MICROSOFT CORPORATION

CASH FLOWS STATEMENTS

 
(In millions)                
  
Year Ended June 30,   2010    2009    2008 

Operations                        

Net income    18,76    14,56    17,68

  $ 0    $ 9    $ 1 
Adjustments to reconcile net income to net cash from
operations:                        

Depreciation, amortization, and other noncash items     2,673      2,562      2,056 

Stock-based compensation     1,891      1,708      1,479 
Net recognized losses (gains) on investments and derivatives     (208)     683      (572)
Excess tax benefits from stock-based compensation     (45)     (52)     (120)
Deferred income taxes     (220)     762      935 
Deferral of unearned revenue     29,374      24,409      24,532 
Recognition of unearned revenue     (28,813)     (25,426)     (21,944)
Changes in operating assets and liabilities:                        

Accounts receivable     (2,238)     2,215      (1,569)

Other current assets     420      (422)     153 
Other long-term assets     (223)     (273)     (98)
Other current liabilities     1,295      (3,371)     (748)
Other long-term liabilities     1,407      1,673      (173)
                
Net cash from operations     24,073      19,037      21,612 
                
Financing                        

Short-term borrowings (repayments), maturities of 90 days or

less, net     (991)     1,178      0 
Proceeds from issuance of debt, maturities longer than 90 days     4,167      4,796      0 
Repayments of debt, maturities longer than 90 days     (2,986)     (228)     0 
Common stock issued     2,311      579      3,494 
Common stock repurchased     (11,269)     (9,353)     (12,533)
Common stock cash dividends paid     (4,578)     (4,468)     (4,015)
Excess tax benefits from stock-based compensation     45      52      120 
Other     10      (19)     0 
                
Net cash used in financing     (13,291)     (7,463)     (12,934)
                
Investing                        

Additions to property and equipment     (1,977)     (3,119)     (3,182)

Acquisition of companies, net of cash acquired     (245)     (868)     (8,053)
Purchases of investments     (30,168)     (36,850)     (20,954)
Maturities of investments     7,453      6,191      2,597 
Sales of investments     15,125      19,806      25,132 
Securities lending payable     (1,502)     (930)     (127)
                
Net cash used in investing     (11,314)     (15,770)     (4,587)
                
Effect of exchange rates on cash and cash equivalents     (39)     (67)     137 
                
Net change in cash and cash equivalents     (571)     (4,263)     4,228 
Cash and cash equivalents, beginning of period     6,076      10,339      6,111 
                
Cash and cash equivalents, end of period   $ 5,505    $ 6,076    $ 10,339