Intuit Fiscal 2007 Revenue Grows 17 Percent
Fourth-Quarter Revenue Increases 31 Percent Over Prior Year
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--
Intuit Inc. (Nasdaq: INTU) today announced strong results for its fourth quarter and fiscal year 2007, which ended July 31.
"We are very pleased with the results of our fourth quarter and fiscal year," said Steve Bennett, Intuit's president and chief executive officer. "All of our businesses performed very well. We posted another year of double-digit revenue and earnings growth and we feel great about our position as we enter fiscal 2008."
Fiscal 2007 Financial Highlights
-- Revenue of $2.67 billion increased 17 percent from fiscal
2006. Growth was driven by strong performance in Intuit's two
largest growth engines, Small Business and Tax, and the
acquisition of Digital Insight in February 2007.
-- GAAP (General Accepted Accounting Principles) operating income
from continuing operations of $637.6 million, up 13 percent
from fiscal 2006.
-- GAAP net income of $440 million, up 6 percent from fiscal
2006. This represents diluted earnings per share, or EPS, of
$1.24, up 7 percent from fiscal 2006.
-- Non-GAAP operating income of $764.8 million, up 17 percent
from fiscal 2006 and non-GAAP diluted EPS of $1.43, up 18
percent from fiscal 2006.
Fiscal 2007 Business Segment Results
-- QuickBooks revenue was $598.2 million, up 11 percent over
fiscal 2006.
-- Payroll and Payments revenue was $516.7 million, up 12 percent
over fiscal 2006.
-- Consumer Tax revenue was $812.9 million, up 15 percent over
fiscal 2006.
-- Professional Tax revenue was $291.8 million, up 7 percent over
fiscal 2006.
-- Financial Institutions revenue was $150.4 million and includes
the results of Digital Insight, which was acquired on Feb. 6,
2007.
-- Other Businesses revenue was $303 million, up 5 percent over
fiscal 2006. This segment excludes the results of the Intuit
Distribution Management Solutions business, whose sale to
Activant Solutions was announced in July. This business is
treated as discontinued operations for all periods presented.
Fourth-Quarter 2007 Highlights
-- Revenue of $432.7 million increased 31 percent from the
year-ago quarter. Growth was driven by the acquisition of
Digital Insight in February 2007 and strong performance in
Small Business.
-- GAAP operating loss from continuing operations of $56.7
million compared with a GAAP operating loss from continuing
operations of $56.9 million in the year-ago quarter. Intuit
typically posts a seasonal loss in its fourth quarter when it
has little revenue from its tax businesses but expenses remain
relatively constant. On a non-GAAP basis, Intuit had an
operating loss of $17.3 million versus a non-GAAP operating
loss of $37.8 million in the year-ago quarter.
-- GAAP net loss of $13.6 million compared with a GAAP net loss
of $18.9 million in the year-ago quarter. This represents a
net loss of $0.04 per share versus a net loss of $0.06 per
share in the year-ago quarter. These results include a gain of
$31 million from the sale of outsourced payroll assets.
-- Non-GAAP net loss of $7.4 million compared with a non-GAAP net
loss of $11.4 million in the year ago quarter. This represents
a non-GAAP net loss per share of $0.02 versus a non-GAAP net
loss per share of $0.03 in the year-ago quarter.
Forward-Looking Guidance for Fiscal 2008
Intuit provided its financial guidance for fiscal 2008, which will end on July 31, 2008. The company expects:
-- Revenue of $3 billion to $3.05 billion, or year-over-year
growth of 12 percent to 14 percent.
-- GAAP operating income of $660 million to $675 million, or
year-over-year growth of 4 percent to 6 percent. On a non-GAAP
basis, operating income is expected to be $855 million to $870
million, or year-over-year growth of 12 percent to 14 percent.
-- GAAP diluted EPS of $1.41 to $1.43, or year-over-year growth
of 14 percent to 15 percent. On a non-GAAP basis, diluted EPS
is expected to be $1.59 to $1.61, or year-over-year growth of
11 percent to 13 percent.
Revenue, GAAP EPS and non-GAAP EPS guidance for each quarter of fiscal 2008 is provided in the accompanying tables.
Fiscal 2008 Business Segment Guidance
Intuit's expected results for its business segments for the 2008 fiscal year are:
-- QuickBooks revenue of $646 million to $667 million, or
year-over-year growth of 8 percent to 12 percent.
-- Payroll and Payments revenue of $543 million to $563 million,
or year-over-year growth of 5 percent to 9 percent. Without
the impact of the sale of Intuit's fully outsourced payroll
customers in February 2007 the company would have expected
revenue growth of 12 percent to 16 percent.
-- Consumer Tax revenue of $880 million to $910 million, or
year-over-year growth of 8 percent to 12 percent.
-- Professional Tax revenue of $289 million to $295 million, or
year-over-year growth of minus 1 percent to 1 percent.
-- Financial Institutions revenue of $300 million to $311
million.
-- Other Businesses revenue of $339 million to $351 million, or
year-over-year growth of 12 percent to 16 percent.
First-Quarter 2008 Guidance
Intuit's expected results for the first quarter of 2008, which will end Oct. 31, 2007 are:
-- Revenue of $426 million to $441 million, or year-over-year
growth of 22 percent to 26 percent.
-- GAAP operating loss of $105 million to $116 million and
non-GAAP operating loss of $56 million to $67 million. Intuit
typically posts a seasonal loss in its first quarter when it
has little revenue from its tax businesses but expenses remain
relatively constant.
-- GAAP net loss per share of $0.07 to $0.09 per share and
non-GAAP net loss per share of $0.12 to $0.14.
Webcast and Conference Call Information
A live audio webcast of Intuit's fourth-quarter and fiscal 2007
conference call is available at
http://www.intuit.com/about_intuit/investors/webcast.jhtml. The call
begins today at 1:30 p.m. PDT. 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://www.intuit.com/about_intuit/investors/earnings/2007/.
The conference call number is 866-837-9786 in the United States or 703-639-1423 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 1120809.
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 August 22, 2007 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 expected financial results; its prospects for the business in fiscal 2008 and beyond; and all of the statements under the headings "Forward-Looking Guidance for Fiscal 2008," "Fiscal 2008 Business Segment Guidance" and "First Quarter 2008 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 ship and deliver products 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 2006 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 August 22, 2007, 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 Twelve Months Ended
------------------- ----------------------
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
--------- --------- ----------- ----------
Net revenue:
Product $207,160 $188,085 $1,447,392 $1,335,430
Service and other 225,512 141,371 1,225,555 957,580
--------- --------- ----------- ----------
Total net revenue 432,672 329,456 2,672,947 2,293,010
--------- --------- ----------- ----------
Costs and expenses:
Cost of revenue:
Cost of product revenue 27,026 26,600 169,101 165,949
Cost of service and
other revenue 90,851 57,319 309,419 232,588
Amortization of
purchased intangible
assets 13,055 1,622 30,926 8,785
Selling and marketing 154,665 130,713 742,368 657,588
Research and development 125,902 101,513 472,516 385,795
General and
administrative 69,859 66,845 291,083 267,233
Acquisition-related
charges 8,022 1,782 19,964 9,478
--------- --------- ----------- ----------
Total costs and
expenses (A) 489,380 386,394 2,035,377 1,727,416
--------- --------- ----------- ----------
Operating income (loss)
from continuing operations (56,708) (56,938) 637,570 565,594
Interest expense (14,268) - (27,091) -
Interest and other income 20,822 22,097 52,689 43,023
Gains on marketable equity
securities and other
investments, net - 256 1,568 7,629
Gain on sale of outsourced
payroll assets 31,270 - 31,676 -
--------- --------- ----------- ----------
Income (loss) from
continuing operations
before income taxes (18,884) (34,585) 696,412 616,246
Income tax provision
(benefit) (B) (6,541) (15,784) 251,607 234,592
Minority interest expense,
net of tax 516 68 1,337 691
--------- --------- ----------- ----------
Net income (loss) from
continuing operations (12,859) (18,869) 443,468 380,963
Net income (loss) from
discontinued operations
(C) (781) 15 (3,465) 36,000
--------- --------- ----------- ----------
Net income (loss) $(13,640) $(18,854) $ 440,003 $ 416,963
========= ========= =========== ==========
Basic net income (loss) per
share from continuing
operations $ (0.04) $ (0.06) $ 1.29 $ 1.10
Basic net income (loss) per
share from discontinued
operations - - (0.01) 0.10
--------- --------- ----------- ----------
Basic net income (loss) per
share $ (0.04) $ (0.06) $ 1.28 $ 1.20
========= ========= =========== ==========
Shares used in basic per
share amounts 337,550 342,505 342,637 347,854
========= ========= =========== ==========
Diluted net income (loss)
per share from continuing
operations $ (0.04) $ (0.06) $ 1.25 $ 1.06
Diluted net income (loss)
per share from
discontinued operations - - (0.01) 0.10
--------- --------- ----------- ----------
Diluted net income (loss)
per share $ (0.04) $ (0.06) $ 1.24 $ 1.16
========= ========= =========== ==========
Shares used in diluted per
share amounts 337,550 342,505 355,815 360,471
========= ========= =========== ==========
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
(A) The following table summarizes the total share-based
compensation expense included in operating expenses for stock
options, restricted stock awards, RSUs and our Employee Stock
Purchase Plan that we recorded for continuing operations for
the periods shown. The impact of our adoption of SFAS 123(R) on
discontinued operations was nominal for these periods.
Three Months Ended Twelve Months Ended
------------------ -------------------
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
--------- -------- ---------- --------
Cost of product revenue $ 129 $ 197 $ 743 $ 941
Cost of service and other
revenue 1,200 379 3,283 1,727
Selling and marketing 5,205 4,757 23,518 21,710
Research and development 5,305 4,303 21,511 18,896
General and administrative 6,489 6,107 27,258 27,066
--------- -------- ---------- --------
Total $ 18,328 $ 15,743 $ 76,313 $ 70,340
========= ======== ========== ========
(B) Our effective tax rate for the twelve months ended July 31, 2007
was approximately 36% and 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, in fiscal 2007 we benefited from the
retroactive extension of the federal research and experimental
credit as it related to fiscal 2006. Our effective tax rate for
the twelve months ended July 31, 2006 was approximately 38% and
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.
(C) In July 2007 we signed a definitive agreement to sell our Intuit
Distribution Management Solutions (IDMS) business for
approximately $100 million in cash. The sale was completed in
August 2007. The decision to sell IDMS was a result of
management's desire to focus resources on Intuit's core
products and services. IDMS was part of our Other Businesses
segment.
In accordance with the provisions of Statement of Financial
Accounting Standards 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," we determined that IDMS became
a long-lived asset held for sale in the fourth quarter of
fiscal 2007. SFAS 144 provides that a long-lived asset
classified as held for sale should be measured at the lower of
its carrying amount or fair value less cost to sell. Since the
carrying value of IDMS at July 31, 2007 was less than the
estimated fair value less cost to sell, no adjustment to the
carrying value of this long-lived asset was necessary during
the twelve months ended July 31, 2007. In accordance with the
provisions of SFAS 144, we discontinued the amortization of
IDMS intangible assets and the depreciation of IDMS property
and equipment in the fourth quarter of fiscal 2007.
Also in accordance with the provisions of SFAS 144 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 statements of operations for all periods
presented. Revenue for IDMS was $52.0 million and $49.3 million
for the twelve months ended July 31, 2007 and 2006. Net loss
for IDMS was $2.4 million and $3.5 million for the twelve
months ended July 31, 2007 and 2006.
In December 2005 we sold our Intuit Information Technology
Solutions (ITS) business for approximately $200 million in
cash. In accordance with SFAS 144 we accounted for the sale of
ITS as discontinued operations. Consequently, we have
segregated the operating results and cash flows of ITS from
continuing operations in our financial statements for all
periods prior to the sale. Revenue for ITS was $20.2 million
and net income was $5.2 million for the twelve months ended
July 31, 2006. We also recorded a net gain on the disposal of
ITS of $34.3 million in the twelve months ended July 31, 2006.
We recorded a net loss of $1.1 million for certain contingent
liabilities that became payable to the purchaser of ITS during
the twelve months ended July 31, 2007.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated August 22, 2007 contains non-GAAP
financial measures. Tables B and 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,
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 gains on marketable
equity securities and other investments, net 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 fourth quarter of fiscal 2006 and full
fiscal 2006; 36% for the fourth quarter of fiscal 2007 and full
fiscal 2007; 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 Twelve Months Ended
------------------- -------------------
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
--------- --------- --------- ---------
GAAP operating income (loss)
from continuing operations $(56,708) $(56,938) $637,570 $565,594
Amortization of purchased
intangible assets 13,055 1,622 30,926 8,785
Acquisition-related charges 8,022 1,782 19,964 9,478
Share-based compensation
expense 18,328 15,743 76,313 70,340
--------- --------- --------- ---------
Non-GAAP operating income
(loss) $(17,303) $(37,791) $764,773 $654,197
========= ========= ========= =========
GAAP net income (loss) $(13,640) $(18,854) $440,003 $416,963
Amortization of purchased
intangible assets 13,055 1,622 30,926 8,785
Acquisition-related charges 8,022 1,782 19,964 9,478
Share-based compensation
expense 18,328 15,743 76,313 70,340
Net gains on marketable equity
securities and other
investments - (256) (1,568) (7,629)
Pre-tax gain on sale of
outsourced payroll assets (31,270) - (31,676) -
Pre-tax gain on sale of
certain assets of our ICBS
business - (2,364) - (2,364)
Income tax effect of non-GAAP
adjustments (2,775) (10,474) (34,512) (29,153)
Income taxes related to sale
of certain assets of our ICBS
business - 10,106 - 10,106
Exclusion of discrete tax
items 50 (8,735) 5,537 (3,458)
Discontinued operations 781 (15) 3,465 (36,000)
--------- --------- --------- ---------
Non-GAAP net income (loss) $ (7,449) $(11,445) $508,452 $437,068
========= ========= ========= =========
GAAP diluted net income (loss)
per share $ (0.04) $ (0.06) $ 1.24 $ 1.16
Amortization of purchased
intangible assets 0.04 0.01 0.09 0.02
Acquisition-related charges 0.02 0.01 0.06 0.03
Share-based compensation
expense 0.05 0.05 0.21 0.20
Net gains on marketable equity
securities and other
investments - - - (0.02)
Pre-tax gain on sale of
outsourced payroll assets (0.09) - (0.09) -
Pre-tax gain on sale of
certain assets of our ICBS
business - (0.01) - (0.01)
Income tax effect of non-GAAP
adjustments - (0.03) (0.11) (0.09)
Income taxes related to sale
of certain assets of our ICBS
business - 0.03 - 0.03
Exclusion of discrete tax
items - (0.03) 0.02 (0.01)
Discontinued operations - - 0.01 (0.10)
--------- --------- --------- ---------
Non-GAAP diluted net income
(loss) per share $ (0.02) $ (0.03) $ 1.43 $ 1.21
========= ========= ========= =========
Shares used in diluted per
share amounts 337,550 342,505 355,815 360,471
========= ========= ========= =========
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)
July 31, July 31,
2007 2006
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 255,201 $ 179,601
Investments 1,048,470 1,017,599
Accounts receivable, net 131,691 88,123
Income taxes receivable 54,178 64,178
Deferred income taxes 84,682 47,199
Prepaid expenses and other current assets 54,854 50,938
Current assets of discontinued operations 8,515 12,093
---------- ----------
Current assets before funds held for payroll
customers 1,637,591 1,459,731
Funds held for payroll customers 314,341 357,299
---------- ----------
Total current assets 1,951,932 1,817,030
Property and equipment, net 298,396 193,617
Goodwill 1,517,036 463,215
Purchased intangible assets, net 292,884 44,595
Long-term deferred income taxes 72,066 144,697
Loans to officers 8,865 8,865
Other assets 58,636 40,392
Long-term assets of discontinued operations 52,211 57,616
---------- ----------
Total assets $4,252,026 $2,770,027
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 119,799 $ 68,547
Accrued compensation and related liabilities 192,286 167,990
Deferred revenue 313,753 282,943
Income taxes payable 33,278 33,560
Other current liabilities 171,650 88,932
Current liabilities of discontinued operations 15,002 16,703
---------- ----------
Current liabilities before payroll customer
fund deposits 845,768 658,675
Payroll customer fund deposits 314,341 357,299
---------- ----------
Total current liabilities 1,160,109 1,015,974
Long-term debt 997,819 -
Other long-term obligations 57,756 15,399
---------- ----------
Total liabilities 2,215,684 1,031,373
---------- ----------
Minority interest 1,329 568
Stockholders' equity 2,035,013 1,738,086
---------- ----------
Total liabilities and stockholders' equity $4,252,026 $2,770,027
========== ==========
Table D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
--------------------- -------------------------
July 31, July 31, July 31, July 31,
2007 2006 2007 2006
---------- ---------- ------------ ------------
Cash flows from
operating activities:
Net income (loss) $ (13,640) $ (18,854) $ 440,003 $ 416,963
Net (income) loss
from ITS
discontinued
operations - - 1,140 (39,533)
---------- ---------- ------------ ------------
Net income (loss)
from continuing
operations (13,640) (18,854) 441,143 377,430
Adjustments to
reconcile net
income (loss) from
continuing
operations to net
cash provided by
(used in) operating
activities:
Depreciation 25,609 25,359 94,175 94,237
Acquisition-
related charges 8,987 2,747 23,823 13,337
Amortization of
purchased
intangible assets 13,334 1,901 32,042 9,902
Amortization of
purchased
intangible assets
to cost of
service and other
revenue 1,734 2,447 8,488 9,263
Share-based
compensation 18,558 15,997 77,314 71,361
Amortization of
premiums and
discounts on
available-for-
sale debt
securities 1,125 820 4,025 3,606
Net gains on
marketable equity
securities and
other investments - (256) (1,568) (7,629)
Pre-tax gain on
sale of
outsourced
payroll assets (31,270) - (31,676) -
Deferred income
taxes (27,425) 16,335 (39,200) (18,943)
Tax benefit from
share-based
compensation
plans 23,972 11,847 56,081 57,956
Excess tax benefit
from share-based
compensation
plans (12,682) (4,032) (30,913) (26,981)
Other 1,019 (1,895) 2,187 (976)
---------- ---------- ------------ ------------
Subtotal 9,321 52,416 635,921 582,563
---------- ---------- ------------ ------------
Changes in
operating assets
and liabilities:
Accounts
receivable 53,076 47,205 (3,913) (10,981)
Prepaid
expenses,
income taxes
and other
current assets (43,083) (38,084) 1,600 (2,912)
Accounts payable (6,887) (22,200) 18,574 4,256
Accrued
compensation
and related
liabilities 43,677 32,435 3,641 26,438
Deferred revenue 77,136 78,325 23,250 18,656
Income taxes
payable (158,949) (207,326) (1,202) (6,276)
Other
liabilities (62,196) (78,929) 48,889 (16,284)
---------- ---------- ------------ ------------
Total changes
in operating
assets and
liabilities (97,226) (188,574) 90,839 12,897
---------- ---------- ------------ ------------
Net cash
provided by
(used in)
operating
activities of
continuing
operations (87,905) (136,158) 726,760 595,460
Net cash provided
by operating
activities of ITS
discontinued
operations - - - 14,090
---------- ---------- ------------ ------------
Net cash
provided by
(used in)
operating
activities (87,905) (136,158) 726,760 609,550
---------- ---------- ------------ ------------
Cash flows from
investing activities:
Purchase of
available-for-sale
debt securities (488,337) (365,201) (2,466,642) (1,636,765)
Liquidation of
available-for-sale
debt securities 557,670 333,994 1,997,825 1,388,216
Maturity of
available-for-sale
debt securities 75,885 42,244 528,647 137,440
Proceeds from the
sale of marketable
equity securities - 256 858 10,256
Net change in funds
held for payroll
customers' money
market funds and
other cash
equivalents (149,455) 51,491 (51,242) 539
Purchases of
property and
equipment (63,949) (22,623) (153,257) (82,074)
Proceeds from sale
of property - - 22 3,026
Change in other
assets (578) (5,310) (8,838) (11,034)
Net change in
payroll customer
fund deposits 55,255 (51,491) (42,958) (539)
Acquisitions of
businesses and
intangible assets,
net of cash
acquired (2,515) (5,373) (1,271,791) (42,231)
Cash received from
acquirer of
outsourced payroll
assets 10,588 - 54,900 -
Proceeds from
divestiture of
business - 23,169 - 23,169
---------- ---------- ------------ ------------
Net cash provided
by (used in)
investing
activities of
continuing
operations (5,436) 1,156 (1,412,476) (209,997)
Net cash provided
by (used in)
investing
activities of ITS
discontinued
operations (1,140) - 19,849 171,833
---------- ---------- ------------ ------------
Net cash provided
by (used in)
investing
activities (6,576) 1,156 (1,392,627) (38,164)
---------- ---------- ------------ ------------
Cash flows from
financing activities:
Proceeds from bridge
credit facility - - 1,000,000 -
Retirement of bridge
credit facility - - (1,000,000) -
Issuance of long-
term debt, net of
discounts - - 997,755 -
Net proceeds from
issuance of common
stock under stock
plans 60,442 61,760 211,370 279,306
Purchase of treasury
stock - (4,201) (506,751) (784,186)
Excess tax benefit
from share-based
compensation plans 12,682 4,032 30,913 26,981
Debt issuance costs
and other 8,195 421 573 (923)
---------- ---------- ------------ ------------
Net cash provided
by (used in)
financing
activities 81,319 62,012 733,860 (478,822)
---------- ---------- ------------ ------------
Effect of exchange
rates on cash and
cash equivalents 3,790 (378) 7,607 3,195
---------- ---------- ------------ ------------
Net increase
(decrease) in cash
and cash equivalents (9,372) (73,368) 75,600 95,759
Cash and cash
equivalents at
beginning of period 264,573 252,969 179,601 83,842
---------- ---------- ------------ ------------
Cash and cash
equivalents at end of
period $ 255,201 $ 179,601 $ 255,201 $ 179,601
========== ========== ============ ============
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
----------------------- -----------------------
Adjust-
From To ments From To
----------------------- --------- -----------------------
Three
Months
Ending
October
31, 2007
Revenue $ 426,000 $ 441,000 $ - $ 426,000 $ 441,000
Operating
loss $ (116,000) $ (105,000) $ 49,000 (a) $ (67,000) $ (56,000)
Diluted
loss per
share $ (0.09) $ (0.07) $ (0.05)(b) $ (0.14) $ (0.12)
Shares 338,000 340,000 338,000 340,000
Three
Months
Ending
January
31, 2008
Revenue $ 833,000 $ 848,000 $ - $ 833,000 $ 848,000
Diluted
earnings
per
share $ 0.28 $ 0.30 $ 0.06 (c) $ 0.34 $ 0.36
Three
Months
Ending
April 30,
2008
Revenue $1,268,000 $1,293,000 $ - $1,268,000 $1,293,000
Diluted
earnings
per
share $ 1.25 $ 1.28 $ 0.08 (d) $ 1.33 $ 1.36
Three
Months
Ending
July 31,
2008
Revenue $ 466,000 $ 471,000 $ - $ 466,000 $ 471,000
Diluted
loss per
share $ (0.13) $ (0.11) $ 0.09 (e) $ (0.04) $ (0.02)
Twelve
Months
Ending
July 31,
2008
Revenue $3,000,000 $3,050,000 $ - $3,000,000 $3,050,000
Operating
income $ 660,000 $ 675,000 $195,000 (f) $ 855,000 $ 870,000
Operating
margin 21% 22% 7%(f) 28% 29%
Diluted
earnings
per
share $ 1.41 $ 1.43 $ 0.18 (g) $ 1.59 $ 1.61
Shares 345,000 348,000 345,000 348,000
See "About Non-GAAP Financial Measures" immediately preceding Table B
for more 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.
(a) Reflects estimated adjustments for share-based compensation
expense of approximately $28 million; amortization of purchased
intangible assets of approximately $11 million; and acquisition-
related charges of approximately $10 million.
(b) Reflects the estimated adjustments in item (a); an adjustment for
an expected pre-tax gain on the sale of certain assets related to
our Complete Payroll and Premier Payroll Service businesses of
approximately $35 million; income taxes related to these
adjustments; and an adjustment for an estimated net gain from
discontinued operations of approximately $26 million.
(c) Reflects estimated adjustments for share-based compensation
expense of approximately $28 million; amortization of purchased
intangible assets of approximately $11 million; acquisition-
related charges of approximately $10 million; an adjustment for
an expected pre-tax gain on the sale of certain assets related to
our Complete Payroll and Premier Payroll Service businesses of
approximately $18 million; and income taxes related to these
adjustments.
(d) Reflects adjustments for share-based compensation expense of
approximately $27 million; amortization of purchased intangible
assets of approximately $11 million; acquisition-related charges
of approximately $10 million; an adjustment for an expected pre-
tax gain on the sale of certain assets related to our Complete
Payroll and Premier Payroll Service businesses of approximately
$8 million; and income taxes related to these adjustments.
(e) Reflects adjustments for share-based compensation expense of
approximately $28 million; amortization of purchased intangible
assets of approximately $11 million; acquisition-related charges
of approximately $10 million; and income taxes related to these
adjustments.
(f) Reflects estimated adjustments for share-based compensation
expense of approximately $111 million; amortization of purchased
intangible assets of approximately $44 million; and acquisition-
related charges of approximately $40 million.
(g) Reflects the estimated adjustments in item (f); an adjustment for
an expected pre-tax gain on the sale of certain assets related to
our Complete Payroll and Premier Payroll Service businesses of
approximately $61 million; income taxes related to these
adjustments; and an adjustment for an estimated net gain from
discontinued operations of approximately $26 million.
Source: Intuit Inc.
Released August 22, 2007