Microsoft 2021 Annual Report

Microsoft Annual Report 2021

Shareholders, colleagues, customers, and partners:

Now that this manuscript is writing, people and organizations around the world are fighting pandemic uncertainty, which continues to suffer. However, when I look back on the past year, which is a very difficult year for many people and will be remembered as a sad chapter in our history, I can find a reason to have hope. I have done it.

Our mission of giving everyone on the earth and all organizations to achieve more things was as urgent and necessary. And in the past year, I, every day, all the size of all industries, all over the world, use our platforms and tools to work on each issue, opportunities, and the community and society as a whole. I was blessed with the opportunity to witness.

I am very honored to see how Microsoft's efforts and commitments, partners' ingenuity, customer trust, and the support of shareholders are linked to powerful achievements. Sales in FY2021 were $ 168 billion, an increase of 18%yea r-o n-year. Operating income increased 32 % to $ 70 billion. The annual sales of the Link y-in Security business exceeded $ 10 billion for the first time.

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Pandemic brought confusion and suffering in our lives and local communities, but also triggered an unprecedented digital transformation.

The percentage of technologies to the entire GDP will double from 5 % to 10 % by 2030. But the most notable thing is what happens to the remaining 90 %. The digital transformation, which is expected to occur in the next 10 years, is just happening.

Microsoft was established for this moment. Our goal is to promote innovation to build a new ecosystem consisting of inventors, c o-researchers, developers, creators, transformers, public servants, o n-site workers, and knowledge workers.

It is very exciting to see our platforms and tools realizing a surprising thing that people and organizations could not imagine a few years ago.

The following is an example: Shareholders, colleagues, customers, and partners:

Now that this manuscript is writing, people and organizations around the world are fighting pandemic uncertainty, which continues to suffer. However, when I look back on the past year, which is a very difficult year for many people and will be remembered as a sad chapter in our history, I can find a reason to have hope. I have done it.
Our mission of giving everyone on the earth and all organizations to achieve more things was as urgent and necessary. And in the past year, I, every day, all the size of all industries, all over the world, use our platforms and tools to work on each issue, opportunities, and the community and society as a whole. I was blessed with the opportunity to witness.
I am very honored to see how Microsoft's efforts and commitments, partners' ingenuity, customer trust, and the support of shareholders are linked to powerful achievements. Sales in FY2021 were $ 168 billion, an increase of 18%yea r-o n-year. Operating income increased 32 % to $ 70 billion. The annual sales of the Link y-in Security business exceeded $ 10 billion for the first time.
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Pandemic brought confusion and suffering in our lives and local communities, but also triggered an unprecedented digital transformation.

It is very exciting to see our platforms and tools realizing a surprising thing that people and organizations could not imagine a few years ago.

The following is an example: shareholders, colleagues, customers, and partners:

chance

Pandemic brought confusion and suffering in our lives and local communities, but also triggered an unprecedented digital transformation.

It is very exciting to see our platforms and tools realizing a surprising thing that people and organizations could not imagine a few years ago.

The following is an example:

NASA's Mars mission achieved a milestone in space exploration when its small robotic helicopter Ingenuity completed the first powered flight to another planet. This feat wouldn't have been possible without 12, 000 developers on GitHub who contributed code to the open-source software that powered the flight.

When a 1, 300-foot-long ship blocked the Suez Canal, disrupting global shipping, our partner Blue Yonder used Microsoft AI technology to help customers find alternative sources for more than $500 million in products and parts affected by delays.

Team Rubicon, a nonprofit responding to humanitarian crises around the world, used Dynamics 365 to manage the deployment of thousands of volunteers and build 169 COVID-19 response sites across the U. S. in just 30 days.

Surgeons from Mt. Sinai Health System in New York and Kyabirwa Surgical Center in Uganda have performed more than 500 surgeries together, even when they are thousands of miles apart, using mixed reality technology that allows doctors in New York to provide annotated recommendations that appear in the field of view of their colleagues in Uganda.

Anheuser-Busch InBev, the world's largest beer manufacturer, used Azure Digital Twins to create an integrated digital model of its brewery and supply chain. The model, synchronized with the physical environment, recreates the complex relationships between physical ingredients and the brewing process, enabling brewers to make contextual adjustments in real time.

Across our solution areas, we deliver platforms, tools, and opportunities to help organizations around the world create their own technology-intensive businesses.

Applications and Infrastructure

Computer architectures are undergoing a fundamental transformation as the number of connected devices and the amount of data generated at the edge grow dramatically. With more than 60 data centers across five continents, including 15 new locations this year, we provide fast access to data and cloud services while also addressing critical data residency requirements.

This year, Azure has expanded the hybrid function so that applications can be built, managed, and deployed anywhere. Azure Arc allows you to deploy Azure Data Services in o n-premises, edges, or mult i-environment environments. Azure Space extends Azure functions through global satellite connections. Azure for Operators also communicates the ultr a-lo w-delay cloud computing in the edge, which is necessary for a groundbreaking scenario, such as precision inventory tracking in the port and a production line that automatically adjusts in accordance with changes in demand. Provide to businesses and companies.

We are also at the forefront of Enterprise Methashaath. This is a new layer of infrastructure that has become possible by the fusion of the digital world and the physical world. This platform layer that combines the Internet, AI, and complex reality is the rea l-world process, location, and rich digital twin simulation of things, and the organization monitors complex systems in real time. Use a feeling to interact in the system, perform simulation so that you can model, analyze, and predict performance.

There are no strategic assets as data. In the next three years, we will create more data than the last 10 years. However, as the amount of data, speed, and diversity increases, the ability to understand data is becoming more and more difficult. The main indicators of the successful digital transformation can be measured by the ability of the organization that creates predictive and analytical skills.

Azure Synapse provides opportunities for companies to use data only for their own interests. Azure Synapse integrates data integration, data warehouse, and big data analysis, allowing companies to search for data on any scale. The new Azure Purview also provides comprehensive data management and governance for mapping all data, regardless of whether it exists in any of the o n-premises, cloud, or SaaS (Software as An Application Service).

In addition, as larg e-scale models themselves become a powerful platform, we will continue to provide abundant AI functions directly to data stacks. Last year, our partner Openai achieved dramatic progress in model training, with the GPT-3 (the world's largest and cutting-edge language model) on the Azure AI Super Computer. We have exclusive licensing GPT-3, use its technological innovation to provide advanced AI solutions to customers and create new solutions using advanced natural language creation. You can.

As organizations focus on building their own technology solutions, you need standardized tools to modern existing applications and build new applications.

To respond to this, we provide a full chain of software development tools to all cloud platforms and customers. It offers the best tools to quickly shift from ideas to code to the cloud, from Visual Studio to GitHub. Visual Studio has more than 25 million monthly users, and GitHub uses more than 65 million developers to build, transplant, and maintain.

With Platform as a Service Layer (PaaS), the new Azure Communications Services allows the developers to integrate the rich communication API to the application using the same infrastructure that gives the Microsoft team.

The Azure Mixed Reality service allows you to express digital information in the context of the 3D world where we live. Also, Microsoft Mesh allows developers to create a mult i-platform composite reality application. This transforms the way people connect with others in a physical way.

Finally, with the integrated portfolio of the AI tools, frameworks, and infrastructure, developers can create solutions to understand, predict, provide insights, and support decisio n-making.

Application development is shifting to various citizen developers, not only professional developers, but also designers, marketing staff, sales representatives, customer service staff, teachers, and students.

Just as Office has revolutionized the productivity of knowledge workers, a power platform with more than 16 million users per month is so that anyone can automate workflows, build apps, create virtual agents, and analyze data. Bring a change to application development.

Every organization is trying to digitize the en d-t o-end operations, from sales and customer services to supply chain management, so that they can respond quickly to changing market mechanics.

Dynamics 365 builds a new generation of business applications for this issue. With a new integration between the Dynamics 365 and the team, everyone in the organization can simply browse customer records in the team and perform meetings, chat and collaborate on Dynamics 365.

In general, we are leading the industry with solutions that meet the needs of major industries. Last year, we introduced industry clouds for financial services, healthcare, manufacturing, no n-profit organizations, and retailers. This will make it easier for companies to fully use our technology stacks, reduce the time to value, increase agility, reduce costs, and use new customization that stimulates the industry. I did it.

AI is the most important priority technology, and health care is the most urgent application. We will provide medical institutions with a clinical ambient intelligence function that improves patient experiences and reduces the overwhelming burden on which doctors are currently struggling by improving patient experiences by nuance hold.

In a rapidly changing digital economy, people need a platform that can acquire new skills, expand networks, and connect with employers. LinkedIn's powerful success clearly shows how important this is. Five years after Microsoft acquired Link Tein, earnings have tripled, and growth has accelerated.

Currently, Link y-in's members have over 774 million, and are leaders in B2B ads, professional recruitment, corporate learning, and sales intelligence. From Office's Linkedin profile to Linkedin Learning Course of Microsoft Viva, Linkedin Sales Navigator Reed in Dynamics 365, we will continue to learn and sell people's learning and connection. I am.

The rise of hybrid work will be one of the biggest changes over the past 100 years in the way of working. The rise of hybrid work will be one of the biggest changes in business models, such as people's work, living location, and business process management methods.

The approach to hybrid work begins with the only al l-i n-one solution, Teams, which supports meetings, calls, chats, collaboration, and business processes in daily workflows. In the past year, hundreds of new features, from new presenter mode to new comprehensive meeting experiences, will be able to easily participate in the meeting from home, office, conference room, anywhere in the factory. I did it. Approximately 250 million people use the group every month.

In this new hybrid work environment, having a digital worker experience platform is the key to business success. Therefore, we have introduced Microsoft Viva, which connects employees and captures the information, resources and support directly to the workflow.

In the past year, it has become clear how computers are indispensable for work, learning, and living at home. In Windows 11, the largest operating system update in the last 10 years, everything from the platform to the store has repeated everything, enhances the productivity, connection and safety of people and organizations, and for developers and creators. Build a more open ecosystem. Every time a new generation of Windows appears, we have opened the nex t-generation hardware innovation key throughout the Eco System. In this holiday season, in addition to the latest innovation in touch, pen, and audio, new PCs from Surface and OEM Eco Systems equipped with Windows 11, which include new brea k-throughs in both accessibility and sustainability, are shipped. I am looking forward to it.

And on Windows 365, we are trying to create a new category of cloud PCs. By introducing the operating system into the cloud, companies can provide complete Windows Experience for employees' personal or corporate devices by clicking only several times. This allows the organization to enhance flexibility and in a safer way to increase the productivity and connection of employees in any place.

The threat has become more complicated and difficult, and it has become more important for customers and society as a whole. To respond to this, we plan to invest $ 20 billion in the next five years and evolve security solutions. Our goal is to support all organizations to enhance security abilities through zer o-trust architectures based on solutions that integrate the cloud and platforms, security, compliance, and device management.

Not only products, but also our operational security and threats are also useful for your sel f-defense. Last year, we blocked 30 billion email threats and 31 billion authentication attacks. We are still monitoring more than 140 groups, which are active in cyber security around the world.

3 billion people are playing games around the world, and the game is the largest category in the entertainment industry. We are expanding the opportunity to reach each one.

Pass Game With Xbox, we are changing the way people discover, connect and engage with games. Great content drives game development, and our acquisition of Zenimax Media this year is adding some of the world's most iconic franchises to the service. We will also continue to lead the fast-growing cloud gaming market. Xbox Cloud Gaming is now available on PC as well as phones and tablets, and will be coming to consoles later this year.

The new Xbox S Series and X Series, launched in November 2020, are the fastest-selling consoles ever. We also continue to expand opportunities in the creator economy by adding new ways for players to create and earn money from their creations across many of our most popular games.

Our Purpose

As we continue to pursue opportunities in the future, we also recognize our growing responsibility in a world that demands more from technology to solve pressing challenges. To help people and organizations around the world achieve more, we are focused on four interrelated pillars:

Supporting Inclusive Economic Opportunity

At Microsoft, we believe that the engines of economic growth must reach all people, communities and countries. It starts with access to broadband. The pandemic has highlighted how without broadband, people lack access to education, healthcare, economic opportunities and more. We continue to work to expand broadband access to millions of people in rural and underserved areas in the U. S. and around the world. In the U. S., we expanded our work this year to eight cities with large broadband gaps, especially in Black and African American communities.

We must also continue to expand access to digital skills. In June 2020, as tens of millions of people lost their jobs due to the pandemic, we mobilized resources across Microsoft, including LinkedIn and Github, to help 25 million people connect with digital skills for in-demand roles. Together with our partners, we have reached more than 47 million people in 250 countries to date, but we're not stopping there. LinkedIn is helping companies create 250, 000 skills-based jobs this year. For example, through LinkedIn's new Pathway Pilot, we're providing tools to help companies source job seekers in a more equitable way - based on proven skills.

In order to build an inclusive economy, we are also responsible for the elimination of the "disability disparity" that affects more than 1 billion people around the world. As a result, in April, we promoted the development of accessible technology, expanded employment opportunities for people with disabilities, and published a fiv e-year new commitment to achieve more inclusive workplaces.

In addition, we will continue to work on no n-profit organizations around the world to use affordable and accessible technology. This year, 2. 5 billion dollar products and services were provided at a discounted price so that 295, 000 no n-profit organizations could provide better services by region. The employees also donated $ 214 million (including the additions from the company) to organizations and activities they value.

Protection of basic rights

We support the basic rights of all people. This year, we have been moving forward in racial unfair and inequality. We announce the first annual report "Racial Equity Initiative: StrangeThening Our Comunities" focusing on judicial reforms, affordable broadbands, skills and education, and support for no n-profit organizations rooted in the local community. I did. In addition, cooperating with various vendors, financial institutions, and channel partners, we continue to increase the representative of the ecosystem. While we are proud of these progress, there are still a lot of things to do to support communities, increase representatives, and strengthen the inclusion culture to affect wider and systemic changes. I understand that.

In addition, democracy systems and processes must be observed. Through our "democrac y-ahead program", we are working in many fields to protect the election process and protect themselves from misinformation. In order to protect journalism, the company has strengthened the ecosystem of local news, restores trust in the news, and provides cyber security and legal security for journalists.

Financial Review

ISSUER PURCHASES OF EQUITY SECURITIES, DIVIDENDS, AND STOCK PERFORMANCE

SHARE REPURCHASES AND DIVIDENDS

This includes taking measures to prevent modern slavery and personal trafficking in business and supply chains, and support humanitarian activities and emergency response. Last year, we mobilized resources to respond to Baleut's explosion, Central America's hurricane, and US mountain fire. To date, cash, technology, and other resources have contributed $ 410 million or more to support the continuous response activities of COVID-19.

Commitment to sustainable future

Pandemic was a decisive problem for the past year and a half, but climate change is a life task. As a global technology company, we have a special responsibility to play a part. In January, Microsoft announced his first annual sustainability report and reported on the progress of carbon minus, zero waste, and water plus by 2030. In 2020, Microsoft reduced 587. 000 tons of carbon emissions and purchased 1. 3 million tons carbon removal. We are building a Planetary Computer that helps and protects the natural system of the earth. It also promises to cover 100 % of power consumption by 2030 by purchasing zero carbon energy.

We also know that new technologies and partnerships are needed to solve carbon problems. That's why we launched Microsoft Cloud for Sustainability to build new business processes that all organizations can measure, report, and reduce the impact on the environment. That's why we are investing directly through the $ 1 billion of the CLIMATE INNOVATION FUND, which helps companies to accelerate carbon dioxide reduction and solution development of removal technology.

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Corporate culture	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. The introduction and utilization of AI is also an important factor in trust. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	29	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	24	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Corporate culture	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion.	32	Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	57	Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.
It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion.	37	I n-house stock buying	36	On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. < SPAN> Microsoft is a more common representative of the community we live and the people around the world that we are trying to serve. I know that I will be able to support better so that I can achieve. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.
Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.	It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	Nothing is so optimistic	28	Chairman and CEO Satia Nadera October 12, 2021	33	I n-house stock buying
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.	It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	126	Nothing is so optimistic	150	Chairman and CEO Satia Nadera October 12, 2021

I n-house stock buying

On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020.

On September 18, 2019, the Board of Directors approved the company's repurchase program, which allows up to $ 40 billion to buy a share. The company's r e-buying program will start in February 2020 after the program approved on September 20, 2016, and will end at any time without an expiration date. As of June 30, 2021, 8. 7 billion dollars remain out of the $ 40 billion stock buying program.

Our company has purchased the following ordinary shares based on the company's back purchase program:	(Unit: Million shares)	Number of shares	Amount	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.
Amount	Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Number of shares	Business year ended on June 30	2021	2020	2019
First quarter	twenty five	5. 270 $	4. 000 $	2. 600 $
Second quarter	27	5. 750	4. 000 $	6. 100
Third quarter	twenty five	5. 750	4. 000 $	3. 899
Fourth quarter	twenty four	6. 200
5. 088
4. 200	total	101	22. 970 $	19. 688 $
16. 799 $	The shares acquired in FY2021 and the fourth quarter of fiscal 2020 are based on the sel f-stock acquisition program approved on September 18, 2019. The shares acquired in the third quarter of 2020 are based on the sel f-stock acquisition program approved on September 20, 2016 and September 18, 2019. All other other shares are based on the repurchase program approved on September 20, 2016. In the above table, in 2021, FY2020, and FY2019, the shares were returned to settlement of the withholding of employees associated with the right of $ 4. 4 billion, $ 3. 3 billion and $ 2. 7 billion. Not included. All sel f-stock acquisitions were made in cash.	Dividend	The Board of Directors declared the following dividends:	Declaration date
Standard date	Payment date	Dividend per share	The Board of Directors declared the following dividends:	2021
(Unit: 1 million yen)	September 15, 2020	November 19, 2020	The Board of Directors declared the following dividends:	0, 56 $
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	December 2, 2020	February 18, 2021

March 11, 2021

STOCK PERFORMANCE

0, 56

4. 221	March 16, 2021	May 20, 2021	June 10, 2021	0, 56	4. 214
June 16, 2021	August 19, 2021	September 9, 2021	0, 56	4. 211	total	2, 24 $
16. 876 $	August 19, 2021	September 18, 2019	November 21, 2019	12 December 2019	0, 51 $	3. 886 $
December 4, 2019	August 19, 2021	March 12, 2020	0, 51	3. 876	March 9, 2020	21 May 2020

June 11, 2020

Business

0, 51

3. 865

General

17 June 2020

August 20, 2020

September 10, 2020

0, 51

3. 856

total

2, 04 $

15. 483 $

The dividends declared on June 16, 2021 are included in other fluid lids as of June 30, 2021.

Microsoft Corporation, S & Amp; P500 index, Nasdaq Computer Index comparison of 5 years of comprehensive performance*.

6/16
17/6
6/18

19/6

6/20

21/6

Microsoft Co., Ltd.

100. 00

138. 05

201. 33

277, 97

427, 51

574, 61

S & amp; amp; p 500

100. 00

117, 90

134, 84

148, 89

160. 06

225, 36

Nasdaq Computer

100. 00

138, 60
182, 60
198, 89
289, 40
440, 62
Investing $ 100 in stocks or indexes on June 30, 2016 (including reeds on dividends). The settlement period is June 30th.

Notes on descriptions about the future, etc.

In this report, our business is a "description of future forecasts" defined in Article 27a of the US Public Second Securities Litigation, Article 27a of the US Securities Law, and Article 21E of the 1934 US Securities and Exchange Law. Includes quotes, predictions, and descriptions for planning, goals, and expected business results. The description of future forecasts may be described in this report, including the following "business" and "management of the financial status and business performance by management." In general, these descriptions of future forecasts are "convinced", "plan", "expect", "predict", "estimate", "strategy", "future", "future" It is identified by opportunities, "planning", "possibility", "should", "plan", "continuing", "possibility" and similar expressions. The description of the future outlook is based on the current expectations and assumptions, which are influenced by risk and uncertainty and may be significantly different from the actual results. The Company is a major result and events in FORM 10-K's "risk factors", "management of financial status and management performance by management and analysis", and "quantitative and qualitative disclosure of market risks" It describes the risks and uncertainty that can be different.

Accept the future Microsoft Corporation, S & amp; P500 index, Nasdaq Computer Index comparison of 5 years of comprehensive performance*.

6/16

17/6

6/18

19/6

6/20

21/6

Microsoft Co., Ltd.

100. 00

138. 05

201. 33

277, 97

427, 51

574, 61

HUMAN CAPITAL RESOURCES

S & amp; amp; p 500

100. 00

117, 90

134, 84

148, 89

160. 06
225, 36
Nasdaq Computer
100. 00

138, 60

182, 60

198, 89

289, 40

440, 62
Investing $ 100 in stocks or indexes on June 30, 2016 (including reeds on dividends). The settlement period is June 30th.
Notes on descriptions about the future, etc.

Comparison of the fiv e-year comparative performance of Microsoft Corporation, S & Amp; P500 index, Nasdaq Computer Index, which accepts the future.

6/16

17/6

6/18

19/6

6/20

21/6

Microsoft Co., Ltd.

100. 00

138. 05

201. 33
277, 97
427, 51
574, 61
S & amp; amp; p 500
100. 00

117, 90

134, 84

148, 89

OPERATING SEGMENTS

160. 06

225, 36

Nasdaq Computer

100. 00

138, 60

182, 60
198, 89
289, 40
440, 62

Investing $ 100 in stocks or indexes on June 30, 2016 (including reeds on dividends). The settlement period is June 30th.

Notes on descriptions about the future, etc.

Accept the future

Microsoft is a technology company that is a mission to enable all the people and all the organizations on the earth to achieve more. Microsoft is working to create local opportunities, growth, and impacts in all countries around the world. Microsoft platforms and tools have contributed to improving small and mediu m-sized enterprises, strengthening the competitiveness of large companies, and improving the efficiency of public sector. In addition, we will support new entrepreneurs, improve the results of education and medical care, and focus on human ingenuity.

We integrate technology and products to provide experiences and solutions to bring out customer value. We strengthen ec o-systems with customers and partners, and support people and organizations in all countries to enhance their recovery and change in technology even in the most difficult situations. In a rapid change, we have witnessed that technology has supported new methods of remote medical care, remote areas, working at home and services to customers. These functions are built on public clouds, and are based on the investment we have made so far.

We are living in the new era of intelligent cloud and intelligent edges, which spures the rapid progress of distributed computing, ambient intelligence, and mult i-layer experience. In other words, the places we go and what we are in contact with are increasingly digitized, creating new opportunities and new discoveries. At the next stage of innovation, computing is more powerful and ubiquitous, from cloud to edges. The ability of artificial intelligence (AI) is rapidly progressing based on data and world knowledge. The physical and virtual worlds are richer in combining things with the Internet of things ("IoT"), and understanding people, things they use, where they go, and contexts surrounding their activities and relationships. I am creating an experience. People's technology experience is more and more natural and more sensual due to interactions such as audio, ink, and gaze, spanning many devices.

What we provide

Established in 1975, develop and support software, services, devices, and solutions provides new value to customers and support people and companies to demonstrate their potential.

It provides a variety of services, such as software, services, platforms, and clou d-based solutions that provide customers to customers, and provides solution support and consulting services. We also provide appropriate online advertisements for viewers around the world.

Our products include operating systems, cros s-device productive applications, server applications, business solution applications, desktops and server management tools, software development tools, and video games. We also design and sell devices, including computers, tablets, game consoles, entertainment consoles, other intelligent devices, and related accessories.

Ambitious to drive us

In order to achieve our vision, R & D activities are focusing on the three ambitions related to each other:

Discover productivity and business processes
Construction of smart cloud and smart edge platform

Create more personal computers.

Discover productivity and business processes

Microsoft offers technology and resources for customers to navigate the remote environment. Microsoft's product families believe that it plays an important role in how people work, learn and connect.

Our growth is to provide continuous innovation safely and promote the main tools and services of productivity and collaboration, including Office, Dynamics, and Linkedin. Microsoft 365 integrates Office 365, Windows, Security Enterprise Mobility+, and enhances the ability of employees with A I-compatible tools that bring out creativity and improve teamwork while realizing compliance. Change We will support the organization to do. Microsoft Team enables quick digital transformation by providing a single tool for chat, call, meeting, and collaboration. Microsoft Viva is an employee experience platform that integrates communication, knowledge, learning, resources, and insights supported by Microsoft 365. Microsoft's Relationship Sales Solution integrates Linkedin's sales navigator and sales dynamics, and transforms business sales through social sales. Dynamics 365 for Talent with Linkedin Recruiter and Learning provides a complete solution for HR staff to overcome human resources competition. Microsoft's power platforms create custom applications, automate workflows, and analyze data independently.

These scripts represent the movements to simplify security and management, release creativity and discover new habits. It is redefined that al l-scale organizations digitize business critical functions and can expect business applications. This creates opportunities to acquire new customers and increase the usage rate and engagement of existing customers.

Construction of smart cloud and smart edge platform

In the new remote world, companies are accelerating their digital transformations to improve employee abilities, optimize business, acquire customers, and in some cases to change the core of products and services. At this time, cooperating with corporate digital transformation is one of the biggest opportunities for us, and we are in our own position to be selected as a strategic digital transformation platform and partner. The success of the company is our success.

Our strategy requires continuous investment in data centers and other hybrids and edge technology that supports our services. Azure is a reliable cloud with comprehensive compliance coverage and A I-based buil t-in security.

Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance. Construction of smart cloud and smart edge platform

Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance. Construction of smart cloud and smart edge platform

Our strategy requires continuous investment in data centers and other hybrids and edge technology that supports our services. Azure is a reliable cloud with comprehensive compliance coverage and A I-based buil t-in security.
Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance.
Microsoft's cloud is the most comprehensive and trusted cloud, offering the best integration across the entire technology stack while delivering openness, faster time to value, lower costs, and greater flexibility. As a global cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. We are seeing more and more new use cases and needs for compute and security at the edge, accelerating innovation across the full spectrum of cutting-edge smart devices, from IoT sensors to gateway devices to cutting-edge hardware to create, manage, and protect peak workloads. With Azure Stack, enterprises can extend Azure into their own datacenters and build a consistent stack across public clouds and Smart Advantage. Azure hybrid infrastructure consistency spans security, compliance, identity, and management, helping support the real-world needs and evolving regulatory requirements of commercial customers and enterprises. Azure Arc simplifies governance and management by providing a consistent platform for managing multiple clouds and on-premise deployments. Security, compliance, identity, and management are the foundation of our entire technology. We provide comprehensive, integrated capabilities to protect people and organizations. April
We are accelerating the deployment of mixed reality solutions with new Azure services and devices. Microsoft Mesh enables presence and shared experiences from anywhere through mixed reality applications. We believe that the opportunity to blend the physical and digital worlds, combined with the power of Azure cloud services, will unlock entirely new workloads and experiences that will shape the next era of computing.

The ability to turn data into AI is what drives our competitive advantage. Azure SQL Database allows customers to move SQL Server from the datacenter to a fully managed instance in the cloud and take advantage of built-in AI. Azure Synapse Analytics, a limitless analytics service, brings together data integration, enterprise data warehouse, and big data analytics to meet business intelligence and machine learning needs. Accelerate the adoption of AI innovations from research to production. Our innovations empower every developer to become an AI developer with accessible new tools, from Azure Machine Learning Studio for building simple machine learning models to the powerful Azure Machine Learning Workbench for more advanced AI modeling and data science. From GitHub to Visual Studio, we provide a chain of developer tools for everyone, regardless of technical expertise, across all platforms, whether Azure, Windows, or other cloud or client platforms.

Making computing more personal

We strive to make computing more personal, putting people at the core of the experience so they can interact with technology in more intuitive, engaging, and dynamic ways. Microsoft 365 makes people and organizations more productive and secure while adapting to more fluid ways of working and learning. Computing plays a critical role in all parts of work, school, and life to stay productive in remote environments.
Windows 10 is the most secure and productive operating system for business. It empowers people with a live AI interface, from Cortana, ink, iconic 3D content storytelling, to voice commands through mixed reality experiences. Revenue generating opportunities for Windows 10 include games, services, subscriptions, and search ads. In June 2021, Microsoft announced Windows 11, the next generation of Windows. Windows 11 builds on the productivity, flexibility, and security strengths of Windows 10 today, adding new experiences like powerful task switching tools, desktop, and more. New ways to connect with chat, information you want at your fingertips. And more. Windows also plays a key role in powering our cloud business and Microsoft 365 strategy, and powering a growing range of devices at the "intelligent edge."
Microsoft Edge is a hig h-speed and safe browser that has a buil t-in shopping tool designed to save your time and money. Organizing tools such as collections, vertical tabs, and Captivating Reader can help maximize time in browsing, streaming, searching, and sharing.
In order to promote innovation, create a new device category, and to support demand in the Windows Ecosystem, we are working on the design and marketing of first party devices. The Surface family includes Surface Book 3, Surface Laptop Go, Surface Go 2, Surface Pro 7, Surface Laptop 4, Surface Pro X, Surface Studio 2, and Surface Duo.
In order to expand the use and deepen engagement, we continue to invest in content, communities, and cloud services, and pursue the expansion of opportunities in the game industry. We have expanded the approach of thinking about games from the en d-two ends, from the production and distribution method of games, how to play with PCs, consoles and mobile streaming play. In March 2021, a larg e-scale and growing player community, such as acquiring Zenimax Media, the parent company of Bethesda Softworks, the world's largest stock private game development, and the world's largest publicity development in the world, in March 2021. , We have established a powerful position. Xbox Game Pass is a community that allows more than 100 first party, thir d-party console and PC title carefully selected library. Xbox Cloud Gaming is a Microsoft game streaming technology that complements our console hardware, and provides the ultimate options to play with your favorite people and your favorite games on your favorite devices. 。
Future opportunities
As software and cloud computing play a major role in all industries and the world, customers are looking forward to accelerating their digital transformation in the era of great turmoil and uncertainty. We continue to develop an integrated intelligent solution that protects business and simplifies IT management, maintains people's productivity and enables collaboration. Our goal is to lead the industry in various technology fields over the long term, which will lead to sustainable growth. We have a great deal of resources in the following fields:
By changing the workplace and providing the latest module business applications, we improve people's communication, collaboration, work, play, and exchange methods.

Create and execute clou d-based services that bring new experiences and opportunities to companies and individuals.

By utilizing AI, using natural communication methods to understand and interpret the needs of customers, act for customers and promote insights.

Use Windows to enhance the cloud business, expand its market share in the PC market, and promote the expansion of engagement with services such as Microsoft 365 Consumer, Teams, Edge, Bing, and Game Pass.

The en d-t o-end integrated solution that covers security, compliance, identity, and management can handle security from all angles in all clouds and platforms.

In any device, people with the common pleasure of games gather, expanding the limits of innovation in console games and PC games, and planning a new game experience that creates the next wave of entertainment.

Microsoft's future growth depends on the definition of product categories, business models and sales activities. We have the opportunity to redefine what customers and their partners expect, and to provide new solutions that reflect the vests of Microsoft.

COVID 19

In March 2020, the World Health Organization declared the epidemic of COVID-19 as a pandemic. The COVID-19 pandemic continues to have a wide range of and unpredictable impact on world society, economy, financial markets, and business habits, affecting our business activities, including employees, customers, partners, and local communities. I am continuing. For the effects of COVID-19 on our 2021 fiscal year's performance, please refer to "Examination and Analysis of Management on Financial Status and Business Performance". The extent to which the COVID-19 trends affect our business in the future will depend on many developmental factors that we are not sure. For these factors and other risks, please refer to our 2021 FORM 10-K risk factors.

Corporate social responsibility

Efforts to sustain Create and execute clou d-based services that bring new experiences and opportunities to companies and individuals.

By utilizing AI, using natural communication methods to understand and interpret the needs of customers, act for customers and promote insights.

The en d-t o-end integrated solution that covers security, compliance, identity, and management can handle security from all angles in all clouds and platforms.

COVID 19

OPERATIONS

Corporate social responsibility

Create and execute clou d-based services that provide new experiences and opportunities to companies and individuals that are working on sustainability.

RESEARCH AND DEVELOPMENT

By utilizing AI, using natural communication methods to understand and interpret the needs of customers, act for customers and promote insights.

The en d-t o-end integrated solution that covers security, compliance, identity, and management can handle security from all angles in all clouds and platforms.
In any device, people with the common pleasure of games gather, expanding the limits of innovation in console games and PC games, and planning a new game experience that creates the next wave of entertainment.
Microsoft's future growth depends on the definition of product categories, business models and sales activities. We have the opportunity to redefine what customers and their partners expect, and to provide new solutions that reflect the vests of Microsoft.
COVID 19
In March 2020, the World Health Organization declared the epidemic of COVID-19 as a pandemic. The COVID-19 pandemic continues to have a wide range of and unpredictable impact on world society, economy, financial markets, and business habits, affecting our business activities, including employees, customers, partners, and local communities. I am continuing. For the effects of COVID-19 on our 2021 fiscal year's performance, please refer to "Examination and Analysis of Management on Financial Status and Business Performance". The extent to which the COVID-19 trends affect our business in the future will depend on many developmental factors that we are not sure. For these factors and other risks, please refer to our 2021 FORM 10-K risk factors.

Corporate social responsibility

Efforts for sustainability

Patagonia is working to enhance the sustainability of technology, highly reliable technology. We will move forward to a sustainable future by reducing environmental footprints, conducting research, supporting customers to create sustainable solutions, and supporting policies that will benefit the environment. Accelerate. In January 2020, we announced a bold commitment and detailed plan to achieve carbon negative by 2030 and remove all carbon discharged from the environment since the founding in 1975 by 2050. 。 This also included the promise of investing $ 1 billion in four years in new technologies and innovative climate change measures. In addition to this promise, we will positive water by 2030, zero waste by 2030, and to protect ecosystems by developing "planetary computer". I promised. It also supports suppliers and customers around the world to reduce carbon dioxide emissions using Microsoft technology.

In January 2021, we announced in 2020 that Microsoft's carbon emissions were reduced by 586. 683 tons. Microsoft purchased 1. 3 million tons of carbon from 26 projects around the world. In addition, the data of the annual sustainability report was subject to examination and explanation by third parties, and the commitment to transparency was shared, including the progress of the sustainability target in the executive compensation determined factor.

Investment in sustainability is reflected in our products, services and devices. From Surface to Xbox, our devices are designed to minimize the impact on the environment. Our cloud, AI services, and data centers help companies to reduce energy consumption, reduce physical footprint, and design sustainable products. In addition, we promised $ 50 million in AI for Earth to accelerate innovation by entrusting AI to the hands of sustainability issues. We promise to be a part of that in order to accelerate the transition to the world, which is economically and environmentally sustainable for everyone.

Efforts for racial unfaithful and inequality

Our future opportunities depend on reaching and empowering all communities, and we are committed to taking action to address racial injustice and inequality. With significant input from employees and leaders who are members of the Black and African American community, our senior leadership team and board of directors announced in June 2020 that they have developed a set of actions to improve the live experience at Microsoft and transform how we advance the communities in which we live and work. These efforts include increasing our representation and strengthening our culture of inclusion by doubling the number of Black and African American managers, senior individual contributors, and senior leaders in the United States by 2025; evolving our ecosystem with our supply chain, banking partners, and partner ecosystem; and leveraging data, technology, and partnerships to strengthen our communities, address racial injustice and disparities in Black and African American communities in the United States, and improve the safety and well-being of our employees and communities. Over the past year, we have worked with our partners and engaged in our neighborhoods and communities to launch and scale many projects and programs, including: Expanding existing justice reforms with $50 million over five years; Expanding access to affordable broadband and devices for Black and African American communities in major urban centers and the key institutions that serve them; Expanding access to skills and training for Black and African American students and working adults to succeed in the digital economy; Expanding technical assistance to nonprofits that provide:

More than doubled our share of transaction volume with Black and African American-owned financial institutions, increasing deposits with minority Black and African American-owned depository institutions and increasing funding to our communities; In addition, we have seen growth in our Black and African American-based vendor base and technology partners in Microsoft Partner Partners, and launched the Black Channel Alliance Community to support Microsoft partners in the Microsoft Cloud and unlock benefits for partners to co-sell with Microsoft.

DISTRIBUTION, SALES, AND MARKETING

We know that more work needs to be done to address racial injustice and inequality, and we are implementing many of these programs to support other disadvantaged communities.

Investing in digital skills

With a continued focus on digital transformation, Microsoft is helping to ensure that no one is left behind, especially as the economy recovers from the COVID-19 pandemic. In June 2020, Microsoft announced that it would expand access to digital skills, which are increasingly essential for many of the world's jobs, especially those who have been hit hardest by recent job losses. Our skills initiative brings together learning resources, certification opportunities, and job-seeking tools from LinkedIn, GitHub, and Microsoft Learn, and is based on data from LinkedIn's Economic Graph. We also invested $20 million in key nonprofit partnerships through Microsoft Charities to support people from disadvantaged communities who are often excluded from the digital economy.

More than 42 million people on every continent will have access to free training through our skills initiative. The initiative has exceeded its initial goals and expanded with a new focus on connecting students with jobs where their new training will help them, and connecting employers with skilled job seekers who may not find them through traditional networks.

Overview

Microsoft aims to recruit, develop and retain a diverse workforce globally. For their success and Microsoft's success, we aim to create an environment where employees can do their best work - a place where they can be unashamedly and authentically themselves, guided by Microsoft values, and where their needs are met. We strive to maximize the potential of our people by creating a respectful, challenging and inclusive work environment.

As of June 30, 2021, the company employed approximately 181. 000 full-time employees. Of the total employees, 67. 000 were in manufacturing, distribution, product support, consulting and other operations. 60. 000 in research and product development, and 40. 000 in sales and marketing. The general and administrative department employed 14, 000 people. Some employees are covered by collective agreements.

Company culture

Microsoft culture is based on the growth mindset. In other words, everyone is on the way to learn and grow. We believe that the possibilities are nurtured and not decided. And you must always learn, curious, and try new things without fear of failure. We have identified the four features to blossom the glow mind set:

We are particular about important things for our customers

Being particular about what is important for our customers.

LICENSING OPTIONS

Working as one company, one Microsoft, rather than multiple businesses.

Bring each other's lives, customers, and the world surrounding us.

The system that listens to employees collects feedback directly from employees and reflects our programs and the needs of employees around the world. In the 2021 fiscal year, 88 % of employees worldwide participated, taking up various topics such as inclusion, salary, benefits, learning and ability development. We also collect about 75. 000 employee questionnaires every day throughout the year. 2021 In the fiscal year, everyday pulse surveys gained valuable insights on how to support employees through the epidemic of COVID-19 and how to deal with racial fronts. In addition to public opinion polls and pulse surveys, they have gained insights through surveys, investigations at the time of joining the company, i n-house YAMMER channel, Q & Amp; A session, etc. Support for employee sessions and ASKHR services.

Diversity and inclusion

Microsoft has an essential and comprehensive mission for all people and all organizations on the earth to achieve more things. We consider diversity and inclusions as the core of business models, reflecting them in actions to affect the economy and people around the world. Billions of people want to achieve more things, but due to various situations, skills, and backgrounds, the opportunities and results are often limited. The better you can express this diversity in Microsoft, the more effect you can innovate for those who are trying to gain power. Microsoft culture is based on the growth mindset. In other words, everyone is on the way to learn and grow. We believe that the possibilities are nurtured and not decided. And you must always learn, curious, and try new things without fear of failure. We have identified the four features to blossom the glow mind set:

We are particular about important things for our customers

Being particular about what is important for our customers.

Working as one company, one Microsoft, rather than multiple businesses.

Bring each other's lives, customers, and the world surrounding us.

Diversity and inclusion

Microsoft has an essential and comprehensive mission for all people and all organizations on the earth to achieve more things. We consider diversity and inclusions as the core of business models, reflecting them in actions to affect the economy and people around the world. Billions of people want to achieve more things, but due to various situations, skills, and backgrounds, the opportunities and results are often limited. The better you can express this diversity in Microsoft, the more effect you can innovate for those who are trying to gain power. Microsoft culture is based on the growth mindset. In other words, everyone is on the way to learn and grow. We believe that the possibilities are nurtured and not decided. And you must always learn, curious, and try new things without fear of failure. We have identified the four features to blossom the glow mind set:

We are particular about important things for our customers

Being particular about what is important for our customers.

Working as one company, one Microsoft, rather than multiple businesses.

Bring each other's lives, customers, and the world surrounding us.

CUSTOMERS

AVAILABLE INFORMATION

Diversity and inclusion

Microsoft has an essential and comprehensive mission for all people and all organizations on the earth to achieve more things. We consider diversity and inclusions as the core of business models, reflecting them in actions to affect the economy and people around the world. Billions of people want to achieve more things, but due to various situations, skills, and backgrounds, the opportunities and results are often limited. The better you can express this diversity in Microsoft, the more effect you can innovate for those who are trying to gain power.
We are inclusive, committed to diversity, and committed to driving global systemic change in our workplaces and workforce to create an inclusive work environment. Through these commitments, we can empower everyone to bring their authentic selves to work at their best every day. We support several highly active employee resource groups that women, families, racial and ethnic minorities, military personnel, people with disabilities, and people who identify as LGBTQI+ can use for support, networking, and community building. As described in our 2020 proxy statement, our senior leadership team’s annual performance and compensation evaluation includes an evaluation of our contributions to culture and employee diversity. To ensure long-term accountability, Patagonia publicly reports progress on a number of workforce metrics, including:
Detailed breakdowns of gender, racial, and ethnic minority representation in our workforce by job type, rank, and business unit.
Our EEO-1 (Equal Employment Opportunity) Report.
Disability Representation
Total Rewards
We have developed dynamic, sustainable and strategic programs to offer a diverse portfolio that attracts, rewards and retains top talent and enables employees to do their best work. These programs reinforce our culture and values, including collaboration and a growth mindset. Managers evaluate and recommend compensation based on how you leverage the work of others and contribute to the success of your colleagues. We track multiple dimensions of stock compensation and career progression.

As part of our efforts to foster an inclusive culture with Microsoft, we have expanded stock eligibility to all Microsoft employees as part of our annual compensation process. This includes non-exempt, exempt and equivalent employees worldwide, including business support professionals and retail employees.

Salary Equity

Discussion & Analysis

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In our 2020 Diversity & Inclusion Report, we reported that all racial and ethnic minority employees in the U. S. earn $1, 006 for every $1, 000 earned by white employees, and that women in the U. S. earn $1, 006 for every $1, 000 earned by white employees, and that women in the U. S. earn $1, 006 for every $1, 000 earned by white employees, and that women in the U. S. earn $1, 006 for every $1, 000 earned by white employees, combined. We also reported that women in the U. S. earn $1, 006 for every $1, 000 earned by white employees, combined. We also reported that women in the U. S. earn $1, 006 for every $1, 000 earned by white employees, combined. Our intended outcome is a global performance and growth approach that encourages our company culture, and competitive compensation that ensures fair pay by role while supporting performance pay.

OVERVIEW

August 20, 2020

Microsoft is committed to supporting the well-being and safety of our employees at work and in their personal lives.

During the Covid-19 influenza pandemic, we took a variety of measures to protect the health and well-being of our employees, suppliers, and customers. We made significant changes to our employee travel policies and implemented office closures to allow non-core employees to work remotely. We continued to pay hourly service providers, such as cleaning and reception staff. To support working parents, we implemented a global paid pandemic school and childcare center, added wellness days for those who need to take time off for mental health and wellness, conducted testing and vaccinations at our Redmond, Washington campus, and expanded Medicare coverage for coronavirus testing, treatment, and telehealth services. We also expanded existing programs, such as Microsoft Cares employee assistance program and family care.

In addition to great steps and programs related to COVID-19, our comprehensive benefits package includes a number of physical, mental, and financial wellness programs, including counseling through the Microsoft Cares employee assistance program, flexible capacity allowances, savings and investment tools, adoption assistance, and backup care for children and seniors. Finally, our occupational health and safety programs help employees stay safe while they work.

Learning and Development
Our growth mindset culture starts with a focus on learning over knowledge. We seek new ideas, foster innovation, embrace challenges, learn from failure and improve over time. To support this culture, we offer a wide range of learning and development opportunities. We believe that learning is more than formal education and our learning philosophy is focused on delivering the right learning at the right time, in the right way. Opportunities include:
Personalized, integrated and connected access to all learning opportunities across our internal learning portal, our external learning portal MS Learn and LinkedIn Learning, available to all employees worldwide.
Classroom learning, learning "pods", Aspire Early Career Programme and a community of exceptional managers.
Opportunities for "stretching" and progression in the workplace.
Managers discuss career and employee development plans, guidance on career opportunities and programmes such as mentoring and sponsorship.
Customised manager learning to build people management capabilities, including differentiated leadership development programmes, and similar learning solutions to develop leadership skills for all employees.
New employee orientation covers a variety of topics, including corporate values, corporate culture, and standards of business conduct, with ongoing onboarding programs.
Our employees embrace a growth mindset and benefit from formal learning opportunities as well as thousands of informal and on-the-job learning opportunities. In terms of formal online learning solutions, more than 5 million courses were taken by employees in fiscal year 2021, with an average of more than 18 hours per employee. With a focus on understanding the company's fundamental beliefs and compliance issues, all employees complete mandatory learning programs such as "Corporate Standards of Conduct," "Privacy," "Unconscious Bias," and "Harassment Prevention." Our Corporate Learning Portal has an average of more than 100, 000 monthly active users. All of our approximately 23, 000 managers are required to complete 25-30 hours of mandatory competency and executive excellence training, with ongoing mandatory training required annually. In addition, all employees complete skills training every year according to the job they will be doing.
New ways of working
The global pandemic has accelerated skills and culture around flexible working. Microsoft launched the Hybrid Workplace Flexibility Guide to better support managers and employees adapting to new ways of working that change norms, embrace flexibility, foster inclusion, and drive innovation. Microsoft's current survey data shows that employees value flexibility around location, workspace, and work hours, with many employees reporting that they plan to return to their work locations as soon as conditions allow, while others plan to adjust their work hours or work remotely for part of the week. Microsoft is committed to building capabilities to support diverse ways of working that enable individuals, teams, and our business to thrive.

We operate and report financial performance in three segments: Productivity and Business Processes, Smart Cloud, and More Personal Computing. The segments provide management with a comprehensive financial view of our core business. The segments enable alignment of strategies and goals across our development, sales, marketing, and services organizations, and provide a framework for timely and rational allocation of resources within our business.

Additional information about our operating segments, geographic and product information is provided in Note 19, "Segment and Geographic Information," to the financial statements.

Our reportable segments are as follows:

Productivity and Business Process Division

The Productivity and Business Process division consists of products and services within the Productivity, Communications and Information Services portfolio, covering a variety of devices and platforms. This segment primarily includes:

Office Commercial, which includes Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business (Office 365 subscriptions, a portion of the Office 365 portion of Microsoft 365 Commercial, and Office subscriptions with an in-premises license).

Office Consumer, which includes Microsoft 365 Consumer subscriptions and Office with an in-premises license, and Office Consumer Services, which includes Skype, Outlook. com and OneDrive.

LinkedIn: Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, Learning Solutions.

The Dynamics Business Solutions, including Dynamics 365, include a set of intelligent clou d-based applications such as ERP, CRM, CRM, Power Apps, Power Automate. More.

Office Commercial aims to enhance individuals, teams, and organizational productivity through various products and services. Growth is whether new users can be acquired in new markets such as workers, small and mediu m-sized businesses, and growth markets, and core products that support communication, collaboration, analytics, security, and compliance. It depends on whether the service can add value. Office CommermerCial sales are mainly affected by the combination of mainly installation bases and average sales per user, and continuous shift combinations from Office 365 to Office 365.

Office consumer

Office consumers aim to increase personal productivity through various products and services. Growth depends on our ability to acquire new users, add value to the core product set, and continue to expand products and services to the new market. OFFICE Consumer sales are mainly affected by the percentage of customers purchasing Office along with new devices and continuous transition from installation of Office to consumers for consumers of Microsoft 365. OFFICE consumer service sales are mainly affected by Skype, Outlook. com, and Onedrive's communication and storage demand, mainly due to subscriptions, advertising, and fractional sales.

Dynamics business solutions, including lin k-t o-in Dynamics 365, have intelligent clou d-based applications such as ERP, CRM, CUSTOMER INSIGHTS, Power Apps, Power Automate. Includes applications.

Commercial office

Office consumer

Dynamics Business Solutions, including lin k-in Dynamics 365, has a set of intelligent clou d-based applications such as ERP, CRM, CRM, Power Apps, Power Automate. Includes.

Commercial office

Office consumer

Lin k-t o-in

Linkedin connects professionals around the world, enhances productivity and success, and transforms companies hiring, buying and selling, and learning. Linkedin's vision is to create economic opportunities for all global labor, through continuous growth of the world's first economic digital digital display. In addition to Link y-in's free service, Linky Tein offers a profitable solution such as talent solutions, marketing solutions, premium subscriptions, sales solutions, and learning solutions. Talent solutions provide insights and tools on human resources planning to hire, nurture and develop human resources. Marketing solutions support a larg e-scale reach, engagement, and conversion. Premium Subscription enables professionals to manage their professionals, expand their network, and connect with human resources through additional services such as premium search. Sales solutions will help companies strengthen their relationships with customers, strengthen their teams with digital sales tools, and get new opportunities. Finally, learning solutions, including Glint, can help you fill an important skill gap when companies need to do more in existing human resources. Link t-in

dynamic

Dynamics has financial management, corporate resource planning (ERP), custome r-related management (CRM), and other business solutions based on cloud and enterpris e-based business solutions such as application development platforms. Provided. Dynamics sales are continuing to Dynamics 365, a unified set of clou d-based intelligent business applications, including the number of licensed users, the number of applications consumed, the average number of applications consumed, the average sales per user, power and energy automation applications. It is brought by a typical transition. Linkedin connects professionals around the world, enhances productivity and success, and transforms companies hiring, buying and selling, and learning. Linkedin's vision is to create economic opportunities for all global labor, through continuous growth of the world's first economic digital digital display. In addition to Link y-in's free service, Linky Tein offers a profitable solution such as talent solutions, marketing solutions, premium subscriptions, sales solutions, and learning solutions. Talent solutions provide insights and tools on human resources planning to hire, nurture and develop human resources. Marketing solutions support a larg e-scale reach, engagement, and conversion. Premium Subscription enables professionals to manage their professionals, expand their network, and connect with human resources through additional services such as premium search. Sales solutions will help companies strengthen their relationships with customers, strengthen their teams with digital sales tools, and get new opportunities. Finally, learning solutions, including Glint, can help you fill an important skill gap when companies need to do more in existing human resources. Link t-in

dynamic

Dynamics has financial management, corporate resource planning (ERP), custome r-related management (CRM), and other business solutions based on cloud and enterpris e-based business solutions such as application development platforms. Provided. Dynamics sales are continuing to Dynamics 365, a unified set of clou d-based intelligent business applications, including the number of licensed users, the number of applications consumed, the average number of applications consumed, the average sales per user, power and energy automation applications. It is brought by a typical transition. Linkedin connects professionals around the world, enhances productivity and success, and transforms companies hiring, buying and selling, and learning. Linkedin's vision is to create economic opportunities for all global labor, through continuous growth of the world's first economic digital digital display. In addition to Link y-in's free service, Linky Tein offers a profitable solution such as talent solutions, marketing solutions, premium subscriptions, sales solutions, and learning solutions. Talent solutions provide insights and tools on human resources planning to hire, nurture and develop human resources. Marketing solutions support a larg e-scale reach, engagement, and conversion. Premium Subscription enables professionals to manage their professionals, expand their network, and connect with human resources through additional services such as premium search. Sales solutions will help companies strengthen their relationships with customers, strengthen their teams with digital sales tools, and get new opportunities. Finally, learning solutions, including Glint, can help you fill an important skill gap when companies need to do more in existing human resources. Link t-in

dynamic

Competitors of Office include software vendors and global application vendors such as Apple, Cisco Systems, Facebook, Google, IBM, Okta, Proofpoint, Slack, Symantec, and Zoom, as well as many web-based and mobile application competitors, as well as local application developers. Apple distributes versions of pre-installed application software, such as email and calendar products, through computers, tablets, and mobile phones. Cisco Systems has built a unified communications business, leveraging its position in enterprise communications equipment. Google offers hosted messaging and productivity suites. Slack offers teamwork and collaboration software. Zoom offers video conferencing and cloud solutions. Skype for Business and Skype also compete with a variety of instant messaging, voice, and video providers, from startups to established enterprises. Okta, Proofpoint, and Symantec offer security solutions for email security, information protection, identity, and governance. Web-based products that compete with standalone applications are also positioned as substitutes for our products and services. We compete by offering tools and services that are powerful, flexible, secure, industry-specific, integrated and easy to use.

LinkedIn faces competition from online professional networks, recruiters, talent management companies, and large companies that focus on talent management and HR services.

Job Boards Companies that offer traditional recruiters, learning and development products and services.

Marketing Solutions competes with online and offline storefronts that generate revenue from advertisers and marketing marketers, and Sales Solutions competes with online and offline storefronts for companies that provide intelligence and information to generate customers and clients.

Dynamics competes with cloud and home-based business solution providers such as Oracle, Salesforce. com, and SAP.

Intelligent Cloud

The Intelligent Cloud division consists of public, private and hybrid server products and cloud services that empower today's businesses and developers. This segment primarily includes:

Server products and cloud services, including Azure, SQL Server, Windows Server, Visual Studio, System Center and related Customer Access Licenses ("CALs"), and GitHub.

Enterprise services including premier support services and microsoft consulting services

Server products and cloud services

Azure is a comprehensive cloud service set that provides developers, IT professionals and companies to create, deploy and manage applications on all platforms and devices. Customers can use Azure for computing, networking, storage, mobile services, web, IoT, cognitive services, and machine learning applications through the global network of the data center. By using Azure, customers can devote more resources to develop and use applications that benefit organizations, rather than managing hardware and software i n-house. Azure's revenue is mainly affected by consuming services for infrastructure as a service and platform as a service, and use r-b y-one services such as Enterprise Mobility + Security.

Our server products are designed to enhance the productivity and efficiency of IT experts, developers, and their systems. Server software is a buil t-in server infrastructure and middleware designed to support software applications built on the Windows Server operating system. This includes server platforms, databases, business intelligence, storage, management and operation, virtualization, servic e-oriented architecture platforms, security, and identity software. It also provides individual software life cycle and development tools for software architects, developers, testers, and project managers. GitHub offers collaboration platforms and code hosting services for developers. Server products are mainly purchased by volume license programs, selling license to partner brand manufacturers ("OEM"), and packaged retail products. CAL provides access to certain server products such as SQL Server and Windows Server, with revenue with related server products.

Business service

Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance. Construction of smart cloud and smart edge platform

Azure faces competition from a wide variety of companies, including Amazon, Google, IBM, Oracle, VMware, and open source. Our mobility + security products also compete with products from many competitors, including identity vendors, security solution vendors, and many other security solution vendors. Azure's competitive advantages include enabling hybrid cloud, deploying existing data alongside public cloud in a single cohesive infrastructure, and operating at scale to meet the needs of businesses of any size and complexity. We believe that the global scale of our cloud, combined with our broad portfolio of identity and security solutions, allows us to effectively solve our customers' complex cyber challenges and differentiate ourselves from our competitors.

Server products face competition from a wide variety of server operating systems and applications offered by companies with different approaches to the market. Vertical embedded computer manufacturers, such as Hewlett-Packard, IBM, and Oracle, offer their own versions of UNIX operating systems preinstalled on their server hardware. Nearly all computer manufacturers offer server hardware for the Linux operating system, and many of them have contributed to the development of the Linux operating system. Linux's competitive position also benefits from the large number of compatible applications currently being produced by many commercial and non-commercial software developers. Some, such as Red Hat, offer versions of Linux.

We work with numerous commercial software vendors offering middleware technology solutions and platforms, connectivity software applications (internet and intranet), security, hosting, databases, and e-business servers to provide enterprise-level computing and point solutions. IBM and Oracle lead a group of companies focused on the Java Platform Enterprise Edition that compete for enterprise-scale computing solutions. Commercial competition for server applications for distributed computing-based customer environments includes technologies from CA, IBM, and Oracle. In middleware, we compete with Java vendors.

Our database, business intelligence and data storage solutions compete against products from IBM, Oracle and SAP, among others. Our systems management solutions compete against server management and virtualization server platform providers, including BMC, CA Technologies, Hewlett-Packard, IBM and VMware, among others. Our software developer products compete against companies such as Adobe, IBM and Oracle, as well as open source projects such as Eclipse (sponsored by CA Technologies, IBM, Oracle and SAP).

We believe that our server products provide customers with advantages in performance, total cost of ownership and productivity by providing superior applications, development tools, compatibility with a broad range of hardware and software applications, security and manageability.

Our enterprise business competes against a broad range of companies, including multinational consulting firms and smaller niche companies specializing in specific technologies, that provide strategic and business planning, application development and infrastructure services.

More Personal Computing

The More Personal Computing division consists of products and services that put customers at the center of our technology experience. This segment primarily includes:

Windows, including Windows OEM ("Windows OEM") licenses and other non-volume licenses of the Windows operating system; Windows Commercial, including Windows Cloud Services and other Windows Commercial; Patent Licenses - Windows IoT™ and MSN Advertising.

Devices, including desktop and computing accessories

Gaming (including Xbox hardware; Content and Services, including digital transactions, Game Pass and other subscriptions, video games, third-party video game rights, cloud services and advertising); Search Advertising.

Windows

SUMMARY RESULTS OF OPERATIONS

The Windows operating system is designed to provide users with a more personal computing experience, enabling consistency of user experience, applications and information across devices. Windows OEM revenue is significantly impacted by the number of licenses that OEMs purchase for the Windows operating system to pre-install on the devices they sell. In addition to computer market volume, Windows OEM revenue is impacted by:	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
Attrition among consumers, small businesses and large enterprises.	Changes in inventory levels in the OEM channel.	Pricing changes and promotions, pricing variances as device mix manufacturing shifts from local and regional system manufacturers to large multinational OEMs, and pricing differences among versions of Windows.	Restrictions in the supply chain for device components.
Piracy.	Windows commercial revenue includes volume licensing of the Windows operating system and Windows cloud services, such as Microsoft Defender advanced threat protection security products. Windows commercial revenue often reflects the number of employees in our licensing business and is relatively independent of the number of computers sold in a given year.	Our patent licenses include patent licensing programs that grant licenses for use in a wide range of technology areas, including mobile devices and cloud products.	Windows IoT extends the power of Windows and the cloud to smart systems by providing specialized operating systems, tools and services for embedded devices.
MSN advertising includes both native and display advertising. Devices	MSN designs and sells devices, including desktops and computer accessories. Our devices are designed to help people and organizations connect with the people and content that matters most to them using Windows and Microsoft embedded products and services. Surface is designed to help organizations, students and consumers be more productive. Device growth is subject to overall PC shipments, our ability to acquire new customers, our product roadmap and our expansion into new categories.	Gambling	Our gaming platform is designed to deliver a wide variety of entertainment through a unique combination of content, community, and cloud. Xbox Game Studios is a collection of first-party studios that create virtual and differentiated gaming experiences. We continue to invest in new game studios and content to expand our IP roadmap and engage new content creators. These unique gaming experiences are the foundation of Xbox Game Pass, a subscription service and gaming community that gives you access to a curated library of more than 100 first-party and third-party console and PC titles.
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	Xbox enables people to connect and share online gaming experiences accessible from Xbox consoles, Windows-enabled devices, and other devices. Xbox is designed to benefit users by providing access to a network of certified applications and services, and to benefit an ecosystem of developers and partners by providing access to a large customer base. Xbox's revenues are primarily derived from subscriptions, sales of first- and third-party content, and advertising. The growth of our gaming business is determined by our overall active user base with Xbox-enabled content, the availability of games, the delivery of exclusive gaming content that players want, the computing power and reliability of the devices used to access our content and services, and our ability to create new experiences through first-party content creators.	Search Advertising	Our search business, which includes Bing and Microsoft Advertising, is designed to serve relevant online advertising to users around the world. We partner with several companies, including Verizon Media Group, through which we serve and monetize search queries. Our growth depends on our ability to acquire new users, understand intent, and match intent to relevant content and advertiser offers.
Windows faces a variety of software products, alternative platforms and devices such as Apple and Google. Windows is competing effectively by providing customers with a wide range of hardware and software applications, including options, value, flexibility, security, eas y-t o-use interfaces, and productivity. I think.	The device faces competition with multiple computers, tablets, and hardware manufacturers that provide unique combinations of hig h-quality industrial design and innovative technology at various prices. Many of these manufacturers are currently or potentially or customers, including Apple and Windows OEMs.	Xbox and our cloud gaming services are facing competition with various online games, ecosystem and game streaming services operated by Amazon, Apple, Facebook, Google, and Tencent. It also competes with other entertainment service providers, such as video streaming and platforms. Our game platform competes with Nintendo and Sony's console platforms, which have a larg e-scale customer base. Our game platform is a major technological innovation in hardware architectures, user interfaces, developer tools, online games and entertainment services, and continuous powerful monopoly by our unique leading game franchise developer. We are convinced that the provision of content and other digital content is effective for competing products and services and has its own differentiation.	Our search projects compete with Google, various websites that provide content and online services to end users, social media platforms and portal sites such as Facebook.
The regional centers in Ireland support Europe, the Middle East and African regions, and the centers in Singapore support Japan, India, and Asi a-Pacific. The Irish regional center supports Europe, the Middle East, and Africa, and the Singapore center supports Japan, India, the Greater and Asia Pacific regions. Fargo, North Dakota, Fort Loader Dale, Florida, Puerto Rico, Washington D. C. Redmond, and Reno, Nevada, supports Latin America and North America. In addition to operations centers, we operate data centers in the United States, Europe, Australia, Asia, Middle East and Africa.	In order to improve the quality and ease of use of products in the international market in accordance with the needs of customers around the world, we are localized many products to local languages and customs. Localization of the product may require a user interface change, a dialog box, or translation of text.	Search Advertising	Product / Service Development and Intellectual Property
We develop most products and services i n-house through the following engineering teams.	Cloud & AI divisions include cloud infrastructure, server, database, CRM, ERP, management / development tools, AI cognitive services, other enterprise business process applications and services We are focusing on enhancing the productivity and efficiency of the system.	Xbox and our cloud gaming services are facing competition with various online games, ecosystem and game streaming services operated by Amazon, Apple, Facebook, Google, and Tencent. It also competes with other entertainment service providers, such as video streaming and platforms. Our game platform competes with Nintendo and Sony's console platforms, which have a larg e-scale customer base. Our game platform is a major technological innovation in hardware architectures, user interfaces, developer tools, online games and entertainment services, and continuous powerful monopoly by our unique leading game franchise developer. We are convinced that the provision of content and other digital content is effective for competing products and services and has its own differentiation.	Our search business, which includes Bing and Microsoft Advertising, is designed to serve relevant online advertising to users around the world. We partner with several companies, including Verizon Media Group, through which we serve and monetize search queries. Our growth depends on our ability to acquire new users, understand intent, and match intent to relevant content and advertiser offers.

Linkedin focuses on our services that change customers, sales, marketing, and learning methods.

Gaming focuses on the development of hardware, content and services in a wide range of platforms, and supports the expansion of use r-based through games and social interaction experiences.

Internal development allows us to maintain the competitive advantage that comes from product differentiation and closer technical control of our products and services. It also gives us the freedom to decide which modifications and improvements are most important and when to implement them. We strive to be informed as early as possible of changes in usage standards and hardware advances that may affect our software and hardware design. We provide application vendors with a variety of resources and guidance for development, training and testing prior to the release of a new software platform or when making significant modifications to an existing platform. We also generally develop product documentation in-house.

We protect our intellectual property investments in a variety of ways. We actively work both in the United States and abroad to ensure that we have in place copyright, trademark, trade secret and other protections that apply to our software and hardware products, services, business plans and brands. We are a leader among technology companies in patent filings and currently have a portfolio of more than 65, 000 patents in the United States. While we use much of our internally developed intellectual property exclusively in our products and services, we also participate in outbound licensing of certain proprietary technologies that are incorporated into our licensees' products. From time to time, we enter into extensive multi-license agreements with other technology companies that cover the entire patent pool. We also purchase or license technology for incorporation into our products and services. We may provide selected intellectual property free of charge or at low cost to achieve strategic objectives, such as advancing industry standards, promoting interoperability, supporting social and environmental initiatives, and attracting and activating external development communities. Deepening our involvement with open source software

We may need to obtain or renew licenses relating to various aspects of our products, services and business methods in the future, but based on past experience and industry practices, we believe that such licenses will generally be obtained on commercially reasonable terms. We believe that our ongoing research and product development is not materially dependent on any licenses or other agreements with any third parties related to the development of our products.

Investing for the Future

Our success is based on our ability to create new and exciting products, services and experiences for our users, our ability to generate and incorporate disruptive technology trends, our ability to enter new geographies and product markets, and our ability to broadly disseminate our products and services. We invest in a number of emerging technology trends and innovations that we believe provide significant opportunities to deliver value to our customers and grow our company. Based on our evaluation of key technology trends, we are committed to the research and development of a wide range of technologies, tools and platforms, including digital work and life experiences, cloud computing, artificial intelligence, devices and operating systems, for the long term.
Our primary product research and development facility is located in Redmond, Washington, but we also operate research and development facilities throughout the United States and around the world. This global approach allows us to remain competitive in our local markets and continue to attract top talent from around the world.
In addition to our core research and development activities, we also operate Microsoft Research. Microsoft Research is one of the world's largest corporate research institutes, and works closely with leading universities around the world to advance the state of the art in computer science and a wide range of other fields, providing a unique perspective on future trends and contributing to our innovations.

We generally fund corporate-level research to look beyond our immediate products and into future opportunities. We also fund functional area-level research and development activities. Much of our division-level research and development is conducted in collaboration with other divisions and leveraged across the company. We expect to continue to invest significantly in a wide range of research and development activities.

We sell and distribute products and services through the following channels: OEM, direct sales, agents, and resale companies. Our sales units collaborate directly with profitable companies and public institutions around the world to identify and meet the requirements for technology and digital transmissions, OEM Relationship Management, System Integrator, Independent Software Vendor, In addition, we support partners who trade directly with our customers, and have various functions, such as selling our products and services, consulting, and executing the ful l-file function.

OEM

SEGMENT RESULTS OF OPERATIONS

We sell our products and services through OEMs that pr e-install our software to new devices and servers sold by the Company. The biggest component of the OEM business is the Windows Operating system pr e-installed on the device. OEM also sells devices with pr e-installed Microsoft products and services, such as Office and other applications and Office 365.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.
Distributor and reseller	The organization also provides licensing to Microsoft products and service partners through a licensing solution partner ("LSP"), distributor, added value reseller ("VAR"), and retailers. Each type of resale partner can reach al l-scale tissue, but LSPs are mainly traded with larg e-scale organizations, distributors are mainly resold in VAR, and VAR usually reaches small and mediu m-sized organizations. ESA usually acquires a license as an LSP and works as a reseller for other volume license programs. Microsoft Cloud Solution Providers are the main partner programs for reselling cloud services.	We sell products to retailers mainly through independent no n-monopoly distributors, regular sales agencies, resale companies, and retailers. Personal consumers mainly receive these products through retail stores. We sell devices through thir d-party retailers. The Company has a network of field sales representatives and field support staff who solicit orders from sales agencies and resale companies, provide product training and sales support.	In addition, our dynamic business solution has been licensed to companies through the global network of channel partners who provide vertical solutions and specialized services.
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	SA transfers rights to new software and upgrades to perpetual licenses released during the term of the agreement. It also provides support, tools, training, and other licensing benefits to help customers develop and use the software effectively. SA is included in some volume licensing agreements and can be purchased as an option in others.	Volume Licensing Programs	Enterprise Agreement
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	Microsoft Products and Services Agreement	The Microsoft Products and Services Agreement is designed for medium and large organizations that want to license cloud services and on-premise software on an as-needed basis. Organizations purchase perpetual licenses or subscribe to licenses. SA is optional when purchasing perpetual licenses.	Open Agreements are a simple and cost-effective way to get the latest technology from Microsoft. The Open Agreement is designed for small and medium-sized organizations that want to license cloud services and on-premise software for 1-3 years. With the Open Agreement, organizations purchase perpetual licenses and SA is optional. With the Open Value Agreement, organizations can choose to purchase perpetual licenses or subscribe to licenses and SA is included.
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Changes in inventory levels in the OEM channel.	Pricing changes and promotions, pricing variances as device mix manufacturing shifts from local and regional system manufacturers to large multinational OEMs, and pricing differences among versions of Windows.	Restrictions in the supply chain for device components.
Partner Program
Distributor and reseller	The Microsoft Service Provider License Agreement enables hosting service providers and independent software vendors who want to license the appropriate Microsoft software products to offer software services and hosted applications to end customers. Partners license the software for a three-year period and are billed monthly for consumption.	The Independent Software Vendor Royalty program allows partners to integrate Microsoft products with other applications and license the integrated business solutions to end users.	Our customers include individual consumers, small and medium-sized businesses, large global enterprises, public agencies, Internet service providers, application developers, and OEMs. Our practice is to ship products immediately when we receive an order from a customer. Therefore, we do not have a large backlog of orders.
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, which will be posted as soon as reasonably practicable after we electronically file or furnish such materials with the U. S. Securities and Exchange Commission (the "SEC") at www. sec. gov.	Information about our business strategy, financial results and metrics for investors.	Investor conference announcements, speeches and events where our management discusses our products, services and competitive strategy. Archives of these events are also available.
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	Corporate governance information, including our Articles of Incorporation, Bylaws, Governance Guidelines, Temple Committee, Code of Conduct and Ethics, Global Social Responsibility Initiatives, and other governance-related policies.	We may from time to time post other news or announcements that we believe may be useful or interesting to investors.	You can sign up for email alerts to receive information in real time.
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	The information posted on these websites is not part of or incorporated by reference in this document or in any other reports filed or furnished with the SEC. In addition to these channels, we use social media to communicate with the public. Information we post on social media may be considered material to investors. We encourage investors, media, and others interested in Microsoft to review the information we post on our social media channels, which are listed on our Investor Relations website.	The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD& A") is intended to assist readers in understanding Microsoft Corporation's results of operations and financial condition. The MD& A is intended to assist readers in understanding Microsoft Corporation's results of operations and financial condition. The MD& A is intended to supplement the Consolidated Financial Statements and should be read in conjunction with the Notes to Financial Statements. This section generally discusses our results of operations for the year ended June 30, 2021 compared to the year ended June 30, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended June 30, 2020 for a discussion of our results of operations for the year ended June 30, 2020 compared to the year ended June 30, 2019.	Our gaming platform is designed to deliver a wide variety of entertainment through a unique combination of content, community, and cloud. Xbox Game Studios is a collection of first-party studios that create virtual and differentiated gaming experiences. We continue to invest in new game studios and content to expand our IP roadmap and engage new content creators. These unique gaming experiences are the foundation of Xbox Game Pass, a subscription service and gaming community that gives you access to a curated library of more than 100 first-party and third-party console and PC titles.

100. 00

The highlight of 2021 compared to 2020 is as follows:

Commercial cloud sales increase 34%to $ 69. 1 billion.
Commercial office products and cloud services sales increased 13%by 22%of office 365.
Consumer office products and cloud services have increased by 10%, and Microsoft 365 consumers have increased to 51. 9 million.
Opportunities for "stretching" and progression in the workplace.

With 43%of Dynamics 365, sales of Dynamics products and cloud services increased 25%.

Server products and cloud services sales increased by 50%of Azure and increased by 27%.
Sales of Windows OEM (manufactured by partner brands) have increased slightly.

Windows commercial products and cloud services increased 14%.

Xbox content and service income increased by 23%.

Search advertising revenue, excluding traffic acquisition costs, increased 13%.
Surface sales increased by 5%.

On March 9, 2021, the Company was completed mainly for cash, mainly for cash, mainly for cash, with the acquisition of Zenimax Media Ink, the parent company of Bethesda Softworks LLC LLC. The acquisition amount contains $ 768 million in cash and cash equivalent. Zenimax's performance has been included in our consolidated financial statements since the acquisition date. Zenimax has been reported as part of the More Personal Computer Business. For more information, please refer to the Financial Note 8 "Corporate bonding".

Industry trends
In the world, both technology and business models are changing frequently, dynamic. Changes in each industry are opportunities to get new products, new technologies, or new ideas that will further change our industry and business. Microsoft is challenging the limits of possibilities through a wide range of R & D activities to determine the demands of changing customers and users, the trends of the industry, and the competitiveness of the industry.

Windows commercial products and cloud services increased 14%.

Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance. Construction of smart cloud and smart edge platform

Our success greatly depends on whether it can attract and maintain skilled employees. We recruit excellent human resources from universities and industries around the world. We have gained excellent human resources by providing excellent work environment, wide range of customers, resources, caree r-up opportunities for various products and businesses, competitive rewards and benefits. Masu. Our software, services, and devices in our general demand correlate to global macroeconomics and geopolitical factors, and they are still dynamic. On March 9, 2021, the Company was completed mainly for the total of $ 8. 1 billion, mainly for cash, mainly for cash, with the acquisition of Zenimax Media Inc. did. The acquisition amount contains $ 768 million in cash and cash equivalent. Zenimax's performance has been included in our consolidated financial statements since the acquisition date. Zenimax has been reported as part of the More Personal Computer Business. For more information, please refer to the Financial Note 8 "Corporate bonding".

Industry trends
In the world, both technology and business models are changing frequently, dynamic. Changes in each industry are opportunities to get new products, new technologies, or new ideas that will further change our industry and business. Microsoft is challenging the limits of possibilities through a wide range of R & D activities to determine the demands of changing customers and users, the trends of the industry, and the competitiveness of the industry.
Economic situation, issues, risks
Clou d-based software, devices, and service markets are dynamic and competitive. While competitors develop new software and devices, they are developing competitive clou d-based services for consumers and companies. The devices and form factors that customers prefer have evolved rapidly, affecting how to access cloud services, in some cases, which clou d-based services are used. In such a change in the environment, we must continue to evolve and adapt for a long time. Infula and devices can continue to increase operating costs and decrease operating margins.

Our success greatly depends on whether it can attract and maintain skilled employees. We recruit excellent human resources from universities and industries around the world. We have gained excellent human resources by providing excellent work environment, wide range of customers, resources, caree r-up opportunities for various products and businesses, competitive rewards and benefits. Masu. Our software, services, and devices in our general demand correlate to global macroeconomics and geopolitical factors, and they are still dynamic. On March 9, 2021, the Company was completed mainly for cash, mainly for cash, mainly for cash, with the acquisition of Zenimax Media Ink, the parent company of Bethesda Softworks LLC LLC. The acquisition amount contains $ 768 million in cash and cash equivalent. Zenimax's performance has been included in our consolidated financial statements since the acquisition date. Zenimax has been reported as part of the More Personal Computer Business. For more information, please refer to the Financial Note 8 "Corporate bonding".

Industry trends
In the world, both technology and business models are changing frequently, dynamic. Changes in each industry are opportunities to get new products, new technologies, or new ideas that will further change our industry and business. Microsoft is challenging the limits of possibilities through a wide range of R & D activities to determine the demands of changing customers and users, the trends of the industry, and the competitiveness of the industry.

Economic situation, issues, risks

OPERATING EXPENSES

Clou d-based software, devices, and service markets are dynamic and competitive. While competitors develop new software and devices, they are developing competitive clou d-based services for consumers and companies. The devices and form factors that customers prefer have evolved rapidly, affecting how to access cloud services, in some cases, which clou d-based services are used. In such a change in the environment, we must continue to evolve and adapt for a long time. Infula and devices can continue to increase operating costs and decrease operating margins.

We sell our products and services through OEMs that pr e-install our software to new devices and servers sold by the Company. The biggest component of the OEM business is the Windows Operating system pr e-installed on the device. OEM also sells devices with pr e-installed Microsoft products and services, such as Office and other applications and Office 365.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
COVID 19	In fiscal 2021, the trend of Covid 19 continued to influence our business management and business performance. The use and demand of the cloud was benefited because the customer accelerated digital transformation priority. Our consumer business also benefited from the remote environment, continuing demand for computing tools and productivity improvement tools, and also performed wel l-performing engagement throughout our game platforms. Customer advertising costs have improved and operating costs related to COVID-19 have been reduced, but transaction licensing was low. COVID-19 trends can continue to affect our business and business performance, and there is an uncertainty in the nature and range of long-term impact. Please refer to the risk factors of FORM 10-K in 2021 for these factors and other risks.	Epocotis	8%
Our sales fluctuates every quarter and generally higher in the second quarter and fourth quarter of the fiscal year. Sales in the second quarter are due to the yea r-end consumption trends in the main market and the consumer consumption trends during the yea r-end and New Year holidays, and the sales in the fourth quarter, depending on the amount of mult i-year IIIStes executed during that period, each lef t-right. It will be.	Change of accounting estimate	In July 2020, the Company should complete the useful life of server and network devices, increase the useful life of server equipment from 3 to 4 years, and increase the useful life of network equipment from 2 to 4 years. I judged that it was. This accounting estimate has been applied since FY2021. Based on the transfer amount of server equipment and network devices included in tangible fixed assets (pure amounts) as of June 30, 2020, the effects of the 2021 fiscal year due to the change in this estimate are $ 2. 7 billion in operating income. Profit is $ 2. 3 billion, an increase of $ 0. 30 per share after the basics and thinning.	Segments that may be reported

We are reporting based on productivity, business processes, smart clouds, and more personal computing. MD & amp; amp; a is displayed as a standard for internal management reports. The differences between internal management reporting standards and accounting principles (hereinafter referred to as "GAAP"), which are generally accepted in the United States, are all included in the company's company and other activities, along with specific compan y-wide and other activities. There is.

Our success is based on our ability to create new and exciting products, services and experiences for our users, our ability to generate and incorporate disruptive technology trends, our ability to enter new geographies and product markets, and our ability to broadly disseminate our products and services. We invest in a number of emerging technology trends and innovations that we believe provide significant opportunities to deliver value to our customers and grow our company. Based on our evaluation of key technology trends, we are committed to the research and development of a wide range of technologies, tools and platforms, including digital work and life experiences, cloud computing, artificial intelligence, devices and operating systems, for the long term.

Measurement method

We sell our products and services through OEMs that pr e-install our software to new devices and servers sold by the Company. The biggest component of the OEM business is the Windows Operating system pr e-installed on the device. OEM also sells devices with pr e-installed Microsoft products and services, such as Office and other applications and Office 365.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
Of the revenue allocated to the remaining obligation to implement, the amount of money that is paid for the previous income and the future period and is recognized as revenue	Commercial cloud revenue	Profit from Azure, Office 365 Commercial, Linkedin Commercial, Dynamics 365 and other commercial cloud properties	3%
Our sales fluctuates every quarter and generally higher in the second quarter and fourth quarter of the fiscal year. Sales in the second quarter are due to the yea r-end consumption trends in the main market and the consumer consumption trends during the yea r-end and New Year holidays, and the sales in the fourth quarter, depending on the amount of mult i-year IIIStes executed during that period, each lef t-right. It will be.	Change of accounting estimate	Productivity / Business Process and Intelligent Cloud	Indicators related to productivity, business processes and smart cloud departments evaluate the soundness of the core business in these departments. These indicators reflect the strategies and trends of cloud and facilities.

Increased profits due to commercial office products and cloud services

Our primary product research and development facility is located in Redmond, Washington, but we also operate research and development facilities throughout the United States and around the world. This global approach allows us to remain competitive in our local markets and continue to attract top talent from around the world.

Increased profits from consumer office products and cloud services

We sell our products and services through OEMs that pr e-install our software to new devices and servers sold by the Company. The biggest component of the OEM business is the Windows Operating system pr e-installed on the device. OEM also sells devices with pr e-installed Microsoft products and services, such as Office and other applications and Office 365.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
Microsoft 365 Consumer (formerly Office 365 Consumer) Number of terminators	Most momentum and profits by cloud services	Profit from Dynamics products and cloud services containing Dynamics 365, which contains Dynamics 365, an intelligent clou d-based application group such as ERP, CRM, Customer Insight, Power Application, Power Application, Automatic Energy. And profits from o n-premises ERP and CRM applications.	0%
Our sales fluctuates every quarter and generally higher in the second quarter and fourth quarter of the fiscal year. Sales in the second quarter are due to the yea r-end consumption trends in the main market and the consumer consumption trends during the yea r-end and New Year holidays, and the sales in the fourth quarter, depending on the amount of mult i-year IIIStes executed during that period, each lef t-right. It will be.	Link y-in profits including talent solutions, marketing solutions, premium subscriptions, sales solutions, and learning solutions	4%	Segments that may be reported

Azure, SQL Server, Windows Server, Visual Studio, Central System, and related customer access licenses ("CALS"), revenue from server products and cloud services including GitHub.

In addition to our core research and development activities, we also operate Microsoft Research. Microsoft Research is one of the world's largest corporate research institutes, and works closely with leading universities around the world to advance the state of the art in computer science and a wide range of other fields, providing a unique perspective on future trends and contributing to our innovations.

OTHER INCOME (EXPENSE), NET

The indicators related to the More Personal Computers segment evaluates the achievements in the main business of the segment. These indicators provide strategic product information to evaluate the performance of business and general consumer businesses. The Windows Business has a variety of viewer targets and sales, which tracks indicators that reflect these various movements.

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
Increase in sales of commercial products and cloud services	Window s-licensed, Windows cloud services, and revenue from Windows commercial products and cloud services including Windows cloud services, other Windows commercial products	Surface device and accessories
Increased profits from Xbox content and services	Increased from digital transactions, Xbox Game Pass and other subscriptions, video games, thir d-party video game usage fees, cloud services and advertising.	Search advertising revenue (excluding TAC)
Search advertising revenue excluding traffic acquisition costs (TAC) paid to Bing ADS network publishers	(Unit: $ 1 million, percentage and amount per share)	32
2021	2020	187
Rate of increase / decrease	Sales	168. 088 $
143. 015 $	18%	General profit margin
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	96. 937	20%

Operating profit

69. 916

INCOME TAXES

52. 959

32%

net income

61. 271

44. 281

38%

Reduction of profit per share

8. 05

5, 76

NON-GAAP FINANCIAL MEASURES

40%

Net income after adjustment (no n-GAAP standard)

The Windows operating system is designed to provide users with a more personal computing experience, enabling consistency of user experience, applications and information across devices. Windows OEM revenue is significantly impacted by the number of licenses that OEMs purchase for the Windows operating system to pre-install on the devices they sell. In addition to computer market volume, Windows OEM revenue is impacted by:	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	Attachment of Windows to devices shipped.
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	5, 76	38%	Our search business, which includes Bing and Microsoft Advertising, is designed to serve relevant online advertising to users around the world. We partner with several companies, including Verizon Media Group, through which we serve and monetize search queries. Our growth depends on our ability to acquire new users, understand intent, and match intent to relevant content and advertiser offers.
With the growth of each field, sales increased $ 25. 1 billion (18%). Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	The cost of sales was partially offset due to a decrease in depreciation expenses due to a change in the estimated service life of servers and network devices, but increased $ 6. 2 billion (13%) due to the growth of commercial cloud and gaming.	0	*
The regional centers in Ireland support Europe, the Middle East and African regions, and the centers in Singapore support Japan, India, and Asi a-Pacific. The Irish regional center supports Europe, the Middle East, and Africa, and the Singapore center supports Japan, India, the Greater and Asia Pacific regions. Fargo, North Dakota, Fort Loader Dale, Florida, Puerto Rico, Washington D. C. Redmond, and Reno, Nevada, supports Latin America and North America. In addition to operations centers, we operate data centers in the United States, Europe, Australia, Asia, Middle East and Africa.	Opening costs have increased $ 2 billion (4 %) due to investment in cloud technology and commercial sales, but the cost of the COVID-19 related to each segment, the cost of the previous year related to the closing of the Microsoft Store, and the lending. Some were partly offset due to a decrease in overwhelming expenses.	38%	Product / Service Development and Intellectual Property
Windows faces a variety of software products, alternative platforms and devices such as Apple and Google. Windows is competing effectively by providing customers with a wide range of hardware and software applications, including options, value, flexibility, security, eas y-t o-use interfaces, and productivity. I think.	The general management expenses were relatively flat due to the expenses related to the closure of the actual Microsoft Store store in the previous year, but were partially offset by some employe e-related expenses and the increase in business taxes.	Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices. < SPAN> Sales increased $ 25. 1 billion (18%) due to the growth of each field. Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	Our search projects compete with Google, various websites that provide content and online services to end users, social media platforms and portal sites such as Facebook.
With the growth of each field, sales increased $ 25. 1 billion (18%). Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	Opening costs have increased $ 2 billion (4 %) due to investment in cloud technology and commercial sales, but the cost of the COVID-19 related to each segment, the cost of the previous year related to the closing of the Microsoft Store, and the lending. Some were partly offset due to a decrease in overwhelming expenses.	0	*
We develop most products and services i n-house through the following engineering teams.	R & D expenses increased $ 1. 4 billion (8 %) due to investment in cloud engineering.	Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices. < SPAN> Sales increased $ 25. 1 billion (18%) due to the growth of each field. Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	Our search business, which includes Bing and Microsoft Advertising, is designed to serve relevant online advertising to users around the world. We partner with several companies, including Verizon Media Group, through which we serve and monetize search queries. Our growth depends on our ability to acquire new users, understand intent, and match intent to relevant content and advertiser offers.

FINANCIAL CONDITION

Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices. With the growth of each field, sales increased $ 25. 1 billion (18%). Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.

The cost of sales was partially offset due to a decrease in depreciation expenses due to a change in the estimated service life of servers and network devices, but increased $ 6. 2 billion (13%) due to the growth of commercial cloud and gaming.

The gross profit margin increased $ 18. 9 billion (20 %) due to the growth of each segment and the use of the server and network devices. The gross profit margin increased due to changes in the estimated life of servers and network devices. Excluding this effect, gross profit margins have slightly decreased due to the decrease in gross profit margin of more PCs. Although the gross profit margin of commercial clouds was partially offset by sales shifts to Ajules, the increase in gross profit margin in the jeals and the number of valuable life of servers and network equipment has increased by 4 points to 71%. I did it.

Opening costs have increased $ 2 billion (4 %) due to investment in cloud technology and commercial sales, but the cost of the COVID-19 related to each segment, the cost of the previous year related to the closing of the Microsoft Store, and the lending. Some were partly offset due to a decrease in overwhelming expenses.

The main fluctuations in operating costs are as follows:

R & D expenses increased $ 1. 4 billion (8 %) due to investment in cloud engineering.

Sales and marketing costs increased $ 519 million (3 %) due to investment in commercial sales, but were partially offset due to a decrease in leafing costs. Sales and marketing costs include 2%of the disadvantage of foreign exchange.

The general management expenses were relatively flat due to the expenses related to the closure of the actual Microsoft Store store in the previous year, but were partially offset by some employe e-related expenses and the increase in business taxes.

Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices.

Net income and diluted EPS were favorably impacted by tax benefits related to the Supreme Court of India's withholding tax ruling, which increased net income by $620 million and diluted EPS by $0. 08.

Revenue, gross margin and operating income included favorable foreign exchange impacts of 3%, 3% and 4%, respectively.

(In millions of dollars, not percentages)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
2020
Change	Revenue
Productivity and Business Processes	$53. 915
$46. 398	16%
Smart Cloud	$60. 080
$48. 366	24%
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	$54. 093

$48, 251

Total

On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020.

$143. 015

18%

Operating Income

Productivity and Business Processes

$24. 351

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	30%	Smart Cloud	$26. 126	$18. 324	Fourth quarter
More Personal Calculations
$19. 439	$15. 911	22%	Total	$69. 916	$52. 959
32%	Reportable Divisions	Productivity and Business Processes	Revenue was 75 $4. 0 billion, or 16%, increased.	Commercial office products and cloud services revenue increased $4. 0 billion, or 13%, driven by 17% growth in seats and higher revenue per user. Commercial office products revenue decreased 23% due to a continued customer shift to cloud products and slower transactions.	Consumer office products and cloud services revenue increased $474 million, or 10%, driven by Microsoft 365 consumer subscription sales, benefiting from strong transactions in Japan, with a strong year-over-year comparison. Microsoft 365 consumer subscriptions increased 22% to 51. 9 million.
LinkedIn revenue increased $2. 2 billion, or 27%, driven by advertising demand in the Marketing Solutions business.	Dynamics products and cloud services sales increased 25%, driven by 43% growth in Dynamics 365.	Operating revenues increased $5. 6 billion, or 30%.	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Revenue, gross margin and operating income include favorable foreign exchange impacts of 2%, 3% and 4%, respectively.
Revenues increased $11. 7 billion, or 24 percent.	Server and cloud services revenues increased $11. 2 billion, or 27 percent, driven by Azure. Azure revenues increased 50 percent due to growth in consumption services. Server revenues increased 6 percent, driven by hybrid and premium solutions, during a strong prior year that benefited from demand related to the end of support for SQL Server 2008 and Windows Server 2008.	Enterprise services revenues increased $534 million, or 8 percent, driven by growth in Premier Support services.	Operating revenues increased $7. 8 billion, or 43 percent.	Gross margin increased $9. 7 billion, or 29 percent, driven by growth in Azure and changes in the estimated useful lives of server and network equipment. Gross margins increased due to changes in the estimated useful lives of server and network equipment. Excluding this impact, gross margin was relatively flat due to improved Azure gross margin, partially offset by a shift in revenue mix toward Azure.	Operating expenses increased $1. 9 billion, or 12%, due to investments in Azure.
Revenue, gross margin, and operating income included favorable foreign exchange impacts of 2%, 3%, and 4%, respectively.	Personal Computer Growth	Revenue increased $5. 8 billion, or 12%.	Windows revenue increased $933 million, or 4%, due to growth in Windows Commercial. Windows Commercial and Cloud Services revenue increased 14% due to demand for Microsoft 365. Windows OEM revenue increased slightly due to consumer PC demand, compared to strong OEM Pro last year, which benefited from the end of support for Windows 7. Windows OEM Pro revenue decreased 9% and Windows OEM non-Pro revenue increased 21%.	Gaming revenue increased $3. 8 billion, or 33%, driven by growth in Xbox content and services and Xbox hardware. Xbox content and services revenue increased 23%, or $2. 3 billion, driven by growth in third-party titles, Xbox Game Pass subscriptions and first-party titles. Xbox hardware revenue increased 92%, driven by higher console prices due to the launch of Xbox Series X\|S.	Search advertising revenue increased $788 million, or 10%. Search advertising revenue, excluding traffic acquisition costs, increased 13% due to higher revenue per search and higher number of searches.
Surface sales increased $302 million, or 5%.	Operating revenue increased $3. 5 billion, or 22%.	Gross profit margins have increased $ 2. 8 billion (10 %) due to the growth of Windows, games, and search advertisements. The gross profit margin decreased due to the shift in the sales structure to the game hardware.	Although the operating costs were partially offset by the investment in the game, $ 752 million (6 %) decreased due to costs related to the closing of the Microsoft Store in the previous year, reducing retailers and marketing costs. did.	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	R & D expenses
(Unit: $ 1 million, excluding ratio)	2021	2020	Rate of increase / decrease	R & D expenses	20. 716 $
19. 269 $	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	12%	13%	(1) PPT	R & D expenses include salaries, employee benefits, stock remuneration expenses, and other expenses related to the number of employees related to product development. R & D expenses include thir d-party development and programming expenses, localization costs for translating software for international markets, and depreciation costs for purchased software codes and service content.
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Sales and marketing	(Unit: $ 1 million, excluding ratio)	2021	2020	Rate of increase / decrease

Sales and marketing
20. 117 $
19. 598 $
Publicing high ratio
12%
14%

(2) PPT

Sales and marketing costs include salaries, employee benefits, stock reward costs, other sales and marketing expenses, advertising expenses, sales promotion expenses, exhibition fees, seminar costs, and other program costs.

Sales and marketing costs increased $ 519 million (3%) due to investment in sales, but were partially offset by the decrease in bad debts. Sales and marketing costs include 2%disadvantageous effects on exchange rates.

General management expenses

(Unit: $ 1 million, excluding ratio)

2021

RECENT ACCOUNTING GUIDANCE

2020

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Rate of increase / decrease

General management expenses

5. 107 $

5. 111 $

Publicing high ratio

(1) PPT

General management expenses include salaries, employee benefits, stock reimbursement, financial, financial, legal, facilities, personnel resources, and other retirement allowances, other expenses, taxes, lawyer fees, and other management costs. Like.

General and administrative expenses were relatively flat due to the expense recorded in the prior year related to the closure of Microsoft Store physical locations, partially offset by an increase in certain employee-related expenses and business taxes.

Other income (expense), net consisted of the following:

(in millions of euros)

Year ended June 30

2021

2020

Interest and dividend income

2. 131 $

2. 680 $

Interest expense

(2. 346)

(2. 591)

Net investment income

1. 232

Gain on valuation of derivatives

Exchange gain (loss)

(191)

Other, net

(40)

Total

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

RISKS

1. 186 $

$77

Derivatives are used to manage foreign currency, equity price, interest rate and credit risks. Gains and losses from changes in fair value of derivatives not designated as hedging instruments are primarily included in other income (expense), net. .

Interest and dividend income decreased due to lower bond yields. Interest expense decreased due to a decrease in long-term debt balances due to debt maturities. Investment income increased due to an increase in gains on sale of equity securities. Derivative valuation gains decreased due to a decrease in gains on foreign exchange forward contracts.

Effective Tax Rate

The effective tax rate for fiscal 2021 and 2020 was 14% and 17%, respectively. The decrease in the effective tax rate was primarily due to the Supreme Court of India's decision on withholding tax in Engineering Analysis Center of Excellence Private Limited v. The Commissioner of Income Tax, the agreement between the U. S. and Indian tax authorities on transfer pricing, the final regulations of the Tax Cuts and Jobs Act ("TCJA"), and increased tax benefits related to stock-based compensation.

Until now, the company has paid with withholding tax on software sales through withholding with Indian agencies and tax audits. In March 2021, the Indian Supreme Court ruled in 86 individual appeals, including those dating back in 2012, that software sales were not eligible for withholding in India. Although we were not the party of the appeal, it was determined that our software sales in India are not subject to withholding. As a result, the Supreme Supreme Court's ruling from 1996 to FY2016 was recorded in the third quarter of fiscal 2021, and the tax effect (pure amount) of $ 62 billion was recorded.

The main reasons for our effective tax rate below the US Federal Statatular Tax rate are the profit that is taxed at low tax rates in overseas jurisdictions generated by our products and services through the overseas regional business bases of Ireland and Puerto Rico. This is due to tax incentives related to stoc k-based rewards, and tax incentive treatment by the Indian Supreme Court for withholding.

The composition ratio of profi t-ag o-prone profits between the United States and other countries affected our effective tax rates as a result of geographical distribution and customer demand for our products and services. In FY2021, the US tax before the US tax was $ 35 billion, and the profit before overseas tax was $ 36. 1 billion. In 2020, the US tax before the US tax was $ 24. 1 billion, and the profit before foreign tax was $ 28. 9 billion.

SENSITIVITY ANALYSIS

Unreserved tax position

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
As of June 30, 2021, the primary outstanding matters in the IRS audit relate to transfer pricing, which, if resolved, could have a material impact on our consolidated financial statements. We believe our provisions for income tax contingencies are adequate. We have not received any proposed assessments on the primary outstanding transfer pricing matters and do not expect these matters to be ultimately resolved within the next 12 months. Based on currently available information, we do not expect a material increase or decrease in our tax contingencies related to these matters within the next 12 months.	We are subject to income tax in many jurisdictions outside the United States. Our operations in certain jurisdictions remain subject to examination for tax years 1996 through 2020, some of which are currently under examination by local tax authorities. The resolution of these tax examinations will have an immaterial impact on our consolidated financial statements.	Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:	(in millions, excluding percentages and per share amounts)
2021	2020	Percentage change	Net income
61. 271$	2020	38%	Net income tax effect related to the Supreme Court of India ruling on tax withholding
(620)	Adjusted net income (non-GAAP)	60. 651$	Net income tax effect related to the Supreme Court of India ruling on tax withholding
37%	Decrease in earnings per share	8. 05$	Net income tax effect related to the Supreme Court of India ruling on tax withholding
40%	Net income tax effect related to the Supreme Court of India ruling on tax withholding	(0. 08)	Net income

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INCOME STATEMENTS

7. 97$
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
evaluation
In general, in addition, in order to determine the fair value of financial products, we use the same assets or debt market prices in active markets. This price determination method applies to level 1 investment such as US government bonds, ordinary stocks, priority stocks, and investment trusts. If the same assets or liabilities in the active market cannot be obtained in order to determine the fair value, other than the market price of similar assets and debt, or the market price directly or indirectly observed. I use input. This price determination method applies to level 2 investments such as commercial paper, transferred deposits, US government agencies, foreign government bonds, mortgage securities, asset securities, corporate bonds, local bonds, etc. Level 3 investment is evaluated using an input model developed internally. Assets and liabilities that are repeatedly measured in fair value using an input input are the intangible assets of the portfolio. < SPAN> The total of cash, cash equivalent and shor t-term investment as of June 30, 2021 and June 30, 2020 was $ 130. 3 billion and $ 136. 5 billion, respectively. The stock investment was $ 6 billion and $ 3 billion, respectively, as of June 30, 2021 and June 30, 2020. Our shor t-term investment is mainly for securing liquidity and conservation of capital. These investments are mainly composed of hig h-quality hig h-yield investment, which are distributed in industries and individual issues. Investment is mainly U S-dolla r-building securities, but it also includes foreign currency securities for risk distribution. Our bond investment is exposed to interest rates and credit risk. The debt portfolio's credit risk and average remaining period are managed to achieve economic returns correlated with a specific bond index. Since shor t-term investment is mainly a bond with high liquidity, the settlement risk related to these investments is minor.	evaluation	In general, in addition, in order to determine the fair value of financial products, we use the same assets or debt market prices in active markets. This price determination method applies to level 1 investment such as US government bonds, ordinary stocks, priority stocks, and investment trusts. If the same assets or liabilities in the active market cannot be obtained in order to determine the fair value, other than the market price of similar assets and debt, or the market price directly or indirectly observed. I use input. This price determination method applies to level 2 investments such as commercial paper, transferred deposits, US government agencies, foreign government bonds, mortgage securities, asset securities, corporate bonds, local bonds, etc. Level 3 investment is evaluated using an input model developed internally. Assets and liabilities that are repeatedly measured in fair value using an input input are the intangible assets of the portfolio. The total of cash, cash equivalent and shor t-term investment as of June 30, 2021 and June 30, 2020 was $ 130. 3 billion and $ 136. 5 billion, respectively. The stock investment was $ 6 billion and $ 3 billion, respectively, as of June 30, 2021 and June 30, 2020. Our shor t-term investment is mainly for securing liquidity and conservation of capital. These investments are mainly composed of hig h-quality hig h-yield investment, which are distributed in industries and individual issues. Investment is mainly U S-dolla r-building securities, but it also includes foreign currency securities for risk distribution. Our bond investment is exposed to interest rates and credit risk. The debt portfolio's credit risk and average remaining period are managed to achieve economic returns correlated with a specific bond index. Since shor t-term investment is mainly a bond with high liquidity, the settlement risk related to these investments is minor.	evaluation
In general, in addition, in order to determine the fair value of financial products, we use the same assets or debt market prices in active markets. This price determination method applies to level 1 investment such as US government bonds, ordinary stocks, priority stocks, and investment trusts. If the same assets or liabilities in the active market cannot be obtained in order to determine the fair value, other than the market price of similar assets and debt, or the market price directly or indirectly observed. I use input. This price determination method applies to level 2 investments such as commercial paper, transferred deposits, US government agencies, foreign government bonds, mortgage securities, asset securities, corporate bonds, local bonds, etc. Level 3 investment is evaluated using an input model developed internally. Assets and liabilities that are repeatedly measured in fair value using an input input are the intangible assets of the portfolio.	Broker pricing is used primarily when market prices are not available, pricing vendors do not price, or broker pricing more closely reflects fair value in the market in which the investment is traded. Broker-priced investments are generally classified as Level 2 investments. In addition, all of our broker-priced investments have sufficient levels of trading volume to indicate that the fair values used are appropriate for these investments. Our fair value procedures include controls to ensure that appropriate fair values are recorded. These controls include model validation, reviewing key inputs to the models, analyzing period-to-period changes in each period, and independently recalculating values as necessary.	Cash Flows	Cash flows from operating activities increased $16. 1 billion to $76. 7 billion in fiscal 2021, primarily due to higher cash received from customers, partially offset by higher cash paid to suppliers and employees. Cash used in financing increased $2. 5 billion to $48. 5 billion in fiscal 2021, primarily due to an increase in common stock repurchases of $4. 4 billion and an increase in dividend payments of $1. 4 billion, partially offset by a decrease in debt repayments of $1. 8 billion and a decrease in cash used in financing of $1. 7 billion. Premiums paid on debt swaps decreased $1. 0 billion. Cash used in investing increased $15. 4 billion to $27. 6 billion in fiscal 2021, primarily due to an increase in cash used in business acquisitions, net of cash acquired, and cash used to purchase intangible and other assets of $6. 4 billion, an increase in cash used for additions to property, plant and equipment of $5. 2 billion, and a decrease in cash from net purchases, sales and redemptions of investments of $4. 1 billion. Liabilities
We issue debt to take advantage of favorable pricing and debt market liquidity, reflecting our creditworthiness and the low interest rate environment. Proceeds from these issuances have been or will be used for general corporate purposes, including working capital, capital expenditures, capital repurchases, acquisitions and repayment of existing debt. In March 2021 and June 2020, we exchanged a portion of our existing debt for cash collateral and new debt with longer maturities to take advantage of favorable funding rates in the debt markets, reflecting our credit ratings and the low interest rate environment. For more information, see Note 11, "Debt," to the Financial Statements.	Unearned Revenue	Unearned revenue primarily includes unearned revenue related to volume licensing programs, including Software Assurance ("SA") and cloud services. Unearned revenue is generally billed annually at the beginning of each contract period for multi-year agreements and recognized ratably over the applicable period. Unearned revenue also includes payments for other deliverables that are paid in advance and for which revenue is earned upon the transfer of control of the product or service. For further information, see Note 1 to the financial statements, "Accounting policies".	The following table sets forth the expected future recognition of unearned revenue as of June 30, 2021:
(in millions of euros)
In general, in addition, in order to determine the fair value of financial products, we use the same assets or debt market prices in active markets. This price determination method applies to level 1 investment such as US government bonds, ordinary stocks, priority stocks, and investment trusts. If the same assets or liabilities in the active market cannot be obtained in order to determine the fair value, other than the market price of similar assets and debt, or the market price directly or indirectly observed. I use input. This price determination method applies to level 2 investments such as commercial paper, transferred deposits, US government agencies, foreign government bonds, mortgage securities, asset securities, corporate bonds, local bonds, etc. Level 3 investment is evaluated using an input model developed internally. Assets and liabilities that are repeatedly measured in fair value using an input input are the intangible assets of the portfolio. < SPAN> The total of cash, cash equivalent and shor t-term investment as of June 30, 2021 and June 30, 2020 was $ 130. 3 billion and $ 136. 5 billion, respectively. The stock investment was $ 6 billion and $ 3 billion, respectively, as of June 30, 2021 and June 30, 2020. Our shor t-term investment is mainly for securing liquidity and conservation of capital. These investments are mainly composed of hig h-quality hig h-yield investment, which are distributed in industries and individual issues. Investment is mainly U S-dolla r-building securities, but it also includes foreign currency securities for risk distribution. Our bond investment is exposed to interest rates and credit risk. The debt portfolio's credit risk and average remaining period are managed to achieve economic returns correlated with a specific bond index. Since shor t-term investment is mainly a bond with high liquidity, the settlement risk related to these investments is minor.	September 30, 2021	15. 922 $	December 31, 2021
In general, in addition, in order to determine the fair value of financial products, we use the same assets or debt market prices in active markets. This price determination method applies to level 1 investment such as US government bonds, ordinary stocks, priority stocks, and investment trusts. If the same assets or liabilities in the active market cannot be obtained in order to determine the fair value, other than the market price of similar assets and debt, or the market price directly or indirectly observed. I use input. This price determination method applies to level 2 investments such as commercial paper, transferred deposits, US government agencies, foreign government bonds, mortgage securities, asset securities, corporate bonds, local bonds, etc. Level 3 investment is evaluated using an input model developed internally. Assets and liabilities that are repeatedly measured in fair value using an input input are the intangible assets of the portfolio.	March 31, 2022	8. 786	June 30, 2022
4. 171	Subsequently	2. 616	Total
Piracy.	Windows commercial revenue includes volume licensing of the Windows operating system and Windows cloud services, such as Microsoft Defender advanced threat protection security products. Windows commercial revenue often reflects the number of employees in our licensing business and is relatively independent of the number of computers sold in a given year.	Our patent licenses include patent licensing programs that grant licenses for use in a wide range of technology areas, including mobile devices and cloud products.	During fiscal 2021 and fiscal 2020, the Company repurchased 101 million shares of its common stock for $23. 0 billion and 126 million shares for $19. 7 billion through its share repurchase program. All repurchases were made in cash. For more information, see Note 16, "Stockholders' Equity," to the Financial Statements.
COVID 19	For more information, see Note 16, "Stockholders' Equity," to the Financial Statements.	Off-Balance Sheet Transactions	We provide indemnifications of varying scope and magnitude to certain customers against third-party intellectual property infringement claims arising from the use of our products or other matters. In addition, we have agreed to cover damages arising from breaches of certain security and privacy promises in our cloud business. In assessing the estimated loss from these liabilities, we consider factors such as the degree to which an adverse outcome is likely and our ability to reasonably estimate the amount of loss. These liabilities do not have a material impact on our consolidated financial statements. Contractual Obligations
Of the revenue allocated to the remaining obligation to implement, the amount of money that is paid for the previous income and the future period and is recognized as revenue	(in millions of euros)	2022	2023-2024
Microsoft 365 Consumer (formerly Office 365 Consumer) Number of terminators	Total	Long-term debt: (a)	Capital payments
MSN advertising includes both native and display advertising. Devices	MSN designs and sells devices, including desktops and computer accessories. Our devices are designed to help people and organizations connect with the people and content that matters most to them using Windows and Microsoft embedded products and services. Surface is designed to help organizations, students and consumers be more productive. Device growth is subject to overall PC shipments, our ability to acquire new customers, our product roadmap and our expansion into new categories.	Gambling	42. 585 $
63. 910 $	Interest expense	77	729
1. 628	2. 847	2. 438	17. 320
24. 233	Construction commitments (b)	8. 927	529
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	5, 76	38%	Operating leases (including imputed interest) (c)
2. 801
4. 956	3. 469	6. 747	17. 973
Finance leases (including imputed interest) (c)	The general management expenses were relatively flat due to the expenses related to the closure of the actual Microsoft Store store in the previous year, but were partially offset by some employe e-related expenses and the increase in business taxes.	Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices. < SPAN> Sales increased $ 25. 1 billion (18%) due to the growth of each field. Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	3. 774
14. 096
4. 956	Temporary tax rate (d)	1. 427	4. 105
Finance leases (including imputed interest) (c)	0	13. 562	Purchase commitments (e)

29. 129

COMPREHENSIVE INCOME STATEMENTS

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	5, 76	38%	Operating leases (including imputed interest) (c)
696
Total	53. 328 $	25. 766 $	23. 475 $
81. 281 $	183. 850 $	See Note 11, "Liabilities," to the financial statements.	See Note 7, "Property, plant and equipment," to the financial statements.
See Note 14, "Leases."	See Note 12, "Income Taxes."	Amounts represent purchase commitments, including open purchase orders and take-off agreements, and are not presented as construction commitments above.	Long-term contingent tax, other tax liabilities and deferred taxes exclude $14. 6 billion from the amounts presented due to the uncertainty of the timing of these liabilities. Also excludes unearned revenue and non-cash income.
Other planned capital uses	On April 11, 2021, I signed a final contract to acquire Nuance Communications (hereinafter "Nuance Company") for $ 56 per share. The final contract to be acquired for $ $ 00 (including nuance bonds). The acquisition is approved by the nuance shareholder, and is expected to be completed by the end of 2021, on the condition that the approval of a specific regulatory authorities and other customary completion conditions are met.	Continue investing in sales, marketing, product support infrastructure, existing and advanced technical fields, and continues to acquire a business strategy. We plan to add stamped assets, such as R & D, sales marketing, support, and new facilities, data, and computer systems for management staff. We expect capital spending to increase in the next few years to support the growth of cloud services. We have operated data operations, corporate offices, research and development facilities, Microsoft Experience Center, and leases for specific devices to raise funds. The Company has not dealt with a rational no n-consolidated business or other people involved in a rational or relevant person.	Liquidity
As a result of TCJA, the transitional tax must be paid only once to the deferred foreign income, which had not been subject to US income tax. Based on TCJA, the transfer tax is paid evenly over eight years, imposed 8 % for the first five years, 15 % in the sixth year, 20 % in the seventh year, and 25 % in the eighth year. Masu. We paid $ 4. 7 billion, including $ 1. 5 billion in 2021. The remaining transfer tax of $ 13. 6 billion will be paid in the next five years, and the final payment will be in FY2026.	Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months, and for the future that will be predictable in the future, dividends, shares i n-house, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	For more information, see Note 1 in financial statements 1 "Accounting Policy". < SPAN> On April 11, 2021, I signed a final contract to acquire Nuance Communications (hereinafter "Nuance") for $ 56 per share. The final contract to be acquired for $ $ 00 (including nuance bonds). The acquisition is approved by the nuance shareholder, and is expected to be completed by the end of 2021, on the condition that the approval of a specific regulatory authorities and other customary completion conditions are met.	Continue investing in sales, marketing, product support infrastructure, existing and advanced technical fields, and continues to acquire a business strategy. We plan to add stamped assets, such as R & D, sales marketing, support, and new facilities, data, and computer systems for management staff. We expect capital spending to increase in the next few years to support the growth of cloud services. We have operated data operations, corporate offices, research and development facilities, Microsoft Experience Center, and leases for specific devices to raise funds. The Company has not dealt with a rational no n-consolidated business or other people involved in a rational or relevant person.

29. 129

BALANCE SHEETS

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
Liquidity
As a result of TCJA, the transitional tax must be paid only once to the deferred foreign income, which had not been subject to US income tax. Based on TCJA, the transfer tax is paid evenly over eight years, imposed 8 % for the first five years, 15 % in the sixth year, 20 % in the seventh year, and 25 % in the eighth year. Masu. We paid $ 4. 7 billion, including $ 1. 5 billion in 2021. The remaining transfer tax of $ 13. 6 billion will be paid in the next five years, and the final payment will be in FY2026.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months, and for the future that will be predictable in the future, dividends, shares i n-house, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	For more information, see Note 1 in financial statements 1 "Accounting Policy".	Our consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's application of accounting policies and the uncertainty of the current economic environment due to COVID-19. Our critical accounting policies include revenue recognition, impairment of investment securities, goodwill, research and development expenses, contingencies, income taxes and inventory.
Revenue Recognition	Contracts with customers often contain promises to transfer multiple products and/or services to a customer. Significant judgment may be required to determine whether the products and services should be considered separate performance obligations and measured separately or together. When cloud-based services include both software licenses and cloud services, judgment is required to determine whether the software licenses are considered separate and accounted for separately, or whether they are not separate and are accounted for together with the cloud services and recognized over time. Some cloud services, particularly Office 365, rely on significant levels of integration, interdependence and interaction between desktop applications and cloud services, which are considered together as performance obligations. Office 365 revenue is recognized by reference in the period in which the cloud services are provided.	Judgment is required to determine the stand-alone selling price ("SSP") of each separate performance obligation. For those that are not sold separately, such as on-premise licenses sold with SA updates or software provided at no additional charge, a single amount is used to estimate the SSP. When we sell each product or service separately, we must estimate new business volume using various amounts and determine whether any discounts should be allocated based on the relative new business volume of the various products and services.
When the SSP is not directly observable, such as when products and services are not sold separately, we determine the SSP using information including market conditions and other observable inputs. Typically, we have multiple SSPs for individual products and services to layer these products and services across customers and circumstances. In such cases, we may determine the SSP using information such as customer size and geography.	SA programs have a variety of benefits and characteristics, so judgment is required to evaluate the delivery model, including the pattern of exercising certain benefits across our customer portfolio.	Our products are generally sold on a returnable basis, and we may offer other credits or incentives and in some cases estimate the customer's usage of our products and services, which we consider as variables in determining the amount of revenue to be recognized. Refunds and credits are estimated at the inception of the contract and updated at the end of each reporting period as additional information becomes available. Changes in estimated variable consideration were not significant for the periods presented.
Impairment of Investment Securities	Fixed income investments are reviewed quarterly for credit losses and impairment. If the cost of an investment exceeds its fair value, we evaluate the investment based on general market conditions, the creditworthiness of the debt issuer, and the extent to which the fair value is below its cost. This determination requires significant judgment. In making this determination, we use a systematic methodology that considers available quantitative and qualitative data to assess the potential impairment of our investments. In addition, we consider certain adverse circumstances related to the financial strength and business prospects of the investee. If we plan to sell the security or it is more likely than not that we will not need to sell the security before it recovers, the decline in fair value below cost is recorded as an impairment charge in other income (expense), net, and a new cost basis for the investment is established. Future losses may be incurred if market, industry and/or investment conditions deteriorate.	Investment in a cock, which is not easy to determine the fair value, is recorded by a qualitative evaluation that the investment is impaired and the fair value is lower than the book value. Relaxed evaluation is performed regularly. In order to determine the amount of impairment loss, it is necessary to estimate the fair value of investment. If the investment is determined to be impaired, the impairment loss will be recorded in other revenue (cost) (pure amount).
Reputation and customer base	Goodwill is recorded as a benchmark unit based on a benchmark unit that is expected to benefit from business integration. The report unit is evaluated every year, and the goodwill is r e-evaluated with a relative fair value distribution approach if necessary. The goodwill may be conducted once a year (May 1st in the Company), and the fair value of the report units may be lower than the book value in a report unit (or the lower level than the operating segment or operating segment). If a low event occurs or changes the situation, a impairment test will be conducted between the annual test and test. Such events or situations include significant changes in the business environment, legal factors, sales ratio, competition, or the sale or disposal of important parts of the report units.	The application of a goodwill test of the goodwill requires the judgment of identifying reports, assets assets and liabilities in the report unit, allocation of goodwill in the report unit, and determining the fair value of each report unit. The fair value of each report unit is mainly estimated using the discount cache flow method. This analysis requires important judgments, such as future cash flows that depend on internal forecasts, estimates the lon g-term growth rate of businesses, estimates the useful life caused by cash flow, and determining weighted average capital costs. Masu.
Estimated quotes used to calculate the fair value of the report will vary from year to year based on operating results, market environments, and other factors. These quotes and assumption changes can have a significant impact on the judgment of the fair value of each report and the impairment of the goodwill.	R & D expenses < SPAN> Investment in an equity securities, whose fair value cannot be determined easily, is recorded by a qualitative evaluation that the investment is impeded and the fair value is lower than the book value. Relaxed evaluation is performed regularly. In order to determine the amount of impairment loss, it is necessary to estimate the fair value of investment. If the investment is determined to be impaired, the impairment loss will be recorded in other revenue (cost) (pure amount).	Reputation and customer base
Goodwill is recorded as a benchmark unit based on a benchmark unit that is expected to benefit from business integration. The report unit is evaluated every year, and the goodwill is r e-evaluated with a relative fair value distribution approach if necessary. The goodwill may be conducted once a year (May 1st in the Company), and the fair value of the report units may be lower than the book value in a report unit (or the lower level than the operating segment or operating segment). If a low event occurs or changes the situation, a impairment test will be conducted between the annual test and test. Such events or situations include significant changes in the business environment, legal factors, sales ratio, competition, or the sale or disposal of important parts of the report units.	The application of a goodwill test of the goodwill requires the judgment of identifying reports, assets assets and liabilities in the report unit, allocation of goodwill in the report unit, and determining the fair value of each report unit. The fair value of each report unit is mainly estimated using the discount cache flow method. This analysis requires important judgments, such as future cash flows that depend on internal forecasts, estimates the lon g-term growth rate of businesses, estimates the useful life caused by cash flow, and determining weighted average capital costs. Masu.	Estimated quotes used to calculate the fair value of the report will vary from year to year based on operating results, market environments, and other factors. These quotes and assumption changes can have a significant impact on the judgment of the fair value of each report and the impairment of the goodwill.
Investment in an equit y-securities, which cannot be easily determined for the R & D expenses, is recorded by a qualitative evaluation that the investment is impaired and the fair value is lower than the book value. Relaxed evaluation is performed regularly. In order to determine the amount of impairment loss, it is necessary to estimate the fair value of investment. If the investment is determined to be impaired, the impairment loss will be recorded in other revenue (cost) (pure amount).	Reputation and customer base	Goodwill is recorded as a benchmark unit based on a benchmark unit that is expected to benefit from business integration. The report unit is evaluated every year, and the goodwill is r e-evaluated with a relative fair value distribution approach if necessary. The goodwill may be conducted once a year (May 1st in the Company), and the fair value of the report units may be lower than the book value in a report unit (or the lower level than the operating segment or operating segment). If a low event occurs or changes the situation, a impairment test will be conducted between the annual test and test. Such events or situations include significant changes in the business environment, legal factors, sales ratio, competition, or the sale or disposal of important parts of the report units.
The application of a goodwill test of the goodwill requires the judgment of identifying reports, assets assets and liabilities in the report unit, allocation of goodwill in the report unit, and determining the fair value of each report unit. The fair value of each report unit is mainly estimated using the discounted cash flow method. This analysis requires important judgments, such as future cash flows that depend on internal forecasts, estimates the lon g-term growth rate of businesses, estimates the useful life caused by cash flow, and determining weighted average capital costs. Masu.	Estimated quotes used to calculate the fair value of the report will vary from year to year based on operating results, market environments, and other factors. These quotes and assumption changes can have a significant impact on the judgment of the fair value of each report and the impairment of the goodwill.	R & D expenses
The cost incurred within the company in the research and development of computer software products is recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Legal and other accidental events	The results of legal procedures and claims raised to the Company are accompanied by significant uncertainty. The estimated amount of loss due to accidental losses such as legal procedures and claims is likely to be a profit or loss when it is highly possible that a loss or debt has occurred and the loss can be estimated reasonably. In terms of the necessity of losing loss, especially the degree of possibility of disadvantaged results and the ability to rationally estimate losses. If these factors change, it may have an important impact on consolidated financial statements.
Corporate taxes, etc. < SPAN> The cost incurred in the company in the research and development of computer software products will be recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Legal and other accidental events	The results of legal procedures and claims raised to the Company are accompanied by significant uncertainty. The estimated amount of loss due to accidental losses such as legal procedures and claims is likely to be a profit or loss when it is highly possible that a loss or debt has occurred and the loss can be estimated reasonably. In terms of the necessity of losing loss, especially the degree of possibility of disadvantaged results and the ability to rationally estimate losses. If these factors change, it may have an important impact on consolidated financial statements.
The cost incurred in the company in the research and development of computer software products such as corporate tax will be recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Legal and other accidental events	The results of legal procedures and claims raised to the Company are accompanied by significant uncertainty. The estimated amount of loss due to accidental losses such as legal procedures and claims is likely to be a profit or loss when it is highly possible that a loss or debt has occurred and the loss can be estimated reasonably. In terms of the necessity of losing loss, especially the degree of possibility of disadvantaged results and the ability to rationally estimate losses. If these factors change, it may have an important impact on consolidated financial statements.
Corporate tax, etc.	The objective of income tax accounting is to recognize current taxes payable or refunded, deferred tax liabilities and deferred tax assets for the future tax consequences of events recognized in an entity's financial statements or tax accounts. Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. Tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that is more than 50% likely to be realized upon ultimate settlement. The accounting literature also provides guidance on the reduction of income tax assets and liabilities, the classification of deferred income tax assets and liabilities, the accounting for interest and penalties related to tax positions, and income tax disclosures. Judgment is required in assessing the future tax consequences of events recognized in consolidated financial statements or tax returns. If the actual outcome of these future tax consequences changes, it could have a material effect on our consolidated financial statements.	The TCJA significantly changes current U. S. tax law and contains many provisions that affect our business. See Note 12, "Income Taxes," to the financial statements for further information.
Inventories	Inventories are carried at average cost and valued at the lower of cost or net realizable value. Cost includes materials, labor and manufacturing overhead costs associated with purchasing and producing the inventory. Net realizable value is the estimated selling price less the estimated costs of completion, disposal and transportation. The Company periodically reviews the amount of inventory on hand, future purchase commitments with suppliers and the estimated useful life of the inventory. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategies and component cost trends. If the review indicates a decrease in usefulness based on value transfer, the Company writes down the inventory to its new cost basis through a charge to cost of sales.	Statement of Management's Responsibility for Financial Statements
The management is responsible for creating the consolidated financial statements and related information described in this report. Consolidated financial statements, including the amount based on the quotes and judgments of management, are created in accordance with the principles of accounting, generally accepted in the United States.
The Company is protected by a loss due to illegal use or illegal disposal, and the financial record is reliable to create consolidated financial statements, and to maintain the accountability of assets, rational costs at reasonable costs. We design and maintain accounting and internal control systems that provide such a guarantee. These systems have been reinforced by the organizational structure that defines the sharing of liability, the cautious selection and training of the qualified person, and the internal control program.
In order to audit internal controls related to consolidated financial statements and financial reports according to the standards of the US Public Company Corporate Surveillance Committee (PSAB), we are Deloitte & amp; AMP; In accordance with the standards of the US Public Company Corporate Corporate Surveillance Committee (PACO), we audit internal controls related to consolidated financial statements and financial reports, and to express opinions, Deloitte & Amp; Touche, an independent registration office. I participated in LLP.	The Board of Directors confirms that they have regularly meet with management, internal auditors and independent registered accounting firms through the audit committee, which consists of only our independent directors. We are discussing matters related to internal control and financial report. Deloitte & amp ;? Touche LLP and internal auditors can access the Audit Committee fully and freely.	CEO Satia Nadera
Amy E. Food Director Vice President and Supreme Finance Officer	Alice L. Jora Corporate Vice President and Section Officer	We are exposed to financial risks from exchange rates, interest rates, credit risks and stock prices. We use derivatives to manage these risks, but derivatives can affect our consolidated financial statements.
Foreign currency	Specific scheduled transactions, assets and debt are exposed to foreign exchange risks. We monitor foreign currency exposure every day to maximize the economic effects of foreign currency positions, including hedging. Our main currency exposure includes the Euro, Japanese yen, British pound, Canada dollar, and Australian dollar.	interest rate
Securities held in the fixed income portfolio are subject to various interest rate risks depending on their maturity. We manage the average remaining maturity of our fixed income portfolio to achieve economic returns that are correlated with certain global fixed income indexes.	Credit	Our fixed income portfolio is diversified and consists primarily of investment securities. We manage our credit exposure to broad indexes to facilitate portfolio diversification.
Justice	Securities held in our equity investment portfolio are subject to price risk.	The following table presents potential future earnings or fair value losses (including related derivatives) resulting from hypothetical changes in relative market prices or interest rates:
(in millions)	(in millions)	Changes in Assumptions
June 30, 2021	Disputes	Foreign Currency - Revenues
10% decline in foreign currency exchange rates	$ (6. 756)	Revenues
Foreign Currency - Investments	10% decline in foreign currency exchange rates	(136)
Fair Value	24%	100 basis points in U. S. Treasury interest rates
(3. 511)	Fair Value	204
Credit	100 basis points increase in credit spreads	(309)
Fair Value	Fair Value	10% decline in equity market price
(602)	Earnings	(in millions, except per share amounts)
Years Ended June 30
2021
2020	2019	Earnings
Products	71. 074 $	68. 041 $
66. 069 $	Other services	97, 014
74, 974	59, 774	Total revenue
168, 088	Inventories are carried at average cost and valued at the lower of cost or net realizable value. Cost includes materials, labor and manufacturing overhead costs associated with purchasing and producing the inventory. Net realizable value is the estimated selling price less the estimated costs of completion, disposal and transportation. The Company periodically reviews the amount of inventory on hand, future purchase commitments with suppliers and the estimated useful life of the inventory. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategies and component cost trends. If the review indicates a decrease in usefulness based on value transfer, the Company writes down the inventory to its new cost basis through a charge to cost of sales.	Statement of Management's Responsibility for Financial Statements

29. 129

CASH FLOWS STATEMENTS

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
34, 013
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	5, 76	38%	Operating leases (including imputed interest) (c)
46, 078
42, 910	Gross profit margin	115. 856	96, 937
82, 933	Research and development expenses	20. 716	19. 269
16. 876	Sales and marketing	20, 117	19. 598
(3. 511)	General and administrative expenses	11	5, 107
5, 111
4, 885	Revenues from operations	69, 916	52, 959
Reputation and customer base	Other income (net)	168	597
Estimated quotes used to calculate the fair value of the report will vary from year to year based on operating results, market environments, and other factors. These quotes and assumption changes can have a significant impact on the judgment of the fair value of each report and the impairment of the goodwill.	Income before income taxes	71, 102	53, 036
Corporate tax, etc.	Deferred income taxes	9, 831	8, 755
In order to audit internal controls related to consolidated financial statements and financial reports according to the standards of the US Public Company Corporate Surveillance Committee (PSAB), we are Deloitte & amp; AMP; In accordance with the standards of the US Public Company Corporate Corporate Surveillance Committee (PACO), we audit internal controls related to consolidated financial statements and financial reports, and to express opinions, Deloitte & Amp; Touche, an independent registration office. I participated in LLP.	Net income	61, 271 $	232
44, 281 $	39, 240 $	Earnings per share	Basic
8, 12 $	5, 82 $	5, 11 $	Diluted
(in millions)	5, 76 $	5, 06 $	Weighted average number of shares outstanding
Fair Value	7, 547	7, 610	591
7. 673	Diluted	7, 608	7, 683
7, 753
See notes.	(In millions)	Years ended June 30	0
2021	2020	2019	Net income
61, 271 $	44, 281 $	39, 240 $	Other comprehensive income (loss), net of tax
Net changes related to derivatives	19	(38)	(173)
Net changes related to investments	(2, 266)	3, 990	2, 405
143. 015 $	873	(426)	(318)
Other comprehensive income (loss)	(1. 374)	3. 526	1. 914
Comprehensive income
59. 897 $	47. 807 $	41. 154 $	Please see attached notes.
($ in millions)	Month 30	2021	2020
Real estate	Current assets	Cash and cash equivalents	14. 224 $
13. 576 $	Short-term investments	116, 110	122, 951
Total cash, cash equivalents and short-term investments	130. 334	136. 527	Accounts receivable, net of allowance for doubtful accounts
143. 015 $	38. 043	32, 011	0
Provisions	2. 636	1. 895	Other current assets
13. 393	11. 482	Total current assets	184. 406
181. 915	Property, plant and equipment, net of accumulated depreciation	51. 351 and 43. 197	59, 715
44, 151	Right-of-use assets under operating leases	11. 088	8. 753
Equity investments	For more information, see Note 1 in financial statements 1 "Accounting Policy".	Our consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's application of accounting policies and the uncertainty of the current economic environment due to COVID-19. Our critical accounting policies include revenue recognition, impairment of investment securities, goodwill, research and development expenses, contingencies, income taxes and inventory.	Reputation and customers

29. 129

STOCKHOLDERS’ EQUITY STATEMENTS

7. 97$
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
15. 075
13. 138	Total assets	333. 779 $	301. 311 $
61, 271 $	Accounts payable	39, 240 $	15. 163 $
Net changes related to derivatives	Long-term borrowings due during the year	8. 072	3. 749
82, 933	Research and development expenses	20. 716	19. 269
143. 015 $	2020	Short-term unearned revenue	11
41. 525	2019	Earnings	11. 666
10. 027
13. 138	88. 657	72, 310	Long-term liabilities
Players remain at the center of the Xbox ecosystem. We continue to create new opportunities for gamers, on and off the console, with the launch of our game streaming service, Xbox Cloud Gaming, and our continued investments in gaming hardware. Xbox Cloud Gaming uses Microsoft's Azure cloud technology to enable instant game streaming to PCs, consoles, and mobile devices, allowing players to take their favorite games with them and play them on the device that's most convenient for them.	Xbox enables people to connect and share online gaming experiences accessible from Xbox consoles, Windows-enabled devices, and other devices. Xbox is designed to benefit users by providing access to a network of certified applications and services, and to benefit an ecosystem of developers and partners by providing access to a large customer base. Xbox's revenues are primarily derived from subscriptions, sales of first- and third-party content, and advertising. The growth of our gaming business is determined by our overall active user base with Xbox-enabled content, the availability of games, the delivery of exclusive gaming content that players want, the computing power and reliability of the devices used to access our content and services, and our ability to create new experiences through first-party content creators.	Search Advertising	27, 190
29, 432	Long-term income	2. 616	3. 180
Net changes related to derivatives	198	Operating lease liabilities	9. 629
7. 671	Other long-term liabilities	0	677
41. 525	71. 074 $	68. 041 $	72, 310
183, 007
13. 138	Equity	Common stock and paid-in capital - 24, 000 authorized shares - 7, 519 and 7, 571 exception shares	83, 111
Other planned capital uses	On April 11, 2021, I signed a final contract to acquire Nuance Communications (hereinafter "Nuance Company") for $ 56 per share. The final contract to be acquired for $ $ 00 (including nuance bonds). The acquisition is approved by the nuance shareholder, and is expected to be completed by the end of 2021, on the condition that the approval of a specific regulatory authorities and other customary completion conditions are met.	Continue investing in sales, marketing, product support infrastructure, existing and advanced technical fields, and continues to acquire a business strategy. We plan to add stamped assets, such as R & D, sales marketing, support, and new facilities, data, and computer systems for management staff. We expect capital spending to increase in the next few years to support the growth of cloud services. We have operated data operations, corporate offices, research and development facilities, Microsoft Experience Center, and leases for specific devices to raise funds. The Company has not dealt with a rational no n-consolidated business or other people involved in a rational or relevant person.	Liquidity
7. 671	1. 822	0	3. 186
41. 525	Other services	97, 014	Common stock and paid-in capital - 24, 000 authorized shares - 7, 519 and 7, 571 exception shares
74, 974	301. 311 $	See accompanying notes.	(in millions)
Year ended June 30, 2021	twenty four	December 2, 2020	2019

29. 129

NOTES

Net income

NOTE 1 — ACCOUNTING POLICIES

61. 271 $

44. 281 $

39. 240 $

Reconciliation of net income to cash and cash equivalents, net provided by operating activities

Depreciation, amortization and other

11. 686

12. 796

Commercial office

$77

6, 118

In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.

4. 652

Net recognized gains on investments and derivatives

(1. 249)

General management expenses

(792)

Deferred taxes

(150)

(6. 463)

Changes in operating assets and liabilities

Accounts receivable

(6. 481)

(2. 577)

5. 107 $

Inventories

Publicing high ratio

(1) PPT

(2. 330)

(1. 718)

Other long-term assets

(3. 459)

(1. 037)

(1. 834)

Accounts payable

2. 798

3. 018

Non-operating income

4. 633

2. 212

4. 462

Income taxes

(2. 309)

(3. 631)

2. 929

Other current liabilities

1. 346

Measurement method

Other long-term liabilities

1. 402

1. 348

Net cash provided by operating activities

(2. 346)

60. 675

52, 185

Financing

Cash premium for debt exchange

(1. 754)

(3. 417)

Repayment of borrowings

(3. 750)

(5. 518)

(4. 000)

Issuance of common stock

1. 693

1. 343

1. 142
Repurchase of common reserves
(27. 385)

(22. 968)

(19. 543)

1. 232

(16. 521)

(15. 137)

(13. 811)

Other (net)

(769)

(334)

(675)

(in millions of euros)

(48. 486)

(46. 031)

(36. 887)

Investments

Additions to property, plant and equipment

(20. 622)

(15. 441)

(13. 925)

Acquisitions of businesses (net of cash acquired and purchases of intangible and other assets)

(8. 909)

NOTE 2 — EARNINGS PER SHARE

(2. 521)

(2. 388)

Purchases of investments
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
51. 792	5, 76	38%	Operating leases (including imputed interest) (c)
14. 008	Temporary tax rate (d)	1. 427	4. 105
(922)	(1. 241)	73	80
Investment cash flows	0	13. 562	Purchase commitments (e)
Exchange rate effects on cash and cash equivalents
(29)	3. 469	6. 747	17. 973
648	The general management expenses were relatively flat due to the expenses related to the closure of the actual Microsoft Store store in the previous year, but were partially offset by some employe e-related expenses and the increase in business taxes.	Operating income increased by $ 17 billion (32 %) due to growth in each segment and a change in the estimated life of servers and network devices. < SPAN> Sales increased $ 25. 1 billion (18%) due to the growth of each field. Smart cloud sales have increased from Azure. Productions and business process sales increased by Office 365 Commercial and Linkedin. Personal computing profits have increased from gaming.	3. 774

13. 576

NOTE 3 — OTHER INCOME (EXPENSE), NET

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Increase in sales of commercial products and cloud services	Window s-licensed, Windows cloud services, and revenue from Windows commercial products and cloud services including Windows cloud services, other Windows commercial products	Surface device and accessories	2021
Increased profits from Xbox content and services	Increased from digital transactions, Xbox Game Pass and other subscriptions, video games, thir d-party video game usage fees, cloud services and advertising.	Search advertising revenue (excluding TAC)	Capital surplus at beginning of period
Search advertising revenue excluding traffic acquisition costs (TAC) paid to Bing ADS network publishers	(Unit: $ 1 million, percentage and amount per share)	32	648
2021	2020	187	144
Rate of increase / decrease	Sales	168. 088 $	Repurchase of common reserve
143. 015 $	18%	General profit margin	Stock-based compensation expense
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	96. 937	20%	Other, net

(1)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Retained earnings at beginning of period	34. 566	24, 150	13. 682
Net income	61. 271	44, 281	39, 240
Common stock dividends	(16. 871)	(15. 483)	(14. 103)
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	(21. 879)	(18. 382)	(15. 346)

Cumulative effect of change in accounting principles

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Accumulated other comprehensive income	Beginning of period	3. 186	(340)
(2. 187)	Other comprehensive income (loss)	69	479
(1. 374)	3. 526	1. 914	Cumulative effect of change in accounting principles
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	(67)	End of period	1. 822

NOTE 4 — INVESTMENTS

3. 186

(340)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.

141. 988 $

118, 304 $

102, 330 $

Dividends per common unit

2, 24 $

2, 04 $

1, 84 $

See accompanying notes.

Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:

Accounting principles

Our consolidated financial statements and attached notes are created in accordance with the principles of accounting (hereinafter referred to as "GAAP"), which are generally accepted in the United States.

The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.

Connection principle

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

Connection principle

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

Estimate and assumption

Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.

In order to create a financial statement, it is necessary for managers to make an estimate and assumption that affects the amount of assets, liabilities, revenue and expenses. Examples of quotes and assumption include revenue recognition, performance obligations and determination of fulfillment, and other obligations such as determination of singl e-selling price (hereinafter referred to as "SSP"), fluctuations and refunds of products. Includes. Product Life Cycle-Heart Heart of Tangible and Intangible Assets. Transportation fee-Inventory market value and demand. Inradinal assets-based ratio-When the technical realization of our products is achieved. The potential impact of uncertain tax positions recognized in consolidated financial statements or tax returns. The timing of investment interruption and the determination of the amount. Due to the risk and uncertainty of the current economic environment due to the COVID-19, the actual results and results may be different from the estimates and assumptions of management.

In July 2020, the Company should complete the useful life of server and network devices, increase the useful life of server equipment from 3 to 4 years, and increase the useful life of network equipment from 2 to 4 years. I judged that it was. The change in accounting estimates applied from the end of 2021. Based on the book value of server equipment and network devices included in tangible fixed assets (pure amounts) as of June 30, 2020, the effects of 2021 fiscal year due to the change in this estimate are operating income of $ 2. 7 billion, net income. It increased by $ 2. 3 billion ($ 0. 30 per share after basic and sparseness).

Foreign currenc y-constructed assets and liabilities are converted by the exchange rate of the balance sheet date. Profit and cost are converted by the average exchange rate during the period. The conversion difference occurs as a result is recorded in other comprehensive profits.

Profit

Product and services revenue and other revenue

Product sales include operating systems, cros s-device productive applications, server applications, business solution applications, desktops and server management tools, software development tools, video games, PCs, tablets, games and entertainment consoles, and related accessories, related accessories. Includes hardware sales.

Services and other sales include sales of clou d-based solutions that provide customers with software, services, platforms, and content, such as Office 365, Azure, Dynamics 365, Xbox. And a consulting service is included. Services and other revenue include online advertising and Linkedin sales.

Profitable recognition

Revenue is recognized by the amount of money that reflects the anticipation of the expected paid in exchange for those products or services when the dominance of the promised product or service is transferred to the customer. The Company has concluded contracts that include various combinations of products and services, and these contracts are usually accounting as separate exercise obligations. The revenue is recognized by deducting the refund allowance and the tax collected from the customer (later transferred to the government authorities).

Products and Services

Some volume licensing programs, including enterprise agreements, include on-site licenses in conjunction with Software Assurance ("SA"). SA transfers rights to new software and upgrades released during the term of the agreement and provides support, tools, and training to help customers develop and use the product more effectively. In-premise licenses are considered separate performance obligations when sold with SA. Revenue allocated to an SA is generally recognized over the contract term as the customer consumes and receives the benefits simultaneously because an SA contains separate performance obligations that are satisfied over time.

Revenue from search advertising is recognized when the ad appears in the search results or when the action necessary to generate revenue is completed. Revenue from consulting services is recognized as a service.

Our hardware generally relies heavily on the underlying operating system and will not operate without it. In such cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized when the property is transferred to a reseller or directly to the end customer through retail stores or online purchases.

Contracts with customers often contain promises to transfer multiple products and services to a customer. Significant judgment may be required to determine whether the products and services should be considered separate performance obligations and measured separately or measured together. When cloud-based services include both software licenses and cloud services, judgment is required to determine whether the software licenses are considered separate and accounted for separately or, rather than separately, accounted for and recognized over time along with the cloud services. Some cloud services, notably Office 365, rely on a significant level of integration, interdependence and interaction between the desktop applications and cloud services, which are considered together as performance obligations. Office 365 revenue is recognized by reference in the period in which the cloud services are provided.

Our products are generally sold with a right of return and may offer other credits or incentives, and in some cases we estimate customer usage of our products and services, which are considered variable considerations in determining the amount of revenue we must recognize. Refunds and credits are estimated at the inception of the contract and updated at the end of each reporting period as additional information becomes available. Changes in estimated variable consideration were not significant for the periods presented.

The timing of revenue recognition may differ from the timing of invoicing to customers. We record accruals when revenue is recognized prior to invoicing and record unearned revenue when revenue is recognized after invoicing. For multi-year agreements, we generally invoice customers at the beginning of each annual coverage period. We record receivables related to revenue recognized for multi-year licenses in that space because we have an unconditional right to invoice and receive payments in the future related to these licenses.

Unearned revenue primarily includes unearned revenue related to volume licensing programs, including SA and cloud services. Unearned revenue is generally billed annually at the beginning of each contract term for multi-year agreements and recognized ratably over the applicable period. Unearned revenue also includes payments for future consulting services, LinkedIn subscriptions, Office 365 subscriptions, Xbox subscriptions, Windows 10 post-delivery support, dynamic business solutions, and other deliverables for which we prepay and earn revenue when we transfer control of the product or service.

(16. 871)

The payment conditions vary depending on the type of contract, but in general, it is necessary to pay within 30 to 60 days. If the timing of revenue recognition is different from the timing of the bill issuance, it is known that our contract does not generally include important loan elements. The main purpose of our claim is to provide customers with a simple and predictable method for purchasing our products and services, and we get loans from customers and provide loans to customers. Not. For example, there are ways to set prices at the start of the subscription contract period, recognize revenue according to the contract period, and set the price of multipl e-yea r-long licenses every year and recognize profits in advance.

As of June 30, 2021 and as of June 30, 2020, the other claims for vendors were $ 965 million and $ 442 million, each included in the paddy lending table. I am.

As of June 30, 2021 and as of June 30, 2020, lon g-term unprofitable money after deducting a debt deduction is $ 3. 4 billion and $ 2. 7 billion, and is included in other lon g-term assets of consolidated balance lending. 。

The increase or decrease in the amount of money for the loan is as follows:

The Company has recorded funding claims to some customers, when providing our software and service products and funding programs for product provision in a limited country. As of June 30, 2021 and as of June 30, 2020, our financial receivables (pure amounts) are $ 4. 4 billion for shor t-term financial receivables and $ 5. 2 billion for lon g-term financial loans, and on the connected balance sheet. Included in fluid assets and other lon g-term assets. The forecasting revenue is recorded based on the problem account, past achievements, and other available data.

Assets are recognized from the costs required to acquire contracts with customers. Payment conditions vary depending on the type of contract, but in general, it is necessary to pay within 30 to 60 days. If the timing of revenue recognition is different from the timing of the bill issuance, it is known that our contract does not generally include important loan elements. The main purpose of our claim is to provide customers with a simple and predictable method for purchasing our products and services, and we get loans from customers and provide loans to customers. Not. For example, there are ways to set prices at the start of the subscription contract period, recognize revenue according to the contract period, and set the price of multipl e-year o n-premises licenses every year and recognize profits in advance.

As of June 30, 2021 and as of June 30, 2020, the other claims for vendors were $ 965 million and $ 442 million, each included in the paddy lending table. I am.

The deposit of the debt reflects the best estimate of potential losses in the accounts receivable. The debt of the loan is determined based on a known suspicious accounts receivable, past experience, and other available data.

The increase or decrease in the amount of money for the loan is as follows:

If the depreciation period is within one year, the Company costs the costs incurred to get a contract with a customer in practical convenience. These costs include the inside sales reward program and certain partner sales incentive programs, as the annual remuneration is determined to be worth the annual sales activities.

Cost costs

Sales and marketing costs include salaries, employee benefits, inventor y-based remuneration costs, and other costs related to sales and marketing personnel, advertising, sales promotion, exhibitions, seminars, and other program costs. Advertising expenses are expensive at the time of occurrence. Advertising expenses were $ 1. 5 billion, $ 1. 6 billion, and $ 1. 6 billion in FY2021, FY2020, and FY2019.

The cost of rewards for stock reimbursement, including a stock unit (RSUS) and a compan y-linked stock unit (PSU), is measured by the fair value of the grant date and the estimated damages through the relevant working period or business interlocking period. It is recognized as a cost in the amount after deduction. The fair value of the share remuneration is based on the amount of deduction of the current value of the dividend, which is expected to be received during the determined period, from the report price of the Company's ordinary shares on the date of the grant. The fair value of PSU is measured using the Monte Carlo evaluation model. The hedging cost of RSUS is recognized by the fla t-rate method, and the hedging cost of PSU is recognized by the acceleration method.

Cost costs

Sales and marketing

Stock compensation

Financial product

investment

We have a maturity date within three months as of the purchase date, and all highly fluid investments that can obtain interest are regarded as cash equivalent. The fair value of these investments is similar to the book value. In general, investment with an initial maturity of more than three months and a remaining maturity of less than one year is classified as a shor t-term investment. Investments with a maturity of more than one year may be classified as shor t-term investments because of high fluid and marke t-based securities are cash investments that can be used for current sales.

Bond investment is classified as a sale that can be sold, and the realization and losses are recorded by this recognition method. The fluctuations in fair value except for credit loss and impairment are recorded in other comprehensive profits. Fair value is estimated based on the generally available market information or other estimates determined by management. If investment costs exceed the fair value, we will evaluate the general market environment, the creditworthiness of debt issuer, and the fair value below the cost. When determining credit loss, a systematic method is used that considers the available quantitative and qualitative data. In addition, consider the healthy of the publisher and certain disadvantageous situations associated with the outlook of the business. If the Company intends to sell the securities, or if the possibility of selling before recovery is more than 50 %, the decline in which the fair value is below the cost is lower than the cost of the acquisition. It is recorded in the cost) (net amount), and a new acquisition cost of the investment is set. If the market, industry, or / or investment deteriorates, impairment may occur in the future. Corporate income tax costs include US and international corporate income taxes and interest and penalty for uncertain tax positions. Specific revenues and costs are not recorded in tax returns and financial statements for the same year. The tax effect due to such a temporary difference is recorded as an yield tax. The deferred tax assets are deducted with a deduction of valuation benefits when the tax benefits are not likely to be realized. All deferred taxes are classified as no n-flowing on the connected balance shine.

Financial product

investment

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

Financial product

The cost incurred within the company in the research and development of computer software products is recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.

Profit

Investments in equity securities whose fair value is readily determinable are measured at fair value. Investments in equity securities whose fair value is not readily determinable are measured using the equity method or at cost adjusted for observable price changes or impairment (known as alternative measurement). Qualitative assessments are performed periodically and impairment is recognized when there are sufficient indicators that the fair value of the investment is less than the transfer value. Changes in value are recorded in other income (expense), net.

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

Derivatives are recognized as assets or liabilities and measured at fair value. The accounting treatment of changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation.

Gains and losses on derivatives designated as cash flow hedges are initially reported as a component of other comprehensive income and subsequently recognized in earnings along with the corresponding hedged item. Gains and losses on hedges of hedging instruments excluded from the assessment of effectiveness are recognized in earnings.

For derivatives not designated as hedges, gains and losses from changes in fair value are recognized primarily in other income (expense), net.

Level 2-input is a market price of similar products in active markets, the market price of the same or similar products in non-active markets, and all important inputs can be observed in the market, or assets or debt It is based on mode l-based evaluation techniques (such as Black Shores Model) that can be confirmed by market data that can be observed over the whole period. If applicable, these models predict future cash flows, and are currently using marke t-based inputs that can be observed, such as interest rate curves, credit periods, foreign exchange and forward prices, and currency points. Reduce it to value. Level 2 investments include commercial paper, transferred deposit, US government agency securities, foreign government bonds, mortgage securities, asset securities, corporate bonds, and local securities. Level 2 assets and liabilities mainly include options and swap contracts.

Level 3-input is generally unable to observe, reflecting the estimates of the owners of the provisions that market participants will usually use in assets or debt prices. Therefore, fair value is determined using mode l-based techniques such as optional price models and discounted cash flow models. Level 3 assets and liabilities include investment in corporate bonds, local bonds, goodwills and intangible assets (when the impairment is recorded by fair value). Inputs that are not observed in models are important for the fair value of assets and debt.

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

The inventory Level 2-input is the market price of similar products in active markets, the same or similar products in non-active markets, and whether all important inputs can be observed in the market. Or, it is based on a mode l-based evaluation technique (such as Black Shawls Model) that can be confirmed by market data that can be observed over the entire period of assets or debt. If applicable, these models predict future cash flows, and are currently using marke t-based inputs that can be observed, such as interest rate curves, credit periods, foreign exchange and forward prices, and currency points. Reduce it to value. Level 2 investments include commercial paper, transferred deposit, US government agency securities, foreign government bonds, mortgage securities, asset securities, corporate bonds, and local securities. Level 2 assets and liabilities mainly include options and swap contracts.

We are measuring stock investments that cannot easily determine fair value with unreasonable gains. The fair value of these investments is determined based on evaluation techniques using the best information that can be obtained, including market prices, market comparison, discounted cash flow, etc.

Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.

Our other fluid financial assets and fluid financial liabilities have fair values similar to their relocation price.

On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.

Leases

For more information, see Note 1 in financial statements 1 "Accounting Policy".

ROU assets represent the right to use the underlying asset of the lease, and lease liabilities represent the obligation to make lease payments resulting from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Most of our leases do not provide for an implicit interest rate, so we generally use an accretive borrowing rate based on estimated interest rates on secured borrowings with a term equal to the total lease payments at the inception date. Operating lease ROU assets also include lease payments and do not include lease incentives. The lease term may include options to extend or terminate the lease if the Company is reasonably certain to exercise such option. Lease payments are recognized on a straight-line basis over the lease term.

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	141. 988 $	118, 304 $	102, 330 $	Dividends per common unit	2, 24 $	2, 04 $	1, 84 $	See accompanying notes.
Income Tax Accounting
Accounting principles
Our consolidated financial statements and attached notes are created in accordance with the principles of accounting (hereinafter referred to as "GAAP"), which are generally accepted in the United States.	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	(in millions of yen, excluding earnings per share)	$ 1	$ 0	Years ended June 30	2021	2020	$ 0
Estimate and assumption	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	61. 271 $	0	0	61. 271 $	39. 240 $	Weighted average number of common shares (B)	0
Foreign currenc y-constructed assets and liabilities are converted by the exchange rate of the balance sheet date. Profit and cost are converted by the average exchange rate during the period. The conversion difference occurs as a result is recorded in other comprehensive profits.	Profit	7. 673	Dilutive effect of stock-based compensation	Short-term unearned revenue	Common stock and common stock equivalents (C)	7. 608	7. 683	0
Some volume licensing programs, including enterprise agreements, include on-site licenses in conjunction with Software Assurance ("SA"). SA transfers rights to new software and upgrades released during the term of the agreement and provides support, tools, and training to help customers develop and use the product more effectively. In-premise licenses are considered separate performance obligations when sold with SA. Revenue allocated to an SA is generally recognized over the contract term as the customer consumes and receives the benefits simultaneously because an SA contains separate performance obligations that are satisfied over time.	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	Basic (A/B)	2	0	8. 12 $	449	5. 82 $	0
Our products are generally sold with a right of return and may offer other credits or incentives, and in some cases we estimate customer usage of our products and services, which are considered variable considerations in determining the amount of revenue we must recognize. Refunds and credits are estimated at the inception of the contract and updated at the end of each reporting period as additional information becomes available. Changes in estimated variable consideration were not significant for the periods presented.	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	8. 05 $	6	5. 76 $	5. 06 $	1	Diluted 1 Stock-based anti-dilutive awards excluded from earnings per share calculations were not material for the periods presented. Other income (expense), net consisted of the following:	0
The increase or decrease in the amount of money for the loan is as follows:	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	2021	41	2020	2019	0	2019	0
The Company has recorded funding claims to some customers, when providing our software and service products and funding programs for product provision in a limited country. As of June 30, 2021 and as of June 30, 2020, our financial receivables (pure amounts) are $ 4. 4 billion for shor t-term financial receivables and $ 5. 2 billion for lon g-term financial loans, and on the connected balance sheet. Included in fluid assets and other lon g-term assets. The forecasting revenue is recorded based on the problem account, past achievements, and other available data.	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	2. 762 $	327	(15. 483)	(2. 346)	0	(2. 346)	0
The Company has recorded funding claims to some customers, when providing our software and service products and funding programs for product provision in a limited country. As of June 30, 2021 and as of June 30, 2020, our financial receivables (pure amounts) are $ 4. 4 billion for shor t-term financial receivables and $ 5. 2 billion for lon g-term financial loans, and on the connected balance sheet. Included in fluid assets and other lon g-term assets. The forecasting revenue is recorded based on the problem account, past achievements, and other available data.	If the depreciation period is within one year, the Company costs the costs incurred to get a contract with a customer in practical convenience. These costs include the inside sales reward program and certain partner sales incentive programs, as the annual remuneration is determined to be worth the annual sales activities.	58	0	0	58	0	58	0
Sales and marketing costs include salaries, employee benefits, inventor y-based remuneration costs, and other costs related to sales and marketing personnel, advertising, sales promotion, exhibitions, seminars, and other program costs. Advertising expenses are expensive at the time of occurrence. Advertising expenses were $ 1. 5 billion, $ 1. 6 billion, and $ 1. 6 billion in FY2021, FY2020, and FY2019.	The Company has redesified some of the past periods to match the display of the current period. The modification of these fiscal years in the ove r-year does not affect the consolidated balance lend shorat, consolidated profit and loss statement, and consolidated cash flow statements.	313	57	17	366	0	366	0
Sales and marketing costs include salaries, employee benefits, inventor y-based remuneration costs, and other costs related to sales and marketing personnel, advertising, sales promotion, exhibitions, seminars, and other program costs. Advertising expenses are expensive at the time of occurrence. Advertising expenses were $ 1. 5 billion, $ 1. 6 billion, and $ 1. 6 billion in FY2021, FY2020, and FY2019.	If the depreciation period is within one year, the Company costs the costs incurred to get a contract with a customer in practical convenience. These costs include the inside sales reward program and certain partner sales incentive programs, as the annual remuneration is determined to be worth the annual sales activities.	91	0	0	91	0	91	0
Financial product	(82)	Other, net	98	(40)	(57)	Total	$ 0
Financial product
The cost incurred within the company in the research and development of computer software products is recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Profit	Net recognized gain (loss) on investments	Net recognized gain (loss) on debt investments were as follows:	$ 0	(in millions)
The cost incurred within the company in the research and development of computer software products is recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Gains and losses on derivatives designated as cash flow hedges are initially reported as a component of other comprehensive income and subsequently recognized in earnings along with the corresponding hedged item. Gains and losses on hedges of hedging instruments excluded from the assessment of effectiveness are recognized in earnings.	2020	0	0	2020
Level 2-input is a market price of similar products in active markets, the market price of the same or similar products in non-active markets, and all important inputs can be observed in the market, or assets or debt It is based on mode l-based evaluation techniques (such as Black Shores Model) that can be confirmed by market data that can be observed over the whole period. If applicable, these models predict future cash flows, and are currently using marke t-based inputs that can be observed, such as interest rate curves, credit periods, foreign exchange and forward prices, and currency points. Reduce it to value. Level 2 investments include commercial paper, transferred deposit, US government agency securities, foreign government bonds, mortgage securities, asset securities, corporate bonds, and local securities. Level 2 assets and liabilities mainly include options and swap contracts.	105 $	Net recognized gain (loss) on debt investments were as follows:	$ 0	12 $
Level 3-input is generally unable to observe, reflecting the estimates of the owners of the provisions that market participants will usually use in assets or debt prices. Therefore, fair value is determined using mode l-based techniques such as optional price models and discounted cash flow models. Level 3 assets and liabilities include investment in corporate bonds, local bonds, goodwills and intangible assets (when the impairment is recorded by fair value). Inputs that are not observed in models are important for the fair value of assets and debt.	(40)	(40)	$ 0	$ 0
We are measuring stock investments that cannot easily determine fair value with unreasonable gains. The fair value of these investments is determined based on evaluation techniques using the best information that can be obtained, including market prices, market comparison, discounted cash flow, etc.	35	0	35	0
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	(2)	Our consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's application of accounting policies and the uncertainty of the current economic environment due to COVID-19. Our critical accounting policies include revenue recognition, impairment of investment securities, goodwill, research and development expenses, contingencies, income taxes and inventory.	(16)	12 $

63 $

$ (4)

$ (97)

The net profit (loss) recognized regarding the securities investment is as follows:

(Unit: $ 1 million)			Business year ended on the 30th of the month			2021
Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	2019	Dividends per common unit	2019	Dividends per common unit	276 $	2021
Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:
1. 057	Interruption of investment	(11)	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	Interruption of investment	(11)
Our products are generally sold with a right of return and may offer other credits or incentives, and in some cases we estimate customer usage of our products and services, which are considered variable considerations in determining the amount of revenue we must recognize. Refunds and credits are estimated at the inception of the contract and updated at the end of each reporting period as additional information becomes available. Changes in estimated variable consideration were not significant for the periods presented.	745 $	Investment assets	Investment items are as follows:	Investment assets	Fair level	(16. 871)
The increase or decrease in the amount of money for the loan is as follows:	Unreasonable loss	Restricted base	Cash and cash equivalent	Investment assets	Stock investment	As of June 30, 2021 and as of June 30, 2020, the other claims for vendors were $ 965 million and $ 442 million, each included in the paddy lending table. I am.
The Company has recorded funding claims to some customers, when providing our software and service products and funding programs for product provision in a limited country. As of June 30, 2021 and as of June 30, 2020, our financial receivables (pure amounts) are $ 4. 4 billion for shor t-term financial receivables and $ 5. 2 billion for lon g-term financial loans, and on the connected balance sheet. Included in fluid assets and other lon g-term assets. The forecasting revenue is recorded based on the problem account, past achievements, and other available data.	Commercial paper	Level 2	4. 316 $	Investment assets	0 $	The deposit of the debt reflects the best estimate of potential losses in the accounts receivable. The debt of the loan is determined based on a known suspicious accounts receivable, past experience, and other available data.
Sales and marketing costs include salaries, employee benefits, inventor y-based remuneration costs, and other costs related to sales and marketing personnel, advertising, sales promotion, exhibitions, seminars, and other program costs. Advertising expenses are expensive at the time of occurrence. Advertising expenses were $ 1. 5 billion, $ 1. 6 billion, and $ 1. 6 billion in FY2021, FY2020, and FY2019.	2, 985 $	Stock compensation	Transferred deposit	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	3. 615	Stock compensation
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	3. 615	2. 920	695	0	US government securities	Bond investment is classified as a sale that can be sold, and the realization and losses are recorded by this recognition method. The fluctuations in fair value except for credit loss and impairment are recorded in other comprehensive profits. Fair value is estimated based on the generally available market information or other estimates determined by management. If investment costs exceed the fair value, we will evaluate the general market environment, the creditworthiness of debt issuer, and the fair value below the cost. When determining credit loss, a systematic method is used that considers the available quantitative and qualitative data. In addition, consider the healthy of the publisher and certain disadvantageous situations associated with the outlook of the business. If the Company intends to sell the securities, or if the possibility of selling before recovery is more than 50 %, the decline in which the fair value is below the cost is lower than the cost of the acquisition. It is recorded in the cost) (net amount), and a new acquisition cost of the investment is set. If the market, industry, or / or investment deteriorates, impairment may occur in the future. < SPAN> Corporate income tax costs include US and international corporate income taxes and interest and penalty for uncertain tax positions. Specific revenues and costs are not recorded in tax returns and financial statements for the same year. The tax effect due to such a temporary difference is recorded as an yield tax. The deferred tax assets are deducted with a deduction of valuation benefits when the tax benefits are not likely to be realized. All deferred taxes are classified as no n-flowing on the connected balance shine.

(Unit: $ 1 million)			Business year ended on the 30th of the month			2021
Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	2019	Dividends per common unit	2019	Dividends per common unit	276 $	2021
Income Tax Accounting
1. 057	0	809	$ 0	$ 0	0	809
Our products are generally sold with a right of return and may offer other credits or incentives, and in some cases we estimate customer usage of our products and services, which are considered variable considerations in determining the amount of revenue we must recognize. Refunds and credits are estimated at the inception of the contract and updated at the end of each reporting period as additional information becomes available. Changes in estimated variable consideration were not significant for the periods presented.	500	5. 76 $	0	0	500	5. 76 $
The increase or decrease in the amount of money for the loan is as follows:	9	2020	0	0	9	2020
The Company has recorded funding claims to some customers, when providing our software and service products and funding programs for product provision in a limited country. As of June 30, 2021 and as of June 30, 2020, our financial receivables (pure amounts) are $ 4. 4 billion for shor t-term financial receivables and $ 5. 2 billion for lon g-term financial loans, and on the connected balance sheet. Included in fluid assets and other lon g-term assets. The forecasting revenue is recorded based on the problem account, past achievements, and other available data.	649	(15. 483)	0	0	649	(15. 483)
Sales and marketing costs include salaries, employee benefits, inventor y-based remuneration costs, and other costs related to sales and marketing personnel, advertising, sales promotion, exhibitions, seminars, and other program costs. Advertising expenses are expensive at the time of occurrence. Advertising expenses were $ 1. 5 billion, $ 1. 6 billion, and $ 1. 6 billion in FY2021, FY2020, and FY2019.	66	17	0	0	66	17
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	3. 458	98	$ 0	$ 0	3. 458	98

Corporate bonds

Level 2

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	118, 304 $	(9)
Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:
0	8. 683	0
Corporate bonds	Level 3	63
0	0	63
0	63	0
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	investment	Financial product

NOTE 5 — DERIVATIVES

$77

371

Level 3

(7)

Total debt investment

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:	Income Tax Accounting
122. 008 $
5. 976 $	116. 032 $	0 $
Fluctuations of fair value recorded in net income	Stock investment	Level 1
1. 582 $	976 $	0 $
606 $
5. 976 $	others	5. 378
Fluctuations of fair value recorded in net income	0	5. 378
Total stock investment	6. 960 $	976 $
0 $	5. 984 $	757

cash

7. 272 $

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	0 $	0 $	0 $	0 $
Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:	Income Tax Accounting
122. 008 $
total	136. 318 $	14. 224 $	116, 110 $	5. 984 $
(Unit: $ 1 million)	Fair level	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	93	0
606 $
total	Restricted base	Cash and cash equivalent	245	(426)
Stock investment	June 30, 2020	Fluctuations of fair value recorded in other comprehensive profits	18	Commercial paper
Level 2	4. 687 $	4. 688 $	400	1. 618 $
3, 070 $	Transferred deposit	Level 2	2. 898	158
2. 898	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	1. 252	0	2. 898
Level 1	92, 067	6. 495	(1)	98. 561
3. 168
Revenue Recognition	US Agency Securities	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	2. 439	$ 0
Estimated quotes used to calculate the fair value of the report will vary from year to year based on operating results, market environments, and other factors. These quotes and assumption changes can have a significant impact on the judgment of the fair value of each report and the impairment of the goodwill.	1. 992	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	199	0
Corporate tax, etc.	6, 982	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	12	0
(in millions)	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Transfer of mortgage loan and assets	0	(426)
Fair Value	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	4. 900	0	4. 900
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	92, 067	6. 495	(1)	98. 561

8. 810

Corporate bonds

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	Local government Kitra	Level 2	(4)	Fourth quarter
Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:
Total debt investment	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	6. 929 $	$ (31)	129. 798 $
6. 882 $	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	4. 688 $	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	4. 688 $
Income Tax Accounting
Total debt investment	1	398	1	400
6. 882 $	0	1. 618 $	0	1. 618 $

2. 551

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.	784 $	In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.	cash	In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.	5. 910 $
Derivative
total
139. 492 $	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	122. 951 $	$ 0	$ 1	$ 0	2, 965 $
Note 5 For the fair value of derivatives, see "Derivative".	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Unreasonable loss of debt investment	0	3	0	130
Debt securities and fair values that have been unrealized less than 12 months and 12 months or more are as follows:	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	12 months or more	0	139	0	168
(Unit: $ 1 million)
139. 492 $	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Unreasonable loss	0	93	0	0
Note 5 For the fair value of derivatives, see "Derivative".	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Total fair value	0	39, 240	0	0
US government and government agencies
total
$ (111)	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	2020	0	0	341	0
Debt securities and fair values that have been unrealized less than 12 months and 12 months or more are as follows:	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	0	0	3. 148	0
606 $
total	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	0	(2)	0	Transfer of mortgages and assets
Stock investment	Gross margin increased $6. 5 billion, or 18%, due to growth in Office 365 Commercial and LinkedIn, and a change in the estimated useful lives of server and network equipment. Gross margin increased due to a change in the estimated useful lives of server and network equipment. Excluding this impact, gross margin decreased slightly due to a shift in sales to cloud products and was lower year-over-year due to increased usage.	Unearned revenue primarily includes unearned revenue related to volume licensing programs, including SA and cloud services. Unearned revenue is generally billed annually at the beginning of each contract term for multi-year agreements and recognized ratably over the applicable period. Unearned revenue also includes payments for future consulting services, LinkedIn subscriptions, Office 365 subscriptions, Xbox subscriptions, Windows 10 post-delivery support, dynamic business solutions, and other deliverables for which we prepay and earn revenue when we transfer control of the product or service.	0	50	0	38

(1)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
US government and government agencies
total
1. 712	(9)	Kitra municipality	58

NOTE 6 — INVENTORIES

(7)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
total	11. 389 $	$ (132)
127 $	$ (3)	83
11. 516 $	$ (135)	Less than 12 months
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Unreasonable loss	(Unit: $ 1 million)

NOTE 7 — PROPERTY AND EQUIPMENT

Fair value

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
June 30, 2020	US government and government agencies	2. 323 $
$ (1)	2. 323 $	$ (1)
Foreign government bonds	(3)	(3)
Transfer of mortgages and assets	1. 014	(6)
1. 014	(6)	Corporate bonds
(17)	(17)	Local bonds
(4)	(4)	total
4. 552 $	$ (31)	4. 552 $

$ (31)

Unreasonable losses of bonds are mainly due to fluctuations in interest rates. The management does not believe that the remaining unreasonable loss is an impairment, based on the evaluation of available evidence.

NOTE 8 — BUSINESS COMBINATIONS

Bond investment vehicle

(Unit: $ 1 million)

Care base after adjustment

Estimate fair value

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months, and for the future that will be predictable in the future, dividends, shares i n-house, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	22. 612 $
Corporate taxes, etc. < SPAN> The cost incurred in the company in the research and development of computer software products will be recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	Within 1 year or 5 years
67, 541	70, 315
Received amount from year to 10 years	139
25, 212	26. 327
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	2. 601

2. 690

total

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	We use derivative products to manage risks on foreign exchange, interest rates, stock prices, and credit, increase investment returns, and promote portfolio diversification. The purpose of maintaining derivatives is to reduce, eliminate, and manage the financial impact of these exposure as efficiently as possible. Some of our derivative programs are not subject to hedge accounting.
Foreign currency	Some planned transactions, assets and debt are exposed to foreign currency risks. We monitor foreign currency exposure every day to maximize the economic effects of foreign hedging positions.	In exchange risks related to some no n-dollar investments, we manage the futures exchange reservation specified in the fair hedging means. The exchange risk related to some eur o-building debt that uses the euro is hedged using the futures exchange reservation specified in the cash flow hedge.
In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	627	Some options and maturity, which are not specified in the hedging means, are used to manage exchange rate variability for specific balance sheet, and to manage other foreign currency exposure.
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	1. 014	(6)

1. 014

(6)

Corporate bonds

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
(17)	Local bonds
Corporate taxes, etc. < SPAN> The cost incurred in the company in the research and development of computer software products will be recorded as expenses until the technical feasibility of the product is established. After the technical feasibility is established, the cost of software will be accounting until the product is generally released to customers. It is necessary to make a decision to determine when the technical feasibility of the product will be established. It has been shown that the technical feasibility of our software products is achieved after all hig h-risk development issues are solved by coding and testing. In general, this is achieved shortly before the product enters the production stage. The depreciation of these expenses is included in the cost of the product for the estimated service life.	(4)
67, 541	4. 552 $
Received amount from year to 10 years	143
25, 212	$ (31)
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Bond investment vehicle

(Unit: $ 1 million)

Care base after adjustment

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	We use derivative products to manage risks on foreign exchange, interest rates, stock prices, and credit, increase investment returns, and promote portfolio diversification. The purpose of maintaining derivatives is to reduce, eliminate, and manage the financial impact of these exposure as efficiently as possible. Some of our derivative programs are not subject to hedge accounting.
22. 612 $	22. 676 $	Within 1 year within 5 years
Foreign currency	447	70, 315
In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	170	25, 212
26. 327	2	10 years after
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	2. 690	total

117. 966 $

122. 008 $

We use derivative products to manage risks on foreign exchange, interest rates, stock prices, and credit, increase investment returns, and promote portfolio diversification. The purpose of maintaining derivatives is to reduce, eliminate, and manage the financial impact of these exposure as efficiently as possible. Some of our derivative programs are not subject to hedge accounting.

NOTE 9 — GOODWILL

Foreign currency

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	In exchange risks related to some no n-dollar investments, we manage the futures exchange reservation specified in the fair hedging means. The exchange risk related to some eur o-building debt that uses the euro is hedged using the futures exchange reservation specified in the cash flow hedge.	In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	Some options and maturity, which are not specified in the hedging means, are used to manage exchange rate variability for specific balance sheet, and to manage other foreign currency exposure.	Income Tax Accounting	In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	Some options and maturity, which are not specified in the hedging means, are used to manage exchange rate variability for specific balance sheet, and to manage other foreign currency exposure.	Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:
Distributor and reseller	Corporate bonds	$ 7	(17)	(17)	Consolidated financial statements include Microsoft Corporation and its subsidiary accounts. Transactions and balance between consolidated companies have been erased.	695	(4)
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	4. 552 $	$ (31)	4. 552 $	$ (31)	Unreasonable losses of bonds are mainly due to fluctuations in interest rates. The management does not believe that the remaining unreasonable loss is an impairment, based on the evaluation of available evidence.	Sales	(Unit: $ 1 million)
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	Estimate fair value	96	June 30, 2021	Within 1 year	22. 612 $	22. 676 $	Within 1 year or 5 years
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	70, 315	Received amount from year to 10 years	25, 212	26. 327	10 years after	2. 601	2. 690

total

117. 966 $

122. 008 $

Foreign currency

Some planned transactions, assets and debt are exposed to foreign currency risks. We monitor foreign currency exposure every day to maximize the economic effects of foreign hedging positions.

NOTE 10 — INTANGIBLE ASSETS

In exchange risks related to some no n-dollar investments, we manage the futures exchange reservation specified in the fair hedging means. The exchange risk related to some eur o-building debt that uses the euro is hedged using the futures exchange reservation specified in the cash flow hedge.

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	Some options and maturity not specified in the hedge means are used to manage exchange rate variability for specific balance sheet, and to manage other foreign currency exposure.	interest rate	Interest rates related to some fixed interest rates are hedged using interest rate swaps specified as fair hedging means, and the fixed interest rates are effectively converted to floating interest rates.	Some options and maturity not specified in the hedge means are used to manage exchange rate variability for specific balance sheet, and to manage other foreign currency exposure.	interest rate	Interest rates related to some fixed interest rates are hedged using interest rate swaps specified as fair hedging means, and the fixed interest rates are effectively converted to floating interest rates.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
Foreign currency	The following table shows the estimated principal of our undecided derivative measured in the US dollar:	(Unit: $ 1 million)	June 30, 2021	June 30, 2020 ($ 1 million) (million dollars) (million dollars)	30, 000 (unit: $ 1 million)	Purchase exchange reservation
22. 612 $	635 $	Sold foreign exchange contract	6. 081	6. 754	Purchased interest rate contract	1. 247
In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	Not classified as hedging means	Foreign exchange reservation purchased	14. 223	11. 896	Sold foreign exchange contract	23. 391
26. 327	Rate of increase / decrease	2. 456	1. 844	474	Other contracts	42
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Fair value of derivatives	The following table presents our derivative instruments:	(in millions)	Derivative assets	Derivative liabilities	Derivative assets (in millions)

Derivative assets (assets) Derivative liabilities

June 30, 2021

June 30, 2020

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	We use derivative products to manage risks on foreign exchange, interest rates, stock prices, and credit, increase investment returns, and promote portfolio diversification. The purpose of maintaining derivatives is to reduce, eliminate, and manage the financial impact of these exposure as efficiently as possible. Some of our derivative programs are not subject to hedge accounting.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	We use derivative products to manage risks on foreign exchange, interest rates, stock prices, and credit, increase investment returns, and promote portfolio diversification. The purpose of maintaining derivatives is to reduce, eliminate, and manage the financial impact of these exposure as efficiently as possible. Some of our derivative programs are not subject to hedge accounting.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
Foreign currency	Forward exchange contracts not designated as hedging instruments	227	(291)	(6)
22. 612 $	56	227	303	70, 315
In the past, optional contracts and futures agreements were used to hedge some of the expected overseas revenue, and it was designated as a cassy flow hedge. The main currencies hedged were the euro, Japanese yen, British pound, Canada dollar, and the Australian dollar.	399	(335)	2	10 years after
26. 327	1. 822	142	0	(154)
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	0	(42)	(154)	70, 315

258 $

$ (235)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
$ (395)
2022	Short-term investments
2023	Short-term investments
2024	$78
2025	$0
2026	$35
$48. 366	137
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	(in millions)

NOTE 11 — DEBT

0	Other short-term liabilities	0	(182)	Adjusted net income and adjusted diluted EPS are non-GAAP financial measures and exclude the tax effects related to the Supreme Court of India's ruling on tax withholding for fiscal year 2021. We believe that these non-GAAP measures assist investors by providing additional information about our operating performance and help identify trends affecting our business. For comparability reporting purposes, management considers non-GAAP measures in conjunction with GAAP financial results to evaluate performance. These non-GAAP financial measures should not be considered a substitute for or superior to financial performance measures prepared in accordance with GAAP. The following table reconciles GAAP reported financial results to non-GAAP financial results:	Income Tax Accounting
0	(53)	(61)	Total	258 $	$ (235)
246 $	$ (395)	Gross derivative assets and liabilities subject to legally enforceable master netting agreements for which we have elected to offset were $395 million and $335 million, respectively, as of June 30, 2021 and $399 million and $399 million, respectively, as of June 30, 2020.	The following table presents the fair value of our derivatives on a gross basis:	(in millions of dollars)	Level 1
Level 2	Level 3	Total	June 30, 2021	Derivative assets	$0
396 $	$	3	399 $	Derivative liabilities	0
(335)	0	(335)	June 30, 2020	Derivative assets	Derivative liabilities
(399)	(399)	The components of the derivative gains and losses recognized in the consolidated statements of operations are as follows:	(in millions of euros)	Year ended	Net income
2021	Other income (expense), net	Net income	2020	Other income (expense), net	Net income
2019	Other income (expense), net	Fair value hedges	Foreign exchange contracts	Derivatives	$0
193 $	$ (130)	Hedged items	0	(188)	Excluded from effectiveness assessment
0	30	Interest rate contracts	Interest rate contracts	0	(37)
Hedged items	0	53	53	Cash flow hedges	0
Forward exchange contracts						Amounts reclassified from accumulated other comprehensive income	0
17						Excluded from effectiveness assessment	0
0						Fair level	93
Items not designated as hedging instruments						Forward exchange contracts	0
27						(123)	(97)
Amy E. Food Director Vice President and Supreme Finance Officer						0	9
10% decline in foreign currency exchange rates						(in millions)	Years ended June 30

2021
2020

2019

Cash flow hedges

Forward exchange contracts

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
$ (395)
2022	$15. 911
2023	159
2024	The provisions consist of the following:
2025	(in millions)
2026	Month 30
$48. 366	2020
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	$52. 959

NOTE 12 — INCOME TAXES

$700

Work in process

Finished goods

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
1. 895
Property, plant and equipment consist of the following:	(in millions)	Month 30	2021
2020	Land	763	662
3. 660	$	1. 823	Buildings and improvements
43. 928	33. 995	Leased assets	6. 884
5. 487
Property, plant and equipment consist of the following:	51. 250	41. 261	Furniture and fixtures
2020	4. 782	2020	111. 066
3. 660	Accumulated depreciation	(51. 351)	194
(43. 197)	Total net	59. 715 $	44. 151 $
24. 233	During fiscal year 2020, we recorded an impairment loss of $186 million on property, plant and equipment, primarily leasehold improvements, due to the closure of our physical Microsoft Store locations.	ZeniMax Media	On March 9, 2021, we completed the acquisition of ZeniMax Media Inc. ("ZeniMax"), the parent company of Bethesda Softworks LLC ("Bethesda"), for total consideration of $8. 1 billion, primarily consisting of cash. The purchase price includes $768 million of cash and cash equivalents acquired. Bethesda is one of the largest privately held game developers in the world and brings a broad portfolio of games, technology and talent to Xbox. ZeniMax's financial results have been included in our consolidated financial statements since the acquisition date. ZeniMax is reported as part of the Other Personal Computers business.

The purchase price allocation at the acquisition date is based on preliminary valuations and is subject to revision once more detailed analyses are completed and additional information regarding the fair values of the assets acquired and liabilities assumed becomes available.

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
5. 469	Intangible asset	1. 968	Other assets
3. 660	(223)	Total debt	8. 121 $
1. 628	The details of the acquisition price allocated to the acquired intangible assets are as follows:	(Unit: 1 million yen)	Amount

52. 959

Technical base

Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
total	1. 968 $	Six years	Six years
On October 25, 2018, the Company acquired GitHub, Inc. (hereafter "GitHub"), a software development platform (hereinafter "GitHub"), with $ 7. 5 billion stock transactions (the total amount of cash payment associated with GitHub stock rewards and rewards Escro) Including $ 1. 3 billion). With this acquisition, the developers can achieve more things in all stages of the development life cycle, accelerating GitHub's business use, providing new users with Microsoft developers. It is expected to be. GitHub's performance has been included in our consolidated financial statements since the date of acquisition. Githab has been reported as part of the intelligent cloud division.
The acquisition price allocation for goodwill was completed on June 30, 2019. The main categories of assets and debt that allocate the acquisition price are as follows:	(Unit: $ 1 million)	Cash, cash equivalent and shor t-term investment	234 $
Reputation and customer base	5. 497	0%	Intangible asset
1. 267	5. 497	0%	Other debt
(217)	Total debt	6. 924 $	Goodwills that have been recognized in connection with the acquisition are mainly due to the synergies expected from future development, and are unlikely to be deducted in taxation. The goodwill was allocated to the intelligent cloud segment.
The details of the acquisition price allocated to the acquired intangible assets are as follows:	(Unit: 1 million yen)	Amount	Heavy average useful life
Custome r-related	648 $	6. 924 $	6. 924 $
Five years	Marketing related	10 years	10 years
2 years	total	1. 267 $	1. 267 $
The transactions recognized separately from the distribution of the purchase price are about $ 600 million, and are related to stock rewards that have been recognized as expenses over the main work period.	Nuance Communications	Amount	The fluctuation associated with the transfer of goodwill is as follows:
(Unit: $ 1 million)	June 30, 2019	Acquisition	others

June 30, 2020

Acquisition

others

June 30, 2021

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
0 $
82, 933	24. 317 $	Smart cloud
11. 351	1. 351	(5)
12. 697	505	865
54	13. 256	More personal calculations
6. 398	(30)	6. 464
44, 281 $	118 (α)	12, 138
Gains and losses on derivatives designated as cash flow hedges are initially reported as a component of other comprehensive income and subsequently recognized in earnings along with the corresponding hedged item. Gains and losses on hedges of hedging instruments excluded from the assessment of effectiveness are recognized in earnings.	42. 026 $	354
1. 454 $	$ (129)	43. 351 $
6. 061 $	873	49. 711 $
This includes a Zenima x-related goodwill of $ 5. 5 billion. reference. See "Corporate bond" for details for details.	The obtained assets and the assessment of the debt obtained will end within 12 months as soon as information about the events and situations that exist as of the acquisition date is available. By adjusting the distribution of the acquisition cost, it may be necessary to change the amount to be distributed to the goodwill during the period when adjustment is determined.	The change in goodwill due to foreign currency conversion and perhces accounting adjustment is displayed as "Other" in the above table. "Others" also include the movement between the departments and the reorganization of the organization.
Ownization of goodwill
The impairment test of the goodwill is performed on May 1 every year at the Cache Mark Level, mainly from the cash flow method, which deducted ris k-weighted average and average capital costs. We believe that the Cash Flow Law is the most reliable indicator of the fair value of the business.	No impairment was confirmed on May 1, 2021, May 1, 2020 and May 1, 2019. As of June 30, 2021 and as of June 30, 2020, the cumulative amount of goodwill was $ 11. 3 billion.	The components of intangible assets are as follows, all finite:
(Unit: $ 1 million)	Total transferred	Accumulated depreciation
Net carryforward	Total carried	Accumulated depreciation
Net carryforward	30 June	2021
Gains and losses on derivatives designated as cash flow hedges are initially reported as a component of other comprehensive income and subsequently recognized in earnings along with the corresponding hedged item. Gains and losses on hedges of hedging instruments excluded from the assessment of effectiveness are recognized in earnings.	Technology-based	9. 779 $
$ (7. 007)	2. 772 $	8. 160 $
$ (6. 381)	1. 779 $	Customer-related
4. 958
Corporate tax, etc.	2. 099	4. 967
(2. 320)	2. 647	Marketing
$ (6. 381)	1. 779 $	Customer-related

4, 158

(1. 588)

2. 570

Contract-based

38%

(431)

(432)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
$ (10. 721)	7. 038 $	Includes $2. 0 billion of ZeniMax intangible assets. See Note 8, "Business Combinations," for further information.	No significant impairments of intangible assets were identified during fiscal 2021, 2020 or 2019. The Company estimates that there is no significant residual value associated with intangible assets.
The components of intangible assets acquired during the periods presented are as follows:	(Millions of yen)	Amount	Weighted average useful life
Amount	Weighted average useful life	647	Year ended June 30
2021	2020	366	508
Technology-based	1. 628 $	4 years	531 $
6 years	Investment assets	4. 552 $	0
4 years	5 years	Marketing	Includes $2. 0 billion of ZeniMax intangible assets. See Note 8, "Business Combinations," for further information.

Reduction of profit per share

8. 05

5, 76

NOTE 13 — UNEARNED REVENUE

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
Distributor and reseller	836 $	5 years
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	The following table sets forth estimated future amortization expense related to intangible assets held as of June 30, 2021:	(in millions)
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	1. 683 $	1. 722
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	$54. 093	498

Subsequent years

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Total
13. 138	Debt consists of the following:
(in millions, by calendar year)	Mesh (in millions, by calendar year)
Declared interest	Effective interest
41. 525	$54. 093

2009 issue $3. 8 billion (A)

NOTE 14 — LEASES

2039

5, 20%

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
4, 50%	4, 57%	486	1. 571
2011 issue $2. 3 billion (A)
2041	5. 30%	5. 36%	718
1. 270	2012 issue $2. 3 billion (A)	336	247
2022-2042	2. 13%-3. 50%	2. 24%-3. 57%	1. 204

1. 650

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
2. 919
2013 issue $4 billion	2021-2033	2. 13%-3. 13%	2. 23%-3. 22%
4, 803	2012 issue $2. 3 billion (A)	336	247
2015 issue $23. 8 billion (A)	Property, plant and equipment, net of accumulated depreciation	409	221
2, 38%-4, 75%
2, 47%-4, 78%	12, 305	15, 549	2016 issue $19. 8 billion (A)
2021-2056	1, 55%-3, 95%	1, 64%-4, 03%	12, 180

16, 955

2017 issue $17 billion (A)
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.
10. 695
The application of a goodwill test of the goodwill requires the judgment of identifying reports, assets assets and liabilities in the report unit, allocation of goodwill in the report unit, and determining the fair value of each report unit. The fair value of each report unit is mainly estimated using the discounted cash flow method. This analysis requires important judgments, such as future cash flows that depend on internal forecasts, estimates the lon g-term growth rate of businesses, estimates the useful life caused by cash flow, and determining weighted average capital costs. Masu.	2020 issuance $10 billion (A)	2050-2060
(in millions)	2, 53%-2, 68%	10. 000
Credit	100 basis points increase in credit spreads	(309)
2, 92%-3, 04%	2, 92%-3, 04%	8, 185
Total face value
63, 910	67, 407	Discounts and issuance costs
(4)	(554)	Hedge fair value adjustments (b)
40	Debt swap insurance (a)	(5. 293)
(in millions)	Total liabilities	58, 146
Fair Value	Current portion of long-term debt	(8, 072)
(3, 749)	Long-term debt	50, 074 $
59, 578 $
2, 47%-4, 78%	See Note 5 - Products for more information about interest rate swaps related to our fixed-rate debt.	Within 1 year within 5 years
2021-2056	(in millions)	Year ended June 30
8. 075 $
2, 47%-4, 78%	5. 250	2. 250
2021-2056	Subsequent	42. 585

Total

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
$ (395)	10. 695	Total face value
2022	Corporate tax, etc.	The breakdown of corporate income tax benefits is as follows:
2023	(Unit: 1 million yen)	The year ended on June 30
2024	2021	Unreasonable loss
2025	2019	Current tax
2026	Federal tax	3. 285 $
$48. 366	4. 718 $	State and Local Tax USA
1. 229	foreigner	5. 467
4. 444	5. 531	Current tax
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	2, 92%-3, 04%	Long-term debt

Deferred tax

NOTE 15 — CONTINGENCIES

25 $

58 $

$ (5. 647)

State and regions

(204)

(6)

(1. 010)

foreigner

(41)

Deferred tax

$ (150)

11 $

$ (6. 463)

Corporate tax adjustment amount

NOTE 16 — STOCKHOLDERS’ EQUITY

9. 831 $

8. 755 $

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
2020	2019	US	34. 972 $
24, 116 $	15. 799 $	54	116
foreigner	36, 130	28. 920	27. 889
Ta x-dwelling profit	71. 102 $	53. 036 $	US

Commitment to sustainable future

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.	Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.			Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.			None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Corporate culture	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. The introduction and utilization of AI is also an important factor in trust. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	29	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	24	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Corporate culture	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion.	32	Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	57	Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.
It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion.	37	I n-house stock buying	36	On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. < SPAN> Microsoft is a more common representative of the community we live and the people around the world that we are trying to serve. I know that I will be able to support better so that I can achieve. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.
Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.	It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	Nothing is so optimistic	28	Chairman and CEO Satia Nadera October 12, 2021	33	I n-house stock buying
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Careing is a new currency for all leaders, and we have built a new framework so that managers can help teams and achieve success through empowerment and accountability. Our managers model our corporate culture and values as a model in action, set goals, guide the team so that they can adapt, understand the ability and motivation of employees, and invest in their growth. Efforts and take care of the employees.	It may be difficult to imagine in this unbearable difficulty and deep uncertainty era, but I have an infinite possibility in the future. What I am encouraged is thanks to everyone who has been working hard to make the world better in the power, shareholders, employees, partners, customers, and restrictions. And we are convinced that if we continue to pursue our mission, we will be able to achieve more things together.	126	Nothing is so optimistic	150	Chairman and CEO Satia Nadera October 12, 2021

I n-house stock buying

On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020.

Our company has purchased the following ordinary shares based on the company's back purchase program:	(Unit: Million shares)	Number of shares	Amount	It also has the belief that investing in security and the public and private sector, including technology companies, must be transparent and coordinate to enable worldwide measures.
Amount	Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Number of shares	Business year ended on June 30	2021	2020	2019
First quarter	twenty five	5. 270 $	4. 000 $	2. 600 $
Second quarter	27	5. 750	4. 000 $	6. 100
Third quarter	twenty five	5. 750	4. 000 $	3. 899
Fourth quarter	twenty four	6. 200
5. 088
4. 200	total	101	22. 970 $	19. 688 $
16. 799 $	The shares acquired in FY2021 and the fourth quarter of fiscal 2020 are based on the sel f-stock acquisition program approved on September 18, 2019. The shares acquired in the third quarter of 2020 are based on the sel f-stock acquisition program approved on September 20, 2016 and September 18, 2019. All other other shares are based on the repurchase program approved on September 20, 2016. In the above table, in 2021, FY2020, and FY2019, the shares were returned to settlement of the withholding of employees associated with the right of $ 4. 4 billion, $ 3. 3 billion and $ 2. 7 billion. Not included. All sel f-stock acquisitions were made in cash.	Dividend	The Board of Directors declared the following dividends:	Declaration date
Standard date	Payment date	Dividend per share	The Board of Directors declared the following dividends:	2021
(Unit: 1 million yen)	September 15, 2020	November 19, 2020	The Board of Directors declared the following dividends:	0, 56 $
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	December 2, 2020	February 18, 2021

March 11, 2021

NOTE 17 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Deferable tax debt

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Repayment of borrowings
13. 138	$ (8. 760)	$ 0	Deferred tax assets
6. 983 $	4. 316 $	25. 766 $	160
Other lon g-term assets	7. 181 $	0	6. 405 $
Lon g-term corporate income tax debt	Our hardware generally relies heavily on the underlying operating system and will not operate without it. In such cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized when the property is transferred to a reseller or directly to the end customer through retail stores or online purchases.	0	8
(204)	Near amount of deferred tax assets	0	6. 983 $
6, 201 $	53. 328 $	25. 766 $	23. 475 $
41. 525	Unreserved tax position	Kitra municipality	$ 0
Financing
13. 138	(Unit: 1 million euros)	The year ended on June 30	2021
2020	2019	Unknown tax Benefit's phase balance	13. 792 $
13. 146 $	11. 961 $	4	93
Reduction associated with reconciliation	(195)	Short-term unearned revenue	(316)
(204)	790	3	74
2, 106	183. 850 $	See Note 11, "Liabilities," to the financial statements.	See Note 7, "Property, plant and equipment," to the financial statements.
7. 671	1. 822	0	3. 186
41. 525	(1)	(5)	The year ended on June 30
14. 550 $
13. 138	13. 146 $	In February 2012, IRS deprived the 2011 revenue agency report on unresolved issues regarding the year 2004 to 2006, and entered the audit stage again. In the fiscal year 2016, some of the IRS audits for tax years from 2007 to 2009 were resolved, and in the 2018 accounting year, some of the IRS audits for tax years from 2010 to 2013. In the second quarter of FY2021, the NTA's additional surveys were solved for the tax year from 2004 to 2013, paid $ 1. 7 billion, including tax and interest. We continue to be audited for the tax year from 2004 to 2017.	As of June 30, 2021, the unresolved main problem is related to the relocation price, and if the problem is resolved, it may have an important impact on consolidated financial statements. We believe that the extra money for unexpected corporate taxes is sufficient. It has not received any evaluation proposals on the unresolved basis for transportation prices, and it is unlikely that these issues will be finally solved within the next year. Based on the available information, we expect that ta x-oriented debt on these issues will not significantly increase or decrease for the next 12 months.
We are subject to corporate taxes in many countries and regions outside the United States. Regarding the tax year from 1996 to 2020, our business in a specific jurisdiction area is still subject to surveys, and some of them are currently being investigated by local tax authorities. The impact of these tax audits on the consolidated financial statements is expected to be minor.	See Note 12, "Income Taxes."	Amounts represent purchase commitments, including open purchase orders and take-off agreements, and are not presented as construction commitments above.	Long-term contingent tax, other tax liabilities and deferred taxes exclude $14. 6 billion from the amounts presented due to the uncertainty of the timing of these liabilities. Also excludes unearned revenue and non-cash income.
41. 525	2020	Productivity improvement and business process	In February 2012, IRS deprived the 2011 revenue agency report on unresolved issues regarding the year 2004 to 2006, and entered the audit stage again. In the fiscal year 2016, some of the IRS audits for tax years from 2007 to 2009 were resolved, and in the 2018 accounting year, some of the IRS audits for tax years from 2010 to 2013. In the second quarter of FY2021, the NTA's additional surveys were solved for the tax year from 2004 to 2013, paid $ 1. 7 billion, including tax and interest. We continue to be audited for the tax year from 2004 to 2017.
18. 643 $	Smart cloud	17. 710	16. 620

NOTE 18 — EMPLOYEE STOCK AND SAVINGS PLANS

More personal calculations

4. 311

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
82, 933	The year ended on June 30, 2021	Phase balance	39. 180 $
Profitable	94. 565	938	816

Recognition of previous income

(89. 604)

Balance at the end of the current fiscal year

44. 141 $

As of June 30, 2021, the revenue allocated to the remaining performance obligations is $ 146 billion, which includes the amount of money claimed and recognized as a profit for the future, of which $ 141 billion. Is related to the revenue of the commercial part. About 50%of the revenue is expected to be recognized within the next 12 months and the rest will be recognized.

We are doing business and lease finance for data, corporate offices, research and development facilities, Microsoft Experience Center, and specific devices. The lease period is one to 15 years, some of which include up to 5 years of extension options, and some have a cancellation option within one year.

Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
2020	2019	Operating / wreath cost	2, 127 $
2, 043 $	1. 707 $	Finance lease cost	Depreciation cost of used assets

921 $

Our approach to privacy begins with the belief that people have the right to own their own personal data, and that companies are responsible for collecting and using personal data. Therefore, we are the first to support the GDPR, the EU's personal information protection law, which is a model of the Personal Information Protection Law all over the world, for the first time as a major technology company, and to enact the Comprehensive Federal Personal Information Protection Law in the United States. I support you.		370 $
Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
386
Total lease loan expenses	1. 307 $	947 $
617 $	Fair level	(Unit: 1 million euros)
Business year ended on the 30th of the month	2021	2020
2019	Level 2	Operating cash flow by operating leasing
2. 052 $	1. 829 $	1. 670 $

Operating cash flow from operating leasing

386

Finance wreath financial cash flow

648

Justice assets received in exchange for leasing debt
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Finance leasing	3. 290	9	11
3. 467	2. 532	Supplementary information on the balance sheet regarding lease is as follows:	(Except for the unit: 1 million yen, lease period and discount rate)

30th of the month

2021

2020

NOTE 19 — SEGMENT INFORMATION AND GEOGRAPHIC DATA

Operating leasing

Nasdaq Computer

100. 00

138, 60

182, 60
198, 89
289, 40
440, 62

Ambitious to drive us

In order to achieve our vision, R & D activities are focusing on the three ambitions related to each other:

Discover productivity and business processes
Construction of smart cloud and smart edge platform

Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance. Construction of smart cloud and smart edge platform

Tangible fixed assets
Our cloud business is profitable from three economies. In other words, data that develops computing resources with a very low cost per unit than small business establishments. Data to adjust and consolidate the demand patterns of various customers, regions, geography, and applications, and improve the use of computing, storage, and network resources. A mult i-tenant site that reduces labor costs for application maintenance.
Microsoft's cloud is the most comprehensive and trusted cloud, offering the best integration across the entire technology stack while delivering openness, faster time to value, lower costs, and greater flexibility. As a global cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. We are seeing more and more new use cases and needs for compute and security at the edge, accelerating innovation across the full spectrum of cutting-edge smart devices, from IoT sensors to gateway devices to cutting-edge hardware to create, manage, and protect peak workloads. With Azure Stack, enterprises can extend Azure into their own datacenters and build a consistent stack across public clouds and Smart Advantage. Azure hybrid infrastructure consistency spans security, compliance, identity, and management, helping support the real-world needs and evolving regulatory requirements of commercial customers and enterprises. Azure Arc simplifies governance and management by providing a consistent platform for managing multiple clouds and on-premise deployments. Security, compliance, identity, and management are the foundation of our entire technology. We provide comprehensive, integrated capabilities to protect people and organizations. April
We are accelerating the deployment of mixed reality solutions with new Azure services and devices. Microsoft Mesh enables presence and shared experiences from anywhere through mixed reality applications. We believe that the opportunity to blend the physical and digital worlds, combined with the power of Azure cloud services, will unlock entirely new workloads and experiences that will shape the next era of computing.

(2. 306)

(1. 385)

Tangible fixed assets

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
In addition, we sell products and services for commercial and consumers such as cloud services, searches, games, etc. through digital marketplace and online store. In fiscal 2002, the actual Microsoft Store store was closed and the Microsoft Experience Center was opened. The Microsoft Experience Center aims to promote deeper involvement with partners and customers, regardless of the industry.
Distributor and reseller	The organization also provides licensing to Microsoft products and service partners through a licensing solution partner ("LSP"), distributor, added value reseller ("VAR"), and retailers. Each type of resale partner can reach al l-scale tissue, but LSPs are mainly traded with larg e-scale organizations, distributors are mainly resold in VAR, and VAR usually reaches small and mediu m-sized organizations. ESA usually acquires a license as an LSP and works as a reseller for other volume license programs. Microsoft Cloud Solution Providers are the main partner programs for reselling cloud services.	We sell products to retailers mainly through independent no n-monopoly distributors, regular sales agencies, resale companies, and retailers. Personal consumers mainly receive these products through retail stores. We sell devices through thir d-party retailers. The Company has a network of field sales representatives and field support staff who solicit orders from sales agencies and resale companies, provide product training and sales support.	12. 541 $
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	SA transfers rights to new software and upgrades to perpetual licenses released during the term of the agreement. It also provides support, tools, training, and other licensing benefits to help customers develop and use the software effectively. SA is included in some volume licensing agreements and can be purchased as an option in others.	Volume Licensing Programs	Eight years
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	Microsoft Products and Services Agreement	The Microsoft Products and Services Agreement is designed for medium and large organizations that want to license cloud services and on-premise software on an as-needed basis. Organizations purchase perpetual licenses or subscribe to licenses. SA is optional when purchasing perpetual licenses.	13 years
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Changes in inventory levels in the OEM channel.	Pricing changes and promotions, pricing variances as device mix manufacturing shifts from local and regional system manufacturers to large multinational OEMs, and pricing differences among versions of Windows.	2, 7%
Partner Program
Distributor and reseller	The Microsoft Service Provider License Agreement enables hosting service providers and independent software vendors who want to license the appropriate Microsoft software products to offer software services and hosted applications to end customers. Partners license the software for a three-year period and are billed monthly for consumption.	The Independent Software Vendor Royalty program allows partners to integrate Microsoft products with other applications and license the integrated business solutions to end users.	(Unit: 1 million yen)
It offers options for organizations that are considering purchasing cloud services, o n-premises software, and SA. The Company provides software to organizations based on a volume license agreement, so that customers can obtain multiple products and services licensing instead of acquiring individual licenses through retail channels. We use various programs designed to provide flexibility to various sizes. These programs may differ around the world, but generally include:	Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports, which will be posted as soon as reasonably practicable after we electronically file or furnish such materials with the U. S. Securities and Exchange Commission (the "SEC") at www. sec. gov.	Information about our business strategy, financial results and metrics for investors.	1. 179 $
The Enterprise Agreement provides large organizations with an easy-to-manage volume licensing program, allowing them the flexibility to purchase cloud services and software licenses in one agreement. The Enterprise Agreement is designed for medium to large organizations that want to license cloud services and on-premise software for three years across their organization. Organizations can choose to purchase perpetual licenses or subscribe to licenses.	Corporate governance information, including our Articles of Incorporation, Bylaws, Governance Guidelines, Temple Committee, Code of Conduct and Ethics, Global Social Responsibility Initiatives, and other governance-related policies.	We may from time to time post other news or announcements that we believe may be useful or interesting to investors.	1. 211
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	The information posted on these websites is not part of or incorporated by reference in this document or in any other reports filed or furnished with the SEC. In addition to these channels, we use social media to communicate with the public. Information we post on social media may be considered material to investors. We encourage investors, media, and others interested in Microsoft to review the information we post on our social media channels, which are listed on our Investor Relations website.	The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD& A") is intended to assist readers in understanding Microsoft Corporation's results of operations and financial condition. The MD& A is intended to assist readers in understanding Microsoft Corporation's results of operations and financial condition. The MD& A is intended to supplement the Consolidated Financial Statements and should be read in conjunction with the Notes to Financial Statements. This section generally discusses our results of operations for the year ended June 30, 2021 compared to the year ended June 30, 2020. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended June 30, 2020 for a discussion of our results of operations for the year ended June 30, 2020 compared to the year ended June 30, 2019.	1. 220

after that

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
After deduction of interest equivalent	(946)	(2. 660)	total
11. 591 $	12. 541 $	As of June 30, 2021, it has an additional $ 5. 4 billion and $ 7. 3 billion of additional operating leasing and finance leasing to untreated data. These operating leases and finance leases are scheduled to start between 2022 and 2026, and the lease period is one to 15 years.	In fiscal 2020, with the closure of the Microsoft store's actual store, the loss of $ 161 million for operating lease usage assets was recorded.
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Changes in inventory levels in the OEM channel.	Pricing changes and promotions, pricing variances as device mix manufacturing shifts from local and regional system manufacturers to large multinational OEMs, and pricing differences among versions of Windows.	2, 7%

The British Columbia trial began in May 2016. Following mediation, the parties agreed to a comprehensive settlement of all three Canadian actions and submitted proposed settlement agreements to the courts of the three jurisdictions for approval. Final settlement proposals and notices were approved by the courts of British Columbia, Ontario and Quebec. The 10-month indemnification period began on November 23, 2020 and will end on September 23, 2021.

Other Antitrust Lawsuits and Claims

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Ultimately, our corporate culture determines the length of our achievement. We aim to create a corporate culture that encourages employees to be curious, experiment, and share what they have learned. For this reason, in recent years, we have focused on building corporate culture, focusing on commitment to growth mind sets.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
In 2013, the defendant in the collective lawsuit filed a claim to exclude plaintiffs' expert testimony on general causal relationships based on defective scientific methodology. In 2014, the court approved some of the defendants' claims for the exclusion of the plaintiff's general causal causal experts and were partially rejected. The defendant opposed the criteria for scientific evidence by experts, and filed an incidental appeal in the Colombia Special Zone Court. In October 2016, the Appeal Court ruled the defendant to adopt the criteria proposed by the defendant, and resigned a trial to conduct the hearing based on the criteria. The plaintiff submitted a supplement to the expert report, but some of the defendants were calling for cancellation. In August 2018, the Judgment ordered an order to delete a part of the plaintiff's expert report. A hearing on general causal relationships is scheduled for January and February 2022.	Other inaccurated	It is also subject to various other claims and lawsuits that occur at any time during our normal business. At present, management does not think that even if the claim to the Company is solved individually or as a whole, it will have a significant adverse effect on our consolidated financial statements, but these issues are unique. Due to sexuality, management's views may be changed in the future.	As of June 30, 2021, the Company has recorded $ 339 million. We intend to vigorously defend these projects, but the negative results exceeding the amount are estimated to be about $ 500 million in total. If the result is ultimately disadvantaged, it may have an important adverse effect on the consolidated financial statements during the period when the result can be estimated rationally.
stock	Normal stocks are as follows:	(Unit: Million shares)	Business year ended on June 30
2021	2020	2019	Start of the current period
7. 571	7. 643	7. 677	Publisher
49	purchase	(101)	Level 1
(150)	Balance at the end of the current fiscal year	7. 519	7. 571
7. 643	I n-house stock buying	On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020.	The following table summarizes the fluctuations of other comprehensive income (loss) of other comprehensive elements:
(Unit: 1 million euros)	The year ended on June 30	2021	2020
Gains and losses on derivatives designated as cash flow hedges are initially reported as a component of other comprehensive income and subsequently recognized in earnings along with the corresponding hedged item. Gains and losses on hedges of hedging instruments excluded from the assessment of effectiveness are recognized in earnings.	Derivative	Phase balance	$ (38)
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	Changes in inventory levels in the OEM channel.	Pricing changes and promotions, pricing variances as device mix manufacturing shifts from local and regional system manufacturers to large multinational OEMs, and pricing differences among versions of Windows.	2, 7%

Replacement adjustment amount to profit and loss

(17)

(341)

Patagonia wants customers and partners to create their own digital abilities and become independent with Patagonia, rather than relying on Patagonia. This will not be realized without trust. For Microsoft, trust is built on privacy, security, digital safety, responsible use of AI, and transparency.
Existing cash, cash, etc., shor t-term investment, sales cash flow, and access to capital markets will be at least 12 months and later predictable future, sales, dividends, shares, and debt. We expect that it will continue to supply enough money to cash commitments for investment and financial activities such as tangible capital spending and TCJ A-related transfer tax.	This growth mindset has been very useful for us over the past year of crisis, confusion, and change. This growth mind is the driving force of our passion, which is particular about customers, and to learn from customers and customers. This growing mind has become able to sympathize with colleagues, enabled our team to cooperate as a team, that is, as one Microsoft. And it leads to our approach to diversity and inclusion. < SPAN> Introduction and utilization of AI are also important factors. In order to avoid unexpected results, AI technology is responsibly used, we take an approach based on fairness, reliability, safety, safety, comprehensive, transparency, and explanation. I am. The responsible AI Promotion Office guarantees that we will practice these principles, and the responsible AI resource center will help our customers and developer communities do the same. Share tools.	Finally, we believe transparency is the foundation of trust. For this reason, we continue to provide clear information on how we operate business and are involved with customers and partners. The CSR Report Hub provides detailed information on the access, environmental data, political activities, employees' population statistics, and human rights activities.	None of the companies, any industry, none of the countries can solve these issues alone. Our own actions are important, but our most important contributions are from share our learning and support other organizations to achieve their goals for a better future. Masu.
Deliver y-related pure fluctuations, $ 7, $ (10) and $ (6)	19	(38)	(173)
Balance at the end of the term	$ (19)	$ (38)	Investment securities
11. 591 $	5. 478 $	1. 488 $	$ (850)
On September 20, 2016, the Board of Directors has approved a repurchase program, up to $ 40 billion. The company's r e-buying program started in December 2016 and completed in February 2020. Microsoft is the more people on the earth, the better, the better the people around the world we are trying to serve. I know that you will be able to support you better. Diversity and Inclusion continue to be important priority for all Microsoft employees, and are incorporated into business performance and career development approaches. In order to accelerate the income travel of employees and the ecosystem, we hold a global event 2021 focusing on diversity and inclusion, and continue to invest in sharing understanding by widely published resources and learning. 。 In addition, as the first year of commitment of inequality and racial unfairness, the number of blacks, Africa n-based, Hispanic, and Latin employees, in the leader of Microsoft in the United States, will be doubled by 2025. We are proceeding smoothly toward the goal.	(2. 216)	3. 987	2. 331

Auditor's Report

Replacement adjustment of losses (profit) included in other revenue (cost) (pure amount)

(63)

Tax costs included in corporate income tax (profit)

(1)

(19)

Replacement from the cumulative amount of other comprehensive profits (loss)

(50)

Investmen t-related pseudonym, $ (602), $ 1.

(2. 266)

3. 990

2. 405

Cumulative impact amount due to the change of accounting field

(67)
Balance at the end of the current fiscal year
3. 222 $
5. 478 $

1. 488 $

Exchange conversion adjustment account

Start of the current period

$ (2. 254)
$ (1. 828)
$ (1. 510)

After deducting the conversion adjustment and other, after deducting the tax effect: $ (9), $ (1), $ (1)
873
(426)

(318)
Balance at the end of the current fiscal year

$ (1. 381)

2. 405

$ (1. 828)

Other comprehensive profit (loss) Cumulative period balance

Exchange conversion adjustment account

3, 186 $

$ (340)
The Company has paid stock rewards to employees and directors. As of June 30, 2021, a total of 2501 million shares have been granted based on our stock plan. The rewards that have been exposed or canceled without shares are issued are usually issued by this system. Microsoft has issued a new Microsoft common stock to satisfy the awards given based on the stock plan. There is also an ESPP for all qualified all employees.
The cost of stock reimbursement and the related tax effects are as follows:
(Unit: 1 million)
The year ended on June 30

2021

2020

Controls & Procedures

2019

CONTROLS AND PROCEDURES

Stock remuneration cost

6, 118 $

5. 289 $

4. 652 $

Replacement adjustment of losses (profit) included in other revenue (cost) (pure amount)

(63)

Stock plan

Stock awards give the right to receive Microsoft's ordinary shares when the award right is confirmed. Stock awards usually have rights for four or five years of working.

Executive incentive plan

(19)

Activity status of all stock systems

The fair value of the share remuneration was estimated on the date of grant using the following prerequisites:

The year ended on June 30

2021

2020

2021

Directors & Officers

0, 51 $ --0, 56

Directors

0, 46 $ - 0, 51

Elim Poon - Journalist, Creative Writer

Last modified: 27.08.2024

Yesterday, Microsoft announced Q4 FY21 Earnings. Included in the report on the financial performance were the following LinkedIn highlights. “We delivered a solid close to the fiscal year driven by Microsoft Cloud quarterly revenue of $ billion, up 21% (up 23% in constant currency). Microsoft Corp. Annual stock financials by MarketWatch. View the latest MSFT financial statements, income statements and financial ratios.

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