In closing I’m encouraged by the progress we’re making in our transformation to become the productivity and platform company for the mobile first cloud first world. I’m proud of how our teams are stepping up to both change and execute to make this transformation happen. I’m confident of the decisions and choices we’re making to drive our business and products forward to serve our customers and partners in the future, with that I will hand over to Amy to go through the quarter’s results in further detail and share our outlook for the next quarter. I look forward to rejoining you after that to answer your questions, thank you.
Amy Hood: Thanks and Good After noon everyone. I start to share and [inaudible] we again made solid progress on our business transformation. We had strong growth in our cloud and subscription businesses, our annuity renewals were healthy as customers remain committed to our enterprise portfolio and our hardware products performed well during the holiday season. As we expected our year-over-year growth rates were impacted by the prior year benefits that we realized in our OEM and Office transactional businesses following the Window XP end of support refresh cycle. Beyond that our results in China and Japan fell short of our expectations. In Japan the PC market lagged due to their [inaudible] economic environment along with the combined impact of XP end of support and the VIT increase last year. Our Office attached right to PCs is very high there so the weak PC market also impacted Office revenue.
With that said let me take you through the financial highlights of our 2nd quarter. Revenue was $26.5 billion up 8% and would have been 1 point better without the impact of foreign exchange, gross margin grew slightly this quarter even when comparing against the year ago that benefited from the XP refresh cycle. Our commitments to ongoing execution improvement and thoughtful portfolio management help improve the gross margin percentage in each of our operating segment. Operating income declined 2% which included $243 million of immigration and restructuring expenses, excluding that operating income grew 1%. A reporting gap earnings-per-share was 71cents was including a 2 cent negative impact from immigration and restructuring expense and a 4 cent income tax charge for an IRS audit adjustments. Foreign exchange had a 1 cent negative impact on EPS.
As we discussed last quarter FX movement first impact our bookings growth and unearned revenue on our balance sheet are contracted but not build balanced was adjusted down to reflect current FX rates, therefore our booking were flat this quarter. On our revenue we got 9% year-over-year to $21.2 billion but the sequential decline was slightly larger slightly higher than we expected due to the larger than anticipated impact from FX. Adjusting for that FX impact, our commercial unearned balance was in line with historical trends and our expectations. From the geographic perspective relative to our expectations, the US outperformed and Europe was generally in line. As I mentioned earlier China and Japan were below our expectations…with that backdrop I will now move to detailed discussion of our results.
Last year we added support for Windows XP that stimulated a PC refresh cycle, in particular in developed market and with business customers. During the period from Q2 through the end of our fiscal year, Windows Pro revenue growth was over 10% and meaningfully outpaced business PC growth. As expected in Q2 PCs have reverted to a more normalized mix between developed and emerging markets and Pro attached to business PCs has returned to levels we saw prior to FY 14. Also to drive revenue growth in academic institutions we lower the price of Windows Pro for that customer segment, this pricing change along with the impact of XP caused Windows revenue growth to be lower than a relatively stable Business PC market we’ve seen since the end of FY 13.
