Microsoft 2007 Annual Report Download - page 61

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PAGE 60
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of June 30, 2007, we had accrued aggregate liabilities of approximately $800 million in other current
liabilities and approximately $800 million in other long-term liabilities for all of the contingent matters described in
this note. While we intend to vigorously defend these matters, there exists the possibility of adverse outcomes
that we estimate could be up to $4.15 billion in aggregate beyond recorded amounts. Were an unfavorable final
outcome to occur, there exists the possibility of a material adverse impact on the Company’s financial position
and on the results of operations for the period in which the effect becomes reasonably estimable
NOTE 18 SEGMENT INFORMATION
Segment revenue and operating income/(loss) was as follows:
(In millions)
Y
ear Ended June 30 2007 2006 2005
Revenue:
Client $14,812
$13,040 $11,901
Server and Tools 11,182
9,680 8,314
Online Services Business 2,474
2,306 2,353
Microsoft Business Division 16,381
14,516 13,298
Entertainment and Devices Division 6,132
4,808 3,485
Unallocated and other 141
(68) 437
Consolidated $51,122
$44,282 $39,788
Y
ear Ended June 30 2007 2006 2005
Operating Income/(Loss):
Client $11,544
$10,245 $9,435
Server and Tools 3,837
3,171 2,381
Online Services Business (745) 115 470
Microsoft Business Division 10,724
9,687 9,146
Entertainment and Devices Division (2,066) (1,284) (464)
Reconciling amounts (4,770) (5,462) (6,407)
Consolidated $18,524
$16,472 $14,561
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for
reporting information about operating segments. This standard requires segmentation based on our internal
organization and reporting of revenue and operating income based upon internal accounting methods. Our
financial reporting systems present various data for management to operate the business, including internal profit
and loss statements prepared on a basis not consistent with U.S. GAAP. In July 2006 we announced a change in
our operating segments from seven to five reflecting previously announced reorganizations. Amounts for fiscal
years 2006 and 2005 have been recast to conform to the current management view. The segments are designed
to allocate resources internally and provide a framework to determine management responsibility. Operating
segments are defined as components of an enterprise about which separate financial information is available that
is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. Our
five segments are Client; Server and Tools; Online Services Business; Microsoft Business Division; and
Entertainment and Devices Division.