and $34.16 billion as of June 30, 2007 and 2006, respectively. Equity and other investments were $10.12 billion and $9.23 billion as of June 30, 2007 and 2006, respectively. Our investments consist primarily of fixed-income securities, diversified among industries and individual issuers. Our investments are generally liquid and investment grade. The portfolio is invested predominantly in U.S.-dollar-denominated securities, but also includes foreign-denominated securities in order to diversify financial risk. As a result of the special dividend paid in the second quarter of fiscal year 2005 and shares repurchased, our retained deficit, including accumulated other comprehensive income, was $29.46 billion at June 30, 2007. Our retained deficit is not expected to impact our future ability to operate or pay dividends given our continuing profitability and strong cash and financial position. 

 

Unearned Revenue 

 

Unearned revenue from volume licensing programs represents customer billings, paid either upfront or annually at the beginning of each billing coverage period, that are accounted for as subscriptions with revenue recognized ratably over the billing coverage period. For certain other licensing arrangements, revenue attributable to undelivered elements, including free post-delivery telephone support and the right to receive unspecified upgrades/enhancements of Microsoft Internet Explorer on a when-and-if-available basis for Windows XP and previous PC operating systems, is based on the sales price of those elements when sold separately and is recognized ratably on a straight-line basis over the life cycle of the related product. Other unearned revenue includes services, Microsoft Dynamics business solution products, Xbox Live subscriptions, advertising, and TV platform for which we have been paid upfront and earn the revenue when we provide the service or software, or otherwise meet the revenue recognition criteria. 

 

 

The following table outlines the expected recognition of unearned revenue as of June 30, 2007: 

 

 

Cash Flows 

 

Fiscal year 2007 compared to fiscal year 2006 

 

Cash flow from operations increased $3.39 billion due to an increase in cash received from customers driven by 15% revenue growth, along with a $1.64 billion decrease in cash outflow for other current assets primarily reflecting changes in inventory. Cash used for financing increased $3.98 billion. Several events occurred during fiscal year 2007 that affected cash used for financing. We issued $6.78 billion of common stock, including $3.25 billion related to 113 million call options exercised by JPMorgan in December 2006. We also completed our tender offer on August 17, 2006, which was included in the $27.58 billion of common stock repurchases. Cash from investing decreased $1.91 billion due to a $3.49 billion decline in securities lending activity where cash collateral is received from the counterparty along with $1.19 billion spent on acquisitions of companies and additions to property and equipment. These impacts were partially offset by a $2.77 billion increase in net cash from combined investment purchases, sales, and maturities. 

 

Fiscal