NOTES PAYABLE AND OTHER BORROWINGS

12 Months Ended

May 31, 2023

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,
		2023				2022
(Amounts in millions)	Date of Issuance	Amount			Effective Interest Rate	Amount			Effective Interest Rate
Fixed-rate senior notes:
$2,500, 2.50%, due October 2022	October 2012	$	—		N.A	$	2,500		2.51%
$1,250, 2.625%, due February 2023	November 2017		—		N.A		1,250		2.64%
$1,000, 3.625%, due July 2023	July 2013		1,000		3.73%		1,000		3.73%
$2,500, 2.40%, due September 2023	July 2016		2,500		2.44%		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	November 2017		2,000		3.01%		2,000		2.98%
$3,500, 2.50%, due April 2025	April 2020		3,500		2.54%		3,500		2.51%
$2,500, 2.95%, due May 2025	May 2015		2,500		3.05%		2,500		3.00%
€750, 3.125%, due July 2025(1)(2)	July 2013		800		3.17%		803		3.17%
$1,000, 5.80%, due November 2025(3)	November 2022		1,000		5.93%		—		N.A
$2,750, 1.65%, due March 2026	March 2021		2,750		1.67%		2,750		1.66%
$3,000, 2.65%, due July 2026	July 2016		3,000		2.73%		3,000		2.69%
$2,250, 2.80%, due April 2027	April 2020		2,250		2.87%		2,250		2.83%
$2,750, 3.25%, due November 2027	November 2017		2,750		3.29%		2,750		3.26%
$2,000, 2.30%, due March 2028	March 2021		2,000		2.36%		2,000		2.34%
$750, 4.50%, due May 2028(3)	February 2023		750		4.60%		—		N.A
$1,250, 6.15%, due November 2029(3)	November 2022		1,250		6.21%		—		N.A
$3,250, 2.95%, due April 2030	April 2020		3,250		3.00%		3,250		2.96%
$750, 4.65%, due May 2030(3)	February 2023		750		4.75%		—		N.A
$500, 3.25%, due May 2030	May 2015		500		3.35%		500		3.30%
$3,250, 2.875%, due March 2031	March 2021		3,250		2.92%		3,250		2.89%
$2,250, 6.25%, due November 2032(3)	November 2022		2,250		6.32%		—		N.A
$1,500, 4.90%, due February 2033(3)	February 2023		1,500		4.95%		—		N.A
$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		4.00%		1,250		3.95%
$1,250, 3.85%, due July 2036	July 2016		1,250		3.89%		1,250		3.85%
$1,750, 3.80%, due November 2037	November 2017		1,750		3.86%		1,750		3.83%
$1,250, 6.50%, due April 2038	April 2008		1,250		6.51%		1,250		6.52%
$1,250, 6.125%, due July 2039	July 2009		1,250		6.17%		1,250		6.19%
$3,000, 3.60%, due April 2040	April 2020		3,000		3.64%		3,000		3.62%
$2,250, 5.375%, due July 2040	July 2010		2,250		5.45%		2,250		5.45%
$2,250, 3.65%, due March 2041	March 2021		2,250		3.72%		2,250		3.70%
$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		4.20%		2,000		4.15%
$3,000, 4.00%, due July 2046	July 2016		3,000		4.03%		3,000		4.00%
$2,250, 4.00%, due November 2047	November 2017		2,250		4.05%		2,250		4.03%
$4,500, 3.60%, due April 2050	April 2020		4,500		3.64%		4,500		3.62%
$3,250, 3.95%, due March 2051	March 2021		3,250		3.98%		3,250		3.96%
$2,500, 6.90%, due November 2052(3)	November 2022		2,500		6.94%		—		N.A
$2,250, 5.55%, due February 2053(3)	February 2023		2,250		5.62%		—		N.A
$1,250, 4.375%, due May 2055	May 2015		1,250		4.44%		1,250		4.40%
$3,500, 3.85%, due April 2060	April 2020		3,500		3.89%		3,500		3.87%
$1,500, 4.10%, due March 2061	March 2021		1,500		4.13%		1,500		4.11%
Term loan credit agreement and other borrowings:
$790, SOFR plus 1.70%, due August 2025(4)	August 2022		790		5.68%		—		N.A
$170, SOFR plus 1.70%, due August 2025	November 2022		170		6.16%		—		N.A
$3,570, SOFR plus 1.70%, due August 2027(4)	August 2022		3,570		5.68%		—		N.A
$1,100, SOFR plus 1.70%, due August 2027	November 2022		1,100		6.16%		—		N.A
Commercial paper notes			563		4.89%		—		N.A
Other borrowings due August 2025	November 2016		113		3.53%		113		3.53%
Total senior notes and other borrowings		$	90,856			$	76,166
Unamortized discount/issuance costs			(323	)			(284	)
Hedge accounting fair value adjustments(2)			(52	)			(23	)
Total notes payable and other borrowings		$	90,481			$	75,859
Notes payable, current		$	4,061			$	3,749
Notes payable and other borrowings, non-current		$	86,420			$	72,110

(1)In July 2013, we issued €750 million of 3.125% senior notes due July 2025 (July 2025 Notes). Principal and unamortized discount/issuance costs for the July 2025 Notes in the table above were calculated using foreign currency exchange rates, as applicable, as of May 31, 2023 and May 31, 2022, respectively. The July 2025 Notes are registered and trade on the New York Stock Exchange.

(2)In fiscal 2018 we 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 $871 million based on LIBOR. The effective interest rates as of May 31, 2023 and 2022 after consideration of the cross-currency interest rate swap agreements were 8.36% and 4.10%, respectively, for the July 2025 Notes. Refer to Note 1 for a description of our accounting for fair value hedges.

(3)In fiscal 2023, we issued $12.3 billion of senior notes and used the net proceeds from the issuance of the senior notes to repay the amount of indebtedness outstanding under the Bridge Credit Agreement, to repay $1.3 billion of senior notes due February 2023 and to partially repay our outstanding commercial paper notes. 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.

(4)In fiscal 2023, we entered into certain interest rate swap agreements that have the economic effect of converting our floating-rate borrowings to fixed-rate borrowings with a fixed annual interest rate of 3.07%, plus a margin depending on the credit rating assigned to our long-term senior unsecured debt, as further discussed below.

Future principal payments (adjusted for the effects of the cross-currency interest rate swap agreements associated with the July 2025 Notes) for all of our borrowings at May 31, 2023 were as follows (in millions):

Fiscal 2024	$	4,063
Fiscal 2025		10,000
Fiscal 2026		5,694
Fiscal 2027		5,250
Fiscal 2028		10,170
Thereafter		55,750
Total	$	90,927

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. We may redeem some or all of the senior notes of each series prior to their maturity, subject to certain restrictions, and the payment of an applicable make-whole premium in certain instances.

The senior notes rank pari passu with any other 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, including the Revolving Credit Agreement and the Term Loan Credit Agreement as described further below. All existing and future liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes, borrowings under the Term Loan Credit Agreement, any future borrowings pursuant to the Revolving Credit Agreement and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at May 31, 2023.

Delayed Draw Term Loan Credit Agreement

On June 8, 2022, we borrowed $15.7 billion under a delayed draw term loan credit agreement (Bridge Credit Agreement) that we entered into in March 2022 to partly finance our acquisition of Cerner. The Bridge Credit Agreement provided that, subject to certain exceptions, net cash proceeds received by us from certain debt and equity issuances shall result in mandatory prepayments under the Bridge Credit Agreement. Interest was based on either (a) a Term Secured Overnight Financing Rate (SOFR)-based formula plus a margin of 100.0 basis points to 137.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis points to 37.5 basis points, depending on the same such credit rating, each as set forth in the Bridge Credit Agreement. The effective interest rate for fiscal 2023 was 3.57%. We fully repaid the amount borrowed under the Bridge Credit Agreement during fiscal 2023.

Revolving Credit Agreement

Our Revolving Credit Agreement provides for an unsecured $6.0 billion, five-year revolving credit facility (the Revolving Facility) to be used for our working capital purposes and for other general corporate purposes. Subject to certain conditions stated in the Revolving Credit Agreement, we may borrow, prepay and reborrow amounts under the Revolving Facility during the term of the Revolving Credit Agreement. All amounts borrowed under the Revolving Credit Agreement will become due on March 8, 2027, unless the commitments are terminated earlier either at our request or, if an event of default occurs, by the lenders (or automatically in the case of certain bankruptcy-related

events). Interest is based on either (a) a Term SOFR-based formula plus a margin of 87.5 basis points to 150.0 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 0.0 basis points to 50.0 basis points, depending on the same such credit rating, each as set forth in the Revolving Credit Agreement. As of May 31, 2023 and 2022, we did not have any outstanding borrowing under the Revolving Credit Agreement.

Five-Year Term Loan Credit Agreement

On August 16, 2022, we entered into a $4.4 billion term loan credit agreement (Term Loan Credit Agreement), which provides for a total term loan commitment of $4.4 billion, comprised of a $3.6 billion term loan (Term Loan 1 Facility) and a $790 million term loan (Term Loan 2 Facility and, together with the Term Loan 1 Facility, the Term Loan Facilities). The proceeds of the Term Loan Facilities may only be used to refinance indebtedness incurred under the Bridge Credit Agreement and to pay related fees and expenses.

On November 2, 2022, the total term loan commitment was increased by $1.3 billion, comprised of $1.1 billion under the Term Loan 1 Facility and $170 million under the Term Loan 2 Facility pursuant to the terms of the Term Loan Credit Agreement.

We may request additional commitments under the Term Loan Credit Agreement up to a maximum of $6.0 billion (each, an Incremental Borrowing). The use of proceeds of any Incremental Borrowing will be specified at the time of such borrowing and may include working capital purposes and other general corporate purposes.

We initially borrowed $4.4 billion on August 16, 2022, and we borrowed an incremental $1.3 billion on November 2, 2022, each under the Term Loan Facilities. We used the net proceeds of the borrowings under the Term Loan Credit Agreement to reduce the amount of indebtedness outstanding under the Bridge Credit Agreement. The effective interest rate for these borrowings during fiscal 2023 was 5.76%.

The Term Loan Credit Agreement provides for repayment of borrowings under the Term Loan Facilities as follows:

•an amount equal to the amount borrowed reduced by any prepayments multiplied by 1.25% on September 30, 2024 and quarterly thereafter until June 30, 2026;

•an amount equal to the amount borrowed reduced by any prepayments multiplied by 2.50% on September 30, 2026 and quarterly thereafter until June 30, 2027; and

•any remaining unpaid principal balance under the Term Loan 1 Facility will become fully due and payable on August 16, 2027 and any remaining unpaid principal balance under the Term Loan 2 Facility will become fully due and payable on August 16, 2025 (subject to any extension of the Term Loan 2 Facility termination date, as set out below), unless the outstanding loans are prepaid earlier at the request of Oracle or accelerated by the lenders if an event of default occurs.

The termination date of the Term Loan 2 Facility may be extended at our sole option by up to 2 years. The termination date of each Term Loan Facility may also be further extended at each lender’s option by up to 2 years.

Interest is based on either (a) a Term SOFR-based formula plus a margin of 147.5 basis points to 197.5 basis points, depending on the credit rating assigned to our long-term senior unsecured debt, or (b) a Base Rate formula plus a margin of 47.5 basis points to 97.5 basis points, depending on the same such credit rating, each as set forth in the Term Loan Credit Agreement.

The Term Loan Credit Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that the ratio of “Consolidated EBITDA” to “Consolidated Net Interest Expense” (each term as defined in the Term Loan Credit Agreement) of Oracle and its subsidiaries shall not be less than 3.0 to 1.0 at the end of any fiscal quarter during the period that the Term Loan Credit Agreement is effective. If an event of default occurs under the Term Loan Credit Agreement and is not cured within the applicable grace period or waived, any unpaid amounts under the Term Loan Credit Agreement may be declared immediately due and payable. We were in compliance with such covenants as of May 31, 2023.

The summary above does not purport to be complete and is qualified in its entirety by reference to the full text of the Term Loan Credit Agreement.

Cash Flow Hedge—Interest Rate Swap Agreements

In August 2022, we entered into certain interest rate swap agreements to manage the related interest rate risk of $4.4 billion borrowings under the Term Loan Credit Agreement by effectively converting the floating-rate to fixed-rate. The economic effect of the swap agreements was to eliminate the uncertainty of the cash flows associated with floating-rate interest payments of the Term Loan Credit Agreement by a fixed annual interest rate of 3.07%, plus a margin depending on the credit rating assigned to our long-term senior unsecured debt as mentioned above. We have designated these interest rate swap agreements as qualifying hedging instruments and are accounting for these as cash flow hedges pursuant to ASC 815, Derivatives and Hedging.

The fair values of these interest rate swap agreements are recognized either as non-current assets or non-current liabilities in our consolidated balance sheets. Changes in the fair values of these interest rate 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 or expense, net in the same period that corresponding interest expense is recognized.

We do not use any interest rate swap agreements for trading purposes.

Cerner Senior Notes and Other Borrowings

In connection with our acquisition of Cerner, we assumed:

•$1.0 billion par value of legacy Cerner senior notes. The acquisition triggered a mandatory offer to prepay such senior notes in accordance with the terms of the underlying note purchase agreements. Holders of $931 million par value of senior notes exercised the option for prepayment, and accordingly, such notes together with accrued interest were redeemed on June 8, 2022, and the remaining outstanding senior notes together with accrued interest were redeemed during the second quarter of fiscal 2023; and

•$600 million of principal amount of revolving credit loans. The entire loan along with accrued interest was settled and the credit facility was terminated on June 8, 2022.

Commercial Paper Program and Commercial Paper Notes

During the first quarter of fiscal 2023, our commercial paper program was increased to $6.0 billion. Our commercial paper program 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 pursuant to dealer agreements with various banks and an Issuing and Paying Agency Agreement with Deutsche Bank Trust Company Americas.

There were $563 million of outstanding commercial paper notes as of May 31, 2023 (none outstanding as of May 31, 2022) that mature at various dates through June 2023. The effective interest rate including issuance costs was 4.89% for fiscal 2023. We use the net proceeds from the issuance of commercial paper for general corporate purposes.