Microsoft 2006 Annual Report Download - page 8

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Special Note About Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating
to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are
identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,”
“will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ
materially from the forward-looking statements. A detailed discussion of these and other risks and uncertainties that could
cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk
Factors of this report. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
BUSINESS DESCRIPTION
GENERAL
Our mission is to enable people and businesses throughout the world to realize their full potential. We work to achieve our
mission through technology that transforms the way people work, play, and communicate. Since our founding in 1975, we have
been a leader in this transformation. We develop and market software, services, and solutions that we believe deliver new
opportunity, convenience, and value to people’s lives. We do business throughout the world and have offices in more than 100
countries.
We generate revenue by developing, manufacturing, licensing, and supporting a wide range of software products for many
computing devices. Our software products include operating systems for servers, personal computers, and intelligent devices;
server applications for distributed computing environments; information worker productivity applications; business solution
applications; high-performance computing applications, and software development tools. We provide consulting and product
support services, and we train and certify computer system integrators and developers. We sell the Xbox 360 video game
console and games, PC games, and peripherals. Online offerings and information are delivered through our Windows Live, Office
Live, and MSN portals and channels.
We also research and develop advanced technologies for future software products. We believe that delivering breakthrough
innovation and high-value solutions through our integrated software platform is the key to meeting our customers’ needs and to
our future growth. We believe that over the past few years we have laid the foundation for long-term growth by delivering
innovative new products, creating opportunities for partners, improving customer satisfaction, putting many of our most
significant legal challenges behind us, and improving our internal processes. Our focus is to build on this foundation by
continuing to innovate on our integrated software platform, delivering compelling value propositions to customers, responding
effectively to customer and partner needs, and continuing to focus internally on product excellence, business efficacy, and
accountability. Our research and development facilities are located primarily in Redmond, Washington. We also have smaller
research facilities in other parts of the United States and around the world, including, but not limited to, China, Denmark,
England, India, Ireland, and Israel.
OPERATING SEGMENTS
Our segments provide management with a comprehensive financial view of our key businesses. The segments provide a
framework for the alignment of strategies and objectives across the development, sales, marketing, and services organizations,
and for the timely and rational allocation of development, sales, marketing, and services resources within businesses. The
segments also help focus strategic planning efforts on key objectives and initiatives across our businesses.
Due to our integrated business structure, operating costs included in one segment may benefit other segments. Therefore,
these segments are not designed to measure operating income or loss that is directly related to the products included in each
segment. Inter-segment cost commissions are estimated by management and used to compensate or charge each segment for
such shared costs and to motivate shared effort. Segments should not be viewed as discrete or easily separable businesses.
For the fiscal years covered by this filing, our seven segments were: Client; Server and Tools; Information Worker; Microsoft
Business Solutions; MSN; Mobile and Embedded Devices; and Home and Entertainment. See Note 18 – Segment Information of
the Notes to Financial Statements for financial information regarding segment reporting. On July 17, 2006, we announced a
change in our operating segments reflecting the culmination of the business realignment announced in September 2005. These
changes will be effective for fiscal year 2007; the seven segments discussed in this section are presented in the way we
internally managed and monitored performance at the business group level in fiscal year 2006, 2005, and 2004.