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Financial Forecast Assumptions
Microsoft Corp (MSFT)
(Dollars and Shares in Millions, Except Per Share Amounts)

 Actual Forecast
  12 Months  
06/30/03  		 12 Months  
06/30/04  		 12 Months  
06/30/05  		   12 Months  
06/30/06  		 12 Months  
06/30/07  		 12 Months  
06/30/08  		 12 Months  
06/30/09  		 12 Months  
06/30/10  
 
Year-to-Year Change in Net Sales NA   14.4%   8.0%    
 
Operating Expenses as % of Net Sales 70.4%   75.5%   63.4%    
 
Other Income (Expense) * $1,509   $3,162   $2,067    
 
Interest Rate on Borrowings * NA   NA   NA    
 
Interest Rate on Subordinated Debt * NA   NA   NA    
 
Income Tax Rate 31.9%   33.0%   26.3%    
 
Cash * $49,048   $60,592   $37,751    
 
Number of Days Sales in Accounts Receivable 58.9   58.4   65.9    
 
Other Current Assets $4,729   $4,084   $3,806    
 
Intangibles * $3,512   $3,684   $3,808    
 
Investments $13,692   $12,210   $11,004    
 
Other Assets $3,332   $5,582   $4,920    
 
Current Maturities * $0   $0   $0    
 
Number of Days Operating Expenses in Accounts Payable 25.4   22.5   30.2    
 
Number of Days Operating Expenses in Accrued Expenses 22.8   17.6   24.1    
 
Taxes Payable * $2,044   $3,478   $2,020    
 
Other Current Obligations * $7,225   $6,514   $7,502    
 
Other Current Liabilities * $1,716   $1,921   $3,607    
 
Term Loan * $0   $0   $0    
 
Subordinated Debt * $0   $0   $0    
 
Other Long Term Obligations * $1,790   $1,663   $1,665    
 
Other Liabilities * $1,056   $2,911   $4,158    
 
Common Stock * $49,234   $56,396   $60,413    
 
Preferred Stock * $0   $0   $0    
 
Other Equity * $0   $0   $0    
 
Treasury Stock * $0   $0   $0    
 
Capital Expenditures (Net) NA   $411   $(114)    
 
Dividends as % of Net Earnings * 11.4%   21.2%   294.7%    
 
Depreciation (Net) NA   $308   $(134)    
 
Estimated Borrowing Base as a % of Accounts Receivable 80.0%   80.0%   80.0%    
 
Estimated Borrowing Base as a % of
      Property, Plant and Equipment (Net)		 50.0%   50.0%   50.0%    
 
Common Shares Outstanding (Fully Diluted) 10,882   10,894   10,906    

* Changes to these assumptions will change your Multi-year forecast but will not change the intrinsic valuation model default assumptions.