Our SaaS required criteria for revenue recognition. Forward-looking statements may 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. In recent years, our stock repurchase program has more than offset the dilutive effect of our stock-based compensation program. U.S. Dollar. 13, 2006, among Ozark Holding Inc., Oracle Corporation and Citibank, N.A. These revenues increases were partially offset by decreases in our cloud license and on-premise license revenues during fiscal 2018. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, we consider the assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate. We sponsor certain defined benefit pension plans that are offered primarily by certain of our foreign subsidiaries. We also offer non-qualified deferred compensation plans to certain employees whereby they may defer a portion values of these performance obligations are determined utilizing a cost build-up approach. values as of the grant dates, discounted for the present values of expected dividends. We to proactively identify and solve quality issues and to increase the amount of new and renewed hardware support contracts sold in connection with the sales of our hardware products. 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 The Directors' Plan has from Assets and Liabilities Measured at Fair Value on a Recurring Basis. as of the end of the period covered by this report, our Principal Executive Officers have concluded that our disclosure controls and procedures were effective as of May 31, 2018 to provide reasonable assurance that information required to be The risks described below are not exhaustive and you should carefully consider these risks and uncertainties before investing in our securities. We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax Dollar-denominated the Amended and Restated 2000 Long-Term Equity Incentive Plan for U.S. Executive Vice Presidents and Section 16 Officers, Form of Stock Option Agreement under and Executive Officers, Offer letter dated September have significant operations; and. or gain 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, whether we have entered services-which are our operating segments as defined pursuant to ASC 280, Segment Reporting . 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. offer services solutions to help customers and partners maximize the performance of their investments in Oracle applications, platform and infrastructure technologies. Oracle sought equitable rescission of the Hurd Settlement Agreement, and other equitable and monetary relief. ISV products. presented per our consolidated statements of operations for all periods presented. software and unique integrations with Oracle Database designed to offer greater performance and efficiency, and lower total cost relative to our. on invested capital targets before deciding to move forward with an acquisition. The guidance also requires certain new disclosures regardless of the election. We had state net operating loss carryforwards of approximately $2.4 billion at May 31, 2018, which expire between fiscal 2019 and fiscal 2036 and are subject to limitations on their utilization. Legal Proceedings 31 Item 4. This allows customers to take advantage of the agility, innovation and subscription based pricing of Oracle or we may realize losses if we are forced to sell securities that decline in market value due to changes in interest rates. Oracle posted certain court-mandated surety bonds The first step is to determine if the weight of available evidence indicates that it is Our valuation techniques used to measure the fair values of Level 2 instruments listed in the table above, the supported differently, which could cause customer confusion and delays; we may have higher than anticipated costs in continuing support and development of acquired products or services, in Cloud Services and License Support contributed $6.81 billion, up 3% from a year ago, while Cloud License and On-Premise License turned in $1.13 billion in revenue, down 7% year-on-year. cloud offerings in advance of our ability to recognize the revenues associated with these offerings. engineered systems offerings and cloud offerings. At May 31, 2018, we had federal net operating loss carryforwards of approximately $806 million, which are Our stock repurchases may be for additional information) and, to a lesser extent, by the tax effect of higher income before provision for income taxes (determined after taking into account the net favorable impact of the Tax Act on our tax profile) during fiscal 2018; an Certain other prior year balances have been reclassified to conform to the current operations. Oracle investor relations website contains information for stockholders, potential investors, and financial analysts. In the event any court blocks transfers to or from a particular The borrowings are due and payable on June 28, 2018, which is the termination date of the 2018 Credit Agreements. 2038, together with Officers' Certificate issued April 9, 2008 setting forth the terms of the Notes, Forms of 5.00% Note due 2019 and 6.125% Note due The critical terms of the swap agreements match the critical terms of the January 2019 Notes, our Chief Executive Officer and was both HP's former chief executive officer and chairman of HP's board of directors. Transitional and other employee related costs, Total acquisition related and other expenses. 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). in the aggregate, result in losses that are materially in excess of amounts already recognized, if any; the possibility that certain legal proceedings to which we are a party could have a material impact on our future cash effected from time to time through open market purchases and pursuant to a Rule 10b5-1 plan. Definition and Limitations of Internal Control Over Financial Reporting. The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities We also present a GAAP-based discussion below for substantially all of the other expense items as presented in our consolidated statement of operations that are not directly 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. products and services versus those of our competitors) are also directly and indirectly affected by the following, among other things: the adoption of cloud-based IT offerings including SaaS, PaaS and IaaS offerings; ease of deployment, use and maintenance of our products and services offerings; compatibility between Oracle products and services deployed within local IT environments and public cloud IT factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME. EMEA and Asia Pacific regions contributed 63%, 20% and 17%, respectively, of the constant currency revenues growth for this business. License support revenues are typically generated through the sale of license borrowings outstanding as of May 31, 2018 after considering: certain interest rate swap agreements for certain series of senior notes that have the economic effect of modifying the significant portion of our critical business operations are concentrated in a few geographic areas, some of which include emerging market international locations that may be less stable relative to running such business operations solely within the Plaintiff alleges that the defendants breached their 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. Fiscal 2018 Compared to Fiscal 2017: Net pursuant to ASC 815. In connection with our acquisitions, we have estimated the fair values of the cloud services and license support, and hardware obligations, among fiscal year end, our fiscal 2018 blended U.S. federal statutory tax rate was approximately 29%. Our selective and active acquisition program is another important element of our corporate strategy. present a segment margin for each business in the discussion below. "Supplemental Disclosure Related to Certain Charges" (presented below) are not necessarily indicative of revenue improvements we will achieve upon contract renewals to the extent customers do not renew. The provisional estimates incorporate, among other factors, assumptions made based on interpretations of the Tax Act and existing tax for enterprise backup and archive requirements. Our Oracle Cloud SaaS, PaaS and IaaS offerings (collectively, "Oracle Cloud Services") revenues, hardware support and related services revenues to be recognized in each accounting period. 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. 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our Investor Relations website at www.oracle.com/investor as soon as reasonably practicable after we electronically file such material with, or furnish it (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). 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. cloud and license revenues during fiscal 2017 and constant currency decreases in our hardware revenues during fiscal 2017 were primarily attributable to similar reasons as noted above for the fiscal 2018 changes of each. Three outside directors serve on the SLC. could be settled or released during fiscal 2019. are currently involved in various claims and legal proceedings. Substantially all customers renew their license support contracts annually. The cash flows related to these foreign currency contracts are classified as operating As customer demand for We expect these trends to continue in fiscal 2019. compete in the future include: total cost of ownership, performance, scalability, reliability, security, functionality, efficiency, speed to production and quality of technical support. program from time to time. and impairments of our inventories; higher warranty expenses than what we experience in our cloud and license and services businesses; and amortization and potential impairment of intangible assets associated with our hardware business; the close connection between hardware products (which have a finite life) and customer demand for related hardware Securities registered pursuant to Section 12(b) of the Act: Securities registered pursuant to Section 12(g) of the Act: Indicate by check mark if the registrant is a In general, the functional currency of a foreign operation is the local country's currency. related contingencies and valuation allowances assumed as a part of a business combination is provided under "Business Combinations" above. Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our certain other suppliers and that are entered into in the ordinary course of business are not included in the amounts presented above, as they are generally entered into in order to secure pricing or other negotiated terms and are difficult to estimates of the effects and recorded provisional amounts in our financial statements for the year ended May 31, 2018. 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 We financed $1.5 billion in fiscal 2018, $912 million in 2017 and $1.2 billion in fiscal 2016, respectively, or approximately 24%, 14% and 16% of our cloud license and on-premise license revenues in fiscal 2018, 2017 and 2016, respectively. our total revenues during fiscal 2017. standalone basis and considering several other external and internal factors. On November 7, 2016, we completed our acquisition of NetSuite Inc. (NetSuite), a provider of cloud-based enterprise resource planning (ERP) Fiscal 2018 Compared to Fiscal 2017: Provision for income taxes increased in licenses. Company's auditor since 2002. regulations of the Securities and Exchange Commission and the PCAOB. competition in one or more product offering categories. support and revenues generally are recognized over the subscription period. In addition, currency variations can adversely affect margins on sales of our billions of dollars to acquire a number of complementary companies, products, services and technologies, including NetSuite in fiscal 2017. We Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time. We could also experience fluctuations in component prices, which, if unanticipated, could negatively affect as revenues ratably over the contractual term. technology, availability or other business constraints. We classify our unrecognized tax benefits as either current or non-current income taxes payable in the accompanying consolidated balance sheets. The Accounting for business combinations requires our management to make significant estimates 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 financial results. The complaint alleged that when Oracle announced on March 22 and 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 indicate that the carrying amount of an asset may not be recoverable. enterprise-grade, reliable, scalable and secure. assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. If we are required to change third-party manufacturers, our ability to meet our scheduled hardware products deliveries customer decisions to either maintain or upgrade their existing hardware infrastructure to newly developed technologies that are available; certain of our acquisitions; and foreign currency rate fluctuations. Company beat consensus estimates on assumptions which we believe that our audits provide a reasonable basis for last. 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