Search advertising revenue increased $616 million or 9%. Representation is only one measure of progress, and we must keep pushing to do more, but Iâm encouraged by our progress. Physical and virtual worlds are coming together with the Internet of Things (âIoTâ) and mixed reality to create richer experiences that understand the context surrounding people, the things they use, the places they go, and their activities and relationships. Attachment of Windows to devices shipped. The 2019 Annual Shareholders Meeting will be held as a virtual-only meeting. We are exposed to economic risk from foreign exchange rates, interest rates, credit risk, and equity prices. We have determined that technological feasibility for our software products is reached after all high-risk development issues have been resolved through coding and testing. We also settled a portion of the IRS audit for tax years 2007 to 2009 in fiscal year 2016, and a portion of the IRS audit for tax years 2010 to 2013 in fiscal year 2018. The mix of income before income taxes between the U.S. and foreign countries impacted our effective tax rate as a result of the geographic distribution of, and customer demand for, our products and services. Office 2019 Word Office 2019 Word offers additional learning functions and tools, captions, acoustic descriptions, text-to-speech, and other enhancements to the user interface. 2019 Annual Report: P&G met or exceeded each of our FY19 core financial goals, while improving market share and generating shareholder value through our strategy of superiority, fueled by productivity, supported by an empowered and agile organization. Beyond GitHub, we are investing to build the most complete toolchain for developers â independent of language, framework, or cloud. The mix of computing devices based on form factor and screen size. The following table presents the fair value of our derivatives instruments on a gross basis: We recognized in other income (expense), net the following gains (losses) on contracts designated as fair value hedges and their related hedged items: We recognized the following gains (losses) on foreign exchange contracts designated as cash flow hedges: We do not have any net derivative gains included in AOCI as of June 30, 2019 that will be reclassified into earnings within the following 12 months. Partners in this program can easily package their own products and services to directly provision, manage, and support their customer subscriptions. Marriott International, Inc. Reid G. Hoffman The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. The largest category of OEMs are direct OEMs as our relationship with them is managed through a direct agreement between Microsoft and the OEM. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. It empowers people with AI-first interfaces ranging from voice-activated commands through Cortana, inking, immersive 3D content storytelling, and mixed reality experiences. We use a single amount to estimate SSP for items that are not sold separately, including on-premises licenses sold with SA or software updates provided at no additional charge. Certain options and forwards not designated as hedging instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (âSECâ) at www.sec.gov. We believe there is an important discussion to be convened about how these new technologies should be used. Skype for Business and Skype also compete with a variety of instant messaging, voice, and video communication providers, ranging from start-ups to established enterprises. Interest on these notes is paid semi-annually, except for the euro-denominated debt securities on which interest is paid annually. Corporate and Other includes corporate-level activity not specifically allocated to a segment, including restructuring expenses. The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Chief Accounting Officer. This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software. The TCJA significantly changes existing U.S. tax law and includes numerous provisions that affect our business. As of June 30, 2019, we had no collateral received under agreements for loaned securities. The Companyâs management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. The largest component of the OEM business is the Windows operating system pre-installed on devices. This global approach helps us remain competitive in local markets and enables us to continue to attract top talent from across the world. I want to know if I already installed Office 365 2019 or if I need to know how to do it? General and administrative expenses increased $273 million or 6%, primarily due to LinkedIn expenses. For hardware warranties, we estimate the costs based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures (if any). Intercompany transactions and balances have been eliminated. Intelligent Cloud revenue increased, driven by server products and cloud services. We perform a qualitative assessment on a quarterly basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. We have a strong position with our Xbox One console, our large and growing highly engaged community of gamers on Xbox Live, and with Windows 10, the most popular operating system for PC gamers. Service and other revenue also includes sales from online advertising and LinkedIn. That is why we are stepping up our commitment. When a cloud-based service includes both on-premises software licenses and cloud services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. Windows revenue increased $925 million or 5%, driven by growth in Windows Commercial and Windows OEM, offset by a decline in patent licensing revenue. Information on our business strategies, financial results, and metrics for investors. Office Consumer Services revenue is mainly affected by the demand for communication and storage through Skype, Outlook.com, and OneDrive, which is largely driven by subscriptions, advertising, and the sale of minutes. Our server products face competition from a wide variety of server operating systems and applications offered by companies with a range of market approaches. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. Windows OEM non-Pro revenue declined 7%, below the consumer PC market, driven by continued pressure in the entry level category. Nearly all computer manufacturers offer server hardware for the Linux operating system and many contribute to Linux operating system development. Former Chairman of the Board Operating income increased $2.4 billion or 26%. Due to the various benefits from and the nature of our SA program, judgment is required to assess the pattern of delivery, including the exercise pattern of certain benefits across our portfolio of customers. The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. The impact on our consolidated balance sheets upon adoption was not material. And, with Power BI, we are the recognized leader in business intelligence in the cloud, with more than 25 million models hosted on the service and 12 million queries processed each hour. Founder, President and Chief Executive If Visual Studio 2019 is already installed, you can edit the list of workloads to include SSDT. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. Securities held in our equity investments portfolio are subject to market price risk. LinkedIn operating loss increased $63 million to $987 million, including $1.5 billion of amortization of intangible assets. We recorded a net cumulative-effect adjustment that resulted in an increase in retained earnings of $557 million, which reversed the previous deferral of income tax consequences and recorded new deferred tax assets from intra-entity transfers involving assets other than inventory, partially offset by a U.S. deferred tax liability related to global intangible low-taxed income (âGILTIâ). Computing experiences are evolving, no longer bound to one device at a time. The components of the deferred income tax assets and liabilities were as follows: Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when the taxes are paid or recovered. The TCJA reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. Foreign currency risks related to certain non-U.S. dollar denominated securities are hedged using foreign exchange forward contracts that are designated as fair value hedging instruments. It is a privilege to lead Microsoft employees around the world who work every day to earn our customersâ trust and help them succeed.