10-QPeriod: Q3 FY2001

MICROSOFT CORP Quarterly Report for Q3 Ended Mar 31, 2001

Filed May 15, 2001For Securities:MSFT

Summary

Microsoft Corporation reported solid financial performance for the nine months ended March 31, 2001. Revenue increased by 10% year-over-year, reaching $18.84 billion, indicating continued business growth. Net income also saw an increase, rising to $7.28 billion for the nine-month period, demonstrating effective cost management and strong sales. The company's balance sheet remains robust, with total assets growing to $59.6 billion and a significant increase in cash and short-term investments to $30.02 billion, providing ample liquidity for future investments and operations. The company continues to invest heavily in research and development, with R&D expenses increasing by 12% for the nine-month period. This investment is crucial for maintaining its competitive edge in the rapidly evolving technology sector. Microsoft also demonstrated a commitment to shareholder returns through its share repurchase program, repurchasing $4.4 billion worth of common stock during the nine months. Despite ongoing legal challenges, management expressed confidence that these matters would not materially impact the company's financial position.

Key Highlights

  • 1Revenue grew 10% to $18.84 billion for the nine months ended March 31, 2001.
  • 2Net income increased to $7.28 billion for the nine months ended March 31, 2001.
  • 3Cash and short-term investments reached $30.02 billion as of March 31, 2001, up from $23.80 billion in the prior year.
  • 4Research and development expenses increased by 12% to $3.015 billion for the nine months ended March 31, 2001.
  • 5The company repurchased $4.4 billion of common stock in the first nine months of fiscal year 2001.
  • 6Adoption of SFAS 133 resulted in a cumulative pre-tax reduction to income of $560 million ($375 million after-tax).
  • 7The company acquired Great Plains Software, Inc. for approximately $1.1 billion on April 5, 2001.

Frequently Asked Questions

For the nine months ended March 31, 2001, Microsoft reported a 10% increase in revenue to $18.84 billion and a net income of $7.28 billion, up from $7.01 billion in the prior year's comparable period. This indicates sustained revenue growth and improved profitability.

Microsoft's financial position is strong, with total cash and short-term investments reaching $30.02 billion as of March 31, 2001, a significant increase from $23.80 billion at June 30, 2000. This provides substantial liquidity and flexibility for strategic initiatives.

Microsoft adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities, effective July 1, 2000. This adoption resulted in a cumulative pre-tax reduction to income of $560 million ($375 million after-tax) and a reduction to Other Comprehensive Income (OCI) of $112 million ($75 million after-tax).

Microsoft is actively engaged in several legal proceedings, including antitrust cases, and indicated that management believes resolving these matters will not have a material adverse impact on the company's financial position or results of operations. However, investors should monitor these developments closely.