Microsoft Corp. today announced revenue of $9.29 billion for the quarter ended June 30, 2004, a 15% increase over revenue of $8.07 billion for the same period in the prior year. Operating income for the fourth quarter was $3.13 billion, which included stock-based compensation expense of $739 million (pre-tax). This compares to operating income of $1.54 billion for the fourth quarter of the prior fiscal year, which included stock-based compensation expense of $665 million (pre-tax) and charges of $796 million (pre-tax) primarily related to the settlement of the Time Warner lawsuit. Net income for the fourth quarter was $2.69 billion including a $208 million tax benefit from the reversal of previously accrued taxes. This compares to net income of $1.48 billion reported in the same quarter of the previous fiscal year. Diluted earnings per share for the quarter were $0.25 which included after-tax charges of $0.05 in stock-based compensation expense and a $0.02 tax benefit from the reversal of previously accrued taxes. This compares to diluted earnings per share of $0.14 in the fourth quarter of the previous fiscal year which included after-tax charges of $0.04 in stock-based compensation expense and $0.05 primarily related to settlement of the Time Warner lawsuit.

The company also announced revenue of $36.84 billion for the fiscal year ended June 30, 2004, a 14% increase over the $32.19 billion reported last year. Net income for fiscal year 2004 was $8.17 billion and diluted earnings per share were $0.75, which included after-tax charges for stock-based compensation expense of $0.35, charges of $0.17 related to the Sun Microsystems settlement and a fine imposed by the European Commission, and a tax benefit of $0.02. For the previous fiscal year, net income and diluted earnings per share were $7.53 billion and $0.69, which included after-tax charges of $0.23 for stock-based compensation expense, charges for investment impairments of $0.07, charges related to legal settlements of $0.06 and a tax benefit of $0.01.

"We had a great quarter with 15% revenue growth as all of our businesses met or exceeded our expectations and our progress on cost efficacy delivered higher operating margins overall," said John Connors, chief financial officer at Microsoft. "Fiscal 2004 was a banner year - revenue grew 14% on strong performances from each of our seven businesses, our emerging business operating margins improved, and we resolved a significant portion of our legal exposure. Entering into the new fiscal year, we announced our intention to provide up to $75 billion in value to shareholders over the next four years and we're confident that we'll continue to grow through innovation and delivering value to our customers."

AW: Audio webcast of earnings announcement