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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule12b-2 of the Exchange Act.

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 Rule12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of ~~March 13,~~September 11, 2017 was: ~~4,114,684,000.~~4,173,053,000.

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 Form10-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:

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 Form10-K for our fiscal year ended May 31, ~~2016~~2017 and our other Quarterly Reports on Form10-Q to be filed by us in our fiscal year ~~2017,~~2018, which runs from June 1, ~~2016~~2017 to May 31, ~~2017.~~2018.

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.


(in millions, except per share data)	February 28, 2017			May 31, 2016			August 31, 2017			May 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	19,748		$	20,152		$	21,321		$	21,784
Marketable securities		39,604			35,973			45,576			44,294
Trade receivables, net of allowances for doubtful accounts of $300 and $327 as of February 28, 2017 and May 31, 2016, respectively		3,721			5,385
Trade receivables, net of allowances for doubtful accounts of $336 and $319 as of August 31, 2017 and May 31, 2017, respectively								3,591			5,300
Inventories		391			212			312			300
Prepaid expenses and other current assets		2,547			2,591			2,535			2,837

Total current assets		66,011			64,313			73,335			74,515

Non-current assets:
Property, plant and equipment, net		5,070			4,000			5,586			5,315
Intangible assets, net		7,788			4,943			7,186			7,679
Goodwill, net		42,504			34,590			43,020			43,045
Deferred tax assets		918			1,291			1,181			1,143
Other assets		3,091			3,043			3,289			3,294

Totalnon-current assets		59,371			47,867			60,262			60,476

Total assets	$	125,382		$	112,180		$	133,597		$	134,991

LIABILITIES AND EQUITY
Current liabilities:
Notes payable and other borrowings, current	$	3,498		$	3,750		$	4,998		$	9,797
Accounts payable		481			504			593			599
Accrued compensation and related benefits		1,516			1,966			1,517			1,966
Deferred revenues		7,388			7,655			10,269			8,233
Other current liabilities		2,907			3,333			2,849			3,583

Total current liabilities		15,790			17,208			20,226			24,178

Non-current liabilities:
Notes payable and other borrowings,non-current		50,469			40,105			48,293			48,112
Income taxes payable		5,162			4,908			5,891			5,681
Othernon-current liabilities		2,938			2,169			2,821			2,774

Totalnon-current liabilities		58,569			47,182			57,005			56,567

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: 4,115 shares and 4,131 shares as of February 28, 2017 and May 31, 2016, respectively		25,970			24,217
Common stock, $0.01 par value and additional paid in capital—authorized: 11,000 shares; outstanding: 4,171 shares and 4,137 shares as of August 31, 2017 and May 31, 2017, respectively								28,089			27,065
Retained earnings		25,576			23,888			28,586			27,598
Accumulated other comprehensive loss		(931	)		(816	)		(716	)		(803	)

Total Oracle Corporation stockholders’ equity		50,615			47,289			55,959			53,860
Noncontrolling interests		408			501			407			386

Total equity		51,023			47,790			56,366			54,246

Total liabilities and equity	$	125,382		$	112,180		$	133,597		$	134,991

For the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016


	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions, except per share data)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016			2017			2016
Revenues:
Cloud software as a service and platform as a service	$	1,011		$	583		$	2,686		$	1,517
Cloud infrastructure as a service		178			152			525			477
Cloud software as a service													$	1,067		$	657
Cloud platform as a service and infrastructure as a service														400			312

Total cloud revenues		1,189			735			3,211			1,994			1,467			969

New software licenses		1,414			1,680			3,792			4,509			966			1,030
Software license updates and product support		4,762			4,669			14,331			14,048			4,951			4,792

Totalon-premise software revenues		6,176			6,349			18,123			18,557			5,917			5,822

Total cloud andon-premise software revenues		7,365			7,084			21,334			20,551			7,384			6,791

Hardware products		520			604			1,478			1,746
Hardware support		508			531			1,559			1,639

Total hardware revenues		1,028			1,135			3,037			3,385
Total services revenues		812			793			2,464			2,517
Hardware revenues														943			996
Services revenues														860			808

Total revenues		9,205			9,012			26,835			26,453			9,187			8,595

Operating expenses:
Cloud software as a service⁽¹⁾														374			283
Cloud platform as a service and infrastructure as a service⁽¹⁾														227			132
Software license updates and product support⁽¹⁾														257			275
Hardware⁽¹⁾														373			391
Services⁽¹⁾														702			695
Sales and marketing⁽¹⁾		2,004			1,903			5,883			5,578			1,992			1,919
Cloud software as a service and platform as a service⁽¹⁾		380			292			1,060			847
Cloud infrastructure as a service⁽¹⁾		125			88			333			268
Software license updates and product support⁽¹⁾		270			293			786			877
Hardware products⁽¹⁾		290			338			775			967
Hardware support⁽¹⁾		147			171			439			526
Services⁽¹⁾		680			657			2,073			2,058
Research and development		1,521			1,419			4,551			4,253			1,574			1,520
General and administrative		241			290			859			832			320			315
Amortization of intangible assets		397			408			1,010			1,283			411			311
Acquisition related and other		30			11			84			35			12			14
Restructuring		161			115			346			293			124			99

Total operating expenses		6,246			5,985			18,199			17,817			6,366			5,954

Operating income		2,959			3,027			8,636			8,636			2,821			2,641

Interest expense		(450	)		(360	)		(1,317	)		(1,105	)		(469	)		(416	)
Non-operating income, net		189			65			437			179			233			148

Income before provision for income taxes		2,698			2,732			7,756			7,710			2,585			2,373
Provision for income taxes		459			590			1,653			1,623			375			541

Net income	$	2,239		$	2,142		$	6,103		$	6,087		$	2,210		$	1,832

Earnings per share:
Basic	$	0.55		$	0.51		$	1.49		$	1.43		$	0.53		$	0.44

Diluted	$	0.53		$	0.50		$	1.45		$	1.41		$	0.52		$	0.43

Weighted average common shares outstanding:
Basic		4,107			4,182			4,110			4,246			4,156			4,119

Diluted		4,204			4,256			4,207			4,328			4,284			4,221

Dividends declared per common share	$	0.15		$	0.15		$	0.45		$	0.45		$	0.19		$	0.15

For the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016


	Three Months Ended					Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017		February 29, 2016			February 28, 2017			February 29, 2016			2017			2016
Net income	$	2,239	$	2,142		$	6,103		$	6,087		$	2,210		$	1,832
Other comprehensive income (loss), net of tax:
Net foreign currency translation gains (losses)		32		142			(39	)		9
Net foreign currency translation gains													38			133
Net unrealized gains on defined benefit plans		9		5			16			25			7			5
Net unrealized gains (losses) on marketable securities		96		69			(117	)		(47	)
Net unrealized gains (losses) on cash flow hedges		4		(23	)		25			(37	)
Net unrealized gains on marketable securities													64			143
Net unrealized (losses) gains on cash flow hedges													(22	)		2

Total other comprehensive income (loss), net		141		193			(115	)		(50	)
Total other comprehensive income, net													87			283

Comprehensive income	$	2,380	$	2,335		$	5,988		$	6,037		$	2,297		$	2,115

For the ~~Nine~~Three Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016


	Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016			2017			2016
Cash flows from operating activities:
Net income	$	6,103		$	6,087		$	2,210		$	1,832
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		722			643			285			222
Amortization of intangible assets		1,010			1,283			411			311
Deferred income taxes		111			(143	)		159			145
Stock-based compensation		1,017			768			403			319
Tax benefits on the vesting of restricted stock-based awards and exercise of stock options		378			188
Other, net		96			116			47			39
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		1,673			1,746			1,752			1,993
(Increase) decrease in inventories		(178	)		87
Increase in inventories								(11	)		(75	)
Decrease in prepaid expenses and other assets		308			95			555			435
Decrease in accounts payable and other liabilities		(862	)		(890	)		(1,062	)		(1,013	)
Decrease in income taxes payable		(388	)		(112	)
(Decrease) increase in deferred revenues		(330	)		24
Increase (decrease) in income taxes payable								32			(94	)
Increase in deferred revenues								1,785			1,761

Net cash provided by operating activities		9,660			9,892			6,566			5,875

Cash flows from investing activities:
Purchases of marketable securities and other investments		(15,571	)		(21,549	)		(7,671	)		(5,513	)
Proceeds from maturities and sales of marketable securities and other investments		11,825			18,845			6,326			1,752
Acquisitions, net of cash acquired		(10,406	)		(313	)		—			(1,143	)
Capital expenditures		(1,496	)		(1,009	)		(473	)		(299	)

Net cash used for investing activities		(15,648	)		(4,026	)		(1,818	)		(5,203	)

Cash flows from financing activities:
Payments for repurchases of common stock		(3,067	)		(8,467	)		(502	)		(2,002	)
Proceeds from issuances of common stock		1,309			802			1,014			487
Shares repurchased for tax withholdings upon vesting of restricted stock-based awards		(237	)		(82	)		(331	)		(170	)
Payments of dividends to stockholders		(1,844	)		(1,918	)		(788	)		(618	)
Proceeds from borrowings, net of issuance costs		13,932			—			—			13,932
Repayments of borrowings		(4,094	)		(2,000	)		(4,800	)		(3,750	)
Distributions to noncontrolling interests		(200	)		(85	)		(34	)		(167	)

Net cash provided by (used for) financing activities		5,799			(11,750	)
Net cash (used for) provided by financing activities								(5,441	)		7,712

Effect of exchange rate changes on cash and cash equivalents		(215	)		(249	)		230			78

Net decrease in cash and cash equivalents		(404	)		(6,133	)
Net (decrease) increase in cash and cash equivalents								(463	)		8,462
Cash and cash equivalents at beginning of period		20,152			21,716			21,784			20,152

Cash and cash equivalents at end of period	$	19,748		$	15,583		$	21,321		$	28,614

Non-cash investing and financing transactions:
Fair values of restricted stock-based awards and stock options assumed in connection with acquisitions	$	90		$	—		$	—		$	6
(Decrease) increase in unsettled repurchases of common stock	$	(69	)	$	3
Increase (decrease) in unsettled investment purchases	$	5		$	(148	)
Decrease in unsettled repurchases of common stock							$	(2	)	$	(3	)
Decrease in unsettled investment purchases							$	(138	)	$	(95	)

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 financial statements and the notes thereto included in our Annual Report on Form10-K for the fiscal year ended May 31, ~~2016.~~2017.

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, ~~2017.~~2018. Certain prior year balances have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income or net income.

During the first ~~nine~~three months of fiscal 2017, we adopted Accounting Standards Update (ASU)~~2016-09,~~2017-04,~~Compensation~~—~~Stock~~~~Compensation~~Intangibles—Goodwill and Other (Topic~~718)~~ 350):~~Improvements~~to~~Employee~~~~Share-Based~~~~Payment~~~~Accounting~~ ~~(ASU2016-09). As~~ ~~required by ASU2016-09,~~ ~~excess tax benefits recognized on stock-based compensation expense are reflected in~~ Simplifying the ~~condensed consolidated statements of operations as a component of the provision~~Test for ~~income taxes on a prospective basis. As required by ASU2016-09,~~ ~~excess tax benefits recognized on stock-based compensation expense are classified as an operating activity in our condensed consolidated statements of cash flows and we~~Goodwill Impairment, which did not have applied this provision on a retrospective basis. For the nine months ended February 29, 2016, net cash provided by operating activities increased by $61 million with a corresponding offset to net cash used for financing activities. Finally, ASU~~2016-09~~ allows for the option to account for forfeitures as they occur, rather than estimating expected forfeitures over the course of a vesting period. We have elected to account for forfeitures as they occur and the net cumulative effect of this change was recognized as a $9 million increase to additional paid in capital, a $3 million increase to deferred tax assets and a $6 million reduction to retained earnings as of June 1, 2016.

~~In addition, in fiscal 2017, we also adopted the following Accounting Standards Updates, none of which had~~ a material impact to our reported financial position or results of ~~operations and cash flows:~~

operations. There have been no ~~other~~ significant changes in our reported financial position or results of operations and cash flows as a result of our adoption of new accounting pronouncements or changes to our significant accounting policies that were disclosed in our Annual Report onForm 10-K for the fiscal year ended May 31, ~~2016.~~2017.

Restricted cash that was included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of ~~February 28,~~August 31, 2017 and May 31, ~~2016~~2017 and our condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016 was nominal.

Acquisition related and other expenses consist of personnel related costs and stock-based compensation for transitional and certain other employees, integration related professional services, certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net.


	Three Months Ended					Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016		February 28, 2017			February 29, 2016			2017			2016
Transitional and other employee related costs	$	15		$	8	$	31		$	40		$	9		$	8
Stock-based compensation		22			—		33			3			1			—
Professional fees and other, net		(2	)		1		26			10			3			5
Business combination adjustments, net		(5	)		2		(6	)		(18	)		(1	)		1

Total acquisition related and other expenses	$	30		$	11	$	84		$	35		$	12		$	14

~~Included in acquisition related and other expenses during the nine months ended February 29, 2016 is an acquisition related benefit of $19 million.~~

Non-operating income, net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily 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.


	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016			2017			2016
Interest income	$	197		$	141		$	578		$	382		$	257		$	177
Foreign currency losses, net		(20	)		(15	)		(102	)		(68	)		(4	)		(13	)
Noncontrolling interests in income		(20	)		(36	)		(95	)		(95	)		(47	)		(35	)
Other income (loss), net		32			(25	)		56			(40	)		27			19

Totalnon-operating income, net	$	189		$	65		$	437		$	179		$	233		$	148

We offer certain of our customers the option to acquire our software products, hardware products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on anon-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~~

and 2016, $818 million and $898 million of financing receivables were sold to financial institutions, ~~were $296 million and $1.3 billion for the three and nine months ended February 28, 2017, respectively, and $304 million and $1.5 billion for the three and nine months ended February 29, 2016,~~ respectively.

~~Goodwill~~~~Impairment:~~Derivatives and Hedging: In ~~January~~August 2017, the Financial Accounting Standards Board (FASB) issued ASU~~2017-04,~~2017-12,~~Intangibles—Goodwill~~Derivatives and~~Other~~ Hedging (Topic~~350)~~ 815):~~Simplifying~~~~the~~~~Test~~ Targeted Improvements to Accounting for~~Goodwill~~~~Impairment~~ Hedging Activities (ASU~~2017-04)~~2017-12), which ~~eliminates step two from~~amends and simplifies existing guidance in order to allow companies to more accurately present the ~~goodwill impairment test. Under~~economic effects of risk management activities in the ~~amendments in~~financial statements. ASU~~2017-04,~~ an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU~~2017-04~~2017-12 is effective for us in ~~our~~the first quarter of fiscal ~~2021 on a prospective basis,~~2020, and earlier adoption is ~~permitted for goodwill impairment tests performed on testing dates after January 1, 2017.~~permitted. We are currently evaluating the impact of our pending adoption of ASU~~2017-04~~2017-12 on our consolidated financial statements.

~~Business~~~~Combinations:~~Retirement Benefits: In ~~January~~March 2017, the FASB issued ASU~~2017-01,~~2017-07,~~Business~~~~Combinations~~Compensation—Retirement Benefits (Topic~~805)~~ 715):~~Clarifying~~ Improving the~~Definition~~ Presentation ofa~~Business~~ Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU~~2017-01)~~2017-07), which provides guidance ~~for evaluating whether certain transactions are to be accounted for as an acquisition (or disposal)~~on the capitalization, presentation and disclosure of ~~either a business or an asset.~~net benefit costs. ASU~~2017-01~~2017-07 is effective for us in ~~our~~the first quarter of fiscal ~~2019 on a prospective basis, and earlier adoption is permitted for transactions occurring subsequent to the issuance of ASU2017-01~~ ~~and not reported in the financial statements.~~2019. We are currently evaluating the impact of our pending adoption of ASU~~2017-01~~2017-07 on our consolidated financial statements.

IncomeTaxes: In October 2016, the FASB issued ASU2016-16,IncomeTaxes(Topic740):Intra-EntityTransfersofAssetsOtherThanInventory ~~(ASU~~(ASU2016-16), which changes the timing of when certain intercompany transactions are recognized within the provision for income taxes. ASU2016-16 is effective for us in our first quarter of fiscal 2019 on a modified retrospective basis, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU2016-16 on our consolidated financial statements.

FinancialInstruments: In June 2016, the FASB issued ASU2016-13,FinancialInstruments—CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments (ASU2016-13), which requires measurement and recognition of expected credit losses for financial assets held. ASU2016-13 is effective for us in our first quarter of fiscal 2021, and earlier adoption is permitted beginning in the first quarter of fiscal 2020. We are currently evaluating the impact of our pending adoption of ASU2016-13 on our consolidated financial statements.

In January 2016, the FASB issued ASU2016-01,FinancialInstruments—Overall~~(Subtopic~~ (Subtopic825-10):RecognitionandMeasurementofFinancialAssetsandFinancialLiabilities (ASU2016-01), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU2016-01 is effective for us in our first quarter of fiscal 2019, and earlier adoption is not permitted except for certain provisions. We currently do not expect that our pending adoption of ASU2016-01 will have a material effect on our consolidated financial statements.

Leases:In February 2016, the FASB issued ASU2016-02,Leases~~(Topic~~(Topic 842) (ASU2016-02). ASU2016-02 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and correspondingright-of-use assets. ASU2016-02 is effective for us in our first quarter of fiscal 2020 on a modified retrospective basis, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU2016-02 on our consolidated financial ~~statements, and we~~statements. We currently expect that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities

andright-of-use assets upon our adoption of ASU2016-02, which will increase our total assets and total liabilities that we report relative to such amounts prior to adoption.

RevenueRecognition: In May 2014, the FASB issued ASU2014-09,RevenuefromContractswithCustomers:Topic606 and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016, ~~and~~ December 2016 and May 2017 within ASU2015-14,ASU 2016-08, ASU2016-10, ASU2016-12, ~~and~~ ASU2016-20 ~~respectively (ASU2014-09,~~ ~~ASU2015-14,~~ ~~ASU2016-08,~~ ~~ASU2016-10,~~ ~~ASU2016-12~~ and ASU~~2016-20,~~2017-10, respectively, and collectively Topic ~~606).~~606. Topic 606 supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Topic 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation, among others. Topic 606 also provides guidance on the recognition of costs related to obtaining customer contracts. Topic 606 is effective for us as of ~~either our first quarter of fiscal 2018 or~~ our first quarter of fiscal 2019 using either of two methods: (1) retrospective application of Topic 606 to each prior reporting period presented with the option to elect certain practical expedients as defined within Topic 606 or (2) retrospective application of Topic 606 with the cumulative effect of initially applying Topic 606 recognized at the date of initial application and providing certain additional disclosures as defined per Topic 606. ~~Preliminarily, we~~The accounting for the recognition of costs related to obtaining customer contracts under Topic 606 is significantly different than our current capitalization policy. The adoption of Topic 606 will result in additional types of costs that will be capitalized. Additionally, all amounts capitalized will be amortized over a period longer than our current policy. We plan to adopt Topic 606 in the first quarter of fiscal 2019 pursuant to the aforementioned adoption method (1) and we do not believe there will be a material impact to our revenues upon adoption. We are continuing to evaluate the impact to our revenues and costs related to our pending adoption of Topic 606 and our preliminary assessments are subject to change. ~~We are also continuing to evaluate the provisions of Topic 606 related to costs for obtaining customer contracts.~~

On ~~July 28,~~November 7, 2016, we ~~entered into an Agreement and Plan~~completed our acquisition of ~~Merger (Merger Agreement) with~~ NetSuite Inc. (NetSuite), a provider of cloud-based enterprise resource planning (ERP) software and related applications and ~~as described further below,~~ a related party to Oracle.

Pursuant to the Merger Agreement, we commenced a tender offer on August 18, 2016 to purchase all of the issued and outstanding shares of NetSuite common stock (NetSuite Shares) at a purchase price of $109.00 per share, net to the seller in cash, without interest thereon, based upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 18, 2016, and in the related Letter of Transmittal. On November 7, 2016, pursuant to the terms of the tender offer and applicable Delaware law, we accepted and paid for the substantial majority of outstanding NetSuite Shares and effectuated the merger of NetSuite with and into a wholly-owned subsidiary of Oracle and NetSuite became an indirect, wholly-owned subsidiary of Oracle. Pursuant to the Merger Agreement, NetSuite Shares that remained outstanding and were not acquired by us were converted into, and cancelled in exchange for, the right to receive $109.00 per share in cash. The unvested equity awards to acquire NetSuite Shares that were outstanding immediately prior to the conclusion of the merger were converted into equity awards denominated in shares of Oracle common stock based on formulas contained in the Merger Agreement. 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 customers. ~~We have included the financial results of NetSuite in our consolidated financial statements from the date of acquisition.~~

Lawrence J. Ellison, Oracle’s Chairman of the Board and Chief Technology Officer and Oracle’s largest stockholder, is an affiliate of NetSuite’s largest stockholder, NetSuite Restricted Holdings LLC (a single member

LLC investment entity whose interests are beneficially owned by a trust controlled by Mr. Ellison), which owned approximately 40% of the issued and outstanding NetSuite Shares immediately prior to the conclusion of the merger. Oracle’s Board of Directors appointed a Special Committee (comprised solely of directors who are independent of the management of Oracle, Mr. Ellison, his family members and any affiliated entities, and NetSuite) to which it delegated the full and exclusive power, authority and discretion of the Board to evaluate, assess, and approve the NetSuite transaction on its behalf. The Special Committee engaged its own independent legal counsel and its own independent financial advisor to advise it on the transaction. The financial advisor provided the Special Committee with a fairness opinion in connection with the transaction. After extensive deliberations, the Special Committee concluded that the transaction terms were fair to Oracle and the transaction was in the best interests of Oracle and its stockholders. The Special Committee unanimously approved the transaction on behalf of Oracle and the Board.

The total preliminary purchase price for NetSuite was approximately $9.1 billion, which consisted of approximately $9.0 billion in cash and $78 million for the fair values of restricted stock-based awards and stock options assumed. ~~Pursuant to our business combinations accounting policy,~~In allocating the purchase price based on estimated fair values, we ~~estimated the preliminary fair values~~recorded approximately $6.7 billion of goodwill, $3.2 billion of identifiable intangible assets and $816 million of net tangible and intangible assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill. The preliminary fair values of net tangible assets and intangible assets acquired were based on preliminary valuations, and our estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date).liabilities. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain tangible assets and liabilities acquired, certain legal matters, income andnon-income based taxes and residual goodwill. We expect to continue to obtain information to assist us in determining the fair values of the net assets acquired during the measurement period. ~~The following table summarizes~~See Note 2 of Notes to Consolidated Financial Statements included in our Annual Report on Form10-K for the ~~estimated preliminary fair values~~fiscal year ended May 31, 2017 for additional information regarding our acquisition of ~~net tangible liabilities and intangible assets acquired from NetSuite:~~

~~We do not expect the goodwill recognized as a part of the NetSuite acquisition to be deductible for income tax purposes.~~NetSuite.

During ~~the first nine months of~~ fiscal 2017, 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 significant.~~aggregate. We have included the financial results of the acquired companies in our condensed consolidated financial statements from their respective acquisition dates, and the results from each of these companies were not individually material to our condensed consolidated financial statements. In the aggregate, the total preliminary purchase price for these acquisitions was approximately ~~$2.1~~$3.0 billion, which consisted of

approximately ~~$2.1~~$3.0 billion in cash and ~~$12~~$13 million for the fair values of restricted stock-based awards and stock options assumed. We preliminarily recorded ~~$196~~$241 million of net tangible assets and ~~$698~~$948 million of identifiable intangible assets, based on their estimated fair values, and ~~$1.2~~$1.8 billion of residual goodwill.

The preliminary fair value estimates for the assets acquired and liabilities assumed for our ~~acquisitions~~ completed ~~during the first nine months of fiscal 2017~~acquisitions were based upon preliminary calculations and valuations, and our estimates and assumptions for these acquisitions are subject to change as we obtain additional information during the respective measurement periods (up to one year from the respective acquisition dates). The primary areas of those preliminary estimates that are not yet finalized relate to certain tangible assets and liabilities acquired, identifiable intangible assets, certain legal matters, income andnon-income based taxes and residual goodwill.

~~We also have entered into certain non-material agreements to acquire certain companies and expect these proposed acquisitions to close during the fourth quarter of fiscal 2017.~~

During fiscal 2016, 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.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Oracle, NetSuite and certain other companies that we acquired since the beginning of fiscal ~~2016~~2017 that were considered relevant for the purposes of unaudited pro forma financial information disclosure as if the companies were combined as of the beginning of fiscal ~~2016.~~2017. The unaudited pro forma financial information for all periods

presented included the business combination accounting effects resulting from these acquisitions, including amortization charges from acquired intangible assets (certain of which are preliminary), stock-based compensation charges for unvested restricted stock-based awards and stock options assumed, if any, and the related tax effects as though the aforementioned companies were combined as of the beginning of fiscal ~~2016.~~2017. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal ~~2016.~~2017.

The unaudited pro forma financial information for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2017 includes only the historical results of Oracle and is included below for comparative purposes only.

The unaudited pro forma financial information for the three months ended August 31, 2016 combined the historical results of Oracle for the three ~~and nine~~ months ended ~~February 28, 2017,~~August 31, 2016, the historical results of NetSuite for the ~~six month period~~three months ended September 30, 2016 ~~(adjusted due~~(due to differences in reporting ~~periods and considering the date we acquired NetSuite)~~periods) and the historical results of certain other companies that we acquired since the beginning of fiscal 2017 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above.

The unaudited pro forma financial information for the three and nine months ended February 29, 2016 combined the historical results of Oracle for the three and nine month periods ended February 29, 2016, the historical results of NetSuite for the three and nine months ended December 31, 2015 (adjusted due to differences in reporting periods) and the historical results of certain other companies that we acquired since the beginning of fiscal 2016 based upon their respective previous reporting periods and the dates these companies were acquired by us, and the effects of the pro forma adjustments listed above. The unaudited pro forma financial information was as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions, except per share data)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016		2017		2016
Total revenues	$	9,221	$	9,306	$	27,313	$	27,295	$	9,187	$	8,856
Net income	$	2,228	$	1,932	$	5,797	$	5,454	$	2,210	$	1,666
Basic earnings per share	$	0.54	$	0.46	$	1.41	$	1.28	$	0.53	$	0.40
Diluted earnings per share	$	0.53	$	0.45	$	1.38	$	1.26	$	0.52	$	0.39

We perform fair value measurements in accordance with FASB Accounting Standards Codification (ASC) 820,FairValueMeasurement. 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:

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


	February 28, 2017						May 31, 2016						August 31, 2017						May 31, 2017
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
(in millions)	Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Corporate debt securities and other	$	235	$	38,205	$	38,440	$	393	$	35,095	$	35,488	$	427	$	43,153	$	43,580	$	580	$	41,038	$	41,618
Commercial paper debt securities		—		4,327		4,327		—		2,155		2,155		—		4,210		4,210		—		5,053		5,053
Money market funds		2,002		—		2,002		3,750		—		3,750		1,502		—		1,502		3,302		—		3,302
Derivative financial instruments		—		23		23		—		122		122		—		40		40		—		40		40

Total assets	$	2,237	$	42,555	$	44,792	$	4,143	$	37,372	$	41,515	$	1,929	$	47,403	$	49,332	$	3,882	$	46,131	$	50,013

Liabilities:
Derivative financial instruments	$	—	$	262	$	262	$	—	$	218	$	218	$	—	$	106	$	106	$	—	$	191	$	191

Our marketable securities investments consist of Tier 1 commercial paper debt securities, corporate debt securities and certain other securities. As of ~~February 28,~~August 31, 2017 and May 31, ~~2016,~~2017, approximately ~~43%~~28% and ~~28%~~32%, respectively, of our marketable securities investments mature within one year and ~~57%~~72% and ~~72%~~68%, respectively, mature within one to six years. Our valuation techniques used to measure the fair values of our marketable securities 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, the counterparties to which have high credit ratings, 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 ~~our~~the $53.1 billion and $54.0 billion ~~and $40.1 billion of borrowings, which consisted primarily~~ of senior notes and the related fair value hedges that were outstanding as of ~~February 28,~~August 31, 2017 and May 31, ~~2016,~~2017, respectively, the estimated fair values of the senior notes and the related fair value hedges ~~issued by Oracle~~ using Level 2 inputs at ~~February 28,~~August 31, 2017 and May 31, ~~2016~~2017 were ~~$55.8~~$55.9 billion and ~~$43.2~~$56.5 billion, respectively.


(in millions)	February 28, 2017		May 31, 2016		August 31, 2017		May 31, 2017
Raw materials	$	244	$	95	$	158	$	186
Work-in-process		46		31		34		42
Finished goods		101		86		120		72

Total	$	391	$	212
Total inventories					$	312	$	300

The changes in intangible assets for fiscal ~~2017~~2018 and the net book value of intangible assets as of ~~February 28,~~August 31, 2017 and May 31, ~~2016~~2017 were as follows:

Total amortization expense related to our intangible assets was ~~$397~~$411 million and ~~$1.0 billion, respectively,~~$311 million for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2017 ~~respectively,~~ and ~~$408 million and $1.3 billion for the three and nine months ended February 29,~~ 2016, respectively. As of ~~February 28,~~August 31, 2017, estimated future amortization expenses related to intangible assets were as follows (in millions):


Remainder of fiscal 2017	$	402
Fiscal 2018		1,362
Remainder of fiscal 2018			$	1,179
Fiscal 2019		1,248		1,408
Fiscal 2020		1,058		1,207
Fiscal 2021		883		1,021
Fiscal 2022		779		918
Fiscal 2023				567
Thereafter		2,056		886

Total intangible assets, net	$	7,788	$	7,186

The changes in the carrying amounts of goodwill, net, which is generally not deductible for tax purposes, for our operating segments for the ~~nine~~three months ended ~~February 28,~~August 31, 2017 were as follows:

~~In July 2016, we issued $14.0 billion, par value, of fixed-rate senior notes comprised of the following as of February 28, 2017:~~

We issued the senior notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock and repayment of indebtedness and future acquisitions. The interest is payable semi-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 senior notes rank pari passu with any other existing and future unsecured and unsubordinated indebtedness of Oracle Corporation. All existing and future indebtedness and liabilities of the subsidiaries of Oracle Corporation are or will be effectively senior to the senior notes. We were in compliance with all debt-related covenants at February 28, 2017.

In connection with our acquisition of NetSuite in the second quarter of fiscal 2017 (see Note 2 above), we assumed $310 million par value of legacy NetSuite convertible notes (NetSuite Debt), which had a fair value of $342 million as of the acquisition date. Our acquisition of NetSuite triggered (a) the right of holders of the NetSuite Debt to convert their debt holdings into an amount payable in cash, at any time through December 22, 2016, based upon conversion formulas that are contained within the NetSuite Debt indenture and (b) the obligation of NetSuite to offer to repurchase the NetSuite Debt from each holder at a purchase price equal to par, plus accrued and unpaid interest, which offer expired on December 21, 2016. In December 2016, we repurchased and settled for cash substantially all of the NetSuite Debt.

~~In the second quarter of fiscal 2017, we assumed $113 million of debt that bears interest at 3.53% and matures in August 2025 in connection with our acquisition of certain land and buildings.~~

In May 2016, we borrowed $3.8 billion pursuant to three revolving credit agreements with JPMorgan Chase Bank, N.A., as initial lender and administrative agent (the 2016 Credit Agreements). In June 2016, we repaid the $3.8 billion and the 2016 Credit Agreements expired pursuant to their terms.

~~There have been no other significant changes in our notes payable or other borrowing arrangements that were disclosed in our Annual Report on Form10-K~~ ~~for the fiscal year ended May 31, 2016.~~

During ~~the first quarter of~~ fiscal 2017, our management approved, committed to and initiated plans to restructure and further improve efficiencies in our operations due to our recent acquisitions and certain other operational activities (2017

Restructuring Plan). ~~Our~~In the first quarter of fiscal 2018, our management ~~subsequently~~ supplemented the 2017 Restructuring Plan ~~in the third quarter of fiscal 2017~~ to reflect additional actions that we expect to take. The total estimated restructuring costs associated with the 2017 Restructuring Plan are up to ~~$615 million~~$1.1 billion and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred. We recorded ~~$363~~$124 million of restructuring expenses in connection with the 2017 Restructuring Plan in the first ~~nine~~three months of fiscal ~~2017~~2018 and we expect to incur the majority of the estimated remaining ~~$252~~$475 million through the end of fiscal 2018. Any changes to the estimates of executing the 2017 Restructuring Plan will be reflected in our future results of operations.


(in millions)	Accrued May 31, 2016⁽²⁾		Nine Months Ended February 28, 2017											Accrued February 28, 2017⁽²⁾		Total Costs Accrued to Date		Total Expected Program Costs			Accrued May 31, 2017⁽²⁾			Three Months Ended August 31, 2017														Accrued August 31, 2017⁽²⁾			Total Costs Accrued to Date			Total Expected Program Costs
(in millions)	Accrued May 31, 2016⁽²⁾		Initial Costs⁽³⁾		Adj. to Cost⁽⁴⁾			Cash Payments			Others⁽⁵⁾					Total Costs Accrued to Date		Total Expected Program Costs		Initial Costs⁽³⁾					Adj. to Cost⁽⁴⁾			Cash Payments				Others⁽⁵⁾						Accrued August 31, 2017⁽²⁾			Total Costs Accrued to Date			Total Expected Program Costs
Fiscal 2017 Oracle Restructuring Plan⁽¹⁾														Accrued February 28, 2017⁽²⁾
Cloud software andon-premise software	$	—	$	106	$	(4	)	$	(57	)	$	1		$	46	$	102	$	151
Software license updates and product support		—		23		—			(12	)		4			15		23		31
Hardware business		—		67		(3	)		(37	)		(1	)		26		64		161
Services business		—		44		—			(23	)		—			21		44		76
Cloud andon-premise software																					Accrued May 31, 2017⁽²⁾	$	85		$	54		$	(2	)		$	(70	)		$	5		$	72		$	230		$	300
Hardware																						31			28			(3	)			(26	)			2			32			113			241
Services																						25			12			(1	)			(22	)			1			15			69			130
Other		—		130		—			(69	)		—			61		130		196			44			41			(6	)			(23	)			—			56			197			413

Total Fiscal 2017 Oracle Restructuring Plan	$	—	$	370	$	(7	)	$	(198	)	$	4		$	169	$	363	$	615		$	185		$	135		$	(12	)		$	(141	)		$	8		$	175		$	609		$	1,084

Total other restructuring plans⁽⁶⁾	$	283	$	8	$	(25	)	$	(153	)	$	(16	)	$	97						$	79		$	1		$	—			$	(15	)		$	3		$	68

Total restructuring plans	$	283	$	378	$	(32	)	$	(351	)	$	(12	)	$	266						$	264		$	136		$	(12	)		$	(156	)		$	11		$	243

Deferred software license updates and product support revenues and deferred hardware ~~support~~ revenues substantially represent customer payments made in advance for support contracts that are typically billed on a per annum basis in advance with corresponding revenues being recognized ratably over the support periods. Deferred cloud software as a service (SaaS), and deferred cloud platform as a service (PaaS) and infrastructure as a service (IaaS) revenues generally resulted from customer payments made in advance for our cloud-based offerings that are recognized over the corresponding contractual term. Deferred services revenues include prepayments for our services business and revenues for these services are generally recognized as the services are performed. Deferred new software licenses revenues typically resulted from customer payments that ~~related~~relate to undelivered products or specified enhancements, customer specific acceptance provisions, time-based license arrangements and software license transactions that cannot be separated from undelivered consulting or other services.

In connection with our acquisitions, we have estimated the fair values of the cloud SaaS, cloud PaaS and ~~PaaS,~~IaaS and software license updates and product ~~support, and hardware~~ support obligations, among others, assumed from our acquired companies. We generally have estimated the fair values of these obligations assumed using a costbuild-up approach. The costbuild-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The sum of the costs and operating profit approximates, in theory, the amount that we would be required to pay a third party to assume these acquired obligations. These aforementioned fair value adjustments recorded for obligations assumed from our acquisitions reduced the cloud SaaS, cloud PaaS and ~~PaaS,~~IaaS and software license updates and product ~~support and hardware~~ support deferred revenues balances that we recorded as liabilities from these acquisitions and also reduced the resulting revenues that we recognized or will recognize over the terms of the acquired obligations during the post-combination periods.

We held certain derivative andnon-derivative instruments that were accounted for pursuant to ASC 815,Derivatives and Hedging (ASC 815) and that were utilized in a consistent manner as of ~~February 28,~~August 31, 2017, May 31, ~~2016~~2017 and ~~February 29,~~August 31, 2016 and during the three ~~and nine~~ months ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016. These instruments include:

We also held certain foreign currency contracts that were not designated as hedges pursuant to ASC 815. ~~The~~As of August 31, 2017 and May 31, 2017, the notional amounts of such forward contracts we held to purchase U.S. Dollars in exchange for other major international currencies were ~~$2.3~~$3.3 billion and ~~$2.7~~$3.4 billion, respectively, and the notional amount of forward contracts we held to sell U.S. Dollars in exchange for other major international currencies were ~~$2.0~~$1.2 billion and ~~$2.0~~$1.4 billion, respectively. The fair values of our outstanding foreign currency forward contracts were nominal as of ~~February 28,~~August 31, 2017 and May 31, ~~2016. Included in ournon-operating~~ ~~income, net were $74 million and $53 million of net~~2017. The cash flows related to these foreign currency contracts are classified as operating activities. Net gains or losses related to these forward contracts ~~for the three and nine months ended February 28,~~are included innon-operating income, net.

August 31, 2017 ~~respectively and $93 million and $163 million of net gains for the three and nine months ended February 29, 2016, respectively.~~

See Note 11 of Notes to Consolidated Financial Statements included in our Annual Report on Form10-K for the fiscal year ended May 31, ~~2016~~2017 for additional information regarding the purpose, accounting and classification of our derivative andnon-derivative instruments. None of our derivative instruments are used for trading purposes. The effects of derivative andnon-derivative instruments designated as hedges on certain of our condensed consolidated financial statements were as follows as of or for each of the respective periods presented below (amounts presented exclude any income tax effects):

Fair Values of Derivative andNon-Derivative Instruments Designated as Hedges in Condensed Consolidated Balance Sheets


		Fair Value							Fair Value as of
(in millions)	Balance Sheet Location	February 28, 2017			May 31, 2016			Balance Sheet Location	August 31, 2017			May 31, 2017
Interest rate swap agreements designated as fair value hedges	Other assets	$	23		$	122		Other assets	$	40		$	40

Cross-currency swap agreements designated as cash flow hedges	Other non-current liabilities	$	(262	)	$	(218	)	Other non-current liabilities	$	(106	)	$	(191	)

Foreign currency borrowings designated as net investment hedge	Notes payable,non-current	$	(951	)	$	(991	)	Notes payable,non-current	$	(938	)	$	(980	)

Effects of Derivative andNon-Derivative Instruments Designated as Hedges on Income and Other Comprehensive Income (OCI) or Loss (OCL)


	Amount of Gain (Loss) Recognized in Accumulated OCI or OCL (Effective Portion)												Location and Amount of Gain (Loss) Reclassified from Accumulated OCI or OCL into Income (Effective Portion)										Amount of Gain (Loss) Recognized in Accumulated OCI or OCL (Effective Portion)						Location and Amount of Gain (Loss) Reclassified from Accumulated OCI or OCL into Income (Effective Portion)
	Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended					Three Months Ended August 31,							Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016				February 28, 2017		February 29, 2016		February 28, 2017			February 29, 2016		2017			2016				2017		2016
Cross-currency swap agreements designated as cash flow hedges	$	6		$	29		$	(44	)	$	(16	)	Non-operating income, net	$	2	$	52	$	(69	)	$	21	$	85		$	3		Non-operating income (expense), net	$	107	$	1

Foreign currency borrowings designated as net investment hedge	$	(1	)	$	(31	)	$	42		$	(13	)	Not applicable	$	—	$	—	$	—		$	—	$	(64	)	$	(1	)	Not applicable	$	—	$	—

Our Board of Directors has approved a program for us to repurchase shares of our common stock. As of ~~February 28,~~August 31, 2017, approximately ~~$5.8~~$4.8 billion remained available for stock repurchases pursuant to our stock repurchase program. We repurchased ~~74.6~~10.2 million shares for ~~$3.0 billion~~$500 million during the ~~nine~~three months ended ~~February 28,~~August 31, 2017 (including ~~0.6~~0.5 million shares for ~~$25~~$23 million that were repurchased but not settled) and ~~222.7~~49.3 million shares for ~~$8.4~~$2.0 billion during the ~~nine~~three months ended ~~February 29,~~August 31, 2016 under the stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a Rule10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

During the ~~nine~~three months ended ~~February 28,~~August 31, 2017, our Board of Directors declared cash dividends of ~~$0.45~~$0.19 per share of our outstanding common stock, which we paid during the same period.

In ~~March~~September 2017, our Board of Directors declared a quarterly cash dividend of $0.19 per share of our outstanding common ~~stock, an increase of $0.04 per share over the prior period dividend.~~stock. The dividend is payable on ~~April 26,~~October 25, 2017 to stockholders of record as of the close of business on ~~April 12,~~October 11, 2017. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

Fiscal 2018 Stock-Based Awards Activity, Valuation and Compensation Expense ~~and Valuations of Stock Awards~~

During the first ~~nine months~~quarter of fiscal ~~2017,~~2018, we issued 5234 million restricted stock-based awards and 77 million stock options (consisting of 508 million service-based ~~restricted~~ stock ~~units (RSUs)~~options (SOs) and 269 million performance-based ~~restricted~~and market- based stock ~~units (PSUs)~~options (PSOs)) ~~and 21 million stock options.~~. Substantially all of the awards were issued as a part of our annual stock-based award process ~~or in connection with our acquisitions~~ and are subject to service-based vesting restrictions, with the ~~PSUs also~~PSOs primarily having performance-based and market-based vesting restrictions. Our fiscal 2018 stock-based awards issuances were partially offset by forfeitures and cancellations of 7 million shares during the first quarter of fiscal 2018.

The RSUs and SOs that were granted during the three months ended August 31, 2017 have vesting restrictions, ~~that are~~valuations and contractual lives of a similar nature to those described in Note 14 of Notes to Consolidated Financial Statements included in our Annual Report onForm10-K for the fiscal year ended May 31, ~~2016. Approximately 7 million~~2017.

The fiscal 2018 PSOs granted consist of seven numerically equivalent vesting tranches that potentially may vest. Each of six of the ~~21 million stock options granted~~individual vesting tranches are governed by an “all or nothing” vesting schedule requiring the attainment of both a performance metric and a market capitalization metric, which may be achieved at any time, in order for each individual tranche to fully vest during a five year performance period, assuming continued employment and service through the ~~first nine months~~date the Compensation Committee of ~~fiscal 2017 were~~the Board of Directors certifies that last of the two metrics for a particular tranche is attained. The seventh vesting tranche requires a market-based metric to ~~our Chief Executive Officers~~be achieved at any time during a five year performance period and ~~Chief Technology Officer~~continued employment and ~~had~~service through the vesting date. The PSOs have contractual lives of ~~five~~eight years ~~versus~~in comparison to the ten year contractual lives for ~~most~~the fiscal 2018 SOs issued. We estimated the fair values of the ~~other stock options granted. Our fiscal 2017 stock-based award issuances were partially offset by forfeitures~~PSOs using a Monte Carlo simulation approach with the following assumptions: risk-free interest rate of 2.14%, expected term of 7 years, expected volatility of 22.44% and ~~cancellations~~dividend yield of ~~10 million shares during~~1.49%. Stock-based compensation expense is to be recognized for each of the ~~first nine months~~six performance-based and market-based tranches once each vesting tranche becomes probable of ~~fiscal 2017.~~achievement over the longer of the estimated implicit service period for performance-metric achievement or derived service period for market-based metric achievement. We have preliminarily estimated service periods for those tranches that have been deemed probable of achievement to be approximately three to five years. Stock-based compensation for the market-based tranche will be recognized using the derived service period for the market-based metric achievement, which we have initially estimated to be approximately three years.

Stock-based compensation expense is included in the following operating expense line items in our condensed consolidated statements of operations:


	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016		2017		2016
Cloud SaaS									$	9	$	5
Cloud PaaS and IaaS										2		1
Software license updates and product support										7		6
Hardware										3		3
Services										14		8
Sales and marketing	$	96	$	57	$	228	$	163		89		63
Cloud software as a service and platform as a service		6		4		17		13
Cloud infrastructure as a service		1		1		3		3
Software license updates and product support		6		6		18		18
Hardware products		2		1		6		4
Hardware support		1		1		3		4
Services		14		7		31		22
Research and development		191		154		574		452		234		195
General and administrative		32		29		104		86		44		38
Acquisition related and other		22		—		33		3		1		—

Total stock-based compensation	$	371	$	260	$	1,017	$	768	$	403	$	319

The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. Our provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to certain earnings considered as indefinitely reinvested in foreign operations, state taxes, the U.S. research and development tax credit, changes in unrecognized tax benefits due to settlements with tax authorities and other events, the tax effects of stock-based compensation and the U.S. domestic production activity deduction. ~~In addition, beginning in fiscal 2017, the provision for income taxes also differs from the tax computed at the U.S. federal statutory tax rate due to the tax effects of stock-based compensation.~~ Our effective tax rate was ~~17.0%~~14.5% and ~~21.3%~~22.8% for the three ~~and nine~~ months ended ~~February 28,~~August 31, 2017 ~~respectively,~~ and ~~21.6% and 21.0% for the three and nine months ended February 29,~~ 2016, respectively.

Our net deferred tax assets were ~~$134~~$693 million and ~~$1.1 billion~~$683 million as of ~~February 28,~~August 31, 2017 and May 31, ~~2016,~~2017, respectively. We believe that it is more likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credit carryforwards. The amount of net deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal ~~2015.~~2016. Our U.S. federal income tax returns have been examined for all years prior to fiscal 2007, and we are no longer subject to audit for those periods. Our U.S. state income tax returns, with some exceptions, have been examined for all years prior to fiscal 2004, and we are no longer subject to audit for those periods.

Internationally, tax authorities for numerousnon-U.S. jurisdictions are also examining returns affecting our unrecognized tax benefits. With some exceptions, we are generally no longer subject to tax examinations innon-U.S. jurisdictions for years prior to fiscal 1997.

We believe that we have adequately provided under GAAP for outcomes related to our tax audits. However, there can be no assurances as to the possible outcomes or any related financial statement effect thereof. On July 27, 2015, inAlteraCorp.v.Commissioner, the U.S. Tax Court issued an opinion related to the treatment of

stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision has yet to be issued by the Tax Court due to other outstanding issues related to the case. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation from its regulations. We have reviewed this case and its impact on Oracle and concluded that no adjustment to the consolidated financial statements is appropriate at this time. We will continue to monitor ongoing developments and potential impacts to our consolidated financial statements.

We are under audit by the IRS and various other domestic and foreign tax authorities with regards to income tax and indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Australia, Brazil, India, ~~Brazil,~~Korea, Spain and ~~Korea,~~the United Kingdom, where the amounts under controversy are significant. In some, although not all, cases, we have reserved for potential adjustments to our provision for income taxes and accrual of indirect taxes that may result from examinations by, or any negotiated agreements with, these 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. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of the federal, state, and foreign income tax liabilities and indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense.

ASC 280,SegmentReporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision makers (CODMs) are our Chief Executive ~~Officers.~~Officers and Chief Technology Officer. We are organized ~~geographically and~~ by line of ~~business.~~business and geographically. While our ~~Chief Executive Officers~~CODMs evaluate results in a number of different ways, the line of business management structure is the primary basis for which the allocation of resources and financial results are assessed. In recent periods, customer demand has increased at a greater rate for cloud-based IT deployment models relative toon-premise IT deployment models. Our CODMs view the operating results of our three businesses and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. As a result, in the fourth quarter of fiscal 2017, we updated our operating segments. The footnote information below presents the financial information provided to our CODMs for their review and assists our CODMs with evaluating the Company’s performance and allocating Company resources.

We have three businesses—cloud andon-premise software, hardware and services—each of which ~~are further divided into certain operating segments. Our cloud andon-premise~~ ~~software business~~ is comprised of ~~three~~a single operating ~~segments: (1) cloud software andon-premise~~ software, which includes our cloud SaaS and PaaS offerings, (2) cloud infrastructure as a service and (3) software license updates and product support. Our hardware business is comprised of two operating segments: (1) hardware products and (2) hardware support. All other operating segments are combined under our services business.segment.

Our cloud ~~software~~ andon-premise software line of business markets, sells and delivers a broad spectrum of ~~application~~applications, platform and ~~platform~~infrastructure technologies through our cloud offerings andon-premise software offerings. Our Oracle Cloud SaaS and Cloud PaaS and IaaS offerings ~~which are~~deliver certain of our applications, platform and ~~platforms software delivered~~infrastructure technologies on a subscription basis via a cloud-based ~~information technology (IT) environment~~deployment models that we host, manage and ~~support,~~support. Our IaaS offerings also include Oracle Managed Cloud Services, which are designed to provide comprehensive software and ~~through the licensing of~~hardware management, maintenance and security services foron-premise, cloud-based or hybrid IT infrastructures. Our cloud andon-premise software business also licenses our software products, generally on a perpetual basis, including Oracle Applications, Oracle Database, Oracle Fusion Middleware and Java, among ~~others.~~

The cloud IaaS line of business includes Oracle Cloud IaaS offerings, which provide infrastructure cloud services that are enterprise-grade, hosted and supported within the Oracle Cloud to perform elastic compute, storage and networking services on a subscription basis; and Oracle Managed Cloud Services, which are comprehensive software and hardware management and maintenance servicesothers, for ~~customer IT infrastructure for a fee for a stated term that are hosted at our Oracle data center facilities, select partner data centers or physically~~on-premise ~~at customer facilities.~~

~~The~~and other IT environments. Customers that license our software have the option to purchase software license updates and product support ~~line of business generates revenues through the sale of software support~~ contracts, ~~related to new software licenses purchased by our customers. The software license updates and product support line of business provides ouron-premise~~ ~~software~~which provide customers with rights to unspecified software product upgrades and maintenance releases, ~~patches released,~~patch releases, internet access to technical content, as well as internet and telephone access to technical support personnel during the support period.

Our hardware business provides Oracle Engineered Systems, servers, storage, industry-specific hardware, virtualization software, operating systems including the Oracle Solaris Operating System and management

The hardware products line of business provides Oracle Engineered Systems, servers, storage, networking, industry-specific hardware, virtualization software, operating systems including the Oracle Solaris Operating System and management software to support diverse IT ~~environments, including cloud computing~~ environments.

Our hardware business also includes hardware support, ~~line of business~~which provides customers with software updates for the software components that are essential to the functionality of ~~our~~the hardware products, such as Oracle Solaris and certain other software, and can include product repairs, maintenance services and technical support services.

Our services business ~~is comprised of the remainder of our operating segments and offers consulting, advanced customer support services and education services. Our consulting line of business primarily~~ provides services to customers ~~in business~~ and IT strategy alignment, enterprise architecture planning and design, initial product implementation and integration and ongoing product enhancements and upgrades. Advanced customer support services provides~~on-premise~~ ~~and remote support services~~partners to ~~our customers to enable increased~~help maximize the performance ~~and higher availability~~ of their investments in Oracle ~~products~~applications, platform and ~~services and also include certain other services. Education services provide training to customers, partners and employees as a part of our mission of accelerating the adoption and use of our cloud,on-premise~~ ~~software and hardware offerings.~~infrastructure technologies.

We do not track our assets ~~by operating segments.~~for each business. Consequently, it is not practical to show assets by operating segment.

The following table presents summary results for each of our three businesses ~~and for~~(fiscal 2017 results have been recast to conform to the ~~operating segments of our cloud andon-premise~~ ~~software and hardware businesses:~~current year’s presentation):


	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016		2017		2016
Cloud software andon-premise software:
Cloud andon-premise software:
Revenues⁽¹⁾	$	2,494	$	2,265	$	6,598	$	6,030	$	7,409	$	6,809
Cloud software as a service and platform as a service expenses		369		284		1,026		822
Sales, marketing and distribution expenses		1,666		1,574		4,873		4,569
Cloud SaaS, PaaS and IaaS expenses										580		401
Software license updates and product support expenses										240		257
Sales and marketing expenses										1,684		1,596

Margin⁽²⁾	$	459	$	407	$	699	$	639	$	4,905	$	4,555
Cloud infrastructure as a service:
Hardware:
Revenues	$	178	$	152	$	525	$	477	$	943	$	996
Cloud infrastructure as a service expenses		122		84		323		256
Sales, marketing and distribution expenses		14		17		46		54
Hardware products and support expenses										366		381
Sales and marketing expenses										170		203

Margin⁽²⁾	$	42	$	51	$	156	$	167	$	407	$	412
Software license updates and product support:
Revenues⁽¹⁾	$	4,762	$	4,669	$	14,332	$	14,049
Software license updates and product support expenses		253		276		733		823

Margin⁽²⁾	$	4,509	$	4,393	$	13,599	$	13,226
Total cloud andon-premise software business:
Revenues⁽¹⁾	$	7,434	$	7,086	$	21,455	$	20,556
Expenses		2,424		2,235		7,001		6,524

Margin⁽²⁾	$	5,010	$	4,851	$	14,454	$	14,032
Hardware products:
Revenues	$	520	$	604	$	1,478	$	1,746
Hardware products expenses		288		337		769		963
Sales, marketing and distribution expenses		195		202		597		625

Margin⁽²⁾	$	37	$	65	$	112	$	158
Hardware support:
Revenues⁽¹⁾	$	508	$	531	$	1,560	$	1,640
Hardware support expenses		140		165		420		504

Margin⁽²⁾	$	368	$	366	$	1,140	$	1,136
Total hardware business:
Revenues⁽¹⁾	$	1,028	$	1,135	$	3,038	$	3,386
Expenses		623		704		1,786		2,092

Margin⁽²⁾	$	405	$	431	$	1,252	$	1,294
Total services business:
Services:
Revenues	$	812	$	793	$	2,464	$	2,519	$	860	$	808
Services expenses		645		630		1,978		1,976		665		665

Margin⁽²⁾	$	167	$	163	$	486	$	543	$	195	$	143
Totals:
Revenues⁽¹⁾	$	9,274	$	9,014	$	26,957	$	26,461	$	9,212	$	8,613
Expenses		3,692		3,569		10,765		10,592		3,705		3,503

Margin⁽²⁾	$	5,582	$	5,445	$	16,192	$	15,869	$	5,507	$	5,110

The following table reconciles total operating segment revenues to total revenues as well as total operating segment margin to income before provision for income taxes:


	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016			2017			2016
Total revenues for operating segments	$	9,274		$	9,014		$	26,957		$	26,461		$	9,212		$	8,613
Cloud software as a service and platform as a service revenues⁽¹⁾		(69	)		(2	)		(120	)		(6	)
Software license updates and product support revenues⁽¹⁾		—			—			(1	)		(1	)
Hardware support revenues⁽¹⁾		—			—			(1	)		(1	)
Cloud andon-premise software revenues⁽¹⁾														(25	)		(18	)

Total revenues	$	9,205		$	9,012		$	26,835		$	26,453		$	9,187		$	8,595


Total margin for operating segments	$	5,582		$	5,445		$	16,192		$	15,869		$	5,507		$	5,110
Cloud software as a service and platform as a service revenues⁽¹⁾		(69	)		(2	)		(120	)		(6	)
Software license updates and product support revenues⁽¹⁾		—			—			(1	)		(1	)
Hardware support revenues⁽¹⁾		—			—			(1	)		(1	)
Cloud andon-premise software revenues⁽¹⁾														(25	)		(18	)
Research and development		(1,285	)		(1,219	)		(3,835	)		(3,652	)		(1,574	)		(1,520	)
Corporate, general and administrative and information technology expenses		(332	)		(403	)		(1,175	)		(1,197	)
General and administrative														(320	)		(315	)
Amortization of intangible assets		(397	)		(408	)		(1,010	)		(1,283	)		(411	)		(311	)
Acquisition related and other		(30	)		(11	)		(84	)		(35	)		(12	)		(14	)
Restructuring		(161	)		(115	)		(346	)		(293	)		(124	)		(99	)
Stock-based compensation		(349	)		(260	)		(984	)		(765	)
Stock-based compensation for operating segments														(124	)		(86	)
Expense allocations and other, net														(96	)		(106	)
Interest expense		(450	)		(360	)		(1,317	)		(1,105	)		(469	)		(416	)
Non-operating income, net		189			65			437			179			233			148

Income before provision for income taxes	$	2,698		$	2,732		$	7,756		$	7,710		$	2,585		$	2,373

Basic earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding restricted stock-based awards, stock options, and shares issuable under the employee stock purchase plan using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
(in millions, except per share data)	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016		2017		2016
Net income	$	2,239	$	2,142	$	6,103	$	6,087	$	2,210	$	1,832

Weighted average common shares outstanding		4,107		4,182		4,110		4,246		4,156		4,119
Dilutive effect of employee stock plans		97		74		97		82		128		102

Dilutive weighted average common shares outstanding		4,204		4,256		4,207		4,328		4,284		4,221

Basic earnings per share	$	0.55	$	0.51	$	1.49	$	1.43	$	0.53	$	0.44
Diluted earnings per share	$	0.53	$	0.50	$	1.45	$	1.41	$	0.52	$	0.43
Shares subject to anti-dilutive restricted stock-based awards and stock options excluded from calculation⁽¹⁾		76		67		75		62		31		72

On June 15, 2011, Hewlett-Packard Company, now Hewlett Packard Enterprise Company (HP), filed a complaint in the California Superior Court, County of Santa Clara against Oracle Corporation alleging numerous causes of action including breach of contract, breach of the covenant of good faith and fair dealing, defamation, intentional interference with prospective economic advantage, and violation of the California Unfair Business Practices Act. The complaint alleged that when Oracle announced on March 22 and 23, 2011 that it would no longer develop future versions of its software to run on HP’s Itanium-based servers, it breached a settlement agreement signed on September 20, 2010 between HP and Mark Hurd (the Hurd Settlement Agreement), who is our Chief Executive Officer and was both HP’s former chief executive officer and chairman of HP’s board of directors. HP sought a judicial declaration of the parties’ rights and obligations under the Hurd Settlement Agreement and other equitable and monetary relief.

Oracle answered the complaint and filed a cross-complaint, which was amended on December 2, 2011. The amended cross-complaint alleged claims including violation of the Lanham Act. Oracle alleged that HP had secretly agreed to pay Intel to continue to develop and manufacture the Itanium microprocessor, and had misrepresented to customers that the Itanium microprocessor had a long roadmap, among other claims. Oracle sought equitable rescission of the Hurd Settlement Agreement, and other equitable and monetary relief.

The court bifurcated the trial and tried HP’s causes of action for declaratory relief and promissory estoppel without a jury in June 2012. The court issued a final statement of decision on August 28, 2012, finding that the Hurd Settlement Agreement required Oracle to continue to develop certain of its software products for use on HP’s Itanium-based servers and to port such products at no cost to HP for as long as HP sells those servers (the Phase One Ruling). A jury trial began on May 23, 2016. On June 30, 2016, the jury returned a verdict in favor of HP on its claims for breach of contract and breach of the implied covenant of good faith and fair dealing and against Oracle on its claim for violation of the Lanham Act (the Phase Two Jury Verdict). The jury awarded HP damages in the amount of $3.0 billion, and HP is entitled to post-judgment interest on this award. On August 30, 2016, the court denied HP’s motion forpre-judgment interest. Judgment was entered on October 20, 2016. Oracle posted certain court-mandated surety bonds with the court in order to proceed with its motion for a new trial and entered into related indemnification agreements with each of the surety bond issuing companies. Oracle filed a motion for a new trial on November 14, 2016, which was denied.

Oracle filed its notice of appeal on January 17, 2017, specifying that it was appealing the trial court’s Phase One Ruling and Phase Two Jury Verdict. On February 2, 2017, HP filed a notice of appeal of the trial court’s denial ofpre-judgment interest. No amounts have been paid or recorded to our results of operations either prior to or subsequent to the Phase One Ruling or Phase Two Jury Verdict. We continue to believe that we have meritorious defenses against HP’s claims, and we intend to present these defenses to the appellate court. Among the arguments we expect to make on appeal are the following: the trial court misapplied fundamental principles of contract law and misinterpreted the Hurd Settlement Agreement, including by disregarding the context of the Hurd Settlement Agreement and the evidence of the parties’ mutual intentions; that HP’s breach of contract claim should fail as a matter of law because HP does not claim and did not prove that Oracle failed to deliver any software under the trial court’s interpretation of the contract; that awarding HP both damages for breach of the Hurd Settlement Agreement and specific performance of that agreement constitutes an improper double recovery; and that the damages award is excessive, unsupported by the evidence, and contrary to law. We cannot currently estimate a reasonably possible range of loss for this action due to the complexities and uncertainty

surrounding the appeal process and the nature of the claims. Litigation is inherently unpredictable, and the outcome of the appeal process related to this action is uncertain. It is possible that the resolution of this action could have a material impact to our future cash flows and results of operations.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)~~On May 3, 2017, a stockholder derivative lawsuit was filed in the Court of Chancery of the State of Delaware. The derivative suit is brought by an alleged stockholder of Oracle, purportedly on Oracle’s behalf, against Oracle, our Chairman of the Board of Directors and Chief Technology Officer in his capacities as a director, officer and an alleged controlling stockholder, one of our Chief Executive Officers (who is also a director), three other directors, and Oracle as a nominal defendant. Plaintiff alleges that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite Inc. (NetSuite) at an excessive price. Plaintiff seeks declaratory relief, an order rescinding or reforming the NetSuite transaction, unspecified monetary damages (including interest), attorneys’ fees and costs, and disgorgement of various unspecified profits, fees, compensation, and benefits. On July 19, 2017, defendants moved to dismiss this complaint.

~~February 28,~~On July 18, 2017, a second stockholder derivative lawsuit was filed in the Court of Chancery of the State of Delaware, brought by another alleged stockholder of Oracle, purportedly on Oracle’s behalf. The suit is brought against all current members and one former member of our Board of Directors, and Oracle as a nominal defendant. Plaintiff alleges that the defendants breached their fiduciary duties by causing Oracle to agree to purchase NetSuite at an excessive price. Plaintiff seeks declaratory relief, unspecified monetary damages (including interest), and attorneys’ fees and costs.

~~(Unaudited)~~On August 9, 2017, the court consolidated the two derivative cases, and vacated the scheduling order relating to defendants’ motion to dismiss the first case. In a September 7, 2017, order, the court appointed plaintiff’s counsel in the second case as lead plaintiffs’ counsel and designated the July 18, 2017 complaint as the operative complaint. The parties will confer regarding the timing of defendants’ response to this complaint.

While Oracle continues to evaluate these claims, we do not believe this litigation will have a material impact on our financial position or results of operations.

We are party to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, including proceedings and claims that relate to acquisitions we have completed or to companies we have acquired or are attempting to acquire. While the outcome of these matters cannot be predicted with certainty, we do not believe that the outcome of any of these matters, individually or in the aggregate, will result in losses that are materially in excess of amounts already recognized, if any.

~~Item 2.~~

Item 2.

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

We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of our businesses ~~key operating segments~~ and significant trends. This overview is followed by a summary of our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then provide a more detailed analysis of our results of operations and financial condition.

Oracle Corporation provides products and services that address all aspects of corporate information technology (IT) environments—~~application,~~applications, platform and infrastructure. Our products are delivered to over 400,000 worldwide customers through a variety of flexible and interoperable IT deployment models includingon-premise, cloud-based or hybrid that enable customer choice and that best meet customer IT needs.

Our Oracle Cloud offerings provide a comprehensive and fully integrated stack of ~~application,~~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). Ouron-premise IT offerings include Oracle ~~database~~Applications, Oracle Database and ~~middleware~~Oracle Fusion Middleware software, ~~application software,~~among others; hardware ~~(Oracle~~products including Oracle Engineered Systems, servers, storage ~~networking~~ and industry-specific ~~products),~~products, among others; and related support and services. We provide our cloud andon-premise offerings to ~~customers worldwide via deployment models~~businesses of many sizes, government agencies, educational institutions and resellers with a sales force positioned to offer the combinations that best suit ~~their~~customer needs.

Our comprehensive and fully integrated stack of Oracle Cloud SaaS, PaaS and IaaS offerings integrate the software, hardware and services on the customers’ behalf in IT environments that we deploy, support and manage for the customer. Our integrated Oracle Cloud offerings are designed to be rapidly deployable to enable customers shorter time to innovation; easily maintainable to reduce integration and testing work; connectable among differing deployment models to enable interchangeability and extendibility between cloud andon-premise IT environments; compatible to easily move workloads betweenon-premise IT environments and the Oracle Cloud; cost-effective by requiring lower upfront customer investment; and to be secure, standards-based and reliable. We are a leader in the core technologies of cloud IT environments, including database and middleware software as well as enterprise applications, virtualization, clustering, large-scale systems management and related infrastructure. Our products and services are the building blocks of our Oracle Cloud services, our partners’ cloud services and our customers’ cloud IT environments.

In addition to providing a broad spectrum of cloud offerings, we develop and sell our applications, platform and infrastructure products and services to our customers worldwide for use in their global data centers andon-premise IT environments. An important element of our corporate strategy is to continue our investments in, and innovation with respect to, our products and services that we offer through our cloud andon-premise software, hardware and services businesses. We have a deep understanding as to how ~~all components within IT environments—application,~~applications, platform and ~~infrastructure—~~infrastructure technologies interact and function with one ~~another.~~another within IT environments. We focus our development efforts on improving the performance, security, operation and integration of these differing technologies to make them more cost-effective and easier to deploy, manage and maintain for our customers and to improve their computing performance relative to our competitors. After the initial purchase of Oracle products and services, our customers can continue to ~~take advantage of~~benefit from our research and development ~~investments~~efforts and deep IT expertise by purchasing and renewing Oracle support offerings for theiron-premise deployments, which may include unspecified product enhancements that we periodically deliver to our ~~software~~ products, ~~among others,~~ and by renewing their cloud SaaS, PaaS and IaaS contracts with us.

As customers deploy with the Oracle Cloud, many are adopting a hybrid IT model whereby certain of their IT ~~resources~~instances are deployed ~~and managed through~~using the Oracle Cloud, while other of their IT ~~resources~~instances are deployed ~~and managed~~using Oracleon-premise ~~and~~offerings, with both ~~sets of resources can~~instances designed with capabilities to be managed as ~~one. We focus~~a single instance. Our Oracle Cloud at Customer program provides another deployment option for customers to utilize the ~~engineering~~Oracle Cloud Machine and Oracle Database Exadata Cloud Machine to bring certain Oracle Cloud SaaS, PaaS and IaaS offerings to a customer’son-premise IT environment to meet data sovereignty, data residency, data protection

and regulatory business policy requirements, among others, while benefiting from the many advantages of ~~our products and services to best connect these different deployment models to enable flexibility, ease, agility, compatibility, extensibility and seamlessness.~~a cloud service.

~~Our~~A selective and active acquisition program is another important element of our corporate strategy. We believe that our acquisitions enhance the products and services that we can offer to customers, expand our customer base, provide greater scale to accelerate innovation, grow our revenues and earnings, and increase stockholder value. In recent years, we have invested billions of dollars to acquire a number of companies, products, services and technologies that add to, are complementary to, or have otherwise enhanced our existing offerings. ~~During~~We expect to continue to acquire companies, products, services and technologies to further our corporate strategy.

In recent periods, customer demand has increased at a greater rate for cloud-based IT deployment models relative toon-premise IT deployment models. To address this demand, we have increased our investments in and focus on the ~~second~~development, marketing and sale of our cloud-based applications, platform and infrastructure technologies resulting in higher growth of our cloud SaaS and cloud PaaS and IaaS revenues as customer preferences have pivoted to the Oracle Cloud for new deployments and as customers migrate to and expand with the Oracle Cloud for their existingon-premise workloads. We expect these trends to continue. We believe that offering customers broad, comprehensive, flexible and interoperable deployment models for our applications, platform and infrastructure technologies is important to our growth strategy and better addresses customer needs relative to our competitors, many of whom provide fewer offerings and more restrictive deployment models. We enable our customers to evolve and transform to substantially any IT deployment model at whatever pace is most appropriate for them.

We have three businesses: cloud andon-premise software; hardware; and services; each of which comprises a single operating segment. Our chief operating decision makers (CODMs), which include our Chief Executive Officers and Chief Technology Officer, view the operating results of our three businesses and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced in recent periods. As a result, during the fourth quarter of fiscal 2017, we ~~acquired NetSuite Inc. (NetSuite), which contributed~~updated our operating segments. The discussion and analysis of financial condition and results of operations presented below provides the current view that is utilized by our CODMs to evaluate performance and determine resource allocations and the prior period results presented below were recast to conform to the ~~growth in our cloud~~

~~SaaS and PaaS revenues, among others, from~~current period’s presentation. In addition to the ~~date of acquisition.~~discussion below, Note 211 of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, provides additional information related to our ~~acquisition of NetSuite. We expect to continue to acquire companies, products, services and technologies to further our corporate strategy.~~

~~We have three businesses that deliver our application, platform and infrastructure technologies: cloud andon-premise~~ software, hardware and services. These businesses can be further divided into certain operating segments (Note 12 of Notes to Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report, provides additional information related to our operating segments). Each of our businesses and operating segments, ~~has unique characteristics and faces different opportunities and challenges. An overview~~including the recasting of our ~~three businesses and related operating segments follows.~~segments’ financial information from prior periods to conform to the current year’s presentation.

Our cloud andon-premise software line of business, which represented 80% of our total revenues on a trailing4-quarter basis, ~~is comprised of three operating segments: (1) cloud software andon-premise~~ ~~software, (2) cloud IaaS and (3) software license updates and product support. On a constant currency basis, we expect that our cloud andon-premise~~ ~~software business’ total revenues generally will continue to increase due to demand for ouron-premise~~ software products and software license updates and product support offerings, including the high percentage of customers that renew their software license updates and product support contracts, expected growth from our cloud SaaS, PaaS and IaaS offerings, and contributions from our acquisitions, which should allow us to grow and continue to make investments in research and development.

~~Cloud~~~~Software~~~~and~~~~On-Premise~~~~Software:~~ ~~Our cloud software andon-premise~~ ~~software line of business~~ markets, sells and delivers a broad spectrum of ~~application~~applications, platform and ~~platform~~infrastructure technologies through our cloud andon-premise software offerings.

Our Oracle Cloud SaaS, PaaS and ~~PaaS~~IaaS offerings ~~which are certain of our software~~deliver applications, platform and ~~platforms that are delivered~~infrastructure technologies via a cloud-based ~~IT environment~~deployment models that we host, manage and ~~support.~~support and that customers access by entering into a subscription agreement with us for a stated period. Our ~~cloud~~IaaS offerings also include Oracle Managed Cloud Services, which are designed to provide comprehensive software and hardware management, maintenance and security services foron-premise, ~~software line~~cloud-based, or hybrid IT infrastructure for a stated period. The majority of ~~business also licenses~~our SaaS, PaaS and IaaS arrangements have an average duration of approximately three years and we strive to renew these contracts when they are eligible for renewal.

We offer customers the ability to license our software products including Oracle Applications, Oracle Database, Oracle Fusion Middleware and Java, among others, foron-premise and other IT environments. Our new software license transactions are generally perpetual in nature and the timing of a few large software license transactions can substantially affect our quarterly new software licenses revenues, which is different than the typical revenue recognition pattern for our cloud-based offerings in which revenues are generally recognized ratably over the subscription period. New software license customers have the option to purchase software license updates and product support contracts, which grant rights to unspecified product upgrades and maintenance releases and patches released during the term of the support period, as well as technical support assistance. Our software

license updates and product support contracts are generally one year in duration and are generally billed in advance of the ~~comprehensiveness~~service being performed and ~~breadth of our~~are generally recognized as revenues as the software support services are delivered.

Our cloud SaaS, cloud PaaS and~~on-premise~~ software offerings provide greater benefit to our customers and differentiates us from many of our competitors that offer more limited or specialized software offerings. Our SaaS and PaaS offerings are designed to be interoperable with one another, thereby limiting the integration and tuning of multiple cloud applications from multiple vendors. Our SaaS and PaaS offerings are designed to deliver secure data isolation and flexible upgrades, self-service access controls for users, a Service-Oriented Architecture (SOA) for integration with~~on-premise~~ ~~systems, and a high performance, high availability infrastructure based on our infrastructure technologies including our Oracle Engineered Systems. Ouron-premise~~ ~~software offerings are substantially designed to operate on both single server and clustered server configurations for cloud oron-premise~~ IT environments, and to support a choice of operating systems including Oracle Solaris, Oracle Linux, Microsoft Windows and third party UNIX products, among others. Our commitment to industry standards results in software offerings that work in customer environments with Oracle or~~non-Oracle~~ ~~hardware or software components and that can be adapted to meet specific industry or business needs. We focus the engineering of our products and services to best connect cloud andon-premise~~ deployment models to enable flexibility, ease, agility, compatibility, extensibility and seamlessness. All of these approaches are designed to support customer choice and reduce customer risk. Our customers include businesses of many sizes, government agencies, educational institutions and resellers. We market and sell our cloud software and~~on-premise~~ software offerings to these customers with a sales force positioned to offer the combinations that best fit customer needs. We enable customers to evolve and transform to substantially any IT environment at whatever pace is most appropriate for them.

~~Our SaaS and PaaS~~ IaaS revenues and new software licenses revenues are affected by the strength of general economic and business conditions, governmental budgetary constraints, the strategy for and competitive position of our ~~software~~ offerings, our acquisitions, our ability to deliver and renew our ~~SaaS and PaaS~~cloud contracts with our existing customers and foreign currency rate fluctuations. In recent periods, we have placed significant strategic emphasis on growing our cloud SaaS and cloud PaaS and IaaS revenues, which represented 16% and 11% our total consolidated revenues during the first quarter of fiscal 2018 and 2017, respectively. This emphasis has affected the growth of our ~~cloud SaaS and~~

~~PaaS revenues and our~~ new software licenses revenues and, to a lesser extent, has also affected the ~~related expenses.~~growth of our software license updates and product support revenues. We expect these trends will ~~continue.~~ continue with the mix of this business’ revenues continuing to shift toward cloud-based services.

Our ~~SaaS~~software license updates and ~~PaaS arrangements are generally one to three years~~product support revenues growth is primarily influenced by four factors: (1) the percentage of our software support contract customer base that renews its software support contracts; (2) the pricing of new software support contracts sold in ~~duration~~connection with the sale of new software licenses; (3) the pricing of new software licenses sold; and (4) the amount of software support contracts assumed from companies we ~~strive to renew these~~have acquired. Substantially all of our customers purchase software license updates and product support contracts when they are eligible for renewal. The substantial majority of our new software license transactions are characterized by long sales cycles and the timing of a few large software license transactions can substantially affect our quarterlyacquireon-premise new software licenses ~~revenues.~~and renew their software license updates and product support contracts when eligible in order to benefit from Oracle’s research and development investments that are utilized as a part of unspecified periodic software updates that may be released and that customers with current software support contracts are entitled to.

~~Cloud software~~On a constant currency basis, we expect that our total cloud andon-premise software revenues ~~represented 27%~~generally will continue to increase due to:

~~4-quarter~~ ~~basis. Our~~We believe all of these factors should contribute to future growth in our cloud ~~software~~ andon-premise software ~~segment’s~~revenues, which should enable us to continue to make investments in research and development to develop and improve our cloud andon-premise software products and services.

Our cloud andon-premise software business’ margin has historically trended upward over the course of the four quarters within a particular fiscal year due to the historical upward trend of our new software licenses revenues over those quarterly periods and because the majority of our costs for this ~~segment~~business are ~~predominantly~~generally fixed in the short term. ~~As discussed further below under “Supplemental Disclosure Related to Certain Charges,” our cloud software andon-premise~~ software segment’s margin has been and will continue to be affected by the fair value adjustments relating to the cloud SaaS and PaaS obligations that we assumed in our business combinations and by the amortization of intangible assets associated with companies and technologies that we have acquired.

Our ~~cloud IaaS segment,~~hardware business, which represented 2%11% of our total revenues on a trailing4-quarter basis, provides a broad selection of hardware products and hardware-related software products including Oracle ~~Cloud IaaS offerings, which are infrastructure cloud services~~Engineered Systems, servers, storage, industry-specific hardware, virtualization software, operating systems, and management software that are ~~enterprise-grade, hosted~~generally recognized as revenues upon delivery to the customer provided all other revenue recognition criteria are met, and ~~supported within~~also include related hardware support. We expect to make investments in research and development to improve existing hardware products and services and to develop new hardware products and services. The majority of our hardware products are sold through indirect channels, including independent distributors and value-added resellers. Our hardware support offerings provide customers with software updates for software components that are essential to the functionality of our hardware products, such as Oracle ~~Cloud to perform elastic compute, storage~~Solaris and ~~networking services on a subscription basis. Our cloud IaaS segment also offers Oracle Managed Cloud Services, which are comprehensive~~certain other software products, and ~~hardware management and~~can include product repairs, maintenance services ~~for customer IT infrastructure for a fee for a stated term that are hosted at our Oracle data center facilities, select partner data centers or physicallyon-premise~~ ~~at customer facilities. We believe that our Oracle Cloud IaaS offerings complement our SaaS~~ and ~~PaaS offerings and allow us to offer customers additional opportunities to access Oracle technologies through the Oracle Cloud to meet their IT needs.~~

~~Software~~~~License~~~~Updates~~~~and~~~~Product~~~~Support:~~ ~~Software license updates and product support revenues are generated through the sale of software support contracts relating toon-premise~~ new software licenses purchased by our customers. Customers that purchase software license updates and product support are granted rights to unspecified product upgrades and maintenance releases and patches released during the term of the support period, as well as technical support ~~assistance. Our software license updates and product~~services. Hardware support contracts are generally ~~one year in duration. Substantially all of ouron-premise~~ software license customers renew their software license updates and product support contracts annually. The growth of software license updates and product support revenues is primarily influenced by four factors: (1) thepriced as a percentage of ~~our software support contract customer base that renews its software support contracts; (2)~~ the ~~amount of new software support contracts sold in connection with the sale of new software licenses; (3) the amount of new software license~~net hardware products fees and are generally recognized as revenues ~~sold; and (4) the amount of software support contracts assumed from companies we have acquired.~~

~~Our software license updates and product support segment, which represented 51% of our total revenues on a trailing4-quarter~~ ~~basis, is our highest margin business unit. Our software support margins over the trailing4-quarters~~ were 93% and accounted for 87% of our total margins over the same period. Over the longer term, we believe that software license updates and product support revenues and margins will grow for the following reasons:

~~Our~~ hardware ~~business is comprised of two operating segments: (1) hardware products and (2) hardware support. Our hardware business represented 12% of our total revenues on a trailing4-quarter~~ ~~basis. We expect our~~support services are delivered.

We generally expect our hardware business to have lower operating margins as a percentage of revenues than our cloud andon-premise software business due to the incremental costs we incur to produce and distribute these products and to provide support services, including direct materials and labor costs. ~~We expect to make investments in research and development to improve existing hardware products and services and to develop new hardware products and services.~~

~~Hardware~~~~Products:~~ We provide a broad selection of hardware and related services, including Oracle Engineered Systems, servers, storage, networking, workstations and related devices, industry-specific hardware, virtualization software, operating systems, and management software to support diverse IT environments, including cloud computing environments. We engineer our hardware products with virtualization and management capabilities to enable the rapid deployment and efficient management of cloud and~~on-premise~~ ~~IT infrastructures. Our hardware products support many of the world’s largest cloud infrastructures, including the Oracle Cloud.~~

Our hardware products are designed to be easier to deploy, manage and maintain for our customers and to improve computing performance relative to our competitors’ offerings. We design our hardware products to seamlessly connect cloud and~~on-premise~~ ~~IT environments to further enable interoperability, interchangeability and extendibility and to work in customer environments that may include other Oracle ornon-Oracle~~ hardware or software components. Our flexible and open approach provides Oracle customers with a broad range of choices in how they deploy our hardware products, which we believe is a priority for our customers.

~~Oracle Engineered Systems are core to our hardware offerings and are important elements of our data center and cloud computing offerings including the Oracle Cloud. Thesepre-integrated~~ products are designed to integrate multiple Oracle technology components to work together to deliver improved performance, availability, security and operational efficiency relative to our competitors’ products; to be upgraded effectively and efficiently; and to simplify maintenance cycles by providing a single solution for software patching. Oracle Engineered Systems are tested before they are shipped to customers and delivered~~ready-to-run,~~ ~~enabling customers to shorten deployment time to production. We offer certain of our Oracle Engineered Systems technologies through flexible deployment options including as a cloud service and foron-premise~~ ~~IT environments.~~

We offer a wide range of server products using our SPARC microprocessor. Our SPARC servers run the Oracle Solaris operating system and are designed to be differentiated by their reliability, security and scalability. Our~~mid-size~~ and large servers are designed to offer better performance and lower total cost of ownership than competitive UNIX systems for business critical applications, for customers having more computationally intensive needs, and as platforms for building cloud computing IT environments. Our SPARC servers are also a core component of the Oracle SuperCluster, one of our Oracle Engineered Systems.

We also offer enterprise x86 servers. These x86 servers are based on microprocessors from Intel Corporation and are compatible with Oracle Solaris, Oracle Linux, Microsoft Windows and other operating systems. Our x86 servers are also a core component of many of our Oracle Engineered Systems including the Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, Oracle Exalytics~~In-Memory~~ ~~Machine and the Oracle Big Data Appliance.~~

Our storage products are engineered for the cloud and designed to securely store, manage, protect, archive, backup and recover customers’ mission critical data assets. Our storage products consist of disk, flash, tape, virtual tape and hardware-related software including file systems software,~~back-up~~ ~~and archive software, hierarchical storage management software and networking for mainframe and heterogeneous systems environments. We also offer certain of our storage offerings as a cloud service.~~

Our ~~networking and data center fabric products, including Oracle Virtual Networking, and Oracle InfiniBand and Ethernet technologies,~~quarterly hardware revenues are ~~used with our server and storage products and are integrated into our management tools~~difficult to ~~help enterprise customers improve infrastructure performance, reduce cost and complexity and simplify storage and server connectivity.~~

~~We offer hardware products and services designed for certain specific industries. Ourpoint-of-sale~~ ~~hardware offerings includepoint-of-sale~~ ~~terminals and related hardware that are designed for managing businesses within the food and beverage, hotel and retail industries, among others.~~predict. Our hardware ~~products and services for~~

~~communications networks include network signaling, policy control and subscriber data management solutions, and session border control technology, among others.~~

~~The majority of our hardware products are sold through indirect channels, including independent distributors and value-added resellers.~~

To produce our hardware products, we rely on both our internal manufacturing operations as well as third party manufacturing partners. Our internal manufacturing operations consist primarily of materials procurement, assembly, testing and quality control of our Oracle Engineered Systems and certain of our enterprise and data center servers and storage products. For all other manufacturing, we generally rely on third party manufacturing partners to produce our hardware-related components and hardware products and we may involve our internal manufacturing operations in the final assembly, testing and quality control processes for these components and products. We distribute most of our hardware products either from our facilities or partner facilities. We strive to reduce costs by simplifying our manufacturing processes through increased standardization of components across product types and a~~“build-to-order”~~ ~~manufacturing process in which products generally are built only after customers have placed firm orders.~~

~~Our hardware products~~ revenues, cost of hardware ~~products~~ and hardware operating margins that we report are affected byby: our ability to timely manufacture or deliver a few large hardware transactions; our strategy for and the competitive position of our hardware products relative to competitor offerings; customer demand for competing offerings such as PaaS and IaaS; the strength of general economic and business ~~conditions,~~conditions; governmental budgetary ~~constraints, certain of our acquisitions and foreign currency rate fluctuations.~~

Our quarterly hardware products revenues are difficult to predict. The timing of customer orders and delays in our ability to timely manufacture or deliver a few large hardware transactions, among other factors, could substantially affect the amount of hardware products revenues, expenses and operating margins that we report.

~~Hardware~~~~Support:~~ Our hardware support offerings provide customers with software updates for software components that are essential to the functionality of our hardware products, such as Oracle Solaris and certain other software products, and can include product repairs, maintenance services and technical support services. Typically, our hardware support contract arrangements are priced as a percentage of the net hardware products fees, are invoiced to the customer at the beginning of the support period and are one year in duration. We continue to evolve hardware support processes that are intended 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. Our hardware support revenues that we report are influenced by a number of factors, including the volume of purchases of hardware products, the pricing and mix of hardware products purchased,constraints; whether customers decide to purchase hardware support contracts at or in close proximity to the time of hardware product ~~sale,~~sale; the percentage of our hardware support contract customer base that renews its support contracts and ~~our acquisitions. Substantially all of these factors are heavily influenced by our customers’~~the close association between hardware products, which have a finite life, and customer demand for related hardware support as hardware products age; customer decisions to either maintain or upgrade their existing hardware infrastructure to newly developed technologies that are ~~available.~~available; certain of our acquisitions; and foreign currency rate fluctuations.

Our services business ~~which~~helps customers and partners maximize the performance of their investments in Oracle applications, platform and infrastructure technologies. We believe that our services are differentiated based on our focus on Oracle technologies, extensive experience, and broad sets of intellectual property and best practices. Our services offerings include consulting services, advanced support services and education services and represented 8%9% of our total revenues on a trailing4-quarter ~~basis, is comprised of the remainder of our operating segments.~~basis. Our services business has lower margins than our cloud andon-premise software and hardware businesses. Our services revenues are impacted by our strategy for and the competitive position of our services; customer demand for our cloud andon-premise software and hardware offerings and the associated services ~~certain of our acquisitions, general economic conditions, governmental budgetary constraints, personnel reductions in our customers’ IT departments, tighter controls over discretionary spending,~~for these offerings; our strategic emphasis on growing our cloud ~~revenues and the growth~~revenues; certain of our acquisitions; general economic conditions; governmental budgetary constraints; personnel reductions in our ~~software~~customers’ IT departments; and ~~hardware offerings. Our services business’ offerings include:~~tighter controls over discretionary spending.

Our selective and active acquisition program is another important element of our corporate strategy. In recent years, we have invested billions of dollars to acquire a number of complementary companies, products, services and ~~technologies.~~technologies, including NetSuite Inc. in the second quarter of fiscal 2017.

We ~~have acquired certain~~expect to continue to acquire companies, products, services and technologies ~~during the fiscal 2017 and 2016 periods presented~~ in ~~this Quarterly Report, including NetSuite.~~furtherance of our corporate strategy. Note 2 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report provides additional information related to our recent acquisitions.

We believe that our acquisition program strengthens our competitive position, enhances the products and services that we can offer to customers, expands our customer base, provides greater scale to accelerate innovation, grows our revenues and earnings and increases stockholder value. We expect to continue to acquire companies, products, services and technologies in furtherance of our corporate strategy.

~~We believe that~~ we can fund ~~our pending and~~any future acquisitions with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities. We estimate the financial impact of any potential acquisition with regard to earnings, operating margin, cash flow and return on invested capital targets before deciding to move forward with an acquisition.

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP) as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC), and we consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission. GAAP, as set forth within the ASC, requires us to make certain estimates, judgments and assumptions. 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 assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent that there are differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. The accounting policies that reflect our

more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include:

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed our critical accounting policies and related disclosures with the Finance and Audit Committee of the Board of Directors.

During the first ~~nine months~~quarter of fiscal ~~2017,~~2018, there were no significant changes to our critical accounting policies and estimates. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form10-K for our fiscal year ended May 31, ~~2016~~2017 provides a more complete discussion of our critical accounting policies and estimates.

The comparability of our operating results in the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2017~~2018 compared to the same ~~periods~~period of fiscal ~~2016~~2017 was impacted by our recent ~~acquisitions.~~acquisitions, including our acquisition of NetSuite Inc. during the second quarter of fiscal 2017. In our discussion of changes in our results of operations from the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2017~~2018 compared to the same ~~periods~~period of fiscal ~~2016,~~2017, we may qualitatively disclose the impact of our acquired products and services ~~for~~(for theone-year period subsequent to the acquisition ~~date~~date) to the growth in certain of our ~~operating segments’~~businesses’ revenues where such qualitative discussions would be meaningful for an understanding of the factors that influenced the changes in our results of operations. When material, we may also provide quantitative disclosures related to such acquired products and services. Expense contributions from our recent acquisitions for each of the respective period comparisons may not be separately identifiable due to the integration of these businesses ~~and operating segments~~ into our existing operations, and/or were insignificant to our results of operations during the periods presented.

We caution readers that, whilepre- and post-acquisition comparisons, as well as any quantified amounts themselves, may provide indications of general trends, any acquisition information that we provide has inherent limitations for the following reasons:

For purposes of presentation of amortization of intangible assets within our condensed consolidated statements of operations included elsewhere in this Quarterly Report, we present a single line item within operating expenses and provide appropriate supplemental footnote disclosure. With respect to the presentation and discussion of our segments’ results for the periods presented, we have assigned the amortization of our intangible assets to the lines of business to which such amortization pertains and also have provided a discussion and presentation of comparative movements for such intangible amortization amounts in totality.

Our quarterly revenues have historically been affected by a variety of seasonal factors, including the structure of our sales force incentive compensation plans, which are common in the technology industry. In each fiscal year,

our total revenues and operating margins are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter. The operating margins of our businesses, in particular, our cloud ~~software~~ andon-premise software ~~segment,~~business and hardware business, are generally affected by seasonal factors in a similar manner as our revenues as certain expenses within our cost structure are relatively fixed in the short term.

In our results of operations discussion below, we provide an overview of our total consolidated revenues, total consolidated expenses and total consolidated operating margin, all of which are presented on a GAAP basis. We also present a GAAP-based discussion below for substantially all of the other expense items as presented in our condensed consolidated statement of operations that are not directly attributable to our three businesses.

In addition, we discuss below the results of each our three businesses—cloud andon-premise software, hardware and services—which are our operating segments as defined pursuant to ASC 280,Segment Reporting. The financial reporting for our three businesses that is presented below is presented in a manner that is consistent with that used by our CODMs. Our operating segment presentation below reflects revenues, direct costs and sales and marketing expenses that correspond to and are directly attributable to each of our three businesses. We also utilize these inputs to calculate and present a segment margin for each business in the discussion below.

Consistent with our internal management reporting processes, the below operating segment presentation includes revenues adjustments related to cloud andon-premise software contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in our consolidated statements of operations for the periods presented due to business combination accounting requirements. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of these items and Note 11 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of our total operating segment revenues as presented in the discussion below to total revenues as presented per our condensed consolidated statements of operations for all periods presented.

In addition, research and development expenses, general and administrative expenses, stock-based compensation expenses, amortization of intangible assets, certain other expense allocations, acquisition related and other expenses, restructuring expenses, interest expense,non-operating income, net and provision for income taxes are not attributed to our operating segments because our management does not view the performance of our businesses including such items and/or it is impractical to do so. Refer to “Supplemental Disclosure Related to Certain Charges” below for additional discussion of certain of these items and Note 11 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a reconciliation of the summations of total segment margin as presented in the discussion below to total income before provision of income taxes as presented per our condensed consolidated statements of operations for all periods presented.

Our international operations have provided and are expected to continue to provide a significant portion of each of our ~~segments’~~businesses’ revenues and expenses. As a result, each ~~segment’s~~businesses’ revenues and expenses and our total

revenues and expenses will continue to be affected by changes in the U.S. Dollar against major international currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effects of foreign currency rate fluctuations, we compare the percent change in the results from one period to another period in this Quarterly Report using constant currency disclosure. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at constant exchange rates (i.e., the rates in effect on May 31, ~~2016,~~2017, which was the last day of our prior fiscal year) rather than the actual exchange rates in effect during the respective periods. For example, if an entity reporting in Euros had revenues of 1.0 million Euros from products sold on ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016, our financial statements would reflect reported revenues of ~~$1.06~~$1.20 million in the first ~~nine months~~quarter of fiscal ~~2017~~2018 (using ~~1.06~~1.20 as themonth-end average exchange rate for the period) and ~~$1.10~~$1.11 million in the first ~~nine months~~quarter of fiscal ~~2016~~2017 (using ~~1.10~~1.11 as themonth-end average exchange rate for the period). The constant currency presentation, however, would translate the results for the ~~three~~first quarter of fiscal 2018 and ~~nine months ended February 28,~~ 2017 ~~and February 29, 2016~~ using the May 31, ~~2016~~2017 exchange rate and indicate, in this example, no change in revenues during the period. In each of the tables below, we present the percent change based on actual, unrounded results in reported currency and in constant currency.


	Three Months Ended										Nine Months Ended											Three Months Ended August 31,
	February 28, 2017			Percent Change				February 29, 2016			February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)			Actual			Constant				Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
*Total Revenues by Geography:*	February 28, 2017							February 29, 2016
Americas	$	5,219			6%		5%	$	4,942		February 28, 2017	$	14,971			2%		2%		$	14,620		$	5,173			7%		7%		$	4,817
EMEA⁽¹⁾		2,558			-4%		1%		2,661			7,529			-3%		2%			7,761			2,539			5%		2%			2,413
Asia Pacific⁽²⁾		1,428			1%		0%		1,409			4,335			6%		3%			4,072			1,475			8%		8%			1,365

Total revenues		9,205			2%		3%		9,012			26,835			1%		2%			26,453			9,187			7%		6%			8,595
*Total Operating Expenses*		6,246			4%		5%		5,985			18,199			2%		3%			17,817			6,366			7%		6%			5,954

*Total Operating Margin*	$	2,959			-2%		-1%	$	3,027		$	8,636			0%		1%		$	8,636		$	2,821			7%		6%		$	2,641

*Total Operating Margin %*		32%							34%			32%								33%			31%								31%
*% Revenues by Geography:*
Americas		57%							55%			56%								55%			56%								56%
EMEA		27%							29%			28%								29%			28%								28%
Asia Pacific		16%							16%			16%								16%			16%								16%
*Total Revenues by Business:*
Cloud andon-premise software	$	7,365			4%		5%	$	7,084		$	21,334			4%		5%		$	20,551		$	7,384			9%		8%		$	6,791
Hardware		1,028			-9%		-9%		1,135			3,037			-10%		-9%			3,385			943			-5%		-6%			996
Services		812			2%		3%		793			2,464			-2%		-1%			2,517			860			6%		5%			808

Total revenues	$	9,205			2%		3%	$	9,012		$	26,835			1%		2%		$	26,453		$	9,187			7%		6%		$	8,595

*% Revenues by Business:*
Cloud andon-premise software		80%							78%			80%								78%			81%								79%
Hardware		11%							13%			11%								13%			10%								12%
Services		9%							9%			9%								9%			9%								9%

~~Fiscal~~~~Third~~~~Quarter~~~~2017~~~~Compared~~to~~Fiscal~~~~Third~~~~Quarter~~~~2016:~~Excluding the effects of foreign currency rate variations, our total revenues increased in the ~~third~~first quarter of fiscal ~~2017~~2018 due to growth in our cloud andon-premise software revenues and services revenues, partially offset by a decrease in our hardware ~~business’~~ revenues. The constant currency increase in our cloud andon-premise software revenues during the ~~third~~first quarter of fiscal ~~2017~~2018 was attributable to growth in our cloud SaaS and cloud PaaS and IaaS revenues, growth in our software license updates and product support revenues, and revenue contributions from our recent acquisitions, and was partially offset by ~~decreases~~a decrease in our new software licenses revenues. The constant currency increase in our services

~~business’~~ revenues during the ~~third~~first quarter of fiscal ~~2017~~2018 was primarily ~~due~~attributable to ~~revenue contributions from~~ our recent acquisitions. The constant currency decrease in our hardware ~~business’~~ revenues during the ~~third~~first quarter of fiscal ~~2017~~2018 was due to ~~a reduction~~reductions in our hardware products revenues and hardware support ~~revenues.~~revenues as we continued to place emphasis on the development, marketing and sale of our cloud-based infrastructure technologies. In constant currency, the Americas region contributed ~~91%~~67%, the EMEA region contributed 8%11% and the Asia Pacific region contributed 1%22% to the growth in our total revenues during the ~~third~~first quarter of fiscal ~~2017.~~2018.

Excluding the effects of foreign currency rate variations, our total operating expenses increased during the ~~third~~first quarter of fiscal ~~2017~~2018 relative to the prior year ~~period. In constant currency, we incurred higher sales and marketing and research and development expenses during the third quarter of fiscal 2017~~period due ~~primarily~~ to ~~increased headcount, and~~ higher cloud SaaS and cloud PaaS and IaaS expenses resulting primarily from increased headcount and infrastructure expenses to support the increase in our cloud SaaS and cloud PaaS and IaaS ~~revenues.~~revenues; higher sales and marketing expenses, which were primarily attributable to increased headcount in our cloud andon-premise software business; increased stock-based compensation expenses; and higher intangible asset amortization due to additional amortization from intangible assets that we acquired in connection with our acquisition of NetSuite and other recently acquired companies. These constant currency expense increases in the ~~third~~first quarter of fiscal ~~2017~~2018 were partially offset by lower hardware ~~products~~product costs and lower employee related expenses for our hardware business due to ~~a decline in~~lower hardware ~~products revenues,~~

revenues; and lower software ~~support and hardware~~ support costs due primarily to lower ~~headcount, and lower general and administrative expenses due primarily to lower professional fees,~~headcount; each in the ~~third~~first quarter of fiscal ~~2017 compared~~2018 relative to the corresponding prior year period.

In constant currency, our total operating margin increased during the first quarter of fiscal 2018, relative to the first quarter of fiscal 2017, due to the increase in our total revenues, and our total operating margin as a percentage of total revenues ~~declined slightly during~~for the ~~third~~first quarter of fiscal ~~2017 due~~2018 was flat as compared to ~~our total expenses growing at a faster rate than our total revenues.~~

~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2017~~~~Compared~~to~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2016:~~ ~~Excluding the effects of currency rate variations, our total revenues increased in~~ the first ~~nine months~~quarter of fiscal ~~2017 due to growth in our cloud andon-premise~~ software revenues, which was attributable to similar reasons as those noted above, and was partially offset by decreases in our hardware business’ and services business’ revenues. In constant currency, the Americas region contributed 56%, the EMEA region contributed 22% and the Asia Pacific region contributed 22% to the growth in our total revenues during the first nine months of fiscal 2017.

Excluding the effects of currency rate variations, our total operating expenses increased during the first nine months of fiscal 2017 primarily due to constant currency expense increases in sales and marketing, research and development, and cloud SaaS, PaaS and IaaS expenses, all generally for similar reasons as noted above. These constant currency expense increases during the first nine months of fiscal 2017 were partially offset by lower hardware products expenses, lower software support expenses, and lower hardware support expenses, all generally for similar reasons as noted above, and lower intangible asset amortization due to certain of our intangible assets that became fully amortized primarily in our software license updates and product support segment.

In constant currency, our total operating margin and total operating margin as a percentage of revenues increased slightly during the first nine months of fiscal 2017 due to the constant currency increase in our total revenues.

To supplement our condensed consolidated financial information, we believe that the following information is helpful to an overall understanding of our past financial performance and prospects for the future. You should review the introduction under “Impact of Acquisitions” (above) for a discussion of the inherent limitations in comparingpre- and post-acquisition information.

Our operating results reported pursuant to GAAP included the following business combination accounting adjustments and expenses related to acquisitions, as well as certain other expense and income items that (increased) or reduced our GAAP net income:


	Three Months Ended						Nine Months Ended						Three Months Ended August 31,
(in millions)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016			2017			2016
Cloud software as a service and platform as a service deferred revenues⁽¹⁾	$	69		$	2		$	120		$	6
Software license updates and product support deferred revenues⁽¹⁾		—			—			1			1
Hardware support deferred revenues⁽¹⁾		—			—			1			1
Cloud andon-premise software deferred revenues⁽¹⁾													$	25		$	18
Acquired deferred sales commissions amortization⁽²⁾		(21	)		—			(29	)		—			(11	)		—
Amortization of intangible assets⁽³⁾		397			408			1,010			1,283			411			311
Acquisition related and other⁽⁴⁾⁽⁶⁾		30			11			84			35			12			14
Restructuring⁽⁵⁾		161			115			346			293			124			99
Stock-based compensation⁽⁶⁾		349			260			984			765
Stock-based compensation, operating segments⁽⁶⁾														124			86
Stock-based compensation, R&D and G&A⁽⁶⁾														278			233
Income tax effects⁽⁷⁾		(336	)		(207	)		(823	)		(658	)		(512	)		(258	)

	$	649		$	589		$	1,694		$	1,726		$	451		$	503


Remainder of fiscal 2017	$	402
Fiscal 2018		1,362
Remainder of fiscal 2018			$	1,179
Fiscal 2019		1,248		1,408
Fiscal 2020		1,058		1,207
Fiscal 2021		883		1,021
Fiscal 2022		779		918
Fiscal 2023				567
Thereafter		2,056		886

Total intangible assets, net	$	7,788	$	7,186

⁽⁶⁾	Stock-based compensation was included in the following operating expense line items of our condensed consolidated statements of operations (in millions):


	Three Months Ended				Nine Months Ended				Three Months Ended August 31,
	February 28, 2017		February 29, 2016		February 28, 2017		February 29, 2016		2017		2016
Cloud SaaS									$	9	$	5
Cloud PaaS and IaaS										2		1
Software license updates and product support										7		6
Hardware										3		3
Services										14		8
Sales and marketing	$	96	$	57	$	228	$	163		89		63
Cloud software as a service and platform as a service		6		4		17		13
Cloud infrastructure as a service		1		1		3		3
Software license updates and product support		6		6		18		18
Hardware products		2		1		6		4
Hardware support		1		1		3		4
Services		14		7		31		22

Stock-based compensation, operating segments										124		86
Research and development		191		154		574		452		234		195
General and administrative		32		29		104		86		44		38

Subtotal	$	349	$	260	$	984	$	765
Acquisition related and other		22		—		33		3		1		—

Total stock-based compensation	$	371	$	260	$	1,017	$	768	$	403	$	319

Stock-based compensation included in acquisition related and other expenses resulted from unvested stock options and restricted stock-based awards assumed from acquisitions whose vesting was accelerated upon termination of the employees pursuant to the terms of those stock options and restricted stock-based awards.

Our cloud andon-premise software business ~~consists of our cloud software andon-premise~~ ~~software segment, our cloud IaaS segment and our software license updates and product support segment.~~

~~Cloud~~~~Software~~~~and~~~~On-Premise~~~~Software:~~ ~~Our cloud software andon-premise~~ ~~software segment~~ engages in the sale, marketing and delivery of our cloud ~~software offerings, including our cloud~~ SaaS and cloud PaaS and IaaS offerings and the licensing of our software foron-premise and other IT ~~environments.~~environments with the option to purchase software license updates and product support contracts. Our cloud SaaS and cloud PaaS and IaaS offerings ~~grant customers access to a broad range of our application~~are generally subscription based and ~~platform software technologies on a~~generally recognized as revenues over the subscription ~~basis in a secure, standards-based, cloud computing environment that generally includes access, hosting, infrastructure management, the use of software updates, and support.~~period. New software licenses revenues represent fees earned from granting customers licenses, generally on a perpetual basis, to use our database and middleware and our ~~application~~applications software products withinon-premise and other IT ~~environments. We continue to place significant emphasis, both domestically~~environments and ~~internationally, on direct sales through our own sales force. We also continue to market our products through indirect channels. Costs associated with our cloud software andon-premise~~ ~~software segment~~ are included in sales and marketing expenses, cloud SaaS and PaaS expenses and amortization of intangible assets. These costs are largely personnel related and include commissions earned by our sales force for the sale of our software offerings, marketing program costs, the cost of providing our cloud SaaS and PaaS offerings and the amortization of intangible assets including developed technology, customer contracts and customer relationship intangibles.

Three Months Ended Nine Months Ended
February 28,
2017 Percent Change February 29,
2016 February 28,
2017 Percent Change February 29,
2016
(Dollars in millions)
Actual Constant Actual Constant
Cloud Software andOn-Premise Software Revenues:

Americas
$ 1,418 19% 19% $ 1,189 $ 3,641 12% 12% $ 3,262
EMEA
616 -5% 0% 645 1,646 0% 5% 1,651
Asia Pacific
391 -9% -10% 429 1,191 7% 4% 1,113

Total revenues
2,425 7% 8% 2,263 6,478 7% 8% 6,026
Expenses:

Cloud software as a service and platform as a service⁽¹⁾
374 30% 31% 288 1,043 25% 27% 834
Sales and marketing⁽¹⁾
1,693 4% 5% 1,620 4,989 6% 7% 4,712
Stock-based compensation
98 73% 73% 57 229 39% 39% 165
Amortization of intangible assets⁽²⁾
290 43% 43% 204 713 13% 13% 634

Total expenses
2,455 13% 14% 2,169 6,974 10% 11% 6,345

Total Margin
$ (30 ) -131% -118% $ 94 $ (496 ) 56% 62% $ (319 )

Total Margin %
-1% 4% -8% -5%
% Revenues by Geography:

Americas
58% 53% 57% 54%
EMEA
25% 28% 25% 27%
Asia Pacific
17% 19% 18% 19%
Revenues by Software Offerings:

Cloud software as a service and platform as a service
$ 1,011 73% 74% $ 583 $ 2,686 77% 79% $ 1,517
New software licenses
1,414 -16% -15% 1,680 3,792 -16% -15% 4,509

Total cloud software andon-premise software revenues
$ 2,425 7% 8% $ 2,263 $ 6,478 7% 8% $ 6,026

% Revenues by Software Offerings:

Cloud software as a service and platform as a service
42% 26% 41% 25%
New software licenses
58% 74% 59% 75%

~~Excluding the effects of currency rate fluctuations, total revenues from our cloud software andon-premise~~ ~~software segment increased by 8 percentage points in each of the third quarter and first nine months of fiscal 2017, respectively, relative~~generally recognized when unrestricted access to the ~~corresponding prior year periods due to growth in our cloud SaaS and PaaS revenues and~~software license is granted provided all other revenue contributions from our recent acquisitions, including our acquisition of NetSuite, and were partially offset by decreases in our new software licenses revenues. The increases in our cloud SaaS and PaaS revenues and decreases in our new software licenses revenues during the fiscal 2017 periods presented were primarily due to the continued strategic emphasis placed on selling, marketing and growing our cloud software offerings and we expect these revenue trends will continue. During the third quarter of fiscal 2017, constant currency revenues growth in the Americas region was partially offset by a revenues decline in the Asia Pacific region. During the first nine months of fiscal 2017, the Americas, EMEA and Asia Pacific regions contributed constant currency regional growth of 76%, 15% and 9%, respectively.

As a result of our acquisitions, we recorded adjustments to reduce assumed cloud SaaS and PaaS obligations to their estimated fair values as of the acquisition dates. Due to our application of business combination accounting rules, cloud SaaS and PaaS revenues in the amounts of $69 million and $2 million for the third quarter of fiscal 2017 and 2016, respectively, and $120 million and $6 million for the first nine months of fiscal 2017 and 2016, respectively, were not recognized during the aforementioned periods and would have been otherwise reported as revenues by our acquired businesses as independent entities.

In reported currency, new software licenses revenues earned from transactions of $3 million or greater decreased by 1% and 7% in the third quarter and first nine months of fiscal 2017, respectively, and represented 30% and 26% of our new software licenses revenues in the third quarter and first nine months of fiscal 2017, respectively, in comparison to 25% and 24% in the third quarter and first nine months of fiscal 2016, respectively.

~~In constant currency, total cloud software andon-premise~~ software expenses increased in the fiscal 2017 periods presented primarily due to higher employee related expenses from increased headcount, higher cloud SaaS and PaaS expenses from increased headcount and infrastructure expenses that were incurred to support the related cloud SaaS and PaaS revenues increases, higher stock-based compensation, and higher amortization of intangible assets due to our recent acquisitions, primarily our acquisition of NetSuite.

~~Excluding the effects of currency rate fluctuations, our cloud software andon-premise~~ software segment’s total margin and total margin as a percentage of revenues decreased in the fiscal 2017 periods presented as our total expenses grew at a faster rate than our total revenues for this segment.

~~Cloud~~~~Infrastructure~~asa~~Service:~~ ~~Our cloud IaaS segment includes Oracle Cloud IaaS and Oracle Managed Cloud Services offerings. Oracle Cloud IaaS provides infrastructure cloud services that~~recognition criteria are enterprise-grade, hosted and supported within the Oracle Cloud to perform elastic compute, storage and networking services on a subscription basis. Oracle Managed Cloud Services are comprehensive software and hardware management and maintenance services for customer IT infrastructure for a fee for a stated term that are hosted at our Oracle data center facilities, select partner data centers or physically~~on-premise~~ at customer facilities. Our cloud IaaS segment’s expenses consist primarily of personnel related expenditures, technology infrastructure expenditures and facilities costs. Operating expenses associated with our IaaS offerings also include sales and marketing expenses, which are largely personnel related, and amortization of intangible assets. For the fiscal 2016 periods presented, our cloud IaaS segment’s revenues and expenses were substantially attributable to our Oracle Managed Cloud Services offerings.

of ~~currency rate fluctuations,~~fiscal 2018, the Americas, ~~region contributed 37%~~EMEA and ~~40%, respectively, the EMEA region contributed 29% and 28%, respectively, and the~~ Asia Pacific ~~region~~regions contributed ~~34%~~constant currency regional growth of 70%, 11% and ~~32%~~19%, ~~respectively, to the increase in software license updates and product support revenues during the third quarter and first nine months of fiscal 2017,~~ respectively.

In constant currency, total cloud andon-premise software expenses increased in the first quarter of fiscal 2018 primarily due to higher cloud SaaS, PaaS and IaaS expenses resulting primarily from increased headcount and technology infrastructure expenses that were incurred to support the related cloud SaaS and cloud PaaS and IaaS revenues increases; and higher sales and marketing expenses resulting from increased headcount. These expense increases were partially offset by lower software license updates and product support expenses ~~decreased~~ during the first quarter of fiscal ~~2017 periods presented~~2018 due primarily to lower employee related expenses resulting from lower ~~headcount~~headcount.

Excluding the effects of currency rate fluctuations, our cloud software and ~~a reduction~~on-premise software segment’s total margin increased during the first quarter of fiscal 2018 due to the increase in ~~expenses associated with certain of our intangible assets that became fully amortized.~~

revenues. In constant currency, total ~~margin and~~ margin as a percentage of revenues ~~increased~~decreased during the first quarter of fiscal 2018 relative to the first quarter of fiscal 2017 ~~periods presented due to the growth in~~as our total expenses grew at a faster rate than our total revenues ~~and the decrease in total expenses~~ for this ~~segment.~~business.

Our hardware business ~~consists of our hardware products segment and hardware support segment.~~

~~Hardware~~~~Products:~~ ~~Hardware products~~ revenues are ~~primarily~~ generated from the sales of our Oracle Engineered Systems, computer server, storage, ~~networking, workstations and related devices~~ and industry-specific hardware ~~products. We~~products foron-premise IT environments that are generally recognized as revenues upon delivery to the customer provided all other revenue recognition criteria are met. Our hardware business also earns revenues from the sale of hardware support contracts purchased by our customers at their option and are generally recognized as revenues ratably as the services are delivered over the contractual term. The majority of our hardware products are sold through indirect channels such as independent distributors and value-added resellers and we also market and sell our hardware products through our direct sales ~~force and indirect channels such as independent distributors and value-added resellers.~~force. Operating expenses associated with our hardware ~~products~~business include the cost of hardware products, which consists of expenses for materials and labor used

to produce these products by our internal manufacturing operations or by ~~third party~~third-party manufacturers, warranty expenses and the impact of periodic changes in inventory valuation, including the impact of inventory determined to be excess and ~~obsolete. Operating expenses associated with our hardware products also include~~obsolete; the cost of materials used to repair customer products; the cost of labor and infrastructure to provide support services; and sales and marketing expenses, which are largely personnel related and include variable compensation earned by our sales force for the sales of our hardware ~~products, and amortization of intangible assets.~~offerings.


	Three Months Ended											Nine Months Ended											Three Months Ended August 31,
	February 28, 2017				Percent Change				February 29, 2016			February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)				Actual			Constant				Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
*Hardware Products Revenues*:	February 28, 2017								February 29, 2016
*Hardware Revenues:*
Americas	$	237				-18%		-19%	$	289		February 28, 2017	$	712			-20%		-20%		$	892		$	485			-8%		-8%		$	527
EMEA		158				-17%		-14%		192			429			-14%		-10%			500			271			-1%		-4%			274
Asia Pacific		125				1%		1%		123			337			-5%		-6%			354			187			-4%		-4%			195

Total revenues		520				-14%		-13%		604			1,478			-15%		-14%			1,746			943			-5%		-6%			996
*Expenses:*
Hardware products⁽¹⁾		288				-14%		-14%		337			769			-20%		-19%			963
Hardware products and support⁽¹⁾																								366			-4%		-5%			381
Sales and marketing⁽¹⁾		200				-4%		-4%		209			618			-5%		-4%			648			170			-15%		-16%			203
Stock-based compensation		6				18%		18%		5			21			35%		35%			15
Amortization of intangible assets⁽²⁾		52				56%		56%		34			113			-2%		-2%			116

Total expenses		546				-6%		-6%		585			1,521			-13%		-12%			1,742
Total expenses⁽¹⁾																								536			-8%		-9%			584

*Total Margin*	$	(26	)			-244%		-234%	$	19		$	(43	)		-926%		-807%		$	4		$	407			-1%		-2%		$	412

*Total Margin %*		-5%								3%			-3%								0%			43%								41%
*% Revenues by Geography:*
Americas		46%								48%			48%								51%			51%								53%
EMEA		30%								32%			29%								29%			29%								28%
Asia Pacific		24%								20%			23%								20%			20%								19%

Excluding the effects of currency rate fluctuations, total hardware ~~products~~ revenues decreased in the first quarter of fiscal 2017 periods presented in comparison to the corresponding prior year periods primarily due to reductions in sales volumes of certain of our product lines, including lower margin products, partially offset by revenues growth in certain of our Oracle Engineered Systems. On a constant currency basis, hardware products revenues declined across all regions during the fiscal 2017 periods presented2018, relative to the ~~corresponding prior years with the exception of Asia Pacific during the third~~first quarter of fiscal 2017, due to our continued emphasis on the development, marketing and sale of our cloud-based infrastructure technologies, which ~~grew modestly.~~resulted in reduced sales volumes of most of ouron-premise hardware product lines during the first quarter of fiscal 2018 and also impacted the volume of customers that purchase hardware support contracts.

Excluding the effects of currency rate fluctuations, total hardware products expenses decreased in the first quarter of fiscal ~~2017 periods presented~~2018, relative to the ~~corresponding prior year periods~~first quarter of fiscal 2017, due primarily ~~due~~ to lower hardware products costs ~~associated with~~and lower employee related expenses, which aligned to lower hardware ~~products~~ revenues.

~~For the fiscal 2017 periods presented,~~In constant currency, total margin ~~and total margin as a percentage of revenues~~ for our hardware ~~products~~ segment decreased on a constant currency basis in comparison to the corresponding prior year ~~periods~~period primarily due to the decrease in our total revenues for this segment.

Three Months Ended Nine Months Ended
February 28,
2017 Percent Change February 29,
2016 February 28,
2017 Percent Change February 29,
2016
(Dollars in millions)
Actual Constant Actual Constant
Hardware Support Revenues:

Americas
$ 274 -3% -3% $ 281 $ 835 -3% -3% $ 863
EMEA
142 -10% -6% 158 440 -11% -7% 495
Asia Pacific
92 1% -1% 92 284 1% -2% 281

Total revenues
508 -4% -3% 531 1,559 -5% -4% 1,639
Expenses:

Hardware support⁽¹⁾
146 -15% -14% 170 436 -17% -16% 522
Stock-based compensation
1 -7% -7% 1 3 -17% -17% 4
Amortization of intangible assets⁽²⁾
18 -52% -52% 36 56 -49% -49% 110

Total expenses
165 -21% -20% 207 495 -22% -22% 636

Total Margin
$ 343 7% 8% $ 324 $ 1,064 6% 7% $ 1,003

Total Margin %
68% 61% 68% 61%
% Revenues by Geography:

Americas
54% 53% 54% 53%
EMEA
28% 30% 28% 30%
Asia Pacific
18% 17% 18% 17%

Excluding the effects of currency rate fluctuations, hardware support revenues decreased in the fiscal 2017 periods presented in comparison to the corresponding prior year periods primarily due to reductions in sales volumes of certain of our hardware product lines for which we offer hardware support. On a constant currency basis, hardware support revenues declined across all regions during the fiscal 2017 periods presented.

Excluding the effects of currency rate fluctuations, total hardware support expenses decreased in the fiscal 2017 periods presented primarily due to lower employee related expenses resulting from lower headcount and a reduction in expenses associated with certain of our intangible assets that became fully amortized.

In constant currency, total ~~hardware support margin and~~ margin as a percentage of ~~total~~ revenues increased for our hardware segment in the first quarter of fiscal ~~2017 periods presented in comparison to the corresponding prior year periods primarily~~2018 due to ~~the total expense reductions for this segment.~~lower expenses.

~~Our services business consists of consulting, advanced customer support services and education services. Consulting revenues are earned by providing~~We offer services to customers and partners to help to maximize the performance of their investments in ~~business~~Oracle applications, platform and ~~IT strategy alignment, enterprise architecture planning and design, initial software implementation and integration, and ongoing software enhancements and upgrades. Advanced customer support~~infrastructure technologies. Services revenues are generally recognized as the services are ~~providedon-premise~~ and remotely to our customers to enable increased performance and higher availability of their Oracle products and services and also include certain other services. Education revenues are earned by providing~~instructor-led,~~ ~~live virtual training, self-paced online training, private events and custom training in the use of our cloud,on-premise~~ ~~software and hardware offerings.~~performed. The cost of providing our services consists primarily of personnel related expenses, technology infrastructure expenditures, facilities expenses and external contractor expenses.


	Three Months Ended										Nine Months Ended											Three Months Ended August 31,
	February 28, 2017			Percent Change				February 29, 2016			February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)			Actual			Constant				Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
*Services Revenues:*	February 28, 2017							February 29, 2016
Americas	$	428			5%		4%	$	408		February 28, 2017	$	1,268			-2%		-1%		$	1,289		$	435			5%		5%		$	413
EMEA		239			-1%		4%		242			729			-4%		2%			758			248			6%		3%			236
Asia Pacific		145			1%		0%		143			467			-1%		-3%			470			177			11%		12%			159

Total revenues		812			2%		3%		793			2,464			-2%		-1%			2,517			860			6%		6%			808
*Expenses:*
Services⁽¹⁾		666			2%		3%		650			2,042			0%		2%			2,036
Stock-based compensation		14			98%		98%		7			31			43%		43%			22
Amortization of intangible assets⁽²⁾		—			-83%		-83%		2			1			-77%		-77%			6

Total expenses		680			3%		4%		659			2,074			0%		2%			2,064
*Total Expenses*⁽¹⁾																							665			0%		-1%			665

*Total Margin*	$	132			-2%		-2%	$	134		$	390			-14%		-13%		$	453		$	195			37%		38%		$	143

*Total Margin %*		16%							17%			16%								18%			23%								18%
*% Revenues by Geography:*
Americas		53%							51%			51%								51%			51%								51%
EMEA		29%							31%			30%								30%			29%								29%
Asia Pacific		18%							18%			19%								19%			20%								20%

~~Fiscal~~~~Third~~~~Quarter~~~~2017~~~~Compared~~to~~Fiscal~~~~Third~~~~Quarter~~~~2016:~~Excluding the effects of currency rate fluctuations, our total services revenues increased in the ~~third~~first quarter of fiscal ~~2017. Constant~~2018 relative to the first quarter of fiscal 2017 due to constant currency increases in our consulting revenues, ~~during the third quarter of fiscal 2017,~~ which were primarily attributable to ~~revenue contributions from~~ our recent ~~acquisitions, were partially offset by constant currency decreases in our education revenues. On a constant currency basis, services revenues growth during~~acquisitions. During the ~~third~~first quarter of fiscal ~~2017 was primarily attributable to~~2018, the Americas, EMEA and ~~EMEA regions.~~Asia Pacific regions contributed constant currency regional growth of 37%, 17% and 46%, respectively.

In constant currency, total services expenses increased during the ~~third~~first quarter of fiscal ~~2017~~2018 primarily due to an increase in headcount related expenses associated with our consulting ~~segment, which were~~offerings, primarily attributable to ~~increased headcount~~higher consulting expense contributions from our recent acquisitions. These constant currency expense increases during the first quarter of fiscal 2018 were partially offset due to a $30 million charge recorded during the first quarter of fiscal 2017 which increased our expenses in the corresponding prior year period.

In constant currency, total services margin and total margin as a percentage of total services revenues ~~decreased~~increased in the ~~third~~first quarter of fiscal ~~2017 as our total expenses grew faster than our total revenues for this segment.~~

~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2017~~~~Compared~~2018, relative to~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2016:~~ ~~Excluding the effects of currency rate fluctuations, our total services revenues declined in~~ the first ~~nine months~~quarter of fiscal 2017, primarily due to ~~decreases in our education revenues, partially offset by a modest~~the increase in our advanced customer support revenues and revenue contributions from our recent acquisitions. On a constant currency basis, services revenues growth in the EMEA region during the first nine months of fiscal 2017 was offset by services revenues declines in the Americas and Asia Pacific regions.

~~In constant currency, our total services expenses increased in the first nine months of fiscal 2017 primarily due to a $30 million charge, which was recorded~~

revenues in the first quarter of fiscal ~~2017~~2018 and ~~not expected to recur, and due to expense contributions from our recent acquisitions.~~

~~In constant currency, total services margin and total margin as a percentage of total services revenues decreased~~the $30 million charge that was recorded during the first ~~nine months~~quarter of fiscal ~~2017 due to the growth in total services expenses for this segment.~~

As of our most recent annual goodwill impairment review date of March 1, 2016, our consulting reporting unit’s fair value was 11% in excess of its carrying value. As of March 1, 2016, we estimated that should our consulting reporting unit’s projected margins and related cash flows unfavorably deviate from our projections by 20% or more each year, our consulting reporting unit likely could incur a goodwill impairment loss. We did not record any goodwill impairment losses during any of the fiscal 2017 and 2016 periods presented. Pursuant to our accounting policy, we will perform our next annual goodwill impairment test as of March 1, 2017.

ResearchandDevelopmentExpenses: Research and development expenses consist primarily of personnel related expenditures. We intend to continue to invest significantly in our research and development efforts because, in our judgment, they are essential to maintaining our competitive position.


	Three Months Ended														Nine Months Ended											Three Months Ended August 31,
	February 28, 2017				Percent Change						February 29, 2016				February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)				Actual				Constant						Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
Research and development⁽¹⁾	February 28, 2017	$	1,330				5%			6%	February 29, 2016		$	1,265	February 28, 2017		$	3,977		5%			6%		$	3,801		$	1,340		1%		0%		$	1,325
Stock-based compensation		191				24%			24%			154				574			27%		27%			452			234			20%		20%		195

Total expenses	$	1,521				7%			8%		$	1,419			$	4,551			7%		8%		$	4,253		$	1,574			4%		3%	$	1,520

*% of Total Revenues*		17%										16%				17%								16%			17%							17%

On a constant currency basis, total research and development expenses increased during the first quarter of fiscal ~~2017 periods presented~~2018 relative to the corresponding prior year ~~periods~~period primarily due to ~~increased employee related expenses resulting from increased headcount, including additional headcount from our recent acquisitions, and~~ higher stock-based compensation.

GeneralandAdministrativeExpenses: General and administrative expenses primarily consist of personnel related expenditures for IT, finance, legal and human resources support functions.


	Three Months Ended														Nine Months Ended											Three Months Ended August 31,
	February 28, 2017				Percent Change						February 29, 2016				February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)				Actual				Constant						Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
General and administrative⁽¹⁾	February 28, 2017	$	209				-20%			-18%	February 29, 2016		$	261	February 28, 2017		$	755		1%			3%		$	746		$	276		0%		-1%		$	277
Stock-based compensation		32				9%			9%			29				104			21%		21%			86			44			16%		16%		38

Total expenses	$	241				-17%			-15%		$	290			$	859			3%		5%		$	832		$	320			2%		1%	$	315

*% of Total Revenues*		3%										3%				3%								3%			3%							4%

~~Fiscal~~~~Third~~~~Quarter~~~~2017~~~~Compared~~to~~Fiscal~~~~Third~~~~Quarter~~~~2016:~~On a constant currency basis, total general and administrative expenses ~~decreased~~increased during the ~~third~~first quarter of fiscal ~~2017~~2018 relative to the corresponding prior year period due primarily ~~to lower professional services expenses, primarily legal related expenses, partially offset by increased employee related expenses attributable to higher headcount.~~

~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2017~~~~Compared~~to~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2016:~~ ~~On a constant currency basis, total general and administrative expenses during the first nine months of fiscal 2017 increased due~~ to increased employee related expenses ~~resulting from increased~~associated with higher headcount and higher stock-based ~~compensation.~~compensation expenses, partially offset by lower professional services expenses that were primarily legal related.

AmortizationofIntangibleAssets: Substantially all of our intangible assets are acquired through our business combinations. We amortize our intangible assets over, and monitor the appropriateness of, the estimated useful lives of these assets. We also periodically review these intangible assets for potential impairment based upon relevant facts and circumstances. Note 5 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report has additional information regarding our intangible assets and related amortization.


	Three Months Ended														Nine Months Ended											Three Months Ended August 31,
	February 28, 2017				Percent Change						February 29, 2016				February 28, 2017			Percent Change					February 29, 2016						Percent Change
(Dollars in millions)				Actual				Constant						Actual					Constant			2017	February 29, 2016				Actual			Constant		2016
Developed technology	February 28, 2017	$	182				36%			36%	February 29, 2016		$	134	February 28, 2017		$	462		8%			8%		$	427		$	190		40%		40%		$	136
SaaS, PaaS and IaaS agreements and related relationships		103				94%			94%			53				251			57%		57%			160			151			140%		140%		63
Software support agreements and related relationships		31				-67%			-67%			93				94			-68%		-68%			297			31			-3%		-3%		32
Other		81				-37%			-37%			128				203			-49%		-49%			399			39			-51%		-51%		80

Total amortization of intangible assets	$	397				-3%			-3%		$	408			$	1,010			-21%		-21%		$	1,283		$	411			32%		32%	$	311

Amortization of intangible assets ~~decreased~~increased during the first quarter of fiscal ~~2017 periods presented~~2018 relative to the corresponding prior year ~~periods~~period due to ~~a reduction in expenses associated with certain of our intangible assets that became fully amortized, partially offset by~~ additional amortization from intangible assets that we acquired in connection with our recent acquisitions, ~~including those associated with~~primarily our acquisition of NetSuite.

AcquisitionRelatedandOtherExpenses: Acquisition related and other expenses consist of personnel related costs and stock-based compensation for transitional and certain other employees, integration related professional services, and certain business combination adjustments including certain adjustments after the measurement period has ended and certain other operating items, net. Stock-based compensation expenses included in acquisition related and other expenses resulted from unvested restricted stock-based awards and stock options assumed from acquisitions whereby vesting was accelerated upon termination of the employees pursuant to the original terms of those restricted stock-based awards and stock options.


	Three Months Ended														Nine Months Ended													Three Months Ended August 31,
	February 28, 2017				Percent Change						February 29, 2016				February 28, 2017				Percent Change					February 29, 2016								Percent Change
(Dollars in millions)				Actual				Constant						Actual						Constant			2017	February 29, 2016					Actual				Constant		2016
Transitional and other employee related costs	February 28, 2017	$	15				98%			98%	February 29, 2016		$	8	February 28, 2017			$	31		-22%			-21%			$	40			$	9		15%		12%		$	8
Stock-based compensation		22				*			*			—				33				977%		977%			3				1				*		*		—
Professional fees and other, net		(2	)			-164%			-170%			1				26				176%		178%			10				3				-33%		-33%		5
Business combination adjustments, net		(5	)			-453%			-487%			2				(6	)			65%		59%			(18	)			(1	)			-256%		-239%		1

Total acquisition related and other expenses	$	30				187%			174%		$	11			$	84				141%		144%		$	35			$	12				-17%		-17%	$	14

On a constant currency basis, ~~the increases in~~ acquisition related and other expenses ~~during~~decreased in the first quarter of fiscal ~~2017 periods presented relative to the corresponding prior year periods were~~2018 primarily due to ~~higher stock compensation expenses as a result~~lower professional fees and the favorable impacts of our acquisition of NetSuite. In addition, during the first nine months of fiscal 2016, we recognized an acquisition related benefit of $19 million, which decreased acquisition related and other expenses during this period.business combination adjustments.

RestructuringExpenses: Restructuring expenses resulted from the execution of management approved restructuring plans that were generally developed to improve our cost structure and/or operations, often in conjunction with our acquisition integration strategies. Restructuring expenses ~~primarily~~ consist of employee severance costs and may also include charges for duplicate facilities and other contract termination costs to improve our cost structure prospectively. For additional information regarding our restructuring plans, see Note 76 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report and Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form10-K for the fiscal year ended May 31, ~~2016.~~2017.


	Three Months Ended											Nine Months Ended								Three Months Ended August 31,
	February 28, 2017				Percent Change				February 29, 2016			February 28, 2017		Percent Change				February 29, 2016					Percent Change
(Dollars in millions)				Actual			Constant				Actual				Constant		2017				Actual			Constant		2016
Restructuring expenses		$	161			39%		42%		$	115		$	346		18%		21%	$	293		$	124		25%		22%	$	99

Restructuring expenses in the first quarter of fiscal 2018 and 2017 ~~periods presented~~ primarily related to our 2017 Restructuring Plan. ~~Restructuring expenses in the fiscal 2016 periods presented primarily related to our 2015 Restructuring Plan, which is complete.~~ Our management approved, committed to and initiated ~~these plans~~the 2017 Restructuring Plan in order to restructure and further improve efficiencies in our operations. In the first quarter of fiscal 2018, our management supplemented the 2017 Restructuring Plan in to reflect additional actions that we expect to take. The total estimated restructuring costs associated with the 2017 Restructuring Plan are up to ~~$615 million~~$1.1 billion and will be recorded to the restructuring expense line item within our condensed consolidated statements of operations as they are incurred. The total estimated remaining restructuring costs associated with the 2017 Restructuring Plan were approximately ~~$252~~$475 million as of ~~February 28,~~August 31, 2017 and the majority of the remaining costs are expected to be incurred through the end of fiscal 2018. Our estimated costs are subject to change in future periods.

The majority of the initiatives undertaken by our 2017 Restructuring Plan were effected to implement our continued move toward developing, marketing and selling our cloud-based offerings. These initiatives impacted certain of our sales and marketing and research and development operations that supported ouron-premise business. Cost savings that are expected to be realized pursuant to our 2017 Restructuring Plan initiatives are primarily expected to be offset by investments in resources and geographies that best address the development, marketing and sale of our cloud-based offerings as customer preferences pivot to the Oracle Cloud.


	Three Months Ended									Nine Months Ended								Three Months Ended August 31,
	February 28, 2017		Percent Change				February 29, 2016			February 28, 2017		Percent Change				February 29, 2016					Percent Change
(Dollars in millions)			Actual		Constant				Actual				Constant		2017				Actual			Constant		2016
Interest expense	$	450		25%		25%		$	360		$	1,317		19%		19%	$	1,105		$	469		13%		13%	$	416

Interest expense increased in the first quarter of fiscal ~~2017 periods presented~~2018, relative to the ~~corresponding prior year periods~~first quarter of fiscal 2017, primarily due to higher average borrowings resulting from our issuance of $14.0 billion of senior notes in July 2016. ~~These increases~~This increase in interest expense during the first quarter of fiscal ~~2017 periods presented were~~2018 was partially offset by ~~reductions~~a reduction in interest expense resulting from the maturity and repayment of ~~$2.0~~$1.0 billion of floating rate senior notes in January 2016. See Recent Financing Activities below and Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our fiscal 2017 borrowings.July 2017.

Non-OperatingIncome,net: Non-operating income, net consists primarily of interest income, net foreign currency exchange gains (losses), the noncontrolling interests in the net profits of our majority-owned subsidiaries (primarily 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.


	Three Months Ended														Nine Months Ended													Three Months Ended August 31,
	February 28, 2017				Percent Change						February 29, 2016				February 28, 2017				Percent Change					February 29, 2016								Percent Change
(Dollars in millions)				Actual				Constant						Actual						Constant			2017	February 29, 2016					Actual				Constant		2016
Interest income	February 28, 2017	$	197				39%			39%	February 29, 2016		$	141	February 28, 2017			$	578		51%			52%			$	382			$	257		45%		45%			$	177
Foreign currency losses, net		(20	)			30%			29%			(15	)			(102	)			50%		64%			(68	)			(4	)			-65%		-70%		(13	)
Noncontrolling interests in income		(20	)			44%			44%			(36	)			(95	)			-1%		-1%			(95	)			(47	)			32%		32%		(35	)
Other income (loss), net		32				227%			227%			(25	)			56				242%		242%			(40	)			27				37%		37%		19

Total non-operating income, net	$	189				190%			187%		$	65			$	437				144%		141%		$	179			$	233				57%		57%	$	148

On a constant currency basis, ournon-operating income, net for the first quarter of fiscal 2018 increased, relative to the first quarter of fiscal 2017, ~~periods presented increased~~ primarily due to higher interest income resulting from higher cash, cash equivalent and short-term investment balances and higher interest rates. In addition, we incurred higher other income, net during the fiscal 2017 periods presented related to investment gains for our deferred compensation plan investments that we held and classified as trading in comparison to net losses for such investments during the fiscal 2016 periods presented. The aforementioned favorable movements in~~non-operating~~ ~~income, net during the fiscal 2017 periods presented were partially offset by higher foreign currency losses, net during the fiscal 2017 periods presented.~~

ProvisionforIncomeTaxes: 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 certain earnings considered as indefinitely reinvested in foreign operations, state taxes, the U.S. research and development tax credit, settlements with tax authorities, the tax effects of stock-based compensation and the U.S. domestic production activity deduction. In addition, beginning in fiscal 2017, the provision for income taxes also differs from the tax computed at the U.S. federal statutory tax rate due to tax effects of stock-based compensation (refer to Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional discussion). Future effective tax rates could be adversely affected by an unfavorable shift of earnings weighted to jurisdictions with higher tax rates, by unfavorable changes in tax laws and regulations, or by adverse rulings in tax related litigation, or by shortfalls in stock-based compensation realized by employees relative to stock-based compensation that was recorded for book purposes, among others.


	Three Months Ended												Nine Months Ended											Three Months Ended August 31,
	February 28, 2017				Percent Change				February 29, 2016				February 28, 2017				Percent Change				February 29, 2016						Percent Change
(Dollars in millions)				Actual			Constant					Actual						Constant		2017	February 29, 2016				Actual			Constant		2016
Provision for income taxes	February 28, 2017	$	459			-22%		-22%	February 29, 2016		$	590	February 28, 2017			$	1,653		2%		2%		$	1,623		$	375		-31%		-31%		$	541

*Effective tax rate*		17.0%								21.6%				21.3	%							21.0%			14.5%							22.8%

~~Fiscal~~~~Third~~~~Quarter~~~~2017~~~~Compared~~to~~Fiscal~~~~Third~~~~Quarter~~~~2016:~~ ~~Provision for income taxes in the third quarter of fiscal 2017 decreased relative to the corresponding prior year period due to the favorable tax effects of excess tax benefits~~

recognized on stock-based compensation expense during the third quarter of fiscal 2017 and net favorable changes relating to unrecognized tax benefits from audit settlements, statute of limitation releases, and other events during the third quarter of fiscal 2017. These favorable impacts to our third quarter of fiscal 2017 provision for income taxes were partially offset by an unfavorable jurisdictional mix of earnings during fiscal 2017 relative to the corresponding prior year period.

~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2017~~~~Compared~~to~~First~~~~Nine~~~~Months~~~~Fiscal~~~~2016:~~Provision for income taxes in the first ~~nine months~~quarter of fiscal 2018 decreased, relative to the first quarter of fiscal 2017 ~~increased relative~~in substantial part to the corresponding prior year period due to net unfavorable changes relating to unrecognized tax benefits from audit settlements, statute of limitation releases, and other events, as well as an unfavorable jurisdictional mix of earnings. These unfavorable movements were substantially offset by the favorable impact of excess tax benefits recognized ~~for~~on stock-based compensation expense and a favorable change in jurisdictional mix of our earnings recognized in the first quarter of fiscal ~~2017, which were not available in~~2018. This favorable impact was partially offset by higher income before provision for income tax during the first quarter of fiscal ~~2016.~~2018.


(Dollars in millions)	February 28, 2017		Change		May 31, 2016		August 31, 2017		Change		May 31, 2017
Working capital	$	50,221		7%	$	47,105	$	53,109		6%	$	50,337
Cash, cash equivalents and marketable securities	$	59,352		6%	$	56,125	$	66,897		1%	$	66,078

Workingcapital: The increase in working capital as of ~~February 28,~~August 31, 2017 in comparison to May 31, ~~2016~~2017 was primarily due to ~~our issuance of $14.0 billion of long-term senior notes in July 2016,~~ the favorable impacts to our net current assets resulting from our net income during the first ~~nine months~~quarter of fiscal ~~2017~~2018 and ~~cash~~ proceeds from stock option exercises. These favorable working capital movements were partially offset by cash used for ~~acquisitions, including our $9.1 billion acquisition of NetSuite in the second quarter of fiscal 2017, cash used for~~ repurchases of our common stock and cash used to pay dividends to our stockholders ~~and cash used for capital expenditures.~~during the first quarter of fiscal 2018. Our working capital may be impacted by some or all of the aforementioned factors in future periods, the amounts and timing of which are variable.

Cash,cashequivalentsandmarketablesecurities: Cash and cash equivalents primarily consist of deposits held at major banks,Tier-1 commercial paper and other securities with original maturities of 90 days or less. Marketable securities consist ofTier-1 commercial paper debt securities, corporate debt securities and certain other securities. The increase in cash, cash equivalents and marketable securities at ~~February 28,~~August 31, 2017 in comparison to May 31, ~~2016~~2017 was primarily due to cash inflows generated by our operations ~~during the first nine months of fiscal 2017, $9.8 billion of cash inflows, net of repayments, from fiscal 2017 debt issuances,~~ and cash inflows from stock option ~~exercises. These cash inflows~~exercises during the first quarter of fiscal 2018 and were partially offset by certain cash outflows, ~~for acquisitions, including our acquisition~~primarily the repayment of ~~NetSuite,~~$4.8 billion of borrowings, repurchases of our common stock, payments of cash dividends to our stockholders and cash used for capital expenditures. Cash, cash equivalents and marketable securities included ~~$52.2~~$58.3 billion held by our foreign subsidiaries as of ~~February 28,~~August 31, 2017, a significant portion of which was generated from the earnings of these foreign subsidiaries that we consider as indefinitely reinvested in our foreign operations outside the United States. These undistributed earnings that are considered as indefinitely reinvested overseas would be subject to U.S. income tax if repatriated to the United States. The amount of cash, cash equivalents and marketable securities that we report in U.S. Dollars for a significant portion of the cash, cash equivalents and marketable securities balances held by our foreign subsidiaries is subject to translation adjustments caused by changes in foreign currency exchange rates as of the end of each respective reporting period (the offset to which is substantially recorded to accumulated other comprehensive loss in our condensed consolidated balance sheets and is also presented as a line item in our condensed consolidated statements of comprehensive income included elsewhere in this Quarterly Report). As the U.S. Dollar ~~strengthened~~generally weakened against certain major international currencies during the first ~~nine months of~~quarter fiscal ~~2017,~~2018, the amount of cash, cash equivalents and marketable securities that we reported in U.S. Dollars for these subsidiaries ~~decreased~~increased on a net basis as of ~~February 28,~~August 31, 2017 relative to what we would have reported using constant currency rates from ~~our~~the May 31, ~~2016~~2017 balance sheet date.

Days sales outstanding, which we calculate by dividing period end accounts receivable by average daily sales for the quarter, was 3635 days at ~~February 28,~~August 31, 2017 compared with 4644 days at May 31, ~~2016.~~2017. The days sales outstanding calculation excludes the impact of any revenue adjustments resulting from business combinations

that reduced our acquired cloud ~~SaaS~~ and ~~PaaS obligations,~~on-premise software ~~license updates and product support obligations and hardware support~~ obligations to fair value. The decline in days sales outstanding was primarily due to strong collections in our first nine months of fiscal 2017 and seasonality resulting in a large volume of software license, hardware products and software support balances outstanding as of May 31, 2016.


	Nine Months Ended								Three Months Ended August 31,
(Dollars in millions)	February 28, 2017			Change		February 29, 2016			2017			Change		2016
Net cash provided by operating activities	$	9,660			-2%	$	9,892		$	6,566			12%	$	5,875
Net cash used for investing activities	$	(15,648	)		289%	$	(4,026	)	$	(1,818	)		-65%	$	(5,203	)
Net cash provided by (used for) financing activities	$	5,799			149%	$	(11,750	)
Net cash (used for) provided by financing activities									$	(5,441	)		171%	$	7,712

Cashflowsfromoperatingactivities: Our largest source of operating cash flows is cash collections from our customers following the purchase and renewal of their software license updates and product support agreements. Payments from customers for these support agreements are generally received near the beginning of the contracts’ terms, which are generally one year in length. Over the course of a fiscal year, we also have historically generated cash from the sales of new software licenses, cloud SaaS, PaaS and IaaS offerings, hardware ~~products, hardware support arrangements~~offerings and services. Our primary uses of cash from operating activities are for employee related expenditures, material and manufacturing costs related to the production of our hardware products, taxes and leased facilities.

Net cash provided by operating activities ~~decreased slightly~~increased during the first ~~nine months~~quarter of fiscal ~~2017~~2018 due primarily to ~~unfavorable working capital movements~~higher net income during the first ~~nine months~~quarter of fiscal ~~2017 including an increase in cash used to purchase inventories and a decrease in unearned software license updates and product support revenues~~2018 relative to the ~~amount of such revenue recognized during the first nine months of fiscal 2017, each in relation to the~~ corresponding ~~movements in the first nine months of fiscal 2016.~~prior year period.

Cashflowsfrominvestingactivities: The changes in cash flows from investing activities primarily relate to our acquisitions, the timing of our purchases, maturities and sales of our investments in marketable debt securities and investments in capital and other assets, including certain intangible assets, to support our growth.

Net cash used for investing activities ~~increased~~decreased in the first ~~nine months~~quarter of fiscal ~~2017~~2018 relative to the first ~~nine months~~quarter of fiscal ~~2016~~2017 primarily due to ~~an increase in cash used for acquisitions, net of cash acquired, an increase~~a decrease in cash used to purchase marketable securities and other investments, net of proceeds received from sales and maturities and ~~increased capital expenditures primarily related to fiscal 2017 real estate purchases.~~a decrease in cash used for acquisitions, net of cash acquired.

Cashflowsfromfinancingactivities: The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments as well as stock repurchases, dividend payments and net proceeds related to employee stock programs.

Net cash ~~provided by~~used in financing activities in the first ~~nine months~~quarter of fiscal ~~2017~~2018 was ~~$5.8~~$5.4 billion in comparison to net cash ~~used for~~provided by financing activities of ~~$11.8~~$7.7 billion during the first ~~nine months~~quarter of fiscal ~~2016.~~2017. The change in financing activities cash flows ~~during~~in the first ~~nine months~~quarter of fiscal ~~2017 in comparison~~2018 relative to the corresponding prior year period was primarily related to ~~borrowing activities, net of~~ debt ~~repayments,~~related cash flows for which we ~~received $9.8~~had debt repayments of $4.8 billion in the first quarter of fiscal 2018 in comparison to $10.2 billion of cash inflows form borrowings, net of repayments, in the first quarter of fiscal 2017. These unfavorable financing cash ~~proceeds~~flows during the first ~~nine months~~quarter of fiscal ~~2017 in comparison~~2018 relative to ~~$2.0 billion of net~~the corresponding prior year period were partially offset by higher cash inflows from stock option exercises and lower cash outflows related to ~~debt settlements~~stock repurchases, each during the first ~~nine months~~quarter of fiscal ~~2016. In addition, we reduced our stock repurchase activity during the first nine months of fiscal 2017, which decreased our cash used~~2018 relative to the corresponding prior year period.

Freecashflow: To supplement our statements of cash flows presented on a GAAP basis, we usenon-GAAP measures of cash flows on a trailing4-quarter basis to analyze cash flows generated from our operations. We believe that free cash flow is also useful as one of the bases for comparing our performance with our competitors. The presentation ofnon-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 flow as follows:


	Trailing 4-Quarters Ended								Trailing4-Quarters Ended August 31,
(Dollars in millions)	February 28, 2017			Change		February 29, 2016			2017			Change		2016
Net cash provided by operating activities	$	13,453			-6%	$	14,252		$	14,817			8%	$	13,679
Capital expenditures		(1,676	)		4%		(1,606	)		(2,195	)		111%		(1,042	)

Free cash flow	$	11,777			-7%	$	12,646		$	12,622			0%	$	12,637

Net income	$	8,917				$	8,844		$	9,713				$	8,986

Free cash flow as percent of net income		132%					143%			130%					141%

Long-TermCustomerFinancing: We offer certain of our customers the option to acquire our software products, hardware products and services offerings through separate long-term payment contracts. We generally sell these contracts that we have financed for our customers on anon-recourse basis to financial institutions within 90 days of the contracts’ dates of execution. We generally 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. We financed ~~$509~~$191 million and ~~$548~~$107 million, respectively, or approximately ~~13%~~20% and ~~12%~~10%, respectively, of our new software licenses revenues in the first ~~nine months~~quarters of fiscal ~~2017~~2018 and ~~2016, and $75 million and $102 million, respectively, or approximately 5% and 6%, respectively, of our hardware products revenues in the first nine months of fiscal 2017 and 2016.~~2017.

~~Cash Dividends~~: In March 2017, our Board of Directors declared a quarterly cash dividend of $0.19 per share of our outstanding common stock, an increase of $0.04 per share over the prior period dividend. The dividend is payable on April 26, 2017 to stockholders of record as of the close of business on April 12, 2017. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

~~Senior Notes: In July 2016, we issued $14.0 billion of senior notes comprised of the following:~~

We issued the senior notes for general corporate purposes, which may include stock repurchases, payment of cash dividends on our common stock, repayment of indebtedness and future acquisitions. Additional details regarding the senior notes are included in Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

~~Other Fiscal 2017 Borrowings Activities~~: In connection with our acquisition of NetSuite in the second quarter of fiscal 2017, we assumed $310 million par value of legacy NetSuite convertible notes (NetSuite Debt), which had a fair value of $342 million as of the acquisition date. In December 2016, we repurchased and settled for cash substantially all of the NetSuite Debt (refer to Note 2 and Note 6 of Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report for additional discussion).

~~In the second quarter of fiscal 2017, we assumed $113 million of debt due August 1, 2025 in connection with the acquisition of certain land and buildings.~~

ContractualObligations: During the first ~~nine months~~quarter of fiscal ~~2017,~~2018, there were no significant changes to our estimates of future payments under our fixed contractual obligations and commitments as presented in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form10-K for our fiscal year ended May 31, 2016 other than our issuance of $14.0 billion of senior notes. Additional details regarding our issuance of $14.0 billion of senior notes are included in Note 6 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.2017.

We believe that our current cash, cash equivalents and marketable securities and cash generated from operations will be sufficient to meet our working capital, capital expenditures and contractual obligation requirements. In

addition, we believe that we could fund ~~our pending and~~any future acquisitions, dividend payments and repurchases of common stock or debt with our internally available cash, cash equivalents and marketable securities, cash generated from operations, additional borrowings or from the issuance of additional securities.

Off-BalanceSheetArrangements: We do not have anyoff-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Our stock-based compensation program is a key component of the compensation package we provide to attract and retain certain of our talented employees and align their interests with the interests of existing stockholders.

We recognize that restricted stock-based awards and stock options dilute existing stockholders and have sought to control the number of stock-based awards granted while providing competitive compensation packages. Consistent with these dual goals, our cumulative potential dilution since June 1, ~~2013~~2014 has been a weighted-average annualized rate of ~~1.4%~~1.2% per year. The potential dilution percentage is calculated as the average annualized new restricted stock-based awards or stock options granted and assumed, net of restricted stock-based awards and stock options forfeited by employees leaving the company, divided by the weighted-average outstanding shares during the calculation period. This maximum potential dilution will only result if all restricted stock-based awards vest and all stock options are exercised. Of the outstanding stock options at ~~February 28,~~August 31, 2017, which generally have aten-year exercise period, ~~less than 1%~~14.9% have exercise prices higher than the market price of our common stock on such date. In recent years, our stock repurchase program has more than offset the dilutive effect of our stock-based compensation ~~program; however,~~program. However, we have recently reduced the level of our stock repurchases and we may ~~continue to reduce~~modify the levels of our stock repurchases in the future asdepending on a number of factors, including the amount of cash we ~~may use our~~have available ~~cash~~ for acquisitions, to pay dividends, to repay or repurchase indebtedness or for other purposes. At ~~February 28,~~August 31, 2017, the maximum potential dilution from all outstanding restricted stock-based awards and unexercised stock options, regardless of when granted and regardless of whether vested or unvested and including stock options where the strike price is higher than the market price as of such date, was ~~10.5%~~10.8%.

For information with respect to recent accounting pronouncements, if any, and the impact of these pronouncements on our consolidated financial statements, if any, see Note 1 of Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

There were no significant changes to our quantitative and qualitative disclosures about market risk during the first ~~nine~~three months of fiscal ~~2017.~~2018. Please refer to Part II, Item 7A. Quantitative and Qualitative Disclosures about

Market Risk included in our Annual Report onForm10-K for our fiscal year ended May 31, ~~2016~~2017 for a more complete discussion of the market risks we encounter.

EvaluationofDisclosureControlsandProcedures: Based on our management’s evaluation (with the participation of our Principal Executive Officers, one of whom is our Principal Financial Officer), as of the end of the period covered by this Quarterly Report, our Principal Executive Officers have concluded that our “disclosure controls and procedures” (as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management (including our Principal Executive Officers) as appropriate to allow timely decisions regarding required disclosure.

ChangesinInternalControloverFinancialReporting: There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

InherentLimitationsonEffectivenessofControls: Our management, including our Principal Executive Officers (one of whom is our Principal Financial Officer), believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

The material set forth in Note 1110 (pertaining to information regarding contingencies related to our income taxes) and Note 1413 (pertaining to information regarding legal contingencies) of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form10-Q is incorporated herein by reference.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form10-K for our fiscal year ended May 31, ~~2016.~~2017. The risks discussed in our Annual Report on Form10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future.

Our Board of Directors has approved a program for us to repurchase shares of our common stock. On March 15, 2016, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $10.0 billion. As of ~~February 28,~~August 31, 2017, approximately ~~$5.8~~$4.8 billion remained available for stock repurchases pursuant to our stock repurchase program.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price, and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to aRule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

The following table summarizes the stock repurchase activity for the three months ended ~~February 28,~~August 31, 2017 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:


Delaware		54-2185193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 Oracle Parkway Redwood City, California		94065
(Address of principal executive offices)		(Zip Code)


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐
(Do not check if a smaller reporting company)
Emerging growth company ☐


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)		3

	Condensed Consolidated Balance Sheets as of ~~February 28,~~August 31, 2017 and May 31, ~~2016~~2017		3

	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016		4

	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016		5

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~February 28,~~August 31, 2017 and ~~February 29,~~ 2016		6

	Notes to Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2824

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5141

Item 4.	Controls and Procedures		5241

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		5343

Item 1A.	Risk Factors		5343

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		53

~~Item 5.~~	~~Other Information~~		5343

Item 6.	Exhibits		5444

	Signatures		5545


	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net				Weighted Average Useful Life⁽¹⁾
(in millions)	May 31, 2016		Additions		February 28, 2017		May 31, 2016			Expense			February 28, 2017			May 31, 2016		February 28, 2017		Weighted Average Useful Life⁽¹⁾
Developed technology	$	3,661	$	1,645	$	5,306	$	(1,876	)	$	(462	)	$	(2,338	)	$	1,785	$	2,968	7 years
SaaS, PaaS and IaaS agreements and related relationships		2,034		2,084		4,118		(704	)		(251	)		(955	)		1,330		3,163	10 years
Software support agreements and related relationships		2,419		—		2,419		(1,287	)		(94	)		(1,381	)		1,132		1,038	—
Other		3,452		126		3,578		(2,756	)		(203	)		(2,959	)		696		619	9 years

Total intangible assets, net	$	11,566	$	3,855	$	15,421	$	(6,623	)	$	(1,010	)	$	(7,633	)	$	4,943	$	7,788	9 years


	Intangible Assets, Gross							Accumulated Amortization									Intangible Assets, Net
(Dollars in millions)	May 31, 2017		Additions & Adjustments, net			August 31, 2017		May 31, 2017			Expense			August 31, 2017			May 31, 2017		August 31, 2017
Developed technology	$	5,397	$	(214	)	$	5,183	$	(2,295	)	$	(190	)	$	(2,485	)	$	3,102	$	2,698
SaaS, PaaS and IaaS agreements and related relationships		4,105		114			4,219		(1,089	)		(151	)		(1,240	)		3,016		2,979
Software support agreements and related relationships		1,565		—			1,565		(559	)		(31	)		(590	)		1,006		975
Other		1,998		18			2,016		(1,443	)		(39	)		(1,482	)		555		534

Total intangible assets, net	$	13,065	$	(82	)	$	12,983	$	(5,386	)	$	(411	)	$	(5,797	)	$	7,679	$	7,186



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



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


(in millions)
Cash and cash equivalents	$	481
Trade receivables, net		32
Other assets		111
Intangible assets		3,157
Goodwill		6,713
Accounts payable and other liabilities		(132	)
Deferred revenues		(163	)
Debt		(342	)
Deferred tax liabilities, net		(777	)

Total	$	9,080


(in millions)	Cloud Software and On-Premise Software			Software License Updates and Product Support			Hardware Support		Consulting			Other, net⁽²⁾		Total Goodwill, net
Balances as of May 31, 2016	$	15,747		$	14,439		$	2,367	$	1,759		$	278	$	34,590
Goodwill from acquisitions		863			—			—		—			7,072		7,935
Goodwill adjustments, net⁽¹⁾		(287	)		(1	)		—		(1	)		268		(21	)

Balances as of February 28, 2017	$	16,323		$	14,438		$	2,367	$	1,758		$	7,618	$	42,504


(in millions)	Cloud and On-Premise Software			Hardware		Services		Total Goodwill, net
Balances as of May 31, 2017	$	38,791		$	2,367	$	1,887	$	43,045
Goodwill adjustments, net⁽¹⁾		(25	)		—		—		(25	)

Balances as of August 31, 2017	$	38,766		$	2,367	$	1,887	$	43,020


			February 28, 2017
(Dollars in millions)	Date of Issuance		Amount			Effective Interest Rate
$4,250, 1.90%, due September 2021		July 2016	$	4,250			1.94	%
$2,500, 2.40%, due September 2023		July 2016		2,500			2.40	%
$3,000, 2.65%, due July 2026		July 2016		3,000			2.69	%
$1,250, 3.85%, due July 2036		July 2016		1,250			3.85	%
$3,000, 4.00%, due July 2046		July 2016		3,000			4.00	%

Total fixed rate senior notes			$	14,000

Unamortized discount/issuance costs				(63	)

Total fixed rate senior notes, net			$	13,937


	Location and Amount of Gain (Loss) Recognized in Income on Derivative											Location and Amount of Gain (Loss) on Hedged Item Recognized in Income Attributable to Risk Being Hedged
		Three Months Ended					Nine Months Ended						Three Months Ended					Nine Months Ended
(in millions)		February 28, 2017			February 29, 2016		February 28, 2017			February 29, 2016			February 28, 2017		February 29, 2016			February 28, 2017		February 29, 2016
Interest rate swap agreements designated as fair value hedges	Interest expense	$	(31	)	$	76	$	(99	)	$	90	Interest expense	$	31	$	(76	)	$	99	$	(90	)


	Location and Amount of Gain (Loss) Recognized in Income on Derivative					Location and Amount of Gain (Loss) on Hedged Item Recognized in Income Attributable to Risk Being Hedged
		Three Months Ended August 31,					Three Months Ended August 31,
(in millions)		2017		2016			2017		2016
Interest rate swap agreements designated as fair value hedges	Interest expense	$	—	$	9	Interest expense	$	—	$	(9	)


(in millions, except per share amounts)	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
December 1, 2016—December 31, 2016		4.4	$	39.42		4.4	$	6,167.4
January 1, 2017—January 31, 2017		4.2	$	39.35		4.2	$	6,000.8
February 1, 2017—February 28, 2017		3.9	$	41.25		3.9	$	5,841.7

Total		12.5	$	39.96		12.5


	ORACLE CORPORATION

Date: ~~March 17,~~September 18, 2017	By:	/s/ SAFRA A. CATZ
		Safra A. Catz
		Chief Executive Officer and Director (Principal Executive and Financial Officer)

Date: ~~March 17,~~September 18, 2017	By:	/s/ WILLIAM COREY WEST
		William Corey West
		Executive Vice President, Corporate Controller and Chief Accounting Officer