UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  • ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    For the Quarterly Period Ended December 31, 2018

    OR

  • ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period FromtoCommission File Number: 001-37845

MICROSOFT CORPORATION

(Exact name of registrant as specified in its charter)

Washington

91-1144442

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

One Microsoft Way, Redmond, Washington

98052-6399

(Address of principal executive offices)

(Zip Code)

(425) 882-8080

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Non-accelerated filer ☐ Emerging growth company ☐

Accelerated filer ☐

Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class

Outstanding as of January 25, 2019

Common Stock, $0.00000625 par value per share

7,672,213,446 shares

MICROSOFT CORPORATION

FORM 10-Q

For the Quarter Ended December 31, 2018

INDEX

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

a)

Income Statements for the Three and Six Months Ended December 31, 2018 and 2017

  • b) Comprehensive Income Statements for the Three and Six Months Ended December 31, 2018 and 2017

  • c) Balance Sheets as of December 31, 2018 and June 30, 2018

  • d) Cash Flows Statements for the Three and Six Months Ended December 31, 2018 and 2017

  • e) Stockholders' Equity Statements for the Three and Six Months Ended December 31, 2018 and 2017

f)

Notes to Financial Statementsg) Report of Independent Registered Public Accounting Firm

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

3 4 5 6 7 8 32 33 47 47

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

SIGNATURE

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

48 48 59 60 61

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INCOME STATEMENTS

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

Revenue:

Product

Service and other

2018

$

16,219 $ 17,926

Total revenue

16,25210,99232,471 28,918

Cost of revenue:

Product

Service and other

5,885 5,498

6,5385,566

Three Months Ended

December 31,2017

Total cost of revenue

12,423 11,064

Gross margin

Research and development Sales and marketing General and administrative

20,04817,854

4,070 3,504

4,5884,562

1,132 1,109

Operating income

Other income, net

10,2588,679

127 490

Income before income taxes Provision for income taxes

10,3859,169

1,965 15,471

Net income (loss)

Earnings (loss) per share:

Basic

Diluted

Weighted average shares outstanding:

Basic

Diluted 7,7687,7107,767

  • $ 8,420$ (6,302)

$ $

1.09$ (0.82)1.08 $ (0.82)

$ 2.22

7,692 7,710 7,683

Refer to accompanying notes.

2018

Six Months Ended

December 31,

2017

32,224

28,037

21,232

61,555

53,456

9,534

8,478

12,794

10,864

22,328

19,342

39,227

34,114

8,047

7,078

8,686

8,374

2,281

2,275

20,213

16,387

393

766

20,606

17,153

3,362

16,879

$

17,244$

274

$

2.24$

0.04

0.04

7,709

7,799

$

$ 33,518

$

3

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

Three Months Ended

December 31,

Net income (loss)

Other comprehensive income (loss), net of tax:

Net change related to derivatives

Net change related to investments Translation adjustments and other

$

Other comprehensive income (loss)

Comprehensive income (loss)

2018

2017

8,420$

(6,302)$

17,244$ 274

(15)

(7)

881

(878)

(264)

(40)

602

(925)

$

9,022$

(7,227)$

241 17,485$

Refer to accompanying notes. Refer to Note 16 - Accumulated Other Comprehensive Income (Loss) for further information.

Six Months Ended

December 31,

2018 2017

  • (60)(113)

620 (319)

(1,166)

253

(1,026)

(752)

4

BALANCE SHEETS

(In millions) (Unaudited)

December 31, 2018

Assets Current assets:

Cash and cash equivalents Short-term investments

$

6,638$ 11,946

121,024 121,822

Total cash, cash equivalents, and short-term investments

Accounts receivable, net of allowance for doubtful accounts of $354 and $377 Inventories

127,662133,768

19,680 26,481

1,9612,662

Other

7,571 6,751

Total current assets

Property and equipment, net of accumulated depreciation of $33,082 and $29,223 Operating lease right-of-use assets

Equity investments

Goodwill

Intangible assets, net Other long-term assets

156,874169,662

32,717 29,460

6,8066,686

2,274 1,862

41,57735,683

8,482 8,053

June 30, 2018

Total assets

Liabilities and stockholders' equity Current liabilities:

Accounts payable

Current portion of long-term debt Accrued compensation Short-term income taxes Short-term unearned revenue Other

$

10,1297,442

258,859 $ 258,848

$

7,563$ 8,617

3,516 3,998

4,6246,103

2,033 2,121

24,28528,905

8,297 8,744

Total current liabilities Long-term debt

Long-term income taxes Long-term unearned revenue Deferred income taxes Operating lease liabilities Other long-term liabilities

50,31858,488

69,653 72,242

29,16130,265

3,799 3,815

2,062541

5,683 5,568

6,0555,211

Total liabilities

166,731 176,130

Commitments and contingencies Stockholders' equity:

Common stock and paid-in capital - shares authorized 24,000; outstanding 7,683 and 7,677 Retained earnings

Accumulated other comprehensive loss

77,55671,223

16,585 13,682

Total stockholders' equity

Total liabilities and stockholders' equity

Refer to accompanying notes.

$

(2,013)92,128 258,859$

(2,187) 82,718 258,848

5

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Microsoft Corporation published this content on 30 January 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 30 January 2019 21:23:03 UTC