Form: 8-K

Current report filing

February 22, 2007

 

Exhibit 99.01
         
Contacts:
  Investors   Media
 
  Bob Lawson   Diane Carlini
 
  Intuit Inc.   Intuit Inc.
 
  650-944-6165   650-944-6251
 
  robert_lawson@intuit.com   diane_carlini@intuit.com
Intuit Announces Second-Quarter Revenue of $763M In Line with
Expectations
MOUNTAIN VIEW, Calif. — Feb. 22, 2007 - Intuit Inc. (Nasdaq: INTU) today announced its second-quarter 2007 revenue increased 3 percent year-over-year to $763 million, in line with expectations. For the first six months of the fiscal year, the company reported revenue growth of 8 percent.
     Growth in the quarter was driven by strong sales in Consumer Tax, which were up 18 percent over the year-ago period, and Payroll and Payments segment, which was up 15 percent year-over-year. This growth was offset partly by revenue shifts in QuickBooks and Pro Tax, which moved about $45 million in revenue from the second quarter to the first and third quarters, compared to last year.
     “We are pleased with the early results of TurboTax and the continued strength in our Payroll and Payments segment,” said Steve Bennett, Intuit’s president and chief executive officer. “We are also excited by the recent acquisition of Digital Insight, which will provide a third platform for growth as we go forward.”
Second-Quarter 2007 Financial Highlights
     Intuit posted GAAP (Generally Accepted Accounting Principles) diluted net income of $145 million in the quarter versus diluted net income of $183 million in the second quarter of 2006. This represents diluted net income of $0.40 per share versus diluted net income of $0.50 per share in the year-ago quarter. Second quarter 2006 results

 


 

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included $28 million, or 7 cents per share, from discontinued operations. Intuit posted non-GAAP diluted net income of $161 million, or $0.45 per share versus $174 million, or $0.48 per share in the second quarter of 2006.
Second-Quarter 2007 Business Segment Results
  •   QuickBooks second quarter revenue was $164 million. The earlier launch of QuickBooks 2007 versus QuickBooks 2006 shifted about $20 million of revenue from the second quarter to the first quarter. Year-to-date QuickBooks revenue was up 5 percent.
 
  •   Payroll and Payments revenue of $138 million was up 15 percent compared to the second quarter of 2006.
 
  •   Consumer Tax revenue was $226 million, up 18 percent year-over-year.
 
  •   Professional Tax revenue was $131 million, down 13 percent as a result of changes in product offerings, which deferred approximately $25 million to the third quarter.
 
  •   Other Businesses revenue of $105 million was up 1 percent.
Forward-looking Guidance
     Forward-looking guidance has been adjusted to reflect the acquisition of Digital Insight, the disposition of certain fully outsourced payroll assets, and a lower effective tax rate. For fiscal 2007 Intuit now expects:
  •   Revenue of $2.625 billion to $2.675 billion, representing annual growth of 12 to 14 percent.
 
  •   GAAP operating income of $585 million to $611 million, and non-GAAP operating income of $725 million to $751 million.
 
  •   GAAP diluted earnings per share, or EPS, of $1.10 to $1.14, and non-GAAP diluted EPS of $1.33 to $1.37.
     Intuit also adjusted its previously given third quarter, fourth quarter and full year fiscal 2007 guidance for revenue and earnings per share, details of which are available on Intuit’s Web site at www.intuit.com/about_intuit/investors/earnings/2007.

 


 

Intuit Earnings Q207
Page 3
Webcast and Conference Call Information
     A live audio webcast of Intuit’s second-quarter 2007 conference call is available at www.intuit.com/about_intuit/investors/webcast_events.html. The call begins today at 1:30 p.m. PDT. The replay of the audio webcast will remain on Intuit’s Web site for one week after the conference call. Intuit has also posted this press release, including the attached tables and non-GAAP to GAAP reconciliations on its Web site and will post the conference call script shortly after the conference call concludes. These documents may be found at web.intuit.com/about_intuit/press_releases/2007/.
     The conference call number is 866-206-6509 in the United States or 703-639-1108 from international locations. No reservation or access code is needed. A replay of the call will be available for one week by calling 888-266-2081, or 703-925-2533 from international locations. The access code is 1035185.
-30-
Intuit, the Intuit logo, Quicken, QuickBooks and TurboTax, among others, are registered trademarks and/or registered service marks of Intuit Inc. in the United States and other countries.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled “About Non-GAAP Financial Measures” as well as the related Table B and Table E which follow it. A copy of the press release filed by Intuit on February 22, 2007 can be found on the investor relations page of Intuit’s Web site.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements, including forecasts of Intuit’s expected financial results; its prospects for the business in fiscal 2007 and beyond; expectations of future growth, including growth of the Digital Insight business; and all of the statements under the heading “Forward-Looking Guidance.”
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, without limitation, the following: product introductions and price competition from our competitors can have unpredictable negative effects on our revenue, profitability and market position; governmental encroachment in our tax businesses or other governmental activities regulating the filing of tax returns could negatively effect our operating results and market position; we may not be able to successfully introduce new products and services to meet our growth and profitability objectives, and current and future products and services may not adequately address customer needs and may not achieve broad market acceptance, which could harm our operating results and financial condition; any failure to maintain reliable and responsive service levels for our offerings could cause us to lose customers and negatively impact our revenues and profitability; any significant product quality problems or delays in our products could harm our revenue, earnings and reputation; our participation in the Free File Alliance may result in lost revenue opportunities and cannibalization of our traditional paid franchise; any

 


 

Intuit Earnings Q207
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failure to properly use and protect personal customer information could harm our revenue, earnings and reputation; our acquisition activities may be disruptive to Intuit and may not result in expected benefits; our use of significant amounts of debt to finance acquisitions or other activities could harm our financial condition and results of operations; our revenue and earnings are highly seasonal and the timing of our revenue between quarters is difficult to predict, which may cause significant quarterly fluctuations in our financial results; predicting tax-related revenues is challenging due to the heavy concentration of activity in a short time period; we have implemented, and are continuing to upgrade, new information systems and any problems with these new systems could interfere with our ability to ship and deliver products and gather information to effectively manage our business; our financial position may not make repurchasing shares advisable or we may issue additional shares in an acquisition causing our number of outstanding shares to grow; and litigation involving intellectual property, antitrust, shareholder and other matters may increase our costs. More details about these and other risks that may impact our business are included in our Form 10-K for fiscal 2006 and in our other SEC filings. You can locate these reports through our website at http://www.intuit.com/about_intuit/investors. Forward-looking statements are based on information as of February 22, 2007, and we do not undertake any duty to update any forward-looking statement or other information in these remarks.

 


 

Table A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    January 31,     January 31,     January 31,     January 31,  
    2007     2006     2007     2006  
Net revenue:
                               
Product
    $549,539       $557,079       $761,959       $739,533  
Service and other
    213,768       185,625       363,419       307,242  
 
                       
Total net revenue
    763,307       742,704       1,125,378       1,046,775  
 
                       
Costs and expenses:
                               
Cost of revenue:
                               
Cost of product revenue
    68,253       71,739       105,596       104,170  
Cost of service and other revenue
    70,293       63,393       138,665       122,641  
Amortization of purchased intangible assets
    2,583       2,763       4,891       5,712  
Selling and marketing
    221,440       196,903       376,538       344,333  
Research and development
    115,474       100,084       235,688       197,364  
General and administrative
    68,606       65,297       145,994       128,892  
Acquisition-related charges
    2,334       3,553       5,176       7,312  
 
                       
Total costs and expenses
    548,983       503,732       1,012,548       910,424  
 
                       
Operating income from continuing operations
    214,324       238,972       112,830       136,351  
Interest and other income
    11,046       5,566       21,336       11,870  
Gains on marketable equity securities and other investments, net
    —       3,027       1,221       7,294  
 
                       
Income from continuing operations before income taxes
    225,370       247,565       135,387       155,515  
Income tax provision [A]
    79,673       92,074       48,405       57,635  
Minority interest
    335       244       550       244  
 
                       
Net income from continuing operations
    145,362       155,247       86,432       97,636  
Net income from discontinued operations [B]
    —       27,726       —       39,533  
 
                       
Net income
    $145,362       $182,973       $86,432       $137,169  
 
                       
 
                               
Basic net income per share from continuing operations
    $0.42       $0.44       $0.25       $0.28  
Basic net income per share from discontinued operations
    —       0.08       —       0.11  
 
                       
Basic net income per share [C]
    $0.42       $0.52       $0.25       $0.39  
 
                       
Shares used in basic per share amounts [C]
    347,185       350,292       346,700       352,552  
 
                       
 
                               
Diluted net income per share from continuing operations
    $0.40       $0.43       $0.24       $0.27  
Diluted net income per share from discontinued operations
    —       0.07       —       0.11  
 
                       
Diluted net income per share [C]
    $0.40       $0.50       $0.24       $0.38  
 
                       
Shares used in diluted per share amounts [C]
    360,573       363,582       360,654       365,200  
 
                       
 
                               
Total share-based compensation expense in continuing operations:
                               
Cost of product revenue
    $262       $245       $480       $533  
Cost of service and other revenue
    644       496       1,261       1,133  
Selling and marketing
    5,759       5,250       11,497       11,557  
Research and development
    5,560       4,684       10,862       10,294  
General and administrative
    7,087       7,074       14,071       14,656  
 
                       
Total
    $19,312       $17,749       $38,171       $38,173  
 
                       
See accompanying Notes.

 


 

INTUIT INC.
NOTES TO TABLE A
[A]   Our effective tax rate for the three months ended January 31, 2007 was approximately 35% and did not differ significantly from the federal statutory rate. Our effective tax rate for the six months ended January 31, 2007 was approximately 36% and differed from the federal statutory rate primarily due to state income taxes, which were partially offset by the benefit we received from federal and state research and experimental credits and tax exempt interest income. In addition, we benefited from the retroactive extension of the federal research and experimental credit. Our effective tax rates for the three and six months ended January 31, 2006 were approximately 37% and differed from the federal statutory rate primarily due to state income taxes, which were partially offset by the benefit we received from federal and state research and experimental credits and tax exempt interest income.
 
[B]   In December 2005 we sold our Intuit Information Technology Solutions (ITS) business for approximately $200 million in cash. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” we accounted for the sale of ITS as discontinued operations. Consequently, we have segregated the operating results and cash flows of ITS from continuing operations in our financial statements for all periods prior to the sale. Revenue for ITS was $5.8 million and $20.2 million for the three and six months ended January 31, 2006. Net income from ITS operations was $1.9 million and $5.2 million for the same periods. We recorded a net gain on the disposal of ITS of $34.3 million in the six months ended January 31, 2006.
 
[C]   Our Board of Directors authorized a two-for-one stock split which was effected in the form of a 100% stock dividend on July 6, 2006. All share and per share figures in these tables retroactively reflect this stock split.

 


 

INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES
The accompanying press release dated February 22, 2007 contains non-GAAP financial measures. Tables B and E reconcile the non-GAAP financial measures in that press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures include non-GAAP operating income (loss) and related operating margin as a percentage of revenue, non-GAAP net income (loss) and non-GAAP net income (loss) per share.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same names and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.
We believe that these non-GAAP financial measures provide meaningful supplemental information regarding Intuit’s operating results primarily because they exclude amounts that we do not consider part of ongoing operating results when assessing the performance of the organization, our operating segments or our senior management. Segment managers are not held accountable for share-based compensation expenses, acquisition-related costs, or the other excluded items that may impact their business units’ operating income (loss) and, accordingly, we exclude these amounts from our measures of segment performance. We also exclude these amounts from our budget and planning process. We believe that our non-GAAP financial measures also facilitate the comparison of results for current periods and guidance for future periods with results for past periods. We exclude the following items from our non-GAAP financial measures:
  •   Share-based compensation expenses. Our non-GAAP financial measures exclude share-based compensation expenses, which consist of expenses for stock options, restricted stock, restricted stock units and purchases of common stock under our Employee Stock Purchase Plan. Segment managers are not held accountable for share-based compensation expenses impacting their business units’ operating income (loss) and, accordingly, we exclude share-based compensation expenses from our measures of segment performance. While share-based compensation is a significant expense affecting our results of operations, management excludes share-based compensation from our budget and planning process. We exclude share-based compensation expenses from our non-GAAP financial measures for these reasons and the other reasons stated above. We compute weighted average dilutive shares using the method required by SFAS 123(R) for both GAAP and non-GAAP diluted net income per share.
 
  •   Amortization of purchased intangible assets and acquisition-related charges. In accordance with GAAP, amortization of purchased intangible assets in cost of revenue includes amortization of software and other technology assets related to acquisitions and acquisition-related charges in operating expenses includes amortization of other purchased intangible assets such as customer lists and covenants not to compete. Acquisition activities are managed on a corporate-wide basis and segment managers are not held accountable for the acquisition-related costs impacting their business units’ operating income (loss). We exclude these amounts from our measures of segment performance and from our budget and planning process. We exclude these items from our non-GAAP financial measures for these reasons, the other reasons stated above and because we believe that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories.
 
  •   Gains and losses on disposals of businesses. We exclude these amounts from our non-GAAP financial measures for the reasons stated above and because they are unrelated to our ongoing business operating results.
 
  •   Gains and losses on marketable equity securities and other investments. We exclude these amounts from our non-GAAP financial measures for the reasons stated above and because they are unrelated to our ongoing business operating results.
 
  •   Income tax effects of excluded items. Our non-GAAP financial measures exclude the income tax effects of the adjustments described above that relate to the current period as well as adjustments for similar items that relate to prior periods. We exclude the impact of these tax items for the reasons stated above and because management believes that they are not indicative of our ongoing business operations.
 
  •   Operating results and gains and losses on the sale of discontinued operations. From time to time, we sell or otherwise dispose of selected operations as we adjust our portfolio of businesses to meet our strategic goals. In accordance with GAAP, we segregate the operating results of discontinued operations as well as gains and losses on the sale of these discontinued operations from continuing operations on our GAAP statements of operations but continue to include them in GAAP net income or loss and net income or loss per share. We exclude these amounts from our non-GAAP financial measures for the reasons stated above and because they are unrelated to our ongoing business operations.
The following describes each non-GAAP financial measure, the items excluded from the most directly comparable GAAP measure in arriving at each non-GAAP financial measure, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-GAAP financial measure.
  (A)   Operating income (loss) and related operating margin as a percentage of revenue. We exclude share-based compensation expenses, amortization of purchased intangible assets and acquisition-related charges from our GAAP operating income (loss) from continuing operations and related operating margin in arriving at our non-GAAP operating income (loss) and related operating margin primarily because we do not consider them part of ongoing operating results when assessing the performance of the organization, our operating segments and senior management or when undertaking our budget and planning process. We believe that the exclusion of these expenses from our non-GAAP financial measures also facilitates the comparison of results for fiscal 2006 and guidance for

 


 

      future periods with results for prior periods. In addition, we exclude amortization of purchased intangible assets and acquisition-related charges from non-GAAP operating income (loss) and operating margin because we believe that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories.
  (B)   Net income (loss) and net income (loss) per share (or earnings per share). We exclude share-based compensation expenses, amortization of purchased intangible assets, acquisition-related charges, net gains on marketable equity securities and other investments, gains and losses on disposals of businesses, certain tax items as described above, and amounts related to discontinued operations from our GAAP net income (loss) and net income (loss) per share in arriving at our non-GAAP net income (loss) and net income (loss) per share. We exclude all of these items from our non-GAAP net income (loss) and net income (loss) per share primarily because we do not consider them part of ongoing operating results when assessing the performance of the organization, our operating segments and senior management or when undertaking our budget and planning process. We believe that the exclusion of these items from our non-GAAP financial measures also facilitates the comparison of results for fiscal 2006 and guidance for future periods with results for prior periods.
 
      In addition, we exclude amortization of purchased intangible assets and acquisition-related charges from our non-GAAP net income (loss) and net income (loss) per share because we believe that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories. We exclude gains on marketable equity securities and other investments, net from our non-GAAP net income (loss) and net income (loss) per share because they are unrelated to our ongoing business operating results. Our non-GAAP financial measures exclude the income tax effects of the adjustments described above that relate to the current period as well as adjustments for similar items that relate to prior periods. We exclude the impact of these tax items because management believes that they are not indicative of our ongoing business operations. The effective tax rates used to calculate non-GAAP net income (loss) and net income (loss) per share were as follows: 35% for the first and second quarters of fiscal 2006; 37% for the first quarter of fiscal 2007; 36% for the second quarter of fiscal 2007; 35% for the first six months of fiscal 2007; and 35% for fiscal 2007 guidance. Finally, we exclude amounts related to discontinued operations from our non-GAAP net income (loss) and net income (loss) per share because they are unrelated to our ongoing business operations.
We refer to these non-GAAP financial measures in assessing the performance of Intuit’s ongoing operations and for planning and forecasting in future periods. These non-GAAP financial measures also facilitate our internal comparisons to Intuit’s historical operating results. We have historically reported similar non-GAAP financial measures and believe that the inclusion of comparative numbers provides consistency in our financial reporting. We compute non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.
The reconciliations of the forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures in Table E include all information reasonably available to Intuit at the date of this press release. These tables include adjustments that we can reasonably predict. Events that could cause the reconciliation to change include acquisitions and divestitures of businesses, goodwill and other asset impairments and sales of marketable equity securities and other investments.

 


 

Table B
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    January 31,     January 31,     January 31,     January 31,  
    2007     2006     2007     2006  
GAAP operating income from continuing operations
    $214,324       $238,972       $112,830       $136,351  
Amortization of purchased intangible assets
    2,583       2,763       4,891       5,712  
Acquisition-related charges
    2,334       3,553       5,176       7,312  
Share-based compensation expense
    19,312       17,749       38,171       38,173  
 
                       
Non-GAAP operating income
    $238,553       $263,037       $161,068       $187,548  
 
                       
 
                               
GAAP net income
    $145,362       $182,973       $86,432       $137,169  
Amortization of purchased intangible assets
    2,583       2,763       4,891       5,712  
Acquisition-related charges
    2,334       3,553       5,176       7,312  
Share-based compensation expense
    19,312       17,749       38,171       38,173  
Gains on marketable equity securities
    —       (3,027 )     (1,221 )     (7,294 )
Income tax effect of non-GAAP adjustments
    (8,663 )     (7,784 )     (17,095 )     (15,787 )
Exclusion of discrete tax items
    (368 )     5,932       1,658       3,711  
Discontinued operations
    —       (27,726 )     —       (39,533 )
 
                       
Non-GAAP net income
    $160,560       $174,433       $118,012       $129,463  
 
                       
 
                               
GAAP diluted net income per share
    $0.40       $0.50       $0.24       $0.38  
Amortization of purchased intangible assets
    0.01       0.01       0.01       0.02  
Acquisition-related charges
    0.01       0.01       0.01       0.02  
Share-based compensation expense
    0.05       0.05       0.11       0.10  
Gains on marketable equity securities
    —       (0.01 )     —       (0.02 )
Income tax effect of non-GAAP adjustments
    (0.02 )     (0.03 )     (0.04 )     (0.05 )
Exclusion of discrete tax items
    —       0.02       —       0.01  
Discontinued operations
    —       (0.07 )     —       (0.11 )
 
                       
Non-GAAP diluted net income per share
    $0.45       $0.48       $0.33       $0.35  
 
                       
 
                               
Shares used in diluted per share amounts
    360,573       363,582       360,654       365,200  
 
                       
See “About Non-GAAP Financial Measures” immediately preceding this Table B for information on these measures, the items excluded from the most directly comparable GAAP measures in arriving at non-GAAP financial measures, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-GAAP financial measure. All share and per share figures in this Table B retroactively reflect our July 2006 two-for-one common stock split.

 


 

Table C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                 
    January 31,     July 31,  
    2007     2006  
ASSETS
               
Current assets:
               
Cash and cash equivalents
    $286,328       $179,601  
Investments
    849,228       1,017,599  
Accounts receivable, net
    310,506       97,797  
Income taxes receivable
    9,318       64,178  
Deferred income taxes
    56,016       47,199  
Prepaid expenses and other current assets
    100,824       53,357  
 
           
Current assets before funds held for payroll customers
    1,612,220       1,459,731  
Funds held for payroll customers
    411,774       357,299  
 
           
Total current assets
    2,023,994       1,817,030  
 
               
Property and equipment, net
    205,377       194,434  
Goodwill, net
    555,023       504,991  
Purchased intangible assets, net
    57,350       59,521  
Long-term deferred income taxes
    135,358       144,697  
Loans to executive officers and other employees
    8,865       8,865  
Other assets
    48,032       40,489  
 
           
Total assets
    $3,033,999       $2,770,027  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
    $120,300       $70,808  
Accrued compensation and related liabilities
    138,145       171,903  
Deferred revenue
    295,463       293,113  
Income taxes payable
    35,984       33,560  
Other current liabilities
    189,328       89,291  
 
           
Current liabilities before payroll customer fund deposits
    779,220       658,675  
Payroll customer fund deposits
    411,774       357,299  
 
           
Total current liabilities
    1,190,994       1,015,974  
 
               
Long-term obligations
    18,378       15,399  
Minority interest
    978       568  
Stockholders’ equity
    1,823,649       1,738,086  
 
           
Total liabilities and stockholders’ equity
    $3,033,999       $2,770,027  
 
           

 


 

Table D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    January 31,     January 31,     January 31,     January 31,  
    2007     2006     2007     2006  
Cash flows from operating activities:
                               
Net income
    $145,362       $182,973       $86,432       $137,169  
Net income from discontinued operations
    —       (27,726 )     —       (39,533 )
 
                       
Net income from continuing operations
    145,362       155,247       86,432       97,636  
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
                               
Depreciation
    21,061       22,616       43,336       45,761  
Acquisition-related charges
    2,334       3,553       5,176       7,312  
Amortization of purchased intangible assets
    2,583       2,763       4,891       5,712  
Amortization of other purchased intangible assets
    2,734       2,259       5,305       4,290  
Share-based compensation
    19,312       17,749       38,171       38,173  
Amortization of premiums and discounts on available-for-sale debt securities
    1,071       972       1,961       2,066  
Net realized loss (gain) on sales of available-for-sale debt securities
    (9 )     98       (1 )     478  
Net gains on marketable equity securities and other investments
    —       (3,027 )     (1,221 )     (7,294 )
Minority interest, net of tax
    335       244       550       244  
Deferred income taxes
    (6,552 )     (4,128 )     (9,399 )     (1,608 )
Tax benefit from share-based compensation plans
    12,634       26,554       29,430       29,076  
Excess tax benefit from share-based compensation plans
    (7,967 )     (12,446 )     (16,720 )     (13,385 )
Other
    68       (40 )     194       (21 )
 
                       
Subtotal
    192,966       212,414       188,105       208,440  
 
                       
Changes in operating assets and liabilities:
                               
Accounts receivable
    (215,488 )     (245,772 )     (212,884 )     (232,851 )
Prepaid expenses, taxes and other current assets
    66,985       70,864       8,727       32,370  
Accounts payable
    22,619       28,937       48,970       59,602  
Accrued compensation and related liabilities
    47,436       43,917       (33,726 )     (20,482 )
Deferred revenue
    19,052       (17,825 )     2,273       (23,062 )
Income taxes payable
    18,415       8,343       2,702       (8,428 )
Other liabilities
    91,152       66,473       102,264       57,002  
 
                       
Total changes in operating assets and liabilities
    50,171       (45,063 )     (81,674 )     (135,849 )
 
                       
Net cash provided by operating activities of continuing operations
    243,137       167,351       106,431       72,591  
Net cash provided by operating activities of discontinued operations
    —       3,109       —       14,090  
 
                       
Net cash provided by operating activities
    243,137       170,460       106,431       86,681  
 
                       
 
                               
Cash flows from investing activities:
                               
Purchases of available-for-sale debt securities
    (479,703 )     (392,673 )     (880,578 )     (681,792 )
Liquidation of available-for-sale debt securities
    495,550       271,213       985,747       826,282  
Maturity of available-for-sale debt securities
    26,784       31,665       61,614       52,440  
Proceeds from the sale of marketable equity securities
    —       4,235       858       4,235  
Net change in funds held for payroll customers’ money market funds and other cash equivalents
    24,438       (78,576 )     (54,475 )     (66,170 )
Purchases of property and equipment
    (23,683 )     (22,855 )     (52,906 )     (47,912 )
Proceeds from sale of property
    22       334       22       334  
Change in other assets
    (2,026 )     (1,925 )     (6,704 )     (6,379 )
Net change in payroll customer fund deposits
    (24,438 )     78,576       54,475       66,170  
Acquisitions of businesses and intangible assets, net of cash acquired
    (1,991 )     (23,733 )     (61,993 )     (33,881 )
 
                       
Net cash provided by (used in) investing activities of continuing operations
    14,953       (133,739 )     46,060       113,327  
Net cash provided by investing activities of discontinued operations
    20,989       171,833       20,989       171,833  
 
                       
Net cash provided by investing activities
    35,942       38,094       67,049       285,160  
 
                       
 
                               
Cash flows from financing activities:
                               
Change in long-term obligations
    (874 )     (260 )     (1,315 )     (894 )
Net proceeds from issuance of common stock under stock plans
    41,299       126,083       124,197       147,551  
Purchase of treasury stock
    (205,373 )     (300,181 )     (205,373 )     (494,981 )
Excess tax benefit from share-based compensation plans
    7,967       12,446       16,720       13,385  
 
                       
Net cash used in financing activities
    (156,981 )     (161,912 )     (65,771 )     (334,939 )
 
                       
 
                               
Effect of exchange rates on cash and cash equivalents
    (1,844 )     1,090       (982 )     1,962  
 
                       
Net increase in cash and cash equivalents
    120,254       47,732       106,727       38,864  
Cash and cash equivalents at beginning of period
    166,074       74,974       179,601       83,842  
 
                       
Cash and cash equivalents at end of period
    $286,328       $122,706       $286,328       $122,706  
 
                       

 


 

Table E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(In thousands, except per share amounts)
(Unaudited)
                                                 
    Forward-Looking Guidance  
    GAAP                     Non-GAAP  
    Range of Estimate                     Range of Estimate  
    From     To     Adjustments             From     To  
Three Months Ending April 30, 2007
                                               
Revenue
  $ 1,102,000     $ 1,132,000     $ —             $ 1,102,000     $ 1,132,000  
Operating income
  $ 527,000     $ 554,000     $ 45,000       [a]     $ 572,000     $ 599,000  
Operating margin
    48 %     49 %     4 %     [a]       52 %     53 %
Diluted earnings per share
  $ 0.94     $ 0.98     $ 0.11       [b]     $ 1.05     $ 1.09  
Shares
    354,000       356,000                       354,000       356,000  
 
                                               
Three Months Ending July 31, 2007
                                               
Revenue
  $ 405,000     $ 418,000     $ —             $ 405,000     $ 418,000  
Diluted loss per share
  $ (0.12 )   $ (0.10 )   $ 0.05       [c]     $ (0.07 )   $ (0.05 )
 
                                               
Twelve Months Ending July 31, 2007
                                               
Revenue
  $ 2,625,000     $ 2,675,000     $ —             $ 2,625,000     $ 2,675,000  
Operating income
  $ 585,000     $ 611,000     $ 140,000       [d]     $ 725,000     $ 751,000  
Operating margin
    23 %     23 %     5 %     [d]       28 %     28 %
Diluted earnings per share
  $ 1.10     $ 1.14     $ 0.23       [e]     $ 1.33     $ 1.37  
Shares
    357,000       359,000                       357,000       359,000  
See “About Non-GAAP Financial Measures” immediately preceding Table B for more information on these measures, the items excluded from the most directly comparable GAAP measures in arriving at non-GAAP financial measures, and the reasons management uses each measure and excludes the specified amounts in arriving at each non-GAAP financial measure.
 
[a]   Reflects estimated adjustments for share-based compensation expense of approximately $21 million; amortization of purchased intangible assets of approximately $14 million; and acquisition-related charges of approximately $10 million.
 
[b]   Reflects the estimated adjustments in item [a] and income taxes related to these adjustments.
 
[c]   Reflects adjustments for share-based compensation expense of approximately $22 million; amortization of purchased intangible assets of approximately $14 million; acquisition-related charges of approximately $10 million; an adjustment for an expected net gain on the sale of certain assets related to our Complete Payroll and Premier Payroll Service businesses of approximately $14 million; and income taxes related to these adjustments.
 
[d]   Reflects estimated adjustments for share-based compensation expense of approximately $82 million; amortization of purchased intangible assets of approximately $33 million; and acquisition-related charges of approximately $25 million.
 
[e]   Reflects the estimated adjustments in item [d]; an adjustment for net gains on marketable equity securities and other investments of approximately $1 million; an adjustment for an expected net gain on the sale of certain assets related to our Complete Payroll and Premier Payroll Service businesses of approximately $14 million; and income taxes related to these adjustments.