Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2018 | Jan. 25, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | MSFT | |
Entity Registrant Name | MICROSOFT CORPORATION | |
Entity Central Index Key | 789,019 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 7,672,213,446 |
INCOME STATEMENTS
INCOME STATEMENTS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 32,471 | $ 28,918 | $ 61,555 | $ 53,456 |
Cost of revenue | 12,423 | 11,064 | 22,328 | 19,342 |
Gross margin | 20,048 | 17,854 | 39,227 | 34,114 |
Research and development | 4,070 | 3,504 | 8,047 | 7,078 |
Sales and marketing | 4,588 | 4,562 | 8,686 | 8,374 |
General and administrative | 1,132 | 1,109 | 2,281 | 2,275 |
Operating income | 10,258 | 8,679 | 20,213 | 16,387 |
Other income, net | 127 | 490 | 393 | 766 |
Income before income taxes | 10,385 | 9,169 | 20,606 | 17,153 |
Provision for income taxes | 1,965 | 15,471 | 3,362 | 16,879 |
Net income (loss) | $ 8,420 | $ (6,302) | $ 17,244 | $ 274 |
Earnings (loss) per share: | ||||
Basic | $ 1.09 | $ (0.82) | $ 2.24 | $ 0.04 |
Diluted | $ 1.08 | $ (0.82) | $ 2.22 | $ 0.04 |
Weighted average shares outstanding: | ||||
Basic | 7,692 | 7,710 | 7,683 | 7,709 |
Diluted | 7,768 | 7,710 | 7,767 | 7,799 |
Product | ||||
Revenue | $ 16,219 | $ 17,926 | $ 33,518 | $ 32,224 |
Cost of revenue | 5,885 | 5,498 | 9,534 | 8,478 |
Service and Other | ||||
Revenue | 16,252 | 10,992 | 28,037 | 21,232 |
Cost of revenue | $ 6,538 | $ 5,566 | $ 12,794 | $ 10,864 |
COMPREHENSIVE INCOME STATEMENTS
COMPREHENSIVE INCOME STATEMENTS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 8,420 | $ (6,302) | $ 17,244 | $ 274 |
Other comprehensive income (loss), net of tax: | ||||
Net change related to derivatives | (15) | (7) | (60) | (113) |
Net change related to investments | 881 | (878) | 620 | (1,166) |
Translation adjustments and other | (264) | (40) | (319) | 253 |
Other comprehensive income (loss) | 602 | (925) | 241 | (1,026) |
Comprehensive income (loss) | $ 9,022 | $ (7,227) | $ 17,485 | $ (752) |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,638 | $ 11,946 |
Short-term investments | 121,024 | 121,822 |
Total cash, cash equivalents, and short-term investments | 127,662 | 133,768 |
Accounts receivable, net of allowance for doubtful accounts of $354 and $377 | 19,680 | 26,481 |
Inventories | 1,961 | 2,662 |
Other | 7,571 | 6,751 |
Total current assets | 156,874 | 169,662 |
Property and equipment, net of accumulated depreciation of $33,082 and $29,223 | 32,717 | 29,460 |
Operating lease right-of-use assets | 6,806 | 6,686 |
Equity investments | 2,274 | 1,862 |
Goodwill | 41,577 | 35,683 |
Intangible assets, net | 8,482 | 8,053 |
Other long-term assets | 10,129 | 7,442 |
Total assets | 258,859 | 258,848 |
Current liabilities: | ||
Accounts payable | 7,563 | 8,617 |
Current portion of long-term debt | 3,516 | 3,998 |
Accrued compensation | 4,624 | 6,103 |
Short-term income taxes | 2,033 | 2,121 |
Short-term unearned revenue | 24,285 | 28,905 |
Other | 8,297 | 8,744 |
Total current liabilities | 50,318 | 58,488 |
Long-term debt | 69,653 | 72,242 |
Long-term income taxes | 29,161 | 30,265 |
Long-term unearned revenue | 3,799 | 3,815 |
Deferred income taxes | 2,062 | 541 |
Operating lease liabilities | 5,683 | 5,568 |
Other long-term liabilities | 6,055 | 5,211 |
Total liabilities | 166,731 | 176,130 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,683 and 7,677 | 77,556 | 71,223 |
Retained earnings | 16,585 | 13,682 |
Accumulated other comprehensive loss | (2,013) | (2,187) |
Total stockholders’ equity | 92,128 | 82,718 |
Total liabilities and stockholders' equity | $ 258,859 | $ 258,848 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 354 | $ 377 |
Property and equipment, accumulated depreciation | $ 33,082 | $ 29,223 |
Common stock, shares authorized | 24,000,000,000 | 24,000,000,000 |
Common stock, outstanding | 7,683,000,000 | 7,677,000,000 |
CASH FLOWS STATEMENTS
CASH FLOWS STATEMENTS - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operations | ||||
Net income (loss) | $ 8,420 | $ (6,302) | $ 17,244 | $ 274 |
Adjustments to reconcile net income (loss) to net cash from operations: | ||||
Depreciation, amortization, and other | 2,995 | 2,536 | 5,832 | 5,035 |
Stock-based compensation expense | 1,183 | 986 | 2,290 | 1,959 |
Net recognized gains on investments and derivatives | (135) | (684) | (375) | (1,207) |
Deferred income taxes | (173) | (2,305) | (420) | (2,358) |
Changes in operating assets and liabilities: | ||||
Accounts receivable | (2,396) | (3,908) | 6,798 | 4,041 |
Inventories | 1,654 | 1,205 | 698 | 182 |
Other current assets | (173) | 354 | (850) | 36 |
Other long-term assets | (473) | (344) | (452) | (622) |
Accounts payable | (440) | 938 | (835) | 531 |
Unearned revenue | (2,122) | (1,065) | (4,563) | (2,871) |
Income taxes | (64) | 15,974 | (1,155) | 16,635 |
Other current liabilities | 656 | 643 | (1,666) | (1,521) |
Other long-term liabilities | (32) | (153) | 11 | 201 |
Net cash from operations | 8,900 | 7,875 | 22,557 | 20,315 |
Financing | ||||
Proceeds from issuance of short-term debt, maturities of 90 days or less, net | 0 | 3,759 | 0 | 49 |
Proceeds from issuance of debt | 0 | 3,229 | 0 | 7,183 |
Repayments of debt | (3,000) | (3,327) | (3,000) | (4,496) |
Common stock issued | 200 | 189 | 560 | 496 |
Common stock repurchased | (6,413) | (2,008) | (10,157) | (4,578) |
Common stock cash dividends paid | (3,544) | (3,238) | (6,764) | (6,241) |
Other, net | (459) | (156) | (1,239) | (306) |
Net cash used in financing | (13,216) | (1,552) | (20,600) | (7,893) |
Investing | ||||
Additions to property and equipment | (3,707) | (2,586) | (7,309) | (4,718) |
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets | (1,593) | (27) | (1,838) | (206) |
Purchases of investments | (16,858) | (45,154) | (36,409) | (78,115) |
Maturities of investments | 3,782 | 6,352 | 8,996 | 11,578 |
Sales of investments | 14,176 | 41,261 | 29,407 | 64,297 |
Securities lending payable | 0 | (177) | 0 | (71) |
Net cash used in investing | (4,200) | (331) | (7,153) | (7,235) |
Effect of foreign exchange rates on cash and cash equivalents | 17 | (17) | (112) | 9 |
Net change in cash and cash equivalents | (8,499) | 5,975 | (5,308) | 5,196 |
Cash and cash equivalents, beginning of period | 15,137 | 6,884 | 11,946 | 7,663 |
Cash and cash equivalents, end of period | $ 6,638 | $ 12,859 | $ 6,638 | $ 12,859 |
STOCKHOLDERS' EQUITY STATEMENTS
STOCKHOLDERS' EQUITY STATEMENTS - USD ($) $ in Millions | Total | Common stock and paid-in capital | Retained earnings | Accumulated other comprehensive Income (loss) |
Balance, beginning of period at Jun. 30, 2017 | $ 69,315 | $ 17,769 | $ 627 | |
Common stock cash dividends | $ (3,238) | |||
Balance, end of period at Sep. 30, 2017 | 69,419 | 19,702 | 526 | |
Cash dividends declared per common share | $ 0.42 | |||
Balance, beginning of period at Jun. 30, 2017 | 69,315 | 17,769 | 627 | |
Common stock issued | 496 | |||
Net income (loss) | $ 274 | 274 | ||
Other comprehensive income (loss) | (1,026) | (1,026) | ||
Common stock cash dividends | (6,470) | (6,471) | ||
Common stock repurchased | (1,577) | (3,005) | ||
Cumulative effect of accounting changes | 0 | 0 | ||
Stock-based compensation expense | 1,959 | |||
Other, net | (1) | |||
Balance, end of period at Dec. 31, 2017 | $ 78,360 | 70,192 | 8,567 | (399) |
Cash dividends declared per common share | $ 0.84 | |||
Balance, beginning of period at Sep. 30, 2017 | 69,419 | 19,702 | 526 | |
Common stock issued | 189 | |||
Net income (loss) | $ (6,302) | (6,302) | ||
Other comprehensive income (loss) | (925) | (925) | ||
Common stock cash dividends | (3,232) | (3,232) | ||
Common stock repurchased | (402) | (1,601) | ||
Cumulative effect of accounting changes | 0 | 0 | ||
Stock-based compensation expense | 986 | |||
Other, net | 0 | |||
Balance, end of period at Dec. 31, 2017 | $ 78,360 | 70,192 | 8,567 | (399) |
Cash dividends declared per common share | $ 0.42 | |||
Balance, beginning of period at Jun. 30, 2018 | $ 82,718 | 71,223 | 13,682 | (2,187) |
Common stock cash dividends | $ (3,544) | |||
Balance, end of period at Sep. 30, 2018 | 71,303 | 17,279 | (2,615) | |
Cash dividends declared per common share | $ 0.46 | |||
Balance, beginning of period at Jun. 30, 2018 | $ 82,718 | 71,223 | 13,682 | (2,187) |
Common stock issued | 6,247 | |||
Net income (loss) | 17,244 | 17,244 | ||
Other comprehensive income (loss) | 241 | 241 | ||
Common stock cash dividends | (7,079) | (7,074) | ||
Common stock repurchased | (2,215) | (7,944) | ||
Cumulative effect of accounting changes | 677 | (67) | ||
Stock-based compensation expense | 2,290 | |||
Other, net | 11 | |||
Balance, end of period at Dec. 31, 2018 | $ 92,128 | 77,556 | 16,585 | (2,013) |
Cash dividends declared per common share | $ 0.92 | |||
Balance, beginning of period at Sep. 30, 2018 | 71,303 | 17,279 | (2,615) | |
Common stock issued | 5,887 | |||
Net income (loss) | $ 8,420 | 8,420 | ||
Other comprehensive income (loss) | 602 | 602 | ||
Common stock cash dividends | (3,535) | (3,546) | ||
Common stock repurchased | (828) | (5,568) | ||
Cumulative effect of accounting changes | 0 | 0 | ||
Stock-based compensation expense | 1,183 | |||
Other, net | 11 | |||
Balance, end of period at Dec. 31, 2018 | $ 92,128 | $ 77,556 | $ 16,585 | $ (2,013) |
Cash dividends declared per common share | $ 0.46 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | NOTE 1 — ACCOUNTING POLICIES Accounting Principles Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Microsoft Corporation fiscal year 2018 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on August 3, 2018. We have recast certain prior period amounts related to investments, derivatives, and fair value measurements to conform to the current period presentation based on our adoption of the new accounting standard for financial instruments. We have also recast prior period commercial cloud revenue to include the commercial portion of LinkedIn to provide a comparable view of our commercial cloud business performance. The commercial portion of LinkedIn includes LinkedIn Recruiter, Sales Navigator, premium business subscriptions, and other services for organizations. The recast of these prior period amounts had no impact on our consolidated financial statements. Principles of Consolidation The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. Intercompany transactions and balances have been eliminated. Estimates and Assumptions Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; product warranties; the fair value of and/or potential impairment of goodwill and intangible assets for our reporting units; product life cycles; useful lives of our tangible and intangible assets; allowances for doubtful accounts; the market value of, and demand for, our inventory; stock-based compensation forfeiture rates; when technological feasibility is achieved for our products; the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns; and determining the timing and amount of impairments for investments. Actual results and outcomes may differ from management’s estimates and assumptions. Financial Instruments Investments We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding other-than-temporary impairments, are recorded in other comprehensive income (“OCI”). Debt investments are impaired when a decline in fair value is judged to be other-than-temporary. Fair value is calculated based on publicly available market information or other estimates determined by management. We employ a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the duration and extent to which the fair value is less than cost. We also evaluate whether we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery. In addition, we consider specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in other income (expense), net and a new cost basis in the investment is established. Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method, or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). 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. Changes in value are recorded in other income (expense), net. We lend certain fixed-income and equity securities to increase investment returns. These transactions are accounted for as secured borrowings and the loaned securities continue to be carried as investments on our consolidated balance sheets. Cash and/or security interests are received as collateral for the loaned securities with the amount determined based upon the underlying security lent and the creditworthiness of the borrower. Cash received is recorded as an asset with a corresponding liability. Derivatives Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as fair value hedges, gains and losses are recognized in other income (expense), net with offsetting gains and losses on the hedged items. For options designated as fair value hedges, changes in the time value are excluded from the assessment of hedge effectiveness and recognized in other income (expense), net. For derivative instruments designated as cash flow hedges, the effective portion of the gains and losses are initially reported as a component of OCI and subsequently recognized in revenue when the hedged exposure is recognized in revenue. Gains and losses on derivatives representing either hedge components excluded from the assessment of effectiveness or hedge ineffectiveness are recognized in other income (expense), net. For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net. Fair Value Measurements We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 investments include U.S. government securities, common and preferred stock, and mutual funds. Our Level 1 derivative assets and liabilities include those actively traded on exchanges. • Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, U.S. agency securities, foreign government bonds, mortgage- and asset-backed securities, corporate notes and bonds, and municipal securities. Our Level 2 derivative assets and liabilities primarily include certain over-the-counter option and swap contracts. • Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include investments in corporate notes and bonds, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. We measure equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. Our other current financial assets and current financial liabilities have fair values that approximate their carrying values. Contract Balances As of December 31, 2018 and June 30, 2018, long-term accounts receivable, net of allowance for doubtful accounts, were $1.9 billion and $1.8 billion, respectively, and are included in other long-term assets on our consolidated balance sheets. Recent Accounting Guidance Recently Adopted Accounting Guidance Income Taxes – Intra-Entity Asset Transfers In October 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance requiring an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. We adopted the guidance effective July 1, 2018. Adoption of the guidance was applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. 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 Financial Instruments – Recognition, Measurement, Presentation, and Disclosure In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most prominent among the changes in the standard is the requirement for changes in the fair value of our equity investments, with certain exceptions, to be recognized through net income rather than OCI. We adopted the standard effective July 1, 2018. Adoption of the standard was applied using a modified retrospective approach through a cumulative-effect adjustment from accumulated other comprehensive income (“AOCI”) to retained earnings as of the effective date, and we elected to measure equity investments without readily determinable fair values at cost with adjustments for observable changes in price or impairments. The cumulative-effect adjustment included any previously held unrealized gains and losses held in AOCI related to our equity investments carried at fair value as well as the impact of recording the fair value of certain equity investments carried at cost. The impact on our consolidated balance sheets upon adoption was not material. Adoption of the standard had no impact to cash from or used in operating, financing, or investing on our consolidated cash flows statements. Recent Accounting Guidance Not Yet Adopted Financial Instruments – Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued new guidance related to accounting for hedging activities. This guidance expands strategies that qualify for hedge accounting, changes how many hedging relationships are presented in the financial statements, and simplifies the application of hedge accounting in certain situations. The standard will be effective for us beginning July 1, 2019, with early adoption permitted for any interim or annual period before the effective date. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes, and systems. Financial Instruments – Credit Losses In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for us beginning July 1, 2020, with early adoption permitted beginning July 1, 2019. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. We are currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes, and systems. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 2 — EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards. The components of basic and diluted EPS were as follows: (In millions, except per share amounts) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Net income (loss) available for common shareholders (A) $ 8,420 $ (6,302 ) $ 17,244 $ 274 Weighted average outstanding shares of common stock (B) 7,692 7,710 7,683 7,709 Dilutive effect of stock-based awards 76 0 84 90 Common stock and common stock equivalents (C) 7,768 7,710 7,767 7,799 Earnings (Loss) Per Share Basic (A/B) $ 1.09 $ (0.82 ) $ 2.24 $ 0.04 Diluted (A/C) $ 1.08 $ (0.82 ) $ 2.22 $ 0.04 Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented. In periods where we recognized a net loss, we excluded the impact of potentially dilutive outstanding stock-based awards from the calculation of diluted loss per share as their inclusion would have an antidilutive effect. |
OTHER INCOME (EXPENSE), NET
OTHER INCOME (EXPENSE), NET | 6 Months Ended |
Dec. 31, 2018 | |
Other Income And Expenses [Abstract] | |
OTHER INCOME (EXPENSE), NET | NOTE 3 — OTHER INCOME (EXPENSE), NET The components of other income (expense), net were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Interest and dividends income $ 704 $ 530 $ 1,385 $ 1,003 Interest expense (672 ) (698 ) (1,346 ) (1,370 ) Net recognized gains on investments 94 768 337 1,341 Net gains (losses) on derivatives 41 (84 ) 38 (134 ) Net losses on foreign currency remeasurements (74 ) (60 ) (69 ) (69 ) Other, net 34 34 48 (5 ) Total $ 127 $ 490 $ 393 $ 766 Net Recognized Gains (Losses) on Investments Net recognized gains (losses) on debt investments were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Realized gains from sales of available-for-sale securities $ 6 $ 5 $ 13 $ 18 Realized losses from sales of available-for-sale securities (5 ) (259 ) (90 ) (339 ) Other-than-temporary impairments of investments (7 ) (4 ) (7 ) (5 ) Total $ (6 ) $ (258 ) $ (84 ) $ (326 ) Net recognized gains (losses) on equity investments were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Net realized gains on investments sold $ 30 $ 1,046 $ 233 $ 1,692 Net unrealized gains on investments still held 73 0 191 0 Impairments of investments (3 ) (20 ) (3 ) (25 ) Total $ 100 $ 1,026 $ 421 $ 1,667 |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
INVESTMENTS | NOTE 4 — INVESTMENTS Investment Components The components of investments were as follows: (In millions) Fair Value Level Cost Basis Unrealized Gains Unrealized Losses Recorded Basis Cash and Cash Equivalents Short-term Investments Equity Investments December 31, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2 $ 1,306 $ 0 $ 0 $ 1,306 $ 1,207 $ 99 $ 0 Certificates of deposit Level 2 1,440 0 0 1,440 1,024 416 0 U.S. government securities Level 1 103,915 422 (707 ) 103,630 3 103,627 0 U.S. agency securities Level 2 290 0 0 290 0 290 0 Foreign government bonds Level 2 6,412 1 (11 ) 6,402 1,029 5,373 0 Mortgage- and asset-backed securities Level 2 3,540 3 (15 ) 3,528 0 3,528 0 Corporate notes and bonds Level 2 7,445 14 (79 ) 7,380 15 7,365 0 Corporate notes and bonds Level 3 15 0 0 15 0 15 0 Municipal securities Level 2 268 35 (1 ) 302 0 302 0 Total debt investments $ 124,631 $ 475 $ (813 ) $ 124,293 $ 3,278 $ 121,015 $ 0 Changes in Fair Value Recorded in Net Income Equity investments Level 1 $ 584 $ 321 $ 20 $ 243 Equity investments Other 2,031 0 0 2,031 Total equity investments $ 2,615 $ 321 $ 20 $ 2,274 Cash $ 3,039 $ 3,039 $ 0 $ 0 Derivatives, net (a) (11 ) 0 (11 ) 0 Total $ 129,936 $ 6,638 $ 121,024 $ 2,274 (In millions) Fair Value Level Cost Basis Unrealized Gains Unrealized Losses Recorded Basis Cash and Cash Equivalents Short-term Investments Equity Investments June 30, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2 $ 2,513 $ 0 $ 0 $ 2,513 $ 2,215 $ 298 $ 0 Certificates of deposit Level 2 2,058 0 0 2,058 1,865 193 0 U.S. government securities Level 1 108,120 62 (1,167 ) 107,015 2,280 104,735 0 U.S. agency securities Level 2 1,742 0 0 1,742 1,398 344 0 Foreign government bonds Level 1 22 0 0 22 0 22 0 Foreign government bonds Level 2 5,063 1 (10 ) 5,054 0 5,054 0 Mortgage- and asset-backed securities Level 2 3,864 4 (13 ) 3,855 0 3,855 0 Corporate notes and bonds Level 2 6,929 21 (56 ) 6,894 0 6,894 0 Corporate notes and bonds Level 3 15 0 0 15 0 15 0 Municipal securities Level 2 271 37 (1 ) 307 0 307 0 Total debt investments $ 130,597 $ 125 $ (1,247 ) $ 129,475 $ 7,758 $ 121,717 $ 0 Equity investments Level 1 $ 533 $ 246 $ 0 $ 287 Equity investments Level 3 18 0 0 18 Equity investments Other 1,558 0 1 1,557 Total equity investments $ 2,109 $ 246 $ 1 $ 1,862 Cash $ 3,942 $ 3,942 $ 0 $ 0 Derivatives, net ( a ) 104 0 104 0 Total $ 135,630 $ 11,946 $ 121,822 $ 1,862 ( a ) Refer to Note 5 – Derivatives for further information on the fair value of our derivative instruments. Equity investments presented as “Other” in the tables above include investments without readily determinable fair values measured using the equity method or measured at cost with adjustments for observable changes in price or impairments, and investments measured at fair value using net asset value as a practical expedient which are not categorized in the fair value hierarchy. As of December 31, 2018 and June 30, 2018, equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments were $1.1 billion and $697 million, respectively. As of December 31, 2018, we had no collateral received under agreements for loaned securities. As of June 30, 2018, collateral received under agreements for loaned securities was $1.8 billion and primarily comprised U.S. government and agency securities. Unrealized Losses on Debt Investments Debt investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows: Less than 12 Months 12 Months or Greater Total (In millions) Fair Value Unrealized Fair Value Unrealized Total December 31, 2018 U.S. government and agency securities $ 16,776 $ (93 ) $ 52,757 $ (614 ) $ 69,533 $ (707 ) Foreign government bonds 51 (4 ) 87 (7 ) 138 (11 ) Mortgage- and asset-backed securities 1,825 (8 ) 359 (7 ) 2,184 (15 ) Corporate notes and bonds 4,372 (53 ) 770 (26 ) 5,142 (79 ) Municipal securities 29 (1 ) 13 0 42 (1 ) Total $ 23,053 $ (159 ) $ 53,986 $ (654 ) $ 77,039 $ (813 ) Less than 12 Months 12 Months or Greater Total (In millions) Fair Value Unrealized Fair Value Unrealized Total June 30, 2018 U.S. government and agency securities $ 82,352 $ (1,064 ) $ 4,459 $ (103 ) $ 86,811 $ (1,167 ) Foreign government bonds 3,457 (7 ) 13 (3 ) 3,470 (10 ) Mortgage- and asset-backed securities 2,072 (9 ) 96 (4 ) 2,168 (13 ) Corporate notes and bonds 3,111 (43 ) 301 (13 ) 3,412 (56 ) Municipal securities 45 (1 ) 0 0 45 (1 ) Total $ 91,037 $ (1,124 ) $ 4,869 $ (123 ) $ 95,906 $ (1,247 ) Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Management does not believe any remaining unrealized losses represent other-than-temporary impairments based on our evaluation of available evidence. Debt Investment Maturities (In millions) Cost Basis Estimated Fair Value December 31, 2018 Due in one year or less $ 39,245 $ 39,040 Due after one year through five years 58,499 58,306 Due after five years through 10 years 26,009 26,077 Due after 10 years 878 870 Total $ 124,631 $ 124,293 |
DERIVATIVES
DERIVATIVES | 6 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
DERIVATIVES | NOTE 5 — DERIVATIVES We use derivative instruments to manage risks related to foreign currencies, equity prices, interest rates, and credit; to enhance investment returns; and to facilitate portfolio diversification. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. Foreign Currency Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions. Option and forward contracts are used to hedge a portion of forecasted international revenue and are designated as cash flow hedging instruments. Principal currencies hedged include the euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. 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. 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. Equity Securities held in our equity investments portfolio are subject to market price risk. Market price risk is managed relative to broad-based global and domestic equity indices using certain convertible preferred investments, options, futures, and swap contracts not designated as hedging instruments. In the past, to hedge our price risk, we also used and designated equity derivatives as hedging instruments, including puts, calls, swaps, and forwards. Other Interest Rate Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities. We manage the average maturity of our fixed-income portfolio to achieve economic returns that correlate to certain broad-based fixed-income indices using exchange-traded option and futures contracts, and over-the-counter swap and option contracts, none of which are designated as hedging instruments. In addition, we use “To Be Announced” forward purchase commitments of mortgage-backed assets to gain exposure to agency mortgage-backed securities. These meet the definition of a derivative instrument in cases where physical delivery of the assets is not taken at the earliest available delivery date. Credit Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. We use credit default swap contracts, not designated as hedging instruments, to manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. We use credit default swaps as they are a low-cost method of managing exposure to individual credit risks or groups of credit risks. Credit-Risk-Related Contingent Features Certain of our counterparty agreements for derivative instruments contain provisions that require our issued and outstanding long-term unsecured debt to maintain an investment grade credit rating and require us to maintain minimum liquidity of $1.0 billion. To the extent we fail to meet these requirements, we will be required to post collateral, similar to the standard convention related to over-the-counter derivatives. As of December 31, 2018, our long-term unsecured debt rating was AAA, and cash investments were in excess of $1.0 billion. As a result, no collateral was required to be posted. The following table presents the notional amounts of our outstanding derivative instruments measured in U.S. dollar equivalents: (In millions) December 31, 2018 June 30, 2018 Designated as Hedging Instruments Foreign exchange contracts sold $ 8,954 $ 11,101 Not Designated as Hedging Instruments Foreign exchange contracts purchased 10,171 9,425 Foreign exchange contracts sold 12,089 13,374 Equity contracts purchased 51 49 Equity contracts sold 7 5 Other contracts purchased 1,302 878 Other contracts sold 468 472 Fair Values of Derivative Instruments The following table presents our derivative instruments: Derivative Derivative Derivative Derivative (In millions) Assets Liabilities Assets Liabilities December 31, 2018 June 30, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Designated as Hedging Instruments Foreign exchange contracts $ 112 $ 0 $ 174 $ 0 Changes in Fair Value Recorded in Net Income Designated as Hedging Instruments Foreign exchange contracts 2 (133 ) 95 0 Not Designated as Hedging Instruments Foreign exchange contracts 113 (93 ) 256 (197 ) Equity contracts 2 (59 ) 2 (7 ) Other contracts 13 (9 ) 11 (3 ) Gross amounts of derivatives 242 (294 ) 538 (207 ) Gross amounts of derivatives offset in the balance sheet (128 ) 128 (152 ) 153 Cash collateral received 0 (112 ) 0 (235 ) Net amounts of derivatives $ 114 $ (278 ) $ 386 $ (289 ) Reported as Short-term investments $ (11 ) $ 0 $ 104 $ 0 Other current assets 121 0 260 0 Other long-term assets 4 0 22 0 Other current liabilities 0 (269 ) 0 (288 ) Other long-term liabilities 0 (9 ) 0 (1 ) Total $ 114 $ (278 ) $ 386 $ (289 ) Gross derivative assets and liabilities subject to legally enforceable master netting agreements for which we have elected to offset were $233 million and $294 million, respectively, as of December 31, 2018, and $533 million and $207 million, respectively, as of June 30, 2018. The following table presents the fair value of our derivatives instruments (In millions) Level 1 Level 2 Level 3 Total December 31, 2018 Derivative assets $ 2 $ 238 $ 2 $ 242 Derivative liabilities (3 ) (291 ) 0 (294 ) June 30, 2018 Derivative assets 1 535 2 538 Derivative liabilities (1 ) (206 ) 0 (207 ) Fair Value Hedge Gains (Losses) We recognized in other income (expense), net the following gains (losses) on contracts designated as fair value hedges and their related hedged items: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Foreign Exchange Contracts Derivatives $ (139 ) $ 14 $ 11 $ 36 Hedged items 184 12 62 10 Total amount of ineffectiveness $ 45 $ 26 $ 73 $ 46 Equity Contracts Derivatives $ 0 $ (71 ) $ 0 $ (307 ) Hedged items 0 71 0 307 Total amount of ineffectiveness $ 0 $ 0 $ 0 $ 0 Amount of equity contracts excluded from effectiveness assessment $ 0 $ 20 $ 0 $ 60 Cash Flow Hedge Gains (Losses) We recognized the following gains (losses) on foreign exchange contracts designated as cash flow hedges: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Effective Portion Gains recognized in other comprehensive income (loss), net of tax of $3 $3 $ 70 $ 10 $ 114 $ 15 Gains reclassified from accumulated other comprehensive income (loss) into revenue 88 19 180 130 Amount Excluded from Effectiveness Assessment and Ineffective Portion Losses recognized in other income (expense), net (14 ) (73 ) (41 ) (164 ) We estimate that $116 million of net derivative gains included in AOCI as of December 31, 2018 will be reclassified into earnings within the following 12 months. No significant amounts of gains (losses) were reclassified from AOCI into earnings as a result of forecasted transactions that failed to occur for the three and six months ended December 31, 2018. Non-designated Derivative Gains (Losses) We recognized in other income (expense), net the following gains (losses) on derivatives not designated as hedging instruments: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Foreign exchange contracts $ (79 ) $ (115 ) $ (109 ) $ (184 ) Equity contracts 0 (49 ) 1 (78 ) Other contracts 8 (2 ) 4 9 Total $ (71 ) $ (166 ) $ (104 ) $ (253 ) |
INVENTORIES
INVENTORIES | 6 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 6 — INVENTORIES The components of inventories were as follows: (In millions) December 31, 2018 June 30, 2018 Raw materials $ 455 $ 655 Work in process 61 54 Finished goods 1,445 1,953 Total $ 1,961 $ 2,662 |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 7 — BUSINESS COMBINATIONS GitHub Inc. On October 25, 2018, we acquired GitHub, Inc. in a $7.5 billion stock transaction (inclusive of total cash payments of $1.3 billion in respect of vested GitHub equity awards and an indemnity escrow). The acquisition is expected to empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsoft’s developer tools and services to new audiences. The financial results of GitHub have been included in our consolidated financial statements since the date of the acquisition. The purchase price allocation as of the date of the acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows: (In millions) Cash, cash equivalents, and short-term investments $ 234 Goodwill 5,441 Intangible assets 1,298 Other assets 157 Other liabilities (206 ) Total $ 6,924 The goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is not expected to be deductible for tax purposes. We assigned the goodwill to our Intelligent Cloud segment. Following are the details of the purchase price allocated to the intangible assets acquired: (In millions) Amount Weighted Average Life Customer-related $ 679 8 years Technology-based 447 5 years Marketing-related 170 10 years Contract-based 2 2 years Total $ 1,298 7 years Transactions recognized separately from the preliminary purchase price allocation were approximately $600 million, primarily related to equity awards recognized as expense over the related service period. Other For the six months ended December 31, 2018, we completed 11 additional acquisitions for $959 million, substantially all of which were paid in cash. These entities have been included in our consolidated results of operations since their respective acquisition dates. |
GOODWILL
GOODWILL | 6 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
GOODWILL | NOTE 8 — GOODWILL Changes in the carrying amount of goodwill were as follows: (In millions) June 30, 2018 Acquisitions Other December 31, 2018 Productivity and Business Processes $ 23,823 $ 326 $ (68 ) $ 24,081 Intelligent Cloud 5,703 5,484 (a) (20 ) 11,167 More Personal Computing 6,157 206 (34 ) 6,329 Total $ 35,683 $ 6,016 $ (122 ) $ 41,577 (a) Includes goodwill of $5.4 billion related to GitHub. See Note 7 – Business Combinations for further information. The measurement periods for the valuation of assets acquired and liabilities assumed end as soon as information on the facts and circumstances that existed as of the acquisition dates becomes available, but do not exceed 12 months. Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during the periods in which the adjustments are determined. Any change in the goodwill amounts resulting from foreign currency translations and purchase accounting adjustments are presented as “Other” in the table above. Also included in “Other” are business dispositions and transfers between segments due to reorganizations, as applicable. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 9 — INTANGIBLE ASSETS The components of intangible assets, all of which are finite-lived, were as follows: (In millions) Gross Accumulated Net Gross Accumulated Net December 31, 2018 June 30, 2018 Technology-based $ 7,548 $ (5,383 ) $ 2,165 $ 7,220 $ (5,018 ) $ 2,202 Customer-related 4,741 (1,487 ) 3,254 4,031 (1,205 ) 2,826 Marketing-related 4,177 (1,197 ) 2,980 4,006 (1,071 ) 2,935 Contract-based 574 (491 ) 83 679 (589 ) 90 Total $ 17,040 (a) $ (8,558 ) $ 8,482 $ 15,936 $ (7,883 ) $ 8,053 (a) Includes intangible assets of $1.3 billion related to GitHub. See Note 7 – Business Combinations for further information. Intangible assets amortization expense was $530 million and $1.1 billion for the three and six months ended December 31, 2018, respectively, and $562 million and $1.1 billion for the three and six months ended December 31, 2017, respectively. The following table outlines the estimated future amortization expense related to intangible assets held as of December 31, 2018: (In millions) Year Ending June 30, 2019 (excluding the six months ended December 31, 2018) $ 871 2020 1,503 2021 1,282 2022 1,182 2023 1,009 Thereafter 2,635 Total $ 8,482 |
DEBT
DEBT | 6 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 10 — DEBT Short-term Debt As of December 31, 2018 and June 30, 2018, we had no commercial paper issued or outstanding. Effective August 31, 2018, we terminated our credit facilities, which served as back-up for our commercial paper program. Long-term Debt As of December 31, 2018, the total carrying value and estimated fair value of our long-term debt, including the current portion, were $73.2 billion and $74.2 billion, respectively. As of June 30, 2018, the total carrying value and estimated fair value of our long-term debt, including the current portion, were $76.2 billion and $77.5 billion, respectively. These estimated fair values are based on Level 2 inputs. The components of our long-term debt, including the current portion, and the associated interest rates were as follows: (In millions, except interest rates) Face Value December 31, 2018 Face Value June 30, 2018 Stated Interest Rate Effective Interest Rate Notes November 3, 2018 $ 0 $ 1,750 1.300% 1.396% December 6, 2018 0 1,250 1.625% 1.824% June 1, 2019 1,000 1,000 4.200% 4.379% August 8, 2019 2,500 2,500 1.100% 1.203% November 1, 2019 18 18 0.500% 0.500% February 6, 2020 1,500 1,500 1.850% 1.952% February 12, 2020 1,500 1,500 1.850% 1.935% October 1, 2020 1,000 1,000 3.000% 3.137% November 3, 2020 2,250 2,250 2.000% 2.093% February 8, 2021 500 500 4.000% 4.082% August 8, 2021 2,750 2,750 1.550% 1.642% December 6, 2021 (a) 2,001 2,044 2.125% 2.233% February 6, 2022 1,750 1,750 2.400% 2.520% February 12, 2022 1,500 1,500 2.375% 2.466% November 3, 2022 1,000 1,000 2.650% 2.717% November 15, 2022 750 750 2.125% 2.239% May 1, 2023 1,000 1,000 2.375% 2.465% August 8, 2023 1,500 1,500 2.000% 2.101% December 15, 2023 1,500 1,500 3.625% 3.726% February 6, 2024 2,250 2,250 2.875% 3.041% February 12, 2025 2,250 2,250 2.700% 2.772% November 3, 2025 3,000 3,000 3.125% 3.176% August 8, 2026 4,000 4,000 2.400% 2.464% February 6, 2027 4,000 4,000 3.300% 3.383% December 6, 2028 (a) 2,001 2,044 3.125% 3.218% May 2, 2033 (a) 629 642 2.625% 2.690% February 12, 2035 1,500 1,500 3.500% 3.604% November 3, 2035 1,000 1,000 4.200% 4.260% August 8, 2036 2,250 2,250 3.450% 3.510% February 6, 2037 2,500 2,500 4.100% 4.152% June 1, 2039 750 750 5.200% 5.240% October 1, 2040 1,000 1,000 4.500% 4.567% February 8, 2041 1,000 1,000 5.300% 5.361% November 15, 2042 900 900 3.500% 3.571% May 1, 2043 500 500 3.750% 3.829% December 15, 2043 500 500 4.875% 4.918% February 12, 2045 1,750 1,750 3.750% 3.800% November 3, 2045 3,000 3,000 4.450% 4.492% August 8, 2046 4,500 4,500 3.700% 3.743% February 6, 2047 3,000 3,000 4.250% 4.287% February 12, 2055 2,250 2,250 4.000% 4.063% November 3, 2055 1,000 1,000 4.750% 4.782% August 8, 2056 2,250 2,250 3.950% 4.033% February 6, 2057 2,000 2,000 4.500% 4.528% Total $ 73,799 $ 76,898 (a) Euro-denominated debt securities. The notes in the table above are senior unsecured obligations and rank equally with our other senior unsecured debt outstanding. Interest on these notes is paid semi-annually, except for the euro-denominated debt securities on which interest is paid annually. As of December 31, 2018 and June 30, 2018, the aggregate debt issuance costs and unamortized discount associated with our long-term debt, including the current portion, were $630 million and $658 million, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 — INCOME TAXES Effective Tax Rate Our effective tax rate was 19% and 169% for the three months ended December 31, 2018 and 2017, respectively, and 16% and 98% for the six months ended December 31, 2018 and 2017, respectively. The decrease in our effective tax rate for the three and six months ended December 31, 2018 compared to the prior year was primarily due to the net charge related to the enactment of the TCJA in the second quarter of fiscal year 2018. Our effective tax rate for the three and six months ended December 31, 2018 was lower than the U.S. federal statutory rate, primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland, Singapore, and Puerto Rico, and tax benefits relating to stock-based compensation. Recent Tax Legislation On December 22, 2017, the TCJA was enacted into law, which significantly changed existing U.S. tax law and included numerous provisions that affect our business, such as imposing a one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate, and adopting a territorial tax system. In fiscal year 2018, the TCJA required us to incur a transition tax on deferred foreign income not previously subject to U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets, and 8% on the remaining income. The TCJA also reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. The TCJA included a provision to tax GILTI of foreign subsidiaries and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. The GILTI and BEAT provisions of the TCJA were effective for us beginning July 1, 2018. The TCJA was effective in the second quarter of fiscal year 2018. We recorded a provisional net charge of $13.8 billion in the second quarter of fiscal year 2018, and $13.7 billion for the fiscal year ended June 30, 2018, related to the TCJA based on reasonable estimates for those tax effects. We adjusted our provisional net charge by recording additional tax expense of $157 million in the second quarter of fiscal year 2019, related to GILTI deferred taxes pursuant to SEC Staff Accounting Bulletin No. 118. As of December 31, 2018, the U.S. Treasury Department and the Internal Revenue Service (“IRS”) are still in the process of issuing various TCJA regulations. Accordingly, future adjustments to the financial statements may be necessary as regulations are issued and when we file our fiscal year 2018 tax returns with the IRS and foreign tax authorities in the current fiscal year. We recorded an estimated charge of $17.8 billion in the second quarter of fiscal year 2018, and $17.9 billion in fiscal year 2018, related to the one-time transition tax on the deemed repatriation of deferred foreign income, which was included in the provision for income taxes on our consolidated income statements and income taxes on our consolidated balance sheets. To calculate the transition tax, we estimated our deferred foreign income for fiscal year 2018 because these tax returns are not complete or due. Taxable income for fiscal year 2018 will be known once the respective tax returns are completed and filed. In addition, U.S. and foreign audit settlements may significantly impact the estimated transition tax. The impact of the U.S. and foreign audits on the transition tax will be known as the audits are concluded. In addition, we recorded an estimated benefit of $4.0 billion in the second quarter of fiscal year 2018, and $4.2 billion in fiscal year 2018, from the impact of changes in the tax rate, primarily on deferred tax assets and liabilities, which was included in provision for income taxes on our consolidated income statements and deferred income taxes and long-term income taxes on our consolidated balance sheets. We remeasured our deferred taxes to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The TCJA subjects a U.S. corporation to tax on its GILTI. Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes. We elected the deferred method, under which we recorded the corresponding deferred tax assets and liabilities on our consolidated balance sheets. Uncertain Tax Positions While we settled a portion of the IRS audit for tax years 2004 to 2006 in the third quarter of fiscal year 2011, a portion of the IRS audit for tax years 2007 to 2009 in the first quarter of fiscal year 2016, and a portion of the IRS audit for tax years 2010 to 2013 in the second quarter of fiscal year 2018, we remain under audit for those years. We continue to be subject to examination by the IRS for tax years 2014 to 2017. In February 2012, the IRS withdrew its 2011 Revenue Agents Report for tax years 2004 to 2006 and reopened the audit phase of the examination. As of December 31, 2018, the primary unresolved issues for this and other open IRS audits are related to transfer pricing. While we believe our allowances for income tax contingencies related to the unresolved issues are adequate, the final resolution of these issues, if unfavorable, could have a material impact on our consolidated financial statements. We have not received a proposed assessment for the unresolved issues and do not expect a final resolution of these issues in the next 12 months. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for these issues within the next 12 months. We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain subject to examination for tax years 1996 to 2018, some of which are currently under audit by local tax authorities. The resolution of each of these audits is not expected to be material to our consolidated financial statements. While we believe our allowances for all income tax contingencies are adequate, the final resolution of these issues, if unfavorable, could have a material impact on our consolidated financial statements. Income tax contingencies and other income tax liabilities were $15.4 billion and $15.1 billion as of December 31, 2018 and June 30, 2018, respectively, and are included in long-term income taxes on our consolidated balance sheets. This increase was primarily due to current period intercompany transactions and interest accruals. |
UNEARNED REVENUE
UNEARNED REVENUE | 6 Months Ended |
Dec. 31, 2018 | |
Revenue From Contract With Customer [Abstract] | |
UNEARNED REVENUE | NOTE 12 — UNEARNED REVENUE Unearned revenue by segment was as follows: (In millions) December 31, June 30, Productivity and Business Processes $ 12,635 $ 14,864 Intelligent Cloud 12,551 14,706 More Personal Computing 2,898 3,150 Total $ 28,084 $ 32,720 Changes in unearned revenue were as follows: (In millions) Six Months Ended December 31, 2018 Balance, beginning of period $ 32,720 Deferral of revenue 30,450 Recognition of unearned revenue (35,086 ) Balance, end of period $ 28,084 Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (“contracted not recognized revenue”), which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted not recognized revenue was $72 billion as of December 31, 2018, of which we expect to recognize approximately 60% of the revenue over the next 12 months and the remainder thereafter. |
LEASES
LEASES | 6 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
LEASES | NOTE 13 — LEASES We have operating and finance leases for datacenters, corporate offices, research and development facilities, retail stores, and certain equipment. Our leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The components of lease expense were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Operating lease cost $ 413 $ 399 $ 823 $ 787 Finance lease cost: Amortization of right-of-use assets $ 84 $ 57 $ 162 $ 105 Interest on lease liabilities 59 44 114 74 Total finance lease cost $ 143 $ 101 $ 276 $ 179 Supplemental cash flow information related to leases was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 407 $ 375 $ 804 $ 744 Operating cash flows from finance leases 59 45 114 75 Financing cash flows from finance leases 54 31 101 56 Right-of-use assets obtained in exchange for lease obligations: Operating leases 472 308 968 699 Finance leases 645 650 1,064 1,378 Supplemental balance sheet information related to leases was as follows: (In millions, except lease term and discount rate) December 31, June 30, Operating Leases Operating lease right-of-use assets $ 6,806 $ 6,686 Other current liabilities $ 1,421 $ 1,399 Operating lease liabilities 5,683 5,568 Total operating lease liabilities $ 7,104 $ 6,967 Finance Leases Property and equipment, at cost $ 5,554 $ 4,543 Accumulated depreciation (566 ) (404 ) Property and equipment, net $ 4,988 $ 4,139 Other current liabilities $ 245 $ 176 Other long-term liabilities 4,965 4,125 Total finance lease liabilities $ 5,210 $ 4,301 Weighted Average Remaining Lease Term Operating leases 7 years 7 years Finance leases 13 years 13 years Weighted Average Discount Rate Operating leases 2.9% 2.7% Finance leases 4.9% 5.2% Maturities of lease liabilities were as follows: (In millions) Year Ending June 30, Operating Leases Finance Leases 2019 (excluding the six months ended December 31, 2018) $ 799 $ 241 2020 1,503 479 2021 1,244 487 2022 1,048 495 2023 861 498 Thereafter 2,439 4,934 Total lease payments 7,894 7,134 Less imputed interest (790 ) (1,924 ) Total $ 7,104 $ 5,210 As of December 31, 2018, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $2.7 billion and $6.4 billion, respectively. These operating and finance leases will commence between fiscal year 2019 and fiscal year 2022 with lease terms of 1 year to 16 years. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 14 — CONTINGENCIES Patent and Intellectual Property Claims There were 32 patent infringement cases pending against Microsoft as of December 31, 2018, none of which are material individually or in aggregate. Antitrust, Unfair Competition, and Overcharge Class Actions Antitrust and unfair competition class action lawsuits were filed against us in British Columbia, Ontario, and Quebec, Canada. All three have been certified on behalf of Canadian indirect purchasers who acquired licenses for Microsoft operating system software and/or productivity application software between 1998 and 2010. The trial of the British Columbia action commenced in May 2016. Following a mediation, the parties agreed to a global settlement of all three Canadian actions, and submitted the proposed settlement agreement to the courts in all three jurisdictions for approval. The final settlement has been approved by the courts in British Columbia, Ontario, and Quebec, and the claims administration process will commence. Other Antitrust Litigation and Claims China State Administration for Industry and Commerce Investigation In 2014, Microsoft was informed that China’s State Agency for Market Regulation (“SAMR”) (formerly State Administration for Industry and Commerce) had begun a formal investigation relating to China’s Anti-Monopoly Law, and the SAMR conducted onsite inspections of Microsoft offices in Beijing, Shanghai, Guangzhou, and Chengdu. In December 2018, the SAMR met with Microsoft representatives and presented their preliminary views as to certain possible violations of China’s Anti-Monopoly Law, to which they have invited Microsoft to respond. Product-Related Litigation U.S. Cell Phone Litigation Microsoft Mobile Oy, a subsidiary of Microsoft, along with other handset manufacturers and network operators, is a defendant in 40 lawsuits filed in the Superior Court for the District of Columbia by individual plaintiffs who allege that radio emissions from cellular handsets caused their brain tumors and other adverse health effects. We assumed responsibility for these claims in our agreement to acquire Nokia’s Devices and Services business and have been substituted for the Nokia defendants. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. In a separate 2009 decision, the Court of Appeals for the District of Columbia held that adverse health effect claims arising from the use of cellular handsets that operate within the U.S. Federal Communications Commission radio frequency emission guidelines (“FCC Guidelines”) are pre-empted by federal law. The plaintiffs allege that their handsets either operated outside the FCC Guidelines or were manufactured before the FCC Guidelines went into effect. The lawsuits also allege an industry-wide conspiracy to manipulate the science and testing around emission guidelines. In 2013, the defendants in the consolidated cases moved to exclude the plaintiffs’ expert evidence of general causation on the basis of flawed scientific methodologies. In 2014, the trial court granted in part and denied in part the defendants’ motion to exclude the plaintiffs’ general causation experts. The defendants filed an interlocutory appeal to the District of Columbia Court of Appeals challenging the standard for evaluating expert scientific evidence. In October 2016, the Court of Appeals issued its decision adopting the standard advocated by the defendants and remanding the cases to the trial court for further proceedings under that standard. The plaintiffs have filed supplemental expert evidence, portions of which the defendants have moved to strike. Canadian Cell Phone Class Action Microsoft Mobile Oy, along with other handset manufacturers and network operators, is a defendant in a 2013 class action lawsuit filed in the Supreme Court of British Columbia by a purported class of Canadians who have used cellular phones for at least 1,600 hours, including a subclass of users with brain tumors, alleging adverse health effects from cellular phone use. Microsoft was served with the complaint in June 2014 and has been substituted for the Nokia defendants. The litigation has been dormant for more than three years. Employment-Related Litigation Moussouris v. Microsoft Current and former female Microsoft employees in certain engineering and information technology roles brought this class action in federal court in Seattle in 2015, alleging systemic gender discrimination in pay and promotions. The plaintiffs moved to certify the class in October 2017. Microsoft filed an opposition in January 2018, attaching an expert report showing no statistically significant disparity in pay and promotions between similarly situated men and women. In June 2018, the court denied the plaintiffs’ motion for class certification. Plaintiffs sought an interlocutory appeal to the U.S. Court of Appeals for the Ninth Circuit, which was granted in September 2018. Other Contingencies We also are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. Although management currently believes that resolving claims against us, individually or in aggregate, will not have a material adverse impact on our consolidated financial statements, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. As of December 31, 2018, we accrued aggregate legal liabilities of $273 million. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $1.0 billion in aggregate beyond recorded amounts are reasonably possible. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on our consolidated financial statements for the period in which the effects become reasonably estimable. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 15 — STOCKHOLDERS’ EQUITY Share Repurchases On September 20, 2016, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. This share repurchase program commenced on December 22, 2016, has no expiration date, and may be suspended or discontinued at any time without notice. As of December 31, 2018, $19.5 billion remained of this $40.0 billion share repurchase program. We repurchased the following shares of common stock under the share repurchase program: (In millions) Shares Amount Shares Amount Fiscal Year 2019 2018 First Quarter 24 $ 2,600 22 $ 1,600 Second Quarter 57 6,100 22 1,800 Total 81 $ 8,700 44 $ 3,400 The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards. All repurchases were made using cash resources. Dividends Our Board of Directors declared the following dividends: Declaration Date Record Date Payment Date Dividend Per Share Amount Fiscal Year 2019 (in millions) September 18, 2018 November 15, 2018 December 13, 2018 $ 0.46 $ 3,544 November 28, 2018 February 21, 2019 March 14, 2019 0.46 3,535 Total $ 0.92 $ 7,079 Fiscal Year 2018 September 19, 2017 November 16, 2017 December 14, 2017 $ 0.42 $ 3,238 November 29, 2017 February 15, 2018 March 8, 2018 0.42 3,232 Total $ 0.84 $ 6,470 The dividend declared on November 28, 2018 was included in other current liabilities as of December 31, 2018. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 16 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in accumulated other comprehensive income (loss) by component: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Derivatives Balance, beginning of period $ 128 $ 28 $ 173 $ 134 Unrealized gains, net of tax of $3 $2 71 11 115 15 Reclassification adjustments for gains included in revenue (88 ) (19 ) (180 ) (130 ) Tax expense included in provision for income taxes 2 1 5 2 Amounts reclassified from accumulated other comprehensive income (loss) (86 ) (18 ) (175 ) (128 ) Net change related to derivatives, net of tax of $1 , $(3) (15 ) (7 ) (60 ) (113 ) Balance, end of period $ 113 $ 21 $ 113 $ 21 Investments Balance, beginning of period $ (1,178 ) $ 1,537 $ (850 ) $ 1,825 Unrealized gains (losses), net of tax of $234 $148 879 (390 ) 556 (317 ) Reclassification adjustments for (gains) losses included in other income (expense), net 2 (751 ) 80 (1,306 ) Tax expense (benefit) included in provision for income taxes 0 263 (16 ) 457 Amounts reclassified from accumulated other comprehensive income (loss) 2 (488 ) 64 (849 ) Net change related to investments, net of tax of $234 $164 881 (878 ) 620 (1,166 ) Cumulative effect of accounting changes 0 0 (67 ) 0 Balance, end of period $ (297 ) $ 659 $ (297 ) $ 659 Translation Adjustments and Other Balance, beginning of period $ (1,565 ) $ (1,039 ) $ (1,510 ) $ (1,332 ) Translation adjustments and other, net of tax of $(1) , $0, $(1) , (264 ) (40 ) (319 ) 253 Balance, end of period $ (1,829 ) $ (1,079 ) $ (1,829 ) $ (1,079 ) Accumulated other comprehensive loss, end of period $ (2,013 ) $ (399 ) $ (2,013 ) $ (399 ) |
SEGMENT INFORMATION AND GEOGRAP
SEGMENT INFORMATION AND GEOGRAPHIC DATA | 6 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION AND GEOGRAPHIC DATA | NOTE 17 — SEGMENT INFORMATION AND GEOGRAPHIC DATA In its operation of the business, management, including our chief operating decision maker, who is also our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis not consistent with GAAP. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Our reportable segments are described below. Productivity and Business Processes Our Productivity and Business Processes segment consists of products and services in our portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment primarily comprises: • Office Commercial, including Microsoft Office 365 subscriptions and Office licensed on-premises, comprising Office, Exchange, SharePoint, Skype for Business, and Microsoft Teams, and related Client Access Licenses (“CALs”). • Office Consumer, including Office 365 subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive. • LinkedIn, including Talent Solutions, Marketing Solutions, and Premium Subscriptions. • Microsoft Dynamics business solutions, including Dynamics ERP on-premises, Dynamics CRM on-premises, and Dynamics 365, a set of cloud-based applications across ERP and CRM. Intelligent Cloud Our Intelligent Cloud segment consists of our public, private, and hybrid server products and cloud services that can power modern business. This segment primarily comprises: • Server products and cloud services, including Microsoft SQL Server, Windows Server, Visual Studio, System Center, and related CALs, Microsoft Azure, and GitHub. • Enterprise Services, including Premier Support Services and Microsoft Consulting Services. More Personal Computing Our More Personal Computing segment consists of products and services geared towards harmonizing the interests of end users, developers, and IT professionals across all devices. This segment primarily comprises: • Windows, including Windows original equipment manufacturer (“OEM”) licensing and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things (“IoT”); and MSN advertising. • Devices, including Microsoft Surface, PC accessories, and other intelligent devices. • Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, and advertising (“Xbox Live”), video games, and third-party video game royalties. • Search. Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin. In addition, certain costs incurred at a corporate level that are identifiable and that benefit our segments are allocated to them. These allocated costs include costs of: legal, including settlements and fines; information technology; human resources; finance; excise taxes; field selling; shared facilities services; and customer service and support. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Certain corporate-level activity is not allocated to our segments, including impairment and restructuring expenses. Segment revenue and operating income were as follows during the periods presented: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Revenue Productivity and Business Processes $ 10,100 $ 8,953 $ 19,871 $ 17,191 Intelligent Cloud 9,378 7,795 17,945 14,717 More Personal Computing 12,993 12,170 23,739 21,548 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 Operating Income Productivity and Business Processes $ 4,015 $ 3,337 $ 7,896 $ 6,343 Intelligent Cloud 3,279 2,832 6,210 4,969 More Personal Computing 2,964 2,510 6,107 5,075 Total $ 10,258 $ 8,679 $ 20,213 $ 16,387 No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for the three or six months ended December 31, 2018 or 2017. Revenue, classified by the major geographic areas in which our customers were located, was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 United States (a) $ 16,787 $ 15,110 $ 31,527 $ 27,657 Other countries 15,684 13,808 30,028 25,799 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 (a) Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue. Revenue from external customers, classified by significant product and service offerings, was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Office products and cloud services $ 7,747 $ 7,075 $ 15,369 $ 13,651 Server products and cloud services 7,791 6,299 14,849 11,796 Windows 4,758 4,839 9,659 9,482 Gaming 4,232 3,920 6,970 5,816 Search advertising 1,976 1,820 3,764 3,459 1,693 1,312 3,223 2,460 Devices 1,948 1,478 3,209 2,632 Enterprise Services 1,521 1,435 2,971 2,806 Other 805 740 1,541 1,354 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 Our commercial cloud revenue, which includes Office 365 commercial, Azure, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, was $9.0 billion and $17.5 billion for the three and six months ended December 31, 2018, respectively, and $6.1 billion and $11.9 billion for the three and six months ended December 31, 2017, respectively. These amounts are primarily included in Office products and cloud services, Server products and cloud services, and LinkedIn in the table above. Assets are not allocated to segments for internal reporting presentations. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment; it is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Accounting Principles | Accounting Principles Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Microsoft Corporation fiscal year 2018 Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on August 3, 2018. We have recast certain prior period amounts related to investments, derivatives, and fair value measurements to conform to the current period presentation based on our adoption of the new accounting standard for financial instruments. We have also recast prior period commercial cloud revenue to include the commercial portion of LinkedIn to provide a comparable view of our commercial cloud business performance. The commercial portion of LinkedIn includes LinkedIn Recruiter, Sales Navigator, premium business subscriptions, and other services for organizations. The recast of these prior period amounts had no impact on our consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. Intercompany transactions and balances have been eliminated. |
Estimates and Assumptions | Estimates and Assumptions Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; product warranties; the fair value of and/or potential impairment of goodwill and intangible assets for our reporting units; product life cycles; useful lives of our tangible and intangible assets; allowances for doubtful accounts; the market value of, and demand for, our inventory; stock-based compensation forfeiture rates; when technological feasibility is achieved for our products; the potential outcome of future tax consequences of events that have been recognized on our consolidated financial statements or tax returns; and determining the timing and amount of impairments for investments. Actual results and outcomes may differ from management’s estimates and assumptions. |
Investments | Investments We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding other-than-temporary impairments, are recorded in other comprehensive income (“OCI”). Debt investments are impaired when a decline in fair value is judged to be other-than-temporary. Fair value is calculated based on publicly available market information or other estimates determined by management. We employ a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the duration and extent to which the fair value is less than cost. We also evaluate whether we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery. In addition, we consider specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, and operational and financing cash flow factors. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in other income (expense), net and a new cost basis in the investment is established. Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method, or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). 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. Changes in value are recorded in other income (expense), net. We lend certain fixed-income and equity securities to increase investment returns. These transactions are accounted for as secured borrowings and the loaned securities continue to be carried as investments on our consolidated balance sheets. Cash and/or security interests are received as collateral for the loaned securities with the amount determined based upon the underlying security lent and the creditworthiness of the borrower. Cash received is recorded as an asset with a corresponding liability. |
Derivatives | Derivatives Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments designated as fair value hedges, gains and losses are recognized in other income (expense), net with offsetting gains and losses on the hedged items. For options designated as fair value hedges, changes in the time value are excluded from the assessment of hedge effectiveness and recognized in other income (expense), net. For derivative instruments designated as cash flow hedges, the effective portion of the gains and losses are initially reported as a component of OCI and subsequently recognized in revenue when the hedged exposure is recognized in revenue. Gains and losses on derivatives representing either hedge components excluded from the assessment of effectiveness or hedge ineffectiveness are recognized in other income (expense), net. For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net. |
Fair Value Measurements | Fair Value Measurements We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 investments include U.S. government securities, common and preferred stock, and mutual funds. Our Level 1 derivative assets and liabilities include those actively traded on exchanges. • Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, U.S. agency securities, foreign government bonds, mortgage- and asset-backed securities, corporate notes and bonds, and municipal securities. Our Level 2 derivative assets and liabilities primarily include certain over-the-counter option and swap contracts. • Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include investments in corporate notes and bonds, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. We measure equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. Our other current financial assets and current financial liabilities have fair values that approximate their carrying values. |
Contract Balances | Contract Balances As of December 31, 2018 and June 30, 2018, long-term accounts receivable, net of allowance for doubtful accounts, were $1.9 billion and $1.8 billion, respectively, and are included in other long-term assets on our consolidated balance sheets. |
Recent Accounting Guidance | Recent Accounting Guidance Recently Adopted Accounting Guidance Income Taxes – Intra-Entity Asset Transfers In October 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance requiring an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party. We adopted the guidance effective July 1, 2018. Adoption of the guidance was applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. 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 Financial Instruments – Recognition, Measurement, Presentation, and Disclosure In January 2016, the FASB issued a new standard related to certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Most prominent among the changes in the standard is the requirement for changes in the fair value of our equity investments, with certain exceptions, to be recognized through net income rather than OCI. We adopted the standard effective July 1, 2018. Adoption of the standard was applied using a modified retrospective approach through a cumulative-effect adjustment from accumulated other comprehensive income (“AOCI”) to retained earnings as of the effective date, and we elected to measure equity investments without readily determinable fair values at cost with adjustments for observable changes in price or impairments. The cumulative-effect adjustment included any previously held unrealized gains and losses held in AOCI related to our equity investments carried at fair value as well as the impact of recording the fair value of certain equity investments carried at cost. The impact on our consolidated balance sheets upon adoption was not material. Adoption of the standard had no impact to cash from or used in operating, financing, or investing on our consolidated cash flows statements. Recent Accounting Guidance Not Yet Adopted Financial Instruments – Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued new guidance related to accounting for hedging activities. This guidance expands strategies that qualify for hedge accounting, changes how many hedging relationships are presented in the financial statements, and simplifies the application of hedge accounting in certain situations. The standard will be effective for us beginning July 1, 2019, with early adoption permitted for any interim or annual period before the effective date. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes, and systems. Financial Instruments – Credit Losses In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The standard will be effective for us beginning July 1, 2020, with early adoption permitted beginning July 1, 2019. Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. We are currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes, and systems. |
Earnings Per Share | Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards. |
Income Taxes | Recent Tax Legislation On December 22, 2017, the TCJA was enacted into law, which significantly changed existing U.S. tax law and included numerous provisions that affect our business, such as imposing a one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate, and adopting a territorial tax system. In fiscal year 2018, the TCJA required us to incur a transition tax on deferred foreign income not previously subject to U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets, and 8% on the remaining income. The TCJA also reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. The TCJA included a provision to tax GILTI of foreign subsidiaries and a base erosion anti-abuse tax (“BEAT”) measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. The GILTI and BEAT provisions of the TCJA were effective for us beginning July 1, 2018. The TCJA was effective in the second quarter of fiscal year 2018. We recorded a provisional net charge of $13.8 billion in the second quarter of fiscal year 2018, and $13.7 billion for the fiscal year ended June 30, 2018, related to the TCJA based on reasonable estimates for those tax effects. We adjusted our provisional net charge by recording additional tax expense of $157 million in the second quarter of fiscal year 2019, related to GILTI deferred taxes pursuant to SEC Staff Accounting Bulletin No. 118. As of December 31, 2018, the U.S. Treasury Department and the Internal Revenue Service (“IRS”) are still in the process of issuing various TCJA regulations. Accordingly, future adjustments to the financial statements may be necessary as regulations are issued and when we file our fiscal year 2018 tax returns with the IRS and foreign tax authorities in the current fiscal year. We recorded an estimated charge of $17.8 billion in the second quarter of fiscal year 2018, and $17.9 billion in fiscal year 2018, related to the one-time transition tax on the deemed repatriation of deferred foreign income, which was included in the provision for income taxes on our consolidated income statements and income taxes on our consolidated balance sheets. To calculate the transition tax, we estimated our deferred foreign income for fiscal year 2018 because these tax returns are not complete or due. Taxable income for fiscal year 2018 will be known once the respective tax returns are completed and filed. In addition, U.S. and foreign audit settlements may significantly impact the estimated transition tax. The impact of the U.S. and foreign audits on the transition tax will be known as the audits are concluded. In addition, we recorded an estimated benefit of $4.0 billion in the second quarter of fiscal year 2018, and $4.2 billion in fiscal year 2018, from the impact of changes in the tax rate, primarily on deferred tax assets and liabilities, which was included in provision for income taxes on our consolidated income statements and deferred income taxes and long-term income taxes on our consolidated balance sheets. We remeasured our deferred taxes to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The TCJA subjects a U.S. corporation to tax on its GILTI. Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes. We elected the deferred method, under which we recorded the corresponding deferred tax assets and liabilities on our consolidated balance sheets. |
Segment Reporting | Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin. In addition, certain costs incurred at a corporate level that are identifiable and that benefit our segments are allocated to them. These allocated costs include costs of: legal, including settlements and fines; information technology; human resources; finance; excise taxes; field selling; shared facilities services; and customer service and support. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Certain corporate-level activity is not allocated to our segments, including impairment and restructuring expenses. Assets are not allocated to segments for internal reporting presentations. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment; it is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Share | The components of basic and diluted EPS were as follows: (In millions, except per share amounts) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Net income (loss) available for common shareholders (A) $ 8,420 $ (6,302 ) $ 17,244 $ 274 Weighted average outstanding shares of common stock (B) 7,692 7,710 7,683 7,709 Dilutive effect of stock-based awards 76 0 84 90 Common stock and common stock equivalents (C) 7,768 7,710 7,767 7,799 Earnings (Loss) Per Share Basic (A/B) $ 1.09 $ (0.82 ) $ 2.24 $ 0.04 Diluted (A/C) $ 1.08 $ (0.82 ) $ 2.22 $ 0.04 |
OTHER INCOME (EXPENSE), NET (Ta
OTHER INCOME (EXPENSE), NET (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Components of Other Income (Expense), Net | The components of other income (expense), net were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Interest and dividends income $ 704 $ 530 $ 1,385 $ 1,003 Interest expense (672 ) (698 ) (1,346 ) (1,370 ) Net recognized gains on investments 94 768 337 1,341 Net gains (losses) on derivatives 41 (84 ) 38 (134 ) Net losses on foreign currency remeasurements (74 ) (60 ) (69 ) (69 ) Other, net 34 34 48 (5 ) Total $ 127 $ 490 $ 393 $ 766 |
Debt Securities | |
Net Recognized Gains (Losses) on Investments | Net recognized gains (losses) on debt investments were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Realized gains from sales of available-for-sale securities $ 6 $ 5 $ 13 $ 18 Realized losses from sales of available-for-sale securities (5 ) (259 ) (90 ) (339 ) Other-than-temporary impairments of investments (7 ) (4 ) (7 ) (5 ) Total $ (6 ) $ (258 ) $ (84 ) $ (326 ) |
Equity Securities | |
Net Recognized Gains (Losses) on Investments | Net recognized gains (losses) on equity investments were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Net realized gains on investments sold $ 30 $ 1,046 $ 233 $ 1,692 Net unrealized gains on investments still held 73 0 191 0 Impairments of investments (3 ) (20 ) (3 ) (25 ) Total $ 100 $ 1,026 $ 421 $ 1,667 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Investment Components | The components of investments were as follows: (In millions) Fair Value Level Cost Basis Unrealized Gains Unrealized Losses Recorded Basis Cash and Cash Equivalents Short-term Investments Equity Investments December 31, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2 $ 1,306 $ 0 $ 0 $ 1,306 $ 1,207 $ 99 $ 0 Certificates of deposit Level 2 1,440 0 0 1,440 1,024 416 0 U.S. government securities Level 1 103,915 422 (707 ) 103,630 3 103,627 0 U.S. agency securities Level 2 290 0 0 290 0 290 0 Foreign government bonds Level 2 6,412 1 (11 ) 6,402 1,029 5,373 0 Mortgage- and asset-backed securities Level 2 3,540 3 (15 ) 3,528 0 3,528 0 Corporate notes and bonds Level 2 7,445 14 (79 ) 7,380 15 7,365 0 Corporate notes and bonds Level 3 15 0 0 15 0 15 0 Municipal securities Level 2 268 35 (1 ) 302 0 302 0 Total debt investments $ 124,631 $ 475 $ (813 ) $ 124,293 $ 3,278 $ 121,015 $ 0 Changes in Fair Value Recorded in Net Income Equity investments Level 1 $ 584 $ 321 $ 20 $ 243 Equity investments Other 2,031 0 0 2,031 Total equity investments $ 2,615 $ 321 $ 20 $ 2,274 Cash $ 3,039 $ 3,039 $ 0 $ 0 Derivatives, net (a) (11 ) 0 (11 ) 0 Total $ 129,936 $ 6,638 $ 121,024 $ 2,274 (In millions) Fair Value Level Cost Basis Unrealized Gains Unrealized Losses Recorded Basis Cash and Cash Equivalents Short-term Investments Equity Investments June 30, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2 $ 2,513 $ 0 $ 0 $ 2,513 $ 2,215 $ 298 $ 0 Certificates of deposit Level 2 2,058 0 0 2,058 1,865 193 0 U.S. government securities Level 1 108,120 62 (1,167 ) 107,015 2,280 104,735 0 U.S. agency securities Level 2 1,742 0 0 1,742 1,398 344 0 Foreign government bonds Level 1 22 0 0 22 0 22 0 Foreign government bonds Level 2 5,063 1 (10 ) 5,054 0 5,054 0 Mortgage- and asset-backed securities Level 2 3,864 4 (13 ) 3,855 0 3,855 0 Corporate notes and bonds Level 2 6,929 21 (56 ) 6,894 0 6,894 0 Corporate notes and bonds Level 3 15 0 0 15 0 15 0 Municipal securities Level 2 271 37 (1 ) 307 0 307 0 Total debt investments $ 130,597 $ 125 $ (1,247 ) $ 129,475 $ 7,758 $ 121,717 $ 0 Equity investments Level 1 $ 533 $ 246 $ 0 $ 287 Equity investments Level 3 18 0 0 18 Equity investments Other 1,558 0 1 1,557 Total equity investments $ 2,109 $ 246 $ 1 $ 1,862 Cash $ 3,942 $ 3,942 $ 0 $ 0 Derivatives, net ( a ) 104 0 104 0 Total $ 135,630 $ 11,946 $ 121,822 $ 1,862 ( a ) Refer to Note 5 – Derivatives for further information on the fair value of our derivative instruments. |
Unrealized Losses on Debt Investments | Debt investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows: Less than 12 Months 12 Months or Greater Total (In millions) Fair Value Unrealized Fair Value Unrealized Total December 31, 2018 U.S. government and agency securities $ 16,776 $ (93 ) $ 52,757 $ (614 ) $ 69,533 $ (707 ) Foreign government bonds 51 (4 ) 87 (7 ) 138 (11 ) Mortgage- and asset-backed securities 1,825 (8 ) 359 (7 ) 2,184 (15 ) Corporate notes and bonds 4,372 (53 ) 770 (26 ) 5,142 (79 ) Municipal securities 29 (1 ) 13 0 42 (1 ) Total $ 23,053 $ (159 ) $ 53,986 $ (654 ) $ 77,039 $ (813 ) Less than 12 Months 12 Months or Greater Total (In millions) Fair Value Unrealized Fair Value Unrealized Total June 30, 2018 U.S. government and agency securities $ 82,352 $ (1,064 ) $ 4,459 $ (103 ) $ 86,811 $ (1,167 ) Foreign government bonds 3,457 (7 ) 13 (3 ) 3,470 (10 ) Mortgage- and asset-backed securities 2,072 (9 ) 96 (4 ) 2,168 (13 ) Corporate notes and bonds 3,111 (43 ) 301 (13 ) 3,412 (56 ) Municipal securities 45 (1 ) 0 0 45 (1 ) Total $ 91,037 $ (1,124 ) $ 4,869 $ (123 ) $ 95,906 $ (1,247 ) |
Debt Investment Maturities | Debt Investment Maturities (In millions) Cost Basis Estimated Fair Value December 31, 2018 Due in one year or less $ 39,245 $ 39,040 Due after one year through five years 58,499 58,306 Due after five years through 10 years 26,009 26,077 Due after 10 years 878 870 Total $ 124,631 $ 124,293 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Notional Amounts of Outstanding Derivative Instruments Measured in U.S. Dollar Equivalents | The following table presents the notional amounts of our outstanding derivative instruments measured in U.S. dollar equivalents: (In millions) December 31, 2018 June 30, 2018 Designated as Hedging Instruments Foreign exchange contracts sold $ 8,954 $ 11,101 Not Designated as Hedging Instruments Foreign exchange contracts purchased 10,171 9,425 Foreign exchange contracts sold 12,089 13,374 Equity contracts purchased 51 49 Equity contracts sold 7 5 Other contracts purchased 1,302 878 Other contracts sold 468 472 |
Fair Values of Derivative Instruments | The following table presents our derivative instruments: Derivative Derivative Derivative Derivative (In millions) Assets Liabilities Assets Liabilities December 31, 2018 June 30, 2018 Changes in Fair Value Recorded in Other Comprehensive Income Designated as Hedging Instruments Foreign exchange contracts $ 112 $ 0 $ 174 $ 0 Changes in Fair Value Recorded in Net Income Designated as Hedging Instruments Foreign exchange contracts 2 (133 ) 95 0 Not Designated as Hedging Instruments Foreign exchange contracts 113 (93 ) 256 (197 ) Equity contracts 2 (59 ) 2 (7 ) Other contracts 13 (9 ) 11 (3 ) Gross amounts of derivatives 242 (294 ) 538 (207 ) Gross amounts of derivatives offset in the balance sheet (128 ) 128 (152 ) 153 Cash collateral received 0 (112 ) 0 (235 ) Net amounts of derivatives $ 114 $ (278 ) $ 386 $ (289 ) Reported as Short-term investments $ (11 ) $ 0 $ 104 $ 0 Other current assets 121 0 260 0 Other long-term assets 4 0 22 0 Other current liabilities 0 (269 ) 0 (288 ) Other long-term liabilities 0 (9 ) 0 (1 ) Total $ 114 $ (278 ) $ 386 $ (289 ) The following table presents the fair value of our derivatives instruments (In millions) Level 1 Level 2 Level 3 Total December 31, 2018 Derivative assets $ 2 $ 238 $ 2 $ 242 Derivative liabilities (3 ) (291 ) 0 (294 ) June 30, 2018 Derivative assets 1 535 2 538 Derivative liabilities (1 ) (206 ) 0 (207 ) |
Not Designated as Hedging Instruments | |
Gains (Losses) on Derivative Instruments | We recognized in other income (expense), net the following gains (losses) on derivatives not designated as hedging instruments: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Foreign exchange contracts $ (79 ) $ (115 ) $ (109 ) $ (184 ) Equity contracts 0 (49 ) 1 (78 ) Other contracts 8 (2 ) 4 9 Total $ (71 ) $ (166 ) $ (104 ) $ (253 ) |
Fair value hedging | |
Gains (Losses) on Derivative Instruments | We recognized in other income (expense), net the following gains (losses) on contracts designated as fair value hedges and their related hedged items: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Foreign Exchange Contracts Derivatives $ (139 ) $ 14 $ 11 $ 36 Hedged items 184 12 62 10 Total amount of ineffectiveness $ 45 $ 26 $ 73 $ 46 Equity Contracts Derivatives $ 0 $ (71 ) $ 0 $ (307 ) Hedged items 0 71 0 307 Total amount of ineffectiveness $ 0 $ 0 $ 0 $ 0 Amount of equity contracts excluded from effectiveness assessment $ 0 $ 20 $ 0 $ 60 |
Cash flow hedging | |
Gains (Losses) on Derivative Instruments | We recognized the following gains (losses) on foreign exchange contracts designated as cash flow hedges: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Effective Portion Gains recognized in other comprehensive income (loss), net of tax of $3 $3 $ 70 $ 10 $ 114 $ 15 Gains reclassified from accumulated other comprehensive income (loss) into revenue 88 19 180 130 Amount Excluded from Effectiveness Assessment and Ineffective Portion Losses recognized in other income (expense), net (14 ) (73 ) (41 ) (164 ) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | The components of inventories were as follows: (In millions) December 31, 2018 June 30, 2018 Raw materials $ 455 $ 655 Work in process 61 54 Finished goods 1,445 1,953 Total $ 1,961 $ 2,662 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) - GitHub Inc | 6 Months Ended |
Dec. 31, 2018 | |
Major Classes of Assets and Liabilities Allocated Purchase Price | The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows: (In millions) Cash, cash equivalents, and short-term investments $ 234 Goodwill 5,441 Intangible assets 1,298 Other assets 157 Other liabilities (206 ) Total $ 6,924 |
Acquired Intangible Assets | Following are the details of the purchase price allocated to the intangible assets acquired: (In millions) Amount Weighted Average Life Customer-related $ 679 8 years Technology-based 447 5 years Marketing-related 170 10 years Contract-based 2 2 years Total $ 1,298 7 years |
GOODWILL (Tables)
GOODWILL (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Carrying Amount of Goodwill | Changes in the carrying amount of goodwill were as follows: (In millions) June 30, 2018 Acquisitions Other December 31, 2018 Productivity and Business Processes $ 23,823 $ 326 $ (68 ) $ 24,081 Intelligent Cloud 5,703 5,484 (a) (20 ) 11,167 More Personal Computing 6,157 206 (34 ) 6,329 Total $ 35,683 $ 6,016 $ (122 ) $ 41,577 (a) Includes goodwill of $5.4 billion related to GitHub. See Note 7 – Business Combinations for further information. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Finite-Lived Intangible Assets | The components of intangible assets, all of which are finite-lived, were as follows: (In millions) Gross Accumulated Net Gross Accumulated Net December 31, 2018 June 30, 2018 Technology-based $ 7,548 $ (5,383 ) $ 2,165 $ 7,220 $ (5,018 ) $ 2,202 Customer-related 4,741 (1,487 ) 3,254 4,031 (1,205 ) 2,826 Marketing-related 4,177 (1,197 ) 2,980 4,006 (1,071 ) 2,935 Contract-based 574 (491 ) 83 679 (589 ) 90 Total $ 17,040 (a) $ (8,558 ) $ 8,482 $ 15,936 $ (7,883 ) $ 8,053 (a) Includes intangible assets of $1.3 billion related to GitHub. See Note 7 – Business Combinations for further information. |
Estimated Future Amortization Expense Related to Intangible Assets | The following table outlines the estimated future amortization expense related to intangible assets held as of December 31, 2018: (In millions) Year Ending June 30, 2019 (excluding the six months ended December 31, 2018) $ 871 2020 1,503 2021 1,282 2022 1,182 2023 1,009 Thereafter 2,635 Total $ 8,482 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-term Debt | The components of our long-term debt, including the current portion, and the associated interest rates were as follows: (In millions, except interest rates) Face Value December 31, 2018 Face Value June 30, 2018 Stated Interest Rate Effective Interest Rate Notes November 3, 2018 $ 0 $ 1,750 1.300% 1.396% December 6, 2018 0 1,250 1.625% 1.824% June 1, 2019 1,000 1,000 4.200% 4.379% August 8, 2019 2,500 2,500 1.100% 1.203% November 1, 2019 18 18 0.500% 0.500% February 6, 2020 1,500 1,500 1.850% 1.952% February 12, 2020 1,500 1,500 1.850% 1.935% October 1, 2020 1,000 1,000 3.000% 3.137% November 3, 2020 2,250 2,250 2.000% 2.093% February 8, 2021 500 500 4.000% 4.082% August 8, 2021 2,750 2,750 1.550% 1.642% December 6, 2021 (a) 2,001 2,044 2.125% 2.233% February 6, 2022 1,750 1,750 2.400% 2.520% February 12, 2022 1,500 1,500 2.375% 2.466% November 3, 2022 1,000 1,000 2.650% 2.717% November 15, 2022 750 750 2.125% 2.239% May 1, 2023 1,000 1,000 2.375% 2.465% August 8, 2023 1,500 1,500 2.000% 2.101% December 15, 2023 1,500 1,500 3.625% 3.726% February 6, 2024 2,250 2,250 2.875% 3.041% February 12, 2025 2,250 2,250 2.700% 2.772% November 3, 2025 3,000 3,000 3.125% 3.176% August 8, 2026 4,000 4,000 2.400% 2.464% February 6, 2027 4,000 4,000 3.300% 3.383% December 6, 2028 (a) 2,001 2,044 3.125% 3.218% May 2, 2033 (a) 629 642 2.625% 2.690% February 12, 2035 1,500 1,500 3.500% 3.604% November 3, 2035 1,000 1,000 4.200% 4.260% August 8, 2036 2,250 2,250 3.450% 3.510% February 6, 2037 2,500 2,500 4.100% 4.152% June 1, 2039 750 750 5.200% 5.240% October 1, 2040 1,000 1,000 4.500% 4.567% February 8, 2041 1,000 1,000 5.300% 5.361% November 15, 2042 900 900 3.500% 3.571% May 1, 2043 500 500 3.750% 3.829% December 15, 2043 500 500 4.875% 4.918% February 12, 2045 1,750 1,750 3.750% 3.800% November 3, 2045 3,000 3,000 4.450% 4.492% August 8, 2046 4,500 4,500 3.700% 3.743% February 6, 2047 3,000 3,000 4.250% 4.287% February 12, 2055 2,250 2,250 4.000% 4.063% November 3, 2055 1,000 1,000 4.750% 4.782% August 8, 2056 2,250 2,250 3.950% 4.033% February 6, 2057 2,000 2,000 4.500% 4.528% Total $ 73,799 $ 76,898 (a) Euro-denominated debt securities. |
UNEARNED REVENUE (Tables)
UNEARNED REVENUE (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Revenue From Contract With Customer [Abstract] | |
Unearned Revenue by Segment | Unearned revenue by segment was as follows: (In millions) December 31, June 30, Productivity and Business Processes $ 12,635 $ 14,864 Intelligent Cloud 12,551 14,706 More Personal Computing 2,898 3,150 Total $ 28,084 $ 32,720 |
Changes in Unearned Revenue | Changes in unearned revenue were as follows: (In millions) Six Months Ended December 31, 2018 Balance, beginning of period $ 32,720 Deferral of revenue 30,450 Recognition of unearned revenue (35,086 ) Balance, end of period $ 28,084 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Operating lease cost $ 413 $ 399 $ 823 $ 787 Finance lease cost: Amortization of right-of-use assets $ 84 $ 57 $ 162 $ 105 Interest on lease liabilities 59 44 114 74 Total finance lease cost $ 143 $ 101 $ 276 $ 179 |
Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 407 $ 375 $ 804 $ 744 Operating cash flows from finance leases 59 45 114 75 Financing cash flows from finance leases 54 31 101 56 Right-of-use assets obtained in exchange for lease obligations: Operating leases 472 308 968 699 Finance leases 645 650 1,064 1,378 |
Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows: (In millions, except lease term and discount rate) December 31, June 30, Operating Leases Operating lease right-of-use assets $ 6,806 $ 6,686 Other current liabilities $ 1,421 $ 1,399 Operating lease liabilities 5,683 5,568 Total operating lease liabilities $ 7,104 $ 6,967 Finance Leases Property and equipment, at cost $ 5,554 $ 4,543 Accumulated depreciation (566 ) (404 ) Property and equipment, net $ 4,988 $ 4,139 Other current liabilities $ 245 $ 176 Other long-term liabilities 4,965 4,125 Total finance lease liabilities $ 5,210 $ 4,301 Weighted Average Remaining Lease Term Operating leases 7 years 7 years Finance leases 13 years 13 years Weighted Average Discount Rate Operating leases 2.9% 2.7% Finance leases 4.9% 5.2% |
Maturities of Lease Liabilities | Maturities of lease liabilities were as follows: (In millions) Year Ending June 30, Operating Leases Finance Leases 2019 (excluding the six months ended December 31, 2018) $ 799 $ 241 2020 1,503 479 2021 1,244 487 2022 1,048 495 2023 861 498 Thereafter 2,439 4,934 Total lease payments 7,894 7,134 Less imputed interest (790 ) (1,924 ) Total $ 7,104 $ 5,210 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Share Repurchases | We repurchased the following shares of common stock under the share repurchase program: (In millions) Shares Amount Shares Amount Fiscal Year 2019 2018 First Quarter 24 $ 2,600 22 $ 1,600 Second Quarter 57 6,100 22 1,800 Total 81 $ 8,700 44 $ 3,400 |
Dividends Declared | Our Board of Directors declared the following dividends: Declaration Date Record Date Payment Date Dividend Per Share Amount Fiscal Year 2019 (in millions) September 18, 2018 November 15, 2018 December 13, 2018 $ 0.46 $ 3,544 November 28, 2018 February 21, 2019 March 14, 2019 0.46 3,535 Total $ 0.92 $ 7,079 Fiscal Year 2018 September 19, 2017 November 16, 2017 December 14, 2017 $ 0.42 $ 3,238 November 29, 2017 February 15, 2018 March 8, 2018 0.42 3,232 Total $ 0.84 $ 6,470 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component | The following table summarizes the changes in accumulated other comprehensive income (loss) by component: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Derivatives Balance, beginning of period $ 128 $ 28 $ 173 $ 134 Unrealized gains, net of tax of $3 $2 71 11 115 15 Reclassification adjustments for gains included in revenue (88 ) (19 ) (180 ) (130 ) Tax expense included in provision for income taxes 2 1 5 2 Amounts reclassified from accumulated other comprehensive income (loss) (86 ) (18 ) (175 ) (128 ) Net change related to derivatives, net of tax of $1 , $(3) (15 ) (7 ) (60 ) (113 ) Balance, end of period $ 113 $ 21 $ 113 $ 21 Investments Balance, beginning of period $ (1,178 ) $ 1,537 $ (850 ) $ 1,825 Unrealized gains (losses), net of tax of $234 $148 879 (390 ) 556 (317 ) Reclassification adjustments for (gains) losses included in other income (expense), net 2 (751 ) 80 (1,306 ) Tax expense (benefit) included in provision for income taxes 0 263 (16 ) 457 Amounts reclassified from accumulated other comprehensive income (loss) 2 (488 ) 64 (849 ) Net change related to investments, net of tax of $234 $164 881 (878 ) 620 (1,166 ) Cumulative effect of accounting changes 0 0 (67 ) 0 Balance, end of period $ (297 ) $ 659 $ (297 ) $ 659 Translation Adjustments and Other Balance, beginning of period $ (1,565 ) $ (1,039 ) $ (1,510 ) $ (1,332 ) Translation adjustments and other, net of tax of $(1) , $0, $(1) , (264 ) (40 ) (319 ) 253 Balance, end of period $ (1,829 ) $ (1,079 ) $ (1,829 ) $ (1,079 ) Accumulated other comprehensive loss, end of period $ (2,013 ) $ (399 ) $ (2,013 ) $ (399 ) |
SEGMENT INFORMATION AND GEOGR_2
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Revenue | Segment revenue and operating income were as follows during the periods presented: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Revenue Productivity and Business Processes $ 10,100 $ 8,953 $ 19,871 $ 17,191 Intelligent Cloud 9,378 7,795 17,945 14,717 More Personal Computing 12,993 12,170 23,739 21,548 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 Operating Income Productivity and Business Processes $ 4,015 $ 3,337 $ 7,896 $ 6,343 Intelligent Cloud 3,279 2,832 6,210 4,969 More Personal Computing 2,964 2,510 6,107 5,075 Total $ 10,258 $ 8,679 $ 20,213 $ 16,387 |
Segment Operating Income (Loss) | Segment revenue and operating income were as follows during the periods presented: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Revenue Productivity and Business Processes $ 10,100 $ 8,953 $ 19,871 $ 17,191 Intelligent Cloud 9,378 7,795 17,945 14,717 More Personal Computing 12,993 12,170 23,739 21,548 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 Operating Income Productivity and Business Processes $ 4,015 $ 3,337 $ 7,896 $ 6,343 Intelligent Cloud 3,279 2,832 6,210 4,969 More Personal Computing 2,964 2,510 6,107 5,075 Total $ 10,258 $ 8,679 $ 20,213 $ 16,387 |
Revenue Classified by Major Geographic Areas | Revenue, classified by the major geographic areas in which our customers were located, was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 United States (a) $ 16,787 $ 15,110 $ 31,527 $ 27,657 Other countries 15,684 13,808 30,028 25,799 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 (a) Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue. |
Revenue Classified by Significant Product and Service Offerings | Revenue from external customers, classified by significant product and service offerings, was as follows: (In millions) Three Months Ended December 31, Six Months Ended December 31, 2018 2017 2018 2017 Office products and cloud services $ 7,747 $ 7,075 $ 15,369 $ 13,651 Server products and cloud services 7,791 6,299 14,849 11,796 Windows 4,758 4,839 9,659 9,482 Gaming 4,232 3,920 6,970 5,816 Search advertising 1,976 1,820 3,764 3,459 1,693 1,312 3,223 2,460 Devices 1,948 1,478 3,209 2,632 Enterprise Services 1,521 1,435 2,971 2,806 Other 805 740 1,541 1,354 Total $ 32,471 $ 28,918 $ 61,555 $ 53,456 Our commercial cloud revenue, which includes Office 365 commercial, Azure, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, was $9.0 billion and $17.5 billion for the three and six months ended December 31, 2018, respectively, and $6.1 billion and $11.9 billion for the three and six months ended December 31, 2017, respectively. These amounts are primarily included in Office products and cloud services, Server products and cloud services, and LinkedIn in the table above. |
Accounting Policies - Additiona
Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jul. 01, 2018 | Jun. 30, 2018 |
Significant Accounting Policies [Line Items] | |||
Long-term accounts receivable, net of allowance for doubtful accounts | $ 1,900 | $ 1,800 | |
Retained earnings | 16,585 | 13,682 | |
Long-term deferred tax liabilities | 2,062 | 541 | |
Other current assets | $ 7,571 | $ 6,751 | |
Accounting Standards Update 2016-16 | |||
Significant Accounting Policies [Line Items] | |||
Retained earnings | $ 557 | ||
Long-term deferred tax assets | 2,800 | ||
Long-term deferred tax liabilities | 2,100 | ||
Other current assets | $ (152) |
Basic and Diluted Earnings Per
Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share Basic And Diluted [Abstract] | ||||
Net income (loss) available for common shareholders (A) | $ 8,420 | $ (6,302) | $ 17,244 | $ 274 |
Weighted average outstanding shares of common stock (B) | 7,692 | 7,710 | 7,683 | 7,709 |
Dilutive effect of stock-based awards | 76 | 0 | 84 | 90 |
Common stock and common stock equivalents (C) | 7,768 | 7,710 | 7,767 | 7,799 |
Earnings (Loss) Per Share | ||||
Basic (A/B) | $ 1.09 | $ (0.82) | $ 2.24 | $ 0.04 |
Diluted (A/C) | $ 1.08 | $ (0.82) | $ 2.22 | $ 0.04 |
Components of Other Income (Exp
Components of Other Income (Expense), Net (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Income And Expenses [Abstract] | ||||
Interest and dividends income | $ 704 | $ 530 | $ 1,385 | $ 1,003 |
Interest expense | (672) | (698) | (1,346) | (1,370) |
Net recognized gains on investments | 94 | 768 | 337 | 1,341 |
Net gains (losses) on derivatives | 41 | (84) | 38 | (134) |
Net losses on foreign currency remeasurements | (74) | (60) | (69) | (69) |
Other, net | 34 | 34 | 48 | (5) |
Total | $ 127 | $ 490 | $ 393 | $ 766 |
Net Recognized Gains (Losses) o
Net Recognized Gains (Losses) on Debt Investments (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | ||||
Realized gains from sales of available-for-sale securities | $ 6 | $ 5 | $ 13 | $ 18 |
Realized losses from sales of available-for-sale securities | (5) | (259) | (90) | (339) |
Total | 94 | 768 | 337 | 1,341 |
Debt Securities | ||||
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | ||||
Other-than-temporary impairments of investments | (7) | (4) | (7) | (5) |
Total | $ (6) | $ (258) | $ (84) | $ (326) |
Net Recognized Gains (Losses)_2
Net Recognized Gains (Losses) on Equity Investments (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | ||||
Net realized gains on investments sold | $ 30 | $ 1,046 | $ 233 | $ 1,692 |
Net unrealized gains on investments still held | 73 | 0 | 191 | 0 |
Total | 94 | 768 | 337 | 1,341 |
Equity Securities | ||||
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | ||||
Other-than-temporary impairments of investments | (3) | (20) | (3) | (25) |
Total | $ 100 | $ 1,026 | $ 421 | $ 1,667 |
Investment Components (Detail)
Investment Components (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | |
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | $ 124,631 | ||||||
Debt investments, Recorded Basis | 124,293 | ||||||
Derivative, net | 114 | $ 386 | |||||
Cash and cash equivalents | 6,638 | $ 15,137 | 11,946 | $ 12,859 | $ 6,884 | $ 7,663 | |
Short-term Investments | 121,024 | 121,822 | |||||
Equity Investments | 2,274 | 1,862 | |||||
Cash, cash equivalents, and investments | 129,936 | 135,630 | |||||
Equity investments | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Equity investments, Recorded Basis | 2,615 | 2,109 | |||||
Cash and cash equivalents | 321 | 246 | |||||
Short-term Investments | 20 | 1 | |||||
Equity Investments | 2,274 | 1,862 | |||||
Equity investments | Other | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Equity investments, Recorded Basis | 2,031 | 1,558 | |||||
Cash and cash equivalents | 0 | 0 | |||||
Short-term Investments | 0 | 1 | |||||
Equity Investments | 2,031 | 1,557 | |||||
Equity investments | Level 1 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Equity investments, Recorded Basis | 584 | 533 | |||||
Cash and cash equivalents | 321 | 246 | |||||
Short-term Investments | 20 | 0 | |||||
Equity Investments | 243 | 287 | |||||
Equity investments | Level 3 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Equity investments, Recorded Basis | 18 | ||||||
Cash and cash equivalents | 0 | ||||||
Short-term Investments | 0 | ||||||
Equity Investments | 18 | ||||||
Cash | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Cash | 3,039 | 3,942 | |||||
Cash and cash equivalents | 3,039 | 3,942 | |||||
Short-term Investments | 0 | 0 | |||||
Equity Investments | 0 | 0 | |||||
Derivatives, net | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Derivative, net | [1] | (11) | 104 | ||||
Cash and cash equivalents | [1] | 0 | 0 | ||||
Short-term Investments | [1] | (11) | 104 | ||||
Equity Investments | [1] | 0 | 0 | ||||
Debt investments | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 124,631 | 130,597 | |||||
Debt investments, Unrealized Gains | 475 | 125 | |||||
Debt investments, Unrealized Losses | (813) | (1,247) | |||||
Debt investments, Recorded Basis | 124,293 | 129,475 | |||||
Cash and cash equivalents | 3,278 | 7,758 | |||||
Short-term Investments | 121,015 | 121,717 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Commercial Paper | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 1,306 | 2,513 | |||||
Debt investments, Unrealized Gains | 0 | 0 | |||||
Debt investments, Unrealized Losses | 0 | 0 | |||||
Debt investments, Recorded Basis | 1,306 | 2,513 | |||||
Cash and cash equivalents | 1,207 | 2,215 | |||||
Short-term Investments | 99 | 298 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Certificates of deposit | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 1,440 | 2,058 | |||||
Debt investments, Unrealized Gains | 0 | 0 | |||||
Debt investments, Unrealized Losses | 0 | 0 | |||||
Debt investments, Recorded Basis | 1,440 | 2,058 | |||||
Cash and cash equivalents | 1,024 | 1,865 | |||||
Short-term Investments | 416 | 193 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | U.S. government securities | Level 1 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 103,915 | 108,120 | |||||
Debt investments, Unrealized Gains | 422 | 62 | |||||
Debt investments, Unrealized Losses | (707) | (1,167) | |||||
Debt investments, Recorded Basis | 103,630 | 107,015 | |||||
Cash and cash equivalents | 3 | 2,280 | |||||
Short-term Investments | 103,627 | 104,735 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | U.S. agency securities | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 290 | 1,742 | |||||
Debt investments, Unrealized Gains | 0 | 0 | |||||
Debt investments, Unrealized Losses | 0 | 0 | |||||
Debt investments, Recorded Basis | 290 | 1,742 | |||||
Cash and cash equivalents | 0 | 1,398 | |||||
Short-term Investments | 290 | 344 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Foreign government bonds | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 6,412 | 5,063 | |||||
Debt investments, Unrealized Gains | 1 | 1 | |||||
Debt investments, Unrealized Losses | (11) | (10) | |||||
Debt investments, Recorded Basis | 6,402 | 5,054 | |||||
Cash and cash equivalents | 1,029 | 0 | |||||
Short-term Investments | 5,373 | 5,054 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Foreign government bonds | Level 1 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 22 | ||||||
Debt investments, Unrealized Gains | 0 | ||||||
Debt investments, Unrealized Losses | 0 | ||||||
Debt investments, Recorded Basis | 22 | ||||||
Cash and cash equivalents | 0 | ||||||
Short-term Investments | 22 | ||||||
Equity Investments | 0 | ||||||
Debt investments | Mortgage- and asset-backed securities | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 3,540 | 3,864 | |||||
Debt investments, Unrealized Gains | 3 | 4 | |||||
Debt investments, Unrealized Losses | (15) | (13) | |||||
Debt investments, Recorded Basis | 3,528 | 3,855 | |||||
Cash and cash equivalents | 0 | 0 | |||||
Short-term Investments | 3,528 | 3,855 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Corporate notes and bonds | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 7,445 | 6,929 | |||||
Debt investments, Unrealized Gains | 14 | 21 | |||||
Debt investments, Unrealized Losses | (79) | (56) | |||||
Debt investments, Recorded Basis | 7,380 | 6,894 | |||||
Cash and cash equivalents | 15 | 0 | |||||
Short-term Investments | 7,365 | 6,894 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Corporate notes and bonds | Level 3 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 15 | 15 | |||||
Debt investments, Unrealized Gains | 0 | 0 | |||||
Debt investments, Unrealized Losses | 0 | 0 | |||||
Debt investments, Recorded Basis | 15 | 15 | |||||
Cash and cash equivalents | 0 | 0 | |||||
Short-term Investments | 15 | 15 | |||||
Equity Investments | 0 | 0 | |||||
Debt investments | Municipal securities | Level 2 | |||||||
Cash, Cash Equivalents and Investments [Line Items] | |||||||
Debt investments, Cost Basis | 268 | 271 | |||||
Debt investments, Unrealized Gains | 35 | 37 | |||||
Debt investments, Unrealized Losses | (1) | (1) | |||||
Debt investments, Recorded Basis | 302 | 307 | |||||
Cash and cash equivalents | 0 | 0 | |||||
Short-term Investments | 302 | 307 | |||||
Equity Investments | $ 0 | $ 0 | |||||
[1] | Refer to Note 5 – Derivatives for further information on the fair value of our derivative instruments. |
Investments - Additional Inform
Investments - Additional Information (Detail) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Investment [Line Items] | ||
Equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments | $ 1,100,000,000 | $ 697,000,000 |
U.S. Government and Agency Securities | ||
Investment [Line Items] | ||
Collateral received | $ 0 | $ 1,800,000,000 |
Unrealized Losses on Debt Inves
Unrealized Losses on Debt Investments (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | $ 23,053 | $ 91,037 |
Less than 12 Months - Unrealized Losses | (159) | (1,124) |
12 Months or Greater - Fair Value | 53,986 | 4,869 |
12 Months or Greater - Unrealized Losses | (654) | (123) |
Total Fair Value | 77,039 | 95,906 |
Total Unrealized Losses | (813) | (1,247) |
U.S. government and agency securities | ||
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | 16,776 | 82,352 |
Less than 12 Months - Unrealized Losses | (93) | (1,064) |
12 Months or Greater - Fair Value | 52,757 | 4,459 |
12 Months or Greater - Unrealized Losses | (614) | (103) |
Total Fair Value | 69,533 | 86,811 |
Total Unrealized Losses | (707) | (1,167) |
Foreign government bonds | ||
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | 51 | 3,457 |
Less than 12 Months - Unrealized Losses | (4) | (7) |
12 Months or Greater - Fair Value | 87 | 13 |
12 Months or Greater - Unrealized Losses | (7) | (3) |
Total Fair Value | 138 | 3,470 |
Total Unrealized Losses | (11) | (10) |
Mortgage- and asset-backed securities | ||
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | 1,825 | 2,072 |
Less than 12 Months - Unrealized Losses | (8) | (9) |
12 Months or Greater - Fair Value | 359 | 96 |
12 Months or Greater - Unrealized Losses | (7) | (4) |
Total Fair Value | 2,184 | 2,168 |
Total Unrealized Losses | (15) | (13) |
Corporate notes and bonds | ||
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | 4,372 | 3,111 |
Less than 12 Months - Unrealized Losses | (53) | (43) |
12 Months or Greater - Fair Value | 770 | 301 |
12 Months or Greater - Unrealized Losses | (26) | (13) |
Total Fair Value | 5,142 | 3,412 |
Total Unrealized Losses | (79) | (56) |
Municipal securities | ||
Unrealized Losses on Investments [Line Items] | ||
Less than 12 Months - Fair Value | 29 | 45 |
Less than 12 Months - Unrealized Losses | (1) | (1) |
12 Months or Greater - Fair Value | 13 | 0 |
12 Months or Greater - Unrealized Losses | 0 | 0 |
Total Fair Value | 42 | 45 |
Total Unrealized Losses | $ (1) | $ (1) |
Debt Investment Maturities (Det
Debt Investment Maturities (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Cost Basis | |
Due in one year or less | $ 39,245 |
Due after one year through five years | 58,499 |
Due after five years through 10 years | 26,009 |
Due after 10 years | 878 |
Debt investments, Cost Basis | 124,631 |
Estimated Fair Value | |
Due in one year or less | 39,040 |
Due after one year through five years | 58,306 |
Due after five years through 10 years | 26,077 |
Due after 10 years | 870 |
Total | $ 124,293 |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Derivative [Line Items] | ||
Minimum required liquidity under certain counterparty agreements | $ 1,000,000,000 | |
Minimum liquidity for the period as defined by certain counterparty agreements | 1,000,000,000 | |
Gross amounts of derivative assets, elected to offset | 233,000,000 | $ 533,000,000 |
Gross amounts of derivative liabilities, elected to offset | 294,000,000 | $ 207,000,000 |
Estimated derivative net gains (losses) included in AOCI that will be reclassified into earnings within 12 months | $ 116,000,000 | |
Senior Unsecured Obligations | ||
Derivative [Line Items] | ||
Debt instrument credit rating | AAA |
Notional Amounts of Outstanding
Notional Amounts of Outstanding Derivative Instruments Measured in U.S. Dollar Equivalents (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Designated as Hedging Instruments | Foreign Exchange Contracts | Derivatives Sold | ||
Derivative [Line Items] | ||
Notional amounts | $ 8,954 | $ 11,101 |
Not Designated as Hedging Instruments | Foreign Exchange Contracts | Derivatives Purchased | ||
Derivative [Line Items] | ||
Notional amounts | 10,171 | 9,425 |
Not Designated as Hedging Instruments | Foreign Exchange Contracts | Derivatives Sold | ||
Derivative [Line Items] | ||
Notional amounts | 12,089 | 13,374 |
Not Designated as Hedging Instruments | Equity Contracts | Derivatives Purchased | ||
Derivative [Line Items] | ||
Notional amounts | 51 | 49 |
Not Designated as Hedging Instruments | Equity Contracts | Derivatives Sold | ||
Derivative [Line Items] | ||
Notional amounts | 7 | 5 |
Not Designated as Hedging Instruments | Other Contracts | Derivatives Purchased | ||
Derivative [Line Items] | ||
Notional amounts | 1,302 | 878 |
Not Designated as Hedging Instruments | Other Contracts | Derivatives Sold | ||
Derivative [Line Items] | ||
Notional amounts | $ 468 | $ 472 |
Fair Values of Derivative Instr
Fair Values of Derivative Instruments (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Derivatives Fair Value [Line Items] | ||
Derivative Assets | $ 242 | $ 538 |
Gross amounts of derivatives offset in the balance sheet, assets | (128) | (152) |
Cash collateral received, assets | 0 | 0 |
Net amounts of derivatives, assets | 114 | 386 |
Derivative Liabilities | (294) | (207) |
Gross amounts of derivatives offset in the balance sheet, liabilities | 128 | 153 |
Cash collateral received, liabilities | (112) | (235) |
Net amounts of derivatives, liabilities | (278) | (289) |
Level 1 | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 2 | 1 |
Derivative Liabilities | (3) | (1) |
Level 2 | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 238 | 535 |
Derivative Liabilities | (291) | (206) |
Level 3 | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 2 | 2 |
Derivative Liabilities | 0 | 0 |
Designated as Hedging Instruments | Foreign Exchange Contracts | Cash Flow Hedges | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 112 | 174 |
Derivative Liabilities | 0 | 0 |
Designated as Hedging Instruments | Foreign Exchange Contracts | Fair Value Hedges | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 2 | 95 |
Derivative Liabilities | (133) | 0 |
Not Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 113 | 256 |
Derivative Liabilities | (93) | (197) |
Not Designated as Hedging Instruments | Equity Contracts | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 2 | 2 |
Derivative Liabilities | (59) | (7) |
Not Designated as Hedging Instruments | Other Contracts | ||
Derivatives Fair Value [Line Items] | ||
Derivative Assets | 13 | 11 |
Derivative Liabilities | (9) | (3) |
Short-term Investments | ||
Derivatives Fair Value [Line Items] | ||
Net amounts of derivatives, assets | (11) | 104 |
Other Current Assets | ||
Derivatives Fair Value [Line Items] | ||
Net amounts of derivatives, assets | 121 | 260 |
Other Long-term Assets | ||
Derivatives Fair Value [Line Items] | ||
Net amounts of derivatives, assets | 4 | 22 |
Other Current Liabilities | ||
Derivatives Fair Value [Line Items] | ||
Net amounts of derivatives, liabilities | (269) | (288) |
Other Long-term Liabilities | ||
Derivatives Fair Value [Line Items] | ||
Net amounts of derivatives, liabilities | $ (9) | $ (1) |
Gains (Losses) on Fair Value He
Gains (Losses) on Fair Value Hedges and Related Hedged Items (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Foreign Exchange Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivatives | $ (139) | $ 14 | $ 11 | $ 36 |
Hedged items | 184 | 12 | 62 | 10 |
Total amount of ineffectiveness | 45 | 26 | 73 | 46 |
Equity Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivatives | 0 | (71) | 0 | (307) |
Hedged items | 0 | 71 | 0 | 307 |
Total amount of ineffectiveness | 0 | 0 | 0 | 0 |
Amount of equity contracts excluded from effectiveness assessment | $ 0 | $ 20 | $ 0 | $ 60 |
Gains (Losses) Related to Cash
Gains (Losses) Related to Cash Flow Hedges (Detail) - Designated as Hedging Instruments - Foreign Exchange Contracts - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Portion | ||||
Gains recognized in other comprehensive income (loss), net of tax of $3, $1, $3, and $1 | $ 70 | $ 10 | $ 114 | $ 15 |
Gains reclassified from accumulated other comprehensive income (loss) into revenue | 88 | 19 | 180 | 130 |
Amount Excluded from Effectiveness Assessment and Ineffective Portion | ||||
Losses recognized in other income (expense), net | $ (14) | $ (73) | $ (41) | $ (164) |
Gains (Losses) Related to Cas_2
Gains (Losses) Related to Cash Flow Hedges (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Designated as Hedging Instruments | Foreign Exchange Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gains recognized in other comprehensive income (loss), tax | $ 3 | $ 1 | $ 3 | $ 1 |
Non-designated Derivative Gains
Non-designated Derivative Gains (Losses) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Changes in fair value of derivatives not designated as hedges | $ (71) | $ (166) | $ (104) | $ (253) |
Foreign Exchange Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Changes in fair value of derivatives not designated as hedges | (79) | (115) | (109) | (184) |
Equity Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Changes in fair value of derivatives not designated as hedges | 0 | (49) | 1 | (78) |
Other Contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Changes in fair value of derivatives not designated as hedges | $ 8 | $ (2) | $ 4 | $ 9 |
Components of Inventories (Deta
Components of Inventories (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 455 | $ 655 |
Work in process | 61 | 54 |
Finished goods | 1,445 | 1,953 |
Total | $ 1,961 | $ 2,662 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) $ in Millions | Oct. 25, 2018USD ($) | Dec. 31, 2018USD ($)Acquisition |
GitHub Inc | ||
Business Acquisition [Line Items] | ||
Acquisition date | Oct. 25, 2018 | |
Total consideration transferred | $ 7,500 | |
Cash paid to acquire the business | 1,300 | |
Transactions recognized separately from preliminary purchase price allocation | $ 600 | |
Other | ||
Business Acquisition [Line Items] | ||
Cash paid to acquire the business | $ 959 | |
Business combination, number of business acquisitions | Acquisition | 11 |
Major Classes of Assets and Lia
Major Classes of Assets and Liabilities Allocated Purchase Price (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 25, 2018 | Jun. 30, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 41,577 | $ 35,683 | |
GitHub Inc | |||
Business Acquisition [Line Items] | |||
Cash, cash equivalents, and short-term investments | $ 234 | ||
Goodwill | 5,400 | 5,441 | |
Intangible assets | $ 1,300 | 1,298 | |
Other assets | 157 | ||
Other liabilities | (206) | ||
Total | $ 6,924 |
Acquired Intangible Assets (Det
Acquired Intangible Assets (Detail) - GitHub Inc - USD ($) $ in Millions | Oct. 25, 2018 | Dec. 31, 2018 |
Acquired Finite Lived Intangible Assets [Line Items] | ||
Amount | $ 1,298 | $ 1,300 |
Weighted Average Life | 7 years | |
Customer-related | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Amount | $ 679 | |
Weighted Average Life | 8 years | |
Technology-based | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Amount | $ 447 | |
Weighted Average Life | 5 years | |
Marketing-related | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Amount | $ 170 | |
Weighted Average Life | 10 years | |
Contract-based | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Amount | $ 2 | |
Weighted Average Life | 2 years |
Carrying Amount of Goodwill (De
Carrying Amount of Goodwill (Detail) $ in Millions | 6 Months Ended | |
Dec. 31, 2018USD ($) | ||
Goodwill [Line Items] | ||
Beginning Balance | $ 35,683 | |
Acquisitions | 6,016 | |
Other | (122) | |
Ending Balance | 41,577 | |
Productivity and Business Processes | ||
Goodwill [Line Items] | ||
Beginning Balance | 23,823 | |
Acquisitions | 326 | |
Other | (68) | |
Ending Balance | 24,081 | |
Intelligent Cloud | ||
Goodwill [Line Items] | ||
Beginning Balance | 5,703 | |
Acquisitions | 5,484 | [1] |
Other | (20) | |
Ending Balance | 11,167 | |
More Personal Computing | ||
Goodwill [Line Items] | ||
Beginning Balance | 6,157 | |
Acquisitions | 206 | |
Other | (34) | |
Ending Balance | $ 6,329 | |
[1] | Includes goodwill of $5.4 billion related to GitHub. See Note 7 – Business Combinations for further information. |
Carrying Amount of Goodwill (Pa
Carrying Amount of Goodwill (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 25, 2018 | Jun. 30, 2018 |
Goodwill [Line Items] | |||
Goodwill | $ 41,577 | $ 35,683 | |
GitHub Inc | |||
Goodwill [Line Items] | |||
Goodwill | $ 5,400 | $ 5,441 |
Finite-Lived Intangible Assets
Finite-Lived Intangible Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 17,040 | [1] | $ 15,936 |
Accumulated Amortization | (8,558) | (7,883) | |
Net Carrying Amount | 8,482 | 8,053 | |
Technology-based | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 7,548 | 7,220 | |
Accumulated Amortization | (5,383) | (5,018) | |
Net Carrying Amount | 2,165 | 2,202 | |
Customer-related | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 4,741 | 4,031 | |
Accumulated Amortization | (1,487) | (1,205) | |
Net Carrying Amount | 3,254 | 2,826 | |
Marketing-related | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 4,177 | 4,006 | |
Accumulated Amortization | (1,197) | (1,071) | |
Net Carrying Amount | 2,980 | 2,935 | |
Contract-based | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 574 | 679 | |
Accumulated Amortization | (491) | (589) | |
Net Carrying Amount | $ 83 | $ 90 | |
[1] | Includes intangible assets of $1.3 billion related to GitHub. See Note 7 – Business Combinations for further information. |
Finite-Lived Intangible Asset_2
Finite-Lived Intangible Assets (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Oct. 25, 2018 |
GitHub Inc | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets | $ 1,300 | $ 1,298 |
Intangible Assets - Additional
Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Intangible assets amortization expense | $ 530 | $ 562 | $ 1,100 | $ 1,100 |
Estimated Future Amortization E
Estimated Future Amortization Expense Related to Intangible Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Year Ending June 30, 2019 (excluding the six months ended December 31, 2018) | $ 871 | |
Year Ending June 30, 2020 | 1,503 | |
Year Ending June 30, 2021 | 1,282 | |
Year Ending June 30, 2022 | 1,182 | |
Year Ending June 30, 2023 | 1,009 | |
Thereafter | 2,635 | |
Net Carrying Amount | $ 8,482 | $ 8,053 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | Dec. 31, 2018 | Jun. 30, 2018 |
Debt Disclosure [Abstract] | ||
Commercial paper | $ 0 | $ 0 |
Long-term debt | 73,200,000,000 | 76,200,000,000 |
Long-term debt fair value | 74,200,000,000 | 77,500,000,000 |
Debt issuance costs and unamortized discount | $ 630,000,000 | $ 658,000,000 |
Long-term Debt (Detail)
Long-term Debt (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | ||
Debt Instrument [Line Items] | |||
Face Value | $ 73,799 | $ 76,898 | |
Notes 1.30 Percent Due November 3rd 2018 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2018 | Nov. 3, 2018 | |
Face Value | $ 0 | $ 1,750 | |
Stated Interest Rate | 1.30% | 1.30% | |
Effective Interest Rate | 1.396% | 1.396% | |
Notes 1.625 Percent Due December 6th 2018 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Dec. 6, 2018 | Dec. 6, 2018 | |
Face Value | $ 0 | $ 1,250 | |
Stated Interest Rate | 1.625% | 1.625% | |
Effective Interest Rate | 1.824% | 1.824% | |
Notes 4.2 Percent Due June 1st 2019 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Jun. 1, 2019 | Jun. 1, 2019 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 4.20% | 4.20% | |
Effective Interest Rate | 4.379% | 4.379% | |
Notes 1.1 Percent Due August 8th 2019 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2019 | Aug. 8, 2019 | |
Face Value | $ 2,500 | $ 2,500 | |
Stated Interest Rate | 1.10% | 1.10% | |
Effective Interest Rate | 1.203% | 1.203% | |
Notes 0.500 Percent Due November 1st 2019 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 1, 2019 | Nov. 1, 2019 | |
Face Value | $ 18 | $ 18 | |
Stated Interest Rate | 0.50% | 0.50% | |
Effective Interest Rate | 0.50% | 0.50% | |
Notes 1.850 Percent Due February 6th 2020 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2020 | Feb. 6, 2020 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 1.85% | 1.85% | |
Effective Interest Rate | 1.952% | 1.952% | |
Notes 1.850 Percent Due February 12th 2020 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2020 | Feb. 12, 2020 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 1.85% | 1.85% | |
Effective Interest Rate | 1.935% | 1.935% | |
Notes 3.0 Percent Due October 1st 2020 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Oct. 1, 2020 | Oct. 1, 2020 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 3.00% | 3.00% | |
Effective Interest Rate | 3.137% | 3.137% | |
Notes 2.0 Percent Due November 3rd 2020 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2020 | Nov. 3, 2020 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 2.00% | 2.00% | |
Effective Interest Rate | 2.093% | 2.093% | |
Notes 4.0 Percent Due February 8th 2021 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 8, 2021 | Feb. 8, 2021 | |
Face Value | $ 500 | $ 500 | |
Stated Interest Rate | 4.00% | 4.00% | |
Effective Interest Rate | 4.082% | 4.082% | |
Notes 1.55 Percent Due August 8th 2021 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2021 | Aug. 8, 2021 | |
Face Value | $ 2,750 | $ 2,750 | |
Stated Interest Rate | 1.55% | 1.55% | |
Effective Interest Rate | 1.642% | 1.642% | |
Notes 2.125 Percent Due December 6th 2021 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | [1] | Dec. 6, 2021 | Dec. 6, 2021 |
Face Value | [1] | $ 2,001 | $ 2,044 |
Stated Interest Rate | [1] | 2.125% | 2.125% |
Effective Interest Rate | [1] | 2.233% | 2.233% |
Notes 2.40 Percent Due February 6th 2022 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2022 | Feb. 6, 2022 | |
Face Value | $ 1,750 | $ 1,750 | |
Stated Interest Rate | 2.40% | 2.40% | |
Effective Interest Rate | 2.52% | 2.52% | |
Notes 2.375 Percent Due February 12th 2022 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2022 | Feb. 12, 2022 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 2.375% | 2.375% | |
Effective Interest Rate | 2.466% | 2.466% | |
Notes 2.65 Percent Due November 3rd 2022 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2022 | Nov. 3, 2022 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 2.65% | 2.65% | |
Effective Interest Rate | 2.717% | 2.717% | |
Notes 2.125 Percent Due November 15th 2022 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 15, 2022 | Nov. 15, 2022 | |
Face Value | $ 750 | $ 750 | |
Stated Interest Rate | 2.125% | 2.125% | |
Effective Interest Rate | 2.239% | 2.239% | |
Notes 2.375 Percent Due May 1st 2023 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | May 1, 2023 | May 1, 2023 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 2.375% | 2.375% | |
Effective Interest Rate | 2.465% | 2.465% | |
Notes 2.0 Percent Due August 8th 2023 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2023 | Aug. 8, 2023 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 2.00% | 2.00% | |
Effective Interest Rate | 2.101% | 2.101% | |
Notes 3.625 Percent Due December 15th 2023 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Dec. 15, 2023 | Dec. 15, 2023 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 3.625% | 3.625% | |
Effective Interest Rate | 3.726% | 3.726% | |
Notes 2.875 Percent Due February 6th 2024 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2024 | Feb. 6, 2024 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 2.875% | 2.875% | |
Effective Interest Rate | 3.041% | 3.041% | |
Notes 2.70 Percent Due February 12th 2025 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2025 | Feb. 12, 2025 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 2.70% | 2.70% | |
Effective Interest Rate | 2.772% | 2.772% | |
Notes 3.125 Percent Due November 3rd 2025 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2025 | Nov. 3, 2025 | |
Face Value | $ 3,000 | $ 3,000 | |
Stated Interest Rate | 3.125% | 3.125% | |
Effective Interest Rate | 3.176% | 3.176% | |
Notes 2.4 Percent Due August 8th 2026 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2026 | Aug. 8, 2026 | |
Face Value | $ 4,000 | $ 4,000 | |
Stated Interest Rate | 2.40% | 2.40% | |
Effective Interest Rate | 2.464% | 2.464% | |
Notes 3.3 Percent Due February 6th 2027 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2027 | Feb. 6, 2027 | |
Face Value | $ 4,000 | $ 4,000 | |
Stated Interest Rate | 3.30% | 3.30% | |
Effective Interest Rate | 3.383% | 3.383% | |
Notes 3.125 Percent Due December 6th 2028 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | [1] | Dec. 6, 2028 | Dec. 6, 2028 |
Face Value | [1] | $ 2,001 | $ 2,044 |
Stated Interest Rate | [1] | 3.125% | 3.125% |
Effective Interest Rate | [1] | 3.218% | 3.218% |
Notes 2.625 Percent Due May 2nd 2033 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | [1] | May 2, 2033 | May 2, 2033 |
Face Value | [1] | $ 629 | $ 642 |
Stated Interest Rate | [1] | 2.625% | 2.625% |
Effective Interest Rate | [1] | 2.69% | 2.69% |
Notes 3.50 Percent Due February 12th 2035 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2035 | Feb. 12, 2035 | |
Face Value | $ 1,500 | $ 1,500 | |
Stated Interest Rate | 3.50% | 3.50% | |
Effective Interest Rate | 3.604% | 3.604% | |
Notes 4.2 Percent Due November 3rd 2035 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2035 | Nov. 3, 2035 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 4.20% | 4.20% | |
Effective Interest Rate | 4.26% | 4.26% | |
Notes 3.45 Percent Due August 8th 2036 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2036 | Aug. 8, 2036 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 3.45% | 3.45% | |
Effective Interest Rate | 3.51% | 3.51% | |
Notes 4.1 Percent Due February 6th 2037 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2037 | Feb. 6, 2037 | |
Face Value | $ 2,500 | $ 2,500 | |
Stated Interest Rate | 4.10% | 4.10% | |
Effective Interest Rate | 4.152% | 4.152% | |
Notes 5.2 Percent Due June 1st 2039 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Jun. 1, 2039 | Jun. 1, 2039 | |
Face Value | $ 750 | $ 750 | |
Stated Interest Rate | 5.20% | 5.20% | |
Effective Interest Rate | 5.24% | 5.24% | |
Notes 4.5 Percent Due October 1st 2040 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Oct. 1, 2040 | Oct. 1, 2040 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 4.50% | 4.50% | |
Effective Interest Rate | 4.567% | 4.567% | |
Notes 5.3 Percent Due February 8th 2041 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 8, 2041 | Feb. 8, 2041 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 5.30% | 5.30% | |
Effective Interest Rate | 5.361% | 5.361% | |
Notes 3.5 Percent Due November 15th 2042 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 15, 2042 | Nov. 15, 2042 | |
Face Value | $ 900 | $ 900 | |
Stated Interest Rate | 3.50% | 3.50% | |
Effective Interest Rate | 3.571% | 3.571% | |
Notes 3.750 Percent Due May 1st 2043 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | May 1, 2043 | May 1, 2043 | |
Face Value | $ 500 | $ 500 | |
Stated Interest Rate | 3.75% | 3.75% | |
Effective Interest Rate | 3.829% | 3.829% | |
Notes 4.875 Percent Due December 15th 2043 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Dec. 15, 2043 | Dec. 15, 2043 | |
Face Value | $ 500 | $ 500 | |
Stated Interest Rate | 4.875% | 4.875% | |
Effective Interest Rate | 4.918% | 4.918% | |
Notes 3.750 Percent Due February 12th 2045 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2045 | Feb. 12, 2045 | |
Face Value | $ 1,750 | $ 1,750 | |
Stated Interest Rate | 3.75% | 3.75% | |
Effective Interest Rate | 3.80% | 3.80% | |
Notes 4.45 Percent Due November 3rd 2045 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2045 | Nov. 3, 2045 | |
Face Value | $ 3,000 | $ 3,000 | |
Stated Interest Rate | 4.45% | 4.45% | |
Effective Interest Rate | 4.492% | 4.492% | |
Notes 3.7 Percent Due August 8th 2046 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2046 | Aug. 8, 2046 | |
Face Value | $ 4,500 | $ 4,500 | |
Stated Interest Rate | 3.70% | 3.70% | |
Effective Interest Rate | 3.743% | 3.743% | |
Notes 4.25 Percent Due February 6th 2047 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2047 | Feb. 6, 2047 | |
Face Value | $ 3,000 | $ 3,000 | |
Stated Interest Rate | 4.25% | 4.25% | |
Effective Interest Rate | 4.287% | 4.287% | |
Notes 4.0 Percent Due February 12th 2055 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 12, 2055 | Feb. 12, 2055 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 4.00% | 4.00% | |
Effective Interest Rate | 4.063% | 4.063% | |
Notes 4.75 Percent Due November 3rd 2055 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Nov. 3, 2055 | Nov. 3, 2055 | |
Face Value | $ 1,000 | $ 1,000 | |
Stated Interest Rate | 4.75% | 4.75% | |
Effective Interest Rate | 4.782% | 4.782% | |
Notes 3.95 Percent Due August 8th 2056 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Aug. 8, 2056 | Aug. 8, 2056 | |
Face Value | $ 2,250 | $ 2,250 | |
Stated Interest Rate | 3.95% | 3.95% | |
Effective Interest Rate | 4.033% | 4.033% | |
Notes 4.5 Percent Due February 6th 2057 | |||
Debt Instrument [Line Items] | |||
Debt maturity date | Feb. 6, 2057 | Feb. 6, 2057 | |
Face Value | $ 2,000 | $ 2,000 | |
Stated Interest Rate | 4.50% | 4.50% | |
Effective Interest Rate | 4.528% | 4.528% | |
[1] | Euro-denominated debt securities. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2018 | |
Income Taxes [Line Items] | |||||
Effective tax rate | 19.00% | 169.00% | 16.00% | 98.00% | |
U.S. federal statutory tax rate | 21.00% | 35.00% | |||
Provision for income taxes | $ 1,965 | $ 15,471 | $ 3,362 | $ 16,879 | |
Long-term income taxes | 29,161 | 29,161 | $ 30,265 | ||
Tax Cuts and Jobs Act | |||||
Income Taxes [Line Items] | |||||
Provision for income taxes | 157 | 13,800 | 13,700 | ||
Charge related to transition tax | 17,800 | 17,900 | |||
Benefit from impact of changes in tax rate | $ 4,000 | 4,200 | |||
Income Tax Contingencies and Other Income Tax Liabilities | |||||
Income Taxes [Line Items] | |||||
Long-term income taxes | $ 15,400 | $ 15,400 | $ 15,100 |
Income Taxes - Additional Inf_2
Income Taxes - Additional Information Regarding Examinations (Detail) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Sep. 30, 2015 | Mar. 31, 2011 | Dec. 31, 2018 | |
Earliest Tax Year | Foreign Country | ||||
Income Tax Examination [Line Items] | ||||
Tax years subject to examination | 1,996 | |||
Latest Tax Year | Foreign Country | ||||
Income Tax Examination [Line Items] | ||||
Tax years subject to examination | 2,018 | |||
Internal Revenue Service (IRS) | Earliest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Tax years under audit | 2,010 | 2,007 | 2,004 | |
Tax years subject to examination | 2,014 | |||
Internal Revenue Service (IRS) | Latest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Tax years under audit | 2,013 | 2,009 | 2,006 | |
Tax years subject to examination | 2,017 |
Unearned Revenue by Segment (De
Unearned Revenue by Segment (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Contract With Customer Liability [Line Items] | ||
Unearned revenue | $ 28,084 | $ 32,720 |
Productivity and Business Processes | ||
Contract With Customer Liability [Line Items] | ||
Unearned revenue | 12,635 | 14,864 |
Intelligent Cloud | ||
Contract With Customer Liability [Line Items] | ||
Unearned revenue | 12,551 | 14,706 |
More Personal Computing | ||
Contract With Customer Liability [Line Items] | ||
Unearned revenue | $ 2,898 | $ 3,150 |
Changes in Unearned Revenue (De
Changes in Unearned Revenue (Detail) $ in Millions | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Balance, beginning of period | $ 32,720 |
Deferral of revenue | 30,450 |
Recognition of unearned revenue | (35,086) |
Balance, end of period | $ 28,084 |
Unearned Revenue - Additional I
Unearned Revenue - Additional Information (Detail) $ in Billions | Dec. 31, 2018USD ($) |
Revenue From Contract With Customer [Abstract] | |
Revenue allocated to remaining performance obligations | $ 72 |
Unearned Revenue - Remaining Pe
Unearned Revenue - Remaining Performance Obligation - Additional Information (Detail) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-01-01 | Dec. 31, 2018 |
Contract With Customer Liability [Line Items] | |
Revenue allocated to remaining performance obligations, percentage of revenue expected to be recognized | 60.00% |
Revenue allocated to remaining performance obligations, expected timing of satisfaction | 12 months |
Leases - Additional Information
Leases - Additional Information (Detail) $ in Billions | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Operating Lease | |
Leases [Line Items] | |
Additional leases, primarily for datacenters, that have not yet commenced | $ 2.7 |
Finance Lease | |
Leases [Line Items] | |
Additional leases, primarily for datacenters, that have not yet commenced | $ 6.4 |
Lower Limit | |
Leases [Line Items] | |
Operating and Finance leases, remaining lease terms | 1 year |
Additional operating leases that have not yet commenced, lease terms | 1 year |
Additional finance leases that have not yet commenced, lease terms | 1 year |
Upper Limit | |
Leases [Line Items] | |
Operating and Finance leases, remaining lease terms | 20 years |
Operating leases, options to extend leases term | 5 years |
Finance leases, options to extend leases term | 5 years |
Operating and Finance leases, options to terminate leases term | 1 year |
Additional operating leases that have not yet commenced, lease terms | 16 years |
Additional finance leases that have not yet commenced, lease terms | 16 years |
Components of Lease Expense (De
Components of Lease Expense (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Leases [Abstract] | ||||
Operating lease cost | $ 413 | $ 399 | $ 823 | $ 787 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 84 | 57 | 162 | 105 |
Interest on lease liabilities | 59 | 44 | 114 | 74 |
Total finance lease cost | $ 143 | $ 101 | $ 276 | $ 179 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information Related to Leases (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ 407 | $ 375 | $ 804 | $ 744 |
Operating cash flows from finance leases | 59 | 45 | 114 | 75 |
Financing cash flows from finance leases | 54 | 31 | 101 | 56 |
Right-of-use assets obtained in exchange for lease obligations: | ||||
Operating leases | 472 | 308 | 968 | 699 |
Finance leases | $ 645 | $ 650 | $ 1,064 | $ 1,378 |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information Related to Leases (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Operating Leases | ||
Operating lease right-of-use assets | $ 6,806 | $ 6,686 |
Total operating lease liabilities | 7,104 | 6,967 |
Finance Leases | ||
Accumulated depreciation | (33,082) | (29,223) |
Property and equipment, net | 32,717 | 29,460 |
Total finance lease liabilities | $ 5,210 | $ 4,301 |
Weighted Average Remaining Lease Term | ||
Operating leases | 7 years | 7 years |
Finance leases | 13 years | 13 years |
Weighted Average Discount Rate | ||
Operating leases | 2.90% | 2.70% |
Finance leases | 4.90% | 5.20% |
Finance Lease | ||
Finance Leases | ||
Property and equipment, at cost | $ 5,554 | $ 4,543 |
Accumulated depreciation | (566) | (404) |
Property and equipment, net | 4,988 | 4,139 |
Other Current Liabilities | ||
Operating Leases | ||
Total operating lease liabilities | 1,421 | 1,399 |
Finance Leases | ||
Total finance lease liabilities | 245 | 176 |
Operating Lease Liabilities | ||
Operating Leases | ||
Total operating lease liabilities | 5,683 | 5,568 |
Other Long-term Liabilities | ||
Finance Leases | ||
Total finance lease liabilities | $ 4,965 | $ 4,125 |
Maturities of lease liabilities
Maturities of lease liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2018 | Jun. 30, 2018 |
Leases [Abstract] | ||
Operating Leases, Year Ending June 30, 2019 (excluding six months ended December 31, 2018) | $ 799 | |
Operating Leases, Year Ending June 30, 2020 | 1,503 | |
Operating Leases, Year Ending June 30, 2021 | 1,244 | |
Operating Leases, Year Ending June 30, 2022 | 1,048 | |
Operating Leases, Year Ending June 30, 2023 | 861 | |
Operating Leases, Thereafter | 2,439 | |
Operating Leases, Total lease payments | 7,894 | |
Operating Leases, Less imputed interest | (790) | |
Operating Leases | 7,104 | $ 6,967 |
Finance Leases, Year Ending June 30, 2019 (excluding the six months ended December 31, 2018) | 241 | |
Finance Leases, Year Ending June 30, 2020 | 479 | |
Finance Leases, Year Ending June 30, 2021 | 487 | |
Finance Leases, Year Ending June 30, 2022 | 495 | |
Finance Leases, Year Ending June 30, 2023 | 498 | |
Finance Leases, Thereafter | 4,934 | |
Finance Leases, Total lease payments | 7,134 | |
Finance Leases, Less imputed interest | (1,924) | |
Finance Leases | $ 5,210 | $ 4,301 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) $ in Millions | Dec. 31, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Accrual for disclosed loss contingencies, current, ending balance | $ 273 |
Amount not accrued for estimated maximum losses for disclosed loss contingencies | $ 1,000 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - Share Repurchase Program 2016 - USD ($) | Dec. 31, 2018 | Sep. 20, 2016 |
Share Repurchases [Line Items] | ||
Amount available for repurchase under the share repurchase program approved by the company's Board of Directors | $ 40,000,000,000 | |
Unused amount of share repurchase program | $ 19,500,000,000 |
Share Repurchases (Detail)
Share Repurchases (Detail) - Share Repurchase Program 2016 - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share Repurchases [Line Items] | ||||||
Shares of common stock repurchased | 57 | 24 | 22 | 22 | 81 | 44 |
Value of common stock repurchased | $ 6,100 | $ 2,600 | $ 1,800 | $ 1,600 | $ 8,700 | $ 3,400 |
Dividends Declared (Detail)
Dividends Declared (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||||||
Declaration Date | Nov. 28, 2018 | Sep. 18, 2018 | Nov. 29, 2017 | Sep. 19, 2017 | ||
Record Date | Feb. 21, 2019 | Nov. 15, 2018 | Feb. 15, 2018 | Nov. 16, 2017 | ||
Payment Date | Mar. 14, 2019 | Dec. 13, 2018 | Mar. 8, 2018 | Dec. 14, 2017 | ||
Dividend Per Share | $ 0.46 | $ 0.46 | $ 0.42 | $ 0.42 | $ 0.92 | $ 0.84 |
Amount | $ 3,535 | $ 3,544 | $ 3,232 | $ 3,238 | $ 7,079 | $ 6,470 |
Summary of Changes in Accumulat
Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, beginning of period | $ 82,718 | |||
Net change related to other comprehensive income (loss) | $ 602 | $ (925) | 241 | $ (1,026) |
Balance, end of period | 92,128 | 78,360 | 92,128 | 78,360 |
Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, beginning of period | 128 | 28 | 173 | 134 |
Unrealized gains (losses), net of tax | 71 | 11 | 115 | 15 |
Tax expense (benefit) included in provision for income taxes | 2 | 1 | 5 | 2 |
Amounts reclassified from accumulated other comprehensive income (loss) | (86) | (18) | (175) | (128) |
Net change related to other comprehensive income (loss) | (15) | (7) | (60) | (113) |
Balance, end of period | 113 | 21 | 113 | 21 |
Derivatives | Revenue | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification adjustments for (gains) losses | (88) | (19) | (180) | (130) |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, beginning of period | (1,178) | 1,537 | (850) | 1,825 |
Unrealized gains (losses), net of tax | 879 | (390) | 556 | (317) |
Tax expense (benefit) included in provision for income taxes | 0 | 263 | (16) | 457 |
Amounts reclassified from accumulated other comprehensive income (loss) | 2 | (488) | 64 | (849) |
Net change related to other comprehensive income (loss) | 881 | (878) | 620 | (1,166) |
Cumulative effect of accounting changes | 0 | 0 | (67) | 0 |
Balance, end of period | (297) | 659 | (297) | 659 |
Investments | Other income (expense), net | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification adjustments for (gains) losses | 2 | (751) | 80 | (1,306) |
Translation adjustments and other | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, beginning of period | (1,565) | (1,039) | (1,510) | (1,332) |
Net change related to other comprehensive income (loss) | (264) | (40) | (319) | 253 |
Balance, end of period | (1,829) | (1,079) | (1,829) | (1,079) |
Accumulated other comprehensive loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance, beginning of period | (2,615) | 526 | (2,187) | 627 |
Net change related to other comprehensive income (loss) | 602 | (925) | 241 | (1,026) |
Cumulative effect of accounting changes | 0 | 0 | (67) | 0 |
Balance, end of period | $ (2,013) | $ (399) | $ (2,013) | $ (399) |
Summary of Changes in Accumul_2
Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivatives | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Unrealized gains (losses), tax | $ 3 | $ 1 | $ 2 | $ 1 |
Net change related to other comprehensive income (loss), tax | 1 | 0 | (3) | (1) |
Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Unrealized gains (losses), tax | 234 | (211) | 148 | (161) |
Net change related to other comprehensive income (loss), tax | 234 | (474) | 164 | (618) |
Translation adjustments and other | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Net change related to other comprehensive income (loss), tax | $ (1) | $ 0 | $ (1) | $ (1) |
Segment Revenue (Detail)
Segment Revenue (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 32,471 | $ 28,918 | $ 61,555 | $ 53,456 |
Productivity and Business Processes | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 10,100 | 8,953 | 19,871 | 17,191 |
Intelligent Cloud | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 9,378 | 7,795 | 17,945 | 14,717 |
More Personal Computing | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 12,993 | $ 12,170 | $ 23,739 | $ 21,548 |
Operating Income (Loss) by Segm
Operating Income (Loss) by Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | $ 10,258 | $ 8,679 | $ 20,213 | $ 16,387 |
Productivity and Business Processes | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | 4,015 | 3,337 | 7,896 | 6,343 |
Intelligent Cloud | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | 3,279 | 2,832 | 6,210 | 4,969 |
More Personal Computing | ||||
Segment Reporting Information [Line Items] | ||||
Operating Income (Loss) | $ 2,964 | $ 2,510 | $ 6,107 | $ 5,075 |
Segment Information and Geogr_3
Segment Information and Geographic Data - Additional Information (Detail) | 6 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Sales to an individual customer | No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for the three or six months ended December 31, 2018 or 2017. |
Revenue Classified by Major Geo
Revenue Classified by Major Geographic Areas (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Geographic Information [Line Items] | |||||
Revenues | $ 32,471 | $ 28,918 | $ 61,555 | $ 53,456 | |
United States | |||||
Geographic Information [Line Items] | |||||
Revenues | [1] | 16,787 | 15,110 | 31,527 | 27,657 |
Other Countries | |||||
Geographic Information [Line Items] | |||||
Revenues | $ 15,684 | $ 13,808 | $ 30,028 | $ 25,799 | |
[1] | Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue. |
Revenue Classified by Significa
Revenue Classified by Significant Product and Service Offerings (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from External Customer [Line Items] | ||||
Revenue | $ 32,471 | $ 28,918 | $ 61,555 | $ 53,456 |
Office Products and Cloud Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 7,747 | 7,075 | 15,369 | 13,651 |
Server Products and Cloud Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 7,791 | 6,299 | 14,849 | 11,796 |
Windows | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 4,758 | 4,839 | 9,659 | 9,482 |
Gaming | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 4,232 | 3,920 | 6,970 | 5,816 |
Search Advertising | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 1,976 | 1,820 | 3,764 | 3,459 |
Revenue from External Customer [Line Items] | ||||
Revenue | 1,693 | 1,312 | 3,223 | 2,460 |
Devices | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 1,948 | 1,478 | 3,209 | 2,632 |
Enterprise Services | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 1,521 | 1,435 | 2,971 | 2,806 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | $ 805 | $ 740 | $ 1,541 | $ 1,354 |
Revenue Classified by Signifi_2
Revenue Classified by Significant Product and Service Offerings (Parenthetical) (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue from External Customer [Line Items] | ||||
Revenue | $ 32,471 | $ 28,918 | $ 61,555 | $ 53,456 |
Commercial Cloud | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | $ 9,000 | $ 6,100 | $ 17,500 | $ 11,900 |