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Tuesday April 20, 4:15 pm Eastern Time
Company Press Release
SOURCE: Microsoft Corp.
Microsoft Announces Strong
Quarterly Revenue and Income
Breadth of Product Line Successes Drives Results
(All prior share and per share amounts have been restated to reflect the
two-for-one stock split in March 1999.)
REDMOND, Wash., April 20 /PRNewswire/ -- Microsoft Corp. (Nasdaq: MSFT - news) today
announced net income of $1.92 billion and diluted earnings per share of $0.35 for the quarter
ended March 31, 1999, a 40 percent increase over the $0.25 diluted earnings per share reported
for the corresponding quarter last year. Revenue totaled $4.33 billion, a 15 percent increase over
the $3.77 billion for the comparable quarter last year.
Reported revenue does not include unearned revenue of $400 million related to the Microsoft®
Office 2000 Technology Guarantee, which will be recognized in coming quarters, as required by
generally accepted accounting principles. The Company also realized investment gains of more
than $350 million during the quarter.
''Microsoft had solid performance across all product lines, but the brightest spots were the
continued migration to Windows NT® Workstation, strong demand for Office despite the
impending upgrade, and the strength of our server applications. Results in Asia were also much
improved,'' said Greg Maffei, chief financial officer. ''However, we remain guarded about growth
in 1999, given the likelihood that organizations will lock down their systems infrastructures due to
year 2000 concerns.''
''Microsoft SQL Server(TM) 7.0 is off to a fabulous start,'' said Paul Maritz, group vice
president, Developer Group. ''Corporate customers and applications developers are choosing
SQL Server 7.0 for their database server needs, and licenses of SQL Server increased more than
50 percent over the comparable quarter of the prior year.''
The English version of Microsoft Office 2000 was released to manufacturing in March, is shipping
to volume license customers worldwide in April, and will be broadly available in the US retail
channel on June 10. The latest version of the Company's flagship productivity suite makes the Web
work for users by streamlining the process of working with people and information, and introduces
applications that intelligently repair themselves and adapt to personal usage patterns, making them
easier to use and manage.
In March, Microsoft released the latest version of Internet Explorer, the award-winning browser
technology. Microsoft Internet Explorer version 5 is the fastest full-featured browser available
today and is the only browser to include IntelliSense® technology to make browsing the Web
easier than ever. Internet Explorer 5 software provides an open platform for software vendors and
Web content providers through its support for Web standards and rich extensibility options. Also
integrated into Internet Explorer 5 is the Microsoft Windows Media(TM) player, providing
customers with easy access to the most compelling audio and video content on the Web.
Also in March, the Company announced a comprehensive strategy for e-commerce, including
Microsoft BizTalk, a new cross-platform e-commerce XML-based framework enabling
business-to-business commerce over the Internet. More than one million Internet sites already use
Windows NT Server, according to an April NetCraft survey of Internet web sites. Windows NT
Server is the platform for BizTalk Server, a forthcoming Microsoft product supporting the BizTalk
framework. Also, a December Intelliquest study indicated that Windows NT Server is the leading
intranet platform, running on 47 percent of corporate intranets.
Microsoft released the latest version of the Windows® CE operating system for the Palm-size PC
-- the first to enable color -- in February. Although similar in functionality to Palm-size PC
software that is shipping in devices today, the color-enabled release of Windows CE for the
Palm-size PC brings an unmatched clarity to device screens, increasing the readability on these
compact, portable devices.
This press release contains statements that are forward-looking. These statements are based on
current expectations that are subject to risks and uncertainties. Actual results will vary because of
factors such as PC shipment growth; technological shifts; customer demand; competitive products
and pricing; product mix; product ship schedules; life cycles; the impact that year 2000 issues may
have on demand for Microsoft's products and services; terms and conditions; litigation; and other
issues discussed in the Company's Form 10-K.
Founded in 1975, Microsoft is the worldwide leader in software for personal computers. The
Company offers a wide range of products and services for business and personal use, each
designed with the mission of making it easier and more enjoyable for people to take advantage of
the full power of personal computing every day.
NOTE: Microsoft, IntelliSense, Windows, Windows Media, and Windows NT are either
registered trademarks or trademarks of Microsoft Corp. in the United States and/or other
countries.
Microsoft Corporation
Income Statements
(In millions, except earnings per share)
Three Months Ended Nine Months Ended
Mar. 31 Mar. 31
1998 1999 1998 1999
Revenue $3,774 $4,331 $10,489 $13,222
Operating expenses:
Cost of revenue 317 350 883 1,090
Research and development 597 611 1,791 1,889
Acquired in-process technology 0 0 296 0
Sales and marketing 829 996 2,493 2,766
General and administrative 104 144 305 392
Other expenses 60 1 181 60
Total operating expenses 1,907 2,102 5,949 6,197
Operating income 1,867 2,229 4,540 7,025
Investment income 190 720 489 1,318
Gain on sale 0 0 0 160
Income before income taxes 2,057 2,949 5,029 8,503
Provision for income taxes 720 1,032 1,896 2,920
Net income $1,337 $1,917 $ 3,133 $ 5,583
Earnings per share (A):
Basic $ 0.27 $ 0.38 $ 0.64 $ 1.11
Diluted $ 0.25 $ 0.35 $ 0.59 $ 1.02
(A) Earnings per share for the three and nine months ended March 31, 1998
have been restated to reflect a two-for-one stock split in March 1999.
Microsoft Corporation
Channel and Product Group Revenue
(In millions)
Three Months Ended Nine Months Ended
Mar. 31 Mar. 31
1998 1999 1998 1999
Channels
South Pacific and
Americas Region $1,256 $1,331 $ 3,543 $ 4,344
Europe, Middle East,
and Africa Region 897 932 2,457 2,969
Asia Region 388 475 1,061 1,155
OEM 1,233 1,593 3,428 4,754
Total revenue $3,774 $4,331 $10,489 $13,222
Product groups
Platforms $1,626 $2,053 $ 4,570 $ 6,299
Applications and Tools 1,868 1,937 4,977 5,799
Interactive Media and Other 280 341 942 1,124
Total revenue $3,774 $4,331 $10,489 $13,222
Microsoft Corporation
Balance Sheets
(In millions)
June 30, 1998 Mar. 31, 1999
Assets
Current assets:
Cash and short-term investments $13,927 $21,761
Accounts receivable 1,460 1,689
Other 502 608
Total current assets 15,889 24,058
Property and equipment 1,505 1,445
Equity investments 4,703 7,474
Other assets 260 584
Total assets $22,357 $33,561
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 759 $ 1,016
Accrued compensation 359 289
Income taxes payable 915 1,347
Unearned revenue 2,888 4,195
Other 809 992
Total current liabilities 5,730 7,839
Stockholders' equity:
Convertible preferred stock 980 980
Common stock and paid-in capital 8,025 12,418
Retained earnings 7,622 12,324
Total stockholders' equity 16,627 25,722
Total liabilities and
stockholders' equity $22,357 $33,561
SOURCE: Microsoft Corp.
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