Microsoft Corporation
Consolidated Statement of Loss and Deficit
Year Ended June 30, 1996
(In millions)
(Unaudited)


Net revenues

$12,056
Operating expenses:
  Cost of revenues

1,652
  Research and development

1,991
  Sales and marketing

3,695
  General and administrative

439
    Total operating expenses

7,777
Operating income

4,279
Interest income

445
Other expenses

(26)
Income before income taxes

4,698
Provision for income taxes

1,157
Net income

$3,541


Reconciliation to results presented in accompanying financial statements:

Net income—Canadian GAAP

$3,541
Tax benefit of stock options

(489)
Net income—U.S. GAAP

$3,052

This statement of loss and deficit has been prepared in accordance with generally accepted accounting principles for Canadian companies to assist your understanding of Microsoft's financial performance. This presentation differs in certain respects from generally accepted accounting principles applicable to United States companies which are used in Microsoft's primary financial statements and its filings with the United States Securities and Exchange Commission. The Microsoft 1996 Annual Report to Shareholders and the 1996 Form 10-K are available on this Web site or copies may be obtained by writing to the Company.

Translated at the average rate for the year (C$1 = U.S. $0.7192).

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