Intuit Exceeds Expectations for Second-Quarter Operating Income and Earnings Per Share
Highlights:
Updates guidance: Expects full-year earnings per share growth of 11 to 18 percent Expects full-year operating income growth of 7 to 13 percent Expects full-year revenue growth of 2 to 6 percent Quarterly revenue of $791 million would have grown 2 percent without timing changes
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq:INTU) today announced second quarter GAAP operating income of $110 million, and GAAP diluted earnings per share of 26 cents, well above its expected range. Second-quarter revenue of $791 million, a five percent decrease from the year-ago quarter, reflects timing changes of $58 million of revenue in its tax businesses between the second and third quarters. Without those changes, revenue would have grown two percent.
"Second-quarter operating income and earnings per share significantly exceeded our guidance, and revenue was within our expected range," said Brad Smith, Intuit's president and chief executive officer. "We continue to adapt in this strained economy and manage the business by focusing on customer acquisition and investing in innovation. By managing our expenses, we expect to deliver strong earnings growth for the year.
"While our company is not recession-proof, we are resilient. Consumers and small business owners are focused on saving and making money, and that is what our products are designed to deliver. We help them put more money in their pockets, which creates demand for many of our offerings in any environment. That's why we still expect to deliver positive revenue growth for fiscal year 2009," Smith said.
Second-Quarter 2009 Financial Highlights
-- Revenue of $791 million, down 5 percent from the year-ago quarter.
Revenue would have grown 2 percent without shifts of Consumer Tax and
Accounting Professionals revenue due to the timing of revenue
recognition for services bundled with the offerings.
-- GAAP (Generally Accepted Accounting Principles) operating income from
continuing operations of $110 million, down from $174 million in the
year-ago quarter. GAAP diluted earnings per share of 26 cents, compared
to 34 cents per share in the year-ago quarter. Without the change in
revenue timing, GAAP operating income from continuing operations would
have been approximately $168 million.
-- Non-GAAP operating income of $172 million, down from $225 million in the
year-ago quarter. Non-GAAP diluted earnings per share of 34 cents
compared to 40 cents per share in the year-ago quarter. Without the
change in revenue timing, non-GAAP operating income would have been
approximately $230 million.
Second-Quarter 2009 Business Segment Results
-- Consumer Tax revenue was $187 million, down 25 percent from the year-ago
quarter. The decline includes a deferral of $70 million in revenue
associated with the bundling of Federal electronic filing with the
desktop product. Without that shift, revenue would have grown 4 percent
year-over-year.
-- QuickBooksrevenue was $164 million, down 2 percent from the year-ago
quarter.
-- Payroll and Payments revenue was $158 million, up 14 percent from the
year-ago quarter.
-- Accounting Professionalsrevenue was $133 million, up 14 percent from the
year-ago quarter. The increase includes a shift of $12 million from Q3
to Q2 due to changes in the offering.
-- Financial Institutionsrevenue was $76 million, up 5 percent from the
year-ago quarter.
-- Other Businessesrevenue was $73 million, down 21 percent from the
year-ago quarter.
Third-Quarter 2009 Guidance
Intuit provided guidance for its third quarter of fiscal year 2009, which will end on April 30. Intuit's expected results for the third quarter are:
-- Revenue of $1.38 billion to $1.46 billion, or growth of 5 percent to 11
percent.
-- GAAP operating income from continuing operations of $723 million to $778
million, or growth of 7 percent to 15 percent. This represents GAAP
diluted earnings per share of $1.38 to $1.49, or growth of 4 percent to
12 percent.
-- Non-GAAP operating income of $783 million to $838 million, or growth of
8 percent to 15 percent. This represents non-GAAP diluted earnings per
share of $1.57 to $1.68, or growth of 13 percent to 21 percent.
Fiscal 2009 Guidance
Intuit also updated its previous guidance for fiscal year 2009. For fiscal 2009, the company now expects:
-- Revenueof $3.13 billion to $3.25 billion, or growth of 2 percent to 6
percent. Prior guidance was for growth of 6 percent to 10 percent.
-- GAAP operating income from continuing operations of $682 million to $735
million, or growth of 5 percent to 13 percent. This represents GAAP
diluted earnings per share of $1.32 to $1.43, or a decline of 6 percent
to growth of 1 percent.
-- Non-GAAP operating income of $917 million to $970 million, or growth of
7 percent to 13 percent. This represents non-GAAP diluted earnings per
share of $1.78 to $1.89, or growth of 11 percent to 18 percent.
Intuit also updated previously given fiscal 2009 business segment revenue guidance. The company now expects:
-- Consumer Tax revenueof $1.0 billion to $1.04 billion, or growth of 8
percent to 12 percent over the prior year, unchanged from prior
guidance.
-- QuickBooks revenueof $580 million to $620 million, or a decline of 7
percent to flat compared with the prior year. Prior guidance was $650
million to $675 million.
-- Payroll and Paymentsrevenueof $619 million to $642 million, or growth of
10 percent to 14 percent over the prior year, unchanged from prior
guidance.
-- Accounting Professionalsrevenueof $345 million to $358 million, or
growth of 5 percent to 9 percent over the prior year, unchanged from
prior guidance.
-- Financial Institutionsrevenueof $313 million to $325 million, or growth
of 5 percent to 9 percent over the prior year, unchanged from prior
guidance.
-- Other Businessesrevenueof $270 million to $290 million, or a decline of
19 percent to 13 percent compared with the prior year. Prior guidance
was $320 million to $340 million.
Webcast and Conference Call Information
A live audio webcast of Intuit's second-quarter 2009 conference call is available at http://investors.intuit.com/events.cfm. The call begins today at 1:30 p.m. Pacific time. The replay of the audio webcast will remain on Intuit's Web site for one week after the conference call. Intuit has also posted this press release, including the attached tables and non-GAAP to GAAP reconciliations on its Web site and will post the conference call script shortly after the conference call concludes. These documents may be found at http://investors.intuit.com/releases.cfm.
The conference call number is 866-814-1918 in the United States or 703-639-1362 from international locations. No reservation or access code is needed. A replay of the call will be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1327578.
Intuit, the Intuit logo and QuickBooks, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "About Non-GAAP Financial Measures" as well as the related Table B and Table E which follow it. A copy of the press release issued by Intuit on February 19, 2009 can be found on the investor relations page of Intuit's Web site.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements, including forecasts of Intuit's future expected financial results; its prospects for the business in fiscal 2009 and beyond; and all of the statements under the headings "Third-Quarter 2009 Guidance" and "Fiscal 2009 Guidance."
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, without limitation, the following: product introductions and price competition from our competitors can have unpredictable negative effects on our revenue, profitability and market position; governmental encroachment in our tax businesses or other governmental activities or public policy affecting the preparation and filing of tax returns could negatively affect our operating results and market position; if economic and market conditions in the U.S. and worldwide continue to decline, our customers may delay or reduce technology purchases which may harm our business, results of operations and financial condition; we may not be able to successfully introduce new products and services to meet our growth and profitability objectives, and current and future products and services may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; any failure to maintain reliable and responsive service levels for our offerings could cause us to lose customers and negatively impact our revenues and profitability; any significant product quality problems or delays in our products could harm our revenue, earnings and reputation; our participation in the Free File Alliance may result in lost revenue opportunities and cannibalization of our traditional paid franchise; any failure to properly use and protect personal customer information could harm our revenue, earnings and reputation; our acquisition activities may be disruptive to Intuit and may not result in expected benefits; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operations; our revenue and earnings are highly seasonal and the timing of our revenue between quarters is difficult to predict, which may cause significant quarterly fluctuations in our financial results; predicting tax-related revenues is challenging due to the heavy concentration of activity in a short time period; we have implemented, and are continuing to upgrade, new information systems and any problems with these new systems could interfere with our ability to deliver products and services and gather information to effectively manage our business; our financial position may not make repurchasing shares advisable or we may issue additional shares in an acquisition causing our number of outstanding shares to grow; and litigation involving intellectual property, antitrust, shareholder and other matters may increase our costs. More details about these and other risks that may impact our business are included in our Form 10-K for fiscal 2008 and in our other SEC filings. You can locate these reports through our website at http://www.intuit.com/about_intuit/investors. Forward-looking statements are based on information as of February 19, 2009, and we do not undertake any duty to update any forward-looking statement or other information in these remarks.
Table A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
Net revenue:
Product $ 434,929 $ 540,790 $ 655,482 $ 759,410
Service and other 356,047 294,084 616,873 520,402
Total net revenue 790,976 834,874 1,272,355 1,279,812
Costs and expenses:
Cost of revenue:
Cost of product 55,645 56,880 89,045 90,627
revenue
Cost of service and 107,492 102,838 219,200 200,292
other revenue
Amortization of
purchased intangible 15,023 13,299 30,236 26,113
assets
Selling and marketing 276,374 263,705 462,560 433,364
Research and 143,249 149,767 279,466 299,103
development
General and 71,088 66,672 136,185 143,787
administrative
Acquisition-related 12,548 8,083 22,136 16,095
charges
Total costs and 681,419 661,244 1,238,828 1,209,381
expenses [A]
Operating income from 109,557 173,630 33,527 70,431
continuing operations
Interest expense (11,686 ) (13,510 ) (23,417 ) (27,559 )
Interest and other 6,190 4,925 4,322 22,116
income
Gains on marketable
equity securities and - - 577 713
other investments,
net
Gain on sale of
outsourced payroll - 14,004 - 37,955
assets [B]
Income from
continuing operations 104,061 179,049 15,009 103,656
before income taxes
Income tax provision 18,650 62,555 (18,467 ) 34,227
(benefit) [C]
Minority interest 371 492 580 998
expense, net of tax
Net income from 85,040 116,002 32,896 68,431
continuing operations
Net income (loss)
from discontinued - (755 ) - 26,012
operations [D]
Net income $ 85,040 $ 115,247 $ 32,896 $ 94,443
Basic net income per
share from continuing $ 0.27 $ 0.35 $ 0.10 $ 0.20
operations
Basic net income
(loss) per share from - - - 0.08
discontinued
operations
Basic net income per $ 0.27 $ 0.35 $ 0.10 $ 0.28
share
Shares used in basic
per share 320,531 331,139 321,900 334,362
calculations
Diluted net income
per share from $ 0.26 $ 0.34 $ 0.10 $ 0.20
continuing operations
Diluted net income
(loss) per share from - - - 0.07
discontinued
operations
Diluted net income $ 0.26 $ 0.34 $ 0.10 $ 0.27
per share
Shares used in
diluted per share 326,319 342,751 329,482 346,014
calculations
INTUIT INC.
NOTES TO TABLE A
[A] The following table summarizes the total share-based compensation expense
that we recorded for the periods shown.
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
Cost of product $ 361 $ 283 $ 607 $ 559
revenue
Cost of service and 1,993 1,953 3,015 3,411
other revenue
Selling and marketing 12,826 9,728 20,906 17,426
Research and 10,209 8,118 16,590 15,999
development
General and 9,509 9,452 15,533 18,794
administrative
Total share-based $ 34,898 $ 29,534 $ 56,651 $ 56,189
compensation
[B] In March 2007 we sold certain assets related to our Complete Payroll and
Premier Payroll Service businesses to Automatic Data Processing, Inc. (ADP) for
a price of up to approximately $135 million in cash. The final purchase price
was contingent upon the number of customers that transitioned to ADP pursuant to
the purchase agreement over a period of approximately one year from the date of
sale. In the three and six months ended January 31, 2008 we recorded pre-tax
gains of $14.0 million and $38.0 million on our statement of operations for
customers who transitioned to ADP during those periods. We received a total
price of $93.6 million and recorded a total pre-tax gain of $83.2 million from
the inception of this transaction through its completion in the third quarter of
fiscal 2008.
[C] Our effective tax rate for the three months ended January 31, 2009 was
approximately 18%. Excluding net one-time benefits primarily related to an
agreement we entered into with a tax authority with respect to tax years ended
prior to fiscal 2009, our effective tax rate for that period was approximately
36%. This differed from the federal statutory rate of 35% primarily due to state
income taxes, which were partially offset by the benefit we received from the
domestic production activities deduction, federal and state research and
experimentation credits, and tax exempt interest income. Our effective tax rate
for the three months ended January 31, 2008 was approximately 35% and did not
differ significantly from the federal statutory rate. State income taxes were
offset primarily by the benefit we received from tax exempt interest income, the
domestic production activities deduction, and federal and state research and
experimentation credits.
We recorded a tax benefit of $18.5 million on pre-tax income of $15.0 million
for the six months ended January 31, 2009. Excluding net one-time benefits
primarily related to an agreement we entered into with a tax authority with
respect to tax years ended prior to fiscal 2009 and the reinstatement of the
federal research and experimentation credit, our effective tax rate for that
period was approximately 36%. This differed from the federal statutory rate of
35% primarily due to state income taxes, which were partially offset by the
benefit we received from the domestic production activities deduction, federal
and state research and experimentation credits, and tax exempt interest income.
Our effective tax rate for the six months ended January 31, 2008 was
approximately 33%. This differed from the federal statutory rate of 35%
primarily due to the benefit we received from tax exempt interest income, the
domestic production activities deduction, federal and state research and
experimentation credits, and a one-time benefit related to executive stock
compensation, partially offset by state income taxes.
[D] In August 2007 we sold our Intuit Distribution Management Solutions (IDMS)
business for approximately $100 million in cash and recorded a net gain on
disposal of $27.5 million. IDMS was part of our Other Businesses segment. In
accordance with the provisions of SFAS 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," we determined that IDMS became a discontinued
operation in the fourth quarter of fiscal 2007. We have therefore segregated the
net assets and operating results of IDMS from continuing operations on our
balance sheets and in our statements of operations for all periods prior to the
sale. Revenue and net loss from IDMS discontinued operations were $1.9 million
and $0.7 million for the six months ended January 31, 2008. Because IDMS
operating cash flows were not material for any period presented, we have not
segregated them from continuing operations on our statements of cash flows. We
have segregated the cash impact of the gain on disposal of IDMS on our statement
of cash flows for the six months ended January 31, 2008.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated February 19, 2009 contains non-GAAP financial measures. Table B and Table E reconcile the non-GAAP financial measures in that press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP operating income (loss) and related operating margin as a percentage of revenue, non-GAAP net income (loss) and non-GAAP net income (loss) per share.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.
We believe that these non-GAAP financial measures provide meaningful supplemental information regarding Intuit's operating results primarily because they exclude amounts that we do not consider part of ongoing operating results when assessing the performance of the organization, our operating segments or our senior management. Segment managers are not held accountable for share-based compensation expenses, acquisition-related costs, or the other excluded items that may impact their business units' operating income (loss) and, accordingly, we exclude these amounts from our measures of segment performance. We also exclude these amounts from our budget and planning process. We believe that our non-GAAP financial measures also facilitate the comparison of results for current periods and guidance for future periods with results for past periods. We exclude the following items from our non-GAAP financial measures:
-- Share-based compensation expenses. Our non-GAAP financial measures
exclude share-based compensation expenses, which consist of expenses for
stock options, restricted stock, restricted stock units and purchases of
common stock under our Employee Stock Purchase Plan. Segment managers
are not held accountable for share-based compensation expenses impacting
their business units' operating income (loss) and, accordingly, we
exclude share-based compensation expenses from our measures of segment
performance. While share-based compensation is a significant expense
affecting our results of operations, management excludes share-based
compensation from our budget and planning process. We exclude
share-based compensation expenses from our non-GAAP financial measures
for these reasons and the other reasons stated above. We compute
weighted average dilutive shares using the method required by SFAS 123
(R) for both GAAP and non-GAAP diluted net income per share.
-- Amortization of purchased intangible assets and acquisition-related
charges. In accordance with GAAP, amortization of purchased intangible
assets in cost of revenue includes amortization of software and other
technology assets related to acquisitions. Acquisition-related charges
in operating expenses include amortization of other purchased intangible
assets such as customer lists, covenants not to compete and trade names.
Acquisition activities are managed on a corporate-wide basis and segment
managers are not held accountable for the acquisition-related costs
impacting their business units' operating income (loss). We exclude
these amounts from our measures of segment performance and from our
budget and planning process. We exclude these items from our non-GAAP
financial measures for these reasons, the other reasons stated above and
because we believe that excluding these items facilitates comparisons to
the results of other companies in our industry, which have their own
unique acquisition histories.
-- Gains and losses on disposals of businesses and assets. We exclude these
amounts from our non-GAAP financial measures for the reasons stated
above and because they are unrelated to our ongoing business operating
results.
-- Gains and losses on marketable equity securities and other investments.
We exclude these amounts from our non-GAAP financial measures for the
reasons stated above and because they are unrelated to our ongoing
business operating results.
-- Income tax effects of excluded items. Our non-GAAP financial measures
exclude the income tax effects of the adjustments described above that
relate to the current period as well as adjustments for similar items
that relate to prior periods. We exclude the impact of these tax items
for the reasons stated above and because management believes that they
are not indicative of our ongoing business operations.
-- Operating results and gains and losses on the sale of discontinued
operations. From time to time, we sell or otherwise dispose of selected
operations as we adjust our portfolio of businesses to meet our
strategic goals. In accordance with GAAP, we segregate the operating
results of discontinued operations as well as gains and losses on the
sale of these discontinued operations from continuing operations on our
GAAP statements of operations but continue to include them in GAAP net
income or loss and net income or loss per share. We exclude these
amounts from our non-GAAP financial measures for the reasons stated
above and because they are unrelated to our ongoing business operations.
The following describes each non-GAAP financial measure, the items excluded from the most directly comparable GAAP measure in arriving at each non-GAAP financial measure, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-GAAP financial measure.
(A) Operating income (loss) and related operating margin as a percentage of revenue. We exclude share-based compensation expenses, amortization of purchased intangible assets and acquisition-related charges from our GAAP operating income (loss) from continuing operations and related operating margin in arriving at our non-GAAP operating income (loss) and related operating margin primarily because we do not consider them part of ongoing operating results when assessing the performance of the organization, our operating segments and senior management or when undertaking our budget and planning process. We believe that the exclusion of these expenses from our non-GAAP financial measures also facilitates the comparison of results for current periods and guidance for future periods with results for prior periods. In addition, we exclude amortization of purchased intangible assets and acquisition-related charges from non-GAAP operating income (loss) and operating margin because we believe that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories.
(B) Net income (loss) and net income (loss) per share (or earnings per share). We exclude share-based compensation expenses, amortization of purchased intangible assets, acquisition-related charges, net gains on marketable equity securities and other investments, gains and losses on disposals of businesses and assets, certain tax items as described above, and amounts related to discontinued operations from our GAAP net income (loss) and net income (loss) per share in arriving at our non-GAAP net income (loss) and net income (loss) per share. We exclude all of these items from our non-GAAP net income (loss) and net income (loss) per share primarily because we do not consider them part of ongoing operating results when assessing the performance of the organization, our operating segments and senior management or when undertaking our budget and planning process. We believe that the exclusion of these items from our non-GAAP financial measures also facilitates the comparison of results for current periods and guidance for future periods with results for prior periods.
In addition, we exclude amortization of purchased intangible assets and acquisition-related charges from our non-GAAP net income (loss) and net income (loss) per share because we believe that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories. We exclude net gains on marketable equity securities and other investments from our non-GAAP net income (loss) and net income (loss) per share because they are unrelated to our ongoing business operating results. Our non-GAAP financial measures exclude the income tax effects of the adjustments described above that relate to the current period as well as adjustments for similar items that relate to prior periods. We exclude the impact of these tax items because management believes that they are not indicative of our ongoing business operations. The effective tax rates used to calculate non-GAAP net income (loss) and net income (loss) per share were as follows: 36% for the first and second quarters of fiscal 2008; 36% for the first quarter of fiscal 2009; 34% for the second quarter of fiscal 2009; and 34% for third quarter and full year fiscal 2009 guidance. Finally, we exclude amounts related to discontinued operations from our non-GAAP net income (loss) and net income (loss) per share because they are unrelated to our ongoing business operations.
We refer to these non-GAAP financial measures in assessing the performance of Intuit's ongoing operations and for planning and forecasting in future periods. These non-GAAP financial measures also facilitate our internal comparisons to Intuit's historical operating results. We have historically reported similar non-GAAP financial measures and believe that the inclusion of comparative numbers provides consistency in our financial reporting. We compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.
The reconciliations of the forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures in Table E include all information reasonably available to Intuit at the date of this press release. These tables include adjustments that we can reasonably predict. Events that could cause the reconciliation to change include acquisitions and divestitures of businesses, goodwill and other asset impairments and sales of marketable equity securities and other investments.
Table B
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
GAAP operating income from $ 109,557 $ 173,630 $ 33,527 $ 70,431
continuing operations
Amortization of purchased 15,023 13,299 30,236 26,113
intangible assets
Acquisition-related charges 12,548 8,083 22,136 16,095
Share-based compensation 34,898 29,534 56,651 56,189
expense
Non-GAAP operating income $ 172,026 $ 224,546 $ 142,550 $ 168,828
GAAP net income $ 85,040 $ 115,247 $ 32,896 $ 94,443
Amortization of purchased 15,023 13,299 30,236 26,113
intangible assets
Acquisition-related charges 12,548 8,083 22,136 16,095
Share-based compensation 34,898 29,534 56,651 56,189
expense
Net gains on marketable
equity securities and other - - (577 ) (713 )
investments
Pre-tax gain on sale of - (14,004 ) - (37,955 )
outsourced payroll assets
Income tax effect of (21,737 ) (13,486 ) (37,964 ) (21,421 )
non-GAAP adjustments
Exclusion of discrete tax (16,262 ) (1,705 ) (21,860 ) (3,171 )
items
Discontinued operations - 755 - (26,012 )
Non-GAAP net income $ 109,510 $ 137,723 $ 81,518 $ 103,568
GAAP diluted net income per $ 0.26 $ 0.34 $ 0.10 $ 0.27
share
Amortization of purchased 0.05 0.04 0.09 0.08
intangible assets
Acquisition-related charges 0.04 0.02 0.07 0.05
Share-based compensation 0.11 0.09 0.17 0.16
expense
Net gains on marketable
equity securities and other - - - -
investments
Pre-tax gain on sale of - (0.04 ) - (0.11 )
outsourced payroll assets
Income tax effect of (0.07 ) (0.04 ) (0.11 ) (0.06 )
non-GAAP adjustments
Exclusion of discrete tax (0.05 ) (0.01 ) (0.07 ) (0.02 )
items
Discontinued operations - - - (0.07 )
Non-GAAP diluted net income $ 0.34 $ 0.40 $ 0.25 $ 0.30
per share
Shares used in diluted per 326,319 342,751 329,482 346,014
share calculations
See "About Non-GAAP Financial Measures" immediately preceding this Table B for
information on these measures, the items excluded from the most directly
comparable GAAP measures in arriving at non-GAAP financial measures, and the
reasons management uses each measure and excludes the specified amounts in
arriving at each non-GAAP financial measure.
Table C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 31, July 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 338,708 $ 413,340
Investments 209,143 414,493
Accounts receivable, net 441,572 127,230
Income taxes receivable 117,704 60,564
Deferred income taxes 78,512 101,730
Prepaid expenses and other current assets 90,548 45,457
Current assets before funds held for customers 1,276,187 1,162,814
Funds held for customers 293,683 610,748
Total current assets 1,569,870 1,773,562
Long-term investments 254,327 288,310
Property and equipment, net 539,854 507,499
Goodwill 1,693,390 1,698,087
Purchased intangible assets, net 219,415 273,087
Long-term deferred income taxes 36,374 52,491
Other assets 76,778 73,548
Total assets $ 4,390,008 $ 4,666,584
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 122,544 $ 115,198
Accrued compensation and related liabilities 131,801 229,819
Deferred revenue 471,903 359,936
Income taxes payable 187 16,211
Other current liabilities 216,142 135,326
Current liabilities before customer fund deposits 942,577 856,490
Customer fund deposits 293,683 610,748
Total current liabilities 1,236,260 1,467,238
Long-term debt 998,089 997,996
Other long-term obligations 120,064 121,489
Total liabilities 2,354,413 2,586,723
Minority interest 1,592 6,907
Stockholders' equity 2,034,003 2,072,954
Total liabilities and stockholders' equity $ 4,390,008 $ 4,666,584
Table D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
Cash flows from
operating activities:
Net income (1) $ 85,040 $ 115,247 $ 32,896 $ 94,443
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation 35,574 27,900 69,159 54,122
Amortization of 29,787 23,460 56,944 46,108
intangible assets
Share-based compensation 34,898 29,534 56,651 56,235
Pre-tax gain on sale of
outsourced payroll - (14,004 ) - (37,955 )
assets
Pre-tax gain on sale of - - - (45,667 )
IDMS (1)
Deferred income taxes (790 ) 7,313 44,217 14,560
Tax benefit from
share-based compensation (3,651 ) 13,232 6,971 25,032
plans
Excess tax benefit from
share-based compensation (370 ) (7,506 ) (6,497 ) (15,761 )
plans
Other 1,523 3,308 6,656 2,936
Subtotal 182,011 198,484 266,997 194,053
Changes in operating
assets and liabilities:
Accounts receivable (299,793 ) (226,467 ) (316,517 ) (236,938 )
Prepaid expenses, taxes 7,021 55,779 (113,889 ) 21,093
and other assets
Accounts payable (6,672 ) (25,623 ) 14,903 10,375
Accrued compensation and 15,609 42,871 (97,010 ) (49,805 )
related liabilities
Deferred revenue 139,789 39,497 122,008 23,800
Income taxes payable 1,484 11,855 (12,678 ) (14,338 )
Other liabilities 103,094 102,511 79,048 89,304
Total changes in
operating assets and (39,468 ) 423 (324,135 ) (156,509 )
liabilities
Net cash provided by
(used in) operating 142,543 198,907 (57,138 ) 37,544
activities (1)
Cash flows from
investing activities:
Purchases of
available-for-sale debt (30,884 ) (159,201 ) (66,956 ) (448,691 )
securities
Sales of
available-for-sale debt 116,489 368,111 264,395 717,617
securities
Maturities of
available-for-sale debt 13,060 43,335 23,855 174,335
securities
Net change in funds held
for customers' money 33,843 (257,934 ) 317,065 (218,839 )
market funds and other
cash equivalents
Purchases of property (49,674 ) (56,644 ) (116,884 ) (121,919 )
and equipment
Net change in customer (33,843 ) 257,934 (317,065 ) 218,839
fund deposits
Acquisitions of
businesses and (848 ) (131,596 ) (3,341 ) (134,071 )
intangible assets, net
of cash acquired
Cash received from
acquirer of outsourced - 7,281 - 27,303
payroll assets
Proceeds from
divestiture of - - - 97,147
businesses
Other 1,794 370 6,565 (6,470 )
Net cash provided by 49,937 71,656 107,634 305,251
investing activities
Cash flows from
financing activities:
Net proceeds from
issuance of common stock
and release of 15,183 64,145 78,499 115,344
restricted stock units
under employee stock
plans
Purchase of treasury (35,047 ) (250,000 ) (200,251 ) (499,998 )
stock
Excess tax benefit from
share-based compensation 370 7,506 6,497 15,761
plans
Issuance of restricted
stock units pursuant to (4 ) - 2,291 2,284
Management Stock
Purchase Plan
Other (987 ) (4,701 ) (1,750 ) (3,595 )
Net cash used in (20,485 ) (183,050 ) (114,714 ) (370,204 )
financing activities
Effect of exchange rates
on cash and cash (2,844 ) (3,433 ) (10,414 ) 2,356
equivalents
Net increase (decrease)
in cash and cash 169,151 84,080 (74,632 ) (25,053 )
equivalents
Cash and cash
equivalents at beginning 169,557 146,068 413,340 255,201
of period
Cash and cash
equivalents at end of $ 338,708 $ 230,148 $ 338,708 $ 230,148
period
(1) Because the operating cash flows of our Intuit Distribution Management
Solutions (IDMS) discontinued operations were not material for any period
presented, we have not segregated them from continuing operations on these
statements of cash flows. We have presented the effect of the gain on disposal
of IDMS on the statement of cash flows for the six months ended January 31,
2008.
Table E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(In thousands, except per share amounts)
(Unaudited)
Forward-Looking Guidance
GAAP Non-GAAP
Range of Estimate Range of Estimate
From To Adjustments From To
Three Months
Ending
April 30,
2009
Revenue $ 1,380,000 $ 1,460,000 $ - $ 1,380,000 $ 1,460,000
Operating $ 723,000 $ 778,000 $ 60,000 [a] $ 783,000 $ 838,000
income
Diluted
earnings per $ 1.38 $ 1.49 $ 0.19 [b] $ 1.57 $ 1.68
share
Shares 327,000 329,000 - 327,000 329,000
Twelve Months
Ending
July 31, 2009
Revenue $ 3,130,000 $ 3,250,000 $ - $ 3,130,000 $ 3,250,000
Operating $ 682,000 $ 735,000 $ 235,000 [c] $ 917,000 $ 970,000
income
Diluted
earnings per $ 1.32 $ 1.43 $ 0.46 [d] $ 1.78 $ 1.89
share
Shares 328,000 331,000 - 328,000 331,000
[a] Reflects estimated adjustments for share-based compensation expense of
approximately $36 million; amortization of purchased intangible assets of
approximately $15 million; and acquisition-related charges of approximately $9
million.
[b] Reflects the estimated adjustments in item [a], income taxes related to
these adjustments, and adjustments for certain discrete GAAP tax items.
[c] Reflects estimated adjustments for share-based compensation expense of
approximately $134 million; amortization of purchased intangible assets of
approximately $60 million; and acquisition-related charges of approximately $41
million.
[d] Reflects the estimated adjustments in item [c], income taxes related to
these adjustments, and adjustments for certain discrete GAAP tax items.
Source: Intuit Inc.
Released February 19, 2009