Microsoft Corporation 10-K Summary: Fiscal Year Ended June 30, 1996
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended June 30, 1996, for Microsoft Corporation, a leading developer of software products including operating systems (Windows 95, Windows NT), server applications (BackOffice), productivity suites (Microsoft Office), and interactive media. The company operates through four main groups: Platforms, Applications and Content, Sales and Support, and Operations. As of June 30, 1996, Microsoft employed 20,561 full-time employees globally.
Key Financial Metrics
Revenue and Profit: The filing text incorporates financial statements by reference and does not explicitly state total revenue or net income figures within the provided narrative. However, it notes that Research and Development (R&D) expenditures were $1,432 million for fiscal 1996, representing 16.5% of net revenues.
Cash Flow and Liquidity: Specific cash flow and liquidity figures are not provided in the text, as the detailed financial statements are incorporated by reference.
Debt: The text does not explicitly state total debt levels.
Market Data: As of September 9, 1996, the aggregate market value of common stock held by non-affiliates was approximately $45.9 billion. There were 596,226,947 shares of common stock outstanding.
Material Changes and Operational Highlights
- R&D Investment: R&D spending increased significantly from $860 million in 1995 to $1,432 million in 1996, reflecting a strategic commitment to innovation.
- Manufacturing Restructuring: In July 1996, Microsoft sold its domestic manufacturing and distribution operation in Snohomish County, Washington. Remaining manufacturing facilities are located in Puerto Rico and Ireland.
- Product Portfolio: The company continued to transition from packaged products to corporate and OEM licenses. Key product releases included Windows 95 (released August 1995) and the expansion of the Microsoft BackOffice server family.
- Joint Ventures: Microsoft established joint ventures including DreamWorks Interactive (50% ownership) and MSNBC (50% ownership with NBC).
Outlook, Risks, and Contingencies
Management Commentary: Management emphasizes the rapid pace of technological change, particularly regarding the Internet, online services, and new programming languages like Java. The company is committed to continued high expenditures for research and product development to maintain competitive advantage.
Legal Proceedings: In September 1996, the Antitrust Division of the U.S. Department of Justice requested information regarding Web browsers. Management believes the resolution of this matter will not have a material adverse impact on financial position or results of operations.
Competitive Risks: The filing highlights intense competition in operating systems (IBM, Apple, UNIX variants), business systems (Oracle, Sybase), desktop applications (IBM/Lotus, Corel), and online services (America Online, CompuServe). The company also faces competition from software piracy.
Investor Verification Checklist
- Verify total net revenue and net income figures in the incorporated 1996 Annual Report to Shareholders (referenced in Item 6 and Item 8).
- Review the detailed Balance Sheet to assess total debt and liquidity positions not explicitly detailed in this text.
- Monitor the status of the U.S. Department of Justice antitrust investigation regarding Web browsers.
- Assess the impact of the sale of the domestic manufacturing operation on future cost structures and supply chain logistics.
- Confirm the performance of new joint ventures (DreamWorks Interactive, MSNBC) and their contribution to future revenue streams.