Microsoft Corporation's June 30, 2012 10-K Annual Report.I need assistance with this; After reading the Treacy and
Question:
Microsoft Corporation's June 30, 2012 10-K Annual Report.I need assistance with this;
After reading the Treacy and Sims article, follow these four steps to analyze the revenues of a company from management's perspective:
Identify a company that interests you.
Access the company's online financial statements (10-K Annual Report) via the SEC/Edgar Web site. If you do not have any specific company that interests you, use the Microsoft Corporation's June 30, 2012 10-K Annual Report found in the Resources.
Review the company's financial statements, paying close attention to the revenues and any corresponding notes and narratives.
Review the company's notes, analysis, and narratives that you can find relative to its revenues.
Using the information gathered from these four steps, answer these questions:
Where are the company's revenues coming from?
How would you interpret this in relation to the company's identified strategy if you were a manager?
What information do you think that you might have access to, as a manager of the firm, that an outsider would not?
Now look at the same information from a stockholder's viewpoint. Keep in mind that as a stockholder, you only have access to public documents and answer these questions:
What is your interpretation of the company's revenues?
Does this make you comfortable with your investment?
Read the Treacy and Sims article, "Take Command of Your Growth," in the Harvard Business Review
ITEM 8. 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 | ||||||
See accompanying notes.
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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 | ||||
See accompanying notes.
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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 | ||||||
See accompanying notes.
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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 | ||||||
See accompanying notes.
Microsoft Corporation's June 30, 2012 10-K Annual Report
Expert Answer:
Where are the companys revenues coming from Microsofts revenues come from a variety of sources including Software Microsofts most important source of ... View the full answer
