Form: 8-K

Current report filing

August 22, 2002

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

August 21, 2002
(Date of Report)
Date of earliest event reported: August 14, 2002

Intuit Inc.
(Exact name of Registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

     
0-21180
(Commission File Number)		   77-0034661
(I.R.S. Employer Identification No.)

2535 Garcia Avenue
Mountain View, California 94043
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:
(650) 944-6000

 

TABLE OF CONTENTS

ITEM 5. OTHER EVENTS.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
CONDENSED CONSOLIDATED BALANCE SHEET
SIGNATURES

Table of Contents

ITEM 5. OTHER EVENTS.

Proposed Acquisition of Blue Ocean Software

     On August 14, 2002, Intuit Inc. announced that it had signed a definitive agreement to acquire Blue Ocean Software Inc., a leading provider of software that helps small businesses manage their information technology resources and assets.

     Intuit currently plans to operate Blue Ocean as a business unit within its Small Business and Personal Finance division and will continue to offer Blue Ocean’s current products and services. Russ Hobbs, Blue Ocean’s chief executive officer, will lead the operating unit as a vice president at Intuit reporting to Lorrie Norrington, executive vice president, Small Business and Personal Finance. Virtually all of Blue Ocean’s 78 employees will be asked to stay with the business. Blue Ocean will continue to be based in Tampa, Florida.

     Under the terms of the agreement, Intuit will acquire all outstanding shares of Blue Ocean’s stock for approximately $170 million in cash. Intuit expects Blue Ocean to contribute approximately $45 million to $55 million in revenue in fiscal year 2003. The acquisition is expected to close in the first quarter of fiscal 2003. The closing of the transaction is subject to standard closing conditions, including various regulatory approvals.

Press Release Announcing Fourth Quarter and Fiscal Year 2002 Results

     Fiscal 2002 Results

     On August 14, 2002, Intuit announced its financial results for the fourth quarter and fiscal year ended July 31, 2002. Intuit reported fiscal 2002 revenue of $1.36 billion, an increase of 18% over fiscal 2001 revenue of $1.15 billion. Intuit reported net income for the year of $140.2 million, or $0.64 per share, up from a net loss of $82.8 million, or a net loss of $0.40 per share, in fiscal 2001. Growth was driven by strong performance in Intuit’s largest businesses — small business and tax. In fiscal 2002, losses related to marketable securities decreased by $82.5 million compared to fiscal 2001 and acquisition-related charges decreased by $66.6 million compared to fiscal 2001. Intuit sold its Quicken Loans mortgage business in July 2002. Quicken Loans is treated as a discontinued operation for accounting purposes. As a result, the financial results for Quicken Loans, reflecting income and expenses totaling $47.1 million, were segregated into a separate line item rather than reflected in Intuit’s operating results.

     Fourth Quarter Results

     Intuit reported revenue of $197.2 million for the fourth quarter of fiscal 2002, an increase of 31% over the $150.3 million for the fourth quarter of fiscal 2001. Growth was driven primarily by strong results in QuickBooks and Canada. Intuit reported a net loss for the quarter of $31.8 million, or a loss of $0.15 per share. Intuit typically reports a loss in its fourth quarter when revenue from tax preparation businesses is minimal, but operating expenses to develop new products and services continue at relatively consistent levels. In the fourth quarter of fiscal 2001, Intuit reported a net loss of $61.3 million, or a loss of $0.29 per share. The smaller loss in the fourth quarter of fiscal 2002 was due in part to the gain on the sale of Quicken Loans of $23.3 million. Intuit acquired Quicken Loans in December 1999. Because the transaction was accounted for as a pooling of interests, the value of the business was reflected on Intuit’s balance sheet as the net value of the tangible assets, rather than the purchase price paid. The gain represents the premium over the net value of the tangible assets.

(Financial statements follow)

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Table of Contents

INTUIT INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(unaudited)

                                     
        Three Months Ended   Twelve Months Ended
        July 31,   July 31,
       
 
        2001   2002   2001   2002
       
 
 
 
Net revenue:
                                
 
Products
   $ 97,406     $ 131,875     $ 834,190     $ 1,001,782  
 
Services
     38,748       51,681       240,381       293,405  
 
Other
     14,164       13,603       73,834       63,161  
 
    
     
     
     
 
Total net revenue
     150,318       197,159       1,148,405       1,358,348  
Costs and expenses:
                                
 
Cost of revenue:
                                
   
Products, services and other
     54,730       56,702       279,305       296,830  
   
Amortization of purchased software and other
     3,729       1,981       14,949       12,423  
 
Customer service and technical support
     32,193       38,327       145,522       173,080  
 
Selling and marketing
     44,495       62,907       235,256       278,826  
 
Research and development
     50,917       49,992       203,739       203,522  
 
General and administrative
     23,454       27,394       95,704       110,441  
 
Charge for purchased research and development
     —       2,151       238       2,151  
 
Charge for vacant facilities
     —       —       —       13,237  
 
Acquisition-related charges
     42,869       40,886       248,179       181,616  
 
Loss on impairment of long-lived asset
     —       —       —       27,000  
 
    
     
     
     
 
   
Total costs and expenses
     252,387       280,340       1,222,892       1,299,126  
 
    
     
     
     
 
   
Income (loss) from continuing operations
     (102,069 )     (83,181 )     (74,487 )     59,222  
Interest and other income and expense, net
     11,368       8,440       57,303       32,944  
Losses on marketable securities and other investments, net
     (10,746 )     (6,269 )     (98,053 )     (15,535 )
Gains (losses) on divestitures
     (16,954 )     —       (15,315 )     8,308  
 
    
     
     
     
 
Income (loss) from continuing operations before income taxes and cumulative effect of accounting change
     (118,401 )     (81,010 )     (130,552 )     84,939  
Income tax benefit (provision) (i)
     45,459       15,235       12,473       (15,179 )
 
    
     
     
     
 
Income (loss) from continuing operations before cumulative effect of accounting change
     (72,942 )     (65,775 )     (118,079 )     69,760  
 
    
     
     
     
 
Discontinued operations, net of income taxes (ii):
                                
 
Net income from Quicken Loans discontinued operations
     11,653       10,713       20,972       47,100  
 
Gain on disposal of Quicken Loans discontinued operations
     —       23,300       —       23,300  
 
    
     
     
     
 
Net income from discontinued operations
     11,653       34,013       20,972       70,400  
 
    
     
     
     
 
Cumulative effect of accounting change, net of income taxes of $9,543
     —       —       14,314       —  
 
    
     
     
     
 
Net income (loss)
   $ (61,289 )   $ (31,762 )   $ (82,793 )   $ 140,160  
 
    
     
     
     
 
Basic net income (loss) per share from continuing operations before cumulative effect of accounting change
   $ (0.35 )   $ (0.31 )   $ (0.57 )   $ 0.33  
Net income per share from discontinued operations
     0.06       0.16       0.10       0.33  
Cumulative effect of accounting change per share
     —       —       0.07       —  
 
    
     
     
     
 
Basic net income (loss) per share
   $ (0.29 )   $ (0.15 )   $ (0.40 )   $ 0.66  
 
    
     
     
     
 
Shares used in basic per share amounts
     209,800       212,003       207,959       211,794  
 
    
     
     
     
 
Diluted net income (loss) per share from continuing operations before cumulative effect of accounting change
   $ (0.35 )   $ (0.31 )   $ (0.57 )   $ 0.32  
Net income per share from discontinued operations
     0.06       0.16       0.10       0.32  
Cumulative effect of accounting change per share
     —       —       0.07       —  
 
    
     
     
     
 
Diluted net income (loss) per share
   $ (0.29 )   $ (0.15 )   $ (0.40 )   $ 0.64  
 
    
     
     
     
 
Shares used in diluted per share amounts
     209,800       212,003       207,959       217,897  
 
    
     
     
     
 

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Table of Contents

i.    There is a difference in the effective tax rate for each of these periods, primarily due to the tax benefit related to divestitures that became available in the second quarter of fiscal 2002.
 
ii.    On July 31, 2002, we sold our Quicken Loans mortgage business. We accounted for the sale as discontinued operations and, accordingly, the operating results of Quicken Loans have been segregated from continuing operations on the statement of operations for the three and twelve months ended July 31, 2001 and 2002. Income taxes netted against net income from discontinued operations amounted to $6.7 million and $6.0 million for the three months ended July 31, 2001 and 2002 and $12.2 million and $26.5 million for the twelve months then ended. The tax benefit related to the $23.3 million gain on the transaction was not recorded because its realization is not assured.

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Table of Contents

INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)

                       
          July 31,   July 31,
          2001   2002
         
 
ASSETS
                
Current assets:
                
    Cash and cash equivalents
   $ 94,301     $ 435,087  
    Short-term investments
     1,119,305       815,342  
    Marketable securities
     85,307       16,791  
    Customer deposits
     205,254       300,409  
    Accounts receivable, net
     26,778       56,467  
    Deferred income taxes
     73,742       67,799  
    Prepaid expenses and other current assets
     31,640       50,729  
    Amounts due from discontinued operations entities
     355,222       252,869  
    Net current assets of discontinued operations
     57,208       —  
 
    
     
 
 
Total current assets
     2,048,757       1,995,493  
Property and equipment, net
     174,659       181,758  
Goodwill and intangibles, net
     415,135       554,422  
Long-term deferred income taxes
     145,905       176,553  
Long-term investments
     24,107       6,765  
Other assets
     41,359       48,035  
Net assets of discontinued operations
     12,351       —  
 
    
     
 
Total assets
   $ 2,862,273     $ 2,963,026  
 
    
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
    Accounts payable
   $ 62,994     $ 76,669  
    Payroll service obligations
     205,067       300,381  
    Deferred revenue
     137,041       159,758  
    Income taxes payable
     82,486       442  
    Short-term note payable
     38,672       17,926  
    Other current liabilities
     162,537       177,601  
 
    
     
 
 
Total current liabilities
     688,797       732,777  
Long-term obligations
     12,150       14,610  
Stockholders’ equity
     2,161,326       2,215,639  
 
    
     
 
Total liabilities and stockholders’ equity
   $ 2,862,273     $ 2,963,026  
 
    
     
 

Note:    On July 31, 2002 we sold our Quicken Loans mortgage business and accounted for the sale as discontinued operations. Quicken Loans balance sheet amounts at July 31, 2001 have therefore been reclassified. Other assets at July 31, 2002 include a $23.3 million note from Rock Acquisition Corporation, the purchaser of the Quicken Loans business.

Retirement of Chief Financial Officer

     On August 14, 2002, Intuit announced that Greg Santora, Senior Vice President and Chief Financial Officer of Intuit, has decided to retire from Intuit at the end of the calendar year, and will remain in his current role until then. Mr. Santora will participate in the search and will work with the new CFO to ensure a smooth transition.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

             
Date:   August 21, 2002       INTUIT INC.
 
 
        By:   /s/ LINDA FELLOWS
Linda Fellows
Vice President, Treasurer
and Director of Investor Relations

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