REDMOND, Wash., April 24 /PRNewswire-FirstCall/ -- Microsoft Corp. today
announced third-quarter revenue, operating income and diluted earnings per
share of $14.45 billion, $4.41 billion and $0.47, respectively. Operating
income and earnings per share results included a charge of $1.42 billion, or
$0.15 per share, for the European Commission fine. Income taxes were reduced
by $0.15 per share for the resolution of a tax audit.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO)
"Our third-quarter results demonstrate the benefit of our diversified
business model," said Chris Liddell, chief financial officer of Microsoft.
"Our broad span across geographies, product categories and customer segments
is a tremendous asset and supports our outlook for double-digit revenue,
operating income and earnings per share growth for this fiscal year and also
for fiscal year 2009."
Entertainment and Devices revenue for the quarter grew 68% over the
comparable period last year driven by robust demand for Xbox 360 consoles.
Cumulative console sales surpassed 19 million during the quarter, up 74% from
a year ago. Server and Tools revenue growth of 18% added to its string of
consecutive double-digit revenue growth quarters, which now stands at 23.
"The breadth of our product offerings and our ability to provide solutions
across a range of customer and partner needs paid off again this quarter. The
third quarter also kicked off the largest enterprise platform launch in our
company history, which highlights Windows Server 2008, SQL Server 2008 and
Visual Studio 2008," said Kevin Turner, chief operating officer of Microsoft.
"These new products strengthen our ability to help business customers and
partners save money, optimize their people, processes and technology, and
position IT as a strategic asset for their businesses."
Business Outlook
Microsoft management offers the following guidance for the quarter ending
June 30, 2008:
-- Revenue is expected to be in the range of $15.5 billion to
$15.8 billion.
-- Operating income is expected to be in the range of $5.8 billion to
$6.2 billion.
-- Diluted earnings per share are expected to be in the range of $0.45 to
$0.48.
Management offers the following preliminary guidance for the full fiscal
year ending June 30, 2009:
-- Revenue is expected to be in the range of $66.9 billion to
$68.0 billion.
-- Operating income is expected to be in the range of $26.7 billion to
$27.4 billion.
-- Diluted earnings per share are expected to be in the range of $2.13 to
$2.19.
Additional details on fiscal year 2009 guidance will be provided in the
fourth-quarter earnings announcement and during the company's Financial
Analyst Meeting on July 24.
Webcast Details
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 April 24, 2009.
Adjusted Financial Results - Reconciliation of Non-GAAP Measures
The financial results for the third quarter of fiscal year 2007 contained
the recognition of $1.67 billion of revenue and operating income that had been
deferred from the first half of the year related primarily to technology
guarantee programs. Operating income also included $154 million of legal
charges. Diluted earnings per share included $0.12 per share associated with
the technology guarantee program, $0.01 for legal charges and $0.02 for tax
benefits.
Three Months Ended Three Months Ended Year-over-Year
March 31, 2008 March 31, 2007 Growth
Diluted Diluted Diluted
earn- earn- earn-
Oper- ings Oper- ings Oper- ings
Rev- ating per Rev- ating per Rev- ating per
enue income share enue income share enue income share
($ in millions,
except per share
amounts)
As reported $14,454 $4,409 $0.47 $14,398 $6,589 $0.50 0% -33% -6%
Technology
guarantee
& pre-
shipment
deferrals ($1,669)($1,669)($0.12)
Certain
legal
charges $1,417 $0.15 $154 $0.01
Tax
benefits ($0.15) ($0.02)
As adjusted $14,454 $5,826 $0.47 $12,729 $5,074 $0.37 14% 15% 27%
This information has been provided to aid readers of the financial
statements in further understanding the company's financial performance. The
impact of certain items and events 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;
-- 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;
-- exposure to increased economic and regulatory uncertainties from
operating a global business;
-- geo-political conditions, natural disaster, cyber-attack or other
catastrophic events disrupting Microsoft's business;
-- acquisitions and joint ventures that adversely affect the business;
-- improper disclosure of personal data could result in liability and harm
to Microsoft's reputation;
-- sales channel disruption such as the bankruptcy of a major distributor;
and
-- Microsoft's ability to implement operating cost structures that align
with revenue growth.
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 Web site at
http://www.microsoft.com/msft.
All information in this release is as of April 24, 2008. 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.
Microsoft Corporation
Income Statements
(In millions, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
Revenue $14,454 $14,398 $44,583 $37,751
Operating expenses:
Cost of revenue 2,514 2,140 8,732 7,456
Research and development 2,035 1,750 5,757 5,173
Sales and marketing 3,155 2,936 9,161 8,126
General and administrative 2,341 983 4,125 2,461
Total operating expenses 10,045 7,809 27,775 23,216
Operating income 4,409 6,589 16,808 14,535
Investment income and other 401 382 1,038 1,282
Income before income taxes 4,810 6,971 17,846 15,817
Provision for income taxes 422 2,045 4,462 4,787
Net income $4,388 $4,926 $13,384 $11,030
Earnings per share:
Basic $0.47 $0.51 $1.43 $1.12
Diluted $0.47 $0.50 $1.41 $1.11
Weighted average shares outstanding:
Basic 9,307 9,725 9,349 9,821
Diluted 9,428 9,862 9,492 9,955
Cash dividends declared per common
share $0.11 $0.10 $0.33 $0.30
Microsoft Corporation
Balance Sheets
(In millions)
March 31, June 30,
2008 2007 (1)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $11,820 $6,111
Short-term investments (including
securities pledged as collateral of
$2,318 and $2,356) 14,521 17,300
Total cash, cash equivalents, and
short-term investments 26,341 23,411
Accounts receivable, net of allowance
for doubtful accounts of $147 and $117 9,871 11,338
Inventories 774 1,127
Deferred income taxes 1,721 1,899
Other 2,782 2,393
Total current assets 41,489 40,168
Property and equipment, net 5,516 4,350
Equity and other investments 8,659 10,117
Goodwill 10,346 4,760
Intangible assets, net 1,639 878
Deferred income taxes 1,367 1,389
Other long-term assets 1,731 1,509
Total assets $70,747 $63,171
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,600 $3,247
Accrued compensation 2,427 2,325
Income taxes 3,765 1,040
Short-term unearned revenue 10,385 10,779
Securities lending payable 2,476 2,741
Other 4,375 3,622
Total current liabilities 27,028 23,754
Long-term unearned revenue 1,754 1,867
Other long-term liabilities 4,411 6,453
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital - shares
authorized 24,000; outstanding 9,310 and
9,380 63,375 60,557
Retained deficit, including accumulated
other comprehensive income of $1,355 and
$1,654 (25,821) (29,460)
Total stockholders' equity 37,554 31,097
Total liabilities and stockholders'
equity $70,747 $63,171
(1) Derived from audited financial statements
Microsoft Corporation
Cash Flows Statements
(In millions) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
Operations
Net income $4,388 $4,926 $13,384 $11,030
Depreciation, amortization,
and other noncash items 532 445 1,448 1,059
Stock-based compensation
expense 373 321 1,066 1,214
Net recognized gains on
investments (179) (61) (500) (296)
Excess tax benefits from
stock-based payment
arrangements (9) (7) (111) (55)
Deferred income taxes 103 981 783 630
Unearned revenue 5,228 4,551 15,044 13,797
Recognition of unearned
revenue (5,368) (6,121) (15,701) (14,436)
Accounts receivable 1,857 1,455 2,077 1,011
Other current assets (69) 7 141 (350)
Other long-term assets (1) (32) (67) (431)
Other current liabilities 1,389 772 525 (424)
Other long-term liabilities (1,162) 54 (562) 645
Net cash from operations 7,082 7,291 17,527 13,394
Financing
Common stock issued 268 784 3,249 5,618
Common stock repurchased (1,240) (6,878) (8,227) (20,358)
Common stock cash dividends (1,023) (976) (2,995) (2,853)
Excess tax benefits from
stock-based payment
arrangements 9 7 111 55
Other - - - (23)
Net cash used in financing (1,986) (7,063) (7,862) (17,561)
Investing
Additions to property and
equipment (759) (461) (1,964) (1,444)
Acquisition of companies, net
of cash acquired (138) (41) (5,967) (502)
Purchases of investments (3,481) (7,257) (15,795) (29,214)
Maturities of investments 462 1,688 1,262 3,847
Sales of investments 2,829 6,264 18,645 32,413
Securities lending payable 309 318 (265) (86)
Net cash from/(used in)
investing (778) 511 (4,084) 5,014
Effect of exchange rates on cash
and cash equivalents 42 13 128 50
Net change in cash and cash
equivalents 4,360 752 5,709 897
Cash and cash equivalents,
beginning of period 7,460 6,859 6,111 6,714
Cash and cash equivalents, end
of period $11,820 $7,611 $11,820 $7,611
Microsoft Corporation
Segment Revenue and Operating Income/(Loss)
(In millions) (Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2008 2007 2008 2007
Revenue
Client $4,025 $5,274 $12,498 $11,167
Server and Tools 3,255 2,748 9,433 8,087
Online Services Business 843 603 2,377 1,764
Microsoft Business Division 4,745 4,827 13,668 11,768
Entertainment and Devices Division 1,576 936 6,565 4,916
Unallocated and other 10 10 42 49
Consolidated $14,454 $14,398 $44,583 $37,751
Operating Income/(Loss)
Client $3,097 $4,204 $9,824 $8,689
Server and Tools 1,092 911 3,220 2,656
Online Services Business (228) (171) (745) (407)
Microsoft Business Division 3,138 3,399 9,017 7,794
Entertainment and Devices Division 89 (324) 614 (746)
Corporate-Level Activity (2,779) (1,430) (5,122) (3,451)
Consolidated $4,409 $6,589 $16,808 $14,535
SOURCE Microsoft Corporation
