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Microsoft: Financial AnalysisSep-04Dec-04Mar-05Jun-05Sep-05Dec-05Mar-06Jun-06Sep-06Dec-06Mar-07Jun-07Sep-07Dec-07Mar-08Jun-08Sep-08Dec-08Mar-09Jun-09Sep-09Dec-09Mar-10Jun-10Sept-10Dec-10Mar-11Jun-11Sept-11Dec-11Mar-12Jun-12Jun-05Jun-06Jun-07Jun-08Jun-09Jun-10Jun-11Jun-12

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1Q052Q053Q054Q051Q062Q063Q064Q061Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q12FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

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Analysis by:

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Silicon Alley Insider

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INCOME STATEMENT1Q052Q053Q054Q051Q062Q063Q064Q061Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q12FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

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Revenues$9,189$10,818$9,620$10,161$9,741$11,837$10,900$11,804$10,811$12,542$14,398$13,371$13,762$16,367$14,545$15,837$15,061$16,629$13,648$13,099$12,920$19,022$14,503$16,039$16,195$19,953$16,428$17,367$17,372$20,885$17,407$18,059$39,788$44,282$51,122$60,511$58,437$62,484$69,943$73,723

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Y/Y Change6%9%13%16%11%6%32%13%27%30%1%18%9%2%-6%-17%-14%14%6%22%25%5%13%8%7%5%6%4%11%15%18%-3%7%12%5%

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Cost of Revenue$1,405$1,875$1,363$1,388$1,253$2,239$2,028$2,130$1,696$3,620$2,140$3,237$2,675$3,543$2,514$2,866$2,848$3,907$2,814$2,586$2,842$3,628$2,755$3,170$3,139$4,833$3,897$3,708$3,777$5,638$3,952$4,163$6,031$7,650$10,693$11,598$12,155$12,395$15,577$17,530

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Margin15%17%14%14%13%19%19%18%16%29%15%24%19%22%17%18%19%23%21%20%22%19%19%20%19%24%24%21%22%27%23%23%15%17%21%19%21%20%22%24%

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Gross Profit$7,784$8,943$8,257$8,773$8,488$9,598$8,872$9,674$9,115$8,922$12,258$10,134$11,087$12,824$12,031$12,971$12,213$12,722$10,834$10,513$10,078$15,394$11,748$12,869$13,056$15,120$12,531$13,659$13,595$15,247$13,455$13,896$33,757$36,632$40,429$48,913$46,282$50,089$54,366$56,193

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Margin85%83%86%86%87%81%81%82%84%71%85%76%81%78%83%82%81%77%79%80%78%81%81%80%81%76%76%79%78%73%77%77%85%83%79%81%79%80%78%76%

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R&D$1,530$1,421$1,482$1,664$1,515$1,591$1,617$1,861$1,786$1,637$1,750$1,948$1,837$1,885$2,035$2,407$2,283$2,290$2,212$2,225$2,065$2,079$2,220$2,350$2,196$2,185$2,269$2,393$2,329$2,371$2,517$2,594$6,097$6,584$7,121$8,164$9,010$8,714$9,043$9,811

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Margin17%13%15%16%16%13%15%16%17%13%12%15%13%12%14%15%15%14%16%17%16%11%15%15%14%11%14%14%13%11%14%14%15%15%14%13%15%14%13%13%

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Sales & Marketing$1,664$2,122$2,070$2,707$1,945$2,689$2,362$2,822$2,191$2,999$2,936$3,329$2,614$3,392$3,155$3,883$3,044$3,662$2,981$3,192$2,790$3,619$3,203$3,602$2,806$3,825$3,393$3,916$2,900$3,762$3,414$3,781$8,563$9,818$11,455$13,044$12,879$13,214$13,940$13,857

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Margin18%20%22%27%20%23%22%24%20%24%20%25%19%21%22%25%20%22%22%24%22%19%22%22%17%19%21%23%17%18%20%21%22%22%22%22%22%21%20%19%

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General & Administrative$1,096$651$1,376$1,413$982$661$1,005$1,110$664$814$983$868$718$1,066$2,341$1,002$887$831$913$1,069$741$1,124$1,152$987$938$945$1,160$1,179$1,163$1,120$1,150$1,136$4,536$3,758$3,329$5,127$3,700$4,004$4,222$4,569

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Margin12%6%14%14%10%6%9%9%6%6%7%6%5%7%16%6%6%5%7%8%6%6%8%6%6%5%7%7%7%5%7%6%11%8%7%8%6%6%6%6%

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Employee severance$290$40$59$0$0$0$0$0$0$0$0$0$0$330$59$0$0

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Goodwill Impairment$6,193$6,193

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Operating Income$3,494$4,749$3,329$2,989$4,046$4,657$3,888$3,881$4,474$3,472$6,589$3,989$5,918$6,481$4,500$5,679$5,999$5,939$4,438$3,987$4,482$8,513$5,173$5,930$7,116$8,165$5,709$6,171$7,203$7,994$6,374$192$14,561$16,472$18,524$22,578$20,363$24,098$27,161$21,763

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Margin38%44%35%29%42%39%36%33%41%28%46%30%43%40%31%36%40%36%33%30%35%45%36%37%44%41%35%36%41%38%37%1%37%37%36%37%35%39%39%30%

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Investment Income & Other$279$420$496$872$506$480$427$377$567$333$382$295$298$339$401$289-$8-$301-$388$155$283$370$168$94$114$332$316$148$103$245-$11$167$2,067$1,790$1,577$1,327-$542$915$910$504

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Income before provision for Income tax$3,773$5,169$3,825$3,861$4,552$5,137$4,315$4,258$5,041$3,805$6,971$4,284$6,216$6,820$4,901$5,968$5,991$5,638$4,050$4,142$4,765$8,883$5,341$6,024$7,230$8,497$6,025$6,319$7,306$8,239$6,363$359$16,628$18,262$20,101$23,905$19,821$25,013$28,071$22,267

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Provision for income taxes$1,245$1,706$1,262$161$1,411$1,484$1,338$1,430$1,563$1,179$2,045$1,249$1,927$2,113$422$1,671$1,618$1,464$1,073$1,097$1,191$2,221$1,335$1,506$1,820$1,863$793$445$1,568$1,615$1,255$851$4,374$5,663$6,036$6,133$5,252$6,253$4,921$5,289

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% of EBT33%33%33%4%31%29%31%34%31%31%29%29%31%31%9%28%27%26%26%26%25%25%25%25%25%22%13%7%21%20%20%237%26%31%30%26%26%25%18%24%

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Net Income$2,528$3,463$2,563$3,700$3,141$3,653$2,977$2,828$3,478$2,626$4,926$3,035$4,289$4,707$4,479$4,297$4,373$4,174$2,977$3,045$3,574$6,662$4,006$4,518$5,410$6,634$5,232$5,874$5,738$6,624$5,108-$492$12,254$12,599$14,065$17,772$14,569$18,760$23,150$16,978

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Margin28%32%27%36%32%31%27%24%32%21%34%23%31%29%31%27%29%25%22%23%28%35%28%28%33%33%32%34%33%32%29%-3%31%28%28%29%25%30%33%23%

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Y/Y Change24%5%16%-24%11%-28%65%7%23%79%-9%42%2%-11%-34%-29%-18%60%35%48%51%0%31%30%6%0%-2%-108%

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EPS (Diluted)$0.32$0.32$0.23$0.34$0.29$0.34$0.29$0.28$0.34$0.26$0.50$0.31$0.45$0.50$0.48$0.46$0.48$0.47$0.33$0.34$0.40$0.74$0.45$0.51$0.62$0.77$0.61$0.69$0.68$0.78$0.60-$0.06$1.22$1.20$1.42$1.88$1.62$2.10$2.69$2.00

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Y/Y Change-8%7%22%-19%18%-23%75%14%31%88%-5%46%6%-5%-30%-26%-16%59%35%50%56%4%36%35%9%1%-2%-109%-2%19%32%-14%30%28%-26%

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Shares Out (Diluted)10,92010,95610,93110,81910,72210,63810,41510,25510,1009,9429,8629,6579,5139,5039,4289,3809,1838,9148,9048,9288,9838,9518,8768,8218,6958,5708,5108,5218,4908,4658,4988,38810,90610,5319,8869,4708,9968,9278,5938,506

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Y/Y Change-2%-3%-5%-5%-6%-7%-5%-6%-6%-4%-4%-3%-3%-6%-6%-5%-2%0%0%-1%-3%-4%-4%-3%-2%-1%0%-2%-3%-6%-4%-5%-1%-4%-1%

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PRODUCT SUMMARY1Q052Q053Q054Q051Q062Q063Q064Q061Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q12FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

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Revenue

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Windows & Windows Live Division$3,316$2,601$5,272$3,817$4,138$4,335$4,025$4,367$4,218$3,982$3,404$3,108$2,880$7,193$4,650$4,781$4,785$5,056$4,447$4,743$4,868$4,736$4,624$4,145$15,006$16,865$14,712$18,491$19,031$18,373

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Y/Y Change25%67%-24%14%2%-8%-15%-29%-32%81%37%54%66%-30%-4%-1%2%-6%4%-13%12%-13%26%3%-3%

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% of Total31%21%37%29%30%26%28%28%28%24%25%24%22%38%32%30%30%25%27%27%28%23%27%23%29%28%25%30%27%25%

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Server & Tools$2,496$2,843$2,749$3,084$2,900$3,278$3,255$3,737$3,406$3,743$3,467$3,510$3,550$3,978$3,706$4,149$3,864$4,288$4,007$4,524$4,250$4,772$4,572$5,092$11,172$13,170$14,126$14,866$16,683$18,686

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Y/Y Change16%15%18%21%17%14%7%-6%4%6%7%18%9%8%8%9%10%11%14%13%18%7%5%12%12%

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% of Total23%23%19%23%21%20%23%24%23%23%25%27%27%21%26%26%24%21%24%26%24%23%26%28%22%22%24%24%24%25%

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Online Services Business$536$625$623$677$671$863$843$838$770$866$721$731$487$579$566$568$527$713$667$680$625$784$707$735$2,461$3,215$3,088$2,199$2,587$2,851

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Y/Y Change25%38%35%24%15%0%-14%-13%-37%-33%-21%-22%8%23%18%20%19%10%6%8%31%-4%-29%18%10%

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% of Total5%5%4%5%5%5%6%5%5%5%5%6%4%3%4%4%3%4%4%4%4%4%4%4%5%5%5%4%4%4%

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Microsoft Business Division$3,419$3,500$4,829$4,628$4,111$4,811$4,745$5,263$4,949$4,876$4,505$4,564$4,514$4,864$4,341$5,375$5,221$6,110$5,329$5,873$5,622$6,279$5,814$6,291$16,376$18,930$18,894$18,642$22,533$24,006

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Y/Y Change20%37%-2%14%20%1%-5%-13%-9%0%-4%18%16%26%23%9%8%3%9%7%16%0%-1%21%7%

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% of Total32%28%34%35%30%29%33%33%33%29%33%35%35%26%30%34%32%31%32%34%32%30%33%35%32%31%32%30%32%33%

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Entertainment and Devices$1,011$2,969$929$1,153$1,929$3,060$1,576$1,575$1,814$3,183$1,567$1,189$1,412$2,381$1,210$1,144$1,795$3,698$1,935$1,487$1,963$4,237$1,616$1,779$6,062$8,140$7,753$8,058$8,915$9,595

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Y/Y Change91%3%70%37%-6%4%-1%-25%-22%-25%-23%-4%27%55%60%30%9%15%-16%20%34%-5%4%11%8%

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% of Total9%24%6%9%14%19%11%10%12%19%11%9%11%13%8%7%11%19%12%9%11%20%9%10%12%13%13%13%13%13%

.

Unallocated and Other$33$4-$4$12$13$20$10$57-$96-$21-$16-$3$77$27$30$22$3$88$43$60$44$77$74$17$45$100-$136$228$194$212

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Y/Y Change-61%400%-350%375%-838%-205%-260%-105%-180%-229%-288%-833%-96%226%43%173%1367%-13%72%-72%122%-236%-268%-15%9%

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% of Total0%0%0%0%0%0%0%0%-1%0%0%0%1%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%0%

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Total$10,811$12,542$14,398$13,371$13,762$16,367$14,454$15,837$15,061$16,629$13,648$13,099$12,920$19,022$14,503$16,039$16,195$19,953$16,428$17,367$17,372$20,885$17,407$18,059$51,122$60,420$58,437$62,484$69,943$73,723

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Y/Y Change27%30%0%18%9%2%-6%-17%-14%14%6%22%25%5%13%8%7%5%6%4%18%-3%7%12%5%

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Operating Income

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Windows & Windows Live Division$2,660$1,858$4,250$2,789$3,367$3,358$3,097$3,228$3,267$2,946$2,514$2,167$1,483$5,417$3,073$3,066$3,286$3,214$2,792$2,908$3,251$2,850$2,952$2,397$11,557$13,050$10,894$13,034$12,200$11,450

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Y/Y Change27%81%-27%16%-3%-12%-19%-33%-55%84%22%41%122%-41%-9%-5%-1%-11%6%-18%13%-17%20%-6%-6%

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Margin80%71%81%73%81%77%77%74%77%74%74%70%51%75%66%64%69%64%63%61%67%60%64%58%77%77%74%70%64%62%

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% of Total59%54%65%70%57%52%70%57%54%50%57%54%33%64%59%52%46%39%49%47%45%36%46%1248%62%58%53%54%45%53%

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Server & Tools$771$980$912$988$962$1,172$1,092$1,373$1,151$1,489$1,344$1,349$1,237$1,464$1,270$1,560$1,540$1,711$1,352$1,686$1,597$1,996$1,738$2,095$3,651$4,599$5,333$5,539$6,608$7,426

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Y/Y Change25%20%20%39%20%27%23%-2%7%-2%-6%16%24%17%6%8%4%17%29%24%26%16%4%19%12%

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Margin31%34%33%32%33%36%34%37%34%40%39%38%35%37%34%38%40%40%34%37%38%42%38%41% 33%35%38%37%40%40%

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% of Total17%28%14%25%16%18%25%24%19%25%30%34%28%17%25%26%22%21%24%27%22%25%27%1091%20%20%26%23%24%34%

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Online Services Business-$102-$100-$149-$186-$264-$245-$228-$488-$480-$471-$575-$732-$477-$463-$709-$688-$558-$559-$776-$745-$494-$458-$479-$6,672-$537-$1,225-$2,258-$2,337-$2,638-$8,103

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Y/Y Change159%145%53%162%82%92%152%50%-1%-2%23%-6%17%21%9%8%-11%-18%-38%796%128%84%3%13%207%

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Margin-19%-16%-24%-27%-39%-28%-27%-58%-62%-54%-80%-100%-98%-80%-125%-121%-106%-78%-116%-110%-79%-58%-68%-908%-22%-38%-73%-106%-102%-284%

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% of Total-2%-3%-2%-5%-4%-4%-5%-9%-8%-8%-13%-18%-11%-5%-14%-12%-8%-7%-14%-12%-7%-6%-8%-3475%-3%-5%-11%-10%-10%-37%

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Microsoft Business Division$2,227$2,137$3,354$2,973$2,694$3,185$3,138$3,341$3,311$3,140$2,877$2,816$2,827$2,947$2,542$3,219$3,465$4,087$3,313$3,761$3,661$4,152$3,770$4,100$10,691$12,358$12,144$11,504$14,124$15,683

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Y/Y Change21%49%-6%12%23%-1%-8%-16%-15%-6%-12%14%23%39%30%17%6%2%14%9%16%-2%-5%23%11%

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Margin65%61%69%64%66%66%66%63%67%64%64%62%63%61%59%60%66%67%62%64%65%66%65%65%65%65%64%62%63%65%

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% of Total50%62%51%75%46%49%71%59%55%53%65%71%63%35%49%54%49%50%58%61%51%52%59%2135%58%55%60%48%52%72%

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Entertainment and Devices-$142-$320-$345-$1,245$165$357$89-$188$178$151-$31-$130$260$365$150-$172$386$666$210$13$352$528-$229-$263-$2,052$423$168$618$1,324$388

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Y/Y Change-216%-212%-126%-85%8%-58%-135%-31%46%142%-584%32%48%82%40%-108%-9%-21%-209%-2123%-121%-60%268%114%-71%

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Margin-14%-11%-37%-108%9%12%6%-12%10%5%-2%-11%18%15%12%-15%22%18%11%1%18%12%-14%-15%-34%5%2%8%15%4%

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% of Total-3%-9%-5%-31%3%6%2%-3%3%3%-1%-3%6%4%3%-3%5%8%4%0%5%7%-4%-137%-11%2%1%3%5%2%

.

Corporate Level Activity-$940-$1,083-$1,433-$1,330-$1,006-$1,346-$2,779-$1,582-$1,428-$1,316-$1,691-$1,483-$848-$1,217-$1,153-$1,055-$1,003-$954-$1,182-$1,452-$1,164-$1,074-$1,378-$1,465-$4,786-$6,713-$5,918-$4,260-$4,619-$5,081

.

Y/Y Change7%24%94%19%42%-2%-39%-6%-41%-8%-32%-29%18%-22%3%38%16%13%17%1%40%-12%-28%8%10%

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% of Total-21%-31%-22%-33%-17%-21%-63%-28%-24%-22%-38%-37%-19%-14%-22%-18%-14%-12%-21%-24%-16%-13%-22%-763%-26%-30%-29%-18%-17%-23%

.

Total$4,474$3,472$6,589$3,989$5,918$6,481$4,409$5,684$5,999$5,939$4,438$3,987$4,482$8,513$5,173$5,930$7,116$8,165$5,709$6,171$7,203$7,994$6,374$192$18,524$22,492$20,363$24,098$26,999$21,763

.

Y/Y Change32%87%-33%42%1%-8%1%-30%-25%43%17%49%59%-4%10%4%1%-2%12%-97%21%-9%18%12%-19%

.

.

CASH FLOW1Q052Q053Q054Q051Q062Q063Q064Q061Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q12FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

.

.

Cash Flow From Operations$4,007$3,619$5,003$3,976$4,329$2,231$4,563$3,281$4,061$2,042$7,291$4,402$5,878$4,567$7,082$4,085$3,370$5,782$6,044$3,841$6,107$4,969$7,393$5,604$8,194$4,186$8,672$5,942$8,493$5,862$9,594$7,677$16,605$14,404$17,796$21,612$19,037$24,073$26,994$31,626

.

Y/Y Change8%-38%-9%-17%-6%-8%60%34%45%124%-3%-7%-43%27%-15%-6%81%-14%22%46%34%-16%17%6%4%40%11%29%-13%24%21%-12%26%12%17%

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% of Total44%33%52%39%44%19%42%28%38%16%51%33%43%28%49%26%22%35%44%29%47%26%51%35%51%21%53%34%49%28%55%43%42%33%35%36%33%39%39%43%

.

Capital Expenditures$173$176$203$260$213$318$302$745$411$572$461$820$510$695$759$1,218$778$842$632$867$435$376$408$758$564$491$658$642$436$498$749$622$812$1,578$2,264$3,182$3,119$1,977$2,355$2,305

.

Y/Y Change23%81%49%187%93%80%53%10%24%22%65%49%53%21%-17%-29%-44%-55%-35%-13%30%31%61%-15%-23%1%14%-3%94%43%41%-2%-37%19%-2%

.

% of Revenue2%2%2%3%2%3%3%6%4%5%3%6%4%4%5%8%5%5%5%7%3%2%3%5%3%2%4%4%3%2%4%3%2%4%4%5%5%3%3%3%

.

FREE CASH FLOW$3,834$3,443$4,800$3,716$4,116$1,913$4,261$2,536$3,650$1,470$6,830$3,582$5,368$3,872$6,323$2,867$2,592$4,940$5,412$2,974$5,672$4,593$6,985$4,846$7,630$3,695$8,014$5,300$8,057$5,364$8,845$7,055$15,793$12,826$15,532$18,430$15,918$22,096$24,639$29,321

.

Y/Y Change7%-44%-11%-32%-11%-23%60%41%47%163%-7%-20%-52%28%-14%4%119%-7%29%63%35%-20%15%9%6%45%10%33%-19%21%19%-14%39%12%19%

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Margin42%32%50%37%42%16%39%21%34%12%47%27%39%24%43%18%17%30%40%23%44%24%48%30%47%19%49%31%46%26%51%39%40%29%30%30%27%35%35%40%

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BALANCE SHEET1Q052Q053Q054Q051Q062Q063Q064Q061Q072Q073Q074Q071Q082Q083Q084Q081Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q12FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

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Total cash, cash equivalents, and short-term investments$64,415$34,504$37,594$37,751$40,056$34,701$34,816$34,161$31,832$28,873$28,236$23,411$21,574$21,076$26,341$23,662$20,722$20,715$25,340$31,447$36,728$36,788$39,666$36,788$44,173$41,252$50,150$52,772$57,403$51,736$59,529$63,040$37,751$34,161$23,411$23,662$31,447$36,788$52,772$63,040

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Inventory$608$304$340$491$726$1,003$1,113$1,478$2,521$1,725$1,750$1,127$1,178$755$774$985$1,640$968$657$717$1,150$740$501$740$1,242$861$1,056$1,372$2,270$1,351$1,412$1,137$491$1,478$1,127$985$717$740$1,372$1,137

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Y/Y Change19%230%227%201%247%72%57%-24%-53%-56%-56%-13%39%28%-15%-27%-30%-24%-24%3%8%16%111%85%83%57%34%-17%201%-24%-13%-27%3%85%-17%

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% of Revenue7%3%4%5%7%8%10%13%23%14%12%8%9%5%5%6%11%6%5%5%9%4%3%5%8%4%6%8%13%6%8%6%

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Current Debt$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$1,975$2,000$1,999$2,000$2,250$2,249$2,249$1,000$1,000$0$0$0$0$0$0$0$0$0$0$0$2,000$1,000$0$0

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Long-Term Debt$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$3,746$3,746$3,746$3,746$4,939$9,665$9,671$11,915$11,921$11,927$11,932$11,938$10,713$0$0$0$0$3,746$4,939$11,921$10,713

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Total Debt$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$0$1,975$2,000$1,999$5,746$5,996$5,995$5,995$5,939$10,665$9,671$11,915$11,921$11,927$11,932$11,938$10,713$0$0$0$0$5,746$5,939$11,921$10,713

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