Microsoft 2012 Annual Report Download - page 34

Off-Balance Sheet Arrangements
We provide indemnifications of varying scope and size to certain customers against claims of intellectual property
infringement made by third parties arising from the use of our products and certain other matters. In evaluating estimated
losses on these indemnifications, we consider factors such as the degree of probability of an unfavorable outcome and
our ability to make a reasonable estimate of the amount of loss. To date, we have not encountered significant costs as a
result of these obligations and have not accrued in our financial statements any liabilities related to these indemnifications.
Contractual Obligations
The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of June 30,
2012:
(In millions)
2013
2014-2015
2016-2017
Thereafter
Total
Long-term debt:
(a)
Principal payments
$
1,250
$
3,000
$
2,500
$
5,250
$
12,000
Interest payments
344
616
491
3,457
4,908
Construction commitments
(b)
353
0
0
0
353
Operating leases
(c)
527
748
387
315
1,977
Purchase commitments
(d)
6,556
884
236
146
7,822
Other long-term liabilities
(e)
0
106
16
30
152
Total contractual obligations
$
9,030
$
5,354
$
3,630
$
9,198
$
27,212
(a) See Note 12 – Debt of the Notes to Financial Statements.
(b) These amounts represent commitments for the construction of buildings, building improvements, and leasehold
improvements.
(c) These amounts represent undiscounted future minimum rental commitments under noncancellable facilities leases.
(d) These amounts represent purchase commitments, including all open purchase orders and all contracts that are take-
or-pay contracts that are not presented as construction commitments above.
(e) We have excluded long-term tax contingencies, other tax liabilities, and deferred income taxes of $9.5 billion and
other long-term contingent liabilities of $220 million (related to the antitrust and unfair competition class action
lawsuits) from the amounts presented, as the amounts that will be settled in cash are not known and the timing of
any payments is uncertain. We have also excluded unearned revenue of $1.4 billion and non-cash items of $202
million.
Other Planned Uses of Capital
On July 18, 2012, we acquired Yammer, Inc. (“Yammer”), a leading provider of enterprise social networks, for $1.2 billion
in cash. Yammer will continue to develop its standalone service and will add an enterprise social networking service to
Microsoft’s portfolio of complementary cloud-based services.
We will continue to invest in sales, marketing, product support infrastructure, and existing and advanced areas of
technology. Additions to property and equipment will continue, including new facilities, data centers, and computer
systems for research and development, sales and marketing, support, and administrative staff. We have operating leases
for most U.S. and international sales and support offices and certain equipment. We have not engaged in any related
party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially
affect liquidity or the availability of capital resources.
Liquidity
We earn a significant amount of our operating income outside the U.S., which is deemed to be permanently reinvested in
foreign jurisdictions. As a result, as discussed above under Cash, Cash Equivalents, and Investments,