EX-99.1 2 d337382dex991.htm PRESS RELEASE PRESS RELEASE

Exhibit 99.1

Microsoft Reports Record Third-Quarter Revenue

Strong business demand drives double-digit operating income growth.

REDMOND, Wash. — Apr. 19, 2012 — Microsoft Corp. today announced quarterly revenue of $17.41 billion for the quarter ended Mar. 31, 2012, a 6% increase from the prior year period. Operating income was $6.37 billion, up 12% from the prior year period.

Net income and diluted earnings per share for the quarter were $5.11 billion and $0.60 per share, compared with $5.23 billion and $0.61 per share, respectively, in the prior year period. Prior year net income and diluted earnings per share included a $461 million or $0.05 per share tax benefit primarily related to a tax settlement with the U.S. Internal Revenue Service.

“We’re driving toward exciting launches across the entire company, while delivering strong financial results,” said Steve Ballmer, chief executive officer at Microsoft. “With the upcoming release of new Windows 8 PCs and tablets, the next version of Office, and a wide array of products and services for the enterprise and consumers, we will be delivering exceptional value to all our customers in the year ahead.”

The Server & Tools business posted $4.57 billion in third-quarter revenue, a 14% increase from the prior year period, driven by double-digit revenue growth in SQL Server and more than 20% growth in System Center revenue.

The Microsoft Business Division reported $5.81 billion in third-quarter revenue, a 9% increase from the prior year period, reflecting the continued strength of Office 2010 with businesses and consumers. Dynamics posted an 11% revenue increase from the prior year period, with Dynamics CRM revenue growing more than 30%.

The Windows and Windows Live Division posted revenue of $4.62 billion, a 4% increase from the prior year period. Strong Windows 7 adoption continued with enterprise desktops on Windows 7 now up to 40% worldwide.

“We saw strong demand for our business desktop and infrastructure offerings,” said Peter Klein, chief financial officer at Microsoft. “Solid revenue growth and continued cost discipline drove double-digit operating income growth.”

The Online Services Division reported revenue of $707 million, a 6% increase from the prior year period, and operating loss improvement of approximately $300 million.

The Entertainment & Devices Division posted revenue of $1.62 billion, a decrease of 16% from the prior period due to a soft gaming console market. Xbox remained the top-selling console in the U.S. for the 15th consecutive month, and the company announced new television content partners and experiences for its 40 million Xbox LIVE members.

“We continue to execute well across our businesses, and we are seeing robust demand for our enterprise products and services,” said Kevin Turner, chief operating officer at Microsoft. “Our investments and offerings in the database platform and public, private, and hybrid cloud are helping our customers transform their operations to meet today’s evolving business demands.”

Business Outlook

Microsoft is revising operating expense guidance downward and now offers a range of $28.3 billion to $28.7 billion for the full year ending June 30, 2012. Microsoft also offers preliminary fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion, representing 6% to 8% growth from the mid-point of fiscal year 2012 guidance.


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 2:30 p.m. PDT (5:30 p.m. EDT) today 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/investor. The webcast will be available for replay through the close of business on Apr. 19, 2013.

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:

 

   

execution and competitive risks in transitioning to cloud-based computing;

 

   

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 data that could result in liability and harm to Microsoft’s reputation;

 

   

outages and disruptions of services provided to customers directly or through third parties if Microsoft fails to maintain an adequate operations infrastructure;

 

   

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 gain customer acceptance and produce offsetting increases in revenue;

 

   

unfavorable changes in general economic conditions, disruption of our partner networks or sales channels, or the availability of credit that affect demand for Microsoft’s products and services or the value of our investment portfolio;

 

   

adverse results in legal disputes;

 

   

unanticipated tax liabilities;

 

   

quality or supply problems in Microsoft’s consumer hardware or other vertically integrated hardware and software products;

 

   

impairment of goodwill or amortizable intangible assets causing a charge to earnings;


   

exposure to increased economic and regulatory uncertainties from operating a global business;

 

   

geopolitical conditions, natural disaster, cyberattack or other catastrophic events disrupting Microsoft’s business; and

 

   

acquisitions, joint ventures and strategic alliances that adversely affect the business.

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/investor.

All information in this release is as of Apr. 19, 2012. 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, press only:

Rapid Response Team, Waggener Edstrom Worldwide, (503) 443-7070, rrt@waggeneredstrom.com

For more information, financial analysts and investors only:

Bill Koefoed, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news/. 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. PST conference call with investors and analysts, is available at http://www.microsoft.com/investor.


MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

 

     Three Months Ended
March 31,
     Nine Months Ended
March 31,
 
     2012     2011      2012      2011  

Revenue

   $ 17,407      $ 16,428       $ 55,664       $ 52,576   

Operating expenses:

          

Cost of revenue

     3,952        3,897         13,367         11,869   

Research and development

     2,517        2,269         7,217         6,650   

Sales and marketing

     3,414        3,393         10,076         10,024   

General and administrative

     1,150        1,160         3,433         3,043   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total operating expenses

     11,033        10,719         34,093         31,586   
  

 

 

   

 

 

    

 

 

    

 

 

 

Operating income

     6,374        5,709         21,571         20,990   

Other income (expense)

     (11     316         337         762   
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income taxes

     6,363        6,025         21,908         21,752   

Provision for income taxes

     1,255        793         4,438         4,476   
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 5,108      $ 5,232       $ 17,470       $ 17,276   
  

 

 

   

 

 

    

 

 

    

 

 

 

Earnings per share:

          

Basic

   $ 0.61      $ 0.62       $ 2.08       $ 2.03   

Diluted

   $ 0.60      $ 0.61       $ 2.05       $ 2.01   

Weighted average shares outstanding:

          

Basic

     8,401        8,420         8,398         8,511   

Diluted

     8,498        8,510         8,502         8,609   

Cash dividends declared per common share

   $ 0.20      $ 0.16       $ 0.60       $ 0.48   


MICROSOFT CORPORATION

BALANCE SHEETS

(In millions)(Unaudited)

 

     March 31,
2012
     June 30,
2011(1)
 

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 6,388       $ 9,610   

Short-term investments (including securities loaned of $1,181 and $1,181)

     53,141         43,162   
  

 

 

    

 

 

 

Total cash, cash equivalents, and short-term investments

     59,529         52,772   

Accounts receivable, net of allowance for doubtful accounts of $322 and $333

     10,961         14,987   

Inventories

     1,412         1,372   

Deferred income taxes

     2,350         2,467   

Other

     2,608         3,320   
  

 

 

    

 

 

 

Total current assets

     76,860         74,918   

Property and equipment, net of accumulated depreciation of $10,952 and $9,829

     8,225         8,162   

Equity and other investments

     9,068         10,865   

Goodwill

     19,698         12,581   

Intangible assets, net

     2,756         744   

Other long-term assets

     1,403         1,434   
  

 

 

    

 

 

 

Total assets

   $ 118,010       $ 108,704   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities:

     

Accounts payable

   $ 3,790       $ 4,197   

Accrued compensation

     3,272         3,575   

Income taxes

     958         580   

Short-term unearned revenue

     13,929         15,722   

Securities lending payable

     1,210         1,208   

Other

     3,011         3,492   
  

 

 

    

 

 

 

Total current liabilities

     26,170         28,774   

Long-term debt

     11,938         11,921   

Long-term unearned revenue

     1,262         1,398   

Deferred income taxes

     1,456         1,456   

Other long-term liabilities

     8,525         8,072   
  

 

 

    

 

 

 

Total liabilities

     49,351         51,621   
  

 

 

    

 

 

 

Commitments and contingencies

     

Stockholders’ equity:

     

Common stock and paid-in capital—shares authorized 24,000; outstanding 8,400 and 8,376

     65,273         63,415   

Retained earnings (deficit), including accumulated other comprehensive income of $1,332 and $1,863

     3,386         (6,332
  

 

 

    

 

 

 

Total stockholders’ equity

     68,659         57,083   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 118,010       $ 108,704   
  

 

 

    

 

 

 

 

(1) 

Derived from audited financial statements.


MICROSOFT CORPORATION

CASH FLOW STATEMENTS

(In millions) (Unaudited)

 

     Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
     2012     2011     2012     2011  

Operations

        

Net income

   $ 5,108      $ 5,232      $ 17,470      $ 17,276   

Adjustments to reconcile net income to net cash from operations:

        

Depreciation, amortization, and other

     766        720        2,170        2,077   

Stock-based compensation expense

     591        541        1,724        1,622   

Net recognized losses (gains) on investments and derivatives

     68        (122     (74     (377

Excess tax benefits from stock-based compensation

     (10     (5     (84     (14

Deferred income taxes

     (134     (59     282        (324

Deferral of unearned revenue

     8,142        6,616        21,825        19,331   

Recognition of unearned revenue

     (8,283     (7,026     (23,993     (21,189

Changes in operating assets and liabilities:

        

Accounts receivable

     2,770        3,031        3,851        3,435   

Inventories

     (50     (170     (79     (258

Other current assets

     73        (618     938        (487

Other long-term assets

     9        (8     (36     172   

Accounts payable

     (114     (51     (380     (235

Other current liabilities

     492        237        (107     (1,174

Other long-term liabilities

     166        354        442        1,197   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash from operations

     9,594        8,672        23,949        21,052   
  

 

 

   

 

 

   

 

 

   

 

 

 

Financing

        

Short-term debt repayments, maturities of 90 days or less, net

     0        0        0        (186

Proceeds from issuance of debt, maturities longer than 90 days

     0        2,239        0        6,960   

Repayments of debt, maturities longer than 90 days

     0        0        0        (814

Common stock issued

     1,091        1,405        1,635        2,242   

Common stock repurchased

     (1,023     (848     (3,999     (10,299

Common stock cash dividends paid

     (1,683     (1,349     (4,707     (3,830

Excess tax benefits from stock-based compensation

     10        5        84        14   

Other

     0        (15     0        (40
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash from (used in) financing

     (1,605     1,437        (6,987     (5,953
  

 

 

   

 

 

   

 

 

   

 

 

 

Investing

        

Additions to property and equipment

     (749     (658     (1,683     (1,713

Acquisition of companies, net of cash acquired, and purchases of intangible and other assets

     (84     0        (9,586     (69

Purchases of investments

     (23,951     (14,394     (45,297     (27,707

Maturities of investments

     4,236        2,286        13,122        4,992   

Sales of investments

     7,946        5,738        23,317        9,768   

Securities lending payable

     361        (111     3        1,063   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing

     (12,241     (7,139     (20,124     (13,666
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rates on cash and cash equivalents

     30        28        (60     83   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash and cash equivalents

     (4,222     2,998        (3,222     1,516   

Cash and cash equivalents, beginning of period

     10,610        4,023        9,610        5,505   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 6,388      $ 7,021      $ 6,388      $ 7,021   
  

 

 

   

 

 

   

 

 

   

 

 

 


MICROSOFT CORPORATION

SEGMENT REVENUE AND OPERATING INCOME (LOSS)

(In millions) (Unaudited)

 

     Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
     2012     2011     2012     2011  

Revenue

        

Windows & Windows Live Division

   $ 4,624      $ 4,447      $ 14,228      $ 14,290   

Server and Tools

     4,572        4,007        13,594        12,156   

Online Services Division

     707        667        2,132        1,927   

Microsoft Business Division

     5,814        5,329        17,700        16,641   

Entertainment and Devices Division

     1,616        1,935        7,814        7,428   

Unallocated and other

     74        43        196        134   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ 17,407      $ 16,428      $ 55,664      $ 52,576   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

        

Windows & Windows Live Division

   $ 2,952      $ 2,792      $ 9,063      $ 9,303   

Server and Tools

     1,738        1,352        5,336        4,604   

Online Services Division

     (479     (776     (1,449     (1,912

Microsoft Business Division

     3,770        3,313        11,619        10,896   

Entertainment and Devices Division

     (229     210        627        1,244   

Corporate-level activity

     (1,378     (1,182     (3,625     (3,145
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated

   $ 6,374      $ 5,709      $ 21,571      $ 20,990