Microsoft Corporation (MSFT) $44.83 U.S

Microsoft Corporation (MSFT) $44.83 U.S. Dollar | Bmrk/Ind: FactSet Country / Technology Services SEC As of: 23 Jul '14

Profile Key Items

Sector Industry Mkt Cap (B) EV (B) Sales (M) Trading Information Valuation 5Y Trend Current vs. Ind vs. Bmrk Technology Services Packaged Software $370.3 $304.6 $86,758 Current Price $44.83 P/E (LTM) 17.0 0.9 1.0 52 Wk Range $30.84 45.71 P/E (NTM) 15.6 0.9 0.9 Microsoft Corp. develops and markets software, services and hardware that deliver new opportunities, greater Avg Daily Vol (3m) 29.86 (M) P/Sales 4.3 1.2 2.7 convenience and enhanced value to people's lives. The company's products include operating systems for computing devices, servers, phones, and other intelligent devices; server applications for distributed computing Short Int (% of P/Bk 4.2 0.9 3.1 1.2% environments; productivity applications; business solution applications; desktop and server management tools; Float) P/CF 11.6 0.8 1.2 software development tools; video games; and online advertising. It also designs and sells hardware devices Key Statistics EV/EBITDA 9.2 0.7 0.9 including surface rt and surface pro, the xbox 360 gaming and entertainment console, kinect for xbox 360, xbox Mkt Value (B) $370.3 EV/Sales 3.5 1.0 1.4 360 accessories, and microsoft pc accessories. The company operates its business through two segments: Devices and Consumer and Commercial. The Devices and Consumer segments develop, market, and support Ent Value (B) $304.6 products and services designed to entertain and connect people, increase personal productivity, help people Shares Out (M) 8,260 Profitability (%) 10Y Trend LTM Ind Bmrk simplify tasks and make more informed decisions online, and help advertisers connect with audiences. Its Dividend (Ann) $1.12 Gross Margin 70.0 52.6 30.4 Devices and Consumer segments are: D&C licensing comprise of windows, including all original equipment Div Yld 2.5% EBITDA Margin 38.0 26.1 17.2 manufacturer licensing and other nonvolume licensing and academic volume licensing of the windows... EBIT Margin 32.7 20.4 12.0 Net Margin 27.0 15.5 8.2 $44.83 Estimates EPS (FY0) $2.63 ROE 27.3 20.4 13.5 YTD 19.8% EPS (FY1) $2.86 3M 12.1% EPS (FY2) $3.16 Growth (%) 10Y Trend LTM Ind Bmrk 1Y 40.0% Beta 0.62 Coverage 27 Analysts Sales 9.7 4.5 3.3 FY1 PE 15.7x Target Price $43.95 EBITDA 3.9 7.5 4.3 LT Growth Rate 10.8% EBIT 1.1 6.9 5.8 Avg Rating Hold (1.75) EPS (Dil) 36.9 3.0 5.2

Price & Volume StreetAccount News

22 JUL '14 11:53 P.M. (ET) Microsoft upgraded to outperform from sector perform at Pacific Crest

22 JUL '14 4:13 P.M. (ET) StreetAccount Metrics Recap Microsoft Q4 Earnings

22 JUL '14 4:05 P.M. (ET)

Microsoft reports Q4 EPS $0.55, incl. items

22 JUL '14 10:56 A.M. (ET) StreetAccount Consensus Metrics Preview Microsoft Q4 Earnings

17 JUL '14 2:52 P.M. (ET) WSJ's Heard on the Street column says toughest times still ahead for Microsoft's wireless handset business

17 JUL '14 8:13 A.M. (ET) Microsoft plans to cut up to 18K positions over the next year

16 JUL '14 11:44 P.M. (ET) Microsoft layoffs to be announced 17Jul NYT

Key Estimates Corporate Information

Earnings FY 14 FY 15E FY 16E Q4 14 Q1 15E Q2 15E Q3 15E Management Board Satya Nadella, 47 John Wendell Thompson, 64 EPS GAAP 2.63 2.86 3.17 0.55 0.63 0.79 0.71 Chief Executive Officer & Director Chairman Growth (%) 1.9 8.6 11.0 6.8 1.0 1.9 3.9 Brian Kevin Turner, 48 Satya Nadella, 47 EPS Non GAAP 2.67 2.88 3.15 0.59 0.64 0.80 0.69 Chief Operating Officer Chief Executive Officer & Director Growth (%) 2.0 7.7 9.3 10.2 1.5 2.0 1.5 Amy E. Hood, 41 Dave F. Marquardt, 65 Income Statement (M) FY 14 FY 15E FY 16E Q4 14 Q1 15E Q2 15E Q3 15E Chief Financial Officer & Executive Vice President Independent Director Sales 86,833 102,023 105,495 23,382 23,009 28,575 24,816 Jim Dubois Charles H. Noski, 61 Growth (%) 11.5 17.5 3.4 17.5 24.2 16.5 21.6 Chief Information Officer & Vice President Independent Director EBITDA 32,166 33,707 36,656 7,652 7,502 9,154 8,309 Frank Henry Brod, 59 Helmut Gunter Gunter Wilhelm Panke, 68 Growth (%) 5.4 4.8 8.7 8.4 2.9 3.7 1.0 CAO, Vice PresidentFinance & Administration Independent NonExecutive Director Judson Althoff Dina Dublon, 60 Operating Income 27,647 29,077 32,031 6,445 6,425 8,146 7,226 VP, PresidentNorth American Sales & Marketing Independent Director Growth (%) 3.3 5.2 10.2 6.1 1.4 2.2 3.6 Net Income 22,074 23,685 25,859 4,612 5,187 6,577 5,822 Growth (%) 1.0 7.3 9.2 7.1 1.1 0.3 2.9 One Microsoft Way Bradford L. Smith Fiscal Year June Per Share FY 14 FY 15E FY 16E Q4 14 Q1 15E Q2 15E Q3 15E Redmond, Washington Investor Relations Contact Exchange NASDAQ Dividends per Share 1.07 1.13 1.16 0.28 0.28 0.29 0.29 980526399 microsoft.com ISIN US5949181045 Cash Flow per Share 3.40 3.70 4.09 0.75 1.17 0.60 1.06 United States Employees (2014) 99,000 CUSIP 594918104 Free Cash Flow per Share 2.76 3.09 3.42 0.54 1.00 0.30 1.03 SEDOL 2588173 Book Value per Share 10.71 12.06 14.19 10.64 10.93 11.43 11.88

Ownership Summary Top Holders Institutions and Insiders

FLOAT 91.9% Institutions Position (000) % O/S % Port 3M Chg (000) Mkt Value (USD) Shares Out 8,260,411,904 The Vanguard Group, Inc. 379,854 4.6 1.1 7,256 17,030,733,824 Short Interest 92,223,936 Capital Research & Management Co. (Wo... 316,105 3.8 2.5 29,392 14,172,560,384 SSgA Funds Management, Inc. 310,720 3.8 1.4 32,356 13,931,120,640 BlackRock Fund Advisors 296,299 3.6 1.1 2,774 13,284,551,680 Fidelity Management & Research Co. 253,863 3.1 1.4 26,912 11,381,935,104 INSIDER 8.1% Inst. Ownership 72.5% Wellington Management Co. LLP 137,453 1.7 1.5 11,957 6,162,726,400 North American 20.6% Northern Trust Investments, Inc. 106,998 1.3 1.4 3,813 4,797,255,680 NonNorth American 11.8% Invesco PowerShares Capital Managemen... 92,177 1.1 5.1 2,703 4,132,759,808 Inst Ownership as % of Float 78.8% Dodge & Cox, Inc. 85,846 1.0 2.5 131 3,848,891,392 Top 10 Inst. Holders 24.9% ValueAct Capital Management LP 74,237 0.9 23.6 2,951 3,328,399,872 PRIMECAP Management Co. 64,192 0.8 3.2 1,566 2,878,036,224 Norges Bank Investment Management 63,452 0.8 0.5 3,501 2,844,864,256

Insiders Position (000) % O/S % Port 3M Chg (000) Mkt Value (USD) NET POSITION CHANGE 2,092,793 BALLMER STEVEN ANTHONY 333,254 4.0 100.0 1 14,941,438,976 Total (2627) 5,986,847,232 GATES WILLIAM HENRY III 318,417 3.9 99.9 1 14,276,222,976 New (163) 48,241,360 Increase (1043) 258,628,336 Wellcome Trust Ltd. (Direct Investments) 6,000 0.1 5.3 0 269,009,984 Decrease (1091) 284,128,576 TURNER BRIAN KEVIN 1,360 0.0 98.2 41 60,965,600 Soldout (118) 20,648,314 NADELLA SATYA 1,089 0.0 99.6 696 48,845,176

Segments Snapshot Quarterly (M) Targets & Ratings

Jun '14 YoY % % of Sales Sep '14E YoY % 3Y Trend Sales 23,382 17.5 100.0 23,009 24.2 Commercial Licensing 11,222 48.0 10,097 5.2 Devices and Consumer Licensing 4,694 20.1 4,290 1.2 Devices and Consumer Hardware 3,418 14.6 4,635 212.1 Commercial Other 2,262 9.7 2,010 25.4 Devices and Consumer Other 1,880 8.0 1,761 7.7 Corporate and Other 102 0.4 25 80.9 Nokia Devices & Services Business LOW MEAN HIGH 34.00 24.16% 43.95 1.96% 54.00 20.46% Unallocated & Other Entertainment & Devices Microsoft Business Division

* Only 10 out of 13 segments shown. See all...

Estimate Growth Quarterly Surprise History Quarterly EPS Q1 '14 Q1 '15E Growth (YoY%) 0.62 0.63 1.0%

Period After Event Mean Surp Amt Surp (%) Period After Event Mean Surp Amt Surp (%) Sales (M) Q1 '14 Q1 '15E Growth (YoY%) Q1 '15 E 0.63 Q1 '15 E 23,009 18,529 23,009 24.2% Q4 '14 0.55 0.60 0.05 8.8 Q4 '14 23,382 22,994 388 1.7 Q3 '14 0.68 0.63 0.05 8.4 Q3 '14 20,403 20,386 17 0.1 Q2 '14 0.78 0.68 0.10 14.2 Q2 '14 24,519 23,668 851 3.6 Q1 '14 0.62 0.54 0.08 15.1 Q1 '14 18,529 17,791 738 4.1 Q4 '13 0.59 0.75 0.16 21.0 Q4 '13 19,896 20,714 818 3.9 Q3 '13 0.72 0.69 0.03 3.8 Q3 '13 20,489 20,535 46 0.2 Q2 '13 0.76 0.75 0.01 1.8 Q2 '13 21,456 21,557 101 0.5 Q1 '13 0.53 0.56 0.03 5.6 Q1 '13 16,008 16,462 454 2.8

Estimate Table Sales Consensus Trend Annual (M) Sales (M)

FY Ending Jun '08 Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Jun '15E Jun '16E Q1 (Sep) 13,762 15,061 12,920 16,195 17,372 16,008 18,529 23,009 23,830 Q2 (Dec) 16,367 16,629 19,022 19,953 20,885 21,456 24,519 28,575 29,315 Q3 (Mar) 14,454 13,648 14,503 16,428 17,407 20,489 20,403 24,816 25,420 Q4 (Jun) 15,837 13,099 16,039 17,367 18,059 19,896 23,382 25,433 25,928 Fiscal Year 60,420 58,437 62,484 69,943 73,723 77,849 86,833 102,023 105,495 EV/Sales (x) 3.8 3.1 2.7 2.6 2.8 2.9 3.2 2.9 2.7 CY Ending Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15E Dec '16E Cal. Year 59,504 60,477 66,244 71,747 75,905 82,378 94,490 103,628 106,118 EV/Sales (x) 2.4 4.0 3.1 2.4 2.2 3.0 3.2 2.8 2.7

Growth (YoY%)

FY Ending Jun '08 Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Jun '15E Jun '16E Q1 (Sep) 27.3 9.4 14.2 25.3 7.3 7.9 15.7 24.2 3.6 Q2 (Dec) 30.5 1.6 14.4 4.9 4.7 2.7 14.3 16.5 2.6 Q3 (Mar) 0.4 5.6 6.3 13.3 6.0 17.7 0.4 21.6 2.4 Q4 (Jun) 18.4 17.3 22.4 8.3 4.0 10.2 17.5 8.8 1.9 Fiscal Year 18.2 3.3 6.9 11.9 5.4 5.6 11.5 17.5 3.4 CY Ending Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15E Dec '16E Cal. Year 6.8 1.6 9.5 8.3 5.8 8.5 14.7 9.7 2.4

Sales Broker Detail Q1 '15E (M) Sales Broker Revisions Q1 '15E (M)

Consensus Sharp Consensus Guidance # of Brokers Consensus Guidance 1M Revision 1W Revision 23,009 23,189 22 23,009 4.9% 0.4%

Top 11 Brokers Research Estimate Bottom 11 Brokers Research Estimate Cowen & Company 16 Jul '14 23,828 BGC Financial, L.P. 16 Jul '14 22,457 Raymond James 18 Jul '14 23,805 Sterne Agee & Leach 16 Jul '14 22,315 Griffin Securities 16 Jul '14 23,503 Restricted 1 23 Jul '14 22,191 FBR Capital Markets ... 14 Jul '14 23,296 Nomura Research 18 Jul '14 22,148 Cross Research 16 Jul '14 23,288 Wells Fargo Securities 23 Jul '14 21,998 Hilliard Lyons 25 Apr '14 23,200 Pacific Crest 25 Apr '14 21,956 RBC Capital Markets 16 Jul '14 23,195 Oppenheimer 23 Jul '14 21,790 Summit Research 08 Jul '14 23,160 Restricted 5 Evercore Partners 21 Jul '14 23,007 Restricted 4 Atlantic Equities 11 Jul '14 22,681 Credit Suisse Restricted 3 15 Jul '14 22,524 Restricted 2

Estimate Table EPS Consensus Trend Annual EPS

FY Ending Jun '08 Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Jun '15E Jun '16E Q1 (Sep) 0.45 0.48 0.40 0.62 0.68 0.53 0.62 0.63 0.71 Q2 (Dec) 0.50 0.47 0.74 0.77 0.78 0.76 0.78 0.79 0.84 Q3 (Mar) 0.47 0.39 0.45 0.61 0.60 0.72 0.68 0.71 0.77 Q4 (Jun) 0.46 0.36 0.51 0.69 0.73 0.59 0.55 0.73 0.81 Fiscal Year 1.87 1.65 2.10 2.69 2.78 2.58 2.63 2.86 3.16 P/E (x) 14.7 14.4 11.0 9.7 11.0 13.4 15.9 15.7 14.2 CY Ending Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15E Dec '16E Cal. Year 1.76 1.88 2.40 2.73 2.68 2.61 2.74 3.00 3.26 P/E (x) 11.0 16.2 11.6 9.5 10.0 14.4 16.3 14.9 13.7

Growth (YoY%)

FY Ending Jun '08 Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Jun '15E Jun '16E Q1 (Sep) 28.6 6.7 16.7 55.0 9.7 22.1 17.0 1.0 12.6 Q2 (Dec) 92.3 6.0 57.4 4.1 1.3 2.6 2.6 1.9 5.4 Q3 (Mar) 4.1 17.0 15.4 35.6 1.6 20.0 5.6 3.9 9.0 Q4 (Jun) 17.9 21.7 41.7 35.3 5.8 19.2 6.8 32.3 11.5 Fiscal Year 25.5 11.7 27.2 28.1 3.3 7.2 1.9 8.6 10.7 CY Ending Dec '08 Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15E Dec '16E Cal. Year 5.0 6.5 27.7 13.9 1.8 2.9 5.3 9.5 8.5

EPS Broker Detail Q1 '15E EPS Broker Revisions Q1 '15E

Consensus Guidance # of Brokers Consensus Guidance 1M Revision 1W Revision 0.63 24 0.63 2.6% 1.3%

Top 12 Brokers Research Estimate Bottom 12 Brokers Research Estimate Sterne Agee & Leach 16 Jul '14 0.76 Hilliard Lyons 25 Apr '14 0.60 Deutsche Bank Rese... 18 Jul '14 0.69 Griffin Securities 16 Jul '14 0.60 Restricted 1 23 Jul '14 0.68 Restricted 6 09 Jun '14 0.59 Raymond James 18 Jul '14 0.67 RBC Capital Markets 16 Jul '14 0.59 Atlantic Equities 11 Jul '14 0.65 Restricted 3 15 Jul '14 0.59 Nomura Research 18 Jul '14 0.65 Wells Fargo Securities 23 Jul '14 0.55 Evercore Partners 21 Jul '14 0.65 Oppenheimer 23 Jul '14 0.51 Cross Research 16 Jul '14 0.64 Pacific Crest 25 Apr '14 0.49 BGC Financial, L.P. 16 Jul '14 0.64 Restricted 5 Summit Research 08 Jul '14 0.63 Restricted 4 FBR Capital Markets ... 14 Jul '14 0.62 Credit Suisse Cowen & Company 16 Jul '14 0.62 Restricted 2

Valuation Summary Valuation Peer Analysis

Valuation 5Y Trend Current 5Y High 5Y Low 5Y Avg vs. Ind vs. Bmrk Microsoft Google Inc. Oracle Adobe Systems Corporation Apple Inc. Class A Corporation Incorporated Amazon.com, P/E 17.0 20.5 9.0 13.6 0.9 1.0 (MSFT) (AAPL) (GOOGL) (ORCL) (ADBE) Inc. (AMZN) P/E NTM 15.6 16.0 8.2 11.3 0.9 0.9 P/E LTM 17.0 15.3 31.2 17.0 131.4 572.8 P/Sales 4.3 5.0 2.9 3.7 1.2 2.7 P/E NTM 15.6 13.9 20.6 12.6 40.4 166.5 P/Sales NTM 3.6 4.5 2.6 3.3 1.1 2.4 PEG NTM 1.4 1.1 1.2 1.3 3.5 3.2 P/Bk 4.2 6.8 3.2 4.4 0.9 3.1 P/Sales 4.3 3.2 6.5 4.7 8.8 2.1 P/Bk NTM 3.7 5.2 2.3 3.4 0.9 1.5 P/Bk 4.2 4.8 4.3 3.8 5.4 16.1 P/CF 11.6 14.1 7.1 9.7 0.8 1.2 P/CF 11.6 10.2 20.4 12.4 31.8 31.6 P/CF NTM 12.0 13.2 6.6 9.1 0.8 1.1 EV/EBITDA 9.2 9.2 15.4 9.3 45.6 44.7 EV/EBITDA 9.2 11.7 5.5 7.4 0.7 0.9 EV/Sales 3.5 3.1 5.6 4.3 8.3 2.1 EV/EBITDA NTM 8.6 10.1 4.8 6.3 0.8 0.9 Div Yld 2.5 2.0 0.0 1.2 0.0 0.0 EV/Sales 3.5 4.5 2.3 3.0 1.0 1.4 EV/Sales NTM 3.0 4.0 2.0 2.7 1.0 1.4

Price to Earnings Price to Earnings NTM

Profitability Ratios Annual Profitability Peer Analysis LTM

Profitability (%) 10Y Trend Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Gross Margin 78.9 80.0 77.7 76.2 73.9 69.0 Operating Margin 34.9 38.2 38.8 37.9 34.2 32.1 Pretax Margin 34.4 40.4 40.1 30.2 34.8 32.0 Net Margin 25.3 30.3 33.1 23.0 28.2 25.4 ROA 18.7 22.6 23.6 14.7 16.5 14.0 ROE 38.4 43.8 44.8 27.5 30.1 26.2 ROTC 35.7 38.5 38.2 23.1 25.3 21.3 Microsoft Google Inc. Oracle Adobe Systems ROIC 36.6 39.7 38.5 23.2 25.9 21.9 Corporation Apple Inc. Class A Corporation Incorporated Amazon.com, Efficiency 10Y Trend Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 (MSFT) (AAPL) (GOOGL) (ORCL) (ADBE) Inc. (AMZN) Revenue/Employee (000) 618.8 696.5 777.2 784.6 784.4 877.1 Gross Margin (%) 70.0 37.5 63.0 75.1 84.1 26.6 Net Income/Employee (000) 156.7 210.8 257.2 180.6 220.8 223.0 Operating Margin (%) 32.7 28.1 29.1 39.1 10.5 0.2 Receivables Turnover (x) 4.6 5.1 5.0 4.8 4.7 4.7 Net Margin (%) 27.0 21.5 20.5 28.6 6.9 0.4 Days of Sales Outstanding 78.6 71.3 73.1 76.1 78.2 77.8 ROA (%) 15.5 18.8 11.8 12.7 2.7 0.9 Inventory Turnover (x) 14.3 17.0 14.8 14.0 13.2 11.7 ROE (%) 27.3 29.5 15.0 23.9 4.2 3.2 Days of Inventory on Hand 25.6 21.5 24.7 26.1 27.7 31.2 Revenue/Employee (000) 840.3 2,186 1,282 313.7 346.5 666.0 Payables Turnover (x) 3.2 3.4 3.9 4.1 4.7 4.5 Receivables Turnover (x) 6.5 12.0 7.2 5.5 8.2 24.2 Days of Payables Outstanding 113.0 108.0 92.6 88.3 78.1 80.9 Inventory Turnover (x) 12.3 71.4 45.9 44.5 9.5 Total Asset Turnover (x) 0.7 0.7 0.6 0.6 0.5 0.5 Payables Turnover (x) 5.4 6.5 12.0 21.3 12.0 6.0 Working Capital Turnover (x) 2.6 2.1 1.5 1.4 1.2 1.3

Credit Ratios Annual Credit Peer Analysis LTM

Liquidity Analysis 10Y Trend Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Current Ratio 1.82 2.13 2.60 2.60 2.71 2.50 Quick Ratio 1.80 2.10 2.56 2.57 2.66 2.45 Cash Ratio 1.16 1.41 1.83 1.93 2.06 1.88 Credit Analysis 10Y Trend Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Interest Coverage (EBITDA) 174.4 101.5 81.4 70.7 Interest Coverage (EBIT) 156.7 92.1 73.6 61.9 Fixed Chg Coverage 156.7 92.1 73.6 61.9 Microsoft Google Inc. Oracle Adobe Systems CFO/Int Exp 159.4 91.5 83.2 67.2 Corporation Apple Inc. Class A Corporation Incorporated Amazon.com, Total Debt/EBITDA 0.3 0.2 0.4 0.4 0.5 0.7 (MSFT) (AAPL) (GOOGL) (ORCL) (ADBE) Inc. (AMZN) Net Debt/EBITDA 1.1 1.2 1.4 1.7 2.0 1.9 Interest Coverage (EBIT) 49.6 161.9 207.3 16.4 6.4 0.9 Net Debt/(EBITDACapEx) 1.3 1.3 1.5 1.8 2.4 2.3 Fixed Chg Coverage 49.6 161.9 207.3 16.4 6.4 0.9 LT Debt/EBITDA 0.2 0.2 0.4 0.3 0.4 0.6 CFO/Int Exp 52.2 175.5 225.8 16.3 17.1 35.6 Total Debt/Total Equity 14.5 12.9 20.9 18.0 19.8 25.2 Total Debt/EBITDA 0.7 0.3 0.3 1.3 2.0 0.9 Total Debt/Total Capital 12.7 11.4 17.3 15.3 16.5 20.1 Net Debt/EBITDA 2.1 0.4 2.4 0.8 2.4 1.5 Total Debt/Total Assets 7.2 6.9 10.9 9.8 10.9 13.1 LT Debt/EBITDA 0.7 0.3 0.1 1.3 1.2 0.9 Net Debt/FFO 1.3 1.3 1.4 1.6 2.0 2.0 Total Debt/Total Equity 25.9 14.1 6.8 51.6 22.7 30.5 LT Debt/FFO 0.2 0.2 0.4 0.3 0.4 0.7 Total Debt/Total Capital 20.6 12.4 6.4 34.0 18.5 23.4 FCF/Total Debt 2.8 3.7 2.1 2.5 1.6 1.2 Total Debt/Total Assets 14.5 8.2 5.4 26.8 14.5 8.7 CFO/Total Debt 3.3 4.1 2.3 2.6 1.8 1.4

DuPont Analysis Annual DuPont Peer Analysis LTM

Microsoft Google Inc. Oracle Adobe Systems Corporation Apple Inc. Class A Corporation Incorporated Amazon.com, (MSFT) (AAPL) (GOOGL) (ORCL) (ADBE) Inc. (AMZN) Jun '06 Jun '07 Jun '08 Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 LTM Asset Turnover 0.6 0.9 0.6 0.4 0.4 2.4 Asset Turnover 0.61 0.74 0.85 0.74 0.75 0.71 0.64 0.59 0.57 x Operating Margin 32.7 28.1 29.1 39.1 10.5 0.2 x Operating Margin 40.2 37.0 40.1 34.9 38.2 38.8 37.9 34.2 32.7 x Interest Burden 1.0 1.0 0.9 0.9 0.9 3.9 x Interest Burden 1.01 1.07 0.98 0.99 1.06 1.03 0.80 1.02 1.01 x Tax Burden 0.8 0.7 0.8 0.8 0.8 0.5 x Tax Burden 0.70 0.70 0.74 0.74 0.75 0.82 0.76 0.81 0.82 = ROA 15.5 18.8 11.8 12.7 2.7 0.9 = ROA 17.3 20.3 25.0 18.7 22.6 23.6 14.7 16.5 15.5 x Equity Leverage 1.8 1.6 1.3 1.9 1.5 3.5 x Equity Leverage 1.65 1.94 2.10 2.05 1.94 1.90 1.88 1.83 1.77 = ROE 27.3 29.5 15.0 23.9 4.2 3.2 = ROE 28.6 39.5 52.5 38.4 43.8 44.8 27.5 30.1 27.3 x Earnings Retention 61.8 70.8 100.0 79.9 100.0 100.0 x Earnings Retention 71.7 72.5 77.0 69.1 75.2 77.3 62.0 65.5 61.8 = Reinvestment Rate 17.0 20.9 15.0 19.2 4.2 3.2 = Reinvestment Rate 20.5 28.8 40.6 26.6 33.1 34.8 17.2 19.8 17.0

Income Statement Annual (M) Income Statement Growth Annual MSFT Ind Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 10Y Trend 5Y CAGR 10Y CAGR Sales/Revenues 61,989 69,950 73,750 77,654 86,833 8.6% 9.0% COGS incl. D&A 12,395 15,577 17,530 20,249 26,934 17.2% 14.9% Gross Inc 49,594 54,373 56,220 57,405 59,899 5.7% 7.1% SG&A 25,932 27,205 28,237 30,836 32,013 4.8% 5.6% Other Oper Expense 0 0 0 0 EBIT(Operating Income) 23,662 27,168 27,983 26,569 27,886 6.8% 9.2% Nonop Inc (Exp) Net 1,275 1,362 1,546 1,121 61 41.3% 32.8% Interest Expense 151 295 380 429 Unusual Exp (Inc) Net 227 164 6,882 209 127 35.6% 26.1% Pretax Income 25,013 28,071 22,267 27,052 27,820 7.0% 8.6% Income Taxes 6,253 4,921 5,289 5,189 5,746 1.8% 3.6% Minority Interest 0 0 0 0 Net Income 18,760 23,150 16,978 21,863 22,074 8.7% 10.5%

EPS (recurring) 2.084 2.707 2.562 2.599 2.639 9.1% 11.1% EPS (diluted) 2.100 2.690 2.000 2.580 2.630 10.2% 13.4%

EBITDA 26,335 29,934 30,950 30,324 33,098 7.9% 10.3%

Balance Sheet Annual (B) Use of Cash Annual (M)

Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 10Y Trend 5Y CAGR 10Y CAGR Curr Assets 55.7 74.9 85.1 101.5 114.2 18.3% 4.9% Cash & ST Inv 36.8 52.8 63.0 77.0 85.7 22.2% 3.5% Accounts Receivable 13.0 15.0 15.8 17.5 19.5 11.8% 12.7% Inventories 0.7 1.4 1.1 1.9 2.7 30.0% 20.2% Other Current Assets 5.1 5.8 5.1 5.0 6.3 1.3% 5.6%

Curr Liabilities 26.1 28.8 32.7 37.4 45.6 11.0% 11.8% STD & Curr Port LT Debt 1.0 0.0 1.2 3.0 2.0 0.0% Accounts Payable 4.0 4.2 4.2 4.8 7.4 17.5% 15.8% Income Tax Payable 1.1 0.6 0.8 0.6 0.8 1.5% 13.9% Other Current Liabilities 20.0 24.0 26.5 29.0 35.4 11.0% 13.7% Cash and Liabilities Jun '09 Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 Cash and Short Term Investments 31,447 36,788 52,772 63,040 77,022 85,709 Total Debt 5.9 11.9 11.9 15.6 22.6 31.6% Share Repurchase 9,353 11,269 11,555 5,029 5,360 7,316 Total Assets 86.1 109.7 122.0 143.5 172.4 16.6% 5.9% Dividends 4,468 4,578 5,180 6,385 7,455 8,879 Total Liabilities 39.9 52.6 55.6 64.5 82.6 15.3% 14.2% Debt Servicing 228 3,137 1,109 380 1,775 3,888 Shrhldrs Equity 46.2 57.1 66.4 78.9 89.8 17.8% 1.8% Net Change in Reporting Period Cash (FX adjusted) 4,263 571 4,105 2,672 3,134 4,865 BVPS 5.327 6.815 7.918 9.479 10.897 19.7% 4.7% Cash Flow Increases/Decreases 3,300 12,965 12,650 7,313 5,650 13,630 Cash Received (Paid) from Debt Activity 5,746 39 5,665 380 3,108 6,962 Dividends Paid 4,468 4,578 5,180 6,385 7,455 8,879 Cash Received (Paid) from Change in Equity 8,774 8,958 9,133 3,116 4,429 6,709

Cash Flow Statement Annual (M) Industry Metrics

Jun '10 Jun '11 Jun '12 Jun '13 Jun '14 10Y Trend 5Y CAGR 10Y CAGR Net Income 18,760 23,150 16,978 21,863 22,074 8.7% 10.5% Deprec & Amort 2,673 2,766 2,967 3,755 5,212 15.3% 20.4% Other Funds 2,199 4,079 10,901 4,609 4,652 28.6% 2.4% Changes in Wk Cap 661 3,003 174 1,375 624 6.4% Operating Cash Flow 24,073 26,994 31,626 28,833 32,231 11.1% 8.2%

Cap Ex 1,977 2,355 2,305 4,257 5,485 Other Investing, Total 9,337 12,261 22,481 19,554 Investing Cash Flow 11,314 14,616 24,786 23,811 18,833 Free Cash Flow 22,096 24,639 29,321 24,576 26,746 10.9% 7.1% Industry Metrics data is only available for certain companies in the following FCF/Share 2.475 2.867 3.447 2.902 3.184 12.5% 9.9% industries: Airlines, Hotel and Gaming, Metals & Mining, Oil & Gas, FCF Yield (%) 10.8 11.0 11.3 8.4 7.6 0.5% 5.8% Pharmaceuticals, and Retail. % of Net Income 117.8 106.4 172.7 112.4 121.2 2.1% 3.1%

Cash Divs Pd 4,578 5,180 6,385 7,455 8,879 Change in Capital Stock 8,958 9,133 3,116 4,429 6,709 Iss/Red Debt 190 5,960 0 3,537 6,962 3.9% Financing Cash Flow 13,291 8,376 9,408 8,148 8,394

Net Change in Cash 571 4,105 2,672 3,134 4,865 6.5%