Form: 8-K

Current report filing

February 18, 2004

 

Exhibit 99.01

         
Contacts:   Investors   Media
    Linda Fellows   Holly Anderson
    Intuit Inc.   Intuit Inc.
    (650) 944-5436   (650) 944-3992
        or
        Heather McLellan
        Intuit Inc.
        (650) 944-3501

FOR IMMEDIATE RELEASE

INTUIT’S SECOND-QUARTER 2004 REVENUE GROWS 14 PERCENT

Raises Pro Forma EPS Guidance for FY 04

MOUNTAIN VIEW, Calif. – Feb. 18, 2004 — Intuit Inc. (Nasdaq: INTU) today announced results for the second quarter of fiscal 2004, which ended Jan. 31, 2004.

     “Intuit delivered good results for the second quarter,” said Steve Bennett, Intuit’s president and chief executive officer. “Five of our six business segments delivered within or above their revenue guidance for the quarter and we’re on track to meet Intuit’s growth targets for the year.”

Second-Quarter 2004 Highlights

  •   Revenue of $636.3 million increased 14 percent from the year-ago quarter.
 
  •   Intuit had pro forma net income of $155.7 million, up 21 percent from $128.8 million in the year-ago quarter. Pro forma diluted earnings per share (EPS) of $0.77 increased 26 percent from $0.61 in the second quarter of fiscal 2003.
 
  •   Intuit had GAAP net income (Generally Accepted Accounting Principles) of $149.1 million, up 16 percent from $128.4 million in the year-ago quarter. This represents GAAP EPS of $0.73 per diluted share, up 22 percent from $0.60 per diluted share in the second quarter of fiscal 2003.

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Second-Quarter Business Segment Revenue Growth

  •   TurboTax revenue of $130.0 million was up 36 percent from second-quarter 2003. Intuit reaffirmed guidance for annual TurboTax revenue growth of 10 percent to 20 percent in fiscal 2004.
 
  •   Revenue from Intuit’s Professional Accounting Solutions (PAS) segment increased 4 percent over the year-ago quarter to $156.8 million. Intuit reaffirmed guidance for annual PAS revenue growth of 7 percent to 12 percent.
 
  •   QuickBooks revenue grew 8 percent year-over-year to $101.3 million, below expectations. This was due to a larger-than-expected drop in lower-priced QuickBooks Basic and Pro units that was not offset by upgrades to higher-priced, higher-end offerings. Intuit is lowering its targets for fiscal 2004 QuickBooks revenue growth to 0 percent to 10 percent.
 
  •   Intuit’s Small Business Products and Services revenue increased 20 percent over the year-ago quarter to $145.3 million. This segment includes Intuit’s payroll businesses as well as other non-accounting products and services. Intuit reaffirmed guidance for annual Small Business Products and Services revenue growth of 15 percent to 25 percent in fiscal 2004.
 
  •   Intuit’s Vertical Business Management Solutions segment had organic year-over-year revenue growth of 9 percent to $26.1 million. Verticals have had 22 percent revenue growth fiscal year to date. Intuit reaffirmed guidance for annual Verticals revenue growth of 15 percent to 25 percent in fiscal 2004.
 
  •   Revenue from Other Businesses, which includes Quicken and Canada, was $76.8 million, up 4 percent from the year-ago quarter. Intuit is raising its fiscal 2004 revenue growth guidance for Other Businesses to 5 percent to 15 percent.

Forward-Looking Guidance for Third-Quarter 2004

Intuit provided its guidance for the third quarter of fiscal 2004, which will end April 30, 2004. Although financial analysts have developed their own estimates for Intuit’s third-quarter performance, Intuit had not previously issued guidance for the quarter. Third-quarter 2004 guidance is:

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  •   Revenue of $685 million to $725 million, or year-over-year growth of 8 percent to 14 percent.
 
  •   Pro forma operating income of $335 million to $355 million, or year-over-year growth of 4 percent to 11 percent, and GAAP operating income of $325 million to $345 million.
 
  •   Pro forma diluted earnings per share of $1.12 to $1.16, or year-over-year growth of 7 percent to 10 percent, and GAAP diluted earnings per share of $1.09 to $1.13.

FY 04 Revenue Guidance Reaffirmed; FY 04 Pro Forma EPS Guidance Raised

Intuit reaffirmed the revenue and pro forma operating income guidance for fiscal 2004 (which ends July 31, 2004) that it provided in May 2003:

  •   Revenue of $1.85 billion to $1.95 billion, or year-over-year growth of approximately 12 percent to 18 percent.
 
  •   Pro forma operating income of $480 million to $510 million, or growth of approximately 20 percent to 28 percent over fiscal 2003. On a GAAP basis, operating income is expected to be $443 million to $473 million, or growth of approximately 29 percent to 38 percent over fiscal 2003.

Intuit has raised its pro forma EPS guidance for fiscal 2004 by three cents per share:

  •   New guidance is for pro forma diluted earnings per share of $1.60 to $1.70, or growth of approximately 15 percent to 22 percent over fiscal 2003. On a GAAP basis, diluted EPS is expected to be $1.48 to $1.58, down approximately 3 percent to 9 percent from fiscal 2003. Fiscal 2003 GAAP diluted EPS included net income and gains from discontinued operations of nearly $80 million, or $0.38 per diluted share, which is not anticipated to recur in fiscal 2004.

Conference Call Scripts, Webcast and Conference Call Information

The script that accompanies Intuit’s earnings conference call and a live audio webcast of the call is available at http://www.intuit.com/about_intuit/investors/webcast_events.html. The call begins today at 1:30 p.m. (PST). The replay of the audio webcast will remain on Intuit’s Web site for one week after the conference call. This press release, including the tables, is available at that site and any other supplemental financial and statistical

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information required to be posted, including pro forma reconciliation, will be posted to that site.

The conference call number is (800) 615-5585 and (706) 679-0331 from international locations. No reservation or access code is needed. A replay of the call will be available for one week by calling (800) 642-1687, and (706) 645-9291 for international locations. The reservation number is 5231499.

About pro forma, or non-GAAP, financial measures

Intuit computes its pro forma, or non-GAAP, financial measures using the same consistent method from quarter to quarter and year to year. Pro forma operating income excludes acquisition-related charges, such as amortization of intangibles and impairment charges, as well as amortization of purchased software and charges for purchased research and development. Pro forma net income and diluted earnings per share exclude discontinued operations, gains and losses on marketable securities and other investments, as well as the tax effects of these transactions. These pro forma financial measures are not prepared in accordance with generally accepted accounting principles and likely are different from non-GAAP or pro forma financial measures used by other companies. The accompanying tables and fact sheet have more details on Intuit’s historical performance and financial projections, the GAAP financial measures that are most directly comparable to Intuit’s pro forma financial measures, and the reconciliation of pro forma financial measures to GAAP.

Cautions About Forward-Looking Statements

This press release contains forward-looking statements, including forecasts of our expected financial results. Statements about Intuit’s “guidance,” statements including words such as “expect,” “anticipate” or “believe,” and statements in the future tense, are forward-looking statements. Actual results may differ materially from our expressed expectations. Some of the important factors that could cause our results to differ include the following:

  •   We face intense competitive pressures in all of our businesses, which can have unpredictable negative effects on our revenue, profitability and market position.
 
  •   Expanding our product and service offerings creates risk due to the increasing complexity and decreasing predictability of our revenue streams.
 
  •   We are continuing to implement new information systems to enable us to execute on our growth strategy, and problems with the design or implementation of these new systems could interfere with our business and operations.
 
  •   Integrating acquired businesses presents several challenges and we may not fully realize the intended benefits of our acquisitions if we do not successfully integrate them with our operations.
 
  •   Given the nature of the products and services that we offer, our revenue and earnings are highly seasonal and this can cause significant quarterly fluctuations in our financial results.
 
  •   We may not be able to generate substantial and sustained revenue growth from new products and services in our QuickBooks, Small Business Products and Services and Vertical Business Management solutions segments.
 
  •   If we fail to maintain reliable and responsive service levels for our tax offerings, we could lose revenue and customers.

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More details about these and other risks are included in our Forms 10-Q, 2003 Form 10-K, and other SEC filings and at http://www.intuit.com/about_intuit/investors. We do not undertake any duty to update the information in this press release except as otherwise required by law.

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Table A1
INTUIT INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

                                     
        Three Months Ended   Six Months Ended
        January 31,   January 31,
       
 
        2003   2004   2003   2004
       
 
 
 
Net revenue:
                               
 
Product
  $ 465,130     $ 510,253     $ 607,033     $ 670,438  
 
Service
    75,348       107,636       130,952       173,903  
 
Other
    17,598       18,400       32,963       34,476  
 
   
     
     
     
 
Total net revenue
    558,076       636,289       770,948       878,817  
 
   
     
     
     
 
Costs and expenses:
                               
 
Cost of revenue:
                               
   
Cost of product revenue
    71,062       65,895       99,774       97,913  
   
Cost of service revenue
    39,557       42,472       76,169       78,308  
   
Cost of other revenue
    5,164       6,889       9,754       13,673  
   
Amortization of purchased software [B]
    3,518       3,324       6,495       6,613  
 
Customer service and technical support
    55,591       63,215       95,221       104,206  
 
Selling and marketing
    97,796       107,640       172,617       199,589  
 
Research and development
    66,080       73,333       130,207       144,664  
 
General and administrative
    38,405       48,131       78,021       91,826  
 
Charge for purchased research and development [C]
    1,070       —       8,859       —  
 
Acquisition-related charges [D]
    9,154       6,780       18,609       12,829  
 
 
   
     
     
     
 
   
Total costs and expenses
    387,397       417,679       695,726       749,621  
 
   
     
     
     
 
Income from continuing operations
    170,679       218,610       75,222       129,196  
Interest and other income
    7,770       7,170       16,556       14,660  
Gains on marketable securities and other investments, net
    2,827       90       3,080       237  
 
   
     
     
     
 
Income from continuing operations before income taxes
    181,276       225,870       94,858       144,093  
Income tax provision [E]
    55,905       76,804       29,936       48,992  
 
   
     
     
     
 
Net income from continuing operations
    125,371       149,066       64,922       95,101  
Discontinued operations, net of income taxes:
                               
 
Gain on disposal of Quicken Loans discontinued operations [F]
    —       —       5,556       —  
 
Net income from Intuit KK discontinued operations [G]
    3,059       —       3,267       —  
 
 
   
     
     
     
 
Net income from discontinued operations
    3,059       —       8,823       —  
 
   
     
     
     
 
Net income
  $ 128,430     $ 149,066     $ 73,745     $ 95,101  
 
   
     
     
     
 
Basic net income per share from continuing operations
  $ 0.61     $ 0.75     $ 0.32     $ 0.48  
Basic net income per share from discontinued operations
    0.01       —       0.04       —  
 
 
   
     
     
     
 
Basic net income per share
  $ 0.62     $ 0.75     $ 0.36     $ 0.48  
 
   
     
     
     
 
Shares used in basic per share amounts
    205,682       197,665       206,823       198,206  
 
   
     
     
     
 
Diluted net income per share from continuing operations
  $ 0.59     $ 0.73     $ 0.31     $ 0.47  
Diluted net income per share from discontinued operations
    0.01       —       0.04       —  
 
 
   
     
     
     
 
Diluted net income per share
  $ 0.60     $ 0.73     $ 0.35     $ 0.47  
 
   
     
     
     
 
Shares used in diluted per share amounts
    212,455       203,430       213,445       203,796  
 
   
     
     
     
 

See accompanying Notes.

 


 

Table A2
INTUIT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

                                     
        Three Months Ended   Six Months Ended
        January 31,   January 31,
       
 
        2003   2004   2003   2004
       
 
 
 
Net revenue:
                               
 
Product
  $ 465,130     $ 510,253     $ 607,033     $ 670,438  
 
Service
    75,348       107,636       130,952       173,903  
 
Other
    17,598       18,400       32,963       34,476  
 
   
     
     
     
 
Total net revenue
    558,076       636,289       770,948       878,817  
 
   
     
     
     
 
Costs and expenses:
                               
 
Cost of revenue:
                               
   
Cost of product revenue
    71,062       65,895       99,774       97,913  
   
Cost of service revenue
    39,557       42,472       76,169       78,308  
   
Cost of other revenue
    5,164       6,889       9,754       13,673  
 
Customer service and technical support
    55,591       63,215       95,221       104,206  
 
Selling and marketing
    97,796       107,640       172,617       199,589  
 
Research and development
    66,080       73,333       130,207       144,664  
 
General and administrative
    38,405       48,131       78,021       91,826  
 
 
   
     
     
     
 
   
Total costs and expenses
    373,655       407,575       661,763       730,179  
 
   
     
     
     
 
Income from operations
    184,421       228,714       109,185       148,638  
Interest and other income
    7,770       7,170       16,556       14,660  
 
   
     
     
     
 
Income before income taxes
    192,191       235,884       125,741       163,298  
Income tax provision
    63,423       80,201       41,495       55,521  
 
   
     
     
     
 
Net income
  $ 128,768     $ 155,683     $ 84,246     $ 107,777  
 
   
     
     
     
 
Basic net income per share
  $ 0.63     $ 0.79     $ 0.41     $ 0.54  
 
   
     
     
     
 
Shares used in basic per share amounts
    205,682       197,665       206,823       198,206  
 
   
     
     
     
 
Diluted net income per share
  $ 0.61     $ 0.77     $ 0.39     $ 0.53  
 
   
     
     
     
 
Shares used in diluted per share amounts
    212,455       203,430       213,445       203,796  
 
   
     
     
     
 

The pro forma, or non-GAAP, financial measures above should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (“GAAP”). These pro forma financial measures are not prepared in accordance with GAAP and likely are different from pro forma financial measures used by other companies. Intuit’s management believes that these pro forma financial measures provide meaningful supplemental information regarding Intuit’s core operating results because they exclude amounts that are not necessarily related to Intuit’s core operating results. Intuit’s management refers to these pro forma financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These pro forma financial measures also facilitate management’s internal comparisons to Intuit’s historical operating results. In addition, Intuit has historically reported similar pro forma financial measures and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Intuit computes pro forma financial measures using the same consistent method from quarter to quarter and year to year. See Tables B1 and B2 for reconciliations of these pro forma financial measures to GAAP.

 


 

Table B1
INTUIT INC.
RECONCILIATION OF PRO FORMA FINANCIAL MEASURES
TO GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [A]-[G]
(In thousands, except per share amounts)
(Unaudited)

                                                                     
        Three Months Ended   Three Months Ended
        January 31, 2003   January 31, 2004
       
 
        Pro                           Pro                        
        Forma   Adjmts   [A]   GAAP   Forma   Adjmts   [A]   GAAP
       
 
     
 
 
     
Net revenue:
                                                               
 
Product
  $ 465,130     $ —             $ 465,130     $ 510,253     $ —             $ 510,253  
 
Service
    75,348       —               75,348       107,636       —               107,636  
 
Other
    17,598       —               17,598       18,400       —               18,400  
 
   
     
             
     
     
             
 
Total net revenue
    558,076       —               558,076       636,289       —               636,289  
 
   
     
             
     
     
             
 
Costs and expenses:
                                                               
 
Cost of revenue:
                                                               
   
Cost of product revenue
    71,062       —               71,062       65,895       —               65,895  
   
Cost of service revenue
    39,557       —               39,557       42,472       —               42,472  
   
Cost of other revenue
    5,164       —               5,164       6,889       —               6,889  
   
Amortization of purchased software
    —       3,518       [B]       3,518       —       3,324       [B]       3,324  
 
Customer service and technical support
    55,591       —               55,591       63,215       —               63,215  
 
Selling and marketing
    97,796       —               97,796       107,640       —               107,640  
 
Research and development
    66,080       —               66,080       73,333       —               73,333  
 
General and administrative
    38,405       —               38,405       48,131       —               48,131  
 
Charge for purchased research and development
    —       1,070       [C]       1,070       —       —               —  
 
Acquisition-related charges
    —       9,154       [D]       9,154       —       6,780       [D]       6,780  
 
   
     
             
     
     
             
 
   
Total costs and expenses
    373,655       13,742               387,397       407,575       10,104               417,679  
 
   
     
             
     
     
             
 
Income from continuing operations
    184,421       (13,742 )             170,679       228,714       (10,104 )             218,610  
Interest and other income
    7,770       —               7,770       7,170       —               7,170  
Gains on marketable securities and other investments, net
    —       2,827               2,827       —       90               90  
 
   
     
             
     
     
             
 
Income from continuing operations before income taxes
    192,191       (10,915 )             181,276       235,884       (10,014 )             225,870  
Income tax provision
    63,423       (7,518 )             55,905       80,201       (3,397 )             76,804  
 
   
     
             
     
     
             
 
Net income from continuing operations
    128,768       (3,397 )             125,371       155,683       (6,617 )             149,066  
Discontinued operations, net of income taxes:
                                                               
 
Gain on disposal of Quicken Loans discontinued operations
    —       —               —       —       —               —  
 
Net income from Intuit KK discontinued operations
    —       3,059       [G]       3,059       —       —               —  
 
   
     
             
     
     
             
 
Net income from discontinued operations
    —       3,059               3,059       —       —               —  
 
   
     
             
     
     
             
 
Net income
  $ 128,768     $ (338 )           $ 128,430     $ 155,683     $ (6,617 )           $ 149,066  
 
   
     
             
     
     
             
 
Basic net income per share from continuing operations
  $ 0.63                     $ 0.61     $ 0.79                     $ 0.75  
Basic net income per share from discontinued operations
    —                       0.01       —                       —  
 
   
                     
     
                     
 
Basic net income per share
  $ 0.63                     $ 0.62     $ 0.79                     $ 0.75  
 
   
                     
     
                     
 
Shares used in basic per share amounts
    205,682                       205,682       197,665                       197,665  
 
   
                     
     
                     
 
Diluted net income per share from continuing operations
  $ 0.61                     $ 0.59     $ 0.77                     $ 0.73  
Diluted net income per share from discontinued operations
    —                       0.01       —                       —  
 
   
                     
     
                     
 
Diluted net income per share
  $ 0.61                     $ 0.60     $ 0.77                     $ 0.73  
 
   
                     
     
                     
 
Shares used in diluted per share amounts
    212,455                       212,455       203,430                       203,430  
 
   
                     
     
                     
 

The pro forma, or non-GAAP, financial measures above should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (“GAAP”). These pro forma financial measures are not prepared in accordance with GAAP and likely are different from pro forma financial measures used by other companies. Intuit’s management believes that these pro forma financial measures provide meaningful supplemental information regarding Intuit’s core operating results because they exclude amounts that are not necessarily related to Intuit’s core operating results. Intuit’s management refers to these pro forma financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These pro forma financial measures also facilitate management’s internal comparisons to Intuit’s historical operating results. In addition, Intuit has historically reported similar pro forma financial measures and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Intuit computes pro forma financial measures using the same consistent method from quarter to quarter and year to year. See Notes [A] through [G] for details.

 


 

Table B2
INTUIT INC.
RECONCILIATION OF PRO FORMA FINANCIAL MEASURES
TO GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [A]-[G]
(In thousands, except per share amounts)
(Unaudited)

                                                                     
        Six Months Ended   Six Months Ended
        January 31, 2003   January 31, 2004
       
 
        Pro                           Pro                        
        Forma   Adjmts   [A]   GAAP   Forma   Adjmts   [A]   GAAP
       
 
     
 
 
         
Net revenue:
                                                               
 
Product
  $ 607,033     $ —             $ 607,033     $ 670,438     $ —             $ 670,438  
 
Service
    130,952       —               130,952       173,903       —               173,903  
 
Other
    32,963       —               32,963       34,476       —               34,476  
 
   
     
             
     
     
             
 
Total net revenue
    770,948       —               770,948       878,817       —               878,817  
 
   
     
             
     
     
             
 
Costs and expenses:
                                                               
 
Cost of revenue:
                                                               
   
Cost of product revenue
    99,774       —               99,774       97,913       —               97,913  
   
Cost of service revenue
    76,169       —               76,169       78,308       —               78,308  
   
Cost of other revenue
    9,754       —               9,754       13,673       —               13,673  
   
Amortization of purchased software
    —       6,495       [B]       6,495       —       6,613       [B]       6,613  
 
Customer service and technical support
    95,221       —               95,221       104,206       —               104,206  
 
Selling and marketing
    172,617       —               172,617       199,589       —               199,589  
 
Research and development
    130,207       —               130,207       144,664       —               144,664  
 
General and administrative
    78,021       —               78,021       91,826       —               91,826  
 
Charge for purchased research and development
    —       8,859       [C]       8,859       —       —               —  
 
Acquisition-related charges
    —       18,609       [D]       18,609       —       12,829       [D]       12,829  
 
   
     
             
     
     
             
 
   
Total costs and expenses
    661,763       33,963               695,726       730,179       19,442               749,621  
 
   
     
             
     
     
             
 
Income from continuing operations
    109,185       (33,963 )             75,222       148,638       (19,442 )             129,196  
Interest and other income
    16,556       —               16,556       14,660       —               14,660  
Gains on marketable securities and other investments, net
    —       3,080               3,080       —       237               237  
 
   
     
             
     
     
             
 
Income from continuing operations before income taxes
    125,741       (30,883 )             94,858       163,298       (19,205 )             144,093  
Income tax provision
    41,495       (11,559 )             29,936       55,521       (6,529 )             48,992  
 
   
     
             
     
     
             
 
Net income from continuing operations
    84,246       (19,324 )             64,922       107,777       (12,676 )             95,101  
Discontinued operations, net of income taxes:
                                                               
 
Gain on disposal of Quicken Loans discontinued operations
    —       5,556       [F]       5,556       —       —               —  
 
Net income from Intuit KK discontinued operations
    —       3,267       [G]       3,267       —       —               —  
 
   
     
             
     
     
             
 
Net income from discontinued operations
    —       8,823               8,823       —       —               —  
 
   
     
             
     
     
             
 
Net income
  $ 84,246     $ (10,501 )           $ 73,745     $ 107,777     $ (12,676 )           $ 95,101  
 
   
     
             
     
     
             
 
Basic net income per share from continuing operations
  $ 0.41                     $ 0.32     $ 0.54                     $ 0.48  
Basic net income per share from discontinued operations
    —                       0.04       —                       —  
 
   
                     
     
                     
 
Basic net income per share
  $ 0.41                     $ 0.36     $ 0.54                     $ 0.48  
 
   
                     
     
                     
 
Shares used in basic per share amounts
    206,823                       206,823       198,206                       198,206  
 
   
                     
     
                     
 
Diluted net income per share from continuing operations
  $ 0.39                     $ 0.31     $ 0.53                     $ 0.47  
Diluted net income per share from discontinued operations
    —                       0.04       —                       —  
 
   
                     
     
                     
 
Diluted net income per share
  $ 0.39                     $ 0.35     $ 0.53                     $ 0.47  
 
   
                     
     
                     
 
Shares used in diluted per share amounts
    213,445                       213,445       203,796                       203,796  
 
   
                     
     
                     
 

The pro forma, or non-GAAP, financial measures above should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (“GAAP”). These pro forma financial measures are not prepared in accordance with GAAP and likely are different from pro forma financial measures used by other companies. Intuit’s management believes that these pro forma financial measures provide meaningful supplemental information regarding Intuit’s core operating results because they exclude amounts that are not necessarily related to Intuit’s core operating results. Intuit’s management refers to these pro forma financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These pro forma financial measures also facilitate management’s internal comparisons to Intuit’s historical operating results. In addition, Intuit has historically reported similar pro forma financial measures and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Intuit computes pro forma financial measures using the same consistent method from quarter to quarter and year to year. See Notes [A] through [G] for details.

 


 

Notes to Tables A1, B1 and B2:

[A]   Tables B1 and B2 reconcile the differences between the pro forma or non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles (“GAAP”), and the GAAP condensed consolidated statements of operations for the three and six months ended January 31, 2003 and 2004. Pro forma operating income (loss) excludes certain cost and expense line items that are in the GAAP statement of operations. For example, for the line item “acquisition-related charges,” the number in the GAAP column is subtracted out of the pro forma column in calculating pro forma operating income or loss. Eliminating cost or expense items improves pro forma results compared to GAAP results. Pro forma net income (loss) starts with pro forma operating income or loss and then excludes certain non-operating gains and losses that are in the GAAP statement of operations. For example, for the line item “gains on marketable securities and other investments, net” the number in the GAAP column is taken out of the pro forma column in calculating pro forma net income or loss. Eliminating loss line items improves pro forma results compared to GAAP results. Eliminating gain line items decreases pro forma results compared to GAAP results.
 
[B]   We amortize the value of software and other technology assets that we receive in connection with certain acquisitions over their estimated useful lives.
 
[C]   In connection with certain acquisitions we determine the value of in-process projects under development for which technological feasibility has not been established. The value of each project is recorded as a charge for purchased research and development at the time of the acquisition. In the six months ended January 31, 2003, we recorded charges for purchased research and development totaling $8.9 million, primarily in connection with our acquisition of Blue Ocean Software, Inc. (now Intuit Information Technology Solutions).
 
[D]   Acquisition-related charges include amortization of purchased intangible assets and deferred compensation related to acquisitions as well as impairment charges. For the three and six months ended January 31, 2003, amortization of purchased intangible assets and deferred compensation was $9.2 million and $18.6 million and there were no impairment charges. For the three and six months ended January 31, 2004, amortization of purchased intangible assets and deferred compensation was $6.8 million and $12.8 million and there were no impairment charges.
 
[E]   Our effective tax rate for the three months ended January 31, 2003 differed from the federal statutory rate primarily due to the net effect of the benefit received from tax exempt interest income and various tax credits offset by state taxes. Our effective tax rate for the six months ended January 31, 2003 differed from the federal statutory rate primarily due to the net effect of the benefit received from tax exempt interest income and various tax credits offset by state taxes and acquisition-related charges recorded in the first quarter of fiscal 2003. Our effective tax rate for the three and six months ended January 31, 2004 differed from the federal statutory rate primarily due to the net effect of the benefit received from tax-exempt interest income and various tax credits offset by state taxes.
 
[F]   On July 31, 2002, we sold our Quicken Loans mortgage business to Rock Acquisition Corporation and accounted for the sale as discontinued operations. In the first quarter of fiscal 2003, we sold our residual minority equity interest in Rock and recorded a gain of $5.6 million.
 
[G]   On February 7, 2003, we sold our wholly owned Japanese subsidiary, Intuit KK, and accounted for the sale as discontinued operations. Accordingly, we have segregated the operating results of Intuit KK from continuing operations on our statement of operations for all periods prior to the sale. Revenue for Intuit KK for the three and six months ended January 31, 2003 was $16.2 million and $26.6 million. Net income before income taxes for Intuit KK for the three and six months ended January 31, 2003 was $5.3 million and $5.6 million.

 


 

Table C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

                   
      July 31,   January 31,
      2003   2004
     
 
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 170,043     $ 87,831  
Short-term investments
    1,036,758       891,081  
Marketable securities
    865       1,113  
Customer deposits
    306,007       281,448  
Accounts receivable, net
    88,156       283,959  
Deferred income taxes
    34,824       34,824  
Prepaid expenses and other current assets
    32,217       60,441  
 
   
     
 
 
Total current assets
    1,668,870       1,640,697  
Property and equipment, net
    188,253       196,913  
Goodwill, net
    591,091       690,766  
Purchased intangible assets, net
    125,445       124,865  
Long-term deferred income taxes
    183,061       183,061  
Loans to executive officers and other employees
    19,690       18,206  
Other assets
    13,857       18,630  
 
   
     
 
Total assets
  $ 2,790,267     $ 2,873,138  
 
   
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 56,786     $ 104,448  
Accrued compensation and related liabilities
    118,678       105,401  
Payroll service obligations
    306,007       281,448  
Deferred revenue
    178,840       203,686  
Income taxes payable
    76,725       103,523  
Other current liabilities
    59,129       145,653  
 
   
     
 
 
Total current liabilities
    796,165       944,159  
Long-term obligations
    29,265       18,864  
Stockholders’ equity
    1,964,837       1,910,115  
 
   
     
 
Total liabilities and stockholders’ equity
  $ 2,790,267     $ 2,873,138  
 
   
     
 

Note:   Cash and short-term investments declined during the first six months of fiscal 2004 due primarily to our use of cash for our stock repurchase programs and for the acquisition of Innovative Merchant Solutions, partially offset by cash generated by operations.

 


 

Table D1
INTUIT INC.
RECONCILIATION OF GUIDANCE FOR PRO FORMA FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME, AND EPS
(In thousands, except per share amounts)
(Unaudited)

                                                 
    Three Months Ending April 30, 2004
   
    Pro Forma                   GAAP
    Range of Estimate                   Range of Estimate
   
                 
    From   To   Adjustments           From   To
   
 
 
         
 
Revenue
  685,000     725,000     —             $ 685,000     $ 725,000  
Operating income
    335,000       355,000       (9,700     [a]       325,300       345,300  
Interest and other income
    3,000       5,000       —               3,000       5,000  
Diluted earnings per share
  1.12     1.16     (0.03     [b]     $ 1.09     $ 1.13  
Shares
    200,000       205,000       —               200,000       205,000  
                                                 
    Twelve Months Ending July 31, 2004
   
    Pro Forma                   GAAP
    Range of Estimate                   Range of Estimate
   
                 
    From   To   Adjustments           From   To
   
 
 
         
 
Revenue
  $ 1,850,000     $ 1,950,000     $ —             $ 1,850,000     $ 1,950,000  
Operating income
    480,000       510,000       (37,000 )     [c]       443,000       473,000  
Interest and other income
    20,000       25,000       —               20,000       25,000  
Diluted earnings per share
  $ 1.60     $ 1.70     $ (0.12 )     [d]     $ 1.48     $ 1.58  
Shares
    202,000       207,000       —               202,000       207,000  

[a]   Reflects estimated adjustments for amortization of purchased software of approximately $3.4 million and amortization of purchased intangible assets of approximately $6.3 million for the three months ending April 30, 2004.
 
[b]   Net of related income tax expense, the pro forma adjustments in item [a] result in a $0.03 per diluted share adjustment for the three months ending April 30, 2004.
 
[c]   Reflects estimated adjustments for amortization of purchased software of approximately $13.0 million and amortization of purchased intangible assets of approximately $24.0 million for the twelve months ending July 31, 2004.
 
[d]   Net of related income tax expense, the pro forma adjustments in item [c] result in a $0.12 per diluted share adjustment for the twelve months ending July 31, 2004.

The pro forma, or non-GAAP, financial measures above should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (“GAAP”). These pro forma financial measures are not prepared in accordance with GAAP and likely are different from pro forma financial measures used by other companies. Intuit’s management believes that these pro forma financial measures provide meaningful supplemental information regarding Intuit’s core operating results because they exclude amounts that are not necessarily related to Intuit’s core operating results. Intuit’s management refers to these pro forma financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These pro forma financial measures also facilitate management’s internal comparisons to Intuit’s historical operating results. In addition, Intuit has historically reported similar pro forma financial measures and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Intuit computes pro forma financial measures using the same consistent method from quarter to quarter and year to year.

The reconciliations of the forward-looking pro forma financial measures to GAAP in this Table D1 include all information reasonably available to Intuit at the date of this press release. The adjustments in this table are those that management can predict. Intuit’s pro forma financial measures exclude acquisition-related charges, discontinued operations and gains and losses on marketable securities. Events that could cause the reconciliation to change include acquisitions and divestitures of businesses, goodwill and other asset impairments and sales of marketable securities.

 


 

TABLE D2
INTUIT INC.
RECONCILIATION OF SUPPLEMENTAL PRO FORMA FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP MEASURES
(In thousands, except per share amounts)
(Unaudited)

                                 
    Three Months Ended April 30, 2003
   
    Pro                        
    Forma   Adjustments           GAAP
   
 
         
Revenue
  $ 634,698     $ —             $ 634,698  
Operating income
    320,595       (12,068 )     [a]       308,527  
Diluted earnings per share
  $ 1.05     $ 0.35       [b]     $ 1.40  
                                 
    Twelve Months Ended July 31, 2003
   
    Pro                        
    Forma   Adjustments           GAAP
   
 
         
Revenue
  $ 1,650,743     $ —             $ 1,650,743  
Operating income
    399,834       (56,602 )     [c]       343,232  
Diluted earnings per share
  $ 1.39     $ 0.24       [d]     $ 1.63  

[a]   Reflects adjustments for amortization of purchased software of $3.7 million and amortization of purchased intangible assets of $8.4 million for the three months ended April 30, 2003.
 
[b]   Reflects the adjustments in item [a] and adjustments for net gains on marketable securities of $7.0 million and net income from discontinued operations of $71.0 million. Net of related income tax expense, these pro forma adjustments resulted in a $0.35 per diluted share adjustment for the three months ended April 30, 2003.
 
[c]   Reflects adjustments for amortization of purchased software of $13.8 million, charges for purchased research and development of $8.9 million and amortization of purchased intangible assets of $33.9 million for the twelve months ended July 31, 2003.
 
[d]   Reflects the adjustments in item [c] and adjustments for net gains on marketable securities of $10.9 million and net income from discontinued operations of $79.8 million. Net of related income tax expense, these pro forma adjustments resulted in a $0.24 per diluted share adjustment for the twelve months ended July 31, 2003.

The pro forma, or non-GAAP, financial measures above should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (“GAAP”). These pro forma financial measures are not prepared in accordance with GAAP and likely are different from pro forma financial measures used by other companies. Intuit’s management believes that these pro forma financial measures provide meaningful supplemental information regarding Intuit’s core operating results because they exclude amounts that are not necessarily related to Intuit’s core operating results. Intuit’s management refers to these pro forma financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These pro forma financial measures also facilitate management’s internal comparisons to Intuit’s historical operating results. In addition, Intuit has historically reported similar pro forma financial measures and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Intuit computes pro forma financial measures using the same consistent method from quarter to quarter and year to year.

 


 

     
Intuit Facts ...   Intuit Inc.
     
Q2/FY04   Investor Relations (650) 944-5436
     
    NASDAQ: INTU
     
Financial Outlook[A]    
                                                 
    ACTUAL   ACTUAL   GUIDANCE   (in future)   GUIDANCE   ACTUAL
(millions)   Q1 FY04   Q2 FY04   Q3 FY04   Q4 FY04   FY04   FY03

 
 
 
 
 
 
QuickBooks
  $ 42.8     $ 101.3     $ 55-$65                     $ 242.8  
% of change YOY
    11 %     8 %     (1%)-17 %             0-%-10 %     24 %
Small Business Products & Services
  $ 123.1     $ 145.3     $ 125-$140                     $ 454.9  
% of change YOY
    22 %     20 %     9%-22 %             15%-25 %     35 %
TurboTax
  $ 5.2     $ 130.0     $ 320-$350                     $ 422.9  
% of change YOY
    (15 %)     36 %     2%-12 %             10%-20 %     20 %
Vertical Businesses
  $ 26.3     $ 26.1     $ 26-$30                     $ 94.8  
% of change YOY
    40 %     9 %     1%-17 %             15%-25 %     New
Prof. Accounting Solutions
  $ 6.9     $ 156.8     $ 85-$95                     $ 243.4  
% of change YOY
    7 %     4 %     6%-18 %             7%-12 %     8 %
All Other
  $ 38.2     $ 76.8     $ 50-$60                     $ 191.9  
% of change YOY
    (9 %)     4 %     12%-34 %             5%-15 %     2 %
 
   
     
     
             
     
 
Total Revenue
  $ 242.5     $ 636.3     $ 685-$725             $ 1850-$1950     $ 1,650.7  
% of change YOY
    14 %     14 %     8%-14 %             12%-18 %     26 %
Operating Income[B]
    ($80.1 )   $ 228.7     $ 335-$355             $ 480-$510     $ 399.8  
% of change YOY
  NA     24 %     4%-11 %             20%-28 %     46 %
Interest & Other Income
  $ 7.5     $ 7.2     $ 3-$5             $ 20-$25     $ 38.7  
% of change YOY
  NA     -8 %     (63%)-(39 %)             (48%)-(35 %)     42 %
EPS[B] not in millions
    ($0.24 )   $ 0.77     $ 1.12-$1.16             $ 1.60-$1.70     $ 1.39  
% of change YOY
  NA     26 %     7%-10 %             15%-22 %     51 %
Weighted Shares
    198.7       203.4       200-205               202-207       211  
Tax Rate
    34 %     34 %     34 %             34 %     33 %

[A]   As of February 18, 2004, this contains forward looking information that is subject to risks and uncertainties. Actual results may differ materially due to the factors included in Intuit’s February 18, 2004 earnings press release and SEC filings and at www.intuit.com/company/investors/considerations.html.
 
[B]   These are pro forma, or non-GAAP, financial measures. They exclude acquisition related costs, pre-tax gains and losses related to marketable securities and other investments, and other similar items. See Tables D1 and D2 of accompanying press release.

Corporate Metrics

                         
    FYE/03   Q2/03   Q2/04
   
 
 
Capital expenditure
  $ 84.7M     $ 27.2M     $ 28.1M  
Depreciation
  $ 73.8M     $ 17.7M     $ 19.4M  
Common Stock Outst.
    199.5M       205.7M       197.2M  
Full Time Employees
    6,624       7,195       7,499  

Segment Composition

QuickBooks
Core (Basic, Pro, 5-Pack, Mac)
Premier (incl. POS)
Enterprise
Online Edition
OEM and Royalties

Small Business Products & Services
Payroll (DIY, OSP)
IT Solutions
Support Programs
Supplies
Merchant Account Services
Customer Manager
Financial Statement Reporter

TurboTax
Basic, Deluxe, Premier

Professional Accounting Solutions
ProSeries, Lacerte
EasyACCT
PAP
Client Manager

Vertical Businesses
Intuit Construction Business Solutions
Intuit Public Sector Solutions
Intuit Real Estate Solutions (MRI)
Intuit Distribution Management Solutions (Eclipse)

 


 

     
Intuit Facts ...   Intuit Inc.
     
Investor Relations (650) 944-5436   NASDAQ: INTU
     
Business Metrics    
                                                                           
      Q2/FY02   Q3/FY02   Q4/FY02   Q1/FY03   Q2/FY03   Q3/FY03   Q4/FY03   Q1/FY04   Q2/FY04
     
 
 
 
 
 
 
 
 
QuickBooks
                                                                       
 
Basic & Pro units (thousands)
    302       325       217       195       308       285       217       163       262  
 
Premier units
    16       23       17       15       37       35       35       26       62  
 
Enterprise units
    0       0       1       1       1       1       1       1       1  
 
 
   
     
     
     
     
     
     
     
     
 
Total QuickBooks units sold[D]
    318       348       235       211       346       321       253       190       325  
Average Sales Price
  $ 207     $ 203     $ 223     $ 217     $ 238     $ 241     $ 255     $ 253     $ 249  
Sell Thru Channel Mix[E]
                                                                       
 
% of units at retail
    65 %     60 %     64 %     65 %     56 %     56 %     49 %     64 %     54 %
 
% of dollars at retail
    61 %     63 %     64 %     63 %     54 %     55 %     47 %     59 %     49 %
QuickBooks Retail Share[C]
                                                                       
 
Unit share FYTD
    82 %     83 %     84 %     76 %     80 %     82 %     82 %     78 %     82 %
 
Dollar share FYTD
    87 %     89 %     89 %     83 %     87 %     89 %     89 %     85 %     89 %
Small Business Products & Services (selected)
                                                                       
Payroll Customers (thousands)
                                                                       
 
DIY (Basic)
    619       661       675       665       681       711       739       753       776  
 
Outsourced
    47       48       60       63       66       66       67       69       71  
Consumer Tax
                                                                       
Federal TurboTax (millions)
                                                                       
 
Desktop units retail
    1.7       2.4     NM   NM     2.1       2.1     NM   NM     2.4  
 
Desktop units direct
    1.2       0.2     NM   NM     1.0       0.9     NM   NM     1.2  
 
Web units paid
    0.2       2.0     NM   NM     0.3       2.1       0.1     NM     0.4  
 
Web units unpaid
    0.1       0.9     NM   NM     0.1       1.2     NM   NM     0.1  
 
 
   
     
     
     
     
     
     
     
     
 
Total TurboTax units[D]
    3.2       5.5     NM   NM     3.5       6.3       0.1     NM     4.1  
TurboTax Efile returns (millions)
    0.6       11.0     NM   NM     1.1       11.0       0.2     NM     1.3  
Sell Thru Channel Mix[E]
                                                                       
 
% of dollars at retail
    54 %     37 %   NM   NM     50 %     32 %   NM   NM     51 %
Federal TurboTax Retail Share[C]
                                                                       
 
Unit share FYTD
    72 %     71 %     71 %   NM     72 %     71 %     71 %   NM     70 %
 
Dollar share FYTD
    81 %     81 %     81 %   NM     80 %     79 %     79 %   NM     79 %
Professional Accounting Solutions
                                                                       
 
Professional Accounting Tax units (thousands)
    86       9     NM   NM     89       7     NM   NM     90  
 
Efile returns (millions)
    0.3       6.0     NM   NM     0.5       7.8     NM   NM     0.7  

[C]   Source: NPD Group NPD Techworld Monthly Retail Software Report through July 2003 for FY02 and FY03. NPD Group Monthly Retail Software Report through December plus the NPD Group NPD Techworld weekly Retail Software Report for the month of January through 1/24/04 for FY04
 
[D]   End-user purchases — or products customers have acquired and/or paid for at both retail and direct.
 
[E]   Estimate based on subset of retailers reporting

NM: Not Meaningful