EX-12 3 msft-ex12_13.htm EX-12 msft-ex12_13.htm

 

Exhibit 12

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

 

(In millions, except ratios) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended June 30, 

 

 

2018

 

 

 

2017

(c)

 

 

2016

(c)

 

 

2015

 

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

$

36,474

 

 

$

29,901

 

 

$

25,639

 

 

$

18,507

 

 

$

  27,820

 

Add: Fixed charges

 

 

2,807

 

 

 

2,324

 

 

 

1,325

 

 

 

867

 

 

 

674

 

Add: Cash distributions from equity method investments

 

 

8

 

 

 

12

 

 

 

12

 

 

 

1

 

 

 

54

 

Subtract: Gain (Loss) from equity method investments

 

 

31

 

 

 

(14

)

 

 

(25

)

 

 

(78

)

 

 

(152

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Earnings

 

$

39,258

 

 

$

32,251

 

 

$

27,001

 

 

$

19,453

 

 

$

28,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Charges (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

$

2,674

 

 

$

2,141

 

 

$

1,185

 

 

$

756

 

 

$

577

 

Capitalized debt related expenses

 

 

59

 

 

 

81

 

 

 

58

 

 

 

25

 

 

 

20

 

Interest component of rental expense

 

 

74

 

 

 

102

 

 

 

82

 

 

 

86

 

 

 

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Fixed Charges

 

$

2,807

 

 

$

2,324

 

 

$

1,325

 

 

$

867

 

 

$

674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of Earnings to Fixed Charges

 

 

14

 

 

 

14

 

 

 

20

 

 

 

22

 

 

 

43

 

(a)

Earnings represent earnings from continuing operations before income taxes and before income (losses) from equity method investments plus: (1) fixed charges; and (2) cash distributions from equity method investments.

(b)

Fixed charges include: (1) interest expense; (2) capitalized debt issuance costs; and (3) the portion of operating rental expense which management believes is representative of the interest component of rental expense.

(c)

Reflects the impact of the adoption of the new accounting standard in fiscal year 2018 related to revenue recognition. Refer to Note 1 – Accounting Policies of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion.