CASH FLOWS STATEMENT (from Microsoft 10-K)

(In millions)

Year Ended June 30 2007 2006 2005

Operations

Net income $ 14,065 $ 12,599 $ 12,254

Depreciation, amortization, and other noncash items 1,440 903 855

Stock-based compensation 1,550 1,715 2,448

Net recognized gains on investments (292) (270) (527)

Stock option income tax benefits 668

Excess tax benefits from stock-based payment

arrangements (77) (89)

Deferred income taxes 421 219 (179)

Unearned revenue 21,032 16,453 13,831

Recognition of unearned revenue (19,382) (14,729) (12,919)

Accounts receivable (1,764) (2,071) (1,243)

Other current assets 232 (1,405) (245)

Other long-term assets (435) (49) 21

Other current liabilities (552) (145) 396

Other long-term liabilities 1,558 1,273 1,245

Net cash from operations 17,796 14,404 16,605

Financing

Common stock issued 6,782 2,101 3,109

Common stock repurchased (27,575) (19,207) (8,057)

Common stock cash dividends (3,805) (3,545) (36,112)

77 89
Excess tax benefits from stock-based payment
(In millions)

Year Ended June 30 2007 2006 2005

arrangements

Other (23) (18)

Net cash used in financing (24,544) (20,562) (41,078)

Investing

Additions to property and equipment (2,264) (1,578) (812)

Acquisition of companies, net of cash acquired (1,150) (649) (207)

Purchases of investments (36,308) (51,117) (68,045)

Maturities of investments 4,736 3,877 29,153

Sales of investments 41,451 54,353 54,938

Securities lending payable (376) 3,117

Net cash from investing 6,089 8,003 15,027

Net change in cash and equivalents (659) 1,845 (9,446)

Effect of exchange rates on cash and equivalents 56 18 (7)

Cash and equivalents, beginning of period 6,714 4,851 14,304

Cash and equivalents, end of period $ 6,111 $ 6,714 $ 4,851

Free cash flow: 17,996 - 24,544 + 6,089 = -659 (million)