Sharpens Strategic Focus with Plans to Divest Demandforce, QuickBase
and Quicken; Increases Dividend 20 Percent

MOUNTAIN VIEW, Calif.–(BUSINESS WIRE)–
Intuit Inc. (Nasdaq:INTU) announced
financial results for the fourth quarter and full-year fiscal 2015. The
company’s fiscal year ended July 31.

“We closed out our fiscal year 2015 on a strong note, with excellent
momentum in each of our core businesses as we continue to see the
benefits of our ongoing transformation into a global cloud company. For
the full fiscal year, total revenue and earnings per share both came in
above the high end of our guidance range, before reclassifying our
planned divestitures,” said Brad Smith, Intuit’s president and chief
executive officer.

“In particular, our small business momentum continues to build and our
QuickBooks Online ecosystem growth is accelerating, driving value for
customers and Intuit. And we delivered great tax products this season.”

Financial Highlights

Intuit’s performance during the fourth quarter and fiscal year:

  • Reported fiscal 2015 revenue of .2 billion.
  • In the U.S., TurboTax Online units increased 11 percent, and total
    TurboTax units grew 7 percent, excluding the Free File Alliance.
  • Increased total QuickBooks Online subscribers by 57 percent for the
    year.
  • Reached 1.075 million QuickBooks Online subscribers through the end of
    the quarter.
  • Increased its commitment to return capital to shareholders with a 20
    percent increase in its cash dividend.

Unless otherwise noted, all growth rates refer to the current period
versus the comparable prior-year period, and the business metrics and
associated growth rates refer to worldwide business metrics.

Divestitures and Portfolio Management

Intuit today announced its intent to divest Demandforce, QuickBase and
Quicken to focus on and invest in businesses that strengthen the
ecosystem and align with two strategic goals: to be the operating system
behind small business success, and to do the nations’ taxes in the U.S.
and Canada.

“Divesting Demandforce, QuickBase and Quicken enables both Intuit and
these businesses to focus on meeting the needs of their respective
customers, while allowing Intuit to accelerate our ability to deliver on
our objectives,” said Neil Williams, chief financial officer. “We are
confident about finding the right outcome for each business. Until then,
we will continue to sell and support all of our current products; we
will not waver in our commitment to customers’ success.”

As a result of this decision, revenue in fiscal 2016 will be reduced by
approximately 0 million and non-GAAP earnings per share will be
reduced by approximately {$content}.10, as the company reports these
held-for-sale assets as discontinued operations.

Business Segment Results

The segment results reflect the treatment of assets held for sale as
discontinued operations.

Small Business

  • Total Small Business segment revenue declined 5 percent for the
    quarter, and 2 percent for the year, reflecting the changes in desktop
    offerings that resulted in ratable revenue recognition.
  • QuickBooks total paying customers grew 7 percent for the year,
    accelerating from last year.
  • The QuickBooks Online Ecosystem continues to build momentum, with
    revenue growth of approximately 25 percent for the year, driven by
    strong customer acquisition.

    • Added 110,000 QuickBooks Online subscribers in the quarter,
      reaching 1,075,000 paying subscribers worldwide.
    • Increased QuickBooks Online subscribers outside the U.S. by over
      135 percent, to 198,000.
    • Ended with 25,000 QuickBooks Self-Employed subscribers, up from
      15,000 last quarter.
  • Online payroll customers grew 18 percent.
  • Online active payments customers grew 5 percent, and online payments
    charge volume grew 19 percent for the year.

Consumer and Professional Tax

  • Consumer Tax revenue grew 8 percent for the fiscal year.
  • ProTax revenue declined 33 percent for the year, in line with
    expectations. As previously disclosed, approximately 0 million in
    fiscal 2015 revenue shifted to fiscal 2016 due to changes in current
    desktop offerings that affected the timing of revenue recognition.

Snapshot of Fourth-quarter Results

     
GAAP Non-GAAP
  Q4   Q4   Q4   Q4  
    FY ’15   FY ’14   Change FY ’15  

FY ’14

  Change
Revenue   6   9   7% 6   9   7%

Operating
Income
(Loss)

  (0)   ()   136% ()     NM
EPS   {$content}.05   ({$content}.10)   NM ({$content}.05)   {$content}.01   NM
Dollars are in millions, except earnings per share (EPS). See “About
Non-GAAP Financial Measures” below for more information regarding
financial measures not prepared in accordance with Generally
Accepted Accounting Principles (GAAP). Q4 FY15 results reflect the
impact of changes to certain desktop software offerings; revenue for
those offerings is recognized as services are delivered, rather than
up front. Q4 FY15 GAAP results also reflect a million intangible
asset impairment charge and the treatment of assets held for sale as
discontinued operations.
 

Snapshot of FY ’15 Full-year Results

     
GAAP Non-GAAP
    FY ’15  

FY ’14

  Change

FY ’15

 

FY ’14

  Change
Revenue   ,192   ,243   (1%) ,192   ,243   (1%)

Operating
Income

  8   ,300   (43%) ,141   ,516   (25%)
EPS   .28   .12   (59%) .59   .40   (24%)
Dollars are in millions, except earnings per share (EPS). See “About
Non-GAAP Financial Measures” below for more information regarding
financial measures not prepared in accordance with Generally
Accepted Accounting Principles (GAAP). Fiscal 2015 results reflect
the impact of changes to certain desktop software offerings; revenue
for those offerings is recognized as services are delivered, rather
than up front. Fiscal 2015 GAAP results also reflect 8 million in
goodwill and intangible asset impairment charges and the treatment
of assets held for sale as discontinued operations.
 

Capital Allocation Summary

  • Ended the fourth quarter with approximately .7 billion in cash and
    investments.
  • Paid out 3 million in dividends and repurchased .25 billion of
    shares in fiscal 2015. The company has .6 billion remaining on its
    authorization and continues to be in the market each quarter.
  • Received board approval for a {$content}.30 per share dividend for the fiscal
    first quarter, payable on Oct. 19. This represents a 20 percent
    increase versus last year and reflects the company’s large and growing
    cash position, as well as more recurring and predictable revenue
    streams.

Forward-looking Guidance

“Looking ahead to fiscal 2016, our customer growth is accelerating,
active use is improving, and global adoption is hitting its stride. I’m
encouraged about the strategic choices we are making for the future and
our commitment to winning in the cloud,” Smith said. “We are creating a
clear value proposition for our small business and tax customers, and we
continue to innovate and to take share in large addressable markets. We
are investing in the areas with the biggest long-term payoff, setting
Intuit up for strong customer and revenue growth for fiscal 2016 and
beyond.”

Intuit announced guidance for fiscal year 2016, which ends July 31. The
company expects:

  • Revenue of .525 billion to .600 billion, growth of 8 to 10 percent.
  • GAAP operating income of .115 billion to .145 billion, growth of
    51 to 55 percent.
  • Non-GAAP operating income of .450 billion to .480 billion, growth
    of 27 to 30 percent.
  • GAAP diluted EPS of .50 to .55, versus .28 in fiscal 2015, which
    included goodwill and intangible asset impairment charges.
  • Non-GAAP diluted EPS of .40 to .45, growth of 31 to 33 percent.

The company expects the following segment revenue growth for fiscal year
2016:

  • Small Business Group: 7 to 9 percent.

    • Total Small Business, including Consumer Ecosystem (Mint, Mint
      Bills and OFX): 5 to 7 percent.
  • Consumer Tax Group: 5 to 7 percent.
  • Professional Tax: 48 to 51 percent.

    • For the fiscal first quarter, the company expects Professional Tax
      revenue of approximately 0 million.

For the first quarter of fiscal 2016, Intuit expects:

  • Revenue of 0 million to 0 million, growth of 8 to 11 percent.
  • GAAP operating loss of million to 0 million, compared to an
    operating loss of 9 million in the year-ago quarter.
  • Non-GAAP operating loss of million to million, compared to an
    operating loss of million in the year-ago quarter.
  • GAAP net loss per share of {$content}.26 to {$content}.27, compared to a net loss per
    share of {$content}.29 in the year-ago quarter.
  • Non-GAAP loss per share of {$content}.03 to {$content}.04, compared to a loss per
    share of {$content}.11 in the year-ago quarter.

Conference Call and Replay Information

Intuit executives will discuss the financial results on a conference
call today at 1:30 p.m. Pacific time. To hear the call, dial
866-348-8108 in the United States or 908-982-4619 from international
locations. No reservation or access code is needed. The conference call
can also be heard live at http://investors.intuit.com/events.cfm.
Prepared remarks for the call will be available on Intuit’s website
after the call ends.

Replay Information

A replay of the conference call will be available for one week by
calling 888-266-2081, or 703-925-2533 from international locations. The
access code for this call is 1661060.

The audio webcast will remain available on Intuit’s website for one week
after the conference call.

About Intuit Inc.

Intuit Inc. creates business and
financial management solutions that simplify the business of life for
small businesses, consumers and accounting professionals.

Its flagship products and services include QuickBooks®,
Quicken®
and TurboTax®,
which make it easier to manage small businesses and payroll processing,
personal finance, and tax preparation and filing. Mint.com
provides a fresh, easy and intelligent way for people to manage their
money, while Demandforce®
offers marketing and communication tools for small businesses. ProSeries®
and Lacerte®
are Intuit’s leading tax preparation offerings for professional
accountants.

Founded in 1983, Intuit had revenue of .2 billion in its fiscal year
2015. The company has approximately 8,000 employees with major offices
in the United States, Canada, the United Kingdom, India and other
locations. More information can be found at www.intuit.com.

Intuit and the Intuit logo, 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 B1, Table B2, and Table E. A copy of the press
release issued by Intuit today can be found on the investor relations
page of Intuit’s Web site.

Cautions About Forward-looking Statements

This press release contains forward-looking statements, including
forecasts of expected growth and future financial results of Intuit and
its reporting segments; Intuit’s prospects for the business in fiscal
2016 and beyond; expectations regarding Intuit’s growth outside the US;
expectations regarding timing and growth of revenue for each of Intuit’s
reporting segments and from current or future products and services;
expectations regarding customer growth; expectations regarding changes
to our products and their impact on Intuit’s business; expectations
regarding the amount and timing of any future dividends or share
repurchases; expectations regarding availability of our offerings;
expectations regarding the impact of our strategic decisions on Intuit’s
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: inherent difficulty in predicting consumer behavior;
difficulties in receiving, processing, or filing customer tax
submissions; consumers may not respond as we expected to our advertising
and promotional activities; product introductions and price competition
from our competitors can have unpredictable negative effects on our
revenue, profitability and market position; governmental encroachment in
our tax businesses or other governmental activities or public policy
affecting the preparation and filing of tax returns could negatively
affect our operating results and market position; we may not be able to
successfully innovate and introduce new offerings and business models to
meet our growth and profitability objectives, and current and future
offerings may not adequately address customer needs and may not achieve
broad market acceptance, which could harm our operating results and
financial condition; business interruption or failure of our information
technology and communication systems may impair the availability of our
products and services, which may damage our reputation and harm our
future financial results; as we upgrade and consolidate our customer
facing applications and supporting information technology
infrastructure, any problems with these implementations could interfere
with our ability to deliver our offerings; any failure to properly use
and protect personal customer information and data could harm our
revenue, earnings and reputation; if we are unable to develop, manage
and maintain critical third party business relationships, our business
may be adversely affected; increased government regulation of our
businesses may harm our operating results; if we fail to process
transactions effectively or fail to adequately protect against potential
fraudulent activities, our revenue and earnings may be harmed; related
publicity regarding such fraudulent activity could cause customers to
lose confidence in using our software and adversely impact our results;
any significant offering quality problems or delays in our offerings
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; the continuing global
economic downturn may continue to impact consumer and small business
spending, financial institutions and tax filings, which could negatively
affect our revenue and profitability; year-over-year changes in the
total number of tax filings that are submitted to government agencies
due to economic conditions or otherwise may result in lost revenue
opportunities; 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;
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; our inability to adequately protect our
intellectual property rights may weaken our competitive position and
reduce our revenue and earnings; our acquisition and divestiture
activities may disrupt our ongoing business, may involve increased
expenses and may present risks not contemplated at the time of the
transactions; our use of significant amounts of debt to finance
acquisitions or other activities could harm our financial condition and
results of operation; and litigation involving intellectual property,
antitrust, shareholder and other matters may increase our costs. More
details about the risks that may impact our business are included in our
Form 10-K for fiscal 2014 and in our other SEC filings. You can locate
these reports through our website at http://investors.intuit.com.
Forward-looking statements are based on information as of August 20,
2015 and we do not undertake any duty to update any forward-looking
statement or other information in these materials.

   

TABLE A

INTUIT INC.

GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended Twelve Months Ended

July 31,
2015

 

July 31,
2014

July 31,
2015

 

July 31,
2014

Net revenue:
Product $ 281 $ 262 $ 1,146 $ 1,459
Service and other 415   387   3,046   2,784  
Total net revenue 696   649   4,192   4,243  
Costs and expenses:
Cost of revenue:
Cost of product revenue 31 32 139 137
Cost of service and other revenue 137 128 556 466
Amortization of acquired technology 8 6 30 18
Selling and marketing 280 229 1,288 1,157
Research and development 215 197 798 714
General and administrative 118 110 483 444
Amortization of other acquired intangible assets 3 2 12 7
Goodwill and intangible asset impairment charges 34     148    
Total costs and expenses [A] 826   704   3,454   2,943  
Operating income (loss) from continuing operations (130 ) (55 ) 738 1,300
Interest expense (6 ) (7 ) (27 ) (31 )
Interest and other income, net (2 ) 23   1   31  
Income (loss) from continuing operations before income taxes (138 ) (39 ) 712 1,300
Income tax provision (benefit) [B] (36 ) (11 ) 299   447  
Net income (loss) from continuing operations (102 ) (28 ) 413 853
Net income (loss) from discontinued operations [C] 116   (1 ) (48 ) 54  
Net income (loss) $ 14   $ (29 ) $ 365   $ 907  
 
Basic net income (loss) per share from continuing operations $ (0.37 ) $ (0.10 ) $ 1.47 $ 2.99
Basic net income (loss) per share from discontinued operations 0.42     (0.17 ) 0.19  
Basic net income (loss) per share $ 0.05   $ (0.10 ) $ 1.30   $ 3.18  
Shares used in basic per share calculations 277   284   281   285  
 
Diluted net income (loss) per share from continuing operations $ (0.37 ) $ (0.10 ) $ 1.45 $ 2.94
Diluted net income (loss) per share from discontinued operations 0.42     (0.17 ) 0.18  
Diluted net income (loss) per share $ 0.05   $ (0.10 ) $ 1.28   $ 3.12  
Shares used in diluted per share calculations 277   284   286   291  
 
Dividends declared per common share $ 0.25   $ 0.19   $ 1.00   $ 0.76  
 

See accompanying Notes.

 

INTUIT INC.

NOTES TO TABLE A

 

[A]

 

The following table summarizes the total share-based compensation
expense that we recorded in continuing operations for the periods
shown.

   
Three Months Ended Twelve Months Ended
(in millions)

July 31,
2015

 

July 31,
2014

July 31,
2015

 

July 31,
2014

Cost of revenue $ 2 $ 2 $ 6 $ 7
Selling and marketing 19 14 69 53
Research and development 24 18 80 59
General and administrative 25   18   87   67
Total share-based compensation expense $ 70   $ 52   $ 242   $ 186
 

[B]

We compute our annual provision for income taxes by applying the
annual effective tax rate to income from recurring operations and
adding the effects of any discrete income tax items specific to
the period. Our effective tax rate for the twelve months ended
July 31, 2015 was approximately 42%. Excluding the effects of the
goodwill impairment charge, which was not tax deductible, our
effective tax rate was approximately 36% and did not differ
significantly from the federal statutory rate of 35%. Our
effective tax rate for the twelve months ended July 31, 2014 was
approximately 34% and did not differ significantly from the
statutory rate of 35%.

 

[C]

In the fourth quarter fiscal 2015 we determined that our
Demandforce, QuickBase, and Quicken businesses became long-lived
assets held for sale and we accounted for them as discontinued
operations.

We have segregated the operating results
for these three businesses in our statements of operations for all
periods presented. Net revenue from these businesses totaled 6
million for the twelve months ended July 31, 2015 and 3 million
for the twelve months ended July 31, 2014. Net loss from
discontinued operations for the twelve months ended July 31, 2015
includes a net loss from discontinued operations of 2 million
partially offset by 4 million in tax benefits from the
anticipated sale of these businesses. For the twelve months ended
July 31, 2014, we recorded net income from discontinued operations
of million.

On August 1, 2013 we completed the sale
of our Intuit Financial Services (IFS) business for approximately
.025 billion in cash. We recorded a gain on the disposal of IFS
of approximately million, net of income taxes, in the first
quarter of fiscal 2014.

On August 19, 2013 we completed
the sale of our Intuit Health business for cash consideration that
was not significant and recorded a loss on disposal that was
offset by a related income tax benefit of approximately
million, resulting in a net gain on disposal of approximately
million in the first quarter of fiscal 2014.

We have
reclassified our balance sheets for all periods presented to
reflect these businesses as discontinued operations. Because the
cash flows of these businesses were not material for any period
presented, we have not segregated them from continuing operations
on our statements of cash flows.

 

TABLE B1

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

 
Fiscal 2015
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) from continuing operations $ (109 ) $ (89 ) $ 1,066 $ (130 ) $ 738
Amortization of acquired technology 7 7 8 8 30
Amortization of other acquired intangible assets 3 3 3 3 12
Professional fees for business combinations 1 1 2
Goodwill and intangible asset impairment charges 114 34 148
Gain on sale of long-lived assets (30 ) (1 ) (31 )
Share-based compensation expense 57   56   59   70   242  
Non-GAAP operating income (loss) from continuing operations $ (42 ) $ (22 ) $ 1,221   $ (16 ) $ 1,141  
 
GAAP net income (loss) $ (84 ) $ (66 ) $ 501 $ 14 $ 365
Amortization of acquired technology 7 7 8 8 30
Amortization of other acquired intangible assets 3 3 3 3 12
Professional fees for business combinations 1 1 2
Goodwill and intangible asset impairment charges 114 34 148
Gain on sale of long-lived assets (30 ) (1 ) (31 )
Share-based compensation expense 57 56 59 70 242
Net (gain) loss on debt securities and other investments 1 3 2 6
Income tax effects and adjustments (19 ) (25 ) (10 ) (29 ) (83 )
Net (income) loss from discontinued operations $ 3   $ 6   $ 155   $ (116 ) $ 48  
Non-GAAP net income (loss) $ (32 ) $ (18 ) $ 804   $ (15 ) $ 739  
 
GAAP diluted net income (loss) per share $ (0.29 ) $ (0.23 ) $ 1.78 $ 0.05 $ 1.28
Amortization of acquired technology 0.02 0.02 0.03 0.03 0.10
Amortization of other acquired intangible assets 0.01 0.01 0.01 0.01 0.04
Professional fees for business combinations 0.01
Goodwill and intangible asset impairment charges 0.40 0.12 0.52
Gain on sale of long-lived assets (0.11 ) (0.11 )
Share-based compensation expense 0.20 0.20 0.21 0.25 0.85
Net (gain) loss on debt securities and other investments 0.01 0.01 0.02
Income tax effects and adjustments (0.06 ) (0.08 ) (0.03 ) (0.10 ) (0.29 )
Net (income) loss from discontinued operations 0.01   0.02   0.55   (0.42 ) 0.17  
Non-GAAP diluted net income (loss) per share $ (0.11 ) $ (0.06 ) $ 2.85   $ (0.05 ) $ 2.59  
 
Shares used in diluted per share calculation 286   285   282   277   286  
 

See “About Non-GAAP Financial Measures” immediately following
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure
and excludes the specified amounts in arriving at each non-GAAP
financial measure.

 

TABLE B2

INTUIT INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

 
Fiscal 2014
Q1   Q2   Q3   Q4   Full Year
GAAP operating income (loss) from continuing operations $ (77 ) $ (55 ) $ 1,487 $ (55 ) $ 1,300
Amortization of acquired technology 4 4 4 6 18
Amortization of other acquired intangible assets 1 2 2 2 7
Professional fees for business combinations 1 4 5
Share-based compensation expense 43   47   44   52   186  
Non-GAAP operating income (loss) from continuing operations $ (29 ) $ (1 ) $ 1,537   $ 9   $ 1,516  
 
GAAP net income (loss) $ (11 ) $ (37 ) $ 984 $ (29 ) $ 907
Amortization of acquired technology 4 4 4 6 18
Amortization of other acquired intangible assets 1 2 2 2 7
Professional fees for business combinations 1 4 5
Share-based compensation expense 43 47 44 52 186
Net (gain) loss on debt securities and other investments (2 ) 1 (21 ) (22 )
Income tax effects and adjustments (11 ) (18 ) (19 ) (12 ) (60 )
Net (income) loss from discontinued operations (46 ) (5 ) (4 ) 1   (54 )
Non-GAAP net income (loss) $ (22 ) $ (5 ) $ 1,011   $ 3   $ 987  
 
GAAP diluted net income (loss) per share $ (0.04 ) $ (0.13 ) $ 3.39 $ (0.10 ) $ 3.12
Amortization of acquired technology 0.01 0.01 0.01 0.02 0.06
Amortization of other acquired intangible assets 0.01 0.01 0.01 0.02
Professional fees for business combinations 0.01 0.02
Share-based compensation expense 0.15 0.17 0.15 0.18 0.64
Net (gain) loss on debt securities and other investments (0.07 ) (0.07 )
Income tax effects and adjustments (0.04 ) (0.06 ) (0.06 ) (0.04 ) (0.21 )
Net (income) loss from discontinued operations (0.16 ) (0.02 ) (0.01 )   (0.18 )
Non-GAAP diluted net income (loss) per share $ (0.08 ) $ (0.02 ) $ 3.49   $ 0.01   $ 3.40  
 
Shares used in diluted per share calculation 288   284   290   290   291  
 

See “About Non-GAAP Financial Measures” immediately following
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure
and excludes the specified amounts in arriving at each non-GAAP
financial measure.

When reported on August 21, 2014,
fourth quarter results included an accrual for a loss contingency
that was resolved before we filed our fiscal 2014 Form 10-K. We
have adjusted our fiscal fourth quarter and full-year 2014
operating income and earnings per share accordingly, resulting in
a GAAP and non-GAAP operating income increase of approximately
million, and a GAAP and non-GAAP earnings per share increase of
approximately {$content}.03.

   

TABLE C

INTUIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 

July 31,
2015

July 31,
2014

ASSETS
Current assets:
Cash and cash equivalents $ 808 $ 849
Investments 889 1,065
Accounts receivable, net 91 115
Income taxes receivable 84 35
Deferred income taxes 231 124
Prepaid expenses and other current assets 94 115
Current assets of discontinued operations 26   29
Current assets before funds held for customers 2,223 2,332
Funds held for customers 337   289
Total current assets 2,560 2,621
 
Long-term investments 27 31
Property and equipment, net 682 589
Goodwill 1,266 1,323
Acquired intangible assets, net 87 133
Other assets 111 108
Long-term assets of discontinued operations 235   396
Total assets $ 4,968   $ 5,201
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 190 $ 145
Accrued compensation and related liabilities 283 262
Deferred revenue 691 495
Other current liabilities 150 150
Current liabilities of discontinued operations 93   80
Current liabilities before customer fund deposits 1,407 1,132
Customer fund deposits 337   289
Total current liabilities 1,744 1,421
 
Long-term debt 500 499
Long-term deferred revenue 152 3
Other long-term obligations 172 166
Long-term obligations of discontinued operations 68   34
Total liabilities 2,636   2,123
 
Stockholders’ equity 2,332   3,078
Total liabilities and stockholders’ equity $ 4,968   $ 5,201
 

TABLE D

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
Twelve Months Ended
July 31, 2015   July 31, 2014
Cash flows from operating activities:
Net income $ 365 $ 907

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation 157 144
Amortization of acquired intangible assets 74 53
Goodwill and intangible asset impairment charges 297
Share-based compensation expense 257 204
Pre-tax gain on sale of discontinued operations (1) (40 )
Net realized gain on sale of available-for-sale equity securities (21 )
Deferred income taxes (100 ) 93
Tax benefit from share-based compensation plans 85 82
Excess tax benefit from share-based compensation plans (85 ) (82 )
Other 4   24  
Total adjustments 689   457  
Changes in operating assets and liabilities:
Accounts receivable 24 (5 )
Income taxes receivable (49 ) 27
Prepaid expenses and other assets 22 (14 )
Accounts payable 35 15
Accrued compensation and related liabilities 24 43
Deferred revenue 398 15
Other liabilities (4 ) 1  
Total changes in operating assets and liabilities 450   82  
Net cash provided by operating activities 1,504   1,446  
Cash flows from investing activities:
Purchases of available-for-sale debt securities (939 ) (1,334 )
Sales of available-for-sale debt securities 620 346
Maturities of available-for-sale debt securities 475 567

Net change in money market funds and other cash equivalents held
to satisfy customer fund obligations

(49 ) (54 )
Net change in customer fund deposits 49 54
Proceeds from the sale of available-for-sale equity securities 26
Purchases of property and equipment (261 ) (186 )
Acquisitions of businesses, net of cash acquired (95 ) (471 )
Proceeds from divestiture of businesses 1,025
Other 18   (22 )
Net cash used in investing activities (182 ) (49 )
Cash flows from financing activities:
Net proceeds from issuance of stock under employee stock plans 107 165
Cash paid for purchases of treasury stock (1,245 ) (1,577 )
Dividends and dividend rights paid (283 ) (220 )
Excess tax benefit from share-based compensation plans 85 82
Other (1 ) (1 )
Net cash used in financing activities (1,337 ) (1,551 )
Effect of exchange rates on cash and cash equivalents (26 ) (6 )
Net decrease in cash and cash equivalents (41 ) (160 )
Cash and cash equivalents at beginning of period 849   1,009  
Cash and cash equivalents at end of period $ 808   $ 849  
 

(1)

Because the cash flows of our discontinued operations were not
material for any period presented, we have not segregated the cash
flows of those businesses on these statements of cash flows. We
have presented the effect of the gains on disposals of
discontinued operations on these statements of cash flow.

 

TABLE E

INTUIT INC.

RECONCILIATION OF FORWARD-LOOKING GUIDANCE FOR NON-GAAP FINANCIAL
MEASURES

TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS

(In millions, except per share amounts)

(Unaudited)

 
Forward-Looking Guidance
GAAP

Range of Estimate

      Non-GAAP

Range of Estimate

From   To Adjmts From   To
Three Months Ending October 31, 2015
Revenue $ 660 $ 680 $ $ 660 $ 680
Operating loss $ (100 ) $ (95 ) $ 90 [a] $ (10 ) $ (5 )
Diluted loss per share $ (0.27 ) $ (0.26 ) $ 0.23 [b] $ (0.04 ) $ (0.03 )
 
Twelve Months Ending July 31, 2016
Revenue $ 4,525 $ 4,600 $ $ 4,525 $ 4,600
Operating income $ 1,115 $ 1,145 $ 335 [c] $ 1,450 $ 1,480
Diluted earnings per share $ 2.50 $ 2.55 $ 0.90 [d] $ 3.40 $ 3.45
 

See “About Non-GAAP Financial Measures” immediately following this
Table E for information on these measures, the items excluded from
the most directly comparable GAAP measures in arriving at non-GAAP
financial measures, and the reasons management uses each measure
and excludes the specified amounts in arriving at each non-GAAP
financial measure.

 

[a]

Reflects estimated adjustments for share-based compensation
expense of approximately million; amortization of acquired
technology of approximately million; and amortization of other
acquired intangible assets of approximately million.

 

[b]

Reflects the estimated adjustments in item [a], income taxes
related to these adjustments, and other income tax effects related
to the use of the long-term non-GAAP tax rate.

 

[c]

Reflects estimated adjustments for share-based compensation
expense of approximately 8 million; amortization of acquired
technology of approximately million; and amortization of other
acquired intangible assets of approximately million.

 

[d]

Reflects the estimated adjustments in item [c], income taxes
related to these adjustments, and other income tax effects related
to the use of the long-term non-GAAP tax rate.

 

INTUIT INC.
ABOUT NON-GAAP FINANCIAL MEASURES

The accompanying press release dated August 20, 2015 contains non-GAAP
financial measures. Table B1, Table B2 and Table E reconcile the
non-GAAP financial measures in that press release to the most directly
comparable financial measures prepared in accordance with Generally
Accepted Accounting Principles (GAAP). These non-GAAP financial measures
include non-GAAP operating income (loss), non-GAAP net income (loss) and
non-GAAP net income (loss) per share.

Non-GAAP financial measures should not be considered as a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP. These non-GAAP financial measures do not reflect a
comprehensive system of accounting, differ from GAAP measures with the
same names and may differ from non-GAAP financial measures with the same
or similar names that are used by other companies.

We compute non-GAAP financial measures using the same consistent method
from quarter to quarter and year to year. We may consider whether other
significant items that arise in the future should be excluded from our
non-GAAP financial measures.

We exclude the following items from all of our non-GAAP financial
measures:

  • Share-based compensation expense
  • Amortization of acquired technology
  • Amortization of other acquired intangible assets
  • Goodwill and intangible asset impairment charges
  • Professional fees for business combinations

We also exclude the following items from non-GAAP net income (loss) and
diluted net income (loss) per share:

  • Gains and losses on debt and equity securities and other investments
  • Income tax effects and adjustments
  • Discontinued operations

We believe that these non-GAAP financial measures provide meaningful
supplemental information regarding Intuit’s operating results primarily
because they exclude amounts that we do not consider part of ongoing
operating results when planning and forecasting and when assessing the
performance of the organization, our individual operating segments or
our senior management. Segment managers are not held accountable for
share-based compensation expense, amortization, or the other excluded
items and, accordingly, we exclude these amounts from our measures of
segment performance. We believe that our non-GAAP financial measures
also facilitate the comparison by management and investors of results
for current periods and guidance for future periods with results for
past periods.

The following are descriptions of the items we exclude from our non-GAAP
financial measures.

Share-based compensation expenses. These consist of non-cash
expenses for stock options, restricted stock units and our Employee
Stock Purchase Plan. When considering the impact of equity awards, we
place greater emphasis on overall shareholder dilution rather than the
accounting charges associated with those awards.

Amortization of acquired technology and amortization of other
acquired intangible assets
. When we acquire an entity, we are
required by GAAP to record the fair values of the intangible assets of
the entity and amortize them over their useful lives. Amortization of
acquired technology in cost of revenue includes amortization of software
and other technology assets of acquired entities. Amortization of other
acquired intangible assets in operating expenses includes amortization
of assets such as customer lists, covenants not to compete and trade
names.

Goodwill and intangible asset impairment charges. We exclude from
our non-GAAP financial measures non-cash charges to adjust the carrying
values of goodwill and other acquired intangible assets to their
estimated fair values.

Professional fees for business combinations. We exclude from our
non-GAAP financial measures the professional fees we incur to complete
business combinations. These include investment banking, legal and
accounting fees.

Gains and losses on debt and equity securities and other investments.
We exclude from our non-GAAP financial measures gains and losses that we
record when we sell or impair available-for-sale debt and equity
securities and other investments.

Income tax effects and adjustments. During fiscal 2014, we
excluded from our non-GAAP financial measures the income tax effects of
the non-GAAP pre-tax adjustments described above, as well as income tax
effects related to business combinations. This was consistent with how
we were evaluating our operating results and planning, forecasting, and
evaluating future periods during that fiscal year.

During fiscal 2015, we began using a long-term non-GAAP tax rate for
evaluating operating results and for planning, forecasting, and
analyzing future periods. This long-term non-GAAP tax rate excludes the
income tax effects of the non-GAAP pre-tax adjustments described above,
assumes the federal research and experimentation credit is continuously
in effect, and eliminates the effects of non-recurring and period
specific items which can vary in size and frequency. Based on our
current long-term projections, we are using a long-term non-GAAP tax
rate of 34% which is consistent with the average of our normalized
fiscal year tax rate over a four year period that includes the past
three fiscal years plus the current fiscal year. We will evaluate this
long-term non-GAAP tax rate on an annual basis and whenever any
significant events occur which may materially affect this long-term
rate. This long-term non-GAAP tax rate could be subject to change for
various reasons including significant changes in our geographic earnings
mix or fundamental tax law changes in major jurisdictions in which we
operate.

Operating results and gains and losses on the sale of discontinued
operations
. From time to time, we sell or otherwise dispose of
selected operations as we adjust our portfolio of businesses to meet our
strategic goals. In accordance with GAAP, we segregate the operating
results of discontinued operations as well as gains and losses on the
sale of these discontinued operations from continuing operations on our
GAAP statements of operations but continue to include them in GAAP net
income or loss and net income or loss per share. We exclude these
amounts from our non-GAAP financial measures.

The reconciliations of the forward-looking non-GAAP financial measures
to the most directly comparable GAAP financial measures in Table E
include all information reasonably available to Intuit at the date of
this press release. These tables include adjustments that we can
reasonably predict. Events that could cause the reconciliation to change
include acquisitions and divestitures of businesses, goodwill and other
asset impairments, and sales of available-for-sale debt securities and
other investments.

Source: Intuit Inc.

Investors
Intuit Inc.
Matt Rhodes, 650-944-2536
matthew_rhodes@intuit.com
or
Media
Intuit
Inc.
Diane Carlini, 650-944-6251
diane_carlini@intuit.com