billion of commercial paper notes in fiscal 2010 of which $881 million was outstanding as of May 31, 2010. These increases were partially offset by a reduction in interest expense associated with the maturities and repayments of $1.0 billion of floating rate senior notes and related variable to fixed interest rate swap agreements in both May 2009 and May 2010.

Non-Operating Income (Expense), net:     Non-operating income (expense), net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling interests in the net profits of our majority-owned subsidiaries (Oracle Financial Services Software Limited and Oracle Japan), and net other income (losses) including net realized gains and losses related to all of our investments and net unrealized gains and losses related to the small portion of our investment portfolio that we classify as trading.

 

Fiscal 2011 Compared to Fiscal 2010:     We recorded non-operating income, net during fiscal 2011 in comparison to non-operating expense, net in fiscal 2010 primarily due to net foreign currency transaction losses incurred in fiscal 2010, which included a foreign currency remeasurement loss of $81 million resulting from the designation of our Venezuelan subsidiary as “highly inflationary” in accordance with the FASB’s ASC 830, Foreign Currency Matters , and the subsequent devaluation of the Venezuelan currency by the Venezuelan government. In addition, our interest income increased in fiscal 2011 due to larger average cash, cash equivalents and marketable securities balances and other income, net increased in fiscal 2011 as a result of gains recognized on the sale of certain equity investments.

Fiscal 2010 Compared to Fiscal 2009:     We incurred non-operating expenses, net in fiscal 2010 in comparison to non-operating income, net in fiscal 2009 primarily due to net foreign currency losses relating to our Venezuelan subsidiary’s operations in fiscal 2010 as described above. Additionally, interest income decreased in fiscal 2010 due to a general decline in market interest rates that resulted in lower yields earned on our cash, cash equivalents and marketable securities balances. Both of the aforementioned items contributed to the change in fiscal 2010 but were partially offset by gains due to favorable changes in the values of our marketable securities that we classify as trading that were held to support our deferred compensation plan obligations.



Provision for Income Taxes:     Our effective tax rate in all periods is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to state taxes and earnings considered as indefinitely reinvested in foreign operations. Future effective tax rates could be adversely affected if earnings are lower than anticipated in countries where we have lower statutory rates, by unfavorable changes in tax laws and regulations or by adverse rulings in tax related litigation.

 

Fiscal 2011 Compared to Fiscal 2010:     Provision for income taxes