NOTES PAYABLE AND OTHER BORROWINGS

12 Months Ended

May 31, 2013

Notes Payable and Other Borrowings [Abstract]

NOTES PAYABLE AND OTHER BORROWINGS

8. NOTES PAYABLE AND OTHER BORROWINGS

Notes payable and other borrowings consisted of the following:

			May 31,
(Dollars in millions)			2013		2012
Short-term borrowings			$	—	$	1,700
4.95% senior notes due April 2013				—		1,250
3.75% senior notes due July 2014, net of fair value adjustments of $41 and $69 as of May 31, 2013 and 2012, respectively(1)				1,541		1,569
5.25% senior notes due January 2016, net of discount of $3 and $4 as of May 31, 2013 and 2012, respectively				1,997		1,996
1.20% senior notes due October 2017, net of discount of $3 as of May 31, 2013				2,497		—
5.75% senior notes due April 2018, net of discount of $1 each as of May 31, 2013 and 2012				2,499		2,499
5.00% senior notes due July 2019, net of discount of $4 and $5 as of May 31, 2013 and 2012, respectively				1,746		1,745
3.875% senior notes due July 2020, net of discount of $2 each as of May 31, 2013 and 2012				998		998
2.50% senior notes due October 2022, net of discount of $2 as of May 31, 2013				2,498		—
6.50% senior notes due April 2038, net of discount of $2 each as of May 31, 2013 and 2012				1,248		1,248
6.125% senior notes due July 2039, net of discount of $7 and $8 as of May 31, 2013 and 2012, respectively				1,243		1,242
5.375% senior notes due July 2040, net of discount $24 each as of May 31, 2013 and 2012, respectively				2,226		2,226
Capital leases				1		1
Total borrowings			$	18,494	$	16,474
Notes payable, current and other current borrowings			$	—	$	2,950
Notes payable, non-current and other non-current borrowings			$	18,494	$	13,524
	__________
	(1)	Refer to Note 11 for a description of our accounting for fair value hedges.

Senior Notes and Other

In October 2012, we issued $5.0 billion of fixed rate senior notes comprised of $2.5 billion of 1.20% notes due October 2017 (2017 Notes) and $2.5 billion of 2.50% notes due October 2022 (2022 Notes). We issued these senior notes for general corporate purposes, which may include stock repurchases, future acquisitions and repayment of indebtedness, including the repayment of $1.25 billion of 4.95% senior notes that matured and were repaid in April 2013.

In July 2010, we issued $3.25 billion of fixed rate senior notes comprised of $1.0 billion of 3.875% notes due July 2020 (2020 Notes) and $2.25 billion of 5.375% notes due July 2040 (2040 Notes, and together with the 2020 Notes, the Original Senior Notes). As part of the offering of the Original Senior Notes, we entered into a registration rights agreement with the initial purchasers for the benefit of the holders of the Original Senior Notes in which we agreed to file with the SEC a registration statement with respect to senior notes identical in all material respects to the Original Senior Notes within fourteen months after the issue date of the Original Senior Notes and on December 16, 2011 we completed a registered offer to exchange the Original Senior Notes for new freely tradable notes having terms substantially identical to the Original Senior Notes. An aggregate of $994 million principal amount of the 2020 Notes and an aggregate of $2.24 billion principal amount of the 2040 Notes were tendered and exchanged in the offer.

In July 2009, we issued $4.5 billion of fixed rate senior notes comprised of $1.5 billion of 3.75% notes due July 2014 (2014 Notes), $1.75 billion of 5.00% notes due July 2019 (2019 Notes) and $1.25 billion of 6.125% notes due July 2039 (2039 Notes).

In April 2008, we issued $5.0 billion of fixed rate senior notes, of which $1.25 billion of 4.95% senior notes was due and paid in April 2013, and $2.5 billion of 5.75% senior notes due April 2018 (2018 Notes) and $1.25 billion of 6.50% senior notes due April 2038 (2038 Notes) remained outstanding as of May 31, 2013.

In January 2006, we issued $5.75 billion of senior notes, of which $2.25 billion of 5.00% senior notes was due and paid in January 2011 and $2.0 billion of 5.25% senior notes due 2016 (2016 Notes) remained outstanding as of May 31, 2013.

The effective interest yields of the 2014 Notes, 2016 Notes, 2017 Notes, 2018 Notes, 2019 Notes, 2020 Notes, 2022 Notes, 2038 Notes, 2039 Notes and 2040 Notes (collectively, the Senior Notes) at May 31, 2013 were 3.75%, 5.32%, 1.24%, 5.76%, 5.05%, 3.93%, 2.51%, 6.52%, 6.19% and 5.45%, respectively. Interest is payable semi-annually for the Senior Notes. In September 2009, we entered into interest rate swap agreements that have the economic effect of modifying the fixed interest obligations associated with the 2014 Notes so that the interest payable on these notes effectively became variable (1.34% at May 31, 2013; see Note 11 for additional information). We may redeem some or all of the Senior Notes of each series at any time, subject to payment of an applicable make-whole premium.

The 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 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 of our commercial paper notes. We were in compliance with all debt-related covenants as of May 31, 2013.

In the third quarter of fiscal 2012, shortly after the closing of our acquisition of RightNow, we repaid, in full, $255 million of RightNow’s legacy convertible notes.

Future principal payments for all of our borrowings at May 31, 2013 were as follows (in millions):

Fiscal 2014	$	—
Fiscal 2015		1,500
Fiscal 2016		2,000
Fiscal 2017		—
Fiscal 2018		5,000
Thereafter		10,000
Total	$	18,500

Commercial Paper Program and Commercial Paper Notes

On April 22, 2013, pursuant to our existing $3.0 billion commercial paper program which allows us to issue and sell unsecured short-term promissory notes pursuant to a private placement exemption from the registration requirements under federal and state securities laws, we entered into new dealer agreements with various banks and a new Issuing and Paying Agency Agreement with JP Morgan Chase Bank, N.A. As of May 31, 2013 and 2012, we did not have any outstanding commercial paper notes. We intend to back-stop any commercial paper notes that we may issue in the future with the 2013 Credit Agreement (see additional details below).

Revolving Credit Agreements

In April 2013, we entered into a $3.0 billion Revolving Credit Agreement with Wells Fargo Bank, N.A., Bank of America, N.A., BNP Paribas, JPMorgan Chase Bank, N.A. and certain other lenders (the 2013 Credit Agreement). The 2013 Credit Agreement provides for an unsecured 5-year revolving credit facility to be used for general corporate purposes including back-stopping any commercial paper notes that we may issue. Subject to certain conditions stated in the 2013 Credit Agreement, we may borrow, prepay and re-borrow amounts under the 2013 Credit Agreement at any time during the term of the 2013 Credit Agreement. Interest under the 2013 Credit Agreement is based on either (a) a LIBOR-based formula or (b) the Base Rate formula, each as set forth in the 2013 Credit Agreement. Any amounts drawn pursuant to the 2013 Credit Agreement are due on April 20, 2018.No amounts were outstanding pursuant to the 2013 Credit Agreement as of May 31, 2013.

The 2013 Credit Agreement contains certain customary representations and warranties, covenants and events of default, including the requirement that our total net debt to total capitalization ratio not exceed 45% on a consolidated basis. If any of the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the 2013 Credit Agreement may be declared immediately due and payable and the 2013 Credit Agreement may be terminated. We were in compliance with the 2013 Credit Agreement's covenants as of May 31, 2013.

On May 29, 2012, we borrowed $1.7 billion pursuant to a revolving credit agreement with JPMorgan Chase Bank, N.A., as initial lender and administrative agent; and J.P. Morgan Securities, LLC, as sole lead arranger and sole bookrunner (the 2012 Credit Agreement). On July 2, 2012, we repaid the $1.7 billion and the 2012 Credit Agreement expired pursuant to its terms.

On May 27, 2011, we entered into two revolving credit agreements with BNP Paribas, as initial lender and administrative agent, and BNP Paribas Securities Corp., as sole lead arranger and sole bookrunner (the 2011 Credit Agreements), and borrowed $1.15 billion pursuant to these agreements. During fiscal 2012, we repaid the $1.15 billion and the 2011 Credit Agreements expired pursuant to their terms.