Description
Please review the presentation on Financial Modeling and Forecasting. Please review the Microsoft Corporation Case Study (Financial Statement) and Submit a paper explaining the components of the spreadsheet and the findings. What is your financial recommendation for forecasting regarding future profits, liabilities, assets, a deficient, etc
Find attached excel spread sheet and a pdf document
Financial Modeling & Forecasting
Jason MacMorran
www.pncpa.com
Presentation Outline
I. Introduction and Learning Objectives
II. Definitions and Standards Overview
III. Uses for Financial Models
IV. Basics of Financial Modeling
V. Basics of Financial Analysis
VI. Sensitivity and Scenario Analysis
VII. Conclusion
Learning Objectives
Understand accounting standards related to prospective
information.
Discuss uses and applications for financial models, including
uses as decision making tools.
Understand basic design and creation of a financial model.
Understand uses for financial analysis and sensitivity analysis.
Definitions and Standards
Overview
Definitions and Standards Overview
The words projection, forecast, pro forma, model, etc., are
often used interchangeably relative to prospective
information.
In an accounting context, they have different meanings.
Generally speaking, the projection, forecast, pro forma or
budget will be the ‘output’, and the financial model will
include the ‘inputs’ and ‘output’.
This section is not intended to be authoritative or a detailed
look at standards, but a general overview of what to look for
and where to find it!
Key Accounting Terms
Forecast – presents an entity’s expected financial position,
results of operations, and cash flows, based on responsible
party’s assumptions reflecting conditions it expects to exist
and actions it expects to take.
Projection – presents an entity’s financial position, results of
operations, and cash flows, based on one or more
hypothetical (what ifs) assumptions provided by a
responsible party.
Hypothetical Assumption – an assumption used to present a
condition or course of action that is not necessarily expected
to occur, but is consistent with the purpose of the projection
(i.e. expansion scenario).
Key Accounting Terms
Financial Analysis – practitioner develops assumptions,
analyzes results, and recommends a course of action.
Partial Presentation – a presentation of prospective financial
information that excludes one or more of the items required
for prospective financial statements.
Responsible Party – person or persons responsible for
assumptions underlying the prospective financial statements.
Types of Presentations
Prospective Information
Prospective Financial Statements
Forecast
Projection
Prospective, but not Financial Statements
Partial presentations
Financial analyses
Not Prospective Information
Pro forma, based on historical amounts
Expired budgets
Uses of Prospective Information
General Use – use by persons with whom the responsible
party is not directly negotiating, for example:
Offering of debt or equity securities under SEC
regulations.
Offering of tax-exempt bonds.
Limited Use – use only by the entity with whom the
responsibly party is negotiating, for example:
Private placement.
Negotiating bank financing.
Merger negotiations.
Internal Use – solely for use by the responsible party.
Uses of Prospective Information
Type of Prospective
Presentation
Appropriate Uses
General Use
Limited Use
Internal Use
Forecast
Yes
Yes
Yes
Projection
No
Yes
Yes
Partial Presentation
No
Yes
Yes
Financial Analysis
No
Yes
Yes
Types of Engagements
Third-party Use:
Special disclaimer on current year budgets – practitioners
may not be required to apply any procedures if they make
certain disclaimers.
Compilation – assembling prospective statements in
conformity with presentation guidelines and issuing
report.
Agreed-upon procedures – varies by engagement, and
can be very limited or quite extensive.
Examination – evaluating assumptions and presentation
of financial information and issuing report.
Internal Use:
Assembly – no type of assurance, does not require report.
Independence
Independence is required in examination and agreed-upon
procedures engagements, but not in compilation or internal
use engagements because no assurance is expressed.
Exceptions
Litigation and valuation projects often have exceptions to
procedure and presentation rules, so long as they are
properly disclaimed.
Key Finance Terms
Net Present Value – present value of expected future cash
flows minus initial investment.
Internal Rate of Return – discount rate at which investment
has zero net present value.
Resources
Accounting
AICPA Attestation Standards
AICPA Guide for Prospective Financial Information
AICPA Practice Aid 06-2 Preparing Financial Models
PPC’s Guide to Forecasts and Projections
Finance
Brealey & Myers Principles of Corporate Finance
Uses for Financial Models
Background
Financial models should tell a story.
What is the business going to do?
How is it going to do it?
How is it reflected in the financials?
Financial models capture the future operating, investing and
financing activities that determine future profitability,
financial position, and risk.
Financial models should be comprehensive, internally
consistent, and externally reasonable.
Background
Financial models can integrate elements of accounting,
finance, economics, corporate psychology, and business
philosophy.
Accounting based models – compilations for investors /
creditors.
Finance / economics based models – decision making (net
present value, internal rate of return, etc.).
Psychology / Philosophy – In a ‘decision making’ model, how
will competitors react to your planned actions? Does the plan
involve risks you know you’re unwilling to take?
Uses for Financial Models
Financing (debt or equity)
Merger / Acquisition
Buy vs. Lease
Lost Profits
Valuation
Business Interruption
Budgeting
Litigation Support
Business Plans
Start-ups
Strategic Plans
Contraction / Closure
Expansion
Financial Models in Everyday Life
A ‘financial model’ does not have to be complex!
Simple situations call for simple financial models:
Buy vs. lease of vehicle
Impact of change in interest rate on borrowing
Payback period on an investment
Complex situations call for complex financial models:
Merger and acquisition pro-forma and future cost savings
Entering new markets / launching new products
Litigation
Basics of Financial Modeling
Basics of Financial Modeling
Define the need
Basic organization
Sample construction
Other layout considerations
Define the Need
What is the desired goal of the financial model?
Launching a new product? Integrating a potential
acquisition? Refinancing debt?
Who is the expected user?
Management? Investors? Bankers?
What is the expected use?
Internal? External?
The above issues will govern the sophistication and reporting
requirements of a financial model.
Define the Need
Presentation / engagement will depend on purpose and
audience.
May require complete financial statements over a defined time
period.
May require limited information over a defined time period.
May require ‘one-time’ sources and uses of funds.
Complete Financial Statements
Most difficult and time consuming to prepare, but also most
instructive to user:
Balance Sheet – measures future liquidity and leverage
Income Statement – measures future operating results
Statement of Cash Flows – outlines future cash needs for
growth (investment and borrowing) and returns to
investors
Collectively, complete financial statements can help measure
return on investment and potential risks.
Limited Information
Most common, including:
Prepare a twelve month budget
Six months of start-up expenses
Amortize a loan over five years
Do not necessarily have to be financial statements!
Sources and Uses of Funds
SOURCES AND USES
Where is money coming
from (bank debt, equity,
etc).
What is it going to be
spent on (equipment,
refinance, operating costs,
etc).
Often seen in refinancing
and bond offerings.
Sources
Cash on Hand
Bank Revolver
Senior Bank Note
Subordinated Bank Note
Owner Contribution
New Equity
Total Sources
Uses
Purchase new equipment
Operating costs
Office manager
Refinance Existing Debt
Working Capital
Cash
Total Uses
Contribution Cap %
$
$
$
$
500
0.6%
0
0.0%
20,000 23.4%
5,000
5.8%
10,000 11.7%
50,000 58.5%
85,500 100.0%
10,000 11.7%
25,000 29.2%
40,000 46.8%
0
0.0%
10,000 11.7%
500
0.6%
85,500 100.0%
Time Period
Generally, time period should match the business life cycle.
5 year projection for a 20 year real estate deal may not be
helpful.
20 year projection in a rapidly changing industry may not
be relevant.
How to handle changes in the economy?
For litigation or damage oriented models, time period should
correspond to period of damage.
Basic Organization
Most financial models include the following basic elements:
Identification of the problem to be solved (buy vs. lease,
expansion, new location, etc.)
Key assumptions (sales growth, margins, capital
expenditures, impact of competitors, etc.)
Output / results (financial statements, net present value,
go / no go decision, etc.)
Sample Construction
Problem – Client / Employer wants to expand an existing
product into a new geographic market (new location).
Which question is better:
Will the project be profitable?
Will the project provide an adequate return on investment?
Accounting based financial statements will show profitability.
Net present value / internal rate of return analysis will show
return on investment.
Sample Construction – Scope
‘Problem’ and expected use/users will define scope of financial
model.
In the case of expansion / new location, the following factors
should be considered:
Will be a long-term project
Will likely require significant investment (equity and /or
debt)
Will likely require consideration of competitor reactions
Based on this ‘problem’ and expected use/users, output should
be complete presentation over a long-term, with consideration
of ‘return’ on the investment.
Sample Construction – Assumptions
What are key assumptions?
Will vary by client and industry
May be impacted by current economic environment in
short-term
Critical points:
Assumptions should be defined separately (i.e. a separate
‘tab’ in Excel workbook); often referred to as ‘projection
drivers’
Assumptions should be reasonable and logical
Assumptions should be supported by historical trends,
industry trends, economic data, or other data (will discuss
later)
Bad assumptions = bad decisions!
Sample Construction – Assumptions
Sample Company
Projection Assumptions
Growth Rates
Line Item
Year 1
Year 2
Revenues
Salaries
Benefits
Supplies
Licenses
Utilities
Repairs and maintenance
Insurance
Telephone
Management fees
Miscellaneous
Year 3
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Year 4
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Year 5
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Terminal
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Accounts Receivable
Year 1
70
5.21
Assumed days outstanding
Accounts receivable turnover
Projected Net Sales
Projected accounts receivable
$
$
953,135
182,793
Year 2
70
5.21
$
$
1,000,792
191,933
Year 3
70
5.21
$
$
1,050,831
201,529
Year 4
70
5.21
$
$
1,103,373
211,606
Year 5
70
5.21
$
$
1,158,542
222,186
Terminal
70
5.21
$ 1,216,469
$
233,295
Accounts Payable
Year 1
Assumed days outstanding
Accounts payable turnover
Projected Operating Expenses, less Int & Depr
Projected accounts payable
Year 2
14
26.07
$
$
718,244
27,549
Year 3
14
26.07
$
$
751,156
28,811
Year 4
14
26.07
$
$
785,714
30,137
Year 5
14
26.07
$
$
822,000
31,529
Terminal
14
26.07
$
$
860,100
32,990
14
26.07
$
$
900,105
34,525
Sample Construction – Income Statement
Easiest place to start:
Core assumptions relate to operations (growth rates,
margins, etc.)
Operations not ‘dependent’ on balance sheet or cash flows
When appropriate, separate fixed and variable costs.
If model is very detailed, consider separate worksheets for
departments, revenues, cost of revenues, operating expenses,
etc.
Separating the model into smaller parts helps to catch errors!
Sample Construction – Income Statement
Sample Company
Projected Income Statements
Year 1
Revenues
$
953,135
Year 2
$
1,000,792
Year 3
$
1,050,831
Year 4
$
1,103,373
Year 5
$
1,158,542
Terminal
$
1,216,469
Operating Expenses
Salaries
286,043
300,345
315,362
331,131
347,687
Benefits
42,906
45,051
47,304
49,669
52,153
54,760
Supplies
187,585
196,964
206,812
217,153
228,011
239,411
Licenses
Lease
365,071
8,000
8,400
8,820
9,261
9,724
10,210
60,000
60,000
60,000
60,000
60,000
60,000
Utilities
12,000
12,600
13,230
13,892
14,586
15,315
Repairs and maintenance
59,710
62,696
65,830
69,122
72,578
76,207
Insurance
28,000
29,400
30,870
32,414
34,034
35,736
Telephone
3,000
3,150
3,308
3,473
3,647
3,829
Interest
3,375
2,758
2,113
1,440
736
30,000
31,500
33,075
34,729
36,465
38,288
1,000
1,050
1,103
1,158
1,216
1,276
140,533
140,533
140,533
150,533
150,533
862,152
894,447
928,360
973,972
1,011,368
900,105
90,983
106,344
122,471
129,400
147,173
316,364
(22,746)
(26,586)
(30,618)
(32,350)
(36,793)
(79,091)
Management fees
Miscellaneous
Depreciation
Total Operating Expenses
Operating Income
Less: Provision for Income Taxes
Net Income
$
68,237
$
79,758
$
91,853
$
97,050
$
110,380
–
–
$
237,273
Sample Construction – Balance Sheet
Often more difficult to model, mostly because cash balances
are ‘iterative’ (turn on Excel feature).
Working capital (receivables, inventory, payables) projected
from assumptions, such as days outstanding / turnover ratios.
Capital expenditures need to support expected level of
operations.
Financing (debt / equity) will depend on capital needs, working
capital requirements, etc.
Retained earnings will roll from net income.
Sample Construction – Balance Sheet
Sample Company
Projected Balance Sheets
Year 1
ASSETS
Current Assets
Cash
Accounts receivable
Total Current Assets
$
Fixed Assets
Fixed assets, at cost
Accumulated depreciation
Total Fixed Assets, net
Total Assets
366,367
182,793
549,160
Year 2
$
564,455
191,933
756,387
Year 3
$
773,599
201,529
975,128
Year 4
$
946,853
211,606
1,158,459
Year 5
$
1,182,298
222,186
1,404,484
Terminal
$
1,409,996
233,295
1,643,292
748,450
(140,533)
607,917
748,450
(281,066)
467,384
748,450
(421,599)
326,851
798,450
(572,132)
226,318
798,450
(722,665)
75,785
798,450
(722,665)
75,785
1,157,077
1,223,771
1,301,979
1,384,777
1,480,269
1,719,077
27,549
61,291
88,840
28,811
46,964
75,776
30,137
31,993
62,130
31,529
16,349
47,877
32,990
(0)
32,990
34,525
(0)
34,525
1,000,000
68,237
1,068,237
1,000,000
147,996
1,147,996
1,000,000
239,849
1,239,849
1,000,000
336,899
1,336,899
1,000,000
447,279
1,447,279
1,000,000
684,552
1,684,552
LIABILITIES & EQUITY
Liabilities
Accounts payable
Notes payable
Total Liabilities
Equity
Capital contributions
Retained earnings
Total Equity
Total Liabilities and Equity
$
1,157,077
$
1,223,771
$
1,301,979
$
1,384,777
$
1,480,269
$
1,719,077
Sample Construction – Cash Flow
Connect the parts from the Balance Sheet and Income
Statement.
Consider a ‘T=0’ time period for initial investments (capital
expenditure, debt financing, equity financing, etc).
Is there a minimum ‘days cash on hand’ to start with? This
will influence financing requirements.
Cash balances are ‘iterative’ (turn on Excel feature).
Sample Construction – Cash Flow
Sample Company
Projected Cash Flows
T=0
Cash Flows from Operating Activities
Net Income
$
Year 1
–
$
Year 2
68,237
$
Year 3
79,758
$
Year 4
91,853
$
Year 5
97,050
$
Terminal
110,380
$
237,273
Adjust for non-cash items
Depreciation
–
140,533
140,533
140,533
150,533
150,533
–
(174,089)
(8,704)
(9,140)
(9,597)
(10,076)
(10,580)
26,347
1,202
1,262
1,326
1,392
1,461
1,534
201,268
212,414
224,115
238,899
251,794
227,698
Adjust for changes in:
(Increase) decrease in accounts receivable
Increase (decrease) in accounts payable
Net Cash Provided (Used) by Operations
(147,742)
(11,109)
Cash Flows from Investing Activities
Capital expenditures
Net Cash Used in Investing
(748,450)
–
–
–
(50,000)
–
–
(748,450)
–
–
–
(50,000)
–
–
75,000
–
–
–
–
–
Cash Flows from Financing Activities
Loan proceeds
Member contributions
1,000,000
Principal payments
Net Cash Provided (Used) by Financing
Net Increase in Cash
Cash, Beginning of Year
Cash, End of Year
–
–
–
–
–
–
(13,709)
(14,326)
(14,971)
(15,645)
(16,349)
–
1,075,000
(13,709)
(14,326)
(14,971)
(15,645)
(16,349)
–
178,808
187,559
198,088
209,144
173,254
235,445
227,698
178,808
366,367
564,455
773,599
946,853
1,182,298
$
–
–
178,808
$
366,367
$
564,455
$
773,599
$
946,853
$
1,182,298
$
1,409,996
Sample Construction – Iterative Calculations
Sample Construction – Cash Flows
Most overlooked in financial modeling, but most important.
Statement of Cash Flows shows:
Timing of capital expenditures for growth
Additional borrowing needs
Ability to provide return on investment
Cash flows available to investors (free cash flows) is a core
element in financial decision making, and is essential to a net
present value analysis or an internal rate of return analysis.
Sample Construction – Decision Making
Sample Company
Decision Making
T=0
Year 1
$
EBIT
Less: tax on EBIT
After-tax EBIT
N/A
Add: depreciation
Less: capital expenditures
$
Present Value
Required Rate of Return
$
(1,075,000)
(1,075,000)
$
129,942
20%
Year 3
109,103
$
Year 4
124,584
$
130,840
Year 5
$
Terminal
147,909
$
316,364
(23,590)
(27,276)
(31,146)
(32,710)
(36,977)
(79,091)
70,769
81,827
93,438
98,130
110,932
237,273
140,533
140,533
140,533
150,533
150,533
–
(7,502)
Free Cash Flows to Debt and Equity
Net Present Value
94,358
–
Less: working capital requirements
Free Cash Flows to Debt and Equity
Year 2
–
(7,877)
(50,000)
(8,271)
–
–
(8,685)
–
(9,119)
(9,575)
$
203,799
$
214,483
$
225,700
$
189,978
$
252,346
$
227,698
$
203,799
$
214,483
$
225,700
$
189,978
$
252,346
$
1,138,490
186,042
163,162
143,080
100,362
111,091
501,203
Other Layout Consideration
Have a summary tab that provides the ‘answer’ concisely.
Have designated ‘input only’ tabs and clearly delineate
variables.
Link and cross-link worksheets
Use Excel formulas:
If/then
Average and median
Lookup
Forecast
Trend
Basics of Financial Analysis
Why Perform Financial Analysis?
Projection assumptions can be supported by historical financial
analysis.
Basic financial analysis tools include:
Common size financial statements
Ratio analysis
Trend analysis
Industry comparatives
Financial analysis tools and techniques can:
Isolate trends (positive and negative).
Help identify strengths and weaknesses.
Common Size Financial Statements
Income Statement line items as a percentage of revenues:
Identify changes in cost of sales, gross profits, and
operating expense margins over time.
Balance Sheet line items as a percentage of total assets:
Identify changes in (and composition of) current assets and
liabilities, fixed assets, debt, and other balances sheet
items over time.
Are margins and compositions expected to stay the same in
the future?
Why have margins changed? Were the changes expected?
Ratio Analysis
Ratio analysis can assist with understanding and projecting:
Growth
Cost control
Asset turnover
Profitability
Risk
How these ratios have changed (or not) over time.
How do ratios compare to benchmarks?
Integra Information (www.integrainfo.com)
RMA Statement Studies (www.statementstudies.org)
Trade associations
Ratio Analysis
Growth Ratios
Growth in revenues
Growth in expenses
Growth in earnings
Cost Control Ratios
Often common size income statement / margins
Turnover Ratios
Receivable turnover
Inventory turnover
Payable turnover
Total asset turnover
Ratio Analysis – Example
Sample Company
Projection Assumptions
Growth Rates
Line Item
Year 1
Year 2
Revenues
Salaries
Benefits
Supplies
Licenses
Utilities
Repairs and maintenance
Insurance
Telephone
Management fees
Miscellaneous
Year 3
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Year 4
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Year 5
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Terminal
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
5%
Accounts Receivable
Year 1
70
5.21
Assumed days outstanding
Accounts receivable turnover
Projected Net Sales
Projected accounts receivable
$
$
953,135
182,793
Year 2
70
5.21
$
$
1,000,792
191,933
Year 3
70
5.21
$
$
1,050,831
201,529
Year 4
70
5.21
$
$
1,103,373
211,606
Year 5
70
5.21
$
$
1,158,542
222,186
Terminal
70
5.21
$ 1,216,469
$
233,295
Accounts Payable
Year 1
Assumed days outstanding
Accounts payable turnover
Projected Operating Expenses, less Int & Depr
Projected accounts payable
Year 2
14
26.07
$
$
718,244
27,549
Year 3
14
26.07
$
$
751,156
28,811
Year 4
14
26.07
$
$
785,714
30,137
Year 5
14
26.07
$
$
822,000
31,529
Terminal
14
26.07
$
$
860,100
32,990
14
26.07
$
$
900,105
34,525
Ratio Analysis
Profitability Ratios
Return on Assets (ROA)
Return on Equity (ROE)
Return on Investment (ROI)
Risk Ratios
Leverage
Interest coverage
Current ratio
Financial Analysis
Beware the pitfalls:
Ratios can be complicated by accounting methods:
How do comparable companies report inventory,
depreciation, etc.
GAAP allows for different treatments, and different
accounting treatments can skew ratio output.
Ratios are ‘industry dependent’:
CPA firms use different ratios than manufacturing firms
Be cautious of ‘rules of thumb’
Financial analysis tools are diagnostic; they do a better job of raising
questions than providing answers!
Sensitivity and Scenario
Analysis
Sensitivity Analysis
Sensitivity Analysis
How does the projection respond to different ‘shocks’?
Important to know which variables and assumptions are most
influential in your model.
Scenario Analysis
Run multiple scenarios:
Measure outcomes of events with different influences.
Often used to see best case and worst case.
Used to establish a range of cash flows for the company, but
does not necessarily increase confidence in ‘decision’.
Monte Carlo Analysis
Monte Carlo analysis:
Measures outcomes of events with random influences and
assigns probabilities based on frequency.
Can run tens of thousands of potential scenarios in seconds.
Does not give you ‘THE’ answer, but gives confidence in the
range of answers for a set of variables.
Conclusion
Parting Thoughts
Be sure to define the problem and expected use.
Support the assumptions.
Consider alternative scenarios.
Provide the right output for the expected user.
Questions
Contact Information
Jason MacMorran, CPA/ABV, CVA, CFF, MS
Postlethwaite & Netterville, APAC
8550 United Plaza Blvd., Suite 1001
Baton Rouge, LA 70809
225.408.4766
jmacmorran@pncpa.com
Microsoft Financial Data – FY12 Q2
This file contains downloadable content that corresponds to Microsoft’s Investor Relations portal
at http://www.microsoft.com/investor. Click a link below to navigate to that section of the
workbook. Each sheet contains a link back to this main page.
Current Financial Statements
Trended Historical Financial Statements
Income Statement
Balance Sheet
Cash Flow
Segment Revenue & Operating Income
Income Statement
Financial Operating Segment History
Unearned Revenue
Yearly Income Statements
MICROSOFT CORPORATION
INCOME STATEMENTS
(In millions, except per share amounts)
Three Months Ended
December 31,
2011
Revenue
$
Six Months Ended
December 31,
2010
20,885
$ 19,953
Cost of revenue
5,638
Research and development
2,371
Sales and marketing
General and administrative
Total operating expenses
2011
$
2010
38,257
$ 36,148
4,833
9,415
7,972
2,185
4,700
4,381
3,762
3,825
6,662
6,631
1,120
945
2,283
1,883
12,891
11,788
23,060
20,867
7,994
8,165
15,197
15,281
245
332
348
446
8,239
8,497
15,545
15,727
Operating expenses:
Operating income
Other income
Income before income taxes
Provision for income taxes
3,183
3,683
$
6,624
$
6,634
$
12,362
$ 12,044
Basic
$
0.79
$
0.78
$
1.47
$
1.41
Diluted
$
0.78
$
0.77
$
1.46
$
1.39
Net income
1,615
1,863
Earnings per share:
Weighted average shares outstanding:
Basic
Diluted
Cash dividends declared per common
share
$
8,402
8,497
8,397
8,555
8,465
8,570
8,489
8,646
0.20
$
0.16
$
0.40
$
0.32
Back to Main
MICROSOFT CORPORATION
BALANCE SHEETS
(In millions)
June 30,
2011(1)
December 31,
2011
Assets
Current assets:
Cash and cash equivalents
Short-term investments (including securities loaned
of $831 and $1,181)
Total cash, cash equivalents, and short-term
investments
Accounts receivable, net of allowance for doubtful
accounts of $321 and $333
$
10,610
$
9,610
41,126
43,162
51,736
52,772
13,643
14,987
Inventories
1,351
1,372
Deferred income taxes
2,169
2,467
Other
Total current assets
Property and equipment, net of accumulated depreciation
of $10,546 and $9,829
Equity and other investments
Goodwill
3,614
3,320
72,513
74,918
8,010
8,162
7,550
10,865
19,670
12,581
Intangible assets, net
2,581
744
Other long-term assets
1,919
1,434
Total assets
$
112,243
$
108,704
$
3,884
$
4,197
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued compensation
2,677
3,575
921
580
13,985
15,722
849
1,208
3,057
3,492
25,373
28,774
11,932
11,921
Long-term unearned revenue
1,349
1,398
Deferred income taxes
1,082
1,456
Other long-term liabilities
8,386
8,072
48,122
51,621
63,902
63,415
Income taxes
Short-term unearned revenue
Securities lending payable
Other
Total current liabilities
Long-term debt
Total liabilities
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized
24,000; outstanding 8,382 and 8,376
Retained earnings (deficit), including accumulated other
comprehensive income of $826 and $1,863
Total stockholders’ equity
219
64,121
(6,332)
57,083
Total liabilities and stockholders’ equity
(1)
Derived from audited financial statements.
$
112,243
$
108,704
Back to Main
MICROSOFT CORPORATION
CASH FLOW STATEMENTS
(In millions)
Three Months Ended
December 31,
2011
Six Months Ended
December 31,
2010
2011
2010
Operations
Net income
Adjustments to reconcile net income
to net cash from operations:
Depreciation, amortization, and
other
Stock-based compensation
expense
Net recognized gains on
investments and derivatives
Excess tax benefits from
stock-based compensation
Deferred income taxes
Deferral of unearned revenue
Recognition of unearned revenue
Changes in operating assets and
liabilities:
Accounts receivable
$
6,624
$
6,634
$
12,362
$ 12,044
678
663
1,404
1,357
575
553
1,133
1,081
(112)
(226)
(4)
14
(4)
(117)
(142)
(74)
416
(255)
(9)
(265)
7,544
6,834
13,683
12,715
(8,057)
(7,301)
(15,710)
(14,163)
(3,652)
(3,270)
1,081
404
Inventories
891
380
(29)
(88)
Other current assets
605
(77)
865
131
Other long-term assets
30
118
(45)
Accounts payable
176
216
(266)
(184)
Other current liabilities
394
(500)
(599)
(1,411)
Other long-term liabilities
156
283
276
843
5,862
4,186
14,355
12,380
Net cash from operations
Financing
Short-term debt repayments,
maturities of 90 days or less, net
Proceeds from issuance of debt,
maturities longer than 90 days
Repayments of debt, maturities
longer than 90 days
Common stock issued
0
(1,000)
0
0
0
0
0
0
0
208
660
544
180
(186)
4,721
(814)
837
Common stock repurchased
(1,042)
(5,052)
(2,976)
(9,451)
Common stock cash dividends paid
Excess tax benefits from
stock-based compensation
(1,683)
(1,363)
(3,024)
(2,481)
Other
Net cash used in financing
4
4
74
0
0
0
9
(25)
(2,513)
(6,751)
(5,382)
(7,390)
(498)
(491)
(934)
(1,055)
(8,627)
(69)
(9,502)
(69)
Investing
Additions to property and equipment
Acquisition of companies, net of
cash acquired, and purchases of
intangible and other assets
Purchases of investments
(10,047)
(5,896)
(21,346)
(13,313)
Maturities of investments
6,061
1,836
8,886
2,706
Sales of investments
7,835
2,603
15,371
4,030
Securities lending payable
Net cash used in investing
Effect of exchange rates on cash
and cash equivalents
Net change in cash and cash
equivalents
Cash and cash equivalents,
beginning of period
Cash and cash equivalents, end of
period
(292)
447
1,174
(1,570)
(7,883)
(52)
(3)
(90)
(2,271)
(4,138)
1,000
(1,482)
8,161
9,610
5,505
12,881
$
(358)
(5,568)
10,610
$
4,023
$
10,610
(6,527)
55
$
4,023
Back to Main
MICROSOFT CORPORATION
SEGMENT REVENUE AND OPERATING INCOME (LOSS)
(In millions)
Three Months Ended
December 31,
2011
Six Months Ended
December 31,
2010
2011
2010
Revenue
Windows & Windows Live Division
$
Server and Tools
4,736
$
4,772
Online Services Division
5,056
$
4,288
9,604
$
9,022
9,843
8,149
784
713
1,425
1,260
Microsoft Business Division
6,279
6,110
11,886
11,312
Entertainment and Devices Division
4,237
3,698
6,198
5,493
Unallocated and other
Consolidated
$
77
88
20,885
$ 19,953
$
122
91
38,257
$ 36,148
Operating income (loss)
Windows & Windows Live Division
$
Server and Tools
$
1,996
Online Services Division
Entertainment and Devices Division
Corporate-level activity
$
6,101
3,593
(559)
(971)
$
6,502
3,248
(1,132)
4,152
4,087
7,839
7,570
528
666
877
1,050
(1,074)
$
3,214
1,711
(458)
Microsoft Business Division
Consolidated
2,850
7,994
(954)
$
8,165
(2,242)
$
15,197
(1,957)
$ 15,281
Back to Main
Microsoft Corporation
Quarterly Income Statements
(In millions, except earnings per share)
Revenue
Operating expenses:
Cost of revenue
Research and development 4
Sales and marketing
General and administrative 5
Other expenses (income)
Total operating expenses
Operating income
Other income (expense)
Noncontinuing items
Income before income taxes
Provision for income taxes
Income before accounting change
Cumulative effect of accounting change
Net income
Preferred stock dividends
Net income available for common shareholders
Basic earnings per share before accounting change
Diluted earnings per share before accounting change
Basic earnings per share
Diluted earnings per share
1
2
3
4
5
Back to Main
Q1-921
Q2-921
Q3-921
Q4-921
Q1-931
Q2-931
Q3-931
Q4-931
$
584 $
686 $
686 $
821 $
824 $
945 $
969 $ 1,048
$
$
$
$
$
$
126
74
160
21
3
384
200
12
0
212
68
144
0
144
0
144
0.02
0.02
0.02
0.02
$
$
$
$
$
$
139
86
193
22
2
442
244
14
0
258
83
175
0
175
0
175
0.02
0.02
0.02
0.02
$
$
$
$
$
$
139
90
184
22
3
438
248
14
0
262
83
179
0
179
0
179
0.02
0.02
0.02
0.02
$
$
$
$
$
$
177
102
221
25
3
528
293
16
0
309
99
210
0
210
0
210
0.02
0.02
0.02
0.02
$
$
$
$
$
$
168
105
237
25
1
536
288
19
0
307
98
209
0
209
0
209
0.02
0.02
0.02
0.02
$
$
$
$
$
$
191
111
288
29
(2)
617
328
19
0
347
111
236
0
236
0
236
0.03
0.02
0.03
0.02
$
$
$
$
$
$
202
116
283
30
2
633
336
21
0
357
114
243
0
243
0
243
0.03
0.02
0.03
0.02
$
$
$
$
$
$
224
138
278
35
6
681
367
23
0
390
125
265
0
265
0
265
0.03
0.03
0.03
0.03
Not restated for adoption of the current accounting guidance on stock-based compensation and no recast of gains (losses) on foreign currency remeasurement
Recast of gains (losses) on foreign currency remeasurement
No recast of gains (losses) on foreign currency remeasurement
Includes expensed acquired in-process technology
Includes employee severance
Q1-941
Q2-941
Q3-941
Q4-941
Q1-951
Q2-951
Q3-951
Q4-951
Q1-961
Q2-961
Q3-961
Q4-961
Q1-971
Q2-971
$
996 $ 1,146 $ 1,261 $ 1,311 $ 1,270 $ 1,516 $ 1,627 $ 1,662 $ 2,085 $ 2,287 $ 2,311 $ 2,367 $ 2,405 $ 2,808
$
$
$
$
$
$
remeasurement
228
134
256
35
4
657
339
23
0
362
123
239
0
239
0
239
0.03
0.02
0.03
0.02
$
$
$
$
$
$
260
150
279
42
2
733
413
25
0
438
149
289
0
289
0
289
0.03
0.03
0.03
0.03
$
$
$
$
$
$
284
156
300
41
4
785
476
26
(120)
382
126
256
0
256
0
256
0.03
0.03
0.03
0.03
$
$
$
$
$
$
305
170
300
48
6
829
482
28
30
540
178
362
0
362
0
362
0.04
0.04
0.04
0.04
$
$
$
$
$
$
284
178
320
51
2
835
435
36
0
471
155
316
0
316
0
316
0.03
0.03
0.03
0.03
$
$
$
$
$
$
331
199
404
62
5
1,001
515
42
0
557
184
373
0
373
0
373
0.04
0.04
0.04
0.04
$
$
$
$
$
$
355
219
436
68
5
1,083
544
48
0
592
196
396
0
396
0
396
0.04
0.04
0.04
0.04
$
$
$
$
$
$
376
264
404
86
4
1,134
528
65
(46)
547
179
368
0
368
0
368
0.04
0.04
0.04
0.04
$
$
$
$
$
$
522
278
514
63
4
1,381
704
66
0
770
271
499
0
499
0
499
0.05
0.05
0.05
0.05
$
$
$
$
$
$
566
305
554
76
(23)
1,478
809
76
0
885
310
575
0
575
0
575
0.06
0.06
0.06
0.06
$
$
$
$
$
$
541
337
572
87
(4)
1,533
778
86
0
864
302
562
0
562
0
562
0.06
0.05
0.06
0.05
$
$
$
$
$
$
516
406
545
90
42
1,599
768
92
0
860
301
559
0
559
0
559
0.06
0.05
0.06
0.05
$
$
$
$
$
$
482
417
518
86
49
1,552
853
92
0
945
331
614
0
614
0
614
0.06
0.06
0.06
0.06
$
$
$
$
$
$
558
449
639
81
46
1,773
1,035
105
0
1,140
399
741
0
741
(1)
740
0.08
0.07
0.08
0.07
Q3-971
Q4-971
Q1-981
Q2-981
Q3-981
Q4-981
Q1-991
Q2-991
Q3-991
Q4-991
Q1-001
Q2-001
Q3-001
Q4-001
$ 3,365 $ 3,358 $ 3,334 $ 3,792 $ 3,984 $ 4,152 $ 4,193 $ 5,195 $ 4,595 $ 5,764 $ 5,384 $ 6,112 $ 5,656 $ 5,804
$
$
$
$
$
$
583
474
639
101
84
1,881
1,484
119
0
1,603
561
1,042
0
1,042
(7)
1,035
0.11
0.10
0.11
0.10
$
$
$
$
$
$
547
523
615
94
80
1,859
1,499
127
0
1,626
569
1,057
0
1,057
(7)
1,050
0.11
0.10
0.11
0.10
$
$
$
$
$
$
534
899
692
95
0
2,220
1,114
88
0
1,202
539
663
0
663
(7)
656
0.07
0.06
0.07
0.06
$
$
$
$
$
$
613
648
764
106
0
2,131
1,661
109
0
1,770
637
1,133
0
1,133
(7)
1,126
0.12
0.11
0.12
0.11
$
$
$
$
$
$
640
611
731
104
0
2,086
1,898
159
0
2,057
720
1,337
0
1,337
(7)
1,330
0.14
0.12
0.14
0.12
$
$
$
$
$
$
673
739
700
128
0
2,240
1,912
176
0
2,088
731
1,357
0
1,357
(7)
1,350
0.14
0.13
0.14
0.13
$
$
$
$
$
$
649
651
685
101
0
2,086
2,107
396
0
2,503
820
1,683
0
1,683
(7)
1,676
0.17
0.15
0.17
0.15
$
$
$
$
$
$
788
715
798
154
0
2,455
2,740
311
0
3,051
1,068
1,983
0
1,983
(7)
1,976
0.20
0.18
0.20
0.18
$
$
$
$
$
$
708
664
842
152
0
2,366
2,229
720
0
2,949
1,032
1,917
0
1,917
(7)
1,910
0.19
0.17
0.19
0.17
$
$
$
$
$
$
669
940
913
308
0
2,830
2,934
454
0
3,388
1,186
2,202
0
2,202
(7)
2,195
0.22
0.20
0.22
0.20
$
$
$
$
$
$
712
813
922
148
0
2,595
2,789
531
0
3,320
1,129
2,191
0
2,191
(7)
2,184
0.21
0.20
0.21
0.20
$
$
$
$
$
$
756
898
1,013
514
0
3,181
2,931
760
0
3,691
1,255
2,436
0
2,436
(6)
2,430
0.24
0.22
0.24
0.22
$
$
$
$
$
$
752
974
1,010
185
0
2,921
2,735
878
0
3,613
1,228
2,385
0
2,385
0
2,385
0.23
0.22
0.23
0.22
$
$
$
$
$
$
782
1,087
1,181
203
0
3,253
2,551
1,100
0
3,651
1,242
2,409
0
2,409
0
2,409
0.23
0.22
0.23
0.22
Q1-011
Q2-011
Q3-011
Q4-011
Q1-023
Q2-023
Q3-023
Q4-023
Q1-033
Q2-033
Q3-033
Q4-033
Q1-043
Q2-043
$ 5,766 $ 6,550 $ 6,403 $ 6,577 $ 6,126 $ 7,741 $ 7,245 $ 7,253 $ 7,746 $ 8,541 $ 7,835 $ 8,065 $ 8,215 $ 10,153
$
$
$
$
$
$
825
956
1,038
170
0
2,989
2,777
1,075
0
3,852
1,271
2,581
(375)
2,206
0
2,206
0.24
0.23
0.21
0.20
$
$
$
$
$
$
864
990
1,290
212
0
3,356
3,194
723
0
3,917
1,293
2,624
0
2,624
0
2,624
0.25
0.24
0.25
0.24
$
$
$
$
$
$
899
1,069
1,198
239
0
3,405
2,998
660
0
3,658
1,207
2,451
0
2,451
0
2,451
0.23
0.22
0.23
0.22
$
$
$
$
$
$
867
1,364
1,359
236
0
3,826
2,751
(2,653)
0
98
33
65
0
65
0
65
0.01
0.01
0.01
0.01
$
$
$
$
$
$
978
1,398
1,457
286
0
4,119
2,007
(1,010)
0
997
319
678
0
678
0
678
0.06
0.06
0.06
0.06
$
$
$
$
$
$
1,691
1,595
1,676
885
0
5,847
1,894
516
0
2,410
771
1,639
0
1,639
0
1,639
0.15
0.15
0.15
0.15
$
$
$
$
$
$
1,567
1,474
1,449
343
0
4,833
2,412
728
0
3,140
1,005
2,135
0
2,135
0
2,135
0.20
0.19
0.20
0.19
$
$
$
$
$
$
1,463
1,832
1,670
329
0
5,294
1,959
(631)
0
1,328
425
903
0
903
0
903
0.08
0.08
0.08
0.08
$
$
$
$
$
$
1,344
1,707
1,415
252
0
4,718
3,028
19
0
3,047
1,006
2,041
0
2,041
0
2,041
0.19
0.19
0.19
0.19
$
$
$
$
$
$
2,137
1,515
2,159
497
0
6,308
2,233
363
0
2,596
731
1,865
0
1,865
0
1,865
0.17
0.17
0.17
0.17
$
$
$
$
$
$
1,274
1,692
1,700
425
0
5,091
2,744
453
0
3,197
1,055
2,142
0
2,142
0
2,142
0.20
0.20
0.20
0.20
$
$
$
$
$
$
1,304
1,681
2,288
1,252
0
6,525
1,540
674
0
2,214
731
1,483
0
1,483
0
1,483
0.14
0.14
0.14
0.14
$
$
$
$
$
$
1,480
1,611
1,505
471
0
5,067
3,148
753
0
3,901
1,287
2,614
0
2,614
0
2,614
0.24
0.24
0.24
0.24
$
$
$
$
$
$
2,344
2,971
2,467
896
0
8,678
1,475
837
0
2,312
763
1,549
0
1,549
0
1,549
0.14
0.14
0.14
0.14
Q3-043
Q4-043
Q1-053
Q2-053
Q3-053
Q4-053
Q1-063
Q2-063
Q3-063
Q4-063
Q1-072
Q2-072
Q3-072
Q4-072
$ 9,175 $ 9,292 $ 9,189 $ 10,818 $ 9,620 $ 10,161 $ 9,741 $ 11,837 $ 10,900 $ 11,804 $ 10,811 $ 12,542 $ 14,398 $ 13,371
$
$
$
$
$
$
1,411
1,538
1,928
3,020
0
7,897
1,278
1,001
0
2,279
964
1,315
0
1,315
0
1,315
0.12
0.12
0.12
0.12
$
$
$
$
$
$
1,481
1,659
2,409
610
0
6,159
3,133
571
0
3,704
1,014
2,690
0
2,690
0
2,690
0.25
0.25
0.25
0.25
$
$
$
$
$
$
1,405
1,530
1,664
1,096
0
5,695
3,494
279
0
3,773
1,245
2,528
0
2,528
0
2,528
0.23
0.23
0.23
0.23
$
$
$
$
$
$
1,875
1,421
2,122
651
0
6,069
4,749
420
0
5,169
1,706
3,463
0
3,463
0
3,463
0.32
0.32
0.32
0.32
$
$
$
$
$
$
1,363
1,482
2,070
1,376
0
6,291
3,329
496
0
3,825
1,262
2,563
0
2,563
0
2,563
0.24
0.23
0.24
0.23
$
$
$
$
$
$
1,388
1,664
2,707
1,413
0
7,172
2,989
872
0
3,861
161
3,700
0
3,700
0
3,700
0.34
0.34
0.34
0.34
$
$
$
$
$
$
1,253
1,515
1,945
982
0
5,695
4,046
506
0
4,552
1,411
3,141
0
3,141
0
3,141
0.29
0.29
0.29
0.29
$
$
$
$
$
$
2,239
1,591
2,689
661
0
7,180
4,657
480
0
5,137
1,484
3,653
0
3,653
0
3,653
0.35
0.34
0.35
0.34
$
$
$
$
$
$
2,028
1,617
2,362
1,005
0
7,012
3,888
427
0
4,315
1,338
2,977
0
2,977
0
2,977
0.29
0.29
0.29
0.29
$
$
$
$
$
$
2,130
1,861
2,822
1,110
0
7,923
3,881
377
0
4,258
1,430
2,828
0
2,828
0
2,828
0.28
0.28
0.28
0.28
$
$
$
$
$
$
1,696
1,786
2,234
664
0
6,380
4,431
610
0
5,041
1,563
3,478
0
3,478
0
3,478
0.35
0.35
0.35
0.35
$
$
$
$
$
$
3,620
1,637
3,038
814
0
9,109
3,433
372
0
3,805
1,179
2,626
0
2,626
0
2,626
0.27
0.26
0.27
0.26
$
$
$
$
$
$
2,140
1,750
2,914
983
0
7,787
6,611
360
0
6,971
2,045
4,926
0
4,926
0
4,926
0.51
0.50
0.51
0.50
$
$
$
$
$
$
3,237
1,948
3,355
868
0
9,408
3,963
321
0
4,284
1,249
3,035
0
3,035
0
3,035
0.32
0.31
0.32
0.31
Q1-082
Q2-082
Q3-082
Q4-082
Q1-09
Q2-09
Q3-09
Q4-09
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
$ 13,762 $ 16,367 $ 14,454 $ 15,837 $ 15,061 $ 16,629 $ 13,648 $ 13,099 $ 12,920 $ 19,022 $ 14,503 $ 16,039 $ 16,195 $ 19,953
$
$
$
$
$
$
2,675
1,837
2,683
718
0
7,913
5,849
367
0
6,216
1,927
4,289
0
4,289
0
4,289
0.46
0.45
0.46
0.45
$
$
$
$
$
$
3,543
1,885
3,420
1,066
0
9,914
6,453
367
0
6,820
2,113
4,707
0
4,707
0
4,707
0.50
0.50
0.50
0.50
$
$
$
$
$
$
2,514
2,035
3,274
2,341
0
10,164
4,290
520
0
4,810
422
4,388
0
4,388
0
4,388
0.47
0.47
0.47
0.47
$
$
$
$
$
$
2,866
2,407
3,883
1,002
0
10,158
5,679
289
0
5,968
1,671
4,297
0
4,297
0
4,297
0.46
0.46
0.46
0.46
$
$
$
$
$
$
2,848
2,283
3,044
887
0
9,062
5,999
(8)
0
5,991
1,618
4,373
0
4,373
0
4,373
0.48
0.48
0.48
0.48
$
$
$
$
$
$
3,907
2,290
3,662
831
0
10,690
5,939
(301)
0
5,638
1,464
4,174
0
4,174
0
4,174
0.47
0.47
0.47
0.47
$
$
$
$
$
$
2,814
2,212
2,981
1,203
0
9,210
4,438
(388)
0
4,050
1,073
2,977
0
2,977
0
2,977
0.33
0.33
0.33
0.33
$
$
$
$
$
$
2,586
2,225
3,192
1,109
0
9,112
3,987
155
0
4,142
1,097
3,045
0
3,045
0
3,045
0.34
0.34
0.34
0.34
$
$
$
$
$
$
2,842
2,065
2,790
741
0
8,438
4,482
283
0
4,765
1,191
3,574
0
3,574
0
3,574
0.40
0.40
0.40
0.40
$
$
$
$
$
$
3,628
2,079
3,619
1,183
0
10,509
8,513
370
0
8,883
2,221
6,662
0
6,662
0
6,662
0.75
0.74
0.75
0.74
$
$
$
$
$
$
2,755
2,220
3,203
1,152
0
9,330
5,173
168
0
5,341
1,335
4,006
0
4,006
0
4,006
0.46
0.45
0.46
0.45
$
$
$
$
$
$
3,170
2,350
3,602
987
0
10,109
5,930
94
0
6,024
1,506
4,518
0
4,518
0
4,518
0.52
0.51
0.52
0.51
$
$
$
$
$
$
3,139
2,196
2,806
938
0
9,079
7,116
114
0
7,230
1,820
5,410
0
5,410
0
5,410
0.63
0.62
0.63
0.62
$
$
$
$
$
$
4,833
2,185
3,825
945
0
11,788
8,165
332
0
8,497
1,863
6,634
0
6,634
0
6,634
0.78
0.77
0.78
0.77
$
$
$
$
$
$
$
Q3-11
16,428 $
Q4-11
17,367 $
Q1-12
Q2-12
17,372 $ 20,885
3,897
2,269
3,393
1,160
0
10,719
5,709
316
0
6,025
793
5,232
0
5,232
0
5,232
0.62
0.61
0.62
0.61
3,708
2,393
3,916
1,179
0
11,196
6,171
148
0
6,319
445
5,874
0
5,874
0
5,874
0.70
0.69
0.70
0.69
3,777
2,329
2,900
1,163
0
10,169
7,203
103
0
7,306
1,568
5,738
0
5,738
0
5,738
0.68
0.68
0.68
0.68
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5,638
2,371
3,762
1,120
0
12,891
7,994
245
0
8,239
1,615
6,624
0
6,624
0
6,624
0.79
0.78
0.79
0.78
Microsoft Corporation
Segment Revenue and Operating Income (Loss)
(In millions)
Revenue
Windows & Windows Live Division
Server and Tools
Online Services Division
Microsoft Business Division
Entertainment and Devices Division
Unallocated and other
Consolidated
Operating Income (Loss)
Windows & Windows Live Division
Server and Tools
Online Services Division
Microsoft Business Division
Entertainment and Devices Division
Corporate-level activity
Consolidated
$
$
$
$
Back to Main
Q1-11
4,787 $
3,861
547
5,202
1,795
3
16,195 $
Q2-11
5,056 $
4,288
713
6,110
3,698
88
19,953 $
Q3-11
4,447 $
4,007
667
5,329
1,935
43
16,428 $
Q4-11
4,743 $
4,524
680
5,873
1,487
60
17,367 $
Fiscal Year
2011
19,033
16,680
2,607
22,514
8,915
194
69,943
Q1-11
3,288 $
1,537
(573)
3,483
384
(1,003)
7,116 $
Q2-11
3,214 $
1,711
(559)
4,087
666
(954)
8,165 $
Q3-11
2,788 $
1,349
(775)
3,308
213
(1,174)
5,709 $
Q4-11
2,904 $
1,684
(744)
3,755
24
(1,452)
6,171 $
Fiscal Year
2011
12,194
6,281
(2,651)
14,633
1,287
(4,583)
27,161
$
$
$
$
Q1-12
Q2-12
4,868 $
4,736
4,250
4,772
641
784
5,607
6,279
1,961
4,237
45
77
17,372 $ 20,885
Q3-12
Q1-12
3,251 $
1,597
(513)
3,687
349
(1,168)
7,203 $
Q3-12
Q2-12
2,850
1,996
(458)
4,152
528
(1,074)
7,994
Q4-12
$
$
Q4-12
$
$
Fiscal Year
2012
9,604
9,022
1,425
11,886
6,198
122
38,257
Fiscal Year
2012
6,101
3,593
(971)
7,839
877
(2,242)
15,197
Unearned Revenue by Business
Back to Main
Q1-061
Unearned Revenue ($ in millions)
Windows & Windows Live Division
Server and Tools
Microsoft Business Division
Other
Total
Unearned Revenue (in %)
Windows & Windows Live Division
Server and Tools
Microsoft Business Division
Other
Total
1
2
$
$
2,636
2,269
3,537
364
8,806
30%
26%
40%
4%
100%
Q2-061
$
$
2,661
2,298
3,527
352
8,838
30%
26%
40%
4%
100%
Q3-061
$
$
2,658
2,394
3,476
373
8,901
30%
27%
39%
4%
100%
Q4-061
$
$
2,851
2,910
4,783
358
10,902
26%
27%
44%
3%
100%
Q1-07
$
$
2,804
2,648
4,301
344
10,097
28%
26%
43%
3%
100%
FY ’06 amounts have been restated for FY ’07 business segments.
FY ’11 amounts have been recast for the FY ’12 movement of Forefront Protection for Office from Server and Tools to the Microsoft Bu
Q2-07
$
$
3,953
2,702
4,863
343
11,861
33%
23%
41%
3%
100%
Q3-07
$
$
2,684
2,825
4,341
433
10,283
26%
28%
42%
4%
100%
Q4-07
$
$
2,875
3,652
5,771
348
12,646
23%
29%
45%
3%
100%
erver and Tools to the Microsoft Business Division.
Q1-08
$
$
2,673
3,449
5,080
370
11,572
23%
30%
44%
3%
100%
Q2-08
$
$
2,620
3,746
5,359
453
12,178
22%
31%
43%
4%
100%
Q3-08
$
$
2,524
3,890
5,253
472
12,139
21%
32%
43%
4%
100%
Q4-08
$
$
2,738
5,007
7,101
451
15,297
18%
33%
46%
3%
100%
Q1-09
$
$
2,402
4,424
6,204
447
13,477
18%
33%
46%
3%
100%
Q2-09
$
$
2,178
4,303
6,077
508
13,066
17%
33%
46%
4%
100%
Q3-09
$
$
2,015
4,104
5,593
600
12,312
16%
33%
46%
5%
100%
Q4-09
$
$
2,345
4,732
6,508
699
14,284
16%
33%
46%
5%
100%
Q1-10
$
$
3,638
4,424
5,920
786
14,768
25%
30%
40%
5%
100%
Q2-10
$
$
1,736
4,227
5,680
885
12,528
14%
34%
45%
7%
100%
Q3-10
$
$
1,498
4,242
5,657
863
12,260
12%
35%
46%
7%
100%
Q1-112
Q4-10
$
$
1,701
5,282
7,004
843
14,830
11%
36%
47%
6%
100%
$
$
1,570
4,812
6,748
789
13,919
11%
35%
48%
6%
100%
Q2-112
$
$
1,467
4,785
6,324
841
13,417
11%
36%
47%
6%
100%
Q3-112
$
$
1,370
4,706
6,013
930
13,019
11%
36%
46%
7%
100%
Q4-112
$
$
1,782
6,315
8,187
836
17,120
10%
37%
48%
5%
100%
Q1-12
$
$
1,628
5,720
7,428
882
15,658
10%
37%
47%
6%
100%
Q2-12
$
1,525
5,612
7,085
1,112
$ 15,334
10%
37%
46%
7%
100%
Microsoft Corporation
Yearly Income Statements
(In millions, except earnings per share)
Revenue
Operating expenses:
Cost of revenue
Research and development 4
Sales and marketing
General and administrative 5
Other expenses
Total operating expenses
Operating income
Other income (expense)
Noncontinuing items
Income before income taxes
Provision for income taxes
Net income before accounting change
Cummulative effect of accounting change
Net Income
Preferred stock dividends
Net income available for common shareholders
Basic earnings per share before accounting change
Diluted earnings per share before accounting change
Basic earnings per share
Diluted earnings per share
1
2
3
4
5
Back to Main
$
FY921
2,777 $
FY931
3,786 $
FY941
4,714 $
FY951
6,075
$
$
$
$
$
581
352
758
90
11
1,792
985
56
0
1,041
333
708
0
708
0
708
0.08
0.08
0.08
0.08
785
470
1,086
119
7
2,467
1,319
82
0
1,401
448
953
0
953
0
953
0.11
0.10
0.11
0.10
1,077
610
1,135
166
16
3,004
1,710
102
(90)
1,722
576
1,146
0
1,146
0
1,146
0.13
0.12
0.13
0.12
1,346
860
1,564
267
16
4,053
2,022
191
(46)
2,167
714
1,453
0
1,453
0
1,453
0.16
0.14
0.16
0.14
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Not restated for adoption of the current accounting guidance on stock-based compensation and no recast of gains (losses) on
Recast of gains (losses) on foreign currency remeasurement
No recast of gains (losses) on foreign currency remeasurement
Includes expensed acquired in-process technology
Includes employee severance
$
FY961
9,050 $
$
$
$
$
$
2,145
1,326
2,185
316
19
5,991
3,059
320
0
3,379
1,184
2,195
0
2,195
0
2,195
0.23
0.21
0.23
0.21
$
$
$
$
$
FY971
11,936 $
2,170
1,863
2,411
362
259
7,065
4,871
443
0
5,314
1,860
3,454
0
3,454
(15)
3,439
0.36
0.33
0.36
0.33
$
$
$
$
$
FY981
15,262 $
2,460
2,897
2,887
433
0
8,677
6,585
532
0
7,117
2,627
4,490
0
4,490
(28)
4,462
0.46
0.42
0.46
0.42
$
$
$
$
$
FY991
19,747 $
FY001
22,956 $
FY011
25,296 $
FY023
28,365 $
FY033
32,187
2,814
2,970
3,238
715
0
9,737
10,010
1,881
0
11,891
4,106
7,785
0
7,785
(28)
7,757
0.77
0.71
0.77
0.71
3,002
3,772
4,126
1,050
0
11,950
11,006
3,269
0
14,275
4,854
9,421
0
9,421
(13)
9,408
0.91
0.85
0.91
0.85
3,455
4,379
4,885
857
0
13,576
11,720
(195)
0
11,525
3,804
7,721
(375)
7,346
0
7,346
0.72
0.69
0.69
0.66
5,699
6,299
6,252
1,843
0
20,093
8,272
(397)
0
7,875
2,520
5,355
0
5,355
0
5,355
0.50
0.48
0.50
0.48
6,059
6,595
7,562
2,426
0
22,642
9,545
1,509
0
11,054
3,523
7,531
0
7,531
0
7,531
0.70
0.69
0.70
0.69
n and no recast of gains (losses) on foreign currency remeasurement
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
FY042
36,835 $
FY052
39,788 $
FY062
44,282 $
FY072
51,122 $
FY082
60,420 $
FY09
58,437 $
FY10
62,484 $
FY11
69,943
$
$
$
$
$
6,596
7,735
8,121
5,275
0
27,727
9,108
3,088
0
12,196
4,028
8,168
0
8,168
0
8,168
0.76
0.75
0.76
0.75
6,031
6,097
8,548
4,536
0
25,212
14,576
2,052
0
16,628
4,374
12,254
0
12,254
0
12,254
1.13
1.12
1.13
1.12
7,650
6,584
9,910
3,758
0
27,902
16,380
1,882
0
18,262
5,663
12,599
0
12,599
0
12,599
1.21
1.20
1.21
1.20
10,693
7,121
11,541
3,329
0
32,684
18,438
1,663
0
20,101
6,036
14,065
0
14,065
0
14,065
1.44
1.42
1.44
1.42
11,598
8,164
13,260
5,127
0
38,149
22,271
1,543
0
23,814
6,133
17,681
0
17,681
0
17,681
1.90
1.87
1.90
1.87
12,155
9,010
12,879
4,030
0
38,074
20,363
(542)
0
19,821
5,252
14,569
0
14,569
0
14,569
1.63
1.62
1.63
1.62
12,395
8,714
13,214
4,063
0
38,386
24,098
915
0
25,013
6,253
18,760
0
18,760
0
18,760
2.13
2.10
2.13
2.10
15,577
9,043
13,940
4,222
0
42,782
27,161
910
0
28,071
4,921
23,150
0
23,150
0
23,150
2.73
2.69
2.73
2.69
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$
$
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$
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$
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$
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$
$
FY12
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