10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended August 31, 2007

OR

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

For the transition period from            to           .

Commission file number: 000-51788

Oracle Corporation

(Exact name of registrant as specified in its charter)

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, including zip code)

(650) 506-7000

(Registrant’s telephone number, including area code)

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 x     NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer x Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o     NO x

The number of shares of registrant’s common stock outstanding as of September 24, 2007 was: 5,121,310,048.

ORACLE CORPORATION

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

			Page
	PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of August 31, 2007 and May 31, 2007		1
		Condensed Consolidated Statements of Operations for the Three Months Ended August 31, 2007 and 2006		2
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2007 and 2006		3
		Notes to Condensed Consolidated Financial Statements		4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		39
	Item 4.	Controls and Procedures		41
	PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings		42
	Item 1A.	Risk Factors		42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
	Item 6.	Exhibits		42
		Signatures		43
EXHIBIT 10.08
EXHIBIT 31.01
EXHIBIT 31.02
EXHIBIT 32.01

PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

ORACLE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

As of August 31, 2007 and May 31, 2007
(Unaudited)

	August 31,		May 31,
(in millions, except per share data)	2007		2007
ASSETS
Current assets:
Cash and cash equivalents	$	6,455	$	6,218
Marketable securities		1,288		802
Trade receivables, net of allowances of $283 and $306		2,735		4,074
Other receivables		284		515
Deferred tax assets		981		968
Prepaid expenses and other current assets		430		306
Total current assets		12,173		12,883
Non-current assets:
Property, net		1,633		1,603
Intangible assets: software support agreements and related relationships, net		2,985		3,002
Intangible assets: others, net		2,950		2,962
Goodwill		13,544		13,479
Deferred tax assets		385		48
Other assets		645		595
Total non-current assets		22,142		21,689
Total assets	$	34,315	$	34,572
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	2	$	1,358
Accounts payable		298		315
Income taxes payable		—		1,237
Accrued compensation and related benefits		1,090		1,349
Accrued restructuring		188		201
Deferred revenues		4,121		3,492
Other current liabilities		1,098		1,435
Total current liabilities		6,797		9,387
Non-current liabilities:
Notes payable and long-term debt, net of current portion		6,236		6,235
Income taxes payable		1,291		—
Deferred tax liabilities		1,121		1,121
Accrued restructuring		251		258
Deferred revenues		270		93
Other long-term liabilities		564		559
Total non-current liabilities		9,733		8,266
Commitments and contingencies
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: 5,117 shares at August 31, 2007 and 5,107 shares at May 31, 2007		10,759		10,293
Retained earnings		6,619		6,223
Accumulated other comprehensive income		407		403
Total stockholders’ equity		17,785		16,919
Total liabilities and stockholders’ equity	$	34,315	$	34,572

See notes to condensed consolidated financial statements.

1

ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended August 31, 2007 and 2006
(Unaudited)

	Three Months Ended
	August 31,
(in millions, except per share data)	2007			2006
Revenues:
New software licenses	$	1,087		$	804
Software license updates and product support		2,383			1,941
Software revenues		3,470			2,745
Services		1,059			846
Total revenues		4,529			3,591
Operating expenses:
Sales and marketing		974			750
Software license updates and product support		228			200
Cost of services		931			780
Research and development		652			506
General and administrative		195			157
Amortization of intangible assets		285			198
Acquisition related		47			48
Restructuring		—			9
Total operating expenses		3,312			2,648
Operating income		1,217			943
Interest expense		(94	)		(83	)
Non-operating income, net		77			102
Income before provision for income taxes		1,200			962
Provision for income taxes		360			292
Net income	$	840		$	670
Earnings per share:
Basic	$	0.16		$	0.13
Diluted	$	0.16		$	0.13
Weighted average common shares outstanding:
Basic		5,110			5,217
Diluted		5,217			5,307

See notes to condensed consolidated financial statements.

2

ORACLE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended August 31, 2007 and 2006
(Unaudited)

	Three Months Ended
	August 31,
(in millions)	2007			2006
Cash Flows From Operating Activities:
Net income	$	840		$	670
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		67			59
Amortization of intangible assets		285			198
Deferred income taxes		24			(6	)
Minority interests in income		12			12
Stock-based compensation		101			50
Tax benefits on the exercise of stock options		129			49
Excess tax benefits from stock-based compensation		(82	)		(30	)
In-process research and development		7			43
Net investment gains related to equity securities		—			(15	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in trade receivables, net		1,381			1,040
Decrease in prepaid expenses and other assets		161			86
Decrease in accounts payable and other liabilities		(679	)		(900	)
Decrease in income taxes payable		(301	)		(6	)
Increase in deferred revenues		756			373
Net cash provided by operating activities		2,701			1,623
Cash Flows From Investing Activities:
Purchases of marketable securities and investments		(896	)		(2,430	)
Proceeds from maturities and sales of marketable securities and investments		561			642
Acquisitions, net of cash acquired		(546	)		(225	)
Capital expenditures		(87	)		(49	)
Net cash used for investing activities		(968	)		(2,062	)
Cash Flows From Financing Activities:
Payments for repurchase of common stock		(530	)		(936	)
Proceeds from issuance of common stock		317			162
Payments of debt		(1,361	)		(7	)
Excess tax benefits from stock-based compensation		82			30
Distributions to minority interests		(28	)		(25	)
Net cash used for financing activities		(1,520	)		(776	)
Effect of exchange rate changes on cash and cash equivalents		24			2
Net increase (decrease) in cash and cash equivalents		237			(1,213	)
Cash and cash equivalents at beginning of period		6,218			6,659
Cash and cash equivalents at end of period	$	6,455		$	5,446
Non-cash financing transactions:
Fair value of stock awards assumed in connection with acquisitions	$	14		$	15
Unsettled repurchases of common stock	$	17		$	64
Debt issued in connection with acquisitions	$	—		$	13

See notes to condensed consolidated financial statements.

3

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)

1.   BASIS OF PRESENTATION

We have prepared the condensed consolidated financial statements included herein, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures 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 Form 10-K for the fiscal year ended May 31, 2007.

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, 2008. Certain prior period balances have been reclassified to conform to the current period presentation. Additionally, there have been no significant changes in new accounting pronouncements or in our critical accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2007 other than the impact of our adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, which affected our Accounting for Income Taxes policy (see Note 9).

2.   NEW ACCOUNTING PRONOUCEMENTS

Fair Value Measurements:  In September 2006, the FASB issued Statement No. 157, Fair Value Measurements. Statement 157 defines fair value, establishes a framework for measuring fair value and expands fair value measurement disclosures. Statement 157 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact of the pending adoption of Statement 157 on our consolidated financial statements.

Fair Value Option for Financial Assets and Financial Liabilities:  In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115, which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities on an instrument-by-instrument basis. Subsequent measurements for the financial assets and liabilities an entity elects to record at fair value will be recognized in earnings. Statement 159 also establishes additional disclosure requirements. Statement 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted provided that the entity also adopts Statement 157. We are currently evaluating the impact of the pending adoption of Statement 159 on our consolidated financial statements.

Accounting for Advanced Payments for Future Research and Development:  In June 2007, the FASB ratified EITF 07-3, Accounting for NonRefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities (EITF 07-3). EITF 07-3 requires that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. EITF 07-3 is effective, on a prospective basis, for fiscal years beginning after December 15, 2007 and will be adopted in the first quarter of fiscal 2009. We are currently evaluating the impact of the pending adoption of EITF 07-3 on our consolidated financial statements.

3.   STOCK-BASED COMPENSATION

We account for share-based payments to employees, including grants of employee stock options and purchases under employee stock purchase plans in accordance with FASB Statement No. 123 (revised 2004), Share-Based

4

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

Payment, which requires that these awards (to the extent they are compensatory) be recognized in our consolidated statements of operations based on their fair values.

As required by Statement 123R, we recognize stock-based compensation expense for awards issued or assumed after June 1, 2006 that are expected to vest. For all awards granted or assumed beginning June 1, 2006, we recognize stock-based compensation expense on a straight-line basis over the service period of the award, which is generally four years. The fair value of the unvested portion of awards granted prior to June 1, 2006 is recognized over the remaining service period using the accelerated expense attribution method, net of estimated forfeitures. In determining whether an award is expected to vest, we use an estimated, forward-looking forfeiture rate based upon our historical forfeiture rates. Stock-based compensation expense recorded using an estimated forfeiture rate is updated for actual forfeitures quarterly. We also consider whether there have been any significant changes in facts and circumstances that would affect our forfeiture rate quarterly. The net effect of forfeiture adjustments based on actual results was an increase to stock-based compensation expense of approximately $9 million for the three months ended August 31, 2007 (nominal for the three months ended August 31, 2006).

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

	Three Months Ended August 31,
	2007		2006
Sales and marketing	$	13	$	10
Software license updates and product support		4		3
Cost of services		4		3
Research and development		28		22
General and administrative		20		12
Subtotal		69		50
Acquisition related charges(1)		32		—
Total	$	101	$	50

⁽¹⁾ Stock-based compensation included in acquisition related charges resulted from unvested options assumed from acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of these options.

We estimate the fair value of our stock awards using the Black-Scholes-Merton option-pricing model, which was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Option valuation models require the input of assumptions, including stock price volatility. Changes in the input assumptions can materially affect the fair value estimates. During the three months ended August 31, 2007 and 2006, the fair value of stock awards was estimated at the date of grant using weighted-average assumptions as follows:

	Three Months Ended
	August 31,
	2007		2006
Expected life (in years)		5.3		5.1
Risk-free interest rate		5.05%		5.14%
Volatility		27%		26%
Dividend yield		—		—
Weighted average fair value at grant date	$	7.10	$	4.88

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ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

The expected life is based on historical exercise patterns and post-vesting termination behavior, the risk-free interest rate is based on United States Treasury instruments and volatility is calculated based on the implied volatility of our longest-term, traded options. We do not currently pay cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

4.   ACQUISITIONS

Fiscal 2008 Acquisition

Agile Software Corporation

We acquired Agile Software Corporation to expand our offering of product life cycle management solutions on July 16, 2007 by means of a merger of Agile with our wholly-owned subsidiary. We have included the financial results of Agile in our consolidated financial results effective July 16, 2007.

The total purchase price for Agile was $492 million which consisted of $471 million in cash paid to acquire the outstanding common stock of Agile, $14 million for the fair value of Agile options assumed and $7 million for transaction costs. In allocating the purchase price based on estimated fair values, we recorded approximately $105 million of goodwill, $198 million of identifiable intangible assets, $184 million of net tangible assets and $5 million of in-process research and development. The preliminary allocation of the purchase price was based upon a preliminary valuation and our estimates and assumptions are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to certain legal matters, income and non-income based taxes and residual goodwill.

Fiscal 2007 Acquisitions

Hyperion Solutions Corporation

On April 13, 2007, we acquired majority ownership of Hyperion Solutions Corporation by means of a cash tender offer and, subsequently, completed a merger of Hyperion with our wholly-owned subsidiary on April 19, 2007. We acquired Hyperion to expand our offerings of enterprise performance management and business intelligence software solutions.

The total purchase price for Hyperion was $3.2 billion which consisted of $3,171 million in cash paid to acquire the outstanding common stock of Hyperion, $51 million for the fair value of Hyperion options assumed and restricted stock awards exchanged and $27 million for acquisition related transaction costs. In allocating the purchase price based on estimated fair values, we recorded approximately $1,620 million of goodwill, $1,460 million of identifiable intangible assets, $113 million of net tangible assets and $56 million of in-process research and development. The preliminary allocation of the purchase price was based upon a preliminary valuation and our estimates and assumptions are subject to change. The primary areas of the purchase price allocation that are not yet finalized relate to certain restructuring liabilities, legal matters, income and non-income based taxes and residual goodwill.

i-flex solutions limited

During fiscal 2007 and fiscal 2006, we acquired interests in and increased our ownership of i-flex solutions limited (Bombay Stock Exchange: IFLX.BO and National Stock Exchange of India: IFLX.NS) to approximately 83% by means of share purchase agreements, an open offer to acquire shares and open market purchases. We acquired a majority ownership in i-flex to expand our offerings of software solutions and services to the financial services industry.

Our cumulative investment in i-flex as of August 31, 2007 was approximately $2.1 billion, which consisted of $2,039 million of cash paid for common stock and $31 million in transaction costs and other expenses. Our

6

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

cumulative investment in i-flex has been allocated to i-flex’s net tangible and identifiable intangible assets based on their estimated fair values as of the respective dates of acquisition of the interests. The minority interest in the net assets of i-flex has been recorded at historical book values. In allocating the purchase price, we recorded approximately $1.6 billion of goodwill, $281 million of identifiable intangible assets, $180 million of net tangible assets and $46 million of in-process research and development.

Other Acquisitions

During the first quarter of fiscal 2008 and fiscal 2007, we acquired several other companies and purchased certain technology and development assets. Our acquisitions during the first quarter of fiscal 2008, excluding Agile, were insignificant. Our other fiscal 2007 acquisitions had a total preliminary purchase price of approximately $1.3 billion, which included cash paid of $1,258 million and the fair value of options assumed of $46 million. We recorded approximately $507 million of goodwill, $574 million of identifiable intangible assets, $174 million of net tangible assets and $49 million of in-process research and development associated with these other fiscal 2007 acquisitions. We have included the effects of these transactions in our results of operations prospectively from the respective dates of the acquisitions. The preliminary purchase price allocations for each of these acquisitions were based upon a preliminary valuation and our estimates and assumptions for certain of these acquisitions are subject to change. The primary areas of the purchase price allocations that are not yet finalized relate to identifiable intangible assets, certain legal matters, income and non-income based taxes and residual goodwill.

Unaudited Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of operations of Oracle, Agile, Hyperion and other collectively significant companies acquired during the first quarter of fiscal 2008 and during fiscal 2007, on a pro forma basis, as though the companies had been combined as of the beginning of each of the periods presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions and any borrowings undertaken to finance these acquisitions had taken place at the beginning of each of the periods presented. The pro forma financial information for the periods presented also includes the business combination accounting effect on historical Agile, Hyperion and other collectively significant companies’ support revenues, amortization charges from acquired intangible assets, stock-based compensation charges for unvested stock awards assumed, adjustments to interest expense and related tax effects.

The unaudited pro forma financial information for the three months ended August 31, 2007 combines the historical results of Oracle for the three months ended August 31, 2007, the historical results of Agile for the period from June 1, 2007 to July 15, 2007, and the business combination accounting effects listed above. The unaudited pro forma financial information for the three months ended August 31, 2006 combines the historical results of Oracle for the three months ended August 31, 2006 and, due to differences in our reporting periods, the historical results of Agile for the three months ended July 31, 2006, the historical results of Hyperion for the three months ended September 30, 2006, the historical results of other collectively significant companies acquired based upon their respective previous reporting periods and the dates that these companies were acquired by us, and the business combination accounting effects listed above.

	Three Months Ended
	August 31,
(in millions, except per share data)	2007		2006
Total revenues	$	4,542	$	3,808
Net income	$	833	$	539
Basic net income per share	$	0.16	$	0.10
Diluted net income per share	$	0.16	$	0.10

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ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

5.   ACQUISITION RELATED CHARGES

Acquisition related charges primarily consist of in-process research and development expenses, integration-related professional services, stock-based compensation expenses and personnel related costs for transitional employees. Stock-based compensation included in acquisition related charges resulted from unvested options assumed from acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of those options.

	Three Months Ended
	August 31,
(in millions)	2007		2006
In-process research and development	$	7	$	43
Transitional employee related costs		6		5
Stock-based compensation		32		—
Professional fees		2		—
Total acquisition related charges	$	47	$	48

6.  NON-OPERATING INCOME, NET

Non-operating income, net consists primarily of interest income, net foreign currency exchange gains, net investment gains related to marketable securities and other investments as well as the minority share in the net profits of i-flex and Oracle Japan.

	Three Months Ended
	August 31,
(in millions)	2007			2006
Interest income	$	74		$	77
Foreign currency gains, net		6			6
Net investment gains related to marketable securities		—			15
Minority interests		(12	)		(12	)
Other		9			16
Total non-operating income, net	$	77		$	102

8

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

7.   GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill, the majority of which is not deductible for tax purposes, by operating segment for the three months ended August 31, 2007, were as follows:

				Software
				License
	New			Updates and
	Software			Product
(in millions)	Licenses			Support			Services			Other(1)			Total
Balance as of May 31, 2007	$	3,169		$	7,122		$	1,505		$	1,683		$	13,479
Goodwill acquired(1)		—			—			—			197			197
Goodwill adjustments(2)		(16	)		(75	)		(9	)		(32	)		(132	)
Balance as of August 31, 2007	$	3,153		$	7,047		$	1,496		$	1,848		$	13,544

(1)	Represents goodwill associated with certain acquisitions that were or will be allocated to our operating segments upon the finalization of our intangible asset valuations.
(2)	Pursuant to business combination accounting rules, goodwill adjustments represent the effect on goodwill of changes to net assets acquired and are primarily attributable to various income tax related adjustments recorded during the first quarter of fiscal 2008.

The changes in intangible assets for the three months ended August 31, 2007 and the net book value of intangible assets at August 31, 2007 were as follows:

	Intangible Assets, Gross						Accumulated Amortization									Net Book Value				Weighted
	May 31,				Aug 31,		May 31,						Aug 31,			May 31,		Aug 31,		Average
(Dollars in millions)	2007		Additions		2007		2007			Expense			2007			2007		2007		Useful Life
Software support agreements and related relationships	$	3,652	$	80	$	3,732	$	(650	)	$	(97	)	$	(747	)	$	3,002	$	2,985		10 years
Developed technology		2,342		108		2,450		(688	)		(120	)		(808	)		1,654		1,642		5 years
Core technology		883		25		908		(254	)		(43	)		(297	)		629		611		5 years
Customer relationships		599		42		641		(85	)		(17	)		(102	)		514		539		9 years
Trademarks		209		1		210		(44	)		(8	)		(52	)		165		158		8 years
Total	$	7,685	$	256	$	7,941	$	(1,721	)	$	(285	)	$	(2,006	)	$	5,964	$	5,935

Total amortization expense related to our intangible assets was $285 million and $198 million for the three months ended August 31, 2007 and 2006, respectively. As of August 31, 2007, estimated future amortization expense related to intangible assets is $871 million for the remainder of fiscal 2008, $1.1 billion in fiscal 2009, $1.0 billion in fiscal 2010, $794 million in fiscal 2011, $656 million in fiscal 2012, $506 million in fiscal 2013 and $940 million thereafter.

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ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

8.   DEFERRED REVENUES

Deferred revenues consisted of the following:

	August 31,		May 31,
(in millions)	2007		2007
Software license updates and product support	$	3,682	$	3,079
Services		287		279
New software licenses		152		134
Deferred revenues, current		4,121		3,492
Deferred revenues, non-current		270		93
Total deferred revenues	$	4,391	$	3,585

Deferred software license updates and product support revenues represent customer payments made in advance for annual support contracts. Software license updates and product support are typically billed on a per annum basis in advance and revenue is recognized ratably over the support period. The deferred software license updates and product support revenues are typically highest at the end of our first fiscal quarter due to the collection of cash from the large volume of service contracts that are sold or renewed in the fiscal quarter ending in May of each year due to the peak in sales surrounding our fiscal year-end. Deferred service revenues include prepayments for consulting, On Demand and education services. Revenue for these services is recognized as the services are performed. Deferred new software license revenues typically result from undelivered products or specified enhancements, customer specific acceptance provisions, software license transactions that cannot be segmented from consulting services or certain extended payment term arrangements. Deferred revenues, non-current are comprised primarily of deferred software license updates and product support revenues to be delivered beyond the next 12 months.

In connection with purchase price allocations related to our acquisitions, we have estimated the fair values of the support obligations assumed. The estimated fair values of the support obligations assumed were determined using a cost-build up approach. The cost-build up approach determines fair value by estimating the costs relating 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 the support obligations. These fair value adjustments reduce the revenues recognized over the support contract term of our acquired contracts and, as a result, we did not recognize software license updates and product support revenues related to support contracts assumed in business acquisitions in the amount of $64 million and $70 million, which would have been otherwise recorded by the acquired entities, for the three months ended August 31, 2007 and 2006 respectively.

9.   INCOME TAXES

The effective tax rate in 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. The provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to state taxes and earnings considered as indefinitely reinvested in foreign operations. The effective tax rate was 30.0% and 30.4% for the three months ended August 31, 2007 and 2006, respectively.

On June 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with Statement 109, Accounting for Income Taxes. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second

10

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

The total amount of gross unrecognized tax benefits as of June 1, 2007 (the date of adoption of FIN 48) was $1.3 billion. The adoption of FIN 48 resulted in an increase to our retained earnings of $4 million. In addition, as of the date of adoption, $612 million of unrecognized benefits would affect our effective tax rate if realized. We recognize interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations and the gross amount of interest and penalties accrued as of the date of adoption was $286 million.

Domestically, U.S. federal and state taxing authorities are currently examining income tax returns of Oracle and various acquired entities for years through fiscal 2006. Many issues are at an advanced stage in the examination process, the most significant of which include the deductibility of certain royalty payments, issues related to certain capital gains and losses, Foreign Sales Corporation/Extraterritorial Income exemptions, stewardship deductions and foreign tax credits taken, or are related to years with expiring statutes of limitation. With all of these domestic audit issues considered in the aggregate, we believe it was reasonably possible that, as of June 1, 2007, the unrecognized tax benefits related to these audits could decrease (whether by payment, release, or a combination of both) in the next 12 months by as much as $256 million ($225 million net of offsetting tax benefits). Our U.S. federal and, with some exceptions, our state income tax returns have been examined for all years prior to fiscal 2000, and we are no longer subject to audit for those periods.

Internationally, tax authorities for numerous non-U.S. jurisdictions are also examining returns affecting unrecognized tax benefits. We believe it was reasonably possible that, as of June 1, 2007, the gross unrecognized tax benefits could decrease in the next 12 months by as much as $73 million ($14 million net of offsetting tax benefits), related primarily to a technical matter of corporate restructuring, which would be affected by the possible passage of favorable legislation. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal 1998.

We believe that we have adequately provided for any reasonably foreseeable outcomes related to our tax audits and that any settlement will not have a material adverse effect on our consolidated financial position or results of operations. However, there can be no assurances as to the possible outcomes.

10.   RESTRUCTURING ACTIVITIES

Hyperion Restructuring Plan

During the fourth quarter of our fiscal year 2007, management approved and initiated plans to restructure certain operations of pre-merger Hyperion to eliminate redundant costs resulting from the acquisition of Hyperion and improve efficiencies in operations. The cash restructuring charges recorded are based on restructuring plans that have been committed to by management.

The total estimated restructuring costs associated with exiting activities of Hyperion are $115 million, consisting primarily of excess facilities obligations through fiscal 2019 as well as severance and other restructuring costs. These costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Hyperion and, accordingly, have resulted in an increase to goodwill. Our restructuring expenses may change as management executes the approved plan. Future decreases to the estimates of executing the Hyperion restructuring plan will be recorded as an adjustment to goodwill indefinitely, whereas

11

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

increases to the estimates will be recorded as an adjustment to goodwill during the purchase accounting allocation period, and as an adjustment to operating expenses thereafter.

Siebel Restructuring Plan

During the third quarter of our fiscal year 2006, management approved and initiated plans to restructure certain operations of pre-merger Siebel Systems, Inc. to eliminate redundant costs resulting from the acquisition of Siebel and improve efficiencies in operations. The cash restructuring charges recorded were based on a restructuring plan that was committed to by management.

The total estimated restructuring costs associated with exiting activities of Siebel were $574 million, consisting primarily of excess facilities obligations through fiscal 2022 as well as severance and other restructuring costs. These costs were recognized as a liability assumed in the purchase business combination and included in the allocation of the cost to acquire Siebel and, accordingly, have resulted in an increase to goodwill. Our restructuring expenses may change as management executes the approved plan. Future decreases to the estimates of executing the Siebel restructuring plan will be recorded as an adjustment to goodwill indefinitely, whereas increases to the estimates will be recorded as operating expenses.

Summary of All Plans

			Three Months Ended												Total		Total
	Accrued		August 31, 2007										Accrued		Costs		Expected
	May 31,		Initial		Adj. to			Cash					Aug 31,		Accrued		Program
(in millions)	2007(1)		Costs(2)		Cost			Payments			Other(3)		2007(1)		to Date		Costs
Hyperion Restructuring Plan
Severance	$	45	$	2	$	—		$	(4	)	$	—	$	43	$	47	$	47
Facilities		46		5		—			(3	)		—		48		52		52
Contracts and other		16		—		(2	)		—			—		14		16		16
Total Hyperion Restructuring	$	107	$	7	$	(2	)	$	(7	)	$	—	$	105	$	115	$	115
Siebel Restructuring Plan
Severance	$	6	$	—	$	—		$	—		$	—	$	6	$	63	$	63
Facilities		230		—		—			(14	)		1		217		472		472
Contracts and other		10		—		—			—			—		10		39		39
Total Siebel Restructuring	$	246	$	—	$	—		$	(14	)	$	1	$	233	$	574	$	574
Total Other Restructuring Plans	$	106	$	—	$	(1	)	$	(4	)	$	—	$	101
Total All Restructuring Plans	$	459	$	7	$	(3	)	$	(25	)	$	1	$	439

(1)	Accrued restructuring at August 31, 2007 and May 31, 2007 was $439 and $459, respectively. The balances include $188 and $201 recorded in accrued restructuring, current and $251 and $258 recorded in accrued restructuring, non-current in the accompanying condensed consolidated balance sheets at August 31, 2007 and May 31, 2007, respectively.
(2)	Costs associated with initial restructuring plan.
(3)	Represents foreign currency translation adjustments.

11.   STOCK REPURCHASES

Our Board of Directors has approved a program to repurchase shares of our common stock to reduce the dilutive effect of our stock option and stock purchase plans. In April 2007, our Board of Directors expanded our repurchase

12

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

program by $4.0 billion and as of August 31, 2007, approximately $3.7 billion was available for share repurchases pursuant to our stock repurchase program. We repurchased approximately 25 million shares for $500 million during the three months ended August 31, 2007 (including approximately 1 million shares for $17 million that were repurchased but not settled) and approximately 67 million shares for $1.0 billion during the three months ended August 31, 2006 (including approximately 4 million shares for $64 million that were repurchased but not settled) under the applicable repurchase programs authorized.

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, our debt repayment obligations, 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 Rule 10b5-1 plan. Our stock repurchase program may be accelerated, suspended, delayed or discontinued at any time.

12.   EARNINGS PER SHARE

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 stock awards 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
	August 31,
(in millions, except per share data)	2007		2006
Net income	$	840	$	670
Weighted-average common shares outstanding		5,110		5,217
Dilutive effect of employee stock plans		107		90
Dilutive weighted-average common shares outstanding		5,217		5,307
Basic earnings per share	$	0.16	$	0.13
Diluted earnings per share	$	0.16	$	0.13
Effect of shares subject to anti-dilutive stock options excluded from calculation(1)		91		105

⁽¹⁾ These weighted shares relate to anti-dilutive stock options as calculated using the treasury stock method (described above) and could be dilutive in the future.

13.   COMPREHENSIVE INCOME

Comprehensive income includes foreign currency translation gains and losses, unrealized gains and losses on debt and equity securities and equity hedge gains and losses that are reflected in stockholders’ equity instead of net income. The following table sets forth the calculation of comprehensive income:

	Three Months Ended
	August 31,
(in millions)	2007			2006
Net income	$	840		$	670
Change in net foreign currency translation gain (loss)		24			(31	)
Change in unrealized gain (loss) on equity hedge, net		(20	)		14
Change in unrealized gain on investments, net		—			1
Comprehensive income	$	844		$	654

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ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

14.   SEGMENT INFORMATION

FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, 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 maker is our Chief Executive Officer. We are organized geographically and by line of business. While our Chief Executive Officer evaluates 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. We have two businesses, software and services, which are further divided into five operating segments. Our software business is comprised of two operating segments: (1) new software licenses and (2) software license updates and product support. Our services business is comprised of three operating segments: (1) consulting, (2) On Demand and (3) education.

The new software license line of business is engaged in the licensing of database and middleware software as well as applications software. Database and middleware software includes database management software, application server software, identification management and access, analytics, development tools and collaboration software. Applications software provides enterprise information that enables companies to manage their business cycles and provide intelligence in functional areas such as financials, human resources, maintenance management, manufacturing, marketing, order fulfillment, product lifecycle management, procurement, projects, sales, services, enterprise resource planning and supply chain planning. The software license updates and product support line of business provides customers with rights to unspecified software product upgrades and maintenance releases, internet access to technical content, as well as internet and telephone access to technical support personnel during the support period. The software license updates and product support line of business also offers customers Oracle Unbreakable Linux Support, which provides enterprise level support for the Linux operating system.

The consulting line of business provides services to customers in business strategy and analysis, business process optimization, and the implementation, deployment and upgrade of our database, middleware and applications software. On Demand includes Oracle On Demand, CRM On Demand and Advanced Customer Services. Oracle On Demand provides multi-featured software and hardware management and maintenance services for customers that deploy our database, middleware and applications software at Oracle’s data center facilities or at a site of our customer’s choosing. CRM On Demand is a service offering that provides our customers with our Siebel CRM Software functionality delivered via a hosted solution that we manage. Advanced Customer Services consists of solution support centers, business critical assistance, technical account management, expert services, configuration and performance analysis, personalized support and annual on-site technical services. The education line of business provides instructor led, media based and internet based training in the use of our database, middleware and applications software.

We do not track our assets by operating segments. Consequently, it is not practical to show assets by operating segments.

14

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

The following table presents a summary of our businesses and operating segments:

	Three Months Ended
	August 31,
(in millions)	2007		2006
New software licenses:
Revenues(1)	$	1,084	$	802
Sales and distribution expenses		838		627
Margin(2)	$	246	$	175
Software license updates and product support:
Revenues(1)	$	2,446	$	2,010
Cost of services		212		185
Margin(2)	$	2,234	$	1,825
Total software business:
Revenues(1)	$	3,530	$	2,812
Expenses		1,050		812
Margin(2)	$	2,480	$	2,000
Consulting:
Revenues(1)	$	796	$	636
Cost of services		674		553
Margin(2)	$	122	$	83
On Demand:
Revenues(1)	$	158	$	125
Cost of services		140		129
Margin(2)	$	18	$	(4	)
Education:
Revenues(1)	$	109	$	88
Cost of services		75		64
Margin(2)	$	34	$	24
Total services business:
Revenues(1)	$	1,063	$	849
Cost of services		889		746
Margin(2)	$	174	$	103
Totals:
Revenues(1)	$	4,593	$	3,661
Expenses		1,939		1,558
Margin(2)	$	2,654	$	2,103

(1)

Operating segment revenues differ from the external reporting classifications for our revenues due to certain software license products that are classified as service revenues for management reporting purposes. Additionally, software license updates and product support revenues for management reporting include $64 million and $70 million of revenues that we did not recognize in the accompanying condensed consolidated statements of operations for the three months ended August 31, 2007 and 2006, respectively. See Note 8 for an explanation of these adjustments and the following table for a reconciliation of operating segment revenues to total revenues.

(2)

The margins reported reflect only the direct controllable costs and expenses of each line of business and do not represent the actual margins for each operating segment because they do not contain an allocation of product development, information technology, marketing and partner programs, and corporate and general and administrative expenses incurred in support of the lines of business. Additionally, the margins do not reflect the amortization of intangible assets, restructuring costs, acquisition related costs or stock-based compensation expenses.

15

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

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

	Three Months Ended
	August 31,
(in millions)	2007			2006
Total revenues for reportable segments	$	4,593		$	3,661
Software license updates and product support revenues(1)		(64	)		(70	)
Total revenues	$	4,529		$	3,591
Total margin for reportable segments	$	2,654		$	2,103
Software license updates and product support revenues(1)		(64	)		(70	)
Product development and information technology expenses		(711	)		(561	)
Marketing and partner program expenses		(93	)		(89	)
Corporate and general and administrative expenses		(164	)		(129	)
Amortization of intangible assets		(285	)		(198	)
Acquisition related		(47	)		(48	)
Restructuring		—			(9	)
Stock-based compensation		(69	)		(50	)
Interest expense		(94	)		(83	)
Non-operating income, net		73			96
Income before provision for income taxes	$	1,200		$	962

⁽¹⁾ Software license updates and product support revenues for management reporting include $64 million and $70 million of revenues that we did not recognize in the accompanying condensed consolidated statements of operations for the three months ended August 31, 2007 and 2006, respectively. See Note 8 for an explanation of these adjustments and this table for a reconciliation of operating segment revenues to total revenues.

15.   PEOPLESOFT CUSTOMER ASSURANCE PROGRAM

In June 2003, in response to our tender offer, PeopleSoft, Inc. implemented what it referred to as the “customer assurance program” or “CAP.” The CAP incorporated a provision in PeopleSoft’s standard licensing arrangement that purports to contractually burden Oracle, as a result of our acquisition of PeopleSoft, with a contingent obligation to make payments to PeopleSoft customers should we fail to take certain business actions for a fixed period. The payment obligation, which typically expires four years from the date of the contract, is fixed at an amount generally between two and five times the license and first year support fees paid to PeopleSoft in the applicable license transaction. PeopleSoft customers retain rights to the licensed products whether or not the CAP payments are triggered.

16

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

The maximum potential penalty under the CAP, by version, as of August 31, 2007 was as follows:

			Maximum Potential
	Dates Offered to Customers(1)		Penalty
CAP Version	Start Date	End Date	(in millions)
Version 1	June 2003	September 12, 2003	$	3
Version 2	September 12, 2003	September 30, 2003		120
Version 3	September 30, 2003	November 7, 2003		25
Version 4	November 18, 2003	June 30, 2004		1,103
Version 5	June 16, 2004	December 28, 2004		741
Version 6	October 12, 2004	December 28, 2004		1,053
			$	3,045

⁽¹⁾ Some contracts originally submitted to customers prior to these end dates were executed following such dates. The majority of the CAP provisions will expire no later than four years after the contract date.

This purported obligation was not reflected as a liability on PeopleSoft’s balance sheet as PeopleSoft concluded that it could be triggered only following the consummation of an acquisition. We have concluded that, as of the date of the acquisition, the penalty provisions under the CAP represented a contingent liability of Oracle. The aggregate potential CAP obligation as of August 31, 2007 was $3.0 billion. Unless the CAP provisions are removed from these licensing arrangements, we do not expect the aggregate potential CAP obligation to decline substantially until later in our fiscal year 2008 when these provisions begin to expire. We have not recorded a liability related to the CAP, as we do not believe it is probable that our post-acquisition activities related to the PeopleSoft and JD Edwards product lines will trigger an obligation to make any payment pursuant to the CAP. While no assurance can be given as to the ultimate outcome of any litigation, we believe we would also have substantial defenses with respect to the legality and enforceability of the CAP contract provisions in response to any claims seeking payment from us under the CAP terms.

16.   LEGAL PROCEEDINGS

Securities Class Action

Stockholder class actions were filed in the United States District Court for the Northern District of California against us and our Chief Executive Officer on and after March 9, 2001. Between March 2002 and March 2003, the court dismissed plaintiffs’ consolidated complaint, first amended complaint and a revised second amended complaint. The last dismissal was with prejudice. On September 1, 2004, the United States Court of Appeals for the Ninth Circuit reversed the dismissal order and remanded the case for further proceedings. The revised second amended complaint named our Chief Executive Officer, our then Chief Financial Officer (who currently is Chairman of our Board of Directors) and a former Executive Vice President as defendants. This complaint was brought on behalf of purchasers of our stock during the period from December 14, 2000 through March 1, 2001. Plaintiffs alleged that the defendants made false and misleading statements about our actual and expected financial performance and the performance of certain of our applications products, while certain individual defendants were selling Oracle stock in violation of federal securities laws. Plaintiffs further alleged that certain individual defendants sold Oracle stock while in possession of material non-public information. Plaintiffs also allege that the defendants engaged in accounting violations. On July 26, 2007, defendants filed a motion for summary judgment, and plaintiffs filed a motion for partial summary judgment against all defendants and a motion for summary judgment against our Chief Executive Officer. On August 7, 2007, plaintiffs filed amended versions of these motions. The parties’ summary judgment motions are fully briefed. Currently, the court has set no date for hearing on these motions. The court has set a trial date of November 26, 2007. Plaintiffs seek unspecified damages

17

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

plus interest, attorneys’ fees and costs, and equitable and injunctive relief. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

Siebel Securities Class Action

On March 10, 2004, William Wollrab, on behalf of himself and purportedly on behalf of a class of stockholders of Siebel, filed a complaint in the United States District Court for the Northern District of California against Siebel and certain of its officers relating to predicted adoption rates of Siebel v7.0 and certain customer satisfaction surveys. This complaint was consolidated and amended on August 27, 2004, with the Policemen’s Annuity and Benefit Fund of Chicago being appointed to serve as lead plaintiff. The consolidated complaint also raised claims regarding Siebel’s business performance in 2002. In October 2004, Siebel filed a motion to dismiss, which was granted on January 28, 2005 with leave to amend. Plaintiffs filed an amended complaint on March 1, 2005. Plaintiffs seek unspecified damages plus interest, attorneys’ fees and costs, and equitable and injunctive relief. Siebel filed a motion to dismiss the amended complaint on April 27, 2005, and on December 28, 2005, the Court dismissed the case with prejudice. On January 17, 2006, plaintiffs filed a notice of appeal, and on September 18, 2006, plaintiffs filed their opening appellate brief. Defendants’ responsive brief was filed on December 15, 2006. Plaintiffs filed their reply brief on January 16, 2007. The court has not yet set a date for oral argument on this appeal. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

Intellectual Property Litigation

Mangosoft, Inc. and Mangosoft Corporation filed a patent infringement action against us in the United States District Court for the District of New Hampshire on November 22, 2002. Plaintiffs alleged that we are willfully infringing U.S. Patent Nos. 6,148,377 (the ‘377 patent) and 5,918,229 (the ‘229 patent), which they claim to own. Plaintiffs seek damages based on our license sales of the Real Application Clusters database option, the 9i and 10g databases, and the Application Server, and seek injunctive relief. We denied infringement and asserted affirmative defenses and counterclaimed against plaintiffs for declaratory judgment that the ‘377 and ‘229 patents are invalid, unenforceable and not infringed by us. On May 19, 2004, the court held a claims construction (Markman) hearing, and on September 21, 2004, it issued a Markman order. On June 21, 2005, plaintiffs withdrew their allegations of infringement of the ‘229 patent. Discovery closed on July 1, 2005. Summary judgment motions were filed on August 25, 2005, and the court held a hearing on these motions on October 17, 2005. On March 14, 2006 the court ruled that Oracle’s Real Application Clusters database option did not infringe the ‘377 patent.

Oracle’s counterclaims against Mangosoft, alleging that the ‘377 patent is invalid and unenforceable, were the only claims that the Court left open for trial. On April 21, 2006 Mangosoft filed a motion asking that Mangosoft be allowed to appeal the noninfringement ruling immediately to the Federal Circuit Court of Appeals and that trial on Oracle’s counterclaims be stayed until that appeal has been resolved. Oracle filed a brief opposing that motion on May 8, 2006. On March 28, 2007, the Court issued an order largely granting the relief sought by Mangosoft. The Court dismissed Oracle’s counterclaims of invalidity and inequitable conduct without prejudice and ordered the entry of judgment of noninfringement consistent with its March 14, 2006 order on summary judgment. On March 29, 2007, the Court entered Judgment in Oracle’s favor on the issue of noninfringement and, on the same day, Mangosoft filed its notice of appeal to the Federal Circuit stating that it was appealing (1) the Court’s March 14, 2006 order on summary judgment, (2) the Court’s order of March 28, 2007, (3) the Court’s claim construction order of September 21, 2004, and (4) the entry of judgment on March 29, 2007. Oracle has filed its statement of costs in the amount of approximately $0.2 million in connection with the entry of judgment. On May 21, 2007, the parties were notified that the matter was selected for inclusion in the Federal Circuit’s mandatory Appellate Mediation Program. A mediation was held on for June 20, 2007, but the matter was not resolved. Mangosoft filed its opening brief in the Federal Circuit on August 6, 2007. Oracle’s responsive brief is due November 16, 2007, with Mangosoft’s reply due on November 30, 2007. We believe that we have meritorious defenses against this action, and we will continue to vigorously defend it.

18

ORACLE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
August 31, 2007
(Unaudited)

SAP Intellectual Property Litigation

On March 22, 2007, Oracle Corporation, Oracle USA, Inc. and Oracle International Corporation (collectively, “Oracle”) filed a complaint in the United States District Court for the Northern District of California against SAP AG, its wholly owned subsidiary, SAP America, Inc., and its wholly owned subsidiary, TomorrowNow, Inc., (collectively, the “SAP Defendants”) alleging violations of the Federal Computer Fraud and Abuse Act and the California Computer Data Access and Fraud Act, civil conspiracy, trespass, conversion, violation of the California Unfair Business Practices Act, and intentional and negligent interference with prospective economic advantage. Oracle alleged that SAP unlawfully accessed Oracle’s Customer Connection support website and improperly took and used Oracle’s intellectual property, including software code and knowledge management solutions. The complaint seeks unspecified damages and preliminary and permanent injunctive relief. On April 10, 2007, Oracle filed a stipulation extending the time for the SAP Defendants to respond to the complaint. On June 1, 2007, Oracle filed their First Amended Complaint, adding claims for infringement of the federal Copyright Act and breach of contract, and dropping the conversion and separately pled conspiracy claims. On July 2, 2007 the SAP Defendants’ filed their Answer and Affirmative Defenses, acknowledging that TomorrowNow had made some “inappropriate downloads” and otherwise denying the claims alleged in the First Amended Complaint. The parties have exchanged their first sets of Requests for Production of Documents and Interrogatories and continue to negotiate a Preservation Order. A Case Management Conference is scheduled to occur on September 25, 2007.

Other Litigation

We are party to various 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 claims or any of the above mentioned legal matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

19

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 key operating business 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 financial condition and results of operations.

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially. When used in this report, the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions are generally intended to identify forward-looking statements. You should not place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this Quarterly Report. We undertake no obligation to publicly release any revisions to the forward-looking statements after the date of this document. You should carefully review the risk factors described in other documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for our fiscal year ended May 31, 2007 and our other Quarterly Reports on Form 10-Q to be filed by us in our fiscal year 2008, which runs from June 1, 2007 to May 31, 2008.

Business Overview

We are the world’s largest enterprise software company. We are organized into two businesses, software and services, which are further divided into five operating segments. Each of these operating segments has unique characteristics and faces different opportunities and challenges. Although we report our actual results in United States dollars, we conduct a significant number of transactions in currencies other than United States dollars. Therefore, we present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. An overview of our five operating segments follows.

Software Business

Our software business is comprised of two operating segments: (1) new software license revenues and (2) software license updates and product support revenues. We expect that our software business revenues will continue to increase, which should allow us to improve margins and profits and continue to make investments in research and development.

New Software Licenses:  We license our database and middleware as well as our applications software to businesses of many sizes, government agencies, educational institutions and resellers. The growth in new software license revenues is affected by the strength of general economic and business conditions, governmental budgetary constraints, the competitive position of our software products and our acquisitions. The new software license business is also characterized by long sales cycles. The timing of a few large software license transactions can substantially affect our quarterly new software license revenues. Since our new software license revenues in a particular quarter can be difficult to predict as a result of the timing of a few large software license transactions, we believe that the analysis of new software revenues on a trailing 4-quarter period provides additional visibility into the underlying performance of our new software license business. New software license revenues represent 33% of our total revenues on a trailing 4-quarter basis. Our new software license margins have been and will be affected by the amortization of intangible assets associated with companies we have acquired.

Competition in the software business is intense. Our goal is to maintain a first or second position in each of our software product categories and certain industry segments as well as to grow our software revenues faster than our competitors. We believe that the features and functionality of our software products are as strong as they have ever been. We have focused on lowering the total cost of ownership of our software products by improving integration, decreasing installation times, lowering administration costs and improving the ease of use. Reducing the total cost of ownership of our products provides our customers with a higher return on their investment, which we believe will create more demand and provide us with a competitive advantage. We have also continued to focus on improving

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the overall quality of our software products and service levels. We believe this will lead to higher customer satisfaction and loyalty and help us achieve our goal of becoming our customers’ leading technology advisor.

Software License Updates and Product Support:  Customers that purchase software license updates and product support are granted rights to unspecified product upgrades and maintenance releases issued during the support period, as well as technical support assistance. In fiscal 2007, we also introduced Oracle Unbreakable Linux Support, which provides enterprise level support for the Linux operating system. Substantially all of our 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 three factors: (1) the renewal rate of the support contract base, (2) the amount of new support contracts sold in connection with the sale of new software licenses, and (3) the support contract base of companies we have acquired.

Software license updates and product support revenues, which represent approximately 46% of our total revenues on a trailing 4-quarter basis, is our highest margin business unit. Support margins over the last trailing 4-quarters were 84%, and account for 78% of our total margins over the same respective period. We believe that software license updates and product support revenues and margins will continue to grow for the following reasons:

•  Substantially all of our customers, including customers from acquired companies, renew their support contracts when eligible for renewal.

•  Substantially all customers purchase license updates and product support subscriptions when they buy new software licenses, resulting in a further increase in our support contract base. Even if new license revenue growth was flat, software license updates and product support revenues would continue to grow assuming renewal and cancellation rates remained relatively constant since substantially all new software license transactions add to the support contract base.

•  Our acquisitions have significantly increased our support contract base, as well as the portfolio of products available to be licensed.

We record adjustments to reduce support obligations assumed in business acquisitions to their estimated fair values at the acquisition dates. As a result, as required by business combination accounting rules, we did not recognize software license updates and product support revenues related to support contracts that would have been otherwise recorded by acquired businesses as independent entities in the amount of $64 million and $70 million in the three months ended August 31, 2007 and 2006, respectively. To the extent underlying support contracts are renewed with us following an acquisition, we will recognize the revenues for the full value of the support contracts over the support periods, the majority of which are one year.

Services Business

Our services business consists of consulting, On Demand and education revenues. Our services business, which represents 21% of our total revenues on a trailing 4-quarter basis, has significantly lower margins than our software business.

Consulting:  Consulting revenues have increased primarily due to higher revenues contributed by i-flex as well as an increase in application implementations created by higher sales of new software applications over the past year. We expect consulting revenues to continue to grow as consulting revenues tend to lag software revenues by several quarters since consulting services, if purchased, are typically performed after the purchase of new software licenses and our new license growth rates have generally increased over the last several quarters in comparison to corresponding prior year periods.

On Demand:  On Demand includes our Oracle On Demand, CRM On Demand as well as Advanced Customer Services. We believe that our On Demand offerings provide our customers flexibility in how they manage their information technology environments and an additional opportunity to lower their total cost of ownership and can therefore provide us with a competitive advantage. We have made and plan to continue to make investments in On Demand to support current and future revenue growth, which has negatively impacted On Demand margins and may continue to do so in the future.

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Education:  The purpose of our education services is to further enhance the usability of our software products by our customers and to create opportunities to grow our software revenues. Education revenues have been impacted by personnel reductions in our customers’ information technology departments, tighter controls over discretionary spending and greater use of outsourcing solutions. Despite these trends, we expect education revenues to increase in fiscal year 2008, primarily due to an increase in customer training on the use of our acquired application products.

Acquisitions

An active acquisition program is an important element of our corporate strategy. Over the past four fiscal years, we have acquired PeopleSoft, Inc., a provider of enterprise applications software products; Siebel Systems, Inc., a provider of customer relationship management software; Hyperion Solutions Corporation, a provider of enterprise performance management and business intelligence software; and others. Typically, the significant majority of our integration activities related to an acquisition are substantially complete in the United States within three to six months after the closing of the acquisition.

We believe our acquisition program supports our long-term strategic direction, strengthens our competitive position, particularly in the applications marketplace, expands our customer base and provides greater scale to increase our investment in research and development to accelerate innovation, grow our earnings and increase stockholder value. We expect to continue to acquire companies, products, services and technologies. See Note 4 of our Notes to Condensed Consolidated Financial Statements for additional information related to our recent acquisitions.

We believe we can fund additional acquisitions with our internally available cash and marketable securities, cash generated from operations, amounts available under our commercial paper program, 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.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). These accounting principles require 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 there are material 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 the following:

•  Revenue Recognition

•  Business Combinations

•  Goodwill and Intangible Assets

•  Accounting for Income Taxes

•  Legal and Other Contingencies

•  Stock-Based Compensation

•  Allowances for Doubtful Accounts and Returns

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

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reviewed these critical accounting policies and related disclosures with the Finance and Audit Committee of the Board of Directors.

With the exception of the below paragraph that discusses the impact of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48) on our critical accounting policy and estimates for accounting for income taxes, during the first quarter of fiscal 2008 there were no significant changes in our critical accounting policies and estimates. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended May 31, 2007 for a more complete discussion of our critical accounting policies and estimates.

On June 1, 2007, we adopted FIN 48, which contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with Statement 109, Accounting for Income Taxes. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. During our first quarter of fiscal 2008, we adjusted our policy in the accounting for and presentation of uncertain tax positions in order to comply with the interpretive guidance set forth in FIN 48.

Results of Operations

The comparability of our operating results in the first quarter of fiscal 2008 compared with the same period in fiscal 2007 is impacted by our acquisitions, principally our acquisition of Hyperion in the fourth quarter of fiscal 2007.

In our discussion of changes in our results of operations from the first quarter of fiscal 2008 compared to the first quarter of fiscal 2007, we quantify the contribution of our acquired products to the growth in new software license revenues and the amount of revenues associated with software license updates and product support and present supplemental disclosure related to acquisition accounting and stock-based compensation where applicable. Although certain revenues were quantifiable, we are unable to identify the following:

•  The contribution of the significant majority of consulting and education services revenues from acquired companies during the first quarter of fiscal 2008 as the significant majority of these services have been fully integrated into our existing operations.

•  The contribution of the significant majority of expenses associated with acquired products and services during the first quarter of fiscal 2008 as the significant majority of these expenses have been fully integrated into our existing operations.

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

•  The quantifications cannot address the substantial effects attributable to our sales force integration efforts, in particular the effect of having a single sales force offer similar products. The commissions earned by our integrated sales force generally do not vary based on the application product sold. We believe that if our sales forces had not been integrated, the relative mix of products sold would have been different.

•  Our acquisitions have not resulted in our entry into a new line of business or product category. Therefore, we provided multiple products with substantially similar features and functionality.

•  Although substantially all of our customers, including customers from acquired companies, renew their software license updates and product support contracts when the contracts are eligible for renewal, amounts shown as support deferred revenue in our supplemental disclosure related to acquisition accounting and stock-based compensation are not necessarily indicative of revenue improvements we will achieve upon contract renewal to the extent customers do not renew.

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Constant Currency Presentation

We compare the percent change in the results from one period to another period in this quarterly report using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect on May 31, 2007, 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 August 31, 2007 and August 31, 2006, our financial statements would reflect revenues of $1.36 million during the first quarter of fiscal 2008 (using 1.36 as the exchange rate) and $1.28 million during the first quarter of fiscal 2007 (using 1.28 as the exchange rate). The constant currency presentation would translate the results for the three months ended August 31, 2007 and 2006 using the May 31, 2007 exchange rate and indicate, in this example, no change in revenues during the periods. In each of the tables below, we present the percent change based on actual results as reported and based on constant currency.

Total Revenues and Operating Expenses

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
Total Revenues by Geography:
Americas	$	2,375		21%		20%	$	1,956
EMEA(1)		1,530		34%		26%		1,140
Asia Pacific		624		26%		22%		495
Total revenues		4,529		26%		22%		3,591
Total Operating Expenses		3,312		25%		21%		2,648
Total Operating Margin	$	1,217		29%		24%	$	943
Total Operating Margin %		27%						26%
% Revenues by Geography:
Americas		52%						54%
EMEA		34%						32%
Asia Pacific		14%						14%
Total Revenues by Business:
Software	$	3,470		26%		23%	$	2,745
Services		1,059		25%		21%		846
Total revenues	$	4,529		26%		22%	$	3,591
% Revenues by Business:
Software		77%						76%
Services		23%						24%

⁽¹⁾ Comprised of Europe, the Middle East and Africa

Total revenues increased in the first quarter of fiscal 2008 due to increased demand for our products and services offerings, strong sales execution and incremental revenues from our acquisitions. The growth in our total revenues was positively affected by foreign currency rate fluctuations of 4 percentage points in the first quarter of fiscal 2008 due to the weakening of the United States dollar relative to other major international currencies. Excluding the effects of currency rate fluctuations, new software license revenues contributed 32% to the growth in total revenues, software license updates and product support revenues contributed 46% and services revenues contributed 22%.

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Excluding the effect of currency rate fluctuations, the Americas contributed 49% to the increase in total revenues, EMEA contributed 38% and Asia Pacific contributed 13%.

Excluding the effect of currency rate fluctuations, the increase in operating expenses in the first quarter of fiscal 2008 was primarily due to higher salary and employee benefits associated with increased headcount levels (primarily resulting from our acquisitions in the first quarter of fiscal 2008 and during fiscal year 2007), as well as higher commissions and travel and entertainment expenses associated with both increased revenues and headcount levels. In addition, operating expenses also increased in the first quarter of fiscal 2008 due to higher amortization costs of intangible assets resulting primarily from acquisitions that we completed since the beginning of fiscal 2007 and higher stock-based compensation charges resulting primarily from the acceleration of vesting of certain acquired stock awards upon employee termination pursuant to the original terms of those awards. Operating expense growth was adversely affected by foreign currency rate fluctuations of 4 percentage points.

Operating margins as a percentage of total revenues increased during the first quarter of fiscal 2008. The growth in our operating margins in the first quarter of fiscal 2008 was favorably affected by foreign currency rate fluctuations of 5 percentage points. Our total revenues grew at a faster rate than our total operating expenses, and grew at an even higher rate after excluding amortization of intangible assets expenses and stock-based compensation expenses.

International operations will continue to provide a significant portion of our total revenues. As a result, total revenues and expenses will continue to be affected by changes in the relative strength of the United States dollar against certain major international currencies.

Supplemental Disclosure Related to Acquisition Accounting and Stock-Based Compensation

To supplement our consolidated financial information we believe the following information is helpful to an overall understanding of our past financial performance and prospects for the future. Readers are directed to the introduction under “Results of Operations” (above) for a discussion of the inherent limitations in comparing pre- and post-acquisition information.

Our operating results include the following business combination accounting entries and expenses related to acquisitions as well as other significant expenses:

	Three Months Ended August 31,
(in millions)	2007			2006
Support deferred revenues(1)	$	64		$	70
Amortization of intangible assets(2)		285			198
Acquisition related charges(3)		47			48
Restructuring(4)		—			9
Stock-based compensation(5)		69			50
Income tax effect(6)		(140	)		(114	)
	$	325		$	261

⁽¹⁾ In connection with purchase price allocations related to our acquisitions, we have estimated the fair values of the support obligations assumed. Due to our application of business combination accounting rules, we did not recognize software license updates and product support revenues related to support contracts that would have otherwise been recorded by the acquired businesses as independent entities, in the amounts of $64 million and $70 million in the first quarter of fiscal 2008 and fiscal 2007, respectively. As of August 31, 2007, approximately $76 million of estimated software license updates and product support revenues related to support contracts assumed will not be recognized during the remainder of fiscal 2008 that would have otherwise been recognized by the acquired businesses as independent entities, due to the application of business combination accounting rules. To the extent customers renew these support contracts, we expect to recognize revenues for the full contract value over the support renewal period.

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⁽²⁾ Represents the amortization of intangible assets acquired in connection with our acquisitions, primarily PeopleSoft, Siebel, Hyperion and i-flex. Estimated future amortization expenses related to intangible assets is as follows (in millions):

Remainder of Fiscal 2008	$	871
Fiscal 2009		1,147
Fiscal 2010		1,021
Fiscal 2011		794
Fiscal 2012		656
Fiscal 2013		506
Thereafter		940
Total	$	5,935

(3)	Acquisition related charges primarily consist of in-process research and development expenses, stock-based compensation expenses, integration-related professional services, and personnel related costs for transitional employees.
(4)	Restructuring costs relate to Oracle employee severance and facility closures in connection with restructuring plans initiated in the third quarter of fiscal 2006, for which additional expenses were recorded during the first quarter of fiscal 2007.
(5)	Stock-based compensation is included in the following operating expense line items of our condensed consolidated statements of operations (in millions):

	Three Months Ended
	August 31,
	2007		2006
Sales and marketing	$	13	$	10
Software license updates and product support		4		3
Cost of services		4		3
Research and development		28		22
General and administrative		20		12
Subtotal		69		50
Acquisition related charges		32		—
Total	$	101	$	50

	Stock-based compensation included in acquisition related charges resulted from unvested options assumed from acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of those options.
(6)	The income tax effect on purchase accounting adjustments and other significant expenses including stock-based compensation was calculated based on our effective tax rate of 30.0% and 30.4% in the first quarter of fiscal 2008 and 2007, respectively.

Software

Software includes new software licenses and software license updates and product support.

New Software Licenses:  New software license revenues represent fees earned from granting customers licenses to use our database and middleware as well as our application software products. We continue to place significant emphasis, both domestically and internationally, on direct sales through our own sales force. We also continue to market our products through indirect channels.

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	Three Months Ended August 31,
				Percent Change
(Dollars in millions)	2007			Actual		Constant		2006
New Software License Revenues:
Americas	$	499			38%		37%	$	362
EMEA		378			45%		38%		260
Asia Pacific		210			15%		12%		182
Total revenues		1,087			35%		32%		804
Expenses:
Sales and marketing(1)		961			30%		25%		740
Stock-based compensation		13			37%		37%		10
Amortization of intangible assets(2)		129			67%		67%		77
Total expenses		1,103			33%		29%		827
Total Margin	$	(16	)		33%		39%	$	(23	)
Total Margin %		-1%							-3%
% Revenues by Geography:
Americas		46%							45%
EMEA		35%							32%
Asia Pacific		19%							23%
Revenues by Product:
Database and middleware	$	694			23%		19%	$	565
Applications		376			65%		61%		228
Total revenues by product		1,070			35%		31%		793
Other revenues		17			53%		48%		11
Total new software license revenues	$	1,087			35%		32%	$	804
% Revenues by Product:
Database and middleware		65%							71%
Applications		35%							29%

(1)	Excluding stock-based compensation
(2)	Included as a component of ‘Amortization of Intangible Assets’ in our condensed consolidated statements of operations

New software license revenues growth was positively affected by foreign currency rate fluctuations of 3 percentage points in the first quarter of fiscal 2008. Excluding the effect of currency rate fluctuations, new software license revenues grew in all major product lines and geographies. Database and middleware revenues contributed 47% to the increase in new software license revenues growth, while applications revenues contributed 53%. The Americas contributed 51%, EMEA contributed 40% and Asia Pacific contributed 9% to the increase in new software license revenues.

We believe that the trailing 4-quarter growth rates provide additional visibility into the underlying performance of our new software license business since large transactions can cause significant swings in our quarterly reported product revenue growth rates and are not predictive of our future quarterly or annual growth rates.

Excluding the effect of currency rate fluctuations, database and middleware revenues grew 19% in the first quarter of fiscal 2008 and 13% over the trailing 4-quarters as a result of a gain in market share, increased demand for our database and middleware products, as well as incremental revenues from acquired companies. Hyperion products

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contributed $28 million, Stellent products contributed $15 million and other recently acquired products contributed $3 million to the total database and middleware revenue growth in the first quarter of fiscal 2008.

On a constant currency basis, applications revenues increased 61% in the first quarter of fiscal 2008 and 30% over the trailing 4-quarters as a result of a gain in market share resulting from a continued strengthening of our competitive position in the applications market due to improved product features and functionality and incremental revenues from acquired companies. Hyperion products contributed $52 million, Portal products contributed $9 million, Agile products contributed $7 million, MetaSolv products contributed $6 million and other recently acquired products contributed $11 million to the growth in our applications revenues during the first quarter of fiscal 2008.

New software license revenues earned from transactions over $0.5 million grew by 66% in the first quarter of fiscal 2008 and increased from 34% of new software license revenues in the first quarter of fiscal 2007 to 42% in the first quarter of fiscal 2008.

Excluding the effect of currency rate fluctuations, sales and marketing expenses increased in the first quarter of fiscal 2008 primarily due to higher salaries and personnel related expenses associated with increased headcount, as well as higher commissions expenses associated with both increased revenues and headcount levels. Total new software license margin as a percentage of revenues increased as the growth rate of our revenues exceeded the growth rate of the majority of our expenses, but was partially offset by higher growth rates in our commissions expenses and amortization of intangible assets expenses, as well as adverse currency impacts that accelerated our operating expense growth rate and reduced our margin percentage.

Software License Updates and Product Support:  Software license updates grant customers rights to unspecified software product upgrades and maintenance releases issued during the support period. Product support includes internet access to technical content as well as internet and telephone access to technical support personnel in our global support centers. Expenses associated with our software license updates and product support line of business include the cost of providing the support services, largely personnel related expenses, and the amortization of our intangible assets associated with software support and customer relationships obtained from our acquisitions.

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
Software License Updates and Product Support Revenues:
Americas	$	1,308		19%		18%	$	1,103
EMEA		794		29%		21%		614
Asia Pacific		281		25%		21%		224
Total revenues		2,383		23%		19%		1,941
Expenses:
Software license updates and product support(1)		224		14%		10%		197
Stock-based compensation		4		40%		40%		3
Amortization of intangible assets(2)		143		29%		29%		111
Total expenses		371		20%		17%		311
Total Margin	$	2,012		23%		19%	$	1,630
Total Margin %		84%						84%
% Revenues by Geography:
Americas		55%						57%
EMEA		33%						32%
Asia Pacific		12%						11%

(1)	Excluding stock-based compensation
(2)	Included as a component of ‘Amortization of Intangible Assets’ in our condensed consolidated statements of operations

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The growth in our software license updates and product support revenues was positively affected by foreign currency rate fluctuations of 4 percentage points in the first quarter of fiscal 2008. Excluding the effect of currency rate fluctuations, software license updates and product support revenues increased in the first quarter of fiscal 2008 as a result of new software licenses during the trailing 4-quarter period (in particular our fourth quarter of fiscal 2007, which was our largest quarter), the renewal of substantially all of the customer base eligible for renewal in the current fiscal year and incremental revenues from the expansion of our customer base from acquisitions. Excluding the effect of currency rate fluctuations, the Americas contributed 51%, EMEA contributed 36% and Asia Pacific contributed 13% to the increase in software license updates and product support revenues.

Software license updates and product support revenues in the first quarter of fiscal 2008 include incremental revenues of $52 million from Hyperion, $9 million from Portal, $8 million from Stellent, $8 million from MetaSolv and $19 million from other recently acquired companies. As a result of our acquisitions, we recorded adjustments to reduce support obligations assumed to their estimated fair value at the acquisition dates. Due to our application of business combination accounting rules, software license updates and product support revenues related to support contracts in the amounts of $64 million and $70 million that would have been otherwise recorded by our acquired businesses as independent entities, were not recognized in the first quarter of fiscal 2008 and 2007, respectively. Historically, substantially all of our customers, including customers from acquired companies, renew their support contracts when such contracts are eligible for renewal. To the extent these underlying support contracts are renewed, we will recognize the revenues for the full value of these contracts over the support periods, the majority of which are one year.

Excluding the effect of currency rate fluctuations, software license updates and product support expenses increased due to higher salary and benefits associated with increased headcount to support the expansion of our customer base and higher amortization expenses resulting from additional intangible assets acquired since the beginning of fiscal 2007. Total software license updates and product support margin as a percentage of revenues increased as the growth rate of our revenues exceeded the growth rate in the majority of our expenses, but was partially offset by the higher growth rate in the amortization of our intangible assets.

Services

Services consist of consulting, On Demand and education.

Consulting:  Consulting revenues are earned by providing services to customers in the design, implementation, deployment and upgrade of our database and middleware as well as applications software products. The cost of providing consulting services consists primarily of personnel related expenditures.

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	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual			Constant			2006
Consulting Revenues:
Americas	$	433		15	%		13	%	$	375
EMEA		273		33	%		24	%		205
Asia Pacific		95		57	%		47	%		60
Total revenues		801		25	%		20	%		640
Expenses:
Cost of services(1)		697		21	%		16	%		576
Stock-based compensation		2		-1	%		-1	%		2
Amortization of intangible assets(2)		10		133	%		133	%		4
Total expenses		709		22	%		17	%		582
Total Margin	$	92		59	%		57	%	$	58
Total Margin %		11%								9%
% Revenues by Geography:
Americas		54%								59%
EMEA		34%								32%
Asia Pacific		12%								9%

(1)	Excluding stock-based compensation
(2)	Included as a component of ‘Amortization of Intangible Assets’ in our condensed consolidated statements of operations

Consulting revenue growth was positively affected by foreign currency rate fluctuations of 5 percentage points in the first quarter of fiscal 2008. Excluding the effect of currency rate fluctuations, consulting revenues increased during the first quarter of fiscal 2008 primarily due to an increase in application product implementations resulting from higher new application software license revenues and $26 million of constant currency revenue growth from i-flex. Excluding the effect of currency rate fluctuations, the Americas contributed 38%, EMEA contributed 40% and Asia Pacific contributed 22% to the increase in consulting revenues.

Excluding the effect of currency rate fluctuations, consulting expenses increased during the first quarter of fiscal 2008 as a result of higher personnel related expenses attributed to higher headcount levels and third-party contractor expenses that supported our increase in revenues, including $15 million of constant currency expense growth from i-flex. Total consulting margin as a percentage of revenues increased primarily due to improved utilization of resources during the first quarter of fiscal 2008, particularly in the EMEA region, and improved margin contribution from i-flex. These improvements were partially offset by an increase in our amortization expenses associated with intangible assets, primarily from acquisitions that we consummated since the beginning of fiscal 2007.

On Demand:  On Demand includes Oracle On Demand, CRM On Demand and Advanced Customer Services. Oracle On Demand provides multi-featured software and hardware management, and maintenance services for our database and middleware as well as our applications software at our data center facilities or at a site of our customer’s choosing. CRM On Demand is a service offering that provides our customers with our Siebel CRM software functionality delivered via a hosted solution that we manage. Advanced Customer Services consists of configuration and performance analysis, personalized support and on-site technical services. The cost of providing On Demand services consists primarily of personnel related expenditures and hardware and facilities costs.

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	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual			Constant			2006
On Demand Revenues:
Americas	$	87		17	%		16	%	$	75
EMEA		51		40	%		31	%		36
Asia Pacific		20		46	%		40	%		14
Total revenues		158		27	%		23	%		125
Expenses:
Cost of services(1)		152		14	%		11	%		133
Stock-based compensation		1		-4	%		-4	%		1
Amortization of intangible assets(2)		3		0	%		0	%		3
Total expenses		156		14	%		11	%		137
Total Margin	$	2		117	%		116	%	$	(12	)
Total Margin %		1%								-10%
% Revenues by Geography:
Americas		55%								60%
EMEA		32%								29%
Asia Pacific		13%								11%

(1)	Excluding stock-based compensation
(2)	Included as a component of ’Amortization of Intangible Assets’ in our condensed consolidated statements of operations

On Demand revenue growth was positively affected by foreign currency rate fluctuations of 4 percentage points in the first quarter of fiscal 2008. Excluding the effect of currency rate fluctuations, On Demand revenues increased due to higher Advanced Customer Services revenues, and the expansion of our subscription base in both Oracle On Demand and CRM On Demand services. Advanced Customer Services revenues contributed 46% of the growth, while Oracle On Demand and CRM On Demand contributed 25% and 29%, respectively. Excluding the effect of currency rate fluctuations, the Americas contributed 41%, EMEA contributed 40% and Asia Pacific contributed 19% to the increase in On Demand revenues.

Excluding the effect of currency rate fluctuations, On Demand expenses increased due to higher salaries and benefits related expenditures associated with increased headcount, and higher technology infrastructure related costs to support the expansion of our customer base. Total On Demand margin as a percentage of revenues improved as the growth in all of our On Demand revenue categories increased at a faster rate than the related operating expenses.

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Education:  Education revenues are earned by providing instructor led, media based and internet based training in the use of our database and middleware as well as applications software. Education expenses primarily consist of personnel related expenditures, facilities and external contractor costs.

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual			Constant			2006
Education Revenues:
Americas	$	48		16	%		15	%	$	41
EMEA		34		36	%		27	%		25
Asia Pacific		18		27	%		22	%		15
Total revenues		100		24	%		20	%		81
Expenses:
Cost of services(1)		78		17	%		12	%		68
Stock-based compensation		1			*			*		—
Total expenses		79		17	%		12	%		68
Total Margin	$	21		58	%		64	%	$	13
Total Margin %		22%								16%
% Revenues by Geography:
Americas		48%								51%
EMEA		34%								31%
Asia Pacific		18%								18%

(1)	Excluding stock-based compensation
*	Not meaningful

Excluding the effect of currency rate fluctuations, education revenues increased in the first quarter of fiscal 2008 due primarily to an increase in customer training on the use of our applications products. The Americas contributed 37%, EMEA contributed 44% and Asia Pacific contributed 19% to the overall increase in education revenues.

Excluding the effects of currency rate fluctuations, education expenses increased due to incremental headcount and associated personnel related expenditures, as well as higher third party contractor and royalty fees associated with increased revenues. Education margin as a percentage of revenues increased as education revenues grew at a faster rate than expenses, but was partially offset by adverse currency effects that accelerated our operating expense growth at a greater rate than our revenues growth and reduced our margin percentage.

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Research and Development Expenses:  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 August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
Research and development(1)	$	624		29%		26%	$	484
Stock-based compensation		28		27%		27%		22
Amortization of intangible assets(2)		—		-100%		-100%		3
Total expenses	$	652		29%		26%	$	509
% of Total Revenues		14%						14%

(1)	Excluding stock-based compensation
(2)	Included as a component of ‘Amortization of Intangible Assets’ in our condensed consolidated statements of operations

Excluding the effect of currency rate fluctuations, research and development expenses increased primarily due to higher salary and benefits expenses associated with higher headcount levels, increased external contractor expenses and higher professional service fees. Research and development headcount increased by approximately 3,700 employees, consisting of a 31% increase in personnel in our applications products divisions and a 11% increase in personnel in our database and middleware products division. The increase in headcount in both divisions was the combined result of our recent acquisitions and our hiring of additional resources to develop new functionality for our legacy products.

General and Administrative Expenses:  General and administrative expenses primarily consist of personnel related expenditures for information technology, finance, legal and human resources support functions.

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
General and administrative(1)	$	175		21%		17%	$	145
Stock-based compensation		20		64%		64%		12
Total expenses	$	195		24%		20%	$	157
% of Total Revenues		4%						4%

⁽¹⁾ Excluding stock-based compensation

Excluding the effect of currency rate fluctuations, general and administrative expenses increased during the first quarter of fiscal 2008 as a result of higher personnel related costs associated with increased headcount to support our expanding operations, increased stock-based compensation expense and increased professional services fees.

Amortization of Intangible Assets:

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
Software support agreements and related relationships	$	97		28%		28%	$	76
Developed technology		120		58%		58%		76
Core technology		43		39%		39%		31
Customer contracts		17		70%		70%		10
Trademarks		8		60%		60%		5
Total amortization of intangible assets	$	285		44%		44%	$	198

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Amortization of intangible assets increased in the first quarter of fiscal 2008 due to amortization of acquired intangibles from Agile, Hyperion, and other recent acquisitions. See Note 7 of Notes to Condensed Consolidated Financial Statements for additional information regarding our intangible assets (including weighted average useful lives) and related amortization expenses.

Acquisition Related Charges:  Acquisition related charges primarily consist of in-process research and development expenses, integration-related professional services, stock-compensation expenses and personnel-related costs for transitional employees. Stock-based compensation included in acquisition related charges relates to unvested options assumed from acquisitions whose vesting was fully accelerated upon termination of the employees pursuant to the terms of these options.

	Three Months Ended August 31,
			Percent Change
(Dollars in millions)	2007		Actual		Constant		2006
In-process research and development	$	7		-84%		-84%	$	43
Transitional employee related costs		6		8%		8%		5
Stock-based compensation		32		*		*		—
Professional fees		2		*		*		—
Total acquisition related charges	$	47		-3%		-3%	$	48

*  Not meaningful

Acquisition related charges decreased slightly in the first quarter of fiscal 2008 primarily due to lower in-process research and development charges, which were almost completely offset by higher stock-based compensation expenses resulting primarily from the acceleration of certain unvested options of former Hyperion employees pursuant to the original terms of those options.

Restructuring:  Restructuring expenses consist of Oracle employee severance costs and Oracle duplicate facilities closures which were initiated to improve our cost structure as a result of acquisitions.

	Three Months Ended August 31,
(Dollars in millions)	2007		Change		2006
Severance costs	$	—		-100%	$	9

Restructuring expenses decreased in the first quarter of fiscal 2008 as our management did not initiate and communicate any plans to restructure our Oracle-based operations during the first quarter of fiscal 2008. Restructuring costs in the first quarter of fiscal 2007 relate to Oracle employee severance and facility closures that were recorded in that period and were a part of restructuring plans initiated in the third quarter of fiscal 2006.

Interest Expense:

	Three Months Ended August 31,
(Dollars in millions)	2007		Change		2006
Interest expense	$	94		12%	$	83

Interest expense increased in the first quarter of fiscal 2008 due to higher average borrowings resulting from our issuances of short-term commercial paper in our fourth quarter of fiscal 2007 (these issuances were repaid during our first quarter of fiscal 2008) and additional long-term senior notes that were issued in our fourth quarter of fiscal 2007.

Non-Operating Income, net:  Non-operating income, net consists primarily of interest income, net foreign currency exchange gains, net investment gains related to marketable securities and other investments as well as the minority share in the net profits of i-flex and Oracle Japan.

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	Three Months Ended August 31,
(Dollars in millions)	2007			Change		2006
Interest income	$	74			-4%	$	77
Foreign currency gains		6			5%		6
Net investment gains related to marketable equity securities and other investments		—			-99%		15
Minority interests		(12	)		0%		(12	)
Other		9			-44%		16
Total non-operating income, net	$	77			-24%	$	102

Non-operating income, net decreased in fiscal 2008 primarily due to lower net investment gains related to marketable equity securities for the first quarter of fiscal 2008.

Provision for Income Taxes:  The 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 federal statutory income tax rate due primarily to state taxes and earnings considered as indefinitely reinvested in foreign operations. Future effective tax rates could be adversely affected if earnings are lower than anticipated in countries where we have lower statutory rates, by unfavorable changes in tax laws and regulations, or by adverse rulings in tax related litigation.

	Three Months Ended August 31,
(Dollars in millions)	2007		Change		2006
Provision for income taxes	$	360		23%	$	292
Effective tax rate		30.0%				30.4%

Provision for income taxes increased in the first quarter of fiscal 2008 due to higher earnings before tax, partially offset by a lower effective tax rate.

Liquidity and Capital Resources

	August 31,				May 31,
(Dollars in millions)	2007		Change		2007
Working capital	$	5,376		54%	$	3,496
Cash, cash equivalents and marketable securities	$	7,743		10%	$	7,020

Working capital:  The increase in working capital as of August 31, 2007 in comparison to May 31, 2007 was primarily due to an increase in our operating cash flows resulting primarily from the collection of our trade receivables generated by our higher fiscal fourth quarter sales volumes and our adoption of FIN 48, which resulted in a significant reclassification of certain short-term tax liabilities to long-term (see Note 9 of our Notes to Condensed Consolidated Financial Statements for additional information). These increases were partially offset by cash used during the first quarter of fiscal 2008 to repurchase our common stock and to pay for our acquisitions.

Cash, cash equivalents and marketable securities:  Cash and cash equivalents consist of highly liquid investments in time deposits held at major banks, commercial paper, United States government agency discount notes, money market mutual funds and other money market securities with original maturities of 90 days or less. Marketable securities primarily consist of commercial paper, corporate notes and United States government agency notes. Cash, cash equivalents and marketable securities include $6.3 billion held by our foreign subsidiaries as of August 31, 2007. The increase in cash, cash equivalents and marketable securities at August 31, 2007 is due to an increase in our operating cash flows resulting primarily from the collection of our trade receivables generated by our higher fiscal fourth quarter sales volumes, partially offset by cash used during the first quarter of fiscal 2008 for repayment of commercial paper (issued in the fourth quarter of fiscal 2007), to repurchase our common stock and to pay for our acquisitions.

Days sales outstanding, which is calculated by dividing period end accounts receivable by average daily sales for the quarter, was 54 days at August 31, 2007 compared with 62 days at May 31, 2007. The days sales outstanding

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calculation excludes the adjustment to reduce software license updates and product support revenues acquired to fair value. The decline in days sales outstanding is primarily due to the collection, in our first quarter of fiscal 2008, of large license and support balances outstanding as of May 31, 2007.

	Three Months Ended August 31,
(Dollars in millions)	2007			Change		2006
Cash provided by operating activities	$	2,701			66%	$	1,623
Cash used for investing activities	$	(968	)		-53%	$	(2,062	)
Cash used for financing activities	$	(1,520	)		96%	$	(776	)

Cash flows from operating activities:  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 software license updates and product support are generally received by the beginning of the contract term, which is generally one year in length. We also generate significant cash from new software license sales and, to a lesser extent, services. Our primary uses of cash from operating activities are for personnel related expenditures as well as payments related to taxes and facilities.

Cash flows provided by operating activities increased in the first quarter of fiscal 2008 primarily due to the collection of trade receivables associated with higher sales volumes and higher net income.

Cash flows from investing activities:  The changes in cash flows from investing activities primarily relate to acquisitions and the timing of purchases, maturities and sales of marketable securities. We also use cash to invest in capital and other assets to support our growth.

Cash used for investing activities decreased in the first quarter of fiscal 2008 primarily due to fewer purchases of marketable securities, partially offset by an increase in cash used for acquisitions.

Cash flows from financing activities:  The changes in cash flows from financing activities primarily relate to borrowings and payments under debt obligations as well as stock repurchase and stock option exercise activity.

Cash used for financing activities increased in the first quarter of fiscal 2008 primarily due to the repayment of short-term commercial paper issued in the fourth quarter of fiscal 2007, partially offset by lower stock repurchases and additional proceeds from employee stock option exercises.

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

	Trailing 4-Quarters Ended August 31,
(Dollars in millions)	2007			Change		2006
Cash provided by operating activities	$	6,598			40%	$	4,706
Capital expenditures(1)		(357	)		53%		(233	)
Free cash flow	$	6,241			40%	$	4,473
Net income	$	4,444				$	3,532
Free cash flow as a percent of net income		140%					127%

⁽¹⁾ Represents capital expenditures as reported in cash flows from investing activities in our condensed consolidated statements of cash flows presented in accordance with U.S. generally accepted accounting principles.

Long-Term Customer Financing

We offer our customers the option to acquire our software and services through separate long-term payment contracts. We generally sell contracts that we have financed on a non-recourse basis to financial institutions. We

36

record the transfers of amounts due from customers to financial institutions as sales of financial assets because we are considered to have surrendered control of these financial assets. In the first quarter of fiscal 2008 and 2007, $153 million and $84 million, respectively, or approximately 14% and 11%, respectively, of our new software license revenues were financed through our financing division.

Contractual Obligations

The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments. Changes in our business needs, cancellation provisions, changing interest rates and other factors may result in actual payments differing from these estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most significant assumptions used in our information within the context of our consolidated financial position, results of operations and cash flows.

The following is a summary of our contractual obligations as of August 31, 2007:

	Year Ending May 31,
(Dollars in millions)	Total		2008		2009		2010		2011		2012		2013		Thereafter
Principal payments on long-term debt(1)	$	6,250	$	—	$	1,000	$	1,000	$	2,250	$	—	$	—	$	2,000
Capital leases(2)		3		3		—		—		—		—		—		—
Interest payments on long-term debt(1)		1,548		195		333		276		219		105		105		315
Operating leases(3)		1,413		252		305		252		168		135		89		212
Purchase obligations(4)		292		64		207		3		3		3		3		9
Funding commitments(5)		3		3		—		—		—		—		—		—
Total contractual obligations	$	9,509	$	517	$	1,845	$	1,531	$	2,640	$	243	$	197	$	2,536

⁽¹⁾ Long-term debt consists of the following as of August 31, 2007:

	Principal Balance
Floating rate senior notes due May 2009 (effective interest rate of 5.60%)	$	1,000
Floating rate senior notes due May 2010 (effective interest rate of 5.64%)		1,000
5.00% senior notes due January 2011, net of discount of $6		2,244
5.25% senior notes due January 2016, net of discount of $9		1,991
Total borrowings	$	6,235

	Interest payments were calculated based on terms of the related agreements and include estimates based on the effective interest rates as of August 31, 2007 for variable rate borrowings. In September 2007, we entered into two interest-rate swap agreements that have the economic effect of modifying the variable interest obligations associated with our floating rate senior notes due May 2009 and May 2010 so that the interest payable on the senior notes effectively becomes fixed at a rate of 4.62% and 4.59%, respectively.
(2)	Represents remaining payments under capital leases of computer equipment assumed from acquisitions.
(3)	Primarily represents leases of facilities and includes future minimum rent payments for facilities that we have vacated pursuant to our restructuring and merger integration activities. We have approximately $348 million in facility obligations, net of estimated sublease income and other costs, in accrued restructuring for these locations in our condensed consolidated balance sheet at August 31, 2007.
(4)	Represents amounts associated with agreements that are enforceable, legally binding and that specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of payments.

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⁽⁵⁾ Represents the maximum additional capital we may need to contribute toward our venture fund investments which are payable upon demand.

We believe that our current cash and cash equivalents, marketable securities and cash generated from operations will be sufficient to meet our working capital, capital expenditures and contractual obligations. In addition, we believe we could fund our acquisitions and repurchase common stock with our internally available cash and investments, cash generated from operations, amounts available under our credit facilities, additional borrowings or from the issuance of additional securities.

Off-Balance Sheet Arrangements

We do not have any off-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 is material to investors.

Stock Options

Our stock option program is a key component of the compensation package we provide to attract and retain talented employees and align their interests with the interests of existing stockholders. We recognize that options dilute existing stockholders and have sought to control the number of options granted while providing competitive compensation packages. Consistent with these dual goals, our cumulative potential dilution since June 1, 2004 has been less than 2.0% and has a weighted average annualized rate of 1.6% per year. The potential dilution percentage is calculated as the weighted average of new option grants for the year, net of 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 options are exercised. Some of these options, which have 10-year exercise periods, have exercise prices substantially higher than the current market price. At August 31, 2007, 23% of our outstanding stock options had exercise prices in excess of the current market price. Consistent with our historical practices, we do not expect that dilution from future grants before the effect of our stock repurchase program will exceed 2.0% per year for our ongoing business. Over the last 10 years, our stock repurchase program has more than offset the dilutive effect of our stock option program; however, we may reduce the level of our stock repurchases in the future as we may use our available cash for acquisitions, to repay indebtedness or for other purposes. At August 31, 2007, the maximum potential dilution from all outstanding and unexercised option awards, regardless of when granted and regardless of whether vested or unvested and including options where the strike price is higher than the current market price, was 8.9%.

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The Compensation Committee of the Board of Directors reviews and approves the organization-wide stock option grants to selected employees, all stock option grants to executive officers and any individual stock option grants in excess of 100,000 shares. A separate Plan Committee, which is an executive officer committee, approves individual stock option grants up to 100,000 shares to non-executive officers and employees. Options granted from June 1, 2004 through August 31, 2007 are summarized as follows (shares in millions):

Options outstanding at May 31, 2004	440
Options granted	225
Options assumed	206
Options exercised	(298	)
Forfeitures and cancellations	(118	)
Options outstanding at August 31, 2007	455
Weighted average annualized options granted, net of forfeitures	84
Weighted average annualized stock repurchases	155
Shares outstanding at August 31, 2007	5,117
Weighted average shares outstanding from June 1, 2004 through August 31, 2007	5,163
Options outstanding as a percent of shares outstanding at August 31, 2007	8.9%
In the money options outstanding (based on our August 31, 2007 stock price) as a percent of shares outstanding at August 31, 2007	6.9%
Weighted average annualized options granted and assumed, net of forfeitures and before stock repurchases, as a percent of weighted average shares outstanding from June 1, 2004 through August 31, 2007	1.6%
Weighted average annualized options granted, net of forfeitures and after stock repurchases, as a percent of weighted average shares outstanding from June 1, 2004 through August 31, 2007	–1.4%

Our Compensation Committee approves the annual organization-wide option grants to selected employees during the ten business-day period following the second business day after the announcement of our fiscal year-end earnings report. During the first quarter of fiscal 2008, we made our annual grant of options and made or assumed other grants to purchase approximately 56 million shares, which were partially offset by forfeitures of 1 million shares.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk.  We generally purchase investments with relatively short maturities. Therefore, interest rate movements generally do not materially affect the valuation of our investments. Changes in the overall level of interest rates affect the interest income that is generated from our investments. During our first quarter of fiscal 2008, total interest income was $74 million with investments yielding an average of 3.99% on a worldwide basis. This interest rate level was up approximately 34 basis points from 3.65% for the first quarter of fiscal 2007. If overall interest rates fell by a similar amount (34 basis points) in fiscal 2008, our annual interest income would decline by approximately $25 million, assuming consistent investment levels. The table below presents the cash, cash equivalent and marketable securities balances and the related weighted average interest rates for our investment portfolio at August 31, 2007. The cash, cash equivalent and marketable securities balances are recorded at fair value at August 31, 2007:

	Market Value of
	Available-for-Sale		Weighted Average
(Dollars in millions)	Securities		Interest Rate
Cash and cash equivalents	$	6,455		4.16%
Marketable securities		1,288		3.51%
Total cash, cash equivalents and marketable securities	$	7,743		4.05%

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The following table includes the United States dollar equivalent of cash, cash equivalents and marketable securities denominated in foreign currencies. See discussion of our foreign currency risk below for a description of how we hedge net assets of certain international subsidiaries from foreign currency exposure.

	U.S. Dollar
	Equivalent at
	August 31,
(in millions)	2007
Euro	$	1,380
British Pound		702
Japanese Yen		658
Chinese Renminbi		357
Canadian Dollar		252
Australian Dollar		241
South African Rand		140
Other currencies		1,507
Total cash, cash equivalents and marketable securities denominated in foreign currencies	$	5,237

Borrowings as of August 31, 2007 were $6.2 billion, consisting of $4.2 billion of fixed rate borrowings and $2.0 billion of variable rate borrowings. Our variable rate borrowings were as follows at August 31, 2007:

(Dollars in millions)	Borrowings		Effective Interest Rate
Floating rate senior notes due May 2009(1)	$	1,000		5.60	%
Floating rate senior notes due May 2010(1)		1,000		5.64	%
Total borrowings subject to variable interest rate fluctuations	$	2,000

⁽¹⁾ The 2009 and 2010 Notes bear interest at a floating rate equal to three-month LIBOR plus 0.02% per year and 0.06% per year, respectively. In September 2007, we entered into two interest-rate swap agreements that have the economic effect of modifying the variable interest obligations associated with our floating rate senior notes due May 2009 and May 2010 so that the interest payable on the senior notes effectively becomes fixed at a rate of 4.62% and 4.59%, respectively.

Interest expense for the first quarter of fiscal 2008 was $94 million. Based on effective interest rates at August 31, 2007, a 50 basis point increase in interest rates on our borrowings subject to variable interest rate fluctuations would increase our interest expense by approximately $10 million annually. As a result of two interest-rate swap agreements that we entered into in September 2007 (described above), we believe we have eliminated this potential variability for future periods.

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Foreign Currency Transaction Risk.  We transact business in various foreign currencies and have established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Under this program, increases or decreases in our foreign currency exposures are offset by gains or losses on the forward contracts, to mitigate the possibility of foreign currency transaction gains or losses. These foreign currency exposures typically arise from intercompany sublicense fees and other intercompany transactions. Our forward contracts generally have terms of 90 days or less. We do not use forward contracts for trading purposes. All outstanding foreign currency forward contracts (excluding our Yen equity hedge described below) are marked to market at the end of the period with unrealized gains and losses included in non-operating income, net. Our ultimate realized gain or loss with respect to currency fluctuations will depend on the currency exchange rates and other factors in effect as the contracts mature. Net foreign exchange transaction losses included in non-operating income, net in the accompanying condensed consolidated statements of operations were nominal and ($2) million for the three months ended August 31, 2007 and 2006, respectively. The unrealized gains of our outstanding foreign currency forward contracts were $10 million at August 31, 2007 and $5 million at May 31, 2007.

Net Investment Risk.  Periodically, we hedge the net assets of certain international subsidiaries (net investment hedges) using foreign currency forward contracts to offset the translation and economic exposures related to our investments in these subsidiaries. We measure the effectiveness of net investment hedges by using the changes in spot exchange rates because this method reflects our risk management strategies, the economics of those strategies in our financial statements and better manages interest rate differentials between different countries. Under this method, the change in fair value of the forward contract attributable to the changes in spot exchange rates (the effective portion) is reported in stockholders’ equity to offset the translation results on the net investments. The remaining change in fair value of the forward contract (the ineffective portion) is recognized in non-operating income, net.

Net gains (losses) on investment hedges reported in stockholders’ equity net of tax effects were ($20) million and $14 million for the three months ended August 31, 2007 and 2006, respectively. Net gains on investment hedges reported in non-operating income, net were $6 million and $7 million for the three months ended August 31, 2007 and 2006, respectively.

At August 31, 2007, we had one net investment hedge in Japanese Yen. The Yen investment hedge minimizes currency risk arising from net assets held in Yen as a result of equity capital raised during the initial public offering and secondary offering of Oracle Japan. The fair value of our Yen investment hedge was nominal as of August 31, 2007 and May 31, 2007. As of August 31, 2007, the Yen investment hedge has a notional amount of $581 million and an exchange rate of 113.55 Yen for each United States dollar.

Item 4.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures.  Our Chief Executive Officer and our Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this quarterly report, have concluded that our disclosure controls and procedures are effective based on their evaluation of these controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.

Changes in Internal Control over Financial Reporting.  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.

Inherent Limitations on Effectiveness of Controls.  Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting 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

41

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.

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

The material set forth in Note 16 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q is incorporated herein by reference.

Item 1A.   Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended May 31, 2007. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.

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

Our Board of Directors has approved a program to repurchase shares of our common stock to reduce the dilutive effect of our stock option and stock purchase plans. In April 2007, our Board of Directors expanded our repurchase program by $4.0 billion and as of August 31, 2007, approximately $3.7 billion was available for share repurchases pursuant to our stock repurchase program. We repurchased approximately 25 million shares for $500 million during the three months ended August 31, 2007 (including approximately 1 million shares for $17 million that were repurchased but not settled) and approximately 67 million shares for $1.0 billion during the three months ended August 31, 2006 (including approximately 4 million shares for $64 million that were repurchased but not settled) under the applicable repurchase programs authorized.

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, our debt repayment obligations (as described above), 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 Rule 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 August 31, 2007 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase programs:

					Total Number of		Approximate Dollar
	Total Number		Average		Shares Purchased as		Value of Shares that
	of Shares		Price Paid		Part of Publicly		May Yet Be Purchased
(In millions, except per share amounts)	Purchased		Per Share		Announced Program		Under the Program
June 1, 2007 — June 30, 2007		12.2	$	19.47		12.2	$	3,970.9
July 1, 2007 — July 31, 2007		6.2	$	20.21		6.2	$	3,845.7
August 1, 2007 — August 31, 2007		6.9	$	19.67		6.9	$	3,709.6
Total		25.3	$	19.78		25.3

Item 6.   Exhibits

Exhibit
Number			Exhibit Title
	10	.08	Form of Stock Option Agreements for the Amended and Restated 2000 Long-Term Equity Incentive Plan
	31	.01	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Lawrence J. Ellison
	31	.02	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Safra A. Catz
	32	.01	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Oracle Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ORACLE CORPORATION
Date: September 26, 2007	By:	/s/  Safra A. Catz Safra A. Catz President, Chief Financial Officer and Director
Date: September 26, 2007	By:	/s/  William Corey West William Corey West Vice President, Corporate Controller and Chief Accounting Officer

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EX-10.08

Exhibit 10.08

Granted to:

Employee ID:

Number of shares:

Type of Stock Option:

Grant Number:

Grant Date:

Grant Expiration Date:

Exercise Price:

Vesting Schedule

Vesting Start Date:

First Date to Exercise Number of Shares Last Date to Exercise

Authorized by:

/s/ Eric R. Ball

Eric R. Ball,
Vice President and Treasurer

FOR SECTION 16 OFFICERS

NOTICE OF STOCK OPTION GRANT
2000 LONG-TERM EQUITY INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION

1.	Grant. Oracle Corporation (the “Company”) has granted to the optionee (“Optionee”) named on the preceding Certificate of Stock Option Grant (the “Certificate”) a non-qualified option (the “Option”) to purchase the total number of shares of Common Stock set forth on such Certificate (the “Shares”) at the exercise price per share set forth therein (the “Exercise Price”). This Option is subject to the terms set forth below and in the Company’s 2000 Long-Term Equity Incentive Plan as amended to date (the “Plan”). In the event of a conflict between the terms of the Plan and the terms of this Notice of Stock Option Grant (the “Grant Notice”), the terms of the Plan shall govern. All capitalized terms not defined herein shall have the meanings ascribed to them in the Plan.
2.	Restrictions on Exercise. Subject to the terms of the Plan and this Grant Notice, the Option may be exercised in increments on or after each vesting date specified on the Certificate, provided that in no event may the Option be exercised after the last date to exercise specified on the Certificate (the “Expiration Date”). In addition, this Option may not be exercised as to fewer than 100 shares unless it is exercised as to all Shares as to which this Option is then exercisable.
	The Optionee agrees to comply with the Insider Trading restrictions applicable to the Company’s officers for one fiscal quarter following the Optionee’s termination of his/her employment relationship with the Company or any Parent, Subsidiary or Affiliate of the Company, regardless of the reason for such termination. Under these restrictions, the Optionee may be prohibited from trading in the Company’s securities during the last month of the fiscal quarter and until two full trading days following the Company’s earnings announcement for that fiscal quarter. Notwithstanding the foregoing, this Option is subject to the time limitations on exercise set forth in Section 6(i) of the Plan and Section 3 below (the “Remaining Option Exercise Period”); provided that if any “No Trading” period under Oracle’s Insider Trading Policy occurs during the Remaining Option Exercise Period and the Optionee is prohibited from trading during such period, the Remaining Option Exercise Period shall be extended by the number of days equivalent to any such periods such that the total amount of time the Optionee shall have to exercise the vested portion of this Option shall be equal to the original Remaining Option Exercise Period (except that, if the Expiration Date of the Option occurs during this additional extension period, such Option shall still expire on the Expiration Date and the additional extension period shall not be extended beyond the Expiration Date).
3.	Termination of Option.

a) This Option shall cease vesting upon termination of Optionee’s employment relationship with Optionee’s employer. An Optionee’s employment relationship shall be considered to have terminated, and the Optionee to have ceased to be employed by the Company or its Parent, Subsidiary or Affiliate, on the earliest of:

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(1)	the date on which the Company, or any Parent, Subsidiary or Affiliate of the Company, as appropriate, delivers to the Optionee notice in a form prescribed by the Company that the Company, or such other entity, is thereby terminating the employment relationship (regardless of whether the notice or termination is lawful or unlawful or is in breach of any contract of employment) unless the Optionee is transferring employment to the Company, or any Parent, Subsidiary or Affiliate;
(2)	the date on which the Optionee delivers notice in a form prescribed by the Company, to the Company, or any Parent, Subsidiary or Affiliate of the Company, as appropriate, that the Optionee is terminating the employment relationship (regardless of whether the notice or termination is lawful or unlawful or is in breach of any contract of employment) unless the Optionee is transferring employment to the Company, or any Parent, Subsidiary or Affiliate;
(3)	the date on which the Optionee ceases to provide services to the Company, or any Parent, Subsidiary or Affiliate of the Company, as appropriate, except where the Optionee is on an authorized leave of absence; or
(4)	the date on which the Optionee ceases to be considered an “employee” under applicable law.

The committee of the Board of Directors of the Company administering the Plan (the “Committee”) shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company and the effective date on which such employment terminated.

b)

If Optionee ceases to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company, as appropriate, for any reason except death or disability, this Option may be exercised to the extent (and only to the extent) that it would have been exercisable upon the date of termination of Optionee’s employment, within three (3) months after the date of termination, subject to Section 2 above, but in any event no later than the Expiration Date of the Option. If employment ceases because of death or disability, this Option may be exercised to the extent (and only to the extent) specified in the Plan, subject to Section 2 above.

4.	Manner of Exercise; Consideration. The Option may be exercised by delivery to the Company of the stock option exercise agreements in the form then approved by the Committee, stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements, as may be required by the Company to comply with applicable laws, together with payment in a form allowed under the Plan. The current forms of Stock Option Exercise Form and Stock Option Exercise Notice and Agreement (the “Exercise Agreement”) are available at the Company’s web site at:
	[Intranet Link]
	The Committee may permit the execution of “same day sale” transactions electronically.

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	Due to administrative restrictions, paying the Exercise Price by means of the surrender of Shares having a Fair Market Value equal to the applicable Exercise Price of the Option is not an available method of exercise under this Grant Notice.
5.	Compliance with Laws and Regulations. The issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal, state, local or foreign securities laws and with all applicable requirements of any stock exchange or national market system on which the Company’s common stock may be listed at the time of such issuance or transfer.
6.	Transferability of Option. This Option may not be transferred in any manner other than (i) by will, or (ii) by the laws of descent and distribution, provided however, a U.S. Optionee may transfer a vested portion of the Option for no consideration to or for the benefit of one or more members of the Optionee’s Immediate Family (including, without limitation, to a trust for the benefit of the Optionee’s Immediate Family)(a “Transferee”), subject to such limits as the Committee may establish, and such Transferee shall remain subject to all the terms and conditions applicable to the Option prior to such transfer. The Optionee will continue to be treated as the holder of the Option for purposes of the Company’s record keeping and for other purposes deemed appropriate by the Company, including the right to consent to amendments to this Grant Notice; notwithstanding that the economic benefits and dispositive control has been transferred to the Transferee. Optionee agrees, on behalf of each Transferee, to exercise the Option upon the direction and arrangement of payment by such transferee and further agrees to forward all information provided by the Company (including but not limited to those required under the U.S. securities laws) with respect to the Option to the Transferee. In the discretion of the Committee, the foregoing right to transfer shall apply to the right to transfer ancillary rights associated with the Option. The term “Immediate Family” shall mean the Optionee’s spouse, qualified same-sex domestic partner, parents, children, stepchildren, adoptive relationships, sisters, brothers and grandchildren (and, for this purpose, shall also include the Optionee). Optionee acknowledges that the Optionee will continue to be liable for any taxes incurred in connection with the exercise of the Option.
7.	Tax Consequences. The U.S. federal income tax consequences of receipt and exercise and transfer of the Option, as well as upon disposition of the Shares following exercise, are set forth in the Plan Prospectus made available at the Company’s web site at:
	[Intranet Link]
	The tax treatment in the Optionee’s country of residence may differ from that reflected in the Plan Prospectus.
8.	Tax Withholding. Regardless of any action the Company or Optionee’s employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Optionee acknowledges that the ultimate liability for all Tax-Related Items legally due by Optionee is and remains Optionee’s responsibility and that the Company and/or Optionee’s employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items.

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Prior to exercise of the Option, Optionee will pay or make adequate arrangements satisfactory to the Company and/or Optionee’s employer to satisfy all withholding and payment on account obligations of the Company and/or Optionee’s employer. In this regard, Optionee authorizes the Company and/or Optionee’s employer to withhold all applicable Tax-Related Items legally payable by Optionee from his or her wages or other cash compensation paid to Optionee by the Company and/or Optionee’s employer or from proceeds of the sale of Shares. Alternatively, or in addition, if permissible under local law, the Company may (1) sell or arrange for the sale of Shares that Optionee acquires to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in Shares, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum withholding amount. Finally, Optionee will pay to the Company or Optionee’s employer any amount of Tax-Related Items that the Company or Optionee’s employer may be required to withhold as a result of Optionee’s participation in the Plan or Optionee’s purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if Optionee fails to comply with his or her obligations in connection with the Tax-Related Items as described in this section.

9.

Nature of the Grant. By entering into this agreement and accepting the grant of an Option evidenced hereby, Optionee acknowledges that: (i) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan and this Grant Notice; (ii) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past; (iii) all decisions with respect to future grants, if any, will be at the sole discretion of the Company; (iv) the Optionee’s participation in the Plan shall not create a right to further employment with the Optionee’s employer and shall not interfere with the ability of the Optionee’s employer to terminate the Optionee’s employment relationship at any time with or without cause; (v) the Optionee’s participation in the Plan is voluntary; (vi) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or Optionee’s employer, and which is outside the scope of the Optionee’s employment contract, if any; (vii) the Option is not part of normal or expected compensation or salary for any purpose including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits (including the 401(k) Savings and Investment Plan and the Deferred Compensation Plan) or similar payments; (viii) the vesting of any Option ceases upon termination of the employment relationship as described in Section 6(j)(iv) of the Plan except as may otherwise be explicitly provided in the Plan document; (ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty, and the value of the Shares Optionee acquires under the Plan may increase or decrease in value, even below the Exercise Price; (x) if the underlying Shares do not increase in value, the Option will have no value; (xi) in the event that Optionee’s employer is not the Company, the grant of an Option will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of an Option will not be interpreted to form an employment contract with Optionee’s employer or any subsidiary or affiliate of the Company; (xii) in consideration of the Option grant, no claim or entitlement to compensation or damages shall arise from termination of the Option or diminution in value of the Option or Shares purchased through exercise of the Option resulting from termination of Optionee’s employment by the Company or Optionee’s employer (for any reason whatsoever and whether or not in breach of local labor laws) and Optionee irrevocably releases the Company

4

	and his or her employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Grant Notice, Optionee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; (xiii) Optionee is responsible for the payment of all taxes and social contributions which may be imposed on the Optionee as a result of accepting and/or exercising Option; and (xiv) the Company has advised Optionee to consult his or her attorney or accountant with respect to the tax consequences upon exercise of the Option and/or disposition of Shares acquired under the Plan.
10.	Data Privacy Consent. As a condition of the grant of the Option, the Optionee hereby explicitly and unambiguously consents to the collection, use, processing and transfer, in electronic or other form, of personal data as described in this paragraph by and among, as applicable, Optionee’s employer and the Company and any of its subsidiaries and affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan. The Optionee understands that the Company and any Parent, Subsidiary or Affiliate hold certain personal information about the Optionee, including the Optionee’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the purpose of managing and administering the Plan (“Data”). The Optionee acknowledges that Data may be transferred to E-Trade, Inc. (“E-Trade”) or such other broker as designated by the Company and to any third parties assisting in the implementation, administration and management of the Plan, provided that the Company ensures that the recipient maintains a level of privacy broadly equivalent to the standard set down in the Company’s Internal Privacy Policy. The Optionee accepts that these recipients may be located in the United States or the European Economic Area and that the recipient’s country may have different data privacy laws and protections than Optionee’s country. Optionee understands that Optionee may request a list with the names and address of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Optionee’s participation in the Plan, including any requisite transfer of such Data to a designated broker or other third party with whom the Optionee may elect to deposit any Shares acquired upon exercise of the Option such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on Optionee’s behalf. The Optionee understands Data will be held only as long as necessary to implement, administer and manage Optionee’s participation in the Plan. The Optionee understands that the Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, without cost to Optionee, by contacting in writing Optionee’s local human resources representative. Optionee understands that withdrawal of consent may, however, affect Optionee’s ability to exercise or realize benefits from the Option. For more information on the consequences of refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact Optionee’s local human resources representative.
	As a condition of the grant of the Option, the Optionee unambiguously gives his or her consent to the transfer of Data, as described in the Grant Notice, and although countries outside of the European Union may lack legal provisions that offer an adequate level of

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	protection, similar to the European Directive 95/46/EC, Optionee agrees that his or her personal data may be transferred to such countries.
11	Entire Agreement; Interpretation. The Plan made available at the Company’s web site at [intranet link] is incorporated herein by reference This Grant Notice and the Plan constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof. The Committee may amend this Grant Notice and the Plan from time to time. Optionee understands and agrees that the terms of the Option can only be amended in writing. Optionee agrees that the terms of the Plan govern the Option and that all interpretations and determinations made by the Company (or its Board of Directors and any committee of the Board administering the Plan) with respect to the Plan and this Grant Notice shall be final and binding on all persons. This Grant Notice is governed by California law except for that body of law pertaining to conflict of laws. Unless Optionee is subject to a Mutual Agreement to Arbitrate with the Company, Optionee agrees to institute any legal action or legal proceeding relating to the Grant Notice or the Plan in state court in San Mateo County, California or in federal court in San Francisco, California. Optionee agrees to submit to the jurisdiction of and agrees that venue is proper in the aforesaid courts in any such action or proceeding.
12.	Language. If Optionee received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.
13.	Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option granted hereunder, participation in the Plan or future options that may be granted under the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
14.	Severability. The provisions of this Grant Notice are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
15.	By clicking “I have Read and Agree” on the button below, Optionee accepts the Option and agrees to be bound by its terms.

These terms apply to grants made on or after July 5, 2007.

6

ORACLE CORPORATION
STOCK OPTION AGREEMENT
2000 LONG-TERM EQUITY INCENTIVE PLAN
U.S. NON-QUALIFIED STOCK OPTION
FOR NON-U.S. SECTION 16 OFFICERS

1.	Grant. Oracle Corporation (the “Company”) has granted to the optionee (“Optionee”) named on the preceding Certificate of Stock Option Grant (the “Certificate”) a U.S. non-qualified option (the “Option”) to purchase the total number of shares of Common Stock set forth on such Certificate (the “Shares”) at the exercise price per share set forth therein (the “Exercise Price”). This Option is subject to the terms set forth below in this stock option agreement including Exhibit A hereto (the “Agreement”) and in the Company’s 2000 Long-Term Equity Incentive Plan as amended to date (the “Plan”). In the event of a conflict between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall govern. All capitalized terms not defined herein shall have the meanings ascribed to them in the Plan.
2.	Restrictions on Exercise. Subject to the terms of the Plan and this Agreement, the Option may be exercised in increments on or after each vesting date specified on the Certificate, provided that in no event may the Option be exercised after the last date to exercise specified on the Certificate (the “Expiration Date”). In addition, this Option may not be exercised as to fewer than 100 Shares unless it is exercised as to all Shares as to which this Option is then exercisable.
	The Optionee agrees to comply with the Insider Trading restrictions applicable to the Company’s officers for one fiscal quarter following the Optionee’s termination of his/her employment relationship with the Company or any Parent, Subsidiary or Affiliate of the Company, regardless of the reason for such termination. Under these restrictions, the Optionee may be prohibited from trading in the Company’s securities during the last month of the fiscal quarter and until two full trading days following the Company’s earnings announcement for that fiscal quarter. Notwithstanding the foregoing, this Option is subject to the time limitations on exercise set forth in Section 6(i) of the Plan and Section 3 below (the “Remaining Option Exercise Period”); provided that if any “No Trading” period under Oracle’s Insider Trading Policy occurs during the Remaining Option Exercise Period and the Optionee is prohibited from trading during such period, the Remaining Option Exercise Period shall be extended by the number of days equivalent to any such periods such that the total amount of time the Optionee shall have to exercise the vested portion of this Option shall be equal to the original Remaining Option Exercise Period (except that, if the Expiration Date of the Option occurs during this additional extension period, such Option shall still expire on the Expiration Date and the additional extension period shall not be extended beyond the Expiration Date).
3.	Termination of Option.

a) This Option shall cease vesting upon termination of Optionee’s employment relationship with Optionee’s employer. An Optionee’s employment relationship shall be considered to have terminated, and the Optionee to have ceased to be employed by the Company or its Parent, Subsidiary or Affiliate, on the earliest of:

1

(1)	the date on which the Optionee’s employer (the “Employer”) delivers to the Optionee notice terminating the employment relationship (regardless of whether the notice or termination is lawful or unlawful or is in breach of any contract of employment) unless the Optionee is transferring employment to the Company, or any Parent, Subsidiary or Affiliate;
(2)	the date on which the Optionee delivers notice to his or her Employer that the Optionee is terminating the employment relationship (regardless of whether the notice or termination is lawful or unlawful or is in breach of any contract of employment) unless the Optionee is transferring employment to the Company, or any Parent, Subsidiary or Affiliate;
(3)	the date on which the Optionee ceases to provide services to the Company, or any Parent, Subsidiary or Affiliate, as appropriate, except where the Optionee is on an authorized leave of absence; or
(4)	the date on which the Optionee ceases to be considered an “employee” under Applicable Law.
	The committee of the Board of Directors of the Company administering the Plan (the “Committee”) shall have discretion to determine whether Optionee has ceased to be employed by the Company or any Parent, Subsidiary or Affiliate, as appropriate, and the effective date on which such employment terminated.
b)	If Optionee ceases to be employed by the Company or any Parent, Subsidiary or Affiliate of the Company, as appropriate, for any reason except death or disability, this Option may be exercised to the extent (and only to the extent) that it would have been exercisable upon the date of termination of Optionee’s employment, within three (3) months after the date of termination, subject to Section 2 above, but in any event no later than the Expiration Date of the Option. If employment ceases because of death or disability, this Option may be exercised to the extent (and only to the extent) specified in the Plan, subject to Section 2 above.
4.	Manner of Exercise; Consideration. The Option may be exercised by delivery to the Company of the stock option exercise agreements in the form then approved by the Committee, stating the number of Shares being purchased, the restrictions imposed on the Shares, if any, and such representations and agreements, as may be required by the Company to comply with applicable laws, together with payment in a form allowed under the Plan. The current forms of stock option exercise form and stock option exercise notice and agreement (the “Exercise Agreement”) are available at the Company’s web site at:
	[Intranet Link]
	The Committee may permit the execution of cashless exercises electronically.
	Exhibit A of this Agreement may limit the available methods of exercise for Optionees in some countries. Therefore, it is important to review Exhibit A for restrictions that may apply to Optionee.
	Due to administrative restrictions, paying the Exercise Price by means of the surrender of Shares having a Fair Market Value equal to the applicable Exercise Price of the Option is not an available method of exercise under this Agreement.

2

5.	Compliance with Laws and Regulations. The issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal, state, local or foreign securities laws and with all applicable requirements of any stock exchange or national market system on which the Company’s common stock may be listed at the time of such issuance or transfer.
6.	Transferability of Option. This Option may not be transferred in any manner other than (i) by will, or (ii) by the laws of descent and distribution.
7.	Tax Consequence. The U.S. federal income tax consequences of the grant and exercise and transfer of the Option, as well as upon disposition of the Shares following exercise, are set forth in the plan prospectus made available at the Company’s web site at:
	[Intranet Link]
	The tax treatment in the Optionee’s country of residence may differ from that reflected in the plan prospectus.
8.	Tax Withholding. Regardless of any action the Company or the Employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Optionee acknowledges that the ultimate liability for all Tax-Related Items legally due by Optionee is and remains Optionee’s responsibility and that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option grant, including the grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items.
	Prior to exercise of the Option, Optionee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, Optionee authorizes the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by Optionee from his or her wages or other cash compensation paid to Optionee by the Company and/or the Employer or from proceeds of the sale of Shares. Alternatively, or in addition, if permissible under local law, the Company may (1) sell or arrange for the sale of Shares that Optionee acquires to meet the withholding obligation for Tax-Related Items, and/or (2) withhold in Shares, provided that the Company only withholds the amount of Shares necessary to satisfy the minimum withholding amount. Finally, Optionee will pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of Optionee’s participation in the Plan or Optionee’s purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if Optionee fails to comply with his or her obligations in connection with the Tax-Related Items as described in this section.
9.	Nature of the Grant. By entering into this Agreement and accepting the grant of an Option evidenced hereby, Optionee acknowledges that: (i) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan and this

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	Agreement; (ii) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past; (iii) all decisions with respect to future grants, if any, will be at the sole discretion of the Company; (iv) the Optionee’s participation in the Plan shall not create a right to further employment with the Optionee’s employer and shall not interfere with the ability of the Employer to terminate the Optionee’s employment relationship at any time with or without cause; (v) the Optionee’s participation in the Plan is voluntary; (vi) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or Employer, and which is outside the scope of the Optionee’s employment contract, if any; (vii) the Option is not part of normal or expected compensation or salary for any purpose including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits (including the 401(k) Savings and Investment Plan and the Deferred Compensation Plan) or similar payments; (viii) the vesting of any Option ceases upon termination of the employment relationship as described in Section 6(i)(iv) of the Plan except as may otherwise be explicitly provided in the Plan document; (ix) the future value of the underlying Shares is unknown and cannot be predicted with certainty, and the value of the Shares Optionee acquires under the Plan may increase or decrease in value, even below the Exercise Price; (x) if the underlying Shares do not increase in value, the Option will have no value; (xi) in the event that the Employer is not the Company, the grant of an Option will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the grant of an Option will not be interpreted to form an employment contract with the Employer or any Subsidiary or Affiliate of the Company; (xii) in consideration of the Option grant, no claim or entitlement to compensation or damages shall arise from termination of the Option or diminution in value of the Option or Shares purchased through exercise of the Option resulting from termination of Optionee’s employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and Optionee irrevocably releases the Company and his or her Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, Optionee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; (xiii) Optionee is responsible for the payment of all taxes and social contributions which may be imposed on the Optionee as a result of accepting and/or exercising Option; and (xiv) the Company has advised Optionee to consult his or her attorney or accountant with respect to the tax consequences upon exercise of the Option and/or disposition of Shares acquired under the Plan.
10.	Data Privacy Consent. As a condition of the grant of the Option, the Optionee hereby explicitly and unambiguously consents to the collection, use, processing and transfer, in electronic or other form, of personal data as described in this paragraph by and among, as applicable, the Employer and the Company and any of its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan.
	The Optionee understands that the Company and any Parent, Subsidiary or Affiliate hold certain personal information about the Optionee, including the Optionee’s name, home address and telephone number, date of birth, social security number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all options or any other entitlement to Shares awarded, canceled, exercised,

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	vested, unvested or outstanding in the Optionee’s favor, for the purpose of managing and administering the Plan (“Data”).
	The Optionee acknowledges that Data may be transferred to E-Trade, Inc. (“E-Trade”) or such other broker as designated by the Company and to any third parties assisting in the implementation, administration and management of the Plan, provided that the Company ensures that the recipient maintains a level of privacy broadly equivalent to the standard set forth in the Company’s Internal Privacy Policy. The Optionee accepts that these recipients may be located in the United States or the European Economic Area and that the recipient’s country may have different data privacy laws and protections than Optionee’s country. Optionee understands that Optionee may request a list with the names and address of any potential recipients of the Data by contacting his or her local human resources representative. The Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Optionee’s participation in the Plan, including any requisite transfer of such Data to a designated broker or other third party with whom the Optionee may elect to deposit any Shares acquired upon exercise of the Option such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on Optionee’s behalf. The Optionee understands Data will be held only as long as necessary to implement, administer and manage Optionee’s participation in the Plan. The Optionee understands that the Optionee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, without cost to Optionee, by contacting in writing Optionee’s local human resources representative. Optionee understands that withdrawal of consent may, however, affect Optionee’s ability to exercise or realize benefits from the Option. For more information on the consequences of refusal to consent or withdrawal of consent, Optionee understands that Optionee may contact Optionee’s local human resources representative.
	As a condition of the grant of the Option, the Optionee unambiguously gives his or her consent to the transfer of Data, as described in this Agreement, and although countries outside of the European Union may lack legal provisions that offer an adequate level of protection, similar to the European Directive 95/46/EC, Optionee agrees that his or her personal data may be transferred to such countries.
11.	Entire Agreement; Interpretation. The Plan made available at the Company’s web site at [Intranet Link] is incorporated herein by reference. This Agreement (which includes Exhibit A hereto) and the Plan constitute the entire agreement of the parties and supersede all prior undertakings and agreements with respect to the subject matter hereof. The Committee may amend this Agreement and the Plan from time to time. Optionee understands and agrees that the terms of the Option can only be amended in writing. Optionee agrees that the terms of the Plan govern the Option and that all interpretations and determinations made by the Company (or its Board of Directors and any committee of the Board administering the Plan) with respect to the Plan and this Agreement shall be final and binding on all persons. This Agreement is governed by California law except for that body of law pertaining to conflict of laws. Unless Optionee is subject to a mutual agreement to arbitrate with the Company, Optionee agrees to institute any legal action or legal proceeding relating to the Agreement or the Plan in state court in San Mateo County, California or in federal court in San Francisco, California. Optionee agrees to submit to the jurisdiction of and agrees that venue is proper in the aforesaid courts in any such action or proceeding.

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12.	Language. If Optionee received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.
13.	Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option granted hereunder, or Shares purchased under the Plan, or participation in the Plan or future options that may be granted under the Plan by electronic means or to request Optionee’s consent to participate in the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
14.	Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
15.	Country-Specific Terms/Notifications. Exhibit A hereto contains country-specific terms and alerts that apply to Optionees. Such terms are part of this Agreement. As a result, Optionee should review the specific terms/notifications that apply to him or her in his or her particular country. These country specific alerts/notifications are available at the Company’s web site (in addition to being attached hereto) at:
	[Intranet Link]
16.	By clicking on the “Accept” button, Optionee accepts the Option and agrees to be bound by its terms as set forth in the Plan and this Agreement (including Exhibit A hereto).
	These terms apply to grants made on or after July 5, 2007.

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Exhibit A

Oracle Corporation
2000 Long-Term Equity Incentive Plan

Special Provisions for Stock Options Granted in Countries Outside the U.S.

This Exhibit A includes additional terms and conditions of the grant of Options that will apply to Optionees in the countries listed below. In addition, this Exhibit A includes country alerts that pertain to exchange controls and other information that Optionees should be aware of with respect to their participation in the Oracle Corporation 2000 Long-Term Equity Incentive Plan (the “Plan”).

The alerts are based on the securities, exchange control and other laws in effect in your country as of May 2007. Such laws are often complex and change frequently. As a result, ORACLE STRONGLY RECOMMENDS THAT YOU DO NOT RELY ON THIS SUMMARY AS YOUR ONLY SOURCE OF INFORMATION RELATING TO THE CONSEQUENCES OF YOUR PARTICIPATION AS THE ALERTS MAY BE OUT OF DATE AT THE TIME YOU PURCHASE OR SELL SHARES.

In addition, the alerts are general in nature. The Company is not providing you with any tax advice with respect to your Option. The alerts that are provided below may not apply to your particular situation, and the Company is not in a position to assure you of any particular result. Accordingly, you are advised to seek appropriate professional advice as to how the tax or other laws in your country apply to your situation. YOU MUST CONSULT YOUR PERSONAL TAX OR LEGAL ADVISORS FOR THE MOST CURRENT INFORMATION.

Finally, note that if you are a citizen or resident of a country other than the one you are working in, the information contained in these alerts may not be applicable to you.

Capitalized terms used but not defined herein shall have the same meanings assigned to them in the Plan.

Singapore

Securities Law Information

The offer is being made on a private basis and is, therefore, exempt from registration in Singapore.

Alert to Optionees in Singapore who are Directors

If you are a director, associate director or shadow director of a Singaporean affiliate of the Company, you are subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Singaporean affiliate in writing when you receive an interest (e.g., Options, Shares) in the Company or any related companies (including when you sell Shares acquired through exercise of your Option). In addition, you must notify the Singaporean subsidiary when you sell or receive shares of the Company or any related company (including when you sell or receive Shares

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acquired under the Plan). These notifications must be made within two days of acquiring or disposing of any interest in the Company or any related company. In addition, a notification must be made of your interests in the Company or any related company within two days of becoming a director.

Switzerland

Tax Alert

For tax reasons, you must exercise your options using the cashless sell-all exercise method. To complete a cashless sell-all exercise you should notify your broker to: (i) sell all of the Shares issued upon exercise; (ii) use the proceeds to pay the Exercise Price, brokerage fees and any applicable taxes; and (iii) remit the balance in cash to you.

Securities Law Alert

The offer is considered a private offering in Switzerland and is therefore not subject to registration in Switzerland.

United Kingdom

Term of Grant

You will receive an option agreement for employees in the U.K, which will govern the terms of your Option.

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EX-31.01

Exhibit 31.01

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Lawrence J. Ellison, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Oracle Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d)	disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Finance and Audit Committee of the registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: September 26, 2007	By:	/s/ Lawrence J. Ellison
		Lawrence J. Ellison
		Chief Executive Officer and Director

EX-31.02

Exhibit 31.02

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Safra A. Catz, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Oracle Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)	designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d)	disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Finance and Audit Committee of the registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: September 26, 2007	By:	/s/ Safra A. Catz
		Safra A. Catz
		President, Chief Financial Officer and Director

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

September 26, 2007

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Ladies and Gentlemen:

The certification set forth below is being furnished to the Securities and Exchange Commission solely for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and with Section 1350 of Chapter 63 of Title 18 of the United States Code.

Lawrence J. Ellison, the Chief Executive Officer of Oracle Corporation, and Safra A. Catz, the Chief Financial Officer of Oracle Corporation, each certifies that:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Oracle Corporation.

/s/ Lawrence J. Ellison  

Lawrence J. Ellison 

Chief Executive Officer and Director 

/s/ Safra A. Catz  

Safra A. Catz 

President, Chief Financial Officer and Director