Microsoft Announces Record Fiscal 1996 Revenues and Income

Redmond, Washington, July 22, 1996 — Microsoft Corporation today announced revenues of $8.67 billion for the fiscal year ended June 30, 1996, a 46% increase over the $5.94 billion reported last year. Net income totaled $2.20 billion, and earnings per share were $3.43, representing a 48% increase compared to $2.32 in fiscal 1995.

Revenues for the quarter ended June 30, 1996 were $2.26 billion, a 39% increase over the comparable quarter in fiscal 1995. For the quarter, net income was $559 million, and earnings per share were $0.87, an increase of 50% compared to the $0.58 earned during the same quarter last year.

Excluding a $0.05 one-time charge in the fourth quarter of fiscal 1995 related to the termination of the proposed Intuit merger, earnings per share grew 45% in fiscal 1996, and 38% in the quarter compared to the same quarter last year.

“We completed another consecutive year of growth in both revenues and profits led by the success of the Windows 95
®
operating system,” said Mike Brown, chief financial officer. “The OEM channel reported quarterly earned revenues of $650 million closing the year at a record $2.5 billion, an increase of 52% over the prior year. We continued our success internationally, especially in the Far East and Intercontinental regions where combined quarterly revenues increased 53%. Desktop application product revenues exceeded $1 billion for the second consecutive quarter and continued to gain share among users.”

“Once again, quarterly revenues from our server and server applications business more than doubled,” said Paul Maritz, group vice president, platforms. “We aim to continue this growth with the release this summer of Microsoft
®
Windows NT
®
Workstation 4.0 and Windows NT Server 4.0, which provides the foundation for the next generation of business computing by combining native Internet/Intranet support and the ease of use of the Windows 95 user interface with the reliability and security customers demand.”

“This was a defining year for Microsoft, strategically and operationally,” said Bob Herbold, chief operating officer. “Delivering on our commitment to embrace and extend the Internet, we released new products such as Microsoft Internet Explorer and Internet Information Server while adding Web functionality to our existing products. Additionally, we continued to reengineer our operations for the Internet era and changing media mix, reducing our cost of goods sold from 14.8% last year to 13.7% this year.”

In other news from the quarter, Microsoft released the first beta of Internet Explorer 3.0, the next generation of its popular World Wide Web browser. Internet Explorer 3.0 introduces a variety of new features, including support for ActiveX™ controls, frames, and Java. In June, Microsoft launched Slate™ on-line magazine (www.slate.com), an interactive magazine of politics, culture and public policy edited by Michael Kinsley, bringing thought-provoking, high-caliber journalism to the Internet’s World Wide Web. Microsoft released the beta version the Windows NT-based proxy server, currently code-named “Catapult.” Catapult enables Internet access to every desktop in an organization. Also in June, Microsoft announced “Normandy,” the code name for the only Internet platform solution designed specifically for Internet service providers and commercial Web publishers, and announced that CompuServe will be the first major online provider to deploy “Normandy.”

Subsequent to the quarter’s end, Microsoft and NBC announced the debut of MSNBC (www.msnbc.com), the only 24-hour, all-news organization that combines television, cable, and the Internet to bring consumers real-time news from around the globe. Additionally, to further streamline its business model and increase operating flexibility, Microsoft recently announced an agreement to sell its domestic manufacturing facility to Kao Infosystems and awarded Kao a three-year contract to produce the majority of its packaged goods for the North American market.

Founded in 1975, Microsoft (NASDAQ
“MSFT”
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

To find out more information about this release please go to http://microsoft.com/msft/html/earnq496.htm/

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