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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-Q

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

               For the quarterly period ended February 28, 2001

                                      OR

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

              For the transition period from         to        .

                        Commission file number: 0-14376

                               ----------------

                              Oracle Corporation
            (Exact name of registrant as specified in its charter)


                                            
                  Delaware                                       94-2871189
       (State or other jurisdiction of                        (I.R.S. Employer
       incorporation or organization)                       Identification No.)


                              500 Oracle Parkway
                        Redwood City, California 94065
         (Address of principal executive offices, including zip code)

                                (650) 506-7000
             (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [_]

The number of shares of the registrant's common stock outstanding as of March
31, 2001 was 5,613,574,751.

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                               ORACLE CORPORATION

                           FORM 10-Q QUARTERLY REPORT

                               ----------------

                               TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                      
 PART I.  FINANCIAL INFORMATION
 Item 1.  Financial Statements
          Condensed Consolidated Balance Sheets at February 28, 2001 and
          May 31, 2000...................................................     3
          Condensed Consolidated Statements of Operations for the three
          months and nine months ended February 28, 2001 and February 29,
          2000...........................................................     4
          Condensed Consolidated Statements of Cash Flows for the nine
          months ended February 28, 2001 and February 29, 2000...........     5
          Notes to Condensed Consolidated Financial Statements...........     6
 Item 2.  Management's Discussion and Analysis of Financial Condition and
          Results of Operations..........................................    11
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk.....    20
 PART II. OTHER INFORMATION
 Item 1.  Legal Proceedings..............................................    22
 Item 6.  Exhibits and Reports on Form 8-K...............................    23
          Signatures.....................................................    24


                                       2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ORACLE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS



                                                          February 28,   May 31,
(in thousands, except share data)                             2001        2000
--------------------------------------------------------- ------------ -----------
                                                          (unaudited)
                                                                 
                         ASSETS
Current assets:
  Cash and cash equivalents..............................  $4,129,338  $ 7,429,206
  Short-term cash investments............................     855,900      332,792
  Trade receivables, net of allowance for doubtful
   accounts of $317,970 at February 28, 2001 and $272,203
   at May 31, 2000.......................................   1,952,119    2,533,964
  Prepaids and other current assets......................     521,685      587,372
                                                           ----------  -----------
      Total current assets...............................   7,459,042   10,883,334
Long-term cash investments...............................      10,000      110,000
Property, net............................................     946,268      934,455
Long-term prepaid income taxes...........................     261,326      322,379
Intangible and other assets..............................     774,104      826,611
                                                           ----------  -----------
      Total assets.......................................  $9,450,740  $13,076,779
                                                           ==========  ===========

          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable and current maturities of long-term
   debt..................................................  $    2,814  $     2,691
  Accounts payable.......................................     277,705      287,495
  Accrued compensation and related benefits..............     535,339      725,860
  Value added tax and sales tax payable..................     136,662      165,304
  Income taxes payable...................................     540,124    2,821,776
  Other accrued liabilities..............................     772,304      725,630
  Customer advances and unearned revenues................   1,040,712    1,133,482
                                                           ----------  -----------
      Total current liabilities..........................   3,305,660    5,862,238
Long-term debt...........................................     300,931      300,770
Deferred income taxes....................................     325,220      266,130
Other long-term liabilities..............................     194,857      186,178
                                                           ----------  -----------
      Total liabilities..................................   4,126,668    6,615,316
                                                           ----------  -----------
Stockholders' equity:
  Preferred stock, $0.01 par value--1,000,000 shares
   authorized; no shares issued or outstanding at
   February 28, 2001 or May 31, 2000.....................         --           --
  Common stock, $0.01 par value, and additional paid in
   capital--11,000,000,000 shares authorized;
   5,609,970,317 and 5,614,671,898 shares issued and
   outstanding at February 28, 2001 and May 31, 2000,
   respectively..........................................   3,707,501    3,112,126
  Retained earnings......................................   1,729,250    3,343,857
  Accumulated other comprehensive income (loss)..........    (112,679)       5,480
                                                           ----------  -----------
      Total stockholders' equity.........................   5,324,072    6,461,463
                                                           ----------  -----------
      Total liabilities and stockholders' equity.........  $9,450,740  $13,076,779
                                                           ==========  ===========


See notes to condensed consolidated financial statements.

                                       3


ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)



                                    Three Months Ended      Nine Months Ended
                                    ---------------------- ----------------------
(in thousands, except per share      Feb. 28,    Feb. 29,   Feb. 28,    Feb. 29,
data)                                  2001        2000       2001        2000
----------------------------------  ----------  ---------- ----------  ----------
                                                           
Revenues:
  Licenses and other..............  $1,125,083  $1,071,373 $3,050,559  $2,606,186
  Services........................   1,549,284   1,378,045  4,545,229   4,149,632
                                    ----------  ---------- ----------  ----------
    Total revenues................   2,674,367   2,449,418  7,595,788   6,755,818
                                    ----------  ---------- ----------  ----------
Operating expenses:
  Sales and marketing.............     665,605     594,696  1,879,434   1,764,555
  Cost of services................     708,614     707,261  2,077,490   2,217,181
  Research and development........     301,455     255,552    818,762     739,653
  General and administrative......     120,570     122,188    337,937     342,780
                                    ----------  ---------- ----------  ----------
    Total operating expenses......   1,796,244   1,679,697  5,113,623   5,064,169
                                    ----------  ---------- ----------  ----------
Operating income..................     878,123     769,721  2,482,165   1,691,649
  Net investment gains (losses)
   related to equity securities...     (22,437)    423,882    (20,472)    415,459
  Other income, net...............      47,745      15,727    183,862      57,947
                                    ----------  ---------- ----------  ----------
Income before provision for income
 taxes............................     903,431   1,209,330  2,645,555   2,165,055
  Provision for income taxes......     320,718     446,154    939,353     780,659
                                    ----------  ---------- ----------  ----------
Net income........................  $  582,713  $  763,176 $1,706,202  $1,384,396
                                    ==========  ========== ==========  ==========
Earnings per share:
  Basic...........................  $     0.10  $     0.14 $     0.30  $     0.24
                                    ==========  ========== ==========  ==========
  Diluted.........................  $     0.10  $     0.13 $     0.29  $     0.23
                                    ==========  ========== ==========  ==========
Weighted average common shares
 outstanding:
  Basic...........................   5,595,808   5,637,878  5,594,765   5,692,500
                                    ==========  ========== ==========  ==========
  Diluted.........................   5,851,333   5,996,378  5,886,397   5,991,260
                                    ==========  ========== ==========  ==========


See notes to condensed consolidated financial statements.

                                       4


ORACLE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)



                                                        Nine Months Ended
                                                      ------------------------
                                                       Feb. 28,     Feb. 29,
(in thousands)                                           2001         2000
----------------------------------------------------- -----------  -----------
                                                             
Cash Flows From Operating Activities:
  Net income......................................... $ 1,706,202  $ 1,384,396
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization....................     206,399      236,389
    Amortization of purchase price in excess of net
     tangible assets acquired........................      53,091       56,646
    Provision for doubtful accounts..................     115,482       79,733
    Net investment (gains) losses related to equity
     securities......................................      20,472     (415,459)
    Changes in assets and liabilities:
      Decrease in trade receivables..................     432,926      324,318
      Decrease in prepaid and other current assets...      56,295       52,206
      Decrease in long-term prepaid income taxes.....      59,679       59,838
      Decrease in accounts payable...................      (7,160)     (60,698)
      Decrease in accrued compensation and related
       benefits......................................    (180,899)    (197,093)
      Decrease in value added tax and sales tax
       payable.......................................     (24,734)     (44,155)
      (Decrease) increase in income taxes payable....  (1,669,877)     231,211
      Increase in other accrued liabilities..........      26,566       57,990
      (Decrease) increase in customer advances and
       unearned revenues.............................     (74,484)       4,628
      Increase (decrease) in deferred income taxes...      14,042      (10,042)
      Increase (decrease) in other long-term
       liabilities...................................       8,891       (5,403)
                                                      -----------  -----------
  Net cash provided by operating activities..........     742,891    1,754,505
                                                      -----------  -----------
Cash Flows From Investing Activities:
    Purchases of cash investments....................    (782,900)    (876,571)
    Proceeds from maturities of cash investments.....     359,792    1,283,267
    Capital expenditures.............................    (216,689)    (219,513)
    Proceeds from sale of marketable securities......     126,988      441,363
    Increase in intangible and other assets..........    (100,772)    (197,464)
                                                      -----------  -----------
  Net cash provided by (used for) investing
   activities........................................    (613,581)     431,082
                                                      -----------  -----------
Cash Flows From Financing Activities:
    Payments for repurchase of common stock..........  (3,771,737)  (2,044,526)
    Proceeds from issuance of common stock...........     409,824      324,466
    Net payments under notes payable and long-term
     debt............................................          (4)      (1,160)
                                                      -----------  -----------
  Net cash used for financing activities.............  (3,361,917)  (1,721,220)
  Effect of exchange rate changes on cash............     (67,261)      17,623
                                                      -----------  -----------
  Net (decrease) increase in cash and cash
   equivalents.......................................  (3,299,868)     481,990
  Cash and cash equivalents at beginning of period...   7,429,206    1,785,715
                                                      -----------  -----------
  Cash and cash equivalents at end of period......... $ 4,129,338  $ 2,267,705
                                                      ===========  ===========


See notes to condensed consolidated financial statements.

                                       5


ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. BASIS OF PRESENTATION

The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to such rules and regulations.
However, the Company believes that the disclosures are adequate to make the
information presented not misleading. These unaudited condensed consolidated
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 2000.

The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments)
which are, in the opinion of management, necessary to state fairly the results
for the interim periods presented. The results of operations for the interim
periods presented are not necessarily indicative of the operating results to
be expected for any subsequent interim period or for the fiscal year ending
May 31, 2001.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year presentation.

2. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income for the period by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income by the weighted
average number of common shares plus the dilutive effect of outstanding stock
options and shares issuable under the employee stock purchase plan using the
treasury stock method. Approximately 66.8 and 65.9 million outstanding stock
options were excluded from the calculation of diluted earnings per share for
the three and nine months ended February 28, 2001, respectively, because they
were anti-dilutive. However, these options could be dilutive in the future.

The following table sets forth the computation of basic and diluted earnings
per share for the periods indicated:



                                   Three Months Ended     Nine Months Ended
                                   --------------------- ---------------------
(in thousands, except per share     Feb. 28,   Feb. 29,   Feb. 28,   Feb. 29,
data)                                 2001       2000       2001       2000
---------------------------------- ---------- ---------- ---------- ----------
                                                        
Net income........................ $  582,713 $  763,176 $1,706,202 $1,384,396
                                   ========== ========== ========== ==========

Weighted average common shares
 outstanding......................  5,595,808  5,637,878  5,594,765  5,692,500
Dilutive effect of employee stock
 plans............................    255,525    358,500    291,632    298,760
                                   ---------- ---------- ---------- ----------
Diluted weighted average common
 shares outstanding...............  5,851,333  5,996,378  5,886,397  5,991,260
                                   ========== ========== ========== ==========

Basic earnings per share.......... $     0.10 $     0.14 $     0.30 $     0.24
                                   ========== ========== ========== ==========
Diluted earnings per share........ $     0.10 $     0.13 $     0.29 $     0.23
                                   ========== ========== ========== ==========


                                       6


ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

3. COMPREHENSIVE INCOME

Comprehensive income includes foreign currency translation gains and losses
and unrealized gains and losses on equity securities that are reflected in
stockholders' equity instead of net income.

The following table sets forth the calculation of comprehensive income for the
periods indicated:



                                  Three Months Ended
                                                         Nine Months Ended
                                  --------------------  ----------------------
                                  Feb. 28,   Feb. 29,    Feb. 28,    Feb. 29,
(in thousands)                      2001       2000        2001        2000
--------------------------------- ---------  ---------  ----------  ----------
                                                        
Net income....................... $ 582,713  $ 763,176  $1,706,202  $1,384,396
Net unrealized gains (losses) on
 equity securities...............    (2,835)   (32,033)    (49,522)     19,506
Foreign currency translation
 gains (losses)..................   (24,452)   108,405     (68,637)    213,211
                                  ---------  ---------  ----------  ----------
Total comprehensive income....... $ 555,426  $ 839,548  $1,588,043  $1,617,113
                                  =========  =========  ==========  ==========


4. STOCK REPURCHASE PROGRAM

The Company's Board of Directors has approved the repurchase of its Common
Stock to reduce the dilutive effect of shares issued under its various
employee stock plans. During the three months ended February 28, 2001,
approximately 12.6 million shares of Common Stock were repurchased for an
aggregate price of approximately $350.9 million. In the first nine months of
fiscal 2001, the Company repurchased approximately 108.0 million shares of
Common Stock for an aggregate price of approximately $3,771.7 million. As of
February 28, 2001, approximately 53.6 million shares remained available for
repurchase.

5. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2000, the Emerging Issues Task Force ("EITF") issued EITF issue
No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock." During the third quarter of
fiscal 2001, the Company modified its one and only outstanding forward
contract covered by EITF No. 00-19 to be in compliance with its requirements.
Under the forward contract, which was entered into in February 1998, the
Company agreed to sell to the counterparty 36,000,000 shares of the Company's
Common Stock at $4.42 per share plus accretion, subject to adjustments over
time. The forward contract has a stated maturity of February 13, 2003. The
modifications, which allow the Company to continue to account for such forward
contract as an equity instrument instead of being classified as an asset or
liability contract requiring it to be marked to fair value through earnings
each period, primarily consist of a provision to permit the Company to settle
in unregistered shares and the removal of collateral requirements.

In March 2000, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation--an Interpretation of Accounting Principles Board ("APB") Opinion
No. 25" ("FIN 44.") FIN 44 clarifies the application of APB Opinion No. 25 and
among other issues clarifies the following: the definition of an employee for
purposes of applying APB Opinion No. 25, the criteria for determining whether
a plan qualifies as a noncompensatory plan, the accounting consequences of
various modifications to the terms of previously fixed stock options or
awards, and the accounting for an exchange of stock compensation awards in a
business combination. FIN 44 was effective as of July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either
December 15, 1998 or January 12, 2000. The Company adopted FIN 44 in the first
quarter of fiscal 2001 and there was no material effect on the Company's
consolidated financial position, results of operations or cash flows.

In December 1999, the SEC released Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements," providing the staff's views in
applying accounting principles generally accepted in the

                                       7


ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

5. RECENT ACCOUNTING PRONOUNCEMENTS (continued)

United States to certain revenue recognition issues. The Company is required
to adopt SAB No. 101, as amended, no later than the fourth quarter of fiscal
2001. The Company does not expect that the adoption of SAB No. 101 will have a
material effect on the Company's consolidated financial position, results of
operations or cash flows.

In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133, as amended, will require the Company to recognize
all derivatives on the balance sheet at fair value. Derivative instruments
used to hedge will be identified specifically to assets, liabilities,
unrecognized firm commitments or forecasted transactions. The gains or losses
resulting from changes in the fair value of derivative instruments will either
be recognized in current earnings or in other comprehensive income, depending
on the use of the derivative and whether the hedging instrument is effective
or ineffective when hedging changes in fair value or cash flows. The Company
is required to adopt SFAS No. 133, as amended, no later than the first quarter
of fiscal 2002. The Company does not believe that the adoption of this
Statement will have a material effect on the Company's consolidated financial
position, results of operations or cash flows.

6. OTHER MATTER

In January 2001, the Company created an irrevocable trust (the "Liberate
Trust") to hold all the Company's shares (the "Liberate Shares") of Liberate
Technologies ("Liberate"). The trustees of the Liberate Trust must vote the
Liberate Shares in the same proportion as all the other stockholders of
Liberate (determined as of the last business day prior to a Liberate
Stockholders' Meeting or the earliest time thereafter that the voting results
are provided to the Trustee). The Company controls the timing of the sales of
the Liberate Shares, subject to a standstill agreement with Liberate and the
trustee of the Liberate Trust, and receives the proceeds of any such sales.
The Liberate Trust terminates only after all shares have been sold. The
standstill agreement prohibits the Company from acquiring any common stock or
voting shares of Liberate and limits the Company's ability to sell the
Liberate Shares to (1) sales in compliance with the volume and manner of sale
limitations of Rule 144 under the Securities Act, (2) sales pursuant to a firm
commitment, underwritten distribution to the public, (3) sales to a person who
will own 10% or less of the total voting power of Liberate Technologies after
such sale or (4) sales pursuant to a tender or exchange offer to the Liberate
stockholders that is not opposed by Liberate's Board of Directors. The
standstill agreement terminates two years after the termination of the
Liberate Trust or sooner if Liberate is dissolved, liquidated or wound up,
substantially all Liberate's assets are sold or another entity acquires
Liberate by merger or consolidation. Prior to the placement of such Liberate
shares into the trust, the Company accounted for its interest in Liberate
using the equity method of accounting. Effective February 1, 2001, the Company
began to account for its ownership interest in Liberate as available for sale
securities under SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities."

7. SEGMENT REPORTING

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," established standards for reporting information about operating
segments in the Company's financial statements. Operating segments are defined
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker,
or decision making group, in deciding how to allocate resources and in
assessing performance. The Company's chief operating decision maker is the
Chief Executive Officer of the Company.

The Company is organized geographically and by line of business. The Company
has four major line of business operating segments: license, support,
education and consulting. While the Chief Executive Officer of the

                                       8


ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

7. SEGMENT REPORTING (continued)

Company evaluates results in a number of different ways, the line of business
management structure is the primary basis for which allocation of resources
and financial performance are assessed. The accounting policies of the line of
business operating segments are the same as those described in the Company's
Annual Report on Form 10-K for the fiscal year ended May 31, 2000. The Company
does not track assets by operating segments. Consequently, it is not practical
to show assets by operating segments.

The following table presents a summary of operating segments:(/1/)



                             Three Months Ended         Nine Months Ended
                            ------------------------  ------------------------
                             Feb. 28,     Feb. 29,     Feb. 28,     Feb. 29,
(in thousands)                 2001         2000         2001         2000
--------------------------- -----------  -----------  -----------  -----------
                                                       
License:
  Revenues from
   unaffiliated
   customers(/2/).......... $ 1,119,905  $ 1,054,506  $ 3,021,578  $ 2,568,397
  Distribution expenses....    (510,991)    (470,559)  (1,425,907)  (1,390,347)
                            -----------  -----------  -----------  -----------
  Distribution
   margin(/3/)............. $   608,914  $   583,947  $ 1,595,671  $ 1,178,050
Support(/4/):
  Revenues from
   unaffiliated
   customers(/2/).......... $   905,774  $   754,413  $ 2,617,238  $ 2,142,069
  Distribution expenses....    (163,781)    (193,579)    (476,829)    (562,121)
                            -----------  -----------  -----------  -----------
  Distribution
   margin(/3/)............. $   741,993  $   560,834  $ 2,140,409  $ 1,579,948
Education:
  Revenues from
   unaffiliated
   customers(/2/).......... $   108,316  $   126,249  $   336,112  $   375,970
  Distribution expenses....     (63,718)     (75,802)    (206,406)    (237,630)
                            -----------  -----------  -----------  -----------
  Distribution
   margin(/3/)............. $    44,598  $    50,447  $   129,706  $   138,340
Consulting:
  Revenues from
   unaffiliated
   customers(/2/).......... $   540,372  $   514,250  $ 1,620,860  $ 1,669,382
  Distribution expenses....    (432,496)    (407,108)  (1,260,627)  (1,305,416)
                            -----------  -----------  -----------  -----------
  Distribution
   margin(/3/)............. $   107,876  $   107,142  $   360,233  $   363,966
Totals:
  Revenues from
   unaffiliated
   customers(/2/).......... $ 2,674,367  $ 2,449,418  $ 7,595,788  $ 6,755,818
  Distribution expenses....  (1,170,986)  (1,147,048)  (3,369,769)  (3,495,514)
                            -----------  -----------  -----------  -----------
  Distribution
   margin(/3/)............. $ 1,503,381  $ 1,302,370  $ 4,226,019  $ 3,260,304
                            ===========  ===========  ===========  ===========

--------
(/1/)  For business and management evaluation purposes, the Company from time
       to time changes the underlying structure for its operating segments.
       Although not materially different, segment data related to prior
       periods were restated, as required by SFAS 131, to conform to the
       current organizational structure.
(/2/)  Operating segment revenues differ from the external reporting
       classifications due to certain license products which are classified as
       services revenues for management reporting purposes.
(/3/)  The distribution margins reported reflect only the direct controllable
       expenses of each line of business and do not represent the actual
       margins for each operating segment since they do not contain an
       allocation for product development and information technology,
       marketing and partner programs, and corporate and general and
       administrative expenses incurred in support of the line of business.
(/4/)  Support includes update rights which, in certain sectors of the
       software industry such as the "shrink wrap sector," would typically be
       classified as license revenue.

                                       9


ORACLE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

7. SEGMENT REPORTING (continued)


Profit Reconciliation



                             Three Months Ended        Nine Months Ended
                             ----------------------  ------------------------
                              Feb. 28,    Feb. 29,    Feb. 28,     Feb. 29,
(in thousands)                  2001        2000        2001         2000
---------------------------- ----------  ----------  -----------  -----------
                                                      
Total distribution margin
 for reportable segments.... $1,503,381  $1,302,370  $ 4,226,019  $ 3,260,304
Product development and
 information technology
 expenses...................   (390,087)   (346,575)  (1,081,609)  (1,005,992)
Marketing and partner
 program expenses...........   (114,905)    (88,926)    (338,609)    (273,002)
Corporate and general and
 administrative expenses....   (100,600)    (75,112)    (260,408)    (233,792)
Net investment gains
 (losses) related to equity
 securities.................    (22,437)    423,882      (20,472)     415,459
Other income, net(/1/)......     28,079      (6,309)     120,634        2,078
                             ----------  ----------  -----------  -----------
  Income before provision
   for income taxes......... $  903,431  $1,209,330  $ 2,645,555  $ 2,165,055
                             ==========  ==========  ===========  ===========

--------
(/1/)  Other income, net differs from those stated on Condensed Consolidated
       Statements of Operations primarily due to the classification of goodwill
       amortization for management reporting purposes.

8. LEGAL PROCEEDINGS

Refer to Part II, Item 1 for a description of legal proceedings.

                                       10


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Forward-Looking Statements

In addition to historical information, this Quarterly Report contains forward-
looking statements. The forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those reflected in such forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Factors That May Affect Future Results
and Market Price of Stock." Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's opinions only
as of the date hereof. The Company undertakes no obligation to revise or
publicly release the results of any revision to these forward-looking
statements. Readers should carefully review the risk factors described in
other documents the Company files from time to time with the SEC, including
the Annual Report on Form 10-K for the fiscal year ended May 31, 2000 and the
Quarterly Reports on Form 10-Q filed by the Company in fiscal 2001.

Results of Operations

Total revenues increased 9% and 12% in the third quarter and first nine months
of fiscal 2001 over the corresponding prior year periods. The increases were
primarily attributable to higher support and license revenues. Sales and
marketing and cost of services expenses continue to represent significant
portions of operating expenses. Sales and marketing as a percentage of total
revenues was 25% for the third quarter and first nine months of fiscal 2001
and 24% and 26% for the respective corresponding prior year periods. Cost of
services as a percentage of total revenues decreased to 26% and 27% for the
third quarter and first nine months of fiscal 2001, respectively, compared to
29% and 33% for the corresponding prior year periods, respectively. Research
and development expenses as a percentage of total revenues remained fairly
constant at 11% for the third quarter and first nine months of fiscal 2001 and
10% and 11% for the corresponding prior year periods. General and
administrative expenses as a percentage of total revenues remained fairly
constant at 5% and 4% for the third quarter and first nine months of fiscal
2001 and 5% for the corresponding prior year periods. Overall, operating
income as a percentage of total revenues increased to 33% for the third
quarter and first nine months of fiscal 2001 compared to 31% and 25% for the
respective corresponding prior year periods.

Domestic revenues increased 6% and 14% for the third quarter and first nine
months of fiscal 2001 over the corresponding prior year periods, respectively.
The slowdown in domestic revenue growth in the third quarter of fiscal 2001
over fiscal 2000 was primarily due to uncertainty related to economic
conditions in the United States of America. International revenues increased
13% and 11% for the third quarter and first nine months of fiscal 2001,
respectively, over the corresponding prior year periods. International
revenues were unfavorably affected during the first nine months of fiscal 2001
as a result of the U.S. dollar strengthening against certain major
international currencies. Excluding the effect of currency rate fluctuations,
international revenues grew 21% for the third quarter and first nine months of
fiscal 2001 over the corresponding prior year periods. Excluding the effect of
currency rate fluctuations, total revenues grew 13% and 17% for the third
quarter and first nine months of fiscal 2001 over the corresponding prior year
periods, respectively. International revenues represented 49% of total
revenues for the third quarter and first nine months of fiscal 2001, as
compared to 47% and 50% of total revenues for the corresponding prior year
periods, respectively. The Company expects that its international operations
will continue to generate a significant portion of total revenues, and thus,
its revenues may be adversely affected if the U.S. dollar continues to
strengthen relative to international currencies.

                                      11


Revenues



                              Three Months Ended            Nine Months Ended
                         ----------------------------- -----------------------------
                          Feb. 28,   Feb. 29,  Percent  Feb. 28,   Feb. 29,  Percent
(in thousands)              2001       2000    Change     2001       2000    Change
------------------------ ---------- ---------- ------- ---------- ---------- -------
                                                           
Licenses and other...... $1,125,083 $1,071,373     5%  $3,050,559 $2,606,186    17%
Services................  1,549,284  1,378,045    12%   4,545,229  4,149,632    10%
                         ---------- ----------         ---------- ----------
  Total revenues........ $2,674,367 $2,449,418     9%  $7,595,788 $6,755,818    12%
                         ========== ==========         ========== ==========
Percent of Revenues:
Licenses and other......        42%        44%                40%        39%
Services................        58%        56%                60%        61%
                         ---------- ----------         ---------- ----------
  Total revenues........       100%       100%               100%       100%
                         ========== ==========         ========== ==========


Licenses and Other Revenues. License revenues represent fees earned for
granting customers licenses to use the Company's software products. Licenses
and other revenues also include documentation and other miscellaneous
revenues. Documentation revenues and other miscellaneous revenues constituted
2% and 3% of total licenses and other revenues for the third quarter and first
nine months of fiscal 2001, respectively, as compared to 3% of total licenses
and other revenues for the corresponding prior year periods. License revenues,
excluding documentation and other miscellaneous revenues, increased 6% and 18%
for the third quarter and first nine months of fiscal 2001 over the
corresponding prior year periods, respectively. Systems software license
revenues, which include server and development tools revenues, increased 1%
and 11% for the third quarter and first nine months of fiscal 2001 over the
corresponding prior year periods, respectively. Business applications revenues
increased 25% and 44% for the third quarter and first nine months of fiscal
2001 over the corresponding prior year periods, respectively. The slowdown in
license revenues in the third quarter of fiscal 2001 was primarily due to
uncertainty related to economic conditions in the United States of America,
that negatively impacted demand for the Company's systems and business
application products.

As a percentage of revenues, licenses and other revenues represented 42% and
40% of total revenues for the third quarter and first nine months of fiscal
2001, respectively, as compared to 44% and 39% of total revenues for the
corresponding prior year periods, respectively. The decrease in licenses and
other revenues as a percentage of total revenues during the third quarter of
fiscal 2001 was primarily a result of an increase in support revenues,
reflecting an increase in the overall customer installed base, as well as the
lower license growth resulting from the uncertainty related to economic
conditions. The increase in licenses and other revenues as a percentage of
total revenues during the first nine months of fiscal 2001 was primarily
caused by a slowdown in the consulting and education services revenue growth
rates.

Services Revenues. Services revenues consist of support, consulting and
education services revenues which comprised 59%, 35% and 6% of total services
revenues, respectively, for the third quarter of fiscal 2001 and 58%, 36% and
6% of total services revenues, respectively, for the nine months ended
February 28, 2001. Support revenues increased 20% and 22% for the third
quarter and first nine months of fiscal 2001 over the corresponding prior year
periods, respectively, reflecting an increase in the overall customer
installed base. Consulting revenues increased 6% and decreased 2% for the
third quarter and first nine months of fiscal 2001 from the corresponding
prior year periods, respectively. The decline in the consulting services
revenue growth rates during the first nine months of fiscal 2001 was primarily
a result of the following: i) a slowdown in the business applications market
during the first part of fiscal 2000, ii) part of the business generated in
fiscal 2000 related to Year 2000 upgrades, iii) a push towards a partner
model, leveraging third party consulting firms who provide consulting services
to the Company's customers, iv) a focus on higher margin business at the
expense of revenue growth, and v) shorter implementation engagements for the
Company's newer generation of products. Education revenues decreased 12% for
the third quarter and first nine months of fiscal 2001 from the corresponding
prior year periods. The decrease in education revenues in the third quarter
and first nine months of fiscal 2001 was due in part to lower business
applications growth experienced during the first part of fiscal 2000.

                                      12


Operating Expenses



                             Three Months Ended             Nine Months Ended
                         ----------------------------- -----------------------------
                          Feb. 28,   Feb. 29,  Percent  Feb. 28,   Feb. 29,  Percent
(in thousands)              2001       2000    Change     2001       2000    Change
------------------------ ---------- ---------- ------- ---------- ---------- -------
                                                           
Sales and marketing..... $  665,605 $  594,696    12%  $1,879,434 $1,764,555     7%
Cost of services........    708,614    707,261     0%   2,077,490  2,217,181    (6%)
Research and
 development............    301,455    255,552    18%     818,762    739,653    11%
General and
 administrative.........    120,570    122,188    (1%)    337,937    342,780    (1%)
                         ---------- ----------         ---------- ----------
  Total operating
   expenses............. $1,796,244 $1,679,697     7%  $5,113,623 $5,064,169     1%
                         ========== ==========         ========== ==========
Percent of Revenues:
Sales and marketing.....        25%        24%                25%        26%
Cost of services........        26%        29%                27%        33%
Research and
 development............        11%        10%                11%        11%
General and
 administrative.........         5%         5%                 4%         5%
                         ---------- ----------         ---------- ----------
  Total operating
   expenses.............        67%        69%                67%        75%
                         ========== ==========         ========== ==========


Total Operating Expenses. Total operating expenses increased 7% and 1% for the
third quarter and first nine months of fiscal 2001 from the corresponding
prior year periods, respectively. Operating expenses were favorably affected
during the first nine months of fiscal 2001 as a result of the U.S. dollar
strengthening against certain major international currencies. Excluding the
effect of currency rate fluctuations, total operating expenses increased 11%
and 5% for the third quarter and first nine months of fiscal 2001 over the
corresponding prior year periods, respectively. Based on current business
conditions, the Company expects to further control operating expenses by
reducing its worldwide workforce approximately one to two percent through
normal attrition and regular business performance assessments.

Sales and Marketing Expenses. The Company continues to place significant
emphasis, both domestically and internationally, on direct sales through its
own sales force. However, the Company also continues to market its products
through indirect channels. Sales and marketing expenses increased 12% and 7%
for the third quarter and first nine months of fiscal 2001 over the
corresponding prior year periods, respectively. As a percentage of licenses
and other revenues, sales and marketing expenses were 59% and 62% for the
third quarter and first nine months of fiscal 2001, respectively, compared to
56% and 68% for the corresponding prior year periods, respectively. The
increase in sales and marketing expenses as a percentage of licenses and other
revenues in the third quarter of fiscal 2001 was due primarily to an increase
in headcount to meet an anticipated increase in demand for the Company's
products, which did not materialize in the quarter due to the economic
uncertainty discussed previously. The decrease in sales and marketing expenses
as a percentage of licenses and other revenues in the first nine months of
fiscal 2001 was due primarily to increased revenues and productivity
improvements in the first half of fiscal 2001 which favorably affected
headcount and headcount related expenditures.

Cost of Services. The cost of providing services consists largely of
consulting, education and support personnel expenses. Cost of services
expenses remained constant for the third quarter of fiscal 2001 over the
corresponding prior year period and decreased by 6% in the first nine months
of fiscal 2001 from the corresponding prior year period. As a percentage of
services revenues, cost of services was 46% for the third quarter and first
nine months of fiscal 2001, compared to 51% and 53% for the corresponding
prior year periods, respectively. The decrease in cost of services as a
percentage of services revenues was due primarily to support revenues, which
have relatively higher margins, constituting a higher percentage of total
services revenues. The decrease in cost of services in absolute terms for the
nine months of fiscal 2001 over the corresponding prior year period was due to
a combination of the favorable effect of currency rate fluctuations as well as
increased productivity efficiencies and controls over headcount and headcount
related expenditures in the support, consulting, and education lines of
business.

                                      13


Research and Development Expenses. Research and development expenses increased
18% and 11% for the third quarter and first nine months of fiscal 2001 over
the corresponding prior year periods, respectively. As a percentage of total
revenues, research and development expenses remained relatively constant at
11% for the third quarter and first nine months of fiscal 2001 compared to 10%
and 11% for the third quarter and first nine months of fiscal 2000. The
Company believes that research and development expenditures are essential to
maintaining its competitive position and expect these costs to continue to
constitute a significant percentage of revenues.

General and Administrative Expenses. General and administrative expenses
decreased 1% for the third quarter and first nine months of fiscal 2001 from
the corresponding prior year periods. As a percentage of revenues, general and
administrative expenses remained relatively constant at 5% and 4% for the
third quarter and first nine months of fiscal 2001, as compared to 5% for each
of the corresponding prior year periods.

Net Investment Gains (Losses) Related To Equity Securities

Net investment losses related to equity securities for the third quarter and
first nine months of fiscal 2001 were due to the Company's equity share in the
results of non-consolidated investees and provision for losses related to
investments in other companies, partially offset by gains realized from sales
of marketable securities. Net investment gains related to equity securities
for the third quarter and first nine months of fiscal 2000 primarily relate to
the gain on the sale of existing shares in Liberate, partially offset by the
Company's equity share in the results of non-consolidated investees. In
February 2000, the Company sold 4,274,703 shares in Liberate, resulting in a
gain on sale of equity securities in the amount of $431.8 million and a
related tax of $166.3 million. In January 2001, the Company created an
irrevocable trust to hold all the Company's shares of Liberate. Prior to the
placement of Liberate shares into the trust, the Company accounted for its
interest in Liberate using the equity method of accounting. Effective February
1, 2001, the Company began to account for its ownership interest in Liberate
as available for sale securities under SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities."

Other Income, Net

Other income, net consists primarily of interest income, interest expense,
foreign currency exchange gains and losses, goodwill amortization and the
minority interest share in the net profits of Oracle Japan. Other income, net
for the third quarter and first nine months of fiscal 2001 increased 204% and
217% over the corresponding prior year periods, respectively. The increases
were primarily due to higher interest income as a result of higher average
cash investment balances, partially offset by an increase in the minority
interest share in the net profits of Oracle Japan. The higher average cash
investment balances were primarily related to the sale of shares in Oracle
Japan in April 2000, partially offset by share repurchases during the first
nine months of fiscal 2001.

Provision for Income Taxes

The Company's effective tax rates have historically differed from the federal
statutory rate primarily because of state taxes. The effective tax rate was
35.5% for the third quarter and first nine months of fiscal 2001, as compared
to 36.9% and 36.1% for each of the corresponding prior year periods. The
provision for income taxes for the third quarter of fiscal 2000 includes
$166.3 million of taxes on the gain on sale of marketable securities in
Liberate. Excluding this transaction, the effective tax rate for the third
quarter of fiscal 2000 would have been 36.0%.

Liquidity and Capital Resources:



                                                Nine Months Ended
                                       ----------------------------------------
                                        Feb. 28,     Feb. 29,
(in thousands)                            2001         2000      Percent Change
-------------------------------------  -----------  -----------  --------------
                                                        
Working capital......................  $ 4,153,382  $ 2,336,036         78%
Cash and cash investments............  $ 4,995,238  $ 2,887,601         73%
Cash provided by operating
 activities..........................  $   742,891  $ 1,754,505        (58%)
Cash provided by (used for) investing
 activities..........................  $  (613,581) $   431,082       (242%)
Cash used for financing activities...  $(3,361,917) $(1,721,220)       (95%)


                                      14


Working capital as of February 28, 2001 was 78% higher than at the end of the
corresponding prior year period, primarily attributable to higher cash and
cash investment balances. The increase in cash and cash investments was
primarily due to proceeds from the sale of stock in Oracle Japan and Liberate
during the last six months of fiscal 2000, partially offset by stock
repurchases since February 29, 2000.

The positive cash flows generated from operations during the first nine months
of fiscal 2001 and fiscal 2000 were primarily attributable to improved
profitability and a decrease in trade receivables. The decline in cash flows
generated from operations in the first nine months of fiscal 2001, as compared
to the first nine months of fiscal 2000, was primarily due to the payment of
taxes related to the gain on sale of Oracle Japan stock that occurred in the
fourth quarter of fiscal 2000.

The negative cash flows from investing activities during the first nine months
of fiscal 2001 related to cash investment purchases and investments in capital
expenditures, partially offset by maturities of cash investments. The positive
cash flows generated from investing activities during the first nine months of
fiscal 2000 primarily reflect increased maturities of cash investments,
partially offset by investments in capital expenditures. The Company expects
to continue to invest in capital and other assets to support its growth.

The Company incurred negative cash flows from financing activities during the
first nine months of fiscal 2001 and fiscal 2000, primarily reflecting Common
Stock repurchases. The Company's Board of Directors has approved the
cumulative repurchase of up to 1,096.0 million shares of its Common Stock on
the open market to reduce the dilutive effect of its stock plans. Pursuant to
this repurchase program, the Company repurchased 108.0 million shares for
approximately $3,771.7 million during the first nine months of fiscal 2001 and
133.6 million shares for approximately $2,044.5 million during the first nine
months of fiscal 2000. As of February 28, 2001, the Company has repurchased,
since inception, a total of approximately 1,042.4 million shares for an
aggregate amount of approximately $11,497.2 million. The Company has primarily
used cash flows from operations and investing activities to fund its
repurchases.

During the third quarter of fiscal 1997, the Company issued $150.0 million in
6.72% Senior Notes due in the year 2004 and $150.0 million in 6.91% Senior
Notes due in the year 2007. The Senior Notes are unsecured general obligations
that rank on parity with all of its other unsecured and unsubordinated
indebtedness that may be outstanding. As of February 28, 2001, the Company
also had other outstanding debt of approximately $3.7 million, primarily in
the form of other notes payable and capital leases.

The Company believes that its current cash and cash equivalents, short-term
cash investments and cash generated from operations will be sufficient to meet
its working capital, capital expenditure, and investment needs through at
least the next 12 months.

Factors That May Affect Future Results and Market Price of Stock

The Company operates in a rapidly changing environment that involves numerous
risks, some of which are beyond its control. The following discussion
highlights some of these risks.

Revenue Growth and Economic Conditions. The revenue growth and profitability
of the Company's business depends on the overall demand for computer software
and services, particularly in the product segments in which the Company
competes. Because the Company's sales are primarily to major corporate and
government customers, its business also depends on general economic and
business conditions. A softening of demand for computer software caused by a
weakening of the economy, particularly in the United States, may result in
decreased revenues and has resulted and may continue to result in lower
revenue growth rates. In particular, one of the challenges the Company
continues to face in promoting future growth in license revenues is the
successful refocusing of its marketing and sales efforts to the Customer
Relationship Management ("CRM") and Internet procurement areas of its
applications business, as well as to the other products in its e-Business
suite. There can be no assurances that the Company will be able to effectively
promote future revenue growth in its systems software and business
applications areas.

                                      15


In October 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") No. 97-2, "Software Revenue
Recognition" which superceded SOP 91-1. SOP 97-2 was effective for the
Company's fiscal year beginning June 1, 1998, as amended by SOP 98-4 and SOP
98-9, and provides guidance on applying generally accepted accounting
principles for software revenue recognition transactions. In December 1999,
the SEC issued SAB No. 101, "Revenue Recognition in Financial Statements,"
which provides further revenue recognition guidance. The accounting profession
continues to review certain provisions of SOP No. 97-2 and SAB No. 101 with
the objective of providing additional guidance on implementing its provisions.
Depending upon the outcome of these reviews and the issuance of implementation
guidelines and interpretations, the Company may be required to change its
revenue recognition policies and business practices, and such changes could
have a material adverse effect on the Company's business, results of
operations or financial position.

New Products. The markets for the Company's products are characterized by
rapid technological advances in hardware and software development, evolving
standards in computer hardware and software technology and frequent new
product introductions and enhancements. Product introductions and short
product life cycles necessitate high levels of expenditures for research and
development. To maintain its competitive position, the Company must enhance
and improve existing products and continue to introduce new products and new
versions of existing products that keep pace with technological developments,
satisfy increasingly sophisticated customer requirements and achieve market
acceptance. The Company's inability to run on new or increasingly popular
operating systems, or the Company's failure to successfully enhance and
improve its products in a timely manner, and position and/or price its
products, could have a material adverse effect on the Company's business,
results of operations, financial condition or cash flows.

Significant undetected errors or delays in new products or new versions of a
product, especially in the area of CRM, may affect market acceptance of the
Company's products and could have a material adverse effect on the Company's
business, results of operations, financial condition or cash flows. If the
Company were to experience delays in the commercialization and introduction of
new or enhanced products, if customers were to experience significant problems
with the implementation and installation of products, or if customers were
dissatisfied with product functionality or performance, this could have a
material adverse effect on the Company's business, results of operations,
financial condition or cash flows.

There can be no assurance that the Company's new products will achieve
significant market acceptance or will generate significant revenue. Additional
products that the Company plans to directly or indirectly market in the future
are in various stages of development.

Sales Forecasts. Management uses a "pipeline" system, a common industry
practice, to forecast sales and trends in the Company's business. The
Company's sales personnel monitor the status of all proposals, such as the
date when they estimate that a customer will make a purchase decision and the
potential dollar amount of the sale. The Company aggregates these estimates
periodically in order to generate a sales pipeline. The Company compares the
pipeline at various points in time to look for trends in its business. While
this pipeline analysis may provide the Company with some guidance in business
planning and budgeting, these pipeline estimates are necessarily speculative
and may not consistently correlate to revenues in a particular quarter or over
a longer period of time. A variation in the conversion of the pipeline into
contracts or in the pipeline itself could cause the Company to improperly plan
or budget and thereby adversely affect its business or results of operations.
In particular, a slowdown in the economy may cause purchasing decisions to be
delayed, reduced in amount or cancelled which will therefore reduce the
overall license pipeline conversion rates in a particular period of time.

Management of Growth. The Company has a history of rapid growth. However, the
Company has at times experienced slowing growth rates in a number of areas.
The Company's future operating results will depend on its ability to manage
growth, accurately forecast revenues and control expenses. The Company's
future operating results may also be adversely impacted by external factors,
such as a slowing in demand for hardware used in conjunction with its
software. A decline in the growth rate of revenues without a corresponding and
timely slowdown in expense growth could have a material adverse effect on the
Company's business, results of operations, financial condition, or cash flows.

                                      16


Pricing. Intense competition in the various markets in which the Company
competes may put pressure on the Company to reduce prices on certain products,
particularly in the markets where certain vendors offer deep discounts in an
effort to recapture or gain market share or to sell other software or hardware
products. Moreover, the Company has made changes to its pricing model and such
changes to the Company's prices and pricing policies could lead to a decline
or delay in sales as the Company's sales force and its customers continue to
adjust to the new pricing policies. The bundling of software products for
promotional purposes or as a long-term pricing strategy or guarantees of
product implementations by certain of the Company's competitors could have the
effect over time of significantly reducing the prices that the Company can
charge for its products. Changes in the customer's use of the Company's
products could also result in lower license revenues if the Company's pricing
model is not adapted to such usage. Shifts toward the use of operating systems
on which the Company experiences relatively greater price competition could
result in lower average license prices, thereby reducing the Company's license
revenues. Additionally, while the distribution of applications through
application service providers may provide a new market for the Company's
products, these new distribution methods could also reduce the price paid for
the Company's products or adversely affect other sales of its products. Any
such price reductions and resulting lower license revenues could have a
material adverse effect on the Company's business, results of operations,
financial condition, or cash flows if the Company cannot offset these price
reductions with a corresponding increase in sales volumes or lower spending.

Competitive Environment. The computer software industry is an intensely
competitive industry with several large vendors that develop and market
databases, application development tools, business applications and business
intelligence products. Certain of these vendors have significantly greater
financial and technical resources than the Company. The introduction of new
competitive products into one or more of the Company's various markets, the
addition of new functionality into an existing competitive product or the
acquisition by one of its competitors of a product could have a material
adverse effect on the Company's business, results of operations, financial
condition or cash flows. In addition, new distribution methods (e.g.
electronic channels) and opportunities presented by the Internet and
electronic commerce have removed many of the barriers to entry historically
faced by small and start-up companies in the software industry. The Company
expects to continue to face intense competition in the various markets in
which it competes.

Hiring and Retention of Employees. The Company's continued growth and success
depend to a significant extent on the continued service of its senior
management and other key employees and the hiring of new qualified employees.
Competition for highly-skilled business, product development, technical and
other personnel is intense due to low overall unemployment rates and the
expansion in information technology spending. Accordingly, the Company may
experience increased compensation costs that may not be offset through either
improved productivity or higher prices. There can be no assurances that the
Company will be successful in continuously recruiting new personnel and in
retaining existing personnel. In general, the Company does not have long-term
employment or non-competition agreements with its employees. The loss of one
or more key employees or the Company's inability to attract additional
qualified employees or retain other employees could have a material adverse
effect on its continued growth.

New Business Areas. The Company has in recent years expanded its technology
into a number of new business areas to foster long-term growth, including on-
line auctions, or exchanges, for a number of business procurement needs,
Internet/electronic commerce, on-line business services, wireless initiatives
and Internet computing. These areas are relatively new to the Company's
product development and sales and marketing personnel. There is no assurance
that the Company will compete effectively or will generate significant
revenues in these new areas. The success of Internet computing and, in
particular, the Company's current Internet computing software products is
difficult to predict because Internet computing represents a method of
computing that is new to the entire computer industry. The successful
introduction of Internet computing to the market will depend in large measure
on (i) the lower cost of ownership of Internet computing relative to
client/server architecture, (ii) the ease of use and administration relative
to client/server architecture, and (iii) how hardware and software vendors
choose to compete in this market. There can be no assurances that sufficient
numbers of vendors will undertake this commitment, that the market will accept
Internet computing or that Internet computing will generate significant
revenues for the Company.

                                      17


International Sales. A substantial portion of the Company's revenues is
derived from international sales and is therefore subject to the related
risks, including the general economic conditions in each country, the overlap
of different tax structures, the difficulty of managing an organization spread
over various countries, changes in regulatory requirements, compliance with a
variety of foreign laws and regulations, longer payment cycles and
volatilities of exchange rates in certain countries. There can be no
assurances that the Company will be able to successfully address each of these
challenges. Other risks associated with international operations include
import and export licensing requirements, trade restrictions and changes in
tariff rates.

A significant portion of the Company's business is conducted in currencies
other than the U.S. dollar. Changes in the value of major foreign currencies
relative to the value of the U.S. dollar adversely affected revenues and
operating results in the first three quarters of fiscal 2001, particularly in
Europe, and will continue to do so throughout fiscal 2001 if the U.S. dollar
strengthens relative to foreign currencies.

Foreign currency transaction gains and losses are primarily related to
sublicense fee and other agreements between the Company and its subsidiaries
and selling distributors. These gains and losses are charged against earnings
in the period incurred. The Company has reduced its transaction and
translation gains and losses associated with converting foreign currencies
into U.S. dollars by using foreign exchange forward contracts to hedge
transaction and translation exposures in major currencies. The Company finds
it impractical to hedge all foreign currencies in which it conducts business.
As a result, the Company will continue to experience foreign currency gains
and losses.

Uneven Patterns of Quarterly Operating Results and Revenues. The Company's
revenues in general, and its license revenues in particular, are relatively
difficult to forecast and vary from quarter to quarter due to various factors,
including the (i) relatively long sales cycles for the Company's products,
(ii) size and timing of individual license transactions, the closing of which
tend to be delayed by customers until the end of a fiscal quarter as a
negotiating tactic, (iii) introduction of new products or product enhancements
by the Company or its competitors, (iv) potential for delay or deferral of
customer implementations of the Company's software, (v) changes in customer
budgets, (vi) seasonality of technology purchases and other general economic
conditions, and (vii) changes in the Company's pricing policies or those of
its competitors. Accordingly, the Company's quarterly results are difficult to
predict until the end of the quarter, and delays in product delivery or
closing of sales near the end of a quarter have historically caused and could
cause quarterly revenues and net income to fall significantly short of
anticipated levels.

The Company's license revenues in any quarter are substantially dependent on
orders booked and shipped in that quarter. Because the Company's operating
expenses are based on anticipated revenue levels and because a high percentage
of its expenses are relatively fixed, a delay in the recognition of revenue
from even a limited number of license transactions could cause significant
variations in operating results from quarter to quarter and could cause net
income to fall significantly short of anticipated levels.

California has recently experienced ongoing power system shortages which have
resulted in "rolling blackouts," and the recent bankruptcy filing by one of
the major California public utilities may increase the number and severity of
these blackouts. These blackouts, blackouts in other regions or procedures
implemented to avert blackouts could cause disruptions to the Company's
operations and the operations of the Company's customers. Such disruptions,
particularly at the end of a quarter, could adversely affect quarterly
revenues and net income by delaying the closing of a number of licensing
transactions.

Uncertainty of Emerging Areas. Despite tremendous growth in emerging areas
such as the Internet, on-line services and electronic commerce, the impact on
the Company of this growth is uncertain. There can be no assurances that the
Company will be able to provide a product offering that will satisfy new
customer demands in these areas. In addition, standards for network protocols,
as well as other industry adopted and de facto standards for the Internet, are
evolving rapidly. There can be no assurances that standards chosen by the
Company will position its products to compete effectively for business
opportunities as they arise on the Internet and other emerging areas.

                                      18


Future Acquisitions. As part of its business strategy, the Company has made
and expects to continue to make acquisitions of, or significant investments
in, businesses that offer complementary products, services and technologies.
Any acquisitions or investments will be accompanied by the risks commonly
encountered in acquisitions of businesses. Such risks include, among other
things, the possibility that the Company pays much more than the acquired
company or assets are worth, the difficulty of assimilating the operations and
personnel of the acquired businesses, the potential product liability
associated with the sale of the acquired company's products, the potential
disruption of the Company's ongoing business, the distraction of management
from the Company's business, the inability of management to maximize the
Company's financial and strategic position, the maintenance of uniform
standards, controls, procedures and policies and the impairment of
relationships with employees and clients as a result of any integration of new
management personnel. These factors could have a material adverse effect on
the Company's business, results of operations, financial condition or cash
flows, particularly in the case of a larger acquisition. Consideration paid
for future acquisitions, if any, could be in the form of cash, stock, stock
purchase rights or a combination thereof. Dilution to existing stockholders
and to earnings per share may result in connection with any such future
acquisitions.

Relative Product Profitability. Certain of the Company's revenues are derived
from products that, as a percentage of revenues, currently require a higher
level of development, distribution and support expenditures compared to
certain of its other products. To the extent that revenues generated from such
products become a greater percentage of the Company's total revenues, the
Company's operating margins may be adversely affected, unless the expenses
associated with such products decline as a percentage of revenues.

Long-term Investment Cycle. Developing and localizing software is expensive
and the investment in product development often involves a long payback cycle.
The Company's plans for the fiscal year ending May 31, 2001 include
significant investments in software research and development and related
product opportunities from which significant revenues are not anticipated for
several years.

Sales Force Restructuring. The Company historically has relied heavily on its
direct sales force. In many years, the Company has restructured or made other
adjustments to its sales force at least once a year. These changes have
generally resulted in a temporary lack of focus and reduced productivity by
the Company's sales force that may have affected revenues in a quarter. There
can be no assurances that the Company will not continue to restructure its
sales force or that the related transition issues associated with
restructuring the sales force will not recur.

Enforcement of the Company's Intellectual Property Rights. The Company relies
on a combination of copyright, patent, trademark, trade secrets,
confidentiality procedures and contractual procedures to protect its
intellectual property rights. Despite the Company's efforts to protect its
intellectual property rights, it may be possible for unauthorized third
parties to copy certain portions of the Company's products or to reverse
engineer or obtain and use technology or other information that the Company
regards as proprietary. There can also be no assurances that the Company's
intellectual property rights would survive a legal challenge to their validity
or provide significant protection for the Company. In addition, the laws of
certain countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. Accordingly, there can be no
assurances that the Company will be able to protect its proprietary technology
against unauthorized third party copying or use, which could adversely affect
the Company's competitive position.

Possibility of Infringement Claims. The Company from time to time receives
notices from third parties claiming infringement by the Company's products of
third party patent and other intellectual property rights. The Company expects
that software products will increasingly be subject to such claims as the
number of products and competitors in the Company's industry segments grow and
the functionality of products overlaps. In addition, the Company expects to
receive more patent infringement claims as companies increasingly seek to
patent their software, especially in light of recent developments in the law
that extend the ability to patent software. Regardless of its merit,
responding to any such claim could be time-consuming, result in costly
litigation and require the Company to enter into royalty and licensing
agreements that may not be offered or available on terms acceptable to the
Company. If a successful claim is made against the Company and the

                                      19


Company fails to develop or license a substitute technology, the Company's
business, results of operations, financial condition or cash flows could be
materially adversely affected.

Possible Volatility of Stock Price. The market price of the Company's Common
Stock has experienced significant fluctuations and may continue to fluctuate
significantly. The market price of the Company's Common Stock may be
significantly affected by factors such as the announcement of new products or
product enhancements by the Company or its competitors, technological
innovation by the Company or its competitors, quarterly variations in the
Company's or its competitors' results of operations, changes in prices of the
Company's or its competitors' products and services, changes in revenue and
revenue growth rates for the Company as a whole or for specific geographic
areas, business units, products or product categories, changes in earnings
estimates by market analysts, speculation in the press or analyst community and
general market conditions or market conditions specific to particular
industries. The stock prices for many companies in the technology sector have
experienced wide fluctuations that often have been unrelated to their operating
performance. Such fluctuations may adversely affect the market price of the
Company's Common Stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures About Market Risk

Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relates primarily to the Company's investment portfolio. The
Company places its investments with high credit quality issuers and, by policy,
limits the amount of credit exposure to any one issuer. As stated in its
policy, the Company is averse to principal loss and seeks to preserve its
invested funds by limiting default risk, market risk, and reinvestment risk.

The Company mitigates default risk by investing in only high credit quality
securities that it believes to be low risk and by positioning its portfolio to
respond appropriately to a significant reduction in a credit rating of any
investment issuer or guarantor. The portfolio includes only marketable
securities with active secondary or resale markets to ensure portfolio
liquidity.

The table below presents the principal amount, related weighted average
interest rates and maturities for the Company's investment portfolio. Short-
term and long-term investments are all in fixed rate instruments. The principal
amount approximates fair value at February 28, 2001.

Table of Investment Securities:



                                                                     Weighted
                                                        Principal     Average
(in thousands)                                            Amount   Interest Rate
------------------------------------------------------- ---------- -------------
                                                             
Cash and cash equivalents.............................. $4,129,338     4.70%
Short term investment (0-1 year).......................    855,900     5.43%
Long term investment (1-2 years).......................     10,000     5.63%
                                                        ----------
Total cash and cash investments........................ $4,995,238
                                                        ==========


Foreign Currency Risk. The Company transacts business in various foreign
currencies and the Company has established a foreign currency hedging program,
utilizing foreign currency forward exchange contracts ("forward contracts") to
hedge certain foreign currency transaction exposures. Under this program,
increases or decreases in the Company's foreign currency transactions are
offset by gains and losses on the forward contracts, so as to mitigate the
possibility of foreign currency transaction gains and losses. The Company does
not use forward contracts for trading purposes. All foreign currency
transactions and all outstanding forward contracts are marked-to-market at the
end of the period with unrealized gains and losses included in other income
(expense). As the foreign currency transactions are realized as cash flows
against the maturing forward contracts, the realized gains and losses are
recorded in net income as a component of other income (expense). The

                                       20


Company's ultimate realized gain or loss with respect to currency fluctuations
will depend on the currency exchange rates and other factors in effect as the
contracts mature. The unrealized gain (loss) on the outstanding forward
contracts at February 28, 2001 was immaterial to the Company's consolidated
financial statements.

The Company also hedges the net assets of certain of its international
subsidiaries. The gains or losses on equity hedges are recorded as a component
of accumulated other comprehensive income (loss) in stockholders' equity.

The tables below present the notional amounts (at contract exchange rates) and
the weighted average contractual foreign currency exchange rates for the
Company's outstanding forward contracts and equity hedges as of February 28,
2001. Notional weighted average exchange rates are quoted using market
conventions where the currency is expressed in currency units per U.S. dollar,
except for Australia, New Zealand, and the UK. All of these forward contracts
and equity hedges mature in ninety days or less as of February 28, 2001.

Table of Forward Contracts:



                                                                    Notional
                                                       Notional Weighted Average
(in thousands)                                          Amount   Exchange Rate
------------------------------------------------------ -------- ----------------
                                                          
Functional Currency:
  Australian Dollar................................... $  2,164         0.52
  Canadian Dollar.....................................   37,539         1.53
  Danish Krone........................................   15,461         8.21
  Euro................................................   86,346         0.91
  Japanese Yen........................................    3,983       115.35
  Korean Won..........................................    2,950     1,255.00
  New Zealand Dollar..................................      557         0.43
  Norwegian Krone.....................................   10,452         9.09
  Singapore Dollar....................................   18,927         1.73
  Swedish Krona.......................................    5,429         9.91
  Swiss Franc.........................................   46,562         1.68
  Thai Baht...........................................   11,111        42.75
  UK Pound............................................  119,421         1.44
                                                       --------
    Total............................................. $360,902
                                                       ========


Table of Equity Hedges:



                                                                    Notional
                                                       Notional Weighted Average
(in thousands)                                          Amount   Exchange Rate
------------------------------------------------------ -------- ----------------
                                                          
Functional Currency:
  Japanese Yen........................................ $14,460       110.65
  UK Pound............................................  17,456         1.45
                                                       -------
    Total............................................. $31,916
                                                       =======


                                      21


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Shareholder class actions were filed in the United States District Court for
the Northern District of California against the Company and its Chief
Executive Officer on and after March 9, 2001. The class actions are all
brought on behalf of purchasers of the stock of the Company during the period
December 15, 2000 through March 1, 2001. Plaintiffs allege that the defendants
made false and misleading statements about the Company's actual and expected
financial performance and the performance of certain of its applications
products, while the individual defendant was selling Company stock, in
violation of Federal securities laws. Plaintiffs further allege that the
individual defendant sold Company stock while in possession of material non-
public information. The Company believes that it has meritorious defenses
against these actions and intends to vigorously defend them.

A shareholder derivative lawsuit was filed in the Superior Court of the State
of California, County of San Mateo on March 12, 2001. Three similar
shareholder derivative lawsuits were filed in the Court of Chancery in the
State of Delaware in and for New Castle County. The derivative suits were
brought by Company stockholders, allegedly on behalf of the Company, against
all of the Company's directors. The derivative plaintiffs allege that these
directors breached their fiduciary duties to the Company by making or causing
to be made alleged misstatements about the Company's revenue, growth, and the
performance of certain of its applications products while certain officers and
directors sold Company stock and by allowing the Company to be sued in the
shareholder class actions. The derivative plaintiffs seek compensatory and
other damages, disgorgement of compensation received, and a declaration that
the defendants breached their fiduciary duties. The Company has not yet
responded to these complaints.

Shareholder class actions were filed in the Superior Court of the State of
California, County of San Mateo against the Company and its Chief Financial
Officer and former President and Chief Operating Officer on and after December
18, 1997. The class actions were brought on behalf of purchasers of the stock
of the Company during the period April 29, 1997 through December 9, 1997.
Plaintiffs allege that the defendants made false and misleading statements
about the Company's actual and expected financial performance, while selling
Company stock, in violation of state securities laws. Plaintiffs further
allege that the individual defendants sold Company stock while in possession
of material non-public information. Discovery is ongoing in these actions. The
Company believes that it has meritorious defenses to these actions and is
vigorously defending them.

A related shareholder derivative lawsuit was filed in the Superior Court of
the State of California, County of San Mateo on November 17, 1998. The
derivative suit was brought by Company stockholders, allegedly on behalf of
the Company, against certain of the Company's current and former officers and
directors. The derivative plaintiffs allege that these officers and directors
breached their fiduciary duties to the Company by making or causing to be made
alleged misstatements about the Company's revenue, growth, and financial
status while certain officers and directors sold Company stock and by allowing
the Company to be sued in the shareholder class actions. The derivative
plaintiffs seek compensatory and other damages, disgorgement of compensation
received and temporary and permanent injunctions requiring the defendants to
relinquish their directorships. On January 15, 1999, the Court entered a
stipulation and order staying the action until further notice.

The Company filed petitions with the United States Tax Court on July 29, 1998,
challenging notices of deficiency issued by the Commissioner of Internal
Revenue that disallowed certain foreign sales corporation commission expense
deductions taken by the Company in its 1988 through 1991 tax years and
assessed additional taxes for those years in excess of $20 million, plus
interest. In a separate action filed by Microsoft Corporation, the Tax Court
ruled on September 15, 2000, in favor of the Commissioner of Internal Revenue
on the same legal issue presented in the Company's case. If allowed to stand
and if followed by the Tax Court in the Company's case, the Microsoft ruling
may be dispositive of that issue in the Company's case and could result in
additional Federal and State taxes up to $130 million, plus interest accruing
at applicable Federal and State rates, for the tax years at issue in the case
and for the Company's subsequent tax filings. The Company filed a motion
requesting the

                                      22


Tax Court to certify the controlling legal issue in its case for immediate
appeal to the Ninth Circuit Court of Appeals. Thereafter, the Company's case
was reassigned to the judge presiding in the Microsoft action and the Tax
Court issued an order staying the Company's case until a final adjudication of
the same legal issue in the Microsoft action. The Company intends to defend
its position vigorously and does not believe that the final outcome will have
a material adverse effect on its consolidated financial position, results of
operations or cash flows.

The Company is currently party to various legal proceedings and claims, either
asserted or unasserted, which arise in the ordinary course of business. While
the outcome of these claims cannot be predicted with certainty, the Company
does not believe that the outcome of any of these legal matters will have a
material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

  None

(b) Reports on Form 8-K

  None

                                      23


                                  SIGNATURES

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

                                          ORACLE CORPORATION

Dated: April 12, 2001                         /s/ Jeffrey O. Henley
                                          By:
                                             ----------------------------------
                                             Jeffrey O. Henley
                                             Executive Vice President and
                                             Chief Financial Officer

Dated: April 12, 2001                         /s/ Jennifer L. Minton
                                          By:
                                             ----------------------------------
                                             Jennifer L. Minton
                                             Senior Vice President and
                                              Corporate Controller

                                      24