Item 1. Business

Oracle Corporation
provides products and services that address all aspects of corporate information technology (IT) environments-application, platform and infrastructure. Our Oracle Cloud offerings provide a comprehensive and fully integrated stack of
application, platform, compute and storage services in all three primary layers of the cloud: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Our on-premise offerings include Oracle database and
middleware software, application software, hardware (Oracle Engineered Systems, servers, storage, networking and industry-specific products), and related support and services. We provide our cloud and on-premise offerings to over 400,000 worldwide
customers via deployment models that best suit their needs.

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

In addition to providing a broad spectrum of cloud offerings, we
develop and sell our products and services to our customers worldwide for use in their global data centers and on-premise IT environments. An important element of our corporate strategy is to continue our investments in, and innovation with respect
to, our products and services that we offer through our cloud and on-premise software, hardware and services businesses. In fiscal 2016, 2015 and 2014, we invested $5.8 billion, $5.5 billion and $5.2 billion, respectively, in research and
development to enhance our existing portfolio of offerings and products and to develop new technologies and services. We have a deep understanding as to how all components within IT environments-application, platform and
infrastructure-interact and function with one another. We focus our development efforts on improving the performance, security, operation and integration of these differing technologies to make them more cost-effective and easier to deploy,
manage and maintain for our customers and to improve their computing performance relative to our competitors. After the initial purchase of Oracle products and services, our customers can continue to take advantage of our research and development
investments and deep IT expertise by purchasing and renewing Oracle support offerings, which may include product enhancements that we periodically deliver to our Oracle E-Business Suite, Siebel, PeopleSoft and JD Edwards application software
products, among others, or by renewing their SaaS, PaaS and IaaS contracts with us.

As customers deploy with the Oracle Cloud, many are
adopting a hybrid IT model whereby certain of their IT resources are deployed and managed through the Oracle Cloud, while other of their IT resources are deployed and managed on-premise, and both sets of resources can be managed as one. Our recently
introduced Oracle Cloud at Customer provides an additional deployment model that customers may opt for and utilizes the Oracle Cloud Machine to bring certain Oracle Cloud PaaS and IaaS offerings to a customer's on-premise IT environment to meet
data sovereignty, data residency, data protection and regulatory business policy requirements, among others. We focus the engineering of our products and services to best connect different deployment models to enable flexibility, ease, agility,
compatibility, extensibility and seamlessness.

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

We have three businesses that deliver our application, platform and infrastructure technologies: cloud and
on-premise software, hardware and services. These businesses can be further divided into certain operating segments (Note 16 of Notes to Consolidated Financial Statements, included elsewhere in this Annual Report, provides additional information
related to our operating segments):

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our cloud and on-premise software business is comprised of three operating segments: (1) cloud software and on-premise software, which includes our
SaaS and PaaS offerings, (2) cloud infrastructure as a service and (3) software license updates and product support. Our cloud and on-premise software business represented 78%, 77% and 76% of our total revenues in fiscal 2016, 2015 and 2014,
respectively;

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our hardware business is comprised of two operating segments: (1) hardware products and (2) hardware support. Our hardware business represented 13% of
our total revenues in fiscal 2016, and 14% of our total revenues in each of fiscal 2015 and 2014; and

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our services business is comprised of the remainder of our operating segments and offers consulting services, enhanced support services and education
services. Our services business represented 9% of our total revenues in each of fiscal 2016 and 2015, and 10% of our total revenues in fiscal 2014.

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

Application, Platform and Infrastructure Technologies

Oracle's comprehensive
portfolio of application, platform and infrastructure technologies address an organization's business, infrastructure and development IT requirements. Our applications, platform and infrastructure technologies are based upon industry standards
and are designed to be enterprise-grade, reliable, scalable and secure. We offer these technologies through our cloud and on-premise software, hardware and services businesses and deliver them through flexible and interoperable deployment models
that enable customer choice and best meet customer IT needs.

Application and Platform Technologies

Our application and platform technologies consist of comprehensive on-premise and cloud software offerings including our SaaS and PaaS offerings, Oracle
Applications, Oracle Database, Oracle Fusion Middleware and Java, among others, and related support.

Our application and platform technologies
are substantially built on standards-based architectures that are designed to help customers reduce the cost and complexity of their IT infrastructure. Our commitment to industry standards results in software that works in customer environments with
Oracle or non-Oracle hardware or software components and that can be adapted to meet specific industry or business needs. This approach is designed to support customer choice and reduce customer risk. Our software offerings are substantially
designed to operate on both single server and clustered server configurations for cloud or on-premise IT environments, and to support a choice of operating systems including Oracle Solaris, Oracle Linux, Microsoft Windows and third-party UNIX
products, among others.

Our application and platform technologies are marketed, sold and delivered through our cloud and on-premise software
business, which includes our cloud software and on-premise software segment and software license updates and product support segment, among others. Cloud software and on-premise software revenues represented 25%, 26% and 28% of our total revenues in
fiscal 2016, 2015 and 2014, respectively. Software license updates and product support revenues represented 51%, 49% and 47% of our total revenues in fiscal 2016, 2015 and 2014, respectively.

Application Technologies

Our application technologies are available through
subscription to our Oracle Cloud SaaS offerings or by the purchase of an on-premise software license. Regardless of the deployment model selected, our application technologies are designed to reduce the risk, cost and complexity of our
customers' IT infrastructures, while supporting customer choice with flexible deployment models that readily enable agility, compatibility and extendibility.

Our application technologies are generally designed using an industry standards-based 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. In addition to applications that are deployable to meet a number of
business automation requirements across a broad range of industries, we also offer industry-specific applications through a focused strategy of investments in internal development and strategic acquisitions. Our industry-specific applications
provide solutions to customers in the communications, engineering and construction, financial services, healthcare, hospitality and retail, manufacturing, public and utilities sectors, among others. 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.

Oracle Cloud Software as a Service (SaaS)

Our broad spectrum of SaaS offerings provides
customers a choice of software applications that are delivered via a cloud-based IT environment that we host, manage and support. Our SaaS offerings are built upon open industry standards such as SQL, Java and HTML5 for easier application
accessibility, integration and development. Our SaaS offerings include a broad suite of modular, next-generation cloud software applications that span core business functions including human capital management (HCM), enterprise resource planning
(ERP), customer experience (CX), and supply chain management (SCM), among others. We also offer a number of cloud-based industry solutions to address specific customer needs within certain industries.

We believe the comprehensiveness and breadth of our SaaS offerings provide greater benefit to our customers and differentiate us from many of our
competitors that offer more limited or specialized cloud-based applications. Our SaaS offerings are designed to be interoperable with one another, thereby limiting the integration and tuning of multiple cloud applications from multiple vendors. Our
SaaS offerings are designed to deliver secure data isolation and flexible upgrades, self-service access controls for users, a Service-Oriented Architecture (SOA) for integration with on-premise systems, built-in social, mobile and business insight
capabilities, and a high performance, high availability infrastructure based on our infrastructure technologies including Oracle Engineered Systems. These SaaS capabilities are designed to simplify IT environments and enable customers to focus
resources on business growth opportunities.

Oracle Human Capital Management Cloud

Oracle HCM cloud applications are designed to be complete and integrated to help organizations find, grow and retain the best talent, enable
collaboration, provide complete workforce insights, increase operational efficiency and enable people to connect from any device. Oracle HCM Cloud includes:

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Oracle Recruiting Cloud, which is designed to provide customers the ability to identify, source, recruit, screen and hire applicants efficiently and
collaboratively;

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Oracle HR Cloud, which is designed to provide organizations a complete view of their employee base and permit employees to manage their profiles and
collaborate with other employees;

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Oracle Compensation and Benefits Cloud, which is designed to provide organizations the tools to manage employee compensation, benefits, and payroll;

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Oracle Performance Management Cloud, which is designed to provide customers with the ability to set meaningful performance management goals and capture
feedback about employees to help them develop;

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Oracle Learning Cloud, which is designed to provide customers with the ability to create and deliver personalized learning content to multiple
audiences and track compliance; and

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Oracle Workforce Management Cloud, which allows customers to track, monitor and increase accuracy of time reporting and implement absence and leave
policies globally or locally.

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Oracle Enterprise Resource Planning Cloud

Oracle Enterprise Resource Planning Cloud is designed to be complete, global and integrated to help organizations of all sizes optimize their back office operations. A single data and security model and
common user interface across the ERP cloud application portfolio are designed to deliver better decision-making and improved workforce productivity. Thousands of customers use our integrated suite of ERP cloud applications that include, among
others:

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Oracle Enterprise Performance Management Cloud, which is designed to help organizations of any size deliver predictable performance, generate accurate
reporting and connect around consistent information, and includes Enterprise Planning Cloud, Account Reconciliation Cloud, and Enterprise Performance Reporting Cloud offerings;

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Oracle Financials Cloud, a financial management solution that is designed to be comprehensive, integrated and highly scalable for global companies in a
wide variety of industries;

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Oracle Procurement Cloud, which is designed to streamline the source-to-pay process through automation and social collaboration to help organizations
manage the procurement process and control costs; and

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Oracle Project Management Cloud, which is designed to optimize the project management process by using a comprehensive set of modern application tools
including role-based analytics, social collaboration, costing and controls.

Oracle Customer Experience Cloud

Oracle Customer Experience Cloud is designed to be complete and integrated to help organizations deliver consistent and personalized
customer experiences across all channels, touch points and interactions. Our CX cloud applications include, among others:

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Oracle Marketing Cloud, which is designed to personalize customer experiences on a consistent platform and to increase customer engagement, advocacy
and revenue generating possibilities using cross-channel, content and social marketing solutions with integrated data management and activation;

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Oracle Sales Cloud, which is designed to enable sales teams to engage with their customers earlier and to generate customer orders more frequently via
a platform that equips sales teams with processes, tools, resources and intelligence to leverage as a part of the sales cycle;

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Oracle Commerce Cloud, which is designed to enable secure customer transactions through almost any device, to be scalable and to support personalized
customer experiences through customer search, merchandising, promotions and content management capabilities;

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Oracle Configure, Price and Quote Cloud, which is designed to help sales teams, channels and ecommerce sites sell faster, more easily and more
accurately through almost any device;

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Oracle Service Cloud, which is designed to provide a unified web, social, and contact center platform that is used to understand customer needs, to
resolve customer problems and to ensure the delivery of accurate information to users; and

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Oracle Field Service Cloud, which is designed to manage the efficient scheduling, dispatch and routing of field service technicians and spare parts to
resolve problems and deliver customer service at customer sites.

Oracle Supply Chain Management Cloud

Our Oracle Supply Chain Management Cloud is designed to help organizations optimize their supply chains and innovate products quickly. Oracle Supply Chain
Management Cloud applications include:

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Oracle Product Lifecycle Management Cloud, which provides a unified platform designed to help customers rapidly innovate, develop and commercialize
profitable products;

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Oracle Supply Chain Planning Cloud, which is designed to allow customers to interactively balance demand and supply to improve supply chain
responsiveness and optimize inventory;

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Oracle Inventory Management Cloud, which is designed to provide visibility and management of material flows, warehouse work and product costs across
the supply chain;

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Oracle Order Management Cloud, which is designed to enable customer order management from order capture channels and to orchestrate the entire order to
cash process;

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Oracle Order Manufacturing Cloud, which is designed for customers to run manufacturing systems and streamline manufacturing processes; and

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Oracle Logistics Cloud, which is designed to enable management of all transportation modes within and across borders to reduce costs, increase
efficiency and ensure compliance.

Oracle Cloud Industry Solutions

Oracle Cloud Industry Solutions are industry-specific SaaS applications that are designed to address the distinct requirements of the communications,
financial services, healthcare, hospitality and retail, manufacturing and utilities sectors, among others.

Oracle Data Cloud

Oracle Data Cloud is designed to enable organizations to leverage consumer data to inform and measure marketing strategies and programs.
Oracle Data Cloud includes Oracle Data as a Service (DaaS), which is an offering that provides a centralized way to source, manage and furnish external data to business users through a cloud service for marketing and customer intelligence purposes.

Oracle Applications

We
license Oracle Applications software for use in data centers and related on-premise IT environments to manage and automate core business functions across the enterprise, including human capital and talent management; customer experience and customer
relationship management; financial management and governance, risk and compliance; procurement; project portfolio management; supply chain management; business analytics and enterprise performance management; and industry-specific applications,
among others. Our Oracle Applications software strategy is designed to provide customers with complete choice and a secure path to benefit from the latest technological advances.

Our Oracle Applications Unlimited program is Oracle's commitment to ongoing investment and innovation in our current application offerings including our Oracle E-Business Suite, Siebel, PeopleSoft
and JD Edwards application software products, among others. Since announcing the Oracle Applications Unlimited program in 2005, we have delivered major releases of all application product lines by combining business functionality with innovative
technologies, providing customers with more adaptive industry processes, business intelligence and optimal end-user productivity.

Platform Technologies

Our
comprehensive platform technologies include license and subscription-based database, middleware and development software offerings including Oracle Database software, the world's most popular enterprise database, and Java, the computer
industry's most widely-used software development language, among others. Our platform technologies are designed to provide a cost-effective, standards-based, 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 platform technologies help them achieve this goal.

Our platform technologies are 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 requirements, 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.

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Oracle Cloud Platform as a Service (PaaS)

Oracle Cloud Platform as a Service is designed to provide a broad suite of services to rapidly build and deploy applications-or extend Oracle Cloud SaaS applications-using Oracle's
enterprise-grade platform technologies. Customers and partners can use our open, standards-based PaaS offerings that are based on Java, Oracle Fusion Middleware, and our Oracle Database Cloud service, including tools for a variety of use cases
across data management, application development, enterprise integration, content sharing and collaboration, visual analysis reporting and IT operations management.

We believe our PaaS offerings are a large opportunity for us to expand our cloud and on-premise software business. We believe our customers increasingly recognize the value of access to Oracle Database,
Oracle Fusion Middleware and Java via a low cost, rapidly deployable, flexible and interoperable services model that Oracle manages and maintains on their behalf. We believe that we can market and sell our PaaS offerings to our extensive installed
base of database, middleware, and applications customers, and reach a broader ecosystem of developers and partners. We also believe we can expand the market of our PaaS services to small to medium-sized enterprises and non-IT lines of business
purchasers.

Oracle Data Management Cloud

Oracle Data Management Cloud is designed to provide a broad and integrated set of capabilities for building, deploying, and managing data-driven applications. Our Oracle Data Management Cloud offerings
include the following, among others:

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Oracle Database Cloud Service, which is designed to provide customers with access to the Oracle Database via a cloud computing IT model. It provides
customers with a choice of a dedicated database instance with direct network connections and full administrative control, or a dedicated schema with a full development and deployment platform managed by Oracle. We also offer Oracle Exadata Cloud
Service, which is a database cloud service that combines the Oracle Database with the high performance and high availability of an Oracle Exadata Engineered System;

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Oracle Database Backup Cloud Service, which is designed as a secure, scalable, on-demand storage solution for backing up Oracle databases to an
off-site storage location within the Oracle Cloud;

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Oracle Big Data Cloud Service, which is a data management platform that is designed to run a variety of big data workloads and technologies while
simplifying operations and, when combined with Oracle Big Data SQL Cloud Service, enables organizations to analyze data across Hadoop, NoSQL and Oracle SQL; and

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Oracle Big Data Preparation Cloud Service, which is designed to be an enterprise data processing and enrichment solution in the Oracle Cloud built
natively for Hadoop and Spark.

Oracle Application Development Cloud

Oracle Application Development Cloud offerings are based upon an end-to-end Java EE framework and are designed to simplify application development by
providing out-of-the-box infrastructure services and visual and declarative development experiences. Our Oracle Application Development Cloud offerings include the following, among others:

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Oracle Java Cloud Service, which is a platform and infrastructure cloud solution designed for building, deploying and managing Java EE applications
easily, rapidly and agilely;

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Oracle Developer Cloud Service, which is designed to be an easy-to-use, automatically provisioned enterprise development platform deployed in the cloud
that supports the complete software development lifecycle;

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Oracle Messaging Cloud Service, which is a cloud-based messaging service that is designed to enable reliable communication between software components
both in the Oracle Cloud and on-premise using standard interfaces;

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Oracle Mobile Cloud Service, which is designed to assist developers in defining mobile application programming interfaces (APIs) and building mobile
applications that connect to enterprise systems quickly and securely;

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Oracle Application Builder Cloud Service, which is designed to enable the creation and hosting of business applications with a visual development
environment from a web browser that integrates with Oracle SaaS applications such as Oracle Sales Cloud; and

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Oracle Application Container Cloud, which is designed to enable the development of additional programming languages like Java SE and Node.JS within the
Oracle Cloud and provides additional lifecycle tools for continuous integration and deployment.

Oracle Integration Cloud

Oracle Integration Cloud is designed to provide organizations with a unified and comprehensive solution to integrate disparate cloud and
on-premise applications. Our Oracle Integration Cloud offerings include, among others:

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Oracle Integration Cloud Service, which is designed to simplify the connections of SaaS applications and on-premise systems using an intuitive user
interface;

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Oracle SOA Cloud Service, which is designed to provide an integration platform to enable organizations to develop and deploy APIs and integration
projects;

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Oracle API Catalog Cloud Service, which is a collection of machine-readable APIs from a collection of Oracle's SaaS and PaaS applications that is
designed to facilitate integration between applications in the Oracle Cloud;

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Oracle Internet of Things (IoT) Cloud Service, which is designed to provide an end-to-end solution for developing IoT-based applications by connecting
existing sensors and devices to analytics engines in the Oracle Cloud; and

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Oracle GoldenGate Cloud Service, which is designed to be a real-time, high performance, scalable, and secure public cloud data integration and
replication solution.

Oracle Content and Process Cloud

Oracle Content and Process Cloud is designed to enable business users to easily collaborate, simplify business automation and communicate more effectively and includes the following offerings, among
others:

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Oracle Documents Cloud Service, which is an enterprise level, content collaboration solution that is designed to enable information to be accessed,
uploaded and shared via the Oracle Cloud;

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Oracle Sites Cloud Service, which is designed to enable the assembly of content, applications and processes to rapidly build and publish marketing and
community websites; and

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Oracle Process Cloud Service, which is designed to enable organizations to collaboratively model business processes, design forms, model decisions, and
implement and deploy a process application to automate business tasks that are typically repetitive and manual.

Oracle
Business Analytics Cloud

Oracle Business Analytics Cloud delivers business analytics across the entire enterprise and includes the
following offerings, among others:

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Oracle Business Intelligence Cloud Service is a cloud-based, enterprise-class analytics platform for creating business intelligence applications that
are designed to convert data into business insight to optimize decision-making; and

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Oracle Data Visualization Cloud Service, which is designed to enable the exploration of data across multiple platforms and devices using self-service
discovery and visual analysis tools.

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Oracle Management Cloud

Oracle Management Cloud is a suite of integrated monitoring, management, and analytics cloud services that is designed to provide real-time analysis and technical and business insights. Oracle Management
Cloud includes the following offerings, among others:

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Oracle Application Performance Monitoring Cloud Service, which is designed to provide development and operations teams with information to find and fix
application issues including end user and application performance information (with associated application logs);

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Oracle IT Analytics Cloud Service, which is designed to provide insight into the performance, availability, and capacity of applications and
infrastructure to enable IT decision-making based on a complete set of analyses; and

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Oracle Log Analytics Cloud Service, which is designed to monitor, aggregate, index and analyze log data from applications and infrastructure and enable
users to search, explore, and correlate this data to troubleshoot problems faster, derive operational insight and make better decisions.

Oracle Cloud at Customer

Oracle Cloud at Customer utilizes the Oracle Cloud Machine to
bring certain Oracle Cloud PaaS and IaaS offerings to a customer's on-premise IT environment on a subscription basis. As an on-premise implementation of the Oracle Cloud, Oracle Cloud at Customer offerings are designed to enable customers to
use certain Oracle Cloud PaaS and IaaS offerings while meeting data sovereignty, data residency, data protection and regulatory business policy requirements, among others.

Oracle Database

We license to customers our Oracle Database software, which 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 graph data. Oracle Database software is used for a variety of purposes, including with packaged applications and custom applications for
transaction processing, data warehousing and business intelligence and as a document repository or specialized data store. Security continues to be a critical characteristic of the Oracle Database and the latest version includes a number of security
enhancements and new features including, among others, encryption of data in motion, conditional auditing, real application security, and transparent sensitive data protection. All security capabilities available are compatible with the Oracle
Multitenant architecture option, which enables customers to quickly and efficiently address the unique security requirements of each of their database instances.

A number of optional add-on products are available with Oracle Database Enterprise Edition software to address specific customer requirements, including:

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a comprehensive portfolio of advanced defense, in-depth security solutions that safeguard data at the source including Oracle Advanced Security, Oracle
Database Vault and Oracle Data Masking and Subsetting, as well as detective security options including Oracle Audit Vault and Database Firewall. Oracle Database security options are designed to ensure data privacy, protect against insider threats,
and enable regulatory compliance for both Oracle and non-Oracle databases;

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in the areas of cloud computing and consolidation, we offer the Oracle Multitenant software option that is designed to make it easier to consolidate
multiple databases quickly and manage them as a cloud service, which enables customers to easily consolidate multiple databases into one without changing their applications. Our Oracle Multitenant architecture option offers the efficiency and cost
savings of managing many databases at one time, yet retains the isolation and resource prioritization of separate databases that is necessary for multitenant cloud services; and

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in the areas of performance and scalability, we offer Oracle Real Application Clusters, Oracle Database In-Memory, Oracle Advanced Compression and
Oracle Partitioning software options. Deploying the

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Oracle Database In-Memory option with virtually any existing Oracle Database compatible application requires no application changes as it is fully integrated with Oracle Database's scale-up,
scale-out, storage tiering, availability and security technologies, which makes any Oracle in-memory database enterprise-ready.

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

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MySQL, the world's most popular open source database, designed for high performance and scalability of web applications and embedded applications,
available in Enterprise, Standard, Classic, Cluster and Community editions;

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Oracle TimesTen In-Memory Database, designed to deliver real-time data management and transaction processing speeds for performance-critical
applications. Oracle TimesTen In-Memory Database can serve as a cache to accelerate Oracle Database and can work as a standalone database at the application tier;

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Oracle Berkeley DB, a family of open source, embeddable, relational, XML and key-value (NoSQL) databases designed for developers to embed within their
applications and devices; and

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Oracle NoSQL Database, a distributed key-value database designed for high availability and massive scalability of high volume transaction processing
with predictable low-latency.

Big Data

Oracle offers big data solutions to complement and extend its Oracle Database software offerings. Big data generally refers to a massive amount of unstructured, streaming and structured data that is so
large that it is difficult to process using traditional IT techniques. As businesses drive more of their critical operations and information management through IT solutions, the volume of this data generated by businesses is increasing at
unprecedented levels.

We believe most businesses view big data as a high-value source of business intelligence that can be used to gain new
insights into customer behavior, anticipate future demand more accurately, align workforce deployment with business activity forecasts and accelerate the pace of operations, among others. Oracle offers a comprehensive portfolio of products and
services to help enterprises capture, manage and analyze big data alongside an enterprise's existing enterprise and streaming data.

Oracle big data solutions for capturing unstructured, streaming and structured data complement existing Oracle Database environments and include Oracle
NoSQL Database and popular open source software such as the Hadoop File System. Oracle Data Integration and Oracle Big Data Connectors are designed to easily and non-invasively integrate data from Hadoop file systems or Oracle NoSQL databases and
Oracle databases to enable a data warehouse to further organize, analyze, interpret, report on and act on information from these high volume data sources.

We offer Oracle Business Analytics products that are designed to leverage big data and enterprise data to enable organizations to analyze the data and discover new ways to strategize, plan, optimize
business operations and capture new market opportunities. Oracle Business Analytics products include data discovery software, enterprise performance management and analytic application software, business intelligence software, and predictive
analytics and self-learning decision optimization software. The Oracle Exalytics In-Memory Machine, an Oracle Engineered System, is designed to run analytic environments at optimal performance and scale, which is ideal for use with big data
environments.

Oracle also offers certain of these big data capabilities via the Oracle Cloud, including, among others, Oracle Big Data Cloud
Service, Oracle Big Data Discovery Cloud Service, Oracle Big Data Appliance Cloud Service, Oracle Exadata Cloud Service, Oracle Data Visualization Cloud Service and Oracle GoldenGate Cloud Service, which are designed to combine data integration,
analytics and data management.

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Oracle Fusion Middleware

We license our Oracle Fusion Middleware software, which is a broad family of integrated application infrastructure software products. These products are 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 our 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 cloud environments including a set of capabilities that allow for better integration with the Oracle Cloud.

Oracle Fusion Middleware software is designed to protect customers' IT investments and work with both Oracle and non-Oracle database, middleware and application software through its open architecture
and adherence to industry standards. Specifically, Oracle Fusion Middleware software is designed to enable customers to integrate Oracle 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 available in various software products and suites, including the following:

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Oracle WebLogic Server and Oracle Cloud Application Foundation, designed to be the most complete, best-of-breed platform for developing cloud
applications;

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Oracle SOA Suite of software products, which are used to create, deploy and manage applications on an SOA;

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Oracle Data Integration software products, which are designed to enable pervasive and continuous access to timely and trusted data across heterogeneous
systems, including real-time and bulk data movement, transformation, bi-directional replication, data services and data quality for customer and product domains;

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Oracle Business Process Management Suite software products, which are designed to enable businesses and IT professionals to design, implement, automate
and evolve business processes and workflows within and across organizations;

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Oracle WebCenter software products, a complete set of web experience management, portals, content management and social networks software, which are
designed to help people work together more efficiently through contextual collaboration tools that optimize connections between people, information and applications and to ensure users have access to the right information in the context of the
business process in which they are engaged;

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Oracle Business Intelligence Suite, a comprehensive set of analytic software products, which are designed to provide customers with the information
they need to make better business decisions;

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Oracle Identity Management software, which is designed to enable customers to manage internal and external users, to secure corporate information from
potential software threats and to streamline compliance initiatives while lowering the total cost of their security and compliance initiatives; and

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Development Tools for application development, database development and business intelligence, including Oracle JDeveloper, an integrated software
environment, which are designed to facilitate rapid development of applications using Oracle Fusion Middleware and popular open source technologies.

Mobile Computing

Among its other middleware offerings, Oracle provides a wide range of
software for mobile computing to address the development needs of businesses that are increasingly focused on delivering mobile device applications to their customers. For example, Oracle Mobile Platform enables developers to build and extend
enterprise applications for popular mobile devices from a single code base. Oracle Mobile Platform supports access to native device services, enables offline applications and is designed to protect enterprise investments from future technology
shifts. Oracle Mobile Security offers comprehensive mobile identity and application management for provisioning of trusted access. 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.

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Oracle also offers certain of these mobile development capabilities via the Oracle Cloud, including Oracle
Mobile Cloud Service.

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 certain of
our Oracle Applications are built using our Java technology platform, which we believe is a key advantage for our business. Customers may license the use of Java or access Java through Oracle Java Cloud Service.

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.

Software License Updates and Product Support

We seek to protect and enhance our customers' current investments in Oracle application and platform technologies by offering proactive and personalized support services, including Oracle Lifetime
Support and product enhancements and upgrades. Software license updates provide on-premise new software license customers with rights to unspecified 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 on-premise new software
licenses and renew their software license updates and product support contracts annually.

Cloud Infrastructure as a Service (IaaS)

Our cloud infrastructure as a service segment, which is a part of our cloud and on-premise software business, represented 2% of total
revenues in each of fiscal 2016 and 2015 and 1% of total revenues in fiscal 2014. Our cloud IaaS segment includes Oracle Cloud IaaS and Oracle Managed Cloud Services offerings.

Oracle Cloud IaaS is designed to deliver enterprise-grade, hosted and supported IT environments within the Oracle Cloud to perform elastic compute, storage and networking services for enterprise
workloads. Organizations can also deploy certain of these IaaS offerings locally at their data center through our Oracle Cloud at Customer program. We continue to invest in IaaS technologies to simplify customer migration to the Oracle Cloud as well
as to provide customers with flexibility of running workloads on, and portability to shift workloads between, on-premise IT environments and the Oracle Cloud. Oracle Cloud IaaS offerings include, among others:

•

Oracle Compute Cloud Service, which is designed to allow organizations to quickly enable virtual compute environments and run them at scale on the
Oracle Cloud with predictable, consistent performance and network isolation;

•

Oracle Storage Cloud Service, which is designed to be a secure and scalable object storage solution for storing and accessing data from any environment
connected to the internet; and

•

Oracle Network Cloud Service, which offers site-to-site virtual private network secure extension and high bandwidth connection services.

Oracle Managed Cloud Services provide comprehensive software and hardware management and maintenance services for customer
IT infrastructure for a fee for a stated term that is hosted at our Oracle data center facilities, select partner data centers or physically on-premise at customer facilities.

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Infrastructure Technologies

Oracle infrastructure technologies consist of our hardware products including Oracle Engineered Systems, servers, storage, networking, industry-specific hardware, virtualization software, operating
systems, management software and related hardware services including support. These complement our Oracle Cloud IaaS offerings described above.

Our infrastructure technologies help customers manage growing amounts of data and business requirements, meet increasing compliance and regulatory demands
and reduce energy, space and operational costs. Our infrastructure technologies support many of the world's largest cloud and on-premise IT environments, including the Oracle Cloud. Our infrastructure technologies are designed to seamlessly
connect cloud and on-premise IT environments to further enable interoperability, interchangeability and extendibility. We design our infrastructure technologies to work in customer environments that may include other Oracle or non-Oracle hardware or
software components. Our flexible and open approach provides Oracle customers with a broad range of choices in how they deploy our infrastructure technologies, which we believe is a priority for our customers.

We focus the operation and integration of our infrastructure technologies to make them easier to deploy, manage and maintain for our customers and to
improve computing performance relative to our competitors' offerings. For example, our Oracle Engineered Systems are designed to integrate multiple Oracle technology components to work together to deliver improved performance, availability,
security and operational efficiency relative to our competitors' products. These same Oracle technology components are tested together and supported together to streamline system deployment and maintenance cycles. We also engineer our hardware
products with virtualization and management capabilities to enable the rapid deployment and efficient management of cloud and on-premise IT infrastructures.

Our infrastructure technologies are substantially marketed, sold and delivered through our hardware business, which includes our hardware products segment and hardware support segment. Our hardware
products revenues represented 7% of our total revenues in fiscal 2016 and 8% of our total revenues in each of fiscal 2015 and 2014. Our hardware support revenues represented 6% of our total revenues in each of fiscal 2016, 2015 and 2014.

Oracle Engineered Systems

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

•

Oracle Exadata Database Machine, a family of integrated software and hardware products that combines our database, storage and operating system
software with our server, storage and networking hardware and is designed to provide a high performance database system for online transaction processing, database consolidation and data warehousing applications;

•

Oracle Exalogic Elastic Cloud, an engineered system that combines Oracle Fusion Middleware software with our server, storage and networking hardware to
run Java and non-Java applications and provide customers with an applications platform for cloud computing;

•

Oracle Exalytics In-Memory Machine, a single server that is designed to be configured for in-memory analytics for business intelligence workloads;

•

Oracle SuperCluster, a general purpose engineered system that combines the optimized database performance of Oracle Exadata storage and the accelerated
application performance on a SPARC/Solaris platform;

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•

Oracle Private Cloud Appliance, an engineered system delivering converged infrastructure for virtualized environments that is designed to be simple to
use, rapidly deployable and capable of running almost any application built upon Linux, Microsoft Windows or Oracle Solaris operating systems;

•

Oracle Database Appliance, which is designed to be a simple, reliable and cost-effective family of converged infrastructure solutions delivering an
optimized appliance for running Oracle Database;

•

Oracle Big Data Appliance, a scalable, engineered system designed for acquiring, organizing and loading unstructured data into a Hadoop file system or
Oracle NoSQL Database and optionally integrating that data with Oracle Databases. The key components of a big data platform are integrated into the Oracle Big Data Appliance to reduce deployment, integration and management risks in comparison to
custom-built solutions; and

•

Oracle Zero Data Loss Recovery Appliance, an engineered system that is integrated with Oracle Database and is designed to eliminate data loss exposure
for databases without impacting production environments.

Servers

We offer a wide range of server products using our SPARC microprocessor, which are designed to be differentiated by their reliability, security and
scalability. Our SPARC-based T7 mid-range servers and M7 high-end servers, for example, are designed to offer better performance and lower total cost of ownership than competitive UNIX systems for business critical applications and for customers
having more computationally intensive needs. Measurably increasing computing performance and reliability, these servers are ideal platforms for building cloud computing IT environments. We also offer servers using microprocessors from Intel
Corporation (Intel). By offering customers a range of microprocessors, we intend to offer our customers maximum flexibility in choosing the types of hardware products that they believe will be most appropriate and valuable for their particular IT
environments.

Our SPARC servers run the Oracle Solaris operating system and are designed for mission critical enterprise environments. Our
SPARC servers are also a core component of the Oracle SuperCluster, one of our Oracle Engineered Systems.

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

Storage

Our storage products are engineered for the cloud and designed to securely store, manage, protect, archive, backup and recover customers' mission
critical data assets. Our storage products consist of disk, flash, tape, virtual tape, and hardware-related software including file systems software, back-up and archive software, hierarchical storage management software and networking for mainframe
and heterogeneous systems environments. We also offer certain of our storage offerings as a cloud service. Our storage products are designed to improve data availability by providing fast data access and dynamic data protection for back-up and
recovery, secure archiving for compliance and integration with the Oracle Cloud for low-cost access to capacity expansion. Our storage products are co-engineered with Oracle software and designed to provide performance benefits for our customers in
Oracle Database and Oracle Applications environments, as well as to work with heterogeneous application and systems environments to maximize performance and efficiency while minimizing management overhead and lowering the total cost of ownership.

Our Oracle ZFS Storage Appliance is designed to improve Network Attached Storage (NAS) performance and manageability and lower total cost of
ownership by combining our advanced storage operating system with a DRAM-centric architecture and leveraging high-performance controllers, flash-based caches and disks. Our Oracle All Flash FS storage system, which is targeted at all-flash Storage
Area Network (SAN) environments, is designed to deliver high performance with low latency to meet business critical service level agreements for dynamic, multi-application workloads and enable customers to consolidate storage applications into a
single data center storage solution.

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Our tape storage product line includes Oracle StorageTek libraries, drives, virtualization systems, media
and associated software packages that provide data lifecycle management, deep analytics and file access through the familiar "drag-and-drop" paradigm. Oracle's Virtual Storage Manager 7 offers the only storage for mainframe
environments with cloud access built in to significantly lower costs of storing and archiving mainframe data. In addition to serving in tape's traditional role as enterprise data backup, these products are intended to provide robust, scalable
solutions at a lower total cost of ownership for long-term data archiving and preservation in vertical industries such as communications, energy, healthcare and internet, among others.

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.

Industry-Specific Hardware Offerings

We offer hardware products and services designed for certain specific industries. Our point-of-sale hardware offerings include
point-of-sale terminals and related hardware that are designed for managing businesses within the food and beverage, hotel and retail industries, among others. Our hardware products and services for communications networks include network signaling,
policy control and subscriber data management solutions, and session border control technology, among others.

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

The Oracle Solaris operating system is designed to provide
a reliable, secure and scalable operating system environment through significant kernel 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 to 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. We also support Oracle Solaris deployed on other companies' hardware products.

The Oracle Linux operating system is optimized for cloud computing and enterprise workloads including databases, middleware and applications. The operating system offers technologies such as containers
and OpenStack support. Oracle Linux also has unique features for the enterprise such as Ksplice, which enables users to patch the Oracle Linux operating system while in use.

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 and file systems.

Management Software

Oracle
invests in a range of management technologies and products in order to meet the needs of customers building and efficiently operating complex IT environments, including both end users' and service providers' cloud environments. Oracle
Enterprise Manager is a comprehensive management solution for all Oracle infrastructure, platform and applications technologies and provides an integrated view of the entire IT lifecycle including deployment, monitoring and lifecycle management.
Oracle Enterprise Manager can be applied to

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cloud, traditional on-premise and hybrid cloud environments in a seamless manner via a single interface, which accelerates customer deployment of and transition to the cloud with Oracle products.
Oracle also enhances and integrates with certain key open technologies including OpenStack, which is broadly supported by Oracle products for customers that require seamless integration with this method of cloud management and provisioning. The
combination of Oracle's comprehensive solutions and investments in open standards allows Oracle customers to manage Oracle products efficiently across a range of IT offerings from traditional on-premise environments to the most advanced cloud
architectures.

Hardware Support

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

Services

We offer services solutions to help customers and partners maximize the performance of their investments in Oracle application, platform and infrastructure technologies. We believe our services are
differentiated based on our focus on Oracle technologies, extensive experience and broad sets of intellectual property and best practices. Our services business represented 9% of our total revenues in each of fiscal 2016 and 2015, and 10% of our
total revenues in fiscal 2014. Our services business, which is comprised of the remainder of our operating segments, offers the following:

•

consulting services that are designed to help our customers and global system integrator partners more successfully architect and deploy our offerings,
including IT strategy alignment, enterprise architecture planning and design, initial software implementation and integration, and ongoing software enhancements and upgrades. 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;

•

advanced customer support services, which are provided on-premise and remotely to our customers to enable increased performance and higher availability
of their Oracle products and services and also include certain other services; and

•

education services for Oracle products and services, including training and certification programs that are offered to customers, partners and
employees through a variety of formats, including instructor-led classes at our education centers, live virtual training, self-paced online training, private events and custom training.

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 offerings through indirect channels. No single customer accounted for 10% or more of
our total revenues in fiscal 2016, 2015 or 2014.

In the United States, our sales and services employees are based in our headquarters and in
field offices throughout the country. Outside the United States, our international subsidiaries sell, support and service our offerings 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 offerings. Our international operations subject us to certain risks, which are more fully described in "Risk Factors" included in Item 1A of

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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 product offerings 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 product offerings. By offering our partners access to our product offerings, 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 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. In each fiscal year, our total revenues and operating margins are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter. The operating margins of our businesses (in
particular, our cloud software and on-premise software and hardware segments) are generally affected by seasonal factors in a similar manner as our revenues as certain expenses within our cost structure are relatively fixed in the short term. 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. Our enterprise cloud and on-premise 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 Enterprise, SAP SE and Amazon.com, Inc. and smaller companies like salesforce.com, inc. and Workday, Inc., as well as many others. In addition, due to the low barriers to
entry in many of our market segments, new technologies and new and growing competitors frequently emerge 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 face increased competition as we 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 offering 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, speed to production and quality of technical support.
Our product and service sales (and the relative strength of our products and services versus those of our competitors) are also directly and indirectly affected by the following, among other things:

•

the adoption of cloud-based IT offerings including SaaS, PaaS and IaaS offerings;

•

ease of deployment, use and maintenance of our products and services offerings;

•

compatibility between Oracle products and services deployed within on-premise IT environments and public cloud IT environments, including our Oracle
Cloud environments;

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•

the adoption of commodity servers and microprocessors;

•

the broader "platform" competition between our industry standard Java technology platform and the .NET programming environment of Microsoft;

•

operating system competition among our Oracle Solaris and Linux operating systems, with alternatives including Microsoft's Windows Server, and
other UNIX and Linux operating systems;

•

the adoption of open source alternatives to commercial software by enterprise software customers;

•

products, features and functionality developed internally by customers and their IT staff;

•

products, features or functionality customized and implemented for customers by consultants, systems integrators or other third parties; and

•

attractiveness of offerings from business processing outsourcers.

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

Oracle Cloud Operations

Oracle Cloud Operations delivers our SaaS, PaaS and IaaS offerings
to customers through the Oracle Cloud, which is a secure, reliable, scalable, enterprise grade platform that is deployed upon Oracle's application, platform and infrastructure products and is managed by Oracle employees within a global network
of data centers. The Oracle Cloud enables secure and isolated cloud-based instances for each of our customers to access the functionality of our SaaS, PaaS and IaaS offerings via a broad spectrum of devices and leverages automated software lifecycle
management to enable the rapid delivery of the latest cloud technology capabilities as they become available.

Manufacturing

To produce our hardware products, we rely on both our internal manufacturing operations as well as third-party manufacturing partners. Our
internal manufacturing operations consist primarily of materials procurement, assembly, testing and quality control of our Oracle Engineered Systems and certain of our enterprise and data center servers, storage products and networking products. For
all other manufacturing, we generally rely on third-party manufacturing partners to produce our hardware-related components and hardware products and we may involve our internal manufacturing operations in the final assembly, testing and quality
control processes for these components and products. We distribute most of our hardware products either from our facilities or partner facilities. Our manufacturing processes substantially 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 product offerings 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 $5.8 billion, $5.5 billion and $5.2 billion in fiscal
2016,

19

2015 and 2014, respectively, or 16%, 14% and 13% of total revenues in fiscal 2016, 2015 and 2014, 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, offerings and enhancements characterize the cloud and on-premise 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, 2016, we employed approximately 136,000 full-time employees,
including approximately 38,000 in sales and marketing, approximately 6,000 in our cloud SaaS, PaaS and IaaS operations, approximately 10,000 in software license updates and product support, approximately 1,000 in the manufacturing of our hardware
products, approximately 5,000 in hardware support, approximately 23,000 in services, approximately 40,000 in research and development and approximately 13,000 in general and administrative positions. Of these employees, approximately 51,000 were
employed in the United States and approximately 85,000 were employed internationally. None of our employees in the United States is represented by a labor union; however, in certain foreign subsidiaries labor unions or workers' councils
represent some of 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 those 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 website at www.oracle.com/investor as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange
Commission. The information posted on or accessible through our website is not incorporated into this Annual Report.

Executive Officers of
the Registrant

Our executive officers are listed below.

Name

Office(s)

Lawrence J. Ellison

Chairman of the Board of Directors, Chief Technology Officer and Director

Safra A. Catz

Chief Executive Officer and Director

Mark V. Hurd

Chief Executive Officer and Director

Jeffrey O. Henley

Vice Chairman of the Board of Directors and Director

Thomas Kurian

President, Product Development

John F. Fowler

Executive Vice President, Systems

Dorian E. Daley

Executive Vice President, General Counsel and Secretary

William Corey West

Executive Vice President, Corporate Controller and Chief Accounting Officer

Mr. Ellison, 71, has been our Chairman of the Board and Chief Technology Officer since September 2014. He served as our
Chief Executive Officer from June 1977, when he founded Oracle, until September 2014. He has served as a Director since June 1977. He previously served as our Chairman of the Board from May 1995 to January 2004.

Ms. Catz, 54, has been our Chief Executive Officer since September 2014. She served as our President from January 2004 to September 2014, our Chief
Financial Officer most recently from April 2011 until September 2014 and a Director since October 2001. She was previously our Chief Financial Officer from November 2005 until September 2008 and our Interim Chief Financial Officer from April 2005
until July 2005. Prior to being named our President, she held various other positions with us since joining Oracle in 1999. She also previously served as a director of HSBC Holdings plc.

Mr. Hurd, 59, has been our Chief Executive Officer since September 2014. He served as our President from September 2010 to September 2014 and a Director since September 2010. Prior to joining us, he
served as Chairman of the Board of Directors of Hewlett-Packard Company from September 2006 to August 2010 and as Chief Executive Officer, President and a member of the Board of Directors of Hewlett-Packard Company from April 2005 to August 2010.

20

Mr. Henley, 71, has served as our Vice Chairman of the Board since September 2014. He previously served as
our Chairman of the Board from January 2004 to September 2014 and has served as a Director since June 1995. He served as our Executive Vice President and Chief Financial Officer from March 1991 to July 2004.

Mr. Kurian, 49, has been our President, Product Development since January 2015. He served as our Executive Vice President, Product Development from July
2009 until January 2015. He served as our 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.

Mr. Fowler, 55, has been Executive Vice President, Systems since February 2010.
Prior to Oracle's acquisition of Sun Microsystems, Inc., Mr. Fowler served as Sun'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.

Ms. Daley, 57, has been our Executive Vice President, General Counsel and
Secretary since April 2015 and was our Senior Vice President, General Counsel and Secretary from October 2007 to April 2015. She served as our 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, 54, has been our Executive Vice President, Corporate Controller and Chief Accounting Officer since April 2015. He served as our
Senior Vice President, Corporate Controller and Chief Accounting Officer from February 2008 to April 2015 and served as our 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.