Microsoft Corporation (NASDAQ:MSFT) Files An 8-K Regulation FD Disclosure
Item 7.01. Regulation FD Disclosure

Beginning July1, 2017, Microsoft Corporation (the “Company”) elected to early adopt the new accounting standards for revenue recognition and leases. The Company is furnishing this Form 8-K under Regulation FD to present the Company’s previously reported financial information on a basis consistent with the standards. Beginning with the quarter ending September30, 2017, the Company’s financial information will reflect adoption of the standards with prior periods adjusted accordingly.

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a new standard related to revenue recognition. The Company elected to early adopt the standard effective July1, 2017 using the full retrospective method, which requires the Company to restate each prior reporting period presented consistent with the standard.

Adoption of the standard had a material impact on the Company’s consolidated income statements and balances sheets, but had no impact to cash from or used in operating, financing, or investing on the consolidated cash flows statements. The most significant impact of the standard relates to the Company’s accounting for software license revenue. Specifically, for Windows 10, the Company recognizes revenue predominantly at the time of billing and delivery rather than ratably over the life of the related device. For certain multi-year, commercial software subscriptions that include both distinct software licenses and Software Assurance, the Company recognizes license revenue at the time of contract execution rather than over the subscription period. Due to the complexity of certain commercial license subscription contracts, the actual revenue recognition treatment required under the standard depends on contract-specific terms and in some instances may vary from recognition at the time of billing. Revenue recognition related to the Company’s hardware, cloud offerings such as Office 365, LinkedIn, and professional services remains substantially unchanged.

Leases

In February 2016, the FASB issued a new standard related to leases. The Company elected to early adopt the standard effective July1, 2017 using a modified retrospective approach, which requires the Company to recognize and measure leases at the beginning of the earliest period presented. The Company elected to apply the available practical expedients on adoption.

Adoption of the standard had a material impact on the Company’s consolidated balance sheets, but did not have a material impact on the consolidated income statements and had no impact to cash from or used in operating, financing, or investing on the consolidated cash flows statements. The most significant impact of the standard is the recognition of right-of-use assets and lease liabilities for operating leases on the consolidated balance sheets. The Company’s accounting for capital leases remains substantially unchanged.

Financial Information

Refer to Exhibit99.1 for financial information on a basis consistent with the new standards for fiscal year 2017 and 2016.

The Company will host a conference call webcast at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) on August3, 2017 to discuss the new standards. The session may be accessed on the Microsoft Investor Relations website at http://www.microsoft.com/en-us/investor.

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 Section18 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.

Item 7.01. Financial Statements and Exhibits

(d) Exhibits.

99.1Microsoft’s Financial Information Restated for the New Standards

MICROSOFT CORP Exhibit
EX-99.1 2 d410488dex991.htm EX-99.1 EX-99.1 Exhibit 99.1 MICROSOFT CORPORATION INCOME STATEMENTS (In millions,…
To view the full exhibit click here

About Microsoft Corporation (NASDAQ:MSFT)

Microsoft Corporation is a technology company. The Company develops, licenses and supports a range of software products, services and devices. Its segments are Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Its products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers, tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services. It also delivers online advertising.