Intuit Second-Quarter Revenue Grows 11 Percent
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--
Intuit Inc. (Nasdaq:INTU) today announced strong second-quarter results, with revenue growing 11 percent to $835 million for the period ending Jan. 31.
"We are pleased with the early results for TurboTax and the continued strong growth in Payroll and Payments," said Brad Smith, Intuit's president and chief executive officer. "We are looking forward to another year of double-digit revenue growth for Intuit."
Second-Quarter 2008 Financial Highlights
-- Revenue of $834.9 million increased 11 percent from the
year-ago quarter. Growth was driven by the acquisition of
Digital Insight in February 2007 and strong performance in
Consumer Tax.
-- Operating income and net income for the quarter reflect the
deferral of approximately $23 million of ProTax revenue to the
third quarter, increased costs related to the acquisition of
Digital Insight and higher marketing spend to support the
launch of the company's Consumer Tax offerings.
-- GAAP (Generally Accepted Accounting Principles) operating
income from continuing operations was $173.6 million,
compared with GAAP operating income from continuing
operations of $214.7 million in the year-ago quarter.
-- GAAP net income was $115.2 million, compared with GAAP net
income of $145.4 million in the year-ago quarter. This
represents GAAP diluted net income per share of $0.34,
compared with GAAP diluted net income per share of $0.40
in the year-ago quarter.
-- Non-GAAP operating income was $224.5 million, compared
with non-GAAP operating income of $237.4 million in the
year-ago quarter. Non-GAAP diluted net income per share
was $0.40, compared with non-GAAP diluted net income per
share of $0.44 in the year-ago quarter.
Second-Quarter 2008 Business Segment Results
-- Consumer Tax revenue was $248.3 million, up 11 percent over
the year-ago quarter.
-- QuickBooks revenue was $175.4 million, up 5 percent over the
year-ago quarter.
-- Payroll and Payments revenue was $138 million, flat compared
with the year-ago quarter, or growth of 16 percent, excluding
the sale of certain payroll assets to ADP during fiscal 2007.
-- Professional Tax revenue was $105.4 million, down 19 percent
from the year-ago quarter. Results were affected by the
previously mentioned deferral of approximately $23 million of
revenue to the third quarter.
-- Financial Institutions revenue was $72.3 million and includes
the results of Digital Insight.
-- Other Businesses revenue was $95.5 million, up 12 percent over
the year-ago quarter.
Forward-looking Guidance
Intuit reaffirmed its previously given revenue guidance for full fiscal year 2008. Intuit also updated operating income and fully diluted earnings per share guidance for fiscal year 2008 to reflect the impact of the acquisition of Homestead Technologies Inc., and the expectation that the research and development tax credit will not be renewed before the end of the fiscal year. For fiscal 2008 the company expects:
-- Revenue of $3.0 billion to $3.05 billion, or growth of 12
percent to 14 percent.
-- GAAP operating income of $635 million to $650 million, or
growth of 0 percent to 2 percent. On a non-GAAP basis,
operating income is expected to be $845 million to $860
million, or growth of 10 percent to 12 percent.
-- GAAP diluted EPS of $1.38 to $1.40, or growth of 11 percent to
13 percent. On a non-GAAP basis, diluted EPS is expected to be
$1.56 to $1.58, or growth of 9 percent to 10 percent.
Intuit also adjusted its previously given third- and fourth-quarter guidance for earnings per share and its previously given fiscal 2008 revenue guidance for the QuickBooks segment. Fiscal 2008 revenue guidance for Intuit's other segments is unchanged. Third-quarter GAAP diluted EPS is now expected to be $1.23 to $1.26. Third-quarter non-GAAP diluted EPS is now expected to be $1.31 to $1.34. Fourth-quarter GAAP EPS is now expected to be a loss of $0.14 to a loss of $0.12. Fourth quarter non-GAAP EPS is now expected to be a loss of $0.05 to a loss of $0.03.
Details on segment revenue guidance are available on Intuit's Web site at www.intuit.com/about_intuit/investors/earnings/2008.
Webcast and Conference Call Information
A live audio webcast of Intuit's second-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 866-802-4328 in the United States or 703-639-1322 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 1194071.
Intuit, the Intuit logo, TurboTax 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 21, 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 February 21, 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 Six Months Ended
----------------------- -----------------------
January 31, January 31, January 31, January 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Net revenue:
Product $540,790 $546,064 $ 759,410 $ 756,180
Service and other 294,084 204,573 520,402 344,950
----------- ----------- ----------- -----------
Total net revenue 834,874 750,637 1,279,812 1,101,130
----------- ----------- ----------- -----------
Costs and expenses:
Cost of revenue:
Cost of product
revenue 56,880 66,079 90,627 101,470
Cost of service
and other revenue 102,838 65,375 200,292 128,191
Amortization of
purchased
intangible assets 13,299 2,304 26,113 4,333
Selling and
marketing 263,705 219,530 433,364 373,048
Research and
development 149,767 113,048 299,103 230,414
General and
administrative 66,672 68,215 143,787 144,229
Acquisition-related
charges 8,083 1,369 16,095 3,247
----------- ----------- ----------- -----------
Total costs and
expenses (A) 661,244 535,920 1,209,381 984,932
----------- ----------- ----------- -----------
Operating income from
continuing operations 173,630 214,717 70,431 116,198
Interest expense (13,510) - (27,559) -
Interest and other
income 4,925 11,027 22,116 21,315
Gains on marketable
equity securities and
other investments,
net - - 713 1,221
Gain on sale of
outsourced payroll
assets (B) 14,004 - 37,955 -
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 179,049 225,744 103,656 138,734
Income tax provision
(C) 62,555 79,829 34,227 49,804
Minority interest
expense, net of tax 492 335 998 550
----------- ----------- ----------- -----------
Net income from
continuing operations 116,002 145,580 68,431 88,380
Net income (loss) from
discontinued
operations (D) (755) (218) 26,012 (1,948)
----------- ----------- ----------- -----------
Net income $115,247 $145,362 $ 94,443 $ 86,432
=========== =========== =========== ===========
Basic net income per
share from continuing
operations $ 0.35 $ 0.42 $ 0.20 $ 0.26
Basic net income
(loss) per share from
discontinued
operations - - 0.08 (0.01)
----------- ----------- ----------- -----------
Basic net income per
share $ 0.35 $ 0.42 $ 0.28 $ 0.25
=========== =========== =========== ===========
Shares used in basic
per share
calculations 331,139 347,185 334,362 346,700
=========== =========== =========== ===========
Diluted net income per
share from continuing
operations $ 0.34 $ 0.40 $ 0.20 $ 0.25
Diluted net income
(loss) per share from
discontinued
operations - - 0.07 (0.01)
----------- ----------- ----------- -----------
Diluted net income per
share $ 0.34 0.40 $ 0.27 $ 0.24
=========== =========== =========== ===========
Shares used in diluted
per share
calculations 342,751 360,573 346,014 360,654
=========== =========== =========== ===========
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 Six Months Ended
----------------------- -----------------------
January 31, January 31, January 31, January 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Cost of product
revenue $ 283 $ 262 $ 559 $ 480
Cost of service
and other revenue 1,953 546 3,411 1,073
Selling and
marketing 9,728 5,690 17,426 11,384
Research and
development 8,118 5,465 15,999 10,675
General and
administrative 9,452 7,071 18,794 14,041
----------- ----------- ----------- -----------
Total share-based
compensation $29,534 $19,034 $56,189 $37,653
=========== =========== =========== ===========
(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 is contingent upon the
number of customers that transition to ADP. Due to actual
customer attrition during the fourth quarter of fiscal 2007 and
the first two quarters of fiscal 2008, we currently estimate the
maximum sales price to be approximately $111 million. The assets
were part of our Payroll and Payments segment.
In accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets," we have not
accounted 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. We
will recognize the net gain on the sale of the assets as
customers are transitioned pursuant to the agreement over a
period not to exceed one year from the date of the sale. In the
three and six months ended January 31, 2008 we recorded a pre-tax
net gains of $14.0 million and $38.0 million in our statement of
operations for customers who transitioned to ADP during those
periods. The total pre-tax net gain recognized from the inception
of this transaction through January 31, 2008 was $69.6 million.
(C) 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 experimental credits. Our effective tax rate for the
three months ended January 31, 2007 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 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.
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 experimental credits,
and a one-time benefit related to executive stock compensation,
partially offset by state income taxes. Our effective tax rate
for the six months ended January 31, 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 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.
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 six
months ended January 31, 2008.
Revenue and net loss from IDMS discontinued operations were $1.9
million and $0.7 million for the six months ended January 31,
2008. Revenue and net loss from IDMS discontinued operations were
$12.7 million and $0.2 million for the three months ended January
31, 2007 and $24.2 million and $1.9 million for the six months
then ended.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated February 21, 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 quarter of
fiscal 2007; 36% for the first and second 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 Six Months Ended
----------------------- -----------------------
January 31, January 31, January 31, January 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
GAAP operating income
from continuing
operations $173,630 $214,717 $ 70,431 $116,198
Amortization of
purchased intangible
assets 13,299 2,304 26,113 4,333
Acquisition-related
charges 8,083 1,369 16,095 3,247
Share-based
compensation expense 29,534 19,034 56,189 37,653
----------- ----------- ----------- -----------
Non-GAAP operating
income $224,546 $237,424 $168,828 $161,431
=========== =========== =========== ===========
GAAP net income $115,247 $145,362 $ 94,443 $ 86,432
Amortization of
purchased intangible
assets 13,299 2,304 26,113 4,333
Acquisition-related
charges 8,083 1,369 16,095 3,247
Share-based
compensation expense 29,534 19,034 56,189 37,653
Net gains on
marketable equity
securities and other
investments - - (713) (1,221)
Pre-tax gain on sale
of outsourced payroll
assets (14,004) - (37,955) -
Income tax effect of
non-GAAP adjustments (13,486) (7,933) (21,421) (15,816)
Exclusion of discrete
tax items (1,705) (511) (3,171) 1,658
Discontinued
operations 755 218 (26,012) 1,948
----------- ----------- ----------- -----------
Non-GAAP net income $137,723 $159,843 $103,568 $118,234
=========== =========== =========== ===========
GAAP diluted net
income per share $ 0.34 $ 0.40 $ 0.27 $ 0.24
Amortization of
purchased intangible
assets 0.04 0.01 0.08 0.01
Acquisition-related
charges 0.02 - 0.05 0.01
Share-based
compensation expense 0.09 0.05 0.16 0.10
Net gains on
marketable equity
securities and other
investments - - - -
Pre-tax gain on sale
of outsourced payroll
assets (0.04) - (0.11) -
Income tax effect of
non-GAAP adjustments (0.04) (0.02) (0.06) (0.04)
Exclusion of discrete
tax items (0.01) - (0.01) -
Discontinued
operations - - (0.08) 0.01
----------- ----------- ----------- -----------
Non-GAAP diluted net
income per share $ 0.40 $ 0.44 $ 0.30 $ 0.33
=========== =========== =========== ===========
Shares used in diluted
per share
calculations 342,751 360,573 346,014 360,654
=========== =========== =========== ===========
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,
2008 2007
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 230,148 $ 255,201
Investments 607,029 1,048,470
Accounts receivable, net 372,385 131,691
Income taxes receivable 4,178 54,178
Deferred income taxes 86,653 84,682
Prepaid expenses and other current assets 75,721 54,854
Current assets of discontinued operations - 8,515
----------- ----------
Current assets before funds held for
payroll customers 1,376,114 1,637,591
Funds held for payroll customers 533,180 314,341
----------- ----------
Total current assets 1,909,294 1,951,932
Property and equipment, net 384,700 298,396
Goodwill 1,628,512 1,517,036
Purchased intangible assets, net 272,955 292,884
Long-term deferred income taxes 97,996 72,066
Loans to officers 8,225 8,865
Other assets 70,174 58,636
Long-term assets of discontinued operations - 52,211
----------- ----------
Total assets $4,371,856 $4,252,026
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 144,169 $ 119,799
Accrued compensation and related liabilities 148,595 192,286
Deferred revenue 336,627 313,753
Income taxes payable 19,131 33,278
Other current liabilities 245,261 171,650
Current liabilities of discontinued
operations - 15,002
----------- ----------
Current liabilities before payroll customer
fund deposits 893,783 845,768
Payroll customer fund deposits 533,180 314,341
----------- ----------
Total current liabilities 1,426,963 1,160,109
Long-term debt 997,906 997,819
Other long-term obligations 100,527 57,756
----------- ----------
Total liabilities 2,525,396 2,215,684
----------- ----------
Minority interest 3,938 1,329
Stockholders' equity 1,842,522 2,035,013
----------- ----------
Total liabilities and stockholders' equity $4,371,856 $4,252,026
=========== ==========
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,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Cash flows from
operating activities:
Net income (1) $ 115,247 $ 145,362 $ 94,443 $ 86,432
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation 27,900 21,061 54,122 43,336
Acquisition-
related charges 8,083 2,334 16,095 5,176
Amortization of
purchased
intangible assets 13,299 2,583 26,113 4,891
Amortization of
purchased
intangible assets
to cost of
service and other
revenue 2,078 2,734 3,900 5,305
Share-based
compensation 29,534 19,312 56,235 38,171
Amortization of
premiums and
discounts on
available-for-
sale debt
securities 753 1,071 1,610 1,961
Net gains on
marketable equity
securities and
other investments - - (713) (1,221)
Pre-tax gain on
sale of
outsourced
payroll assets (14,004) - (37,955) -
Pre-tax gain on
sale of IDMS (1) - - (45,667) -
Deferred income
taxes 7,313 (6,552) 14,560 (9,399)
Tax benefit from
share-based
compensation
plans 13,232 12,634 25,032 29,430
Excess tax benefit
from share-based
compensation
plans (7,506) (7,967) (15,761) (16,720)
Other 2,555 394 2,039 743
----------- ----------- ----------- -----------
Subtotal 198,484 192,966 194,053 188,105
----------- ----------- ----------- -----------
Changes in
operating assets
and liabilities:
Accounts
receivable (226,467) (215,488) (236,938) (212,884)
Prepaid
expenses, taxes
and other
assets 55,779 66,985 21,093 8,727
Accounts payable (25,623) 22,619 10,375 48,970
Accrued
compensation
and related
liabilities 42,871 47,436 (49,805) (33,726)
Deferred revenue 39,497 19,052 23,800 2,273
Income taxes
payable 11,855 18,415 (14,338) 2,702
Other
liabilities 102,511 91,152 89,304 102,264
----------- ----------- ----------- -----------
Total changes
in operating
assets and
liabilities 423 50,171 (156,509) (81,674)
----------- ----------- ----------- -----------
Net cash
provided by
operating
activities (1) 198,907 243,137 37,544 106,431
----------- ----------- ----------- -----------
Cash flows from
investing activities:
Purchases of
available-for-sale
debt securities (159,201) (479,703) (448,691) (880,578)
Liquidation of
available-for-sale
debt securities 368,111 495,550 717,617 985,747
Maturity of
available-for-sale
debt securities 43,335 26,784 174,335 61,614
Proceeds from the
sale of marketable
equity securities - - - 858
Net change in funds
held for payroll
customers' money
market funds and
other cash
equivalents (257,934) 24,438 (218,839) (54,475)
Purchases of
property and
equipment (56,644) (23,683) (121,919) (52,906)
Change in other
assets 370 (2,004) (6,470) (6,682)
Net change in
payroll customer
fund deposits 257,934 (24,438) 218,839 54,475
Acquisitions of
businesses and
intangible assets,
net of cash
acquired (131,596) (1,991) (134,071) (61,993)
Cash received from
acquirer of
outsourced payroll
assets 7,281 - 27,303 -
Cash received from
acquirer of IDMS
(1) - - 97,147 -
----------- ----------- ----------- -----------
Net cash
provided by
investing
activities of
continuing
operations 71,656 14,953 305,251 46,060
Net cash provided
by investing
activities of
discontinued
operations - 20,989 - 20,989
----------- ----------- ----------- -----------
Net cash
provided by
investing
activities 71,656 35,942 305,251 67,049
----------- ----------- ----------- -----------
Cash flows from
financing activities:
Net proceeds from
issuance of common
stock under stock
plans 64,145 41,299 115,344 124,197
Purchase of treasury
stock (250,000) (205,373) (499,998) (205,373)
Excess tax benefit
from share-based
compensation plans 7,506 7,967 15,761 16,720
Issuance of
restricted stock
units pursuant to
Management Stock
Purchase Plan - - 2,284 -
Other (4,701) (874) (3,595) (1,315)
----------- ----------- ----------- -----------
Net cash used in
financing
activities (183,050) (156,981) (370,204) (65,771)
----------- ----------- ----------- -----------
Effect of exchange
rates on cash and
cash equivalents (3,433) (1,844) 2,356 (982)
----------- ----------- ----------- -----------
Net decrease in cash
and cash equivalents 84,080 120,254 (25,053) 106,727
Cash and cash
equivalents at
beginning of period 146,068 166,074 255,201 179,601
----------- ----------- ----------- -----------
Cash and cash
equivalents at end of
period $ 230,148 $ 286,328 $ 230,148 $ 286,328
=========== =========== =========== ===========
(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,
2008
Revenue $1,268,000 $1,293,000 $ - $1,268,000 $1,293,000
Operating
income $ 644,000 $ 654,000 $ 56,000 (a) $ 700,000 $ 710,000
Operating
margin 51% 52% 4% (a) 55% 56%
Diluted
earnings
per share $ 1.23 $ 1.26 $ 0.08 (b) $ 1.31 $ 1.34
Shares 339,000 341,000 - 339,000 341,000
Three
Months
Ending
July 31,
2008
Revenue $ 466,000 $ 471,000 $ - $ 466,000 $ 471,000
Diluted
loss per
share $ (0.14) $ (0.12) $ 0.09 (c) $ (0.05) $ (0.03)
Twelve
Months
Ending
July 31,
2008
Revenue $3,000,000 $3,050,000 $ - $3,000,000 $3,050,000
Operating
income $ 635,000 $ 650,000 $210,000 (d) $ 845,000 $ 860,000
Operating
margin 21% 21% 7% (d) 28% 28%
Diluted
earnings
per share $ 1.38 $ 1.40 $ 0.18 (e) $ 1.56 $ 1.58
Shares 345,000 348,000 - 345,000 348,000
(a) Reflects estimated adjustments for share-based compensation
expense of approximately $34 million; amortization of purchased
intangible assets of approximately $14 million; and acquisition-
related charges of approximately $8 million.
(b) Reflects the estimated adjustments in item (a); an adjustment for
an expected pre-tax gain on the sale of certain outsourced
payroll assets of approximately $11 million; and income taxes
related to these adjustments.
(c) Reflects estimated adjustments for share-based compensation
expense of approximately $34 million; amortization of purchased
intangible assets of approximately $14 million; acquisition-
related charges of approximately $8 million; and income taxes
related to these adjustments.
(d) Reflects estimated adjustments for share-based compensation
expense of approximately $124 million; amortization of purchased
intangible assets of approximately $54 million; and acquisition-
related charges of approximately $32 million.
(e) Reflects the estimated adjustments in item (d); an adjustment for
an expected pre-tax gain on the sale of certain outsourced
payroll assets of approximately $49 million; income taxes related
to these adjustments; and an adjustment for a net gain from
discontinued operations of approximately $26 million.
Source: Intuit Inc.
Released February 21, 2008