DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Aug. 31, 2016 | Sep. 12, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 | |
Trading Symbol | ORCL | |
Entity Registrant Name | Oracle Corporation | |
Entity Central Index Key | 1,341,439 | |
Current Fiscal Year End Date | --05-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 4,105,567,000 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 28,614 | $ 20,152 |
Marketable securities | 39,782 | 35,973 |
Trade receivables, net of allowances for doubtful accounts of $344 and $327 as of August 31, 2016 and May 31, 2016, respectively | 3,407 | 5,385 |
Inventories | 286 | 212 |
Prepaid expenses and other current assets | 2,362 | 2,591 |
Total current assets | 74,451 | 64,313 |
Non-current assets: | ||
Property, plant and equipment, net | 4,108 | 4,000 |
Intangible assets, net | 5,091 | 4,943 |
Goodwill, net | 35,350 | 34,590 |
Deferred tax assets | 1,142 | 1,291 |
Other assets | 3,081 | 3,043 |
Total non-current assets | 48,772 | 47,867 |
Total assets | 123,223 | 112,180 |
Current liabilities: | ||
Notes payable and other borrowings, current | 999 | 3,750 |
Accounts payable | 551 | 504 |
Accrued compensation and related benefits | 1,419 | 1,966 |
Deferred revenues | 9,462 | 7,655 |
Other current liabilities | 2,711 | 3,333 |
Total current liabilities | 15,142 | 17,208 |
Non-current liabilities: | ||
Notes payable, non-current | 53,057 | 40,105 |
Income taxes payable | 5,031 | 4,908 |
Other non-current liabilities | 2,161 | 2,169 |
Total non-current liabilities | 60,249 | 47,182 |
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: 4,106 shares and 4,131 shares as of August 31, 2016 and May 31, 2016, respectively | 24,588 | 24,217 |
Retained earnings | 23,380 | 23,888 |
Accumulated other comprehensive loss | (533) | (816) |
Total Oracle Corporation stockholders' equity | 47,435 | 47,289 |
Noncontrolling interests | 397 | 501 |
Total equity | 47,832 | 47,790 |
Total liabilities and equity | $ 123,223 | $ 112,180 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICAL - USD ($) shares in Millions, $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 344 | $ 327 |
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 | 4,106 | 4,131 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | ||
Revenues: | |||
Cloud software as a service and platform as a service | $ 798 | $ 451 | |
Cloud infrastructure as a service | 171 | 160 | |
Total cloud revenues | 969 | 611 | |
New software licenses | 1,030 | 1,151 | |
Software license updates and product support | 4,792 | 4,696 | |
Total on-premise software revenues | 5,822 | 5,847 | |
Total cloud and on-premise software revenues | 6,791 | 6,458 | |
Hardware products | 462 | 570 | |
Hardware support | 534 | 558 | |
Total hardware revenues | 996 | 1,128 | |
Total services revenues | 808 | 862 | |
Total revenues | 8,595 | 8,448 | |
Operating expenses: | |||
Sales and marketing | [1] | 1,919 | 1,731 |
Cloud software as a service and platform as a service | [1] | 319 | 276 |
Cloud infrastructure as a service | [1] | 96 | 89 |
Software license updates and product support | [1] | 275 | 291 |
Hardware products | [1] | 242 | 303 |
Hardware support | [1] | 149 | 180 |
Services | [1] | 695 | 711 |
Research and development | 1,520 | 1,390 | |
General and administrative | 315 | 257 | |
Amortization of intangible assets | 311 | 452 | |
Acquisition related and other | 14 | 31 | |
Restructuring | 99 | 83 | |
Total operating expenses | 5,954 | 5,794 | |
Operating income | 2,641 | 2,654 | |
Interest expense | (416) | (374) | |
Non-operating income, net | 148 | 30 | |
Income before provision for income taxes | 2,373 | 2,310 | |
Provision for income taxes | 541 | 563 | |
Net income | $ 1,832 | $ 1,747 | |
Earnings per share: | |||
Basic (in dollars per share) | $ 0.44 | $ 0.40 | |
Diluted (in dollars per share) | $ 0.43 | $ 0.40 | |
Weighted average common shares outstanding: | |||
Basic (in shares) | 4,119 | 4,317 | |
Diluted (in shares) | 4,221 | 4,412 | |
Dividends declared per common share (in dollars per share) | $ 0.15 | $ 0.15 | |
[1] | Exclusive of amortization of intangible assets, which is shown separately. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Net income | $ 1,832 | $ 1,747 |
Portion Attributable to Parent [Member] | ||
Net income | 1,832 | 1,747 |
Other comprehensive gain (loss), net of tax: | ||
Net foreign currency translation gains (losses) | 133 | (1) |
Net unrealized gains on defined benefit plans | 5 | 13 |
Net unrealized gains (losses) on marketable securities | 143 | (126) |
Net unrealized gains (losses) on cash flow hedges | 2 | (29) |
Total other comprehensive gain (loss), net | 283 | (143) |
Comprehensive income | $ 2,115 | $ 1,604 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 1,832 | $ 1,747 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 222 | 219 |
Amortization of intangible assets | 311 | 452 |
Deferred income taxes | 145 | (30) |
Stock-based compensation | 319 | 253 |
Tax benefits on the vesting of restricted stock-based awards and exercise of stock options | 215 | 102 |
Other, net | 39 | 45 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Decrease in trade receivables, net | 1,993 | 2,150 |
(Increase) decrease in inventories | (75) | 50 |
Decrease in prepaid expenses and other assets | 435 | 379 |
Decrease in accounts payable and other liabilities | (1,013) | (1,353) |
Decrease in income taxes payable | (309) | (204) |
Increase in deferred revenues | 1,761 | 2,071 |
Net cash provided by operating activities | 5,875 | 5,881 |
Cash flows from investing activities: | ||
Purchases of marketable securities and other investments | (5,513) | (11,669) |
Proceeds from maturities and sales of marketable securities and other investments | 1,752 | 4,644 |
Acquisitions, net of cash acquired | (1,143) | 0 |
Capital expenditures | (299) | (446) |
Net cash used for investing activities | (5,203) | (7,471) |
Cash flows from financing activities: | ||
Payments for repurchases of common stock | (2,002) | (2,846) |
Proceeds from issuances of common stock | 487 | 296 |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | (170) | (70) |
Payments of dividends to stockholders | (618) | (650) |
Proceeds from borrowings, net of issuance costs | 13,932 | 0 |
Repayments of borrowings | (3,750) | 0 |
Distributions to noncontrolling interests | (167) | (25) |
Net cash provided by (used for) financing activities | 7,712 | (3,295) |
Effect of exchange rate changes on cash and cash equivalents | 78 | (92) |
Net increase (decrease) in cash and cash equivalents | 8,462 | (4,977) |
Cash and cash equivalents at beginning of period | 20,152 | 21,716 |
Cash and cash equivalents at end of period | 28,614 | 16,739 |
Non-cash investing and financing transactions: | ||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | 6 | 0 |
(Decrease) increase in unsettled repurchases of common stock | (3) | 185 |
Decrease in unsettled investment purchases | $ (95) | $ (342) |
BASIS OF PRESENTATION AND RECEN
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Aug. 31, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS | 1. BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS Basis of Presentation We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (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, 2016. 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, 2017. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income or net income. During the first quarter of fiscal 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting There have been no other significant changes in our reported financial position or results of operations and cash flows as a result of our adoption of new accounting pronouncements or changes to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2016. 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 certain adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation expenses included in acquisition related and other expenses resulted from unvested stock 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 stock options and restricted stock-based awards. Three Months Ended August 31, (in millions) 2016 2015 Transitional and other employee related costs $ 8 $ 24 Stock-based compensation — 3 Professional fees and other, net 5 4 Business combination adjustments, net 1 — Total acquisition related and other expenses $ 14 $ 31 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. Three Months Ended August 31, (in millions) 2016 2015 Interest income $ 177 $ 117 Foreign currency losses, net (13 ) (25 ) Noncontrolling interests in income (35 ) (30 ) Other income (loss), net 19 (32 ) Total non-operating income, net $ 148 $ 30 Sales of Financing Receivables We offer certain of our customers the option to acquire our software products, hardware 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, 2016 and 2015, $898 million and $972 million of financing receivables were sold to financial institutions, respectively. Recent Accounting Pronouncements Statement of Cash Flows: In August 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal 2019 and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. Financial Instruments: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter of fiscal 2021, and earlier adoption is permitted beginning in the first quarter of fiscal 2020. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. ASU 2016-02 is effective for us in our first quarter of fiscal 2020 on a modified retrospective basis, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements, and we currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. Revenue Recognition: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12 collectively, Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 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. Topic 606 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 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, among others. Topic 606 is effective for us as of either our first quarter of fiscal 2018 or our first quarter of fiscal 2019 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. Preliminarily, we plan to adopt Topic 606 in the first quarter of fiscal 2019 pursuant to the aforementioned adoption method (1) and we do not believe there will be a material impact to our revenues upon adoption. We are continuing to evaluate the impacts of our pending adoption of Topic 606 and our preliminary assessments are subject to change. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Aug. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 2. ACQUISITIONS Proposed Acquisition of NetSuite Inc., a Related Party On July 28, 2016, we entered into an Agreement and Plan of Merger (Merger Agreement) with NetSuite Inc. (NetSuite), a provider of cloud-based enterprise resource planning (ERP) software and related applications and, as described further below, a related party to Oracle. We entered into the Merger Agreement to acquire NetSuite to, among other things, expand our cloud software as a service offerings with a complementary set of cloud ERP and related cloud software applications for customers. Pursuant to the Merger Agreement, we commenced a tender offer on August 18, 2016 to purchase all of the issued and outstanding shares of NetSuite common stock (NetSuite Shares) at a purchase price of $109.00 per share, net to the seller in cash, without interest thereon, based upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 18, 2016, and in the related Letter of Transmittal. The tender offer period is scheduled to expire on October 6, 2016. The consummation of the offer is subject to the valid tender of (i) a majority of the sum of (a) the aggregate number of issued and outstanding NetSuite Shares and (b) the aggregate number of NetSuite Shares issuable upon the conversion, exchange or exercise of all vested and outstanding stock options, restricted stock units, performance share units of NetSuite or any other rights to acquire, or securities convertible into or exchangeable for, NetSuite Shares and (ii) a majority of the issued and outstanding NetSuite Shares not owned by (a) the executive officers or directors of NetSuite and their affiliates, (b) Lawrence J. Ellison, his family members, and any of their affiliates and (c) Oracle or its affiliates, in each case as calculated pursuant to the Merger Agreement. The consummation of the offer is also conditioned upon (A) receipt of certain regulatory approvals, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and approval under certain other foreign antitrust laws and (B) certain other customary closing conditions. After the consummation of the offer and the satisfaction of certain conditions, a wholly-owned subsidiary of Oracle will merge with and into NetSuite. In addition, unvested equity awards to acquire NetSuite Shares that are outstanding immediately prior to the consummation of the merger will generally be assumed by Oracle and converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. Vested equity awards outstanding immediately prior to the consummation of the merger generally will be cancelled in exchange for the right to receive an amount in cash based on a formula contained in the Merger Agreement. The estimated total purchase price for NetSuite is approximately $9.3 billion. Lawrence J. Ellison, Oracle’s Chairman of the Board and Chief Technology Officer and Oracle’s largest stockholder, is an affiliate of NetSuite’s largest stockholder, NetSuite Restricted Holdings LLC (a single member LLC investment entity whose interests are beneficially owned by a trust controlled by Mr. Ellison) which owns approximately 40% of the issued and outstanding NetSuite Shares. Oracle’s Board of Directors appointed a Special Committee (comprised solely of directors who are independent of the management of Oracle, Mr. Ellison, his family members and any affiliated entities, and NetSuite) to which it delegated the full and exclusive power, authority and discretion of the Board to evaluate, assess, and approve the NetSuite transaction on its behalf. The Special Committee engaged its own independent legal counsel, Skadden, Arps, Slate, Meagher & Flom LLP, and its own independent financial advisor, Moelis & Company LLC, to advise it on the transaction. Moelis & Company LLC provided the Special Committee with a fairness opinion in connection with the transaction. After extensive deliberations, the Special Committee concluded that the transaction terms were fair to Oracle and the transaction was in the best interests of Oracle and its stockholders. The Special Committee unanimously approved the transaction on behalf of Oracle and the Board. Other Fiscal 2017 Acquisitions During the first quarter of fiscal 2017, we acquired certain companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not individually or in the aggregate significant. We have included the financial results of the acquired companies in our consolidated financial statements from their respective acquisition dates, and the results from each of these companies were not individually material to our consolidated financial statements. In the aggregate, the total preliminary purchase price for these acquisitions was approximately $1.4 billion, which consisted of approximately $1.4 billion in cash and $6 million for the fair values of restricted stock-based awards and stock options assumed. We preliminarily recorded $116 million of net tangible assets and $459 million of identifiable intangible assets, based on their estimated fair values, and $777 million of residual goodwill. We also have entered into certain non-material agreements to acquire certain companies and expect these proposed acquisitions to close during the second quarter of fiscal 2017. Fiscal 2016 Acquisitions During fiscal 2016, we acquired certain companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate. 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 2016 that were considered relevant for the purposes of unaudited pro forma financial information disclosure as if the companies were combined as of the beginning of fiscal 2016. The unaudited pro forma financial information for all periods presented also included the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal 2016. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal 2016. The unaudited pro forma financial information for the three months ended August 31, 2016 combined the historical results of Oracle for the three months ended August 31, 2016 and the historical results of certain other companies that we acquired since the beginning of fiscal 2017 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, 2015 combined the historical results of Oracle for the three months ended August 31, 2015 and the historical results of certain other companies that we acquired since the beginning of fiscal 2016 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows: Three Months Ended August 31, (in millions, except per share data) 2016 2015 Total revenues $ 8,603 $ 8,522 Net income $ 1,828 $ 1,713 Basic earnings per share $ 0.44 $ 0.39 Diluted earnings per share $ 0.43 $ 0.39 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Aug. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 3. FAIR VALUE MEASUREMENTS We perform fair value measurements in accordance with the FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement 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 Level 2 inputs are defined above): August 31, 2016 May 31, 2016 Fair Value Measurements Using Input Types Fair Value Measurements Using Input Types (in millions) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Money market funds $ 4,251 $ — $ 4,251 $ 3,750 $ — $ 3,750 U.S. Treasury securities 14 — 14 214 — 214 Commercial paper debt securities — 8,339 8,339 — 2,155 2,155 Corporate debt securities and other 166 36,656 36,822 179 35,095 35,274 Derivative financial instruments — 131 131 — 122 122 Total assets $ 4,431 $ 45,126 $ 49,557 $ 4,143 $ 37,372 $ 41,515 Liabilities: Derivative financial instruments $ — $ 215 $ 215 $ — $ 218 $ 218 Our marketable securities investments consist of Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. As of August 31, 2016 and May 31, 2016, approximately 37% and 28%, respectively, of our marketable securities investments mature within one year and 63% and 72%, respectively, mature within one to six 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 were 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 $54.1 billion and $40.1 billion of borrowings, which consisted of senior notes and the related fair value hedges that were outstanding as of August 31, 2016 and May 31, 2016, respectively, the estimated fair values of our senior notes and the related fair value hedges using Level 2 inputs at August 31, 2016 and May 31, 2016 were $58.1 billion and $43.2 billion, respectively. As of May 31, 2016, the estimated fair value of our $3.8 billion of short-term borrowings approximated carrying value due to the short maturity of the borrowings. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Aug. 31, 2016 | |
Inventory Net [Abstract] | |
INVENTORIES | 4. INVENTORIES Inventories consisted of the following: (in millions) August 31, 2016 May 31, 2016 Raw materials $ 140 $ 95 Work-in-process 45 31 Finished goods 101 86 Total $ 286 $ 212 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended |
Aug. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | 5. INTANGIBLE ASSETS AND GOODWILL The changes in intangible assets for fiscal 2017 and the net book value of intangible assets as of August 31, 2016 and May 31, 2016 were as follows: Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted Average (in millions) May 31, 2016 Additions August 31, 2016 May 31, 2016 Expense August 31, 2016 May 31, 2016 August 31, 2016 Useful Life (1) Developed technology $ 3,661 $ 177 $ 3,838 $ (1,876 ) $ (136 ) $ (2,012 ) $ 1,785 $ 1,826 5 years Software support agreements and related relationships 2,419 — 2,419 (1,287 ) (32 ) (1,319 ) 1,132 1,100 N.A. SaaS, PaaS and IaaS agreements and related relationships 2,034 265 2,299 (704 ) (63 ) (767 ) 1,330 1,532 8 years Customer relationships and contract backlog 1,399 — 1,399 (1,121 ) (27 ) (1,148 ) 278 251 N.A. Hardware support agreements and related relationships 1,010 — 1,010 (797 ) (26 ) (823 ) 213 187 N.A. Trademarks and other 1,043 17 1,060 (838 ) (27 ) (865 ) 205 195 5 years Total intangible assets, net $ 11,566 $ 459 $ 12,025 $ (6,623 ) $ (311 ) $ (6,934 ) $ 4,943 $ 5,091 7 years (1) Represents weighted-average useful lives of intangible assets acquired during fiscal 2017 Total amortization expense related to our intangible assets was $311 million and $452 million for the three months ended August 31, 2016 and 2015, respectively. As of August 31, 2016, estimated future amortization expenses related to intangible assets were as follows (in millions): Remainder of fiscal 2017 $ 806 Fiscal 2018 945 Fiscal 2019 836 Fiscal 2020 688 Fiscal 2021 543 Fiscal 2022 442 Thereafter 831 Total intangible assets, net $ 5,091 The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the three months ended August 31, 2016 were as follows: (in millions) Cloud Software Software License Updates Hardware Support Consulting Other, net (2) Total Goodwill, net Balances as of May 31, 2016 $ 15,747 $ 14,439 $ 2,367 $ 1,759 $ 278 $ 34,590 Goodwill from acquisitions 777 — — — — 777 Goodwill adjustments, net (1) (17 ) — — — — (17 ) Balances as of August 31, 2016 $ 16,507 $ 14,439 $ 2,367 $ 1,759 $ 278 $ 35,350 (1) Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effects on goodwill of changes to net assets acquired during the period that such a change is identified, provided that any such change is within the measurement period (up to one year from the date of the acquisition). (2) Represents goodwill allocated to our other operating segments. |
NOTES PAYABLE AND OTHER BORROWI
NOTES PAYABLE AND OTHER BORROWINGS | 3 Months Ended |
Aug. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND OTHER BORROWINGS | 6. NOTES PAYABLE AND OTHER BORROWINGS Senior Notes In July 2016, we issued $14.0 billion, par value, of fixed-rate senior notes comprised of the following as of August 31, 2016: August 31, 2016 (Dollars in millions) Date of Issuance Amount Effective Interest Rate $4,250, 1.90%, due September 2021 July 2016 $ 4,250 1.94% $2,500, 2.40%, due September 2023 July 2016 2,500 2.40% $3,000, 2.65%, due July 2026 July 2016 3,000 2.69% $1,250, 3.85%, due July 2036 July 2016 1,250 3.85% $3,000, 4.00%, due July 2046 July 2016 3,000 4.00% Total fixed-rate senior notes $ 14,000 Unamortized discount/issuance costs (67 ) Total fixed-rate senior notes, net $ 13,933 We issued the senior notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and repayment of indebtedness and future acquisitions. The interest is payable semi-annually. We may redeem some or all of the 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 senior notes rank pari passu with any other existing and future unsecured and unsubordinated indebtedness of Oracle Corporation. All existing and future indebtedness and liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes. We were in compliance with all debt-related covenants at August 31, 2016. Revolving Credit Agreements In May 2016, we borrowed $3.8 billion pursuant to three revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2016 Credit Agreements). In June 2016, we repaid the $3.8 billion and the 2016 Credit Agreements expired pursuant to their terms. 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, 2016. |
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES | 3 Months Ended |
Aug. 31, 2016 | |
Restructuring And Related Activities [Abstract] | |
RESTRUCTURING ACTIVITIES | 7. RESTRUCTURING ACTIVITIES Fiscal 2017 Oracle Restructuring Plan During the first quarter of fiscal 2017, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our recent acquisitions and certain other operational activities (2017 Restructuring Plan). The total estimated restructuring costs associated with the 2017 Restructuring Plan are up to $502 million and will be recorded to the restructuring expense line item within our consolidated statements of operations as they are incurred. We recorded $112 million of restructuring expenses in connection with the 2017 Restructuring Plan in the first quarter of fiscal 2017 and we expect to incur the majority of the estimated remaining $390 million through the end of fiscal 2018. Any changes to the estimates of executing the 2017 Restructuring Plan will be reflected in our future results of operations. Summary of All Plans Accrued Three Months Ended August 31, 2016 Accrued Total Costs Total Expected (in millions) May 31, 2016 (2) Initial Costs (3) Adj. Cost (4) Cash Payments Others (5) August 2016 (2) Accrued to Date Program Costs Fiscal 2017 Oracle Restructuring Plan (1) Cloud software and on-premise software $ — $ 46 $ — $ (22 ) $ — $ 24 $ 46 $ 204 Software license updates and product support — 7 — (4 ) — 3 7 41 Hardware business — 30 — (11 ) — 19 30 111 Services business — 14 — (6 ) — 8 14 63 General and administrative and other — 15 — (7 ) — 8 15 83 Total Fiscal 2017 Oracle Restructuring Plan $ — $ 112 $ — $ (50 ) $ — $ 62 $ 112 $ 502 Total other restructuring plans (6) $ 283 $ 1 $ (14 ) $ (73 ) $ (1 ) $ 196 Total restructuring plans $ 283 $ 113 $ (14 ) $ (123 ) $ (1 ) $ 258 (1) Restructuring costs recorded for individual line items primarily related to employee severance costs. (2) The balances at August 31, 2016 and May 31, 2016 included $235 million and $255 million, respectively, recorded in other current liabilities, and $23 million and $28 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 (primarily the Fiscal 2015 Oracle Restructuring Plan) 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 periodic impact to our condensed consolidated statements of operations was not significant. |
DEFERRED REVENUES
DEFERRED REVENUES | 3 Months Ended |
Aug. 31, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
DEFERRED REVENUES | 8. DEFERRED REVENUES Deferred revenues consisted of the following: (in millions) August 31, 2016 May 31, 2016 Software license updates and product support $ 7,365 $ 5,864 Cloud SaaS, PaaS and IaaS 909 705 Hardware support and other 750 675 Services 372 339 New software licenses 66 72 Deferred revenues, current 9,462 7,655 Deferred revenues, non-current (in other non-current liabilities) 528 536 Total deferred revenues $ 9,990 $ 8,191 Deferred software license updates and product support revenues and deferred hardware 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 cloud software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS) revenues generally resulted from customer payments made in advance for our cloud-based offerings that are recognized over the corresponding contractual term. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred new software licenses revenues typically resulted 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 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 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 INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended |
Aug. 31, 2016 | |
Derivative 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 $2.0 billion of 2.25% senior notes due October 2019 (October 2019 Notes) and our $1.5 billion of 2.80% senior notes due July 2021 (July 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 match the critical terms of the October 2019 Notes, July 2021 Notes and the January 2019 Notes that the interest rate swap agreements pertain to, 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 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, 2016 or 2015. 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 (July 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 July 2025 Notes due to remeasurement of the effective portion is reported in accumulated other comprehensive loss in 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, 2016 or 2015. 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, 2016 for additional information regarding these contracts). As of August 31, 2016 and May 31, 2016, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies were $2.1 billion and $2.7 billion, respectively and the notional amount of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were $904 million and $2.0 billion, respectively. The fair values of our outstanding foreign currency forward contracts were nominal as of August 31, 2016 and May 31, 2016. Included in our non-operating income, net were $6 million and $97 million of net gains related to these forward contracts for the three months ended August 31, 2016 and 2015, 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 Fair Value (in millions) Balance Sheet Location August 31, 2016 May 31, 2016 Interest rate swap agreements designated as fair value hedges Other assets $ 131 $ 122 Cross-currency swap agreements designated as cash flow hedges Other non-current $ (215 ) $ (218 ) Foreign currency borrowings designated as net investment hedge Notes payable, non-current $ (1,024 ) $ (991 ) Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) Amount of Gain (Loss) Recognized in Accumulated OCI or OCL Location Three Months Ended August 31, Three Months Ended August 31, (in millions) 2016 2015 2016 2015 Cross-currency swap agreements designated as cash flow hedges $ 3 $ 22 Non-operating income, net $ 1 $ 51 Foreign currency borrowings designated as net investment hedge $ (1 ) $ (31 ) Not applicable $ — $ — Location and Amount of Gain Recognized in Income on Derivative Location and Amount of Loss on Hedged Item Recognized in Income Attributable to Risk Being Three Months Ended August 31, Three Months Ended August 31, (in millions) 2016 2015 2016 2015 Interest rate swap agreements designated as fair value hedges Interest expense $ 9 $ 1 Interest expense $ (9 ) $ (1 ) |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Aug. 31, 2016 | |
Stockholders Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | 10. STOCKHOLDERS’ EQUITY Common Stock Repurchases Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of August 31, 2016, approximately $6.8 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased 49.3 million shares for $2.0 billion during the three months ended August 31, 2016 (including 2.2 million shares for $91 million that were repurchased but not settled) and 75.7 million shares for $3.0 billion during the three months ended August 31, 2015 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 repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time. Dividends on Common Stock During the first quarter of fiscal 2017, our Board of Directors declared cash dividends of $0.15 per share of our outstanding common stock, which we paid during the same period. In September 2016, our Board of Directors declared a quarterly cash dividend of $0.15 per share of our outstanding common stock. The dividend is payable on October 26, 2016 to stockholders of record as of the close of business on October 12, 2016. 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 2017, we issued 33 million restricted stock-based awards (consisting of 31 million service-based restricted stock units (RSUs) and 2 million performance-based restricted stock units (PSUs)) and 19 million stock options. Substantially all of the awards were issued as a part of our annual stock-based award process and are subject to service-based vesting restrictions, with the PSUs also having performance-based vesting restrictions, that are of a similar nature to those described in Note 14 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2016. Approximately 7 million of the 19 million stock options granted during the first quarter of fiscal 2017 were to our Chief Executive Officers and Chief Technology Officer and had contractual lives of five years versus the ten year contractual lives for the other stock options granted. Our fiscal 2017 stock-based award issuances were partially offset by forfeitures and cancellations of 3 million shares during the first quarter of fiscal 2017. Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations: Three Months Ended August 31, (in millions) 2016 2015 Sales and marketing $ 63 $ 51 Cloud software as a service and platform as a service 5 4 Cloud infrastructure as a service 1 1 Software license updates and product support 6 6 Hardware products 2 2 Hardware support 1 1 Services 8 8 Research and development 195 148 General and administrative 38 29 Acquisition related and other — 3 Total stock-based compensation $ 319 $ 253 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Aug. 31, 2016 | |
Income Tax Disclosure [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, settlements with tax authorities and the U.S. domestic production activity deduction. In addition, beginning in fiscal 2017, the provision for income taxes also differs from the tax computed at the U.S. federal statutory tax rate due to the tax effects of stock-based compensation. Our effective tax rate was 22.8% and 24.4% for the three months ended August 31, 2016 and 2015, respectively. Our net deferred tax assets were $982 million and $1.1 billion as of August 31, 2016 and May 31, 2016, respectively. We believe that 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 2015. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2007, and we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2004, 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 under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof. On July 27, 2015, in Altera Corp. v. Commissioner We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, India, Brazil, and Korea, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these tax authorities or final outcomes in judicial proceedings, and we believe that the final outcome of these examinations, agreements or judicial proceedings will not have a material effect on our results of operations. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of the federal, state, and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Aug. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 12. SEGMENT INFORMATION ASC 280, Segment Reporting We have three businesses—cloud and on-premise software, hardware and services—which are further divided into certain operating segments. Our cloud and on-premise software business is comprised of three operating segments: (1) cloud software and on-premise software, which includes our cloud SaaS and PaaS offerings, (2) cloud infrastructure as a service and (3) software license updates and product support. Our hardware business is comprised of two operating segments: (1) hardware products and (2) hardware support. All other operating segments are combined under our services business. Our cloud software and on-premise software line of business markets, sells and delivers a broad spectrum of application and platform technologies through our SaaS and PaaS offerings, which are certain of our applications and platforms software delivered via a cloud-based information technology (IT) environment that we host, manage and support, and through the licensing of our software products including Oracle Applications, Oracle Database, Oracle Fusion Middleware and Java, among others. The cloud IaaS line of business includes Oracle Cloud IaaS offerings, which provide infrastructure cloud services that are enterprise-grade, hosted and supported within the Oracle Cloud to perform elastic compute, storage and networking services on a subscription basis; and Oracle Managed Cloud Services, which are comprehensive software and hardware management and maintenance services for customer IT infrastructure for a fee for a stated term that are hosted at our Oracle data center facilities, select partner data centers or physically on-premise at customer facilities. The software license updates and product support line of business generates revenues through the sale of software support contracts related to new software licenses purchased by our customers. The software license updates and product support line of business provides our on-premise software 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 products line of business provides Oracle Engineered Systems, servers, storage, networking, industry-specific hardware, virtualization software, operating systems including the Oracle Solaris Operating System and management software to support diverse IT environments, including cloud computing environments. Our hardware support line of business provides customers with software updates for the software components that are essential to the functionality of our hardware products, such as Oracle Solaris and certain other software, 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 services provides on-premise and remote support services to our customers to enable increased performance and higher availability of their Oracle products and services and also include certain other services. Education services provide training to customers, partners and employees as a part of our mission of accelerating the adoption and use of our cloud, on-premise software and hardware offerings. 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 cloud and on-premise software and hardware businesses: Three Months Ended August 31, (in millions) 2016 2015 Cloud software and on-premise software: Revenues (1) $ 1,845 $ 1,603 Cloud software as a service and platform as a service expenses 308 268 Sales and distribution expenses 1,580 1,395 Margin (2) $ (43 ) $ (60 ) Cloud infrastructure as a service: Revenues $ 171 $ 160 Cloud infrastructure as a service expenses 93 85 Sales and distribution expenses 16 22 Margin (2) $ 62 $ 53 Software license updates and product support: Revenues (1) $ 4,793 $ 4,697 Software license updates and product support expenses 257 271 Margin (2) $ 4,536 $ 4,426 Total cloud and on-premise software business: Revenues (1) $ 6,809 $ 6,460 Expenses 2,254 2,041 Margin (2) $ 4,555 $ 4,419 Hardware products: Revenues $ 462 $ 570 Hardware products expenses 240 301 Sales and distribution expenses 203 204 Margin (2) $ 19 $ 65 Hardware support: Revenues (1) $ 534 $ 559 Hardware support expenses 141 172 Margin (2) $ 393 $ 387 Total hardware business: Revenues (1) $ 996 $ 1,129 Expenses 584 677 Margin (2) $ 412 $ 452 Total services business: Revenues $ 808 $ 862 Services expenses 665 678 Margin (2) $ 143 $ 184 Totals: Revenues (1) $ 8,613 $ 8,451 Expenses 3,503 3,396 Margin (2) $ 5,110 $ 5,055 (1) Cloud software and on-premise software, software license updates and product support and hardware support revenues for management reporting included revenues related to cloud SaaS and PaaS, software support and hardware support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented. 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 as reported in our condensed consolidated statements of operations. (2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, corporate, general and administrative and IT expenses. Additionally, the margins reported do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating income, 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) 2016 2015 Total revenues for operating segments $ 8,613 $ 8,451 Cloud software as a service and platform as a service revenues (1) (17 ) (1 ) Software license updates and product support revenues (1) (1 ) (1 ) Hardware support revenues (1) — (1 ) Total revenues $ 8,595 $ 8,448 Total margin for operating segments $ 5,110 $ 5,055 Cloud software as a service and platform as a service revenues (1) (17 ) (1 ) Software license updates and product support revenues (1) (1 ) (1 ) Hardware support revenues (1) — (1 ) Product development (1,276 ) (1,188 ) Corporate, general and administrative and information technology expenses (432 ) (394 ) Amortization of intangible assets (311 ) (452 ) Acquisition related and other (14 ) (31 ) Restructuring (99 ) (83 ) Stock-based compensation (319 ) (250 ) Interest expense (416 ) (374 ) Non-operating income, net 148 30 Income before provision for income taxes $ 2,373 $ 2,310 (1) Cloud SaaS and PaaS revenues, software license updates and product support revenues and hardware support revenues for management reporting included revenues that would have otherwise been recorded by our acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations for the periods presented due to business combination accounting requirements. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Aug. 31, 2016 | |
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 restricted stock-based awards, stock options, 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) 2016 2015 Net income $ 1,832 $ 1,747 Weighted average common shares outstanding 4,119 4,317 Dilutive effect of employee stock plans 102 95 Dilutive weighted average common shares outstanding 4,221 4,412 Basic earnings per share $ 0.44 $ 0.40 Diluted earnings per share $ 0.43 $ 0.40 Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation (1) 72 57 (1) These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and could be dilutive in the future. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Aug. 31, 2016 | |
Legal Proceedings [Abstract] | |
LEGAL PROCEEDINGS | 14. LEGAL PROCEEDINGS Hewlett-Packard Company Litigation On June 15, 2011, Hewlett-Packard Company, now Hewlett Packard Enterprise 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 is our Chief Executive Officer and 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 (the Phase One Ruling). A jury trial began on May 23, 2016. On June 30, 2016, the jury returned a verdict in favor of HP on its claims for breach of contract and breach of the implied covenant of good faith and fair dealing and against Oracle on its claim for violation of the Lanham Act (the Phase Two Jury Verdict). The jury awarded HP damages in the amount of $3.0 billion, and HP is entitled to post-judgment interest on this award. On August 30, 2016, the court denied HP’s motion for pre-judgment interest. Final judgment has not yet been entered pending resolution of several non-jury issues and post-trial motions. Upon final notice of entry of judgment, Oracle plans to appeal the trial court’s Phase One Ruling and Phase Two Jury Verdict. No amounts have been paid or recorded to our results of operations either prior to or subsequent to the Phase One Ruling or Phase Two Jury Verdict. We continue to believe that we have meritorious defenses against HP’s claims, and we intend to present these defenses to the appellate court. Among the arguments we expect to make on appeal are the following: the trial court misapplied fundamental principles of contract law and misinterpreted the Hurd Settlement Agreement, including by disregarding the context of the Hurd Settlement Agreement and the evidence of the parties’ mutual intentions; that HP’s breach of contract claim should fail as a matter of law because HP does not claim and did not prove that Oracle failed to deliver any software under the trial court’s interpretation of the contract; that awarding HP both damages for breach of the Hurd Settlement Agreement and specific performance of that agreement constitutes an improper double recovery; that HP’s promissory estoppel claim is defective for several reasons, including that HP never claimed or proved that Oracle failed to deliver any software encompassed by the alleged promise; and that the damages award is excessive, unsupported by the evidence, and contrary to law. We cannot currently estimate a reasonably possible range of loss for this action due to the complexities and uncertainty surrounding the appeal process and the nature of the claims. Litigation is inherently unpredictable, and the outcome of the appeal process related to this action is uncertain. It is possible that the resolution of this action could have a material impact to our future cash flows and results of operations. State of Oregon Litigation On August 22, 2014, the Attorney General for the State of Oregon filed suit against Oracle and a number of individuals. Other lawsuits between the parties followed which have been disclosed in certain of Oracle’s previous filings with the SEC, including Oracle’s Annual Report on Form 10-K for the fiscal year ended May 31, 2016. The individuals were all voluntarily dismissed with prejudice on September 12, 2016. On September 15, 2016, the State of Oregon, Oracle and Mythics, Inc. executed a comprehensive settlement resolving all outstanding litigation in these lawsuits. The settlement was immaterial to Oracle’s consolidated financial statements. 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. |
BASIS OF PRESENTATION AND REC21
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 3 Months Ended |
Aug. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (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, 2016. 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, 2017. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income or net income. During the first quarter of fiscal 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting There have been no other significant changes in our reported financial position or results of operations and cash flows as a result of our adoption of new accounting pronouncements or changes to our significant accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2016. |
Acquisition Related and Other Expenses | Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs for transitional and certain other employees, stock-based compensation expenses, integration related professional services, certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation expenses included in acquisition related and other expenses resulted from unvested stock 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 stock options and restricted stock-based awards. Three Months Ended August 31, (in millions) 2016 2015 Transitional and other employee related costs $ 8 $ 24 Stock-based compensation — 3 Professional fees and other, net 5 4 Business combination adjustments, net 1 — Total acquisition related and other expenses $ 14 $ 31 |
Non-Operating Income, net | 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. Three Months Ended August 31, (in millions) 2016 2015 Interest income $ 177 $ 117 Foreign currency losses, net (13 ) (25 ) Noncontrolling interests in income (35 ) (30 ) Other income (loss), net 19 (32 ) Total non-operating income, net $ 148 $ 30 |
Sales of Financing Receivables | Sales of Financing Receivables We offer certain of our customers the option to acquire our software products, hardware 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, 2016 and 2015, $898 million and $972 million of financing receivables were sold to financial institutions, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Statement of Cash Flows: In August 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15), which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 is effective for us in our first quarter of fiscal 2019 and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-15 on our consolidated financial statements. Financial Instruments: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for us in our first quarter of fiscal 2021, and earlier adoption is permitted beginning in the first quarter of fiscal 2020. We are currently evaluating the impact of our pending adoption of ASU 2016-13 on our consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. ASU 2016-02 is effective for us in our first quarter of fiscal 2020 on a modified retrospective basis, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements, and we currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption of ASU 2016-02, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption. Revenue Recognition: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers: Topic 606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12, respectively (ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-12 collectively, Topic 606). Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 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. Topic 606 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 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, among others. Topic 606 is effective for us as of either our first quarter of fiscal 2018 or our first quarter of fiscal 2019 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. Preliminarily, we plan to adopt Topic 606 in the first quarter of fiscal 2019 pursuant to the aforementioned adoption method (1) and we do not believe there will be a material impact to our revenues upon adoption. We are continuing to evaluate the impacts of our pending adoption of Topic 606 and our preliminary assessments are subject to change. |
BASIS OF PRESENTATION AND REC22
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Acquisition Related Other Expenses | Three Months Ended August 31, (in millions) 2016 2015 Transitional and other employee related costs $ 8 $ 24 Stock-based compensation — 3 Professional fees and other, net 5 4 Business combination adjustments, net 1 — Total acquisition related and other expenses $ 14 $ 31 |
Non-Operating Income, net | Three Months Ended August 31, (in millions) 2016 2015 Interest income $ 177 $ 117 Foreign currency losses, net (13 ) (25 ) Noncontrolling interests in income (35 ) (30 ) Other income (loss), net 19 (32 ) Total non-operating income, net $ 148 $ 30 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Business Combinations [Abstract] | |
Unaudited Pro Forma Financial Information | Three Months Ended August 31, (in millions, except per share data) 2016 2015 Total revenues $ 8,603 $ 8,522 Net income $ 1,828 $ 1,713 Basic earnings per share $ 0.44 $ 0.39 Diluted earnings per share $ 0.43 $ 0.39 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | August 31, 2016 May 31, 2016 Fair Value Measurements Using Input Types Fair Value Measurements Using Input Types (in millions) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Money market funds $ 4,251 $ — $ 4,251 $ 3,750 $ — $ 3,750 U.S. Treasury securities 14 — 14 214 — 214 Commercial paper debt securities — 8,339 8,339 — 2,155 2,155 Corporate debt securities and other 166 36,656 36,822 179 35,095 35,274 Derivative financial instruments — 131 131 — 122 122 Total assets $ 4,431 $ 45,126 $ 49,557 $ 4,143 $ 37,372 $ 41,515 Liabilities: Derivative financial instruments $ — $ 215 $ 215 $ — $ 218 $ 218 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Inventory Net [Abstract] | |
Inventories | (in millions) August 31, 2016 May 31, 2016 Raw materials $ 140 $ 95 Work-in-process 45 31 Finished goods 101 86 Total $ 286 $ 212 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted Average (in millions) May 31, 2016 Additions August 31, 2016 May 31, 2016 Expense August 31, 2016 May 31, 2016 August 31, 2016 Useful Life (1) Developed technology $ 3,661 $ 177 $ 3,838 $ (1,876 ) $ (136 ) $ (2,012 ) $ 1,785 $ 1,826 5 years Software support agreements and related relationships 2,419 — 2,419 (1,287 ) (32 ) (1,319 ) 1,132 1,100 N.A. SaaS, PaaS and IaaS agreements and related relationships 2,034 265 2,299 (704 ) (63 ) (767 ) 1,330 1,532 8 years Customer relationships and contract backlog 1,399 — 1,399 (1,121 ) (27 ) (1,148 ) 278 251 N.A. Hardware support agreements and related relationships 1,010 — 1,010 (797 ) (26 ) (823 ) 213 187 N.A. Trademarks and other 1,043 17 1,060 (838 ) (27 ) (865 ) 205 195 5 years Total intangible assets, net $ 11,566 $ 459 $ 12,025 $ (6,623 ) $ (311 ) $ (6,934 ) $ 4,943 $ 5,091 7 years (1) Represents weighted-average useful lives of intangible assets acquired during fiscal 2017 |
Estimated Future Amortization Expenses Related to Intangible Assets | Remainder of fiscal 2017 $ 806 Fiscal 2018 945 Fiscal 2019 836 Fiscal 2020 688 Fiscal 2021 543 Fiscal 2022 442 Thereafter 831 Total intangible assets, net $ 5,091 |
Goodwill | (in millions) Cloud Software Software License Updates Hardware Support Consulting Other, net (2) Total Goodwill, net Balances as of May 31, 2016 $ 15,747 $ 14,439 $ 2,367 $ 1,759 $ 278 $ 34,590 Goodwill from acquisitions 777 — — — — 777 Goodwill adjustments, net (1) (17 ) — — — — (17 ) Balances as of August 31, 2016 $ 16,507 $ 14,439 $ 2,367 $ 1,759 $ 278 $ 35,350 (1) Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effects on goodwill of changes to net assets acquired during the period that such a change is identified, provided that any such change is within the measurement period (up to one year from the date of the acquisition). (2) Represents goodwill allocated to our other operating segments. |
NOTES PAYABLE AND OTHER BORRO27
NOTES PAYABLE AND OTHER BORROWINGS (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable and Other Borrowings | August 31, 2016 (Dollars in millions) Date of Issuance Amount Effective Interest Rate $4,250, 1.90%, due September 2021 July 2016 $ 4,250 1.94% $2,500, 2.40%, due September 2023 July 2016 2,500 2.40% $3,000, 2.65%, due July 2026 July 2016 3,000 2.69% $1,250, 3.85%, due July 2036 July 2016 1,250 3.85% $3,000, 4.00%, due July 2046 July 2016 3,000 4.00% Total fixed-rate senior notes $ 14,000 Unamortized discount/issuance costs (67 ) Total fixed-rate senior notes, net $ 13,933 |
RESTRUCTURING ACTIVITIES (Table
RESTRUCTURING ACTIVITIES (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Restructuring And Related Activities [Abstract] | |
Summary of All Plans | Accrued Three Months Ended August 31, 2016 Accrued Total Costs Total Expected (in millions) May 31, 2016 (2) Initial Costs (3) Adj. Cost (4) Cash Payments Others (5) August 2016 (2) Accrued to Date Program Costs Fiscal 2017 Oracle Restructuring Plan (1) Cloud software and on-premise software $ — $ 46 $ — $ (22 ) $ — $ 24 $ 46 $ 204 Software license updates and product support — 7 — (4 ) — 3 7 41 Hardware business — 30 — (11 ) — 19 30 111 Services business — 14 — (6 ) — 8 14 63 General and administrative and other — 15 — (7 ) — 8 15 83 Total Fiscal 2017 Oracle Restructuring Plan $ — $ 112 $ — $ (50 ) $ — $ 62 $ 112 $ 502 Total other restructuring plans (6) $ 283 $ 1 $ (14 ) $ (73 ) $ (1 ) $ 196 Total restructuring plans $ 283 $ 113 $ (14 ) $ (123 ) $ (1 ) $ 258 (1) Restructuring costs recorded for individual line items primarily related to employee severance costs. (2) The balances at August 31, 2016 and May 31, 2016 included $235 million and $255 million, respectively, recorded in other current liabilities, and $23 million and $28 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 (primarily the Fiscal 2015 Oracle Restructuring Plan) 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 periodic impact to our condensed consolidated statements of operations was not significant. |
DEFERRED REVENUES (Tables)
DEFERRED REVENUES (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenues | (in millions) August 31, 2016 May 31, 2016 Software license updates and product support $ 7,365 $ 5,864 Cloud SaaS, PaaS and IaaS 909 705 Hardware support and other 750 675 Services 372 339 New software licenses 66 72 Deferred revenues, current 9,462 7,655 Deferred revenues, non-current (in other non-current liabilities) 528 536 Total deferred revenues $ 9,990 $ 8,191 |
DERIVATIVE FINANCIAL INSTRUME30
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Derivative Instrument Detail [Abstract] | |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets | Fair Value (in millions) Balance Sheet Location August 31, 2016 May 31, 2016 Interest rate swap agreements designated as fair value hedges Other assets $ 131 $ 122 Cross-currency swap agreements designated as cash flow hedges Other non-current $ (215 ) $ (218 ) Foreign currency borrowings designated as net investment hedge Notes payable, non-current $ (1,024 ) $ (991 ) |
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) | Amount of Gain (Loss) Recognized in Accumulated OCI or OCL Location Three Months Ended August 31, Three Months Ended August 31, (in millions) 2016 2015 2016 2015 Cross-currency swap agreements designated as cash flow hedges $ 3 $ 22 Non-operating income, net $ 1 $ 51 Foreign currency borrowings designated as net investment hedge $ (1 ) $ (31 ) Not applicable $ — $ — Location and Amount of Gain Recognized in Income on Derivative Location and Amount of Loss on Hedged Item Recognized in Income Attributable to Risk Being Three Months Ended August 31, Three Months Ended August 31, (in millions) 2016 2015 2016 2015 Interest rate swap agreements designated as fair value hedges Interest expense $ 9 $ 1 Interest expense $ (9 ) $ (1 ) |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Stockholders Equity Note [Abstract] | |
Stock-Based Compensation Expense | Three Months Ended August 31, (in millions) 2016 2015 Sales and marketing $ 63 $ 51 Cloud software as a service and platform as a service 5 4 Cloud infrastructure as a service 1 1 Software license updates and product support 6 6 Hardware products 2 2 Hardware support 1 1 Services 8 8 Research and development 195 148 General and administrative 38 29 Acquisition related and other — 3 Total stock-based compensation $ 319 $ 253 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Segment Reporting [Abstract] | |
Summary of Businesses and Operating Segments Results | Three Months Ended August 31, (in millions) 2016 2015 Cloud software and on-premise software: Revenues (1) $ 1,845 $ 1,603 Cloud software as a service and platform as a service expenses 308 268 Sales and distribution expenses 1,580 1,395 Margin (2) $ (43 ) $ (60 ) Cloud infrastructure as a service: Revenues $ 171 $ 160 Cloud infrastructure as a service expenses 93 85 Sales and distribution expenses 16 22 Margin (2) $ 62 $ 53 Software license updates and product support: Revenues (1) $ 4,793 $ 4,697 Software license updates and product support expenses 257 271 Margin (2) $ 4,536 $ 4,426 Total cloud and on-premise software business: Revenues (1) $ 6,809 $ 6,460 Expenses 2,254 2,041 Margin (2) $ 4,555 $ 4,419 Hardware products: Revenues $ 462 $ 570 Hardware products expenses 240 301 Sales and distribution expenses 203 204 Margin (2) $ 19 $ 65 Hardware support: Revenues (1) $ 534 $ 559 Hardware support expenses 141 172 Margin (2) $ 393 $ 387 Total hardware business: Revenues (1) $ 996 $ 1,129 Expenses 584 677 Margin (2) $ 412 $ 452 Total services business: Revenues $ 808 $ 862 Services expenses 665 678 Margin (2) $ 143 $ 184 Totals: Revenues (1) $ 8,613 $ 8,451 Expenses 3,503 3,396 Margin (2) $ 5,110 $ 5,055 (1) Cloud software and on-premise software, software license updates and product support and hardware support revenues for management reporting included revenues related to cloud SaaS and PaaS, software support and hardware support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented. 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 as reported in our condensed consolidated statements of operations. (2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, corporate, general and administrative and IT expenses. Additionally, the margins reported do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating income, net. |
Reconciliation of Total Operating Segment Revenues to Total Revenues | Three Months Ended August 31, (in millions) 2016 2015 Total revenues for operating segments $ 8,613 $ 8,451 Cloud software as a service and platform as a service revenues (1) (17 ) (1 ) Software license updates and product support revenues (1) (1 ) (1 ) Hardware support revenues (1) — (1 ) Total revenues $ 8,595 $ 8,448 |
Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes | Total margin for operating segments $ 5,110 $ 5,055 Cloud software as a service and platform as a service revenues (1) (17 ) (1 ) Software license updates and product support revenues (1) (1 ) (1 ) Hardware support revenues (1) — (1 ) Product development (1,276 ) (1,188 ) Corporate, general and administrative and information technology expenses (432 ) (394 ) Amortization of intangible assets (311 ) (452 ) Acquisition related and other (14 ) (31 ) Restructuring (99 ) (83 ) Stock-based compensation (319 ) (250 ) Interest expense (416 ) (374 ) Non-operating income, net 148 30 Income before provision for income taxes $ 2,373 $ 2,310 (1) Cloud SaaS and PaaS revenues, software license updates and product support revenues and hardware support revenues for management reporting included revenues that would have otherwise been recorded by our acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations for the periods presented due to business combination accounting requirements. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Aug. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Three Months Ended August 31, (in millions, except per share data) 2016 2015 Net income $ 1,832 $ 1,747 Weighted average common shares outstanding 4,119 4,317 Dilutive effect of employee stock plans 102 95 Dilutive weighted average common shares outstanding 4,221 4,412 Basic earnings per share $ 0.44 $ 0.40 Diluted earnings per share $ 0.43 $ 0.40 Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation (1) 72 57 (1) These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and could be dilutive in the future. |
BASIS OF PRESENTATION AND REC34
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | Jun. 01, 2016 | May 31, 2016 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Increase in net cash provided by operating activities | $ 5,875 | $ 5,881 | ||
Reduction to retained earnings | (23,380) | $ (23,888) | ||
Sales of Financing Receivables [Narrative] [Abstract] | ||||
Sales of financing receivables | $ 898 | 972 | ||
ASU 2016-09 [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Increase in net cash provided by operating activities | $ 25 | |||
Increase to additional paid in capital | $ 9 | |||
Increase to deferred tax assets | 3 | |||
Reduction to retained earnings | $ 6 |
BASIS OF PRESENTATION AND REC35
BASIS OF PRESENTATION AND RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Acquisition Related and Other Expenses [Abstract] | ||
Transitional and other employee related costs | $ 8 | $ 24 |
Stock-based compensation | 3 | |
Professional fees and other, net | 5 | 4 |
Business combination adjustments, net | 1 | |
Total acquisition related and other expenses | 14 | 31 |
Non-Operating Income, net [Abstract] | ||
Interest income | 177 | 117 |
Foreign currency losses, net | (13) | (25) |
Noncontrolling interests in income | (35) | (30) |
Other income (loss), net | 19 | (32) |
Total non-operating income, net | $ 148 | $ 30 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | |
Acquisition [Line Items] | |||
Fair value of restricted stock-based awards and stock options assumed | $ 6 | $ 0 | |
Goodwill | 35,350 | $ 34,590 | |
Acquisitions Proforma [Abstract] | |||
Total revenues | 8,603 | 8,522 | |
Net income | $ 1,828 | $ 1,713 | |
Basic earnings per share (in dollars per share) | $ 0.44 | $ 0.39 | |
Diluted earnings per share (in dollars per share) | $ 0.43 | $ 0.39 | |
NetSuite Inc. [Member] | Merger Agreement | |||
Acquisition [Line Items] | |||
Merger agreement date | Jul. 28, 2016 | ||
Business Combination Reason For Business Combination | We entered into the Merger Agreement to acquire NetSuite to, among other things, expand our cloud software as a service offerings with a complementary set of cloud ERP and related cloud software applications for customers. | ||
Business acquisition per share price | $ 109 | ||
Total purchase price | $ 9,300 | ||
Tender offer period expiration date | Oct. 6, 2016 | ||
Percentage of share owned | 40.00% | ||
Other Fiscal 2017 Acquisitions [Member] | |||
Acquisition [Line Items] | |||
Total purchase price | $ 1,400 | ||
Cash portion of purchase price | 1,400 | ||
Fair value of restricted stock-based awards and stock options assumed | 6 | ||
Net tangible assets | 116 | ||
Intangible assets | 459 | ||
Goodwill | $ 777 | ||
Fiscal 2016 Acquisitions [Member] | |||
Acquisition [Line Items] | |||
Materiality of acquisitions individually or in the aggregate | These acquisitions were not significant individually or in the aggregate. |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | May 31, 2016 | |
Assets [Abstract] | ||
Money market funds | $ 4,251 | $ 3,750 |
U.S. Treasury securities | 14 | 214 |
Commercial paper debt securities | 8,339 | 2,155 |
Corporate debt securities and other | 36,822 | 35,274 |
Derivative financial instruments | 131 | 122 |
Total assets | 49,557 | 41,515 |
Liabilities [Abstract] | ||
Derivative financial instruments | $ 215 | $ 218 |
Marketable security investments maturity information [Abstract] | ||
Maturity of marketable security investments | As of August 31, 2016 and May 31, 2016, approximately 37% and 28%, respectively, of our marketable securities investments mature within one year and 63% and 72%, respectively, mature within one to six years. | |
Percentage of marketable securities investments mature within one year | 37.00% | 28.00% |
Percentage of marketable securities investments mature within one to six years | 63.00% | 72.00% |
Short and Long Term Debt [Abstract] | ||
Short-term borrowings | $ 999 | $ 3,750 |
Senior notes | 54,100 | 40,100 |
Fair Value Measurements Using Input Types Level 1 [Member] | ||
Assets [Abstract] | ||
Money market funds | 4,251 | 3,750 |
U.S. Treasury securities | 14 | 214 |
Corporate debt securities and other | 166 | 179 |
Total assets | 4,431 | 4,143 |
Fair Value Measurements Using Input Types Level 2 [Member] | ||
Assets [Abstract] | ||
Commercial paper debt securities | 8,339 | 2,155 |
Corporate debt securities and other | 36,656 | 35,095 |
Derivative financial instruments | 131 | 122 |
Total assets | 45,126 | 37,372 |
Liabilities [Abstract] | ||
Derivative financial instruments | 215 | 218 |
Total debt fair value | $ 58,100 | $ 43,200 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Inventory Net [Abstract] | ||
Raw materials | $ 140 | $ 95 |
Work-in-process | 45 | 31 |
Finished goods | 101 | 86 |
Total | $ 286 | $ 212 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 12,025 | $ 11,566 | ||
Additions | 459 | |||
Accumulated Amortization | (6,934) | (6,623) | ||
Expense | (311) | $ (452) | ||
Total intangible assets, net | $ 5,091 | 4,943 | ||
Intangible assets subject to amortization [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Useful Life (in years) | [1] | 7 years | ||
Intangible assets subject to amortization [Member] | Developed technology [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 3,838 | 3,661 | ||
Additions | 177 | |||
Accumulated Amortization | (2,012) | (1,876) | ||
Expense | (136) | |||
Intangible assets subject to amortization | $ 1,826 | 1,785 | ||
Weighted Average Useful Life (in years) | [1] | 5 years | ||
Intangible assets subject to amortization [Member] | Software support agreements and related relationships [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 2,419 | 2,419 | ||
Additions | 0 | |||
Accumulated Amortization | (1,319) | (1,287) | ||
Expense | (32) | |||
Intangible assets subject to amortization | 1,100 | 1,132 | ||
Intangible assets subject to amortization [Member] | SaaS, PaaS and IaaS agreements and related relationships [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | 2,299 | 2,034 | ||
Additions | 265 | |||
Accumulated Amortization | (767) | (704) | ||
Expense | (63) | |||
Intangible assets subject to amortization | $ 1,532 | 1,330 | ||
Weighted Average Useful Life (in years) | [1] | 8 years | ||
Intangible assets subject to amortization [Member] | Customer relationships and contract backlog [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 1,399 | 1,399 | ||
Additions | 0 | |||
Accumulated Amortization | (1,148) | (1,121) | ||
Expense | (27) | |||
Intangible assets subject to amortization | 251 | 278 | ||
Intangible assets subject to amortization [Member] | Hardware support agreements and related relationships [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | 1,010 | 1,010 | ||
Additions | 0 | |||
Accumulated Amortization | (823) | (797) | ||
Expense | (26) | |||
Intangible assets subject to amortization | 187 | 213 | ||
Intangible assets subject to amortization [Member] | Trademarks and other [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | 1,060 | 1,043 | ||
Additions | 17 | |||
Accumulated Amortization | (865) | (838) | ||
Expense | (27) | |||
Intangible assets subject to amortization | $ 195 | $ 205 | ||
Weighted Average Useful Life (in years) | [1] | 5 years | ||
[1] | Represents weighted-average useful lives of intangible assets acquired during fiscal 2017 |
INTANGIBLE ASSETS AND GOODWIL40
INTANGIBLE ASSETS AND GOODWILL Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | Aug. 31, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 311 | $ 452 |
INTANGIBLE ASSETS AMORTIZATION
INTANGIBLE ASSETS AMORTIZATION (Details) - USD ($) $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Finite lived intangible assets future amortization expense [Abstract] | ||
Remainder of fiscal 2017 | $ 806 | |
Fiscal 2,018 | 945 | |
Fiscal 2,019 | 836 | |
Fiscal 2,020 | 688 | |
Fiscal 2,021 | 543 | |
Fiscal 2,022 | 442 | |
Thereafter | 831 | |
Total intangible assets, net | $ 5,091 | $ 4,943 |
GOODWILL (Details)
GOODWILL (Details) $ in Millions | 3 Months Ended | |
Aug. 31, 2016USD ($) | ||
Goodwill [Line Items] | ||
Balances at period start | $ 34,590 | |
Goodwill from acquisitions | 777 | |
Goodwill adjustments, net | (17) | [1] |
Balances at period end | 35,350 | |
Cloud Software and On-Premise Software [Member] | ||
Goodwill [Line Items] | ||
Balances at period start | 15,747 | |
Goodwill from acquisitions | 777 | |
Goodwill adjustments, net | (17) | [1] |
Balances at period end | 16,507 | |
Software License Updates and Product Support [Member] | ||
Goodwill [Line Items] | ||
Balances at period start | 14,439 | |
Goodwill from acquisitions | 0 | |
Goodwill adjustments, net | 0 | [1] |
Balances at period end | 14,439 | |
Hardware Support [Member] | ||
Goodwill [Line Items] | ||
Balances at period start | 2,367 | |
Goodwill from acquisitions | 0 | |
Goodwill adjustments, net | 0 | [1] |
Balances at period end | 2,367 | |
Consulting [Member] | ||
Goodwill [Line Items] | ||
Balances at period start | 1,759 | |
Goodwill from acquisitions | 0 | |
Goodwill adjustments, net | 0 | [1] |
Balances at period end | 1,759 | |
Other, net [Member] | ||
Goodwill [Line Items] | ||
Balances at period start | 278 | [2] |
Goodwill from acquisitions | 0 | [2] |
Goodwill adjustments, net | 0 | [1],[2] |
Balances at period end | $ 278 | [2] |
[1] | Pursuant to our business combinations accounting policy, we recorded goodwill adjustments for the effects on goodwill of changes to net assets acquired during the period that such a change is identified, provided that any such change is within the measurement period (up to one year from the date of the acquisition) | |
[2] | Represents goodwill allocated to our other operating segments |
NOTES PAYABLE AND OTHER BORRO43
NOTES PAYABLE AND OTHER BORROWINGS Narrative (Details) - USD ($) $ in Millions | Jun. 27, 2016 | Aug. 31, 2016 | Jul. 07, 2016 | May 31, 2016 |
Notes Payable Other Borrowings [Line Items] | ||||
Senior notes, par value | $ 14,000 | |||
Debt instrument redemption description | We may redeem some or all of the 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. | |||
Debt-related covenants | We were in compliance with all debt-related covenants at August 31, 2016. | |||
Short-term borrowings | $ 999 | $ 3,750 | ||
2016 Credit Agreement [Member] | ||||
Notes Payable Other Borrowings [Line Items] | ||||
Revolving credit agreement issuance date | May 23, 2016 | |||
Short-term borrowings | $ 3,750 | |||
Repayments of credit agreements | $ 3,750 | |||
Revolving Credit Agreement | In May 2016, we borrowed $3.8 billion pursuant to three revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2016 Credit Agreements). In June 2016, we repaid the $3.8 billion and the 2016 Credit Agreements expired pursuant to their terms. There have been no other significant changes in our notes payable or other borrowing arrangements that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2016. |
NOTES PAYABLE AND OTHER BORRO44
NOTES PAYABLE AND OTHER BORROWINGS (Details) - USD ($) $ in Millions | 3 Months Ended | |
Aug. 31, 2016 | Jul. 07, 2016 | |
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 14,000 | |
Unamortized discount/issuance costs | (67) | |
Total fixed-rate senior notes, net | 13,933 | |
Senior notes, par value | $ 14,000 | |
1.90% senior notes due September 2021 [Member] | ||
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 4,250 | |
Date of issuance | Jul. 7, 2016 | |
Effective interest rate | 1.94% | |
Senior notes, par value | $ 4,250 | |
Stated interest rate percentage | 1.90% | |
Maturity date | Sep. 15, 2021 | |
2.40% senior notes due September 2023 [Member] | ||
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 2,500 | |
Date of issuance | Jul. 7, 2016 | |
Effective interest rate | 2.40% | |
Senior notes, par value | $ 2,500 | |
Stated interest rate percentage | 2.40% | |
Maturity date | Sep. 15, 2023 | |
2.65% senior notes due July 2026 [Member] | ||
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 3,000 | |
Date of issuance | Jul. 7, 2016 | |
Effective interest rate | 2.69% | |
Senior notes, par value | $ 3,000 | |
Stated interest rate percentage | 2.65% | |
Maturity date | Jul. 15, 2026 | |
3.85% senior notes due July 2036 [Member] | ||
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 1,250 | |
Date of issuance | Jul. 7, 2016 | |
Effective interest rate | 3.85% | |
Senior notes, par value | $ 1,250 | |
Stated interest rate percentage | 3.85% | |
Maturity date | Jul. 15, 2036 | |
4.00% senior notes due July 2046 [Member] | ||
Notes Payable Other Borrowings [Line Items] | ||
Fixed-rate senior notes | $ 3,000 | |
Date of issuance | Jul. 7, 2016 | |
Effective interest rate | 4.00% | |
Senior notes, par value | $ 3,000 | |
Stated interest rate percentage | 4.00% | |
Maturity date | Jul. 15, 2046 |
RESTRUCTURING ACTIVITIES (Detai
RESTRUCTURING ACTIVITIES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | ||
Restructuring reserve [Line Items] | |||
Restructuring expenses | $ 99 | $ 83 | |
Accrued at period start | [1],[2] | 283 | |
Initial Costs | [1],[3] | 113 | |
Adjustments to Cost | [1],[4] | (14) | |
Cash Payments | [1] | (123) | |
Others | [1],[5] | (1) | |
Accrued at period end | [1],[2] | 258 | |
Fiscal 2017 Oracle Restructuring [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 502 | |
Restructuring expenses | 112 | ||
Remaining expenses to incur | $ 390 | ||
Expected completion date | May 31, 2018 | ||
Accrued at period start | [1],[2] | $ 0 | |
Initial Costs | [1],[3] | 112 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (50) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 62 | |
Total Costs Accrued to Date | [1] | 112 | |
Fiscal 2017 Oracle Restructuring [Member] | Cloud software and on-premise software [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 204 | |
Accrued at period start | [1],[2] | 0 | |
Initial Costs | [1],[3] | 46 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (22) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 24 | |
Total Costs Accrued to Date | [1] | 46 | |
Fiscal 2017 Oracle Restructuring [Member] | Software license updates and product support [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 41 | |
Accrued at period start | [1],[2] | 0 | |
Initial Costs | [1],[3] | 7 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (4) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 3 | |
Total Costs Accrued to Date | [1] | 7 | |
Fiscal 2017 Oracle Restructuring [Member] | Hardware business [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 111 | |
Accrued at period start | [1],[2] | 0 | |
Initial Costs | [1],[3] | 30 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (11) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 19 | |
Total Costs Accrued to Date | [1] | 30 | |
Fiscal 2017 Oracle Restructuring [Member] | Services business [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 63 | |
Accrued at period start | [1],[2] | 0 | |
Initial Costs | [1],[3] | 14 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (6) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 8 | |
Total Costs Accrued to Date | [1] | 14 | |
Fiscal 2017 Oracle Restructuring [Member] | General and administrative and other [Member] | |||
Restructuring reserve [Line Items] | |||
Total expected program costs | [1] | 83 | |
Accrued at period start | [1],[2] | 0 | |
Initial Costs | [1],[3] | 15 | |
Adjustments to Cost | [1],[4] | 0 | |
Cash Payments | [1] | (7) | |
Others | [1],[5] | 0 | |
Accrued at period end | [1],[2] | 8 | |
Total Costs Accrued to Date | [1] | 15 | |
Other Restructuring Plans [Member] | |||
Restructuring reserve [Line Items] | |||
Accrued at period start | [1],[2],[6] | 283 | |
Initial Costs | [1],[3],[6] | 1 | |
Adjustments to Cost | [1],[4],[6] | (14) | |
Cash Payments | [1],[6] | (73) | |
Others | [1],[5],[6] | (1) | |
Accrued at period end | [1],[2],[6] | $ 196 | |
[1] | Restructuring costs recorded for individual line items primarily related to employee severance costs. | ||
[2] | The balances at August 31, 2016 and May 31, 2016 included $235 million and $255 million, respectively, recorded in other current liabilities, and $23 million and $28 million, respectively, recorded in other non-current liabilities. | ||
[3] | Costs recorded for the respective restructuring plans during the current period presented. | ||
[4] | All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments. | ||
[5] | Represents foreign currency translation and certain other adjustments. | ||
[6] | Other restructuring plans presented in the table above included condensed information for other Oracle-based plans (primarily the Fiscal 2015 Oracle Restructuring Plan) and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the period presented but for which the periodic impact to our condensed consolidated statements of operations was not significant. |
RESTRUCTURING ACTIVITIES Narrat
RESTRUCTURING ACTIVITIES Narrative (Details) - USD ($) $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Restructuring Reserve [Abstract] | ||
Accrued restructuring liabilities, current (in other current liabilities) | $ 235 | $ 255 |
Accrued restructuring liabilities, non-current (in other non-current liabilities) | $ 23 | $ 28 |
DEFERRED REVENUES (Details)
DEFERRED REVENUES (Details) - USD ($) $ in Millions | Aug. 31, 2016 | May 31, 2016 |
Deferred Revenues [Line Items] | ||
Deferred revenues, current | $ 9,462 | $ 7,655 |
Deferred revenues, non-current (in other non-current liabilities) | 528 | 536 |
Total deferred revenues | 9,990 | 8,191 |
Software license updates and product support [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 7,365 | 5,864 |
Cloud SaaS, PaaS and IaaS [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 909 | 705 |
Hardware support and other [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 750 | 675 |
Services business [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 372 | 339 |
New software licenses [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | $ 66 | $ 72 |
DERIVATIVE FINANCIAL INSTRUME48
DERIVATIVE FINANCIAL INSTRUMENTS Narrative (Details) € in Millions, $ in Millions | 3 Months Ended | ||||||
Aug. 31, 2016USD ($) | Aug. 31, 2015USD ($) | Jul. 07, 2016USD ($) | May 31, 2016USD ($) | Jul. 08, 2014USD ($) | Jul. 16, 2013USD ($) | Jul. 10, 2013EUR (€) | |
Debt Instruments [Abstract] | |||||||
Total debt issued | $ 14,000 | ||||||
Interest Rate Swap Agreements (Narrative) [Abstract] | |||||||
Description of fair value hedges | 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 $2.0 billion of 2.25% senior notes due October 2019 (October 2019 Notes) and our $1.5 billion of 2.80% senior notes due July 2021 (July 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 match the critical terms of the October 2019 Notes, July 2021 Notes and the January 2019 Notes that the interest rate swap agreements pertain to, including the notional amounts and maturity dates. We do not use any interest rate swap agreements for trading purposes. | ||||||
Cash Flow Hedges (Narrative) [Abstract] | |||||||
Description of cash flow hedges | 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 do not use any cross-currency swap agreements for trading purposes. | ||||||
Net Investment Hedges (Narrative) [Abstract] | |||||||
Description of net investment hedge | In July 2013, we designated our €750 million of 3.125% senior notes due July 2025 (July 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. | ||||||
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | |||||||
Net gains related to forward contracts | $ 6 | $ 97 | |||||
Foreign Currency Forward Contracts Not Designated as Hedges [Abstract] | |||||||
Description of foreign currency forward contracts not designated as hedges | We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. 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, 2016 for additional information regarding these contracts). As of August 31, 2016 and May 31, 2016, the notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies were $2.1 billion and $2.7 billion, respectively and the notional amount of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were $904 million and $2.0 billion, respectively. The fair values of our outstanding foreign currency forward contracts were nominal as of August 31, 2016 and May 31, 2016. | ||||||
Forward contracts held to purchase U.S. Dollars [Member] | Foreign Currency Forward Contracts Not Designated as Hedges [Member] | |||||||
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | |||||||
Notional amounts of forward contracts | $ 2,100 | $ 2,700 | |||||
Forward contracts held to sell U.S. Dollars [Member] | Foreign Currency Forward Contracts Not Designated as Hedges [Member] | |||||||
Foreign Currency Forward Contracts Not Designated as Hedges (Narrative) [Abstract] | |||||||
Notional amounts of forward contracts | $ 904 | $ 2,000 | |||||
Fair value hedges [Member] | Interest rate swap agreements [Member] | 2.25% senior notes due October 2019 [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt issued | $ 2,000 | ||||||
Stated interest rate percentage | 2.25% | ||||||
Maturity date | Oct. 8, 2019 | ||||||
Fair value hedges [Member] | Interest rate swap agreements [Member] | 2.80% senior notes due July 2021 [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt issued | $ 1,500 | ||||||
Stated interest rate percentage | 2.80% | ||||||
Maturity date | Jul. 8, 2021 | ||||||
Fair value hedges [Member] | Interest rate swap agreements [Member] | 2.375% senior notes due January 2019 [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt issued | $ 1,500 | ||||||
Stated interest rate percentage | 2.375% | ||||||
Maturity date | Jan. 15, 2019 | ||||||
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | |||||||
Derivative Instrument Detail [Abstract] | |||||||
Amount of ineffectiveness measured | $ 0 | 0 | |||||
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | 2.25% senior notes due January 2021 [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt issued | € | € 1,250 | ||||||
Stated interest rate percentage | 2.25% | ||||||
Maturity date | Jan. 10, 2021 | ||||||
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% | ||||||
Net investment hedge [Member] | Foreign currency borrowings [Member] | |||||||
Derivative Instrument Detail [Abstract] | |||||||
Amount of ineffectiveness measured | $ 0 | $ 0 | |||||
Net investment hedge [Member] | Foreign currency borrowings [Member] | 3.125% senior notes due July 2025 [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt issued | € | € 750 | ||||||
Stated interest rate percentage | 3.125% | ||||||
Maturity date | Jul. 10, 2025 |
DERIVATIVE FINANCIAL INSTRUME49
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | |||
Fair value, assets | $ 131 | $ 122 | |
Fair value, liabilities | (215) | (218) | |
Interest rate swap agreements [Member] | Interest expense [Member] | |||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) [Abstract] | |||
Amount of Gain Recognized in Income on Derivative | 9 | $ 1 | |
Amount of Loss on Hedged Item Recognized in Income Attributable to Risk Being Hedged | (9) | (1) | |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Other assets [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | |||
Fair value, assets | 131 | 122 | |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | |||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) [Abstract] | |||
Amount of Gain (Loss) Recognized in Accumulated OCI or OCL (Effective Portion) | 3 | 22 | |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | Non-operating income, net [Member] | |||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) [Abstract] | |||
Amount of Gain Reclassified from Accumulated OCI or OCL into Income (Effective Portion) | 1 | 51 | |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | Other non-current liabilities [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | |||
Fair value, liabilities | (215) | (218) | |
Net investment hedge [Member] | Foreign currency borrowings [Member] | |||
Effects of Derivative and Non-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL) [Abstract] | |||
Amount of Gain (Loss) Recognized in Accumulated OCI or OCL (Effective Portion) | (1) | (31) | |
Amount of Gain Reclassified from Accumulated OCI or OCL into Income (Effective Portion) | 0 | $ 0 | |
Net investment hedge [Member] | Foreign currency borrowings [Member] | Notes payable, non-current [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets [Abstract] | |||
Fair value, debt | $ (1,024) | $ (991) |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | Sep. 13, 2016 | |
Stock Repurchases (Narrative) [Abstract] | |||
Amount available for future repurchases | $ 6,800 | ||
Repurchases of common stock (in shares) | 49.3 | 75.7 | |
Repurchased amount | $ 2,000 | $ 3,000 | |
Repurchased shares that were not settled (in shares) | 2.2 | ||
Repurchased amount that was not settled | $ 91 | ||
Dividends on Common Stock [Abstract] | |||
Dividends per share, declared and paid (in dollars per share) | $ 0.15 | $ 0.15 | |
Dividends declared per share of outstanding common stock (in dollars per share) | $ 0.15 | ||
Dividend payable date | Oct. 26, 2016 | ||
Dividend record date | Oct. 12, 2016 | ||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Stock options granted (in shares) | 19 | ||
Restricted stock-based awards granted (in shares) | 33 | ||
Forfeitures and cancellations (in shares) | 3 | ||
Total stock-based compensation | $ 319 | $ 253 | |
Service-based restricted stock units [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Restricted stock-based awards granted (in shares) | 31 | ||
Performance-based restricted stock units [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Restricted stock-based awards granted (in shares) | 2 | ||
Chief Technology Officer and Chief Executive Officers [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Stock options granted (in shares) | 7 | ||
Expiration date | 5 years | ||
Other stock options [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Expiration date | 10 years | ||
Sales and marketing [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | $ 63 | 51 | |
Cloud software as a service and platform as a service [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 5 | 4 | |
Cloud infrastructure as a service [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 1 | 1 | |
Software license updates and product support [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 6 | 6 | |
Hardware products [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 2 | 2 | |
Hardware Support [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 1 | 1 | |
Services business [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 8 | 8 | |
Research and development [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | 195 | 148 | |
General and administrative [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | $ 38 | 29 | |
Acquisition related and other [Member] | |||
Stock-Based Compensation Expense and Valuations of Stock Awards [Abstract] | |||
Total stock-based compensation | $ 3 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | May 31, 2016 | |
Income Tax Examination [Line Items] | |||
Effective income tax rate | 22.80% | 24.40% | |
Net deferred tax assets | $ 982 | $ 1,100 | |
Domestic Country [Member] | |||
Income Tax Examination [Line Items] | |||
Income tax examinations | Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2015. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2007, and we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2004, and we are no longer subject to audit for those periods. | ||
Foreign Country [Member] | |||
Income Tax Examination [Line Items] | |||
Income tax examinations | 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. |
SEGMENT INFORMATION Narrative (
SEGMENT INFORMATION Narrative (Details) | 3 Months Ended |
Aug. 31, 2016BusinessSegment | |
Segment reporting information [Line Items] | |
Number of businesses | Business | 3 |
Cloud and on-premise software business [Member] | |
Segment reporting information [Line Items] | |
Number of operating segments | 3 |
Total hardware business [Member] | |
Segment reporting information [Line Items] | |
Number of operating segments | 2 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | ||
Segment reporting information [Line Items] | |||
Revenues | $ 8,595 | $ 8,448 | |
Margin | 5,110 | 5,055 | |
Cloud Software and On-Premise Software [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 1,845 | 1,603 |
Cloud software as a service and platform as a service expenses | 308 | 268 | |
Sales and distribution expenses | 1,580 | 1,395 | |
Margin | [2] | (43) | (60) |
Cloud infrastructure as a service [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | 171 | 160 | |
Cloud infrastructure as a service expenses | 93 | 85 | |
Sales and distribution expenses | 16 | 22 | |
Margin | [2] | 62 | 53 |
Software license updates and product support [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 4,793 | 4,697 |
Software license updates and product support expenses | 257 | 271 | |
Margin | [2] | 4,536 | 4,426 |
Total cloud and on-premise software business [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 6,809 | 6,460 |
Expenses | 2,254 | 2,041 | |
Margin | [2] | 4,555 | 4,419 |
Hardware products [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | 462 | 570 | |
Hardware products expenses | 240 | 301 | |
Sales and distribution expenses | 203 | 204 | |
Margin | [2] | 19 | 65 |
Hardware Support [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 534 | 559 |
Hardware support expenses | 141 | 172 | |
Margin | [2] | 393 | 387 |
Total hardware business [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 996 | 1,129 |
Expenses | 584 | 677 | |
Margin | [2] | 412 | 452 |
Total services business [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | 808 | 862 | |
Services expenses | 665 | 678 | |
Margin | [2] | 143 | 184 |
Total for operating segments [Member] | |||
Segment reporting information [Line Items] | |||
Revenues | [1] | 8,613 | 8,451 |
Expenses | 3,503 | 3,396 | |
Margin | [2] | $ 5,110 | $ 5,055 |
[1] | Cloud software and on-premise software, software license updates and product support and hardware support revenues for management reporting included revenues related to cloud SaaS and PaaS, software support and hardware support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented. 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 as reported in our condensed consolidated statements of operations. | ||
[2] | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, corporate, general and administrative and IT expenses. Additionally, the margins reported do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating income, net. |
SEGMENT INFORMATION RECONCILIAT
SEGMENT INFORMATION RECONCILIATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | ||
Reconciliation of Total Operating Segment Revenues to Total Revenues [Abstract] | |||
Total revenues | $ 8,595 | $ 8,448 | |
Cloud software as a service and platform as a service revenues | [1] | (17) | (1) |
Software license updates and product support revenues | [1] | (1) | (1) |
Hardware support revenues | [1] | (1) | |
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | |||
Total margin for operating segments | 5,110 | 5,055 | |
Cloud software as a service and platform as a service revenues | [1] | (17) | (1) |
Software license updates and product support revenues | [1] | (1) | (1) |
Hardware support revenues | [1] | (1) | |
Product development | (1,276) | (1,188) | |
Corporate, general and administrative and information technology expenses | (432) | (394) | |
Amortization of intangible assets | (311) | (452) | |
Acquisition related and other | (14) | (31) | |
Restructuring | (99) | (83) | |
Stock-based compensation | (319) | (250) | |
Interest expense | (416) | (374) | |
Non-operating income, net | 148 | 30 | |
Income before provision for income taxes | 2,373 | 2,310 | |
Total for operating segments Member | |||
Reconciliation of Total Operating Segment Revenues to Total Revenues [Abstract] | |||
Total revenues | [2] | 8,613 | 8,451 |
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | |||
Total margin for operating segments | [3] | $ 5,110 | $ 5,055 |
[1] | Cloud SaaS and PaaS revenues, software license updates and product support revenues and hardware support revenues for management reporting included revenues that would have otherwise been recorded by our acquired businesses as independent entities but were not recognized in our condensed consolidated statements of operations for the periods presented due to business combination accounting requirements. | ||
[2] | Cloud software and on-premise software, software license updates and product support and hardware support revenues for management reporting included revenues related to cloud SaaS and PaaS, software support and hardware support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented. 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 as reported in our condensed consolidated statements of operations. | ||
[3] | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, corporate, general and administrative and IT expenses. Additionally, the margins reported do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other non-operating income, net. |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | ||
Aug. 31, 2016 | Aug. 31, 2015 | ||
Earnings Per Share [Abstract] | |||
Net income | $ 1,832 | $ 1,747 | |
Weighted average common shares outstanding | 4,119 | 4,317 | |
Dilutive effect of employee stock plans | 102 | 95 | |
Dilutive weighted average common shares outstanding | 4,221 | 4,412 | |
Basic earnings per share | $ 0.44 | $ 0.40 | |
Diluted earnings per share | $ 0.43 | $ 0.40 | |
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation | [1] | 72 | 57 |
[1] | These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and could be dilutive in the future |
LEGAL PROCEEDINGS (Details)
LEGAL PROCEEDINGS (Details) - USD ($) | Sep. 15, 2016 | Jun. 30, 2016 | Aug. 31, 2016 |
Hewlett-Packard Litigation [Member] | |||
Legal Proceedings [Line Items] | |||
Damages awarded, value | $ 3,000,000,000 | ||
Damages paid, value | $ 0 | $ 0 | |
Inestimable loss related to litigation | We cannot currently estimate a reasonably possible range of loss for this action due to the complexities and uncertainty surrounding the appeal process and the nature of the claims. | ||
State of Oregon Litigation [Member] | Subsequent Event | |||
Legal Proceedings [Line Items] | |||
Loss contingency, settlement agreement, terms | On September 15, 2016, the State of Oregon, Oracle and Mythics, Inc. executed a comprehensive settlement resolving all outstanding litigation in these lawsuits. | ||
Loss related to litigation settlement | The settlement was immaterial to Oracle’s consolidated financial statements. | ||
Other Litigation [Member] | |||
Legal Proceedings [Line Items] | |||
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. |