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Redmond, Wash. – July 19, 2007 – Microsoft Corp. today announced revenue of $13.37 billion for the quarter ended June 30, 2007, a 13% increase over the same period of the prior year. Diluted earnings per share for the quarter were $0.31. Excluding $0.08 of previously announced charges primarily related to Xbox 360™ warranty policies, earnings per share would have been $0.39, an increase of 26% over the same period of the prior year when also adjusted for certain items. For the fiscal year ended June 30, 2007, Microsoft announced revenue of $51.12 billion, a 15% increase over the prior year. Diluted earnings per share for the year were $1.42. Excluding certain items, earnings per share would have been $1.49, an increase of 17% over the prior year when also adjusted for certain items. $31 billion in cash, or approximately 175% of operating cash flow, was returned to shareholders during the year through share buybacks and dividends. “Surpassing $50 billion in annual sales is a testament to the innovation and value that our product groups delivered into the marketplace, as well as the outstanding execution by our field sales, marketing teams and partners to bring that value to life with our customers,” said Kevin Turner, chief operating officer at Microsoft. “In fiscal year 2008, we will continue to drive growth through new product offerings, such as Windows ServerŽ 2008, Visual StudioŽ 2008, SQL Server™ 2008, Office PerformancePoint™ Server 2007, and Microsoft Dynamics™ Live CRM.” This fiscal year marked the general availability of Microsoft’s flagship products, Windows VistaŽ and the 2007 Microsoft Office system. Revenue growth was primarily driven by solid customer acceptance of these products, as well as increasing sales of existing products such as SQL Server, Windows Server, Visual Studio, and Xbox 360™ consoles. “Our results this quarter cap off an extremely strong fiscal year for the company,” said Chris Liddell, chief financial officer at Microsoft. “We have healthy core businesses and are strategically investing in growth opportunities, which will build on our success and contribute to continued double-digit revenue and earnings growth in fiscal year 2008.” Business Outlook Microsoft management offers the following guidance for the quarter ending September 30, 2007:
Revenue is expected to be in the range of $12.4 billion to $12.6 billion. Operating income is expected to be in the range of $5.0 billion to $5.2 billion. Diluted earnings per share are expected to be $0.38 to $0.40. Management offers the following guidance for the full fiscal year ending June 30, 2008: Revenue is expected to be in the range of $56.8 billion to $57.8 billion. Operating income is expected to be in the range of $22.2 billion to $22.7 billion. Diluted earnings per share are expected to be in the range of $1.69 to $1.73. Microsoft will hold an audio webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today with Chris Liddell, senior vice president and chief financial officer, Frank Brod, corporate vice president and chief accounting officer, and Colleen Healy, general manager of Investor Relations, to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/msft. The webcast will be available for replay through the close of business on July 19, 2008. Microsoft Corporation Adjusted Financial Results – Non-GAAP Measures Reconciliation
This information has been provided to aid readers of the financial statements in further understanding the company's financial performance and the impact that certain items and events had on the financial results may not be indicative of trends affecting the company's business. For comparability of reporting, management considers this information in conjunction with GAAP amounts in evaluating business performance. The non-GAAP financial measures provided above should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. About Microsoft Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential. Forward-Looking Statements Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as: challenges to Microsoft’s business model; intense competition in all of Microsoft’s markets; Microsoft’s continued ability to protect its intellectual property rights; claims that Microsoft has infringed the intellectual property rights of others; the possibility of unauthorized disclosure of significant portions of Microsoft’s source code; actual or perceived security vulnerabilities in Microsoft products that could reduce revenue or lead to liability; improper disclosure of personal or business-sensitive data could result in liability or harm Microsoft’s reputation; government litigation and regulation affecting how Microsoft designs and markets its products; Microsoft’s ability to attract and retain talented employees; delays in product development and related product release schedules; significant business investments that may not produce offsetting increases in revenue; changes in general economic conditions that affect demand for computer hardware or software; adverse results in legal disputes; unanticipated tax liabilities; Microsoft’s consumer hardware products may experience quality or supply problems; impairment of goodwill or amortizable intangible assets causing a charge to earnings; changes in accounting that may affect Microsoft’s reported earnings and operating income; Microsoft may not meet its or third-party financial forecasts; exposure to increased economic and regulatory uncertainties from operating a global business; geo-political conditions, natural disaster, cyber-attack or other catastrophic event disrupting Microsoft’s business; acquisitions and joint ventures that adversely affect the business; limitations on the availability of insurance and resulting uninsured losses; sales channel disruption such as the bankruptcy of a major distributor; implementation of operating cost structures that align with revenue growth; and foreign currency, interest rate, fixed income, equity and commodity price risks. For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/msft. All information in this release is as of July 19, 2007. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations. For more information, financial analysts and investors only: Colleen Healy, general manager, Investor Relations, (425) 706-3703 For more information, press only: Rapid Response Team, Waggener Edstrom Worldwide, (503) 443-7070, rrt@waggeneredstrom.com Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft web page at http://www.microsoft.com/presspass/ on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/msft. Item 1. Financial Statements MICROSOFT CORPORATION
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