Income Statements

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INCOME STATEMENTS
(In millions, except per share amounts)
Year Ended June 30, 2012 2011 2010
Revenue $ 73,723 $ 69,943 $ 62,484
Operating expenses:
Cost of revenue 17,530 15,577 12,395
Research and development 9,811 9,043 8,714
Sales and marketing 13,857 13,940 13,214
General and administrative 4,569 4,222 4,063
Goodwill impairment 6,193 0 0
Total operating expenses 51,960 42,782 38,386
Operating income 21,763 27,161 24,098
Other income 504 910 915
Income before income taxes 22,267 28,071 25,013
Provision for income taxes 5,289 4,921 6,253
Net income $ 16,978 $ 23,150 $ 18,760
Earnings per share:
Basic $ 2.02 $ 2.73 $ 2.13
Diluted $ 2.00 $ 2.69 $ 2.10
Weighted average shares outstanding:
Basic 8,396 8,490 8,813
Diluted 8,506 8,593 8,927
Cash dividends declared per common share $ 0.80 $ 0.64 $ 0.52

Balance Sheets

BALANCE SHEETS
(In millions)
June 30, 2012 2011
Assets
Current assets:
Cash and cash equivalents $ 6,938 $ 9,610
Short-term investments (including securities loaned of $785 and $1,181) 56,102 43,162
Total cash, cash equivalents, and short-term investments 63,040 52,772
Accounts receivable, net of allowance for doubtful accounts of $389 and $333 15,780 14,987
Inventories 1,137 1,372
Deferred income taxes 2,035 2,467
Other 3,092 3,320
Total current assets 85,084 74,918
Property and equipment, net of accumulated depreciation of $10,962 and $9,829 8,269 8,162
Equity and other investments 9,776 10,865
Goodwill 13,452 12,581
Intangible assets, net 3,170 744
Other long-term assets 1,520 1,434
Total assets $ 121,271 $ 108,704
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,175 $ 4,197
Current portion of long-term debt 1,231 0
Accrued compensation 3,875 3,575
Income taxes 789 580
Short-term unearned revenue 18,653 15,722
Securities lending payable 814 1,208
Other 3,151 3,492
Total current liabilities 32,688 28,774
Long-term debt 10,713 11,921
Long-term unearned revenue 1,406 1,398
Deferred income taxes 1,893 1,456
Other long-term liabilities 8,208 8,072
Total liabilities 54,908 51,621
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 8,381 and 8,376 65,797 63,415
Retained earnings (deficit), including accumulated other comprehensive income of $1,422 and $1,863 566 (6,332)
Total stockholders’ equity 66,363 57,083
Total liabilities and stockholders’ equity $ 121,271 $ 108,704

Cash Flows Statements

CASH FLOWS STATEMENTS
(In millions)
Year Ended June 30, 2012 2011 2010
Operations
Net income $ 16,978 $ 23,150 $ 18,760
Adjustments to reconcile net income to net cash from operations:
Goodwill impairment 6,193 0 0
Depreciation, amortization, and other 2,967 2,766 2,673
Stock-based compensation expense 2,244 2,166 1,891
Net recognized gains on investments and derivatives (200) (362) (208)
Excess tax benefits from stock-based compensation (93) (17) (45)
Deferred income taxes 954 2 (220)
Deferral of unearned revenue 36,104 31,227 29,374
Recognition of unearned revenue (33,347) (28,935) (28,813)
Changes in operating assets and liabilities:
Accounts receivable (1,156) (1,451) (2,238)
Inventories 184 (561) (44)
Other current assets 493 (1,259) 464
Other long-term assets (248) 62 (223)
Accounts payable (31) 58 844
Other current liabilities 410 (1,146) 451
Other long-term liabilities 174 1,294 1,407
Net cash from operations 31,626 26,994 24,073
Financing
Short-term debt repayments, maturities of 90 days or less, net 0 (186) (991)
Proceeds from issuance of debt, maturities longer than 90 days 0 6,960 4,167
Repayments of debt, maturities longer than 90 days 0 (814) (2,986)
Common stock issued 1,913 2,422 2,311
Common stock repurchased (5,029) (11,555) (11,269)
Common stock cash dividends paid (6,385) (5,180) (4,578)
Excess tax benefits from stock-based compensation 93 17 45
Other 0 (40) 10
Net cash used in financing (9,408) (8,376) (13,291)
Investing
Additions to property and equipment (2,305) (2,355) (1,977)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets (10,112) (71) (245)
Purchases of investments (57,250) (35,993) (30,168)
Maturities of investments 15,575 6,897 7,453
Sales of investments 29,700 15,880 15,125
Securities lending payable (394) 1,026 (1,502)
Net cash used in investing (24,786) (14,616) (11,314)
Effect of exchange rates on cash and cash equivalents (104) 103 (39)
Net change in cash and cash equivalents (2,672) 4,105 (571)
Cash and cash equivalents, beginning of period 9,610 5,505 6,076
Cash and cash equivalents, end of period $ 6,938 $ 9,610 $ 5,505

Stockholders’ Equity

STOCKHOLDERS’ EQUITY STATEMENTS
(In millions)
Year Ended June 30, 2012 2011 2010
Common stock and paid-in capital
Balance, beginning of period $ 63,415 $ 62,856 $ 62,382
Common stock issued 1,924 2,422 2,311
Common stock repurchased (1,714) (3,738) (3,113)
Stock-based compensation expense 2,244 2,166 1,891
Stock-based compensation income tax deficiencies (75) (292) (647)
Other, net 3 1 32
Balance, end of period 65,797 63,415 62,856
Retained earnings (deficit)
Balance, beginning of period (6,332) (16,681) (22,824)
Net income 16,978 23,150 18,760
Other comprehensive income:
Net unrealized gains (losses) on derivatives 255 (627) 27
Net unrealized gains (losses) on investments (390) 1,054 265
Translation adjustments and other (306) 381 (206)
Comprehensive income 16,537 23,958 18,846
Common stock cash dividends (6,721) (5,394) (4,547)
Common stock repurchased (2,918) (8,215) (8,156)
Balance, end of period 566 (6,332) (16,681)
Total stockholders’ equity $ 66,363 $ 57,083 $ 46,175

Stockholders’ Equity

STOCKHOLDERS’ EQUITY STATEMENTS
(In millions)
Year Ended June 30, 2012 2011 2010
Common stock and paid-in capital
Balance, beginning of period $ 63,415 $ 62,856 $ 62,382
Common stock issued 1,924 2,422 2,311
Common stock repurchased (1,714) (3,738) (3,113)
Stock-based compensation expense 2,244 2,166 1,891
Stock-based compensation income tax deficiencies (75) (292) (647)
Other, net 3 1 32
Balance, end of period 65,797 63,415 62,856
Retained earnings (deficit)
Balance, beginning of period (6,332) (16,681) (22,824)
Net income 16,978 23,150 18,760
Other comprehensive income:
Net unrealized gains (losses) on derivatives 255 (627) 27
Net unrealized gains (losses) on investments (390) 1,054 265
Translation adjustments and other (306) 381 (206)
Comprehensive income 16,537 23,958 18,846
Common stock cash dividends (6,721) (5,394) (4,547)
Common stock repurchased (2,918) (8,215) (8,156)
Balance, end of period 566 (6,332) (16,681)
Total stockholders’ equity $ 66,363 $ 57,083 $ 46,175

INCOME STATEMENTS
(In millions, except per share amounts)
Year Ended June 30, 2015 2014 2013
Revenue $ 93,580 $ 86,833 $ 77,849
Cost of revenue 33,038 27,078 20,385
Gross margin 60,542 59,755 57,464
Research and development 12,046 11,381 10,411
Sales and marketing 15,713 15,811 15,276
General and administrative 4,611 4,677 5,013
Impairment, integration, and restructuring 10,011 127 0
Operating income 18,161 27,759 26,764
Other income, net 346 61 288
Income before income taxes 18,507 27,820 27,052
Provision for income taxes 6,314 5,746 5,189
Net income $ 12,193 $ 22,074 $ 21,863
Earnings per share:
Basic $ 1.49 $ 2.66 $ 2.61
Diluted $ 1.48 $ 2.63 $ 2.58
Weighted average shares outstanding:
Basic 8,177 8,299 8,375
Diluted 8,254 8,399 8,470
Cash dividends declared per common share $ 1.24 $ 1.12 $ 0.92
COMPREHENSIVE INCOME STATEMENTS
(In millions)
Year Ended June 30, 2015 2014 2013
Net income $ 12,193 $ 22,074 $ 21,863
Other comprehensive income (loss):
Net unrealized gains (losses) on derivatives (net of tax effects of $20, $(4), and $(14)) 559 (35) (26)
Net unrealized gains (losses) on investments (net of tax effects of $(197), $936, and $195) (362) 1,737 363
Translation adjustments and other (net of tax effects of $16, $12, and $(8)) (1,383) 263 (16)
Other comprehensive income (loss) (1,186) 1,965 321
Comprehensive income $ 11,007 $ 24,039 $ 22,184

(In millions)
June 30, 2013 2012
Assets
Current assets:
Cash and cash equivalents $ 3,804 $ 6,938
Short-term investments (including securities loaned of $579 and $785) 73,218 56,102
Total cash, cash equivalents, and short-term investments 77,022 63,040
Accounts receivable, net of allowance for doubtful accounts of $336 and $389 17,486 15,780
Inventories 1,938 1,137
Deferred income taxes 1,632 2,035
Other 3,388 3,092
Total current assets 101,466 85,084
Property and equipment, net of accumulated depreciation of $12,513 and $10,962 9,991 8,269
Equity and other investments 10,844 9,776
Goodwill 14,655 13,452
Intangible assets, net 3,083 3,170
Other long-term assets 2,392 1,520
Total assets $ 142,431 $ 121,271
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 4,828 $ 4,175
Current portion of long-term debt 2,999 1,231
Accrued compensation 4,117 3,875
Income taxes 592 789
Short-term unearned revenue 20,639 18,653
Securities lending payable 645 814
Other 3,597 3,151
Total current liabilities 37,417 32,688
Long-term debt 12,601 10,713
Long-term unearned revenue 1,760 1,406
Deferred income taxes 1,709 1,893
Other long-term liabilities 10,000 8,208
Total liabilities 63,487 54,908
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 8,328 and 8,381 67,306 65,797
Retained earnings (deficit) 9,895 (856)
Accumulated other comprehensive income 1,743 1,422
Total stockholders’ equity 78,944 66,363
Total liabilities and stockholders’ equity $ 142,431 $ 121,271

See accompanying notes.

BALANCE SHEETS
(In millions)
June 30, 2015 2014
Assets
Current assets:
Cash and cash equivalents $ 5,595 $ 8,669
Short-term investments (including securities loaned of $75 and $541) 90,931 77,040
Total cash, cash equivalents, and short-term investments 96,526 85,709
Accounts receivable, net of allowance for doubtful accounts of $335 and $301 17,908 19,544
Inventories 2,902 2,660
Deferred income taxes 1,915 1,941
Other 5,461 4,392
Total current assets 124,712 114,246
Property and equipment, net of accumulated depreciation of $17,606 and $14,793 14,731 13,011
Equity and other investments 12,053 14,597
Goodwill 16,939 20,127
Intangible assets, net 4,835 6,981
Other long-term assets 2,953 3,422
Total assets $ 176,223 $ 172,384
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 6,591 $ 7,432
Short-term debt 4,985 2,000
Current portion of long-term debt 2,499 0
Accrued compensation 5,096 4,797
Income taxes 606 782
Short-term unearned revenue 23,223 23,150
Securities lending payable 92 558
Other 6,766 6,906
Total current liabilities 49,858 45,625
Long-term debt 27,808 20,645
Long-term unearned revenue 2,095 2,008
Deferred income taxes 2,835 2,728
Other long-term liabilities 13,544 11,594
Total liabilities 96,140 82,600
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 8,027 and 8,239 68,465 68,366
Retained earnings 9,096 17,710
Accumulated other comprehensive income 2,522 3,708
Total stockholders’ equity 80,083 89,784
Total liabilities and stockholders’ equity $ 176,223 $ 172,384

CASH FLOWS STATEMENTS
(In millions)
Year Ended June 30, 2015 2014 2013
Operations
Net income $ 12,193 $ 22,074 $ 21,863
Adjustments to reconcile net income to net cash from operations:
Goodwill and asset impairments 7,498 0 0
Depreciation, amortization, and other 5,957 5,212 3,755
Stock-based compensation expense 2,574 2,446 2,406
Net recognized losses (gains) on investments and derivatives (443) (109) 80
Excess tax benefits from stock-based compensation (588) (271) (209)
Deferred income taxes 224 (331) (19)
Deferral of unearned revenue 45,072 44,325 44,253
Recognition of unearned revenue (44,920) (41,739) (41,921)
Changes in operating assets and liabilities:
Accounts receivable 1,456 (1,120) (1,807)
Inventories (272) (161) (802)
Other current assets 62 (29) (129)
Other long-term assets 346 (628) (478)
Accounts payable (1,054) 473 537
Other current liabilities (624) 1,075 146
Other long-term liabilities 1,599 1,014 1,158
Net cash from operations 29,080 32,231 28,833
Financing
Proceeds from issuance of short-term debt, maturities of 90 days or less, net 4,481 500 0
Proceeds from issuance of debt 10,680 10,350 4,883
Repayments of debt (1,500) (3,888) (1,346)
Common stock issued 634 607 931
Common stock repurchased (14,443) (7,316) (5,360)
Common stock cash dividends paid (9,882) (8,879) (7,455)
Excess tax benefits from stock-based compensation 588 271 209
Other 362 (39) (10)
Net cash used in financing (9,080) (8,394) (8,148)
Investing
Additions to property and equipment (5,944) (5,485) (4,257)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets (3,723) (5,937) (1,584)
Purchases of investments (98,729) (72,690) (75,396)
Maturities of investments 15,013 5,272 5,130
Sales of investments 70,848 60,094 52,464
Securities lending payable (466) (87) (168)
Net cash used in investing (23,001) (18,833) (23,811)
Effect of exchange rates on cash and cash equivalents (73) (139) (8)
Net change in cash and cash equivalents (3,074) 4,865 (3,134)
Cash and cash equivalents, beginning of period 8,669 3,804 6,938
Cash and cash equivalents, end of period $ 5,595 $ 8,669 $ 3,804

STOCKHOLDERS’ EQUITY STATEMENTS
(In millions)
Year Ended June 30, 2015 2014 2013
Common stock and paid-in capital
Balance, beginning of period $ 68,366 $ 67,306 $ 65,797
Common stock issued 634 607 920
Common stock repurchased (3,700) (2,328) (2,014)
Stock-based compensation expense 2,574 2,446 2,406
Stock-based compensation income tax benefits 588 272 190
Other, net 3 63 7
Balance, end of period 68,465 68,366 67,306
Retained earnings
Balance, beginning of period 17,710 9,895 (856)
Net income 12,193 22,074 21,863
Common stock cash dividends (10,063) (9,271) (7,694)
Common stock repurchased (10,744) (4,988) (3,418)
Balance, end of period 9,096 17,710 9,895
Accumulated other comprehensive income
Balance, beginning of period 3,708 1,743 1,422
Other comprehensive income (loss) (1,186) 1,965 321
Balance, end of period 2,522 3,708 1,743
Total stockholders’ equity $ 80,083 $ 89,784 $ 78,944

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