NOTES TO FINANCIAL STATEMENTS

NOTE 8   GOODWILL

During fiscal 2002, goodwill was reduced by $85 million, principally in connection with Microsoft’s exchange of all of its 33.7 million shares and warrants of Expedia, Inc. to USA Networks, Inc. No goodwill was acquired or impaired during fiscal 2002. As of June 30, 2002, Desktop and Enterprise Software and Services goodwill was $1.1 billion, Consumer Software, Services, and Devices goodwill was $258 million, and Consumer Commerce Investments goodwill was $72 million.