Intuit Announces Record Third-Quarter Revenue; Raises Full-Year Revenue and Earnings Guidance
Quarterly Revenue up 15 Percent; Earnings per Share up 28 Percent
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--
Intuit Inc. (Nasdaq:INTU) today announced record third-quarter revenue of $1.3 billion, a 15 percent increase over the year-ago quarter. Earnings per share were up 28 percent. Growth was driven by excellent performance in the consumer and professional tax segments.
"We had an outstanding tax season and the small business segments, including QuickBooks and Payroll and Payments, also performed well," said Brad Smith, Intuit's president and chief executive officer. "As a result, we're raising our fiscal year revenue and earnings estimates and expect to deliver another year of double-digit revenue and earnings growth for Intuit."
Third-Quarter 2008 Financial Highlights
-- Revenue of $1.313 billion increased 15 percent from the
year-ago quarter.
-- GAAP (Generally Accepted Accounting Principles) operating
income of $675 million increased 17 percent from the year-ago
quarter.
-- GAAP net income of $444 million increased 21 percent from the
year-ago quarter. This represents GAAP diluted earnings per
share of $1.33, up 28 percent from the year-ago quarter.
-- Non-GAAP operating income of $728 million increased 17 percent
from the year-ago quarter. This represents non-GAAP diluted
earnings per share of $1.39, up 23 percent from the year-ago
quarter.
Third-Quarter 2008 Business Segment Results
-- Consumer Tax revenue was $657 million, up 16 percent over the
year-ago quarter.
-- QuickBooks revenue was $165 million, up 5 percent over the
year-ago quarter.
-- Payroll and Payments revenue was $142 million, up 14 percent
over the year-ago quarter.
-- Professional Tax revenue was $166 million, up 20 percent from
the year-ago quarter. Results were affected by the previously
reported deferral of approximately $23 million of revenue from
the second quarter to the third quarter. Year to date,
Professional Tax revenue is up 1 percent.
-- Financial Institutions revenue was $76 million, up 17 percent
from the year-ago quarter. This segment includes Digital
Insight, which was acquired on Feb. 6, 2007. Intuit's third
fiscal quarter begins on Feb. 1. On a full-quarter basis, the
Financial Institutions third-quarter revenue growth rate would
have been 10 percent.
-- Other Businesses revenue was $107 million, up 20 percent over
the year-ago quarter.
Forward-looking Guidance
Intuit raised full-year 2008 revenue, operating income and earnings per share guidance. For fiscal 2008 the company expects:
-- Revenue of $3.05 billion to $3.06 billion, or growth of 14
percent.
-- GAAP operating income of $655 million to $665 million, or
growth of 3 percent to 4 percent. On a non-GAAP basis,
operating income is expected to be $860 million to $870
million, or growth of 12 percent to 14 percent.
-- GAAP diluted earnings per share, or EPS, of $1.42 to $1.44, or
growth of 15 percent to 16 percent. On a non-GAAP basis,
diluted EPS is expected to be $1.61 to $1.63, or growth of 13
percent to 14 percent.
Intuit also raised its previously given fiscal year revenue guidance for the Consumer Tax segment, which is now expected to grow 14 percent. All other fiscal year 2008 segment revenue guidance remained unchanged. Additional guidance details are available on Intuit's Web site at www.intuit.com/about_intuit/investors/earnings/2008.
New Stock Repurchase Program
Intuit also announced today a new stock repurchase program authorizing the purchase of up to $600 million of Intuit stock over the next three years. Intuit used all remaining funds in its last $800 million repurchase program, authorized in May 2007, during its fiscal third-quarter 2008, which ended on April 30. Since authorizing its first stock repurchase program in May 2001, Intuit has spent approximately $4.5 billion to repurchase approximately 186 million shares of its stock.
Webcast and Conference Call Information
A live audio webcast of Intuit's third-quarter 2008 conference call is available at http://www.intuit.com/about_intuit/investors/webcast.jhtml. 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://intuit.com/about_intuit/investors/earnings/2008/.
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 1232067.
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 May 20, 2008 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 double-digit revenue growth and other future expected financial results; its prospects for the business in fiscal 2008 and beyond; and all of the statements under the heading "Forward-Looking 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 regulating the filing of tax returns could negatively affect our operating results and market position; 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 2007 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 May 20, 2008, 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 Nine Months Ended
----------------------- -----------------------
April 30, April 30, April 30, April 30,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net revenue:
Product $ 517,670 $ 484,052 $1,277,080 $1,240,232
Service and other 795,338 655,093 1,315,740 1,000,043
----------- ----------- ----------- -----------
Total net revenue 1,313,008 1,139,145 2,592,820 2,240,275
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenue:
Cost of product
revenue 34,637 40,605 125,264 142,075
Cost of service
and other revenue 105,311 90,377 305,603 218,568
Amortization of
purchased
intangible assets 14,075 13,538 40,188 17,871
Selling and
marketing 246,095 214,655 679,459 587,703
Research and
development 149,985 116,200 449,088 346,614
General and
administrative 79,150 76,995 222,937 221,224
Acquisition-related
charges 9,254 8,695 25,349 11,942
----------- ----------- ----------- -----------
Total costs and
expenses (A) 638,507 561,065 1,847,888 1,545,997
----------- ----------- ----------- -----------
Operating income from
continuing operations 674,501 578,080 744,932 694,278
Interest expense (12,830) (12,823) (40,389) (12,823)
Interest and other
income 10,361 10,552 32,477 31,867
Gains on marketable
equity securities and
other investments,
net 477 347 1,190 1,568
Gain on sale of
outsourced payroll
assets (B) 13,616 406 51,571 406
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 686,125 576,562 789,781 715,296
Income tax provision
(C) 241,612 208,344 275,839 258,148
Minority interest
expense, net of tax 334 271 1,332 821
----------- ----------- ----------- -----------
Net income from
continuing operations 444,179 367,947 512,610 456,327
Net income (loss) from
discontinued
operations (D) - (736) 26,012 (2,684)
----------- ----------- ----------- -----------
Net income $ 444,179 $ 367,211 $ 538,622 $ 453,643
=========== =========== =========== ===========
Basic net income per
share from continuing
operations $ 1.37 $ 1.08 $ 1.55 $ 1.33
Basic net income
(loss) per share from
discontinued
operations - - 0.08 (0.01)
----------- ----------- ----------- -----------
Basic net income per
share $ 1.37 $ 1.08 $ 1.63 $ 1.32
=========== =========== =========== ===========
Shares used in basic
per share
calculations 323,408 339,495 330,862 344,351
=========== =========== =========== ===========
Diluted net income per
share from continuing
operations $ 1.33 $ 1.04 $ 1.50 $ 1.28
Diluted net income
(loss) per share from
discontinued
operations - - 0.08 (0.01)
----------- ----------- ----------- -----------
Diluted net income per
share $ 1.33 $ 1.04 $ 1.58 $ 1.27
=========== =========== =========== ===========
Shares used in diluted
per share
calculations 333,436 351,686 341,869 357,767
=========== =========== =========== ===========
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
(A) The following table summarizes the total share-based compensation
expense that we recorded for continuing operations for the periods
shown. The share-based compensation expense that we recorded for
discontinued operations for these periods was nominal.
Three Months Ended Nine Months Ended
--------------------- ----------------------
April 30, April 30, April 30, April 30,
2008 2007 2008 2007
---------- ---------- ----------- ----------
Cost of product revenue $ 288 $ 134 $ 847 $ 614
Cost of service and
other revenue 1,483 1,010 4,894 2,083
Selling and marketing 10,684 6,929 28,110 18,313
Research and development 8,378 5,531 24,377 16,206
General and
administrative 9,260 6,728 28,054 20,769
---------- ---------- ----------- ----------
Total share-based
compensation $ 30,093 $ 20,332 $ 86,282 $ 57,985
========== ========== =========== ==========
(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 nine months ended April 30, 2008 we recorded pre-tax net gains of $13.6 million and $51.6 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.
In accordance with the provisions of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," we did not account for this transaction as a discontinued operation because the operations and cash flows of the assets could not be clearly distinguished, operationally or for financial reporting purposes, from the rest of our outsourced payroll business. The assets were part of our Payroll and Payments segment.
(C) Our effective tax rate for the three months ended April 30, 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 experimental credits. Our effective tax rate for the three months ended April 30, 2007 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 federal and state research and experimental credits and tax exempt interest income.
Our effective tax rate for the nine months ended April 30, 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 experimental credits. Our effective tax rate for the nine months ended April 30, 2007 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 federal and state research and experimental credits and tax exempt interest income. In addition, we benefited from the retroactive extension of the federal research and experimental credit in the fiscal 2007 period.
(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. Assets held for sale at July 31, 2007 consisted primarily of goodwill and purchased intangible assets. 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 nine months ended April 30, 2008.
Revenue and net loss from IDMS discontinued operations were $1.9 million and $0.7 million for the nine months ended April 30, 2008. Revenue and net income from IDMS discontinued operations were $15.3 million and $0.4 million for the three months ended April 30, 2007 and revenue and net loss were $39.5 million and $1.5 million for the nine months then ended.
In the second quarter of fiscal 2008 we recorded a net loss of $0.8 million for certain contingent liabilities that became payable to the purchaser of Intuit Information Technology Solutions, which we sold in December 2005.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated May 20, 2008 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 and acquisition-related charges in
operating expenses includes 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: 37% for the first quarter of fiscal 2007; 36% for the second and third quarters of fiscal 2007; 36% for the first, second, and third quarters of fiscal 2008; and 36% for fiscal 2008 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 Nine Months Ended
------------------- -------------------
April 30, April 30, April 30, April 30,
2008 2007 2008 2007
--------- --------- --------- ---------
GAAP operating income from
continuing operations $674,501 $578,080 $744,932 $694,278
Amortization of purchased
intangible assets 14,075 13,538 40,188 17,871
Acquisition-related charges 9,254 8,695 25,349 11,942
Share-based compensation
expense 30,093 20,332 86,282 57,985
--------- --------- --------- ---------
Non-GAAP operating income $727,923 $620,645 $896,751 $782,076
========= ========= ========= =========
GAAP net income $444,179 $367,211 $538,622 $453,643
Amortization of purchased
intangible assets 14,075 13,538 40,188 17,871
Acquisition-related charges 9,254 8,695 25,349 11,942
Share-based compensation
expense 30,093 20,332 86,282 57,985
Net gains on marketable equity
securities and other
investments (477) (347) (1,190) (1,568)
Pre-tax gain on sale of
outsourced payroll assets (13,616) (406) (51,571) (406)
Income tax effect of non-GAAP
adjustments (18,143) (15,213) (39,563) (31,029)
Exclusion of discrete tax items (1,408) 3,121 (4,580) 4,779
Discontinued operations - 736 (26,012) 2,684
--------- --------- --------- ---------
Non-GAAP net income $463,957 $397,667 $567,525 $515,901
========= ========= ========= =========
GAAP diluted net income per
share $ 1.33 $ 1.04 $ 1.58 $ 1.27
Amortization of purchased
intangible assets 0.04 0.04 0.12 0.05
Acquisition-related charges 0.03 0.02 0.07 0.03
Share-based compensation
expense 0.09 0.06 0.25 0.16
Net gains on marketable equity
securities and other
investments - - - -
Pre-tax gain on sale of
outsourced payroll assets (0.04) - (0.15) -
Income tax effect of non-GAAP
adjustments (0.06) (0.04) (0.12) (0.09)
Exclusion of discrete tax items - 0.01 (0.01) 0.01
Discontinued operations - - (0.08) 0.01
--------- --------- --------- ---------
Non-GAAP diluted net income per
share $ 1.39 $ 1.13 $ 1.66 $ 1.44
========= ========= ========= =========
Shares used in diluted per
share calculations 333,436 351,686 341,869 357,767
========= ========= ========= =========
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)
April 30, July 31,
2008 2007
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 471,504 $ 255,201
Investments 425,396 1,048,470
Accounts receivable, net 225,047 131,691
Income taxes receivable 457 54,178
Deferred income taxes 86,786 84,682
Prepaid expenses and other
current assets 61,301 54,854
Current assets of discontinued
operations - 8,515
---------------- ----------------
Current assets before funds
held for customers 1,270,491 1,637,591
Funds held for customers 358,001 314,341
---------------- ----------------
Total current assets 1,628,492 1,951,932
Property and equipment, net 469,675 298,396
Long term investments 295,459 -
Goodwill 1,698,436 1,517,036
Purchased intangible assets, net 290,125 292,884
Long-term deferred income taxes 95,319 72,066
Loans to officers 8,225 8,865
Other assets 62,702 58,636
Long-term assets of discontinued
operations - 52,211
---------------- ----------------
Total assets $ 4,548,433 $ 4,252,026
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 156,531 $ 119,799
Accrued compensation and related
liabilities 179,423 192,286
Deferred revenue 280,244 313,753
Income taxes payable 214,523 33,278
Other current liabilities 200,873 171,650
Current liabilities of
discontinued operations - 15,002
---------------- ----------------
Current liabilities before
customer fund deposits 1,031,594 845,768
Customer fund deposits 358,001 314,341
---------------- ----------------
Total current liabilities 1,389,595 1,160,109
Long-term debt 997,951 997,819
Other long-term obligations 104,283 57,756
---------------- ----------------
Total liabilities 2,491,829 2,215,684
---------------- ----------------
Minority interest 6,180 1,329
Stockholders' equity 2,050,424 2,035,013
---------------- ----------------
Total liabilities and
stockholders' equity $ 4,548,433 $ 4,252,026
================ ================
Table D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
----------------------- -----------------------
April 30, April 30, April 30, April 30,
2008 2007 2008 2007
---------- ------------ ---------- ------------
Cash flows from
operating activities:
Net income $ 444,179 $ 367,211 $ 538,622 $ 453,643
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation 31,420 25,230 85,542 68,566
Acquisition-related
charges 9,254 9,660 25,349 14,836
Amortization of
purchased
intangible assets 14,075 13,817 40,188 18,708
Amortization of
purchased
intangible assets
to cost of service
and other revenue 2,189 1,449 6,089 6,754
Share-based
compensation 30,093 20,585 86,328 58,756
Amortization of
premiums and
discounts on
available-for-sale
debt securities 946 939 2,556 2,900
Net gains on
marketable equity
securities and
other investments (477) (347) (1,190) (1,568)
Pre-tax gain on
sale of outsourced
payroll assets (13,616) - (51,571) -
Pre-tax gain on
sale of IDMS - - (45,667) -
Deferred income
taxes 4,582 (2,376) 19,142 (11,775)
Tax benefit from
share-based
compensation plans 3,059 2,679 28,091 32,109
Excess tax benefit
from share-based
compensation plans (2,024) (1,511) (17,785) (18,231)
Other 4,959 1,159 6,998 1,902
---------- ------------ ---------- ------------
Subtotal 528,639 438,495 722,692 626,600
---------- ------------ ---------- ------------
Changes in
operating assets
and liabilities:
Accounts
receivable 150,540 155,895 (86,398) (56,989)
Prepaid expenses,
taxes and other
assets 19,470 35,956 40,563 44,683
Accounts payable 333 (23,509) 10,708 25,461
Accrued
compensation and
related
liabilities 28,231 (6,310) (21,574) (40,036)
Deferred revenue (56,746) (56,159) (32,946) (53,886)
Income taxes
payable 196,883 155,045 182,545 157,747
Other liabilities (35,401) 8,821 53,903 111,085
---------- ------------ ---------- ------------
Total changes in
operating assets
and liabilities 303,310 269,739 146,801 188,065
---------- ------------ ---------- ------------
Net cash provided
by operating
activities 831,949 708,234 869,493 814,665
---------- ------------ ---------- ------------
Cash flows from
investing activities:
Purchases of
available-for-sale
debt securities (290,300) (1,097,727) (738,991) (1,978,305)
Liquidation of
available-for-sale
debt securities 151,142 454,408 868,759 1,440,155
Maturity of
available-for-sale
debt securities 26,760 391,148 201,095 452,762
Proceeds from the
sale of marketable
equity securities - - - 858
Net change in funds
held for customers'
money market funds
and other cash
equivalents 181,124 152,688 (37,715) 98,213
Purchases of property
and equipment (95,335) (36,402) (217,254) (89,308)
Change in other
assets 4,384 (1,556) (2,086) (8,238)
Net change in
customer fund
deposits (181,124) (152,688) 37,715 (98,213)
Acquisitions of
businesses and
intangible assets,
net of cash acquired (128,768) (1,207,283) (262,839) (1,269,276)
Cash received from
acquirer of
outsourced payroll
assets 7,576 44,312 34,879 44,312
Cash received from
acquirer of IDMS - - 97,147 -
---------- ------------ ---------- ------------
Net cash used in
investing
activities of
continuing
operations (324,541) (1,453,100) (19,290) (1,407,040)
Net cash provided
by investing
activities of
discontinued
operations - - - 20,989
---------- ------------ ---------- ------------
Net cash used in
investing
activities (324,541) (1,453,100) (19,290) (1,386,051)
---------- ------------ ---------- ------------
Cash flows from
financing activities:
Proceeds from bridge
credit facility - 1,000,000 - 1,000,000
Retirement of bridge
credit facility - (1,000,000) - (1,000,000)
Issuance of long-term
debt, net of
discounts - 997,755 - 997,755
Net proceeds from
issuance of common
stock under stock
plans 31,602 26,731 146,946 150,928
Purchase of treasury
stock (300,000) (301,378) (799,998) (506,751)
Excess tax benefit
from share-based
compensation plans 2,024 1,511 17,785 18,231
Issuance of
restricted stock
units pursuant to
Management Stock
Purchase Plan - - 2,284 -
Other 523 (6,307) (3,072) (7,622)
---------- ------------ ---------- ------------
Net cash provided
by (used in)
financing
activities (265,851) 718,312 (636,055) 652,541
---------- ------------ ---------- ------------
Effect of exchange
rates on cash and
cash equivalents (201) 4,799 2,155 3,817
---------- ------------ ---------- ------------
Net increase
(decrease) in cash
and cash equivalents 241,356 (21,755) 216,303 84,972
Cash and cash
equivalents at
beginning of period 230,148 286,328 255,201 179,601
---------- ------------ ---------- ------------
Cash and cash
equivalents at end of
period $ 471,504 $ 264,573 $ 471,504 $ 264,573
========== ============ ========== ============
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 Adjust From To
ments
----------------------- --------- -----------------------
Three
Months
Ending
July 31,
2008
Revenue $ 466,000 $ 471,000 $ - $ 466,000 $ 471,000
Diluted
loss per
share $ (0.16) $ (0.14) $ 0.11 (a) $ (0.05) $ (0.03)
Twelve
Months
Ending
July 31,
2008
Revenue $3,050,000 $3,060,000 $ - $3,050,000 $3,060,000
Operating
income $ 655,000 $ 665,000 $205,000 (b) $ 860,000 $ 870,000
Operating
margin 21% 22% 7%(b) 28% 29%
Diluted
earnings
per
share $ 1.42 $ 1.44 $ 0.19 (c) $ 1.61 $ 1.63
Shares 339,000 341,000 - 339,000 341,000
(a) Reflects estimated adjustments for share-based compensation
expense of approximately $30 million; amortization of purchased
intangible assets of approximately $14 million; acquisition-related
charges of approximately $10 million; and income taxes related to
these adjustments.
(b) Reflects estimated adjustments for share-based compensation
expense of approximately $116 million; amortization of purchased
intangible assets of approximately $54 million; and acquisition-
related charges of approximately $35 million.
(c) Reflects the estimated adjustments in item (b); an adjustment for
an expected pre-tax gain on the sale of certain outsourced payroll
assets of approximately $52 million; income taxes related to these
adjustments; and an adjustment for net income from discontinued
operations of approximately $26 million.
Source: Intuit Inc.
Released May 20, 2008