Windows Commercial revenue often reflects the number of information workers in a licensed enterprise and is relatively independent of the number of PCs sold in a given year. In fiscal year 2020, our U.S. income before income taxes was $24.1 billion and our foreign income before income taxes was $28.9 billion. We license software to organizations under volume licensing agreements to allow the customer to acquire multiple licenses of products and services instead of having to acquire separate licenses through retail channels. Rotary in Action. 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. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency positions, including hedges. Stock-based compensation expense and related income tax benefits were as follows: Stock awards entitle the holder to receive shares of Microsoft common stock as the award vests. Share Your Ministry's COVID-19 Status. We use credit default swap contracts to manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. In AI, we have the most comprehensive portfolio of tools, frameworks, and infrastructure. It is in times like these that our ability to stay true to Microsoft’s mission and corporate purpose is of the utmost importance. With Azure Stack, organizations can extend Azure into their own datacenters to create a consistent stack across the public cloud and the intelligent edge. We have also added to our early stage optionality in nickel with the acquisition of the Honeymoon Well tenements in Western Australia. If market, industry, and/or investee conditions deteriorate, we may incur future impairments. Extended disruptions at these suppliers could lead to a similar disruption in our ability to manufacture devices. For hardware warranties, we estimate the costs based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures (if any). We perform a qualitative assessment on a quarterly basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. We have paid transition tax of $3.2 billion, which included $1.2 billion for fiscal year 2020. PDF 555KB 10,487KB 2014. The fair value of stock awards was estimated on the date of grant using the following assumptions: During fiscal year 2020, the following activity occurred under our stock plans: As of June 30, 2020, there was approximately $10.2 billion of total unrecognized compensation costs related to stock awards. Certain acquired net operating loss carryforwards are subject to an annual limitation, but are expected to be realized with the exception of those which have a valuation allowance. Share this page. A personâs experience with technology spans a multitude of devices and has become increasingly more natural and multi-sensory with voice, ink, and gaze interactions. We adopted the standard effective July 1, 2019. While it may be necessary in the future to seek or renew licenses relating to various aspects of our products, services, and business methods, we believe, based upon past experience and industry practice, such licenses generally can be obtained on commercially reasonable terms. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an active market or use observable inputs for their pricing without applying significant adjustments. Operating income increased $3.3 billion or 25%, including an unfavorable foreign currency impact of 2%. We announced a final dividend of US$0.55 per share, taking the total dividend for the year to US$1.20 per share, a return of US$6.1 billion to shareholders, the third year in a row we have returned over US$6 billion.