UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



Rþ		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended ~~April 30,~~October 31, 2013



o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from ____________ to ____________ .

Commission File Number 0-21180

INTUIT INC.

(Exact name of registrant as specified in its charter)



Delaware (State of incorporation)		77-0034661 (IRS employer identification no.)
	2700 Coast Avenue, Mountain View, CA 94043 (Address of principal executive offices)

	(650) 944-6000 (Registrant’s telephone number, including area code)

Indicate by 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 Rþ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Rþ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No Rþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ~~296,925,259~~284,852,965 shares of Common Stock, $0.01 par value, were outstanding at ~~May 23,~~November 18, 2013.

INTUIT INC.

FORM 10-Q

INDEX



	Page Number
PART I FINANCIAL INFORMATION

ITEM 1: Financial Statements

Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~April 30,~~October 31, 2013 and 2012	3

Condensed Consolidated Statements of Comprehensive ~~Income~~Loss for the three ~~and nine~~ months ended ~~April 30,~~October 31, 2013 and 2012	4

Condensed Consolidated Balance Sheets at ~~April 30,~~October 31, 2013 and July 31, ~~2012~~2013	5

Condensed Consolidated Statements of Stockholders’ Equity for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 and 2012	6

Condensed Consolidated Statements of Cash Flows for the three ~~and nine~~ months ended ~~April 30,~~October 31, 2013 and 2012	7

Notes to Condensed Consolidated Financial Statements	8

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk	3431

ITEM 4: Controls and Procedures	3532

PART II OTHER INFORMATION

ITEM 1: Legal Proceedings	3633

ITEM 1A: Risk Factors	3633

ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds	4744

ITEM 6: Exhibits	4844

Signatures	4945


EX-10.01
EX-10.02
EX-31.01
EX-31.02
EX-32.01
EX-32.02
EX-101.INS XBRL Instance Document
EX-101.SCH XBRL Taxonomy Extension Schema
EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase
EX-101.LAB XBRL Taxonomy Extension Label Linkbase
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase

Intuit, the Intuit logo, QuickBooks, TurboTax, Lacerte, ProSeries, Quicken, and Mint, 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. Other parties’ marks are the property of their respective owners.

Table of Contents

PART I

ITEM 1

FINANCIAL STATEMENTS

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
(In millions, except per share amounts)	April 30, 2013			April 30, 2012			April 30, 2013			April 30, 2012			October 31, 2013			October 31, 2012
Net revenue:
Product	$	638		$	598		$	1,267		$	1,239		$	229		$	227
Service and other	1,540			1,328			2,526			2,261			393			335
Total net revenue	2,178			1,926			3,793			3,500			622			562
Costs and expenses:
Cost of revenue:
Cost of product revenue	30			32			102			116			29			32
Cost of service and other revenue	152			162			459			444			108			103
Amortization of acquired technology	5			3			16			9			6			4
Selling and marketing	406			352			1,029			898			258			227
Research and development	177			163			534			490			176			168
General and administrative	108			101			315			288			118			94
Amortization of other acquired intangible assets	7			2			21			33			4			7
Goodwill and intangible asset impairment charge	46			—			46			—
Total costs and expenses	931			815			2,522			2,278			699			635
Operating income from continuing operations	1,247			1,111			1,271			1,222
Operating loss from continuing operations													(77		)	(73		)
Interest expense	(8		)	(12		)	(23		)	(42		)	(8		)	(8		)
Interest and other income, net	3			9			6			23			5			2
Income before income taxes	1,242			1,108			1,254			1,203
Income tax provision	420			372			412			404
Net income from continuing operations	822			736			842			799
Net income (loss) from discontinued operations	—			(2		)	32			(11		)
Net income	$	822		$	734		$	874		$	788
Loss before income taxes													(80		)	(79		)
Income tax benefit													(23		)	(25		)
Net loss from continuing operations													(57		)	(54		)
Net income from discontinued operations													46			35
Net loss													$	(11	)	$	(19	)

Basic net income per share from continuing operations	$	2.77		$	2.50		$	2.84		$	2.69
Basic net income (loss) per share from discontinued operations	—			(0.01		)	0.11			(0.04		)
Basic net income per share	$	2.77		$	2.49		$	2.95		$	2.65
Basic net loss per share from continuing operations													$	(0.20	)	$	(0.18	)
Basic net income per share from discontinued operations													0.16			0.12
Basic net loss per share													$	(0.04	)	$	(0.06	)
Shares used in basic per share calculations	297			295			296			297			288			296

Diluted net income per share from continuing operations	$	2.71		$	2.43		$	2.78		$	2.61
Diluted net income (loss) per share from discontinued operations	—			(0.01		)	0.11			(0.03		)
Diluted net income per share	$	2.71		$	2.42		$	2.89		$	2.58
Diluted net loss per share from continuing operations													$	(0.20	)	$	(0.18	)
Diluted net income per share from discontinued operations													0.16			0.12
Diluted net loss per share													$	(0.04	)	$	(0.06	)
Shares used in diluted per share calculations	304			303			303			306			288			296

Dividends declared per common share	$	0.17		$	0.15		$	0.51		$	0.45		$	0.19		$	0.17

See accompanying notes.

Table of Contents

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~LOSS

(Unaudited)

Three Months Ended Nine Months Ended
(In millions) April 30,
2013 April 30,
2012 April 30,
2013 April 30,
2012

Net income $ 822
$ 734
$ 874
$ 788
Other comprehensive income, net of income taxes:
Unrealized losses on available-for-sale debt securities —
—
—
(1 )
Unrealized gains on available-for-sale equity securities —
19
3
19
Foreign currency translation gains (losses) —
1
1
(4 )
Total other comprehensive income, net —
20
4
14
Comprehensive income $ 822
$ 754
$ 878
$ 802



	Three Months Ended
(In millions)	October 31, 2013			October 31, 2012

Net loss	$	(11	)	$	(19	)
Other comprehensive income (loss), net of income taxes:
Unrealized gains on available-for-sale debt securities	2			—
Unrealized gains (losses) on available-for-sale equity securities	(1		)	3
Foreign currency translation gains (losses)	(2		)	1
Total other comprehensive income (loss), net	(1		)	4
Comprehensive loss	$	(12	)	$	(15	)

See accompanying notes.

Table of Contents

INTUIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions)	April 30, 2013			July 31, 2012			October 31, 2013			July 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	1,412		$	393		$	417		$	1,009
Investments	583			351			699			652
Accounts receivable, net	312			183			137			130
Income taxes receivable	1			53			205			62
Deferred income taxes	136			184			122			166
Prepaid expenses and other current assets	72			69			142			98
Current assets of discontinued operations							—			44
Current assets before funds held for customers	2,516			1,233			1,722			2,161
Funds held for customers	184			290			228			235
Total current assets	2,700			1,523			1,950			2,396
Long-term investments	88			75			45			83
Property and equipment, net	588			567			563			555
Goodwill	2,159			2,200			1,250			1,246
Acquired intangible assets, net	165			213			158			149
Other assets	110			106			102			102
Long-term assets of discontinued operations							—			955
Total assets	$	5,810		$	4,684		$	4,068		$	5,486
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	231		$	157		$	168		$	137
Accrued compensation and related liabilities	211			231			128			218
Deferred revenue	423			443			474			495
Income taxes payable	274			—
Other current liabilities	223			144			155			156
Current liabilities of discontinued operations							—			39
Current liabilities before customer fund deposits	1,362			975			925			1,045
Customer fund deposits	184			290			228			235
Total current liabilities	1,546			1,265			1,153			1,280
Long-term debt	499			499			499			499
Other long-term obligations	195			176			192			167
Long-term obligations of discontinued operations							—			9
Total liabilities	2,240			1,940			1,844			1,955
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—			—			—			—
Common stock and additional paid-in capital	3,245			3,018			2,995			3,201
Treasury stock, at cost	(5,038		)	(4,911		)	(5,986		)	(4,952		)
Accumulated other comprehensive income	29			25			19			20
Retained earnings	5,334			4,612			5,196			5,262
Total stockholders’ equity	3,570			2,744			2,224			3,531
Total liabilities and stockholders’ equity	$	5,810		$	4,684		$	4,068		$	5,486

See accompanying notes.

Table of Contents

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions, except shares in thousands)
Shares of
Common
Stock

Common
Stock and
Additional
Paid-In
Capital

Treasury
Stock

Accumulated
Other
Comprehensive
Income

Retained
Earnings

Total
Stockholders'
Equity
Balance at July 31, 2012 295,289
$ 3,018
$ (4,911 ) $ 25
$ 4,612
$ 2,744
Components of comprehensive income:
Net income —
—
—
—
874
874
Other comprehensive income, net of income taxes —
—
—
4
—
4
Comprehensive income 878
Issuance of treasury stock under employee stock plans 6,274
20
165
—
—
185
Tax benefit from share-based compensation plans —
65
—
—
—
65
Stock repurchases under stock repurchase programs (4,820 ) —
(292 ) —
—
(292 )
Cash dividends declared ($0.51 per share) —
—
—
—
(152 ) (152 )
Share-based compensation expense —
142
—
—
—
142
Balance at April 30, 2013 296,743
$ 3,245
$ (5,038 ) $ 29
$ 5,334
$ 3,570



(In millions, except shares in thousands)	Shares of Common Stock		Common Stock and Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income			Retained Earnings			Total Stockholders' Equity
Balance at July 31, 2013	299,503		$	3,201		$	(4,952	)	$	20		$	5,262		$	3,531
Comprehensive loss	—		—			—			(1		)	(11		)	(12		)
Issuance of treasury stock under employee stock plans	2,801		(6		)	86			—			—			80
Stock repurchases under stock repurchase programs	(17,607	)	(280		)	(1,120		)	—			—			(1,400		)
Cash dividends declared ($0.19 per share)	—		—			—			—			(55		)	(55		)
Tax benefit from share-based compensation plans	—		33			—			—			—			33
Share-based compensation expense	—		47			—			—			—			47
Balance at October 31, 2013	284,697		$	2,995		$	(5,986	)	$	19		$	5,196		$	2,224

(In millions, except shares in thousands)
Shares of
Common
Stock

Common
Stock and
Additional
Paid-In
Capital

Treasury
Stock

Accumulated
Other
Comprehensive
Income

Retained
Earnings

Total
Stockholders'
Equity
Balance at July 31, 2011 300,597
$ 2,886
$ (4,316 ) $ 15
$ 4,031
$ 2,616
Components of comprehensive income:
Net income —
—
—
—
788
788
Other comprehensive income, net of income taxes —
—
—
14
—
14
Comprehensive income 802
Issuance of treasury stock under employee stock plans 8,705
(63 ) 231
—
(8 ) 160
Tax benefit from share-based compensation plans —
64
—
—
—
64
Stock repurchases under stock repurchase programs (14,973 ) —
(793 ) —
—
(793 )
Cash dividends declared ($0.45 per share) —
—
—
—
(134 ) (134 )
Share-based compensation expense —
120
—
—
—
120
Balance at April 30, 2012 294,329
$ 3,007
$ (4,878 ) $ 29
$ 4,677
$ 2,835



(In millions, except shares in thousands)	Shares of Common Stock		Common Stock and Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income		Retained Earnings			Total Stockholders' Equity
Balance at July 31, 2012	295,289		$	3,018	$	(4,911	)	$	25	$	4,612		$	2,744
Comprehensive loss	—		—		—			4		(19		)	(15		)
Issuance of treasury stock under employee stock plans	2,688		3		70			—		—			73
Stock repurchases under stock repurchase programs	(1,694	)	—		(100		)	—		—			(100		)
Cash dividends declared ($0.17 per share)	—		—		—			—		(50		)	(50		)
Tax benefit from share-based compensation plans	—		44		—			—		—			44
Share-based compensation expense	—		49		—			—		—			49
Balance at October 31, 2012	296,283		$	3,114	$	(4,941	)	$	29	$	4,543		$	2,745

See accompanying notes.

Table of Contents

INTUIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
(In millions)	April 30, 2013			April 30, 2012			April 30, 2013			April 30, 2012			October 31, 2013			October 31, 2012
Cash flows from operating activities:
Net income	$	822		$	734		$	874		$	788
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss													$	(11	)	$	(19	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	42			42			124			130			39			40
Amortization of acquired intangible assets	15			10			45			55			11			14
Goodwill and intangible asset impairment charge	46			—			46			—
Share-based compensation expense	46			37			142			120			47			49
Pre-tax gain on sale of discontinued operations	—			—			(53		)	—			(40		)	(53		)
Deferred income taxes	4			18			52			1			77			53
Tax benefit from share-based compensation plans	9			19			65			64			33			44
Excess tax benefit from share-based compensation plans	(9		)	(19		)	(65		)	(62		)	(33		)	(44		)
Other	3			1			12			3			5			4
Total adjustments	156			108			368			311			139			107
Changes in operating assets and liabilities:
Accounts receivable	229			297			(129		)	(124		)	(11		)	(1		)
Prepaid expenses, income taxes receivable and other assets	194			102			49			84
Income taxes receivable													(143		)	(112		)
Prepaid expenses and other assets													(44		)	(16		)
Accounts payable	18			(4		)	76			80			32			12
Accrued compensation and related liabilities	28			42			(20		)	(5		)	(103		)	(96		)
Deferred revenue	(228		)	(218		)	(11		)	(36		)	(29		)	(16		)
Income taxes payable	273			256			274			257			(1		)	—
Other liabilities	(43		)	(39		)	79			73			(19		)	(4		)
Total changes in operating assets and liabilities	471			436			318			329			(318		)	(233		)
Net cash provided by operating activities	1,449			1,278			1,560			1,428
Net cash used in operating activities													(190		)	(145		)
Cash flows from investing activities:
Purchases of available-for-sale debt securities	(465		)	(149		)	(675		)	(492		)	(163		)	(87		)
Sales of available-for-sale debt securities	89			116			279			382			71			81
Maturities of available-for-sale debt securities	70			49			165			138			79			21
Net change in money market funds and other cash equivalents held to satisfy customer fund obligations	100			5			106			89			7			81
Net change in customer fund deposits	(100		)	(5		)	(106		)	(89		)	(7		)	(81		)
Purchases of property and equipment	(32		)	(33		)	(147		)	(125		)	(47		)	(70		)
Acquisitions of businesses, net of cash acquired													(9		)	(3		)
Proceeds from divestiture of businesses	—			—			60			—			1,025			60
Other	(7		)	—			(29		)	15			(7		)	(2		)
Net cash used in investing activities	(345		)	(17		)	(347		)	(82		)
Net cash provided by investing activities													949			—
Cash flows from financing activities:
Repayment of debt	—			(500		)	—			(500		)
Net proceeds from issuance of treasury stock under employee stock plans	44			54			185			160			72			73
Purchases of treasury stock	(92		)	(207		)	(292		)	(793		)	(1,400		)	(100		)
Cash dividends paid to stockholders	(51		)	(45		)	(152		)	(134		)	(55		)	(50		)
Excess tax benefit from share-based compensation plans	9			19			65			62			33			44
Net cash used in financing activities	(90		)	(679		)	(194		)	(1,205		)	(1,350		)	(33		)
Effect of exchange rates on cash and cash equivalents	(1		)	—			—			(4		)	(1		)	1
Net increase in cash and cash equivalents	1,013			582			1,019			137
Net decrease in cash and cash equivalents													(592		)	(177		)
Cash and cash equivalents at beginning of period	399			277			393			722			1,009			393
Cash and cash equivalents at end of period	$	1,412		$	859		$	1,412		$	859		$	417		$	216

See accompanying notes.

Table of Contents

INTUIT INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


1.	Description of Business and Summary of Significant Accounting Policies

Description of Business

Intuit Inc. provides business and financial management solutions for small businesses, consumers, and accounting ~~professionals and financial institutions.~~professionals. With flagship products and services that include QuickBooks, TurboTax and Quicken, we help customers solve important business and financial management problems, such as running a small business, paying bills, filing income tax returns, and managing personal finances. ProSeries and Lacerte are Intuit’s tax preparation offerings for professional accountants. ~~Our Financial Services business provides digital banking solutions to banks and credit unions.~~ Incorporated in 1984 and headquartered in Mountain View, California, we sell our products and services primarily in the United States.

Basis of Presentation

These condensed consolidated financial statements include the financial statements of Intuit and its wholly owned subsidiaries. We have eliminated all significant intercompany balances and transactions in consolidation. We have included all adjustments, consisting only of normal recurring items, which we considered necessary for a fair presentation of our financial results for the interim periods presented.

We ~~acquired Demandforce, Inc. in May 2012 and we~~ have ~~included the results of operations for that business~~reclassified certain amounts previously reported in our ~~consolidated results of~~financial statements to conform to the current presentation, including amounts related to discontinued operations ~~from the date of acquisition.~~ and reportable segments. See Note 4, “Discontinued Operations,” and Note 10, “Segment Information,” for more information.

As discussed in Note 4, we sold our Intuit Websites business in September 2012. In August 2013 we sold our Intuit Financial Services (IFS) business and our Intuit Health business. We have reclassified our ~~financial~~ statements of operations for all periods ~~prior to the sale~~presented to reflect ~~that business~~these three businesses as discontinued operations. We have also segregated the net assets of IFS from continuing operations on our balance sheet at July 31, 2013. The net assets of Intuit Websites and Intuit Health were not significant, so we have not segregated them from continuing operations on our balance sheet at July 31, 2013. Because the cash flows of our Intuit Websites, IFS, and Intuit Health discontinued operations were not material for any period presented, we have not segregated the cash flows of those businesses from continuing operations on our statements of cash flows. Unless noted otherwise, discussions in these notes pertain to our continuing operations.

These unaudited condensed consolidated financial statements and accompanying notes should be read together with the audited consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012~~2013. Results for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 do not necessarily indicate the results we expect for the fiscal year ending July 31, ~~2013~~2014 or any other future period.

Seasonality

Our QuickBooks, Consumer Tax, and ~~Accounting Professionals businesses~~Professional Tax offerings are highly seasonal. Revenue from our QuickBooks software products tends to be highest during our second and third fiscal quarters. Sales of income tax preparation products and services are heavily concentrated in the period from November through April. ~~Seasonal~~These seasonal patterns mean that our total net revenue is usually highest during our second quarter ending January 31 and third quarter ending April 30. We typically report losses in our first quarter ending October 31 and fourth quarter ending July 31. During these quarters, revenue from our tax businesses is minimal while core operating expenses such as research and development continue at relatively consistent levels.

Significant Accounting Policies

We describe our significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012~~2013. There have been no changes to our significant accounting policies during the first ~~nine~~three months of fiscal ~~2013~~2014.

Computation of Net Income (Loss) Per Share

We compute basic net income or loss per share using the weighted average number of common shares outstanding during the period. We compute diluted net income per share using the weighted average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares include shares issuable upon the exercise of stock options and upon the vesting of restricted stock units (RSUs) under the treasury stock method.

We include stock options with combined exercise prices, unrecognized compensation expense and tax benefits that are less than the average market price for our common stock, and RSUs with unrecognized compensation expense and tax benefits that are less than the average market price for our common stock, in the calculation of diluted net income per share. We exclude stock

Table of Contents

options with combined exercise prices, unrecognized compensation expense and tax benefits that are greater than the average market price for our common stock, and RSUs with unrecognized compensation expense and tax benefits that are greater than the average market price for our common stock, from the calculation of diluted net income per share because their effect is anti-dilutive. Under the treasury stock method, the amount that must be paid to exercise stock options, the amount of compensation expense for future service that we have not yet recognized for stock options and RSUs, and the amount of tax benefits that will be recorded in additional paid-in capital when the awards become deductible are assumed to be used to repurchase shares.

~~Table of Contents~~

In loss periods, basic net loss per share and diluted net loss per share are the same since the effect of potential common shares is anti-dilutive and therefore excluded.

The following table presents the composition of shares used in the computation of basic and diluted net income per share for the periods indicated.


	Three Months Ended					Nine Months Ended					Three Months Ended
(In millions, except per share amounts)	April 30, 2013		April 30, 2012			April 30, 2013		April 30, 2012			October 31, 2013			October 31, 2012
Numerator:
Net income from continuing operations	$	822	$	736		$	842	$	799
Net income (loss) from discontinued operations	—		(2		)	32		(11		)
Net income	$	822	$	734		$	874	$	788
Net loss from continuing operations											$	(57	)	$	(54	)
Net income from discontinued operations											46			35
Net loss											$	(11	)	$	(19	)

Denominator:
Shares used in basic per share amounts:
Weighted average common shares outstanding	297		295			296		297			288			296

Shares used in diluted per share amounts:
Weighted average common shares outstanding	297		295			296		297			288			296
Dilutive common equivalent shares from stock options
and restricted stock awards	7		8			7		9			—			—
Dilutive weighted average common shares outstanding	304		303			303		306			288			296

Basic and diluted net income per share:
Basic net income per share from continuing operations	$	2.77	$	2.50		$	2.84	$	2.69
Basic net income (loss) per share from discontinued operations	—		(0.01		)	0.11		(0.04		)
Basic net income per share	$	2.77	$	2.49		$	2.95	$	2.65
Basic and diluted net loss per share:
Basic net loss per share from continuing operations											$	(0.20	)	$	(0.18	)
Basic net income per share from discontinued operations											0.16			0.12
Basic net loss per share											$	(0.04	)	$	(0.06	)

Diluted net income per share from continuing operations	$	2.71	$	2.43		$	2.78	$	2.61
Diluted net income (loss) per share from discontinued operations	—		(0.01		)	0.11		(0.03		)
Diluted net income per share	$	2.71	$	2.42		$	2.89	$	2.58
Diluted net loss per share from continuing operations											$	(0.20	)	$	(0.18	)
Diluted net income per share from discontinued operations											0.16			0.12
Diluted net loss per share											$	(0.04	)	$	(0.06	)

Shares excluded from computation of diluted net income per share:
Shares excluded from computation of diluted net loss per share:
Weighted average stock options and restricted stock units that would have been included in the computation of dilutive common equivalent shares outstanding if net income had been reported in the period											17			22

Weighted average stock options and restricted stock units excluded from computation due to anti-dilutive effect	3		—			3		3			3			3

Concentration of Credit Risk and Significant Customers

No customer accounted for 10% or more of total net revenue in the ~~three or~~ ~~nine~~three months ended ~~April 30,~~October 31, 2013 or ~~April 30,~~October 31, 2012. No customer accounted for 10% or more of gross accounts receivable at ~~April 30,~~October 31, 2013 or July 31, ~~2012~~2013.

~~Recent~~

Table of Contents

Accounting Pronouncements Recently Adopted

ASU 2013-02, "“Comprehensive Income (Topic 220)"”

In February 2013 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This update amends Accounting Standards Codification (ASC) Topic 220, “Comprehensive Income,” to require reporting entities to provide information about the amounts reclassified from accumulated other comprehensive income by component. In addition, reporting entities ~~will be~~are required to present, either on the face of the statement of operations or in the footnotes to the financial statements, significant amounts reclassified from accumulated other comprehensive income by statement of operations line item. ASU 2013-02 ~~is effective prospectively for reporting periods beginning after December 15, 2012, which means that it will be~~became effective for our fiscal year ~~beginning~~that began on August 1, 2013. ~~We do not believe that~~Our adoption of ASU 2013-02 ~~will~~did not have a significant impact on our consolidated financial statements.

~~Table of Contents~~


2.	Fair Value Measurements

The authoritative guidance defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, we consider the principal or most advantageous market for an asset or liability and assumptions that market participants would use when pricing the asset or liability. In addition, we consider and use all valuation methods that are appropriate in estimating the fair value of an asset or liability.

The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data for substantially the full term of the assets or liabilities.

Level 3 uses one or more significant inputs that are supported by little or no market activity and that are significant to the determination of fair value. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Table of Contents

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and financial liabilities that we measured at fair value on a recurring basis at the dates indicated, classified in accordance with the fair value hierarchy described above.


	April 30, 2013								July 31, 2012								October 31, 2013								July 31, 2013
(In millions)	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Assets:
Cash equivalents, primarily money market funds	$	1,198	$	—	$	—	$	1,198	$	333	$	—	$	—	$	333	$	303	$	—	$	—	$	303	$	917	$	—	$	—	$	917
Available-for-sale debt securities:
Municipal bonds	—		428		—		428		—		260		—		260		—		500		—		500		—		489		—		489
Municipal auction rate securities	—		—		33		33		—		—		41		41
Corporate notes	—		242		—		242		—		142		—		142		—		269		—		269		—		269		—		269
U.S. agency securities	—		88		—		88		—		124		—		124		—		73		—		73		—		69		—		69
Municipal auction rate securities																	—		—		28		28		—		—		33		33
Available-for-sale corporate equity securities	38		—		—		38		33		—		—		33		32		—		—		32		33		—		—		33
Total available-for-sale securities	38		758		33		829		33		526		41		600		32		842		28		902		33		827		33		893
Total assets measured at fair value on a recurring basis	$	1,236	$	758	$	33	$	2,027	$	366	$	526	$	41	$	933	$	335	$	842	$	28	$	1,205	$	950	$	827	$	33	$	1,810
Liabilities:
Senior notes (1)	$	—	$	575	$	—	$	575	$	—	$	582	$	—	$	582	$	—	$	561	$	—	$	561	$	—	$	560	$	—	$	560


(1)	Carrying value on our balance sheet at ~~April 30,~~October 31, 2013 was $499 million and at July 31, ~~2012~~2013 was $499 million. See Note 6.

~~Table of Contents~~

The following table summarizes our cash equivalents and available-for-sale debt and equity securities by balance sheet classification and level in the fair value hierarchy at the dates indicated.


	April 30, 2013								July 31, 2012									October 31, 2013								July 31, 2013
(In millions)	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3			Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
In cash and cash equivalents	$	1,189	$	—	$	—	$	1,189	$	219	$	—	$	—		$	219	$	250	$	—	$	—	$	250	$	857	$	—	$	—	$	857
In funds held for customers	9		—		—		9		114		—		—			114		53		—		—		53		60		—		—		60
Total cash equivalents	$	1,198	$	—	$	—	$	1,198	$	333	$	—	$	—	��	$	333	$	303	$	—	$	—	$	303	$	917	$	—	$	—	$	917
Available-for-sale securities:
In investments	$	—	$	583	$	—	$	583	$	—	$	351	$	—		$	351	$	32	$	667	$	—	$	699	$	—	$	652	$	—	$	652
In funds held for customers	—		175		—		175		—		175		—			175		—		175		—		175		—		175		—		175
In long-term investments	38		—		33		71		33		—		41			74		—		—		28		28		33		—		33		66
Total available-for-sale securities	$	38	$	758	$	33	$	829	$	33	$	526	$	41		$	600	$	32	$	842	$	28	$	902	$	33	$	827	$	33	$	893

We value our Level 1 assets, consisting primarily of money market funds, using quoted prices in active markets for identical instruments. Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of municipal bonds, corporate notes, and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying significant adjustments. Our fair value processes include controls that are designed to ensure that we record appropriate fair values for our Level 2 investments. These controls include comparison to pricing provided by a

Table of Contents

secondary pricing service or investment manager, validation of pricing sources and models, review of key model inputs, analysis of period-over-period price fluctuations, and independent recalculation of prices where appropriate.

Financial liabilities whose fair values we measure using Level 2 inputs consist of debt. See Note 6, “Long-Term Obligations,” for more information. We measure the fair value of our senior notes based on their trading prices and the interest rates we could obtain for other borrowings with similar terms.

Financial assets whose fair values we measure using significant unobservable (Level 3) inputs consist of municipal auction rate securities that are no longer liquid. ~~There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the~~ ~~nine~~ ~~months ended~~ ~~April 30, 2013~~.

~~The following table presents a reconciliation of activity for our Level 3 assets for the~~ ~~nine~~ ~~months ended~~ ~~April 30, 2013~~.

Nine Months
Ended
(In millions) April 30,
2013
Beginning balance $ 41
Redemptions at par (8 )
Ending balance $ 33

We ~~estimated~~estimate the fair values of these ~~municipal~~ auction rate securities at ~~April 30, 2013~~ ~~and~~ ~~July 31, 2012~~ using a discounted cash flow ~~model whose key inputs included~~model. During the ~~projected future interest rates; the likely timing~~first quarter of principal repayments; publicly available pricing data for recently issued student loan backed securities that are not subject to auctions; and the impact of the reduced liquidity for auction rate securities. Any significant changes in the inputs to the model may have a significant impact on the estimated fair valuesfiscal 2014 we redeemed $5 million of these ~~securities.~~

~~Using our discounted cash flow model we determined that the fair values~~securities at par, leaving a remaining balance of ~~the municipal auction rate securities we held~~$28 million at ~~April 30,~~October 31, 2013 ~~were approximately equal~~. We continued to ~~their par values. As a result, we recorded~~ no ~~decrease in the fair values of those securities for the~~ ~~nine~~ ~~months then ended. These securities are included in~~classify them as long-term investments ~~on our balance sheets at~~

~~Table of Contents~~

~~April 30, 2013~~ ~~and~~ ~~July 31, 2012~~ based on the maturities of the underlying securities at ~~those dates.~~that date. We do not intend to sell our municipal auction rate securities and it is not more likely than not that we will be required to sell them before recovery at par, which may be at maturity. Based on our expected operating cash flows and our other sources of cash, we do not believe that the reduction in liquidity of our municipal auction rate securities will have a material impact on our overall ability to meet our liquidity needs.

~~Assets~~There were no transfers between Level 1, Level 2, and ~~Liabilities Measured at Fair Value on a Non-Recurring Basis~~

~~Assets measured at fair value on a non-recurring basis include reporting units measured at fair value in a goodwill impairment test. Estimates of fair value for reporting units fall under~~ Level 3 of the fair value ~~hierarchy.~~

In March 2013 the largest customer for our Intuit Health business acquired a company that offers similar solutions and competes with us directly in that market space. As a result, we performed an interim impairment test of goodwill and acquired intangible assetshierarchy during the third quarter of fiscal 2013. We concluded that the carrying amounts of goodwill and certain definite-lived acquired intangible assets associated with our Intuit Health business were impaired and recorded an impairment charge of ~~$46 million~~three that reduced the carrying value of those assets to zero. For goodwill, the amount of the impairment charge was determined by comparing the carrying value of goodwill assigned to the reporting unit with the implied fair value of the goodwill. We used a weighted combination of a discounted cash flow model (income approach) and comparisons to publicly traded companies engaged in similar businesses (market approach) to estimate the fair value of our Intuit Health reporting unit. Key assumptions that we used in the income approach included the amount and timing of estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for the business, and a rate of return that considered the relative risk of achieving the cash flows and the time value of money. For the market approach, we estimated the fair value of the reporting unit based on market multiples of revenue, operating income, and earnings for comparable publicly traded companies engaged in similar businesses. For those acquired intangible assets where the unamortized balances exceeded the undiscounted future net cash flows, we measured the amount of the impairment by calculating the amount by which the carrying values exceeded the estimated fair values, which were based on projected discounted future net cash flows. We believe that the assumptions used to determine the impairment amounts for the goodwill and acquired intangible assets for this business unit are reasonable. Intuit Health is part of our Other Businesses reportable segment.months ended October 31, 2013.


3.	Cash and Cash Equivalents, Investments and Funds Held for Customers

We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash equivalents consist primarily of AAA-rated money market funds in all periods presented. Investments at October 31, 2013 consist of available-for-sale investment-grade debt securities that we carry at fair value and an available-for-sale corporate equity investment that we carry at fair value. Funds held for customers consist of cash and cash equivalents and investment grade available-for-sale debt ~~securities.~~securities in all periods presented. Long-term investments at October 31, 2013 consist ~~primarily~~ of ~~illiquid~~ municipal auction rate ~~securities and an available-for-sale corporate equity investment that we intend to hold for more than twelve months, both of which we carry at fair value.~~securities. See Note 2, ““Fair Value Measurements,” for more information. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments in debt securities by limiting our holdings with any individual issuer.

The following table summarizes our cash and cash equivalents, investments, and funds held for customers by balance sheet classification at the dates indicated.


	April 30, 2013				July 31, 2012				October 31, 2013				July 31, 2013
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Classification on balance sheets:
Cash and cash equivalents	$	1,412	$	1,412	$	393	$	393	$	417	$	417	$	1,009	$	1,009
Investments	583		583		350		351		670		699		653		652
Funds held for customers	184		184		289		290		228		228		235		235
Long-term investments	55		88		47		75		45		45		54		83
Total cash and cash equivalents, investments, and funds held for customers	$	2,234	$	2,267	$	1,079	$	1,109	$	1,360	$	1,389	$	1,951	$	1,979

Table of Contents

The following table summarizes our cash and cash equivalents, investments, and funds held for customers by investment category at the dates indicated.

See Note 2, “Fair Value Measurements,” for more information on our municipal auction rate securities.


	April 30, 2013				July 31, 2012				October 31, 2013				July 31, 2013
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Type of issue:
Total cash and cash equivalents	$	1,421	$	1,421	$	508	$	508	$	470	$	470	$	1,069	$	1,069
Available-for-sale debt securities:
Municipal bonds	429		428		259		260		499		500		489		489
Municipal auction rate securities	33		33		41		41
Corporate notes	241		242		141		142		268		269		269		269
U.S. agency securities	88		88		124		124		73		73		69		69
Municipal auction rate securities									28		28		33		33
Total available-for-sale debt securities	791		791		565		567		868		870		860		860
Available-for-sale corporate equity securities	5		38		5		33		5		32		5		33
Other long-term investments	17		17		1		1		17		17		17		17
Total cash and cash equivalents, investments, and funds held for customers	$	2,234	$	2,267	$	1,079	$	1,109	$	1,360	$	1,389	$	1,951	$	1,979

We use the specific identification method to compute gains and losses on investments. We include realized gains and losses on our available-for-sale debt securities in interest and other income, net in our statements of operations. Gross realized gains and losses on our available-for-sale debt securities for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 and ~~April 30,~~October 31, 2012 were not significant.

We accumulate unrealized gains and losses on our available-for-sale debt and equity securities, net of income taxes, in accumulated other comprehensive income in the stockholders’ equity section of our balance sheets. Gross unrealized gains and losses on our available-for-sale debt securities at ~~April 30,~~October 31, 2013 and July 31, ~~2012~~2013 were not significant. The cumulative gross unrealized gain on our available-for-sale corporate equity security was approximately $3327 million at ~~April 30,~~October 31, 2013.

We periodically review our investment portfolios to determine if any investment is other-than-temporarily impaired due to changes in credit risk or other potential valuation concerns. We believe that the investments we held at ~~April 30,~~October 31, 2013 were not other-than-temporarily impaired. Unrealized losses at ~~April 30,~~October 31, 2013 were not significant and were due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. We do not intend to sell these investments and it is not more likely than not that we will be required to sell them before recovery at par, which may be at maturity.

The following table summarizes our available-for-sale debt securities classified by the stated maturity date of the security at the dates indicated.


	April 30, 2013				July 31, 2012				October 31, 2013				July 31, 2013
(In millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	207	$	207	$	218	$	218	$	239	$	239	$	234	$	235
Due within two years	200		200		134		135		297		298		245		245
Due within three years	220		220		131		132		183		184		211		210
Due after three years	164		164		82		82		149		149		170		170
Total available-for-sale debt securities	$	791	$	791	$	565	$	567	$	868	$	870	$	860	$	860

Available-for-sale debt securities due after three years in the table above include our municipal auction rate securities. See Note 2, “~~Fair~~ “Fair Value Measurements,” for more information. All of the remaining securities in that category had effective maturities of three years or less due to interest reset dates or mandatory call dates.

Table of Contents


4.	Discontinued Operations

Intuit Financial Services

On August 1, 2013 we completed the sale of our Intuit Financial Services (IFS) business for approximately $1.025 billion in cash. We recorded a gain on the disposal of IFS of approximately $36 million, net of income taxes, in the first quarter of fiscal 2014. The decision to sell the IFS business was a result of management's desire to focus resources on our offerings for small businesses, consumers, and accounting professionals. The IFS business comprised substantially all of our former Financial Services reporting segment.

We classified our IFS business as discontinued operations and have therefore segregated its operating results from continuing operations in our statements of operations for all periods presented. Revenue and income before income taxes for IFS during the three months ended October 31, 2012 were $80 million and $11 million. We have also segregated the net assets of IFS from continuing operations on our balance sheet at July 31, 2013. Because operating cash flows from the IFS business were not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.

Intuit Health

In July 2013 management having the authority to do so formally approved a plan to sell our Intuit Health business and on August 19, 2013 we completed the sale for cash consideration that was not significant. We recorded a $4 million pre-tax loss on the disposal of Intuit Health that was more than offset by a related income tax benefit of approximately $14 million, resulting in a net gain on disposal of approximately $10 million in the first quarter of fiscal 2014. The decision to sell the Intuit Health business was a result of management's desire to focus resources on its offerings for small businesses, consumers, and accounting professionals. Intuit Health was part of our former Other Businesses reporting segment.

We classified our Intuit Health business as discontinued operations and have therefore segregated its operating results in our statements of operations for all periods presented. We have not segregated the net assets of Intuit Health from continuing operations on our balance sheets at July 31, 2013 because net assets held for sale consisted primarily of operating assets and liabilities that were not material. Because operating cash flows from the Intuit Health business were also not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.

Intuit Websites

On September 17, 2012 we sold our Intuit Websites business, which was a component of our former 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 have 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~~ ~~nine~~ ~~months ended~~ ~~April 30, 2013. Net revenue from Intuit Websites was~~ ~~$19~~ ~~million for the three months ended~~ ~~April 30, 2012~~ ~~and~~ ~~$57~~ ~~million for the~~ ~~nine~~ ~~months ended~~ ~~April 30, 2012~~.

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.


5.	Current Liabilities

Unsecured Revolving Credit Facility

On February 17, 2012 we entered into an agreement with certain institutional lenders for a $500 million unsecured revolving credit facility that will expire on February 17, 2017. Advances under the credit facility will accrue interest at rates that are equal to, at our election, either JP Morgan's alternate base rate plus a margin that ranges from 0.0% to 0.5% or ~~LIBOR~~London Interbank Offered Rate (LIBOR) plus a margin that ranges from 0.9% to 1.5%. Actual margins under either election will be based on our senior debt credit ratings. The agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 as of any date and a ratio of annual EBITDA to interest payable of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. We remained in compliance with these covenants at all times during the quarter ended ~~April 30,~~October 31, 2013. We may use amounts borrowed under this credit facility for general corporate purposes, including future acquisitions. To date we have not borrowed under this credit facility.

Table of Contents

Other Current Liabilities

Other current liabilities were as follows at the dates indicated:


(In millions)	April 30, 2013		July 31, 2012		October 31, 2013		July 31, 2013
Reserve for product returns	$	53	$	19	$	20	$	20
Reserve for rebates	56		17		19		15
Current portion of license fee payable	—		10		10		10
Current portion of deferred rent	8		8		8		8
Interest payable	3		10		3		10
Executive deferred compensation plan liabilities	64		56		72		64
Other	39		24		23		29
Total other current liabilities	$	223	$	144	$	155	$	156

The balances of several of our other current liabilities, particularly our reserves for product returns and rebates, are affected by the seasonality of our business. See Note 1, “Description of Business and Summary of Significant Accounting Policies – Seasonality,” for more information.


6.	Long-Term Obligations

Long-Term Debt

On March 12, 2007 we issued $500 million of ~~5.40%~~ ~~senior unsecured notes due on March 15, 2012 (the 2012 Notes) and~~ ~~$500~~ ~~million of~~ 5.75% senior unsecured notes due on March 15, 2017 (the ~~2017~~ Notes) ~~(together, the Notes), for a total principal amount of~~ $1 ~~billion. In March 2012 we repaid the 2012 Notes when they became due using cash from operations.~~. We carried the ~~2017~~ Notes at face value less the unamortized discount in long-term debt on our balance sheets at ~~April 30,~~October 31, 2013

~~Table of Contents~~

and July 31, ~~2012~~2013. The ~~2017~~ Notes are redeemable by Intuit at any time, subject to a make-whole premium, and include covenants that limit our ability to grant liens on our facilities and to enter into sale and leaseback transactions, subject to significant allowances. We paid $29 ~~million in cash for interest on the 2017 Notes during the~~ ~~nine~~ ~~months ended~~ ~~April 30, 2013~~ ~~and~~ ~~$56~~14 million in cash for interest on the Notes during the ~~nine~~three months ended ~~April 30,~~October 31, 2013 and $14 million in cash for interest on the Notes during the three months ended October 31, 2012.

Other Long-Term Obligations

Other long-term obligations were as follows at the dates indicated:


(In millions)	April 30, 2013			July 31, 2012			October 31, 2013			July 31, 2013
Total deferred rent	$	55		$	53		$	55		$	55
Total license fee payable	47			54			49			48
Long-term income tax liabilities							38			38
Long-term deferred revenue	43			42			18			32
Long-term income tax liabilities	36			41
Long-term deferred income tax liabilities	16			—			43			6
Other	7			5			7			7
Total long-term obligations	204			195			210			186
Less current portion (included in other current liabilities)	(9		)	(19		)	(18		)	(19		)
Long-term obligations due after one year	$	195		$	176		$	192		$	167


7.	Income Taxes

Effective Tax Rate

In January 2013 the American Taxpayer Relief Act of 2012 was signed into law. The Act includes a reinstatement of the federal research and experimentation credit through December 31, 2013 that was retroactive to January 1, 2012. We recorded a discrete tax benefit for the retroactive effect during the nine months ended April 30, 2013.

Our effective tax rate for the three months ended ~~April 30,~~October 31, 2013 was approximately ~~34%~~ ~~and for~~29%. Excluding the ~~nine months~~ ~~ended~~ ~~April 30, 2013~~ ~~was approximately~~ ~~33%~~ ~~and these rates did not differ significantly from the federal statutory rate~~impact of ~~35%. The benefits we received from the domestic production activities deduction and the federal research and experimentation credit were substantially offset by state income taxes in both periods.~~

~~Our~~discrete tax items primarily related to share-based compensation, our effective tax rate for the three ~~and nine~~ months ended ~~April 30, 2012~~October 31, 2013 was approximately 34% and did not differ significantly from the federal statutory rate of 35%. The benefits we received from the

Table of Contents

domestic production activities deduction and the federal research and experimentation credit were substantially offset by state income ~~taxes in both periods.~~taxes.

Our effective tax rate for the three months ended October 31, 2012 was approximately 33%. Excluding the impact of discrete tax items primarily related to share-based compensation, our effective tax rate for the three months ended October 31, 2012 was approximately 35% and did not differ significantly from the federal statutory rate of 35%. The benefit we received from the domestic production activities deduction was substantially offset by state income taxes.

Unrecognized Tax Benefits and Other Considerations

The total amount of our unrecognized tax benefits at July 31, ~~2012~~2013 was $3839 million. Net of related deferred tax assets, unrecognized tax benefits were $2827 million at that date. If we were to recognize these net benefits, our income tax expense would reflect a favorable net impact of $2827 million. There were no material changes to these amounts during the ~~nine~~three months ended ~~April 30,~~October 31, 2013. We do not believe that it is reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months.


8.	Stockholders’ Equity

Stock Repurchase Programs

Intuit’s Board of Directors has authorized a series of common stock repurchase programs. Shares of common stock repurchased under these programs become treasury shares. We repurchased ~~4.8~~17.6 million shares for $~~292~~1.4 billion under these programs during the three months ended October 31, 2013 and 1.7 million shares for $100 million under these programs during the ~~nine~~three months ended ~~April 30, 2013~~ ~~and~~ ~~15.0~~ ~~million shares for~~ ~~$793~~ ~~million under these programs during the~~ ~~nine~~ ~~months ended~~ ~~April 30,~~October 31, 2012. At ~~April 30,~~October 31, 2013, we had authorization from our Board of Directors to expend up to an additional $~~1.4~~2.0 billion for stock repurchases through August ~~15, 2014~~19, 2017. Future stock repurchases under the current program are at the

~~Table of Contents~~

discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.

To facilitate our stock repurchase program, from time to time we repurchase shares in the open market. On August 23, 2013 we entered into an accelerated share repurchase (ASR) agreement with a large financial institution to repurchase $1.4 billion of Intuit's common stock on an accelerated basis. On August 23, 2013 we paid $1.4 billion to the financial institution and received an initial delivery of 17.6 million shares of Intuit common stock. The total number of shares to be delivered will be calculated using the daily volume weighted average price of Intuit common shares traded during the pricing period, less an agreed discount. The pricing period is scheduled to end in December 2013, but it may conclude sooner at the election of the financial institution. If the total number of shares to be delivered exceeds the number of shares delivered on August 23, 2013, we will receive the remaining balance of shares from the financial institution. Based on the current trading prices of our common stock, we expect to receive additional shares. If the total number of shares to be delivered is less than the number of shares delivered on August 23, 2013, we have the contractual right to deliver to the financial institution either shares of Intuit common stock or cash equal to the value of those shares. We have treated the ASR as a forward contract indexed to our own common stock. The forward contract meets all of the applicable criteria for equity classification, so we have not accounted for it as a derivative instrument. We have reflected the shares delivered to us by the financial institution in the first quarter of fiscal 2014 as treasury shares as of the date they were physically delivered in computing weighted average shares outstanding for both basic and diluted net loss per share. The repurchased shares did not have a material impact on our net loss per share calculations in the first quarter of fiscal 2014.

Repurchased shares of our common stock are held as treasury shares until they are reissued or retired. When we reissue treasury stock, if the proceeds from the sale are more than the average price we paid to acquire the shares we record an increase in additional paid-in capital. Conversely, if the proceeds from the sale are less than the average price we paid to acquire the shares, we record a decrease in additional paid-in capital to the extent of increases previously recorded for similar transactions and a decrease in retained earnings for any remaining amount.

Dividends on Common Stock

During the ~~nine~~three months ended ~~April 30,~~October 31, 2013 we declared and paid a quarterly cash ~~dividends that totaled~~dividend of $~~0.51~~0.19 per share of outstanding common stock or approximately $~~152~~55 million. In ~~May~~November 2013 our Board of Directors declared a quarterly cash dividend of $~~0.17~~0.19 per share of outstanding common stock payable on ~~July 18, 2013~~January 21, 2014 to stockholders of record at the close of business on ~~July~~January 10, ~~2013~~2014. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.

Table of Contents

Share-Based Compensation Expense

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


	Three Months Ended						Nine Months Ended						Three Months Ended
(In millions, except per share amounts)	April 30, 2013			April 30, 2012			April 30, 2013			April 30, 2012			October 31, 2013			October 31, 2012
Cost of revenue	$	2		$	1		$	6		$	4		$	2		$	2
Selling and marketing	16			14			51			43			15			16
Research and development	14			11			42			37			14			13
General and administrative	14			11			43			36			16			15
Total share-based compensation expense	46			37			142			120			47			46
Income tax benefit	(15		)	(12		)	(47		)	(39		)	(15		)	(15		)
Decrease in net income	$	31		$	25		$	95		$	81
Decrease in net income per share:
Increase in net loss from continuing operations													$	32		$	31
Increase in net loss per share:
Basic	$	0.10		$	0.08		$	0.32		$	0.27		$	0.11		$	0.10
Diluted	$	0.10		$	0.08		$	0.31		$	0.26		$	0.11		$	0.10

The table above excludes share-based compensation expense for our discontinued operations, which totaled approximately $3 million for the three months ended October 31, 2012. Because we have not reclassified our statements of cash flows to segregate discontinued operations, this amount is included in share-based compensation expense on our statement of cash flows for that period.

Share-Based Awards Available for Grant

A summary of share-based awards available for grant under our 2005 Equity Incentive Plan for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 was as follows:



(Shares in thousands)	Shares Available for Grant
Balance at July 31, ~~2012~~2013	~~21,760~~12,120
Options granted	(~~196~~25	)
Restricted stock units granted (1)	(~~1,343~~740	)
Share-based awards canceled/forfeited/expired (1)(2)	~~1,885~~2,559
Balance at ~~April 30,~~October 31, 2013	~~22,106~~13,914

(1)

Under the terms of our Amended and Restated 2005 Equity Incentive Plan, as amended through July 24, 2012 (2005 Equity Incentive Plan), RSUs granted from the pool of shares available for grant on or after November 1, 2010 reduce the pool by 2.3 shares for each share granted. RSUs forfeited and returned to the pool of shares available for grant increase the pool by 2.3 shares for each share forfeited.


(2)	Stock options and restricted stock units canceled, expired or forfeited under our 2005 Equity Incentive Plan, are returned to the pool of shares available for grant. Stock options and restricted stock units canceled, expired or forfeited under older expired plans are not returned to the pool of shares available for grant.

1617

Table of Contents

Stock Option Activity and Related Share-Based Compensation Expense

A summary of stock option activity for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 was as follows:


	Options Outstanding				Options Outstanding
(Shares in thousands)	Number of Shares		Weighted Average Exercise Price Per Share		Number of Shares		Weighted Average Exercise Price Per Share
Balance at July 31, 2012	18,061		$	37.49
Balance at July 31, 2013					14,206		$	43.77
Options granted	196		61.54		25		64.45
Options exercised	(4,982	)	32.66		(1,864	)	37.11
Options canceled or expired	(502	)	44.04		(335	)	53.14
Balance at April 30, 2013	12,773		$	39.49
Balance at October 31, 2013					12,032		$	44.59

Exercisable at April 30, 2013	8,108		$	33.22
Exercisable at October 31, 2013					7,295		$	36.34

At ~~April 30,~~October 31, 2013, there was approximately $4548 million of unrecognized compensation cost related to non-vested stock options that we expect to recognize as expense in the future. We will adjust unrecognized compensation cost for future changes in estimated forfeitures. We expect to recognize that cost over a weighted average vesting period of ~~1.9~~2.1 years.

Restricted Stock Unit Activity and Related Share-Based Compensation Expense

A summary of restricted stock unit activity for the ~~nine~~three months ended ~~April 30,~~October 31, 2013 was as follows:


	Restricted Stock Units				Restricted Stock Units
(Shares in thousands)	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Nonvested at July 31, 2012	9,607		$	46.79
Nonvested at July 31, 2013					9,184		$	55.23
Granted	584		61.32		322		64.86
Restricted stock units assumed or granted in connection with acquisitions					656		69.48
Vested	(1,035	)	36.67		(679	)	47.44
Forfeited	(670	)	47.83		(1,013	)	64.50
Nonvested at April 30, 2013	8,486		$	48.94
Nonvested at October 31, 2013					8,470		$	56.21

At ~~April 30,~~October 31, 2013, there was approximately $~~192~~308 million of unrecognized compensation cost related to non-vested RSUs ~~and restricted stock~~ that we expect to recognize as expense in the future. We will adjust unrecognized compensation cost for future changes in estimated forfeitures. We expect to recognize that cost over a weighted average vesting period of ~~2.0~~2.4 years.


9.	Litigation

On January 13, 2012, two putative class actions were filed against Intuit Inc. in connection with our TurboTax income tax preparation software: Smith v. Intuit Inc. (U.S. District Court, Northern District of California) and Quildon v. Intuit Inc. (California Superior Court, Santa Clara County). The plaintiffs in both cases had asserted that the fees charged for the refund processing service offered within TurboTax are “refund anticipation loans” and the disclosures about those fees do not comply with California and federal laws. The Smith case was brought in federal court on behalf of a proposed nationwide class and subclasses; the Quildon case was brought in state court on behalf of a proposed California class and subclasses. In January 2013, for the purposes of settlement and without any admission of wrongdoing or liability, Intuit reached an agreement in principle to resolve all claims raised in the Smith and Quildon matters for an amount that is not material to our consolidated financial statements. We accrued that amount in the second quarter of fiscal 2013. ~~The terms~~In October 2013, the U.S. District Court granted final approval to the settlement of the ~~proposed settlement are subject~~Smith case. An objector has lodged a notice of appeal of that order to the ~~approval~~U.S. Court of Appeals for the Ninth Circuit. The U.S. appeals court ~~which could approve, reject, or suggest modifications to those terms.~~will set a date for a hearing on the objector’s appeal. The Quildon case remains stayed pending the final outcome on the Smith case. We currently believe that the likelihood of a material change to the proposed settlement amount is remote.

Table of Contents

Intuit is subject to certain routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our business, including assertions that we may be infringing patents or other intellectual property rights of others. We currently believe that, in addition to any amounts accrued, the amount of potential losses, if any, for any pending claims of any type (either alone or combined) will not have a material impact on our consolidated financial statements. The

~~Table of Contents~~

ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on Intuit because of defense costs, negative publicity, diversion of management resources and other factors. Our failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims could adversely affect our business.


10.	Segment Information

See Note 4, “Discontinued Operations,” for information about our Intuit Financial Services and Intuit Health businesses, which we classified as discontinued operations during fiscal 2013. Effective August 1, 2013, we reorganized our continuing businesses to align with our strategic focus on small businesses, consumers, and professional accountants. We also aligned our international businesses, all of which were in our former Other Businesses segment, into their respective lines of business and we are now managing those international businesses within their respective reportable segments. As a result of this reorganization, we have defined ~~seven~~three reportable segments based on factors such as how we manage our operations and how our chief operating decision maker views results. We define the chief operating decision maker (CODM) as our Chief Executive Officer and our Chief Financial Officer. Our ~~chief operating decision maker~~CODM organizes and manages our business primarily on the basis of product and service offerings. The CODM reviews revenue by reportable segment and by product line within each reportable segment, but reviews operating income or loss only at the reportable segment level.

Small Business. Our Small Business segment includes three main product lines – Small Business Financial Solutions, Small Business Management Solutions, and Accountant and Advisor – targeting the small business market.

Our Small Business Financial Solutions product line includes QuickBooks financial and business management software and services; QuickBooks technical support; and financial supplies. This product line also includes several payment processing services for small businesses, including merchant services such as credit and debit card processing; Web-based transaction processing services for online merchants; GoPayment mobile payment processing services; QuickBooks Point of Sale solutions; and secure online payments for small businesses and their customers through the Intuit Payment Network.

Our Small Business Management Solutions product line includes small business payroll products and services, including desktop payroll offerings such as QuickBooks Basic Payroll and QuickBooks Enhanced Payroll; online payroll offerings such as Quickbooks Online Payroll and Intuit Online Payroll; and full service payroll offerings such as QuickBooks Assisted Payroll and Intuit Full Service Payroll. This product line also includes Demandforce, which provides online marketing and customer communication solutions, and QuickBase.

Our Accountant and Advisor product line includes QuickBooks Premier Accountant Edition and the QuickBooks ProAdvisor Program, both intended for the accounting professionals who serve small businesses.

Consumer. Our Consumer segment includes two product lines – Consumer Tax and Consumer Ecosystem – targeting consumers.

Consumer Tax includes TurboTax income tax preparation products and services and electronic tax filing services.

Consumer Ecosystem includes our personal finance offerings, Quicken and Mint.

Professional Tax. Our Professional Tax segment targets professional accountants and includes Lacerte, ProSeries, and Intuit Tax Online professional tax preparation products and services, electronic tax filing services, bank product transmission services, and training services.

All of our business segments ~~except Other Businesses~~ operate primarily in the United States and sell primarily to customers in the United States. International total net revenue was ~~less than~~approximately 5% of consolidated total net revenue for all periods presented.

We include expenses such as corporate selling and marketing, product development, and general and administrative expenses and share-based compensation expenses that are not allocated to specific segments in unallocated corporate items. Unallocated corporate items also include amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges.

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the financial statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012~~

Table of Contents

2013. Except for goodwill and purchased intangible assets, we do not generally track assets by reportable segment and, consequently, we do not disclose total assets by reportable segment.

~~Table of Contents~~

The following table shows our financial results by reportable segment for the periods indicated. Results for ~~our Financial Management Solutions segment~~all periods presented have been adjusted ~~for all periods presented~~ to exclude results for our Intuit Websites, ~~business,~~Intuit Financial Services, and Intuit Health businesses, which we have classified as discontinued operations ~~in the fourth quarter of fiscal 2012.~~for all periods presented. See Note 4, “Discontinued Operations,” for more information.

~~Beginning in the first quarter of~~ Segment results for fiscal 2013 ~~we moved the segment revenue and operating results for our Mint business from Personal Finance in our Other Businesses segment~~have also been reclassified to our Financial Services segment. Since segment revenue and operating results for Mint were not significant for any period presented, we did not reclassify previously reported segment results to reflect this change. As a result of the reorganization of the reporting structure of Personal Finance and synergies achieved during the time it was managed as one business, we allocated a portion of the total goodwill associated with that reporting unit to Personal Finance and a portion to Mint, which was transferredconform to the Financial Services reporting unit. We based the allocation of the total goodwill on the fair value of the remaining Personal Finance reporting unit compared with the fair value of the Mint component at the time of the transfer. The subsequent financial performance of the Personal Finance reporting unit relative to the projections used for the allocation of goodwill will determine the realizability of that goodwill.fiscal 2014 segment presentation, as described earlier in this footnote.

Three Months Ended Nine Months Ended
(In millions) April 30,
2013 April 30,
2012 April 30,
2013 April 30,
2012
Net revenue:
Financial Management Solutions $ 221
$ 178
$ 609
$ 506
Employee Management Solutions 144
129
423
378
Payment Solutions 120
107
351
300
Consumer Tax 1,221
1,072
1,473
1,408
Accounting Professionals 257
236
412
394
Financial Services 99
91
285
272
Other Businesses 116
113
240
242
Total net revenue $ 2,178
$ 1,926
$ 3,793
$ 3,500

Operating income from continuing operations:
Financial Management Solutions $ 94
$ 75
$ 227
$ 195
Employee Management Solutions 90
81
260
228
Payment Solutions 37
25
83
72
Consumer Tax 977
845
974
931
Accounting Professionals 211
194
273
261
Financial Services 23
23
58
66
Other Businesses 56
49
72
58
Total segment operating income 1,488
1,292
1,947
1,811
Unallocated corporate items:
Share-based compensation expense (46 ) (37 ) (142 ) (120 )
Other common expenses (137 ) (139 ) (451 ) (427 )
Amortization of acquired technology (5 ) (3 ) (16 ) (9 )
Amortization of other acquired intangible assets (7 ) (2 ) (21 ) (33 )
Goodwill and intangible asset impairment charge (46 ) —
(46 ) —
Total unallocated corporate items (241 ) (181 ) (676 ) (589 )
Total operating income from continuing operations $ 1,247
$ 1,111
$ 1,271
$ 1,222



	Three Months Ended
(In millions)	October 31, 2013			October 31, 2012
Net revenue:
Small Business segment:
Small Business Financial Solutions	$	316		$	291
Small Business Management Solutions	189			164
Accountant and Advisor	15			14
Total Small Business segment revenue	520			469

Consumer segment:
Consumer Tax	42			38
Consumer Ecosystem	35			34
Total Consumer segment revenue	77			72

Professional Tax segment revenue	25			21
Total net revenue	$	622		$	562

Operating loss from continuing operations:
Small Business segment operating income	$	190		$	165
Consumer segment operating loss	(24		)	(17		)
Professional Tax segment operating loss	(9		)	(11		)
Total segment operating income	157			137
Unallocated corporate items:
Share-based compensation expense	(47		)	(46		)
Other common expenses	(177		)	(153		)
Amortization of acquired technology	(6		)	(4		)
Amortization of other acquired intangible assets	(4		)	(7		)
Total unallocated corporate items	(234		)	(210		)
Total operating loss from continuing operations	$	(77	)	$	(73	)


~~11.~~	~~Subsequent Event~~

On May 20, 2013 Intuit announced a strategic organizational realignment. The new structure comes as the Company increases its focus on two strategic outcomes: being the world’s small business operating system, and providing winning solutions to do the nations’ taxes in the U.S. and Canada. Effective August 1, 2013 the Company will be organized into the following key business units: Small Business Financial Solutions and Small Business Management Solutions, Consumer Tax, Consumer Ecosystem, Accounting Professionals, and Financial Services. The company's international small business and tax businesses will be centralized into these respective business units and all lines of business will be managed on a global basis in the future. We are assessing the impact that these changes will have on our reporting segments.

1920

Table of Contents

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) includes the following sections:

Executive Overview that discusses at a high level our operating results and some of the trends that affect our business.

Significant changes since our most recent Annual Report on Form 10-K in the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments underlying our financial statements.

Results of Operations that includes a more detailed discussion of our revenue and expenses.

Liquidity and Capital Resources which discusses key aspects of our statements of cash flows, changes in our balance sheets, and our financial commitments.

You should note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please see Item 1A in Part II of this Quarterly Report on Form 10-Q for important information to consider when evaluating such statements.

You should read this MD&A in conjunction with the financial statements and related notes in Part I, Item 1 of this ~~report~~Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012~~2013. We ~~acquired Demandforce, Inc. in May 2012 and we have included the results of operations for that~~sold our Intuit Websites business in September 2012. In August 2013 we completed the sales of our ~~consolidated results~~Intuit Financial Services (IFS) business and our Intuit Health business. We have reclassified our statements of operations ~~from the date of acquisition. We have also reclassified our financial statements~~ for all periods presented to reflect these three businesses as discontinued operations. We have also segregated the net assets of IFS from continuing operations on our balance sheet at July 31, 2013. The net assets of Intuit Websites and Intuit Health were not significant, so we have not segregated them from continuing operations on our balance sheet at July 31, 2013. Because the operating cash flows of our Intuit Websites, ~~business as~~IFS, and Intuit Health discontinued ~~operations.~~operations were not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows. See “Results of Operations – Discontinued Operations” later in this Item 2 for more information. Unless otherwise noted, the following discussion pertains only to our continuing operations.

Executive Overview

This overview provides a high-level discussion of our business and growth strategy as well as the trends, opportunities, challenges, and risks that affect our performance and operating results. Understanding our growth strategy and the trends that affect our business provides context for the discussion of financial results and future opportunities which follows this overview. This summary is not intended to be exhaustive, nor is it a substitute for the detailed discussion and analysis provided elsewhere in this Quarterly Report on Form 10-Q.

About Intuit

Intuit is a leading provider of business and financial management solutions for small businesses, consumers, and accounting ~~professionals~~professionals. As discussed in Item 1, “Business Overview – Our Business Portfolio,” in our Form 10-K for the fiscal year ended July 31, 2013, effective August 1, 2013 we reorganized our businesses to align with our strategic focus on small businesses, consumers, and ~~financial institutions.~~professional accountants. We also aligned our international businesses, all of which were in our former Other Businesses segment, into their respective lines of business and we are now managing those international businesses within their respective reportable segments. As a result of this reorganization, we now organize our ~~portfolio of~~ businesses into ~~four principal categories~~three reportable segments – Small Business, ~~Group, Tax, Financial Services~~Consumer, and ~~Other Businesses. These categories include seven financial reporting segments.~~Professional Tax.

Small ~~Business Group:~~Business: This ~~category~~segment includes three ~~segments~~main product lines – Small Business Financial ~~Management~~ Solutions, ~~Employee~~Small Business Management Solutions, and ~~Payment Solutions~~Accountant and Advisor – targeting the small business ~~market and represented 39% of our revenue in fiscal 2012.~~market.

Our Small Business Financial ~~Management~~ Solutions ~~segment~~product line includes QuickBooks financial and business management ~~software~~online services and ~~services;~~desktop software; QuickBooks technical support; and financial ~~supplies;~~supplies. This product line also includes several payment processing services for small businesses, including merchant services such as credit and debit card processing; Web-based transaction processing services for online merchants; GoPayment mobile payment processing services; QuickBooks Point of Sale solutions; and secure online payments for small businesses and their customers through the Intuit Payment Network.

Our Small Business Management Solutions product line includes small business payroll products and services and Demandforce, which provides online marketing and customer communication solutions.

Table of Contents

Our ~~Employee Management Solutions segment provides payroll products~~Accountant and ~~services.~~

~~Our Payment Solutions segment provides merchant services, including credit~~Advisor product line includes QuickBooks Premier Accountant Edition and ~~debit card processing, electronic check conversion and automated clearing house services; Web-based transaction processing services~~the QuickBooks ProAdvisor Program, both intended for ~~online merchants; and GoPayment mobile payment processing services.~~the accounting professionals who serve small businesses.

~~Tax:~~Consumer: This ~~category~~segment includes two ~~segments~~product lines – Consumer Tax and ~~Accounting Professionals~~Consumer Ecosystem – ~~and represented 45% of our revenue in fiscal 2012.~~targeting consumers.

~~Our~~ Consumer Tax ~~segment~~ includes TurboTax income tax preparation products and ~~services for consumers~~services.

Consumer Ecosystem includes our personal finance offerings, Quicken and ~~small businesses.~~Mint.

~~Our Accounting Professionals~~Professional Tax: This segment targets professional accountants and includes Lacerte, ProSeries, and Intuit Tax Online professional tax products and services. ~~This segment also includes QuickBooks Premier Accountant Edition and the QuickBooks ProAdvisor Program for accounting professionals.~~

~~Table of Contents~~

~~Financial Services:~~ This segment consists primarily of digital banking solutions - both online and mobile - for financial institutions and Mint online personal finance services. This segment represented 9% of our revenue in fiscal 2012.

~~Other Businesses:~~ This segment represented 7% of our revenue in fiscal 2012 and includes our global businesses, primarily in Canada, the United Kingdom, and Singapore; Quicken personal finance products and services; and Intuit Health online patient-to-provider communication solutions.

Our Growth Strategy

~~We see significant opportunities to drive future growth, based~~Based on our assessment of key technology and demographic trends – an increasingly borderless world, the prevalence of mobile devices, and ~~our focus on building~~the scalability of the cloud – we see significant opportunities to drive future growth by continuing to solve the unmet needs of small businesses, consumers, and ~~enabling others to build – innovative offerings to simplify the business of life for our customers. In the first quarter of fiscal 2013 we refined our three-point~~accounting professionals. Our evolving growth ~~strategy:~~strategy includes three key elements:

Focus on the product – we call it “Delivering awesome product experiences.” ~~Customers increasingly demand anytime, anywhere, any device access~~Computing devices are moving to ~~their information.~~the palm of our hands in the form of tablets and smart phones. Therefore, we are increasingly focused on reimagining our products with a mobile-first, and in some cases mobile-only, design. Our TurboTax solutions, for example, let customers prepare and file their entire tax returns online, via tablet, mobile phone or ~~the desktop. In addition, we~~desktop computer. We also believe that a key factor in growing our customer base is ~~to deliver~~delivering an amazing first-use experience so our customers can get the value they expect from our offerings as ~~easily~~quickly and ~~quickly~~easily as possible.

Creating network effect platforms – we call it “Enabling the contributions of others.” We expect to solve problems faster and more efficiently for our growing base of customers by moving to more open platforms with application programming interfaces that enable the contributions of end users and third-party developers. One example of this is QuickBooks Online, which ~~now~~ allows small business customers all over the world to ~~contribute~~localize, configure, and add value to ~~localizing~~ the ~~product.~~offering.

Leveraging our data for our customers' benefit – we call it ~~“Enabling~~“Using data to create delight.” Our 6045 million customers are generating valuable data that we seek to appropriately use to deliver better products and breakthrough benefits by eliminating the need to enter data, helping them make better decisions and improving transactions and interactions.

Industry Trends and Seasonality

The industry in which we operate is dynamic and highly competitive, and we expect it to remain so in the future. The markets for software and related services, especially highly-available connected services, are characterized by rapid technological change, shifting customer needs, and frequent new product introductions and enhancements. ~~Competition~~Competitive interest and expertise in many of the markets we serve ~~particularly small business services, consumer tax, and online and mobile banking,~~ have grown markedly over the past few years and we expect this trend to continue. There are also large, cloud-based service companies who innovate quickly and serve small businesses and consumers. While today our competition with such companies may be limited, as we and those companies grow, our competition with them may increase. In recent years the widespread availability of the Internet, the emergence of mobile devices, and the explosion of social media have accelerated the pace of change and revolutionized the way that people throughout the world manage important financial tasks. The result is a global market that is shifting from traditional services that are paper-based, human-produced, and brick-and-mortar bound, to one where people understand, demand, and embrace the benefits of connected services. This trend toward connected services is the primary driver of the strategies in all of our businesses.

Our QuickBooks, Consumer Tax, and ~~Accounting Professionals businesses~~Professional Tax offerings are highly seasonal. Revenue from our QuickBooks software products tends to be highest during our second and third fiscal quarters. Sales of income tax preparation products and services are heavily concentrated from November through April. In our Consumer Tax business, a greater proportion of our revenue has shifted to later in this seasonal period due in part to the growth in sales of TurboTax Online, for which we recognize revenue when tax returns are printed or electronically filed. The seasonality of our Consumer Tax and ~~Accounting Professionals~~Professional Tax revenue is also affected by the timing of the availability of tax forms from taxing agencies and the ability of those agencies to receive electronic tax return submissions. Delays in the availability of tax forms or the ability of taxing agencies to

~~Table of Contents~~

receive submissions can cause revenue to shift between our fiscal quarters. These seasonal patterns mean that our total net revenue is usually highest during our second quarter ending January 31 and third quarter ending April 30. We typically report losses in our first quarter ending October 31 and fourth quarter ending July 31. During these quarters, revenue from our tax businesses is minimal while core operating expenses such as research and development continue at relatively consistent levels. We believe the seasonality of

Table of Contents

our revenue and profitability is likely to continue in the future. In our MD&A we often focus on year-to-date results for our seasonal businesses as they are generally more meaningful than quarterly results.

Key Challenges and Risks

Our growth strategy depends upon our ability to initiate and embrace disruptive technology trends, to enter new markets, and to drive broad adoption of the products and services we develop and market. Our future growth also increasingly depends on the strength of our third-party business relationships and our ability to continue to develop, maintain and strengthen new and existing relationships. To remain competitive and continue to grow, we are investing significant resources in our product development, marketing, and sales capabilities, and we expect to continue to do so in the future.

As we continue transitioning to offer more connected services, the ongoing operation and availability of our information technology and communication systems and those of our external service providers is becoming increasingly important. Because we help customers manage their financial lives, we face risks associated with the hosting, collection, use and retention of personal customer information and data. We are investing significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities, and we expect to continue to do so in the future.

For a complete discussion of the most significant risks and uncertainties affecting our business, please see “Forward-Looking Statements and Risk Factors” in Item 1A of this Quarterly Report.

Overview of Financial Results

The most important financial indicators that we use to assess our business are revenue growth for the company as a whole, for each reporting segment, and for product lines within each reporting segment; operating income growth and operating income ~~growth~~margins for the company as a whole and for each ~~business~~reporting segment; ~~operating income margin;~~ earnings per share; and cash flow from operations. We also track certain non-financial drivers of revenue growth and, when material, identify them in the applicable discussions of business segment results below. These non-financial ~~indicators~~drivers include, for example, customer growth and retention, and, in certain businesses, transaction volume. Customers for our connected services offerings have generally grown faster than those for our traditional software offerings, reflecting our strategic focus on connected services over the past few years. Connected services generated $2.7 billion or 64% of our total revenue in fiscal ~~2012,~~2013, compared with 50% of our total revenue five years ago. We expect connected services revenue as a percentage of our total revenue to continue to grow in the future. We track transaction volume in businesses such as our ~~Payments Solutions~~payment processing business, where total credit and debit card transaction volume, which correlates strongly with the macroeconomic environment, contributes to revenue growth.

Total net revenue for the first ~~nine~~three months of fiscal ~~2013~~2014 was $~~3.8 billion~~622 million, an increase of 8%11% compared with the same period of fiscal ~~2012~~2013. Our Small Business ~~Group and Consumer Tax~~ segment ~~were~~was the key ~~drivers~~driver of revenue growth in the first ~~nine~~three months of fiscal ~~2013~~2014. Revenue in our Small Business ~~Group~~segment grew ~~17%~~11% compared with the same period a year ago due to growth in connected services offerings such as QuickBooks Online, payment processing services, and ~~our May 2012 acquisition of Demandforce. Revenue in our Consumer Tax segment grew~~ 5% ~~in the first~~ ~~nine months~~ ~~of fiscal~~ ~~2013~~ ~~due to 4% growth in paid federal units.~~online payroll services.

Operating ~~income~~loss from continuing operations for the first ~~nine~~three months of fiscal ~~2013~~2014 was $~~1.3 billion~~77 million, an increase of 4%5% compared with the same period of fiscal ~~2012~~2013. Higher revenue was ~~partially~~more than offset by higher costs and ~~expenses, including higher expenses for staffing, advertising and other marketing programs, and share-based compensation. We also recorded a $46 million charge for~~expenses. In the ~~impairment of goodwill and intangible assets in our Intuit Health business in the third~~first quarter of fiscal ~~2013.~~ 2014 we accelerated some spending for our customer data strategy and small business marketing to drive growth during the rest of fiscal 2014. As a result, expenses grew slightly faster than revenue in the quarter.

Net ~~income~~loss from continuing operations increased 5%6% in the first ~~nine~~three months of fiscal ~~2013~~2014 compared with the same period of fiscal ~~2012~~2013 due to the higher operating ~~income~~loss and a lower ~~interest expense. Diluted~~effective tax rate on the pre-tax loss. Basic and diluted net ~~income~~loss per share from continuing operations for the first ~~nine~~three months of fiscal ~~2013~~2014 increased 7%$0.02 to $~~2.78~~0.20, due to the higher net loss and the decline in ~~line~~weighted average basic and diluted common shares compared with the ~~increase in net income.~~same period of fiscal 2013.

We ended the first ~~nine~~three months of fiscal ~~2013~~2014 with cash, cash equivalents and investments totaling $~~2.0~~1.1 billion. During the first ~~nine~~three months of fiscal ~~2013~~2014 we generated $1.0 billion in cash ~~from operations, from the issuance of common stock under employee stock plans, and~~ from the sale of our Intuit ~~Websites business. During the same period we~~Financial Services business and used $1.4 billion in cash for the repurchase of shares of our common stock under our stock repurchase ~~programs,~~programs. During the same period we generated cash from the issuance of common stock under employee stock plans and used cash for operations, the payment of cash dividends, and ~~for~~ capital expenditures. At ~~April 30,~~October 31, 2013, we had authorization from our Board of Directors to expend up to an additional $~~1.4~~2.0 billion for stock repurchases through August ~~15, 2014~~19, 2017.

2223

Table of Contents

Critical Accounting Policies and Estimates

In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our net revenue, operating income or loss, and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2012~~2013 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. We believe that there were no significant changes in those critical accounting policies and estimates during the first ~~nine~~three months of fiscal ~~2013~~2014. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit and Risk Committee of our Board of Directors.

~~Goodwill, Intangible Assets, and Other Long-Lived Assets - Impairment Assessments~~

Results of Operations

Financial Overview

(Dollars in millions, except per share amounts) Q3
FY13 Q3
FY12
$
Change

%
Change
YTD
Q3
FY13 YTD
Q3
FY12
$
Change

%
Change
Total net revenue $ 2,178
$ 1,926
$ 252
13 % $ 3,793
$ 3,500
$ 293
8 %
Operating income from continuing operations 1,247
1,111
136
12 % 1,271
1,222
49
4 %
Net income from continuing operations 822
736
86
12 % 842
799
43
5 %
Diluted net income per share from continuing operations $ 2.71
$ 2.43
$ 0.28
12 % $ 2.78
$ 2.61
$ 0.17
7 %



(Dollars in millions, except per share amounts)	Q1 FY14			Q1 FY13			$ Change			% Change
Total net revenue	$	622		$	562		$	60		11	%
Operating loss from continuing operations	(77		)	(73		)	(4		)	5	%
Net loss from continuing operations	(57		)	(54		)	(3		)	6	%
Basic and diluted net loss per share from continuing operations	$	(0.20	)	$	(0.18	)	$	(0.02	)	11	%

~~Current Fiscal Quarter~~

Total net revenue increased $~~252~~60 million or ~~13%~~11% in the ~~third~~first quarter of fiscal ~~2013~~2014 compared with the same quarter of fiscal ~~2012~~2013. ~~Revenue~~Our Small Business segment was upthe key driver of the revenue increase, growing ~~17%~~11% in. Within the Small Business segment, revenue from our Small Business ~~Group.~~ Financial ~~Management~~ Solutions ~~segment revenue~~product line increased ~~24%, or 12% excluding revenue from Demandforce, which we acquired in May 2012. Higher organic revenue in this segment was driven by~~9% due to continuing growth in QuickBooks Online ~~revenue. Employee~~and QuickBooks Enterprise Solutions revenue and to higher total card transaction volume in our payment processing business. Revenue from our Small Business Management Solutions ~~segment revenue~~product line increased ~~11%~~15% due to ~~customer growth, improved customer adoption of payroll direct deposit services, and~~ price increases for desktop payroll ~~customers. Payment Solutions segment revenue increased~~ ~~13%~~customers and online payroll customer growth; and due to ~~fee structure changes and higher total card transaction volume. In our tax businesses, Consumer Tax segment revenue increased~~ ~~14%~~ ~~and Accounting Professionals segment revenue grew~~ 9%. The Internal Revenue Service began accepting federal income tax returns about two weeks later than in the previous tax season, which we believe contributed to a shift of some Consumer Tax revenue from the second quarter of fiscal 2013 to the third quarter of fiscal 2013. See ~~“Business Segment Results”~~ ~~later in this Item 2 for more information about the results for all of our business segments.~~

~~Operating income from continuing operations increased~~ ~~12%~~ ~~in the~~ ~~third~~ ~~quarter of fiscal~~ ~~2013~~ ~~compared with the same quarter of fiscal~~ ~~2012~~ ~~due to the increase in revenue described above partially offset by higher costs and operating expenses. Total operating expenses increased~~ ~~$126~~ ~~million in the fiscal~~ ~~2013~~ ~~quarter due in part to higher expenses for advertising and other marketing programs in our Financial Management Solutions and Consumer Tax segments. We also recorded a $46 million~~

~~Table of Contents~~

~~charge to operating expense for the impairment of goodwill and intangible assets in our Intuit Health business. See “Operating Expenses”~~ ~~later in this Item 2 for more information.~~

~~Net income from continuing operations and diluted net income per share from continuing operations for the third quarter of fiscal 2013 increased~~ ~~12%~~ ~~compared with the same quarter of fiscal~~ ~~2012, in line with the increase in operating income for that quarter.~~

~~Fiscal Year to Date~~

~~Total net revenue increased~~ ~~$293 million~~ or 8% ~~in the first~~ ~~nine months~~ ~~of fiscal~~ ~~2013~~ ~~compared with the same period of fiscal~~ ~~2012. Revenue was up~~ ~~17%~~ ~~in our Small Business Group. Financial Management Solutions segment revenue increased~~ ~~20%, or 9% excluding revenue from Demandforce, which we acquired in May 2012. Higher organic revenue in this segment was driven by continuing~~ growth in ~~QuickBooks Online revenue. Employee Management Solutions segment revenue increased~~ ~~12%~~ ~~due to customer growth, improved customer adoption of payroll direct deposit services,~~Demandforce customers and ~~price increases for desktop payroll customers. Payment Solutions segment revenue increased~~ ~~17%~~ ~~due to fee structure changes and higher total card transaction volume. In our tax businesses, Consumer Tax segment revenue increased~~ 5% ~~due to 4% growth in paid federal units. Accounting Professionals segment revenue grew~~ 4% ~~due to customer growth and price increases in our professional tax business, and higher QuickBooks Premier Accountant Edition~~ revenue. See “Business Segment Results” later in this Item 2 for more information about the results for all of our business segments.

Operating ~~income~~loss from continuing operations increased 4%5% in the ~~first~~ ~~nine months~~first quarter of fiscal ~~2013~~2014 compared with the same ~~period~~quarter of fiscal ~~2012~~2013. ~~The increase in~~In the first quarter of fiscal 2014 we accelerated some spending for our customer data strategy and small business marketing to drive growth during the rest of fiscal 2014. As a result, expenses grew slightly faster than revenue ~~described above was partially offset by higher costs and operating expenses. Total operating expenses increased~~ ~~$236~~ ~~million~~ in the ~~fiscal~~ ~~2013~~ period due to higher expenses for staffing, for advertising and other marketing programs in our Financial Management Solutions and Consumer Tax segments, and for share-based compensation. We also recorded a $46 million charge to operating expense for the impairment of goodwill and intangible assets in our Intuit Health business.quarter. See “Operating Expenses” later in this Item 2 for more information.

Net ~~income~~loss from continuing operations for the first quarter of fiscal 2014increased 5%6% incompared with the ~~first~~ ~~nine months~~same quarter of fiscal 2013 due to the higher operating loss and a lower effective tax rate on the pre-tax loss. Basic and diluted net loss per share from continuing operations for the first quarter of fiscal 2014 increased $0.02 to $0.20 due to the higher net loss and the decline in weighted average basic and diluted common shares compared with the same ~~period of fiscal~~ ~~2012~~ due primarily to the increase in operating income. Interest expense was also lower in the fiscal 2013 period due to the repayment of debt in fiscal 2012. We recorded a $10 million gain on the sale of a stock warrant in interest and other income in the first quarter of fiscal ~~2012.~~2013. See “Non-Operating Income and Expenses – ~~Interest Expense”~~ Income Taxes”and “~~Interest~~Liquidity and ~~Other Income, Net,~~Capital Resources – Stock Repurchase Programs and Dividends on Common Stock,”later in this Item 2 for more information. ~~Diluted net income per share from continuing operations for the first~~ ~~nine months~~ ~~of fiscal~~ ~~2013~~ ~~increased~~ 7% to ~~$2.78, in line with the increase in net income for that period.~~

Business Segment Results

The information below is organized in accordance with our ~~seven~~three reportable business segments. See “Executive Overview - About Intuit” earlier in this Item 2 and Note 10 to the financial statements in Part I, Item 1 of this Quarterly Report for more information. All of our business segments ~~except Other Businesses~~ operate primarily in the United States and sell primarily to customers in the United States. International total net revenue was ~~less than~~approximately 5% of consolidated total net revenue for all periods presented.

Segment operating income or loss is segment net revenue less segment cost of revenue and operating expenses. See “Executive Overview – Industry Trends and Seasonality” earlier in this Item 2 for a description of the seasonality of our business. Segment

Table of Contents

expenses do not include certain costs, such as corporate selling and marketing, product development, and general and administrative expenses and share-based compensation expenses, which are not allocated to specific segments. These unallocated costs totaled $~~593~~224 million in the first ~~nine~~three months of fiscal 2014 and $199 million in the first three months of fiscal 2013 ~~and~~ ~~$547 million~~ ~~in the first~~ ~~nine~~ ~~months of fiscal~~ ~~2012~~. Unallocated costs increased in the fiscal ~~2013~~2014 period due to increases in corporate product development and selling and marketing expenses in support of the growth of our ~~businesses, and to a lesser extent to increases in share-based compensation expenses.~~businesses. Segment expenses also do not include amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges. See Note 10 to the financial statements in Part I, Item 1 of this ~~report~~Quarterly Report for reconciliations of total segment operating income or loss to consolidated operating income or loss for each fiscal period presented.

Beginning in the first quarter of fiscal 2013, we moved the segment revenue and operating results for our Mint business from Personal Finance in our Other Businesses segment to our Financial Services segment. Since segment revenue and operating results for Mint were not significant for any period presented, we did not reclassify previously reported segment results to reflect this change. As a result of the reorganization of the reporting structure of Personal Finance and synergies achieved during the time it was managed as one business, we allocated a portion of the total goodwill associated with that reporting unit to Personal Finance and a portion to Mint, which was transferred to the Financial Services reporting unit. We based the allocation of the total goodwill on the fair value of the remaining Personal Finance reporting unit compared with the fair value of the Mint component at the time of the transfer. The subsequent financial performance of the Personal Finance reporting unit relative to the projections used for the allocation of goodwill will determine the realizability of that goodwill.

~~Table of Contents~~

We calculate revenue growth rates and segment operating margin figures using dollars in thousands. Those results may vary from figures calculated using the dollars in millions presented below.

~~Financial Management Solutions~~Small Business


(Dollars in millions)	Q3 FY13			Q3 FY12			% Change		YTD Q3 FY13			YTD Q3 FY12			% Change		Q1 FY14			Q1 FY13			% Change
Product revenue	$	117		$	111				$	318		$	316				$	192		$	187		3	%
Service and other revenue	104			67					291			190					328			282			16	%
Total segment revenue	$	221		$	178		24	%	$	609		$	506		20	%	$	520		$	469		11	%
% of total revenue	10		%	9		%			16		%	14		%			84		%	83		%

Segment operating income	$	94		$	75		27	%	$	227		$	195		16	%	$	190		$	165		15	%
% of related revenue	43		%	41		%			37		%	39		%			37		%	35		%

Our Small Business segment includes our Small Business Financial Solutions (SBFS), Small Business Management Solutions ~~(FMS)~~(SBMS), and Accountant and Advisor product lines. Service and other revenue in our Small Business segment is derived primarily from QuickBooks Online, our hosted financial and business management offering; QuickBooks technical support plans; payment processing services for small businesses; small business payroll services, including Quickbooks Online Payroll, QuickBooks Assisted Payroll, Intuit Online Payroll, and Intuit Full Service Payroll; Demandforce; and QuickBase. Product revenue in our Small Business segment is derived primarily from QuickBooks desktop software products, including QuickBooks Pro, QuickBooks Premier, QuickBooks Premier Accountant Edition, and QuickBooks Enterprise Solutions; financial ~~supplies such as paper checks, envelopes, invoices, business cards~~supplies; QuickBooks Basic Payroll and ~~business stationery. FMS service~~QuickBooks Enhanced Payroll; QuickBooks Point of Sale solutions; and ~~other revenue is derived primarily from QuickBooks Online; QuickBooks technical support plans; Demandforce, which provides online marketing and customer communication solutions~~ProAdvisor Program subscriptions for the accounting professionals who serve small ~~businesses; QuickBase; and royalties from small business online services.~~businesses.

~~FMS~~Small Business segment total net revenue increased $43 ~~million or~~ ~~24%~~ ~~in the~~ ~~third~~ ~~quarter of fiscal 2013 and~~ ~~$103~~ ~~million or~~ ~~20%~~ ~~in the first~~ ~~nine months~~ of fiscal 2013 compared with the same periods of fiscal 2012. When adjusted to exclude revenue from Demandforce, which we acquired in May 2012, FMS revenue was 12% higher in the third quarter of fiscal 2013 and 9% higher in the first nine months of fiscal 2013. Total U.S. QuickBooks customers were up 6% while U.S. QuickBooks Online subscribers grew 24%, driving the organic revenue growth in this segment in both fiscal 2013 periods. QuickBooks desktop units were up slightly in the third quarter of fiscal 2013 and down 8% in the first nine months of fiscal 2013 compared with the same periods of fiscal 2012 due to a continuing trend toward customer adoption of our online QuickBooks offerings.

~~FMS segment operating income as a percentage of related revenue increased slightly in the~~ ~~third~~ ~~quarter of fiscal 2013 and decreased slightly in the first~~ ~~nine months~~ of fiscal 2013 compared with the same periods of fiscal 2012. The increases in segment revenue described above were partially offset by higher segment costs and expenses that included costs and expenses for Demandforce. For the first ~~nine months~~ ~~of fiscal 2013 staffing expenses were about $55 million higher, driven by an increase in headcount. Advertising and other marketing program expenses also increased.~~

~~Employee Management Solutions~~

(Dollars in millions) Q3
FY13 Q3
FY12
%
Change
YTD
Q3
FY13 YTD
Q3
FY12
%
Change
Product revenue $ 74
$ 70
$ 219
$ 207

Service and other revenue 70
59
204
171

Total segment revenue $ 144
$ 129
11 % $ 423
$ 378
12 %
% of total revenue 7 % 7 % 11 % 11 %

Segment operating income $ 90
$ 81
11 % $ 260
$ 228
14 %
% of related revenue 62 % 62 % 61 % 60 %

Employee Management Solutions (EMS) product revenue is derived primarily from QuickBooks Basic Payroll and QuickBooks Enhanced Payroll, which are products sold on a subscription basis that offer payroll tax tables, payroll reports, federal and state payroll tax forms, and electronic tax payment and filing to small businesses that prepare their own payrolls. EMS service and other revenue is derived primarily from QuickBooks Online Payroll, QuickBooks Assisted Payroll, Intuit Online Payroll, Intuit Full Service Payroll, fees for payroll direct deposit services, and fees for other small business payroll and employee management services. Service and other revenue for this segment also includes interest earned on funds held for customers.

~~Table of Contents~~

~~EMS total net revenue increased~~ ~~$15~~51 million or 11% in the ~~third~~first quarter of fiscal ~~2013 and~~ ~~$45~~2014 ~~million or~~ ~~12%~~ ~~in the first~~ ~~nine months~~ ~~of fiscal 2013~~ compared with the same ~~periods~~quarter of fiscal ~~2012. Revenue was higher in~~2013. Within the ~~fiscal 2013 periods~~Small Business segment, revenue from our SBFS product line increased 9% due to ~~customer~~29% growth in our ~~Enhanced desktop payroll~~QuickBooks Online subscriber base and ~~online payroll solutions, improved customer adoption of payroll direct deposit services, and~~21% growth in our QuickBooks Enterprise Solutions subscriber base. SBFS revenue also increased due to 6% higher total card transaction volume in our payment processing business. Revenue from our SBMS product line increased 15% due to price increases for desktop payroll ~~customers. At~~ ~~April 30, 2013, total U.S. payroll~~ customers ~~were up 3% while U.S.~~and 18% online payroll ~~customers were up 20% compared with~~ ~~April 30, 2012~~.

~~EMS segment operating income as a percentage of related~~customer growth. SBMS revenue ~~was flat in the~~ ~~third~~ ~~quarter of fiscal 2013 and~~also increased ~~slightly in the first~~ ~~nine months~~ ~~of fiscal 2013 compared with the same periods of fiscal 2012. Segment operating income was consistent in these periods~~ due to ~~the increases in segment~~higher Demandforce revenue ~~described above and relatively stable segment operating expenses.~~

~~Payment Solutions~~

(Dollars in millions) Q3
FY13 Q3
FY12
%
Change
YTD
Q3
FY13 YTD
Q3
FY12
%
Change
Product revenue $ 7
$ 7
$ 20
$ 19

Service and other revenue 113
100
331
281

Total segment revenue $ 120
$ 107
13 % $ 351
$ 300
17 %
% of total revenue 5 % 5 % 9 % 9 %

Segment operating income $ 37
$ 25
42 % $ 83
$ 72
14 %
% of related revenue 31 % 25 % 24 % 24 %

Payment Solutions product revenue is derived primarily from QuickBooks Point of Sale solutions, which help retailers process and track sales electronically and integrate with QuickBooks financial software. Payment Solutions service and other revenue is derived primarily from merchant services for small businesses that include credit card, debit card, electronic benefits, and gift card processing services; check verification, check guarantee and electronic check conversion, including automated clearing house (ACH) and Check21 capabilities; Web-based transaction processing services for online merchants; and GoPayment mobile payment processing services.

~~Payment Solutions total net revenue increased~~ ~~$13~~ ~~million or~~ ~~13%~~ ~~in the~~ ~~third~~ ~~quarter of fiscal 2013 and~~ ~~$51~~ ~~million or~~ ~~17%~~ ~~in the first~~ ~~nine months~~ ~~of fiscal 2013 compared with the same periods of fiscal 2012. Higher revenue in the fiscal 2013 periods~~ was driven by ~~fee structure changes and 6% higher U.S. total credit and debit card transaction volume. Our U.S. merchant customer base grew 10%~~36% growth in the ~~first~~ ~~nine months~~ ~~of fiscal 2013 compared with the same period of fiscal 2012.~~subscriber base.

~~Payment Solutions~~Small Business segment operating income as a percentage of related revenue increased in the ~~third~~first quarter of fiscal ~~2013 and was flat in the first~~ ~~nine months~~2014 ~~of fiscal 2013~~ compared with the same ~~periods~~quarter of fiscal ~~2012.~~2013. The ~~increases~~increase in segment revenue described above ~~were~~was partially offset by ~~higher segment costs and expenses, including~~$17 million in higher staffing expenses ~~associated with~~due to an increase in headcount and ~~higher chargeback losses from mobile offerings~~a $6 million increase in ~~cost of revenue in the first half of the fiscal year.~~advertising and other marketing program expenses.

~~Consumer Tax~~

(Dollars in millions) Q3
FY13 Q3
FY12
%
Change
YTD
Q3
FY13 YTD
Q3
FY12
%
Change
Product revenue $ 152
$ 139
$ 213
$ 213

Service and other revenue 1,069
933
1,260
1,195

Total segment revenue $ 1,221
$ 1,072
14 % $ 1,473
$ 1,408
5 %
% of total revenue 56 % 56 % 39 % 40 %

Segment operating income (loss) $ 977
$ 845
16 % $ 974
$ 931
5 %
% of related revenue 80 % 79 % 66 % 66 %

2625

Table of Contents

Consumer



(Dollars in millions)	Q1 FY14			Q1 FY13			% Change
Product revenue	$	19		$	23		(16	)%
Service and other revenue	58			49			17	%
Total segment revenue	$	77		$	72		7	%
% of total revenue	12		%	13		%

Segment operating loss	$	(24	)	$	(17	)	41	%
% of related revenue	(32		)%	(24		)%

Our Consumer segment includes our Consumer Tax and Consumer Ecosystem product ~~revenue is derived primarily from TurboTax federal and state consumer and small business desktop tax return preparation software.~~lines. Consumer Tax service and other revenue is derived primarily from TurboTax Online hosted tax return preparation services and electronic tax filing services.

Consumer Tax ~~segment~~product revenue is derived primarily from TurboTax desktop tax return preparation software. Consumer Ecosystem product revenue is derived primarily from Quicken desktop personal finance software products. Consumer Ecosystem service and other revenue is derived primarily from fees for consumer online transactions as well as from online lead generation fees from our Mint personal finance offerings.

Due to the seasonal nature of our Consumer Tax offerings, we typically generate nominal revenue from consumer tax products and services in our first fiscal quarter compared with our second and third fiscal quarters. The majority of Consumer Tax product line revenue for the first quarter of each fiscal year is for the filing of extended returns for the previous tax year. Consumer Tax product line revenue increased ~~$149~~$4 million or ~~14%~~11% in the ~~third~~first quarter of fiscal ~~2013~~2014 compared with the same quarter of fiscal ~~2012. The Internal Revenue Service began accepting federal income~~2013 primarily because customers filed more extended tax returns ~~about two weeks later than~~ in the ~~previous tax season, which we believe contributed to a shift of some Consumer Tax revenue from~~fiscal 2014 quarter compared with the ~~second~~same quarter of fiscal 2013. Because of the seasonality of our Consumer Tax product line revenue, we do not believe that first fiscal quarter revenue in our Consumer segment is indicative of revenue trends for the current fiscal year. We will not have substantially complete results for the 2013 totax season until the third quarter of fiscal ~~2013.~~2014.

Revenue for our Consumer ~~Tax segment revenue increased~~ ~~$65~~ ~~million or~~ 5%Ecosystem product line grew 2% in the ~~first~~ ~~nine months~~first quarter of ~~fiscal 2013~~2014 compared with the same ~~period~~quarter of fiscal ~~2012 due to 4% growth in paid federal units. Online federal units represented approximately 77% of total TurboTax federal units~~2013.

In our first fiscal quarter our Consumer segment typically generates operating losses because Consumer Tax product line revenue is nominal while segment operating expenses for functions such as research and development continue at relatively consistent levels. We do not believe that Consumer segment operating results for the ~~2012 tax season, up slightly from approximately 76% for the comparable portion of the 2011 tax season.~~

~~Consumer Tax segment operating income as a percentage of related revenue was flat in the~~ first ~~nine months~~quarter of fiscal ~~2013~~2014 compared with the same ~~period~~quarter of fiscal ~~2012 due to~~2013 are indicative of trends for the ~~higher revenue described above partially offset by higher expenses for advertising and other marketing programs in the~~full fiscal ~~2013 period.~~year.

~~Accounting Professionals~~

Professional Tax


(Dollars in millions)	Q3 FY13			Q3 FY12			% Change		YTD Q3 FY13			YTD Q3 FY12			% Change		Q1 FY14			Q1 FY13			% Change
Product revenue	$	203		$	194				$	351		$	343				$	18		$	17		4	%
Service and other revenue	54			42					61			51					7			4			75	%
Total segment revenue	$	257		$	236		9	%	$	412		$	394		4	%	$	25		$	21		16	%
% of total revenue	12		%	12		%			11		%	11		%			4		%	4		%

Segment operating income	$	211		$	194		9	%	$	273		$	261		4	%
Segment operating loss																	$	(9	)	$	(11	)	(23	)%
% of related revenue	82		%	82		%			66		%	66		%			(35		)%	(53		)%

~~Accounting Professionals~~Professional Tax segment product revenue is derived primarily from ~~Lacerte~~ProSeries and ~~ProSeries~~Lacerte professional tax preparation software ~~products and from QuickBooks Premier Accountant Edition and ProAdvisor Program for professional accountants. Accounting Professionals~~products. Professional Tax segment service and other revenue is derived primarily from Intuit Tax Online tax return preparation services, electronic tax filing services, bank product transmission services, and training services.

~~Accounting Professionals~~Due to the seasonal nature of our Professional Tax offerings, we typically generate nominal revenue from professional tax products and services in our first fiscal quarter compared with our second and third fiscal quarters. The majority of Professional Tax revenue for the first quarter of each fiscal year is for the filing of extended returns for the previous tax year. Professional Tax total net revenue increased $184 million or 4%16% in the first ~~nine months~~quarter of fiscal ~~2013~~2014 compared with the same ~~period~~quarter of fiscal ~~2012 due to customer growth and price increases in our professional tax business, and higher QuickBooks Premier Accountant Edition revenue.~~

~~Accounting Professionals segment operating income as a percentage of related revenue was flat in the first~~ ~~nine months~~ ~~of fiscal 2013 compared with the same period of fiscal 2012 due to the increase in revenue described above and relatively stable costs and expenses.~~

~~Financial Services~~

(Dollars in millions) Q3
FY13 Q3
FY12
%
Change
YTD
Q3
FY13 YTD
Q3
FY12
%
Change
Product revenue $ —
$ —
$ —
$ —

Service and other revenue 99
91
285
272

Total segment revenue $ 99
$ 91
9 % $ 285
$ 272
5 %
% of total revenue 5 % 5 % 8 % 8 %

Segment operating income $ 23
$ 23
4 % $ 58
$ 66
(11 )%
% of related revenue 24 % 25 % 21 % 24 %

2726

Table of Contents

~~Financial Services service and other revenue is derived~~2013 primarily from online and mobile banking solutions that are hosted in our data centers and delivered as software as a service to financial institutions. Financial Services service and other revenue also includes fees for implementation services and online lead generation fees from our Mint personal finance business.

~~Financial Services total net revenue increased~~ 9%because customers filed more extended tax returns in the ~~third~~fiscal 2014 quarter ~~of fiscal 2013 and~~ 5% ~~in the first~~ ~~nine months~~ ~~of fiscal 2013~~ compared with the same ~~periods of fiscal 2012. Financial Services revenue increased 6% in the~~ ~~third~~quarter of fiscal ~~2013 and 8% in the~~2013. We do not believe that first ~~nine months~~ of fiscal 2013 when fiscal 2012 revenue is adjusted to exclude revenue from our corporate banking business, which we sold in March 2012, and fiscal 2013 revenue is adjusted to exclude Mint revenue, which we reported in our Other Businesses segment in fiscal 2012. Revenue growth in both fiscal 2013 periods was primarily driven by higher mobile banking revenue. Mobile banking revenue grew due to an increase in mobile banking end users and usage.

~~Financial Services segment operating income as a percentage of related revenue declined in the~~ ~~third~~quarter ~~and first~~ ~~nine months~~ of fiscal 2013 compared with the same periods of fiscal 2012. The increases in segment revenue described above were offset by higher segment costs and expenses that included costs and expenses for Mint. Staffing expenses were higher due to an increase in headcount and data center hosting expenses increased.

~~Other Businesses~~

(Dollars in millions) Q3
FY13 Q3
FY12
%
Change
YTD
Q3
FY13 YTD
Q3
FY12
%
Change
Product revenue $ 85
$ 77
$ 146
$ 141

Service and other revenue 31
36
94
101

Total segment revenue $ 116
$ 113
3 % $ 240
$ 242
— %
% of total revenue 5 % 6 % 6 % 7 %

Segment operating income $ 56
$ 49
15 % $ 72
$ 58
24 %
% of related revenue 48 % 43 % 30 % 24 %

Other Businesses consist primarily of Quicken; Intuit Health; and our global businesses, primarily in Canada, the United Kingdom, and Singapore. Quicken product revenue is derived primarily from Quicken personal finance desktop software products. Quicken service and other revenue is derived primarily from fees from consumer online transactions and Quicken Loans trademark royalties. Intuit Health service revenue is derived from online patient-to-provider communication services and fees for implementation services. In Canada, product revenue is derived primarily from localized versions of QuickBooks and Quicken as well as consumer desktop tax return preparation software and professional tax preparation products. Service and other revenue in ~~Canada consists primarily~~this segment is indicative of revenue ~~from QuickBooks support plans, payroll services, and merchant payment processing services. In~~trends for the United Kingdom, product revenue is derived primarily from localized versions of QuickBooks and QuickBooks Payroll. In Singapore and other international locations, service and other revenue is derived from QuickBooks Online.

~~Other Businesses total net revenue increased~~ 3% incurrent fiscal year. We will not have substantially complete results for the ~~third~~ ~~quarter of fiscal~~ 2013 ~~and was flat in the first~~ ~~nine months~~ ~~of fiscal 2013 compared with the same periods of fiscal 2012. Other Businesses revenue increased 10% in the~~ ~~third~~ ~~quarter of fiscal 2013 and increased 7% in the first~~ ~~nine months~~ ~~of fiscal 2013 when fiscal 2012 revenue is adjusted to exclude Mint revenue, which we transferred to our Financial Services segment in fiscal 2013. Global revenue increased 8% in~~tax season until the third quarter of fiscal ~~2013~~2014.

In our first fiscal quarter our Professional Tax segment typically generates operating losses because revenue is nominal while operating expenses for functions such as research and ~~6% in~~development continue at relatively consistent levels. We do not believe that Professional Tax operating results for the first ~~nine months~~quarter of fiscal ~~2013~~2014 compared with the same ~~periods of fiscal 2012, driven by growth in global small business revenue.~~

~~Other Businesses segment operating income as a percentage of related revenue increased in the third~~ quarter ~~and first~~ ~~nine months~~ of fiscal 2013 ~~compared with~~are indicative of trends for the ~~same periods of~~full fiscal ~~2012. Segment costs and expenses were lower due to the transfer of Mint to our Financial Services segment in fiscal 2013.~~year.

~~Table of Contents~~

Cost of Revenue


(Dollars in millions)	Q3 FY13		% of Related Revenue		Q3 FY12		% of Related Revenue		YTD Q3 FY13		% of Related Revenue		YTD Q3 FY12		% of Related Revenue		Q1 FY14		% of Related Revenue		Q1 FY13		% of Related Revenue
Cost of product revenue	$	30	5	%	$	32	5	%	$	102	8	%	$	116	9	%	$	29	13	%	$	32	14	%
Cost of service and other revenue	152		10	%	162		12	%	459		18	%	444		20	%	108		27	%	103		31	%
Amortization of acquired technology	5		n/a		3		n/a		16		n/a		9		n/a		6		n/a		4		n/a
Total cost of revenue	$	187	9	%	$	197	10	%	$	577	15	%	$	569	16	%	$	143	23	%	$	139	25	%

Cost of product revenue as a percentage of product revenue decreased slightly in the first ~~nine months~~quarter of fiscal ~~2013~~2014 compared with the same ~~periods~~quarter of fiscal ~~2012~~2013 due to ~~favorable~~ product mix. Cost of service and other revenue as a percentage of service and other revenue decreased in the ~~third~~first quarter ~~and first~~of fiscal ~~nine months~~2014 compared with the same quarter of fiscal 2013 ~~compared with the same periods of fiscal 2012~~ due to growth in ~~our TurboTax~~connected service offerings such as QuickBooks Online, ~~QuickBooks Online,~~payment processing services, and online payroll ~~offerings and~~services. Online revenues have relatively lower ~~data center hosting~~ costs ~~partially offset by higher chargeback losses from mobile offerings in~~of revenue compared with our ~~Payment Solutions business in the first half of the fiscal year.~~other service offerings.

Operating Expenses

(Dollars in millions) Q3
FY13
% of
Total
Net
Revenue
Q3
FY12
% of
Total
Net
Revenue
YTD
Q3
FY13
% of
Total
Net
Revenue
YTD
Q3
FY12
% of
Total
Net
Revenue
Selling and marketing $ 406
19 % $ 352
18 % $ 1,029
27 % $ 898
26 %
Research and development 177
8 % 163
9 % 534
14 % 490
14 %
General and administrative 108
5 % 101
5 % 315
8 % 288
8 %
Amortization of other acquired intangible assets 7
— % 2
— % 21
1 % 33
1 %
Goodwill and intangible asset impairment charge 46
2 % —
— % 46
1 % —
— %
Total operating expenses $ 744
34 % $ 618
32 % $ 1,945
51 % $ 1,709
49 %

~~Current Fiscal Quarter~~



(Dollars in millions)	Q1 FY14		% of Total Net Revenue		Q1 FY13		% of Total Net Revenue
Selling and marketing	$	258	41	%	$	227	40	%
Research and development	176		28	%	168		30	%
General and administrative	118		19	%	94		17	%
Amortization of other acquired intangible assets	4		1	%	7		1	%
Total operating expenses	$	556	89	%	$	496	88	%

Total operating expenses as a percentage of total net revenue increased slightly to ~~34%~~89% in the ~~third~~first quarter of fiscal ~~2013~~2014 from ~~32%~~88% in the same quarter of fiscal ~~2012.~~2013. Total net revenue for the ~~third~~first quarter of fiscal ~~2013~~2014 grew $~~252~~60 million and total operating expenses increased $~~126~~60 million. ~~The increase in operating expenses included the addition of operating expenses for Demandforce, which we acquired in May 2012.~~ Operating expenses increased about ~~$26~~$20 million for staffing expenses associated with higher headcount and about $13 million for advertising and other marketing programs in our ~~Financial Management Solutions~~Small Business and Consumer ~~Tax~~ segments. ~~As described in~~ ~~“Critical Accounting Policies and Estimates”~~ earlier in this Item 2, we also recorded a $46 million charge to operating expense for the impairment of goodwill and intangible assets in our Intuit Health business during the third quarter of fiscal 2013.

~~Fiscal Year to Date~~

~~Total operating expenses as a percentage of total net revenue increased to~~ ~~51%~~ ~~in the first~~ ~~nine months~~ ~~of fiscal 2013 from~~ ~~49%~~ ~~in the same period of fiscal 2012. Total net revenue for the first~~ ~~nine months~~ ~~of fiscal 2013 grew~~ ~~$293~~ ~~million and total operating expenses increased~~ ~~$236~~ million. The increase in operating expenses included the addition of operating expenses for Demandforce, which we acquired in May 2012. Operating expenses increased about $79 million for higher staffing expenses associated with higher headcount, about $48 million for advertising and other marketing programs in our Financial Management Solutions and Consumer Tax segments, and about $20 million for higher share-based compensation expense.

~~Table of Contents~~

Share-based compensation expense increased because the market price of our common stock was higher at the time of our broad-based July 2012 grant of stock options and restricted stock units compared with the prior fiscal year. As described in ~~“Critical Accounting Policies and Estimates”~~ earlier in this Item 2, we also recorded a $46 million charge to operating expense for the impairment of goodwill and intangible assets in our Intuit Health business during the third quarter of fiscal 2013.

Non-Operating Income and Expenses

Interest Expense

Interest expense of $238 million for the first ~~nine~~three months of fiscal ~~2013~~2014 and ~~$42~~ ~~million for the first~~ ~~nine months~~ of fiscal ~~2012~~2013 consisted primarily of interest on senior notes that we issued in March 2007. See Note 6 to the financial statements in Part I, Item 1 of this Quarterly Report for more information.

Table of Contents

Interest and Other Income, Net


	Three Months Ended				Nine Months Ended					Three Months Ended
(In millions)	April 30, 2013		April 30, 2012		April 30, 2013			April 30, 2012		October 31, 2013		October 31, 2012
Interest income	$	1	$	2	$	2		$	6	$	1	$	1
Net gain (loss) on executive deferred compensation plan assets	2		2		6			1
Gain on disposition of stock warrants	—		—		—			10
Net gain on executive deferred compensation plan assets										3		1
Other	—		5		(2		)	6		1		—
Total interest and other income, net	$	3	$	9	$	6		$	23	$	5	$	2

Interest and other income, net consists primarily of interest income and net gains on executive deferred compensation plan assets. Lower interest rates ~~more than~~ offset the effect of higher average invested balances and resulted in ~~lower~~stable interest income in the ~~third~~first quarter of fiscal ~~2013~~2014 compared with the same quarter of fiscal ~~2012. Lower average invested balances and lower interest rates resulted in lower interest income in the first~~ ~~nine months~~ ~~of fiscal~~ 2013 ~~compared with the same period of fiscal~~ ~~2012~~. In accordance with authoritative guidance, we record gains and losses associated with executive deferred compensation plan assets in interest and other income and gains and losses associated with the related liabilities in operating expenses. The total amounts recorded in operating expenses for each period are ~~generally~~approximately equal to the total amounts recorded in interest and other ~~income.~~

~~In connection with our acquisition of Digital Insight Corporation~~income in fiscal 2007, we acquired stock warrants for a privately held company. During the first quarter of fiscal 2012 that company was acquired and we recorded a gain of approximately $10 million on the disposition of the warrants.those periods.

Income Taxes

We compute our provision for or benefit from income taxes by applying the estimated annual effective tax rate to income or loss from recurring operations and adding the effects of any discrete income tax items specific to the period. Our effective tax ~~rate~~rates for the ~~third~~first ~~quarter~~quarters of fiscal 2014 and fiscal 2013 ~~was~~were approximately ~~34%~~29% and33%. Excluding the impact of discrete tax items primarily related to share-based compensation, our effective tax ~~rate~~rates for ~~the first nine months of fiscal~~ ~~2013~~ ~~was~~those quarters were approximately ~~33%~~34% and ~~these rates~~35% and did not differ significantly from the federal statutory rate of 35%. ~~Our effective tax rate~~See Note 7 to the financial statements in Part I, Item 1 of this Quarterly Report for ~~the~~ ~~third~~ ~~quarter and first~~ ~~nine months~~ ~~of fiscal~~ ~~2012~~ ~~was approximately~~ ~~34%~~ ~~and did not differ significantly from the federal statutory rate of~~ ~~35%~~.more information.

Discontinued Operations

On ~~September 17, 2012~~ weWe sold our Intuit Websites business ~~which was a component of our Financial Management Solutions reporting segment,~~in September 2012 for approximately $60 million in cash and recorded a gain on disposal of approximately $32 million, net of income ~~taxes.~~taxes, in the first quarter of fiscal 2013. We sold our Intuit Financial Services (IFS) business in August 2013 for approximately $1.025 billion in cash and recorded a gain on disposal of approximately $36 million, net of income taxes, in the first quarter of fiscal 2014. We also sold our Intuit Health business in August 2013 for cash consideration that was not significant and recorded a $4 million pre-tax loss on disposal that was more than offset by a related income tax benefit of approximately $14 million, resulting in a net gain on disposal of approximately $10 million in the first quarter of fiscal 2014. We have ~~segregated the operating results of Intuit Websites from continuing operations in~~reclassified our statements of operations for all periods ~~prior~~presented to ~~the sale.~~reflect these three businesses as discontinued operations. See Note 4 to the financial statements in Part I, Item 1 of this ~~report~~Quarterly Report for more information.

~~Table of Contents~~

Liquidity and Capital Resources

Overview

At ~~April 30,~~October 31, 2013, our cash, cash equivalents and investments totaled $~~2.0~~1.1 billion, ~~an increase~~a decrease of $~~1.3 billion~~545 million from July 31, ~~2012~~2013 due to the factors discussed under “Statements of Cash Flows” below. Our primary source of liquidity has been cash from operations, which entails the collection of accounts receivable for products and services. Our primary uses of cash have been for research and development programs, selling and marketing activities, capital projects, acquisitions of businesses, debt service costs, repurchases of our common stock, and the payment of cash dividends. As discussed in “Executive Overview – Industry Trends and Seasonality” earlier in this Item 2, our business is subject to significant seasonality. The total balance of our cash, cash equivalents, and investments generally fluctuates with that seasonal pattern. We believe the seasonality of our business is likely to continue in the future.

Table of Contents

The following table summarizes selected measures of our liquidity and capital resources at the dates indicated:


(Dollars in millions)	April 30, 2013		July 31, 2012		$ Change		% Change		October 31, 2013		July 31, 2013		$ Change			% Change
Cash, cash equivalents and investments	$	1,995	$	744	$	1,251	168	%
Cash, cash equivalents, and investments									$	1,116	$	1,661	$	(545	)	(33	)%
Long-term investments	88		75		13		17	%	45		83		(38		)	(46	)%
Long-term debt	499		499		—		—	%	499		499		—			—	%
Working capital	1,154		258		896		347	%	797		1,116		(319		)	(29	)%
Ratio of current assets to current liabilities	1.7 : 1		1.2 : 1						1.7 : 1		1.9 : 1

We expect to generate significant cash from our operations during fiscal ~~2013.~~2014. Since our operations are primarily domestic, approximately ~~90%~~87% of our cash, cash equivalents and investments at ~~April 30,~~October 31, 2013 were located in the U.S. and none of those funds were restricted. Our only significant debt consists of $500 million in senior unsecured notes due in March 2017. We also have an unused $500 million unsecured revolving line of credit facility available to us for general corporate purposes, including future acquisitions.

We evaluate, on an ongoing basis, the merits of acquiring technology or businesses, or establishing strategic relationships with and investing in other companies. Our strong liquidity profile enables us to respond nimbly to these kinds of opportunities.

Based on past performance and current expectations, we believe that our cash and cash equivalents, investments, and cash generated from operations will be sufficient to meet anticipated seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements, and other liquidity requirements associated with our operations for at least the next 12 months. We expect to return excess cash generated by operations to our stockholders through repurchases of our common stock and payment of cash dividends, after taking into account our operating and strategic cash needs.

Statements of Cash Flows

The following table summarizes selected items from our statements of cash flows for the first ~~nine~~three months of each of fiscal ~~2013~~2014 and fiscal ~~2012~~2013. See the financial statements in Part I, Item 1 of this ~~report~~Quarterly Report for complete statements of cash flows for those periods.


	Nine Months Ended									Three Months Ended
(Dollars in millions)	April 30, 2013			April 30, 2012			Change			October 31, 2013			October 31, 2012			$ Change
Net cash provided by (used in):
Operating activities	$	1,560		$	1,428		$	132		$	(190	)	$	(145	)	$	(45	)
Investing activities	(347		)	(82		)	(265		)	949			—			949
Financing activities	(194		)	(1,205		)	1,011			(1,350		)	(33		)	(1,317		)
Effect of exchange rate changes on cash	—			(4		)	4			(1		)	1			(2		)
Increase in cash and cash equivalents	$	1,019		$	137		$	882
Total decrease in cash and cash equivalents										$	(592	)	$	(177	)	$	(415	)

~~Table of Contents~~

During the first ~~nine~~three months of fiscal ~~2013~~2014 we generated $1.0 billion in cash from ~~operations,~~the sale of our Intuit Financial Services business and used $1.4 billion in cash to repurchase shares of our common stock under our stock repurchase programs. See “Stock Repurchase Programs and Dividends on Common Stock” immediately below for more information. During the same period we also generated cash from the issuance of common stock under employee stock plans and ~~from~~used cash for operations, including the ~~sale~~payment of ~~our Intuit Websites business. We used part of the cash we generated from operations to pay~~ accrued bonuses for ~~the prior~~ fiscal ~~year and to fund a seasonal increase in accounts receivable. During the same period we also used cash for the repurchase of shares of our common stock under our stock repurchase programs,~~2013, for the payment of cash dividends, and for capital expenditures. ~~We expect to pay approximately $320 million in income taxes during the fourth quarter of fiscal 2013.~~

During the first ~~nine~~three months of fiscal ~~2012~~2013 we generated cash from ~~operations~~the sale of our Intuit Websites business and from the issuance of common stock under employee stock plans. ~~We used part of the cash we generated from operations to pay accrued bonuses for the prior fiscal year and to fund a seasonal increase in accounts receivable.~~ During the same period we ~~also~~ used cash ~~to repay $500 million in senior notes that became due in March~~for operations, including the payment of accrued bonuses for fiscal 2012, ~~and~~ for the repurchase of shares of our common stock under our stock repurchase programs, for the payment of cash dividends, and for capital expenditures.

Stock Repurchase Programs and Dividends on Common Stock

As described in Note 8 to the financial statements in Part I, Item 1 of this ~~report,~~Quarterly Report, during the first ~~nine~~three months of fiscal ~~2013~~2014 we continued to repurchase shares of our common stock under repurchase programs that our Board of Directors has authorized. At ~~April 30,~~October 31, 2013, we had authorization from our Board of Directors to expend up to an additional $~~1.4~~2.0 billion

Table of Contents

for stock repurchases through August ~~15, 2014~~19, 2017. We currently expect to continue repurchasing our common stock on a quarterly basis; however, future stock repurchases under the current program are at the discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors.

To facilitate the stock repurchase program described above, from time to time we repurchase shares in the open market. On August 23, 2013 we entered into an accelerated share repurchase (ASR) agreement with a large financial institution to repurchase $1.4 billion of Intuit's common stock on an accelerated basis. On August 23, 2013 we paid $1.4 billion to the financial institution and received an initial delivery of 17.6 million shares of Intuit common stock. The total number of shares to be delivered will be calculated using the daily volume weighted average price of Intuit common shares traded during the pricing period, less an agreed discount. The pricing period is scheduled to end in December 2013, but it may conclude sooner at the election of the financial institution. If the total number of shares to be delivered exceeds the number of shares delivered on August 23, 2013, we will receive the remaining balance of shares from the financial institution. Based on the current trading prices of our common stock, we expect to receive additional shares. If the total number of shares to be delivered is less than the number of shares delivered on August 23, 2013, we have the contractual right to deliver to the financial institution either shares of Intuit common stock or cash equal to the value of those shares. We have reflected the shares delivered to us by the financial institution in the first quarter of fiscal 2014 as treasury shares as of the date they were physically delivered in computing weighted average shares outstanding for both basic and diluted net loss per share.

During the first ~~nine~~three months of fiscal ~~2013~~2014 we also continued to pay quarterly cash dividends on shares of our outstanding common stock. In ~~May~~November 2013 our Board of Directors declared a quarterly cash dividend of $~~0.17~~0.19 per share of outstanding common stock payable on ~~July 18, 2013~~January 21, 2014 to stockholders of record at the close of business on ~~July~~January 10, ~~2013~~2014. We currently expect to continue paying comparable cash dividends on a quarterly basis; however, future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.

Unsecured Revolving Credit Facility

On February 17, 2012 we entered into an agreement with certain institutional lenders for a $500 million unsecured revolving credit facility that will expire on February 17, 2017. See Note 5 to the financial statements in Part I, Item 1 of this ~~report~~Quarterly Report for a description of the key terms of this agreement, including the covenants. We remained in compliance with those covenants at all times during the quarter ended ~~April 30,~~October 31, 2013. We may use amounts borrowed under this credit facility for general corporate purposes, including future acquisitions. To date we have not borrowed under the credit facility. We monitor counterparty risk associated with the institutional lenders that are providing the credit facility. We currently believe that the credit facility will be available to us should we choose to borrow under it.

Cash Held by Foreign Subsidiaries

Our cash, cash equivalents, and investments totaled $~~2.0~~1.1 billion at ~~April 30,~~October 31, 2013. Of this amount, approximately ~~10%~~13% was held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were located primarily in Canada, and to a lesser extent in India, Singapore, and the ~~UK.~~United Kingdom. We intend to permanently reinvest a significant portion of our earnings from foreign operations, and we currently do not anticipate that we will need funds generated from foreign operations to fund our domestic operations. In the event that funds from foreign operations are needed to fund operations in the United States, if U.S. taxes have not been previously provided on the related earnings we would provide for and pay additional U.S. taxes at the time we change our intention with regard to the reinvestment of those earnings.

Off-Balance Sheet Arrangements

At ~~April 30,~~October 31, 2013, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.

Contractual Obligations

We presented our contractual obligations at July 31, ~~2012~~2013 in our Annual Report on Form 10-K for the fiscal year then ended. There were no significant changes in those obligations during the first ~~nine~~three months of fiscal ~~2013~~2014.

~~Table of Contents~~

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements on our consolidated financial statements, see Note 1 to the financial statements in Part I, Item 1 of this Quarterly ~~Report on Form 10-Q.~~Report.

3330

Table of Contents

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Investment Risk

There has been significant deterioration and instability in the financial markets since 2008. This period of extraordinary disruption and readjustment in the financial markets has exposed us to investment risks beyond those typically inherent in investment securities. The value and liquidity of the securities in which we invest could deteriorate rapidly and the issuers of these securities could be subject to credit rating downgrades. In light of the current market conditions and these additional risks, we actively monitor market conditions and developments specific to the securities in which we invest. We believe that we take a conservative approach to investing our funds in that we invest only in highly-rated securities and diversify our portfolio of investments. While we believe we take prudent measures to mitigate investment related risks, such risks cannot be fully eliminated because of market circumstances that are outside our control.

Our investments consist of instruments that meet quality standards that are consistent with our investment policy. This policy specifies that, except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments by limiting our holdings with any individual issuer. We do not hold derivative financial instruments or European sovereign debt in our portfolio of investments. See Note 3 to the financial statements in Part I, Item 1 of this Quarterly Report ~~on Form 10-Q~~ for a summary of the cost and fair value of our investments by type of issue.

Interest Rate Risk

Our cash equivalents and investments are subject to market risk due to changes in interest rates. Interest rate movements affect the interest income we earn on cash equivalents and investments and the fair value of those investments. ~~Should~~If the Federal Reserve Target Rate ~~increase~~had increased by 25 basis points from the level of ~~April 30,~~October 31, 2013, the value of our investments at that date would ~~decrease~~have decreased by approximately $32 million. ~~Should~~If the Federal Reserve Target Rate ~~increase~~had increased by 100 basis points from the level of ~~April 30,~~October 31, 2013, the value of our investments at that date would ~~decrease~~have decreased by approximately $10 million.

We are also exposed to the impact of changes in interest rates as they affect our $500 million revolving credit facility. Advances under the credit facility accrue interest at rates that are equal to JP Morgan's alternate base rate plus a margin that ranges from 0.0% to 0.5% or the London InterBank Offered Rate (LIBOR) plus a margin that ranges from 0.9% to 1.5%, in both cases based on our senior debt credit ratings. Consequently, our interest expense would fluctuate with changes in the general level of these interest rates if we were to borrow any amounts under the credit facility. NoAt October 31, 2013, no amounts ~~are currently~~were outstanding under the credit facility.

On March 12, 2007 we issued $500 million of 5.75% senior unsecured notes due on March 15, 2017. We carry these senior notes at face value less unamortized discount on our balance sheets. Since these senior notes bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of these notes fluctuates when interest rates change. See Note 2 and Note 6 to the financial statements in Part I, Item 1 of this Quarterly Report ~~on Form 10-Q~~ for more information.

Impact of Foreign Currency Rate Changes

The functional currencies of our international operating subsidiaries are the local currencies. We translate the assets and liabilities of our foreign subsidiaries at the exchange rates in effect on the balance sheet date. We translate their revenue, costs and expenses at the average rates of exchange in effect during the period. We include translation gains and losses in the stockholders’ equity section of our balance sheets. We include net gains and losses resulting from foreign exchange transactions in interest and other income ~~net~~ in our statements of operations.

Since we translate foreign currencies (primarily Canadian dollars, British pounds, Indian rupees, and Singapore dollars) into U.S. dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results. The historical impact of currency fluctuations on our financial results has generally been immaterial. We believe that our exposure to currency exchange fluctuation risk is not significant primarily because our ~~international~~global subsidiaries invoice customers and satisfy their financial obligations almost exclusively in their local currencies.

Although the impact of currency fluctuations on our financial results has generally been immaterial in the past and we believe that for the reasons cited above currency fluctuations will not be significant in the future, there can be no guarantee that the impact of currency fluctuations will not be material in the future. As of ~~April 30,~~October 31, 2013, we did not engage in foreign currency hedging activities.

3431

Table of Contents

ITEM 4

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based upon an evaluation of the effectiveness of disclosure controls and procedures, Intuit’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures as defined under Exchange Act Rule 13a-15(e) and 15d-15(e) were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission and is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During our most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3532

Table of Contents

PART II

ITEM 1

LEGAL PROCEEDINGS

See Note 9 to the financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of legal proceedings.

ITEM 1A

RISK FACTORS

Forward-Looking Statements and Risk Factors

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements in this report, other than statements that are purely historical, are forward-looking statements. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “forecast,” “estimate,” “seek,” and similar expressions also identify forward-looking statements. In this report, forward-looking statements include, without limitation, the following:

our expectations and beliefs regarding future conduct and growth of the business;

~~our belief that the delay by the IRS in accepting federal income tax returns contributed to a shift in some revenue from the second quarter of fiscal 2013 to the third quarter of fiscal 2013;~~

our beliefs and expectations regarding seasonality, competition and other trends that affect our businesses;

our expectation that we will solve problems faster and more efficiently for our growing base of customers by moving to more open platforms with application programming interfaces that enable the contributions of end users and third-party developers;

our expectation that we will continue to invest significant resources in our product development, marketing and sales capabilities in the future;

our expectation that we will continue to invest significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities;

our expectation that connected services revenue as a percentage of our total revenue will continue to grow in the future;

the assumptions underlying our Critical Accounting Policies and Estimates, including our estimates regarding product rebate and return reserves; the collectability of accounts receivable; stock volatility and other assumptions used to estimate the fair value of share-based compensation; the fair value of goodwill; and expected future amortization of acquired intangible assets;

our belief that the investments we hold are not other-than-temporarily impaired;

our belief that the reduction in liquidity of the municipal auction rate securities we hold will not have a material impact on our overall ability to meet our liquidity needs;

our expectation that we will continue to repurchase our common stock on a quarterly basis;

our expectation that we will continue to pay a comparable cash dividend on a quarterly basis;

our belief that our exposure to currency exchange fluctuation risk will not be significant in the future;

our assessments and estimates that determine our effective tax rate;

our ~~expectation that we will pay approximately $320 million in income taxes in the fourth quarter of fiscal 2013;~~

~~our~~ belief that it is not reasonably possible that there will be a significant increase or decrease in our unrecognized tax benefits over the next 12 months;

our belief that we will not need funds generated from foreign operations to fund our domestic operations;

our belief that our cash and cash equivalents, investments and cash generated from operations will be sufficient to meet our seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements and other liquidity requirements associated with our operations for at least the next 12 months;

our expectation that we will return excess cash generated by operations to our stockholders through repurchases of our common stock and payment of cash dividends; and

~~Table of Contents~~

our assessments and beliefs regarding the future outcome of pending legal proceedings and the liability, if any, that Intuit may incur as a result of those proceedings.

We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. We encourage you to read carefully all information provided in this Quarterly

Table of Contents

Report and in our other filings with the Securities and Exchange Commission before deciding to invest in our stock or to maintain or change your investment. These forward-looking statements are based on information as of the filing date of this Quarterly Report, and we undertake no obligation to publicly revise or update any forward-looking statement for any reason.

Because forward-looking statements involve risks and uncertainties, there are important factors that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include the following:

We face intense competitive pressures that may harm our operating results.

We face intense competition in all of our businesses, and we expect competition to remain intense in the future. Our competitors and potential competitors range from large and established entities to emerging start-ups. Our competitors may introduce superior products and services, reduce prices, have greater technical, marketing and other resources, have greater name recognition, have larger installed bases of customers, have well-established relationships with our current and potential customers, advertise aggressively or beat us to market with new products and services. In addition, we may face competition from existing companies, with large established consumer user-bases and broad-based platforms, who may change or expand the focus of their business strategies and marketing to target our customers, ~~such as~~including small businesses and ~~financial institutions.~~tax customers. We also face intensified competition from providers of free accounting, tax, payments, ~~banking~~ and other financial services. In order to compete, we have also introduced free offerings in several categories, but we may not be able to attract customers or effectively monetize all of these offerings, and customers who have formerly paid for Intuit’s products and services may elect to use free offerings instead. These competitive factors may diminish our revenue and profitability and harm our ability to acquire and retain customers.

Our consumer tax business also faces significant competition from the public sector, where we face the risk of federal and state taxing authorities developing software or other systems to facilitate tax return preparation and electronic filing at no charge to taxpayers. These or similar programs may be introduced or expanded in the future, which may cause us to lose customers and revenue. Although the Free File Alliance has kept the federal government from being a direct competitor to Intuit’s tax offerings, it has fostered additional online competition and may cause us to lose significant revenue opportunities. The current agreement with the Free File Alliance is scheduled to expire in October 2014. We anticipate that governmental encroachment at both the federal and state levels may present a continued competitive threat to our business for the foreseeable future.

Future revenue growth depends upon our ability to adapt to technological change and successfully introduce new and enhanced products, services and business models.

The software as a service (SaaS), desktop software and mobile technology industries are characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. As we continue to grow our software as a service, mobile and other offerings, we must continue to innovate and develop new products and features to meet changing customer needs and attract and retain talented software developers. We need to continue to develop our skills, tools and capabilities to capitalize on existing and emerging technologies, which require us to devote significant resources.

A number of our businesses also derive a significant amount of their revenue from one-time upfront license fees and rely on customer upgrades and service offerings to generate a significant portion of their revenues. In addition, our consumer and professional tax businesses depend significantly on revenue from customers who return each year to use our updated tax preparation and filing software and services. As our existing products mature, encouraging customers to purchase product upgrades becomes more challenging unless new product releases provide features and functionality that have meaningful incremental value. If we are not able to develop and clearly demonstrate the value of new or upgraded products or services to our customers, our revenues may be harmed. In addition, as we continue to introduce and expand our new business models, including offerings that are subscription-based or that are free to end users, we may be unsuccessful in monetizing or increasing customer adoption of these offerings.

The number of people who access products and services through devices other than personal computers, including mobile phones, smartphones, and handheld computers such as tablets, has increased dramatically in the past few years. We have limited experience to date in developing products and services for users of these alternative devices, and the versions of our products and services developed for these devices may not be compelling to users. Even if we are able to attract new users through these mobile offerings, the amount of revenue that we derive per user from mobile offerings may be less than the revenue that we have historically derived from users of personal computers. As new devices and new platforms are continually being released, it is difficult to predict the problems we may encounter in developing versions of our products and services for use on these alternative devices and we may need to devote significant resources to the creation, support, and maintenance of

~~Table of Contents~~

such offerings. If we are slow to develop products and technologies that are compatible with these alternative devices, of if our competitors are able to achieve those results more quickly than us, we will fail to capture a significant share of an increasingly important portion of the market for online services, which could adversely affect our business.

Table of Contents

In some cases, we may expend a significant amount of resources and management attention on offerings that do not ultimately succeed in their markets. We have encountered difficulty in launching new products and services in the past. If we misjudge customer needs in the future, our new products and services may not succeed and our revenues and earnings may be harmed. We have also invested, and in the future expect to invest, in new business models, geographies, strategies and initiatives. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, expenses associated with the initiatives and inadequate return on investments. Because these new initiatives are inherently risky, they may not be successful and may harm our financial condition and operating results.

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 continue to transition our business to more connected services, we become more dependent on the continuing operation and availability of our information technology and communication systems and those of our external service ~~providers.~~providers, including, for example, third party Internet-based or “cloud” computing services. We do not have redundancy for all of our systems, many of our critical applications reside in only one of our data centers, and our disaster recovery planning may not account for all eventualities. We also do not maintain real-time back-up of all our data, and in the event of significant system disruption we may experience loss of data or processing capabilities, which may cause us to lose customers and may materially harm our reputation and our operating results. In addition, we are in the process of updating our customer facing applications and the supporting information technology infrastructure to meet our customers’ expectations for continuous service availability. Any difficulties in upgrading these applications or infrastructure or failure of our systems or those of our third-party service providers may result in interruptions in our service, which may reduce our revenues and profits, cause us to lose customers and damage our reputation. Any prolonged interruptions at any time may result in lost customers, additional refunds of customer charges, negative publicity and increased operating costs, any of which may significantly harm our business, financial condition and results of operations.

We are in the process of migrating our applications and infrastructure to new data centers. If we do not execute the transition to the new data centers in an effective manner, we may experience unplanned service disruptions or unforeseen increases in costs which may harm our operating results and our business.

Our business operations, data centers, information technology and communications systems are vulnerable to damage or interruption from natural disasters, human error, malicious attacks, fire, power loss, telecommunications failures, computer viruses, computer denial of service attacks, terrorist attacks and other events beyond our control. The majority of our research and development activities, our corporate headquarters, our principal information technology systems, and other critical business operations are located near major seismic faults. We do not carry earthquake insurance for direct quake-related losses. Our future financial results may be materially harmed in the event of a major earthquake or other natural or man-made disaster.

We rely on internal systems and external systems maintained by manufacturers, distributors and other service providers to take and fulfill customer orders, handle customer service requests and host certain online activities. Any interruption or failure of our internal or external systems may prevent us or our service providers from accepting and fulfilling customer orders or cause company and customer data to be unintentionally disclosed. Our continuing efforts to upgrade and expand our network security and other information systems as well as our high-availability capabilities may be costly, and problems with the design or implementation of system enhancements may harm our business and our results of operations.

Our hosting, collection, use and retention of personal customer information and data require costly compliance efforts, and a breach of our security measures could disrupt our businesses, result in the disclosure of confidential information, damage our reputation, and cause losses.

A number of our businesses collect, use and retain large amounts of personal customer information and data, including credit card numbers, tax return information, bank account numbers and passwords, personal and business financial data, social security numbers, healthcare information and payroll information. We may also develop new business models that use certain personal information, or data derived from personal information. In addition, we collect and maintain personal information of our employees in the ordinary course of our business. Some of this personal customer and employee information is held, and some transactions are executed, by third parties. In addition, as many of our products and services are Web-based and mobile-application-based, the amount of data we store for our users on our servers and the servers of our vendors that provide hosting services (including personal information) has been increasing and will continue to increase as we further transition our businesses to connected services. We and our vendors use commercially available security technologies to protect transactions and personal information. We use security and business controls to limit access and use of personal information and require our vendors to implement similar controls. However, we may not have the ability to effectively monitor the implementation of security measures of our vendors, and, in any event, individuals or third parties may be able to circumvent these security and

~~Table of Contents~~

business measures, and errors in the storage, use or transmission of personal information may result in a breach of customer or employee privacy or theft of assets, which may require notification under applicable data privacy regulations. We employ

Table of Contents

contractors, temporary and seasonal employees who may have access to the personal information of customers and employees or who may execute transactions in the normal course of their duties. While we conduct background checks of our employees and other individuals and limit access to systems and data, it is possible that one or more of these individuals may circumvent these controls, resulting in a security breach.

We are subject to laws, rules and regulations relating to the collection, use, and security of user data. New laws in this area have been passed by several jurisdictions, and other jurisdictions are considering imposing additional restrictions. These new laws may be interpreted and applied inconsistently from jurisdiction to jurisdiction and our current data protection policies and practices may not be consistent with those interpretations and applications. In addition, the ability to execute transactions and the possession and use of personal information and data in conducting our business subjects us to legislative and regulatory burdens that may require notification to customers or employees of a security breach, restrict our use of personal information and hinder our ability to acquire new customers or market to existing customers. As our business continues to expand to new industry segments that may be more highly regulated for privacy and data security, and to countries outside the United States that have more strict data protection laws, our compliance requirements and costs may increase. We have incurred —– and may continue to incur —– significant expenses to comply with mandatory privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations.

A major breach of our security measures or those of third parties that provide hosting services for us, execute transactions or hold and manage personal information may have serious negative consequences for our businesses, including possible fines, penalties and damages, reduced customer demand for our services, harm to our reputation and brands, further regulation and oversight by federal or state agencies, and loss of our ability to provide financial transaction services or accept and process customer credit card orders or tax returns. From time to time, we detect, or receive notices from customers or public or private agencies that they have detected, vulnerabilities in our servers, our software or third-party software components that are distributed with our products. The existence of vulnerabilities, even if they do not result in a security breach, may harm customer confidence and require substantial resources to address, and we may not be able to discover or remediate such security vulnerabilities before they are exploited. In addition, our technologies, systems, and networks and our customers' devices have been subject to, and are likely to continue to be the target of, cyber attacks, computer viruses, worms, phishing attacks, malicious software programs and other information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of ~~our or~~ our customers' confidential, proprietary and other information, or otherwise disrupt our or our customers' or other third parties' business operations. Although this is an industry-wide problem that affects software across platforms, it is increasingly affecting our offerings because hackers tend to focus their efforts on well-known offerings that are popular among customers, and we expect them to continue to do so. If hackers are able to circumvent our security measures, or if we are unable to detect an intrusion into our systems and contain such intrusion in a reasonable amount of time, some of our customers' personal information may be compromised. Although we have commercially available network and application security, internal control measures, and physical security procedures to safeguard our systems, there can be no assurance that a security breach, intrusion, loss or theft of personal information will not occur, which may harm our business, customer reputation and future financial results and may require us to expend significant resources to address these problems, including notification under data privacy regulations.

If we are unable to develop, manage and maintain critical third party business relationships, our business may be adversely affected.

Our growth is dependent on the strength of our business relationships and our ability to continue to develop, maintain and leverage new and existing relationships. We rely on various third party partners, including software and service providers, suppliers, vendors, manufacturers, distributors, contractors, financial institutions, core processors, licensing partners and development partners, among others, in many areas of our business in order to deliver our offerings and operate our business. We also rely on third parties to support the operation of our business by maintaining our physical facilities, equipment, power systems and infrastructure. In certain instances, these third party relationships are sole source or limited source relationships and can be difficult to replace or substitute depending on the level of integration of the third party’s products or services into, or with, our offerings and/or the general availability of such third party’s products and services. In addition, there may be few or no alternative third party providers or vendors in the market. Further, there can be no assurance that we will be able to adequately retain third party contractors engaged to help us operate our business. The failure of third parties to provide acceptable and high quality products, services and technologies or to update their products, services and technologies may result in a disruption to our business operations and our customers, which may reduce our revenues and profits, cause us to lose customers and damage our reputation. Alternative arrangements and services may not be available to us on commercially reasonable terms or we may experience business interruptions upon a transition to an alternative partner.

In particular, we have relationships with banks, credit unions orand other financial institutions ~~both as customers and as suppliers of~~that support certain critical services we offer to our other customers. If macroeconomic conditions or other factors cause any of these

~~Table of Contents~~

institutions to fail, consolidate, stop providing certain services or institute cost-cutting efforts, our business and financial results may suffer and we may be unable to offer those services to our customers.

Table of Contents

We increasingly utilize the distribution platforms of third parties like Apple's App Store and Google Play for Android for the distribution of certain of our product offerings. Although we benefit from the strong brand recognition and large user base of these distribution platforms to attract new customers, the platform owners have wide discretion to change the pricing structure, terms of service and other policies with respect to us and other developers. Any adverse changes by these third parties could adversely affect our financial results.

Increased government regulation of our businesses may harm our operating results.

Many of our businesses are ~~in highly~~ regulated ~~areas,~~under federal, state and local laws, including our tax, accounting professionals, payroll and payments ~~financial services, prepaid debit card and healthcare~~ businesses. There have been significant new regulations and heightened focus by the government on many of these ~~areas.~~ areas, as well as in areas such as insurance and healthcare (including, for example, the Affordable Care Act) that affect certain of our products and services. In addition, as we ~~seek to grow~~expand our products and services and revise our business models, both domestically and internationally, we may ~~expand into more highly-regulated businesses~~become subject to additional government regulation or ~~countries, which may subject us to~~ increased regulatory scrutiny. ~~The application~~Further, regulators may adopt new laws or regulations or their interpretation of ~~these~~existing laws ~~and regulations to our businesses is often unclear and compliance with these~~or regulations may ~~involve~~differ from ours. These regulatory requirements could impose significant ~~costs or~~limitations, require changes to our business, ~~practices~~or cause changes in customer purchasing behavior that may result in reduced ~~revenue.~~revenue or increased costs which may affect our operating results. Any changes that we may incur as a result of any such regulations may not be sustained over time depending on a number of factors, including market and industry reactions to such regulations.

In order to meet regulatory standards, we may be required to increase investment in compliance and auditing functions or new technologies. In addition, government authorities may enact other laws, rules or regulations that place new burdens or restrictions on our business or determine that our operations are directly subject to existing rules or regulations, such as requirements related to data collection, privacy, use, transmission, retention, processing and security, which may make our business more costly, less efficient or impossible to conduct, and may require us to modify our current or future products or services, which may harm our future financial results.

The tax preparation industry continues to receive heightened attention from federal and state governments. New legislation, regulation, public policy considerations, litigation by the government or private entities, or new interpretations of existing laws may result in greater oversight of the tax preparation industry, restrict the types of products and services that we can offer or the prices we can charge, or otherwise cause us to change the way we operate our tax businesses or offer our tax products and services. ~~This~~We may not be able to respond quickly to such regulatory, legislative and other developments, and these changes may in turn ~~may~~ increase our cost of doing business and limit our revenue opportunities. In addition, if our practices are not consistent with new interpretations of existing laws, we may become subject to lawsuits, penalties, and other liabilities that did not previously apply. We are also required to comply with a variety of state revenue agency standards in order to successfully operate our tax preparation and electronic filing services. Changes in state-imposed requirements by one or more of the states, including the required use of specific technologies or technology standards, may significantly increase the costs of providing those services to our customers and may prevent us from delivering a quality product to our customers in a timely manner.

Our Financial Services business provides services to banks, credit unions and other financial institutions that are subject to extensive and complex federal and state regulation. As a result, our financial institution customers require that our products and services comply with the regulations applicable to these customers. If we are unable to comply with these regulations, we may incur significant costs and penalties, face litigation or governmental proceedings, and lose our ability to sell to these customers. Any of these adverse events may harm our future financial results and our reputation.

If we fail to process transactions effectively or fail to adequately protect against disputed or potential fraudulent activities, our revenue and earnings may be harmed.

Our operations process a significant volume and dollar value of transactions on a daily basis, especially in our payroll and payments businesses. Due to the size and volume of transactions that we handle, effective processing systems and controls are essential to ensure that transactions are handled appropriately. Despite our efforts, it is possible that we may make errors or that funds may be misappropriated due to fraud. The systems supporting our business are comprised of multiple technology platforms that are difficult to scale. If we are unable to effectively manage our systems and processes we may be unable to process customer data in an accurate, reliable and timely manner, which may harm our business. In our payments processing service business, if merchants for whom we process payment transactions are unable to pay refunds due to their customers in connection with disputed or fraudulent merchant transactions, we may be required to pay those amounts and our payments may exceed the amount of the customer reserves we have established to make such payments.

The online tax preparation, payroll administration and online payments industries have been experiencing an increasing amount of fraudulent activities by third parties. Although we do not believe that any of this activity is uniquely targeted at our business, this type of fraudulent activity may adversely impact our own operations in our consumer tax, payroll, and payments businesses. In addition to any direct damages and potential fines that may result from such fraud, which may be substantial, a loss of confidence in our controls may seriously harm our business and damage our brand. As fraud detection and prevention

~~Table of Contents~~

abilities improve across the various industries in which we operate, we may implement risk control mechanisms that could make it more difficult for legitimate customers to obtain and use our products as well as prevent the sale of our products to those parties seeking to facilitate fraudulent activity, which could result in lost revenue and negatively impact our operating results.

Table of Contents

Third parties claiming that we infringe their proprietary rights may cause us to incur significant legal expenses and prevent us from selling our products.

As the number of products in the software industry increases and the functionality of these products further overlap, and as we acquire technology through acquisitions or licenses, we may become increasingly subject to infringement claims, including patent, copyright, and trademark infringement claims. Litigation may be necessary to determine the validity and scope of the patent rights of others. We have received an increasing number of allegations of patent infringement claims in the past and expect to receive more claims in the future based on allegations that our offerings infringe upon patents held by third parties. Some of these claims are the subject of pending litigation against us and against some of our customers. These claims may involve patent holding companies or other adverse patent owners who have no relevant product revenues of their own, and against whom our own patents may provide little or no deterrence. The ultimate outcome of any allegation is uncertain and, regardless of outcome, any such claim, with or without merit, may be time consuming to defend, result in costly litigation, divert management’s time and attention from our business, require us to stop selling, delay shipping or redesign our products, or require us to pay monetary damages for royalty or licensing fees, or to satisfy indemnification obligations that we have with some of our customers. Our failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims may harm our business.

We rely on third party intellectual property in our products and services.

Many of our products and services include intellectual property of third parties, which we license under agreements that must be renewed or renegotiated from time to time. We may not be able to obtain licenses to these third party technologies or content on reasonable terms, or at all. If we are unable to obtain the rights necessary to use this intellectual property in our products and services, we may not be able to sell the affected offerings, and customers who are currently using the affected product may be disrupted, which may in turn harm our future financial results, damage our brand, and result in customer loss. Also, we and our customers have been and may continue to be subject to infringement claims as a result of the third party intellectual property incorporated in to our offerings. Although we try to mitigate this risk and we may not be ultimately liable for any potential infringement, pending claims require us to use significant resources, require management attention and could result in loss of customers.

Some of our offerings include third-party software that is licensed under so-called “open source” licenses, some of which may include a requirement that, under certain circumstances, we make available, or grant licenses to, any modifications or derivative works we create based upon the open source software. Although we have established internal review and approval processes to mitigate these risks, we may not be sure that all open source software is submitted for approval prior to use in our products. Many of the risks associated with usage of open source may not be eliminated, and may, if not properly addressed, harm our business.

Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.

Our patents, trademarks, trade secrets, copyrights and other intellectual property rights are important assets for us. We aggressively protect our intellectual property rights by relying on federal, state and common law rights in the U.S. and internationally, as well as a variety of administrative procedures. We also rely on contractual restrictions to protect our proprietary rights in products and services. The efforts that we take to protect our proprietary rights may not always be sufficient or effective. Protecting our intellectual property rights is costly and time consuming and may not be successful in every location. Any significant impairment of our intellectual property rights could harm our business, our brand and our ability to compete.

Policing unauthorized use and copying of our products is difficult, expensive, and time consuming. Current U.S. laws that prohibit copying give us only limited practical protection from software piracy and the laws of many other countries provide very little protection. We frequently encounter unauthorized copies of our software being sold through online marketplaces. Although we continue to evaluate and put in place technology solutions to attempt to lessen the impact of piracy and engage in efforts to educate consumers and public policy leaders on these issues and cooperate with industry groups in their efforts to combat piracy, we expect piracy to be a persistent problem that results in lost revenues and increased expenses.

~~Table of Contents~~

Because competition for our key employees is intense, we may not be able to attract, retain and develop the highly skilled employees we need to support our planned growth.

Much of our future success depends on the continued service and availability of skilled personnel, including members of our executive team, and those in technical, marketing and staff positions. Experienced personnel in the software, mobile technologies, data security, and software as a service industries are in high demand and competition for their talents is intense, especially in California and India, where the majority of our employees are located. Also, as we strive to continue to adapt to technological change and introduce new and enhanced products and business models, we must be able to secure, maintain and

Table of Contents

develop the right quality and quantity of engaged and committed talent. Although we strive to be an employer of choice, we may not be able to continue to successfully attract, retain and develop key personnel which may cause our business to suffer.

As our product and service offerings become more tightly integrated, we may be required to recognize the related revenue over relatively longer periods of time.

Our expanding range of products and services, and the combinations in which we offer them, generate different revenue streams than our traditional desktop software businesses, and the accounting policies that apply to revenue from these offerings are complex. For example, as we offer more online services bundled with software products, we may be required to defer a higher percentage of our software product revenue into future fiscal periods. In addition, as we offer more services on a subscription basis, we recognize revenue from those services over the periods in which the services are provided. This may result in significant shifts of revenue from quarter to quarter, or from one fiscal year to the next.

The nature of our products and services necessitates timely product launches, and if we experience significant product quality problems or delays, it may harm our revenue, earnings and reputation.

All of our tax products and many of our non-tax products have rigid development timetables that increase the risk of errors in our products and the risk of launch delays. Our tax preparation software product development cycle is particularly challenging due to the need to incorporate unpredictable tax law and tax form changes each year and because our customers expect high levels of accuracy and a timely launch of these products to prepare and file their taxes by the tax filing deadline. Due to the complexity of our products and the condensed development cycles under which we operate, our products sometimes contain “bugs” that may unexpectedly interfere with the operation of the software. The complexity of our products may also make it difficult for us to consistently deliver offerings that contain the features, functionality and level of accuracy that our customers expect. When we encounter problems we may be required to modify our code, distribute patches to customers who have already purchased the product and recall or repackage existing product inventory in our distribution channels. If we encounter development challenges or discover errors in our products late in our development cycle it may cause us to delay our product launch date. Any major defects or launch delays may lead to loss of customers and revenue, negative publicity, customer and employee dissatisfaction, reduced retailer shelf space and promotions, and increased operating expenses, such as inventory replacement costs, legal fees or payments resulting from our commitment to reimburse penalties and interest paid by customers due solely to calculation errors in our consumer tax preparation products.

Our businesses are highly seasonal and our quarterly results could fluctuate significantly.

Several of our businesses are highly seasonal which historically has caused significant quarterly fluctuations in our financial results. Revenue and operating results are usually strongest during the second and third fiscal quarters ending January 31 and April 30 due to our tax businesses contributing most of their revenue during those quarters and the timing of the release of our small business software products and upgrades. We typically experience lower revenues, and operating losses, in the first and fourth quarters ending October 31 and July 31. Our financial results may also fluctuate from quarter to quarter and year to year due to a variety of factors, including changes in product sales mix that affect average selling prices; product release dates; the timing of delivery of federal and state tax forms; any delay in our ability to successfully submit electronically filed tax returns with government agencies; changes in consumer behavior; the timing of our discontinuation of support for older product offerings; changes to our bundling strategy, such as the inclusion of upgrades with certain offerings; changes to how we communicate the availability of new functionality in the future (any of which may impact the pattern of revenue recognition); and the timing of acquisitions, divestitures, and goodwill and acquired intangible asset impairment charges. Any fluctuations in our operating results may adversely affect our stock price.

We are frequently a party to litigation and regulatory inquiries which could result in an unfavorable outcome and have an adverse effect on our business, financial condition, results of operation and cash flows.

We are subject to various legal proceedings, claims and regulatory inquiries that have arisen out of the ordinary conduct of our business and are not yet resolved and additional claims and inquiries may arise in the future. The number and significance of these claims and inquiries have increased as our businesses have evolved. Any proceedings, claims or inquiries initiated by or against us, whether successful or not, may be time consuming; result in costly litigation, damage awards, consent decrees,

~~Table of Contents~~

injunctive relief or increased costs of business; require us to change our business practices or products; require significant amounts of management time; result in diversion of significant operations resources; or otherwise harm of business and future financial results. For further information about specific litigation, see Part II, Item 1, “Legal Proceedings.”

~~The continued~~

Table of Contents

Adverse global economic ~~downturn may~~conditions could harm our business and financial condition.

The ~~continued~~onset or continuation of adverse macroeconomic developments could negatively affect our business and financial condition. Adverse global economic ~~downturn has~~events have caused, and could, in the future, cause disruptions and ~~extreme~~ volatility in global financial markets and increased rates of default and bankruptcy, and ~~has impacted~~could impact consumer and small business spending. ~~These macroeconomic developments have affected and may continue to negatively affect our business and financial condition.~~ In particular, because the majority of our revenue is derived from sales within the U.S., economic conditions in the U.S. have an even greater impact on us than companies with a more diverse international presence. ~~Potential~~Challenging economic times could cause potential new customers ~~may~~ not to purchase or to delay ~~purchase~~purchasing of our products and services, and ~~many of~~could cause our existing customers ~~may~~to discontinue purchasing or delay upgrades of our existing products and services, thereby negatively impacting our revenues and future financial results. Decreased consumer spending levels ~~may~~could also reduce credit and debit card transaction processing volumes causing reductions in our payments revenue. Poor economic conditions and high unemployment ~~has~~have caused, and ~~may continue to~~could in the future cause, a significant decrease in the number of tax returns filed, which may have a significant effect on the number of tax returns we prepare and file. In addition, weakness in the end-user consumer and small business markets ~~may~~could negatively affect the cash flow of our distributors and resellers who ~~may,~~could, in turn, delay paying their obligations to us, which ~~may~~could increase our credit risk exposure and cause delays in our recognition of revenue or future sales to these customers. Additionally, if macroeconomic or other factors continue to cause banks, credit unions, mortgage lenders and other financial institutions to fail, or result in further cost-cutting efforts or consolidation of these entities, we may lose current or potential customers, achieve less revenue per customer and/or lose valuable relationships with such of these entities that provide critical services to our customers. Any of these events ~~may~~could harm our business and our future financial results.

We regularly invest resources to update and improve our internal information technology systems and software platforms. Should our investments not succeed, or if delays or other issues with new or existing internal technology systems and software platforms disrupt our operations, our business could be harmed.

We rely on our network and data center infrastructure and internal technology systems for many of our development, marketing, operational, support, sales, accounting and financial reporting activities. We are continually investing resources to update and improve these systems and environments in order to meet existing, as well as the growing and changing requirements of our business and customers. If we experience prolonged delays or unforeseen difficulties in updating and upgrading our systems and architecture, we may experience outages and may not be able to deliver certain offerings and develop new offerings and enhancements that we need to remain competitive. Such improvements and upgrades are often complex, costly and time consuming. In addition such improvements can be challenging to integrate with our existing technology systems, or may uncover problems with our existing technology systems. Unsuccessful implementation of hardware or software updates and improvements could result in outages, disruption in our business operations, loss of revenue or damage to our reputation.

Our international operations are subject to increased risks which may harm our business, operating results, and financial condition.

In addition to uncertainty about our ability to generate revenues from our foreign operations and expand into international markets, there are risks inherent in doing business internationally, including:

trade barriers and changes in trade regulations;

difficulties in developing, staffing, and simultaneously managing a large number of varying foreign operations as a result of distance, language, and cultural differences;

stringent local labor laws and regulations;

credit risk and higher levels of payment fraud;

profit repatriation restrictions, and foreign currency exchange restrictions;

political or social unrest, economic instability, repression, or human rights issues;

geopolitical events, including natural disasters, acts of war and terrorism;

import or export regulations;

compliance with U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to government officials;

antitrust and competition regulations;

potentially adverse tax developments;

economic uncertainties relating to European sovereign and other debt;

different, ~~and~~uncertain or more stringent user protection, data protection, privacy and other laws; and

~~Table of Contents~~

risks related to other government regulation or required compliance with local laws.

Table of Contents

Violations of the complex foreign and U.S. laws and regulations that apply to our international operations may result in fines, criminal actions or sanctions against us, our officers or our employees, prohibitions on the conduct of our business and damage to our reputation. Although we have implemented policies and procedures designed to promote compliance with these laws, there can be no assurance that our employees, contractors or agents will not violate our policies. These risks inherent in our international operations and expansion increase our costs of doing business internationally and may result in harm to our business, operating results, and financial condition.

If actual product returns exceed returns reserves, our future financial results may be harmed.

We ship more desktop software products to our distributors and retailers than we expect them to sell, in order to reduce the risk that distributors or retailers may run out of products. This is particularly true for our Consumer Tax products, which have a short selling season and for which returns occur primarily in our fiscal third and fourth quarters. Like many software companies that sell their products through distributors and retailers, we have historically accepted significant product returns. We establish reserves against revenue for product returns in our financial statements based on estimated returns and we closely monitor product sales and inventory in the retail channel in an effort to maintain adequate reserves. In the past, returns have not differed significantly from these reserves. However, if we experience actual returns that significantly exceed reserves, it may result in lower net revenue.

Unanticipated changes in our income tax rates may affect our future financial results.

Our future effective income tax rates may be favorably or unfavorably affected by unanticipated changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or their interpretation. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. These continuous examinations may result in unforeseen tax-related liabilities, which may harm our future financial results.

Amortization of acquired intangible assets and impairment charges may cause significant fluctuation in our net income.

Our acquisitions have resulted in significant expenses, including amortization and impairment of acquired technology and other acquired intangible assets, and impairment of goodwill. Total costs and expenses in these categories were approximately ~~$83~~$99 million in ~~the first nine months of~~ fiscal 2013, ~~$53~~$33 million in fiscal 2012, ~~$85~~and $50 million in fiscal ~~2011, and $85 million in fiscal 2010.~~2011. Although under current accounting rules goodwill is not amortized, we may incur impairment charges related to the goodwill already recorded and to goodwill arising out of future acquisitions. We test the impairment of goodwill annually in our fourth fiscal quarter or more frequently if indicators of impairment arise. The timing of the formal annual test may result in charges to our statement of operations in our fourth fiscal quarter that may not have been reasonably foreseen in prior periods. The total costs and expenses for fiscal 2013 and fiscal 2011 included goodwill and intangible asset impairment charges of $46 million and $30 million, respectively, that reduced the carrying value of our Intuit Health goodwill and intangible assets to zero. We recorded the goodwill and intangible assets for that reporting unit on our balance sheet in May 2010 in connection with our acquisition of Medfusion, Inc. At ~~April 30,~~October 31, 2013, we had $~~2.2~~1.3 billion in goodwill and $~~165~~158 million in net acquired intangible assets on our balance sheet, both of which may be subject to impairment charges in the future. New acquisitions, and any impairment of the value of acquired intangible assets, may have a significant negative impact on our future financial results.

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.

We have acquired and may continue to acquire companies, products and technologies that complement our strategic direction. Acquisitions involve significant risks and uncertainties, including:

inability to successfully integrate the acquired technology and operations into our business and maintain uniform standards, controls, policies, and procedures;

inability to realize synergies expected to result from an acquisition;

disruption of our ongoing business and distraction of management;

challenges retaining the key employees, customers, resellers and other business partners of the acquired operation;

the internal control environment of an acquired entity may not be consistent with our standards and may require significant time and resources to improve;

unidentified issues not discovered in our due diligence process, including product or service quality issues, intellectual property issues and legal ~~contingencies.~~contingencies;

failure to successfully further develop an acquired business or technology and any resulting impairment of amounts currently capitalized as intangible assets;

Table of Contents

in the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries.

We have divested and may in the future divest certain assets or businesses that no longer fit with our strategic direction or growth targets. Divestitures involve significant risks and uncertainties, including:

inability to find potential buyers on favorable terms;

failure to effectively transfer liabilities, contracts, facilities and employees to buyers;

requirements that we retain or indemnify buyers against certain liabilities and obligations in connection with any such divestiture;

the possibility that we will become subject to third-party claims arising out of such divestiture;

challenges in identifying and separating the intellectual properties to be divested from the intellectual properties that we wish to retain;

inability to reduce fixed costs previously associated with the divested assets or business;

challenges in collecting the proceeds from any divestiture;

disruption of our ongoing business and distraction of management;

loss of key employees who leave the Company as a result of a divestiture;

if customers or partners of the divested business do not receive the same level of service from the new owners, our other businesses may be adversely affected, to the extent that these customers or partners also purchase other products offered by us or otherwise conduct business with our retained business.

Because acquisitions and divestitures are inherently risky, our transactions may not be successful and may, in some cases, harm our operating results or financial condition. Although we typically fund our acquisitions through cash available from

~~Table of Contents~~

operations, if we were to use debt to fund acquisitions or for other purposes, our interest expense and leverage would increase significantly, and if we were to issue equity securities as consideration in an acquisition, current shareholders’ percentage ownership and earnings per share would be diluted.

We have $500 million in debt outstanding and may incur other debt in the future, which may adversely affect our financial condition and future financial results.

In fiscal 2007 we issued $500 million in senior unsecured notes due in March 2012 and $500 million in senior unsecured notes due in March 2017. We repaid the March 2012 notes when they became due using cash from operations. As the March 2017 debt matures, we will have to expend significant resources to either repay or refinance these notes. If we decide to refinance the notes, we may be required to do so on different or less favorable terms or we may be unable to refinance the notes at all, both of which may adversely affect our financial condition.

We have also entered into a $500 million five-year revolving credit facility. Although we have no current plans to request any advances under this credit facility, we may use the proceeds of any future borrowing for general corporate purposes, including future acquisitions.

This debt may adversely affect our financial condition and future financial results by, among other things:

increasing our vulnerability to downturns in our business, to competitive pressures and to adverse economic and industry conditions;

requiring the dedication of a portion of our expected cash from operations to service our indebtedness, thereby reducing the amount of expected cash flow available for other purposes, including capital expenditures and acquisitions; and

limiting our flexibility in planning for, or reacting to, changes in our businesses and our industries.

Our current revolving credit facility imposes restrictions on us, including restrictions on our ability to create liens on our assets and the ability of our subsidiaries to incur indebtedness, and require us to maintain compliance with specified financial ratios. Our ability to comply with these ratios may be affected by events beyond our control. In addition, our short- and long-term debt includes covenants that may adversely affect our ability to incur certain liens or engage in certain types of sale and leaseback transactions. If we breach any of the covenants under our short- and long-term debt or our revolving credit facility and do not obtain a waiver from the lenders, then, subject to applicable cure periods, any outstanding indebtedness may be declared immediately due and payable.

Table of Contents

In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our debt and equity securities. If our credit ratings are downgraded or other negative action is taken, the interest rate payable by us under our revolving credit facility may increase. In addition, any downgrades in our credit ratings may affect our ability to obtain additional financing in the future and may affect the terms of any such financing.

We are subject to risks associated with information disseminated through our services.

The laws relating to the liability of online services companies for information such as online content disseminated through their services are subject to frequent challenges. In spite of settled law in the U.S., claims are made against online services companies by parties who disagree with the content. Where our online content is accessed on the internet outside of the U.S., challenges may be brought under foreign laws which do not provide the same protections for online services companies as in the U.S. These challenges in either U.S. or foreign jurisdictions may rise to legal claims alleging defamation, libel, invasion of privacy, negligence, copyright or trademark infringement, or other theories based on the nature and content of the materials disseminated through the services. Certain of our services include content generated by users of our online services. Although this content is not generated by us, claims of defamation or other injury may be made against us for that content. Any costs incurred as a result of this potential liability may harm our business.

Our stock price may be volatile and your investment could lose value.

Our stock price is subject to changes in recommendations or earnings estimates by financial analysts, changes in investors' or analysts' valuation measures for our stock, our credit ratings and market trends unrelated to our performance. Furthermore, speculation in the press or investment community about our strategic position, financial condition, results of operations, business or security of our products, can cause changes in our stock price. These factors, as well as general economic and political conditions and the timing of announcements in the public market regarding new products, product enhancements or technological advances by our competitors or us, and any announcements by us of acquisitions, major transactions, or management changes may adversely affect our stock price. Further, any changes in the amounts or frequency of share repurchases or dividends may also adversely affect our stock price. A significant drop in our stock price could expose us to the

~~Table of Contents~~

risk of securities class actions lawsuits, which may result in substantial costs and divert management's attention and resources, which may adversely affect our business.

Our business depends on our strong reputation and the value of our brands.

Developing and maintaining awareness of our brands is critical to achieving widespread acceptance of our existing and future products and services and is an important element in attracting new customers. Adverse publicity (whether or not justified) relating to events or activities attributed to us, our employees or agents may tarnish our reputation and reduce the value of our brands. Damage to our reputation and loss of brand equity may reduce demand for our products and services and thus have an adverse effect on our future financial results, as well as require additional resources to rebuild our reputation and restore the value of the brands.

4643

Table of Contents

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In connection with our purchase of substantially all of the assets of Full Slate, Inc. on October 30, 2013, we issued 182,808 shares of our common stock to Full Slate and 20,308 shares of our common stock to U.S. Bank, National Association (who holds such shares in escrow and is their record owner until certain covenants in the asset purchase agreement between the Company and Full Slate have been performed). Following the closing of the acquisition, Full Slate converted into a limited liability company, following which it distributed the shares to its four equityholders, such that each of them became the record owner of 45,702 shares. The shares of our common stock were unregistered and issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. The Intuit common stock issued at the closing of the acquisition had an aggregate value of approximately $14 million. On November 6, 2013, we filed a registration statement on Form S-3 registering 116,064 shares with an aggregate value of approximately $8 million. The remainder of the shares issued in the Full Slate acquisition continue to be unregistered.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Stock repurchase activity during the three months ended ~~April 30,~~October 31, 2013 was as follows:

Period
Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans

Approximate
Dollar Value
of Shares
That May Yet
Be Purchased
Under
the Plans
February 1, 2013 through February 28, 2013 539,253
$ 61.98
539,253
$ 1,506,635,830
March 1, 2013 through March 31, 2013 399,985
$ 66.06
399,985
$ 1,480,212,532
April 1, 2013 through April 30, 2013 519,848
$ 62.45
519,848
$ 1,447,748,511
Total 1,459,086
$ 63.27
1,459,086



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans
August 1, 2013 through August 31, 2013	17,607,300	$	63.61	17,607,300	$	2,047,748,511
September 1, 2013 through September 30, 2013	—	$	—	—	$	2,047,748,511
October 1, 2013 through October 31, 2013	—	$	—	—	$	2,047,748,511
Total	17,607,300	$	63.61	17,607,300

Note: All of the shares purchased as part of publicly announced plans during the three months ended October 31, 2013 were purchased under a plan we announced on August 18, 2011 under which we were authorized to repurchase up to $2.0 billion of our common stock from time to time over a three-year period ending on August 15, 2014. On August 19, 2013 our Board approved a new stock repurchase program under which we are authorized to repurchase up to an additional $2.0 billion of our common stock from time to time over a four-year period ending on August 19, 2017. At October 31, 2013, authorization from our Board of Directors to expend up to $2.0 billion remained available under that plan.

On August 23, 2013 we entered into an accelerated share repurchase (ASR) agreement with a large financial institution to repurchase $1.4 billion of Intuit's common stock on an accelerated basis. See “Liquidity and Capital Resources - Stock Repurchase Programs and Dividends on Common Stock” in Part I, Item 2 of this Quarterly Report for more information.

~~Notes:~~

~~All of the shares purchased as part of publicly announced plans during the three months ended~~ ~~April 30, 2013~~ ~~were purchased under a plan we announced on~~ ~~August 18, 2011~~ ~~under which we are authorized to repurchase up to $2 billion of our common stock from time to time over a three-year period ending on~~ ~~August 15, 2014. At~~ ~~April 30, 2013, authorization from our Board of Directors to expend up to~~ ~~$1.4~~ ~~billion remained available under that plan.~~

ITEM 6

EXHIBITS

See Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q.

4744

Table of Contents

~~ITEM 6~~SIGNATURES

~~EXHIBITS~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~We have filed the following exhibits as part~~



		INTUIT INC. (Registrant)
Date:	November 22, 2013	By:	/s/ R. NEIL WILLIAMS
			R. Neil Williams
			Senior Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer)

Table of ~~this report:~~Contents

EXHIBIT INDEX



Exhibit Number	Exhibit Description	Filed Herewith	Incorporated by Reference

10.01	Amended and Restated Amendment Seven effective September 1, 2013 to the Master Service Agreement by and between Intuit and Arvato Digital Services LLC	X

10.02+	Amended and Restated Level Up Analytics, Inc. 2012 Stock Plan filed with the SEC by Intuit on November 1, 2013 as Exhibit 99.01 to the Registration Statement on Form S-8 (file number 333-192062)		X

31.01	Certification of Chief Executive Officer	X

31.02	Certification of Chief Financial Officer	X

32.01*	Section 1350 Certification (Chief Executive Officer)	X

32.02*	Section 1350 Certification (Chief Financial Officer)	X

101.INS	XBRL Instance Document	X

101.SCH	XBRL Taxonomy Extension Schema	X

101.CAL	XBRL Taxonomy Extension Calculation Linkbase	X

101.LAB	XBRL Taxonomy Extension Label Linkbase	X

101.PRE	XBRL Taxonomy Extension Presentation Linkbase	X

101.DEF	XBRL Taxonomy Extension Definition Linkbase	X




*+	~~This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.~~

~~Table of Contents~~

~~SIGNATURES~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~



		~~INTUIT INC.~~ ~~(Registrant)~~
~~Date:~~	~~May 30, 2013~~	~~By:~~	~~/s/ R. NEIL WILLIAMS~~
			~~R. Neil Williams~~
			~~Senior Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer)~~

~~Table of Contents~~

~~EXHIBIT INDEX~~



~~Exhibit~~ ~~Number~~	~~Exhibit Description~~	~~Filed~~ ~~Herewith~~	~~Incorporated by~~ ~~Reference~~

~~31.01~~	~~Certification of Chief Executive Officer~~	X

~~31.02~~	~~Certification of Chief Financial Officer~~	X

32.01*	~~Section 1350 Certification (Chief Executive Officer)~~	X

32.02*	~~Section 1350 Certification (Chief Financial Officer)~~	X

~~101.INS~~	~~XBRL Instance Document~~	X

~~101.SCH~~	~~XBRL Taxonomy Extension Schema~~	X

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase~~	X

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase~~	X

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase~~	X

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase~~	X



	Indicates a management contract or compensatory plan or arrangement.
*	This exhibit is intended to be furnished and shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.

5046



	Nine Months
	Ended
(In millions)	April 30, 2013
Beginning balance	$	41
Redemptions at par	(8		)
Ending balance	$	33

Large accelerated filer Rþ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

(Do not check if a smaller reporting company)