Microsoft (MSFT)

Subsequent Events

We evaluated events occurring between the end of our most recent fiscal year and July 29, 2009, the date the financial statements were issued.

NOTE 19    SUBSEQUENT EVENTS

On July 12, 2006, the European Commission imposed a fine of €281 million ($351 million) on Microsoft related to the Commission’s March 2004 decision in its competition law investigation. As of June 30, 2006, the total amount of the fine was included in other current liabilities.

On July 20, 2006, we announced that our Board of Directors authorized two new share repurchase programs, comprised of a $20 billion tender offer which was completed on August 17, 2006, and an additional $20 billion ongoing share repurchase program with an expiration of June 30, 2011. Under the tender offer, we repurchased approximately 155 million shares of our common stock, or approximately 1.5% of our common stock outstanding, for approximately $3.8 billion at a per share price of $24.75.

On August 18, 2006, we announced that the authorization for the ongoing share repurchase program, previously announced on July 20, 2006, had been increased by approximately $16.2 billion. As a result, the company is authorized to repurchase additional shares in an amount up to $36.2 billion through June 30, 2011.

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 Part II 

Item 8

Note 11 – Subsequent Events

On April 19, 2006, the jury in the Z4 Technologies, Inc. v. Microsoft patent infringement case (see Note 8 — Contingencies) rendered a $115 million verdict against us. The trial court has not yet ruled on our defense of inequitable conduct or the plaintiff’s request for an injunction and enhancement of damages for willful infringement. We intend to appeal the verdict.

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