
Software license updates and product support | 5 | 6 | |||||
Hardware systems products | 1 | 2 | |||||
Hardware systems support | 1 | 3 | |||||
Services | 6 | 6 | |||||
Research and development | 108 | 97 | |||||
General and administrative | 45 | 42 | |||||
Acquisition related and other | 3 | 2 | |||||
Total stock-based compensation | $ | 215 | $ | 200 | |||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Segment Information [Abstract] | ' | ||||||
Summary of Businesses and Operating Segments Results | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
New software licenses and cloud software subscriptions: | |||||||
Revenues(1) | $ | 1,707 | $ | 1,653 | |||
Cloud software-as-a-service and platform-as-a-service expenses | 143 | 95 | |||||
Sales and distribution expenses | 1,279 | 1,178 | |||||
Margin(2) | $ | 285 | $ | 380 | |||
Cloud infrastructure-as-a-service: | |||||||
Revenues | $ | 138 | $ | 109 | |||
Cloud infrastructure-as-a-service expenses | 76 | 67 | |||||
Sales and distribution expenses | 18 | 20 | |||||
Margin(2) | $ | 44 | $ | 22 | |||
Software license updates and product support: | |||||||
Revenues(1) | $ | 4,731 | $ | 4,432 | |||
Software license updates and product support expenses | 257 | 276 | |||||
Margin(2) | $ | 4,474 | $ | 4,156 | |||
Total software and cloud business: | |||||||
Revenues(1) | $ | 6,576 | $ | 6,194 | |||
Expenses | 1,773 | 1,636 | |||||
Margin(2) | $ | 4,803 | $ | 4,558 | |||
Hardware systems products: | |||||||
Revenues | $ | 578 | $ | 669 | |||
Hardware systems products expenses | 297 | 329 | |||||
Sales and distribution expenses | 201 | 217 | |||||
Margin(2) | $ | 80 | $ | 123 | |||
Hardware systems support: | |||||||
Revenues(1) | $ | 588 | $ | 597 | |||
Hardware systems support expenses | 184 | 201 | |||||
Margin(2) | $ | 404 | $ | 396 | |||
Total hardware systems business: | |||||||
Revenues(1) | $ | 1,166 | $ | 1,266 | |||
Expenses | 682 | 747 | |||||
Margin(2) | $ | 484 | $ | 519 | |||
Total services business: | |||||||
Revenues(1) | $ | 857 | $ | 921 | |||
Services expenses | 665 | 687 | |||||
Margin(2) | $ | 192 | $ | 234 | |||
Totals: | |||||||
Revenues(1) | $ | 8,599 | $ | 8,381 | |||
Expenses | 3,120 | 3,070 | |||||
Margin(2) | $ | 5,479 | $ | 5,311 | |||
-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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August, 31 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 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 income (expense), net. | ||||||
Reconciliation of Total Operating Segment Revenues to Total Revenues | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions) | 2014 | 2013 | |||||
Total revenues for operating segments | $ | 8,599 | $ | 8,381 | |||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -2 | -3 | |||||
Software license updates and product support revenues(1) | — | -1 | |||||
Hardware systems support revenues(1) | -1 | -5 | |||||
Total revenues | $ | 8,596 | $ | 8,372 | |||
Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes | ' | ||||||
Total margin for operating segments | $ | 5,479 | $ | 5,311 | |||
Cloud software-as-a-service and platform-as-a-service revenues (1) | -2 | -3 | |||||
Software license updates and product support revenues(1) | — | -1 | |||||
Hardware systems support revenues(1) | -1 | -5 | |||||
Product development | -1,174 | -1,094 | |||||
Marketing and partner program expenses | -119 | -131 | |||||
Corporate, general and administrative and information technology expenses | -367 | -345 | |||||
Amortization of intangible assets | -547 | -595 | |||||
Acquisition related and other | -25 | -10 | |||||
Restructuring | -69 | -56 | |||||
Stock-based compensation | -212 | -198 | |||||
Interest expense | -261 | -217 | |||||
Non-operating income, net | 16 | 7 | |||||
Income before provision for income taxes | $ | 2,718 | $ | 2,663 | |||
-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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August 31, 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 for an explanation of these adjustments. | ||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | ||||||
Aug. 31, 2014 | |||||||
Earnings Per Share [Abstract] | ' | ||||||
Earnings Per Share | ' | ||||||
Three Months Ended | |||||||
August 31, | |||||||
(in millions, except per share data) | 2014 | 2013 | |||||
Net income | $ | 2,184 | $ | 2,191 | |||
Weighted average common shares outstanding | 4,451 | 4,608 | |||||
Dilutive effect of employee stock plans | 97 | 66 | |||||
Dilutive weighted average common shares outstanding | 4,548 | 4,674 | |||||
Basic earnings per share | $ | 0.49 | $ | 0.48 | |||
Diluted earnings per share | $ | 0.48 | $ | 0.47 | |||
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation(1) | 26 | 289 | |||||
-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. | ||||||
BASIS_OF_PRESENTATION_AND_RECE2
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 |
Acquisition Related and Other Expenses [Abstract] | ' | ' |
Transitional and other employee related costs | $9 | $6 |
Stock-based compensation | 3 | 2 |
Professional fees and other, net | 13 | 3 |
Business combination adjustments, net | ' | -1 |
Total acquisition related and other expenses | 25 | 10 |
Non-Operating Income, net [Abstract] | ' | ' |
Interest income | 89 | 57 |
Foreign currency losses, net | -41 | -35 |
Noncontrolling interests in income | -46 | -17 |
Other income, net | 14 | 2 |
Total non-operating income, net | 16 | 7 |
Sales of Financing Receivables [Narrative] [Abstract] | ' | ' |
Sales of financing receivables | $724 | $828 |
ACQUISITIONS_Details
ACQUISITIONS (Details) (USD $) | 3 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | 3 Months Ended | |||||||
In Millions, except Per Share data, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | 31-May-14 | Aug. 31, 2014 | 31-May-14 | Feb. 28, 2014 | Aug. 31, 2014 | Feb. 06, 2014 | Sep. 30, 2014 | Aug. 31, 2014 | Sep. 08, 2014 | Sep. 05, 2014 | Sep. 03, 2014 | Jul. 03, 2014 | Aug. 31, 2014 |
Other Fiscal 2015 Acquisitions [Member] | Other Fiscal 2014 Acquisitions [Member] | Responsys, Inc. [Member] | Responsys, Inc. [Member] | Responsys, Inc. [Member] | MICROS Systems, Inc. [Member] | MICROS Systems, Inc. [Member] | MICROS Systems, Inc. [Member] | MICROS Systems, Inc. [Member] | MICROS Systems, Inc. [Member] | MICROS Systems, Inc. [Member] | Pillar Data Systems, Inc. [Member] | ||||
Acquisitions [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition completion date | ' | ' | ' | ' | ' | ' | 6-Feb-14 | ' | ' | 3-Sep-14 | ' | ' | ' | ' | ' |
Total preliminary purchase price | ' | ' | ' | ' | $2,300 | $1,600 | ' | ' | $4,100 | ' | ' | ' | ' | ' | ' |
Cash portion of purchase price | ' | ' | ' | ' | ' | 1,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of stock options and restricted stock-based awards assumed | ' | ' | ' | ' | ' | 147 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Identifiable intangible assets recorded | ' | ' | ' | ' | 1,100 | ' | ' | 580 | ' | ' | ' | ' | ' | ' | ' |
In-process research and development recorded | ' | ' | ' | ' | 99 | ' | ' | 14 | ' | ' | ' | ' | ' | ' | ' |
Net tangible liabilities assumed | ' | ' | ' | ' | 243 | ' | ' | 39 | ' | ' | ' | ' | ' | ' | ' |
Goodwill | 29,707 | ' | 29,652 | ' | 1,300 | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' | ' |
Materiality of acquisitions individually or in the aggregate | ' | ' | ' | 'These acquisitions were not significant individually or in the aggregate. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contingent consideration paid or payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 |
Merger agreement date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 22-Jun-14 | ' | ' | ' | ' | 29-Jun-11 |
Business acquisition per share price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $68 | $68 | ' | $68 | ' |
Preliminary purchase price paid at tender offer dates | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 330 | ' | ' | ' |
Percentage of voting equity interests acquired at the date of acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80.00% | ' | ' |
Percentage of additional voting equity interests acquired at the extended tender offer period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | ' | ' | ' |
Acquisitions Proforma [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | 8,596 | 8,459 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $2,184 | $2,131 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic earnings per share (in dollars per share) | $0.49 | $0.46 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Diluted earnings per share (in dollars per share) | $0.48 | $0.46 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | 31-May-14 |
Assets [Abstract] | ' | ' |
U.S. Treasury securities | $476 | ' |
Commercial paper debt securities | 12,164 | 7,969 |
Corporate debt securities and other | 20,190 | 16,657 |
Derivative financial instruments | 67 | 97 |
Total assets | 32,897 | 24,723 |
Liabilities [Abstract] | ' | ' |
Derivative financial instruments | 3 | ' |
Total debt | 32,600 | 24,200 |
Marketable security investments maturity information [Abstract] | ' | ' |
Maturity of marketable security investments | ' | ' |
As of August 31, 2014 and May 31, 2014, approximately 50% and 45%, respectively, of our marketable securities investments mature within one year and 50% and 55%, respectively, mature within one to four years. | ||
Fair Value Measurements Using Input Types Level 1 [Member] | ' | ' |
Assets [Abstract] | ' | ' |
U.S. Treasury securities | 476 | ' |
Corporate debt securities and other | 158 | 119 |
Total assets | 634 | 119 |
Fair Value Measurements Using Input Types Level 2 [Member] | ' | ' |
Assets [Abstract] | ' | ' |
Commercial paper debt securities | 12,164 | 7,969 |
Corporate debt securities and other | 20,032 | 16,538 |
Derivative financial instruments | 67 | 97 |
Total assets | 32,263 | 24,604 |
Liabilities [Abstract] | ' | ' |
Derivative financial instruments | 3 | ' |
Total debt fair value | $35,100 | $26,400 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, unless otherwise specified | ||
Inventories [Abstract] | ' | ' |
Raw materials | $72 | $74 |
Work-in-process | 23 | 28 |
Finished goods | 84 | 87 |
Total | $179 | $189 |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | 31-May-14 | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | $16,595 | ' | $16,580 | |
In-process research and development | 15 | ' | ' | |
Additions | 15 | ' | ' | |
Accumulated Amortization | -10,990 | ' | -10,443 | |
Expense | -547 | -595 | ' | |
Intangible assets subject to amortization | 5,590 | ' | ' | |
Total intangible assets, net | 5,605 | ' | 6,137 | |
Intangible assets subject to amortization [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 16,580 | ' | 16,550 | |
Additions | 30 | ' | ' | |
Accumulated Amortization | -10,990 | ' | -10,443 | |
Expense | -547 | ' | ' | |
Intangible assets subject to amortization | 5,590 | ' | 6,107 | |
Weighted Average Useful Life (in years) | '3 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 | ' | 5,218 | |
Accumulated Amortization | -4,542 | ' | -4,403 | |
Expense | -139 | ' | ' | |
Intangible assets subject to amortization | 676 | ' | 815 | |
Intangible assets subject to amortization [Member] | Hardware systems support agreements and related relationships [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 969 | ' | 969 | |
Accumulated Amortization | -565 | ' | -530 | |
Expense | -35 | ' | ' | |
Intangible assets subject to amortization | 404 | ' | 439 | |
Intangible assets subject to amortization [Member] | Developed technology [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 4,412 | ' | 4,387 | |
Additions | 25 | ' | ' | |
Accumulated Amortization | -2,343 | ' | -2,176 | |
Expense | -167 | ' | ' | |
Intangible assets subject to amortization | 2,069 | ' | 2,211 | |
Weighted Average Useful Life (in years) | '3 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Core technology [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 1,617 | ' | 1,617 | |
Accumulated Amortization | -1,355 | ' | -1,294 | |
Expense | -61 | ' | ' | |
Intangible assets subject to amortization | 262 | ' | 323 | |
Intangible assets subject to amortization [Member] | Customer relationships and contract backlog [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 2,055 | ' | 2,054 | |
Additions | 1 | ' | ' | |
Accumulated Amortization | -1,531 | ' | -1,459 | |
Expense | -72 | ' | ' | |
Intangible assets subject to amortization | 524 | ' | 595 | |
Weighted Average Useful Life (in years) | '1 year | [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 | 1,793 | ' | 1,789 | |
Additions | 4 | ' | ' | |
Accumulated Amortization | -353 | ' | -305 | |
Expense | -48 | ' | ' | |
Intangible assets subject to amortization | 1,440 | ' | 1,484 | |
Weighted Average Useful Life (in years) | '3 years | [1] | ' | ' |
Intangible assets subject to amortization [Member] | Trademarks [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
Intangible Assets, Gross | 516 | ' | 516 | |
Accumulated Amortization | -301 | ' | -276 | |
Expense | -25 | ' | ' | |
Intangible assets subject to amortization | 215 | ' | 240 | |
In-process research and development [Member] | ' | ' | ' | |
Total intangible assets [Line Items] | ' | ' | ' | |
In-process research and development | 15 | ' | 30 | |
Additions | ($15) | ' | ' | |
[1] | Represents weighted average useful lives of intangible assets acquired during fiscal 2015. |
INTANGIBLE_ASSETS_AMORTIZATION
INTANGIBLE ASSETS AMORTIZATION (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, unless otherwise specified | ||
Intangible assets estimated future amortization expense [Abstract] | ' | ' |
Remainder of Fiscal 2015 | $1,395 | ' |
Fiscal 2016 | 1,345 | ' |
Fiscal 2017 | 749 | ' |
Fiscal 2018 | 611 | ' |
Fiscal 2019 | 511 | ' |
Fiscal 2020 | 387 | ' |
Thereafter | 592 | ' |
Total intangible assets subject to amortization | 5,590 | ' |
In-process research and development | 15 | ' |
Total intangible assets, net | $5,605 | $6,137 |
GOODWILL_Details
GOODWILL (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | |
Goodwill [Line Items] | ' | |
Balances at period start | $29,652 | |
Goodwill from acquisitions | 22 | |
Goodwill adjustments | 33 | [1] |
Balances at period end | 29,707 | |
New Software Licenses and Cloud Software Subscriptions [Member] | ' | |
Goodwill [Line Items] | ' | |
Balances at period start | 13,139 | |
Goodwill from acquisitions | 15 | |
Goodwill adjustments | 13 | [1] |
Balances at period end | 13,167 | |
Software License Updates and Product Support [Member] | ' | |
Goodwill [Line Items] | ' | |
Balances at period start | 12,472 | |
Goodwill from acquisitions | 0 | |
Goodwill adjustments | 0 | |
Balances at period end | 12,472 | |
Hardware Systems Support [Member] | ' | |
Goodwill [Line Items] | ' | |
Balances at period start | 2,082 | |
Goodwill from acquisitions | 0 | |
Goodwill adjustments | 19 | [1] |
Balances at period end | 2,101 | |
Other [Member] | ' | |
Goodwill [Line Items] | ' | |
Balances at period start | 1,959 | [2] |
Goodwill from acquisitions | 7 | [2] |
Goodwill adjustments | 1 | [1],[2] |
Balances at period end | $1,967 | [2] |
[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 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 (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Aug. 31, 2014 | Jul. 08, 2014 |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | $10,000 |
Debt-related covenants | 'We were in compliance with all debt-related covenants at August 31, 2014. | ' |
Debt instrument redemption description | 'We may redeem some or all of the Fixed Rate Senior Notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances. The 2017 Notes and 2019 Floating Rate Notes may not be redeemed prior to their maturity. | ' |
Floating rate senior notes due 2017 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 1,000 |
Maturity date | 7-Jul-17 | ' |
Senior notes effective interest yield percentage | 0.43% | ' |
Debt instrument LIBOR rate | 0.20% | ' |
Floating rate senior notes due 2019 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 750 |
Maturity date | 8-Oct-19 | ' |
Senior notes effective interest yield percentage | 0.74% | ' |
Debt instrument LIBOR rate | 0.51% | ' |
2.25% senior notes due October 2019 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 2,000 |
Stated interest rate percentage | 2.25% | ' |
Maturity date | 8-Oct-19 | ' |
Senior notes effective interest yield percentage | 2.27% | ' |
Annual interest rate after the economic effect of the interest rate swaps | 0.72% | ' |
2.80% senior notes due July 2021 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 1,500 |
Stated interest rate percentage | 2.80% | ' |
Maturity date | 8-Jul-21 | ' |
Senior notes effective interest yield percentage | 2.82% | ' |
Annual interest rate after the economic effect of the interest rate swaps | 0.87% | ' |
3.40% senior notes due July 2024 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 2,000 |
Stated interest rate percentage | 3.40% | ' |
Maturity date | 8-Jul-24 | ' |
Senior notes effective interest yield percentage | 3.43% | ' |
4.30% senior notes due July 2034 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 1,750 |
Stated interest rate percentage | 4.30% | ' |
Maturity date | 8-Jul-34 | ' |
Senior notes effective interest yield percentage | 4.30% | ' |
4.50% senior notes due July 2044 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Senior notes issuance date | 8-Jul-14 | ' |
Total debt issued | ' | 1,000 |
Stated interest rate percentage | 4.50% | ' |
Maturity date | 8-Jul-44 | ' |
Senior notes effective interest yield percentage | 4.50% | ' |
3.75% senior notes due July 2014 [Member] | ' | ' |
Notes payable and other borrowings [Line Items] | ' | ' |
Stated interest rate percentage | 3.75% | ' |
Maturity date | 8-Jul-14 | ' |
Repayment of borrowings | 1,500 | ' |
RESTRUCTURING_ACTIVITIES_Detai
RESTRUCTURING ACTIVITIES (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | |
Restructuring Reserve [Line Items] | ' | ' | |
Accrued at Period Start | $169 | [1] | ' |
Initial Costs | 84 | [2] | ' |
Adjustments to Cost | -15 | [3] | ' |
Cash Payments | -73 | ' | |
Others | -2 | [4] | ' |
Accrued at Period End | 163 | [1] | ' |
Restructuring Expenses | 69 | 56 | |
Fiscal 2013 Oracle Restructuring [Member] | ' | ' | |
Restructuring Reserve [Line Items] | ' | ' | |
Accrued at Period Start | 61 | [5] | ' |
Initial Costs | 83 | [2],[5] | ' |
Adjustments to Cost | -3 | [3],[5] | ' |
Cash Payments | -62 | [5] | ' |
Others | -3 | [4],[5] | ' |
Accrued at Period End | 76 | [5] | ' |
Total Costs Accrued to Date | 579 | [5] | ' |
Total Expected Program Costs | 705 | [5] | ' |
Restructuring Expenses | 80 | ' | |
Remaining Expenses to Incur | 126 | ' | |
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 | 12 | [5] | ' |
Initial Costs | 22 | [2],[5] | ' |
Adjustments to Cost | -1 | [3],[5] | ' |
Cash Payments | -18 | [5] | ' |
Accrued at Period End | 15 | [5] | ' |
Total Costs Accrued to Date | 147 | [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 | 5 | [5] | ' |
Initial Costs | 4 | [2],[5] | ' |
Cash Payments | -2 | [5] | ' |
Accrued at Period End | 7 | [5] | ' |
Total Costs Accrued to Date | 22 | [5] | ' |
Total Expected Program Costs | 34 | [5] | ' |
Fiscal 2013 Oracle Restructuring [Member] | Hardware systems business [Member] | ' | ' | |
Restructuring Reserve [Line Items] | ' | ' | |
Accrued at Period Start | 18 | [5] | ' |
Initial Costs | 28 | [2],[5] | ' |
Adjustments to Cost | -1 | [3],[5] | ' |
Cash Payments | -16 | [5] | ' |
Others | -1 | [4],[5] | ' |
Accrued at Period End | 28 | [5] | ' |
Total Costs Accrued to Date | 166 | [5] | ' |
Total Expected Program Costs | 208 | [5] | ' |
Fiscal 2013 Oracle Restructuring [Member] | Services [Member] | ' | ' | |
Restructuring Reserve [Line Items] | ' | ' | |
Accrued at Period Start | 11 | [5] | ' |
Initial Costs | 20 | [2],[5] | ' |
Cash Payments | -17 | [5] | ' |
Accrued at Period End | 14 | [5] | ' |
Total Costs Accrued to Date | 119 | [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 | 15 | [5] | ' |
Initial Costs | 9 | [2],[5] | ' |
Adjustments to Cost | -1 | [3],[5] | ' |
Cash Payments | -9 | [5] | ' |
Others | -2 | [4],[5] | ' |
Accrued at Period End | 12 | [5] | ' |
Total Costs Accrued to Date | 125 | [5] | ' |
Total Expected Program Costs | 139 | [5] | ' |
Other Restructuring Plans [Member] | ' | ' | |
Restructuring Reserve [Line Items] | ' | ' | |
Accrued at Period Start | 108 | [6] | ' |
Initial Costs | 1 | [2],[6] | ' |
Adjustments to Cost | -12 | [3],[6] | ' |
Cash Payments | -11 | [6] | ' |
Others | 1 | [4],[6] | ' |
Accrued at Period End | $87 | [6] | ' |
[1] | The balances at August 31, 2014 and May 31, 2014 included $112 million and $100 million, respectively, recorded in other current liabilities, and $51 million and $69 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. | ||
[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 period presented but for which the current impact to our consolidated statements of operations was not significant. |
RESTRUCTURING_ACTIVITIES_Narra
RESTRUCTURING ACTIVITIES Narrative (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, unless otherwise specified | ||
Total Restructuring Liabilities [Abstract] | ' | ' |
Accrued restructuring liabilities, current (in other current liabilities) | $112 | $100 |
Accrued restructuring liabilities, non-current (in other non-current liabilities) | $51 | $69 |
DEFERRED_REVENUES_Details
DEFERRED REVENUES (Details) (USD $) | Aug. 31, 2014 | 31-May-14 |
In Millions, unless otherwise specified | ||
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | $8,939 | $7,269 |
Deferred revenues, non-current (in other non-current liabilities) | 464 | 404 |
Total deferred revenues | 9,403 | 7,673 |
Software license updates and product support [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 7,498 | 5,909 |
Hardware systems support and other [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 738 | 664 |
Services [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 376 | 364 |
Cloud SaaS, PaaS and IaaS [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | 249 | 248 |
New software licenses [Member] | ' | ' |
Deferred Revenues [Line Items] | ' | ' |
Deferred revenues, current | $78 | $84 |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | 3 Months Ended | |||||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | 31-May-14 | Aug. 31, 2014 | 31-May-14 |
Foreign Currency Forward Contracts Not Designated as Hedges [Member] | Foreign Currency Forward Contracts Not Designated as Hedges [Member] | Foreign Currency Forward Contracts Not Designated as Hedges [Member] | Foreign Currency Forward Contracts Not Designated as Hedges [Member] | |||
Forward contracts held to purchase U.S. Dollars [Member] | Forward contracts held to purchase U.S. Dollars [Member] | Forward contracts held to sell U.S. Dollars [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 | ' | ' | $2,900 | $3,600 | $1,400 | $2,000 |
Net (losses) gains related to forward contracts | ($31) | $68 | ' | ' | ' | ' |
DERIVATIVES_FINANCIAL_INSTRUME
DERIVATIVES FINANCIAL INSTRUMENTS (Details) | Aug. 31, 2014 | Jul. 08, 2014 | 31-May-14 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Jul. 10, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | 31-May-14 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Jul. 10, 2013 | Aug. 31, 2014 | 31-May-14 | Aug. 31, 2014 | Jul. 16, 2013 | Aug. 31, 2014 | 31-May-14 | 31-May-14 | Aug. 31, 2014 |
In Millions, unless otherwise specified | USD ($) | USD ($) | USD ($) | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Cash flow hedges [Member] | Net investment hedge [Member] | Net investment hedge [Member] | Net investment hedge [Member] | Net investment hedge [Member] | Net investment hedge [Member] | Net investment hedge [Member] | Fair value hedges [Member] | Fair value hedges [Member] | Fair value hedges [Member] | Fair value hedges [Member] | Fair value hedges [Member] | Fair value hedges [Member] |
Interest expense [Member] | Interest expense [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Cross-currency swap agreements [Member] | Foreign currency borrowings [Member] | Foreign currency borrowings [Member] | Foreign currency borrowings [Member] | Foreign currency borrowings [Member] | Foreign currency borrowings [Member] | Foreign currency borrowings [Member] | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | Interest rate swap agreements [Member] | ||||
USD ($) | USD ($) | USD ($) | USD ($) | 2.25% senior notes due January 2021 [Member] | 2.25% senior notes due January 2021 [Member] | Non-operating (expense) income, net [Member] | Non-operating (expense) income, net [Member] | Other assets [Member] | Other assets [Member] | USD ($) | USD ($) | 3.125% senior notes due July 2025 [Member] | 3.125% senior notes due July 2025 [Member] | Notes payable and other non-current borrowings [Member] | Notes payable and other non-current borrowings [Member] | 2.375% senior notes due January 2019 [Member] | 2.375% senior notes due January 2019 [Member] | Other assets [Member] | Other assets [Member] | Prepaid expenses and other current assets [Member] | Other non-current liabilities [Member] | ||||
USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | EUR (€) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||||||||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value, assets | $67 | ' | $97 | ' | ' | ' | ' | ' | ' | ' | ' | $57 | $74 | ' | ' | ' | ' | ' | ' | ' | ' | $10 | $15 | $8 | ' |
Fair value, liabilities | -3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3 |
Fair value, debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,127 | -1,116 | ' | ' | ' | ' | ' | ' |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Loss (OCL) [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of (Loss) Gain Recognized in Accumulated OCL (Effective Portion) | ' | ' | ' | ' | ' | -17 | 2 | ' | ' | ' | ' | ' | ' | 32 | -13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of (Loss) Gain Reclassified from Accumulated OCL into Income (Effective Portion) | ' | ' | ' | ' | ' | ' | ' | ' | ' | -52 | 34 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of (Loss) Recognized in Income on Derivative | ' | ' | ' | -16 | -23 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of Gain on Hedged Item Recognized in Income Attributable to Risk Being Hedged | ' | ' | ' | 16 | 23 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total debt issued | ' | 10,000 | ' | ' | ' | ' | ' | ' | 1,250 | ' | ' | ' | ' | ' | ' | ' | 750 | ' | ' | ' | 1,500 | ' | ' | ' | ' |
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% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stated interest rate percentage | ' | ' | ' | ' | ' | ' | ' | 2.25% | ' | ' | ' | ' | ' | ' | ' | 3.13% | ' | ' | ' | 2.38% | ' | ' | ' | ' | ' |
Derivative Instrument Detail [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of ineffectiveness measured | ' | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 3 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | Sep. 18, 2014 |
Dividends on Common Stock [Abstract] | ' | ' | ' |
Dividends per share, declared and paid (in dollars per share) | $0.12 | $0.12 | ' |
Dividends declared per share of outstanding common stock (in dollars per share) | ' | ' | $0.12 |
Dividend payable date | 29-Oct-14 | ' | ' |
Dividend record date | 8-Oct-14 | ' | ' |
Stock Repurchases (Narrative) [Abstract] | ' | ' | ' |
Approved expansion of stock repurchase program | ' | ' | $13,000 |
Amount available for future repurchases | 2,300 | ' | ' |
Repurchases of common stock (in shares) | 48,800,000 | 92,800,000 | ' |
Repurchased amount | 2,000 | 3,000 | ' |
Repurchased shares that were not settled (in shares) | 2,300,000 | ' | ' |
Repurchased amount that was not settled | 94 | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 215 | 200 | ' |
Stock options granted and assumed (in shares) | 30,000,000 | ' | ' |
Restricted stock-based awards granted (in shares) | 22,000,000 | ' | ' |
Forfeitures and cancellations (in shares) | 6,000,000 | ' | ' |
Equivalent number of shares deducted against share pool (in actual number of shares) | 2.5 | ' | ' |
Weighted Average Input Assumptions Used and Resulting Fair Values [Abstract] | ' | ' | ' |
Expected life (in years) | '5 years 2 months | '5 years 1 month | ' |
Risk-free interest rate | 1.70% | 1.40% | ' |
Volatility | 23.00% | 27.00% | ' |
Dividend yield | 1.20% | 1.60% | ' |
Weighted-average fair value per share (in dollars per share) | $8.69 | $6.63 | ' |
Sales and marketing [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 43 | 39 | ' |
Cloud software-as-a-service and platform-as-a-service [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 2 | 2 | ' |
Cloud infrastructure-as-a-service [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 1 | 1 | ' |
Software license updates and product support [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 5 | 6 | ' |
Hardware systems products [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 1 | 2 | ' |
Hardware systems support [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 1 | 3 | ' |
Services [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 6 | 6 | ' |
Research and development [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 108 | 97 | ' |
General and administrative [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | 45 | 42 | ' |
Acquisition related and other [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Total stock-based compensation | $3 | $2 | ' |
Performance-based restricted stock units [Member] | ' | ' | ' |
Stock-based Compensation Expense [Line Items] | ' | ' | ' |
Restricted stock-based awards granted (in shares) | 3,000,000 | ' | ' |
Maximum percentage that can exceed target performance metric | 150.00% | ' | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | 31-May-14 |
Income Taxes [Abstract] | ' | ' | ' |
Effective income tax rate | 19.70% | 17.70% | ' |
Net deferred tax assets | $1,400 | ' | $1,400 |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | ||
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 | $2 | [1] | $3 | [1] |
Software license updates and product support revenues | ' | 1 | [1] | |
Hardware systems support revenues | 1 | [1] | 5 | [1] |
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 8,596 | 8,372 | ||
Margin | 5,479 | 5,311 | ||
New software licenses and cloud software subscriptions [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 1,707 | [2] | 1,653 | [2] |
Cloud software-as-a-service and platform-as-a-service expenses | 143 | 95 | ||
Sales and distribution expenses | 1,279 | 1,178 | ||
Margin | 285 | [3] | 380 | [3] |
Cloud infrastructure-as-a-service [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 138 | 109 | ||
Cloud infrastructure-as-a-service expenses | 76 | 67 | ||
Sales and distribution expenses | 18 | 20 | ||
Margin | 44 | [3] | 22 | [3] |
Software license updates and product support [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 4,731 | [2] | 4,432 | [2] |
Software license updates and product support expenses | 257 | 276 | ||
Margin | 4,474 | [3] | 4,156 | [3] |
Total software and cloud business [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 6,576 | [2] | 6,194 | [2] |
Expenses | 1,773 | 1,636 | ||
Margin | 4,803 | [3] | 4,558 | [3] |
Hardware systems products [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 578 | 669 | ||
Hardware systems products expenses | 297 | 329 | ||
Sales and distribution expenses | 201 | 217 | ||
Margin | 80 | [3] | 123 | [3] |
Hardware systems support [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 588 | [2] | 597 | [2] |
Hardware systems support expenses | 184 | 201 | ||
Margin | 404 | [3] | 396 | [3] |
Total hardware systems business [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 1,166 | [2] | 1,266 | [2] |
Expenses | 682 | 747 | ||
Margin | 484 | [3] | 519 | [3] |
Total services business [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 857 | [2] | 921 | [2] |
Services expenses | 665 | 687 | ||
Margin | 192 | [3] | 234 | [3] |
Total for operating segments [Member] | ' | ' | ||
Segment reporting information [Line Items] | ' | ' | ||
Revenues | 8,599 | [2] | 8,381 | [2] |
Expenses | 3,120 | 3,070 | ||
Margin | $5,479 | [3] | $5,311 | [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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August 31, 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August, 31 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 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 income (expense), net. |
SEGMENT_INFORMATION_RECONCILIA
SEGMENT INFORMATION RECONCILIATION (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | ||
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ' | ' | ||
Total margin for operating segments | $5,479 | $5,311 | ||
Cloud software-as-a-service and platform-as-a-service revenues | -2 | [1] | -3 | [1] |
Software license updates and product support revenues | ' | -1 | [1] | |
Hardware systems support revenues | -1 | [1] | -5 | [1] |
Product development | -1,174 | -1,094 | ||
Marketing and partner program expenses | -119 | -131 | ||
Corporate, general and administrative and information technology expenses | -367 | -345 | ||
Amortization of intangible assets | -547 | -595 | ||
Acquisition related and other | -25 | -10 | ||
Restructuring | -69 | -56 | ||
Stock-based compensation | -212 | -198 | ||
Interest expense | -261 | -217 | ||
Non-operating income, net | 16 | 7 | ||
Income before provision for income taxes | 2,718 | 2,663 | ||
Reconciliation of Total Operating Segment Revenues to Total Revenues [Line Items] | ' | ' | ||
Cloud software-as-a-service and platform-as-a-service revenues | -2 | [1] | -3 | [1] |
Software license updates and product support revenues | ' | -1 | [1] | |
Hardware systems support revenues | -1 | [1] | -5 | [1] |
Total revenues | 8,596 | 8,372 | ||
Total for operating segments [Member] | ' | ' | ||
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ' | ' | ||
Total margin for operating segments | 5,479 | [2] | 5,311 | [2] |
Reconciliation of Total Operating Segment Revenues to Total Revenues [Line Items] | ' | ' | ||
Total revenues | $8,599 | [3] | $8,381 | [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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August 31, 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 income (expense), net. | |||
[3] | 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 condensed consolidated statements of operations in the amounts of $2 million and $3 million for the three months ended August 31, 2014 and 2013, 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 condensed consolidated statements of operations in the amount of $1 million for the three months ended August, 31 2013. 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 $1 million and $5 million for the three months ended August 31, 2014 and 2013, respectively. See Note 8 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 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. |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2013 | ||
Computation of Basic and Diluted Earnings Per Share [Abstract] | ' | ' | ||
Net income | $2,184 | $2,191 | ||
Weighted average common shares outstanding | 4,451 | 4,608 | ||
Dilutive effect of employee stock plans | 97 | 66 | ||
Dilutive weighted average common shares outstanding | 4,548 | 4,674 | ||
Basic earnings per share | $0.49 | $0.48 | ||
Diluted earnings per share | $0.48 | $0.47 | ||
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation | 26 | [1] | 289 | [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. |
LEGAL_PROCEEDINGS_Details
LEGAL PROCEEDINGS (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||
In Millions, unless otherwise specified | Aug. 31, 2014 | Aug. 31, 2012 | Nov. 30, 2010 | 31-May-11 | Aug. 29, 2014 | Aug. 12, 2014 | 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 | ' |
Court settlement amount of plaintiffs' and attorneys' fees and costs that Oracle paid | ' | ' | ' | ' | ' | 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 that Oracle may accept as a remittitur | ' | ' | ' | ' | ' | ' | ' | 272 |
Benefit related to certain litigation | ' | 306 | ' | ' | ' | ' | ' | ' |
Recovery of legal costs | ' | ' | 120 | ' | ' | ' | ' | ' |
Court ordered judgment vacating remittitur amount | ' | ' | ' | ' | 272 | ' | ' | ' |
Court instructions to condition new trial on Oracle's rejection of remittitur amount | ' | ' | ' | ' | $356.70 | ' | ' | ' |