Business Outlook. Webcast Details. Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at p. PDT p. The webcast will be available for replay through the close of business on July 19, For fourth quarter fiscal year revenue, operating income, and earnings per share growth, we included the impact of revenue deferred during the fourth quarter of fiscal year relating to the Windows Upgrade Offer and excluded the impact of the goodwill impairment charge in the fourth quarter of fiscal year For full year fiscal year revenue, operating income, and earnings per share growth, we included the impact of revenue deferred during the fourth fiscal quarter of fiscal year relating to the Windows Upgrade Offer, excluded the impact of the goodwill impairment charge in the fourth quarter of fiscal year , and excluded the impact of the tax settlement benefit in the third quarter of fiscal year For comparability of reporting, management considers this information in conjunction with GAAP amounts in evaluating business performance.
These non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. About Microsoft. Forward-Looking Statements. Actual results could differ materially because of factors such as:. All information in this release is as of July 19, For more information, press only:. For more information, financial analysts and investors only:.
Bill Koefoed, general manager, Investor Relations, Web links, telephone numbers and titles were correct at time of publication, but may since have changed. In millions, except per share amounts Unaudited. Three Months Ended. June 30,. Twelve Months Ended. Operating expenses:. Cost of revenue. Research and development.
Sales and marketing. General and administrative. Goodwill impairment. Total operating expenses. Operating income. Other income. Income before income taxes. Provision for income taxes. Net income loss. Earnings loss per share:. Weighted average shares outstanding:. Cash dividends declared per common share. In millions Unaudited. Current assets:. Cash and cash equivalents. Total cash, cash equivalents, and short-term investments.
Deferred income taxes. Total current assets. Equity and other investments. Intangible assets, net. Other long-term assets. Total assets. Liabilities and stockholders' equity. Current liabilities:.
Accounts payable. Current portion of long-term debt. Accrued compensation. Income taxes. Short-term unearned revenue. Securities lending payable. The user state information is captured and restored by using task sequences.
When the user state information is captured, the information can be stored in one of the following ways:. You can store the user state data remotely by configuring a state migration point. The Capture task sequence sends the data to the state migration point. Then, after the operating system is deployed, the Restore task sequence retrieves the data and restores the user state on the destination computer.
You can store the user state data locally to a specific location. In this scenario, the Capture task sequence copies the user data to a specific location on the destination computer. Then, after the operating system is deployed, the Restore task sequence retrieves the user data from that location. You can specify hard links that can be used to restore the user data to its original location. In this scenario, the user state data remains on the drive when the old operating system is removed.
Then, after the operating system is deployed, the Restore task sequence uses the hard links to restore the user state data to its original location. For more information Manage user state. You can deploy an operating system to computers that are not managed by Configuration Manager. There is no record of these computers in the Configuration Manager database.
These computers are referred to as unknown computers. Unknown computers include the following:. For more information, see Prepare for unknown computer deployments. When you deploy an operating system, you can associate users with the destination computer to support user device affinity actions. When you associate a user with the destination computer, the administrative user can later perform actions on whichever computer is associated with that user, such as deploying an application to the computer of a specific user.
However, when you deploy an operating system, you cannot deploy the operating system to the computer of a specific user. For more information, see Associate users with a destination computer. You can create task sequences to perform a variety of tasks within your Configuration Manager environment. The actions of the task sequence are defined in the individual steps of the sequence. When the task sequence is run, the actions of each step are performed at the command-line level without requiring user intervention.
You can use task sequences for the following:. Create a task sequence to install an operating system. Create a task sequence for non-operating system deployments. Create a task sequence to capture an operating system. Create a task sequence to capture and restore user state. Create a custom task sequence. Skip to main content. This browser is no longer supported. Download Microsoft Edge More info. Contents Exit focus mode. Please rate your experience Yes No.
Server and Tools operating income increased primarily due to revenue growth, offset in part by higher costs of providing products and services and increased sales and marketing expenses. Online Services Division "OSD" develops and markets information and content designed to help people simplify tasks and make more informed decisions online, and help advertisers connect with audiences. Bing and MSN generate revenue through the sale of search and display advertising, accounting for nearly all of OSD's revenue.
Search revenue grew primarily due to increased revenue per search, resulting from ongoing improvements in ad products, while display advertising revenue decreased primarily due to industry-wide market pressure. Operating loss was further reduced by higher revenue and lower cost of revenue and operating expenses. Search revenue grew due to increased revenue per search, increased volumes reflecting general market growth, and share gains in the U.
According to third-party sources, Bing organic U. Bing-powered U. The non-cash, non-tax-deductible charge related mainly to goodwill acquired through our acquisition of aQuantive, Inc. Microsoft Business Division "MBD" develops and markets software and online services designed to increase personal, team, and organization productivity. The general availability of the new Office started on January 29, We evaluate MBD results based upon the nature of the end user in two primary parts: business revenue and consumer revenue.
Business revenue includes Office revenue generated through subscription and volume licensing agreements with software assurance, license-only agreements for Office, and Microsoft Dynamics revenue. Consumer revenue includes revenue from retail packaged product sales and OEM revenue.
MBD revenue increased reflecting growth in business revenue, partially offset by a decline in consumer revenue. MBD operating income increased, primarily due to revenue growth, offset in part by higher sales and marketing expenses and cost of revenue.
MBD revenue increased primarily reflecting sales of Office. MBD operating income increased, primarily due to revenue growth, offset in part by higher cost of revenue and research and development expenses. Research and development expenses increased, due mainly to an increase in headcount-related expenses. Entertainment and Devices Division "EDD" develops and markets products and services designed to entertain and connect people. We acquired Skype on October 13, , and its results of operations from that date are reflected in our results discussed below.
In June , we announced that we expect our next generation console, Xbox One, to be available for purchase in the second quarter of fiscal year EDD revenue increased, due to higher Windows Phone and Skype revenue, offset in part by lower Xbox platform revenue. Skype revenue increased, due primarily to including a full year of results in fiscal year We shipped 9.
EDD operating income increased, primarily due to revenue growth and lower cost of revenue, offset in part by higher operating expenses. EDD revenue increased primarily reflecting Skype and Windows Phone revenue, offset in part by lower Xbox platform revenue.
We shipped Video game revenue decreased due to strong sales of Halo Reach in the prior year. EDD operating income decreased reflecting higher cost of revenue and operating expenses, offset in part by revenue growth. Certain corporate-level activity is not allocated to our segments, including costs of: broad-based sales and marketing; product support services; human resources; legal; finance; information technology; corporate development and procurement activities; research and development; costs of operating our retail stores; and legal settlements and contingencies.
Corporate-level expenses increased due mainly to full year Puerto Rican excise taxes, higher headcount-related expenses, and changes in foreign currency exchange rates. Cost of revenue includes: manufacturing and distribution costs for products sold, including Xbox and Surface, and programs licensed; operating costs related to product support service centers and product distribution centers; costs incurred to include software on PCs sold by OEMs, to drive traffic to our websites, and to acquire online advertising space "traffic acquisition costs" ; costs incurred to support and maintain internet-based products and services, including datacenter costs and royalties; warranty costs; inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized research and development costs.
Cost of revenue increased reflecting higher headcount-related expenses, payments made to Nokia, and changes in the mix of products and services sold. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development.
Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code. Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel and the costs of advertising, promotions, trade shows, seminars, and other programs.
General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and other administrative personnel, certain taxes, and legal and other administrative fees. We test goodwill for impairment annually on May 1 at the reporting unit level using a fair value approach.
No impairment of goodwill was identified as of May 1, Our goodwill impairment test as of May 1, , indicated that OSD's carrying value exceeded its estimated fair value. We use derivative instruments to: manage risks related to foreign currencies, equity prices, interest rates, and credit; enhance investment returns; and facilitate portfolio diversification. Gains and losses from changes in fair values of derivatives that are not designated as hedges are primarily recognized in other income expense.
Other than those derivatives entered into for investment purposes, such as commodity contracts, the gains losses are generally economically offset by unrealized gains losses in the underlying available-for-sale securities, which are recorded as a component of other comprehensive income "OCI" until the securities are sold or other-than-temporarily impaired, at which time the amounts are reclassified from accumulated other comprehensive income "AOCI" into other income expense.
Dividends and interest income decreased due to lower yields on our fixed-income investments, offset in part by higher average portfolio investment balances.
Net recognized gains on investments decreased primarily due to lower gains on sales of equity and fixed-income securities and a gain recognized on the partial sale of our Facebook holding in the prior year, offset in part by lower other-than-temporary impairments. Net losses on derivatives decreased due to gains on equity derivatives in the current fiscal year as compared with losses in the prior fiscal year, and lower losses on commodity and foreign exchange derivatives as compared to the prior fiscal year, offset in part by losses on interest-rate derivatives in the current fiscal year as compared to gains in the prior fiscal year.
Interest expense increased due to our increased issuance of debt in the prior year. Net recognized gains on investments increased, primarily due to higher gains on sales of equity and fixed-income securities and a gain recognized on the partial sale of our Facebook holding upon the initial public offering on May 18, , offset in part by higher other-than-temporary impairments. Net losses on derivatives increased due to losses on commodity and equity derivatives in the current fiscal year as compared with gains in the prior fiscal year, offset in part by fewer losses on foreign exchange contracts in the current fiscal year as compared to the prior fiscal year.
Changes in foreign currency remeasurements were primarily due to currency movements net of our hedging activities. Our effective tax rate was lower than the U. Changes in the mix of income before income taxes between the U. We supply Windows, our primary Windows Division product, to customers through our U. In fiscal years and , our U. The primary driver for the increase in the U. This increase relates primarily to transfer pricing, including transfer pricing developments in certain foreign tax jurisdictions, primarily Denmark.
While we settled a portion of the I. In February , the I. As of June 30, , the primary unresolved issue relates to transfer pricing which could have a significant impact on our financial statements if not resolved favorably. We do not believe it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months because we do not believe the remaining open issues will be resolved within the next 12 months.
We also continue to be subject to examination by the I. We are subject to income tax in many jurisdictions outside the U. Our operations in certain jurisdictions remain subject to examination for tax years to , some of which are currently under audit by local tax authorities.
The resolutions of these audits are not expected to be material to our financial statements. Our effective tax rates were lower than the U. In fiscal year , we settled a portion of an I. The primary driver for the decrease in the U. Our short-term investments are primarily to facilitate liquidity and for capital preservation.
They consist predominantly of highly liquid investment-grade fixed-income securities, diversified among industries and individual issuers. The investments are predominantly U. Our fixed-income investments are exposed to interest rate risk and credit risk. The credit risk and average maturity of our fixed-income portfolio are managed to achieve economic returns that correlate to certain fixed-income indices.
The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities.
While we own certain mortgage-backed and asset-backed fixed-income securities, our portfolio as of June 30, does not contain material direct exposure to subprime mortgages or structured vehicles that derive their value from subprime collateral.
We routinely monitor our financial exposure to both sovereign and non-sovereign borrowers and counterparties. Our gross exposures to our customers and investments in Portugal, Italy, Ireland, Greece, and Spain are individually and collectively not material. We lend certain fixed-income and equity securities to increase investment returns. The loaned securities continue to be carried as investments on our balance sheet. Cash received is recorded as an asset with a corresponding liability.
Intra-year variances in the amount of securities loaned are mainly due to fluctuations in the demand for the securities. In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine the fair value of our financial instruments. This pricing methodology applies to our Level 1 investments, such as exchange-traded mutual funds, domestic and international equities, and U. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly.
This pricing methodology applies to our Level 2 investments such as corporate notes and bonds, foreign government bonds, mortgage-backed securities, and U. Level 3 investments are valued using internally developed models with unobservable inputs.
Assets and liabilities measured using unobservable inputs are an immaterial portion of our portfolio. A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an active market or use observable inputs for their pricing without applying significant adjustments.
Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors, or when a broker price is more reflective of fair values in the market in which the investment trades. Our broker-priced investments are generally classified as Level 2 investments because the broker prices these investments based on similar assets without applying significant adjustments. In addition, all of our broker-priced investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments.
Our fair value processes include controls that are designed to ensure appropriate fair values are recorded. These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. We issued debt to take advantage of favorable pricing and liquidity in the debt markets, reflecting our credit rating and the low interest rate environment.
The proceeds of these issuances were or will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt.
These estimated fair values are based on Level 2 inputs. The components of our long-term debt, including the current portion, and the associated interest rates were as follows as of June 30, Interest on the notes is paid semi-annually, except for the euro-denominated debt securities on which interest is paid annually.
The Notes are senior unsecured obligations and rank equally with our other unsecured and unsubordinated debt outstanding.
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