2011 decreased due to a reduction in the amount of debt that we issued in fiscal 2011 ($1.15 billion borrowed pursuant to our revolving credit facilities and $3.25 billion of long-term senior notes issued) in comparison to fiscal 2010 ($4.5 billion of long-term senior notes and $2.8 billion of commercial paper notes issued). This unfavorable impact to our financing cash flows was partially offset by a cash favorable reduction in debt repayments during fiscal 2011 (repayments of $2.25 billion of senior notes in January 2011 and $881 million of commercial paper notes) in comparison to fiscal 2010 (repayments of $1.9 billion of commercial paper notes, $1.0 billion of floating rate senior notes and $700 million of Sun’s legacy convertible notes) and an increase in proceeds from stock option exercises during fiscal 2011.

Free cash flow:     To supplement our statements of cash flows presented on a GAAP basis, we use non-GAAP measures of cash flows on a trailing 4-quarter basis to analyze cash flows generated from our operations. We believe free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. We calculate free cash flows as follows:

 

Long-Term Customer Financing:     We offer certain of our customers the option to acquire our software products, hardware systems products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed 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 financial assets because we are considered to have surrendered control of these financial assets. We financed $1.6 billion, $1.5 billion and $1.2 billion, respectively, or approximately 16% of our new software license revenues in each of fiscal 2012, 2011 and 2010, and $134 million and $117 million, respectively, or approximately 3% of our hardware systems products revenues in each of fiscal 2012 and 2011.

Recent Financing Activities:

Revolving Credit Agreement :    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). Interest for the 2012 Credit Agreement is based on either (x) a “base rate” calculated as the highest of (i) JPMorgan’s prime rate, (ii) the federal funds effective rate plus 0.50% and (iii) the LIBOR for deposits in U.S. Dollars plus 1%, or (y) LIBOR for deposits made in U.S. Dollars plus 0.35%, depending on the type of borrowings made by us. This borrowing is due on July 2, 2012, which is the termination date of the 2012 Credit Agreement. Additional details regarding the 2012 Credit Agreement are included in Note 8 of Notes to Consolidated Financial