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NOTES PAYABLE AND OTHER BORROWINGS
 12 Months Ended
May. 31, 2015
Notes Payable and Other Borrowings [Abstract]  
NOTES PAYABLE AND OTHER BORROWINGS

8. NOTES PAYABLE AND OTHER BORROWINGS

 

Notes payable consisted of the following:

 

 

May 31,

(Dollars in millions)

 

2015

 

2014

3.75% senior notes due July 2014, net of fair value adjustment of $8 as of May 31, 2014(1)

 

$

—

 

$

1,508

5.25% senior notes due January 2016, net of discount of $1 and $2 as of May 31, 2015 and 2014, respectively

 

 

1,999

 

 

1,998

Floating rate senior notes due July 2017, net of debt issuance cost of $1 as of May 31, 2015

 

 

999

 

 

—

1.20% senior notes due October 2017, net of discount and debt issuance costs of $6 and $9 as of May 31, 2015 and 2014, respectively

 

 

2,494

 

 

2,491

5.75% senior notes due April 2018, net of debt issuance costs of $7 and $8 as of May 31, 2015 and 2014, respectively

 

 

2,493

 

 

2,492

Floating rate senior notes due January 2019, net of debt issuance costs of $1 each as of May 31, 2015 and 2014

 

 

     499

 

 

499

2.375% senior notes due January 2019, net of fair value losses of $21 and $15 and discount and debt issuance costs of $7 and $9 as of

 

 

 

 

 

 

      May 31, 2015 and May 31, 2014, respectively(1)

 

 

1,514

 

 

1,506

5.00% senior notes due July 2019, net of discount and debt issuance costs of $11 and $12 as of May 31, 2015 and 2014, respectively

 

 

1,739

 

 

1,738

Floating rate senior notes due October 2019, net of debt issuance cost of $2 as of May 31, 2015

 

 

748

 

 

—

2.25% senior notes due October 2019, net of fair value loss of $22 and discount and debt issuance cost of $7 as of May 31, 2015(1)

 

 

2,015

 

 

—

3.875% senior notes due July 2020, net of discount and debt issuance costs of $4 and $5 as of May 31, 2015 and 2014, respectively

 

 

996

 

 

995

2.25% senior notes due January 2021, net of discount and debt issuance costs of $11 and $14 as of May 31, 2015 and 2014, respectively (2)

 

 

1,341

 

 

1,685

2.80% senior notes due July 2021, net of fair value loss of $31 and discount and debt issuance cost of $6 as of May 31, 2015 (1)

 

 

1,525

 

 

—

2.50% senior notes due May 2022, net of discount and debt issuance cost of $17 as of May 31, 2015

 

 

2,483

 

 

—

2.50% senior notes due October 2022, net of discount and debt issuance costs of $10 and $11 as of May 31, 2015 and 2014, respectively

 

 

2,490

 

 

2,489

3.625% senior notes due July 2023, net of discount and debt issuance costs of $11 and $12 as of May 31, 2015 and 2014, respectively

 

 

989

 

 

988

3.40% senior notes due July 2024, net of discount and debt issuance cost of $12 as of May 31, 2015

 

 

1,988

 

 

—

2.95% senior notes due May 2025, net of discount and debt issuance cost of $22 as of May 31, 2015

 

 

2,478

 

 

—

3.125% senior notes due July 2025, net of discount and debt issuance costs of $6 and $9 as of May 31, 2015 and 2014, respectively (2)

 

 

804

 

 

1,013

3.25% senior notes due May 2030, net of discount and debt issuance cost of $6 as of May 31, 2015

 

 

494

 

 

—

4.30% senior notes due July 2034, net of discount and debt issuance cost of $13 as of May 31, 2015

 

 

1,737

 

 

—

3.90% senior notes due May 2035, net of discount and debt issuance cost of $18 as of May 31, 2015

 

 

1,232

 

 

—

6.50% senior notes due April 2038, net of discount and debt issuance costs of $5 and $6 as of May 31, 2015 and 2014, respectively

 

 

1,245

 

 

1,244

6.125% senior notes due July 2039, net of discount and debt issuance costs of $12 and $14 as of May 31, 2015 and 2014, respectively

 

 

1,238

 

 

1,236

5.375% senior notes due July 2040, net of discount and debt issuance costs of $34 and $35 as of May 31, 2015 and 2014, respectively

 

 

2,216

 

 

2,215

4.50% senior notes due July 2044, net of debt issuance cost of $8 as of May 31, 2015

 

 

992

 

 

—

4.125% senior notes due May 2045, net of discount and debt issuance cost of $24 as of May 31, 2015

 

 

1,976

 

 

—

4.375% senior notes due May 2055, net of discount and debt issuance cost of $16 as of May 31, 2015

 

 

1,234

 

 

—

Total borrowings

 

$

41,958

 

$

24,097

Notes payable, current

 

$

1,999

 

$

1,508

Notes payable, non-current

 

$

39,959

 

$

22,589

 

 

 

 

 

 

 

__________

(1)

Refer to Note 11 for a description of our accounting for fair value hedges.

(2)

Euro based notes valued at May 31, 2015 and May 31, 2014 foreign exchange rates, respectively (see further discussion below)

 

Senior Notes and Other

 

In May 2015, we issued $10.0 billion of senior notes comprised of $2.5 billion of 2.50% notes due May 2022 (2022 Notes), $2.5 billion of 2.95% notes due May 2025 (2025 Notes), $500 million 3.25% notes due May 2030 (2030 Notes), $1.25 billion of 3.90% notes due May 2035 (2035 Notes), $2.0 billion of 4.125% notes due May 2045 (2045 Notes) and $1.25 billion of 4.375% notes due May 2055 (2055 Notes, and together with the 2022 Notes, 2025 Notes, 2030 Notes, 2035 Notes and 2045 Notes, the May 2015 Senior Notes). We issued the May 2015 Senior Notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and future acquisitions, and repayment of indebtedness.

 


In July 2014, we issued $10.0 billion of senior notes comprised of $1.0 billion of floating rate notes due July 2017 (2017 Floating Rate Notes), $750 million of floating rate notes due October 2019 (2019 Floating Rate Notes), $2.0 billion of 2.25% notes due October 2019 (2019 Notes), $1.5 billion of 2.80% notes due July 2021 (2021 Notes), $2.0 billion of 3.40% notes due July 2024 (2024 Notes), $1.75 billion of 4.30% notes due July 2034 (2034 Notes) and $1.0 billion of 4.50% notes due July 2044 (2044 Notes and, together with the 2017 Floating Rate Notes, 2019 Floating Rate Notes, 2019 Notes, 2021 Notes, 2024 Notes and 2034 Notes, the July 2014 Senior Notes). The floating rate notes bear interest at a floating rate equal to three-month LIBOR plus 0.20% for the 2017 Floating Rate Notes and 0.51% for the 2019 Floating Rate Notes (0.47% and 0.78% as of May 31, 2015, respectively) with interest payable quarterly. We issued the July 2014 Senior Notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock, our acquisition of MICROS and future acquisitions, and repayment of indebtedness.

 

In July 2013, we issued €2.0 billion ($2.2 billion and $2.7 billion as of May 31, 2015 and 2014, respectively) of fixed rate senior notes comprised of €1.25 billion of 2.25% notes due January 2021 (January 2021 Notes) and €750 million of 3.125% notes due July 2025 (July 2025 Notes, and together with the January 2021 Notes, the Euro Notes). The Euro Notes are registered and trade on the New York Stock Exchange.

 

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 11 for additional information). Further, 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 (see Note 11 for additional information).

 

In July 2013, we also issued $3.0 billion of senior notes comprised of $500 million of floating rate notes due January 2019 (January 2019 Floating Rate Notes), $1.5 billion of 2.375% notes due January 2019 (January 2019 Notes) and $1.0 billion of 3.625% notes due July 2023 (2023 Notes). The January 2019 Floating Rate Notes bear interest at a floating rate equal to three-month LIBOR plus 0.58% (0.86% and 0.81% as of May 31, 2015 and 2014, respectively) with interest payable quarterly.

 

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 (October 2022 Notes).

 

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).

 

In July 2009, we issued $4.5 billion of fixed rate senior notes of which $1.5 billion of 3.75% notes (2014 Notes) was due and paid in July 2014 (we also settled the fixed to variable interest rate swap agreements associated with the 2014 Notes) and $1.75 billion of 5.00% notes due July 2019 (July 2019 Notes) and $1.25 billion of 6.125% notes due July 2039 (2039 Notes) remained outstanding as of May 31, 2015.

 

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, 2015.

 

In January 2006, we issued $5.75 billion of senior notes, of which $2.0 billion of 5.25% senior notes due January 2016 (2016 Notes) remained outstanding as of May 31, 2015.

 

The effective interest yields of the 2016 Notes, 2017 Notes, 2018 Notes, January 2019 Notes, July 2019 Notes, 2019 Notes, 2020 Notes, 2021 Notes, 2022 Notes, October 2022 Notes, 2023 Notes, 2024 Notes, 2025 Notes, July 2025 Notes, 2030 Notes, 2034 Notes, 2035 Notes, 2038 Notes, 2039 Notes, 2040 Notes, 2044 Notes, 2045 Notes and 2055 Notes (collectively and together with the January 2021 Notes, the Senior Notes) at May 31, 2015 were 5.32%, 1.24%, 5.76%, 2.44%, 5.05%, 2.27%, 3.93%, 2.82%, 2.56%, 2.51%, 3.73%, 3.43%, 3.00%, 3.17%, 3.30%, 4.30%, 3.95%, 6.52%, 6.19%, 5.45%, 4.50%, 4.15%, and 4.40%, respectively. In July 2014 and July 2013, we entered into certain interest rate swap agreements that have the economic effects of modifying the fixed interest obligations associated with the 2019 Notes, January 2019 Notes and 2021 Notes so that the interest payable on these notes effectively became variable based on LIBOR (0.76%, 0.93% and 0.91%, respectively, at May 31, 2015; and 0.88% for the January 2019 Notes at May 31, 2014; see Note 11 for additional information). The effective interest yield of the January 2021 Notes was 2.33% (3.53% after the economic effects of the cross-currency swap agreements described above and in Note 11). Interest is payable semi-annually for the Senior Notes 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 2017 Floating Rate Notes, January 2019 Floating Rate Notes and 2019 Floating Rate Notes (collectively the Floating Rate Notes) may not be redeemed prior to their maturity.

 

The Senior Notes and the Floating Rate 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 the Floating Rate Notes and any future issuances of commercial paper notes. We were in compliance with all debt-related covenants at May 31, 2015.

 

Future principal payments for all of our borrowings at May 31, 2015 were as follows (in millions):

Fiscal 2016

 

$ 

2,000

Fiscal 2017

 

 

—

Fiscal 2018

 

 

6,000

Fiscal 2019

 

 

 2,000

Fiscal 2020

 

 

4,500

Thereafter

 

 

27,966

Total

 

$

42,466

 

 

 

 

 

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, 2015 and 2014, 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, 2015 and 2014.

 

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, 2015.

 

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). During fiscal 2013, we repaid the $1.7 billion and the 2012 Credit Agreement expired pursuant to its terms.