Intuit Exceeds Second-Quarter Revenue and Earnings Guidance; Raises Outlook for Fiscal Year Results
MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Intuit Inc. (Nasdaq:INTU) today announced financial results for its second quarter ended Jan. 31.
Second-Quarter Highlights
-- Revenue increased 8 percent over the comparable quarter, to $837
million. Revenue was more than $20 million higher than guidance adjusted
for the sale of the Intuit Real Estate Solutions business.
-- On a GAAP basis, (Generally Accepted Accounting Principles) operating
income grew 26 percent to $139 million. Non-GAAP operating income grew
20 percent, to $206 million, $31 million over the top end of the
guidance range.
-- GAAP diluted earnings per share were 35 cents, up 35 percent over the
second quarter of last year. Non-GAAP diluted earnings per share were 38
cents, 6 cents above the top of the guidance range.
-- Total TurboTax federal units were up 11 percent through Feb. 13.
-- The Financial Institutions segment reported 10 percent revenue growth,
driven by strong bill pay user growth and positive early results for
TurboTax for Online Banking.
-- In the small business group, Employee Management Solutions and Payment
Solutions revenue grew double digits and each of the small business
segments saw an increase in average revenue per customer compared to the
second quarter of last year.
Note: all comparisons are versus the same period a year ago.
GAAP Non-GAAP
Q2 10 Q2 09 % change Q2 10 Q2 09 % change
Revenue $837 $773 8 $837 $773 8
Operating Income $139 $111 26 $206 $172 20
EPS $0.35 $0.26 35 $0.38 $0.34 12
Dollars in millions except for EPS
Based on these strong results, particularly in the tax business, Intuit raised its full-year revenue and earnings guidance. For fiscal year 2010 the company expects revenue growth of 6 to 9 percent, $3.3 billion to $3.4 billion. All comparisons exclude the Intuit Real Estate Solutions business, which is accounted for as a discontinued operation.
Company Perspective
"We are very pleased that our fiscal second quarter revenue and earnings per share exceeded the top end of our guidance," said Brad Smith, Intuit's president and chief executive officer. "While it is still early in the year, we are confident in our ability to perform well in the second half and therefore are raising our revenue and earnings guidance for the year."
"We wanted to come out of the recession stronger than we went in, so we focused on adding customers and continued to invest in innovation. These results demonstrate that our strategy is working. We continue to see great success growing our core businesses, with a strong quarter in tax and good results in our small business division. At the same time we're making strides in building out adjacent businesses, entering new geographies and transitioning to connected services."
Quarterly Business Segment Results and Highlights
Small Business total revenue was up 5 percent for the second-quarter. Each of the three small business segments saw an increase in average revenue per customer compared to the second quarter of last year.
Financial Management Solutions
-- Revenue was down 3 percent, while revenue per customer was up.
-- Intuit has more than doubled the Intuit Websites customer base since
completing the acquisition of Homestead at the end of 2007. These
customers are largely new to the franchise, and have the potential to
adopt other Intuit services like payments and email marketing.
Employee Management Solutions
-- Revenue grew 12 percent, reflecting the acquisition of PayCycle, and
steady performance in the desktop payroll business.
Payment Solutions
-- Revenue was up 14 percent, driven by strong customer base growth, which
was up 13 percent this quarter.
Consumer Tax Group
-- Revenue grew 15 percent over the comparable quarter, driven by very
strong growth in TurboTax Online. Total TurboTax federal units were up
11 percent through Feb. 13.
-- Intuit added a new product, SnapTax, into its tax offerings this tax
season. Building on the growing trend toward a digital world and more
use of mobile devices, SnapTax lets California taxpayers prepare and
file their simple federal and state returns from their iPhones. They
snap a photo of their 2009 W-2, answer a few basic questions and click
"send" to submit and e-file, all within a matter of minutes.
Accounting Professionals
-- Segment revenue declined 7 percent from last year. Revenue would have
been flat year-over-year if not for a $9 million revenue shift that has
been deferred from the second to the third quarter. Expected revenue
growth for the year remains at 3 percent to 7 percent.
Financial Institutions
-- Revenue grew 10 percent, with 16 percent bill pay user growth
contributing to another strong quarter.
-- About 1,200 financial institutions are offering TurboTax for Online
Banking this tax season. The offering demonstrates Intuit's unique
ability to combine capabilities across business segments to create
innovative solutions to reach more customers and solve their financial
problems.
Other Businesses
-- Segment revenue grew 38 percent, driven primarily by strength in
Personal Finance.
-- Personal Finance benefited from the Mint.com acquisition and a strong
new Quicken desktop release. Since the acquisition, the number of new
Mint.com registered users has accelerated.
-- Intuit launched its first product for the Indian market, Intuit Money
Manager, in December. This is an online personal finance tool developed
specifically to help consumers plan, track, and grow their money. This
innovative product has the potential to help tens of millions of
consumers save time, save money, and make better financial decisions.
-- Quicken Health Expense Tracker is now in market and available to more
than 26 million health plan members.
Forward-looking Guidance
For fiscal year 2010 Intuit expects:
-- Revenue of $3.3 billion to $3.4 billion, growth of 6 to 9 percent.
-- GAAP operating income of $785 million to $825 million. Non-GAAP
operating income of $1.01 billion to $1.05 billion, growth of 9 to 13
percent.
-- GAAP diluted earnings per share of $1.63 to $1.70, or growth of 21 to 26
percent. Non-GAAP diluted EPS of $1.97 to $2.04, growth of 8 to 12
percent.
For the third-quarter Intuit expects:
-- Revenue of $1.51 billion to $1.59 billion, growth of 7 to 12 percent.
-- GAAP operating income of $811 million to $861 million, growth of 6 to 13
percent. Non-GAAP operating income of $860 million to $910 million,
growth of 3 to 9 percent.
-- GAAP diluted EPS of $1.64 to $1.74, growth of 12 to 18 percent. Non-GAAP
diluted EPS of $1.75 to $1.85, growth of 4 to 10 percent.
Conference Call Information
Intuit executives will discuss the financial results on a conference call at 1:30 p.m. Pacific time today. To hear the call, dial 866-238-1645 in the United States or 703-639-1163 from international locations. No reservation or access code is needed. The conference call can also be heard live via webcast at http://investors.intuit.com/events.cfm. Prepared remarks for the call will be available on Intuit's Web site after the call ends.
A replay of the conference call will also be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code for this call is 1427610.
The audio webcast will remain available on Intuit's Web site for one week after the conference call.
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. A copy of the press release issued by Intuit today can be found on the investor relations page of Intuit's Web site.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements, including forecasts of Intuit's future expected financial results; its prospects for the business in fiscal 2010; 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 or public policy affecting the preparation and filing of tax returns could negatively affect our operating results and market position; if economic and market conditions in the U.S. and worldwide continue to decline, our customers may delay or reduce technology purchases which may harm our business, results of operations and financial condition; we may not be able to successfully introduce new products and services to meet our growth and profitability objectives, and current and future products and services may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; any failure to maintain reliable and responsive service levels for our offerings could cause us to lose customers and negatively impact our revenues and profitability; any significant product quality problems or delays in our products could harm our revenue, earnings and reputation; our participation in the Free File Alliance may result in lost revenue opportunities and cannibalization of our traditional paid franchise; any failure to properly use and protect personal customer information could harm our revenue, earnings and reputation; our acquisition activities may be disruptive to Intuit and may not result in expected benefits; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operations; our revenue and earnings are highly seasonal and the timing of our revenue between quarters is difficult to predict, which may cause significant quarterly fluctuations in our financial results; predicting tax-related revenues is challenging due to the heavy concentration of activity in a short time period; we have implemented, and are continuing to upgrade, new information systems and any problems with these new systems could interfere with our ability to deliver products and services and gather information to effectively manage our business; our financial position may not make repurchasing shares advisable or we may issue additional shares in an acquisition causing our number of outstanding shares to grow; and litigation involving intellectual property, antitrust, shareholder and other matters may increase our costs. More details about these and other risks that may impact our business are included in our Form 10-K for fiscal 2009 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 Feb. 18, 2010, and we do not undertake any duty to update any forward-looking statement or other information in these materials.
Table A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2010 2009 2010 2009
Net revenue:
Product $ 422 $ 433 $ 627 $ 651
Service and other 415 340 684 584
Total net revenue 837 773 1,311 1,235
Costs and expenses:
Cost of revenue:
Cost of product 48 56 83 88
revenue
Cost of service and 114 98 223 200
other revenue
Amortization of
purchased intangible 16 14 38 29
assets
Selling and marketing 277 271 457 451
Research and 144 140 285 274
development
General and 88 70 165 134
administrative
Acquisition-related 11 13 21 23
charges
Total costs and 698 662 1,272 1,199
expenses [A]
Operating income from 139 111 39 36
continuing operations
Interest expense (15 ) (12 ) (31 ) (24 )
Interest and other 2 6 7 5
income
Income from continuing
operations before 126 105 15 17
income taxes
Income tax provision 46 19 4 (17 )
(benefit) [B]
Net income from 80 86 11 34
continuing operations
Net income (loss) from
discontinued 34 (1 ) 35 (1 )
operations [C]
Net income $ 114 $ 85 $ 46 $ 33
Basic net income per
share from continuing $ 0.25 $ 0.27 $ 0.04 $ 0.10
operations
Basic net income
(loss) per share from 0.11 - 0.11 -
discontinued
operations
Basic net income per $ 0.36 $ 0.27 $ 0.15 $ 0.10
share
Shares used in basic 314 321 317 322
per share calculations
Diluted net income per
share from continuing $ 0.25 $ 0.26 $ 0.03 $ 0.10
operations
Diluted net income
(loss) per share from 0.10 - 0.11 -
discontinued
operations
Diluted net income per $ 0.35 $ 0.26 $ 0.14 $ 0.10
share
Shares used in diluted 323 326 326 329
per share calculations
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
[A] The following table summarizes the total share-based compensation expense
from continuing operations that we recorded for the periods shown.
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
(in millions) 2010 2009 2010 2009
Cost of product $ 1 $ 1 $ 1 $ 1
revenue
Cost of service and 2 2 4 3
other revenue
Selling and 12 12 19 20
marketing
Research and 11 10 20 16
development
General and 11 9 20 15
administrative
Total share-based $ 37 $ 34 $ 64 $ 55
compensation
Our effective tax rate for the three months ended January 31, 2010 was
approximately 37%. This differed from the federal statutory rate of 35%
primarily due to state income taxes, which were partially offset by the
benefit we received from the domestic production activities deduction and
the federal and state research and experimentation credits. Our effective
[B] tax rate for the three months ended January 31, 2009 was approximately 18%.
Excluding discrete tax benefits primarily related to a favorable agreement
we entered into with a tax authority with respect to tax years ended prior
to fiscal 2009, our effective tax rate for that period was approximately
36% and did not differ significantly from the federal statutory rate of
35%.
Our effective tax rate for the six months ended January 31, 2010 was
approximately 27%. Excluding discrete tax benefits primarily related to
routine stock option deduction benefits, our effective tax rate for that
period was approximately 37%. This differed from the federal statutory rate
of 35% primarily due to state income taxes, which were partially offset by
the benefit we received from the domestic production activities deduction
and the federal and state research and experimentation credits. We recorded
a tax benefit of $17 million on pre-tax income of $17 million for the six
months ended January 31, 2009. Excluding discrete tax benefits primarily
related to a favorable agreement we entered into with a tax authority as
described above and the retroactive reinstatement of the federal research
and experimentation credit, our effective tax rate for that period was
approximately 36% and did not differ significantly from the federal
statutory rate of 35%.
In January 2010 we sold our Intuit Real Estate Solutions (IRES) business
for approximately $128 million in cash and recorded a net gain on disposal
of $35 million. IRES was part of our Other Businesses segment. We
determined that IRES became a discontinued operation in the second quarter
of fiscal 2010. We have therefore segregated the net assets and operating
results of IRES from continuing operations on our balance sheets and in our
[C] statements of operations for all periods prior to the sale. Revenue and net
income from IRES discontinued operations were as shown in the following
table for the periods indicated. Because IRES 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 IRES on our statements of cash
flows for the three and six months ended January 31, 2010.
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
(In 2010 2009 2010 2009
millions)
Net $ 14 $ 18 $ 33 $ 37
revenue
Net loss $ (1 ) $ (1 ) $ - $ (1 )
Table B
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2010 2009 2010 2009
GAAP operating income $ 139 $ 111 $ 39 $ 36
Amortization of
purchased intangible 16 14 38 29
assets
Acquisition-related 11 13 21 23
charges
Professional fees for 3 - 4 -
business combinations
Share-based 37 34 64 55
compensation expense
Non-GAAP operating $ 206 $ 172 $ 166 $ 143
income
GAAP net income $ 114 $ 85 $ 46 $ 33
Amortization of
purchased intangible 16 14 38 29
assets
Acquisition-related 11 13 21 23
charges
Professional fees for 3 - 4 -
business combinations
Share-based 37 34 64 55
compensation expense
Net gains on
marketable equity - - - (1 )
securities and other
investments
Income tax effect of (25 ) (21 ) (47 ) (36 )
non-GAAP adjustments
Exclusion of discrete - (16 ) (1 ) (22 )
tax items
Discontinued (34 ) 1 (35 ) 1
operations
Non-GAAP net income $ 122 $ 110 $ 90 $ 82
GAAP diluted net $ 0.35 $ 0.26 $ 0.14 $ 0.10
income per share
Amortization of
purchased intangible 0.05 0.04 0.12 0.09
assets
Acquisition-related 0.03 0.04 0.06 0.07
charges
Professional fees for 0.01 - 0.01 -
business combinations
Share-based 0.12 0.11 0.20 0.17
compensation expense
Net gains on
marketable equity - - - -
securities and other
investments
Income tax effect of (0.08 ) (0.06 ) (0.14 ) (0.11 )
non-GAAP adjustments
Exclusion of discrete - (0.05 ) - (0.07 )
tax items
Discontinued (0.10 ) - (0.11 ) -
operations
Non-GAAP diluted net $ 0.38 $ 0.34 $ 0.28 $ 0.25
income per share
Shares used in diluted 323 326 326 329
per share calculations
See "About Non-GAAP Financial Measures" immediately following Table E 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 millions)
(Unaudited)
January 31, July 31,
2010 2009
ASSETS
Current assets:
Cash and cash equivalents $ 337 $ 679
Investments 609 668
Accounts receivable, net 468 135
Income taxes receivable 23 67
Deferred income taxes 80 92
Prepaid expenses and other current assets 86 43
Current assets of discontinued operations - 12
Current assets before funds held for customers 1,603 1,696
Funds held for customers 313 272
Total current assets 1,916 1,968
Long-term investments 92 97
Property and equipment, net 518 527
Goodwill 1,853 1,754
Purchased intangible assets, net 269 291
Long-term deferred income taxes 43 36
Other assets 87 77
Long-term assets of discontinued operations - 76
Total assets $ 4,778 $ 4,826
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 159 $ 103
Accrued compensation and related liabilities 135 171
Deferred revenue 511 360
Income taxes payable 2 -
Other current liabilities 234 153
Current liabilities of discontinued operations - 25
Current liabilities before customer fund 1,041 812
deposits
Customer fund deposits 313 272
Total current liabilities 1,354 1,084
Long-term debt 998 998
Other long-term obligations 170 187
Total liabilities 2,522 2,269
Stockholders' equity 2,256 2,557
Total liabilities and stockholders' equity $ 4,778 $ 4,826
Table D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31, January 31, January 31,
2010 2009 2010 2009
Cash flows from
operating activities:
Net income $ 114 $ 85 $ 46 $ 33
Adjustments to
reconcile net income
to net cash provided
by (used in) operating
activities:
Depreciation 36 36 75 69
Amortization of 32 30 68 57
intangible assets
Share-based 38 35 65 57
compensation
Pre-tax gain on sale (58 ) - (58 ) -
of IRES
Deferred income taxes 2 (1 ) (22 ) 44
Tax benefit from
share-based 4 (4 ) 10 7
compensation plans
Excess tax benefit
from share-based (2 ) - (5 ) (6 )
compensation plans
Other 6 2 10 7
Total adjustments 58 98 143 235
Changes in operating
assets and
liabilities:
Accounts receivable (318 ) (300 ) (331 ) (317 )
Prepaid expenses,
taxes and other 51 7 (5 ) (114 )
current assets
Accounts payable 47 (7 ) 56 15
Accrued compensation
and related 19 16 (38 ) (97 )
liabilities
Deferred revenue 180 140 156 122
Income taxes payable 2 1 2 (13 )
Other liabilities 92 103 76 79
Total changes in
operating assets and 73 (40 ) (84 ) (325 )
liabilities
Net cash provided by
(used in) operating 245 143 105 (57 )
activities
Cash flows from
investing activities:
Purchases of
available-for-sale (162 ) (31 ) (550 ) (67 )
debt securities
Sales of
available-for-sale 96 117 418 264
debt securities
Maturities of
available-for-sale 7 13 43 24
debt securities
Net change in funds
held for customers' 41 34 107 317
money market funds and
other cash equivalents
Purchases of property (34 ) (50 ) (66 ) (117 )
and equipment
Net change in customer 20 (34 ) 41 (317 )
fund deposits
Acquisitions of
businesses, net of (141 ) - (141 ) -
cash acquired
Proceeds from
divestiture of 122 - 122 -
business
Other (3 ) 1 (6 ) 4
Net cash provided by
(used in) investing (54 ) 50 (32 ) 108
activities
Cash flows from
financing activities:
Net proceeds from
issuance of common 85 18 150 95
stock under stock
plans
Tax payments related
to restricted stock (5 ) (2 ) (20 ) (14 )
issuance
Purchase of treasury (250 ) (35 ) (550 ) (200 )
stock
Excess tax benefit
from share-based 2 - 5 6
compensation plans
Other - (2 ) (1 ) (2 )
Net cash used in (168 ) (21 ) (416 ) (115 )
financing activities
Effect of exchange
rates on cash and cash 1 (2 ) 1 (10 )
equivalents
Net increase
(decrease) in cash and 24 170 (342 ) (74 )
cash equivalents
Cash and cash
equivalents at 313 169 679 413
beginning of period
Cash and cash
equivalents at end of $ 337 $ 339 $ 337 $ 339
period
Table E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(In millions, 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, 2010
Revenue $ 1,510 $ 1,590 $ - $ 1,510 $ 1,590
Operating income $ 811 $ 861 $ 49 [a] $ 860 $ 910
Diluted earnings per share $ 1.64 $ 1.74 $ 0.11 [b] $ 1.75 $ 1.85
Shares 320 324 - 320 324
Twelve Months Ending
July 31, 2010
Revenue $ 3,300 $ 3,400 $ - $ 3,300 $ 3,400
Operating income $ 785 $ 825 $ 225 [c] $ 1,010 $ 1,050
Diluted earnings per share $ 1.63 $ 1.70 $ 0.34 [d] $ 1.97 $ 2.04
Shares 319 323 - 319 323
See "About Non-GAAP Financial Measures" immediately following this Table E 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.
[a] Reflects estimated adjustments for share-based compensation expense of
approximately $34 million; amortization of purchased intangible assets of
approximately $4 million; and acquisition-related charges of approximately $11
million.
[b] Reflects the estimated adjustments in item [a], income taxes related to
these adjustments, and adjustments for certain discrete GAAP tax items.
[c] Reflects estimated adjustments for share-based compensation expense of
approximately $133 million; amortization of purchased intangible assets of
approximately $46 million; acquisition-related charges of approximately $42
million; and professional fees for business combinations of approximately $4
million.
[d] Reflects the estimated adjustments in item [c], income taxes related to
these adjustments, adjustments for certain discrete GAAP tax items, and an
adjustment for a net gain from discontinued operations of approximately $35
million.
INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated February 18, 2010 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), 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 compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year. We may consider whether other significant items that arise in the future should be excluded from our non-GAAP financial measures.
We exclude the following items from all of our non-GAAP financial measures:
-- Share-based compensation expense
-- Amortization of purchased intangible assets
-- Acquisition-related charges
-- Professional fees for business combinations
We also exclude the following items from non-GAAP net income (loss) and diluted net income (loss) per share:
-- Gains and losses on marketable equity securities and other investments
-- Income tax effects of excluded items
-- Discontinued operations
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 planning and forecasting and when assessing the performance of the organization, our individual operating segments or our senior management. Segment managers are not held accountable for share-based compensation expenses, acquisition-related charges, or the other excluded items and, accordingly, we exclude these amounts from our measures of segment performance. We believe that our non-GAAP financial measures also facilitate the comparison by management and investors of results for current periods and guidance for future periods with results for past periods.
The following are descriptions of the items we exclude from our non-GAAP financial measures.
Share-based compensation expenses. These consist of non-cash expenses for stock options, restricted stock units and purchases of common stock under our Employee Stock Purchase Plan. When considering the impact of equity awards, we place greater emphasis on overall shareholder dilution rather than the accounting charges associated with those awards.
Amortization of purchased intangible assets and acquisition-related charges. When we acquire an entity, we are required by GAAP to record the fair values of the intangible assets of the entity and amortize them over their useful lives. Amortization of purchased intangible assets in cost of revenue includes amortization of software and other technology assets of acquired entities. Acquisition-related charges in operating expenses include amortization of other purchased intangible assets such as customer lists, covenants not to compete and trade names.
Professional fees for business combinations. We exclude from our non-GAAP financial measures the professional fees we incur to complete business combinations. These include investment banking, legal and accounting fees.
Gains and losses on marketable equity securities and other investments. We exclude from our non-GAAP financial measures gains and losses that we record when we sell or impair marketable equity securities and other investments.
Income tax effects of excluded items. We exclude from our non-GAAP financial measures 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. This is consistent with how we plan, forecast and evaluate our operating results.
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.
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.
Source: Intuit Inc.
Released February 18, 2010