Intuit Announces Record Third-Quarter Revenue; Raises Full-Year Revenue and Earnings Guidance
Third-Quarter Revenue Totals $1.15 Billion, up 21 Percent Over Prior Year
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--
Intuit Inc. (Nasdaq:INTU) today announced its third-quarter 2007 revenue increased 21 percent over the year-ago quarter to $1.15 billion. This marks the first time Intuit revenue has exceeded $1 billion in a quarter.
Growth was driven by a strong tax season, excellent performance in QuickBooks and the acquisition of Digital Insight to create a Financial Institutions segment. Revenue for the first nine months of the fiscal year grew 14 percent.
"We had great results from all of our businesses this quarter," said Steve Bennett, Intuit's president and chief executive officer. "Our two biggest growth engines, Tax and Small Business, continue to perform very well and our newest growth engine, Financial Institutions, is also making a significant contribution. We're on track for another year of double-digit revenue and earnings growth."
Third-Quarter 2007 Financial Highlights
Intuit posted GAAP (Generally Accepted Accounting Principles) net income of $367 million in the quarter compared to $299 million in the third quarter of 2006. This represents diluted net income per share of $1.04 compared to diluted net income per share of $0.84 in the year-ago quarter. Intuit posted non-GAAP net income of $399 million, or $1.13 per share versus $318 million, or $0.89 per share in the third quarter of 2006.
Third-Quarter 2007 Business Segment Results
-- Consumer Tax revenue was $567 million, up 14 percent over the
year-ago quarter. Consumer Tax revenue is up 15 percent
year-to-date.
-- Professional Tax revenue was $138 million, up 32 percent over
the year-ago quarter. Professional Tax revenue is up 6 percent
year-to-date.
-- QuickBooks revenue was $155 million, up 22 percent over the
year-ago quarter. QuickBooks revenue is up 10 percent
year-to-date.
-- Payroll and Payments revenue was $125 million, up 7 percent
over the year-ago quarter. Excluding the impact of the
outsourced payroll customers transitioning to ADP, revenue
growth would have been 13 percent in the third quarter.
Payroll and Payments revenue is up 14 percent year-to-date.
-- Financial Institutions revenue was $65 million and includes
the results of Digital Insight, which was acquired on Feb. 6.
-- Other Businesses revenue of $104 million was up 6 percent over
the year-ago quarter.
Forward-looking Guidance
Intuit updated its revenue, GAAP diluted earnings per share, and non-GAAP diluted earnings per share guidance for fiscal 2007, which ends on July 31. The company now expects:
-- Revenue - Former guidance: $2.625 billion to $2.675 billion,
representing annual growth of 12 percent to 14 percent. New
guidance: $2.685 billion to $2.7 billion, representing annual
growth of approximately 15 percent.
-- GAAP diluted earnings per share - Former guidance: $1.10 to
$1.14. New guidance: $1.15 to $1.17.
-- Non-GAAP diluted earnings per share - Former guidance: $1.33
to $1.37. New guidance: $1.38 to $1.40. The new guidance
represents annual EPS growth of 14 percent to 16 percent.
The company's guidance for the fourth quarter of 2007 is unchanged. Additional details are available on Intuit's Web site at http://web.intuit.com/about_intuit/investors/earnings/2007/.
Company Announces New Stock Repurchase Program
Intuit also announced today a new stock repurchase program for up to $800 million over the next three years. Intuit used all remaining funds in its last $500 million repurchase program, authorized in May 2006, during its third-quarter 2007, which ended on April 30. Since authorizing its first stock repurchase program in May 2001, Intuit has spent approximately $3.7 billion to repurchase approximately 159 million shares of its stock.
Webcast and Conference Call Information
A live audio webcast of Intuit's third-quarter 2007 conference call is available at http://web.intuit.com/about_intuit/investors/webcast_events.html. 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://web.intuit.com/about_intuit/investors/earnings/2007/.
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 1077233.
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 filed by Intuit on May 17, 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 2007 and beyond; expectations of double-digit revenue and earnings growth; 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 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 May 17, 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 Nine Months Ended
--------------------- -----------------------
April 30, April 30, April 30, April 30,
2007 2006 2007 2006
----------- --------- ----------- -----------
Net revenue:
Product $ 489,620 $420,201 $1,251,579 $1,159,734
Service and other 664,777 532,402 1,028,196 839,644
----------- --------- ----------- -----------
Total net revenue 1,154,397 952,603 2,279,775 1,999,378
----------- --------- ----------- -----------
Costs and expenses:
Cost of revenue:
Cost of product
revenue 43,729 43,667 149,325 147,837
Cost of service and
other revenue 95,095 64,264 233,760 186,905
Amortization of
purchased
intangible assets 13,817 2,289 18,708 8,001
Selling and marketing 216,514 187,654 593,052 531,987
Research and
development 119,132 97,335 354,820 294,699
General and
administrative 77,685 74,009 223,679 202,901
Acquisition-related
charges 9,660 3,278 14,836 10,590
----------- --------- ----------- -----------
Total costs and
expenses 575,632 472,496 1,588,180 1,382,920
----------- --------- ----------- -----------
Operating income from
continuing operations 578,765 480,107 691,595 616,458
Interest expense (12,823) - (12,823) -
Interest and other income 10,967 9,070 32,303 20,940
Gains on marketable
equity securities and
other investments, net 347 79 1,568 7,373
----------- --------- ----------- -----------
Income from continuing
operations before income
taxes 577,256 489,256 712,643 644,771
Income tax provision (A) 208,634 190,229 257,039 247,864
Minority interest 271 379 821 623
----------- --------- ----------- -----------
Net income from
continuing operations 368,351 298,648 454,783 396,284
Net income (loss) from
discontinued operations
(B) (1,140) - (1,140) 39,533
----------- --------- ----------- -----------
Net income $ 367,211 $298,648 $ 453,643 $ 435,817
=========== ========= =========== ===========
Basic net income per
share from continuing
operations $ 1.08 $ 0.87 $ 1.32 $ 1.14
Basic net income (loss)
per share from
discontinued operations - - - 0.11
----------- --------- ----------- -----------
Basic net income per
share (C) $ 1.08 $ 0.87 $ 1.32 $ 1.25
=========== ========= =========== ===========
Shares used in basic per
share amounts (C) 339,495 343,670 344,351 349,656
=========== ========= =========== ===========
Diluted net income per
share from continuing
operations $ 1.04 $ 0.84 $ 1.27 $ 1.09
Diluted net income (loss)
per share from
discontinued operations - - - 0.11
----------- --------- ----------- -----------
Diluted net income per
share (C) $ 1.04 $ 0.84 $ 1.27 $ 1.20
=========== ========= =========== ===========
Shares used in diluted
per share amounts (C) 351,686 355,918 357,767 362,226
=========== ========= =========== ===========
Total share-based
compensation expense in
continuing operations:
Cost of product
revenue $ 135 $ 211 $ 615 $ 744
Cost of service and
other revenue 1,105 456 2,366 1,589
Selling and marketing 7,002 5,572 18,499 17,129
Research and
development 5,623 4,609 16,485 14,903
General and
administrative 6,720 6,343 20,791 20,999
----------- --------- ----------- -----------
Total $ 20,585 $ 17,191 $ 58,756 $ 55,364
=========== ========= =========== ===========
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
(A) Our effective tax rate for the three and nine months ended April
30, 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, we benefited from the retroactive extension
of the federal research and experimental credit in the nine months
ended April 30, 2007. Our effective tax rates for the three and
nine months ended April 30, 2006 were approximately 39% and 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.
(B) In December 2005 we sold our Intuit Information Technology
Solutions (ITS) business for approximately $200 million in cash.
In accordance with the provisions of Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets," 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 income before income taxes
was $9.1 million for the nine months ended April 30, 2006. We
recorded a net gain on the disposal of ITS of $34.3 million in the
nine months ended April 30, 2006. We recorded a net loss of $1.1
million for certain contingent liabilities that became payable to
the purchaser of ITS during the three months ended April 30, 2007.
(C) Our Board of Directors authorized a two-for-one stock split which
was effected in the form of a 100% stock dividend on July 6, 2006.
All share and per share figures in these tables retroactively
reflect this stock split.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated May 17, 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 123R 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: 35% for
the first and second quarters of fiscal 2006; 38% for the third
quarter of fiscal 2006; 37% for the first nine months of fiscal
2006; 37% for the fourth quarter of fiscal 2006 and full fiscal
2006; 37% for the first quarter of fiscal 2007; 36% for the second
and third quarters of fiscal 2007, the first nine months of fiscal
2007, and for fiscal 2007 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,
2007 2006 2007 2006
----------- ----------- ----------- ----------
GAAP operating income
from continuing
operations $ 578,765 $ 480,107 $ 691,595 $ 616,458
Amortization of
purchased intangible
assets 13,817 2,289 18,708 8,001
Acquisition-related
charges 9,660 3,278 14,836 10,590
Share-based
compensation expense 20,585 17,191 58,756 55,364
----------- ----------- ----------- ----------
Non-GAAP operating
income $ 622,827 $ 502,865 $ 783,895 $ 690,413
=========== =========== =========== ==========
GAAP net income $ 367,211 $ 298,648 $ 453,643 $ 435,817
Amortization of
purchased intangible
assets 13,817 2,289 18,708 8,001
Acquisition-related
charges 9,660 3,278 14,836 10,590
Share-based
compensation expense 20,585 17,191 58,756 55,364
Net gains on marketable
equity securities and
other investments (347) (79) (1,568) (7,373)
Pre-tax gain on sale of
outsourced payroll
assets (406) - (406) -
Income tax effect of
non-GAAP adjustments (15,699) (8,573) (32,794) (24,360)
Exclusion of discrete
tax items 3,121 5,543 4,779 9,254
Discontinued operations 1,140 - 1,140 (39,533)
----------- ----------- ----------- ----------
Non-GAAP net income $ 399,082 $ 318,297 $ 517,094 $ 447,760
=========== =========== =========== ==========
GAAP diluted net income
per share $ 1.04 $ 0.84 $ 1.27 $ 1.20
Amortization of
purchased intangible
assets 0.04 0.01 0.05 0.02
Acquisition-related
charges 0.03 0.01 0.04 0.03
Share-based
compensation expense 0.06 0.05 0.17 0.16
Net gains on marketable
equity securities and
other investments - - - (0.02)
Pre-tax gain on sale of
outsourced payroll
assets - - - -
Income tax effect of
non-GAAP adjustments (0.05) (0.03) (0.09) (0.07)
Exclusion of discrete
tax items 0.01 0.01 0.01 0.03
Discontinued operations - - - (0.11)
----------- ----------- ----------- ----------
Non-GAAP diluted net
income per share $ 1.13 $ 0.89 $ 1.45 $ 1.24
=========== =========== =========== ==========
Shares used in diluted
per share amounts 351,686 355,918 357,767 362,226
=========== =========== =========== ==========
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. All share and per share figures in this Table B retroactively reflect our July 2006 two-for-one common stock split.
Table C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 30, July 31,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 264,573 $ 179,601
Investments 1,100,529 1,017,599
Accounts receivable, net 190,776 97,797
Income taxes receivable 471 64,178
Deferred income taxes 58,877 47,199
Prepaid expenses and other current assets 58,895 53,357
----------- -----------
Current assets before funds held for
payroll customers 1,674,121 1,459,731
Funds held for payroll customers 259,086 357,299
----------- -----------
Total current assets 1,933,207 1,817,030
Property and equipment, net 254,128 194,434
Goodwill, net 1,569,009 504,991
Purchased intangible assets, net 326,496 59,521
Long-term deferred income taxes 63,614 144,697
Loans to executive officers and other
employees 8,865 8,865
Other assets 58,037 40,489
----------- -----------
Total assets $4,213,356 $2,770,027
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 129,343 $ 70,808
Accrued compensation and related
liabilities 153,231 171,903
Deferred revenue 244,356 293,113
Income taxes payable 191,559 33,560
Other current liabilities 252,034 89,291
----------- -----------
Current liabilities before payroll
customer fund deposits 970,523 658,675
Payroll customer fund deposits 259,086 357,299
----------- -----------
Total current liabilities 1,229,609 1,015,974
Long-term debt 997,777 -
Other long-term obligations 41,681 15,399
----------- -----------
Total liabilities 2,269,067 1,031,373
----------- -----------
Minority interest 967 568
Stockholders' equity 1,943,322 1,738,086
----------- -----------
Total liabilities and stockholders'
equity $4,213,356 $2,770,027
=========== ===========
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,
2007 2006 2007 2006
------------ ---------- ------------ ------------
Cash flows from
operating
activities:
Net income $ 367,211 $ 298,648 $ 453,643 $ 435,817
Net (income) loss
from discontinued
operations 1,140 - 1,140 (39,533)
------------ ---------- ------------ ------------
Net income from
continuing
operations 368,351 298,648 454,783 396,284
Adjustments to
reconcile net
income from
continuing
operations to net
cash provided by
operating
activities:
Depreciation 25,230 23,117 68,566 68,878
Acquisition-
related charges 9,660 3,278 14,836 10,590
Amortization of
purchased
intangible
assets 13,817 2,289 18,708 8,001
Amortization of
purchased
intangible
assets to cost
of service and
other revenue 1,449 2,526 6,754 6,816
Share-based
compensation 20,585 17,191 58,756 55,364
Amortization of
premiums and
discounts on
available-for-
sale debt
securities 939 720 2,900 2,786
Net gains on
marketable
equity
securities and
other
investments (347) (79) (1,568) (7,373)
Deferred income
taxes (2,376) (33,670) (11,775) (35,278)
Tax benefit from
share-based
compensation
plans 2,679 17,033 32,109 46,109
Excess tax
benefit from
share-based
compensation
plans (1,511) (9,564) (18,231) (22,949)
Pre-tax gain on
sale of
outsourced
payroll assets (406) - (406) -
Other 425 218 1,168 919
------------ ---------- ------------ ------------
Subtotal 438,495 321,707 626,600 530,147
------------ ---------- ------------ ------------
Changes in
operating
assets and
liabilities:
Accounts
receivable 155,895 174,665 (56,989) (58,186)
Prepaid
expenses,
taxes and
other
current
assets 35,956 2,802 44,683 35,172
Accounts
payable (23,509) (33,146) 25,461 26,456
Accrued
compensa-
tion and
related
liabili-
ties (6,310) 14,485 (40,036) (5,997)
Deferred
revenue (56,159) (36,607) (53,886) (59,669)
Income taxes
payable 155,045 209,478 157,747 201,050
Other
liabilities 14,257 5,643 116,521 62,645
------------ ---------- ------------ ------------
Total
changes in
operating
assets and
liabili-
ties 275,175 337,320 193,501 201,471
------------ ---------- ------------ ------------
Net cash
provided by
operating
activities
of
continuing
operations 713,670 659,027 820,101 731,618
Net cash
provided by
operating
activities of
discontinued
operations - - - 14,090
------------ ---------- ------------ ------------
Net cash
provided by
operating
activities 713,670 659,027 820,101 745,708
------------ ---------- ------------ ------------
Cash flows from
investing
activities:
Purchases of
available-for-
sale debt
securities (1,097,727) (589,772) (1,978,305) (1,271,564)
Liquidation of
available-for-
sale debt
securities 454,408 227,940 1,440,155 1,054,222
Maturity of
available-for-
sale debt
securities 391,148 42,756 452,762 95,196
Proceeds from the
sale of
marketable equity
securities - 5,765 858 10,000
Net change in
funds held for
payroll
customers' money
market funds and
other cash
equivalents 152,688 15,218 98,213 (50,952)
Purchases of
property and
equipment (36,402) (11,539) (89,308) (59,451)
Proceeds from sale
of property - 2,692 22 3,026
Change in other
assets (1,556) 655 (8,260) (5,724)
Net change in
payroll customer
fund deposits (152,688) (15,218) (98,213) 50,952
Acquisitions of
businesses and
intangible
assets, net of
cash acquired (1,212,719) (2,977) (1,274,712) (36,858)
Deposit from
acquirer of
outsourced
payroll assets 44,312 - 44,312 -
------------ ---------- ------------ ------------
Net cash used
in investing
activities
of
continuing
operations (1,458,536) (324,480) (1,412,476) (211,153)
Net cash
provided by
investing
activities of
discontinued
operations - - 20,989 171,833
------------ ---------- ------------ ------------
Net cash used
in investing
activities (1,458,536) (324,480) (1,391,487) (39,320)
------------ ---------- ------------ ------------
Cash flows from
financing
activities:
Issuance of debt 997,777 - 997,777 -
Net proceeds from
issuance of
common stock
under stock plans 26,731 69,995 150,928 217,546
Purchase of
treasury stock (301,378) (285,004) (506,751) (779,985)
Excess tax benefit
from share-based
compensation
plans 1,511 9,564 18,231 22,949
Debt issuance
costs and other (6,329) (450) (7,644) (1,344)
------------ ---------- ------------ ------------
Net cash
provided by
(used in)
financing
activities 718,312 (205,895) 652,541 (540,834)
------------ ---------- ------------ ------------
Effect of exchange
rates on cash and
cash equivalents 4,799 1,611 3,817 3,573
------------ ---------- ------------ ------------
Net increase
(decrease) in cash
and cash
equivalents (21,755) 130,263 84,972 169,127
Cash and cash
equivalents at
beginning of period 286,328 122,706 179,601 83,842
------------ ---------- ------------ ------------
Cash and cash
equivalents at end
of period $ 264,573 $ 252,969 $ 264,573 $ 252,969
============ ========== ============ ============
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,
2007
Revenue $ 405,000 $ 418,000 $ - $ 405,000 $ 418,000
Diluted
loss per
share $ (0.12) $ (0.10) $ 0.05 (a) $ (0.07) $ (0.05)
Twelve
Months
Ending
July 31,
2007
Revenue $2,685,000 $2,700,000 $ - $2,685,000 $2,700,000
Operating
income $ 600,000 $ 611,000 $140,000 (b) $ 740,000 $ 751,000
Operating
margin 22% 23% 5%(b) 27% 28%
Diluted
earnings
per
share $ 1.15 $ 1.17 $ 0.23 (c) $ 1.38 $ 1.40
Shares 355,000 357,000 355,000 357,000
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 $22 million; amortization of purchased
intangible assets of approximately $14 million; and
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 $14 million; and income taxes related
to these adjustments.
(b) Reflects estimated adjustments for share-based compensation
expense of approximately $80 million; amortization of purchased
intangible assets of approximately $34 million; and
acquisition-related charges of approximately $26 million.
(c) Reflects the estimated adjustments in item (b); an adjustment for
net gains on marketable equity securities and other investments of
approximately $2 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 $14
million; an adjustment for net loss from discontinued operations
of $1 million; and income taxes related to these adjustments.
Source: Intuit Inc.
Released May 17, 2007