false Q1 2021 0001341439 --05-31 Large Accelerated Filer true true 1 1 1 1 1 1 0 0 0001341439 2020-06-01 2020-08-31 xbrli:shares 0001341439 2020-09-04 0001341439 us-gaap:CommonStockMember 2020-06-01 2020-08-31 0001341439 orcl:SeniorNotesDueJanuary2021Member 2020-06-01 2020-08-31 0001341439 orcl:SeniorNotesDueJuly2025Member 2020-06-01 2020-08-31 iso4217:USD 0001341439 2020-08-31 0001341439 2020-05-31 iso4217:USD xbrli:shares 0001341439 2019-06-01 2019-08-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-05-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-05-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-06-01 2020-08-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-06-01 2019-08-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-08-31 0001341439 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-08-31 0001341439 us-gaap:RetainedEarningsMember 2020-05-31 0001341439 us-gaap:RetainedEarningsMember 2019-05-31 0001341439 us-gaap:RetainedEarningsMember 2020-06-01 2020-08-31 0001341439 us-gaap:RetainedEarningsMember 2019-06-01 2019-08-31 0001341439 us-gaap:RetainedEarningsMember 2020-08-31 0001341439 us-gaap:RetainedEarningsMember 2019-08-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2020-05-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-05-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2020-06-01 2020-08-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-06-01 2019-08-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2020-08-31 0001341439 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-08-31 0001341439 2019-08-31 0001341439 2019-05-31 xbrli:pure 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-08-31 0001341439 us-gaap:CorporateDebtSecuritiesMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:CorporateDebtSecuritiesMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-05-31 0001341439 us-gaap:CorporateDebtSecuritiesMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2020-08-31 0001341439 us-gaap:CommercialPaperMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:CommercialPaperMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:CommercialPaperMember 2020-05-31 0001341439 us-gaap:CommercialPaperMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2020-08-31 0001341439 us-gaap:MoneyMarketFundsMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel1Member us-gaap:MoneyMarketFundsMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:MoneyMarketFundsMember 2020-05-31 0001341439 us-gaap:MoneyMarketFundsMember 2020-05-31 0001341439 us-gaap:FairValueInputsLevel1Member 2020-08-31 0001341439 us-gaap:FairValueInputsLevel2Member 2020-08-31 0001341439 us-gaap:FairValueInputsLevel1Member 2020-05-31 0001341439 us-gaap:FairValueInputsLevel2Member 2020-05-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2020-08-31 0001341439 us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2020-05-31 0001341439 us-gaap:SeniorNotesMember 2020-08-31 0001341439 us-gaap:SeniorNotesMember 2020-05-31 0001341439 us-gaap:DevelopedTechnologyRightsMember 2020-05-31 0001341439 orcl:CloudServicesAndLicenseSupportAgreementsAndRelatedRelationshipsMember 2020-05-31 0001341439 us-gaap:OtherIntangibleAssetsMember 2020-05-31 0001341439 us-gaap:DevelopedTechnologyRightsMember 2020-06-01 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportAgreementsAndRelatedRelationshipsMember 2020-06-01 2020-08-31 0001341439 us-gaap:OtherIntangibleAssetsMember 2020-06-01 2020-08-31 0001341439 us-gaap:DevelopedTechnologyRightsMember 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportAgreementsAndRelatedRelationshipsMember 2020-08-31 0001341439 us-gaap:OtherIntangibleAssetsMember 2020-08-31 0001341439 orcl:CloudAndLicenseBusinessMember 2020-05-31 0001341439 orcl:HardwareBusinessMember 2020-05-31 0001341439 orcl:ServicesBusinessMember 2020-05-31 0001341439 orcl:CloudAndLicenseBusinessMember 2020-06-01 2020-08-31 0001341439 orcl:HardwareBusinessMember 2020-06-01 2020-08-31 0001341439 orcl:ServicesBusinessMember 2020-06-01 2020-08-31 0001341439 orcl:CloudAndLicenseBusinessMember 2020-08-31 0001341439 orcl:HardwareBusinessMember 2020-08-31 0001341439 orcl:ServicesBusinessMember 2020-08-31 0001341439 orcl:Fiscal2019OracleRestructuringMember 2020-06-01 2020-08-31 0001341439 orcl:Fiscal2019OracleRestructuringMember 2019-06-01 2019-08-31 0001341439 orcl:CloudAndLicenseBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-05-31 0001341439 orcl:HardwareBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-05-31 0001341439 orcl:ServicesBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-05-31 0001341439 orcl:Fiscal2019OracleRestructuringMember us-gaap:CorporateNonSegmentMember 2020-05-31 0001341439 orcl:Fiscal2019OracleRestructuringMember 2020-05-31 0001341439 orcl:OtherRestructuringPlansIncludingSunMember 2020-05-31 0001341439 orcl:CloudAndLicenseBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:HardwareBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:ServicesBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:Fiscal2019OracleRestructuringMember us-gaap:CorporateNonSegmentMember 2020-06-01 2020-08-31 0001341439 orcl:OtherRestructuringPlansIncludingSunMember 2020-06-01 2020-08-31 0001341439 orcl:CloudAndLicenseBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-08-31 0001341439 orcl:HardwareBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-08-31 0001341439 orcl:ServicesBusinessMember orcl:Fiscal2019OracleRestructuringMember us-gaap:OperatingSegmentsMember 2020-08-31 0001341439 orcl:Fiscal2019OracleRestructuringMember us-gaap:CorporateNonSegmentMember 2020-08-31 0001341439 orcl:Fiscal2019OracleRestructuringMember 2020-08-31 0001341439 orcl:OtherRestructuringPlansIncludingSunMember 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportMember orcl:CloudAndLicenseBusinessMember 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportMember orcl:CloudAndLicenseBusinessMember 2020-05-31 0001341439 orcl:HardwareMember orcl:HardwareBusinessMember 2020-08-31 0001341439 orcl:HardwareMember orcl:HardwareBusinessMember 2020-05-31 0001341439 orcl:ServicesToCustomersAndPartnersMember orcl:ServicesBusinessMember 2020-08-31 0001341439 orcl:ServicesToCustomersAndPartnersMember orcl:ServicesBusinessMember 2020-05-31 0001341439 orcl:CloudLicenseAndOnPremiseLicenseMember orcl:CloudAndLicenseBusinessMember 2020-08-31 0001341439 orcl:CloudLicenseAndOnPremiseLicenseMember orcl:CloudAndLicenseBusinessMember 2020-05-31 0001341439 orcl:ForwardContractsHeldToPurchaseUsDollarsMember us-gaap:NondesignatedMember 2020-08-31 0001341439 orcl:ForwardContractsHeldToPurchaseUsDollarsMember us-gaap:NondesignatedMember 2020-05-31 0001341439 orcl:ForwardContractsHeldToSellUsDollarsMember us-gaap:NondesignatedMember 2020-08-31 0001341439 orcl:ForwardContractsHeldToSellUsDollarsMember us-gaap:NondesignatedMember 2020-05-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:OtherCurrentAssetsMember 2020-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:OtherCurrentAssetsMember 2020-05-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentAssetsMember 2020-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentAssetsMember 2020-05-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentAssetsMember 2020-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentAssetsMember 2020-05-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:CashFlowHedgingMember us-gaap:OtherCurrentLiabilitiesMember 2020-08-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:CashFlowHedgingMember us-gaap:OtherCurrentLiabilitiesMember 2020-05-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentLiabilitiesMember 2020-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:FairValueHedgingMember us-gaap:OtherNoncurrentLiabilitiesMember 2020-05-31 0001341439 orcl:NotesPayableCurrentMember us-gaap:FairValueHedgingMember 2020-08-31 0001341439 orcl:NotesPayableCurrentMember us-gaap:FairValueHedgingMember 2020-05-31 0001341439 orcl:NotesAndLoansNoncurrentMember us-gaap:FairValueHedgingMember 2020-08-31 0001341439 orcl:NotesAndLoansNoncurrentMember us-gaap:FairValueHedgingMember 2020-05-31 0001341439 us-gaap:NonoperatingIncomeExpenseMember 2020-06-01 2020-08-31 0001341439 us-gaap:InterestExpenseMember 2020-06-01 2020-08-31 0001341439 us-gaap:NonoperatingIncomeExpenseMember 2019-06-01 2019-08-31 0001341439 us-gaap:InterestExpenseMember 2019-06-01 2019-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:FairValueHedgingMember 2020-06-01 2020-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember us-gaap:FairValueHedgingMember 2020-06-01 2020-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:FairValueHedgingMember 2019-06-01 2019-08-31 0001341439 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember us-gaap:FairValueHedgingMember 2019-06-01 2019-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:FairValueHedgingMember 2020-06-01 2020-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:InterestExpenseMember us-gaap:FairValueHedgingMember 2020-06-01 2020-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:FairValueHedgingMember 2019-06-01 2019-08-31 0001341439 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:InterestExpenseMember us-gaap:FairValueHedgingMember 2019-06-01 2019-08-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:CashFlowHedgingMember 2020-06-01 2020-08-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:InterestExpenseMember us-gaap:CashFlowHedgingMember 2020-06-01 2020-08-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:NonoperatingIncomeExpenseMember us-gaap:CashFlowHedgingMember 2019-06-01 2019-08-31 0001341439 orcl:CrossCurrencySwapMember us-gaap:InterestExpenseMember us-gaap:CashFlowHedgingMember 2019-06-01 2019-08-31 0001341439 us-gaap:CashFlowHedgingMember orcl:CrossCurrencySwapAgreementsMember 2020-06-01 2020-08-31 0001341439 us-gaap:CashFlowHedgingMember orcl:CrossCurrencySwapAgreementsMember 2019-06-01 2019-08-31 0001341439 us-gaap:SubsequentEventMember 2020-09-10 2020-09-10 0001341439 orcl:CloudServicesAndLicenseSupportMember 2020-06-01 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportMember 2019-06-01 2019-08-31 0001341439 orcl:HardwareMember 2020-06-01 2020-08-31 0001341439 orcl:HardwareMember 2019-06-01 2019-08-31 0001341439 orcl:ServicesBusinessMember 2020-06-01 2020-08-31 0001341439 orcl:ServicesBusinessMember 2019-06-01 2019-08-31 0001341439 us-gaap:SellingAndMarketingExpenseMember 2020-06-01 2020-08-31 0001341439 us-gaap:SellingAndMarketingExpenseMember 2019-06-01 2019-08-31 0001341439 us-gaap:ResearchAndDevelopmentExpenseMember 2020-06-01 2020-08-31 0001341439 us-gaap:ResearchAndDevelopmentExpenseMember 2019-06-01 2019-08-31 0001341439 us-gaap:GeneralAndAdministrativeExpenseMember 2020-06-01 2020-08-31 0001341439 us-gaap:GeneralAndAdministrativeExpenseMember 2019-06-01 2019-08-31 orcl:Business orcl:Segment 0001341439 orcl:CloudAndLicenseBusinessMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:CloudAndLicenseBusinessMember us-gaap:OperatingSegmentsMember 2019-06-01 2019-08-31 0001341439 orcl:HardwareBusinessMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:HardwareBusinessMember us-gaap:OperatingSegmentsMember 2019-06-01 2019-08-31 0001341439 orcl:ServicesBusinessMember us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 orcl:ServicesBusinessMember us-gaap:OperatingSegmentsMember 2019-06-01 2019-08-31 0001341439 us-gaap:OperatingSegmentsMember 2020-06-01 2020-08-31 0001341439 us-gaap:OperatingSegmentsMember 2019-06-01 2019-08-31 0001341439 us-gaap:MaterialReconcilingItemsMember 2020-06-01 2020-08-31 0001341439 us-gaap:MaterialReconcilingItemsMember 2019-06-01 2019-08-31 0001341439 srt:AmericasMember 2020-06-01 2020-08-31 0001341439 srt:AmericasMember 2019-06-01 2019-08-31 0001341439 us-gaap:EMEAMember 2020-06-01 2020-08-31 0001341439 us-gaap:EMEAMember 2019-06-01 2019-08-31 0001341439 srt:AsiaPacificMember 2020-06-01 2020-08-31 0001341439 srt:AsiaPacificMember 2019-06-01 2019-08-31 0001341439 orcl:ApplicationsCloudServicesAndLicenseSupportMember 2020-06-01 2020-08-31 0001341439 orcl:ApplicationsCloudServicesAndLicenseSupportMember 2019-06-01 2019-08-31 0001341439 orcl:InfrastructureCloudServicesAndLicenseSupportMember 2020-06-01 2020-08-31 0001341439 orcl:InfrastructureCloudServicesAndLicenseSupportMember 2019-06-01 2019-08-31 0001341439 orcl:CloudServicesAndLicenseSupportMember 2020-06-01 2020-08-31 0001341439 orcl:CloudServicesAndLicenseSupportMember 2019-06-01 2019-08-31 0001341439 orcl:HewlettPackardLitigationMember 2016-06-30 2016-06-30 0001341439 orcl:HewlettPackardLitigationMember 2020-06-01 2020-08-31 orcl:Claim 0001341439 2019-07-06 2019-07-08

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-35992

 

Oracle Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

 

54-2185193

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

500 Oracle Parkway

 

94065

Redwood City, California 

(Address of principal executive offices)

 

(Zip Code)

 

(650) 506-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

2.25% senior notes due January 2021 

3.125% senior notes due July 2025 

ORCL

New York Stock Exchange  

New York Stock Exchange 

New York Stock Exchange 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes    ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   

 

Accelerated filer   

Non-accelerated filer   

 

Smaller reporting company   

Emerging growth company   

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No    ☒

The number of shares of registrant’s common stock outstanding as of September 4, 2020 was: 3,007,161,000.

 

 

 


Table of Contents

 

ORACLE CORPORATION 

FORM 10-Q QUARTERLY REPORT

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

PART I.

 

FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of August 31, 2020 and May 31, 2020

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2020 and 2019

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended August 31, 2020 and 2019

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity for the Three Months Ended August 31, 2020 and 2019

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2020 and 2019

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

27

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

43

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

43

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

45

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

45

 

 

 

 

 

Item 1A.

 

Risk Factors

 

45

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

45

 

 

 

 

 

Item 6.

 

Exhibits

 

46

 

 

 

 

 

 

 

Signatures

 

47

 

 

 

 


Table of Contents

 

Cautionary Note on Forward-Looking Statements

For purposes of this Quarterly Report, the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Quarterly Report on Form 10-Q contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include, among other things, statements regarding:

 

our expectations regarding the impacts on our business as a result of the global COVID-19 pandemic;

 

our expectation that we may acquire companies, products, services and technologies to further our corporate strategy as compelling opportunities become available;

 

our expectation that, on a constant currency basis, our total cloud and license revenues generally will continue to increase due to expected growth in our cloud services and our license support offerings, and continued demand for our cloud license and on-premise license offerings;

 

our belief that our Oracle Cloud Software-as-a-Service and Infrastructure-as-a-Service (SaaS and IaaS, respectively, and collectively, Oracle Cloud Services) offerings are opportunities for us to expand our cloud and license business, and that demand for our Oracle Cloud Services will continue to increase;

 

our expectation that substantially all of our customers will renew their license support contracts annually;

 

our expectation that our hardware business will have lower operating margins as a percentage of revenues than our cloud and license business;

 

our expectation that we will continue to make significant investments in research and development, and our belief that research and development efforts are essential to maintaining our competitive position;

 

our expectation that our international operations will continue to provide a significant portion of our total revenues and expenses;

 

the sufficiency of our sources of funding for working capital, capital expenditures, contractual obligations, acquisitions, dividends, stock repurchases, debt repayments and other matters;

 

our belief that we have adequately provided under U.S. generally accepted accounting principles for outcomes related to our tax audits and that the final outcome of our tax related examinations, agreements or judicial proceedings will not have a material effect on our results of operations, and our belief that our net deferred tax assets will be realized in the foreseeable future;

 

our belief that the outcome of certain legal proceedings and claims to which we are a party will not, individually or in the aggregate, result in losses that are materially in excess of amounts already recognized, if any;

1


Table of Contents

 

 

the possibility that certain legal proceedings to which we are a party could have a material impact on our future cash flows and results of operations;

 

the timing and amount of expenses we expect to incur and the cost savings we expect to realize pursuant to our Fiscal 2019 Oracle Restructuring Plan;

 

the timing and amount of future cash dividend payments and stock repurchases, including our expectation that the levels of our future stock repurchase activity may be modified in comparison to past periods in order to use available cash for other purposes;

 

our expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements;

 

our expectation that, to the extent customers renew support contracts or cloud SaaS and IaaS contracts from companies that we have acquired, we will recognize revenues for the full contracts’ values over the respective renewal periods;

 

our ability to predict quarterly hardware revenues;

 

the percentage of remaining performance obligations that we expect to recognize as revenues over the next twelve months;

 

our expectations regarding our ability to collect delayed customer payments;

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “strives,” “estimates,” “will,” “should,” “is designed to” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included in documents we file from time to time with the U.S. Securities and Exchange Commission (the SEC), including our Annual Report on Form 10-K for our fiscal year ended May 31, 2020 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal 2021, which runs from June 1, 2020 to May 31, 2021.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Quarterly Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our expectations only as of the date of this Quarterly Report.

2


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of August 31, 2020 and May 31, 2020

(Unaudited)

 

(in millions, except per share data)

 

August 31,

2020

 

 

May 31,

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

27,276

 

 

$

37,239

 

Marketable securities

 

 

15,003

 

 

 

5,818

 

Trade receivables, net of allowances for doubtful accounts of $457 and $409 as of August 31, 2020 and May 31, 2020, respectively

 

 

4,576

 

 

 

5,551

 

Prepaid expenses and other current assets

 

 

3,084

 

 

 

3,532

 

Total current assets

 

 

49,939

 

 

 

52,140

 

Non-current assets:

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

6,401

 

 

 

6,244

 

Intangible assets, net

 

 

3,405

 

 

 

3,738

 

Goodwill, net

 

 

43,867

 

 

 

43,769

 

Deferred tax assets

 

 

3,152

 

 

 

3,252

 

Other non-current assets

 

 

6,782

 

 

 

6,295

 

Total non-current assets

 

 

63,607

 

 

 

63,298

 

Total assets

 

$

113,546

 

 

$

115,438

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Notes payable, current

 

$

2,997

 

 

$

2,371

 

Accounts payable

 

 

534

 

 

 

637

 

Accrued compensation and related benefits

 

 

1,390

 

 

 

1,453

 

Deferred revenues

 

 

9,875

 

 

 

8,002

 

Other current liabilities

 

 

3,952

 

 

 

4,737

 

Total current liabilities

 

 

18,748

 

 

 

17,200

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Notes payable and other borrowings, non-current

 

 

67,769

 

 

 

69,226

 

Income taxes payable

 

 

12,690

 

 

 

12,463

 

Other non-current liabilities

 

 

4,199

 

 

 

3,832

 

Total non-current liabilities

 

 

84,658

 

 

 

85,521

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Oracle Corporation stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value—authorized: 1.0 shares; outstanding: none

 

 

 

 

 

 

Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 3,014 shares and 3,067 shares as of August 31, 2020 and May 31, 2020, respectively

 

 

26,238

 

 

 

26,486

 

Accumulated deficit

 

 

(15,410

)

 

 

(12,696

)

Accumulated other comprehensive loss

 

 

(1,337

)

 

 

(1,716

)

Total Oracle Corporation stockholders’ equity

 

 

9,491

 

 

 

12,074

 

Noncontrolling interests

 

 

649

 

 

 

643

 

Total equity

 

 

10,140

 

 

 

12,717

 

Total liabilities and equity

 

$

113,546

 

 

$

115,438

 

 

 

See notes to condensed consolidated financial statements.

3


Table of Contents

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended August 31, 2020 and 2019

(Unaudited)

 

 

 

Three Months Ended

August 31,

 

(in millions, except per share data)

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Cloud services and license support

 

$

6,947

 

 

$

6,805

 

Cloud license and on-premise license

 

 

886

 

 

 

812

 

Hardware

 

 

814

 

 

 

815

 

Services

 

 

720

 

 

 

786

 

Total revenues

 

 

9,367

 

 

 

9,218

 

Operating expenses:

 

 

 

 

 

 

 

 

Cloud services and license support(1)

 

 

1,011

 

 

 

982

 

Hardware(1)

 

 

246

 

 

 

272

 

Services

 

 

623

 

 

 

703

 

Sales and marketing(1)

 

 

1,854

 

 

 

2,018

 

Research and development

 

 

1,589

 

 

 

1,557

 

General and administrative

 

 

295

 

 

 

292

 

Amortization of intangible assets

 

 

345

 

 

 

414

 

Acquisition related and other

 

 

19

 

 

 

25

 

Restructuring

 

 

174

 

 

 

78

 

Total operating expenses

 

 

6,156

 

 

 

6,341

 

Operating income

 

 

3,211

 

 

 

2,877

 

Interest expense

 

 

(614

)

 

 

(494

)

Non-operating (expenses) income, net

 

 

(2

)

 

 

99

 

Income before provision for income taxes

 

 

2,595

 

 

 

2,482

 

Provision for income taxes

 

 

344

 

 

 

345

 

Net income

 

$

2,251

 

 

$

2,137

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.74

 

 

$

0.64

 

Diluted

 

$

0.72

 

 

$

0.63

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

3,041

 

 

 

3,317

 

Diluted

 

 

3,107

 

 

 

3,410

 

 

(1)

Exclusive of amortization of intangible assets, which is shown separately.

 

 

 

See notes to condensed consolidated financial statements.

4


Table of Contents

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended August 31, 2020 and 2019

(Unaudited)

 

 

 

Three Months Ended

August 31,

 

(in millions)

 

2020

 

 

2019

 

Net income

 

$

2,251

 

 

$

2,137

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

Net foreign currency translation gains (losses)

 

 

325

 

 

 

(8

)

Net unrealized gains on defined benefit plans

 

 

46

 

 

 

4

 

Net unrealized gains on marketable securities

 

 

3

 

 

 

85

 

Net unrealized gains (losses) on cash flow hedges

 

 

5

 

 

 

(24

)

Total other comprehensive income, net

 

 

379

 

 

 

57

 

Comprehensive income

 

$

2,630

 

 

$

2,194

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

5


Table of Contents

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended August 31, 2020 and 2019

(Unaudited)

 

 

 

Three Months Ended

August 31,

 

(in millions, except per share data)

 

2020

 

 

2019

 

Common stock and additional paid in capital

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

26,486

 

 

$

26,909

 

Common stock issued

 

 

567

 

 

 

316

 

Stock-based compensation

 

 

428

 

 

 

446

 

Repurchases of common stock

 

 

(765

)

 

 

(707

)

Other, net

 

 

(478

)

 

 

(514

)

Balance, end of period

 

$

26,238

 

 

$

26,450

 

Accumulated deficit

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

(12,696

)

 

$

(3,496

)

Repurchases of common stock

 

 

(4,235

)

 

 

(4,293

)

Cash dividends declared

 

 

(730

)

 

 

(795

)

Net income

 

 

2,251

 

 

 

2,137

 

Other, net

 

 

 

 

 

1

 

Balance, end of period

 

$

(15,410

)

 

$

(6,446

)

Other equity, net

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

(1,073

)

 

$

(1,050

)

Other comprehensive income, net

 

 

379

 

 

 

57

 

Other, net

 

 

6

 

 

 

8

 

Balance, end of period

 

$

(688

)

 

$

(985

)

Total stockholders' equity

 

$

10,140

 

 

$

19,019

 

Cash dividends declared per common share

 

$

0.24

 

 

$

0.24

 

 

 

 

 

See notes to condensed consolidated financial statements.

 

6


Table of Contents

 

ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended August 31, 2020 and 2019

(Unaudited)

 

 

 

Three Months Ended

August 31,

 

(in millions)

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

2,251

 

 

$

2,137

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

356

 

 

 

336

 

Amortization of intangible assets

 

 

345

 

 

 

414

 

Deferred income taxes

 

 

173

 

 

 

(14

)

Stock-based compensation

 

 

428

 

 

 

446

 

Other, net

 

 

78

 

 

 

60

 

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

 

 

 

Decrease in trade receivables, net

 

 

1,077

 

 

 

1,313

 

Decrease in prepaid expenses and other assets

 

 

380

 

 

 

481

 

Decrease in accounts payable and other liabilities

 

 

(294

)

 

 

(813

)

Decrease in income taxes payable

 

 

(586

)

 

 

(121

)

Increase in deferred revenues

 

 

1,745

 

 

 

1,761

 

Net cash provided by operating activities

 

 

5,953

 

 

 

6,000

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of marketable securities and other investments

 

 

(10,678

)

 

 

(216

)

Proceeds from maturities of marketable securities and other investments

 

 

1,459

 

 

 

879

 

Proceeds from sales of marketable securities

 

 

 

 

 

12,111

 

Acquisitions, net of cash acquired

 

 

 

 

 

(2

)

Capital expenditures

 

 

(436

)

 

 

(386

)

Net cash (used for) provided by investing activities

 

 

(9,655

)

 

 

12,386

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments for repurchases of common stock

 

 

(4,945

)

 

 

(5,005

)

Proceeds from issuances of common stock

 

 

567

 

 

 

316

 

Shares repurchased for tax withholdings upon vesting of restricted stock-based awards

 

 

(478

)

 

 

(514

)

Payments of dividends to stockholders

 

 

(730

)

 

 

(795

)

Repayments of borrowings

 

 

(1,000

)

 

 

(1,750

)

Other, net

 

 

93

 

 

 

(54

)

Net cash used for financing activities

 

 

(6,493

)

 

 

(7,802

)

Effect of exchange rate changes on cash and cash equivalents

 

 

232

 

 

 

(15

)

Net (decrease) increase in cash and cash equivalents

 

 

(9,963

)

 

 

10,569

 

Cash and cash equivalents at beginning of period

 

 

37,239

 

 

 

20,514

 

Cash and cash equivalents at end of period

 

$

27,276

 

 

$

31,083

 

Non-cash financing activities:

 

 

 

 

 

 

 

 

Change in unsettled repurchases of common stock

 

$

55

 

 

$

(5

)

 

 

See notes to condensed consolidated financial statements.

 

7


Table of Contents

 

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2020

(Unaudited)

 

1.

BASIS OF PRESENTATION, RECENT ACCOUNTING PRONOUNCEMENTS AND OTHER

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures herein are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020.

We believe that all necessary adjustments, which consisted only of normal recurring items, have been included in the accompanying financial statements to present fairly the results of the interim periods. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for our fiscal year ending May 31, 2021.

During the first quarter of fiscal 2021, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance; and ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), neither of which had a material impact to our current or historical condensed consolidated financial statements. There have been no changes to our significant accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020 that had a significant impact on our condensed consolidated financial statements or notes thereto as of and for the three months ended August 31, 2020.

 

Remaining Performance Obligations from Contracts with Customers

Trade receivables, net of allowance for doubtful accounts, and deferred revenues are reported net of related uncollected deferred revenues in our condensed consolidated balance sheets as of August 31, 2020 and May 31, 2020. The revenues recognized during the three months ended August 31, 2020 and 2019, respectively, that were included in the opening deferred revenues balance as of May 31, 2020 and 2019, respectively, were approximately $3.4 billion and $3.5 billion, respectively. Revenues recognized from performance obligations satisfied in prior periods and impairment losses recognized on our receivables were immaterial in each of the three months ended August 31, 2020 and 2019.  

Remaining performance obligations, as defined in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020, were $35.5 billion as of August 31, 2020, approximately 61% of which we expect to recognize as revenues over the next twelve months and the remainder thereafter.

8


Table of Contents

 

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2020

(Unaudited)

 

Sales of Financing Receivables

We offer certain of our customers the option to acquire certain of our cloud and license, hardware and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on a non-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We record the transfers of amounts due from customers to financial institutions as sales of financing receivables because we are considered to have surrendered control of these financing receivables. Financing receivables sold to financial institutions were $677 million and $705 million for each of the three months ended August 31, 2020 and 2019, respectively.

Cash, Cash Equivalents and Restricted Cash

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of August 31, 2020 and May 31, 2020 and our condensed consolidated statements of cash flows for the three months ended August 31, 2020 and 2019 was nominal.

Acquisition Related and Other Expenses

Acquisition related and other expenses primarily consist of personnel related costs for transitional and certain other employees, certain business combination adjustments including adjustments after the measurement period has ended, and certain other operating items, net.

 

 

 

Three Months Ended

August 31,

 

(in millions)

 

2020

 

 

2019

 

Transitional and other employee related costs

 

$

2

 

 

$

4

 

Business combination adjustments, net

 

 

1

 

 

 

3

 

Other, net

 

 

16

 

 

 

18

 

Total acquisition related and other expenses

 

$

19

 

 

$

25

 

Non-Operating (Expenses) Income, net

Non-operating (expenses) income, net consists primarily of interest income, net foreign currency exchange 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 and expenses, including net realized gains and losses related to all of our investments, net unrealized gains and losses related to the small portion of our investment portfolio related to our deferred compensation plan, net unrealized gains and losses related to certain equity securities and non-service net periodic pension income and losses.

 

 

 

Three Months Ended

August 31,

 

(in millions)

 

2020

 

 

2019

 

Interest income

 

$

31

 

 

$

190

 

Foreign currency losses, net

 

 

(50

)

 

 

(55

)

Noncontrolling interests in income

 

 

(38

)

 

 

(40

)

Other, net

 

 

55

 

 

 

4

 

Total non-operating (expenses) income, net

 

$

(2

)

 

$

99

 

 

9


Table of Contents

 

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2020

(Unaudited)

 

Recent Accounting Pronouncements

Financial Instruments:  In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We are still evaluating the impact, but do not expect ASU 2020-04 to have a material impact on our consolidated financial statements.

Income Taxes:  In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify various areas related to the accounting for income taxes and improve consistent application of Topic 740. ASU 2019-12 is effective for us beginning in fiscal 2022, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2019-12 on our consolidated financial statements.

 

2.

ACQUISITIONS

Fiscal 2021 and 2020 Acquisitions

During the first quarter of fiscal 2021 and full year of fiscal 2020, we acquired certain companies and purchased certain technology and development assets primarily to expand our products and services offerings. These acquisitions were not significant individually or in the aggregate to our condensed consolidated financial statements.

 

 

3.

FAIR VALUE MEASUREMENTS

We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820, Fair Value Measurement. ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the principal or most advantageous market in which we would transact and consider assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.

ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value:

 

Level 1:  quoted prices in active markets for identical assets or liabilities;

 

Level 2:  inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

 

Level 3:  unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

10


Table of Contents

 

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2020

(Unaudited)

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our assets and liabilities measured at fair value on a recurring basis consisted of the following (Level 1 and Level 2 inputs are defined above):

 

 

 

August 31, 2020

 

 

May 31, 2020

 

 

 

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

 

$

3,661

 

 

$

7,200

 

 

$

10,861

 

 

$

4,036

 

 

$

2,589

 

 

$

6,625

 

Commercial paper debt securities

 

 

 

 

 

9,029

 

 

 

9,029

 

 

 

 

 

 

5,640

 

 

 

5,640

 

Money market funds

 

 

8,378

 

 

 

 

 

 

8,378

 

 

 

18,587

 

 

 

 

 

 

18,587

 

Derivative financial instruments

 

 

 

 

 

79

 

 

 

79

 

 

 

 

 

 

29

 

 

 

29

 

Total assets

 

$

12,039

 

 

$

16,308

 

 

$

28,347

 

 

$

22,623

 

 

$

8,258

 

 

$

30,881

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

$

 

 

$

143

 

 

$

143

 

 

$

 

 

$

268

 

 

$

268

 

 

We classify our marketable securities as available-for-sale debt securities at the time of purchase and reevaluate such classification as of each balance sheet date. Our marketable securities investments consist of Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. Marketable securities as presented per our condensed consolidated balance sheets included securities with original maturities at the time of purchase greater than three months and the remainder of the securities were included in cash and cash equivalents. As of August 31, 2020 and May 31, 2020, substantially all of our marketable securities investments mature within one year. Our valuation techniques used to measure the fair values of our instruments 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 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 $70.8 billion and $71.6 billion of senior notes and the related fair value hedges that we had outstanding as of August 31, 2020 and May 31, 2020, respectively, the estimated fair values of the senior notes and the related fair value hedges using Level 2 inputs at August 31, 2020 and May 31, 2020 were $80.6 billion and $80.9 billion, respectively.

 

 

11


Table of Contents

 

ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2020

(Unaudited)

 

4.

INTANGIBLE ASSETS AND GOODWILL

The changes in intangible assets for fiscal 2021 and the net book value of intangible assets as of August 31, 2020 and May 31, 2020 were as follows:

 

 

 

Intangible Assets, Gross

 

 

Accumulated Amortization

 

 

Intangible Assets, Net

 

(in millions)

 

May 31,

2020

 

 

Additions &

Adjustments, net(1)

 

 

August 31,

2020

 

 

May 31,

2020

 

 

Expense

 

 

August 31,

2020

 

 

May 31,

2020

 

 

August 31,

2020

 

Developed technology

 

$

4,471

 

 

$

3

 

 

$

4,474

 

 

$

(3,290

)

 

$

(158

)

 

$

(3,448

)

 

$

1,181

 

 

$

1,026

 

Cloud services and license support agreements and related relationships

 

 

5,589

 

 

 

9

 

 

 

5,598

 

 

 

(3,271

)

 

 

(164

)

 

 

(3,435

)

 

 

2,318

 

 

 

2,163

 

Other

 

 

1,341

 

 

 

 

 

 

1,341

 

 

 

(1,102

)

 

 

(23

)

 

 

(1,125

)

 

 

239

 

 

 

216

 

Total intangible assets, net

 

$

11,401