DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - USD ($) | 12 Months Ended | ||
May 31, 2018 | Jun. 15, 2018 | Nov. 30, 2017 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | May 31, 2018 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 | ||
Trading Symbol | ORCL | ||
Entity Registrant Name | Oracle Corporation | ||
Entity Central Index Key | 1,341,439 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --05-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Common Stock, Shares Outstanding (in shares) | 3,981,155,000 | ||
Entity Public Float (in dollars) | $ 142,975,778,000 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 21,620 | $ 21,784 |
Marketable securities | 45,641 | 44,294 |
Trade receivables, net of allowances for doubtful accounts of $370 and $319 as of May 31, 2018 and May 31, 2017, respectively | 5,279 | 5,300 |
Prepaid expenses and other current assets | 3,424 | 3,137 |
Total current assets | 75,964 | 74,515 |
Non-current assets: | ||
Property, plant and equipment, net | 5,897 | 5,315 |
Intangible assets, net | 6,670 | 7,679 |
Goodwill, net | 43,755 | 43,045 |
Deferred tax assets | 1,491 | 1,143 |
Other non-current assets | 3,487 | 3,294 |
Total non-current assets | 61,300 | 60,476 |
Total assets | 137,264 | 134,991 |
Current liabilities: | ||
Notes payable and other borrowings, current | 4,491 | 9,797 |
Accounts payable | 529 | 599 |
Accrued compensation and related benefits | 1,789 | 1,966 |
Deferred revenues | 8,429 | 8,233 |
Other current liabilities | 3,957 | 3,583 |
Total current liabilities | 19,195 | 24,178 |
Non-current liabilities: | ||
Notes payable and other borrowings, non-current | 56,128 | 48,112 |
Income taxes payable | 13,422 | 5,681 |
Other non-current liabilities | 2,295 | 2,774 |
Total non-current liabilities | 71,845 | 56,567 |
Commitments and contingencies | 0 | |
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: 3,997 shares and 4,137 shares as of May 31, 2018 and May 31, 2017, respectively | 28,950 | 27,065 |
Retained earnings | 18,412 | 27,598 |
Accumulated other comprehensive loss | (1,636) | (803) |
Total Oracle Corporation stockholders' equity | 45,726 | 53,860 |
Noncontrolling interests | 498 | 386 |
Total equity | 46,224 | 54,246 |
Total liabilities and equity | $ 137,264 | $ 134,991 |
CONSOLIDATED BALANCE SHEETS PAR
CONSOLIDATED BALANCE SHEETS PARENTHETICAL - USD ($) shares in Millions, $ in Millions | May 31, 2018 | May 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 370 | $ 319 |
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 | 3,997 | 4,137 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Revenues: | ||||
Cloud services and license support | $ 26,254 | $ 23,800 | $ 21,714 | |
Cloud license and on-premise license | 6,190 | 6,418 | 7,276 | |
Hardware | 3,993 | 4,152 | 4,668 | |
Services | 3,394 | 3,358 | 3,389 | |
Total revenues | 39,831 | 37,728 | 37,047 | |
Operating expenses: | ||||
Cloud services and license support | [1] | 3,612 | 3,015 | 2,664 |
Hardware | [1] | 1,581 | 1,653 | 2,064 |
Services | [1] | 2,888 | 2,801 | 2,751 |
Sales and marketing | [1] | 8,431 | 8,197 | 7,884 |
Research and development | 6,091 | 6,159 | 5,787 | |
General and administrative | 1,289 | 1,176 | 1,155 | |
Amortization of intangible assets | 1,620 | 1,451 | 1,638 | |
Acquisition related and other | 52 | 103 | 42 | |
Restructuring | 588 | 463 | 458 | |
Total operating expenses | 26,152 | 25,018 | 24,443 | |
Operating income | 13,679 | 12,710 | 12,604 | |
Interest expense | (2,025) | (1,798) | (1,467) | |
Non-operating income, net | 1,237 | 605 | 305 | |
Income before provision for income taxes | 12,891 | 11,517 | 11,442 | |
Provision for income taxes | 9,066 | 2,182 | 2,541 | |
Net income | $ 3,825 | $ 9,335 | $ 8,901 | |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.93 | $ 2.27 | $ 2.11 | |
Diluted (in dollars per share) | $ 0.90 | $ 2.21 | $ 2.07 | |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 4,121 | 4,115 | 4,221 | |
Diluted (in shares) | 4,238 | 4,217 | 4,305 | |
Dividends declared per common share (in dollars per share) | $ 0.76 | $ 0.64 | $ 0.60 | |
[1] | Exclusive of amortization of intangible assets, which is shown separately |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Net income | $ 3,825 | $ 9,335 | $ 8,901 |
Other comprehensive (loss) income, net of tax: | |||
Total other comprehensive (loss) income, net | (833) | 27 | 206 |
Portion Attributable to Parent [Member] | |||
Net income | 3,825 | 9,335 | 8,901 |
Other comprehensive (loss) income, net of tax: | |||
Net foreign currency translation (losses) gains | (295) | 99 | 73 |
Net unrealized gains (losses) on defined benefit plans | 34 | (102) | 50 |
Net unrealized (losses) gains on marketable securities | (609) | (9) | 72 |
Net unrealized gains (losses) on cash flow hedges | 37 | 25 | (15) |
Total other comprehensive (loss) income, net | (833) | 13 | 180 |
Comprehensive income | $ 2,992 | $ 9,348 | $ 9,081 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock and Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Oracle Corporation Stockholders' Equity | Noncontrolling Interests |
Balances at May. 31, 2015 | $ 49,098 | $ 23,156 | $ 26,503 | $ (996) | $ 48,663 | $ 435 |
Beginning common stock shares outstanding at May. 31, 2015 | 4,343 | |||||
Common stock issued under stock-based compensation plans | $ 1,304 | 1,304 | 0 | 0 | 1,304 | 0 |
Common stock issued under stock-based compensation plans, Shares | 60 | |||||
Common stock issued under stock purchase plans | $ 121 | 121 | 0 | 0 | 121 | 0 |
Common stock issued under stock purchase plans, Shares | 3 | |||||
Assumption of stock-based compensation plan awards in connection with acquisitions | $ 1 | 1 | 0 | 0 | 1 | 0 |
Stock-based compensation | 1,037 | 1,037 | 0 | 0 | 1,037 | 0 |
Repurchase of common stock | $ (10,439) | (1,464) | (8,975) | 0 | (10,439) | 0 |
Repurchase of common stock, Shares | (271.9) | |||||
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | $ (89) | (89) | 0 | 0 | (89) | 0 |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards, Shares | (3) | |||||
Cash dividends declared | $ (2,541) | 0 | (2,541) | 0 | (2,541) | 0 |
Tax benefit from stock plans | 141 | 141 | 0 | 0 | 141 | 0 |
Other, net | 19 | 10 | 0 | 0 | 10 | 9 |
Distributions to noncontrolling interests | (85) | 0 | 0 | 0 | 0 | (85) |
Other comprehensive income (loss), net | 206 | 0 | 0 | 180 | 180 | 26 |
Net income | 9,017 | 0 | 8,901 | 0 | 8,901 | 116 |
Balances at May. 31, 2016 | $ 47,790 | 24,217 | 23,888 | (816) | 47,289 | 501 |
Ending common stock shares outstanding at May. 31, 2016 | 4,131 | |||||
Common stock issued under stock-based compensation plans | $ 2,063 | 2,063 | 0 | 0 | 2,063 | 0 |
Common stock issued under stock-based compensation plans, Shares | 95 | |||||
Common stock issued under stock purchase plans | $ 118 | 118 | 0 | 0 | 118 | 0 |
Common stock issued under stock purchase plans, Shares | 3 | |||||
Assumption of stock-based compensation plan awards in connection with acquisitions | $ 90 | 90 | 0 | 0 | 90 | 0 |
Stock-based compensation | 1,350 | 1,350 | 0 | 0 | 1,350 | 0 |
Repurchase of common stock | $ (3,492) | (504) | (2,988) | 0 | (3,492) | 0 |
Repurchase of common stock, Shares | (85.6) | |||||
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | $ (283) | (283) | 0 | 0 | (283) | 0 |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards, Shares | (6) | |||||
Cash dividends declared | $ (2,631) | 0 | (2,631) | 0 | (2,631) | 0 |
Other, net | 19 | 14 | (6) | 0 | 8 | 11 |
Distributions to noncontrolling interests | (258) | 0 | 0 | 0 | 0 | (258) |
Other comprehensive income (loss), net | 27 | 0 | 0 | 13 | 13 | 14 |
Net income | 9,453 | 0 | 9,335 | 0 | 9,335 | 118 |
Balances at May. 31, 2017 | $ 54,246 | 27,065 | 27,598 | (803) | 53,860 | 386 |
Ending common stock shares outstanding at May. 31, 2017 | 4,137 | |||||
Common stock issued under stock-based compensation plans | $ 2,277 | 2,277 | 0 | 0 | 2,277 | 0 |
Common stock issued under stock-based compensation plans, Shares | 105 | |||||
Common stock issued under stock purchase plans | $ 125 | 125 | 0 | 0 | 125 | 0 |
Common stock issued under stock purchase plans, Shares | 3 | |||||
Assumption of stock-based compensation plan awards in connection with acquisitions | $ 3 | 3 | 0 | 0 | 3 | 0 |
Stock-based compensation | 1,607 | 1,607 | 0 | 0 | 1,607 | 0 |
Repurchase of common stock | $ (11,503) | (1,632) | (9,871) | 0 | (11,503) | 0 |
Repurchase of common stock, Shares | (238) | |||||
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | $ (506) | (506) | 0 | 0 | (506) | 0 |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards, Shares | (10) | |||||
Cash dividends declared | $ (3,140) | 0 | (3,140) | 0 | (3,140) | 0 |
Other, net | 22 | 11 | 0 | 0 | 11 | 11 |
Distributions to noncontrolling interests | (34) | 0 | 0 | 0 | 0 | (34) |
Other comprehensive income (loss), net | (833) | 0 | 0 | (833) | (833) | 0 |
Net income | 3,960 | 0 | 3,825 | 0 | 3,825 | 135 |
Balances at May. 31, 2018 | $ 46,224 | $ 28,950 | $ 18,412 | $ (1,636) | $ 45,726 | $ 498 |
Ending common stock shares outstanding at May. 31, 2018 | 3,997 |
CONSOLIDATED STATEMENTS OF EQU7
CONSOLIDATED STATEMENTS OF EQUITY PARENTHETICAL - $ / shares | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Dividends declared per common share (in dollars per share) | $ 0.76 | $ 0.64 | $ 0.60 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 3,825 | $ 9,335 | $ 8,901 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 1,165 | 1,000 | 871 |
Amortization of intangible assets | 1,620 | 1,451 | 1,638 |
Allowances for doubtful accounts receivable | 146 | 129 | 130 |
Deferred income taxes | (611) | (486) | (105) |
Stock-based compensation | 1,607 | 1,350 | 1,037 |
Other, net | (26) | 123 | 143 |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
(Increase) decrease in trade receivables, net | (117) | 18 | 96 |
Increase in prepaid expenses and other assets | (276) | (24) | (2) |
Decrease in accounts payable and other liabilities | (264) | (37) | (13) |
Increase in income taxes payable | 8,143 | 732 | 313 |
Increase in deferred revenues | 174 | 535 | 676 |
Net cash provided by operating activities | 15,386 | 14,126 | 13,685 |
Cash flows from investing activities: | |||
Purchases of marketable securities and other investments | (25,282) | (25,867) | (24,562) |
Proceeds from maturities and sales of marketable securities and other investments | 23,117 | 17,615 | 21,247 |
Acquisitions, net of cash acquired | (1,724) | (11,221) | (650) |
Capital expenditures | (1,736) | (2,021) | (1,189) |
Net cash used for investing activities | (5,625) | (21,494) | (5,154) |
Cash flows from financing activities: | |||
Payments for repurchases of common stock | (11,347) | (3,561) | (10,440) |
Proceeds from issuances of common stock | 2,402 | 2,181 | 1,425 |
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards | (506) | (283) | (89) |
Payments of dividends to stockholders | (3,140) | (2,631) | (2,541) |
Proceeds from borrowings, net of issuance costs | 12,443 | 17,732 | 3,750 |
Repayments of borrowings | (9,800) | (4,094) | (2,000) |
Distributions to noncontrolling interests | (34) | (258) | (85) |
Net cash (used for) provided by financing activities | (9,982) | 9,086 | (9,980) |
Effect of exchange rate changes on cash and cash equivalents | 57 | (86) | (115) |
Net (decrease) increase in cash and cash equivalents | (164) | 1,632 | (1,564) |
Cash and cash equivalents at beginning of period | 21,784 | 20,152 | 21,716 |
Cash and cash equivalents at end of period | 21,620 | 21,784 | 20,152 |
Non-cash investing and financing transactions: | |||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | 3 | 90 | 1 |
Change in unsettled repurchases of common stock | 154 | (69) | (1) |
Change in unsettled investment purchases | (303) | 73 | (112) |
Supplemental schedule of cash flow data: | |||
Cash paid for income taxes | 1,562 | 1,983 | 2,331 |
Cash paid for interest | $ 1,910 | $ 1,612 | $ 1,616 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Oracle Corporation provides products and services that address all aspects of corporate information technology (IT) environments—applications, platform and infrastructure. Our applications, platform and infrastructure offerings are delivered to customers worldwide through a variety of flexible and interoperable IT deployment models, including cloud-based, on-premise, or hybrid, which enable customer choice and flexibility. Our Oracle Cloud offerings provide a comprehensive and fully integrated stack of applications, platform, compute, storage and networking services in all three primary layers of the cloud: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Our Oracle Cloud SaaS, PaaS and IaaS offerings (collectively, “Oracle Cloud Services”) integrate the software, hardware and services on customers’ behalf in IT environments that we deploy, support and manage for the customer. We offer our customers the option to deploy our comprehensive set of cloud offerings including Oracle Cloud Services or to purchase our software and hardware products and related services to manage their own cloud-based or on-premise IT environments. Customers that purchase our software products may elect to purchase license support contracts, which provide our customers with rights to unspecified license upgrades and maintenance releases issued during the support period as well as technical support assistance. Customers that purchase our hardware products may elect to purchase hardware support contracts, which provide customers with software updates and can include product repairs, maintenance services, and technical support services. Oracle Corporation conducts business globally and was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977. Basis of Financial Statements The consolidated financial statements included our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle’s stockholders for all periods presented. The noncontrolling interests in our net income were not significant to our consolidated results for the periods presented and therefore have been included as a component of non-operating income, net in our consolidated statements of operations. Intercompany transactions and balances have been eliminated. Certain other 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. In fiscal 2018, we adopted Accounting Standards Update (ASU) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment Impacts of the U.S. Tax Cuts and Jobs Act of 2017 The comparability of our operating results in fiscal 2018 compared to the corresponding prior year periods, and of our consolidated balance sheets as of May 31, 2018 relative to May 31, 2017, was impacted by the U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act), which was signed into law on December 22, 2017. Effective January 1, 2018, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%; creates a quasi-territorial tax system that a) generally allows, among other provisions, companies to repatriate certain foreign source earnings without incurring additional U.S. income tax for such earnings generated after December 31, 2017 and b) generally requires companies to pay a one-time transition tax on certain foreign subsidiary earnings generated prior to December 31, 2017 that, in substantial part, were previously tax deferred; creates new taxes on certain foreign sourced earnings; limits deductibility of certain future compensation arrangements to certain highly compensated employees; and provides tax incentives for the exportation of U.S. products to foreign jurisdictions and for the purchase of qualifying capital equipment, among other provisions. Because we have a May 31 fiscal year end, our fiscal 2018 blended U.S. federal statutory tax rate was approximately 29%. During fiscal 2018, our provision for income taxes increased and our net income decreased, primarily as a result of the following items related to the enactment of the Tax Act: • $7.8 billion of income tax expense, which we refined by a $166 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 118 (SAB 118), related to the application of the one-time transition tax to certain foreign subsidiary earnings that were generated prior to December 31, 2017 and for which such expense was substantially recorded to non-current income taxes payable in our consolidated balance sheet and corresponds to the amount we currently expect to periodically settle over an eight year period as provided by the Tax Act; partially offset by: • $820 million of income tax benefit, which we refined by a $76 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with SAB 118, related to the remeasurement of our net deferred tax liabilities based on the rates at which they are expected to reverse in the future; and • the net favorable impacts of the Tax Act on our tax profile and effective tax rate beginning on January 1, 2018, which we generally expect will continue into future periods. The net expense related to the enactment of the Tax Act has been accounted for during fiscal 2018 based on provisional estimates pursuant to SAB 118. Subsequent adjustments, if any, will be accounted for in the period such adjustments are identified. The provisional estimates incorporate, among other factors, assumptions made based on interpretations of the Tax Act and existing tax laws and a range of historical financial and tax-specific facts and information, including among other items, the amount of cash and other specified assets and liabilities of the company and its foreign subsidiaries on relevant dates and estimates of deferred tax balances pending finalization of those balances. Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC), and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Revenue Recognition Our sources of revenues include: • cloud and license revenues, which include the sale of: cloud services and license support; and cloud license and on-premise licenses, which represent licenses purchased by customers for use in both cloud and on-premise deployments; • hardware revenues, which include the sale of hardware products including Oracle Engineered Systems, servers, and storage products, and industry-specific hardware; and hardware support revenues; and • services revenues, which are earned from providing cloud-, license- and hardware-related services including consulting, advanced customer support and education services. Revenue Recognition for Cloud Services Offerings, Hardware Products, Hardware Support and Related Services (Non-software Elements) Our revenue recognition policy for non-software deliverables including our cloud services offerings, hardware products, hardware support and related services is based upon the accounting guidance contained in ASC 605-25, Revenue Recognition, Multiple-Element Arrangements Revenues from the sales of our non-software elements are recognized when: (1) persuasive evidence of an arrangement exists; (2) we deliver the products or services; (3) the sale price is fixed or determinable; and (4) collection is reasonably assured. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met. Revenues for our cloud services offerings sold on a subscription basis are generally recognized ratably over the contract term commencing with the date the service is made available to customers. Revenues for cloud services offerings sold on a usage basis are generally recognized as the customer consumes the service, provided all other revenue recognition criteria have been satisfied. Revenues from the sale of hardware products are generally recognized upon delivery of the hardware product to the customer provided all other revenue recognition criteria are satisfied. Hardware support contracts are entered into at the customer’s option and are recognized ratably over the contractual term of the arrangements, which is typically one year, provided all other revenue recognition criteria have been satisfied. Revenue Recognition for Multiple-Element Arrangements—Cloud Services Offerings, Hardware Products, Hardware Support and Related Services (Non-software Arrangements) We enter into arrangements with customers that purchase non-software related products and services from us at the same time, or within close proximity of one another (referred to as non-software multiple-element arrangements). Each element within a non-software multiple-element arrangement is accounted for as a separate unit of accounting provided the following criteria are met: the delivered products or services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by us. We consider a deliverable to have standalone value if the product or service is sold separately by us or another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a general right of return relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. For those units of accounting that include more than one deliverable but are treated as a single unit of accounting, we generally recognize revenues over the contractual period of the arrangement, or in the case of our cloud services offerings, we generally recognize revenues over the contractual term of the cloud services subscription. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenue to the respective revenue line items within our consolidated statements of operations based on a rational and consistent methodology utilizing our best estimate of relative selling prices of such elements. For our non-software multiple-element arrangements, we allocate revenue to each element based on a selling price hierarchy at the arrangement’s inception. The selling price for each element is based upon the following selling price hierarchy: vendor-specific objective evidence (VSOE) if available, third-party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE are available (a description as to how we determine VSOE, TPE and ESP is provided below). If a tangible hardware product includes software, we determine whether the tangible hardware product and the software work together to deliver the product’s essential functionality and, if so, the entire product is treated as a non-software deliverable. The total arrangement consideration is allocated to each separate unit of accounting for each of the non-software deliverables using the relative selling prices of each unit based on the selling price hierarchy. We limit the amount of revenue recognized for delivered elements to an amount that is not contingent upon future delivery of additional products or services or meeting of any specified performance conditions. When possible, we establish VSOE of selling price for deliverables in software and non-software multiple-element arrangements using the price charged for a deliverable when sold separately. TPE is established by evaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated customers. If we are unable to determine the selling price because VSOE or TPE does not exist, we determine ESP for the purposes of allocating the arrangement by reviewing historical transactions, including transactions whereby the deliverable was sold on a standalone basis and considering several other external and internal factors. Revenue Recognition for Cloud License and On-Premise License and License Related Services (Software Elements) The basis for our cloud license and on-premise license revenues and related services revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition For license arrangements that do not require significant modification or customization of the underlying license, we recognize cloud license and on-premise license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of license sale because the foregoing conditions are not met, are generally recognized when those conditions are subsequently met. The vast majority of our cloud license and on-premise license arrangements include license support contracts, which are entered into at the customer’s option. We recognize the related fees ratably over the term of the arrangement, typically one year. License support contracts provide customers with rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period and include internet access to technical content, as well as internet and telephone access to technical support personnel. License support contracts are generally priced as a percentage of the net cloud license and on-premise license fees and are generally invoiced in full at the beginning of the support term. Substantially all of our customers renew their license support contracts annually. Revenue Recognition for Multiple-Element Arrangements — Cloud License and On-Premise License, Support and Related Services (Software Arrangements) We often enter into arrangements with customers that purchase cloud licenses and on-premise licenses, license support and related services from us at the same time, or within close proximity of one another (referred to as software related multiple-element arrangements). For those software related multiple-element arrangements, we have applied the residual method to determine the amount of cloud license and on-premise license revenues to be recognized pursuant to ASC 985-605. Under the residual method, if VSOE exists for undelivered elements in a multiple-element arrangement, VSOE of the undelivered elements is deferred with the remaining portion of the arrangement consideration generally recognized upon delivery of the license. Where VSOE does not exist for the undelivered element in such arrangement, no revenue is recognized until the earlier of the point in time at which 1) VSOE has been established for such element; or 2) the element that does not have VSOE has been delivered. Revenue Recognition for Multiple-Element Arrangements — Arrangements with Software and Non-software Elements We also enter into multiple-element arrangements that may include a combination of our various software related and non-software related products and services offerings including cloud licenses and on-premise licenses, license support, cloud services offerings, hardware products, hardware support, consulting, advanced customer support services and education. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and the non-software group of elements. We then further allocate consideration within the software group to the respective elements within that group following the guidance in ASC 985-605 and our policies as described above. In addition, we allocate the consideration within the non-software group to each respective element within that group based on a selling price hierarchy at the arrangement’s inception as described above. After the arrangement consideration has been allocated to the software group of elements and non-software group of elements, we account for each respective element in the arrangement as described above and below. Other Revenue Recognition Policies Applicable to Software and Non-software Elements Many of our cloud license and on-premise license arrangements include consulting implementation services sold separately under consulting engagement contracts and are included as a part of our services business. Consulting revenues from these arrangements are generally accounted for separately from cloud license and on-premise license revenues because the arrangements qualify as services transactions as defined in ASC 985-605. The more significant factors considered in determining whether the revenues should be accounted for separately include the nature of services (i.e., consideration of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance criteria on the realizability of the license fee. Revenues for consulting services are generally recognized as the services are performed. If an arrangement contains multiple elements and does not qualify for separate accounting for the product and service transactions, then cloud license and on-premise license revenues and/or hardware products revenues, including the costs of hardware products, are generally recognized together with the services based on contract accounting using either the percentage-of-completion or completed-contract method. We also evaluate arrangements with governmental entities containing “fiscal funding” or “termination for convenience” provisions, when such provisions are required by law, to determine the probability of possible cancellation. We consider multiple factors, including the history with the customer in similar transactions, the “essential use” of the license or hardware products and the planning, budgeting and approval processes undertaken by the governmental entity. If we determine upon execution of these arrangements that the likelihood of cancellation is remote, we then recognize revenues for such arrangements once all of the criteria described above have been met. If such a determination cannot be made, revenues are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity for such arrangements. We assess whether fees are fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirements are met. Our standard payment terms are net 30 days. However, payment terms may vary based on the country in which the agreement is executed. We evaluate non-standard payment terms based on whether we have successful collection history on comparable arrangements (based upon similarity of customers, products, and arrangement economics) and, if so, generally conclude such payment terms are fixed and determinable and thereby satisfy the required criteria for revenue recognition. While most of our arrangements for sales within our businesses include short-term payment terms, we have a standard practice of providing long-term financing to creditworthy customers primarily through our financing division. Since fiscal 1989, when our financing division was formed, we have established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date. Provided all other revenue recognition criteria have been met, we recognize cloud license and on-premise license revenues and hardware products revenues for these arrangements upon delivery, net of any payment discounts from financing transactions. We have generally sold receivables financed through our financing division on a non-recourse basis to third-party financing institutions within 90 days of the contracts’ dates of execution and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in ASC 860, Transfers and Servicing Our customers include several of our suppliers and, occasionally, we have purchased goods or services for our operations from these vendors at or about the same time that we have sold our products to these same companies (Concurrent Transactions). License agreements, sales of hardware or sales of services that occur within a common time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we acquire goods or services from a customer, we negotiate the purchase separately from any sales transaction, at terms we consider to be at arm’s length and settle the purchase in cash. We recognize revenues from Concurrent Transactions if all of our revenue recognition criteria are met and the goods and services acquired are necessary for our current operations. Business Combinations We apply the provisions of ASC 805, Business Combinations Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if: (1) it is probable that an asset existed or a liability had been incurred at the acquisition date and (2) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. Marketable and Non-Marketable Securities In accordance with ASC 320, Investments Debt and Equity Securities, We hold investments in certain non-marketable equity securities in which we do not have a controlling interest or significant influence. These equity securities are recorded at cost and included in other non-current assets in the accompanying consolidated balance sheets. If based on the terms of our ownership of these non-marketable securities, we determine that we exercise significant influence on the entity to which these non-marketable securities relate, we apply the requirements of ASC 323, Investments Equity Method and Joint Ventures . Fair Values of Financial Instruments We apply the provisions of ASC 820, Fair Value Measurement The additional disclosures regarding our fair value measurements are included in Note 4. Allowances for Doubtful Accounts We record allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the geographic region that the receivable was recorded in and current economic trends. We write-off a receivable and charge it against its recorded allowance when we have exhausted our collection efforts without success. Concentrations of Risk Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, derivatives and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution. Investment policies have been implemented that limit purchases of marketable debt securities to investment-grade securities. Our derivative contracts are transacted with various financial institutions with high credit standings and any exposure to counterparty credit-related losses in these contracts is largely mitigated with collateral security agreements that provide for collateral to be received or posted when the net fair values of these contracts fluctuate from contractually established thresholds. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2018, 2017 or 2016. We outsource the manufacturing, assembly and delivery of certain of our hardware products to a variety of companies, many of which are located outside the United States. Further, we have simplified our supply chain processes by reducing the number of third-party manufacturing partners and the number of locations where these third-party manufacturers build our hardware products. Any inability of these third-party manufacturing partners to deliver the contracted services for our hardware products could adversely impact future operating results of our hardware business. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. We evaluate our ending inventories for estimated excess quantities and obsolescence. This evaluation includes analysis of sales levels by product and projections of future demand within specific time horizons (generally six to nine months). Inventories in excess of future demand are written down and charged to hardware expenses. In addition, we assess the impact of changing technology to our inventories and we write down inventories that are considered obsolete. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventories are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $398 million and $300 million at May 31, 2018 and 2017, respectively. Other Receivables Other receivables represent value-added tax and sales tax receivables associated with the sale of our products and services to third parties. Other receivables are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $802 million and $794 million at May 31, 2018 and 2017, respectively. Deferred Sales Commissions We defer sales commission expenses associated with our cloud SaaS, PaaS and IaaS offerings, and recognize the related expenses over the non-cancelable terms of the related contracts, which are typically one to three years. The current portion of the deferred sales commissions balances are included in prepaid expenses and other current assets and the non-current portion of the deferred sales commissions balances are included in other assets as of May 31, 2018 and 2017. Amortization of deferred sales commissions is included as a component of sales and marketing expenses in our consolidated statements of operations. Property, Plant and Equipment Property, plant and equipment are stated at the lower of cost or realizable value, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the assets, which range from one to 40 years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the lease terms, as appropriate. Property, plant and equipment are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize any significant property impairment charges in fiscal 2018, 2017 or 2016. Goodwill, Intangible Assets and Impairment Assessments Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives, which generally range from one to 10 years. Each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. The carrying amounts of our goodwill and intangible assets are periodically reviewed for impairment (at least annually for goodwill and indefinite lived intangible assets) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. When goodwill is assessed for impairment, we have the option to perform an assessment of qualitative factors of impairment (optional assessment) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If we determine that it is more likely than not that the fair value of the reporting unit is less than its carryin |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
May 31, 2018 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 2. ACQUISITIONS Fiscal 2018 Acquisitions Acquisition of Aconex Limited On March 28, 2018, we completed our acquisition of Aconex Limited (Aconex), a provider of cloud-based collaboration software for construction projects. We have included the financial results of Aconex in our consolidated financial statements from the date of acquisition. These results were not individually material to our consolidated financial statements. The total preliminary purchase price for Aconex was approximately $1.2 billion, which consisted of approximately $1.2 billion in cash and $1 million for the fair values of stock options and restricted stock-based awards assumed. In connection with the Aconex acquisition, we have preliminarily recorded $32 million of net tangible assets and $368 million of identifiable intangible assets based on their estimated fair values, and $832 million of residual goodwill. Goodwill generated from our acquisition of Aconex was primarily attributable to synergies expected to arise after the acquisition and is not expected to be tax deductible. Other Fiscal 2018 Acquisitions During fiscal 2018, we acquired certain other companies and purchased certain technology and development assets primarily to expand our products and services offerings Fiscal 2017 Acquisitions Acquisition of NetSuite Inc., a Related Party On November 7, 2016, we completed our acquisition of NetSuite Inc. (NetSuite), a provider of cloud-based enterprise resource planning (ERP) software and related applications and a related party to Oracle. We acquired 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. Lawrence J. Ellison, Oracle’s Chairman of the Board and Chief Technology Officer and Oracle’s largest stockholder, was 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 owned approximately 40% of the issued and outstanding NetSuite Shares immediately prior to the conclusion of the merger. The total purchase price for NetSuite was approximately $9.1 billion, which consisted of approximately $9.0 billion in cash and $78 million for the fair values of restricted stock-based awards and stock options assumed. In allocating the purchase price based on estimated fair values, we recorded approximately $6.7 billion of goodwill, $3.2 billion of identifiable intangible assets and $763 million of net tangible liabilities. Goodwill generated from our acquisition of NetSuite was primarily attributable to synergies expected to arise after the acquisition and was not tax deductible. Other Fiscal 2017 Acquisitions During 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 purchase price for these acquisitions was approximately $3.0 billion, which consisted of $3.0 billion in cash and $13 million for the fair values of restricted stock-based awards and stock options assumed. Based on their estimated fair values, we recorded $243 million of net tangible assets and $948 million of identifiable intangible assets and $1.8 billion of residual goodwill related to our fiscal 2017 acquisitions. 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 Unaudited Pro Forma Financial Information The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle, NetSuite, Aconex and certain other companies that we acquired since the beginning of fiscal 2017 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 2017. The unaudited pro forma financial information for all periods presented 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 2017. 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 2017. The unaudited pro forma financial information for fiscal 2018 combined the historical results of Oracle for fiscal 2018 and the historical results of Aconex for the twelve month period ended December 31, 2017 (adjusted due to differences in reporting periods and considering the date we acquired Aconex) and certain other companies that we acquired since the beginning of fiscal 2018 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information for fiscal 2017 combined the historical results of Oracle for fiscal 2017, the historical results of NetSuite for the six month period ended September 30, 2016 (adjusted due to differences in reporting periods and considering the date we acquired NetSuite) and the historical results of Aconex and 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 was as follows: Year Ended May 31, (in millions, except per share data) 2018 2017 Total revenues $ 39,977 $ 38,416 Net income $ 3,738 $ 8,825 Basic earnings per share $ 0.91 $ 2.14 Diluted earnings per share $ 0.88 $ 2.09 |
CASH, CASH EQUIVALENTS AND MARK
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | 12 Months Ended |
May 31, 2018 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | 3. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES Cash and cash equivalents primarily consist of deposits held at major banks, Tier-1 commercial paper and other securities with original maturities of 90 days or less. Marketable securities consist of Tier-1 commercial paper debt securities, corporate debt securities and certain other securities. The amortized principal amounts of our cash, cash equivalents and marketable securities approximated their fair values at May 31, 2018 and 2017. We use the specific identification method to determine any realized gains or losses from the sale of our marketable securities classified as available-for-sale. Such realized gains and losses were insignificant for fiscal 2018, 2017 and 2016. The following table summarizes the components of our cash equivalents and marketable securities held, substantially all of which were classified as available-for-sale: May 31, (in millions) 2018 2017 Corporate debt securities and other $ 44,302 $ 41,618 Commercial paper debt securities 1,647 5,053 Money market funds 6,500 3,302 Total investments $ 52,449 $ 49,973 Investments classified as cash equivalents $ 6,808 $ 5,679 Investments classified as marketable securities $ 45,641 $ 44,294 As of May 31, 2018 and 2017, approximately 26% and 32%, respectively, of our marketable securities investments mature within one year and 74% and 68%, respectively, mature within one to five years. Our investment portfolio is subject to market risk due to changes in interest rates. As described above, we limit purchases of marketable debt securities to investment-grade securities, which have high credit ratings and also limit the amount of credit exposure to any one issuer. As stated in our investment policy, we are averse to principal loss and seek to preserve our invested funds by limiting default risk and market risk. Restricted cash that was included within cash and cash equivalents as presented within our consolidated balance sheets as of May 31, 2018 and 2017 and our consolidated statements of cash flows for the years ended May 31, 2018, 2017 and 2016 was nominal. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
May 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS We perform fair value measurements in accordance with ASC 820. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. Assets 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): May 31, 2018 May 31, 2017 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: Corporate debt securities and other $ 223 $ 44,079 $ 44,302 $ 580 $ 41,038 $ 41,618 Commercial paper debt securities — 1,647 1,647 — 5,053 5,053 Money market funds 6,500 — 6,500 3,302 — 3,302 Derivative financial instruments — 29 29 — 40 40 Total assets $ 6,723 $ 45,755 $ 52,478 $ 3,882 $ 46,131 $ 50,013 Liabilities: Derivative financial instruments $ — $ 158 $ 158 $ — $ 191 $ 191 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 that 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 the $58.0 billion and $54.0 billion of senior notes and the related fair value hedges that we had outstanding as of May 31, 2018 and 2017, respectively, the estimated fair values of the senior notes and the related fair value hedges using Level 2 inputs at May 31, 2018 and 2017 were $59.0 billion and $56.5 billion, respectively. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
May 31, 2018 | |
Property Plant And Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net consisted of the following: Estimated May 31, (Dollars in millions) Useful Life 2018 2017 Computer, network, machinery and equipment 1-5 years $ 6,156 $ 5,112 Buildings and improvements 1-40 years 3,893 3,466 Furniture, fixtures and other 5-15 years 662 651 Land — 868 830 Construction in progress — 229 235 Total property, plant and equipment 1-40 years 11,808 10,294 Accumulated depreciation (5,911 ) (4,979 ) Total property, plant and equipment, net $ 5,897 $ 5,315 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 12 Months Ended |
May 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | 6. INTANGIBLE ASSETS AND GOODWILL The changes in intangible assets for fiscal 2018 and the net book value of intangible assets as of May 31, 2018 and 2017 were as follows: Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted Average (Dollars in millions) May 31, 2017 Additions Retirements May 31, 2018 May 31, 2017 Expense Retirements May 31, 2018 May 31, 2017 May 31, 2018 Useful Life (1) Developed technology $ 5,397 $ 153 $ (241 ) $ 5,309 $ (2,295 ) $ (758 ) $ 239 $ (2,814 ) $ 3,102 $ 2,495 3 years Cloud services and license support agreements and related relationships 5,670 423 (94 ) 5,999 (1,648 ) (731 ) 94 (2,285 ) 4,022 3,714 5 years Other 1,998 37 (413 ) 1,622 (1,443 ) (131 ) 413 (1,161 ) 555 461 5 years Total intangible assets, net $ 13,065 $ 613 $ (748 ) $ 12,930 $ (5,386 ) $ (1,620 ) $ 746 $ (6,260 ) $ 7,679 $ 6,670 4 years (1) Represents weighted-average useful lives of intangible assets acquired during fiscal 2018. Total amortization expense related to our intangible assets was $1.6 billion, $1.5 billion and $1.6 billion in fiscal 2018, 2017 and 2016, respectively. As of May 31, 2018, estimated future amortization expenses related to intangible assets were as follows (in millions): Fiscal 2019 $ 1,605 Fiscal 2020 1,400 Fiscal 2021 1,174 Fiscal 2022 966 Fiscal 2023 613 Thereafter 912 Total intangible assets, net $ 6,670 The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for fiscal 2018 and 2017 were as follows: (in millions) Cloud and License Hardware Services Total Goodwill, net Balances as of May 31, 2016 $ 30,336 $ 2,367 $ 1,887 $ 34,590 Goodwill from acquisitions 8,543 — — 8,543 Goodwill adjustments, net (1) (88 ) — — (88 ) Balances as of May 31, 2017 38,791 2,367 1,887 43,045 Goodwill from acquisitions 1,052 — — 1,052 Goodwill adjustments, net (1) (243 ) — (99 ) (342 ) Balances as of May 31, 2018 $ 39,600 $ 2,367 $ 1,788 $ 43,755 (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). |
NOTES PAYABLE AND OTHER BORROWI
NOTES PAYABLE AND OTHER BORROWINGS | 12 Months Ended |
May 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND OTHER BORROWINGS | 7. NOTES PAYABLE AND OTHER BORROWINGS Notes payable and other borrowings consisted of the following: May 31, 2018 May 31, 2017 (Dollars in millions) Date of Issuance Amount Effective Interest Rate Amount Effective Interest Rate Fixed-rate senior notes: $2,500, 1.20%, due October 2017 October 2012 $ — N.A. $ 2,500 1.24% $2,500, 5.75%, due April 2018 April 2008 — N.A. 2,500 5.76% $1,500, 2.375%, due January 2019 (1) July 2013 1,500 2.44% 1,500 2.44% $1,750, 5.00%, due July 2019 July 2009 1,750 5.05% 1,750 5.05% $2,000, 2.25%, due October 2019 (1) July 2014 2,000 2.27% 2,000 2.27% $1,000, 3.875%, due July 2020 July 2010 1,000 3.93% 1,000 3.93% €1,250, 2.25%, due January 2021 (2)(3) July 2013 1,446 2.33% 1,395 2.33% $1,500, 2.80%, due July 2021 (1) July 2014 1,500 2.82% 1,500 2.82% $4,250, 1.90%, due September 2021 (5) July 2016 4,250 1.94% 4,250 1.94% $2,500, 2.50%, due May 2022 May 2015 2,500 2.56% 2,500 2.56% $2,500, 2.50%, due October 2022 October 2012 2,500 2.51% 2,500 2.51% $1,250, 2.625%, due February 2023 (6) November 2017 1,250 2.64% — N.A. $1,000, 3.625%, due July 2023 July 2013 1,000 3.73% 1,000 3.73% $2,500, 2.40%, due September 2023 (5) July 2016 2,500 2.40% 2,500 2.40% $2,000, 3.40%, due July 2024 July 2014 2,000 3.43% 2,000 3.43% $2,000, 2.95%, due November 2024 (6) November 2017 2,000 2.98% — N.A. $2,500, 2.95%, due May 2025 May 2015 2,500 3.00% 2,500 3.00% €750, 3.125%, due July 2025 (2)(4) July 2013 868 3.17% 837 3.17% $3,000, 2.65%, due July 2026 (5) July 2016 3,000 2.69% 3,000 2.69% $2,750, 3.25%, due November 2027 (6) November 2017 2,750 3.26% — N.A. $500, 3.25%, due May 2030 May 2015 500 3.30% 500 3.30% $1,750, 4.30%, due July 2034 July 2014 1,750 4.30% 1,750 4.30% $1,250, 3.90%, due May 2035 May 2015 1,250 3.95% 1,250 3.95% $1,250, 3.85%, due July 2036 (5) July 2016 1,250 3.85% 1,250 3.85% $1,750, 3.80%, due November 2037 (6) November 2017 1,750 3.83% — N.A. $1,250, 6.50%, due April 2038 (1) April 2008 1,250 6.52% 1,250 6.52% $1,250, 6.125%, due July 2039 July 2009 1,250 6.19% 1,250 6.19% $2,250, 5.375%, due July 2040 July 2010 2,250 5.45% 2,250 5.45% $1,000, 4.50%, due July 2044 July 2014 1,000 4.50% 1,000 4.50% $2,000, 4.125%, due May 2045 May 2015 2,000 4.15% 2,000 4.15% $3,000, 4.00%, due July 2046 (5) July 2016 3,000 4.00% 3,000 4.00% $2,250, 4.00%, due November 2047 (6) November 2017 2,250 4.03% — N.A. $1,250, 4.375%, due May 2055 May 2015 1,250 4.40% 1,250 4.40% Floating-rate senior notes: $1,000, three-month LIBOR plus 0.20%, due July 2017 July 2014 — N.A. 1,000 1.35% $500, three-month LIBOR plus 0.58%, due January 2019 July 2013 500 2.93% 500 1.74% $750, three-month LIBOR plus 0.51%, due October 2019 July 2014 750 2.84% 750 1.67% Revolving credit agreements and other borrowings: $3,800, LIBOR plus 0.50%, due June 2017 May 2017 — N.A. 3,800 1.54% $2,500, LIBOR plus 0.50%, due June 2018 May 2018 2,500 2.48% — N.A. Other borrowings due August 2025 November 2016 113 3.53% 113 3.53% Total senior notes and other borrowings $ 60,927 $ 58,145 Unamortized discount/issuance costs (282 ) (276 ) Hedge accounting fair value adjustments (1) (26 ) 40 Total notes payable and other borrowings $ 60,619 $ 57,909 Notes payable and other borrowings, current $ 4,491 $ 9,797 Notes payable and other borrowings, non-current $ 56,128 $ 48,112 (1) We have entered into certain interest rate swap agreements that have the economic effects of modifying the fixed-interest obligations associated with the 2.375% senior notes due January 2019 (January 2019 Notes), the 2.25% senior notes due October 2019 (October 2019 Notes), the 2.80% senior notes due July 2021 (July 2021 Notes), and the 6.50% senior notes due April 2038 (April 2038 Notes) so that the interest payable on these notes effectively became variable based on LIBOR. The effective interest rates after consideration of these fixed to variable interest rate swap agreements were 3.00% and 1.81%, respectively, for the January 2019 Notes, 2.81% and 1.64%, respectively, for the October 2019 Notes, and 2.96% and 1.79%, respectively, for the July 2021 Notes as of May 31, 2018 and 2017, respectively. The effective interest rate as of May 31, 2018 after consideration of the fixed to variable interest rate swap agreements was 5.65% for the April 2038 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. (2) In July 2013, we issued €2.0 billion of fixed-rate senior notes comprised of €1.25 billion of 2.25% senior notes due January 2021 (January 2021 Notes) and €750 million of 3.125% senior notes due July 2025 (July 2025 Notes, and together with the January 2021 Notes, the Euro Notes). Principal and unamortized discount/issuance costs for the Euro Notes in the table above were calculated using foreign currency exchange rates as of May 31, 2018 and May 31, 2017, respectively. The Euro Notes are registered and trade on the New York Stock Exchange. (3) In connection with the issuance of the January 2021 Notes, we entered into certain cross-currency swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a fixed-rate, U.S. Dollar-denominated debt of $1.6 billion with a fixed annual interest rate of 3.53% (see Note 10 for additional information). (4) We designated the 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 in connection with the issuance of the July 2025 Notes. In our fourth quarter of fiscal 2018 we de-designated the 2025 Notes as a net investment hedge and entered into certain cross-currency interest rate swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a variable-rate, U.S. Dollar-denominated debt of $0.9 billion based on LIBOR. The effective interest rate as of May 31, 2018 after consideration of the cross-currency interest rate swap agreements was 5.17% for the July 2025 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. (5) In July 2016, we issued $14.0 billion of 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. (6) In November 2017, we issued $10.0 billion of 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. Future principal payments (adjusted for the effects of the cross-currency swap agreements associated with the January 2021 Notes and July 2025 Notes) for all of our borrowings at May 31, 2018 were as follows (in millions): Fiscal 2019 $ 4,500 Fiscal 2020 4,500 Fiscal 2021 2,446 Fiscal 2022 8,250 Fiscal 2023 3,750 Thereafter 37,481 Total $ 60,927 Senior Notes Interest is payable semi-annually for the senior notes listed in the above table except for the Euro Notes for which interest is payable annually and the floating-rate senior notes for which interest is payable quarterly. 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 except for the floating-rate senior notes which may not be redeemed prior to their maturity. The senior notes rank pari passu with any other notes we may issue in the future pursuant to our commercial paper program (see additional discussion regarding our commercial paper program below) and all existing and future unsecured senior indebtedness of Oracle Corporation. All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at May 31, 2018. Revolving Credit Agreements In May 2018, we entered into three revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2018 Credit Agreements) and borrowed $2.5 billion pursuant to these agreements. The 2018 Credit Agreements provided us with short-term borrowings for working capital and other general corporate purposes. Interest for the 2018 Credit Agreements is based on either (1) a LIBOR-based formula or (2) the Base Rate formula, as set forth in the 2018 Credit Agreements. The borrowings are due and payable on June 28, 2018, which is the termination date of the 2018 Credit Agreements. In May 2017, we borrowed $3.8 billion pursuant to four revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2017 Credit Agreements). In June 2017, we repaid the $3.8 billion and the 2017 Credit Agreements expired pursuant to their terms. 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. In April 2013, we entered into a $3.0 billion Revolving Credit Agreement with Wells Fargo Bank, N.A., Bank of America, N.A., BNP Paribas, JPMorgan Chase Bank, N.A. and certain other lenders (the 2013 Credit Agreement). The 2013 Credit Agreement provided for an unsecured 5-year revolving credit facility to be used for general corporate purposes including back-stopping any commercial paper notes that we may issue Commercial Paper Program and Commercial Paper Notes In April 2013, pursuant to our existing $3.0 billion commercial paper program which allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws, we entered into new dealer agreements with various banks and a new Issuing and Paying Agency Agreement with JP Morgan Chase Bank, N.A Other Borrowings Activities In connection with our acquisition of NetSuite in the second quarter of fiscal 2017 (see Note 2 above), we assumed $310 million par value of legacy NetSuite convertible notes (NetSuite Debt), which had a fair value of $342 million as of the acquisition date. In December 2016, we repurchased and settled for cash substantially all of the NetSuite Debt. In the second quarter of fiscal 2017, we assumed $113 million of debt that bears interest at 3.53% and matures in August 2025 in connection with our acquisition of certain land and buildings. |
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES | 12 Months Ended |
May 31, 2018 | |
Restructuring And Related Activities [Abstract] | |
RESTRUCTURING ACTIVITIES | 8. 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). Restructuring costs associated with the 2017 Restructuring Plan were recorded to the restructuring expense line item within our consolidated statements of operations as they were incurred. Actions pursuant to the 2017 Restructuring Plan were substantially complete as of May 31, 2018. Fiscal 2015 Oracle Restructuring Plan During the second quarter of fiscal 2015, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our acquisition of MICROS Systems, Inc. and certain other operational activities (2015 Restructuring Plan). Restructuring costs associated with the 2015 Restructuring Plan were recorded to the restructuring expense line item within our consolidated statements of operations as they were incurred. Actions pursuant to the 2015 Restructuring Plan were substantially complete as of May 31, 2016. Summary of All Plans Fiscal 2018 Activity Accrued Year Ended May 31, 2018 Accrued (in millions) May 31, 2017 (2) Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2018 (2) Fiscal 2017 Oracle Restructuring Plan (1) Cloud and license $ 85 $ 156 $ (12 ) $ (150 ) $ 3 $ 82 Hardware 31 167 (15 ) (122 ) — 61 Services 25 48 (4 ) (54 ) 1 16 Other (6) 44 267 (6 ) (208 ) (7 ) 90 Total Fiscal 2017 Oracle Restructuring Plan $ 185 $ 638 $ (37 ) $ (534 ) $ (3 ) $ 249 Total other restructuring plans (7) $ 79 $ 1 $ (14 ) $ (37 ) $ 4 $ 33 Total restructuring plans $ 264 $ 639 $ (51 ) $ (571 ) $ 1 $ 282 Fiscal 2017 Activity Accrued Year Ended May 31, 2017 Accrued (in millions) May 31, 2016 Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2017 (2) Fiscal 2017 Oracle Restructuring Plan (1) Cloud and license $ — $ 184 $ (6 ) $ (100 ) $ 7 $ 85 Hardware — 91 (3 ) (57 ) — 31 Services — 59 (1 ) (34 ) 1 25 Other (6) — 166 (4 ) (118 ) — 44 Total Fiscal 2017 Oracle Restructuring Plan $ — $ 500 $ (14 ) $ (309 ) $ 8 $ 185 Total other restructuring plans (7) $ 283 $ 8 $ (31 ) $ (169 ) $ (12 ) $ 79 Total restructuring plans $ 283 $ 508 $ (45 ) $ (478 ) $ (4 ) $ 264 Fiscal 2016 Activity Accrued Year Ended May 31, 2016 Accrued (in millions) May 31, 2015 Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2016 Fiscal 2015 Oracle Restructuring Plan (1) Cloud and license $ 16 $ 263 $ (8 ) $ (129 ) $ 4 $ 146 Hardware 6 67 (8 ) (43 ) 1 23 Services 9 44 (4 ) (35 ) — 14 Other (6) 5 108 — (56 ) (2 ) 55 Total Fiscal 2015 Oracle Restructuring Plan $ 36 $ 482 $ (20 ) $ (263 ) $ 3 $ 238 Total other restructuring plans (7) $ 84 $ 2 $ (6 ) $ (27 ) $ (8 ) $ 45 Total restructuring plans $ 120 $ 484 $ (26 ) $ (290 ) $ (5 ) $ 283 (1) Restructuring costs recorded for individual line items primarily related to employee severance costs. (2) The balances at May 31, 2018 and 2017 included $257 million and $242 million, respectively, recorded in other current liabilities and $25 million and $22 million, respectively, recorded in other non-current liabilities. (3) Costs recorded for the respective restructuring plans during the periods 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) Represents employee related severance costs for functions that are not included within our operating segments and certain facilities related restructuring costs. (7) Other restructuring plans presented in the tables above included condensed information for certain Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. |
DEFERRED REVENUES
DEFERRED REVENUES | 12 Months Ended |
May 31, 2018 | |
Deferred Revenue Disclosure [Abstract] | |
DEFERRED REVENUES | 9. DEFERRED REVENUES Deferred revenues consisted of the following: May 31, (in millions) 2018 2017 Cloud services and license support $ 7,292 $ 7,144 Hardware 645 640 Services 437 382 Cloud license and on-premise license 55 67 Deferred revenues, current 8,429 8,233 Deferred revenues, non-current (in other non-current liabilities) 625 602 Total deferred revenues $ 9,054 $ 8,835 Deferred cloud services and license support revenues and deferred hardware revenues substantially represent customer payments made in advance for cloud or support contracts that are typically billed in advance with corresponding revenues generally being recognized ratably over the contractual periods. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred new cloud license and on-premise license revenues typically resulted from customer payments that relate to undelivered products or specified enhancements, customer-specific acceptance provisions, time-based license arrangements and 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 services and license support, and hardware 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 services and license support and hardware 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 | 12 Months Ended |
May 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | 10. DERIVATIVE FINANCIAL INSTRUMENTS Fair Value Hedges — In May 2018, we entered into certain cross-currency interest rate swap agreements to manage the foreign currency exchange rate risk associated with our July 2025 Notes by effectively converting the fixed-rate, Euro denominated 2025 Notes, including the annual interest payments and the payment of principal at maturity, to variable-rate, U.S. Dollar denominated debt based on LIBOR. In April 2018, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed-interest obligations associated with our April 2038 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. 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 October 2019 Notes and our 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 January 2019 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. The critical terms of the swap agreements match the critical terms of the July 2025 Notes, April 2038 Notes, October 2019 Notes, July 2021 Notes and the January 2019 Notes that the swap agreements pertain to, including the notional amounts and maturity dates. We have designated the aforementioned swap agreements as qualifying hedging instruments and are accounting for them as fair value hedges pursuant to ASC 815. These transactions are characterized as fair value hedges for financial accounting purposes because they protect us against changes in the fair values of certain of our fixed-rate borrowings due to benchmark interest rate movements. The changes in fair values of these swap agreements are recognized as interest expense in our consolidated statements of operations with the corresponding amounts included in other assets or other non-current liabilities in our consolidated balance sheets. The amount of net gain (loss) attributable to the risk being hedged is recognized as interest expense in our consolidated statements of operations with the corresponding amount included in notes payable, non-current. The periodic interest settlements for the swap agreements for the July 2025 Notes, April 2038 Notes, October 2019 Notes, July 2021 Notes and the January 2019 Notes are recorded as interest expense and are included as a part of cash flows from operating activities. We do not use any swap agreements for trading purposes. Cash Flow Hedges — In connection with the issuance of the 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 values of the Euro-denominated January 2021 Notes are remeasured and the interest expense is recognized. The ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, are 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 fiscal 2018, 2017 or 2016. 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 — In July 2013, we designated our 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, was recognized in non-operating income, net in our consolidated statements of operations. We evaluated the effectiveness of our net investment hedge at the beginning of every quarter. We did not record any ineffectiveness for fiscal 2018, 2017 or 2016. In the fourth quarter of fiscal 2018, we de-designated the July 2025 Notes as a net investment hedge, and as noted above, we entered into cross-currency interest rate swap agreements to manage the foreign currency exchange risk associated with our July 2025 Notes by effectively converting the fixed-rate, Euro denominated debt, including the annual interest payments and the payment of principal at maturity, to variable-rate, U.S. Dollar denominated debt. Foreign Currency Forward Contracts Not Designated as Hedges We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. We may suspend this program from time to time. Our foreign currency exposures typically arise from intercompany sublicense fees, intercompany loans and other intercompany transactions that are generally expected to be cash settled in the near term. Our foreign currency forward contracts are generally short-term in duration. Our ultimate realized gain or loss with respect to currency fluctuations will generally depend on the size and type of cross-currency exposures that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized and unrealized gains or losses on foreign currency forward contracts to offset these exposures and other factors. Neither do we use these foreign currency forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to ASC 815. Accordingly, we recorded the fair values of these contracts as of the end of each reporting period to our consolidated balance sheets with changes in fair values recorded to our consolidated statements of operations. The balance sheet classification for the fair values of these forward contracts is prepaid expenses and other current assets for forward contracts in an unrealized gain position and other current liabilities for forward contracts in an unrealized loss position. The statement of operations classification for changes in fair values of these forward contracts is non-operating income, net, for both realized and unrealized gains and losses. The notional amounts of the forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies was $3.4 billion as of each of May 31, 2018 and 2017 and the notional amounts of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies was $1.4 billion as of each of May 31, 2018 and 2017. The fair values of our outstanding foreign currency forward contracts were nominal at May 31, 2018 and 2017. The cash flows related to these foreign currency contracts are classified as operating activities. Net gains or losses related to these forward contracts are included in non-operating income, net. 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 Consolidated Balance Sheets Fair Value as of May 31, (in millions) Balance Sheet Location 2018 2017 Interest rate swap agreements designated as fair value hedges Other current liabilities $ (7 ) $ — Interest rate swap agreements designated as fair value hedges Other non-current assets $ 29 $ 40 Interest rate swap agreements designated as fair value hedges Other non-current liabilities $ (48 ) $ — Cross-currency swap agreements designated as cash flow hedges Other non-current liabilities $ (103 ) $ (191 ) Foreign currency borrowings designated as net investment hedge Notes payable, non-current $ — $ (980 ) 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 (Effective Portion) Year Ended May 31, (in millions) 2018 2017 2016 Cross-currency swap agreements designated as cash flow hedges $ 88 $ 27 $ 26 Foreign currency borrowings designated as net investment hedge $ (30 ) $ (1 ) $ (25 ) Amount of Gain (Loss) Reclassified from Accumulated OCI or OCL into Income (Effective Portion) Year Ended May 31, (in millions) Location 2018 2017 2016 Cross-currency swap agreements designated as cash flow hedges Non-operating income (expense), net $ 51 $ 2 $ 41 Amount of Gain (Loss) Recognized in Income on Derivative Year Ended May 31, (in millions) Location 2018 2017 2016 Interest rate swap agreements designated as fair value hedges Interest expense $ (66 ) $ (82 ) $ 48 Amount of Gain (Loss) on Hedged Item Recognized in Income Attributable to Risk Being Hedged Year Ended May 31, (in millions) Location 2018 2017 2016 Interest rate swap agreements designated as fair value hedges Interest expense $ 66 $ 82 $ (48 ) |
COMMITMENTS AND CERTAIN CONTING
COMMITMENTS AND CERTAIN CONTINGENCIES | 12 Months Ended |
May 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CERTAIN CONTINGENCIES | 11. COMMITMENTS AND CERTAIN CONTINGENCIES Lease Commitments We lease certain facilities, furniture and equipment under operating leases. As of May 31, 2018, future minimum annual operating lease payments and future minimum payments to be received from non-cancelable subleases were as follows: (in millions) Fiscal 2019 $ 377 Fiscal 2020 314 Fiscal 2021 248 Fiscal 2022 184 Fiscal 2023 144 Thereafter 372 Future minimum operating lease payments 1,639 Less: minimum payments to be received from non-cancelable subleases (29 ) Total future minimum operating lease payments, net $ 1,610 Lease commitments included future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities, as discussed in Note 8. We have approximately $61 million in facility obligations, net of estimated sublease income and other costs, in accrued restructuring for these locations in our consolidated balance sheet at May 31, 2018. Rent expense was $292 million, $273 million and $283 million for fiscal 2018, 2017 and 2016, respectively, net of sublease income of approximately $104 million, $87 million and $45 million for fiscal 2018, 2017 and 2016, respectively. Certain lease agreements contain renewal options providing for extensions of the lease terms. Unconditional Obligations In the ordinary course of business, we enter into certain unconditional purchase obligations with our suppliers, which are agreements that are enforceable and legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the payment. We utilize several external manufacturers to manufacture sub-assemblies for our hardware products and to perform final assembly and testing of finished hardware products. We also obtain individual components for our hardware products from a variety of individual suppliers based on projected demand information. Such purchase commitments are based on our forecasted component and manufacturing requirements and typically provide for fulfillment within agreed upon lead-times and/or commercially standard lead-times for the particular part or product and have been included in the amounts below. Routine arrangements for other materials and goods that are not related to our external manufacturers and certain other suppliers and that are entered into in the ordinary course of business are not included in the amounts below, as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to quantify in a meaningful way. As of May 31, 2018, our unconditional purchase and certain other obligations were as follows (in millions): Fiscal 2019 $ 757 Fiscal 2020 291 Fiscal 2021 189 Fiscal 2022 114 Fiscal 2023 24 Total $ 1,375 As described in Notes 7 and 10 above, as of May 31, 2018 we have senior notes and other borrowings of $60.9 billion that mature at various future dates and derivative financial instruments outstanding that we leverage to manage certain risks and exposures. Guarantees Our cloud, license and hardware sales agreements generally include certain provisions for indemnifying customers against liabilities if our products infringe a third party’s intellectual property rights. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any material liabilities related to such obligations in our consolidated financial statements. Certain of our sales agreements also include provisions indemnifying customers against liabilities in the event we breach confidentiality or service level requirements. It is not possible to determine the maximum potential amount under these indemnification agreements due to our limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Our Oracle Cloud Services agreements generally include a warranty that the cloud services will be performed in all material respects as defined in the agreement during the service period. We occasionally are required, for various reasons, to enter into financial guarantees with third parties in the ordinary course of our business including, among others, guarantees related to taxes, import licenses and letters of credit on behalf of parties with whom we conduct business. Such agreements have not had a material effect on our results of operations, financial position or cash flows. In connection with certain litigation, we posted certain court-mandated surety bonds with a court and entered into related indemnification agreements with each of the surety bond issuing companies. Additional information is provided in Note 17 below. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
May 31, 2018 | |
Stockholders Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | 12. STOCKHOLDERS’ EQUITY Common Stock Repurchases Our Board of Directors has approved a program for us to repurchase shares of our common stock. During fiscal 2018, our Board of Directors approved expansions of our stock repurchase program totaling $24.0 billion. As of May 31, 2018, 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 and pursuant to a Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time. Dividends on Common Stock During fiscal 2018, 2017 and 2016, our Board of Directors declared cash dividends of $0.76, $0.64 and $0.60 per share of our outstanding common stock, respectively, which we paid during the same period. In June 2018, our Board of Directors declared a quarterly cash dividend of $0.19 per share of our outstanding common stock. The dividend is payable on July 31, 2018 to stockholders of record as of the close of business on July 17, 2018. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. Accumulated Other Comprehensive Loss The following table summarizes, as of each balance sheet date, the components of our accumulated other comprehensive loss, net of income taxes: May 31, (in millions) 2018 2017 Foreign currency translation losses and other, net $ (974 ) $ (679 ) Unrealized losses on defined benefit plans, net (322 ) (356 ) Unrealized (losses) gains on marketable securities, net (422 ) 187 Unrealized gains on cash flow hedges, net 82 45 Total accumulated other comprehensive loss $ (1,636 ) $ (803 ) |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
May 31, 2018 | |
Compensation Related Costs [Abstract] | |
EMPLOYEE BENEFIT PLANS | 13. EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans Stock Plans In fiscal 2001, we adopted the 2000 Long-Term Equity Incentive Plan, which provides for the issuance of long-term performance awards, including restricted stock-based awards, non-qualified stock options and incentive stock options, as well as stock purchase rights and stock appreciation rights, to our eligible employees, officers and directors who are also employees or consultants, independent consultants and advisers. • In fiscal 2011, our stockholders, upon the recommendation of our Board of Directors (the Board), approved the adoption of the Amended and Restated 2000 Long-Term Equity Incentive Plan (the 2000 Plan), which extended the termination date of the 2000 Plan by 10 years and increased the number of authorized shares of stock that may be issued by 388,313,015 shares. • In fiscal 2014, our stockholders, upon the recommendation of the Board, approved a further increase in the number of authorized shares of stock that may be issued under the 2000 Plan by 305,000,000 shares. Under the terms of the 2000 Plan, long-term full value awards are granted in the form of restricted stock units (RSUs) and performance stock units (PSUs). For each share granted as a full value award under the 2000 Plan, an equivalent of 2.5 shares is deducted from our pool of shares available for grant. • In fiscal 2018, our stockholders, upon the recommendation of the Board, approved a further increase in the number of authorized shares of stock that may be issued under the 2000 Plan by 330,000,000 shares, and approved material terms of the performance goals under which PSUs and performance-based stock options (PSOs) could be granted. As of May 31, 2018, the 2000 Plan had 83 million unvested RSUs outstanding, 3 million unvested PSUs outstanding, 69 million PSOs outstanding and service-based stock options (SOs) to purchase 231 million shares of common stock outstanding of which 197 million shares were vested. As of May 31, 2018, approximately 376 million shares of common stock were available for future awards under the 2000 Plan. To date, we have not issued any stock purchase rights or stock appreciation rights under the 2000 Plan. The vesting schedule for all awards grated under the 2000 Plan are established by the Compensation Committee of the Board of Directors. RSUs generally require vesting 25% annually over four years. The vesting schedule for PSUs currently requires achieving performance targets and providing service over four fiscal years. SOs are granted at not less than fair market value, become exercisable generally 25% annually over four years under our current practice, and generally expire 10 years from the date of grant. PSOs granted to four of our executive officers in fiscal 2018 consist of seven numerically equivalent vesting tranches that potentially may vest. One tranche vests solely on attainment of a market-based metric. The remaining six tranches require the attainment of both a performance metric and a market capitalization metric. In each case, the market-based metric, performance metrics and market capitalization metrics may be achieved at any time during a five year performance period, assuming continued employment and service through the date the Compensation Committee of the Board of Directors certifies that performance has been achieved. The PSOs have contractual lives of eight years in comparison to the typical ten year contractual lives for SOs. For the six tranches of the PSOs with both performance and market conditions, stock-based compensation expense is to be recognized once each vesting tranche becomes probable of achievement over the longer of the estimated implicit service period or derived service. We have preliminarily estimated service periods for those tranches that have been deemed probable of achievement to be approximately three to five years. Stock-based compensation for the market-based tranche will be recognized using the derived service period for the market-based metric achievement, which we have initially estimated to be approximately three years. In fiscal 1993, the Board adopted the 1993 Directors’ Stock Plan (the Directors’ Plan), which provides for the issuance of RSUs and other stock-based awards, including non-qualified stock options, to non-employee directors. The Directors’ Plan has from time to time been amended and restated. Under the terms of the Directors’ Plan, 10 million shares of common stock are reserved for issuance In connection with certain of our acquisitions, we assumed certain outstanding restricted stock-based awards and stock options under each acquired company’s respective stock plans, or we substituted substantially similar awards under the 2000 Plan. These restricted stock-based awards and stock options assumed or substituted generally retain all of the rights, terms and conditions of the respective plans under which they were originally granted. As of May 31, 2018, approximately 3 million shares of restricted stock-based awards and stock options to purchase 3 million shares of common stock were outstanding under these plans. The following table summarizes restricted stock-based award activity, including service based awards and performance-based awards, granted pursuant to Oracle-based stock plans and stock plans assumed from our acquisitions for our last three fiscal years ended May 31, 2018: Restricted Stock-Based Awards Outstanding (in millions, except fair value) Number of Shares Weighted-Average Grant Date Fair Value Balance, May 31, 2015 28 $ 40.63 Granted 34 $ 38.50 Vested and Issued (7 ) $ 40.39 Canceled (3 ) $ 39.73 Balance, May 31, 2016 52 $ 39.29 Granted 42 $ 39.40 Assumed 14 $ 37.83 Vested and Issued (18 ) $ 40.39 Canceled (7 ) $ 39.73 Balance, May 31, 2017 83 $ 39.18 Granted 44 $ 47.42 Vested and Issued (27 ) $ 39.10 Canceled (11 ) $ 41.97 Balance, May 31, 2018 89 $ 42.93 The total grant date fair value of restricted stock-based awards that were vested and issued in fiscal 2018, 2017 and 2016 was $1.0 billion, $715 million and $261 million, respectively. As of May 31, 2018, total unrecognized stock-based compensation expense related to non-vested restricted stock-based awards was $2.5 billion and is expected to be recognized over the remaining weighted-average vesting period of 2.70 years. In each of fiscal 2017 and 2016, 2 million PSUs were granted which vest upon the attainment of certain performance metrics and service-based vesting. Based upon actual attainment relative to the “target” performance metric, certain participants have the ability to be issued up to 150% of the target number of PSUs originally granted, or to be issued no PSUs at all. In fiscal 2018, 2.4 million PSUs vested and 1.6 million PSUs remained outstanding as of May 31, 2018. The following table summarizes stock option activity, including SOs and PSOs, and includes awards granted pursuant to the 2000 Plan and stock plans assumed from our acquisitions for our last three fiscal years ended May 31, 2018: Options Outstanding (in millions, except exercise price) Shares Under Stock Option Weighted-Average Exercise Price Balance, May 31, 2015 413 $ 28.64 Granted (1) 25 $ 40.34 Assumed 1 $ 4.97 Exercised (53 ) $ 25.13 Canceled (11 ) $ 35.19 Balance, May 31, 2016 375 $ 29.66 Granted (1) 18 $ 40.90 Assumed 2 $ 13.06 Exercised (77 ) $ 26.65 Canceled (6 ) $ 36.28 Balance, May 31, 2017 312 $ 29.02 Granted (2) 77 $ 50.95 Exercised (78 ) $ 28.78 Canceled (7 ) $ 45.70 Balance, May 31, 2018 304 $ 36.11 (1) 7 million SOs were granted in total during each of fiscal 2017 and 2016 to our Chief Executive Officers and Chief Technology Officer and have contractual lives of five years versus the ten-year contractual lives for most of the other SOs granted. (2) Stock options outstanding that have vested and that are expected to vest as of May 31, 2018 were as follows: Outstanding Stock Options (in millions) Weighted- Average Exercise Price Weighted- Average Remaining Contract Term (in years) Aggregate Intrinsic Value (1) (in millions) Vested 201 $ 30.06 3.89 $ 3,344 Expected to vest (2) 60 $ 45.91 6.90 202 Total 261 $ 33.74 4.59 $ 3,546 (1) The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2018 of $46.72 and the exercise prices for all “in-the-money” options outstanding, excluding tax effects. (2) The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2018 was approximately $375 million and is expected to be recognized over a weighted-average period of 3.33 years. Approximately 43 million shares outstanding as of May 31, 2018 were not expected to vest. Stock-Based Compensation Expense and Valuations of Stock Awards We estimated the fair values of our restricted stock-based awards that are solely subject to service-based vesting requirements based upon their market values as of the grant dates, discounted for the present values of expected dividends. The fair values of our PSUs were also measured based upon their market values as of their respective grant dates, discounted for the present values of expected dividends. The vesting conditions and related terms of our PSUs were communicated to each participating employee as of their respective grant dates and included attainment metrics that were defined, fixed and based upon consistent U.S. GAAP metrics or internal metrics that are defined, fixed and consistently determined, and that require the employee to render service. Therefore, these awards met the performance-based award classification criteria as defined within ASC 718. We estimated the fair values of our stock options that were solely subject to service-based vesting requirements using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair values of stock options. Option valuation models, including the Black-Scholes-Merton option-pricing model, require the input of assumptions, including stock price volatility. Changes in the input assumptions can affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The fair values of our stock options were estimated at the grant dates or at the acquisition dates for options assumed in a business combination. The weighted-average input assumptions used and resulting fair values of our stock options were as follows for fiscal 2018, 2017 and 2016: Year Ended May 31, 2018 2017 2016 Expected life (in years) 4.7 4.8 4.8 Risk-free interest rate 2.0% 1.0% 1.6% Volatility 22% 23% 24% Dividend yield 1.5% 1.5% 1.5% Weighted-average fair value per share $ 9.34 $ 8.18 $ 8.49 The expected life input is based on historical exercise patterns and post-vesting termination behavior, the risk-free interest rate input is based on U.S. Treasury instruments, the annualized dividend yield input is based on the per share dividend declared by the Board and the volatility input is calculated based on the implied volatility of our publicly traded options. We estimated the fair values of the PSOs issued during fiscal 2018 using a Monte Carlo simulation approach as of the grant date with the following assumptions: risk-free interest rate of 2.14%, expected term of 7 years, expected volatility of 22.44% and dividend yield of 1.49%. Stock-based compensation expense is included in the following operating expense line items in our consolidated statements of operations: Year Ended May 31, (in millions) 2018 2017 2016 Cloud services and license support $ 82 $ 54 $ 44 Hardware 10 11 12 Services 52 44 29 Sales and marketing 361 306 220 Research and development 921 770 609 General and administrative 180 130 120 Acquisition related and other 1 35 3 Total stock-based compensation 1,607 1,350 1,037 Estimated income tax benefit included in provision for income taxes (451 ) (423 ) (322 ) Total stock-based compensation, net of estimated income tax benefit $ 1,156 $ 927 $ 715 Tax Benefits from Exercises of Stock Options and Vesting of Restricted Stock-Based Awards Total cash received as a result of option exercises was approximately $2.3 billion, $2.1 billion and $1.3 billion for fiscal 2018, 2017 and 2016, respectively. The total aggregate intrinsic value of restricted stock-based awards that vested and were issued and stock options that were exercised was $3.0 billion, $2.0 billion and $1.0 billion for fiscal 2018, 2017 and 2016, respectively. In connection with the vesting and issuance of restricted stock-based awards and stock options that were exercised, the tax benefits realized by us were $860 million, $614 million and $311 million for fiscal 2018, 2017 and 2016, respectively. Employee Stock Purchase Plan We have an Employee Stock Purchase Plan (Purchase Plan) that allows employees to purchase shares of common stock at a price per share that is 95% of the fair market value of Oracle stock as of the end of the semi-annual option period. As of May 31, 2018, 48 million shares were reserved for future issuances under the Purchase Plan. We issued 3 million shares in each of fiscal 2018, 2017 and 2016, respectively, under the Purchase Plan. Defined Contribution and Other Postretirement Plans We offer various defined contribution plans for our U.S. and non-U.S. employees. Total defined contribution plan expense was $384 million, $366 million and $387 million for fiscal 2018, 2017 and 2016, respectively. The number of plan participants in our benefit plans has generally increased in recent years as we have hired additional employees and assumed eligible employees from our acquisitions. In the United States, regular employees can participate in the Oracle Corporation 401(k) Savings and Investment Plan (Oracle 401(k) Plan). Participants can generally contribute up to 40% of their eligible compensation on a per-pay-period basis as defined by the Oracle 401(k) Plan document or by the section 402(g) limit as defined by the U.S. Internal Revenue Service (IRS). We match a portion of employee contributions, currently 50% up to 6% of compensation each pay period, subject to maximum aggregate matching amounts. Our contributions to the Oracle 401(k) Plan, net of forfeitures, were $151 million, $157 million and $153 million in fiscal 2018, 2017 and 2016, respectively. We also offer non-qualified deferred compensation plans to certain employees whereby they may defer a portion of their annual base and/or variable compensation until retirement or a date specified by the employee in accordance with the plans. Deferred compensation plan assets and liabilities were each approximately $555 million as of May 31, 2018 and were each approximately $487 million as of May 31, 2017 and were presented in other assets and other non-current liabilities in the accompanying consolidated balance sheets. We sponsor certain defined benefit pension plans that are offered primarily by certain of our foreign subsidiaries. Many of these plans were assumed through our acquisitions or are required by local regulatory requirements. We may deposit funds for these plans with insurance companies, third-party trustees, or into government-managed accounts consistent with local regulatory requirements, as applicable. Our total defined benefit plan pension expenses were $102 million, $85 million and $95 million for fiscal 2018, 2017 and 2016, respectively. The aggregate projected benefit obligation and aggregate net liability (funded status) of our defined benefit plans as of May 31, 2018 was $1.1 billion and $711 million, respectively, and as of May 31, 2017 was $1.1 billion and $712 million, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
May 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 14. INCOME TAXES Our effective tax rates for each of the periods presented are the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. In the third quarter of fiscal 2018 the Tax Act was signed into law. The more significant provisions of the Tax Act as applicable to us are described in Note 1 above under “Impacts of the U.S. Tax Cuts and Jobs Act of 2017”. Our provision for income taxes for fiscal 2018 varied from the 21% U.S. statutory rate imposed by the Tax Act due primarily to the January 1, 2018 effective date of the Tax Act, the impacts of the Tax Act upon adoption, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation and the U.S. domestic production activity deduction. Prior to the January 1, 2018 effective date of the Tax Act, our provision for income taxes historically differed from the tax computed at the previous 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, the tax effects of stock-based compensation and the U.S. domestic production activity deduction. The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31, (in millions) 2018 2017 2016 Domestic $ 3,816 $ 3,533 $ 4,033 Foreign 9,075 7,984 7,409 Income before provision for income taxes $ 12,891 $ 11,517 $ 11,442 The provision for income taxes consisted of the following: Year Ended May 31, (Dollars in millions) 2018 2017 2016 Current provision: Federal $ 8,329 $ 936 $ 1,301 State 264 257 271 Foreign 1,084 1,475 1,074 Total current provision $ 9,677 $ 2,668 $ 2,646 Deferred benefit: Federal $ (614 ) $ (201 ) $ (123 ) State (13 ) (36 ) (21 ) Foreign 16 (249 ) 39 Total deferred benefit $ (611 ) $ (486 ) $ (105 ) Total provision for income taxes $ 9,066 $ 2,182 $ 2,541 Effective income tax rate 70.3% 18.9% 22.2% The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: Year Ended May 31, (in millions) 2018 2017 2016 U.S. federal statutory tax rate 29.2 % 35.0 % 35.0 % Tax provision at statutory rate $ 3,765 $ 4,031 $ 4,005 Impact of the Tax Act of 2017 One-time transition tax 7,781 — — Deferred tax effects (820 ) — — Foreign earnings at other than United States rates (1,006 ) (1,299 ) (1,284 ) State tax expense, net of federal benefit 155 150 176 Settlements and releases from judicial decisions and statute expirations, net (252 ) (189 ) (150 ) Domestic production activity deduction (87 ) (119 ) (155 ) Stock-based compensation (302 ) (149 ) 74 Other, net (168 ) (243 ) (125 ) Total provision for income taxes $ 9,066 $ 2,182 $ 2,541 We recorded a provisional adjustment to our U.S. deferred income taxes as of May 31, 2018 to reflect the reduction in the U.S statutory tax rate from 35% to 21% resulting from the Tax Act. The components of our deferred tax liabilities and assets were as follows: May 31, (in millions) 2018 2017 Deferred tax liabilities: Unrealized gain on stock $ (78 ) $ (130 ) Acquired intangible assets (1,254 ) (2,502 ) Unremitted earnings — (1,515 ) Depreciation and amortization (158 ) (180 ) Other (48 ) (23 ) Total deferred tax liabilities $ (1,538 ) $ (4,350 ) Deferred tax assets: Accruals and allowances $ 567 $ 532 Employee compensation and benefits 789 1,251 Differences in timing of revenue recognition 310 385 Tax credit and net operating loss carryforwards 2,614 4,029 Total deferred tax assets $ 4,280 $ 6,197 Valuation allowance (1,308 ) (1,164 ) Net deferred tax assets $ 1,434 $ 683 Recorded as: Non-current deferred tax assets $ 1,491 $ 1,143 Non-current deferred tax liabilities (in other non-current liabilities) (57 ) (460 ) Net deferred tax assets $ 1,434 $ 683 We provide for taxes on the undistributed earnings and the other outside basis temporary differences of foreign subsidiaries unless they are considered indefinitely reinvested outside the United States. At May 31, 2018, the amount of temporary differences related to other outside basis temporary differences of investments in foreign subsidiaries upon which United States income taxes have not been provided was approximately $7.9 billion. If the other outside basis differences were recognized in a taxable transaction, they would generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise taxable transaction. At May 31, 2018, assuming a full utilization of the foreign tax credits, the potential net deferred tax liability associated with these other outside basis temporary differences would be approximately $1.5 billion. Our net deferred tax assets were $1.4 billion and $683 million as of May 31, 2018 and 2017, 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. The valuation allowance was $1.3 billion and $1.2 billion at each of May 31, 2018 and 2017, respectively. Substantially all of the valuation allowances as of May 31, 2018 and 2017 related to tax assets established in purchase accounting. Any subsequent reduction of that portion of the valuation allowance and the recognition of the associated tax benefits associated with our acquisitions will be recorded to our provision for income taxes subsequent to our final determination of the valuation allowance or the conclusion of the measurement period (as defined above), whichever comes first. At May 31, 2018, we had federal net operating loss carryforwards of approximately $806 million, which are subject to limitation on their utilization. We classify our unrecognized tax benefits as either current or non-current income taxes payable in the accompanying consolidated balance sheets. The aggregate changes in the balance of our gross unrecognized tax benefits, including acquisitions, were as follows: Year Ended May 31, (in millions) 2018 2017 2016 Gross unrecognized tax benefits as of June 1 $ 4,919 $ 4,561 $ 4,038 Increases related to tax positions from prior fiscal years 200 128 350 Decreases related to tax positions from prior fiscal years (65 ) (218 ) (111 ) Increases related to tax positions taken during current fiscal year 833 595 461 Settlements with tax authorities (42 ) (85 ) (73 ) Lapses of statutes of limitation (273 ) (47 ) (73 ) Cumulative translation adjustments and other, net 13 (15 ) (31 ) Total gross unrecognized tax benefits as of May 31 $ 5,585 $ 4,919 $ 4,561 As of May 31, 2018, 2017 and 2016, $4.2 billion, $3.4 billion and $3.1 billion, respectively, of unrecognized tax benefits would affect our effective tax rate if recognized. We recognized interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations of $127 million, $125 million and $26 million during fiscal 2018, 2017 and 2016, respectively. Interest and penalties accrued as of May 31, 2018 and 2017 were $992 million and $885 million, respectively. Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2017. Many issues are at an advanced stage in the examination process, the most significant of which include the deductibility of certain royalty payments, transfer pricing, extraterritorial income exemptions, domestic production activity, foreign tax credits, and research and development credits taken. With all of these domestic audit issues considered in the aggregate, we believe that it was reasonably possible that, as of May 31, 2018, the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months by as much as $665 million ($611 million net of offsetting tax benefits). 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. We believe that it was reasonably possible that, as of May 31, 2018, the gross unrecognized tax benefits, could decrease (whether by payment, release, or a combination of both) by as much as $162 million ($68 million net of offsetting tax benefits) in the next 12 months, related primarily to transfer pricing. 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, Australia, Brazil, Canada, India, Indonesia, Korea, Mexico, Spain and the United Kingdom, 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 | 12 Months Ended |
May 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | 15. SEGMENT INFORMATION ASC 280, Segment Reporting We have three businesses—cloud and license, hardware and services—each of which are comprised of a single operating segment. Our cloud and license business engages in the sale, marketing and delivery of our applications, platform and infrastructure technologies through various deployment models including license support offerings; Oracle Cloud Services offerings; and cloud license and on-premise license offerings. License support revenues are typically generated through the sale of license support contracts related to cloud license and on-premise licenses purchased by our customers at their option and are generally recognized as revenues ratably over the contractual term. Our Oracle Cloud Services offerings deliver certain of our applications, platform and infrastructure technologies on a subscription basis via cloud-based deployment models that we host, manage and support and revenues generally are recognized over the subscription period. Cloud license and on-premise license revenues represent fees Our hardware business provides Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Our hardware business also includes hardware support, which provides customers with software updates for the software components that are essential to the functionality of the hardware products, such as Oracle Solaris and certain other software, and can include product repairs, maintenance services and technical support services. Our services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications, platform and infrastructure technologies. We do not track our assets for each business. Consequently, it is not practical to show assets by operating segment. The following table presents summary results for each of our three businesses for each of fiscal 2018, 2017 and 2016: Year Ended May 31, (in millions) 2018 2017 2016 Cloud and license: Revenues (1) $ 32,491 $ 30,389 $ 28,997 Cloud services and license support expenses 3,447 2,885 2,545 Sales and marketing expenses 7,219 6,886 6,570 Margin (2) $ 21,825 $ 20,618 $ 19,882 Hardware: Revenues (1) $ 3,993 $ 4,152 $ 4,669 Hardware products and support expenses 1,551 1,623 2,031 Sales and marketing expenses 635 820 867 Margin (2) $ 1,807 $ 1,709 $ 1,771 Services: Revenues $ 3,394 $ 3,358 $ 3,391 Services expenses 2,739 2,668 2,634 Margin (2) $ 655 $ 690 $ 757 Totals: Revenues (1) $ 39,878 $ 37,899 $ 37,057 Expenses 15,591 14,882 14,647 Margin (2) $ 24,287 $ 23,017 $ 22,410 (1) Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 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 consolidated statements of (2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, general and administrative and certain other allocable expenses. Additionally, the margins reported above 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. Refer to the table below for a reconciliation of our total margin for operating segments to our income before provision for income taxes as reported in our consolidated statements of operations. The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before provision for income taxes: Year Ended May 31, (in millions) 2018 2017 2016 Total revenues for operating segments $ 39,878 $ 37,899 $ 37,057 Cloud and license revenues (1) (47 ) (171 ) (9 ) Hardware revenues (1) — — (1 ) Total revenues $ 39,831 $ 37,728 $ 37,047 Total margin for operating segments $ 24,287 $ 23,017 $ 22,410 Cloud and license revenues (1) (47 ) (171 ) (9 ) Hardware revenues (1) — — (1 ) Research and development (6,091 ) (6,159 ) (5,787 ) General and administrative (1,289 ) (1,176 ) (1,155 ) Amortization of intangible assets (1,620 ) (1,451 ) (1,638 ) Acquisition related and other (52 ) (103 ) (42 ) Restructuring (588 ) (463 ) (458 ) Stock-based compensation for operating segments (505 ) (415 ) (305 ) Expense allocations and other, net (416 ) (369 ) (411 ) Interest expense (2,025 ) (1,798 ) (1,467 ) Non-operating income, net 1,237 605 305 Income before provision for income taxes $ 12,891 $ 11,517 $ 11,442 (1) Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 for an explanation of these adjustments and this table for a reconciliation of our total operating segment revenues to our total revenues as reported in our consolidated statements of operations. Geographic Information Disclosed in the table below is geographic information for each country that comprised greater than three percent of our total revenues for any of fiscal 2018, 2017 or 2016. As of and for the Year Ended May 31, 2018 2017 2016 (in millions) Revenues Long-Lived Assets (1) Revenues Long-Lived Assets (1) Revenues Long-Lived Assets (1) United States $ 19,077 $ 4,976 $ 17,770 $ 4,680 $ 17,264 $ 3,646 United Kingdom 2,172 510 1,999 402 2,349 334 Japan 1,693 388 1,618 380 1,465 375 Germany 1,375 179 1,417 116 1,438 40 Canada 1,143 78 1,102 60 1,096 44 Other countries 14,371 1,223 13,822 1,090 13,435 989 Total $ 39,831 $ 7,354 $ 37,728 $ 6,728 $ 37,047 $ 5,428 (1) Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
May 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 16. 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: Year Ended May 31, (in millions, except per share data) 2018 2017 2016 Net income $ 3,825 $ 9,335 $ 8,901 Weighted average common shares outstanding 4,121 4,115 4,221 Dilutive effect of employee stock plans 117 102 84 Dilutive weighted average common shares outstanding 4,238 4,217 4,305 Basic earnings per share $ 0.93 $ 2.27 $ 2.11 Diluted earnings per share $ 0.90 $ 2.21 $ 2.07 Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation (1) 64 74 63 (1) These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and contingently issuable shares under PSO and PSU agreements. Such shares could be dilutive in the future. See Note 13 for information regarding the exercise prices of our outstanding, unexercised stock options. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
May 31, 2018 | |
Legal Proceedings [Abstract] | |
LEGAL PROCEEDINGS | 17. 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. Judgment was entered on October 20, 2016. Oracle posted certain court-mandated surety bonds with the court in order to proceed with its motion for a new trial and entered into related indemnification agreements with each of the surety bond issuing companies. Oracle filed a motion for a new trial on November 14, 2016, which was denied. Oracle filed its notice of appeal on January 17, 2017, specifying that it was appealing the trial court’s Phase One Ruling and Phase Two Jury Verdict. On February 2, 2017, HP filed a notice of appeal of the trial court’s denial of pre-judgment interest. 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; 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. Derivative Litigation On May 3, 2017, a stockholder derivative lawsuit was filed in the Court of Chancery of the State of Delaware. The derivative suit is brought by an alleged stockholder of Oracle, purportedly on Oracle’s behalf, against Oracle, our Chairman of the Board of Directors and Chief Technology Officer in his capacities as a director, officer and an alleged controlling stockholder, one of our Chief Executive Officers (who is also a director), three other directors, and Oracle as a nominal defendant. Plaintiff alleges that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite Inc. (NetSuite) at an excessive price. Plaintiff seeks declaratory relief, an order rescinding or reforming the NetSuite transaction, unspecified monetary damages (including interest), attorneys’ fees and costs, and disgorgement of various unspecified profits, fees, compensation, and benefits. On July 18, 2017, a second stockholder derivative lawsuit was filed in the Court of Chancery of the State of Delaware, brought by another alleged stockholder of Oracle, purportedly on Oracle’s behalf. The suit is brought against all current members and one former member of our Board of Directors, and Oracle as a nominal defendant. Plaintiff alleges that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite at an excessive price. Plaintiff seeks declaratory relief, unspecified monetary damages (including interest), and attorneys’ fees and costs. On August 9, 2017, the court consolidated the two derivative cases. In a September 7, 2017 order, the court appointed plaintiff’s counsel in the second case as lead plaintiffs’ counsel and designated the July 18, 2017 complaint as the operative complaint. The defendants filed a motion to dismiss on October 27, 2017, and after briefing and argument, the court denied this motion on March 19, 2018. The parties stipulated that all of the individual defendants, except for our Chief Technology Officer and one of our Chief Executive Officers, should be dismissed from this case without prejudice, and on March 28, 2018, the court approved this stipulation. On May 4, 2018, the remaining defendants answered plaintiff’s complaint. On May 4, 2018, the Board of Directors established a Special Litigation Committee (the SLC) to investigate the allegations in this derivative action. Three outside directors serve on the SLC. While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations. Other Litigation We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any. |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
May 31, 2018 | |
Valuation And Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | SCHEDULE II ORACLE CORPORATION VALUATION AND QUALIFYING ACCOUNTS (in millions) Beginning Balance Additions Charged to Operations or Other Accounts Write-offs Translation Adjustments and Other Ending Balance Allowances for Doubtful Trade Receivables Year Ended: May 31, 2016 $ 285 $ 130 $ (90 ) $ 2 $ 327 May 31, 2017 $ 327 $ 129 $ (138 ) $ 1 $ 319 May 31, 2018 $ 319 $ 146 $ (98 ) $ 3 $ 370 |
ORGANIZATION AND SIGNIFICANT 27
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Nature of Operations | Oracle Corporation provides products and services that address all aspects of corporate information technology (IT) environments—applications, platform and infrastructure. Our applications, platform and infrastructure offerings are delivered to customers worldwide through a variety of flexible and interoperable IT deployment models, including cloud-based, on-premise, or hybrid, which enable customer choice and flexibility. Our Oracle Cloud offerings provide a comprehensive and fully integrated stack of applications, platform, compute, storage and networking services in all three primary layers of the cloud: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Our Oracle Cloud SaaS, PaaS and IaaS offerings (collectively, “Oracle Cloud Services”) integrate the software, hardware and services on customers’ behalf in IT environments that we deploy, support and manage for the customer. We offer our customers the option to deploy our comprehensive set of cloud offerings including Oracle Cloud Services or to purchase our software and hardware products and related services to manage their own cloud-based or on-premise IT environments. Customers that purchase our software products may elect to purchase license support contracts, which provide our customers with rights to unspecified license upgrades and maintenance releases issued during the support period as well as technical support assistance. Customers that purchase our hardware products may elect to purchase hardware support contracts, which provide customers with software updates and can include product repairs, maintenance services, and technical support services. Oracle Corporation conducts business globally and was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977. |
Basis of Financial Statements | Basis of Financial Statements The consolidated financial statements included our accounts and the accounts of our wholly- and majority-owned subsidiaries. Noncontrolling interest positions of certain of our consolidated entities are reported as a separate component of consolidated equity from the equity attributable to Oracle’s stockholders for all periods presented. The noncontrolling interests in our net income were not significant to our consolidated results for the periods presented and therefore have been included as a component of non-operating income, net in our consolidated statements of operations. Intercompany transactions and balances have been eliminated. Certain other 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. In fiscal 2018, we adopted Accounting Standards Update (ASU) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment |
Impacts of the U.S. Tax Cuts and Jobs Act of 2017 | Impacts of the U.S. Tax Cuts and Jobs Act of 2017 The comparability of our operating results in fiscal 2018 compared to the corresponding prior year periods, and of our consolidated balance sheets as of May 31, 2018 relative to May 31, 2017, was impacted by the U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act), which was signed into law on December 22, 2017. Effective January 1, 2018, the Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%; creates a quasi-territorial tax system that a) generally allows, among other provisions, companies to repatriate certain foreign source earnings without incurring additional U.S. income tax for such earnings generated after December 31, 2017 and b) generally requires companies to pay a one-time transition tax on certain foreign subsidiary earnings generated prior to December 31, 2017 that, in substantial part, were previously tax deferred; creates new taxes on certain foreign sourced earnings; limits deductibility of certain future compensation arrangements to certain highly compensated employees; and provides tax incentives for the exportation of U.S. products to foreign jurisdictions and for the purchase of qualifying capital equipment, among other provisions. Because we have a May 31 fiscal year end, our fiscal 2018 blended U.S. federal statutory tax rate was approximately 29%. During fiscal 2018, our provision for income taxes increased and our net income decreased, primarily as a result of the following items related to the enactment of the Tax Act: • $7.8 billion of income tax expense, which we refined by a $166 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with U.S. Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 118 (SAB 118), related to the application of the one-time transition tax to certain foreign subsidiary earnings that were generated prior to December 31, 2017 and for which such expense was substantially recorded to non-current income taxes payable in our consolidated balance sheet and corresponds to the amount we currently expect to periodically settle over an eight year period as provided by the Tax Act; partially offset by: • $820 million of income tax benefit, which we refined by a $76 million increase as of May 31, 2018 from our initial estimate made in our third quarter of fiscal 2018 in accordance with SAB 118, related to the remeasurement of our net deferred tax liabilities based on the rates at which they are expected to reverse in the future; and • the net favorable impacts of the Tax Act on our tax profile and effective tax rate beginning on January 1, 2018, which we generally expect will continue into future periods. The net expense related to the enactment of the Tax Act has been accounted for during fiscal 2018 based on provisional estimates pursuant to SAB 118. Subsequent adjustments, if any, will be accounted for in the period such adjustments are identified. The provisional estimates incorporate, among other factors, assumptions made based on interpretations of the Tax Act and existing tax laws and a range of historical financial and tax-specific facts and information, including among other items, the amount of cash and other specified assets and liabilities of the company and its foreign subsidiaries on relevant dates and estimates of deferred tax balances pending finalization of those balances. |
Use of Estimates | Use of Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC), and we consider the various staff accounting bulletins and other applicable guidance issued by the SEC. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our consolidated financial statements will be affected. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. |
Revenue Recognition | Revenue Recognition Our sources of revenues include: • cloud and license revenues, which include the sale of: cloud services and license support; and cloud license and on-premise licenses, which represent licenses purchased by customers for use in both cloud and on-premise deployments; • hardware revenues, which include the sale of hardware products including Oracle Engineered Systems, servers, and storage products, and industry-specific hardware; and hardware support revenues; and • services revenues, which are earned from providing cloud-, license- and hardware-related services including consulting, advanced customer support and education services. Revenue Recognition for Cloud Services Offerings, Hardware Products, Hardware Support and Related Services (Non-software Elements) Our revenue recognition policy for non-software deliverables including our cloud services offerings, hardware products, hardware support and related services is based upon the accounting guidance contained in ASC 605-25, Revenue Recognition, Multiple-Element Arrangements Revenues from the sales of our non-software elements are recognized when: (1) persuasive evidence of an arrangement exists; (2) we deliver the products or services; (3) the sale price is fixed or determinable; and (4) collection is reasonably assured. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met. Revenues for our cloud services offerings sold on a subscription basis are generally recognized ratably over the contract term commencing with the date the service is made available to customers. Revenues for cloud services offerings sold on a usage basis are generally recognized as the customer consumes the service, provided all other revenue recognition criteria have been satisfied. Revenues from the sale of hardware products are generally recognized upon delivery of the hardware product to the customer provided all other revenue recognition criteria are satisfied. Hardware support contracts are entered into at the customer’s option and are recognized ratably over the contractual term of the arrangements, which is typically one year, provided all other revenue recognition criteria have been satisfied. Revenue Recognition for Multiple-Element Arrangements—Cloud Services Offerings, Hardware Products, Hardware Support and Related Services (Non-software Arrangements) We enter into arrangements with customers that purchase non-software related products and services from us at the same time, or within close proximity of one another (referred to as non-software multiple-element arrangements). Each element within a non-software multiple-element arrangement is accounted for as a separate unit of accounting provided the following criteria are met: the delivered products or services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by us. We consider a deliverable to have standalone value if the product or service is sold separately by us or another vendor or could be resold by the customer. Further, our revenue arrangements generally do not include a general right of return relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. For those units of accounting that include more than one deliverable but are treated as a single unit of accounting, we generally recognize revenues over the contractual period of the arrangement, or in the case of our cloud services offerings, we generally recognize revenues over the contractual term of the cloud services subscription. For the purposes of revenue classification of the elements that are accounted for as a single unit of accounting, we allocate revenue to the respective revenue line items within our consolidated statements of operations based on a rational and consistent methodology utilizing our best estimate of relative selling prices of such elements. For our non-software multiple-element arrangements, we allocate revenue to each element based on a selling price hierarchy at the arrangement’s inception. The selling price for each element is based upon the following selling price hierarchy: vendor-specific objective evidence (VSOE) if available, third-party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE are available (a description as to how we determine VSOE, TPE and ESP is provided below). If a tangible hardware product includes software, we determine whether the tangible hardware product and the software work together to deliver the product’s essential functionality and, if so, the entire product is treated as a non-software deliverable. The total arrangement consideration is allocated to each separate unit of accounting for each of the non-software deliverables using the relative selling prices of each unit based on the selling price hierarchy. We limit the amount of revenue recognized for delivered elements to an amount that is not contingent upon future delivery of additional products or services or meeting of any specified performance conditions. When possible, we establish VSOE of selling price for deliverables in software and non-software multiple-element arrangements using the price charged for a deliverable when sold separately. TPE is established by evaluating similar and interchangeable competitor products or services in standalone arrangements with similarly situated customers. If we are unable to determine the selling price because VSOE or TPE does not exist, we determine ESP for the purposes of allocating the arrangement by reviewing historical transactions, including transactions whereby the deliverable was sold on a standalone basis and considering several other external and internal factors. Revenue Recognition for Cloud License and On-Premise License and License Related Services (Software Elements) The basis for our cloud license and on-premise license revenues and related services revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition For license arrangements that do not require significant modification or customization of the underlying license, we recognize cloud license and on-premise license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of license sale because the foregoing conditions are not met, are generally recognized when those conditions are subsequently met. The vast majority of our cloud license and on-premise license arrangements include license support contracts, which are entered into at the customer’s option. We recognize the related fees ratably over the term of the arrangement, typically one year. License support contracts provide customers with rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period and include internet access to technical content, as well as internet and telephone access to technical support personnel. License support contracts are generally priced as a percentage of the net cloud license and on-premise license fees and are generally invoiced in full at the beginning of the support term. Substantially all of our customers renew their license support contracts annually. Revenue Recognition for Multiple-Element Arrangements — Cloud License and On-Premise License, Support and Related Services (Software Arrangements) We often enter into arrangements with customers that purchase cloud licenses and on-premise licenses, license support and related services from us at the same time, or within close proximity of one another (referred to as software related multiple-element arrangements). For those software related multiple-element arrangements, we have applied the residual method to determine the amount of cloud license and on-premise license revenues to be recognized pursuant to ASC 985-605. Under the residual method, if VSOE exists for undelivered elements in a multiple-element arrangement, VSOE of the undelivered elements is deferred with the remaining portion of the arrangement consideration generally recognized upon delivery of the license. Where VSOE does not exist for the undelivered element in such arrangement, no revenue is recognized until the earlier of the point in time at which 1) VSOE has been established for such element; or 2) the element that does not have VSOE has been delivered. Revenue Recognition for Multiple-Element Arrangements — Arrangements with Software and Non-software Elements We also enter into multiple-element arrangements that may include a combination of our various software related and non-software related products and services offerings including cloud licenses and on-premise licenses, license support, cloud services offerings, hardware products, hardware support, consulting, advanced customer support services and education. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and the non-software group of elements. We then further allocate consideration within the software group to the respective elements within that group following the guidance in ASC 985-605 and our policies as described above. In addition, we allocate the consideration within the non-software group to each respective element within that group based on a selling price hierarchy at the arrangement’s inception as described above. After the arrangement consideration has been allocated to the software group of elements and non-software group of elements, we account for each respective element in the arrangement as described above and below. Other Revenue Recognition Policies Applicable to Software and Non-software Elements Many of our cloud license and on-premise license arrangements include consulting implementation services sold separately under consulting engagement contracts and are included as a part of our services business. Consulting revenues from these arrangements are generally accounted for separately from cloud license and on-premise license revenues because the arrangements qualify as services transactions as defined in ASC 985-605. The more significant factors considered in determining whether the revenues should be accounted for separately include the nature of services (i.e., consideration of whether the services are essential to the functionality of the licensed product), degree of risk, availability of services from other vendors, timing of payments and impact of milestones or acceptance criteria on the realizability of the license fee. Revenues for consulting services are generally recognized as the services are performed. If an arrangement contains multiple elements and does not qualify for separate accounting for the product and service transactions, then cloud license and on-premise license revenues and/or hardware products revenues, including the costs of hardware products, are generally recognized together with the services based on contract accounting using either the percentage-of-completion or completed-contract method. We also evaluate arrangements with governmental entities containing “fiscal funding” or “termination for convenience” provisions, when such provisions are required by law, to determine the probability of possible cancellation. We consider multiple factors, including the history with the customer in similar transactions, the “essential use” of the license or hardware products and the planning, budgeting and approval processes undertaken by the governmental entity. If we determine upon execution of these arrangements that the likelihood of cancellation is remote, we then recognize revenues for such arrangements once all of the criteria described above have been met. If such a determination cannot be made, revenues are recognized upon the earlier of cash receipt or approval of the applicable funding provision by the governmental entity for such arrangements. We assess whether fees are fixed or determinable at the time of sale and recognize revenues if all other revenue recognition requirements are met. Our standard payment terms are net 30 days. However, payment terms may vary based on the country in which the agreement is executed. We evaluate non-standard payment terms based on whether we have successful collection history on comparable arrangements (based upon similarity of customers, products, and arrangement economics) and, if so, generally conclude such payment terms are fixed and determinable and thereby satisfy the required criteria for revenue recognition. While most of our arrangements for sales within our businesses include short-term payment terms, we have a standard practice of providing long-term financing to creditworthy customers primarily through our financing division. Since fiscal 1989, when our financing division was formed, we have established a history of collection, without concessions, on these receivables with payment terms that generally extend up to five years from the contract date. Provided all other revenue recognition criteria have been met, we recognize cloud license and on-premise license revenues and hardware products revenues for these arrangements upon delivery, net of any payment discounts from financing transactions. We have generally sold receivables financed through our financing division on a non-recourse basis to third-party financing institutions within 90 days of the contracts’ dates of execution and we classify the proceeds from these sales as cash flows from operating activities in our consolidated statements of cash flows. We account for the sales of these receivables as “true sales” as defined in ASC 860, Transfers and Servicing Our customers include several of our suppliers and, occasionally, we have purchased goods or services for our operations from these vendors at or about the same time that we have sold our products to these same companies (Concurrent Transactions). License agreements, sales of hardware or sales of services that occur within a common time period from the date we have purchased goods or services from that same customer are reviewed for appropriate accounting treatment and disclosure. When we acquire goods or services from a customer, we negotiate the purchase separately from any sales transaction, at terms we consider to be at arm’s length and settle the purchase in cash. We recognize revenues from Concurrent Transactions if all of our revenue recognition criteria are met and the goods and services acquired are necessary for our current operations. |
Business Combinations | Business Combinations We apply the provisions of ASC 805, Business Combinations Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as termination and exit costs pursuant to ASC 420, Exit or Disposal Cost Obligations For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, we will recognize an asset or a liability for such pre-acquisition contingency if: (1) it is probable that an asset existed or a liability had been incurred at the acquisition date and (2) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We reevaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date with any adjustments to our preliminary estimates being recorded to goodwill if identified within the measurement period. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statement of operations and could have a material impact on our results of operations and financial position. |
Marketable and Non-Marketable Securities | Marketable and Non-Marketable Securities In accordance with ASC 320, Investments Debt and Equity Securities, We hold investments in certain non-marketable equity securities in which we do not have a controlling interest or significant influence. These equity securities are recorded at cost and included in other non-current assets in the accompanying consolidated balance sheets. If based on the terms of our ownership of these non-marketable securities, we determine that we exercise significant influence on the entity to which these non-marketable securities relate, we apply the requirements of ASC 323, Investments Equity Method and Joint Ventures . |
Fair Value of Financial Instruments | Fair Values of Financial Instruments We apply the provisions of ASC 820, Fair Value Measurement The additional disclosures regarding our fair value measurements are included in Note 4. We perform fair value measurements in accordance with ASC 820. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value: • Level 1: quoted prices in active markets for identical assets or liabilities; • Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or • Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. |
Allowances for Doubtful Accounts | Allowances for Doubtful Accounts We record allowances for doubtful accounts based upon a specific review of all significant outstanding invoices. For those invoices not specifically reviewed, provisions are provided at differing rates, based upon the age of the receivable, the collection history associated with the geographic region that the receivable was recorded in and current economic trends. We write-off a receivable and charge it against its recorded allowance when we have exhausted our collection efforts without success. |
Concentrations of Risk | Concentrations of Risk Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, derivatives and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution. Investment policies have been implemented that limit purchases of marketable debt securities to investment-grade securities. Our derivative contracts are transacted with various financial institutions with high credit standings and any exposure to counterparty credit-related losses in these contracts is largely mitigated with collateral security agreements that provide for collateral to be received or posted when the net fair values of these contracts fluctuate from contractually established thresholds. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. No single customer accounted for 10% or more of our total revenues in fiscal 2018, 2017 or 2016. We outsource the manufacturing, assembly and delivery of certain of our hardware products to a variety of companies, many of which are located outside the United States. Further, we have simplified our supply chain processes by reducing the number of third-party manufacturing partners and the number of locations where these third-party manufacturers build our hardware products. Any inability of these third-party manufacturing partners to deliver the contracted services for our hardware products could adversely impact future operating results of our hardware business. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. We evaluate our ending inventories for estimated excess quantities and obsolescence. This evaluation includes analysis of sales levels by product and projections of future demand within specific time horizons (generally six to nine months). Inventories in excess of future demand are written down and charged to hardware expenses. In addition, we assess the impact of changing technology to our inventories and we write down inventories that are considered obsolete. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventories are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $398 million and $300 million at May 31, 2018 and 2017, respectively. |
Other Receivables | Other Receivables Other receivables represent value-added tax and sales tax receivables associated with the sale of our products and services to third parties. Other receivables are included in prepaid expenses and other current assets in our consolidated balance sheets and totaled $802 million and $794 million at May 31, 2018 and 2017, respectively. |
Deferred Sales Commissions | Deferred Sales Commissions We defer sales commission expenses associated with our cloud SaaS, PaaS and IaaS offerings, and recognize the related expenses over the non-cancelable terms of the related contracts, which are typically one to three years. The current portion of the deferred sales commissions balances are included in prepaid expenses and other current assets and the non-current portion of the deferred sales commissions balances are included in other assets as of May 31, 2018 and 2017. Amortization of deferred sales commissions is included as a component of sales and marketing expenses in our consolidated statements of operations. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at the lower of cost or realizable value, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives of the assets, which range from one to 40 years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements or the lease terms, as appropriate. Property, plant and equipment are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did not recognize any significant property impairment charges in fiscal 2018, 2017 or 2016. |
Goodwill, Intangible Assets and Impairment Assessments | Goodwill, Intangible Assets and Impairment Assessments Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Intangible assets that are not considered to have an indefinite useful life are amortized over their useful lives, which generally range from one to 10 years. Each period we evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. The carrying amounts of our goodwill and intangible assets are periodically reviewed for impairment (at least annually for goodwill and indefinite lived intangible assets) and whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. When goodwill is assessed for impairment, we have the option to perform an assessment of qualitative factors of impairment (optional assessment) prior to necessitating a quantitative impairment test. Should the optional assessment be used for any given fiscal year, qualitative factors to consider include cost factors; financial performance; legal, regulatory, contractual, political, business, or other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. If we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative test is then performed. Otherwise, no further testing is required. For those reporting units tested using a quantitative approach, we compare the fair value of each reporting unit with the carrying amount of the reporting unit, including goodwill. To determine the fair value of each reporting unit we utilize estimates, judgments and assumptions including estimated future cash flows the reporting unit is expected to generate on a discounted basis, future economic and market conditions, and market comparable of peer companies, among others. If the estimated fair value of the reporting unit is less than the carrying amount of the reporting unit, impairment is recognized for the difference, limited to the amount of goodwill recognized for the reporting unit. We did not recognize any goodwill impairment charges in fiscal 2018, 2017 or 2016. Recoverability of finite lived intangible assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. Recoverability of indefinite lived intangible assets is measured by comparison of the carrying amount of the asset to its fair value. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. We did not recognize any intangible asset impairment charges in fiscal 2018, 2017 or 2016. |
Derivative Financial Instruments | Derivative Financial Instruments During fiscal 2018, 2017 and 2016, we used derivative and non-derivative financial instruments to manage foreign currency and interest rate risks (see Note 10 below for additional information). We account for these instruments in accordance with ASC 815, Derivatives and Hedging The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For a derivative instrument designated as a fair value hedge, loss or gain attributable to the risk being hedged is recognized in earnings in the period of change with a corresponding offset recorded to the item for which the risk is being hedged. For a derivative instrument designated as a cash flow hedge, each reporting period we record the change in fair value on the effective portion of the derivative to accumulated other comprehensive loss in our consolidated balance sheets, and an amount is reclassified out of accumulated other comprehensive loss into earnings to offset the earnings impact that is attributable to the risk being hedged. For the non-derivative financial instrument that was designated as a net investment hedge for our investments in certain of our international subsidiaries, the change on account of remeasurement of the effective portion for each reporting period was recorded to accumulated other comprehensive loss in our consolidated balance sheets until the net investment is sold, at which time the amounts are reclassified from accumulated other comprehensive loss to non-operating income, net. We perform the effectiveness testing of our aforementioned designated hedges on a quarterly basis and material changes in ineffective portions of the derivatives, if any, are recognized immediately in earnings. We have designated the aforementioned swap agreements as qualifying hedging instruments and are accounting for them as fair value hedges pursuant to ASC 815. These transactions are characterized as fair value hedges for financial accounting purposes because they protect us against changes in the fair values of certain of our fixed-rate borrowings due to benchmark interest rate movements. The changes in fair values of these swap agreements are recognized as interest expense in our consolidated statements of operations with the corresponding amounts included in other assets or other non-current liabilities in our consolidated balance sheets. The amount of net gain (loss) attributable to the risk being hedged is recognized as interest expense in our consolidated statements of operations with the corresponding amount included in notes payable, non-current. The periodic interest settlements for the swap agreements for the July 2025 Notes, April 2038 Notes, October 2019 Notes, July 2021 Notes and the January 2019 Notes are recorded as interest expense and are included as a part of cash flows from operating activities. 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 values of the Euro-denominated January 2021 Notes are remeasured and the interest expense is recognized. The ineffective portion of the unrealized gains and losses on these cross-currency swaps, if any, are 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 fiscal 2018, 2017 or 2016. 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 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, was recognized in non-operating income, net in our consolidated statements of operations. We evaluated the effectiveness of our net investment hedge at the beginning of every quarter. We did not record any ineffectiveness for fiscal 2018, 2017 or 2016. In the fourth quarter of fiscal 2018, we de-designated the July 2025 Notes as a net investment hedge, and as noted above, we entered into cross-currency interest rate swap agreements to manage the foreign currency exchange risk associated with our July 2025 Notes by effectively converting the fixed-rate, Euro denominated debt, including the annual interest payments and the payment of principal at maturity, to variable-rate, U.S. Dollar denominated debt. We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. We may suspend this program from time to time. Our foreign currency exposures typically arise from intercompany sublicense fees, intercompany loans and other intercompany transactions that are generally expected to be cash settled in the near term. Our foreign currency forward contracts are generally short-term in duration. Our ultimate realized gain or loss with respect to currency fluctuations will generally depend on the size and type of cross-currency exposures that we enter into, the currency exchange rates associated with these exposures and changes in those rates, the net realized and unrealized gains or losses on foreign currency forward contracts to offset these exposures and other factors. Neither do we use these foreign currency forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to ASC 815. Accordingly, we recorded the fair values of these contracts as of the end of each reporting period to our consolidated balance sheets with changes in fair values recorded to our consolidated statements of operations. The balance sheet classification for the fair values of these forward contracts is prepaid expenses and other current assets for forward contracts in an unrealized gain position and other current liabilities for forward contracts in an unrealized loss position. The statement of operations classification for changes in fair values of these forward contracts is non-operating income, net, for both realized and unrealized gains and losses. |
Legal and Other Contingencies | Legal and Other Contingencies We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant matter and assess our potential financial exposure. Descriptions of our accounting policies associated with contingencies assumed as a part of a business combination are provided under “Business Combinations” above. For legal and other contingencies that are not a part of a business combination or related to income taxes, we accrue a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable, and the amount can be reasonably estimated. Note 17 below provides additional information regarding certain of our legal contingencies. |
Shipping and Handling Costs | Shipping and Handling Costs Our shipping and handling costs for hardware products sales are included in hardware expenses for all periods presented. |
Foreign Currency | Foreign Currency We transact business in various foreign currencies. In general, the functional currency of a foreign operation is the local country’s currency. Consequently, revenues and expenses of operations outside the United States are translated into U.S. Dollars using weighted-average exchange rates while assets and liabilities of operations outside the United States are translated into U.S. Dollars using exchange rates at the balance sheet dates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying consolidated balance sheets and related periodic movements are summarized as a line item in our consolidated statements of comprehensive income. Net foreign exchange transaction losses included in non-operating income, net in the accompanying consolidated statements of operations were $74 million, $152 million and $110 million in fiscal 2018, 2017 and 2016, respectively. |
Stock-Based Compensation | Stock-Based Compensation We account for share-based payments to employees, including grants of service-based restricted stock awards, performance-based restricted stock awards (PSUs), service-based employee stock options, performance-based stock options (PSOs), and purchases under employee stock purchase plans in accordance with ASC 718, Compensation Stock Compensation, For our service-based stock awards, we recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. For our PSUs and PSOs, we recognize stock-based compensation expense on a straight-line basis over the longer of the derived, explicit or implicit service period (which is the period of time expected for the performance condition to be satisfied). During our interim and annual reporting periods, stock-based compensation expense is recorded based on expected attainment of performance targets. Changes in our estimates of the expected attainment of performance targets that result in a change in the number of shares that are expected to vest, or changes in our estimates of implicit service periods may cause the amount of stock-based compensation expense that we record for each interim reporting period to vary. Any changes in estimates that impact our expectation of the number of shares that are expected to vest are reflected in the amount of stock-based compensation expense that we recognize for each PSU or PSO tranche on a cumulative catch up basis during each interim reporting period in which such estimates are altered. Changes in estimate of the implicit service period are recognized prospectively. We record deferred tax assets for stock-based compensation awards that result in deductions on certain of our income tax returns based on the amount of stock-based compensation recognized and the fair values attributable to the vested portion of stock awards assumed in connection with a business combination at the statutory tax rates in the jurisdictions that we are able to recognize such tax deductions. The impacts of the actual tax deductions for stock-based awards that are realized in these jurisdictions are generally recognized in the reporting period that a restricted stock-based award vests or a stock option is exercised with any shortfall/windfall relative to the deferred tax asset established recorded as a discrete detriment/benefit to our provision for income taxes in such period. |
Advertising | Advertising All advertising costs are expensed as incurred. Advertising expenses, which were included within sales and marketing expenses, were $138 million, $95 million and $68 million in fiscal 2018, 2017 and 2016, respectively. |
Research and Development and Software Development Costs | Research and Development and Software Development Costs All research and development costs are expensed as incurred. Software development costs required to be capitalized under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, Internal-Use Software, |
Acquisition Related and Other Expenses | Acquisition Related and Other Expenses Acquisition related and other expenses consist of personnel related costs and stock-based compensation for transitional and certain other employees, integration related professional services, and certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Year Ended May 31, (in millions) 2018 2017 2016 Transitional and other employee related costs $ 48 $ 41 $ 45 Stock-based compensation 1 35 3 Professional fees and other, net 3 33 10 Business combination adjustments, net — (6 ) (16 ) Total acquisition related and other expenses $ 52 $ 103 $ 42 |
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 Corporation Japan) and net other income (losses), including net realized gains and losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading. Year Ended May 31, (in millions) 2018 2017 2016 Interest income $ 1,201 $ 802 $ 538 Foreign currency losses, net (74 ) (152 ) (110 ) Noncontrolling interests in income (135 ) (118 ) (116 ) Other income (loss), net 245 73 (7 ) Total non-operating income, net $ 1,237 $ 605 $ 305 |
Income Taxes | Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes A two-step approach is applied pursuant to ASC 740 in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations. A description of our accounting policies associated with tax related contingencies and valuation allowances assumed as a part of a business combination is provided under “Business Combinations” above. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Comprehensive Income: In February 2018, the FASB issued ASU 2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows companies to reclassify stranded tax effects resulting from the Tax Act, from accumulated other comprehensive income to retained earnings. The guidance also requires certain new disclosures regardless of the election. ASU 2018-02 is effective for us in the first quarter of fiscal 2020, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2018-02 on our consolidated financial statements. Derivatives and Hedging: In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. ASU 2017-12 is effective for us in the first quarter of fiscal 2020, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2017-12 on our consolidated financial statements. Retirement Benefits: In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which provides guidance on the capitalization, presentation and disclosure of net benefit costs. ASU 2017-07 is effective for us in the first quarter of fiscal 2019. We currently do not expect that our pending adoption of ASU 2017-07 will have a material effect on our consolidated financial statements. Income Taxes: In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which changes the timing of when certain intercompany transactions are recognized within the provision for income taxes. ASU 2016-16 is effective for us in our first quarter of fiscal 2019 on a modified retrospective basis, and earlier adoption is permitted. We currently do not expect that our pending adoption of ASU 2016-16 will have a material effect 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 We currently do not expect that our pending adoption of ASU 2016-01 will have a material effect on our consolidated financial statements. Leases: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) and issued subsequent amendments to the initial guidance in September 2017 within ASU 2017-13 (collectively, Topic 842). Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. Topic 842 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 Topic 842 on our consolidated financial statements. 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 Topic 842, 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 No. 2014-09, Revenue from Contracts with Customers, T opic 606 and subsequent amendments to the initial guidance: ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20, ASU 2017-10, ASU 2017-13 and ASU 2017-14, (collectively, Topic 606), which is effective for us in our first quarter of fiscal 2019. 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 also provides guidance on the recognition of costs related to obtaining customer contracts, which will result in additional costs that will be capitalized. We will adopt the requirements of the new standard as of June 1, 2018, utilizing the full retrospective method of transition and will adjust our consolidated financial statements from amounts previously reported for the fiscal 2018 and 2017 periods. We do not believe there will be a material impact to our revenues or operating expenses upon adoption of Topic 606. We are continuing to evaluate the impact related to our pending adoption of Topic 606 and our preliminary assessments are subject to change. |
ORGANIZATION AND SIGNIFICANT 28
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
May 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Acquisition Related and Other Expenses | Year Ended May 31, (in millions) 2018 2017 2016 Transitional and other employee related costs $ 48 $ 41 $ 45 Stock-based compensation 1 35 3 Professional fees and other, net 3 33 10 Business combination adjustments, net — (6 ) (16 ) Total acquisition related and other expenses $ 52 $ 103 $ 42 |
Non-Operating Income, net | Year Ended May 31, (in millions) 2018 2017 2016 Interest income $ 1,201 $ 802 $ 538 Foreign currency losses, net (74 ) (152 ) (110 ) Noncontrolling interests in income (135 ) (118 ) (116 ) Other income (loss), net 245 73 (7 ) Total non-operating income, net $ 1,237 $ 605 $ 305 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
May 31, 2018 | |
Business Combinations [Abstract] | |
Unaudited Pro Forma Financial Information | Year Ended May 31, (in millions, except per share data) 2018 2017 Total revenues $ 39,977 $ 38,416 Net income $ 3,738 $ 8,825 Basic earnings per share $ 0.91 $ 2.14 Diluted earnings per share $ 0.88 $ 2.09 |
CASH, CASH EQUIVALENTS AND MA30
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Tables) | 12 Months Ended |
May 31, 2018 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | |
Cash, Cash Equivalents and Marketable Securities | May 31, (in millions) 2018 2017 Corporate debt securities and other $ 44,302 $ 41,618 Commercial paper debt securities 1,647 5,053 Money market funds 6,500 3,302 Total investments $ 52,449 $ 49,973 Investments classified as cash equivalents $ 6,808 $ 5,679 Investments classified as marketable securities $ 45,641 $ 44,294 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
May 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on a Recurring Basis | May 31, 2018 May 31, 2017 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: Corporate debt securities and other $ 223 $ 44,079 $ 44,302 $ 580 $ 41,038 $ 41,618 Commercial paper debt securities — 1,647 1,647 — 5,053 5,053 Money market funds 6,500 — 6,500 3,302 — 3,302 Derivative financial instruments — 29 29 — 40 40 Total assets $ 6,723 $ 45,755 $ 52,478 $ 3,882 $ 46,131 $ 50,013 Liabilities: Derivative financial instruments $ — $ 158 $ 158 $ — $ 191 $ 191 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
May 31, 2018 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | Estimated May 31, (Dollars in millions) Useful Life 2018 2017 Computer, network, machinery and equipment 1-5 years $ 6,156 $ 5,112 Buildings and improvements 1-40 years 3,893 3,466 Furniture, fixtures and other 5-15 years 662 651 Land — 868 830 Construction in progress — 229 235 Total property, plant and equipment 1-40 years 11,808 10,294 Accumulated depreciation (5,911 ) (4,979 ) Total property, plant and equipment, net $ 5,897 $ 5,315 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 12 Months Ended |
May 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets, Gross Accumulated Amortization Intangible Assets, Net Weighted Average (Dollars in millions) May 31, 2017 Additions Retirements May 31, 2018 May 31, 2017 Expense Retirements May 31, 2018 May 31, 2017 May 31, 2018 Useful Life (1) Developed technology $ 5,397 $ 153 $ (241 ) $ 5,309 $ (2,295 ) $ (758 ) $ 239 $ (2,814 ) $ 3,102 $ 2,495 3 years Cloud services and license support agreements and related relationships 5,670 423 (94 ) 5,999 (1,648 ) (731 ) 94 (2,285 ) 4,022 3,714 5 years Other 1,998 37 (413 ) 1,622 (1,443 ) (131 ) 413 (1,161 ) 555 461 5 years Total intangible assets, net $ 13,065 $ 613 $ (748 ) $ 12,930 $ (5,386 ) $ (1,620 ) $ 746 $ (6,260 ) $ 7,679 $ 6,670 4 years (1) Represents weighted-average useful lives of intangible assets acquired during fiscal 2018. |
Estimated Future Amortization Expenses Related to Intangible Assets | Fiscal 2019 $ 1,605 Fiscal 2020 1,400 Fiscal 2021 1,174 Fiscal 2022 966 Fiscal 2023 613 Thereafter 912 Total intangible assets, net $ 6,670 |
Goodwill | (in millions) Cloud and License Hardware Services Total Goodwill, net Balances as of May 31, 2016 $ 30,336 $ 2,367 $ 1,887 $ 34,590 Goodwill from acquisitions 8,543 — — 8,543 Goodwill adjustments, net (1) (88 ) — — (88 ) Balances as of May 31, 2017 38,791 2,367 1,887 43,045 Goodwill from acquisitions 1,052 — — 1,052 Goodwill adjustments, net (1) (243 ) — (99 ) (342 ) Balances as of May 31, 2018 $ 39,600 $ 2,367 $ 1,788 $ 43,755 (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). |
NOTES PAYABLE AND OTHER BORRO34
NOTES PAYABLE AND OTHER BORROWINGS (Tables) | 12 Months Ended |
May 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable and Other Borrowings | May 31, 2018 May 31, 2017 (Dollars in millions) Date of Issuance Amount Effective Interest Rate Amount Effective Interest Rate Fixed-rate senior notes: $2,500, 1.20%, due October 2017 October 2012 $ — N.A. $ 2,500 1.24% $2,500, 5.75%, due April 2018 April 2008 — N.A. 2,500 5.76% $1,500, 2.375%, due January 2019 (1) July 2013 1,500 2.44% 1,500 2.44% $1,750, 5.00%, due July 2019 July 2009 1,750 5.05% 1,750 5.05% $2,000, 2.25%, due October 2019 (1) July 2014 2,000 2.27% 2,000 2.27% $1,000, 3.875%, due July 2020 July 2010 1,000 3.93% 1,000 3.93% €1,250, 2.25%, due January 2021 (2)(3) July 2013 1,446 2.33% 1,395 2.33% $1,500, 2.80%, due July 2021 (1) July 2014 1,500 2.82% 1,500 2.82% $4,250, 1.90%, due September 2021 (5) July 2016 4,250 1.94% 4,250 1.94% $2,500, 2.50%, due May 2022 May 2015 2,500 2.56% 2,500 2.56% $2,500, 2.50%, due October 2022 October 2012 2,500 2.51% 2,500 2.51% $1,250, 2.625%, due February 2023 (6) November 2017 1,250 2.64% — N.A. $1,000, 3.625%, due July 2023 July 2013 1,000 3.73% 1,000 3.73% $2,500, 2.40%, due September 2023 (5) July 2016 2,500 2.40% 2,500 2.40% $2,000, 3.40%, due July 2024 July 2014 2,000 3.43% 2,000 3.43% $2,000, 2.95%, due November 2024 (6) November 2017 2,000 2.98% — N.A. $2,500, 2.95%, due May 2025 May 2015 2,500 3.00% 2,500 3.00% €750, 3.125%, due July 2025 (2)(4) July 2013 868 3.17% 837 3.17% $3,000, 2.65%, due July 2026 (5) July 2016 3,000 2.69% 3,000 2.69% $2,750, 3.25%, due November 2027 (6) November 2017 2,750 3.26% — N.A. $500, 3.25%, due May 2030 May 2015 500 3.30% 500 3.30% $1,750, 4.30%, due July 2034 July 2014 1,750 4.30% 1,750 4.30% $1,250, 3.90%, due May 2035 May 2015 1,250 3.95% 1,250 3.95% $1,250, 3.85%, due July 2036 (5) July 2016 1,250 3.85% 1,250 3.85% $1,750, 3.80%, due November 2037 (6) November 2017 1,750 3.83% — N.A. $1,250, 6.50%, due April 2038 (1) April 2008 1,250 6.52% 1,250 6.52% $1,250, 6.125%, due July 2039 July 2009 1,250 6.19% 1,250 6.19% $2,250, 5.375%, due July 2040 July 2010 2,250 5.45% 2,250 5.45% $1,000, 4.50%, due July 2044 July 2014 1,000 4.50% 1,000 4.50% $2,000, 4.125%, due May 2045 May 2015 2,000 4.15% 2,000 4.15% $3,000, 4.00%, due July 2046 (5) July 2016 3,000 4.00% 3,000 4.00% $2,250, 4.00%, due November 2047 (6) November 2017 2,250 4.03% — N.A. $1,250, 4.375%, due May 2055 May 2015 1,250 4.40% 1,250 4.40% Floating-rate senior notes: $1,000, three-month LIBOR plus 0.20%, due July 2017 July 2014 — N.A. 1,000 1.35% $500, three-month LIBOR plus 0.58%, due January 2019 July 2013 500 2.93% 500 1.74% $750, three-month LIBOR plus 0.51%, due October 2019 July 2014 750 2.84% 750 1.67% Revolving credit agreements and other borrowings: $3,800, LIBOR plus 0.50%, due June 2017 May 2017 — N.A. 3,800 1.54% $2,500, LIBOR plus 0.50%, due June 2018 May 2018 2,500 2.48% — N.A. Other borrowings due August 2025 November 2016 113 3.53% 113 3.53% Total senior notes and other borrowings $ 60,927 $ 58,145 Unamortized discount/issuance costs (282 ) (276 ) Hedge accounting fair value adjustments (1) (26 ) 40 Total notes payable and other borrowings $ 60,619 $ 57,909 Notes payable and other borrowings, current $ 4,491 $ 9,797 Notes payable and other borrowings, non-current $ 56,128 $ 48,112 (1) We have entered into certain interest rate swap agreements that have the economic effects of modifying the fixed-interest obligations associated with the 2.375% senior notes due January 2019 (January 2019 Notes), the 2.25% senior notes due October 2019 (October 2019 Notes), the 2.80% senior notes due July 2021 (July 2021 Notes), and the 6.50% senior notes due April 2038 (April 2038 Notes) so that the interest payable on these notes effectively became variable based on LIBOR. The effective interest rates after consideration of these fixed to variable interest rate swap agreements were 3.00% and 1.81%, respectively, for the January 2019 Notes, 2.81% and 1.64%, respectively, for the October 2019 Notes, and 2.96% and 1.79%, respectively, for the July 2021 Notes as of May 31, 2018 and 2017, respectively. The effective interest rate as of May 31, 2018 after consideration of the fixed to variable interest rate swap agreements was 5.65% for the April 2038 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. (2) In July 2013, we issued €2.0 billion of fixed-rate senior notes comprised of €1.25 billion of 2.25% senior notes due January 2021 (January 2021 Notes) and €750 million of 3.125% senior notes due July 2025 (July 2025 Notes, and together with the January 2021 Notes, the Euro Notes). Principal and unamortized discount/issuance costs for the Euro Notes in the table above were calculated using foreign currency exchange rates as of May 31, 2018 and May 31, 2017, respectively. The Euro Notes are registered and trade on the New York Stock Exchange. (3) In connection with the issuance of the January 2021 Notes, we entered into certain cross-currency swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a fixed-rate, U.S. Dollar-denominated debt of $1.6 billion with a fixed annual interest rate of 3.53% (see Note 10 for additional information). (4) We designated the 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 in connection with the issuance of the July 2025 Notes. In our fourth quarter of fiscal 2018 we de-designated the 2025 Notes as a net investment hedge and entered into certain cross-currency interest rate swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a variable-rate, U.S. Dollar-denominated debt of $0.9 billion based on LIBOR. The effective interest rate as of May 31, 2018 after consideration of the cross-currency interest rate swap agreements was 5.17% for the July 2025 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. (5) In July 2016, we issued $14.0 billion of 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. (6) In November 2017, we issued $10.0 billion of 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. |
Future Principal Payments for all Borrowings | Fiscal 2019 $ 4,500 Fiscal 2020 4,500 Fiscal 2021 2,446 Fiscal 2022 8,250 Fiscal 2023 3,750 Thereafter 37,481 Total $ 60,927 |
RESTRUCTURING ACTIVITIES (Table
RESTRUCTURING ACTIVITIES (Tables) | 12 Months Ended |
May 31, 2018 | |
Restructuring And Related Activities [Abstract] | |
Summary of All Plans | Fiscal 2018 Activity Accrued Year Ended May 31, 2018 Accrued (in millions) May 31, 2017 (2) Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2018 (2) Fiscal 2017 Oracle Restructuring Plan (1) Cloud and license $ 85 $ 156 $ (12 ) $ (150 ) $ 3 $ 82 Hardware 31 167 (15 ) (122 ) — 61 Services 25 48 (4 ) (54 ) 1 16 Other (6) 44 267 (6 ) (208 ) (7 ) 90 Total Fiscal 2017 Oracle Restructuring Plan $ 185 $ 638 $ (37 ) $ (534 ) $ (3 ) $ 249 Total other restructuring plans (7) $ 79 $ 1 $ (14 ) $ (37 ) $ 4 $ 33 Total restructuring plans $ 264 $ 639 $ (51 ) $ (571 ) $ 1 $ 282 Fiscal 2017 Activity Accrued Year Ended May 31, 2017 Accrued (in millions) May 31, 2016 Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2017 (2) Fiscal 2017 Oracle Restructuring Plan (1) Cloud and license $ — $ 184 $ (6 ) $ (100 ) $ 7 $ 85 Hardware — 91 (3 ) (57 ) — 31 Services — 59 (1 ) (34 ) 1 25 Other (6) — 166 (4 ) (118 ) — 44 Total Fiscal 2017 Oracle Restructuring Plan $ — $ 500 $ (14 ) $ (309 ) $ 8 $ 185 Total other restructuring plans (7) $ 283 $ 8 $ (31 ) $ (169 ) $ (12 ) $ 79 Total restructuring plans $ 283 $ 508 $ (45 ) $ (478 ) $ (4 ) $ 264 Fiscal 2016 Activity Accrued Year Ended May 31, 2016 Accrued (in millions) May 31, 2015 Initial Costs (3) Adj. to Cost (4) Cash Payments Others (5) May 31, 2016 Fiscal 2015 Oracle Restructuring Plan (1) Cloud and license $ 16 $ 263 $ (8 ) $ (129 ) $ 4 $ 146 Hardware 6 67 (8 ) (43 ) 1 23 Services 9 44 (4 ) (35 ) — 14 Other (6) 5 108 — (56 ) (2 ) 55 Total Fiscal 2015 Oracle Restructuring Plan $ 36 $ 482 $ (20 ) $ (263 ) $ 3 $ 238 Total other restructuring plans (7) $ 84 $ 2 $ (6 ) $ (27 ) $ (8 ) $ 45 Total restructuring plans $ 120 $ 484 $ (26 ) $ (290 ) $ (5 ) $ 283 (1) Restructuring costs recorded for individual line items primarily related to employee severance costs. (2) The balances at May 31, 2018 and 2017 included $257 million and $242 million, respectively, recorded in other current liabilities and $25 million and $22 million, respectively, recorded in other non-current liabilities. (3) Costs recorded for the respective restructuring plans during the periods 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) Represents employee related severance costs for functions that are not included within our operating segments and certain facilities related restructuring costs. (7) Other restructuring plans presented in the tables above included condensed information for certain Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. |
DEFERRED REVENUES (Tables)
DEFERRED REVENUES (Tables) | 12 Months Ended |
May 31, 2018 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenues | May 31, (in millions) 2018 2017 Cloud services and license support $ 7,292 $ 7,144 Hardware 645 640 Services 437 382 Cloud license and on-premise license 55 67 Deferred revenues, current 8,429 8,233 Deferred revenues, non-current (in other non-current liabilities) 625 602 Total deferred revenues $ 9,054 $ 8,835 |
DERIVATIVE FINANCIAL INSTRUME37
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
May 31, 2018 | |
Derivative Instrument Detail [Abstract] | |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets | Fair Value as of May 31, (in millions) Balance Sheet Location 2018 2017 Interest rate swap agreements designated as fair value hedges Other current liabilities $ (7 ) $ — Interest rate swap agreements designated as fair value hedges Other non-current assets $ 29 $ 40 Interest rate swap agreements designated as fair value hedges Other non-current liabilities $ (48 ) $ — Cross-currency swap agreements designated as cash flow hedges Other non-current liabilities $ (103 ) $ (191 ) Foreign currency borrowings designated as net investment hedge Notes payable, non-current $ — $ (980 ) |
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 (Effective Portion) Year Ended May 31, (in millions) 2018 2017 2016 Cross-currency swap agreements designated as cash flow hedges $ 88 $ 27 $ 26 Foreign currency borrowings designated as net investment hedge $ (30 ) $ (1 ) $ (25 ) Amount of Gain (Loss) Reclassified from Accumulated OCI or OCL into Income (Effective Portion) Year Ended May 31, (in millions) Location 2018 2017 2016 Cross-currency swap agreements designated as cash flow hedges Non-operating income (expense), net $ 51 $ 2 $ 41 Amount of Gain (Loss) Recognized in Income on Derivative Year Ended May 31, (in millions) Location 2018 2017 2016 Interest rate swap agreements designated as fair value hedges Interest expense $ (66 ) $ (82 ) $ 48 Amount of Gain (Loss) on Hedged Item Recognized in Income Attributable to Risk Being Hedged Year Ended May 31, (in millions) Location 2018 2017 2016 Interest rate swap agreements designated as fair value hedges Interest expense $ 66 $ 82 $ (48 ) |
COMMITMENTS AND CERTAIN CONTI38
COMMITMENTS AND CERTAIN CONTINGENCIES (Tables) | 12 Months Ended |
May 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Lease Commitments | (in millions) Fiscal 2019 $ 377 Fiscal 2020 314 Fiscal 2021 248 Fiscal 2022 184 Fiscal 2023 144 Thereafter 372 Future minimum operating lease payments 1,639 Less: minimum payments to be received from non-cancelable subleases (29 ) Total future minimum operating lease payments, net $ 1,610 |
Unconditional Purchase and Certain Other Obligations | Fiscal 2019 $ 757 Fiscal 2020 291 Fiscal 2021 189 Fiscal 2022 114 Fiscal 2023 24 Total $ 1,375 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
May 31, 2018 | |
Stockholders Equity Note [Abstract] | |
Accumulated Other Comprehensive Loss | The following table summarizes, as of each balance sheet date, the components of our accumulated other comprehensive loss, net of income taxes: May 31, (in millions) 2018 2017 Foreign currency translation losses and other, net $ (974 ) $ (679 ) Unrealized losses on defined benefit plans, net (322 ) (356 ) Unrealized (losses) gains on marketable securities, net (422 ) 187 Unrealized gains on cash flow hedges, net 82 45 Total accumulated other comprehensive loss $ (1,636 ) $ (803 ) |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
May 31, 2018 | |
Employee Benefits And Share Based Compensation [Abstract] | |
Summary of Restricted Stock Based Award Activity | Restricted Stock-Based Awards Outstanding (in millions, except fair value) Number of Shares Weighted-Average Grant Date Fair Value Balance, May 31, 2015 28 $ 40.63 Granted 34 $ 38.50 Vested and Issued (7 ) $ 40.39 Canceled (3 ) $ 39.73 Balance, May 31, 2016 52 $ 39.29 Granted 42 $ 39.40 Assumed 14 $ 37.83 Vested and Issued (18 ) $ 40.39 Canceled (7 ) $ 39.73 Balance, May 31, 2017 83 $ 39.18 Granted 44 $ 47.42 Vested and Issued (27 ) $ 39.10 Canceled (11 ) $ 41.97 Balance, May 31, 2018 89 $ 42.93 |
Summary of Stock Option Activity | Options Outstanding (in millions, except exercise price) Shares Under Stock Option Weighted-Average Exercise Price Balance, May 31, 2015 413 $ 28.64 Granted (1) 25 $ 40.34 Assumed 1 $ 4.97 Exercised (53 ) $ 25.13 Canceled (11 ) $ 35.19 Balance, May 31, 2016 375 $ 29.66 Granted (1) 18 $ 40.90 Assumed 2 $ 13.06 Exercised (77 ) $ 26.65 Canceled (6 ) $ 36.28 Balance, May 31, 2017 312 $ 29.02 Granted (2) 77 $ 50.95 Exercised (78 ) $ 28.78 Canceled (7 ) $ 45.70 Balance, May 31, 2018 304 $ 36.11 (1) 7 million SOs were granted in total during each of fiscal 2017 and 2016 to our Chief Executive Officers and Chief Technology Officer and have contractual lives of five years versus the ten-year contractual lives for most of the other SOs granted. (2) Outstanding Stock Options (in millions) Weighted- Average Exercise Price Weighted- Average Remaining Contract Term (in years) Aggregate Intrinsic Value (1) (in millions) Vested 201 $ 30.06 3.89 $ 3,344 Expected to vest (2) 60 $ 45.91 6.90 202 Total 261 $ 33.74 4.59 $ 3,546 (1) The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2018 of $46.72 and the exercise prices for all “in-the-money” options outstanding, excluding tax effects. (2) The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2018 was approximately $375 million and is expected to be recognized over a weighted-average period of 3.33 years. Approximately 43 million shares outstanding as of May 31, 2018 were not expected to vest. |
Valuation of Stock Options | Year Ended May 31, 2018 2017 2016 Expected life (in years) 4.7 4.8 4.8 Risk-free interest rate 2.0% 1.0% 1.6% Volatility 22% 23% 24% Dividend yield 1.5% 1.5% 1.5% Weighted-average fair value per share $ 9.34 $ 8.18 $ 8.49 |
Stock-Based Compensation Expense | Year Ended May 31, (in millions) 2018 2017 2016 Cloud services and license support $ 82 $ 54 $ 44 Hardware 10 11 12 Services 52 44 29 Sales and marketing 361 306 220 Research and development 921 770 609 General and administrative 180 130 120 Acquisition related and other 1 35 3 Total stock-based compensation 1,607 1,350 1,037 Estimated income tax benefit included in provision for income taxes (451 ) (423 ) (322 ) Total stock-based compensation, net of estimated income tax benefit $ 1,156 $ 927 $ 715 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
May 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Geographical Breakdown of Income Before Provision for Income Taxes | Year Ended May 31, (in millions) 2018 2017 2016 Domestic $ 3,816 $ 3,533 $ 4,033 Foreign 9,075 7,984 7,409 Income before provision for income taxes $ 12,891 $ 11,517 $ 11,442 |
Components of Provision for Income Taxes | Year Ended May 31, (Dollars in millions) 2018 2017 2016 Current provision: Federal $ 8,329 $ 936 $ 1,301 State 264 257 271 Foreign 1,084 1,475 1,074 Total current provision $ 9,677 $ 2,668 $ 2,646 Deferred benefit: Federal $ (614 ) $ (201 ) $ (123 ) State (13 ) (36 ) (21 ) Foreign 16 (249 ) 39 Total deferred benefit $ (611 ) $ (486 ) $ (105 ) Total provision for income taxes $ 9,066 $ 2,182 $ 2,541 Effective income tax rate 70.3% 18.9% 22.2% |
Reconciliation of Differences Between Federal Statutory Tax Rate and Effective Tax Rate | Year Ended May 31, (in millions) 2018 2017 2016 U.S. federal statutory tax rate 29.2 % 35.0 % 35.0 % Tax provision at statutory rate $ 3,765 $ 4,031 $ 4,005 Impact of the Tax Act of 2017 One-time transition tax 7,781 — — Deferred tax effects (820 ) — — Foreign earnings at other than United States rates (1,006 ) (1,299 ) (1,284 ) State tax expense, net of federal benefit 155 150 176 Settlements and releases from judicial decisions and statute expirations, net (252 ) (189 ) (150 ) Domestic production activity deduction (87 ) (119 ) (155 ) Stock-based compensation (302 ) (149 ) 74 Other, net (168 ) (243 ) (125 ) Total provision for income taxes $ 9,066 $ 2,182 $ 2,541 |
Components of Deferred Tax Liabilities and Assets | May 31, (in millions) 2018 2017 Deferred tax liabilities: Unrealized gain on stock $ (78 ) $ (130 ) Acquired intangible assets (1,254 ) (2,502 ) Unremitted earnings — (1,515 ) Depreciation and amortization (158 ) (180 ) Other (48 ) (23 ) Total deferred tax liabilities $ (1,538 ) $ (4,350 ) Deferred tax assets: Accruals and allowances $ 567 $ 532 Employee compensation and benefits 789 1,251 Differences in timing of revenue recognition 310 385 Tax credit and net operating loss carryforwards 2,614 4,029 Total deferred tax assets $ 4,280 $ 6,197 Valuation allowance (1,308 ) (1,164 ) Net deferred tax assets $ 1,434 $ 683 Recorded as: Non-current deferred tax assets $ 1,491 $ 1,143 Non-current deferred tax liabilities (in other non-current liabilities) (57 ) (460 ) Net deferred tax assets $ 1,434 $ 683 |
Gross Unrecognized Tax Benefits, Including Acquisitions | Year Ended May 31, (in millions) 2018 2017 2016 Gross unrecognized tax benefits as of June 1 $ 4,919 $ 4,561 $ 4,038 Increases related to tax positions from prior fiscal years 200 128 350 Decreases related to tax positions from prior fiscal years (65 ) (218 ) (111 ) Increases related to tax positions taken during current fiscal year 833 595 461 Settlements with tax authorities (42 ) (85 ) (73 ) Lapses of statutes of limitation (273 ) (47 ) (73 ) Cumulative translation adjustments and other, net 13 (15 ) (31 ) Total gross unrecognized tax benefits as of May 31 $ 5,585 $ 4,919 $ 4,561 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
May 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Businesses Results | Year Ended May 31, (in millions) 2018 2017 2016 Cloud and license: Revenues (1) $ 32,491 $ 30,389 $ 28,997 Cloud services and license support expenses 3,447 2,885 2,545 Sales and marketing expenses 7,219 6,886 6,570 Margin (2) $ 21,825 $ 20,618 $ 19,882 Hardware: Revenues (1) $ 3,993 $ 4,152 $ 4,669 Hardware products and support expenses 1,551 1,623 2,031 Sales and marketing expenses 635 820 867 Margin (2) $ 1,807 $ 1,709 $ 1,771 Services: Revenues $ 3,394 $ 3,358 $ 3,391 Services expenses 2,739 2,668 2,634 Margin (2) $ 655 $ 690 $ 757 Totals: Revenues (1) $ 39,878 $ 37,899 $ 37,057 Expenses 15,591 14,882 14,647 Margin (2) $ 24,287 $ 23,017 $ 22,410 (1) Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 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 consolidated statements of (2) The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, general and administrative and certain other allocable expenses. Additionally, the margins reported above 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. Refer to the table below for a reconciliation of our total margin for operating segments to our income before provision for income taxes as reported in our consolidated statements of operations. |
Reconciliation of Total Operating Segment Revenues to Total Revenues | Year Ended May 31, (in millions) 2018 2017 2016 Total revenues for operating segments $ 39,878 $ 37,899 $ 37,057 Cloud and license revenues (1) (47 ) (171 ) (9 ) Hardware revenues (1) — — (1 ) Total revenues $ 39,831 $ 37,728 $ 37,047 |
Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes | Total margin for operating segments $ 24,287 $ 23,017 $ 22,410 Cloud and license revenues (1) (47 ) (171 ) (9 ) Hardware revenues (1) — — (1 ) Research and development (6,091 ) (6,159 ) (5,787 ) General and administrative (1,289 ) (1,176 ) (1,155 ) Amortization of intangible assets (1,620 ) (1,451 ) (1,638 ) Acquisition related and other (52 ) (103 ) (42 ) Restructuring (588 ) (463 ) (458 ) Stock-based compensation for operating segments (505 ) (415 ) (305 ) Expense allocations and other, net (416 ) (369 ) (411 ) Interest expense (2,025 ) (1,798 ) (1,467 ) Non-operating income, net 1,237 605 305 Income before provision for income taxes $ 12,891 $ 11,517 $ 11,442 (1) Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 for an explanation of these adjustments and this table for a reconciliation of our total operating segment revenues to our total revenues as reported in our consolidated statements of operations. |
Geographic Information | As of and for the Year Ended May 31, 2018 2017 2016 (in millions) Revenues Long-Lived Assets (1) Revenues Long-Lived Assets (1) Revenues Long-Lived Assets (1) United States $ 19,077 $ 4,976 $ 17,770 $ 4,680 $ 17,264 $ 3,646 United Kingdom 2,172 510 1,999 402 2,349 334 Japan 1,693 388 1,618 380 1,465 375 Germany 1,375 179 1,417 116 1,438 40 Canada 1,143 78 1,102 60 1,096 44 Other countries 14,371 1,223 13,822 1,090 13,435 989 Total $ 39,831 $ 7,354 $ 37,728 $ 6,728 $ 37,047 $ 5,428 (1) Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
May 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Year Ended May 31, (in millions, except per share data) 2018 2017 2016 Net income $ 3,825 $ 9,335 $ 8,901 Weighted average common shares outstanding 4,121 4,115 4,221 Dilutive effect of employee stock plans 117 102 84 Dilutive weighted average common shares outstanding 4,238 4,217 4,305 Basic earnings per share $ 0.93 $ 2.27 $ 2.11 Diluted earnings per share $ 0.90 $ 2.21 $ 2.07 Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation (1) 64 74 63 (1) These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and contingently issuable shares under PSO and PSU agreements. Such shares could be dilutive in the future. See Note 13 for information regarding the exercise prices of our outstanding, unexercised stock options. |
ORGANIZATION AND SIGNIFICANT 44
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
Feb. 28, 2018 | May 31, 2018 | Dec. 31, 2017 | May 31, 2018 | May 31, 2017 | May 31, 2016 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Federal statutory income tax rate, percent | 21.00% | 35.00% | 29.20% | 35.00% | 35.00% | |
Federal statutory tax rate, approximately | 29.00% | |||||
Income tax expense related to one-time transition tax, tax cuts and jobs act 2017 | $ 166 | $ 7,800 | ||||
Income tax benefit related to remeasurement of deferred tax liabilities, tax cuts and jobs act 2017 | $ 76 | $ 820 | ||||
Concentrations of Risk [Abstract] | ||||||
Customer Concentrations | No single customer accounted for 10% or more of our total revenues in fiscal 2018, 2017 or 2016. | |||||
Supplier Concentrations | We outsource the manufacturing, assembly and delivery of certain of our hardware products to a variety of companies, many of which are located outside the United States. Further, we have simplified our supply chain processes by reducing the number of third-party manufacturing partners and the number of locations where these third-party manufacturers build our hardware products. Any inability of these third-party manufacturing partners to deliver the contracted services for our hardware products could adversely impact future operating results of our hardware business. | |||||
Credit Risk Concentrations | Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, derivatives and trade receivables. Our cash and cash equivalents are generally held with large, diverse financial institutions worldwide to reduce the amount of exposure to any single financial institution. Investment policies have been implemented that limit purchases of marketable debt securities to investment-grade securities. Our derivative contracts are transacted with various financial institutions with high credit standings and any exposure to counterparty credit-related losses in these contracts is largely mitigated with collateral security agreements that provide for collateral to be received or posted when the net fair values of these contracts fluctuate from contractually established thresholds. We generally do not require collateral to secure accounts receivable. The risk with respect to trade receivables is mitigated by credit evaluations we perform on our customers, the short duration of our payment terms for the significant majority of our customer contracts and by the diversification of our customer base. | |||||
Inventory Net [Abstract] | ||||||
Total inventories | $ 398 | $ 398 | $ 300 | |||
Other Receivables [Narrative] [Abstract] | ||||||
Other receivables included in prepaid expenses and other current assets | $ 802 | $ 802 | 794 | |||
Property, Plant and Equipment [Abstract] | ||||||
Impairment of Property, Plant and Equipment | We did not recognize any significant property impairment charges in fiscal 2018, 2017 or 2016. | |||||
Goodwill, Intangible Assets and Impairment Assessments [Abstract] | ||||||
Goodwill impairment loss | $ 0 | 0 | $ 0 | |||
Impairment of intangible assets | We did not recognize any intangible asset impairment charges in fiscal 2018, 2017 or 2016. | |||||
Foreign Currency [Abstract] | ||||||
Net foreign exchange transaction losses included in non-operating income, net | $ 74 | 152 | 110 | |||
Advertising [Abstract] | ||||||
Advertising expenses | $ 138 | $ 95 | $ 68 | |||
Research and Development and Software Development Costs [Abstract] | ||||||
Research Development And Computer Software Activity Description | Software development costs required to be capitalized under ASC 985-20, Costs of Software to be Sold, Leased or Marketed, and under ASC 350-40, Internal-Use Software, were not material to our consolidated financial statements in fiscal 2018, 2017 and 2016. | |||||
Minimum [Member] | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Property, plant and equipment, estimated useful lives | 1 year | |||||
Goodwill, Intangible Assets and Impairment Assessments [Abstract] | ||||||
Finite lived intangible assets, useful life | 1 year | |||||
Maximum [Member] | ||||||
Property, Plant and Equipment [Abstract] | ||||||
Property, plant and equipment, estimated useful lives | 40 years | |||||
Goodwill, Intangible Assets and Impairment Assessments [Abstract] | ||||||
Finite lived intangible assets, useful life | 10 years |
ORGANIZATION AND SIGNIFICANT 45
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Acquisition Related and Other Expenses [Abstract] | |||
Transitional and other employee related costs | $ 48 | $ 41 | $ 45 |
Stock-based compensation | 1 | 35 | 3 |
Professional fees and other, net | 3 | 33 | 10 |
Business combination adjustments, net | 0 | (6) | (16) |
Total acquisition related and other expenses | 52 | 103 | 42 |
Non-Operating Income, net [Abstract] | |||
Interest income | 1,201 | 802 | 538 |
Foreign currency losses, net | (74) | (152) | (110) |
Noncontrolling interests in income | (135) | (118) | (116) |
Other income (loss), net | 245 | 73 | (7) |
Total non-operating income, net | $ 1,237 | $ 605 | $ 305 |
ACQUISITIONS Narrative (Details
ACQUISITIONS Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Acquisition [Line Items] | |||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | $ 3 | $ 90 | $ 1 |
Goodwill, net | $ 43,755 | $ 43,045 | $ 34,590 |
Aconex Limited [Member] | Related Party [Member] | |||
Acquisition [Line Items] | |||
Acquisition completion date | Mar. 28, 2018 | ||
Total purchase price | $ 1,200 | ||
Cash portion of purchase price | 1,200 | ||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | 1 | ||
Net tangible assets (liabilities) | 32 | ||
Intangible assets | 368 | ||
Goodwill, net | $ 832 | ||
Other Fiscal 2018 Acquisitions [Member] | |||
Acquisition [Line Items] | |||
Materiality of acquisition individually or in the aggregate | These acquisitions were not significant individually or in the aggregate. | ||
NetSuite Inc. [Member] | Related Party [Member] | |||
Acquisition [Line Items] | |||
Acquisition completion date | Nov. 7, 2016 | ||
Total purchase price | $ 9,100 | ||
Cash portion of purchase price | 9,000 | ||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | 78 | ||
Net tangible assets (liabilities) | (763) | ||
Intangible assets | 3,200 | ||
Goodwill, net | $ 6,700 | ||
Business combination reason for business combination | We acquired 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. | ||
Percentage of shares owned | 40.00% | ||
Other Fiscal 2017 Acquisitions [Member] | |||
Acquisition [Line Items] | |||
Total purchase price | $ 3,000 | ||
Cash portion of purchase price | 3,000 | ||
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions | 13 | ||
Net tangible assets (liabilities) | 243 | ||
Intangible assets | 948 | ||
Goodwill, net | $ 1,800 | ||
Materiality of acquisition individually or in the aggregate | These acquisitions were not individually or in the aggregate significant. | ||
Fiscal 2016 Acquisitions [Member] | |||
Acquisition [Line Items] | |||
Materiality of acquisition individually or in the aggregate | These acquisitions were not significant individually or in the aggregate. |
ACQUISITIONS - UNAUDITED PRO FO
ACQUISITIONS - UNAUDITED PRO FORMA FINANCIAL INFORMATION (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Acquisitions Proforma [Abstract] | ||
Total revenues | $ 39,977 | $ 38,416 |
Net income | $ 3,738 | $ 8,825 |
Basic earnings per share | $ 0.91 | $ 2.14 |
Diluted earnings per share | $ 0.88 | $ 2.09 |
CASH, CASH EQUIVALENTS AND MA48
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Cash Cash Equivalents And Short Term Investments [Abstract] | ||
Corporate debt securities and other | $ 44,302 | $ 41,618 |
Commercial paper debt securities | 1,647 | 5,053 |
Money market funds | 6,500 | 3,302 |
Total investments | 52,449 | 49,973 |
Investments classified as cash equivalents | 6,808 | 5,679 |
Investments classified as marketable securities | $ 45,641 | $ 44,294 |
Percentage of marketable securities investments mature within one year | 26.00% | 32.00% |
Percentage of marketable securities investments mature within one to five years | 74.00% | 68.00% |
Maturity of marketable security investments | As of May 31, 2018 and 2017, approximately 26% and 32%, respectively, of our marketable securities investments mature within one year and 74% and 68%, respectively, mature within one to five years. | |
Restricted cash and cash equivalent item, description | Restricted cash that was included within cash and cash equivalents as presented within our consolidated balance sheets as of May 31, 2018 and 2017 and our consolidated statements of cash flows for the years ended May 31, 2018, 2017 and 2016 was nominal. |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Assets [Abstract] | ||
Corporate debt securities and other | $ 44,302 | $ 41,618 |
Commercial paper debt securities | 1,647 | 5,053 |
Money market funds | 6,500 | 3,302 |
Derivative financial instruments | 29 | 40 |
Total assets | 52,478 | 50,013 |
Liabilities [Abstract] | ||
Derivative financial instruments | 158 | 191 |
Fair Value Measurements Using Input Types Level 1 [Member] | ||
Assets [Abstract] | ||
Corporate debt securities and other | 223 | 580 |
Commercial paper debt securities | 0 | 0 |
Money market funds | 6,500 | 3,302 |
Derivative financial instruments | 0 | 0 |
Total assets | 6,723 | 3,882 |
Liabilities [Abstract] | ||
Derivative financial instruments | 0 | 0 |
Fair Value Measurements Using Input Types Level 2 [Member] | ||
Assets [Abstract] | ||
Corporate debt securities and other | 44,079 | 41,038 |
Commercial paper debt securities | 1,647 | 5,053 |
Money market funds | 0 | 0 |
Derivative financial instruments | 29 | 40 |
Total assets | 45,755 | 46,131 |
Liabilities [Abstract] | ||
Derivative financial instruments | $ 158 | $ 191 |
FAIR VALUE MEASUREMENTS Narrati
FAIR VALUE MEASUREMENTS Narrative (Details) - USD ($) $ in Billions | May 31, 2018 | May 31, 2017 |
Short and Long Term Debt [Abstract] | ||
Senior notes | $ 58 | $ 54 |
Fair Value Measurements Using Input Types Level 2 [Member] | ||
Liabilities [Abstract] | ||
Total debt fair value | $ 59 | $ 56.5 |
PROPERTY, PLANT AND EQUIPMENT51
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Millions | 12 Months Ended | |
May 31, 2018 | May 31, 2017 | |
Property, Plant And Equipment [Line Items] | ||
Computer, network, machinery and equipment | $ 6,156 | $ 5,112 |
Buildings and improvements | 3,893 | 3,466 |
Furniture, fixtures and other | 662 | 651 |
Land | 868 | 830 |
Construction in progress | 229 | 235 |
Total property, plant and equipment | 11,808 | 10,294 |
Accumulated depreciation | (5,911) | (4,979) |
Total property, plant and equipment, net | $ 5,897 | $ 5,315 |
Minimum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 1 year | |
Maximum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 40 years | |
Computer, network, machinery and equipment | Minimum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 1 year | |
Computer, network, machinery and equipment | Maximum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Buildings and improvements | Minimum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 1 year | |
Buildings and improvements | Maximum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 40 years | |
Furniture, fixtures and other | Minimum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 5 years | |
Furniture, fixtures and other | Maximum | ||
Property, Plant And Equipment [Line Items] | ||
Estimated Useful Lives | 15 years |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 12,930 | $ 13,065 | ||
Additions | 613 | |||
Retirements | (748) | |||
Accumulated Amortization | (6,260) | (5,386) | ||
Expense | (1,620) | (1,451) | $ (1,638) | |
Retirements | 746 | |||
Intangible Assets, Net | $ 6,670 | 7,679 | ||
Weighted Average Useful Life (in years) | [1] | 4 years | ||
Developed technology [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 5,309 | 5,397 | ||
Additions | 153 | |||
Retirements | (241) | |||
Accumulated Amortization | (2,814) | (2,295) | ||
Expense | (758) | |||
Retirements | 239 | |||
Intangible Assets, Net | $ 2,495 | 3,102 | ||
Weighted Average Useful Life (in years) | [1] | 3 years | ||
Cloud services and license support agreements and related relationships [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 5,999 | 5,670 | ||
Additions | 423 | |||
Retirements | (94) | |||
Accumulated Amortization | (2,285) | (1,648) | ||
Expense | (731) | |||
Retirements | 94 | |||
Intangible Assets, Net | $ 3,714 | 4,022 | ||
Weighted Average Useful Life (in years) | [1] | 5 years | ||
Other [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible Assets, Gross | $ 1,622 | 1,998 | ||
Additions | 37 | |||
Retirements | (413) | |||
Accumulated Amortization | (1,161) | (1,443) | ||
Expense | (131) | |||
Retirements | 413 | |||
Intangible Assets, Net | $ 461 | $ 555 | ||
Weighted Average Useful Life (in years) | [1] | 5 years | ||
[1] | Represents weighted-average useful lives of intangible assets acquired during fiscal 2018 |
INTANGIBLE ASSETS AND GOODWIL53
INTANGIBLE ASSETS AND GOODWILL Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Amortization of intangible assets | $ 1,620 | $ 1,451 | $ 1,638 |
INTANGIBLE ASSETS AMORTIZATION
INTANGIBLE ASSETS AMORTIZATION (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Finite lived intangible assets future amortization expense [Abstract] | ||
Fiscal 2,019 | $ 1,605 | |
Fiscal 2,020 | 1,400 | |
Fiscal 2,021 | 1,174 | |
Fiscal 2,022 | 966 | |
Fiscal 2,023 | 613 | |
Thereafter | 912 | |
Intangible Assets, Net | $ 6,670 | $ 7,679 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | ||
Goodwill [Line Items] | |||
Balances at period start | $ 43,045 | $ 34,590 | |
Goodwill from acquisitions | 1,052 | 8,543 | |
Goodwill adjustments, net | [1] | (342) | (88) |
Balances at period end | 43,755 | 43,045 | |
Cloud and License [Member] | |||
Goodwill [Line Items] | |||
Balances at period start | 38,791 | 30,336 | |
Goodwill from acquisitions | 1,052 | 8,543 | |
Goodwill adjustments, net | [1] | (243) | (88) |
Balances at period end | 39,600 | 38,791 | |
Hardware [Member] | |||
Goodwill [Line Items] | |||
Balances at period start | 2,367 | 2,367 | |
Goodwill from acquisitions | 0 | 0 | |
Goodwill adjustments, net | [1] | 0 | 0 |
Balances at period end | 2,367 | 2,367 | |
Services [Member] | |||
Goodwill [Line Items] | |||
Balances at period start | 1,887 | 1,887 | |
Goodwill from acquisitions | 0 | 0 | |
Goodwill adjustments, net | [1] | (99) | 0 |
Balances at period end | $ 1,788 | $ 1,887 | |
[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). Amounts also include any changes in goodwill balances for the periods presented that resulted from foreign currency translations. |
NOTES PAYABLE AND OTHER BORRO56
NOTES PAYABLE AND OTHER BORROWINGS (Details) € in Millions, $ in Millions | 12 Months Ended | |||||||
May 31, 2018USD ($) | May 31, 2017USD ($) | May 31, 2018EUR (€) | Nov. 30, 2017USD ($) | Jul. 07, 2016USD ($) | Jul. 10, 2013EUR (€) | |||
Notes Payable Other Borrowings [Line Items] | ||||||||
Notes payable and other borrowings | $ 60,927 | $ 58,145 | ||||||
Unamortized discount/issuance costs | (282) | (276) | ||||||
Hedge accounting fair value adjustments | [1] | (26) | 40 | |||||
Total notes payable and other borrowings | 60,619 | 57,909 | ||||||
Notes payable and other borrowings, current | 4,491 | 9,797 | ||||||
Notes payable and other borrowings, non-current | 56,128 | 48,112 | ||||||
Senior notes and other borrowings, par value | $ 60,927 | $ 10,000 | $ 14,000 | € 2,000 | ||||
1.20% senior notes due October 2017 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Oct. 25, 2012 | |||||||
Notes payable and other borrowings | $ 2,500 | |||||||
Effective interest rate | 1.24% | |||||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Stated interest rate percentage | 1.20% | |||||||
Maturity date | Oct. 15, 2017 | |||||||
5.75% senior notes due April 2018 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Apr. 9, 2008 | |||||||
Notes payable and other borrowings | $ 2,500 | |||||||
Effective interest rate | 5.76% | |||||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Stated interest rate percentage | 5.75% | |||||||
Maturity date | Apr. 15, 2018 | |||||||
2.375% senior notes due January 2019 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [1] | Jul. 16, 2013 | ||||||
Notes payable and other borrowings | [1] | $ 1,500 | $ 1,500 | |||||
Effective interest rate | [1] | 2.44% | 2.44% | 2.44% | ||||
Senior notes and other borrowings, par value | [1] | $ 1,500 | ||||||
Stated interest rate percentage | 2.375% | 2.375% | ||||||
Maturity date | [1] | Jan. 15, 2019 | ||||||
5.00% senior notes due July 2019 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 9, 2009 | |||||||
Notes payable and other borrowings | $ 1,750 | $ 1,750 | ||||||
Effective interest rate | 5.05% | 5.05% | 5.05% | |||||
Senior notes and other borrowings, par value | $ 1,750 | |||||||
Stated interest rate percentage | 5.00% | 5.00% | ||||||
Maturity date | Jul. 8, 2019 | |||||||
2.25% senior notes due October 2019 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [1] | Jul. 8, 2014 | ||||||
Notes payable and other borrowings | [1] | $ 2,000 | $ 2,000 | |||||
Effective interest rate | [1] | 2.27% | 2.27% | 2.27% | ||||
Senior notes and other borrowings, par value | [1] | $ 2,000 | ||||||
Stated interest rate percentage | 2.25% | 2.25% | ||||||
Maturity date | [1] | Oct. 8, 2019 | ||||||
3.875% senior notes due July 2020 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 12, 2010 | |||||||
Notes payable and other borrowings | $ 1,000 | $ 1,000 | ||||||
Effective interest rate | 3.93% | 3.93% | 3.93% | |||||
Senior notes and other borrowings, par value | $ 1,000 | |||||||
Stated interest rate percentage | 3.875% | 3.875% | ||||||
Maturity date | Jul. 15, 2020 | |||||||
2.25% senior notes due January 2021 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [2],[3] | Jul. 10, 2013 | ||||||
Notes payable and other borrowings | [2],[3] | $ 1,446 | $ 1,395 | |||||
Effective interest rate | [2],[3] | 2.33% | 2.33% | 2.33% | ||||
Senior notes and other borrowings, par value | € | € 1,250 | [2],[3] | 1,250 | |||||
Stated interest rate percentage | 2.25% | 2.25% | ||||||
Maturity date | [2],[3] | Jan. 10, 2021 | ||||||
2.80% senior notes due July 2021 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [1] | Jul. 8, 2014 | ||||||
Notes payable and other borrowings | [1] | $ 1,500 | $ 1,500 | |||||
Effective interest rate | [1] | 2.82% | 2.82% | 2.82% | ||||
Senior notes and other borrowings, par value | $ 1,500 | |||||||
Stated interest rate percentage | 2.80% | 2.80% | ||||||
Maturity date | Jul. 8, 2021 | |||||||
1.90% senior notes due September 2021 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [4] | Jul. 7, 2016 | ||||||
Notes payable and other borrowings | [4] | $ 4,250 | $ 4,250 | |||||
Effective interest rate | [4] | 1.94% | 1.94% | 1.94% | ||||
Senior notes and other borrowings, par value | [4] | $ 4,250 | ||||||
Stated interest rate percentage | 1.90% | 1.90% | ||||||
Maturity date | [4] | Sep. 15, 2021 | ||||||
2.50% senior notes due May 2022 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 2,500 | $ 2,500 | ||||||
Effective interest rate | 2.56% | 2.56% | 2.56% | |||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Stated interest rate percentage | 2.50% | 2.50% | ||||||
Maturity date | May 15, 2022 | |||||||
2.50% senior notes due October 2022 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Oct. 25, 2012 | |||||||
Notes payable and other borrowings | $ 2,500 | $ 2,500 | ||||||
Effective interest rate | 2.51% | 2.51% | 2.51% | |||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Stated interest rate percentage | 2.50% | 2.50% | ||||||
Maturity date | Oct. 15, 2022 | |||||||
2.625% senior notes due february 2023 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [5] | Nov. 9, 2017 | ||||||
Notes payable and other borrowings | [5] | $ 1,250 | ||||||
Effective interest rate | 2.64% | 2.64% | ||||||
Senior notes and other borrowings, par value | $ 1,250 | |||||||
Stated interest rate percentage | 2.625% | 2.625% | ||||||
Maturity date | Feb. 15, 2023 | |||||||
3.625% senior notes due July 2023 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [2],[6] | Jul. 16, 2013 | ||||||
Notes payable and other borrowings | $ 1,000 | $ 1,000 | ||||||
Effective interest rate | 3.73% | 3.73% | 3.73% | |||||
Senior notes and other borrowings, par value | $ 1,000 | |||||||
Stated interest rate percentage | 3.625% | 3.625% | ||||||
Maturity date | Jul. 23, 2023 | |||||||
2.40% senior notes due September 2023 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [4] | Jul. 7, 2016 | ||||||
Notes payable and other borrowings | [4] | $ 2,500 | $ 2,500 | |||||
Effective interest rate | [4] | 2.40% | 2.40% | 2.40% | ||||
Senior notes and other borrowings, par value | [4] | $ 2,500 | ||||||
Stated interest rate percentage | 2.40% | 2.40% | ||||||
Maturity date | [4] | Sep. 15, 2023 | ||||||
3.40% senior notes due July 2024 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2014 | |||||||
Notes payable and other borrowings | $ 2,000 | $ 2,000 | ||||||
Effective interest rate | 3.43% | 3.43% | 3.43% | |||||
Senior notes and other borrowings, par value | $ 2,000 | |||||||
Stated interest rate percentage | 3.40% | 3.40% | ||||||
Maturity date | Jul. 8, 2024 | |||||||
2.95% senior notes due November 2024 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [5] | Nov. 9, 2017 | ||||||
Notes payable and other borrowings | [5] | $ 2,000 | ||||||
Effective interest rate | 2.98% | 2.98% | ||||||
Senior notes and other borrowings, par value | $ 2,000 | |||||||
Stated interest rate percentage | 2.95% | 2.95% | ||||||
Maturity date | Nov. 15, 2024 | |||||||
2.95% senior notes due May 2025 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 2,500 | $ 2,500 | ||||||
Effective interest rate | 3.00% | 3.00% | 3.00% | |||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Stated interest rate percentage | 2.95% | 2.95% | ||||||
Maturity date | May 15, 2025 | |||||||
3.125% senior notes due July 2025 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [6] | Jul. 10, 2013 | ||||||
Notes payable and other borrowings | [2],[6] | $ 868 | $ 837 | |||||
Effective interest rate | [2],[6] | 3.17% | 3.17% | 3.17% | ||||
Senior notes and other borrowings, par value | € | € 750 | [2],[6] | € 750 | |||||
Stated interest rate percentage | 3.125% | 3.125% | ||||||
Maturity date | [2],[6] | Jul. 10, 2025 | ||||||
2.65% senior notes due July 2026 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [4] | Jul. 7, 2016 | ||||||
Notes payable and other borrowings | [4] | $ 3,000 | $ 3,000 | |||||
Effective interest rate | [4] | 2.69% | 2.69% | 2.69% | ||||
Senior notes and other borrowings, par value | [4] | $ 3,000 | ||||||
Stated interest rate percentage | 2.65% | 2.65% | ||||||
Maturity date | [4] | Jul. 15, 2026 | ||||||
3.25% senior notes due November 2027 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [5] | Nov. 9, 2017 | ||||||
Notes payable and other borrowings | [5] | $ 2,750 | ||||||
Effective interest rate | 3.26% | 3.26% | ||||||
Senior notes and other borrowings, par value | $ 2,750 | |||||||
Stated interest rate percentage | 3.25% | 3.25% | ||||||
Maturity date | Nov. 15, 2027 | |||||||
3.25% senior notes due May 2030 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 500 | $ 500 | ||||||
Effective interest rate | 3.30% | 3.30% | 3.30% | |||||
Senior notes and other borrowings, par value | $ 500 | |||||||
Stated interest rate percentage | 3.25% | 3.25% | ||||||
Maturity date | May 15, 2030 | |||||||
4.30% senior notes due July 2034 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2014 | |||||||
Notes payable and other borrowings | $ 1,750 | $ 1,750 | ||||||
Effective interest rate | 4.30% | 4.30% | 4.30% | |||||
Senior notes and other borrowings, par value | $ 1,750 | |||||||
Stated interest rate percentage | 4.30% | 4.30% | ||||||
Maturity date | Jul. 8, 2034 | |||||||
3.90% senior notes due May 2035 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 1,250 | $ 1,250 | ||||||
Effective interest rate | 3.95% | 3.95% | 3.95% | |||||
Senior notes and other borrowings, par value | $ 1,250 | |||||||
Stated interest rate percentage | 3.90% | 3.90% | ||||||
Maturity date | May 15, 2035 | |||||||
3.85% senior notes due July 2036 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [4] | Jul. 7, 2016 | ||||||
Notes payable and other borrowings | [4] | $ 1,250 | $ 1,250 | |||||
Effective interest rate | [4] | 3.85% | 3.85% | 3.85% | ||||
Senior notes and other borrowings, par value | [4] | $ 1,250 | ||||||
Stated interest rate percentage | 3.85% | 3.85% | ||||||
Maturity date | [4] | Jul. 15, 2036 | ||||||
3.80% senior notes due November 2037 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [5] | Nov. 9, 2017 | ||||||
Notes payable and other borrowings | [5] | $ 1,750 | ||||||
Effective interest rate | 3.83% | 3.83% | ||||||
Senior notes and other borrowings, par value | $ 1,750 | |||||||
Stated interest rate percentage | 3.80% | 3.80% | ||||||
Maturity date | Nov. 15, 2037 | |||||||
6.50% senior notes due April 2038 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [1] | Apr. 9, 2008 | ||||||
Notes payable and other borrowings | $ 1,250 | $ 1,250 | ||||||
Effective interest rate | 6.52% | 6.52% | 6.52% | |||||
Senior notes and other borrowings, par value | $ 1,250 | |||||||
Stated interest rate percentage | 6.50% | 6.50% | ||||||
Maturity date | Apr. 15, 2038 | |||||||
6.125% senior notes due July 2039 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2009 | |||||||
Notes payable and other borrowings | $ 1,250 | $ 1,250 | ||||||
Effective interest rate | 6.19% | 6.19% | 6.19% | |||||
Senior notes and other borrowings, par value | $ 1,250 | |||||||
Stated interest rate percentage | 6.125% | 6.125% | ||||||
Maturity date | Jul. 8, 2039 | |||||||
5.375% senior notes due July 2040 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 12, 2010 | |||||||
Notes payable and other borrowings | $ 2,250 | $ 2,250 | ||||||
Effective interest rate | 5.45% | 5.45% | 5.45% | |||||
Senior notes and other borrowings, par value | $ 2,250 | |||||||
Stated interest rate percentage | 5.375% | 5.375% | ||||||
Maturity date | Jul. 15, 2040 | |||||||
4.50% senior notes due July 2044 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2014 | |||||||
Notes payable and other borrowings | $ 1,000 | $ 1,000 | ||||||
Effective interest rate | 4.50% | 4.50% | 4.50% | |||||
Senior notes and other borrowings, par value | $ 1,000 | |||||||
Stated interest rate percentage | 4.50% | 4.50% | ||||||
Maturity date | Jul. 8, 2044 | |||||||
4.125% senior notes due May 2045 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 2,000 | $ 2,000 | ||||||
Effective interest rate | 4.15% | 4.15% | 4.15% | |||||
Senior notes and other borrowings, par value | $ 2,000 | |||||||
Stated interest rate percentage | 4.125% | 4.125% | ||||||
Maturity date | May 15, 2045 | |||||||
4.00% senior notes due July 2046 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [4] | Jul. 7, 2016 | ||||||
Notes payable and other borrowings | [4] | $ 3,000 | $ 3,000 | |||||
Effective interest rate | [4] | 4.00% | 4.00% | 4.00% | ||||
Senior notes and other borrowings, par value | [4] | $ 3,000 | ||||||
Stated interest rate percentage | 4.00% | 4.00% | ||||||
Maturity date | [4] | Jul. 15, 2046 | ||||||
4.00% senior notes due November 2047 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | [5] | Nov. 9, 2017 | ||||||
Notes payable and other borrowings | [5] | $ 2,250 | ||||||
Effective interest rate | 4.03% | 4.03% | ||||||
Senior notes and other borrowings, par value | $ 2,250 | |||||||
Stated interest rate percentage | 4.00% | 4.00% | ||||||
Maturity date | Nov. 15, 2047 | |||||||
4.375% senior notes due May 2055 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 5, 2015 | |||||||
Notes payable and other borrowings | $ 1,250 | $ 1,250 | ||||||
Effective interest rate | 4.40% | 4.40% | 4.40% | |||||
Senior notes and other borrowings, par value | $ 1,250 | |||||||
Stated interest rate percentage | 4.375% | 4.375% | ||||||
Maturity date | May 15, 2055 | |||||||
Floating rate senior notes due July 2017 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2014 | |||||||
Notes payable and other borrowings | $ 1,000 | |||||||
Effective interest rate | 1.35% | |||||||
Senior notes and other borrowings, par value | $ 1,000 | |||||||
Maturity date | Jul. 7, 2017 | |||||||
Debt instrument LIBOR rate | 0.20% | |||||||
Floating rate senior notes due January 2019 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 16, 2013 | |||||||
Notes payable and other borrowings | $ 500 | $ 500 | ||||||
Effective interest rate | 2.93% | 1.74% | 2.93% | |||||
Senior notes and other borrowings, par value | $ 500 | |||||||
Maturity date | Jan. 15, 2019 | |||||||
Debt instrument LIBOR rate | 0.58% | |||||||
Floating rate senior notes due October 2019 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Jul. 8, 2014 | |||||||
Notes payable and other borrowings | $ 750 | $ 750 | ||||||
Effective interest rate | 2.84% | 1.67% | 2.84% | |||||
Senior notes and other borrowings, par value | $ 750 | |||||||
Maturity date | Oct. 8, 2019 | |||||||
Debt instrument LIBOR rate | 0.51% | |||||||
Revolving credit agreements due June 2017 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 31, 2017 | |||||||
Notes payable and other borrowings, current | $ 3,800 | |||||||
Effective interest rate | 1.54% | |||||||
Senior notes and other borrowings, par value | $ 3,800 | |||||||
Maturity date | Jun. 30, 2017 | |||||||
Debt instrument LIBOR rate | 0.50% | |||||||
Revolving credit agreements due June 2018 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | May 31, 2018 | |||||||
Notes payable and other borrowings, current | $ 2,500 | |||||||
Effective interest rate | 2.48% | 2.48% | ||||||
Senior notes and other borrowings, par value | $ 2,500 | |||||||
Maturity date | Jun. 29, 2018 | |||||||
Debt instrument LIBOR rate | 0.50% | |||||||
Other borrowings due August 2025 [Member] | ||||||||
Notes Payable Other Borrowings [Line Items] | ||||||||
Date of issuance | Nov. 7, 2016 | |||||||
Notes payable and other borrowings | $ 113 | $ 113 | ||||||
Effective interest rate | 3.53% | 3.53% | 3.53% | |||||
Maturity date | Aug. 1, 2025 | |||||||
[1] | We have entered into certain interest rate swap agreements that have the economic effects of modifying the fixed-interest obligations associated with the 2.375% senior notes due January 2019 (January 2019 Notes), the 2.25% senior notes due October 2019 (October 2019 Notes), the 2.80% senior notes due July 2021 (July 2021 Notes), and the 6.50% senior notes due April 2038 (April 2038 Notes) so that the interest payable on these notes effectively became variable based on LIBOR. The effective interest rates after consideration of these fixed to variable interest rate swap agreements were 3.00% and 1.81%, respectively, for the January 2019 Notes, 2.81% and 1.64%, respectively, for the October 2019 Notes, and 2.96% and 1.79%, respectively, for the July 2021 Notes as of May 31, 2018 and 2017, respectively. The effective interest rate as of May 31, 2018 after consideration of the fixed to variable interest rate swap agreements was 5.65% for the April 2038 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. | |||||||
[2] | In July 2013, we issued €2.0 billion of fixed-rate senior notes comprised of €1.25 billion of 2.25% senior notes due January 2021 (January 2021 Notes) and €750 million of 3.125% senior notes due July 2025 (July 2025 Notes, and together with the January 2021 Notes, the Euro Notes). Principal and unamortized discount/issuance costs for the Euro Notes in the table above were calculated using foreign currency exchange rates as of May 31, 2018 and May 31, 2017, respectively. The Euro Notes are registered and trade on the New York Stock Exchange. | |||||||
[3] | In connection with the issuance of the January 2021 Notes, we entered into certain cross-currency swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a fixed-rate, U.S. Dollar-denominated debt of $1.6 billion with a fixed annual interest rate of 3.53% (see Note 10 for additional information). | |||||||
[4] | In July 2016, we issued $14.0 billion of 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. | |||||||
[5] | In November 2017, we issued $10.0 billion of 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 | |||||||
[6] | We designated the 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 in connection with the issuance of the July 2025 Notes. In our fourth quarter of fiscal 2018 we de-designated the 2025 Notes as a net investment hedge and entered into certain cross-currency interest rate swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a variable-rate, U.S. Dollar-denominated debt of $0.9 billion based on LIBOR. The effective interest rate as of May 31, 2018 after consideration of the cross-currency interest rate swap agreements was 5.17% for the July 2025 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. |
NOTES PAYABLE AND OTHER BORRO57
NOTES PAYABLE AND OTHER BORROWINGS Narrative (Details) € in Millions | Jun. 29, 2017USD ($) | Jun. 27, 2016USD ($) | Nov. 30, 2016USD ($) | May 31, 2018USD ($) | May 31, 2017USD ($) | May 31, 2018EUR (€) | Apr. 30, 2018USD ($) | Nov. 30, 2017USD ($) | Jul. 07, 2016USD ($) | May 31, 2016USD ($) | Jul. 10, 2013EUR (€) | ||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Senior notes and other borrowings, par value | $ 60,927,000,000 | $ 10,000,000,000 | $ 14,000,000,000 | € 2,000 | |||||||||
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 except for the floating-rate senior notes which may not be redeemed prior to their maturity. | ||||||||||||
Debt-related covenants | We were in compliance with all debt-related covenants at May 31, 2018 | ||||||||||||
Short-term borrowings | $ 4,491,000,000 | $ 9,797,000,000 | |||||||||||
Other Notes Payable [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Debt instrument fair value | $ 342,000,000 | ||||||||||||
Other notes payable | $ 310,000,000 | ||||||||||||
Other borrowings due August 2025 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Revolving credit agreement due date | Aug. 1, 2025 | ||||||||||||
Other loans payable | $ 113,000,000 | ||||||||||||
Debt instrument interest rate percentage | 3.53% | ||||||||||||
2018 Credit Agreement [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Date of issuance | May 24, 2018 | ||||||||||||
Short-term borrowings | $ 2,500,000,000 | ||||||||||||
Revolving credit agreement due date | Jun. 28, 2018 | ||||||||||||
Revolving credit agreement capacity | In May 2018, we entered into three revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2018 Credit Agreements) and borrowed $2.5 billion pursuant to these agreements. The 2018 Credit Agreements provided us with short-term borrowings for working capital and other general corporate purposes. Interest for the 2018 Credit Agreements is based on either (1) a LIBOR-based formula or (2) the Base Rate formula, as set forth in the 2018 Credit Agreements. The borrowings are due and payable on June 28, 2018, which is the termination date of the 2018 Credit Agreements. | ||||||||||||
2017 Credit Agreement [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Date of issuance | May 24, 2017 | ||||||||||||
Short-term borrowings | $ 3,800,000,000 | ||||||||||||
Revolving credit agreement capacity | In May 2017, we borrowed $3.8 billion pursuant to four revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2017 Credit Agreements). In June 2017, we repaid the $3.8 billion and the 2017 Credit Agreements expired pursuant to their terms. | ||||||||||||
Repayments of credit agreements | $ 3,800,000,000 | ||||||||||||
2016 Credit Agreement [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Date of issuance | May 23, 2016 | ||||||||||||
Short-term borrowings | $ 3,750,000,000 | ||||||||||||
Revolving credit agreement capacity | 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. | ||||||||||||
Repayments of credit agreements | $ 3,750,000,000 | ||||||||||||
2013 Credit Agreement [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Revolving credit agreement due date | Apr. 30, 2018 | ||||||||||||
Revolving credit agreement capacity | In April 2013, we entered into a $3.0 billion Revolving Credit Agreement with Wells Fargo Bank, N.A., Bank of America, N.A., BNP Paribas, JPMorgan Chase Bank, N.A. and certain other lenders (the 2013 Credit Agreement). The 2013 Credit Agreement provided for an unsecured 5-year revolving credit facility to be used for general corporate purposes including back-stopping any commercial paper notes that we may issue. In April 2018, the 2013 Credit Agreement expired. No amounts were outstanding as of the expiration date nor as of May 31, 2017. | ||||||||||||
Revolving credit agreement initiation date | Apr. 22, 2013 | ||||||||||||
Revolving credit agreement capacity | $ 3,000,000,000 | $ 3,000,000,000 | |||||||||||
Revolving credit facility period | 5 years | ||||||||||||
Revolving credit agreement amount outstanding | $ 0 | $ 0 | |||||||||||
2.375% senior notes due January 2019 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Annual interest rate after the economic effect of the interest rate swaps | 3.00% | 1.81% | 3.00% | ||||||||||
Senior notes and other borrowings, par value | [1] | $ 1,500,000,000 | |||||||||||
Effective interest rate | [1] | 2.44% | 2.44% | 2.44% | |||||||||
Date of issuance | [1] | Jul. 16, 2013 | |||||||||||
Revolving credit agreement due date | [1] | Jan. 15, 2019 | |||||||||||
Debt instrument interest rate percentage | 2.375% | 2.375% | |||||||||||
2.25% senior notes due October 2019 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Annual interest rate after the economic effect of the interest rate swaps | 2.81% | 1.64% | 2.81% | ||||||||||
Senior notes and other borrowings, par value | [1] | $ 2,000,000,000 | |||||||||||
Effective interest rate | [1] | 2.27% | 2.27% | 2.27% | |||||||||
Date of issuance | [1] | Jul. 8, 2014 | |||||||||||
Revolving credit agreement due date | [1] | Oct. 8, 2019 | |||||||||||
Debt instrument interest rate percentage | 2.25% | 2.25% | |||||||||||
2.80% senior notes due July 2021 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Annual interest rate after the economic effect of the interest rate swaps | 2.96% | 1.79% | 2.96% | ||||||||||
Senior notes and other borrowings, par value | $ 1,500,000,000 | ||||||||||||
Effective interest rate | [1] | 2.82% | 2.82% | 2.82% | |||||||||
Date of issuance | [1] | Jul. 8, 2014 | |||||||||||
Revolving credit agreement due date | Jul. 8, 2021 | ||||||||||||
Debt instrument interest rate percentage | 2.80% | 2.80% | |||||||||||
6.50% senior notes due April 2038 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Annual interest rate after the economic effect of the interest rate swaps | 5.65% | 5.65% | |||||||||||
Senior notes and other borrowings, par value | $ 1,250,000,000 | ||||||||||||
Effective interest rate | 6.52% | 6.52% | 6.52% | ||||||||||
Date of issuance | [1] | Apr. 9, 2008 | |||||||||||
Revolving credit agreement due date | Apr. 15, 2038 | ||||||||||||
Debt instrument interest rate percentage | 6.50% | 6.50% | |||||||||||
2.25% senior notes due January 2021 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Senior notes and other borrowings, par value | € | € 1,250 | [2],[3] | 1,250 | ||||||||||
Senior notes fixed principal amount | $ 1,600,000,000 | ||||||||||||
Annual interest rate for the 2.25% notes due January 2021 after the economic effect of the cross-currency swaps | 3.53% | 3.53% | |||||||||||
Effective interest rate | [2],[3] | 2.33% | 2.33% | 2.33% | |||||||||
Date of issuance | [2],[3] | Jul. 10, 2013 | |||||||||||
Revolving credit agreement due date | [2],[3] | Jan. 10, 2021 | |||||||||||
Debt instrument interest rate percentage | 2.25% | 2.25% | |||||||||||
3.125% senior notes due July 2025 [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Senior notes and other borrowings, par value | € | € 750 | [2],[4] | € 750 | ||||||||||
Effective interest rate | [2],[4] | 3.17% | 3.17% | 3.17% | |||||||||
Date of issuance | [4] | Jul. 10, 2013 | |||||||||||
Revolving credit agreement due date | [2],[4] | Jul. 10, 2025 | |||||||||||
Debt instrument interest rate percentage | 3.125% | 3.125% | |||||||||||
3.125% senior notes due July 2025 [Member] | Cross-currency interest rate swap agreements [Member] | |||||||||||||
Notes Payable Other Borrowings [Line Items] | |||||||||||||
Senior notes fixed principal amount | $ 900,000,000 | ||||||||||||
Effective interest rate | 5.17% | 5.17% | |||||||||||
[1] | We have entered into certain interest rate swap agreements that have the economic effects of modifying the fixed-interest obligations associated with the 2.375% senior notes due January 2019 (January 2019 Notes), the 2.25% senior notes due October 2019 (October 2019 Notes), the 2.80% senior notes due July 2021 (July 2021 Notes), and the 6.50% senior notes due April 2038 (April 2038 Notes) so that the interest payable on these notes effectively became variable based on LIBOR. The effective interest rates after consideration of these fixed to variable interest rate swap agreements were 3.00% and 1.81%, respectively, for the January 2019 Notes, 2.81% and 1.64%, respectively, for the October 2019 Notes, and 2.96% and 1.79%, respectively, for the July 2021 Notes as of May 31, 2018 and 2017, respectively. The effective interest rate as of May 31, 2018 after consideration of the fixed to variable interest rate swap agreements was 5.65% for the April 2038 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. | ||||||||||||
[2] | In July 2013, we issued €2.0 billion of fixed-rate senior notes comprised of €1.25 billion of 2.25% senior notes due January 2021 (January 2021 Notes) and €750 million of 3.125% senior notes due July 2025 (July 2025 Notes, and together with the January 2021 Notes, the Euro Notes). Principal and unamortized discount/issuance costs for the Euro Notes in the table above were calculated using foreign currency exchange rates as of May 31, 2018 and May 31, 2017, respectively. The Euro Notes are registered and trade on the New York Stock Exchange. | ||||||||||||
[3] | In connection with the issuance of the January 2021 Notes, we entered into certain cross-currency swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a fixed-rate, U.S. Dollar-denominated debt of $1.6 billion with a fixed annual interest rate of 3.53% (see Note 10 for additional information). | ||||||||||||
[4] | We designated the 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 in connection with the issuance of the July 2025 Notes. In our fourth quarter of fiscal 2018 we de-designated the 2025 Notes as a net investment hedge and entered into certain cross-currency interest rate swap agreements that have the economic effect of converting our fixed-rate, Euro-denominated debt, including annual interest payments and the payment of principal at maturity, to a variable-rate, U.S. Dollar-denominated debt of $0.9 billion based on LIBOR. The effective interest rate as of May 31, 2018 after consideration of the cross-currency interest rate swap agreements was 5.17% for the July 2025 Notes. Refer to Notes 1 and 10 for a description of our accounting for fair value hedges. |
FUTURE PRINCIPAL PAYMENTS FOR A
FUTURE PRINCIPAL PAYMENTS FOR ALL BORROWINGS (Details) $ in Millions, € in Billions | May 31, 2018USD ($) | Nov. 30, 2017USD ($) | Jul. 07, 2016USD ($) | Jul. 10, 2013EUR (€) |
Principal Payments for All Borrowings [Abstract] | ||||
Fiscal 2,019 | $ 4,500 | |||
Fiscal 2,020 | 4,500 | |||
Fiscal 2,021 | 2,446 | |||
Fiscal 2,022 | 8,250 | |||
Fiscal 2,023 | 3,750 | |||
Thereafter | 37,481 | |||
Total | $ 60,927 | $ 10,000 | $ 14,000 | € 2 |
RESTRUCTURING ACTIVITIES (Detai
RESTRUCTURING ACTIVITIES (Details) - USD ($) $ in Millions | 12 Months Ended | |||||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||||
Restructuring reserve [Line Items] | ||||||
Restructuring expenses | $ 588 | $ 463 | $ 458 | |||
Accrued at period start | [1] | 264 | [2] | 283 | 120 | |
Initial Costs | [1],[3] | 639 | 508 | 484 | ||
Adjustments to Cost | [1],[4] | (51) | (45) | (26) | ||
Cash Payments | [1] | (571) | (478) | (290) | ||
Others | [1],[5] | 1 | (4) | (5) | ||
Accrued at period end | [1] | 282 | [2] | 264 | [2] | 283 |
Fiscal 2017 Oracle Restructuring [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Restructuring expenses | 601 | 486 | ||||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2018 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2] | 185 | ||||
Initial Costs | [1],[3] | 638 | ||||
Adjustments to Cost | [1],[4] | (37) | ||||
Cash Payments | [1] | (534) | ||||
Others | [1],[5] | (3) | ||||
Accrued at period end | [1],[2] | 249 | 185 | |||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2018 Activity [Member] | Cloud and license [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2] | 85 | ||||
Initial Costs | [1],[3] | 156 | ||||
Adjustments to Cost | [1],[4] | (12) | ||||
Cash Payments | [1] | (150) | ||||
Others | [1],[5] | 3 | ||||
Accrued at period end | [1],[2] | 82 | 85 | |||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2018 Activity [Member] | Hardware [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2] | 31 | ||||
Initial Costs | [1],[3] | 167 | ||||
Adjustments to Cost | [1],[4] | (15) | ||||
Cash Payments | [1] | (122) | ||||
Others | [1],[5] | 0 | ||||
Accrued at period end | [1],[2] | 61 | 31 | |||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2018 Activity [Member] | Services [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2] | 25 | ||||
Initial Costs | [1],[3] | 48 | ||||
Adjustments to Cost | [1],[4] | (4) | ||||
Cash Payments | [1] | (54) | ||||
Others | [1],[5] | 1 | ||||
Accrued at period end | [1],[2] | 16 | 25 | |||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2018 Activity [Member] | Other [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2],[6] | 44 | ||||
Initial Costs | [1],[3],[6] | 267 | ||||
Adjustments to Cost | [1],[4],[6] | (6) | ||||
Cash Payments | [1],[6] | (208) | ||||
Others | [1],[5],[6] | (7) | ||||
Accrued at period end | [1],[2],[6] | 90 | 44 | |||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2017 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 185 | [2] | 0 | ||
Initial Costs | [1],[3] | 500 | ||||
Adjustments to Cost | [1],[4] | (14) | ||||
Cash Payments | [1] | (309) | ||||
Others | [1],[5] | 8 | ||||
Accrued at period end | [1] | 185 | [2] | 0 | ||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2017 Activity [Member] | Cloud and license [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 85 | [2] | 0 | ||
Initial Costs | [1],[3] | 184 | ||||
Adjustments to Cost | [1],[4] | (6) | ||||
Cash Payments | [1] | (100) | ||||
Others | [1],[5] | 7 | ||||
Accrued at period end | [1] | 85 | [2] | 0 | ||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2017 Activity [Member] | Hardware [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 31 | [2] | 0 | ||
Initial Costs | [1],[3] | 91 | ||||
Adjustments to Cost | [1],[4] | (3) | ||||
Cash Payments | [1] | (57) | ||||
Others | [1],[5] | 0 | ||||
Accrued at period end | [1] | 31 | [2] | 0 | ||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2017 Activity [Member] | Services [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 25 | [2] | 0 | ||
Initial Costs | [1],[3] | 59 | ||||
Adjustments to Cost | [1],[4] | (1) | ||||
Cash Payments | [1] | (34) | ||||
Others | [1],[5] | 1 | ||||
Accrued at period end | [1] | 25 | [2] | 0 | ||
Fiscal 2017 Oracle Restructuring [Member] | Fiscal 2017 Activity [Member] | Other [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[6] | 44 | [2] | 0 | ||
Initial Costs | [1],[3],[6] | 166 | ||||
Adjustments to Cost | [1],[4],[6] | (4) | ||||
Cash Payments | [1],[6] | (118) | ||||
Others | [1],[5],[6] | 0 | ||||
Accrued at period end | [1],[6] | $ 44 | [2] | 0 | ||
Fiscal 2015 Oracle Restructuring [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Restructuring expenses | 462 | |||||
Completion date | May 31, 2016 | |||||
Fiscal 2015 Oracle Restructuring [Member] | Fiscal 2016 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | $ 238 | 36 | |||
Initial Costs | [1],[3] | 482 | ||||
Adjustments to Cost | [1],[4] | (20) | ||||
Cash Payments | [1] | (263) | ||||
Others | [1],[5] | 3 | ||||
Accrued at period end | [1] | 238 | ||||
Fiscal 2015 Oracle Restructuring [Member] | Fiscal 2016 Activity [Member] | Cloud and license [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 146 | 16 | |||
Initial Costs | [1],[3] | 263 | ||||
Adjustments to Cost | [1],[4] | (8) | ||||
Cash Payments | [1] | (129) | ||||
Others | [1],[5] | 4 | ||||
Accrued at period end | [1] | 146 | ||||
Fiscal 2015 Oracle Restructuring [Member] | Fiscal 2016 Activity [Member] | Hardware [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 23 | 6 | |||
Initial Costs | [1],[3] | 67 | ||||
Adjustments to Cost | [1],[4] | (8) | ||||
Cash Payments | [1] | (43) | ||||
Others | [1],[5] | 1 | ||||
Accrued at period end | [1] | 23 | ||||
Fiscal 2015 Oracle Restructuring [Member] | Fiscal 2016 Activity [Member] | Services [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 14 | 9 | |||
Initial Costs | [1],[3] | 44 | ||||
Adjustments to Cost | [1],[4] | (4) | ||||
Cash Payments | [1] | (35) | ||||
Others | [1],[5] | 0 | ||||
Accrued at period end | [1] | 14 | ||||
Fiscal 2015 Oracle Restructuring [Member] | Fiscal 2016 Activity [Member] | Other [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1] | 55 | 5 | |||
Initial Costs | [1],[3] | 108 | ||||
Adjustments to Cost | [1],[4] | 0 | ||||
Cash Payments | [1] | (56) | ||||
Others | [1],[5] | (2) | ||||
Accrued at period end | [1] | 55 | ||||
Other Restructuring Plans [Member] | Fiscal 2018 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[2],[7] | 79 | ||||
Initial Costs | [1],[3],[7] | 1 | ||||
Adjustments to Cost | [1],[4],[7] | (14) | ||||
Cash Payments | [1],[7] | (37) | ||||
Others | [1],[5],[7] | 4 | ||||
Accrued at period end | [1],[2],[7] | 33 | 79 | |||
Other Restructuring Plans [Member] | Fiscal 2017 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[7] | $ 79 | [2] | 283 | ||
Initial Costs | [1],[3],[7] | 8 | ||||
Adjustments to Cost | [1],[4],[7] | (31) | ||||
Cash Payments | [1],[7] | (169) | ||||
Others | [1],[5],[7] | (12) | ||||
Accrued at period end | [1],[7] | 79 | [2] | 283 | ||
Other Restructuring Plans [Member] | Fiscal 2016 Activity [Member] | ||||||
Restructuring reserve [Line Items] | ||||||
Accrued at period start | [1],[6] | $ 45 | 84 | |||
Initial Costs | [1],[3],[6] | 2 | ||||
Adjustments to Cost | [1],[4],[6] | (6) | ||||
Cash Payments | [1],[6] | (27) | ||||
Others | [1],[5],[6] | (8) | ||||
Accrued at period end | [1],[6] | $ 45 | ||||
[1] | Restructuring costs recorded for individual line items primarily related to employee severance costs. | |||||
[2] | The balances at May 31, 2018 and 2017 included $257 million and $242 million, respectively, recorded in other current liabilities and $25 million and $22 million, respectively, recorded in other non-current liabilities. | |||||
[3] | Costs recorded for the respective restructuring plans during the periods presented. | |||||
[4] | All plan adjustments were changes in estimates whereby increases and decreases in costs were generally recorded to operating expenses in the period of adjustments. | |||||
[5] | Represents foreign currency translation and certain other adjustments. | |||||
[6] | Represents employee related severance costs for functions that are not included within our operating segments and certain facilities related restructuring costs. | |||||
[7] | Other restructuring plans presented in the tables above included condensed information for certain Oracle-based plans and other plans associated with certain of our acquisitions whereby we continued to make cash outlays to settle obligations under these plans during the periods presented but for which the periodic impact to our consolidated statements of operations was not significant. |
RESTRUCTURING ACTIVITIES Narrat
RESTRUCTURING ACTIVITIES Narrative (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Restructuring Reserve [Abstract] | ||
Accrued restructuring liabilities, current (in other current liabilities) | $ 257 | $ 242 |
Accrued restructuring liabilities, non-current (in other non-current liabilities) | $ 25 | $ 22 |
DEFERRED REVENUES (Details)
DEFERRED REVENUES (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Deferred Revenues [Line Items] | ||
Deferred revenues, current | $ 8,429 | $ 8,233 |
Deferred revenues, non-current (in other non-current liabilities) | 625 | 602 |
Total deferred revenues | 9,054 | 8,835 |
Cloud services and license support [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 7,292 | 7,144 |
Hardware [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 645 | 640 |
Services business [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | 437 | 382 |
Cloud license and on-premise license [Member] | ||
Deferred Revenues [Line Items] | ||
Deferred revenues, current | $ 55 | $ 67 |
DERIVATIVE FINANCIAL INSTRUME62
DERIVATIVE FINANCIAL INSTRUMENTS Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | May 31, 2015 | |
Interest Rate Swap Agreements and Cross-Currency Interest Rate Swap Agreements (Narrative) [Abstract] | ||||
Description of fair value hedges | In May 2018, we entered into certain cross-currency interest rate swap agreements to manage the foreign currency exchange rate risk associated with our July 2025 Notes by effectively converting the fixed-rate, Euro denominated 2025 Notes, including the annual interest payments and the payment of principal at maturity, to variable-rate, U.S. Dollar denominated debt based on LIBOR. In April 2018, we entered into certain interest rate swap agreements that have the economic effect of modifying the fixed-interest obligations associated with our April 2038 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. 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 October 2019 Notes and our 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 January 2019 Notes so that the interest payable on these senior notes effectively became variable based on LIBOR. The critical terms of the swap agreements match the critical terms of the July 2025 Notes, April 2038 Notes, October 2019 Notes, July 2021 Notes and the January 2019 Notes that the swap agreements pertain to, including the notional amounts and maturity dates. | |||
Cash Flow Hedges (Narrative) [Abstract] | ||||
Description of cash flow hedges | In connection with the issuance of the 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. | |||
Net Investment Hedges (Narrative) [Abstract] | ||||
Description of net investment hedge | In July 2013, we designated our 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 [Abstract] | ||||
Description of foreign currency forward contracts not designated as hedges | We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, our strategy is to enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transactions. We may suspend this program from time to time. Our foreign currency exposures typically arise from intercompany sublicense fees, intercompany loans and other intercompany transactions that are generally expected to be cash settled in the near term. Neither do we use these foreign currency forward contracts for trading purposes nor do we designate these forward contracts as hedging instruments pursuant to ASC 815. The fair values of our outstanding foreign currency forward contracts were nominal at May 31, 2018 and 2017. | |||
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 | $ 3,400 | $ 3,400 | ||
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 | 1,400 | 1,400 | ||
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | ||||
Debt Instruments [Abstract] | ||||
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% | |||
Derivative Instrument Detail [Abstract] | ||||
Amount of ineffectiveness measured | $ 0 | $ 0 | $ 0 | |
Net investment hedge [Member] | Foreign currency borrowings [Member] | ||||
Derivative Instrument Detail [Abstract] | ||||
Amount of ineffectiveness measured | $ 0 | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME63
DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets [Abstract] | |||
Fair value, liabilities | $ (158) | $ (191) | |
Fair value, assets | 29 | 40 | |
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 (Loss) Recognized in Income on Derivative | (66) | (82) | $ 48 |
Amount of Gain (Loss) on Hedged Item Recognized in Income Attributable to Risk Being Hedged | 66 | 82 | (48) |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Other current liabilities [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets [Abstract] | |||
Fair value, liabilities | (7) | 0 | |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Other non-current assets [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets [Abstract] | |||
Fair value, assets | 29 | 40 | |
Fair value hedges [Member] | Interest rate swap agreements [Member] | Other non-current liabilities [Member] | |||
Fair Values of Derivative and Non-Derivative Instruments Designated as Hedges in Consolidated Balance Sheets [Abstract] | |||
Fair value, liabilities | (48) | 0 | |
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) | 88 | 27 | 26 |
Cash flow hedges [Member] | Cross-currency swap agreements [Member] | Non-operating income (expense), 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 (Loss) Reclassified from Accumulated OCI or OCL into Income (Effective Portion) | 51 | 2 | 41 |
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 Consolidated Balance Sheets [Abstract] | |||
Fair value, liabilities | (103) | (191) | |
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) | (30) | (1) | $ (25) |
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 Consolidated Balance Sheets [Abstract] | |||
Fair value, debt | $ 0 | $ (980) |
COMMITMENTS AND CERTAIN CONTI64
COMMITMENTS AND CERTAIN CONTINGENCIES (Details) $ in Millions | May 31, 2018USD ($) |
Lease Commitments [Abstract] | |
Fiscal 2,019 | $ 377 |
Fiscal 2,020 | 314 |
Fiscal 2,021 | 248 |
Fiscal 2,022 | 184 |
Fiscal 2,023 | 144 |
Thereafter | 372 |
Future minimum operating lease payments | 1,639 |
Less: minimum payments to be received from non-cancelable subleases | (29) |
Total future minimum operating lease payments, net | 1,610 |
Unconditional Obligations [Abstract] | |
Fiscal 2,019 | 757 |
Fiscal 2,020 | 291 |
Fiscal 2,021 | 189 |
Fiscal 2,022 | 114 |
Fiscal 2,023 | 24 |
Total | $ 1,375 |
COMMITMENTS AND CERTAIN CONTI65
COMMITMENTS AND CERTAIN CONTINGENCIES Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Lease Commitments [Abstract] | |||
Facility obligations, net of estimated sub-lease income and other costs, in accrued restructuring | $ 61 | ||
Rent expense, net of sublease income | 292 | $ 273 | $ 283 |
Sublease income | 104 | 87 | $ 45 |
Unconditional Obligations [Abstract] | |||
Notes payable and other borrowings | $ 60,927 | $ 58,145 | |
Guarantees [Abstract] | |||
Financial impact of guarantees | Such agreements have not had a material effect on our results of operations, financial position or cash flows. |
STOCKHOLDERS' EQUITY Narrative
STOCKHOLDERS' EQUITY Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Jun. 19, 2018 | May 31, 2018 | May 31, 2017 | May 31, 2016 |
Stock Repurchases [Abstract] | ||||
Approved expansion of stock repurchase program | $ 24,000 | |||
Amount available for future repurchases | $ 17,800 | |||
Repurchases of common stock (in shares) | 238 | 85.6 | 271.9 | |
Repurchased amount | $ 11,503 | $ 3,492 | $ 10,439 | |
Repurchased shares that were not settled (in shares) | 3.8 | |||
Repurchased amount that was not settled | $ 180 | |||
Dividends on Common Stock [Abstract] | ||||
Dividends per share, declared and paid (in dollars per share) | $ 0.76 | $ 0.64 | $ 0.60 | |
Subsequent Event [Member] | ||||
Dividends on Common Stock [Abstract] | ||||
Dividends declared per share of outstanding common stock (in dollars per share) | $ 0.19 | |||
Dividend payable date | Jul. 31, 2018 | |||
Dividend record date | Jul. 17, 2018 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Accumulated Other Comprehensive Loss [Abstract] | ||
Foreign currency translation losses and other, net | $ (974) | $ (679) |
Unrealized losses on defined benefit plans, net | (322) | (356) |
Unrealized (losses) gains on marketable securities, net | (422) | 187 |
Unrealized gains on cash flow hedges, net | 82 | 45 |
Total accumulated other comprehensive loss | $ (1,636) | $ (803) |
EMPLOYEE BENEFIT PLANS Continue
EMPLOYEE BENEFIT PLANS Continued (Details) | 12 Months Ended | |||||||||
May 31, 2018TrancheExecutiveOfficershares | May 31, 2017shares | May 31, 2016shares | May 31, 2014shares | May 31, 2013shares | May 31, 2011shares | May 31, 2015shares | ||||
Stock-based Payment Award [Line Items] | ||||||||||
Options outstanding | 304,000,000 | 312,000,000 | 375,000,000 | 413,000,000 | ||||||
Options outstanding vested | 201,000,000 | |||||||||
Restricted stock-based awards outstanding | 89,000,000 | 83,000,000 | 52,000,000 | 28,000,000 | ||||||
Stock options outstanding | 43,000,000 | |||||||||
Restricted stock-based awards granted (in shares) | 44,000,000 | 42,000,000 | 34,000,000 | |||||||
Restricted stock-based awards vested (in shares) | 27,000,000 | 18,000,000 | 7,000,000 | |||||||
Stock options granted | 77,000,000 | [1] | 18,000,000 | [2] | 25,000,000 | [2] | ||||
Performance-based restricted stock units [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Restricted stock-based awards outstanding | 1,600,000 | |||||||||
Restricted stock-based awards granted (in shares) | 2,000,000 | 2,000,000 | ||||||||
Restricted stock-based awards vested (in shares) | 2,400,000 | |||||||||
Minimum percentage for performance metric | 0.00% | |||||||||
Maximum percentage that can exceed target performance metric | 150.00% | |||||||||
Performance-based stock options [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Expiration period | 8 years | |||||||||
Number of vesting tranches granted that potentially may vest | Tranche | 7 | |||||||||
Number of tranches vests on attainment of market-based metric | Tranche | 1 | |||||||||
Number of vesting tranches require attainment of both a performance and a market condition | Tranche | 6 | |||||||||
Award performance period | 5 years | |||||||||
Award service period for performance-based metrics, minimum | 3 years | |||||||||
Award service period for performance-based metrics, maximum | 5 years | |||||||||
Award service period for market-based metric | 3 years | |||||||||
Performance-based stock options [Member] | Executive Officers [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
PSOs granted to number of executive officers | ExecutiveOfficer | 4 | |||||||||
Service-based stock options [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Expiration period | 10 years | |||||||||
Chief Technology Officer and Chief Executive Officers [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Expiration period | 5 years | |||||||||
Stock options granted | 7,000,000 | 7,000,000 | ||||||||
Chief Executive Officers, Chief Technology Officer and President, Product Development [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Stock options granted | 69,000,000 | |||||||||
2000 Plan [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Increase in number of authorized shares of stock that may be issued | 330,000,000 | 305,000,000 | 388,313,015 | |||||||
Vesting percentage | 25.00% | |||||||||
Vesting period | 4 years | |||||||||
Expiration period | 10 years | |||||||||
Options outstanding | 231,000,000 | |||||||||
Options outstanding vested | 197,000,000 | |||||||||
Shares of common stock available for future awards | 376,000,000 | |||||||||
2000 Plan [Member] | Restricted Stock Units [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Restricted stock-based awards outstanding | 83,000,000 | |||||||||
Equivalent number of shares deducted against share pool (in actual number of shares) | 2.5 | |||||||||
2000 Plan [Member] | Performance-based restricted stock units [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Restricted stock-based awards outstanding | 3,000,000 | |||||||||
2000 Plan [Member] | Employee Stock Options [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Stock options outstanding | 69,000,000 | |||||||||
Directors' Plan [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Increase in number of authorized shares of stock that may be issued | 2,000,000 | |||||||||
Vesting period | 4 years | |||||||||
Expiration period | 10 years | |||||||||
Options outstanding | 1,000,000 | |||||||||
Options outstanding vested | 1,000,000 | |||||||||
Shares of common stock available for future awards | 1,000,000 | |||||||||
Directors' Plan [Member] | Restricted Stock Units [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Restricted stock-based awards outstanding | 109,000 | |||||||||
Acquired plans [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Options outstanding | 3,000,000 | |||||||||
Acquired plans [Member] | Restricted Stock Units [Member] | ||||||||||
Stock-based Payment Award [Line Items] | ||||||||||
Restricted stock-based awards outstanding | 3,000,000 | |||||||||
[1] | Awards granted in fiscal 2018 included 69 million PSOs granted in total to our Chief Executive Officers, Chief Technology Officer, and President, Product Development, the contractual terms of which are described in greater detail above. | |||||||||
[2] | 7 million SOs were granted in total during each of fiscal 2017 and 2016 to our Chief Executive Officers and Chief Technology Officer and have contractual lives of five years versus the ten-year contractual lives for most of the other SOs granted. |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||||||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |||||
Shares Under Restricted Stock-based Awards [Abstract] | |||||||
Beginning balance | 83 | 52 | 28 | ||||
Granted | 44 | 42 | 34 | ||||
Assumed | 14 | ||||||
Vested and Issued | (27) | (18) | (7) | ||||
Canceled | (11) | (7) | (3) | ||||
Ending balance | 89 | 83 | 52 | ||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Total grant date fair value of restricted stock-based awards, vested and issued | $ 1,000 | $ 715 | $ 261 | ||||
Beginning balance | $ 39.18 | $ 39.29 | $ 40.63 | ||||
Granted | 47.42 | 39.40 | 38.50 | ||||
Assumed | 37.83 | ||||||
Vested and Issued | 39.10 | 40.39 | 40.39 | ||||
Canceled | 41.97 | 39.73 | 39.73 | ||||
Ending balance | $ 42.93 | $ 39.18 | $ 39.29 | ||||
Unrecognized compensation expense related to non-vested restricted stock-based awards | $ 2,500 | ||||||
Shares Under Stock Option [Abstract] | |||||||
Beginning balance | 312 | 375 | 413 | ||||
Granted | 77 | [1] | 18 | [2] | 25 | [2] | |
Assumed | 2 | 1 | |||||
Exercised | (78) | (77) | (53) | ||||
Canceled | (7) | (6) | (11) | ||||
Ending balance | 304 | 312 | 375 | ||||
Vested | 201 | ||||||
Expected to vest | [3] | 60 | |||||
Total | 261 | ||||||
Weighted Average Exercise Price [Abstract] | |||||||
Beginning balance | $ 29.02 | $ 29.66 | $ 28.64 | ||||
Granted | 50.95 | [1] | 40.90 | [2] | 40.34 | [2] | |
Assumed | 13.06 | 4.97 | |||||
Exercised | 28.78 | 26.65 | 25.13 | ||||
Canceled | 45.70 | 36.28 | 35.19 | ||||
Ending balance | 36.11 | $ 29.02 | $ 29.66 | ||||
Vested | 30.06 | ||||||
Expected to vest | [3] | 45.91 | |||||
Total | $ 33.74 | ||||||
Weighted Average Remaining Contract Term (in years) [Abstract] | |||||||
Vested | 3 years 10 months 20 days | ||||||
Expected to vest | [3] | 6 years 10 months 24 days | |||||
Total | 4 years 7 months 2 days | ||||||
Aggregate Intrinsic Value (in millions) [Abstract] | |||||||
Vested | [4] | $ 3,344 | |||||
Expected to vest | [3],[4] | 202 | |||||
Total | [4] | $ 3,546 | |||||
Closing stock price | $ 46.72 | ||||||
Unrecognized compensation expense for shares expected to vest | $ 375 | ||||||
Shares not expected to vest | 43 | ||||||
Weighted Average Input Assumptions Used and Resulting Fair Values [Abstract] | |||||||
Expected life (in years) | 4 years 8 months 12 days | 4 years 9 months 18 days | 4 years 9 months 18 days | ||||
Risk-free interest rate | 2.00% | 1.00% | 1.60% | ||||
Volatility | 22.00% | 23.00% | 24.00% | ||||
Dividend yield | 1.50% | 1.50% | 1.50% | ||||
Weighted-average fair value per share | $ 9.34 | $ 8.18 | $ 8.49 | ||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | $ 1,607 | $ 1,350 | $ 1,037 | ||||
Estimated income tax benefit included in provision for income taxes | (451) | (423) | (322) | ||||
Total stock-based compensation, net of estimated income tax benefit | $ 1,156 | $ 927 | $ 715 | ||||
Common stock issued under stock purchase plans | 3 | 3 | 3 | ||||
Other Postretirement Plans [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total defined benefit plan pension expense | $ 102 | $ 85 | $ 95 | ||||
Aggregate projected benefit obligation | 1,100 | 1,100 | |||||
Aggregate net liability (funded status) | $ 711 | $ 712 | |||||
Employee Stock Purchase Plan [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Stock purchase price as a percentage of the fair market value on the purchase date | 95.00% | ||||||
Shares of common stock available for future awards | 48 | ||||||
Common stock issued under stock purchase plans | 3 | 3 | 3 | ||||
Cloud services and license support [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | $ 82 | $ 54 | $ 44 | ||||
Hardware [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | 10 | 11 | 12 | ||||
Services business [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | 52 | 44 | 29 | ||||
Sales and marketing [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | 361 | 306 | 220 | ||||
Research and development [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | 921 | 770 | 609 | ||||
General and administrative [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | 180 | 130 | 120 | ||||
Acquisition related and other [Member] | |||||||
Stock-based compensation expense and valuations of stock awards [Abstract] | |||||||
Total stock-based compensation | $ 1 | $ 35 | $ 3 | ||||
Restricted Stock Units [Member] | |||||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Weighted average recognition period of unrecognized compensation expense for shares expected to vest | 2 years 8 months 12 days | ||||||
Employee Stock Options [Member] | |||||||
Weighted Average Grant Date Fair Value [Abstract] | |||||||
Weighted average recognition period of unrecognized compensation expense for shares expected to vest | 3 years 3 months 29 days | ||||||
Performance-based stock options [Member] | |||||||
Weighted Average Input Assumptions Used and Resulting Fair Values [Abstract] | |||||||
Expected life (in years) | 7 years | ||||||
Risk-free interest rate | 2.14% | ||||||
Volatility | 22.44% | ||||||
Dividend yield | 1.49% | ||||||
[1] | Awards granted in fiscal 2018 included 69 million PSOs granted in total to our Chief Executive Officers, Chief Technology Officer, and President, Product Development, the contractual terms of which are described in greater detail above. | ||||||
[2] | 7 million SOs were granted in total during each of fiscal 2017 and 2016 to our Chief Executive Officers and Chief Technology Officer and have contractual lives of five years versus the ten-year contractual lives for most of the other SOs granted. | ||||||
[3] | The unrecognized compensation expense calculated under the fair value method for shares expected to vest (unvested shares net of expected forfeitures) as of May 31, 2018 was approximately $375 million and is expected to be recognized over a weighted-average period of 3.33 years. Approximately 43 million shares outstanding as of May 31, 2018 were not expected to vest. | ||||||
[4] | The aggregate intrinsic value was calculated based on the gross difference between our closing stock price on the last trading day of fiscal 2018 of $46.72 and the exercise prices for all “in-the-money” options outstanding, excluding tax effects. |
TAX BENEFITS FROM EXERCISES OF
TAX BENEFITS FROM EXERCISES OF STOCK OPTIONS AND VESTING OF RESTRICTED STOCK-BASED AWARDS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Tax Benefits from Exercise of Stock Options and Vesting of Restricted Stock-Based Awards [Abstract] | |||
Total cash received as a result of option exercises | $ 2,300 | $ 2,100 | $ 1,300 |
Aggregate intrinsic value of vesting of restricted stock-based awards and options exercised | 3,000 | 2,000 | 1,000 |
Tax benefits realized in connection with the vesting of restricted stock-based awards and exercises of stock options | $ 860 | $ 614 | $ 311 |
DEFERRED CONTRIBUTION PLANS (De
DEFERRED CONTRIBUTION PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Defined contribution plan expense | $ 384 | $ 366 | $ 387 |
United States [Member] | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Oracle 401(K) Plan employee contribution maximum rate | 40.00% | ||
Oracle 401 (K) employer contribution match rate | 50.00% | ||
Oracle 401(K) employer maximum match on employee contribution each pay period | 6.00% | ||
Oracle 401 (K) plan employer contribution | $ 151 | $ 157 | $ 153 |
DEFERRED COMPENSATION PLANS (De
DEFERRED COMPENSATION PLANS (Details) - Other Postretirement Plans [Member] - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Deferred Compensation Plan Disclosure [Line Items] | ||
Deferred compensation plan assets | $ 555 | $ 487 |
Deferred compensation plan liabilities | $ 555 | $ 487 |
INCOME TAXES Narrative (Details
INCOME TAXES Narrative (Details) - USD ($) $ in Millions | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 31, 2018 | Dec. 31, 2017 | May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Income Tax Examination [Line Items] | |||||
Federal statutory income tax rate, percent | 21.00% | 35.00% | 29.20% | 35.00% | 35.00% |
Other outside basis temporary differences of investments in foreign subsidiaries | $ 7,900 | $ 7,900 | |||
Potential net deferred tax liability related to other outside basis temporary differences | 1,500 | 1,500 | |||
Deferred Tax Assets and Liabilities (Narrative) [Abstract] | |||||
Net deferred tax assets | 1,434 | 1,434 | $ 683 | ||
Valuation allowance | 1,308 | 1,308 | 1,164 | ||
Tax Credit Carryforwards [Abstract] | |||||
Tax credit carryforwards subject to limitation on utilization | 893 | 893 | |||
Tax credit carryforwards not subject to expiration dates | 738 | 738 | |||
Tax credit carryforwards subject to expiration dates | 155 | 155 | |||
Unrecognized Tax Benefits (Narrative) [Abstract] | |||||
Unrecognized tax benefits that would affect our effective tax rate if recognized | 4,200 | 4,200 | 3,400 | $ 3,100 | |
Interest and penalties related to uncertain tax positions recognized in our provision for income taxes | 127 | 125 | $ 26 | ||
Interest and penalties related to uncertain tax positions accrued | 992 | $ 992 | $ 885 | ||
Income Tax Examinations [Abstract] | |||||
Income tax examinations | 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, Australia, Brazil, Canada, India, Indonesia, Korea, Mexico, Spain and the United Kingdom, 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. | ||||
Earliest Tax Year [Member] | |||||
Tax Credit Carryforwards [Abstract] | |||||
Tax credit carryforward expiration dates | May 31, 2019 | ||||
Latest Tax Year [Member] | |||||
Tax Credit Carryforwards [Abstract] | |||||
Tax credit carryforward expiration dates | May 31, 2038 | ||||
Federal [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Net operating loss carryforwards | 806 | $ 806 | |||
Federal [Member] | Expire in various years between fiscal 2019 and fiscal 2036 [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Net operating loss carryforwards | 802 | $ 802 | |||
Federal [Member] | Earliest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2019 | ||||
Federal [Member] | Latest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2036 | ||||
State [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Net operating loss carryforwards | 2,400 | $ 2,400 | |||
State [Member] | Earliest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2019 | ||||
State [Member] | Latest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2036 | ||||
Foreign [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Net operating loss carryforwards | 1,800 | $ 1,800 | |||
Foreign net operating loss carryforwards not subject to expiration | 1,800 | 1,800 | |||
Foreign net operating loss carryforwards subject to expiration | 92 | 92 | |||
Unrecognized Tax Benefits (Narrative) [Abstract] | |||||
Reasonably possible decrease in the next 12 months in gross unrecognized, net of offsetting tax benefits | 68 | ||||
Reasonably possible decrease in the next 12 months in gross unrecognized tax benefits | 162 | $ 162 | |||
Income Tax Examinations [Abstract] | |||||
Income tax examinations | Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting our unrecognized tax benefits. We believe that it was reasonably possible that, as of May 31, 2018, the gross unrecognized tax benefits, could decrease (whether by payment, release, or a combination of both) by as much as $162 million ($68 million net of offsetting tax benefits) in the next 12 months, related primarily to transfer pricing. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 1997. | ||||
Foreign [Member] | Earliest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2019 | ||||
Foreign [Member] | Latest Tax Year [Member] | |||||
Operating Loss Carryforwards [Abstract] | |||||
Operating loss carryforwards expiration date | May 31, 2035 | ||||
Domestic [Member] | |||||
Unrecognized Tax Benefits (Narrative) [Abstract] | |||||
Reasonably possible decrease in the next 12 months in gross unrecognized, net of offsetting tax benefits | $ 611 | ||||
Reasonably possible decrease in the next 12 months in gross unrecognized tax benefits | $ 665 | $ 665 | |||
Income Tax Examinations [Abstract] | |||||
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 2017. Many issues are at an advanced stage in the examination process, the most significant of which include the deductibility of certain royalty payments, transfer pricing, extraterritorial income exemptions, domestic production activity, foreign tax credits, and research and development credits taken. With all of these domestic audit issues considered in the aggregate, we believe that it was reasonably possible that, as of May 31, 2018, the gross unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months by as much as $665 million ($611 million net of offsetting tax benefits). Our U.S. federal income tax returns have been examined for all years prior to fiscal 2007 and we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2004, and we are no longer subject to audit for those periods. |
INCOME TAXES - Geographical Bre
INCOME TAXES - Geographical Breakdown of Income before Provision for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ 3,816 | $ 3,533 | $ 4,033 |
Foreign | 9,075 | 7,984 | 7,409 |
Income before provision for income taxes | $ 12,891 | $ 11,517 | $ 11,442 |
INCOME TAXES - Components of Pr
INCOME TAXES - Components of Provision for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Provision for Income Taxes [Abstract] | |||
Federal | $ 8,329 | $ 936 | $ 1,301 |
State | 264 | 257 | 271 |
Foreign | 1,084 | 1,475 | 1,074 |
Total current provision | 9,677 | 2,668 | 2,646 |
Federal | (614) | (201) | (123) |
State | (13) | (36) | (21) |
Foreign | 16 | (249) | 39 |
Total deferred benefit | (611) | (486) | (105) |
Total provision for income taxes | $ 9,066 | $ 2,182 | $ 2,541 |
Effective income tax rate | 70.30% | 18.90% | 22.20% |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Differences Between Federal Statutory Tax Rate and Effective Tax Rate (Details) - USD ($) $ in Millions | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||
May 31, 2018 | Dec. 31, 2017 | May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Reconciliation of Differences Between Amount Computed by Applying Federal Statutory Rate to our Income Before Provision for Income Taxes and Provision for Income Taxes [Abstract] | |||||
Federal statutory income tax rate, percent | 21.00% | 35.00% | 29.20% | 35.00% | 35.00% |
Tax provision at statutory rate | $ 3,765 | $ 4,031 | $ 4,005 | ||
Impact of Tax Cuts and Jobs Act of 2017 | |||||
One-time transition tax | 7,781 | 0 | 0 | ||
Deferred tax effects | (820) | 0 | 0 | ||
Foreign earnings at other than United States rates | (1,006) | (1,299) | (1,284) | ||
State tax expense, net of federal benefit | 155 | 150 | 176 | ||
Settlements and releases from judicial decisions and statute expirations, net | (252) | (189) | (150) | ||
Domestic production activity deduction | (87) | (119) | (155) | ||
Stock-based compensation | (302) | (149) | 74 | ||
Other, net | (168) | (243) | (125) | ||
Total provision for income taxes | $ 9,066 | $ 2,182 | $ 2,541 |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Liabilities and Assets (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Components of Deferred Tax Liabilities [Abstract] | ||
Unrealized gain on stock | $ (78) | $ (130) |
Acquired intangible assets | (1,254) | (2,502) |
Unremitted earnings | 0 | (1,515) |
Depreciation and amortization | (158) | (180) |
Other | (48) | (23) |
Total deferred tax liabilities | (1,538) | (4,350) |
Components of Deferred Tax Assets [Abstract] | ||
Accruals and allowances | 567 | 532 |
Employee compensation and benefits | 789 | 1,251 |
Differences in timing of revenue recognition | 310 | 385 |
Tax credit and net operating loss carryforwards | 2,614 | 4,029 |
Total deferred tax assets | 4,280 | 6,197 |
Valuation allowance | (1,308) | (1,164) |
Net deferred tax assets | $ 1,434 | $ 683 |
INCOME TAXES - Components of 78
INCOME TAXES - Components of Deffered Tax Liabilities and Assets Continued (Details) - USD ($) $ in Millions | May 31, 2018 | May 31, 2017 |
Components of Deferred Tax Assets and Liabilities [Abstract] | ||
Non-current deferred tax assets | $ 1,491 | $ 1,143 |
Non-current deferred tax liabilities (in other non-current liabilities) | (57) | (460) |
Net deferred tax assets | $ 1,434 | $ 683 |
INCOME TAXES - Gross Unrecogniz
INCOME TAXES - Gross Unrecognized Tax Benefits, Including Acquisitions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Gross Unrecognized Tax Benefits Including Acquisitions [Abstract] | |||
Gross unrecognized tax benefits as of June 1 | $ 4,919 | $ 4,561 | $ 4,038 |
Increases related to tax positions from prior fiscal years | 200 | 128 | 350 |
Decreases related to tax positions from prior fiscal years | (65) | (218) | (111) |
Increases related to tax positions taken during current fiscal year | 833 | 595 | 461 |
Settlements with tax authorities | (42) | (85) | (73) |
Lapses of statutes of limitation | (273) | (47) | (73) |
Cumulative translation adjustments and other, net | (15) | (31) | |
Cumulative translation adjustments and other, net | 13 | ||
Total gross unrecognized tax benefits as of May 31 | $ 5,585 | $ 4,919 | $ 4,561 |
SEGMENT INFORMATION Narrative (
SEGMENT INFORMATION Narrative (Details) | 12 Months Ended |
May 31, 2018BusinessSegment | |
Segment reporting information [Line Items] | |
Number of businesses | Business | 3 |
Cloud and license [Member] | |
Segment reporting information [Line Items] | |
Number of operating segments | 1 |
Hardware [Member] | |
Segment reporting information [Line Items] | |
Number of operating segments | 1 |
Services [Member] | |
Segment reporting information [Line Items] | |
Number of operating segments | 1 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Segment reporting information [Line Items] | ||||
Revenues | $ 39,831 | $ 37,728 | $ 37,047 | |
Cloud services and license support expenses | [1] | 3,612 | 3,015 | 2,664 |
Sales and marketing expenses | [1] | 8,431 | 8,197 | 7,884 |
Margin | 24,287 | 23,017 | 22,410 | |
Total for operating segments [Member] | ||||
Segment reporting information [Line Items] | ||||
Revenues | [2] | 39,878 | 37,899 | 37,057 |
Expenses | 15,591 | 14,882 | 14,647 | |
Margin | [3] | 24,287 | 23,017 | 22,410 |
Total for operating segments [Member] | Cloud and license [Member] | ||||
Segment reporting information [Line Items] | ||||
Revenues | [2] | 32,491 | 30,389 | 28,997 |
Cloud services and license support expenses | 3,447 | 2,885 | 2,545 | |
Sales and marketing expenses | 7,219 | 6,886 | 6,570 | |
Margin | [3] | 21,825 | 20,618 | 19,882 |
Total for operating segments [Member] | Hardware [Member] | ||||
Segment reporting information [Line Items] | ||||
Revenues | [2] | 3,993 | 4,152 | 4,669 |
Hardware products and support expenses | 1,551 | 1,623 | 2,031 | |
Sales and marketing expenses | 635 | 820 | 867 | |
Margin | [3] | 1,807 | 1,709 | 1,771 |
Total for operating segments [Member] | Services [Member] | ||||
Segment reporting information [Line Items] | ||||
Revenues | 3,394 | 3,358 | 3,391 | |
Services expenses | 2,739 | 2,668 | 2,634 | |
Margin | [3] | $ 655 | $ 690 | $ 757 |
[1] | Exclusive of amortization of intangible assets, which is shown separately | |||
[2] | Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 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 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, general and administrative and certain other allocable expenses. Additionally, the margins reported above 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. Refer to the table below for a reconciliation of our total margin for operating segments to our income before provision for income taxes as reported in our consolidated statements of operations. |
SEGMENT INFORMATION RECONCILIAT
SEGMENT INFORMATION RECONCILIATION (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Reconciliation of Operating Segment Revenues to Revenues [Abstract] | ||||
Total revenues | $ 39,831 | $ 37,728 | $ 37,047 | |
Cloud and license revenues | [1],[2] | (47) | (171) | (9) |
Hardware revenues | [2] | 0 | 0 | (1) |
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ||||
Total margin for operating segments | 24,287 | 23,017 | 22,410 | |
Cloud and license revenues | [1],[2] | (47) | (171) | (9) |
Hardware revenues | [2] | 0 | 0 | (1) |
Research and development | (6,091) | (6,159) | (5,787) | |
General and administrative | (1,289) | (1,176) | (1,155) | |
Amortization of intangible assets | (1,620) | (1,451) | (1,638) | |
Acquisition related and other | (52) | (103) | (42) | |
Restructuring | (588) | (463) | (458) | |
Stock-based compensation for operating segments | (505) | (415) | (305) | |
Expense allocations and other, net | (416) | (369) | (411) | |
Interest expense | (2,025) | (1,798) | (1,467) | |
Non-operating income, net | 1,237 | 605 | 305 | |
Income before provision for income taxes | 12,891 | 11,517 | 11,442 | |
Total for operating segments Member | ||||
Reconciliation of Operating Segment Revenues to Revenues [Abstract] | ||||
Total revenues | [1] | 39,878 | 37,899 | 37,057 |
Reconciliation of Total Operating Segment Margin to Income Before Provision for Income Taxes [Abstract] | ||||
Total margin for operating segments | [3] | $ 24,287 | $ 23,017 | $ 22,410 |
[1] | Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 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 consolidated statements of operations. | |||
[2] | Cloud and license revenues and hardware revenues presented for management reporting included revenues related to cloud and license obligations and hardware obligations 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 due to business combination accounting requirements. See Note 9 for an explanation of these adjustments and this table for a reconciliation of our total operating segment revenues to our total revenues as reported in our 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, general and administrative and certain other allocable expenses. Additionally, the margins reported above 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. Refer to the table below for a reconciliation of our total margin for operating segments to our income before provision for income taxes as reported in our consolidated statements of operations. |
SEGMENT INFORMATION Continued (
SEGMENT INFORMATION Continued (Details) - USD ($) $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | $ 39,831 | $ 37,728 | $ 37,047 | |
Long-Lived Assets | [1] | 7,354 | 6,728 | 5,428 |
United States [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 19,077 | 17,770 | 17,264 | |
Long-Lived Assets | [1] | 4,976 | 4,680 | 3,646 |
United Kingdom [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 2,172 | 1,999 | 2,349 | |
Long-Lived Assets | [1] | 510 | 402 | 334 |
Japan [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 1,693 | 1,618 | 1,465 | |
Long-Lived Assets | [1] | 388 | 380 | 375 |
Germany [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 1,375 | 1,417 | 1,438 | |
Long-Lived Assets | [1] | 179 | 116 | 40 |
Canada [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 1,143 | 1,102 | 1,096 | |
Long-Lived Assets | [1] | 78 | 60 | 44 |
Other countries [Member] | ||||
Revenues from external customers and long lived assets [Line Items] | ||||
Revenues | 14,371 | 13,822 | 13,435 | |
Long-Lived Assets | [1] | $ 1,223 | $ 1,090 | $ 989 |
[1] | Long-lived assets exclude goodwill, intangible assets, equity investments and deferred taxes, which are not allocated to specific geographic locations as it is impracticable to do so. |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | |||
May 31, 2018 | May 31, 2017 | May 31, 2016 | ||
Earnings Per Share [Abstract] | ||||
Net income | $ 3,825 | $ 9,335 | $ 8,901 | |
Weighted average common shares outstanding | 4,121 | 4,115 | 4,221 | |
Dilutive effect of employee stock plans | 117 | 102 | 84 | |
Dilutive weighted average common shares outstanding | 4,238 | 4,217 | 4,305 | |
Basic earnings per share | $ 0.93 | $ 2.27 | $ 2.11 | |
Diluted earnings per share | $ 0.90 | $ 2.21 | $ 2.07 | |
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation | [1] | 64 | 74 | 63 |
[1] | These weighted shares relate to anti-dilutive restricted stock-based awards and stock options as calculated using the treasury stock method and contingently issuable shares under PSO and PSU agreements. Such shares could be dilutive in the future. See Note 13 for information regarding the exercise prices of our outstanding, unexercised stock options. |
LEGAL PROCEEDINGS (Details)
LEGAL PROCEEDINGS (Details) - USD ($) | Jun. 30, 2016 | May 31, 2018 |
Hewlett-Packard Litigation [Member] | ||
Legal Proceedings [Line Items] | ||
Damages awarded, value | $ 3,000,000,000 | |
Damages paid, value | $ 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. | |
Hewlett-Packard Litigation [Member] | Surety Bond [Member] | ||
Legal Proceedings [Line Items] | ||
Guarantor obligations, origin and purpose | Oracle posted certain court-mandated surety bonds with the court in order to proceed with its motion for a new trial and entered into related indemnification agreements with each of the surety bond issuing companies. | |
Derivative Litigation [Member] | ||
Legal Proceedings [Line Items] | ||
Derivative litigations and related action | While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations. | |
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. |
VALUATION AND QUALIFYING ACCO86
VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
May 31, 2018 | May 31, 2017 | May 31, 2016 | |
Allowances for Doubtful Trade Receivables [Abstract] | |||
Beginning Balance | $ 319 | $ 327 | $ 285 |
Additions Charged to Operations or Other Accounts | 146 | 129 | 130 |
Write-offs | (98) | (138) | (90) |
Translation Adjustments and Other | 3 | 1 | 2 |
Ending Balance | $ 370 | $ 319 | $ 327 |