Indicate by a check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes X[X]         No [  ]

Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X]         No [  ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Approximately 212,690,599205,703,236 shares of Common Stock, $0.01 par value, as of January 31, 20022003

Intuit, the Intuit logo, QuickBooks, Quicken, TurboTax, ProSeries, Lacerte, QuickBase, FundWare and Track-it!, among others, are registered trademarks and/or registered service marks of Intuit Inc., or one of its subsidiaries, in the United States and other countries. Intuit Master Builder, MRI and Intuit Eclipse, among others, are trademarks and/or service marks of Intuit Inc., or one of its subsidiaries, in the United States and other countries. Other parties’ marks are the property of their respective owners and should be treated as such.

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(1)

Includes $9.5 million and $8.1 million of loans due from affiliates as of July 31, 2001 and January 31, 2002, respectively.

See accompanying notes.

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See accompanying notes.

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See accompanying notes.

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1. Summary of Significant Accounting Policies

Basis of Presentation

Intuit Inc. (“Intuit”) has prepared the accompanying unaudited condensedThe consolidated financial statements in accordance with generally accepted accounting principles for interim financial statements. The financial statements include the financial statements of Intuit and its wholly-owned subsidiaries. AllWe have eliminated all intercompany balances and transactions have been eliminated in consolidation. CertainWe have reclassified certain other previously reported amounts have been reclassified to conform to the current presentation format.presentation. As discussed in Note 6 , the Quicken Loans mortgage business, which we sold on July 31, 2002, has been accounted for as discontinued operations in accordance with Accounting Principles Board (“APB”) Opinion No. 30. Also as discussed in Note 6, Intuit KK, our Japanese subsidiary, became a long-lived asset held for sale during the second quarter of fiscal 2003 in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144. Accordingly, we have reclassified our financial statements for all periods presented to reflect Quicken Loans and Intuit KK as discontinued operations. Unless noted otherwise, discussions in these notes pertain to our continuing operations.

We have included all normal recurring adjustments consideredand the non-recurring adjustments described in Note 6 that we consider necessary to give a fair presentation of our operating results for the periods shown.presented. Results for the three and six months ended January 31, 20022003 do not necessarily indicate the results to be expectedwe expect for the fiscal year ending July 31, 20022003 or any other future period. These consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements for the fiscal year ended July 31, 20012002 included in Intuit’s Form 10-K, filed with the Securities and Exchange Commission on October 5, 2001.September 25, 2002. This Form 10-K reflected Quicken Loans as discontinued operations. We expect to file financial statements reclassified to reflect Intuit KK as a discontinued operation on Form 8-K.

Use of Estimates

To comply with generally accepted accounting principles, weWe make estimates and assumptions that affect the amounts reported in the financial statements and the disclosures made in the accompanying notes. Estimates are usedFor example, we use estimates for reserves for product returns and exchanges, reserves for rebates, and to determine the collectibility of accounts receivable and the value of deferred taxes and other amounts.tax assets. We also use estimates to determine the remaining economic lives and carrying valuevalues of goodwill, purchased intangibles, fixed assetsproperty and equipment and other long-lived assets. We also use assumptions when employing the Black-Scholes valuation model to estimate the fair value of stock options granted for pro forma disclosures. See Note 11. Despite our intention to establish accurate estimates and assumptions, actual results may differ from our estimates.

Net Revenue

For our shrink-wrappedWe derive revenues from the sale of packaged software products and supplies, product support, professional services, outsourced payroll services and multiple element arrangements that may include any combination of these items. We recognize revenue for software products and related services in accordance with Statement of Position (“SOP”) 97-2, “Software Revenue Recognition,” as modified by SOP 98-9. For other offerings, we follow Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.” We recognize revenue when we ship products (which is when title passes) — either to retailers or directly to end user customers. We recognize revenue only if payment is probable andpersuasive evidence of an arrangement exists, we have no significant remaining obligations todelivered the customer. We recognize revenue net of returns reserves based on historical returns experience. product or performed the service, the fee is fixed or determinable and collectibility is probable.

In some situations, we receive advance payments from our customers. RevenueWe defer revenue associated with these advance payments is deferred until we ship the products are shipped or services are provided. We also reduceperform the services.

In accordance with the Financial Accounting Standards Board’s (“FASB’s”) Emerging Issues Task Force Issue No. 01-9, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Product,” we generally account for cash consideration (such as sales incentives) that we give to our customers or resellers as a reduction of revenue by the estimated cost of rebates when products are shipped.rather than as an operating expense.

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Product Revenue

We recognize revenue from the sale of our packaged software products and supplies when we ship the product (which is when title passes) either to retailers and distributors or directly to end-user customers. We sell some of our QuickBooks and consumer tax products on consignment to a limited number of resellers. We recognize revenue for these consignment transactions only when the end-user sale has occurred.

We reduce product revenue from distributors and retailers for estimated returns that are based on historical returns experience and other factors such as the volume and price mix of products in the retail channel, trends in retailer inventory and economic trends that might impact customer demand for our products. We also reduce product revenue for the estimated redemption of rebates on certain current product sales. Our estimated reserves for distributor and retailer sales incentive rebates are based on distributors’ and retailers’ actual performance against the terms and conditions of rebate programs, which we typically establish annually. End user rebate reserves are estimated based on the terms and conditions of the specific promotional rebate program, actual sales during the promotion, the amount of redemptions received, historical redemption trends by product and by type of promotional program and the economic value of the rebate.

Service Revenue

We recognize revenue from outsourced payroll processing and payroll tax filing services as the services are performed, provided we have no other obligations.remaining obligations to these customers. We generally require customers to remit payroll and payroll tax liability funds to us in advance of the applicable payroll due date via electronic funds transfer. We include in total net revenue the interest earned on invested balances resulting from timing differences between the collection of these funds from customers and the remittance of suchthe funds to outside parties because this interest income represents an integral part of the revenue generated from our services. We recognize this interest as it is earned. However, interest income generated from our cash and cash equivalents balance is included in other income because this interest income does not result from our operating activities.

We defer loan origination revenue and the associated commissions and processing costs on loans held for sale until the related loan is sold.offer several technical support plans. We recognize gains and losses on loans at the time we sell them, based upon the difference between the selling price and the carrying value of the related loans sold. We recognize interest income on mortgage loans held for sale as it is earned, and we recognize interest expenses on related borrowings as cost of revenue as we incur them.

We also offer several plans under which customers are charged for technical support assistance. For plans where we collect fees in advance, we recognize revenue over the life of the plan, which is generally one year. We include costs incurred for fee-for-supportthese support plans in cost of revenue.

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Service revenue also includes revenue from training, consulting and implementation services. We recognize revenue as these services are performed, provided we have no other remaining obligations to these customers.

Other Revenue

Other revenue consists primarily of fees from other products and services when it is earned based on the nature of the particular product or service. For products and services that we provide over a period of time, weonline advertising agreements. We typically recognize revenue pro rata based on the contractual time period. However,

Multiple Element Arrangements

We also enter into certain revenue arrangements for which we are obligated to deliver multiple products and/or services (multiple elements). For these arrangements, which generally include software products, we allocate and defer revenue for the undelivered elements based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is generally the price charged when that element is sold separately.

In situations where VSOE exists for all elements (delivered and undelivered), we provide or deliverallocate the product or service at a specific point in time,total revenue to be earned under the arrangement among the various elements, based on their relative fair value. For transactions where VSOE exists only for the undelivered elements, we allocate and defer revenue based on VSOE of fair value of the undelivered elements, and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue. If VSOE does not exist for undelivered items that are services, then we recognize the entire arrangement fee ratably over the remaining service period. If VSOE does not exist for undelivered elements that are specified products or features, we defer revenue until the earlier of the delivery of all elements or the point at which we determine VSOE for these undelivered elements.

We recognize revenue related to the delivered products or services only if: (1) the above revenue recognition criteria are met; (2) any undelivered products or services are not essential to the functionality of the delivered products and services; (3) payment for the delivered products or services is not contingent upon delivery of the productremaining products or completionservices; (4) we have an enforceable claim to receive the amount due in the event that we do not deliver the undelivered products or services; and (5) as discussed above, there is evidence of the service.fair value for each of the undelivered products or services.

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Shipping and Handling Costs

Costs incurred withWe record the amounts we charge our customers for the shipping and handling of our shrink-wrapped software products are recordedas product revenue and we record the related costs as cost of products in our resultsstatement of operations.

Customer Deposits and Payroll Service and Technical SupportObligations

Customer service and technical support costs include the costs associated with performing order processing, answering customer inquiries through Web sites and other electronic means and providing free technical support assistance to customers by telephone. In connection with the sale of certain products, we provide a limited amount of free technical support assistance to customers. We do not defer the recognition of any revenue associated with sales of these products, since the cost of providing this free technical support and related customer service is insignificant. The technical support is provided within one year after the associated revenue is recognized and free product enhancements are minimal and infrequent. We accrue the estimated cost of providing this free support upon product shipment.

Cash and Cash Equivalents and Short-Term Investments

We consider highly liquid investments with maturities of three months or less at the date of purchase to bedeposits represent cash equivalents. Short-term investments consist of available-for-sale debt securities that are carried at fair value. Available-for-sale debt securities are classified as current assets based upon our intent and ability to use any and all of these securities as necessary to satisfy the significant short-term liquidity requirements that may arise from the highly seasonal and cyclical natureheld on behalf of our businesses. Becausepayroll customers. Payroll service obligations consist primarily of payroll taxes we owe on behalf of our significant business seasonality, cash flow requirements may fluctuate dramatically from quarter to quarter and require us to use a significant amount of the short-term investments held as available-for-sale securities. See Note 2 for more information about cash and cash equivalents and short-term investments.

Marketable Securities and Other Investments

Our available-for-sale marketable securities are carried at fair value and we include unrealized gains and losses, net of tax, in stockholders’ equity. We use the specific identification method to account for gains and losses on marketable equity securities. Our other long-term investments are stated at cost. See Note 3 for more information about our marketable securities and other investments.payroll customers.

Goodwill, Purchased Intangible Assets and Other Long-lived Assets

We record goodwill when the purchase price of net tangible and intangible assets we acquire exceeds their fair value. We amortizeIn previous fiscal years, including fiscal 2002, we generally amortized goodwill on a straight-line basis over periods ranging from 3three to 5five years. However, in accordance with SFAS 142, “Goodwill and Other Intangible Assets,” we did not amortize goodwill for acquisitions completed after June 30, 2001, and effective August 1, 2002 we no longer amortize goodwill for acquisitions completed before July 1, 2001. See “Recent Pronouncements”below for more information. We generally amortize the cost of identified intangiblesintangible assets on a straight-line basis over periods ranging from 1one to 1510 years.

We regularly perform reviews to determine if the carrying values of our long-lived assets are impaired. The reviewsWe look for facts or circumstances, either internal or external, indicating that indicate thatwe may not recover the carrying value of the asset may not be recovered.

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asset. We measure impairment loss related to long-lived assets based on the amount by which the carrying amountamounts of such assets exceedsexceed their fair values. Our measurement of fair value is generally based on an analysis of the present value of estimated future discounted cash flows. In performing thisOur analysis we use the bestis based on available information available in the circumstances, includingand reasonable and supportable assumptions and projections. The discounted cash flow analysis considers the likelihood of possible outcomes and is based on our best estimate of projected future cash flows. If necessary, we perform subsequent calculations to measure the amount of the impairment loss based on the excess of the carrying value over the fair value of the impaired assets. If

Stock-Based Incentive Program

We provide equity incentives to our employees (including those we hire as a result of acquisitions) and to our independent Board members through a carefully managed stock incentive program. We maintain four stock option plans and an Employee Stock Purchase Plan for different groups of eligible participants, and we also have outstanding stock options that we assumed in connection with certain acquisitions. We apply the intrinsic value recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” in accounting for stock-based incentives. Accordingly, we are not required to record compensation expense when stock options are granted to eligible participants as long as the exercise price is not less than the fair market valuesvalue of the stock when the option is granted. We are also not required to record compensation expense in connection with the Employee Stock Purchase Plan as long as the purchase price of the stock is not less than 85% of the lower of the fair market value at the beginning of each three-month, six-month or 12-month offering period or at the end of each applicable three-month purchase period. See Note 11 for an illustration of the assets were not available,effect on net income (loss) and net income (loss) per share if we would calculatehad applied the fair value using the present valuerecognition provisions of estimated expected future discounted cash flows. The cash flow calculations, including the discount rate, would be based on management’s best estimates, using appropriate assumptions and projections at the time. In June 2001, the Financial Accounting Standards Board (“FASB”) issued FAS 142, “Goodwill and Other Intangible Assets.” In October 2001, the FASB issued SFAS No. 144,123, ““Accounting for the Impairment or Disposal of Long-Lived Assets.Stock-Based Compensation,”We intend to implement both FAS 142 and FAS 144 beginning in the first quarter of fiscal 2003. See“Recent Pronouncements”below for more information.stock-based incentives.

Concentration of Credit Risk and Significant Customers and Suppliers

We operate in markets that are highly competitive and rapidly changing. Significant technological changes, changes in customer requirements, the emergence of competitive products or services with new capabilities and other factors could negatively impact our operating results.

We are also subject to risks related to changes in the values of our marketable securities and private equity investments. See Note 3 for a discussionsignificant balance of short-term investments as well as risks associated with these assets.related to the collectibility of our trade accounts receivable. Our remaining investment portfolio is diversified andof short-term investments consists primarily of short-term investment-grade securities.securities that we diversify by limiting our holdings with any individual issuer in a managed portfolio to a maximum of $5 million.

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We sell a significant portion of our products through third-party resellersretailers and distributors and, asdistributors. As a result, maintain one individually significant receivable balance with a major distributor. If the financial condition or operations of this distributor deteriorates substantially, our operating results could be adversely affected. We alsowe face risks related to the collectibility of our trade accounts receivable. As of January 31, 2002, two of our major retail customers collectively accounted for approximately 20% of our accounts receivable balance. To appropriately manage this risk, we perform ongoing evaluations of customer credit. Generally,credit and limit the amount of credit extended as we deem appropriate but generally do not require collateral. We maintain reserves for estimated credit losses and these losses have historically been within our expectations. However, since we cannot necessarily predict future changes in the financial stability of our customers, we cannot guarantee that our reserves will continue to be adequate.

In the normal courseDue to changes in our distribution arrangements during fiscal 2002, we are selling an increasing proportion of our software products directly to a variety of retailers rather than through a few major distributors. No distributor or individual retailer accounted for 10% or more of total net revenue in the second quarter or first six months of fiscal 2002 or 2003, nor did any customer account for 10% or more of accounts receivable at July 31, 2002 or January 31, 2003.

In connection with the sale of our Quicken Loans mortgage business in July 2002, we enter into loan commitmentsagreed to extendcontinue providing to the purchasing company a line of credit in orderof up to meet$375.0 million to fund mortgage loans for a transition period of up to six months. The line was secured by the financing needs of our customers. Loan commitments are agreements to lend to a customer as long as all conditions specified in the contract are met. Commitments generally have fixed expiration dates or other termination clauses and may require the customer to pay a fee. We evaluate each customer’s creditworthiness on a case-by-case basis.

Loan commitments subject us to market risks and credit risks. Market risk is the risk that interest rates may rise after a loan commitment is made. To offset this risk on conventionalrelated mortgage loans and government-insured loans that are in process, we utilize mandatory forward sale commitments. At Januaryhad an outstanding balance of $245.6 million at July 31, 2002 we had $261.6and $180.1 million at October 31, 2002. The line was repaid in mandatory forward sale commitments for future deliveryJanuary 2003. As part of mortgages to Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. Loan commitments also involve credit risk relating to the customer. We use the same credit policies for making credit commitments as we doconsideration for the underlying loan product.sale of the business, we also held a five-year promissory note in the principal amount of $23.3 million from the purchasing company. The note was repaid in October 2002. See Note 56.

We rely on three third party vendors to perform substantially all outsourced aspects of manufacturing and distribution for more informationour primary retail desktop software products. We also have a key single-source vendor for our financial supplies business that prints and fulfills orders for all of our checks and most other products for our financial supplies business. While we believe that relying heavily on loan commitments.key vendors improves the efficiency and reliability of our business operations, relying on any one vendor for a significant aspect of our business can have a significant negative impact on our revenue and profitability if that vendor fails to perform at acceptable service levels.

Recent Pronouncements

On June 29, 2001, the FASB issued Statements of Financial Accounting Standards No. 141 (SFAS 141), “Business Combinations,” and No.SFAS 142, (SFAS 142), “Goodwill and Other Intangible Assets.”

SFAS 141 supersedes APB Opinion No. 16, “Business Combinations,” and eliminates the pooling-of-interests method of accounting for business combinations, thus requiring that all business combinations be accounted for using the purchase method. The requirements of SFAS 141 apply to all business combinations initiated after June 30, 2001.

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SFAS 142 supercedes APB Opinion No. 17, “Intangible Assets,” and provides that goodwill and other intangible assets that have an indefinite useful life will no longer be amortized. However, these assets must be reviewed for impairment at least annually or more frequently if an event occurs indicating the potential for impairment. SFAS 142The shift from an amortization approach to an impairment approach applies to all business combinationsacquisitions completed after June 30, 2001. For business combinations completed before July 1, 2001, we will adopt SFAS 142 effective August 1, 2002. We are currently evaluatingadopted the impactremaining elements of SFAS 142 on our financial position and statement of operations. We expect the adoption of SFAS 142 to reduce our ongoing quarterly amortization of goodwill expense significantly, commencing withthis new standard in the first quarter of fiscal 2003.2003 and therefore ceased amortizing goodwill for acquisitions made prior to July 1, 2001. However, it is possible that in the future we wouldmay incur less frequent, but larger, impairment charges related to the goodwill already recorded as well asand to goodwill arising out of future acquisitions asacquisitions. In addition, we will continue to expandamortize our business.purchased intangible assets and to assess those assets for impairment as appropriate.

As of the date of adoption of SFAS 142 on August 1, 2002, we had an unamortized acquired intangible assets balance of $123.6 million and an unamortized goodwill balance of $430.8 million. These balances reflect the transfer of $1.9 million in assembled workforce from intangible assets to goodwill in accordance with SFAS 142. In connection with the transitional goodwill impairment evaluation provisions under SFAS 142, we completed a goodwill impairment review as of August 1, 2002 and found no impairment.

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A reconciliation of previously reported net income and net income per share to amounts that would have been reported if the non-amortization provisions of SFAS 142 had been in effect from the beginning of fiscal 2002 is as follows:

In October 2001,July 2002, the FASB issued SFAS No. 144,146,“Accounting for Costs Associated with Exit and Disposal Activities.”This statement revises the Impairmentaccounting for activities relating to exiting or Disposaldisposing of Long-Lived Assets,businesses or assets under EITF Issue No. 94-3,“Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.”which appliesA formal commitment to a plan to exit an activity or dispose of long-lived assets will no longer be sufficient to record a one-time charge for most exit and disposal costs. Instead, companies will record exit or disposal costs when they are incurred and can be measured at fair value, and will subsequently adjust the recorded liability for changes in estimated cash flows. The provisions of SFAS 146 are effective prospectively for exit or disposal activities initiated after December 31, 2002. Companies may not restate previously issued financial statements for the effect of the provisions of SFAS 146, and liabilities that were recorded under EITF Issue No. 94-3 are not affected. We adopted SFAS 146 effective December 31, 2002 and there was no impact on our financial position, results of operations or cash flows.

On December 31, 2002, the FASB issued SFAS 148,“Accounting for Stock-Based Compensation – Transition and Disclosure.”This statement amends SFAS 123, “Accounting for Stock-Based Compensation,”to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting and records compensation expense for all stock-based employee compensation. It also amends the disclosure provisions of that statement to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, this statement amends APB Opinion No. 28, “Interim Financial Reporting,”to require disclosure about those effects in interim financial statements. The amendment of the transition and annual disclosure requirements of SFAS 123 are effective for fiscal years ending after December 15, 2002. The amendment of the disclosure requirements of APB Opinion No. 28 is effective for financial reports containing condensed consolidated financial statements for interim periods beginning after December 15, 2001.2002. Since we have not elected to change to the fair value based method of accounting and therefore do not record compensation expense for most stock-based employee compensation, the transition provisions of SFAS 144 supersedes148 had no impact on our financial position, results of operations or cash flows. We adopted the disclosure provisions of this statement in the first quarter of fiscal 2003. See Note 11.

In November 2002, the FASB Statement 121,issued Financial Interpretation No. (“FIN”) 45,“Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.”FIN 45 elaborates on the existing disclosure requirements for most guarantees, including residual value guarantees issued in conjunction with operating lease agreements. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,”and portions of APB Opinion 30,“Reporting the Results of Operations.”SFAS 144 provides a single accounting model for long-lived assets we expect to dispose of and significantly changes the criteria for classifying an asset as held-for-sale. This classification is important because held-for-sale assets are not depreciated and are stated at the lower of fair value of the obligation it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and measurement provisions of this interpretation apply on a prospective basis to guarantees issued or carrying amount. SFAS 144 alsomodified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods

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ending after December 15, 2002. We are currently evaluating the potential impact of FIN 45. If FIN 45 is applicable to us, our prospective revenue, cost of revenue and operating expenses could be negatively affected.

In January 2003, the FASB issued FIN 46,“Consolidation of Variable Interest Entities.”FIN 46 requires expected future operating lossesus to consolidate a variable interest entity if we are subject to a majority of the risk of loss from discontinued operationsthe variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. A variable interest entity is a corporation, partnership, trust or any other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be displayedessentially passive or it may engage in research and development or other activities on behalf of another company. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the period(s) in whichfirst fiscal year or interim period beginning after June 15, 2003. Some of the losses are actually incurred, rather thandisclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the amount of the loss is estimated, as presently required.variable interest entity was established. We will adopt SFAS 144 effective August 1, 2002do not currently have any variable interest entities and, accordingly, we do not expect theour adoption of SFAS 144FIN 46 to have a material impact on our consolidated financial statements.position, results of operations or cash flows.

In November 2001, the Emerging Issues Task Force (“EITF”) released Issue No. 01-09, “Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Product,” which applies to annual or interim financial statement periods beginning after December 15, 2001. The release provides that cash consideration (including sales incentives) that we give to our customers or resellers should be accounted for as a reduction of revenue unless we receive a benefit that is identifiable and that can be reasonably estimated. We will adopt this new release prospectively to transactions beginning in the third quarter of fiscal 2002. We do not expect the adoption of EITF Issue No. 01-09 to have a material impact on our total net revenue.

Foreign Currency

The functional currency of all our foreign subsidiaries is the local currency. Assets and liabilities of our foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenue, costs and expenses are translated at average rates of exchange in effect during the year. We report translation gains and losses as a separate component of stockholders’ equity. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statement of operations and were immaterial in all periods presented.

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2. Cash and Cash Equivalents and      Short-Term Investments

The following schedule summarizes the estimated fair value of our cash and cash equivalents and short-term investments:investments as of the dates indicated:

			July 31,				January 31,
			2001				2002
(In thousands)
Cash and cash equivalents:
	Cash		$	33,427			$	50,529
	Certificates of deposit			5,600				5,200
	Money market funds			406,077				430,327
	Commercial paper and corporate notes			—				2,499
	Municipal bonds			5,000				—
			$	450,104			$	488,555
Short-term investments:
	Corporate notes		$	63,723			$	44,221
	Municipal bonds			1,030,442				943,565
	U.S. Government securities			25,140				17,043
			$	1,119,305			$	1,004,829

The following table outlinessummarizes the estimated fair value of Intuit’sour available-for-sale debt securities held in short-term investments classified by the stated maturity date of the security:

		July 31,				January 31,
		2001				2002
(In thousands)
Due within one year		$	215,205			$	237,785
Due within two years			221,620				178,583
Due within three years			—				4,000
Due after three years			682,480				584,461
		$	1,119,305			$	1,004,829

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3. Marketable Securities and Other Investments

We held the following available-for-sale securities at July 31, 2001 and January 31, 2002. The cost basis reflects adjustments for other-than-temporary impairments in value as well as sales of securities:

						Gross Unrealized
		Cost												Estimated
(In thousands)		Basis				Gains				Losses				Fair Value
July 31, 2001
Checkfree Corporation common stock		$	35,621			$	37,215			$	—			$	72,836
S1 Corporation common stock			7,741				2,714				—				10,455
		$	43,362			$	39,929			$	—			$	83,291
January 31, 2002
Checkfree Corporation common stock		$	35,621			$	—			$	(628	)		$	34,993
S1 Corporation common stock			4,924				2,812				—				7,736
		$	40,545			$	2,812			$	(628	)		$	42,729

We also held investments in At Home Corporation (which did business as Excite@Home) and 724 Solutions as of July 31, 2001. We designated those investments as trading securities and fluctuations in the market value of these shares were reported in the consolidated statement of operations. We sold all of the shares of these securities during the first quarter of fiscal 2002.

Our remaining marketable securities, which are quoted on the Nasdaq Stock Market, are stocks of high technology companies whose market prices have been extremely volatile and have declined substantially during the past two years. These declines have resulted, and could continue to result, in a material reduction in the carrying value of these assets. This has a negative impact on our operating results. If these securities experience further declines in fair value that are considered other-than-temporary, we will reflect the additional loss in our consolidated statement of operations in the period when the subsequent impairment becomes apparent.

The fair values of our long-term investments have also declined substantially since our initial investments due to the volatility and economic downturn in the high technology industry.

During the six months ended January 31, 2002, we sold 280,000 shares of S1 Corporation and recognized realized gains of $1.9 million. This gain was offset by a realized loss of $1.9 million recorded in connection with the sale of our options to purchase additional shares of S1. In addition, we sold 37,906 shares of 724 Solutions and 1,533,504 shares of Excite@Home and recognized aggregate losses of $1.6 million during the six months ended January 31, 2002. For our long-term investments, we recorded losses of $3.3 million for other-than-temporary declines in value and $5.7 million to reflect the declines in valuation. This resulted in combined net losses on marketable securities and other investments of $10.6 million for the six months ended January 31, 2002.

During fiscal 2001, we adopted FAS 133, “Accounting for Derivative Instruments and Hedging Activities,” which establishes accounting and reporting standards for derivative instruments and hedging activities. It requires us to recognize all derivatives as either assets or liabilities on the balance sheet and record those instruments at fair value. In May 1999, we completed a $50 million investment (970,813 shares) in Security First Technologies, now known as S1 Corporation (“S1”). In connection with this agreement, we received options to purchase 4.8 million additional shares of S1 common stock, at a per-share purchase price of $51.50. These options contained a net-exercise feature. In August 2000, we recorded the cumulative effect of the change in accounting for derivatives for our 4.8 million S1 options held in long-term investments. This resulted in a one-time cumulative effect of $14.3 million, net of income taxes totaling $9.5 million. FAS 133 requires the derivatives to be carried at fair value, so subsequent fluctuations in the fair value of these options were included in our net loss. For the three and six months ended January 31, 2001 these fluctuations resulted in a loss of $2.4 million and $10.0 million net of income taxes, which decreased the basic and diluted net loss per share for the periods by $0.01 and $0.05 per share. During the first quarter of fiscal 2002, we sold these options and recorded a realized loss of $1.9 million.

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4.3.     Goodwill and Intangible Assets

Goodwill and purchasedChanges in the carrying value of goodwill by reportable segment during the first six months of fiscal 2003 were as follows. Our reportable segments are described in Note 7.

Purchased intangible assets consisted of the following at the dates indicated:

						Net balance at
		Life in				July 31,				January 31,
		Years				2001				2002
(In thousands)
Goodwill			3-5			$	326,986			$	269,270
Customer lists			3-5				53,423				45,302
Covenants not to compete			3-5				3,060				3,600
Purchased technology			1-5				24,078				23,033
Assembled workforce			2-5				3,598				2,605
Trade names and logos			1-15				4,189				4,790
						$	415,334			$	348,600

Balances presented above are net of total accumulated amortization of $598.1 million at July 31, 2001 and $490.4 million at January 31, 2002.

As discussedThe increase in Note 1, we regularly perform reviews to determine if there are events or circumstances that indicate the carrying values of our goodwill and intangible assets may be impaired. During the three months ended January 31, 2002, events and circumstances indicated impairment of goodwill and intangible assets that we received in connection with our acquisitions of the Internet-based advertising business that we acquired from Venture Finance Software Corp. in August 2000 and the Site Solutions business that we acquired from Boston Light Corp. in August 1999.

Indicators of impairment for our Internet-based advertising business included a steep decline in demand for online advertising reflecting the industry-wide decline in Internet advertising spending and management’s assessment that revenues and profitability would continue to declinepurchased technology in the future based on analyses and forecasts completed duringfirst six months of fiscal 2003 was due primarily to our acquisition of Blue Ocean Software, Inc. in the secondfirst quarter of fiscal 2002. The primary indicator of impairment for our Site Solutions business was management’s decision to transfer the customer base of Site Solutions and collaborate with a third party. This collaboration eliminated our use of technology purchased from Boston Light and was effective during the second quarter of fiscal 2002.

In each case, we measured the impairment loss based on the amount by which the carrying amount of the assets exceeded their fair value based on lower projected profits and decreases in cash flow. Our measurement of fair value was based on an analysis of the future discounted cash flows as discussed in2003. See Note 1. Based on our analyses, we recorded charges of $22.6 million ($17.4 million to acquisition-related charges and $5.2 million to amortization of purchased software) to reduce the carrying value of the assets associated with our Internet-based advertising business to zero, and a charge of $4.7 million ($4.6 million to acquisition-related charges and $0.1 million to amortization of purchased software) to reduce the carrying value of assets relating to our Site Solutions business to zero. These businesses were included in our Personal Finance and Small Business Divisions.5.

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We classifysummarize the following expenses ason the acquisition-related charges inline of our consolidated statementsstatement of operations:

		Six Months Ended
		January 31,				January 31,
		2001				2002
(In thousands)
Amortization of goodwill		$	68,624			$	64,289
Amortization of purchased intangibles			11,726				13,807
Amortization of acquisition-related deferred compensation			2,330				3,084
Impairment charges			—				22,006
Other			73				—
		$	82,753			$	103,186