UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended May 31, 20122013

OR

For the transition period from            to            

Commission file number: 000-51788

Oracle Corporation

(Exact name of registrant as specified in its charter)

(650) 506-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  x    NO  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ¨    NO  x

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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

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

The aggregate market value of the voting stock held by non-affiliates of the registrant was $119,072,791,000$113,629,323,000 based on the number of shares held by non-affiliates of the registrant as of May 31, 2012,2013, and based on the closing sale price of common stock as reported by the NASDAQ Global Select Market on November 30, 2011,2012, which is the last business day of the registrant’s most recently completed second fiscal quarter. This calculation does not reflect a determination that persons are affiliates for any other purposes.

Number of shares of common stock outstanding as of June 20, 2012: 4,882,506,000.19, 2013: 4,630,807,000.

Documents Incorporated by Reference:

Portions of the registrant’s definitive proxy statement relating to its 20122013 annual stockholders’ meeting are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

ORACLE CORPORATION

FISCAL YEAR 20122013

FORM 10-K

ANNUAL REPORT

TABLE OF CONTENTS

Cautionary Note on Forward-Looking Statements

For purposes of this Annual Report, the terms “Oracle,” “we,” “us” and “our” refer to Oracle Corporation and its consolidated subsidiaries. This Annual Report on Form 10-K contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include, among other things, statements regarding:

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements may be preceded by, followed by or include the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” “is designed to” and similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about our business that could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” included elsewhere

in this Annual Report and as may be updated in filings we make from time to time with the Securities and Exchange Commission (the SEC), including the Quarterly Reports on Form 10-Q to be filed by us in our fiscal year 2013,2014, which runs from June 1, 20122013 to May 31, 2013.2014.

We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or risks, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. New information, future events or risks could cause the forward-looking events we discuss in this Annual Report not to occur. You should not place undue reliance on these forward-looking statements, which reflect our opinionsexpectations only as of the date of this Annual Report.

PART I

Item 1.    Business

General

We are the world’s largest provider of enterprise software and a leading provider of computer hardware products and services. Ourservices that are engineered to work together in the cloud and in the data center. We are a leader in the core technologies of cloud computing, including database and middleware as well as web-based applications, virtualization, clustering and large-scale systems management. We provide cloud services as well as software and hardware systems,products to other cloud service providers, both public and services businesses develop, manufacture, market, host and supportprivate. Oracle database and middleware software, applications software and hardware systems, with the latter consisting primarily ofsystems—including computer server, storage and storage products.networking products—are the building blocks of our own cloud services, our partners’ cloud services and our customers’ private cloud environments. Our businesses providecustomers can subscribe to use select Oracle software and hardware products through our cloud offerings, or purchase our software and hardware products and related services to build their own private cloud or on-premise information technology (IT) environments. Our strategy is to deliver reliable and scalable products and services that are built upon industry standards and are engineered to work together or independently within existing customer informationindependently. We also pursue new or emerging growth opportunities in order to maintain technology (IT) environments, and run securely onleadership. Offering customers a wide range of customer IT environments, including cloud computing environments.

Cloud computing environments provide on demand access to a shared pool of computing resourceschoice in a scalable, self-service manner, delivering advantages in speed, agility and efficiency. Cloud computing has evolved from technologies and services that Oracle has provided for many years, including clustering, server virtualization, Service-Oriented Architecture (SOA), shared services, large-scale management automation, and more recently, engineered systems. Our secure, reliable, and scalable product offerings are designed to improve business efficiencies at a lower total cost of ownership. We seek to be an industry leader in each of the product categories in which we compete, and to expand into new and emerging markets.

We believe our ability to offer our customers choice and flexibility in the manner in whichhow they deployuse our products and services—while maintaining enterprise-grade reliability, security and interoperability based upon industry standards—interoperability—is important to our corporate strategy. Oracle Fusion Applications, for example, offer customers a choice of deployment models to run our standards-based software applications in on-premise or cloud computing IT environments. Oracle Cloud is a family of our cloud-based software subscription offerings that provides access to select Oracle software applications and software platforms on a subscription basis in a secure, standards-based cloud computing environment. Oracle Cloud includes software applications as a service, such as Oracle Fusion Human Capital Management (HCM) Cloud Service and Oracle Fusion Customer Relationship Management (CRM) Cloud Service, and software platform services such as Oracle Database Cloud Service and Oracle Java Cloud Service, among others.

We believe ourthat internal growth and continued innovation with respect to our software, hardware and services businesses are the foundation of our long-term strategic plans. In fiscal 2013, we invested $4.9 billion and in each of fiscal 2012 and 2011 we invested $4.5 billion and in fiscal 2010, we invested $3.3 billion, in research and development to enhance our existing portfolio of products and services and to develop new products and services. We continue to focus the engineering of our hardware and software products to make them work together more effectively and deliver improved computing performance, reliability and security to our customers. For example, Oracle Engineered Systems, which include our Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud and Oracle SPARC SuperCluster products, amongstamong others, combine certain of our hardware and software offerings to provide engineered systemsin a way that increaseincreases computing performance and reduce storage requirements relative to our competitors’ products, creating time savings, efficiencies and operational cost advantages for our customers. With products that are engineered to work together, our customers can reduce much of the complexity of IT and make available resources they would otherwise spend on IT operations. In addition to our introductions of new, innovative hardware and software products, we also continue to demonstrate our commitment to customer choice through ongoing enhancements to our existing products, including our Oracle E-Business Suite, Siebel, PeopleSoft and JD Edwards applications software products.

Our software, hardware systems and services businesses are further divided into certain operating segments. Our software business is comprised of two operating segments: (1) new software licenses and cloud software subscriptions and (2) software license updates and product support. Our hardware systems business is comprised of two operating segments: (1) hardware systems products and (2) hardware systems support. Our services business is comprised of the remainder of our operating segments and offers consulting services, managed cloud services and education services. Our software, hardware systems and services businesses represented 74%, 14% and 12% of our total revenues, respectively, in fiscal 2013; 70%, 17% and 13%, respectively, in fiscal 2012; and 68%, 19% and 13%, respectively, in fiscal 2011. See Note 16 of Notes to Consolidated Financial Statements, included elsewhere in this Annual Report, for additional information related to our operating segments.

We also believe that an active acquisition program is ananother important element of our corporate strategy as it strengthens our competitive position, enhances the products and services that we can offer to customers, expands our customer base, provides greater scale to accelerate innovation, grows our revenues and earnings and increases stockholder value. In recent years, we have invested billions of dollars to acquire a number of companies, products, services and technologies that add to, are complementary to, or have otherwise enhanced our existing offerings. We expect to continue to acquire companies, products, services and technologies to further our corporate strategy.

We are organized into three businesses—software, hardware systems and services—which are further divided into certain operating segments. Our software business is comprised of two operating segments: (1) new software licenses and (2) software license updates and product support. Our hardware systems business consists of two operating segments: (1) hardware systems products and (2) hardware systems support. Our services business is comprised of the remainder of our operating segments and offers consulting services, managed cloud services,

and education services. Our software, hardware systems and services businesses represented 70%, 17% and 13% of our total revenues, respectively, in fiscal 2012; 68%, 19% and 13%, respectively, in fiscal 2011; and 77%, 9% and 14%, respectively, in fiscal 2010. Prior to our acquisition of Sun Microsystems, Inc. (Sun) in January 2010, we did not have a hardware systems business. See Note 16 of Notes to Consolidated Financial Statements, included elsewhere in this Annual Report, for additional information related to our operating segments.

Oracle Corporation was incorporated in 2005 as a Delaware corporation and is the successor to operations originally begun in June 1977.

Oracle and Cloud Computing

OurOracle’s cloud computing strategy offers customerssolutions include a broad suite of subscription-based, enterprise-grade cloud services and a portfolio of enterprise-gradecloud products to build and manage public and private clouds. Our comprehensive cloud strategy enables customers to choose the right approach for them, whether it is a cloud environment through the use of Oracle Cloud, through one of our Oracle private cloud environment offerings, or through the use of our Oracle Engineered Systems as the foundation for customers’ cloud environments.

Oracle Cloud

Oracle Cloud is a comprehensive set of cloud service offerings that is designed to provide customers and partners with access to application services, social services, platform services and common infrastructure services on a subscription basis that we host, manage and support. Oracle Cloud is built upon open industry standards such as SQL, Java and HTML5 for easier application portability, integration and development. Oracle Cloud is designed to deliver:

Oracle Cloud Application Services automate mission-critical business functions, including enterprise resource planning, budgeting, financial reporting, human capital management, talent management, sales and marketing, and customer service and support, among others.

Oracle Cloud Social Services include secure social networking for enterprise collaboration, social engagement and monitoring across social channels, social marketing, and data and insight. Oracle Cloud Social Services are designed to help organizations use social data, channels and tools to drive greater customer understanding, to engage customers through compelling social experiences, to gain brand insights, to transform enterprise collaboration and recruitment, and to enrich business applications with external company contact and industry data.

Oracle Cloud Platform Services deliver Oracle Database and Java services in the cloud so that developers can extend Oracle Cloud Application Services or build new applications. Customers and partners can use our open, standards-based Java platform based on Oracle WebLogic Server to build, test, deploy and scale applications in the cloud. Customers also have access to Oracle Database as a cloud service, including tools for rapid application development, RESTful web services, SQL and PL/SQL support and a suite of productivity applications.

Oracle Private Cloud Offerings

Oracle’s private cloud offerings are a comprehensive portfolio of software and hardware products and services that areenterprises use to build, deploy, integrate, secure scalable, and reliable,manage their private software-as-a-service, platform-as-a-service and based upon industry standards to enable interoperabilityinfrastructure-as-a-service cloud services. Oracle’s private cloud offerings include applications, platform and portability. Additionally, we offer customersinfrastructure offerings.

Oracle’s Cloud Applications span numerous mission-critical business functions, can be deployed in a pragmatic roadmap to adopt theprivate cloud, computing environment that best fits their needs, whether that is a “private” cloud or a “public” cloud. Private clouds are exclusive to a single organization, whereas “public” clouds are used by multiple organizations on a shared basis and can be hosted and managed bythrough Oracle Managed Cloud Services. Oracle’s Cloud Platform provides a third-party service provider. Our enterprise-grade softwareshared and hardware products and services for private and public cloud computing environments include, among others:

infrastructure management, the use of software updates and support), platform-as-a-service (PaaS, an application development and deployment platform delivered as a service to developers who use the platform to build, deploy and manage applications) and infrastructure-as-a-service (IaaS, which consists of computing servers, storage and networking delivered as a service) clouds.

extra capacity only during the time it is used. For certain Oracle Cloud

Engineered Systems, Oracle Cloud is a family of our cloud-based software subscription offerings that provides our customers and partners subscription-based, self-service access to certain of our database and middleware, and applications software. Oracle Cloud provides many common services including: resource management and isolation, security, data exchange and integration, virus scanning, and centralized self-service monitoring.

Oracle Cloud provides customers with flexible deployment models to run our business applications in cloud computing or on-premise IT environments, andIaaS also includes Oracle Fusion CRM Cloud Service,Platinum and PlatinumPlus Services for a higher level of support and advisory services. Oracle Fusion HCM Cloud ServicePlatinumPlus Services helps ensure these systems remain configured and the Oracle Social Network. We also offer certain software applications via subscription-based, cloud computing delivery models including Oracle RightNow Customer Experiencetuned correctly with quarterly automated assessments for performance, availability and Oracle Taleo Talent Management Cloud Service, among others.security.

Oracle Cloud also provides our software platforms as services including Oracle Java Cloud Service and Oracle Database Cloud Service. Oracle Java Cloud Service provides customers with an open, standards-based Java application development and deployment platform built on Oracle’s WebLogic Server functionality in a cloud environment that we manage and offer to customers via a subscription-based arrangement. Customers and partners are able to use standard Java Integrated Development Environments such as Oracle JDeveloper, NetBeans and Eclipse to create applications that can then be deployed on the Oracle Java Cloud Service. Oracle Database Cloud Service provides customers with Oracle Database functionality in a cloud environment that we manage and offer to customers via a subscription-based arrangement. Oracle Database Cloud Service includes the Oracle Application Express (APEX) application development environment and a set of business productivity applications that are designed to be easy to use and can be quickly provisioned.

Oracle Engineered Systems

An important element of our corporate strategy and product development efforts is to engineer our hardware and software products together to deliver efficiencies that simplify our customers’ IT environments; provide increased IT performance, reliability, and security; and free up resources that customers can use to invest in innovation and competitive differentiation. Oracle Engineered Systems are a part of our hardware systems segment, and are pre-integrated products engineered to include multiple elements of Oracle software and hardware products. Oracle Engineered Systems provide the foundationcore building blocks for IT consolidationOracle’s data center and cloud computing and are designed to deliver high performance and scalability; provide faster time to production; reduce data storage costs; and enable customers to efficiently purchase, deploy and support their IT environments. All Oracle Engineered Systems are tested in the factory and delivered ready to run.offerings. These pre-integrated products are also designed to be upgraded effectively and efficiently. As integrated systems, Oracle Engineered Systemsefficiently and simplify routine maintenance such as software patching, by providing a single solution that coversfor software patching. They are tested before they are shipped to customers and delivered ready to run, enabling customers to shorten the entire system. Oracletime to production. Oracle’s Engineered Systems include Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, Oracle Exalytics In-Memory Machine, SPARC SuperCluster, Oracle Database Appliance, and Oracle Big Data Appliance.include:

Oracle Exadata Database Machine

Oracle Exadata Database Machine is a family of integrated software and hardware products that combines our database, storage and operating system software with our server, storage and networking hardware. Oracle Exadata Database Machine is designed to enable customers to consolidate databases, manage large volumes of data, improve query response times, and reduce costs by improving data storage and using fewer IT resources.

Oracle Exalogic Elastic Cloud

Oracle Exalogic Elastic Cloud is an engineered system that combines Oracle Fusion Middleware software with our hardware to run Java and non-Java applications and provide customers with an applications platform for cloud computing. Oracle Exalogic Elastic Cloud is designed to improve the performance of applications that run

on it and enable customers to consolidate multiple applications onto a single system that is designed to be scalable, reliable and secure.

Oracle Exalytics In-Memory Machine

•

Oracle Big Data Appliance,an engineered system designed for acquiring, organizing and loading unstructured data into an Oracle database. By integrating the key components of a big data platform such as Hadoop and Oracle NoSQL Database into a single product, Oracle Big Data Appliance is a scalable big data infrastructure system that is designed to reduce the risks of a custom-built solution. The Oracle Exalytics In-Memory Machine is a single server that is designed to be configured for in-memory analytics for business intelligence workloads. The Oracle Exalytics In-Memory Machine features an optimized Oracle Business Intelligence Foundation Suite and Oracle TimesTen In-Memory Database. The Oracle Business Intelligence Foundation Suite takes advantage of large memory, processors, storage, networking, operating system and system configuration of the Oracle Exalytics hardware. This optimization is designed to provide better query responsiveness, higher user scalability and lower total cost of ownership. SPARC SuperCluster Our SPARC SuperCluster is a general purpose engineered system that combines the computing power of our SPARC processor, the performance and scalability of Oracle Solaris, the optimized database performance of Oracle Exadata storage and the accelerated middleware processing of the Oracle Exalogic Elastic Cloud. Oracle SPARC SuperCluster is designed to provide the scalability and performance demanded by a wide range of Oracle and non-Oracle enterprise workloads. It is an ideal mission-critical consolidation platform that is designed to run multiple tiers, from database to middleware to application, and to support multiple applications and operating systems side by side. SPARC SuperCluster enables faster deployment, increased systems utilization and reduced data center space and energy requirements. Oracle Database Appliance Oracle Database Appliance is an integrated, fault resilient system of software, servers, storage and networking in a single box that is designed to deliver high-availability database services for a wide range of homegrown and packaged online transaction processing (OLTP) and data warehousing applications. The Oracle Database Appliance is designed to enable enterprises to consolidate OLTP and data warehousing databases up to four terabytes in size. Oracle Big Data Appliance Oracle Big Data Appliance is an engineered system designed for acquiring, organizing and loading unstructured data into an Oracle database. By integrating the key components of a big data platform into a single product, Oracle Big Data Appliance is a scalable and supported big data infrastructure that reduces the risks of a custom built solution. Built using our industry-standard hardware, Oracle Big Data Appliance is installed and configured for high performance and availability.

Software, Hardware Systems and Services Businesses

Software Business

Our software business consists of our new software licenses and cloud software subscriptions segment and software license updates and product support segment.

New Software Licenses and Cloud Software Subscriptions

The new software licenses and cloud software subscriptions operating segment of our software business primarily includes the licensing of database, middleware and middlewareapplications software licenses, as well as applications software.cloud software subscriptions that provide access to a broad range of our software offerings.

Our software solutions are built on a standards-based architecture that is designed to help customers reduce the cost and complexity of their IT infrastructures by delivering solutions via aninfrastructure. Our commitment to industry standards-based, integrated architecture. This standards-based architecture enables ourstandards results in software to workthat works in customer environments that may includewith Oracle or non-Oracle hardware or software components.components and that can be adapted to meet specific industry or business needs. This approach is designed to support customer choice toand reduce customer risk and to be adapted to the specific needs of any industry or application. In this model, our database and certain of our middleware offerings are designed to manage and protect a customer’s underlying business information, while

application servers run enterprise applications that are designed to automate multiple business functions and provide intelligence in critical functional areas.risk. Our software products are designed to operate on both single server and clustered server configurations for on-premisecloud or cloud computingon-premise IT environments and to support a choice of operating systems including for example, Oracle Solaris, Oracle Linux, Microsoft Windows and third party UNIX products.products, among others.

New software licenselicenses and cloud software subscriptions revenues represented 27%28%, 26%27% and 28%26% of total revenues in fiscal 2013, 2012 2011 and 2010,2011, respectively.

Database and Middleware Software

Our database and middleware software provide a range of offerings that are designed to provide a cost-effective, high-performance platform for running and managing business applications for midsize businesses, as well as large, global enterprises. Our customers are increasingly focused on reducing the total cost of their IT infrastructure and we believe that our software offerings help them

achieve this goal. Our software is designed to accommodate demanding, non-stop business environments using clustered middleware and database servers and storage. These clusters are designed to scale incrementally as required to address our customers’ IT capacity, satisfy their planning and procurement needs, support their business applications with a standardized platform architecture, reduce their risk of data loss and IT infrastructure downtime and efficiently utilize available IT resources to meet quality of service expectations.

New software license revenues from database and middleware products represented 70% of our new software license revenues in fiscal 2012 and 72% in each of fiscal 2011 and 2010.

Database Software

Oracle Database software is the world’s most popular enterprise database software. It is designed to enable reliable and secure storage, retrieval and manipulation of all forms of data, including: transactional data, business information and analytics; semi-structured and unstructured data in the form of weblogs, text, social media feeds, XML files, office documents, images, video and spatial images; and other specialized forms of data, such as human genomic and medical data. Oracle Database software is used for a variety of purposes, including packaged applications, custom application development, OLTP applications, data warehousing and business intelligence and as a document repository or specialized data store.

Oracle Database software is available in four editions: Enterprise Edition, Standard Edition, Standard Edition One and Express Edition. All editions are built using the same underlying code, which means that our database software can scale from small, single processor servers to clusters of multi-processor servers and our Oracle Exadata Database Machines.

We also offer customers in-memory database software, including Oracle TimesTen In-Memory Database, the world’s most popular in-memory database, and Oracle In-Memory Database Cache.database. Oracle TimesTen In-Memory Database is designed to deliver real-time data management and transaction processing speeds for performance-critical applications, from complex analytical queries and speed-of-thought data visualization, to mission-critical, industry-specific applications such as call centers, trading platforms, reservation systems and smart meters. Oracle TimesTen In-Memory Database supports multiple computing platforms, is compatible withcan serve as a cache to accelerate Oracle Database software, and can work as a standalone database at the applicationsapplication tier. Oracle In-Memory Database Cache acts as a high performance cache for Oracle Database Enterprise Edition and is used to provide immediate access to historical data in existing Oracle Databases that are frequently accessed such as customer and user lists, open orders, and product catalogs.

A number of optional add-on products are available with Oracle Database Enterprise Edition software to address specific customer requirements. In the areas of performance and scalability, we offer Oracle Real Application Clusters, Oracle Advanced Compression and Oracle Partitioning software options. In the area of data security, we offer Oracle Advanced Security, Oracle Database Vault, Oracle Audit Vault and Oracle Database Firewall software options.

In addition to the four editions of Oracle Database, we also offer a portfolio of specialized database software products to address particular customer requirements, including:

Big Data

Oracle also offers products to address the full spectrum of enterprise big data requirements, including embedded Java, Oracle NoSQL Database and MySQL products for acquiring big data; Oracle Big Data Appliance and Oracle Data integrator to organize big data; and Oracle Advanced Analytics database option, Oracle Exadata Database Machine, and Oracle Exalytics In-Memory Machine to analyze big data. With Oracle’s big data offerings, an enterprise can evolve its current enterprise data architecture to incorporate big data while taking advantage of the proven reliability, flexibility and performance of Oracle information management products.

Middleware Software

Oracle Fusion Middleware software is a broad family of integrated application infrastructure software products that is designed to form a reliable and scalable foundation on which customers can build, deploy, secure, access and integrate business applications and automate their business processes. Built with Oracle’s Java technology platform, Oracle Fusion Middleware products can be used as a foundation for custom, packaged and composite applications—or applications that can be deployed in private or public cloud environments.

Oracle Fusion Middleware software is designed to protect customers’ IT investments and work with both Oracle and non-Oracle database, middleware and applications software through its open architecture and adherence to industry standards such as Java Enterprise Edition (Java EE) and Business Process Execution Language (BPEL), among others.

By using Oracle Fusion Middleware software, we believe customers can better adapt to business changes rapidly, reduce their risks related to security and compliance, increase user productivity and drive better business decisions.standards. Specifically, Oracle Fusion Middleware software is designed to enable customers to integrate heterogeneousOracle and non-Oracle business applications,

automate business processes, scale applications to meet customer demand, simplify security and compliance, manage lifecycles of documents and get actionable, targeted business intelligence; all while continuing to utilize their existing IT systems. In addition, Oracle Fusion Middleware software supports multiple development languages and tools, which enables developers to build and deploy web services, websites, portals and web-based applications.

Oracle Fusion Middleware software is used to integrate, extend, rapidly configure and secure enterprise applications. Oracle Fusion Middleware integrates with Oracle Applications as well as other third party applications, including applications in clouds. Oracle Fusion Middleware software is also the foundation for Oracle Fusion Applications—providing customers greater benefits from a unified application platform.

Oracle Fusion Middleware software is available in various software products and suites, including the following functional areas:following:

Application Server and Cloud Application Foundation

The foundation of Oracle Fusion Middleware software is Oracle WebLogic Server—an application server that is compliant with the Java EE specification. Oracle WebLogic Server incorporates clustering and caching technology,

which increases application reliability, performance, security and scalability. In addition to Oracle WebLogic, Oracle combines cloud infrastructure components into the Oracle cloud application foundation, including Oracle Virtual Assembly Builder, Oracle Coherence, Oracle JRockit, Oracle Tuxedo and Oracle GlassFish Server.

Oracle Virtual Assembly Builder works with Oracle WebLogic Server to increase the efficiency of application virtualization and to enable users to quickly and easily design and deploy multi-tier applications to virtualized IT environments, both conventional and cloud. Oracle Coherence is an in-memory data grid solution that enables organizations to predictably scale applications by providing fast and reliable access to frequently used data. Oracle JRockit is a high performance Java Virtual Machine designed to run Java applications on multi-core processors with higher and more predictable performance. Oracle Tuxedo runs legacy, mainframe and non-Java applications written in the C, C++ and COBOL languages that have transaction reliability, scalability and performance requirements. Oracle GlassFish Server enhances the value of Oracle Fusion Middleware software for developers by accelerating development practices and decreasing application time-to-market.

Service-Oriented Architecture and Business Process Management

Service-Oriented Architecture is a software development and architecture methodology that creates a modular, re-usable approach to applications development; makes it easy to integrate systems with each other; and reduces the need for costly custom development. Oracle SOA Suite is a suite of middleware software products used to create, deploy and manage applications on a Service-Oriented Architecture including Oracle JDeveloper, Oracle BPEL Process Manager, Oracle Web Services Manager, Oracle Business Rules, Oracle Business Activity Monitoring and Oracle Service Bus. Oracle Architecture;

includes big data capabilities to transform and load unstructured data from non-Oracle environments into Oracle Database or Oracle Exadata. Additionally, Oracle Enterprise Data Quality enables users to profile any type of data (customer or product-oriented) and to clean it using a variety of automated matching and cleansing rules making the data more reliable and more accurate.

Oracle JDeveloperFusion Middleware software products also address key enterprise technology trends including business analytics and mobile computing.

Business Analytics

Business analytics software enables enterprises to discover new ways to strategize, plan and optimize business operations. Oracle Business Analytics products are designed to enable customers to gain insight into every aspect of their business, to better plan and forecast, and to flexibly access their data from a number of computing devices. Oracle Business Analytics products include enterprise performance management and analytic applications software, business intelligence software, and advanced analytic software.

Mobile Computing

Oracle provides supporta wide range of software for developing Java applications; webmobile computing. For example, Oracle Business Intelligence Mobile provides business intelligence functionality, from interactive dashboards to location intelligence, while enabling users to initiate business processes from a mobile device. Oracle ADF Mobile enables developers to build and extend enterprise applications for popular mobile devices from a single code base. Oracle ADF Mobile supports access to native device services, composite SOAenables offline applications and business processes; rich user interfaces using AJAX/DHTML and Flash technologies; and websites using popular scripting languages. Oracle JDeveloper software also provides comprehensive application lifecycle management facilities including modeling, building, debugging, unit testing, profiling and optimizing applications and is integrated with the Oracle Application Development Framework software, which provides a declarative framework for building business applications and popular open source tools, including Eclipse and NetBeans.protects enterprise investments from future technology shifts.

Java

Java is the computer industry’s most widely-used software development language and is viewed as a global standard. The Java programming language and platform together represent one of the most popular and powerful development environments in the world, one that is used by millions of developers globally to develop business applications. Oracle Fusion Middleware software products and Oracle Fusion Applications are built using our Java technology platform, which we believe is a key advantage for our business.

Java is designed to enable developers to write software on a single platform and run it on many other different platforms, independent of operating system and hardware architecture. Java has been adopted by both independent software vendors (ISV) that have built their products on Java and by enterprise organizations building custom applications or consuming Java-based ISV products.

For customers, the Java platform is designed to enable a variety of compatible applications, independent of their vendor, and to support a global community of Java developers, support engineers and knowledge bases that can help customers reduce the risk of and time to deployment as well as the ongoing cost of ownership and maintenance.

There are three primary editions of Java (Standard, Enterprise and Micro) that support a broad spectrum of usage ranging from mobile phones to desktop computers to server applications. Java can also be found embedded in a variety of devices and machines, including printers, cars, airplanes, tablets, DVD players, set-top boxes, pens, smart meters and bank ATM machines; and JavaCard is designed for specialized use in smart cards. Certain of our products are built primarily to enable customers to run Java applications on and with them, such as Oracle WebLogic Server and Oracle Coherence. Many more of our products are built with and rely on Java, such as the Oracle Fusion Middleware software product family and Oracle Fusion Applications. We expect to continue to innovate and invest in Java technology for the benefit of customers and the Java community.

Management Software

Oracle Enterprise Manager is Oracle’s integrated enterprise IT management and cloud management family of products. Oracle Enterprise Manager is designed to combine the self-management capabilities built into Oracle products with its business-driven IT management capabilities to deliver a holistic approach to IT management across the entire Oracle technology portfolio, including Oracle Database and Oracle Exadata, Oracle Fusion Middleware and Oracle Exalogic Elastic Cloud, Oracle Applications, Oracle Solaris, Oracle Linux, Oracle VM and our complete hardware portfolio. Oracle Enterprise Manager is designed to manage Oracle’s software and hardware portfolio whether deployed using traditional IT architectures or in cloud computing architectures. In both cases, Oracle Enterprise Manager is designed to provide a complete IT lifecycle management approach, including configuring elements of an IT environment, monitoring service levels;levels, diagnosing and troubleshooting problems, patching and provisioning IT environments, managing compliance reporting and providing change management in a unified way across physical and virtualized IT environments.

Virtualization Software

Oracle VM is server virtualization software for both Oracle SPARC and x86-based servers, and supports both Oracle and non-Oracle applications. Oracle VM software is designed to enable different applications to share a single physical system for higher utilization and efficiency, and simplify software deployment by enabling pre-configured software images to be created and rapidly deployed without installation or configuration errors.

Applications Software

Oracle Applications are designed using an industry standards-based, integrated architecture to manage and automate core business functions across the enterprise, as well as to help customers differentiate and innovate in those processes unique to their industries or organizations. Oracle Applications are also designed to reduce the risk, cost, and complexity of our customers’ IT infrastructures, while supporting customer choice and providing flexibility in deployment models and upgrade paths.

Through a focused strategy of investments in internal research and development and strategic acquisitions, we also provide industry-specific solutions for customers in a number of different industries including communications, engineering and construction, financial services, health services,healthcare, manufacturing, public sector, retail and utilities. We continueutilities, among others. Oracle Applications are designed to broadenreduce the numberrisk, cost and complexity of softwareour customers’ IT infrastructures, while supporting customer choice with flexible deployment models and upgrade paths.

Our applications that we offer on a subscription basis via a cloud computing environmentstrategy is designed to provide our customers with complete choice and flexibility in how they manage their software investments and software deployments. New software license revenues from applications software represented 30% of our new software license revenues in fiscal 2012 and 28% in each of fiscal 2011 and 2010.

Oracle’s Applications strategy provides customers with a secure path to adopt ourbenefit from the latest technology advances which are designed to improve the customer software experience and enable better business performance. Central to that strategy is Oracle’sadvances. Our Oracle Applications Unlimited program which isdemonstrates our commitment to customer choice through ongoing investment and innovation in our current applications offerings. Oracle Fusion Applications build upon this commitment and are designed to work with and evolve customer investments in their existing applications portfolio. Oracle Lifetime Support helps ensure customers will continue to have a choice in upgrade paths based on their enterprise needs.

We protect our customers’ current investments in Oracle Applications by delivering new product releases that incorporate customer-specific and industry-specific innovations across product lines. Since announcing our Applications Unlimited program in 2005, we have delivered major releases onof all applications product lines by combining business functionality with innovative technologies, such as role-based analytics, secure search, identity management, self-service and workflow to deliverproviding customers with more adaptive industry processes, business intelligence and insights, and optimal end-user productivity.

Oracle Fusion Applications are partWe continue to broaden the number of cloud-based software applications that we offer on a subscription basis. This includes a comprehensive suite of modular, next-generation software applications that enable efficient management ofspan core business functions across the enterprise. Oracle Fusion Applications are designed using commercially-available technology standards such as Javaincluding enterprise resource planning, planning and BPEL; the principles of SOA;budgeting, financial reporting, human capital management, talent management, sales and a common approachmarketing, and architecture for the user experience, business intelligence, social networkingcustomer service and mobility. With their tailored user experience and embedded analytical capabilities, Oracle Fusion Applications are designed to increase user productivity and allow customers to manage functions across different environments more effectively. Using a SOA approach, Oracle Fusion Applications are engineered to provide customers with more flexibility to innovate and adopt next-generation technologies at their own pace, whether via one module, a product family, or an entire suite. Oracle Fusion Applications are engineered to be cloud-ready and thus offer flexible deployment options, including on-premise, public cloud, private cloud, or a combination of these options.support, among others.

We also continue to offer and enhance Oracle Applications including our Oracle E-Business Suite, Siebel, PeopleSoft,address specific business and JD Edwards product families. All Oracle Applications are enterprise-grade and based upon industry standards, and designed to automate core business processes and address industry-specific needs.

The primary applications software offerings include:requirements including:

Human Capital Management

We offer a broad portfolio of Human Resource and Talent Management applications, and flexible deployment options for on-premise or cloud computing IT environments.

Our complete and integrated offerings provide coresuite of human capital management applications software is designed to help organizations manage their human resource transactions, workforce service automationoperations and delivery, and complete enterprise talent management. Our global, web-based, single system architecture is designed for organizations of every size, industry and region. In fiscal 2012, we acquired Taleo Corporation, a leading provider of cloud-based talent management software that helps organizations attract, develop, motivate and retain human capital. We believe our portfolio of HCM solutions creates a broad offering for organizations to manage theirOracle Human Capital Management delivers core human resource operationstransactions, workforce service delivery and employee careers, eithercomplete enterprise talent management via cloud offerings such asour Oracle Fusion HCM Cloud Service and Oracle Taleo Talent Management service; or on-premise solutions, including Oracle Fusion HCM (which is also cloud ready), Oracle E-Business Suite HCM,solutions.

Customer Experience and PeopleSoft HCM.

Customer Relationship Management

We offer a broad portfolio of CRM applications, complete customer experience software solution—including Siebel CRM, Oracle E-Business Suite CRM, PeopleSoft CRM, Oracle Fusion Applications for CRM, and Oracle RightNow CX Service Cloud, customer relationship management—that areis designed to help our customers manage their selling processes more efficiently; integrateorganizations deliver simple, consistent, and relevant experiences across all channels, touch points and interactions. We provide customer experience solutions for commerce, loyalty and marketing, campaignsservice and content into their selling processes more effectively;support, integrated sales and deliver high quality customer service across multiple channels, including call centers, web,marketing, social, insight and mobile devices. Ourindustry requirements. In fiscal 2013, we acquired Eloqua, Inc. (Eloqua), a provider of cloud-based marketing automation and revenue performance management software. We expect Eloqua to become the centerpiece of the Oracle CRM On Demand and Siebel CRM offerings also provide many industry-specific features designed to support the specialized needs of users in key sectors, such as communications, consumer products, financial services, high technology, insurance, life sciences and the public sector. Customers may also elect to use our subscription-based CRM cloud offerings, including Oracle Fusion CRM Cloud Service and Oracle RightNow Customer Experience, among others.Marketing Cloud.

FinancialsFinancial Management and Governance, Risk and Compliance

Our complete and integrated financial management and GRCsoftware solutions are designed to enable our customers tohelp organizations meet fiduciary and statutory requirements, more efficiently manage risk across athe global enterprise accelerate the credit-to-cash cycle ofand achieve business transactions, trackperformance and social responsibilities. We offer solutions for finance operations, risk management and advanced financial operations and cash flow through accounting and treasury functions and manage business performance. In addition to our portfolio of financial management applications from Oracle E-Business Suite, PeopleSoft, and JD Edwards, we also offer Oracle Fusion GRC, a component of the Oracle Fusion Applications suite, to provide unified intelligence and insight into all GRC activities, end-to-end support for cross-industry and industry-specific GRC processes, and automated controls that work across multiple business applications.controls.

Procurement

We offer a broad portfolio of advanced procurement applications, including JD Edwards EnterpriseOne Supply Management, JD Edwards World Distribution Management and Supplier Self-Service, Oracle E-Business Suite Advanced Procurement, Oracle Fusion Procurement, and PeopleSoft Supplier Relationship Management, among others. These integrated procurement applicationssoftware suites that are designed to provide packaged integration to back-office applications that fullyin order to support “source-to-settle” processes for all categories of spend, including capital goods, direct materials, indirect goods and services.the complete source-to-settle process. Our procurement applications also provide industry-specific capabilities and the flexibility to leverage applications on demand, on-premise or in any combination to achieve procurement objectives.capabilities.

Supply ChainProject Portfolio Management

We offer a broad portfolio of SCMproject portfolio management applications including Agile, Demantra, JD Edwards, Oracle E-Business Suite, and Oracle Fusion Applications, among others,software that support supply chain management processes such as demand management, order management, supply chain planning, sales and operations planning, procurement and sourcing to product development, manufacturing, transportation and warehouse management. Our SCM software offerings areis designed to provide our customers with the ability to forecast and fulfill demand for their products through end-to-end, integrated, yet modular software. For example, customers can use Demantra products to predict demand and market requirements; Agile products to manage the lifecycle of their products, innovate, and adapt them in response to volatile market conditions; Oracle Advanced Procurement products to optimize supplier and procurement networks and reduce costs; Oracle Fusion Order Orchestration to orchestrate and fulfill orders across global networks; and Oracle, PeopleSoft, and JD Edwards manufacturing applications to deploy lean, mixed-mode manufacturing with integrated manufacturing execution systems that meet both discrete and process requirements.

Enterprise Project Portfolio Management

We offer a broad portfolio of EPPM applications, including JD Edwards EnterpriseOne Project Management, Oracle E-Business Suite’s family of Oracle Projects, Oracle Fusion Project Portfolio Management, PeopleSoft Enterprise Service Automation, and Primavera Project Portfolio Management. Oracle EPPM applications target project-intensive industries such as engineering and construction, aerospace and defense, utilities, oil and gas,

manufacturing, professional services, and project-intensive departments within other industries. Our EPPM products help companies propose, prioritize and select project investments; andinvestments as well as plan, manage and control the most complex projects and project portfolios. Additionally, our Primavera Project Portfolio Management family of products provideswe provide industry-specific solutions for project-intensive industries such as oil and gas, utilities, engineering and construction, aerospace and defense and public sector. Through role-based user experience, embedded analytics, and collaborative tools, our EPPM solutions

Supply Chain Management

Our supply chain management software applications are designed to provide project stakeholders, project managers,help organizations achieve value chain transformation. Oracle offers a broad portfolio of supply chain management applications that customers can adopt as an entire suite or individual applications, including value chain planning, value chain execution, product lifecycle management, asset lifecycle management, order orchestration and team members with the information needed to plan, mandatefulfillment and deliver across the organization.manufacturing solutions.

Business Analytics and Enterprise Performance Management

Our Oracle Hyperion Performance Managementbusiness analytics software solutions include enterprise performance management and analytic applications that are designed to help organizations discover new ways to strategize, plan and optimize business operations and capture new market opportunities. Our integrated suite of products are a modular set of integratedenterprise performance management applications that integrateworks with both Oracle and non-Oracle transactional systems to help organizations automate, integrate and administer a broad range ofsupports strategic planning and goal setting, financial and operational management processes. Our EPM applications include Hyperion Strategy Management; Hyperion Financial Close and Reporting; Hyperion Planning, Budgeting and Forecasting; and Hyperion Profitability and Cost Management. These applications enable organizations to define and model their financial structure, define their operating plans and manage financial budgets, allocate indirect revenues and costs to better understand business unit profitability, consolidate and aggregate financial results from a variety of systems, and manage theplanning, financial close and statutory reporting processes.

Business Intelligence / Analytic Applications

and profitability management. We providealso deliver packaged business intelligence applications for cross-industrythat support business processes as well asfunctions and industry-specific analytic applications. Each of our business intelligence applications features packaged data models, packaged ETL processes, packaged key performance indicators (KPIs), and packaged dashboards to deliver insight that is tailored for specific business processes. Our business intelligence applications are built on Oracle’s business intelligence technology, and source data from multiple versions of Oracle’s comprehensive portfolio of applications as well as from non-Oracle data sources. Our EPM and business intelligence applications, together with our business intelligence technology, enable us to offer our customers an integrated solution that spans planning and budgeting, financial management, operational analytics, and reporting.

Web Commerce

Our Web Commerce solutions are designed to enable enterprises to deliver a consistent, relevant and personalized cross-channel buying experience through catalog, merchandising, marketing, guided search and navigation, personalization, automated recommendations and live-help capabilities. By combining certain technologies that we have recently acquired including Art Technology Group, Inc.’s and Endeca Technologies Inc.’s Web Commerce software with our legacy Oracle and Siebel CRM software, we offer a unified cross-channel commerce and CRM platform, which is designed to enable businesses to deliver a consistent experience across a variety of different customer points of contact, including online, in-store, mobile, social and kiosk. This combined platform is designed to enable our customers to strengthen their customers’ loyalty, improve brand value, achieve better operating results, increase customer service and improve business response times across online and traditional commerce environments.

Industry-Specific Applications

Oracle Applications can be tailored to offer customers a variety of industry-specific solutions. As a part of our strategy, we strive to ensure that our applications portfolio addresses the major industry-influenced technology challenges of customers in key industries that we view as strategic to our future growth, including communications, consumer goods, education, energy, engineering and construction, financial services, healthcare, life sciences, manufacturing, professional services, public sector, retail, travel, transportation and utilities. For example, we offer the financial services sector a suite of applications addressing cash management, trade, treasury, payments, lending, private wealth management, asset management, compliance, enterprise risk and business analytics, among others. We offer the retail sector software solutions designed to provide unified and actionable data among store, merchandising and financial operations. Our applications for consumer goods

manufacturers are designed to provide them with the ability to build their brand against retail private label programs by engaging directly with the consumer. Our Public Sector solutions are designed to provide national and local governments with the ability to improve service delivery to citizens, increase internal efficiency and improve transparency. Our ability to offer applications to address industry-specific complex processes provides us an opportunity to expand our customers’ knowledge of our broader product offerings and address customer specific technology challenges.

We continue to broaden the number of cloud-based software applications available on a subscription basis. This includes a comprehensive suite of modular, next-generation software applications that span core business functions including enterprise resource planning, budgeting, financial reporting, human capital management, talent management, sales and marketing, and customer service and support, among others.

Software License Updates and Product Support

We seek to protect and enhance our customers’ current investments in Oracle software by offering proactive and personalized support services, including ourOracle Lifetime Support policy and unspecified product enhancements and upgrades. Software license updates provide customers with rights to unspecified software product upgrades and maintenance releases and patches released during the term of the support period. Product support includes internet and telephone access to technical support personnel located in our global support centers, as well as internet access to technical content through “My Oracle Support”. Software license updates and product support contracts are generally priced as a percentage of the net new software license fees. Substantially all of our customers purchase software license updates and product support contracts when they acquire new software licenses and renew their software license updates and product support contracts annually. Our software license updates and product support revenues represented 43%46%, 42%43% and 49%42% of our total revenues in fiscal 2013, 2012 2011 and 2010,2011, respectively.

Hardware Systems Business

Our hardware systems business consists of two operating segments:our hardware systems products segment and hardware systems support.support segment.

Hardware Systems Products

We provide a completebroad selection of hardware systems and related services including servers, storage, networking, virtualization software, operating systems and management software to support diverse IT environments, including public and private cloud computing environments. We engineer our hardware systems with virtualization and management capabilities to enable the rapid deployment and efficient management of cloud and on-premise IT infrastructures. Oracle’sOur hardware systemsproducts support many of the world’s largest public and private clouds, and power Oracle’s own internal cloud initiatives, including the Oracle Cloud, our software development private cloud and our Oracle University’sUniversity self-service private cloud.

Our hardware products and services are designed to be “open,” or to work in customer environments that may include other Oracle or non-Oracle hardware or software components. These products and services also help to meet customers’ demands to manage growing amounts of data and business requirements to meet increasing compliance and regulatory demands and to reduce energy, space and operational costs. We have also engineered our hardware systems products to create performance and operational cost advantages for customers when our hardware and software products are combined as Oracle Engineered Systems.

OurWe also provide our customers flexible deployment models for certain of our hardware systems products. Oracle IaaS, an on-premise cloud offering for deploying certain Oracle Engineered Systems include Oracle Exadata Database Machine, Oracle Exalogic Elastic Cloud, Oracle Exalytics In-Memory Machine, SPARC SuperCluster, Oracle Database Appliance and Oracle Big Data Appliance. By combiningto customers on a subscription basis, allows our server and storage hardwarecustomers to cost effectively handle peak computing workloads with our software, our open, integrated products better address customer and cloud computing requirements for performance, scalability, reliability, security, ease of management and lower total cost of ownership. capacity on demand.

Our hardware systems products represented 10%8%, 12%10% and 6%12% of our total revenues in fiscal 2013, 2012 2011 and 2010,2011, respectively.

Servers

We offer a wide range of server systems using our SPARC microprocessor. Our SPARC servers are differentiated by their reliability, security and scalability; and by the customer environments that they target (general purpose or specialized systems).scalability. Our midsizemid-size and large servers are designed to offer greater performance and lower total cost of ownership than mainframe systems for business critical applications and for customers having more computationally intensive needs. We recently announced T-5 and M-5, the new versions of our mid-range and high-end SPARC server lines built upon new SPARC processors, which measurably increase computing performance. These new versions of our servers expand our SPARC portfolio and are designed to be ideal platforms for building cloud computing IT environments.

Our SPARC servers run the Oracle Solaris operating system and

are designed for the most demanding mission critical enterprise environments at any scale.environments. SPARC servers are also a core component of the Oracle SPARC SuperCluster, one of our Oracle Engineered Systems.

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

Our Netra line of products are aimed at the unique needs of original equipment manufacturers (OEMs) and network equipment providers (NEPs). Rack-optimized systems and our blade product offerings combine high-density hardware architecture and system management software that OEMs find particularly useful in building their own solution architectures.

Storage

Our storage products are designed to securely manage, protect, archive and restore customers’ mission critical data assets and consist of tape, disk, flash and hardware-related software including file systems software, back-up and archive software and storage management software and networking for mainframe and open systems environments. Our storage products are designed to improve data availability by providing fast data access and dynamic data protection for restoration and secure archiving for compliance. Our storage products are designed to work together, to work with Oracle software and to work with multi-vendor application and systems environments to maximize performance and efficiency while minimizing management overhead and reducing the total cost of ownership.

Our Sun ZFS Storage Appliance Network Attached Storage (NAS) offering is designed to provide improvedimproves performance, manageability and reduced total cost of ownership by combining third-generationour software with high-performance controllers, flash-based caches and disks. OurThe foundation of our Oracle Pillar Axiom Storage Area Network (SAN) system leveragesis a patented quality-of-service architecture designed to meet business critical service level agreements under dynamic, multi-application loads and enable customers to consolidate storage applications into a single data center storage solution.

Our tape storage product line includes StorageTEK libraries, drives, virtualization systems, media and device software. These products are intended to provide robust solutions for both long-term preservation and near-term protection of customer data at a lower total cost of ownership.

Networking and Data Center Fabric Products

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

Communications Networks Solutions

We recently expanded our products and services offerings for communications networks with our acquisitions of Acme Packet, Inc. (Acme Packet) in the fourth quarter of fiscal 2013, and Tekelec Global, Inc. (Tekelec) in the first quarter of fiscal 2014. Acme Packet is a global provider of session border control technology for service providers and enterprises that enables secure delivery of next-generation voice, data and unified communications services and applications. Tekelec is a global provider of network signaling, policy control and subscriber data management solutions for communications networks designed to enable service providers to deliver, control and monetize innovative and personalized communications services.

Oracle Solaris and Oracle Linux Operating Systems, Virtualization and Other Hardware-Related Software

The Oracle Solaris operating system is designed to provideprovides a reliable, secure and scalable operating system environment through significant corekernel feature development, networking, security and file system technologies as well as close integration with hardware features. This design provides us with an ability to combine Oracle Solaris with our own hardware components to achieve certain performance and efficiency advantages in comparison towith our competitors. The Oracle Solaris operating system is based on the UNIX operating system, but is unique among UNIX systems in that it is available on our SPARC servers and x86 servers that are substantially based upon microprocessors from Intel.servers. We also support Oracle Solaris deployed on other companies’ hardware products.

Oracle provides a broad virtualization solution from the desktop to the data center. Oracle Solaris 11 provides comprehensive, built-in virtualization capabilities for the operating system, network and storage resources. In addition to its built-in virtualization capabilities, Oracle Solaris 11 is engineered for server virtualization on both x86 and SPARC based systems.

The Oracle Linux operating system with Oracle’s Unbreakable Enterprise Kernel is a Linux operating system for enterprise workloads including databases, middleware and applications. Oracle’s Unbreakable Enterprise Kernel is designed to work well with Oracle products and enables users to patch core operating systems without downtime.

Oracle provides a broad portfolio of virtualization solutions from the desktop to the data center. Oracle VM is server virtualization software for both Oracle SPARC and x86 servers and supports both Oracle and non-Oracle applications. Oracle VM software is designed to enable different applications to share a single physical system for higher utilization and efficiency and simplify software deployment by enabling pre-configured software images to be created and rapidly deployed without installation or configuration errors. In addition, Oracle Solaris 11 provides comprehensive, built-in virtualization capabilities for both SPARC and x86 servers, networking and storage resources.

In addition to Oracle Solaris and Oracle Linux operating systems and Oracle’s virtualization software, we also develop a range of other hardware-related software, including development tools, compilers, management tools for servers and storage, diagnostic tools virtualization, and file systems.

Hardware Systems Support

Our hardware systems support offerings provide customers with software updates for the software components that are essential to the functionality of our server and storage products, such as Oracle Solaris and certain other software products, and can include product repairs, maintenance services and technical support services. We continue to evolve hardware systems support processes that are intended to proactively identify and solve quality issues and to increase the amount of new hardware systems support contracts sold and renewed in connection with the sales of our hardware systems products. Hardware systems support contracts are generally priced as a percentage of the net hardware systems products fees. Our hardware systems support revenues represented 7%6% of our total revenues in fiscal 2013 and 7% in each of fiscal 2012 and 20112011.

Oracle Platinum Service is a special hardware support service available to Oracle Premier Support customers running certified configurations on Oracle Engineered Systems to ensure these systems remain configured and 3% in fiscal 2010.tuned correctly for optimal performance.

Services Business

We deliver an integrated services solution to help customers and partners maximize the performance of their investments in Oracle technology. Our services are differentiated based on our focus on Oracle technology, extensive experience and broad set of intellectual property and best practices. Our services business is comprised of the remainder of our operating segments and offers consulting services, managed cloud services and education services. Our services business represented 13%12% of our total revenues in fiscal 2013 and 13% in each of fiscal 2012 and 2011 and 14% of our total revenues in fiscal 2010.2011.

Consulting

Oracle Consulting is designed to help our customers more successfully architect and deploy our products. Our consulting services include business and IT strategy alignment, enterprise architecture planning and design, initial product implementation and integration and ongoing product enhancements and upgrades. Together these services are designed to help our customers achieve their business goals, reduce the risk associated with their IT initiatives and maximize their return on investment. Oracle Consulting engages customers directly and provides specialized expertise to our global systems integrator partners. We utilize a global, blended delivery model to optimize value for our customers and partners, consisting of on-premise consultants from local geographies, industry specialists and consultants from our global delivery and solution centers.

Managed Cloud Services

Oracle managed cloud services provide comprehensive software and hardware management and maintenance services—including deployment, management, monitoring, patching, security and upgrade services—for customers hosted at our Oracle data center facilities, select partner data centers or physically on-premise at customer facilities. Additionally, we provide support services, both on-premise and remote, to Oracleour customers to enable increased performance and higher availability of their products and services. We believe that our managed cloud services offerings provide our customers with greater value and choice through increased business performance, reduced risk, a predictable cost and more flexibility in terms of service in order to maximize the performance of their Oracle software and hardware products and services.

Education

We provide training to customers, partners and employees as a part of our mission of accelerating the adoption and use of our software and hardware products and to create opportunities to grow our product revenues. Our training is provided through a variety of formats, including instructor-led classes at our education centers, live virtual training, self-paced online training, training via CD-ROM, private events and custom training. Our live virtual class offerings allow students anywhere in the world to receive real-time, interactive training online. In addition, we also offer a certification program certifyingfor database administrators, developers, implementers, consultants and architects.

Marketing and Sales

We directly market and sell our products and services to businesses of many sizes and in many industries, government agencies and educational institutions. We also market and sell our products through indirect channels. No single customer accounted for 10% or more of our total revenues in fiscal 2013, 2012 2011 or 2010.2011.

In the United States, our sales and serviceservices employees are based in our headquarters and in field offices throughout the country. Outside the United States, our international subsidiaries sell, support and supportservice our products in their local countries as well as within other foreign countries where we do not operate through a direct sales subsidiary. Our geographic coverage allows us to draw on business and technical expertise from a global workforce, provides stability to our operations and revenue streams to offset geography-specific economic trends and offers us an opportunity to take advantage of new markets for our products. Our international operations subject us to certain risks, which are more fully described in “Risk Factors” included in Item 1A. of this Annual Report. A summary of our domestic and international revenues and long-lived assets is set forth in Note 16 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

We also market our products worldwide through indirect channels. The companies that comprise our indirect channel network are members of the Oracle Partner Network. The Oracle Partner Network is a global program that manages our business relationships with a large, broad-based network of companies, including independent software and hardware vendors, system integrators and resellers that deliver innovative solutions and services based upon our products. By offering our partners access to our premier products, educational information, technical services, marketing and sales support, the Oracle Partner Network program extends our market reach by providing our partners with the resources they need to be successful in delivering solutions to customers globally. The majority of our hardware systems products are sold through indirect channels including independent distributors and value added resellers.

Seasonality and Cyclicality

Our quarterly revenues have historically been affected by a variety of seasonal factors, including the structure of our sales force incentive compensation plans, which are common in the technology industry. Our total revenues and operating margins are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter. The operating margins of our businesses are generally affected by seasonal factors in a similar manner as our revenues (in particular, our new software licenses and cloud software subscriptions segment) as certain expenses within our cost structure are relatively fixed in the short term. See “Selected Quarterly Financial Data” in Item 7 of this Annual Report for a more complete description of the seasonality and cyclicality of our revenues, expenses and margins.

Competition

We face intense competition in all aspects of our business. The nature of the IT industry creates a competitive landscape that is constantly evolving as firms emerge, expand or are acquired, as technology evolves and as customer demands and competitive pressures otherwise change.

Our customers are demanding less complexity and lower total cost in the implementation, sourcing, integration and ongoing maintenance of their enterprise software and hardware systems. Our enterprise software and hardware offerings compete directly with some offerings from some of the largest and most competitive companies in the world, including Microsoft Corporation (Microsoft), International Business Machines Corporation (IBM), Intel, Hewlett-Packard Company (HP) and SAP AG and smaller companies like Salesforce.com,salesforce.com, inc., as well as many others. In addition, the low barriers to entry in many of our market segments regularly introduce new technologies and new and growing competitors to challenge our offerings. Our competitors range from companies offering broad IT solutions across many of our lines of business to vendors providing point solutions, or offerings focused on a specific functionality, product area or industry. In addition, as we expand into new market segments, we will face increased competition as we will compete with existing competitors, as well as firms that may be partners in other areas of our business and other firms with whom we have not previously competed. Moreover, we or our competitors may take certain strategic actions—including acquisitions, partnerships and joint ventures, or repositioning of product lines—which invite even greater competition in one or more product categories.

Key competitive factors in each of the segments in which we currently compete and may compete in the future include: total cost of ownership, performance, scalability, reliability, security, functionality, efficiency, ease of management and quality of technical support. Our product sales (and the relative strength of our products versus those of our competitors) are also directly and indirectly affected by the following, among other things:

For more information about the competitive risks we face, refer to Item 1A. “Risk Factors.”Factors” included elsewhere in this Annual Report.

Manufacturing

To produce our hardware systems products, we rely on both our internal manufacturing operations as well as third party manufacturing partners. Our internal manufacturing operations consist primarily of finalmaterials procurement, assembly, testtesting and quality control of our Oracle Engineered Systems and certain of our enterprise and data center servers, storage systems and storage systems.networking products. For substantially all other manufacturing, we generally rely on third party manufacturing partners.partners to produce our hardware related components and hardware products and we may involve our internal manufacturing operations in the final assembly, testing and quality control processes for these components and products. We distribute most of our hardware systems products either from our facilities or partner facilities. Our manufacturing processes are based on standardization of components across product types, centralization of assembly and distribution centers and a “build-to-order” methodology in which products generally are built only after customers have placed firm orders. Production of our hardware products requires that we purchase materials, supplies, product subassemblies and full assemblies from a number of vendors. For most of our hardware products, we have existing alternate sources of supply or such sources are readily available. However, we do rely on sole sources for certain of our hardware products. As a result, we continue to evaluate potential risks of disruption to our supply chain operations. Refer to “Risk Factors” included in Item 1A. within this Annual Report for additional discussion of the challenges we encounter with respect to the sources and availability of supplies for our products and the related risks to our business.

Research and Development

We develop the substantial majority of our products internally. In addition, we have extended our product offerings and intellectual property through acquisitions of businesses and technologies. We also purchase or license intellectual property rights in certain circumstances. Internal development allows us to maintain technical control over the design and development of our products. We have a number of United States and foreign patents and pending applications that relate to various aspects of our products and technology. While we believe that our patents have value, no single patent is essential to us or to any of our principal business segments. Research and development expenditures were $4.9 billion in fiscal 2013 and $4.5 billion in each of fiscal 2012 and 2011, or 13%, 12% and $3.3 billion in fiscal 2010, or 12%, 13% and 12% of total revenues in fiscal 2013, 2012 2011 and 2010,2011, respectively. Rapid technological advances in hardware and software development, evolving standards in computer hardware and software technology, changing customer needs and frequent new product introductions and enhancements characterize the software and hardware markets in which we compete. We plan to continue to dedicate a significant amount of resources to research and development efforts to maintain and improve our current product and services offerings.

Employees

As of May 31, 2012,2013, we employed approximately 115,000120,000 full-time employees, including approximately 30,00033,000 in sales and marketing, approximately 9,000 in software license updates and product support, approximately 1,000 in the manufacturing of our hardware systems products, approximately 6,000 in hardware systems support, approximately 26,00025,000 in services, approximately 32,00035,000 in research and development and approximately 11,000 in general and administrative positions. Of these employees, approximately 42,00043,000 were locatedemployed in the United States and approximately 73,00077,000 were employed internationally. None of our employees in the United States is represented by a labor union; however, in certain foreign subsidiaries workers’ councils represent our employees.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our Investor Relations web site at www.oracle.com/investor as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information posted on or accessible through our web site is not incorporated into this Annual Report.

Executive Officers of the Registrant

Our executive officers are listed below.

Mr. Ellison, 67,68, has been Chief Executive Officer and a Director since he founded Oracle in June 1977. He served as Chairman of the Board from May 1995 to January 2004.

Mr. Henley, 67,68, has served as Chairman of the Board since January 2004 and as a Director since June 1995. He served as Executive Vice President and Chief Financial Officer from March 1991 to July 2004.

Ms. Catz, 50,51, has been a President since January 2004, Chief Financial Officer most recently since April 2011 and has served as a Director since October 2001. She was previously Chief Financial Officer from November 2005 until September 2008 and Interim Chief Financial Officer from April 2005 until July 2005. Prior to being named President, she held various other positions with us since joining Oracle in 1999. She also currently serves as a director of HSBC Holdings plc.

Mr. Hurd, 55,56, has been a President and served as a Director since September 2010. Prior to joining us, he served as Chairman of the Board of Directors of HP from September 2006 to August 2010 and as Chief Executive Officer, President and a member of the Board of Directors of HP from April 2005 to August 2010.

Mr. Fowler, 51,52, has been Executive Vice President, Systems since February 2010. Prior to joining us, Mr. Fowler served as Sun Microsystems, Inc.’s Executive Vice President, Systems Group from May 2006 to February 2010, as Executive Vice President, Network Systems Group from May 2004 to May 2006 and as Chief Technology Officer, Software Group from July 2002 to May 2004 and Director, Corporate Development from July 2000 to July 2002.2004.

Mr. Kurian, 45,46, has been Executive Vice President, Product Development since July 2009. He served as Senior Vice President of Development from February 2001 until July 2009. Mr. Kurian worked in Oracle Server Technologies as Vice President of Development from March 1999 until February 2001. He also held various other positions with us since joining Oracle in 1996.

Ms. Daley, 53,54, has been Senior Vice President, General Counsel and Secretary since October 2007. She served as Vice President, Legal, Associate General Counsel and Assistant Secretary from June 2004 to October 2007, as Associate General Counsel and Assistant Secretary from October 2001 to June 2004 and as Associate General Counsel from February 2001 to October 2001. She held various other positions with us since joining Oracle’s Legal Department in 1992.

Mr. West, 50,51, has been Senior Vice President, Corporate Controller and Chief Accounting Officer since February 2008 and was Vice President, Corporate Controller and Chief Accounting Officer from April 2007 to February 2008. His previous experience includes 14 years with Arthur Andersen LLP, most recently as a partner.

Item 1A.    Risk Factors

We operate in rapidly changing economic and technological environments that present numerous risks, many of which are driven by factors that we cannot control or predict. The following discussion, as well as our “Critical Accounting Policies and Estimates”

discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7), highlights some of these risks. The risks described below are not exhaustive and you should carefully consider these risks and uncertainties before investing in our securities.

Economic, political and market conditions can adversely affect our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price.    Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. These include:

Macroeconomic developments like the debtongoing economic crisis in certain countries in the European Union, the continued slow pace of economic recovery in the United States and slowing economieseconomic conditions in parts of Asia and South America could negatively affect our business, operating results or financial condition which, in turn, could adversely affect our stock price. In addition, there is significant focus in the United States on the overall reduction in government spending at the federal level known as “sequestration” that has recently gone into effect. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending could cause current or potential customers to reduce their information technology (IT) budgets or be unable to fund software, hardware systems or services purchases, which could cause customers to delay, decrease or cancel purchases of our products and services or cause customers not to pay us or to delay paying us for previously purchased products and services.

In addition, political unrest in regions like the Middle East, terrorist attacks around the globe and the potential for other hostilities in various parts of the world, potential public health crises and natural disasters continue to contribute to a climate of economic and political uncertainty that could adversely affect our results of operations and financial condition, including our revenue growth and profitability. These factors generally have the strongest effect on our sales of new software licenses, hardware systems products, hardware systems support and related services and, to a lesser extent, also may affect our renewal rates for software license updates and product support.

We may fail to achieve our financial forecasts due to inaccurate sales forecasts or other factors.    Our revenues, and particularly our new software licenselicenses revenues and hardware systems products revenues, are difficult to forecast, and, as a result, our quarterly operating results can fluctuate substantially. Our limited experience with managing our hardware business and forecasting its future financial results creates additional challenges with our forecasting processes.

We use a “pipeline” system, a common industry practice, to forecast sales and trends in our business. Our sales personnel monitor the status of all proposals and estimate when a customer will make a purchase decision and the dollar amount of the sale. These estimates are aggregated periodically to generate a sales pipeline. Our pipeline estimates can prove to be unreliable both in a particular quarter and over a longer period of time, in part because the “conversion rate” or “closure rate” of the pipeline into contracts can be very difficult to estimate. A contractionreduction in the conversion rate, or in the pipeline itself, could cause us to plan or budget incorrectly and adversely affect our business or results of operations. In particular, a slowdown in IT spending or economic conditions generally can unexpectedly reduce the conversion rate in particular periods as purchasing decisions are delayed, reduced in amount or cancelled. The conversion rate can also be affected by the tendency of some of our customers to wait until the end of a fiscal period in the hope of obtaining more favorable terms, which can also impede our ability to negotiate, execute and deliver upon these contracts in a timely manner. In addition, for

newly acquired companies, we have limited ability to predict how their pipelines will convert into sales or revenues for a number of quarters following the acquisition. Conversion rates post-acquisition may be quite different from the acquired companies’ historical conversion rates. Differences in conversion rates can also be affected by changes in our business practices that we implement with our newly acquired companies that may affect customer behavior.

A substantial portion of our new software licenselicenses revenue contracts and hardware systems products contracts is completed in the latter part of a quarter and a significant percentage of these are largelarger orders. Because a significant portion of our cost structure is largely fixed in the short-term, revenue shortfalls tend to have a disproportionately negative impact on our profitability. The

number of large new software licenselicenses transactions and, to a lesser extent, hardware systems products transactions also increases the risk of fluctuations in our quarterly results because a delay in even a small number of these transactions could cause our quarterly revenues and profitability to fall significantly short of our predictions.

Our hardware systems revenues and profitability could decline further if we do not manage the risks associated with our hardware systems business.    Our hardware systems business may adversely affect our overall profitability if we do not effectively manage the associated risks. We may not achieve our estimated revenue, profit or other financial projections with respect to our hardware systems business in a timely manner or at all due to a number of factors, including:

Our periodic workforce restructurings, including reorganizations of our sales force, can be disruptive.    We have in the past restructured or made other adjustments to our workforce, including our direct sales force on which we rely heavily, in response to management changes, product changes, performance issues, acquisitions and other internal and external considerations. For example, in fiscal 2013, we hired a significant number of new people to our direct sales force and reorganized the various sales teams so that they increased their focus on specific products and services and became more specialized. In the past, these types of sales force restructurings have resulted in temporary reduced productivity while the sales teams adjusted to their new roles and responsibilities. In addition, we may not achieve or sustain the expected growth or cost savings benefits of these restructurings, or do so within the expected timeframe. These effects could recur in connection with future acquisitions and other restructurings and our revenues and other results of operations could be negatively affected.

Our strategy of transitioning to a mixed direct and indirect sales model for our hardware systems products may not succeed and could result in lower hardware revenues or profits. Disruptions to our software indirect sales channel could affect our future operating results.    Although we will continue to sell our hardware systems products through indirect channels, including independent distributors and value added resellers, we have enhanced our direct sales coverage for our hardware products and intend that our direct sales force will sell a larger portion of our hardware products in the future than they do now. These direct sales efforts, however, may not be successful. Our relationships with some of our channel partners may deteriorate because we have reduced our reliance on some of these partners for sales of our hardware products and have modified our approach and timing to the manufacturing of our products, which could result in reduced demand from the channel partners or certain customer segments serviced by these channel partners. Some hardware revenues from channel partners may not be replaced by revenues generated from our own sales personnel or may not be replaced as quickly as we

expect. In addition, these newly hired salespeople may not be able to achieve our sales forecasts for our hardware business. If we experience any of these risks, our hardware revenues and profits may decline.

Our software indirect channel network is comprised primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and independent software vendors. Our relationships with these channel participants are important elements of our software marketing and sales efforts. Our financial results could be adversely affected if our contracts with channel participants were terminated, if our relationships with channel participants were to deteriorate, if any of our competitors enter into strategic relationships with or acquire a significant channel participant, if the financial condition or operations of our channel participants were to weaken or if the level of demand for our channel participants’ products and services were to decrease. There can be no assurance that we will be successful in maintaining, expanding or developing our relationships with channel participants. If we are not successful, we may lose sales opportunities, customers and revenues.

Our cloud computing strategy, including our Oracle Cloud and Oracle managed cloud services offerings, may not be successful.    We offer customers a broad portfolio of software and hardware products and services to enable customers to adopt a cloud computing strategy that is right for them. Oracle Cloud is a comprehensive set of cloud service offerings that is designed to provide customers and partners with access to application services, social networking services, platform services and common infrastructure services on a subscription basis and managed, hosted and supported by Oracle. Oracle managed cloud services include software and hardware management and maintenance services hosted at our data center facilities, select partner data centers or physically on-premise at customer facilities. These business models continue to evolve, and we may not be able to compete effectively, generate significant revenues or maintain their profitability. We have acquired other cloud computing companies and incur expenses associated with the infrastructures and marketing of our managed cloud services and cloud software subscriptions offerings in advance of our ability to recognize the revenues associated with these offerings. Demand for our cloud offerings may unfavorably impact demand for certain of our other products and services, including new software licenses and software license updates and product support services.

If our data protection or other security measures are compromised and as a result our data, our customers’ data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable, our brand and reputation could be damaged, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, all of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions.    We are in the information technology business, and our products and services store, retrieve, manipulate and manage our customers’ information and data as well as our own. We have a reputation for secure and reliable software and hardware products and services and have invested a great deal of time and resources in protecting the integrity and security of our products, services and internal and external data that we manage.

Nevertheless, we encounter attempts by third parties to penetrate or bypass our data protection and other security measures and gain unauthorized access to our networks, systems and data or compromise the confidential information or data of our customers. Computer hackers and others may be able to develop and deploy IT related viruses, worms, and other malicious software programs that could attack our products and services, exploit potential security vulnerabilities of our products and services, create system disruptions and cause shutdowns or denials of service. Data may also be accessed or modified improperly as a result of employee or supplier error or malfeasance and third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our data, our customers’ data or our IT systems.

Although this is an industry-wide problem that affects other software and hardware companies, it affects Oracle in particular because computer hackers tend to focus their efforts on the most popular or well-known IT companies, and they may focus on Oracle because of our reputation for, and marketing efforts associated with, having secure products and services. These risks for us will increase as we continue to grow our cloud offerings and services and store and process increasingly large amounts of our customers’ confidential information and data and host or manage parts of our customers’ businesses in cloud-based IT environments, especially in customer sectors involving particularly sensitive data such as health sciences, financial services and the government. We also have an active acquisition program and have acquired a number of companies, products, services and technologies over the years. While we make significant efforts to address any IT security issues with respect to our acquisitions, we may still inherit such risks when we integrate these acquisitions within Oracle.

If a cyber attack or other security incident described above were to allow unauthorized access to or modification of our customers’ data or our own data or our IT systems or if the services we provide to our customers were disrupted, or if our products or services are perceived as having security vulnerabilities, we could suffer damage to our brand and reputation. Customers could lose

confidence in the security and reliability of our products and services and perceive them to be not secure. This in turn could lead to fewer customers using our products and services and result in reduced revenue and earnings. The costs we would incur to address and fix these security incidents would increase our expenses. These types of security incidents could also lead to lawsuits, regulatory investigations and claims and increased legal liability, including in some cases contractual costs related to customer notification and fraud monitoring.

Further, as regulatory focus on privacy issues continues to increase and worldwide laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business will intensify. Changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personally identifiable information, could greatly increase our cost of providing our products and services.

Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our existing products and services.    Rapid technological advances and evolving standards in computer hardware and software development and communications infrastructure, changing and increasingly sophisticated customer needs and frequent new product introductions and enhancements characterize the enterprise software and hardware systems marketsindustries in which we compete. If we are unable to develop new or sufficiently differentiated products and services, or enhance and improve our products and support services in a timely manner or to position and/or price our products and services to meet demand, customers may not buy new software licenses, cloud software subscriptions or hardware systems products or purchase or renew software license updates and product support or hardware systems support contracts. Renewals of these support contracts are important to the growth of our business. In addition, IT standards from both consortia and formal standards-setting forums as well as de facto marketplace standards are rapidly evolving. We cannot provide any assurance that the standards on which we choose to develop new products will allow us to compete effectively for business opportunities in emerging areas.

We have released Oracle Fusion Applications, the next generationcontinued to refresh and release new offerings of our applications software offerings, which are designed to unify the best-of-business functional capabilities from all ofand hardware products and services, including our applications on an open-standards-based technology foundation accessible by customers through the cloud or on-premise. We have also recently designedOracle Cloud and built our Oracle Engineered Systems product offerings including Oracle Exadata Database Machine, a fast database warehousing machine that runs online transaction processing applications; Oracle Exalogic Elastic Cloud, an integrated “cloud” machine which has server hardware and middleware software that have been engineered together; Oracle Exalytics In-Memory Machine, an engineered system featuring in-memory software and hardware and an optimized business intelligence platform; and SPARC SuperCluster, an engineered system which combines optimized database performance with accelerated middleware processing capabilities; among others.offerings. If we do not continue to develop and release these or other new or enhanced products and services within the anticipated time frames, if there is a delay in market acceptance of a new, enhanced or acquired product line or service, if there are changes in information technology trends for which we do not adequately anticipate or react our product development efforts toward, if we do not timely optimize complementary product lines and services or if we fail to adequately integrate, support or enhance acquired product lines or services, our business may be adversely affected.

If we are unable to compete effectively with existing or new hardware systems or software competitors, the results of operations and prospects for our business could be harmed through fewer customer orders, reduced pricing, lower revenues or lower profits.    Our hardware systems business will compete with, among others, (i) systems manufacturers and resellers of systems based on our own microprocessors and operating systems and those of our competitors, (ii) microprocessor/chip manufacturers and (iii) providers of storage products. Our hardware systems business may also cause us to compete with companies who historically have been our partners. TheseSome of these competitors may have more experience than we do in managing a hardware business. A large portion of our hardware products are based on our SPARC microprocessor and Oracle Solaris operating system platform, which has a smaller installed base than certain of our competitors’ platforms and which may make it difficult for us to win new customers that have already made significant investments in our competitors’

platforms. Certain of these competitors also compete very aggressively on price. A loss in our competitive position could result in lower revenues or profitability, which could adversely impact our ability to realize the revenue and profitability forecasts for our hardware systems business.

Many vendors develop and market databases, middleware products, application development tools, business applications, collaboration products and business intelligence products, amongst others, that compete with our software offerings. In addition, several companies offer software-as-a-service (SaaS) or cloud computing and business process outsourcing (BPO) as competitive alternatives to buying software and hardware, and customer interest in cloud or SaaS solutions is increasing. Some of these competitors have greater financial or technical resources than we do. Our competitors that offer business applications and middleware products may influence a customer’s purchasing decision for the underlying database in an effort to persuade potential customers not to acquire our products. We could lose customers if our competitors introduce new competitive products, add new functionality, acquire competitive products, reduce prices or form strategic alliances with other companies. Vendors that offer SaaS, cloud or BPO solutions may persuade our customers not to purchase our on-premise products. We may also face increasing competition from open source software initiatives in which competitors may provide software and intellectual property for free. Existing or new competitors could gain sales opportunities or customers at our expense.

Acquisitions present many risks and we may not realize the financial and strategic goals that were contemplated at the time of a transaction.    In recent years, we have invested billions of dollars to acquire a number of companies, products, services and technologies. An active acquisition program is an important element of our overall corporate strategy and we expect to continue to make acquisitions in the future. Risks we may face in connection with our acquisition program include:

The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or several concurrent acquisitions.

Our international sales and operations subject us to additional risks that can adversely affect our operating results.    We derive a substantial portion of our revenues from, and have significant operations, outside of the United States. Our international operations include software and hardware systems development, manufacturing, assembly, sales, customer support, consulting, managed cloud services and shared administrative service centers.

Compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions. These laws and regulations include U.S. laws and local laws which include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, prohibitions on payments to governmental officials, import and trade restrictions and export requirements. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Compliance with these laws requires a significant amount of management attention and effort, which may divert management’s attention from running our business operations and could harm our ability to grow our business, or may increase our expenses as we engage specialized or other additional resources to assist us with our compliance efforts. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties. We monitor our operations and investigate allegations of improprieties relating to transactions and the way in which such transactions are recorded. Where circumstances warrant, we provide information and report our findings to government authorities, but no assurance can be given that action will not be taken by such authorities.

We are also subject to a variety of other risks and challenges in managing an organization operating in various countries, including those related to:

As a result of our hardware systems business, the number and complexity of laws and regulations that we are subject to have increased. The variety of risks and challenges listed above could also disrupt or otherwise negatively impact the supply chain operations for our hardware systems products segment and the sales of our products and services in affected countries or regions.

As the majority shareholder of Oracle Financial Services Software Limited, a publicly traded Indian software company focused on the banking industry, we are faced with several additional risks, including being subject to local securities regulations and being unable to exert full control.

Our hardware systems offerings are complex products. If we cannot successfully manage the required processes to meet customer requirements and demand on a timely basis, the results of our hardware systems business will suffer.    Designing, developing, manufacturing and introducing new hardware systems products are complicated processes. The development process is uncertain and requires a high level of innovation from both systems hardware and software product designers and engineers and the suppliers of the components used in these products. The development process is also lengthy and costly. Once a new hardware systems product is developed, we face several challenges in the manufacturing process. We must be able to forecast customer demand and manufacture new hardware systems products in sufficient volumes to meet this demand and do so in a cost effective manner. Our “build-to-order” manufacturing model, in which our hardware systems products generally are not built until after customers place orders, may from time to time experience delays in delivering our hardware systems products to customers in a timely manner. These delays could cause our customers to purchase hardware products and services from our competitors. We must also manage new hardware product introductions and transitions to minimize the impact of customer delayed purchases of existing hardware systems products in anticipation of new hardware systems product releases. Because the design and manufacturing processes for components are also very complicated, it is possible that we could experience design or manufacturing flaws. These design or manufacturing flaws could delay or prevent the production of the components for which we have previously committed to pay or need to fulfill orders from customers. These types of component flaws could also prevent the production of our hardware products or cause our hardware products to be returned, recalled or rejected resulting in lost revenues, increases in warranty costs or costs related to remediation efforts, damage to our reputation, penalties and litigation.

Acquisitions present many risks and we may not realize the financial and strategic goals that were contemplated at the time of a transaction.    In recent years, we have invested billions of dollars to acquire a number of companies, products, services and technologies. An active acquisition program is an important element of our overall corporate strategy and we expect to continue to make acquisitions in the future. Risks we may face in connection with our acquisition program include:

The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or several concurrent acquisitions.

Our hardware systems revenues and profitability could decline if we do not manage the risks associated with our hardware systems business.    Our hardware systems business may adversely affect our overall profitability if we do not manage the associated risks. We may not achieve our estimated revenue, profit or other financial projections with respect to our hardware systems business in a timely manner or at all due to a number of factors, including:

Our strategy of transitioning to a mixed direct and indirect sales model for our hardware systems products may not succeed and could result in lower hardware revenues or profits. Disruptions to our software indirect sales channel could affect our future operating results.    Although we will continue to sell our hardware systems products through indirect channels, including independent distributors and value added resellers, we have enhanced our direct sales coverage for our hardware products and intend that our direct sales force will sell a larger portion of our hardware products in the future than they do now. These direct sales efforts, however, may not be successful. Our relationships with some of our channel partners may deteriorate because we are reducing our reliance on some of these partners for sales of our hardware products, are modifying our approach and timing to the manufacturing of our products and have altered certain of Sun’s legacy business practices with these channel partners, which could result in reduced demand from the channel partners or certain customer segments serviced by these channel partners. Some hardware revenues from channel partners may not be replaced by revenues generated from our own sales personnel or may not be replaced as quickly as we expect. In addition, we may not be able to hire qualified hardware salespeople, sales consultants and other personnel for our direct sales model at the rate or in the numbers we need to generate the hardware revenues and profit margins we have projected for future periods. Even if we can meet our hiring needs, these salespeople may not be able to achieve our sales forecasts for our hardware business. If we experience any of these risks, our hardware revenues and/or profits may decline.

Our software indirect channel network is comprised primarily of resellers, system integrators/implementers, consultants, education providers, internet service providers, network integrators and independent software vendors. Our relationships with these channel participants are important elements of our software marketing and sales efforts. Our financial results could be adversely affected if our contracts with channel participants were terminated, if our relationships with channel participants were to deteriorate, if any of our competitors enter into

strategic relationships with or acquire a significant channel participant or if the financial condition of our channel participants were to weaken. There can be no assurance that we will be successful in maintaining, expanding or developing our relationships with channel participants. If we are not successful, we may lose sales opportunities, customers and revenues.

Our international sales and operations subject us to additional risks that can adversely affect our operating results.    We derive a substantial portion of our revenues from, and have significant operations, outside of the United States. Our international operations include software and hardware systems development, manufacturing, assembly, sales, customer support, consulting, managed cloud services and shared administrative service centers.

Compliance with international and U.S. laws and regulations that apply to our international operations increases our cost of doing business in foreign jurisdictions. These laws and regulations include U.S. laws and local laws which include data privacy requirements, labor relations laws, tax laws, anti-competition regulations, prohibitions on payments to governmental officials, import and trade restrictions and export requirements. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could result in prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties. We monitor our international operations and investigate allegations of improprieties relating to transactions and the way in which such transactions are recorded. Where circumstances warrant, we provide information and report our findings to government authorities, but no assurance can be given that action will not be taken by such authorities.

We are also subject to a variety of other risks and challenges in managing an organization operating in various countries, including those related to:

As a result of our hardware systems business, the volume and complexity of laws and regulations that we are subject to have increased. The variety of risks and challenges listed above could also disrupt or otherwise negatively impact the supply chain operations for our hardware systems products segment and the sales of our products and services in affected countries or regions.

As the majority shareholder of Oracle Financial Services Software Limited, a publicly traded Indian software company focused on the banking industry, we are faced with several additional risks, including being subject to local securities regulations and being unable to exert full control.

The future operating results of our hardware systems business will depend on our ability to manage our component inventory to meet the demands of our hardware systems customers and to avoid component inventory write-downs.    We depend on suppliers to design, develop, manufacture and deliver on a timely basis

the necessary components for our hardware products. While many of the components purchased are standard, some components (standard or otherwise) require long lead times to manufacture and deliver. Furthermore, there are some components that can only be purchased from a single vendor due to price, quality, technology, availability or other business constraints. As a result, our supply chain operations could be disrupted or negatively impacted by natural disasters, political unrest or other factors affecting the countries or regions where these single source component vendors are located. We may be unable to purchase these items from the respective single vendors on acceptable terms or may experience significant delays or quality issues in the delivery of necessary parts or components from a particular vendor. If we had to find a new supplier for these parts and components, hardware systems product shipments could be delayed, which would adversely affect our hardware systems revenues. We could also experience fluctuations in component prices which, if unanticipated, could negatively impact our hardware systems business cost structure. These factors may make it difficult for us to plan and procure appropriate component inventory levels in a timely fashion to meet customer demand for our hardware products. Therefore we may experience component inventory shortages which may result in production delays or customers choosing to purchase fewer hardware products from us or systems products from our competitors. We negotiate supply commitments with vendors early in the manufacturing process to ensure we have sufficient components for our hardware products to meet anticipated customer demand. We must also manage our levels of older component inventories used in our hardware products to minimize inventory write-offs or write-downs. If we have excess inventory, it may be necessary to write-down the inventory, which would adversely affect our operating results. If one or more of the risks described above occurs, our hardware systems business and related operating results could be materially and adversely affected.

We expect to continue to depend on third party manufacturers to build certain hardware systems products and third party logistics providers to deliver our products. As such, we are susceptible to manufacturing and logistics delays that could prevent us from shipping customer orders on time, if at all, and may result in the loss of sales and customers.    We outsource the manufacturing, assembly and delivery of certain of our hardware products to a variety of companies, many of which are located outside the United States. Our reliance on these third parties reduces our control over the manufacturing and delivery process, exposing us to risks, including reduced control over quality assurance, product costs, product supply and delivery delays as well as the political and economic uncertainties and natural disasters of the international locations where certain of these third party manufacturers have facilities and operations. Any manufacturing disruption or logistics delays by these third parties could impair our ability to fulfill orders for these hardware systems products for extended periods of time. If we are unable to manage our relationships with these third parties effectively, or if these third parties experience delays, disruptions, capacity constraints, regulatory issues or quality control problems in their operations, or fail to meet our future requirements for timely delivery, our ability to ship and/or deliver certain of our hardware systems products to our customers could be impaired and our hardware systems business could be harmed.

We have simplified our supply chain processes by reducing the number of third party manufacturing partners and the number of locations where these third party manufacturers build our hardware systems products. We therefore have become more dependent on a fewer number of these manufacturing partners and locations. If these partners experience production problems or delays or cannot meet our demand for products, we may not be able to find alternate manufacturing sources in a timely or cost effective manner, if at all. If we are required to change third party manufacturers, our ability to meet our scheduled hardware systems products deliveries to our customers could be adversely affected, which could cause the loss of sales and existing or potential customers, delayed revenue recognition or an increase in our hardware systems products expenses, all of which could adversely affect the margins of our hardware business.

These challenges and risks also exist when we acquire companies with hardware products and related supply chain operations. In some cases, we may be dependent, at least initially, on supply chain operations that we are less familiar with and thus may be slower to adjust or react to these challenges and risks.

We may experience foreign currency gains and losses.    We conduct a significant number of transactions and hold cash in currencies other than the U.S. Dollar. Changes in the value of major foreign currencies, particularly the Euro, Japanese Yen and British Pound relative to the U.S. Dollar can significantly affect our assets, revenues and operating results. Generally, our revenues and operating results are adversely affected when the dollar strengthens relative to other currencies and are positively affected when the dollar weakens. Generally, our assets are adversely affected when we must devalue our cash and other bank deposits held in a foreign currency due to fluctuations or changes in exchange rates.

During fiscal 2013 and 2010, we incurred foreign currency losses associated with our Venezuelan subsidiary due to it being designated as operating in a highly inflationary economy and due to the subsequent devaluation of the Venezuelan Bolivar relative to the U.S. Dollar. We could experience similar foreign currency volatility in the future if the Venezuelan government further devalues the Venezuelan currency, the amounts and timing of which are uncertain.

In addition, we incur foreign currency transaction gains and losses, primarily related to sublicense fees and other intercompany agreements among us and our subsidiaries that we expect to cash settle in the near term, which are

charged against earnings in the period incurred. We have a program which primarily utilizes foreign currency forward contracts to offset the risks associated with these foreign currency exposures that we may suspend from time to time. As a part of this program, we enter into foreign currency forward contracts so that increases or decreases in our foreign currency exposures are offset by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with our foreign currency transaction gains or losses. A large portion of our consolidated operations are international, and we expect that we will continue to realize gains or losses with respect to our foreign currency exposures, net of gains or losses from our foreign currency forward contracts. For example, we will experience foreign currency gains and losses in certain instances if it is not possible or cost effective to hedge our foreign currency exposures or should we suspend our foreign currency forward contract program. Our ultimate realized loss or gain with respect to currency fluctuations will generally depend on the size and type of cross-currency exposures that we enter into, the currency exchange rates associated with these exposures and changes in those rates, whether we have entered into foreign currency forward contracts to offset these exposures and other factors. All of these factors could materially impact our results of operations, financial position and cash flows, the timing of which is variable and generally outside of our control.

We may not be able to protect our intellectual property rights.    We rely on copyright, trademark, patent and trade secret laws, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights. Despite our efforts, these protections may be limited. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any patents owned by us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. In addition, the laws of some countries do not provide the same level of protection of our intellectual property rights as do the laws and courts of the United States. If we cannot protect our intellectual property rights against unauthorized copying or use, or other misappropriation, we may not remain competitive.

Third parties have claimed and, in the future, may claim infringement or misuse of intellectual property rights and/or breach of license agreement provisions.    We periodically receive notices from, or have lawsuits filed against us by, others claiming infringement or other misuse of their intellectual property rights and/or breach of our agreements with them. These third parties include entities that do not have the capabilities to design, manufacture, or distribute products or services or that acquire intellectual property like patents for the sole purpose of monetizing their acquired intellectual property through asserting claims of infringement and misuse. We expect the number of such claims will increase as:

Responding to any such claim, regardless of its validity, could:

We may lose key employees or may be unable to hire enough qualified employees.    We rely on the continued service of our senior management, including our Chief Executive Officer and founder, members of our executive team and other key employees and the hiring of new qualified employees. In the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. In addition, acquisitions could cause us to lose key personnel of the acquired companies or at Oracle. We may also experience increased compensation costs that are not offset by either improved productivity or higher sales. We may not be successful in recruiting new personnel and in retaining and motivating existing personnel. With rare exceptions, we do not have long-term employment or non-competition agreements with our employees. Members of our senior management team have left Oracle over the years for a variety of reasons, and we cannot assure you that there will not be additional departures, which may be disruptive to our operations.

We continually focus on improving our cost structure by hiring personnel in countries where advanced technical expertise is available at lower costs. When we make adjustments to our workforce, we may incur expenses associated with workforce reductions that delay the benefit of a more efficient workforce structure. We may also experience increased competition for employees in these countries as the trend toward globalization continues, which may affect our employee retention efforts and increase our expenses in an effort to offer a competitive compensation program. Our compensation program includes stock options, which are an important tool in attracting and retaining employees in our industry. If our stock price performs poorly, it may adversely affect our ability to retain or attract employees. In addition, because we expense all stock-based compensation, we may in the future change our stock-based and other compensation practices. Some of the changes we consider from time to time include a reduction in the number of employees granted stock options, a reduction in the number of stock options granted per employee and a change to alternative forms of stock-based compensation.compensation, all of which may have an impact on our ability to retain employees and also impact the amount of stock-based compensation expense that we record. Any changes in our compensation practices or changes made by competitors could affect our ability to retain and motivate existing personnel and recruit new personnel.

Our sales to government clients subject us to business volatility and risks, including government budgeting cycles and appropriations, early termination, audits, investigations, sanctions and penalties.    We derive revenues from contracts with the U.S. government, state and local governments, and foreign governments and their respective agencies, which may terminate most of these contracts at any time, without cause. There is increased pressure for governments and their agencies, both domestically and internationally, to reduce spending. Ourspending, including a series of spending cuts at the U.S. federal level known as “sequestration” that has recently gone into effect and which may cause a reduction in revenues from our U.S. federal government customers. Further, our U.S. federal government contracts are subject to the approval of appropriations being made by the U.S. Congress to fund the expenditures under these contracts. Similarly, our contracts at the state and local levels in the U.S. and our contracts with foreign governments and their agencies are generally subject to government funding authorizations. Additionally, government contracts are generally subject to audits and investigations which could result in various civil and criminal penalties and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.

We may need to change our pricing models to compete successfully.    The intense competition we face in the sales of our products and services and general economic and business conditions can put pressure on us to change our prices. If our competitors offer deep discounts on certain products or services or develop products that the marketplace considers more valuable, we may need to lower prices or offer other favorable terms in order to compete successfully. Any such changes may reduce margins and could adversely affect operating results. Our software license updates and product support fees and hardware systems support fees are generally priced as a percentage of our net new software licenselicenses fees and net new hardware systems products fees, respectively. Our competitors may offer lower pricing on their support offerings, which could put pressure on us to further discount our new license prices.

Any broad-based change to our prices and pricing policies could cause our revenues to decline or be delayed as our sales force implements and our customers adjust to the new pricing policies. Some of our competitors may bundle products for promotional purposes or as a long-term pricing strategy or provide guarantees of prices and product implementations. These practices could, over time, significantly constrain the prices that we can charge for certain of our products. If we do not adapt our pricing models to reflect changes in customer use of our products or changes in customer demand, our revenues could decrease. Additionally, increased distribution of applications through cloud and SaaS providers, may reduce the average price for our products or adversely affect other sales of our products, reducing our revenues unless we can offset price reductions with volume increases. The increase in open source software distribution may also cause us to change our pricing models.

Our cloud computing strategy, including our Oracle Cloud and Oracle managed cloud services offerings, may not be successful.    We offer customers a broad portfolio of software and hardware products and services to enable a roadmap for customers to adopt cloud computing. Oracle Cloud includes our cloud software subscription offerings such as Oracle Fusion Human Capital Management Cloud Service, Oracle Fusion Customer Relationship Management Cloud Service, Oracle RightNow Customer Experience and Oracle Taleo Talent Management Cloud Service, among others, all of which provide our customers with certain of our software applications functionality within a cloud-based IT environment that we manage and offer via a subscription-based model. In addition, Oracle Cloud also includes software platforms within a cloud-based IT environment that we manage and offer to customers via a subscription-based model including Oracle Database Cloud Service and Oracle Java Cloud Service. Oracle managed cloud services include software and hardware management and maintenance services hosted at our data center facilities, select partner data centers or physically on-premise at customer facilities. These business models continue to evolve and we may not be able to compete effectively, generate significant revenues or maintain their profitability. We incur expenses associated with the infrastructures and marketing of our managed cloud services and cloud software subscription offerings in advance of our ability to recognize the revenues associated with these offerings. Demand for our cloud software subscription offerings may unfavorably impact demand for certain of our other products and services including new software licenses and software license updates and product support services.

If our data protection or other security measures are compromised and as a result our data, our customers’ data or our IT systems are accessed improperly, made unavailable, or improperly modified, our products and services may be perceived as vulnerable, our brand and reputation could be damaged, the IT services we provide to our customers could be disrupted, and customers may stop using our products and services, all of which could reduce our revenue and earnings, increase our expenses and expose us to legal claims and regulatory actions.    We are in the information technology business, and our products and services store, retrieve, manipulate and manage our customers’ information and data as well as our own. We have a reputation for secure and reliable software and hardware products and services and have invested a great deal of time and resources in protecting the integrity and security of our products, services and internal and external data that we manage.

Nevertheless, computer hackers will attempt to penetrate or bypass our data protection and other security measures and gain unauthorized access to our networks, systems and data or compromise the confidential information or data of our customers. Computer hackers may be able to develop and deploy IT related viruses, worms, and other malicious software programs that could attack our products and services, exploit potential security vulnerabilities of our products and services, create system disruptions and cause shutdowns or denials of service. Data may also be accessed or modified improperly as a result of employee or supplier error or malfeasance and third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our data, our customers’ data or our IT systems.

Although this is an industry-wide problem that affects other software and hardware companies, it affects Oracle in particular because computer hackers tend to focus their efforts on the most popular or well-known IT companies, and they may focus on Oracle because of our reputation for, and marketing efforts associated with, having secure products and services. These risks for us will increase as we continue to grow our cloud-based offerings and services and store and process increasingly large amounts of our customers’ confidential information and data and host or manage parts of our customers’ businesses in cloud-based IT environments, especially in customer sectors involving particularly sensitive data such as health sciences, financial services and the government. We also have an active acquisition program and have acquired a number of companies, products, services and technologies over the years. While we make significant efforts to address any IT security issues with respect to our acquisitions, we may still inherit such risks when we integrate these acquisitions within Oracle.

If a cyberattack or other security incident described above were to allow unauthorized access to or modification of our customers’ data or our own data or our IT systems or if the services we provide to our customers were disrupted, or if our products or services are perceived as having security vulnerabilities, we could suffer damage to our brand and reputation. Customers could lose confidence in the security and reliability of our products and

services and perceive them to be not secure. This in turn could lead to fewer customers using our products and services and result in reduced revenue and earnings. The costs we would incur to address and fix these security incidents would increase our expenses. These types of security incidents could also lead to lawsuits, regulatory investigations and claims and increased legal liability, including in some cases contractual costs related to customer notification and fraud monitoring.

Further, as regulatory focus on privacy issues continues to increase and worldwide laws and regulations concerning the protection of personal information expand and become more complex, these potential risks to our business will intensify. Changes in laws or regulations associated with the protection of certain types of data, such as healthcare data or other personally identifiable information, could greatly increase our cost of providing our products and services.

Our periodic workforce restructurings can be disruptive.    We have in the past restructured or made other adjustments to our workforce, including our direct sales force on which we rely heavily, in response to management changes, product changes, performance issues, acquisitions and other internal and external considerations. In the past, sales force and other restructurings have generally resulted in a temporary lack of focus and reduced productivity. These effects could recur in connection with future acquisitions and other restructurings and our revenues could be negatively affected.

We might experience significant errors in our software and hardware products and services.    Despite testing prior to their release, software and hardware products sometimes contain errors, especially when first introduced or when new versions are released. The detection and correction of any errors can be time consuming and costly. Errors in our software or hardware products could affect the ability of our products to work with other software or hardware products, could delay the development or release of new products or new versions of products and could adversely affect market acceptance of our products. If we experience errors or delays in releasing our new software or hardware products or new versions of our software or hardware products, we could lose revenues. In addition, we run our own business operations and run the cloud software subscription offerings,subscriptions, Oracle managed cloud services and other outsourcing services support and consulting services,that we offer to our customers on our products and networks andnetworks. Therefore any flaws, if exploited, could affect our ability to conduct our business operations. End users, who rely on our software products and services for applications that are critical to their businesses, may have a greater sensitivity to product errors than customers for software products generally. Errors in our software and hardware products or services could expose us to product liability, performance and/or warranty claims as well as harm our reputation, which could impact our future sales of products and services.

We may not receive significant revenues from our current research and development efforts for several years, if at all.    Developing software and hardware products is expensive and the investment in product development often involves a long return on investment cycle. We have made and expect to continue to make significant investments in research and development and related product opportunities. Accelerated product introductions and short product life cycles require high levels of expenditures for research and development that could adversely affect our operating results if not offset by revenue increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, we do not expect to receive significant revenues from these investments for several years, if at all.

Business disruptions could affect our operating results.    A significant portion of our research and development activities and certain other critical business operations are concentrated in a few geographic areas. We are a highly automated business and a disruption or failure of our systems could cause delays in completing sales and providing services, including some of our cloud software subscriptionsubscriptions and managed cloud services offerings. A major earthquake, fire or other catastrophic event that results in the destruction or disruption of any of our critical business or IT systems could severely affect our ability to conduct normal business operations and, as a result, our future operating results could be materially and adversely affected.

Adverse litigation results could affect our business.    We are subject to various legal proceedings. Litigation can be lengthy, expensive and disruptive to our operations, and can divert our management’s attention away from the running of our business. The results of our litigation also cannot be predicted with certainty. An adverse decision could result in monetary damages or injunctive relief that could affect our business, operating results or financial condition. Additional information regarding certain of the lawsuits we are involved in is discussed under Note 18 of Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

We may have exposure to additional tax liabilities.    As a multinational corporation, we are subject to income taxes as well as non-income based taxes, in both the United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. We are regularly under audit by tax authorities and those authorities often do not agree with positions taken by us on our tax returns.

Changes in tax laws or tax rulings may have a significantly adverse impact on our effective tax rate. For example, certain U.S. government proposals for fundamental U.S. international tax reform, if enacted, could have a significant adverse impact on our effective tax rate. Further, in the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our intercompany transfer pricing has been and is currently being reviewed by the U.S. Internal Revenue Service (IRS) and by foreign tax jurisdictions and will likely be subject to additional audits in the future. We have negotiated certain unilateral Advance Pricing Agreements with the IRS and certain selected bilateral Advance Pricing Agreements that cover many of our intercompany transfer pricing issues and preclude the relevant tax authorities from making a transfer pricing adjustment within the scope of these agreements. However, these agreements do not cover substantial elements of our transfer pricing. In addition, our provision for income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions which we consider to be indefinitely reinvested outside the United States that have lower statutory tax rates and earnings being higher than anticipated in jurisdictions that have higher statutory tax rates.

We are also subject to non-income based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. We are regularly under audit by tax authorities with respect to these non-income based taxes and may have exposure to additional non-income based tax liabilities. Our acquisition activities have increased our non-income based tax exposures, particularly with our entry into the hardware systems business, which increased the volume and complexity of laws and regulations that we are subject to and with which we must comply.

Although we believe that our income and non-income based tax estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Charges to earnings resulting from acquisitions may adversely affect our operating results.    Under business combination accounting standards pursuant to ASC 805,Business Combinations, we recognize the identifiable assets acquired, the liabilities assumed and any non-controlling interests in acquired companies generally at their acquisition date fair values and, in each case, separately from goodwill. Goodwill as of the acquisition date is measured as the excess amount of consideration transferred, which is also generally measured at fair value, and the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. Our estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain. After we complete an acquisition, the following factors could result in material charges and adversely affect our operating results and may adversely affect our cash flows:

Substantially all of these costs will be accounted for as expenses that will decrease our net income and earnings per share for the periods in which those costs are incurred. Charges to our operating results in any given period could differ substantially from other periods based on the timing and size of our future acquisitions and the extent of integration activities. A more detailed discussion of our accounting for business combinations and other items is presented in the “Critical Accounting Policies and Estimates” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 7).

There are risks associated with our outstanding and future indebtedness.    As of May 31, 2012,2013, we had an aggregate of $16.5$18.5 billion of outstanding indebtedness that will mature between the remainder of calendar 20122013 and calendar 2040 and we may incur additional indebtedness in the future. Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these risks successfully.

We may also need to refinance a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing may not be as favorable as the terms of our existing debt. Furthermore, if prevailing interest rates or other factors at the time of refinancing result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. Should we incur future increases in interest expense, our ability to utilize certain of our foreign tax credits to reduce our U.S. federal income tax could be limited, which could unfavorably affect our provision for income taxes and effective tax rate. In addition, changes by any rating agency to our outlook or credit rating could negatively affect the value of both our debt and equity securities and increase the interest amounts we pay on outstanding or future debt. These risks could adversely affect our financial condition and results of operations.

Environmental and other related laws and regulations subject us to a number of risks and could result in significant liabilities and costs.    Some of our hardware systems operations are subject to state, federal and international laws governing protection of the environment, proper handling and disposal of materials used to manufacture our products, human health and safety, and regulating the use of certain chemical substances.substances and disclosure of the use of certain “conflict minerals.” We endeavor to comply with these environmental and other laws, yet compliance with such laws could increase our product design, development, procurement, manufacturing and manufacturingadministration costs, limit our ability to manage excess and obsolete non-compliant inventory, change our sales activities, or otherwise impact future financial results of our hardware systems business. Any violation of these laws can subject us to significant liability, including fines, penalties and possible prohibition of sales of our products into one or more states or countries and result in a material adverse effect on the financial condition or results of operations of our hardware systems business. A significant portion of our hardware systems revenues come from international sales. Environmental legislation within the European Union (EU), including the EU Directive on Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment Directive (WEEE Directive), as well as China’s regulation on Management Methods for Controlling Pollution Caused by Electronic Information Products may increase our cost of doing business internationally and impact our hardware systems revenues from EU countries and China as we endeavor to comply with and implement these requirements. In addition, similar environmental legislation has been or may be enacted in other jurisdictions, the cumulative impact of which could be significant.

Our stock price could become more volatile and your investment could lose value.    All of the factors discussed in this section could affect our stock price. The timing of announcements in the public market regarding new products, product enhancements or technological advances by our competitors or us and any announcements by us of acquisitions, major transactions, or management changes could also affect our stock price. Changes in the amounts and frequency of share repurchases or dividends could adversely affect our stock price. Our stock price is subject to speculation in the press and the analyst community, changes in recommendations or earnings estimates by financial analysts, changes in investors’ or analysts’ valuation measures for our stock, our credit ratings and market trends unrelated to our performance. A significant drop in our stock price could also expose us to the risk of securities class actions lawsuits, which could result in substantial costs and divert management’s attention and resources, which could adversely affect our business.

Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

Our properties consist of owned and leased office facilities for sales, support, research and development, consulting, manufacturing and administrative personnel. Our headquarters facility consists of approximately 2.12.0 million square feet in Redwood City, California, substantially all of which we own. We lease our principal internal manufacturing facility for our hardware systems products in Hillsboro, Oregon. We also own or lease other office facilities for current use consisting of approximately 24.923.8 million square feet in various other locations in the United States and abroad. We believe our facilities are in good condition and suitable for the conduct of our business. Approximately 5.13.9 million square feet, or 19%15%, of total owned and leased space is sublet or is being actively marketed for sublease or disposition.

Item 3.    Legal Proceedings

The material set forth in Note 18 of Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K is incorporated herein by reference.

Item 4.    Mine Safety Disclosures

None.

PART II

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the NASDAQ Global Select Market under the symbol “ORCL” and has been traded on the NASDAQ since our initial public offering in 1986. On June 20, 2013, we announced that we applied to list our common stock on the New York Stock Exchange (the “NYSE”) under our current symbol “ORCL”. Subject to the approval by the NYSE of our listing application, we expect that our common stock will begin trading on the NYSE on July 15, 2013. According to the records of our transfer agent, we had 15,26913,270 stockholders of record as of May 31, 2012.2013. The following table sets forth the low and high sale priceprices per share of our common stock, based on the last daily sale, in each of our last eight fiscal quarters.

WeDuring fiscal 2013, our Board of Directors declared and paid cash dividends in the aggregate of $0.30 per share of outstanding common stock, which included an accelerated cash dividend of $0.18 per share of outstanding common stock paid on December 21, 2012. This accelerated cash dividend was intended by our Board of Directors to be in lieu of quarterly dividends that we would have otherwise announced with our earnings results for the second, third and fourth quarters of fiscal 2013, and that would have been paid in calendar year 2013. During fiscal 2012, we declared and paid cash dividends totaling $0.24 and $0.21 per share of outstanding common share over the course of fiscal 2012 and 2011, respectively.stock.

In June 2012,2013, our Board of Directors declared a quarterly cash dividend of $0.12 per share of outstanding common stock. This $0.12 per share cash dividend was an increase of $0.06 per share over the last regular quarterly cash dividend of $0.06 per share of outstanding common stock paid on November 2, 2012 and was declared earlier than the Board of Directors had previously planned. The $0.12 per share cash dividend is payable on August 3, 20122, 2013 to stockholders of record as of the close of business on July 13, 2012.12, 2013. We currently expect to continue paying comparable cash dividends on a quarterly basis;basis in the future; however, future declarations of dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors.

For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report.

Stock Repurchase Programs

Our Board of Directors has approved a program for us to repurchase shares of our common stock. On December 20, 2011,June 18, 2012, we announced that our Board of Directors approved an expansion of our stock repurchase program by an additional $5.0$10.0 billion. On June 18, 2012,20, 2013, we announced that our Board of Directors approved a further expansion by an additional $10.0$12.0 billion. Approximately $3.1$2.1 billion remained available for stock repurchases as of May 31, 20122013 pursuant to our stock repurchase program prior to the additional amount authorized in June 2012.2013.

Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, our cash requirements for acquisitions and dividend payments, our debt repayment obligations or repurchases of our debt, our stock price and economic and market conditions. Our stock repurchases may be effected from time to time through open market purchases or pursuant to a 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 May 31, 20122013 and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program: