Intuit Grows First-quarter Revenue 12 Percent; Reiterates Full-year Guidance

[C] On September 17, 2012 we sold our Intuit Websites business, which was a component of our Financial Management Solutions reporting segment, for approximately $60 million in cash and recorded a gain on disposal of approximately $32 million, net of income taxes.

We determined that Intuit Websites became discontinued operations in the fourth quarter of fiscal 2012. We have therefore segregated the operating results of Intuit Websites from continuing operations in our statements of operations for all periods prior to the sale. Net revenue from Intuit Websites was $9 million for the three months ended October 31, 2012 and $19 million for the three months ended October 31, 2011.

Net assets held for sale at July 31, 2012 consisted primarily of operating assets and liabilities that were not material, so we have not segregated them on our balance sheets. Because operating cash flows from the Intuit Websites business were also not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.

TABLE B INTUIT INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES (In millions, except per share amounts) (Unaudited)
	Three Months Ended
	October 31, 2012											October 31, 2011
GAAP operating loss from continuing operations	$	(69						)				$	(84	)
Amortization of acquired technology	5											3
Amortization of other acquired intangible assets	7											21
Share-based compensation expense	49											40
Non-GAAP operating loss from continuing operations	$	(8						)				$	(20	)
GAAP net loss	$	(19						)				$	(64	)
Amortization of acquired technology	5											3
Amortization of other acquired intangible assets	7											21
Share-based compensation expense	49											40
Net gains on debt securities and other investments	—											(11		)
Income tax effect of non-GAAP adjustments	(19							)				(18		)
Net income (loss) from discontinued operations	(32							)				6
Non-GAAP net loss	$	(9						)				$	(23	)
GAAP diluted net loss per share	$	(0.06						)				$	(0.21	)
Amortization of acquired technology	0.02											0.01
Amortization of other acquired intangible assets	0.02											0.07
Share-based compensation expense	0.17											0.13
Net gains on debt securities and other investments	—											(0.04		)
Income tax effect of non-GAAP adjustments	(0.07							)				(0.06		)
Net income (loss) from discontinued operations	(0.11							)				0.02
Non-GAAP diluted net loss per share	$	(0.03						)				$	(0.08	)
Shares used in diluted per share calculation	296											300

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

TABLE C INTUIT INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited)
	October 31, 2012					July 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	216				$	393
Investments	342					351
Accounts receivable, net	184					183
Income taxes receivable	165					53
Deferred income taxes	133					184
Prepaid expenses and other current assets	85					69
Current assets before funds held for customers	1,125					1,233
Funds held for customers	209					290
Total current assets	1,334					1,523
Long-term investments	75					75
Property and equipment, net	595					567
Goodwill	2,191					2,200
Acquired intangible assets, net	201					213
Other assets	98					106
Total assets	$	4,494				$	4,684
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	167				$	157
Accrued compensation and related liabilities	135					231
Deferred revenue	421					443
Other current liabilities	142					144
Current liabilities before customer fund deposits	865					975
Customer fund deposits	209					290
Total current liabilities	1,074					1,265
Long-term debt	499					499
Other long-term obligations	176					176
Total liabilities	1,749					1,940
Stockholders’ equity	2,745					2,744
Total liabilities and stockholders’ equity	$	4,494				$	4,684

TABLE D INTUIT INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Three Months Ended
	October 31, 2012												October 31, 2011
Cash flows from operating activities:
Net loss	$		(19						)				$	(64	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	40												44
Amortization of acquired intangible assets	14												28
Share-based compensation expense	49												40
Pre-tax gain on sale of discontinued operations	(53								)				—
Deferred income taxes	53												(5		)
Tax benefit from share-based compensation plans	44												30
Excess tax benefit from share-based compensation plans	(44								)				(29		)
Other	4												(6		)
Total adjustments	107												102
Changes in operating assets and liabilities:
Accounts receivable	(1								)				5
Prepaid expenses, income taxes receivable and other assets	(128								)				(78		)
Accounts payable	12												39
Accrued compensation and related liabilities	(96								)				(74		)
Deferred revenue	(16								)				(25		)
Income taxes payable	—												1
Other liabilities	(4								)				(16		)
Total changes in operating assets and liabilities	(233								)				(148		)
Net cash used in operating activities	(145								)				(110		)
Cash flows from investing activities:
Purchases of available-for-sale debt securities	(87								)				(197		)
Sales of available-for-sale debt securities	81												136
Maturities of available-for-sale debt securities	21												41
Net change in money market funds and other cash equivalents held to satisfy customer fund obligations	81												93
Net change in customer fund deposits	(81								)				(93		)
Purchases of property and equipment	(70								)				(44		)
Proceeds from divestiture of businesses	60												—
Other	(5								)				14
Net cash provided by (used in) investing activities	—												(50		)
Cash flows from financing activities:
Net proceeds from issuance of treasury stock under employee stock plans	73												45
Purchases of treasury stock	(100								)				(255		)
Cash dividends paid to stockholders	(50								)				(45		)
Excess tax benefit from share-based compensation plans	44												29
Net cash used in financing activities	(33								)				(226		)
Effect of exchange rates on cash and cash equivalents	1												(3		)
Net decrease in cash and cash equivalents	(177								)				(389		)
Cash and cash equivalents at beginning of period	393												722
Cash and cash equivalents at end of period	$		216										$	333

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 January 31, 2013
Revenue		$	1,020			$	1,040			$	—					$	1,020			$	1,040
Operating income		$	130			$	150			$	60			[a]		$	190			$	210
Diluted earnings per share		$	0.27			$	0.30			$	0.13			[b]		$	0.40			$	0.43
Three Months Ending April 30, 2013
Revenue		$	2,155			$	2,215			$	—					$	2,155			$	2,215
Diluted earnings per share		$	2.65			$	2.70			$	0.13			[c]		$	2.78			$	2.83
Three Months Ending July 31, 2013
Revenue		$	728			$	748			$	—					$	728			$	748
Diluted earnings per share		$	(0.01	)		$	0.01			$	0.13			[d]		$	0.12			$	0.14
Twelve Months Ending July 31, 2013
Revenue		$	4,550			$	4,650			$	—					$	4,550			$	4,650
Operating income		$	1,315			$	1,345			$	255			[e]		$	1,570			$	1,600
Diluted earnings per share		$	2.76			$	2.82			$	0.56			[f]		$	3.32			$	3.38

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.

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