The lawsuits also allege an industry- wide conspiracy to manipulate the science and testing around emission guidelines. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Prior year net income and diluted EPS were positively impacted by the net tax benefit related to the India Supreme Court decision on withholding taxes, which resulted in an increase to net income and diluted EPS of $620 million and $0.08, respectively. We have over 27,000 people managers, all of whom must complete between 20-33 hours of required manager capability and excellence training and are assigned ongoing required training each year. Our corporate learning portal has over 100,000 average monthly active users. Due to investments in software that increased efficiencies in how we operate our server and network equipment, as well as advances in technology, we determined we should increase the estimated useful lives of both server and network equipment from four years to six years. At our very core, we need to deliver innovation that helps drive broad economic growth. The fair values of these investments approximate their carrying values. Our effective tax rate for fiscal years 2022 and 2021 was 13% and 14%, respectively. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency positions, including hedges. Im constantly in awe of how our employees bring their passion to work each dayfor each other, for our customers, and for their communities. In addition to these channels, we use social media to communicate to the public. We also are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. Opportunities include: Our employees embrace the growth mindset and take advantage of the formal learning opportunities as well as thousands of informal and on-the-job learning opportunities. As of June 30, 2022, $40.7 billion remained of this $60.0 billion share repurchase program. Additional information on our reportable segments is contained in Note 19 Segment Information and Geographic Data of the Notes to Financial Statements in our fiscal year 2022 Form 10-K. We use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. It is classified as operating in the Family Clothing Stores industry. Other comprehensive income (loss), net of tax: Total cash, cash equivalents, and short-term investments, Accounts receivable, net of allowance for doubtful accounts of, Property and equipment, net of accumulated depreciation of, Common stock and paid-in capital shares authorized 24,000; outstanding, Accumulated other comprehensive income (loss), Total liabilities and stockholders equity. Across our customer solution areas, we are delivering powerful platforms, tools, and services that expand our opportunity to help every organization in every industry deliver on the digital imperativewith a business model that is trusted and always aligned with their success. Becoming more diverse and inclusive in everything we do. The investments we make in sustainability carry through to our products, services, and devices. The company's fourth quarter fiscal year 2021 net sales of $4.5 billion were down 3% compared to 2019. We are accelerating adoption of AI innovations from research to products. Xbox content and services revenue increased 3% driven by growth in Xbox Game Pass subscriptions and first- party content, offset in part by a decline in third-party content. In a dynamic labor market, LinkedIn is helping professionals use the platform to connect, learn, grow, and get hired. We encourage investors, the media, and others interested in Microsoft to review the information we post on the social media channels listed on our Investor Relations website. Zara is one of the largest international fashion companies belonging to Inditex, one of the world"s largest distribution groups. In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine the fair value of our financial instruments. Comparison of Backlogged Requests from Previous and Current Annual Report To ensure accountability over time, we publicly disclose our progress on a multitude of workforce metrics including: We develop dynamic, sustainable, market-driven, and strategic programs with the goal of providing a highly differentiated portfolio to attract, reward, and retain top talent and enable our employees to thrive. For the third quarter, the company reported. We have not received a proposed assessment for the unresolved key transfer pricing issues and do not expect a final resolution of these issues in the next 12 months. 2021-22 Annual report. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. From infrastructure and data, to business applications and collaboration, we provide unique, differentiated value to customers. Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. We joined the First Movers Coalition as an early leader and expert partner in the carbon dioxide removal sector, with a commitment of $200 million toward carbon removal by 2030. These allocated costs include legal, including settlements and fines, information technology, human resources, finance, excise taxes, field selling, shared facilities services, and customer service and support. We have audited the accompanying consolidated balance sheets of Microsoft Corporation and subsidiaries (the "Company") as of June 30, 2022 and 2021, the related consolidated statements of income, comprehensive income, cash flows, andstockholders'equity, for each of the three years in the period ended June 30, 2022, and the related notes (collectively referred to as the "financial statements"). Shares repurchased during the third quarter of fiscal year 2020 were under the share repurchase programs approved on both September 20, 2016 and September 18, 2019. Explanation added for translation to English. The segments enable the alignment of strategies and objectives across the development, sales, marketing, and services organizations, and they provide a framework for timely and rational allocation of resources within businesses. Adjusted net income and adjusted diluted earnings per share (EPS) are non-GAAP financial measures which exclude the net income tax benefit related to transfer of intangible properties in the first quarter of fiscal year 2022 and the net income tax benefit related to an India Supreme Court decision on withholding taxes in the third quarter of fiscal year 2021. Across our ecosystem, we are more than 90% of the way toward our commitment to spend an incremental $500 million with Black- and African American-owned suppliers. CALs provide access rights to certain server products, including SQL Server and Windows Server, and revenue is reported along with the associated server product. The analysis, based on recent and previously unpublished data on the brand's logistics hub in Zaragoza (northeast Spain), sheds light on the modus operandi of the group and confirms the crucial importance of logistics in all facets of the production model. Zara has got only 4.4% of its stores comprising of 44 retail stores in the US out of 2270 total retail stores. Customer mix between consumer, small and medium businesses, and large enterprises. During fiscal year 2022, our Daily Pulse surveys gave us invaluable insights into ways we could support employees through the COVID-19 pandemic, addressing racial injustice, the war in Ukraine, and their general wellbeing. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Operating leases are included in operating lease right-of-use (ROU) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. .. .. Consolidated statement of changes in equity. Server products and cloud services, including Azure and other cloud services; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and Nuance and GitHub. We analyze 43 trillion security signals daily and use the insights to inform increased protections. As we look to the next year and beyond, well continue to reflect on where the world needs us to do better. No respite. We put our commitment into practice, not only within Microsoft but by empowering our customers and partners to do the same and by advocating for policy change. We have a network of field sales representatives and field support personnel that solicit orders from distributors and resellers and provide product training and sales support. We expect capital expenditures to increase in coming years to support growth in our cloud offerings. Azures competitive advantage includes enabling a hybrid cloud, allowing deployment of existing datacenters with our public cloud into a single, cohesive infrastructure, and the ability to run at a scale that meets the needs of businesses of all sizes and complexities. In response to the Great Reshuffle, in fiscal year 2022 we announced a sizable investment in annual merit and annual stock award opportunity for all employees below senior executive levels. Property and equipment is stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. We work to ensure that technology is inclusive, trusted, and increases sustainability. have expensive design, advertising and raw material costs. In February 2012, the IRS withdrew its 2011 Revenue Agents Report related to unresolved issues for tax years 2004 to 2006 and reopened the audit phase of the examination. Despite these Scope 3 increases, we will continue to build the foundations and do the work to deliver on our commitments, and help our customers and partners achieve theirs. Gains and losses from changes in fair values of derivatives that are not designated as hedging instruments are primarily recognized in other income (expense), net. Annual Reports will also contain 'Discussion and Analysis from the Management', along with Corporate Information, Report on Corporate Ggovernance and detailed financial results for the last 10 years. Server products and cloud services revenue increased $14.7 billion or 28% driven by Azure and other cloud services. We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities. Microsoft Cloud (formerly commercial cloud) revenue increased 32% to $91.2 billion. Customers are looking to unlock value while simplifying security and management. By using our site, you agree to our collection of information through the use of cookies. We have paid transition tax of $6.2 billion, which included $1.5 billion for fiscal year 2022. Inditex. Seventy percent of employees globally participated in our fiscal year 2022 Employee Signals survey, which covers a variety of topics such as thriving, inclusion, team culture, wellbeing, and learning and development. Interest expense decreased due to a decrease in outstanding long-term debt due to debt maturities. Additions to property and equipment will continue, including new facilities, datacenters, and computer systems for research and development, sales and marketing, support, and administrative staff. Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. Cosmos DB is the go-to database powering the worlds most demanding, mission-critical workloads, at any scale. Xbox hardware revenue increased 16% due to continued demand for Xbox Series X|S. Operating expenses increased $6.3 billion or 14% driven by investments in cloud engineering, LinkedIn, Gaming, and commercial sales. .. 28. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to seven years; computer equipment, two to four years; buildings and improvements, five to 15 years; leasehold improvements, three to 20 years; and furniture and equipment, one to 10 years. ISBN: 978-624-5917-07-5. We have savings plans in the U.S. that qualify under Section 401(k) of the Internal Revenue Code, and a number of savings plans in international locations. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The total shareholder dividend for FY2022 was 325 US cents, an annual cash return of a record US$16.4 billion to shareholders and representing a 77 per cent payout ratio. Were continuing our pursuit of our own ambitious commitments and helping others achieve their climate goals, aided by technology. Our Xbox Game Pass subscription service now includes access to hundreds of games. The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of ZeniMax. Enterprise Services, including Enterprise Support Services, Microsoft Consulting Services, and Nuance professional services. LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions. Tested management's identification and treatment of contract terms. (28) Compensation cost for stock awards, which include restricted stock units (RSUs) and performance stock units (PSUs), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service or performance period. (19) 74 How can strategic management within the HRM department ensure that HRM plays an effective role in the company's strategic management process? The ability to convert data into AI drives our competitive advantage. Our fair value processes include controls that are designed to ensure appropriate fair values are recorded. We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. GitHub provides a collaboration platform and code hosting service for developers. It was organized as the joint venture of the Inditex group and as a new holding company in 1975 (About ZARA, n. p.). Office Commercial products revenue declined 22% driven by continued customer shift to cloud offerings. Office Consumer revenue is mainly affected by the percentage of customers that buy Office with their new devices and the continued shift from Office licensed on-premises to Microsoft 365 Consumer subscriptions. Xbox Cloud Gaming is Microsofts game streaming technology that is complementary to our console hardware and gives fans the ultimate choice to play the games they want, with the people they want, on the devices they want. For a discussion of the year ended June 30, 2021 compared to the year ended June 30, 2020, please refer to in our fiscal year 2022 Form 10-K, "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, 2021. No respite; Chapters. To meet the expectations of our stakeholders and to and maintain their trust, we are committed to conducting our business in ways that are principled, transparent, and accountable and we have made a broad range of environmental and social commitments. Our cloud and AI services and datacenters help businesses cut energy consumption, reduce physical footprints, and design sustainable products. The COVID-19 pandemic led to record unemployment, disrupting livelihoods of people around the world. Conclusions on recognizing and measuring uncertain tax positions involve significant estimates and management judgment and include complex considerations of the Internal Revenue Code, related regulations, tax case laws, and prior-year audit settlements. Attachment of Windows to devices shipped. In-the-classroom learning, learning cohorts, our early-in-career Aspire program, and manager excellence communities. Surface revenue increased $226 million or 3%. The agreement allows customers to acquire monthly or annual subscriptions for cloud-based services. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Amendment No. Microsoft Cloud gross margin percentage decreased slightly to 70%. All deferred income taxes are classified as long-term in our consolidated balance sheets. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Archived annual reports. Were always working to close the gap between our espoused culture and the lived experience of the more than 220,000 people who work at Microsoft. President and Chief Financial Officer, We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. Executive Vice President and Chief Financial Officer, Judson Althoff The better we represent that diversity inside Microsoft, the more effectively we can innovate for those we seek to empower. 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