Accounting Policies
Stock Split
Accounting Changes
Unearned Revenue
Cash and Short-Term Investments
Inventories
Property and Equipment
Equity and Other Investments
Goodwill
Intangible Assets
Derivatives
Investment Income/(Loss)
Income Taxes
Stockholders' Equity
Other Comprehensive Income
Employee Stock and Savings Plans
Earnings Per Share
Acquisitions
Commitments and Guarantees
Contingencies
Segment Information
Note 4-Unearned Revenue
Unearned revenue from volume
licensing programs represents customer billings, paid either upfront or
annually at the beginning of each billing coverage period, which are accounted
for as subscriptions with revenue recognized ratably over the billing coverage
period. For certain other licensing arrangements revenue attributable to
undelivered elements, including free post-delivery telephone support and the right
to receive unspecified upgrades/enhancements of Microsoft Internet Explorer on
a when-and-if-available basis, is based on the sales price of those elements
when sold separately and is recognized ratably on a straight-line basis over
the related product's life cycle. The percentage of revenue recorded as
unearned due to undelivered elements ranges from approximately 15% to 25% of
the sales price for Windows XP Home, approximately 5% to 15% of the sales price
for Windows XP Professional, and approximately 5% to 15% of the sales price for
desktop applications, depending on the terms and conditions of the license and
prices of the elements. Product life cycles are currently estimated at three
and a half years for Windows operating systems and two years for desktop
applications. Unearned revenue also includes payments for online advertising
for which the advertisement has yet to be displayed and payments for
post-delivery support services to be performed in the future.
The components of unearned revenue
were as follows:
(In millions) |
|
|
|
June 30 |
2002 |
|
2003 |
|
|
|
|
Volume licensing programs |
$ 4,158 |
|
$ 5,472 |
Undelivered elements |
2,830 |
|
2,847 |
Other |
755 |
|
696 |
Unearned revenue |
$ 7,743 |
|
$ 9,015 |
Unearned revenue by segment was as follows:
(In millions) |
|
|
|
June 30 |
2002 |
|
2003 |
|
|
|
|
Client |
$ 3,023 |
|
$ 3,165 |
Server and Tools |
1,595 |
|
2,185 |
Information Worker |
2,757 |
|
3,305 |
Other segments |
368 |
|
360 |
Unearned revenue |
$ 7,743 |
|
$ 9,015 |
Of
the $9.02 billion of unearned revenue at June 30, 2003, $2.65 billion is expected to be
recognized in the first quarter of fiscal 2004, $2.05 billion in the second
quarter of fiscal 2004, $1.53 billion in the third quarter of fiscal 2004,
$1.00 billion in the fourth quarter of fiscal 2004, and $1.79 billion
thereafter.
|