Microsoft Reaches Agreement Resolving SEC Inquiry

REDMOND, Wash., June 3, 2002 — Microsoft Corp. confirmed today that it has reached an agreement with the Securities and Exchange Commission (SEC) resolving the SECs investigation of certain aspects of Microsofts accounting and documentation for reserves, allowances and accruals during Microsofts fiscal years 1995 through 1998. To conclude this matter, the company has consented to the entry of an order that it comply with Securities Exchange Act provisions that require companies to make accurate filings and maintain records and controls sufficient to prepare financial statements in conformity with Generally Accepted Accounting Principles.

The agreement has no impact on Microsofts reported financial results; no restatement of any reported financial results is required and no penalty has been assessed. Microsoft has cooperated fully in the SECs inquiry, which has been disclosed in Microsofts financial statements since June 1999.

The company is pleased to have resolved these matters with the SEC and looks forward to an open and constructive working relationship with the SEC on important accounting issues affecting the software industry.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT” ) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

Microsoft is a registered trademark of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Note to editors: If you are interested in viewing additional information on Microsoft, please visit the Microsoft Web page at http://www.microsoft.com/presspass/ on Microsoft’s corporate information pages. Web links, telephone numbers and titles were correct at time of publication, but may since have changed. Journalists and analysts may contact Microsoft’s Rapid Response Team for additional assistance.