best places to work. These changes will enable us to better reward and retain top talent, while providing a workplace that is positive, inclusive, and collaborative. 

 

We also continue to work to foster social and economic advancement for communities in developing nations through partnerships with public- and private-sector organizations. We support a broad range of efforts to expand access to technology, provide training that can give people the skills they need to thrive in today’s economy, and nurture local software economies that open the door to new opportunities and greater prosperity. 

 

In 2006, community learning centers supported by our Unlimited Potential program reached more than 14.5 million people in 100 countries. Through our Partners in Learning program, we helped provide information and communications technology curriculum and skills training to 42 million primary and secondary teachers and students in 101 countries. By 2010, we intend to provide technology training to 250 million people who were previously underserved by technology. 

 

Incredible Opportunities in the Decade Ahead 

 

In many ways, the founding of Microsoft 30 years ago was a critical catalyst for the creation of the software industry, the popularizations of the PC, and the rise of the information revolution. 

 

Today, it’s not just the PC that is changing the world. Software is everywhere. It is revolutionizing the telephone and transforming the way we watch television. It ties businesses to customers and partners in new ways. It links students to vast collections of information stored around the world. It connects hundreds of millions of people across the globe to incredible economic, social, and cultural opportunities. 

 

As thrilling as the last 30 years have been, we think the next 10 years promise to be the most exciting in the history of Microsoft and our industry as a whole. We believe strongly that everything this company has delivered to date is really just the foundation for the truly profound changes we will see during the next 10 years. Because software is more central every day to the way we work, communicate, learn, and play, we believe no company is better positioned than Microsoft to thrive in the coming decade. 

 

We are deeply inspired by the incredible opportunities that lie ahead for our company. It is your support that enables us to continue to pursue these opportunities. Thank you.





RESULTS OF OPERATIONS FOR FISCAL YEARS 2006, 2005, AND 2004 

 

OVERVIEW 

 

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Microsoft Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to the financial statements (“Notes”). 

We develop, manufacture, license, and support a wide range of software products for many computing devices. Our software products include operating systems for servers, PCs, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business