If you're using oracle 11g then you can use PIVOT like this:
select YR, QTR, USER_CODE, "1_MO_PCT" MO1_PCT, "2_MO_PCT" MO2_PCT, "3_MO_PCT" MO3_PCT ,
case when "1_MO_PCT" >= 85 and "2_MO_PCT" >= 85 and "2_MO_PCT" >= 85 then 7000 end INC,
user updated_by, sysdate updated_on
from (
select m1.yr, m1.mo, m1.qtr, m1.user_code, m1.mo_perf, m2.qtr_perf
from myview1 m1 join myview2 m2 on m1.yr=m2.yr
and m1.qtr = m2.qtr and m1.user_code = m2.user_code )t
pivot(
max(mo_perf) MO_PCT for mo in (1,2,3)
)