We strive to make computing more personal by putting people at the core of the experience, enabling them to interact with technology in more intuitive, engaging, and dynamic ways. We have distribution agreements covering one or more of our products with virtually all the multinational OEMs, including Dell, Hewlett-Packard, Lenovo, and with many regional and local OEMs. Dynamics provides cloud-based and on-premises business solutions for financial management, enterprise resource planning (ERP), customer relationship management (CRM), supply chain management, and other application development platforms for small and medium businesses, large organizations, and divisions of global enterprises. In its operation of the business, management, including our chief operating decision maker, who is also our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis not consistent with GAAP. Microsoft Corporation. We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain subject to examination for tax years 1996 to 2021, some of which are currently under audit by local tax authorities. 122 74 1 9 4 13 (2,180) Treasury In addition to these channels, we use social media to communicate to the public. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our consolidated financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use, or disposition of company assets that could have a material effect on our consolidated financial statements would be prevented or detected on a timely basis. 122 Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, codes of conduct and ethics, global corporate social responsibility initiatives, and other governance-related policies. Customers are looking to us to help improve productivity and the affordability of their products and services. This year, we blocked 34.7 billion identity threats and 37 billion email threats. In July 2022, we completed an assessment of the useful lives of our server and network equipment. The components of other income (expense), net were as follows: We use derivative instruments to manage risks related to foreign currencies, equity prices, interest rates, and credit; enhance investment returns; and facilitate portfolio diversification. We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. After helping over 30 million people in 249 countries and territories with our global skills initiative, we introduced a new initiative to support a more skills-based labor market, with greater flexibility and accessible learning paths to develop the right skills needed for the most in-demand jobs. Stock awards generally vest over a service period of four years or five years. The decrease in our effective tax rate for fiscal year 2021 compared to fiscal year 2020 was primarily due to tax benefits from the India Supreme Court decision on withholding taxes, an agreement between the U.S. and India tax authorities related to transfer pricing, final TCJA regulations, and an increase in tax benefits relating to stock-based compensation. With our expanding portfolio of business applications, we are helping every business become a hyperconnected businessunifying data, process, and teams across the organization. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. Xbox Game Pass is a community with access to a curated library of over 100 first- and third-party console and PC titles. The Zara Spring/Summer 2022 Semi Annual Sale Dates You Need To Know. Teri L. List 1,3 Any shareholder can join the Annual Meeting, while shareholders of record as of October 12, 2022, will be able to vote and submit questions during the meeting. Xbox content and services revenue increased 3%. Expanding in Asia & the US The US is the biggest market in the fashion industry. We remain under audit for tax years 2004 to 2017. Our growth mindset culture begins with valuing learning over knowing seeking out new ideas, driving innovation, embracing challenges, learning from failure, and improving over time. In fiscal years 2022, 2021, and 2020, there were no individually significant other reconciling items. measures include information that is essential to assess the evolution of the Group. Annual Financial Report: PDF [631.6 KB/ 94 pages] For the Period Ended March 2021. Finally, we provide clear reporting and information on how we run our business and how we work with customers and partners, delivering the transparency that is central to trust. Our work to help preserve, protect, and advance democracy by promoting a healthy information ecosystem and safeguarding electoral processes is as salient as ever in todays geopolitical climate. Unearned revenue also includes payments for consulting services to be performed in the future, LinkedIn subscriptions, Office 365 subscriptions, Xbox subscriptions, Windows post-delivery support, Dynamics business solutions, and other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. We believe that our audit provides a reasonable basis for our opinion. Technology is a deflationary force in an inflationary economy. We use derivatives instruments to manage these risks, however, they may still impact our consolidated financial statements. Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Our Main Goals 2022 / 100% of our electricity from renewables 2023 / 100% free of single use plastics for all our customers 2023 / 100% more sustainable cotton (organic, BC, and/or recycled cotton) 2023 / 100% sustainable man-made cellulosic fibres from more sustainable sources 2025 / 100% more sustainable linen and recycled polyester Our vision is to create economic opportunity for every member of the global workforce through the ongoing development of the worlds first Economic Graph, a digital representation of the global economy. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Certain cloud services, primarily Office 365, depend on a significant level of integration, interdependency, and interrelation between the desktop applications and cloud services, and are accounted for together as one performance obligation. Windows Commercial products and cloud services revenue increased 11% driven by demand for Microsoft 365. The information found on these websites is not part of, or incorporated by reference into, this or any other report we file with, or furnish to, the SEC. accounting records of Inditex and of the other Group companies. These programs reinforce our culture and values such as collaboration and growth mindset. There are billions of people who want to achieve more, but have a different set of circumstances, abilities, and backgrounds that often limit access to opportunity and achievement. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Also included in Other are business dispositions and transfers between segments due to reorganizations, as applicable. Azure is a trusted cloud with comprehensive compliance coverage and AI-based security built in. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. We are 90 percent of the way to our 2025 commitment to double the number of Black and African American people managers, senior individual contributors, and senior leaders in the U.S., and 50 percent of the way for Hispanic and Latinx people managers, senior individual contributors, and senior leaders in the U.S. We exceeded our goal on increasing the percentage of transaction volumes with Black- and African American-owned financial institutions and increased our deposits with Black- and African American-owned minority depository institutions, enabling increased funds into local communities. Essential to this is our commitment to continually exercise our growth mindset and confront our fixed mindset with humility, curiosity, compassion, and the recognition that, while none of us will ever be perfect, we can always be better than we are today. We also deliver relevant online advertising to a global audience. Capitalized software development costs are amortized over the estimated lives of the products. They are decisive. The investments are predominantly U.S. dollar-denominated securities, but also include foreign currency-denominated securities to diversify risk. Under Open Value agreements, organizations can elect to purchase perpetual licenses or subscribe to licenses and SA is included. This section generally discusses the results of our operations for the year ended June 30, 2022 compared to the year ended June 30, 2021. To meet the expectations of our stakeholders and to and maintain their trust, we are committed to conducting our business in ways that are principled, transparent, and accountable and we have made a broad range of environmental and social commitments. PSP Partners, LLC, John W. Thompson 3,4 Long-lived assets, excluding financial instruments and tax assets, classified by the location of the controlling statutory company and with countries over 10% of the total shown separately, were as follows: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, To the Stockholders and the Board of Directors of Microsoft Corporation. To make it easy for our readers, all the annual reports released in 2021 - 2022 will be linked on this page. Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided. As part of our effort to promote a One Microsoft and inclusive culture, in fiscal year 2021 we expanded stock eligibility to all Microsoft employees as part of our annual rewards process. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. Competitors to Office include software and global application vendors, such as Apple, Cisco Systems, Meta, Google, IBM, Okta, Proofpoint, Slack, Symantec, Zoom, and numerous web-based and mobile application competitors as well as local application developers. The transfer of intangible properties resulted in a $3.3 billion net income tax benefit in the first quarter of fiscal year 2022, as the value of future U.S. tax deductions exceeds the current tax liability from the U.S. global intangible low-taxed income (GILTI) tax. Adjustments to reconcile net income to net cash from operations: Net recognized gains on investments and derivatives. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. The remaining transition tax of $12.0 billion is payable over the next four years, with $1.3 billion payable within 12 months. But skills alone arent enoughwe need to help people better prepare for and connect to jobs. Our products are generally sold with a right of return, we may provide other credits or incentives, and in certain instances we estimate customer usage of our products and services, which are accounted for as variable consideration when determining the amount of revenue to recognize. Click the button below to request a report when . The components of basic and diluted EPS were as follows: Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented. In our 2021 Diversity and Inclusion Report, we reported that all racial and ethnic minority employees in the U.S. combined earn $1.006 for every $1.000 earned by their white counterparts, that women in the U.S. earn $1.002 for every $1.000 earned by their counterparts in the U.S. who are men, and women in the U.S. plus our twelve other largest employee geographies representing 86.6% of our global population (Australia, Canada, China, France, Germany, India, Ireland, Israel, Japan, Romania, Singapore, and the United Kingdom) combined earn $1.001 for every $1.000 by men in these countries. Cosmos DB is the go-to database powering the worlds most demanding, mission-critical workloads, at any scale. Interest and dividends income decreased due to lower portfolio balances. We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The future monetary system We must ensure the growth we drive reaches every person, organization, community, and country. Since IKEA was founded nearly 80 years ago, we have sided with the many and believe that better homes should be available to all, no matter how thin their wallets. On-premises licenses are considered distinct performance obligations when sold with SA. If recognized, the resulting tax benefit would affect our effective tax rates for fiscal years 2022, 2021, and 2020 by $13.3 billion, $12.5 billion, and $12.1 billion, respectively. For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net. Revenue, classified by the major geographic areas in which our customers were located, was as follows: Revenue, classified by significant product and service offerings, was as follows: We have recast certain previously reported amounts in the table above to conform to the way we internally manage and monitor our business. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. Office Commercial products and cloud services revenue increased $4.4 billion or 13%. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. . 4.4. PDF full text (2.9 MB) | 138 pages. There is no respite for the global economy. reserves Reserves of This segment primarily comprises: Azure is a comprehensive set of cloud services that offer developers, IT professionals, and enterprises freedom to build, deploy, and manage applications on any platform or device. Letter of transmittal. Our innovation helps every developer be an AI developer, with approachable new tools from Azure Machine Learning Studio for creating simple machine learning models, to the powerful Azure Machine Learning Workbench for the most advanced AI modeling and data science. If we want to serve the world, we need to represent the world. Archives of these events are also available. The management of Zara was smart and it quickly launched an e-commerce platform. We have paid transition tax of $6.2 billion, which included $1.5 billion for fiscal year 2022. Definition and Limitations of Internal Control over Financial Reporting. Second quarter revenue is driven by corporate year-end spending trends in our major markets and holiday season spending by consumers, and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. During fiscal years 2022 and 2021, we repurchased 95 million shares and 101 million shares of our common stock for $28.0 billion and $23.0 billion, respectively, through our share repurchase programs. Growth in Devices is dependent on total PC shipments, the ability to attract new customers, our product roadmap, and expanding into new categories. We offer an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and we provide solution support and consulting services. Under the TCJA, the transition tax is payable in interest-free installments over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. The case for digital transformation has never been more urgent. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Office Consumer Services revenue is mainly affected by the demand for communication and storage through Skype, Outlook.com, and OneDrive, which is largely driven by subscriptions, advertising, and the sale of minutes. In fiscal year 2021, we closed our Microsoft Store physical locations and opened our Microsoft Experience Centers. As of June 30, 2022 and 2021, accumulated goodwill impairment was $11.3 billion. Refer to Note 1 Accounting Policies of the Notes to Financial Statements in our fiscal year 2022 Form 10-K for further discussion. 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