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MSFT > SEC Filings for MSFT > Form 8-K on 20-Sep-2013All Recent SEC Filings

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Regulation FD Disclosure

Item 7.01. Regulation FD Disclosure

In July 2013, Microsoft Corporation (the "Company") announced a realignment of its organizational structure as part of its transformation to a devices and services company. The changes are intended to enable the Company to innovate with greater speed, efficiency, and capability. As a result of these changes, information that the Company's chief operating decision maker (its chief executive officer) regularly reviews for purposes of allocating resources and assessing performance changed. Therefore, beginning in fiscal year 2014, the Company will report its financial performance based on the five reportable segments described below.

This Form 8-K provides a description of the new reporting structure and a summary of the effects of these changes on Microsoft's historical segment results. The information contained in this Form 8-K is being furnished pursuant to Regulation FD in order to provide the financial community with summary financial information and historical data that is presented on a basis consistent with our new reporting structure. Beginning with the quarter ending September 30, 2013, our financial statements will reflect the new reporting structure with prior periods adjusted accordingly.

Devices and Consumer

Devices and Consumer ("D&C") develops and markets products and services designed to entertain and connect people, increase personal productivity, help people simplify tasks and make more informed decisions online, and help advertisers connect with audiences. D&C revenue is generated from three segments:

D&C Licensing, comprising: Windows, including OEM and other non-volume licensing of the Windows operating system and related software ("Consumer Windows"); non-volume licensing of Microsoft Office for consumers ("Consumer Office"); Windows Phone, including related patent licensing; and certain other patent licensing revenue;

D&C Hardware, comprising: the Xbox 360 gaming and entertainment console and accessories, second-party and third-party video games, and Xbox LIVE subscriptions ("Xbox Platform"); Surface; and Microsoft PC accessories; and

D&C Other, comprising: Resale, including Windows Store, Xbox LIVE transactions, and the Windows Phone Marketplace; search advertising; display advertising; Subscription, comprising Office 365 Home Premium; Studios, comprising first-party video games; our retail stores; and certain other consumer products and services not included in the categories above.


Our Commercial segments develop and market software and services designed to increase individual, team, and organization productivity and efficiency, and to simplify everyday tasks through seamless operations across the user's hardware and software. Our Commercial segments are:

Commercial Licensing, comprising: server products, including Windows Server, Microsoft SQL Server, Visual Studio, System Center, and Windows Embedded; volume licensing of the Windows operating system (excluding OEM and other non-volume licensing of the Windows operating system) ("Commercial Windows"); Microsoft Office for business ("Commercial Office"), including Exchange, SharePoint, and Lync; Microsoft Dynamics business solutions, excluding Dynamics CRM Online; and Skype; and

Commercial Other, comprising: Enterprise Services, including Premier product support services and Microsoft Consulting Services; Online Services, comprising Office 365 (excluding Office 365 Home Premium), other Microsoft Office online offerings, and Dynamics CRM Online; Windows Azure; and certain other commercial products and online services not included in the categories above.

Corporate and Other includes adjustments to conform our internal accounting policies to U.S. GAAP and corporate-level activity not specifically attributed to a segment. Significant internal accounting policies that differ from U.S. GAAP relate to revenue recognition, income statement classification, and depreciation.

Recast segment and segment group financial results

The following tables provide recast segment revenue and gross margin, and segment group operating expenses and operating income for the years ended June 30, 2013 and 2012. The recasting of previously issued financial information does not represent a restatement of previously issued financial statements and does not affect our reported net income, earnings per share, total assets, or stockholders' equity for any of the previously reported periods.

               (In millions)
               Year Ended June 30,                  2013         2012
               Devices and Consumer   Licensing   $ 19,021     $ 19,495
                                      Hardware       6,461        6,740
                                      Other          6,618        6,203

                                      Total       $ 32,100     $ 32,438
               Commercial             Licensing   $ 39,686     $ 37,126
                                      Other          5,660        4,644

                                      Total       $ 45,346     $ 41,770
               Corporate and Other                     403         (485 )

               Consolidated                       $ 77,849     $ 73,723

               (In millions)
               Year Ended June 30,                  2013         2012
               Gross margin
               Devices and Consumer   Licensing   $ 17,044     $ 17,240
                                      Hardware         956        2,495
                                      Other          2,046        1,998

                                      Total       $ 20,046     $ 21,733
               Commercial             Licensing   $ 36,261     $ 34,463
                                      Other            921          579

                                      Total       $ 37,182     $ 35,042
               Corporate and Other                     372         (582 )

               Consolidated                       $ 57,600     $ 56,193

                     (In millions)
                     Year Ended June 30,      2013         2012
                     Operating expenses
                     Devices and Consumer   $ 10,625     $ 15,682
                     Commercial               16,050       15,064
                     Corporate and Other       4,161        3,684

                     Consolidated           $ 30,836     $ 34,430

                    (In millions)
                    Year Ended June 30,      2013          2012
                    Operating income
                    Devices and Consumer   $  9,421      $  6,051
                    Commercial               21,132        19,978
                    Corporate and Other      (3,789 )      (4,266 )

                    Consolidated           $ 26,764      $ 21,763

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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