EXHIBIT 99.01
CONTACTS: INVESTORS MEDIA
Linda Fellows, VP, Treasurer Heather McLellan
Intuit Inc. Intuit Inc.
(650) 944-5436 (650) 944-3501
or
Jennifer Fellner
Access PR for Intuit
(415) 844-6275
FOR IMMEDIATE RELEASE
INTUIT'S THIRD-QUARTER 2003 REVENUE GROWS 29 PERCENT
TurboTax Growth Outpaces Category for Federal Tax Software
MOUNTAIN VIEW, CALIF. -- MAY 14, 2003 -- Intuit Inc. (NASDAQ: INTU) today
announced results for its third fiscal quarter, which ended April 30, 2003.
- REVENUE OF $634.7 MILLION INCREASED 29 PERCENT from the third quarter of
fiscal 2002. Growth was driven primarily by strong gains in Intuit's
TurboTax business as an increasing portion of consumer tax revenue
shifted from the second to the third quarter. Intuit's Small Business
Products and Services business also had strong year-over-year growth.
- INTUIT'S THIRD-QUARTER PRO FORMA NET INCOME FROM CONTINUING OPERATIONS
WAS $220.3 MILLION, UP 46 PERCENT from the year-earlier period. Pro
forma diluted earnings per share of $1.05 was up 52 percent over the
year-ago period. (See Table B1 for a reconciliation of pro forma
financial measures to the most directly comparable GAAP financial
measures.)
- ON A GAAP BASIS, INTUIT HAD NET INCOME OF $294.0 MILLION, UP 103 PERCENT
from $144.5 million in the year-earlier period. This represents $1.40
per diluted share, up 109 percent from $0.67 per share in the third
quarter of fiscal 2002. This quarter's GAAP results benefited from
stronger revenue growth as well as a $71.0 million after-tax gain on the
sale of its Japanese subsidiary.
"Intuit is a strong, growing and profitable company, as evidenced again by
our solid quarterly results," said Steve Bennett, Intuit's president and chief
executive officer. "We have a great portfolio of businesses with tremendous
growth opportunities. And we're working to improve our execution and getting
better every day."
BUSINESS UNIT REVENUE GROWTH
- TURBOTAX REVENUE OF $313.1 MILLION WAS UP 28 PERCENT from the third
quarter of fiscal 2002. Year-to-date TurboTax revenue of $414.4 million
was up 24 percent.
- REVENUE FROM INTUIT'S PROFESSIONAL ACCOUNTING SOLUTIONS BUSINESS
INCREASED 12 PERCENT over the third quarter of fiscal 2002 to $81.2
million.
- INTUIT'S SMALL BUSINESS PRODUCTS AND SERVICES REVENUE INCREASED 41
PERCENT over the year-ago quarter to $114.7 million. This unit includes
payroll, supplies, technical support and information technology
solutions.
- QUICKBOOKS REVENUE GREW 12 PERCENT over the third-quarter of fiscal 2002
to $55.2 million as Intuit continues to execute its Right for My
Business strategy. Revenue has increased 18 percent year-to-date.
- INTUIT'S VERTICAL BUSINESS MANAGEMENT SOLUTIONS UNIT CONTRIBUTED $25.7
MILLION in revenue in the third quarter, a 7 percent increase over the
revenue those companies generated in the year-earlier period.
- REVENUE FROM OTHER BUSINESSES, WHICH INCLUDES QUICKEN AND CANADA, WAS
$44.8 MILLION, up 16 percent over third-quarter fiscal 2002.
INTUIT COMPLETES ANOTHER SUCCESSFUL TURBOTAX SEASON
Intuit completed another strong tax season, with revenue up 28 percent
for the quarter and 24 percent year-to-date. Total paid TurboTax federal units
were 8.5 million, up 12 percent over last season. According to the IRS,
individual returns prepared by software -- both on the desktop and Web -- grew
only 8 percent, slower than Intuit's growth.
"All in all, this was a solid tax season for us," said Bennett. "We grew
faster than the industry and were successful in driving customers to new,
higher-end offerings, though product activation didn't perform as we'd expected.
Intuit has a long heritage of doing right by customers, and some of our
customers didn't have the great experience they expect from Intuit. In addition,
we didn't get the revenue and profit growth we expected. Therefore, we've
decided to discontinue product activation next season." Bennett noted
that next year, the company would include in-product technology to unlock
marketing and trial versions of TurboTax products.
FORWARD-LOOKING GUIDANCE FOR FOURTH-QUARTER AND FISCAL 2003
Intuit's guidance for the fourth quarter of fiscal 2003 is:
- Revenue of $240 million-$250 million, or year-over-year growth of 28-34
percent. The company expects the following revenue ranges for its
businesses:
- QuickBooks: $53 million-$58 million.
- Small Business Services: $112 million-$120 million.
- TurboTax: $5 million-$8 million
- Professional Accounting Solutions: $6 million-$8 million
- Verticals: $24 million-$28 million
- Other: $30 million-$33 million
- A pro forma operating loss of $30 million-$35 million and a GAAP
operating loss of $41 million-$46 million.
- A pro forma net loss per diluted share of $0.06-$0.09 and a GAAP net
loss per diluted share of $0.10-$0.13.
Adding fourth-quarter guidance to Intuit's actual results from the first three
quarters, Intuit's guidance for fiscal 2003 is:
- Revenue of $1.65 billion-$1.66 billion, or year-over-year growth of
25-26 percent.
- Pro forma operating income of $395 million-$400 million, or growth of
44-46 percent over fiscal 2002. This corresponds to GAAP operating
income of $338 million-$343 million.
- Pro forma EPS of $1.36-$1.39, or year-over-year growth of 48-51 percent.
This corresponds to GAAP EPS of $1.61-$1.64. Pro forma EPS guidance has
been adjusted to reflect the strength of third-quarter results.
FORWARD-LOOKING GUIDANCE FOR FISCAL 2004
Intuit also provided its guidance for fiscal 2004, which begins Aug. 1, 2003:
- Revenue of $1.85 billion-$1.95 billion, or year-over-year growth of
approximately 12-18 percent. Intuit's fiscal 2003 year-over-year
revenue growth
benefits from acquisitions the company made the prior year.
- Pro forma operating income of $480 million-$510 million, or growth of
approximately 21-28 percent over fiscal 2003. On a GAAP basis, operating
income is expected to be $449 million-$479 million, or growth of
approximately 32-41 percent over fiscal 2003.
- Pro forma diluted earnings per share of $1.57-$1.67, or growth of
approximately 14-21 percent over fiscal 2003. On a GAAP basis, diluted
EPS is expected to be $1.47-$1.57, down approximately 3-10 percent from
fiscal 2003. Fiscal 2003 GAAP EPS includes net income and gains from
discontinued operations of nearly $80 million, which is not anticipated
to recur in fiscal 2004.
ABOUT PRO FORMA, OR NON-GAAP, FINANCIAL MEASURES
Intuit computes its pro forma, or non-GAAP, financial measures using the same
consistent method from quarter to quarter and year to year. Pro forma operating
income excludes acquisition-related charges, such as amortization of goodwill
and intangibles and impairment charges, as well as amortization of purchased
software and charges for purchased research and development. Pro forma net
income and diluted earnings per share exclude discontinued operations, gains and
losses on marketable securities and other investments, as well as the tax
effects of these transactions. These pro forma financial measures are not
prepared in accordance with generally accepted accounting principles and likely
are different from non-GAAP or pro forma financial measures used by other
companies. The accompanying tables and fact sheet have more details on Intuit's
historical performance and financial projections, the GAAP financial measures
that are most directly comparable to Intuit's pro forma financial measures, and
the reconciliations of pro forma financial measures to GAAP.
CONFERENCE CALL SCRIPTS AND DIAL-IN INFORMATION
The script that accompanies the Intuit earnings conference call and a live audio
Web-cast of the call is available at www.intuit.com/company/investors. This
press release, including the tables, is available at that site and any other
supplemental financial and statistical information required to be posted,
including pro forma reconciliations, will be posted to that site.
The conference call number is 800-615-5585 (706-679-0331 from international
locations). The call begins today at 1:30 p.m. pacific time. No reservation or
access code is needed. Those planning to listen to the conference call should
download the script before the call begins. A replay of the call will be
available for one week by calling 800-642-1687 (706-645-9291 for international
locations). The reservation number is 186346.
CAUTIONS ABOUT FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements about future financial
results and other events that have not yet occurred, including guidance about
Intuit's expected results for the remainder of fiscal 2003 and for fiscal 2004.
Statements with words like "expects," "anticipates" or "believes," and
statements in the future tense, are forward-looking statements. Actual results
may differ materially from Intuit's expressed expectations because of risks and
uncertainties about the future. Some of the important factors
that could cause Intuit's results to differ are listed below. More details about
these and other risks are included in Intuit's SEC filings and at
www.intuit.com/company/investors/considerations.html. The company does not
intend to update the information in this press release if any forward-looking
statement later turns out to be inaccurate.
- Seasonality causes significant quarterly fluctuations in Intuit's
revenue and net income.
- The reconciliation of the forward-looking pro forma financial measures
to their most directly comparable GAAP financial measure includes all
information reasonably available to Intuit at the date of this press
release. The adjustments are those that management can predict. Intuit's
pro forma financial measures exclude acquisition-related charges,
discontinued operations and gains and losses on marketable securities.
Events that could cause the reconciliation to change include
acquisitions and divestitures of businesses, goodwill and other asset
impairments and sales of marketable securities.
- Actual product returns may exceed product return reserves, particularly
for Intuit's tax preparation software.
- If Intuit fails to maintain reliable and responsive service levels for
its electronic tax offerings or customer support function, it could lose
revenue and customers.
- Integrating acquired businesses creates challenges for Intuit's
operational, financial and management information systems. If Intuit is
unable to adequately address these and other issues presented by
acquisitions, Intuit may not fully realize the intended benefits of its
acquisitions.
- Expansion of Intuit's product and service offerings requires Intuit to
develop and enhance more and increasingly complex products, market and
sell higher-priced products and services and distribute and support an
expanding portfolio of products and services. It also increases the
number and complexity of Intuit's revenue models. If Intuit is unable to
support its expanded businesses, they may not achieve sustainable
financial viability or broad customer acceptance.
- Intuit faces competitive pressures in all of its businesses, which can
have a negative impact on its revenue, profitability and market
position.
- Acquisition-related charges can substantially reduce Intuit's net
income, and cause significant fluctuations in net income.
- Risks related to Intuit's distribution channels include challenges in
negotiating favorable terms with retailers and the negative effect of
the current economic environment on retail sales. In addition, expansion
of certain of Intuit's product and service offerings requires Intuit to
develop and manage a direct sales organization, which is a new
distribution method for Intuit.
- If Intuit does not provide accurate and timely services in its employer
services businesses, it faces potential liability to customers,
additional expense to correct product errors and loss of customers.
- Revenue growth for Intuit's vertical business management solutions is
subject to risks such as the negative impact of the current economic
environment and the potential disruption to the businesses during the
acquisition integration process.
- If revenue from consumer tax products continues to shift to the third
fiscal quarter, there will be increased uncertainty for the full tax
season.
- Risks relating to customer privacy and security and increasing
governmental regulation could hinder the growth of Intuit's businesses.
TABLE A1
INTUIT INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------- --------------------------
2002 2003 2002 2003
----------- ----------- ----------- -----------
Net revenue:
Products $ 326,712 $ 391,613 $ 850,881 $ 998,646
Services 150,107 225,984 227,057 356,936
Other 14,333 17,101 47,440 50,064
----------- ----------- ----------- -----------
Total net revenue 491,152 634,698 1,125,378 1,405,646
Costs and expenses:
Cost of revenue:
Products, services and other 67,441 88,706 233,696 274,403
Amortization of purchased software 1,565 3,662 10,442 10,157
Customer service and technical support 42,499 46,044 128,484 141,265
Selling and marketing 72,834 83,108 203,846 255,725
Research and development 50,814 62,002 149,636 192,209
General and administrative 26,840 34,243 81,827 112,264
Charge for purchased research and development -- -- -- 8,859
Charge for vacant facilities 13,237 -- 13,237 --
Acquisition-related charges (iii) 37,516 8,406 140,515 27,015
Loss on impairment of long-lived asset -- -- 27,000 --
----------- ----------- ----------- -----------
Total costs and expenses 312,746 326,171 988,683 1,021,897
----------- ----------- ----------- -----------
Income from continuing operations 178,406 308,527 136,695 383,749
Interest and other income 7,184 8,193 24,647 24,749
Gains (losses) on marketable securities and other
investments, net 1,356 7,014 (9,266) 10,094
Gain on divestiture 8,308 -- 8,308 --
----------- ----------- ----------- -----------
Income from continuing operations before income taxes 195,254 323,734 160,384 418,592
Income tax provision (i) 62,552 100,766 31,092 130,702
----------- ----------- ----------- -----------
Income from continuing operations 132,702 222,968 129,292 287,890
Discontinued operations, net of income taxes (iv) and (v):
Net income from Quicken Loans discontinued operations 9,918 -- 36,387 --
Gain on disposal of Quicken Loans discontinued operations -- -- -- 5,556
Net income from Intuit KK discontinued operations 1,861 -- 6,243 3,267
Gain on disposal of Intuit KK discontinued operations -- 71,009 -- 71,009
----------- ----------- ----------- -----------
Net income from discontinued operations 11,779 71,009 42,630 79,832
----------- ----------- ----------- -----------
Net income $ 144,481 $ 293,977 $ 171,922 $ 367,722
=========== =========== =========== ===========
Basic net income per share from continuing operations $ 0.63 $ 1.08 $ 0.61 $ 1.39
Basic net income per share from discontinued operations 0.05 0.35 0.20 0.39
----------- ----------- ----------- -----------
Basic net income per share $ 0.68 $ 1.43 $ 0.81 $ 1.78
=========== =========== =========== ===========
Shares used in basic per share amounts 211,614 205,709 211,724 206,452
=========== =========== =========== ===========
Diluted net income per share from continuing operations $ 0.62 $ 1.06 $ 0.59 $ 1.35
Diluted net income per share from discontinued operations 0.05 0.34 0.20 0.38
----------- ----------- ----------- -----------
Diluted net income per share $ 0.67 $ 1.40 $ 0.79 $ 1.73
=========== =========== =========== ===========
Shares used in diluted per share amounts 217,173 210,448 217,667 212,446
=========== =========== =========== ===========
TABLE A2
INTUIT INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
APRIL 30, APRIL 30,
----------------------- -----------------------
2002 2003 2002 2003
---------- ---------- ---------- ----------
Net revenue:
Products $ 326,712 $ 391,613 $ 850,881 $ 998,646
Services 150,107 225,984 227,057 356,936
Other 14,333 17,101 47,440 50,064
---------- ---------- ---------- ----------
Total net revenue 491,152 634,698 1,125,378 1,405,646
Costs and expenses:
Cost of revenue:
Products, services and other 67,441 88,706 233,696 274,403
Customer service and technical support 42,499 46,044 128,484 141,265
Selling and marketing 72,834 83,108 203,846 255,725
Research and development 50,814 62,002 149,636 192,209
General and administrative 26,840 34,243 81,827 112,264
Charge for vacant facilities 13,237 -- 13,237 --
---------- ---------- ---------- ----------
Total costs and expenses 273,665 314,103 810,726 975,866
---------- ---------- ---------- ----------
Income from operations 217,487 320,595 314,652 429,780
Interest and other income 7,184 8,193 24,647 24,749
---------- ---------- ---------- ----------
Income before income taxes 224,671 328,788 339,299 454,529
Income tax provision 74,141 108,500 111,969 149,995
---------- ---------- ---------- ----------
Net income $ 150,530 $ 220,288 $ 227,330 $ 304,534
========== ========== ========== ==========
Basic net income per share $ 0.71 $ 1.07 $ 1.07 $ 1.48
========== ========== ========== ==========
Shares used in basic per share amount 211,614 205,709 211,724 206,452
========== ========== ========== ==========
Diluted net income per share $ 0.69 $ 1.05 $ 1.04 $ 1.43
========== ========== ========== ==========
Shares used in diluted per share amount 217,173 210,448 217,667 212,446
========== ========== ========== ==========
THE PRO FORMA OR NON-GAAP FINANCIAL MEASURES ABOVE SHOULD NOT BE CONSIDERED AS A
SUBSTITUTE FOR, OR SUPERIOR TO, MEASURES OF FINANCIAL PERFORMANCE PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"). THESE PRO
FORMA FINANCIAL MEASURES ARE NOT PREPARED IN ACCORDANCE WITH GAAP AND LIKELY ARE
DIFFERENT FROM PRO FORMA FINANCIAL MEASURES USED BY OTHER COMPANIES. INTUIT'S
MANAGEMENT BELIEVES THAT THESE PRO FORMA FINANCIAL MEASURES PROVIDE MEANINGFUL
SUPPLEMENTAL INFORMATION REGARDING INTUIT'S CORE OPERATING RESULTS BECAUSE THEY
EXCLUDE AMOUNTS THAT ARE NOT NECESSARILY RELATED TO INTUIT'S CORE OPERATING
RESULTS. INTUIT'S MANAGEMENT REFERS TO THESE PRO FORMA FINANCIAL MEASURES IN
ASSESSING THE PERFORMANCE OF INTUIT'S ONGOING OPERATIONS AND FOR PLANNING AND
FORECASTING IN FUTURE PERIODS. THESE PRO FORMA FINANCIAL MEASURES ALSO
FACILITATE MANAGEMENT'S INTERNAL COMPARISONS TO INTUIT'S HISTORICAL OPERATING
RESULTS. IN ADDITION, INTUIT HAS HISTORICALLY REPORTED SIMILAR PRO FORMA
FINANCIAL MEASURES AND BELIEVES THAT THE INCLUSION OF COMPARATIVE NUMBERS
PROVIDES CONSISTENCY IN ITS FINANCIAL REPORTING. INTUIT COMPUTES PRO FORMA
FINANCIAL MEASURES USING THE SAME CONSISTENT METHOD FROM QUARTER TO QUARTER AND
YEAR TO YEAR. SEE TABLES B1 AND B2 FOR RECONCILIATIONS OF THESE PRO FORMA
FINANCIAL MEASURES TO GAAP.
TABLE B1
INTUIT INC.
RECONCILIATION OF PRO FORMA FINANCIAL MEASURES
TO GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (ii)-(v)
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
APRIL 30, 2002 APRIL 30, 2003
---------------------------------- ----------------------------------
PRO PRO
FORMA ADJMTS GAAP FORMA ADJMTS GAAP
--------- --------- --------- --------- --------- ---------
Net revenue:
Products $ 326,712 $ -- $ 326,712 $ 391,613 $ -- $ 391,613
Services 150,107 -- 150,107 225,984 -- 225,984
Other 14,333 -- 14,333 17,101 -- 17,101
--------- --------- --------- --------- --------- ---------
Total net revenue 491,152 -- 491,152 634,698 -- 634,698
Costs and expenses:
Cost of revenue:
Products, services and other 67,441 -- 67,441 88,706 -- 88,706
Amortization of purchased software -- 1,565 1,565 -- 3,662 3,662
Customer service and technical support 42,499 -- 42,499 46,044 -- 46,044
Selling and marketing 72,834 -- 72,834 83,108 -- 83,108
Research and development 50,814 -- 50,814 62,002 -- 62,002
General and administrative 26,840 -- 26,840 34,243 -- 34,243
Charge for purchased research and
development -- -- -- -- -- --
Charge for vacant facilities 13,237 -- 13,237 -- -- --
Acquisition-related charges -- 37,516 37,516 -- 8,406 8,406
Loss on impairment of long-lived asset -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total costs and expenses 273,665 39,081 312,746 314,103 12,068 326,171
--------- --------- --------- --------- --------- ---------
Income from continuing operations 217,487 (39,081) 178,406 320,595 (12,068) 308,527
Interest and other income 7,184 -- 7,184 8,193 -- 8,193
Gains (losses) on marketable securities
and other investments, net -- 1,356 1,356 -- 7,014 7,014
Gain on divestiture -- 8,308 8,308 -- -- --
--------- --------- --------- --------- --------- ---------
Income from continuing operations
before income taxes 224,671 (29,417) 195,254 328,788 (5,054) 323,734
Income tax provision 74,141 (11,589) 62,552 108,500 (7,734) 100,766
--------- --------- --------- --------- --------- ---------
Income from continuing operations 150,530 (17,828) 132,702 220,288 2,680 222,968
Discontinued operations, net of income taxes:
Net income from Quicken Loans
discontinued operations -- 9,918 9,918 -- -- --
Gain on disposal of Quicken Loans
discontinued operations -- -- -- -- -- --
Net income from Intuit KK
discontinued operations -- 1,861 1,861 -- -- --
Gain on disposal of Intuit KK
discontinued operations -- -- -- -- 71,009 71,009
--------- --------- --------- --------- --------- ---------
Net income from discontinued operations -- 11,779 11,779 -- 71,009 71,009
--------- --------- --------- --------- --------- ---------
Net income $ 150,530 $ (6,049) $ 144,481 $ 220,288 $ 73,689 $ 293,977
========= ========= ========= ========= ========= =========
Basic net income per share from
continuing operations $ 0.71 $ 0.63 $ 1.07 $ 1.08
Basic net income per share from
discontinued operations -- 0.05 -- 0.35
--------- --------- --------- ---------
Basic net income per share $ 0.71 $ 0.68 $ 1.07 $ 1.43
========= ========= ========= =========
Shares used in basic per share amounts 211,614 211,614 205,709 205,709
========= ========= ========= =========
Diluted net income per share from
continuing operations $ 0.69 $ 0.62 $ 1.05 $ 1.06
Diluted net income per share from
discontinued operations -- 0.05 -- 0.34
--------- --------- --------- ---------
Diluted net income per share $ 0.69 $ 0.67 $ 1.05 $ 1.40
========= ========= ========= =========
Shares used in diluted per share amounts 217,173 217,173 210,448 210,448
========= ========= ========= =========
THE PRO FORMA OR NON-GAAP FINANCIAL MEASURES ABOVE SHOULD NOT BE CONSIDERED AS A
SUBSTITUTE FOR, OR SUPERIOR TO, MEASURES OF FINANCIAL PERFORMANCE PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"). THESE PRO
FORMA FINANCIAL MEASURES ARE NOT PREPARED IN ACCORDANCE WITH GAAP AND LIKELY ARE
DIFFERENT FROM PRO FORMA FINANCIAL MEASURES USED BY OTHER COMPANIES. INTUIT'S
MANAGEMENT BELIEVES THAT THESE PRO FORMA FINANCIAL MEASURES PROVIDE MEANINGFUL
SUPPLEMENTAL INFORMATION REGARDING INTUIT'S CORE OPERATING RESULTS BECAUSE THEY
EXCLUDE AMOUNTS THAT ARE NOT NECESSARILY RELATED TO INTUIT'S CORE OPERATING
RESULTS. INTUIT'S MANAGEMENT REFERS TO THESE PRO FORMA FINANCIAL MEASURES IN
ASSESSING THE PERFORMANCE OF INTUIT'S ONGOING OPERATIONS AND FOR PLANNING AND
FORECASTING IN FUTURE PERIODS. THESE PRO FORMA FINANCIAL MEASURES ALSO
FACILITATE MANAGEMENT'S INTERNAL COMPARISONS TO INTUIT'S HISTORICAL OPERATING
RESULTS. IN ADDITION, INTUIT HAS HISTORICALLY REPORTED SIMILAR PRO FORMA
FINANCIAL MEASURES AND BELIEVES THAT THE INCLUSION OF COMPARATIVE NUMBERS
PROVIDES CONSISTENCY IN ITS FINANCIAL REPORTING. INTUIT COMPUTES PRO FORMA
FINANCIAL MEASURES USING THE SAME CONSISTENT METHOD FROM QUARTER TO QUARTER AND
YEAR TO YEAR. SEE NOTES II THROUGH V FOR DETAILS.
TABLE B2
INTUIT INC.
RECONCILIATION OF PRO FORMA FINANCIAL MEASURES
TO GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (ii)-(v)
(In thousands, except per share data)
(Unaudited)
NINE MONTHS ENDED NINE MONTHS ENDED
April 30, 2002 APRIL 30, 2003
---------------------------------------- ----------------------------------------
PRO PRO
FORMA ADJMTS GAAP FORMA ADJMTS GAAP
----------- ----------- ----------- ----------- ----------- -----------
Net revenue:
Products $ 850,881 $ -- $ 850,881 $ 998,646 $ -- $ 998,646
Services 227,057 -- 227,057 356,936 -- 356,936
Other 47,440 -- 47,440 50,064 -- 50,064
----------- ----------- ----------- ----------- ----------- -----------
Total net revenue 1,125,378 -- 1,125,378 1,405,646 -- 1,405,646
Costs and expenses:
Cost of revenue:
Products, services and other 233,696 -- 233,696 274,403 -- 274,403
Amortization of purchased software -- 10,442 10,442 -- 10,157 10,157
Customer service and technical support 128,484 -- 128,484 141,265 -- 141,265
Selling and marketing 203,846 -- 203,846 255,725 -- 255,725
Research and development 149,636 -- 149,636 192,209 -- 192,209
General and administrative 81,827 -- 81,827 112,264 -- 112,264
Charge for purchased research and
development -- -- -- -- 8,859 8,859
Charge for vacant facilities 13,237 -- 13,237 -- -- --
Acquisition-related charges -- 140,515 140,515 -- 27,015 27,015
Loss on impairment of long-lived asset -- 27,000 27,000 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total costs and expenses 810,726 177,957 988,683 975,866 46,031 1,021,897
----------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations 314,652 (177,957) 136,695 429,780 (46,031) 383,749
Interest and other income 24,647 -- 24,647 24,749 -- 24,749
Gains (losses) on marketable securities
and other investments, net -- (9,266) (9,266) -- 10,094 10,094
Gain on divestiture -- 8,308 8,308 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 339,299 (178,915) 160,384 454,529 (35,937) 418,592
Income tax provision 111,969 (80,877) 31,092 149,995 (19,293) 130,702
----------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations 227,330 (98,038) 129,292 304,534 (16,644) 287,890
Discontinued operations, net of income taxes:
Net income from Quicken Loans
discontinued operations -- 36,387 36,387 -- -- --
Gain on disposal of Quicken Loans
discontinued operations -- -- -- -- 5,556 5,556
Net income from Intuit KK
discontinued operations -- 6,243 6,243 -- 3,267 3,267
Gain on disposal of Intuit KK
discontinued operations -- -- -- -- 71,009 71,009
----------- ----------- ----------- ----------- ----------- -----------
Net income from discontinued operations -- 42,630 42,630 -- 79,832 79,832
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 227,330 $ (55,408) $ 171,922 $ 304,534 $ 63,188 $ 367,722
=========== =========== =========== =========== =========== ===========
Basic net income per share from
continuing operations $ 1.07 $ 0.61 $ 1.48 $ 1.39
Basic net income per share from
discontinued operations -- 0.20 -- 0.39
----------- ----------- ----------- -----------
Basic net income per share $ 1.07 $ 0.81 $ 1.48 $ 1.78
=========== =========== =========== ===========
Shares used in basic per share amounts 211,724 211,724 206,452 206,452
=========== =========== =========== ===========
Diluted net income per share from
continuing operations $ 1.04 $ 0.59 $ 1.43 $ 1.35
Diluted net income per share from
discontinued operations -- 0.20 -- 0.38
----------- ----------- ----------- -----------
Diluted net income per share $ 1.04 $ 0.79 $ 1.43 $ 1.73
=========== =========== =========== ===========
Shares used in diluted per share amounts 217,667 217,667 212,446 212,446
=========== =========== =========== ===========
THE PRO FORMA OR NON-GAAP FINANCIAL MEASURES ABOVE SHOULD NOT BE CONSIDERED AS A
SUBSTITUTE FOR, OR SUPERIOR TO, MEASURES OF FINANCIAL PERFORMANCE PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"). THESE PRO
FORMA FINANCIAL MEASURES ARE NOT PREPARED IN ACCORDANCE WITH GAAP AND LIKELY ARE
DIFFERENT FROM PRO FORMA FINANCIAL MEASURES USED BY OTHER COMPANIES. INTUIT'S
MANAGEMENT BELIEVES THAT THESE PRO FORMA FINANCIAL MEASURES PROVIDE MEANINGFUL
SUPPLEMENTAL INFORMATION REGARDING INTUIT'S CORE OPERATING RESULTS BECAUSE THEY
EXCLUDE AMOUNTS THAT ARE NOT NECESSARILY RELATED TO INTUIT'S CORE OPERATING
RESULTS. INTUIT'S MANAGEMENT REFERS TO THESE PRO FORMA FINANCIAL MEASURES IN
ASSESSING THE PERFORMANCE OF INTUIT'S ONGOING OPERATIONS AND FOR PLANNING AND
FORECASTING IN FUTURE PERIODS. THESE PRO FORMA FINANCIAL MEASURES ALSO
FACILITATE MANAGEMENT'S INTERNAL COMPARISONS TO INTUIT'S HISTORICAL OPERATING
RESULTS. IN ADDITION, INTUIT HAS HISTORICALLY REPORTED SIMILAR PRO FORMA
FINANCIAL MEASURES AND BELIEVES THAT THE INCLUSION OF COMPARATIVE NUMBERS
PROVIDES CONSISTENCY IN ITS FINANCIAL REPORTING. INTUIT COMPUTES PRO FORMA
FINANCIAL MEASURES USING THE SAME CONSISTENT METHOD FROM QUARTER TO QUARTER AND
YEAR TO YEAR. SEE NOTES II THROUGH V FOR DETAILS.
NOTES TO TABLES A1, B1 AND B2:
i. There is a difference in the effective tax rate for each of these
periods, primarily due to the net effect of non-deductible merger and
divestiture related charges offset by the benefit received from
tax-exempt interest income and various tax credits.
ii. Tables B1 and B2 reconcile the differences between the pro forma or
non-GAAP financial measures, which are not prepared in accordance
with generally accepted accounting principles ("GAAP"), and the GAAP
condensed consolidated statements of operations for the three and
nine months ended April 30, 2002 and 2003. Pro forma operating income
(loss) excludes certain cost and expense line items that are in the
GAAP statement of operations. For example, for the line item
"acquisition-related charges," the number in the GAAP column is
subtracted out of the pro forma column in calculating pro forma
operating income or loss. Eliminating cost or expense items increases
pro forma results compared to GAAP results. Pro forma net income
(loss) starts with pro forma operating income or loss and then
excludes certain non-operating gains and losses that are in the GAAP
statement of operations. For example, for the line item "gains
(losses) on marketable securities and other investments, net" the
number in the GAAP column is taken out of the pro forma column in
calculating pro forma net income or loss. Eliminating loss line items
increases pro forma results compared to GAAP results. Eliminating
gain line items decreases pro forma results compared to GAAP results.
iii. Acquisition-related charges include amortization of goodwill and
intangible assets as well as impairment charges. For the three and
nine months ended April 30, 2002, amortization of goodwill was $29.2
million and $93.4 million, amortization of intangible assets and
deferred compensation was $8.3 million and $25.1 million, and there
were $22.0 million in impairment charges. For the three and nine
months ended April 30, 2003, there was no goodwill amortization due
to the implementation of Statement of Financial Accounting Standards
No. 142 on August 1, 2002. Amortization of intangible assets and
deferred compensation during those periods was $8.4 million and $27.0
million, and there were no impairment charges.
iv. On July 31, 2002, we sold our Quicken Loans mortgage business to Rock
Acquisition Corporation. We accounted for the sale as discontinued
operations and, accordingly, the operating results of Quicken Loans
have been segregated from continuing operations on our statement of
operations for the three and nine months ended April 30, 2002. Income
taxes netted against net income from discontinued operations amounted
to $5.6 million and $20.5 million for those periods. In the first
quarter of fiscal 2003, we sold our residual minority equity interest
in Rock and recorded a gain of $5.6 million.
v. On February 7, 2003, we sold our wholly owned Japanese subsidiary,
Intuit KK, to a private equity investment firm located in Japan for
9.5 billion yen or approximately $79.0 million. Intuit KK became a
long-lived asset held for sale and a discontinued operation during
the second quarter of fiscal 2003 and, accordingly, its operating
results have been segregated from continuing operations on our
statement of operations for all periods presented. Income tax
benefits included in net income from discontinued operations amounted
to $0.2 million and $0.7 million for the three and nine months ended
April 30, 2002. Income tax expense netted against net income from
discontinued operations amounted to $2.4 million for the first six
months of fiscal 2003. In the third quarter of fiscal 2003, there was
no material income or loss from Intuit KK discontinued operations and
we recorded a gain of $71.0 million on the sale, net of income taxes
of $5.1 million.
TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
APRIL 30, JULY 31, APRIL 30,
2002 2002 2003
---------- ---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 106,351 $ 414,748 $ 450,279
Short-term investments 1,297,133 815,342 1,072,124
Marketable securities 48,469 16,791 --
Customer deposits 256,353 300,409 325,170
Accounts receivable, net 62,079 51,999 119,475
Deferred income taxes 82,572 67,799 63,941
Income taxes receivable -- 2,187 --
Prepaid expenses and other current assets 32,348 49,581 35,870
Amounts due from discontinued operations entities 411,977 241,616 --
Net current assets of discontinued operations 104,619 -- --
---------- ---------- ----------
Total current assets 2,401,901 1,960,472 2,066,859
Property and equipment, net 164,591 179,122 192,629
Goodwill, net 240,066 428,948 584,826
Purchased intangibles, net 70,706 125,474 134,868
Long-term deferred income taxes 150,102 176,553 172,835
Loans to executive officers and other employees 13,545 21,270 19,901
Other assets 14,183 31,854 10,331
Net long-term assets of discontinued operations 14,535 4,312 --
---------- ---------- ----------
Total assets $3,069,629 $2,928,005 $3,182,249
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 67,721 $ 71,069 $ 73,406
Accrued compensation and related liabilities 79,299 87,426 115,753
Payroll service obligations 256,369 300,381 325,103
Deferred revenue 86,350 147,120 129,185
Income taxes payable 103,978 -- 117,338
Other current liabilities 154,687 84,072 150,150
Net current liabilities of discontinued operations -- 7,688 --
---------- ---------- ----------
Total current liabilities 748,404 697,756 910,935
Long-term obligations 11,209 14,610 11,807
Stockholders' equity 2,310,016 2,215,639 2,259,507
---------- ---------- ----------
Total liabilities and stockholders' equity $3,069,629 $2,928,005 $3,182,249
========== ========== ==========
Note: We present our balance sheet at April 30, 2002 for comparison to our
balance sheet at April 30, 2003 due to the seasonality of our business.
Balance sheets for all periods presented have been reclassified to reflect
Intuit KK as discontinued operations.
TABLE D
INTUIT INC.
RECONCILIATION OF GUIDANCE FOR PRO FORMA FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING INCOME (LOSS), AND EPS
(Dollars in thousands)
(Unaudited)
THREE MONTHS ENDING JULY 31, 2003
-----------------------------------------------------------------
Pro Forma GAAP
Range of Estimate Range of Estimate
---------------------- ----------------------
From To Adjustments From To
--------- --------- ---------- --------- ---------
Revenue $ 240,000 $ 250,000 $ -- $ 240,000 $ 250,000
Operating loss (35,000) (30,000) (11,000)(a) (46,000) (41,000)
Interest and other income 8,000 10,000 -- 8,000 10,000
Diluted loss per share $ (0.09) $ (0.06) $ (0.04)(b) $ (0.13) $ (0.10)
Shares 204,000 207,000 -- 204,000 207,000
TWELVE MONTHS ENDING JULY 31, 2003
------------------------------------------------------------------
Pro Forma GAAP
Range of Estimate Range of Estimate
----------------------- -----------------------
From To Adjustments From To
---------- ---------- ---------- ---------- ----------
Revenue $1,646,000 $1,656,000 $ -- $1,646,000 $1,656,000
Operating income 395,000 400,000 (57,000)(c) 338,000 343,000
Interest and other income 33,000 35,000 -- 33,000 35,000
Diluted earnings per share $ 1.36 $ 1.39 $ 0.25(d) $ 1.61 $ 1.64
Shares 210,000 211,000 -- 210,000 211,000
TWELVE MONTHS ENDING JULY 31, 2004
------------------------------------------------------------------
Pro Forma GAAP
Range of Estimate Range of Estimate
----------------------- -----------------------
From To Adjustments From To
---------- ---------- ---------- ---------- ----------
Revenue $1,850,000 $1,950,000 $ -- $1,850,000 $1,950,000
Operating income 480,000 510,000 (31,000)(e) 449,000 479,000
Interest and other income 20,000 25,000 -- 20,000 25,000
Diluted earnings per share $ 1.57 $ 1.67 $ (0.10)(f) $ 1.47 $ 1.57
Shares 210,000 215,000 -- 210,000 215,000
(a) Pro forma guidance reflects estimated adjustments for amortization of
purchased software of approximately $3.6 million and amortization of
purchased intangible assets of approximately $7.4 million for the three
months ending July 31, 2003.
(b) Net of income taxes, the pro forma adjustments in item (a) result in a
$0.04 per diluted share adjustment for the three months ending July 31,
2003.
(c) Pro forma guidance reflects estimated adjustments for amortization of
purchased software of approximately $13.7 million, charge for purchased
research and development of approximately $8.9 million and amortization of
purchased intangible assets of approximately $34.4 million for the twelve
months ending July 31, 2003.
(d) Pro forma diluted earnings per share reflects the adjustments in item (c)
net of income taxes and adjustments net of income taxes to exclude gains
on marketable securities of approximately $10.1 million, income from
discontinued operations of approximately $8.8 million and gain on disposal
of Intuit KK discontinued operations of approximately $71.0 million. These
adjustments result in a $0.25 per diluted share adjustment for the twelve
months ending July 31, 2003.
(e) Pro forma guidance reflects estimated adjustments for amortization of
purchased software of approximately $12.0 million and amortization of
purchased intangible assets of approximately $19.0 million for the twelve
months ending July 31, 2004.
(f) Net of income taxes, the pro forma adjustments in item (e) result in a
$0.10 per diluted share adjustment for the twelve months ending July 31,
2004.
THE PRO FORMA OR NON-GAAP FINANCIAL MEASURES ABOVE SHOULD NOT BE CONSIDERED AS A
SUBSTITUTE FOR, OR SUPERIOR TO, MEASURES OF FINANCIAL PERFORMANCE PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"). THESE PRO
FORMA FINANCIAL MEASURES ARE NOT PREPARED IN ACCORDANCE WITH GAAP AND LIKELY ARE
DIFFERENT FROM PRO FORMA FINANCIAL MEASURES USED BY OTHER COMPANIES. INTUIT'S
MANAGEMENT BELIEVES THAT THESE PRO FORMA FINANCIAL MEASURES PROVIDE MEANINGFUL
SUPPLEMENTAL INFORMATION REGARDING INTUIT'S CORE OPERATING RESULTS BECAUSE THEY
EXCLUDE AMOUNTS THAT ARE NOT NECESSARILY RELATED TO INTUIT'S CORE OPERATING
RESULTS. INTUIT'S MANAGEMENT REFERS TO THESE PRO FORMA FINANCIAL MEASURES IN
ASSESSING THE PERFORMANCE OF INTUIT'S ONGOING OPERATIONS AND FOR PLANNING AND
FORECASTING IN FUTURE PERIODS. THESE PRO FORMA FINANCIAL MEASURES ALSO
FACILITATE MANAGEMENT'S INTERNAL COMPARISONS TO INTUIT'S HISTORICAL OPERATING
RESULTS. IN ADDITION, INTUIT HAS HISTORICALLY REPORTED SIMILAR PRO FORMA
FINANCIAL MEASURES AND BELIEVES THAT THE INCLUSION OF COMPARATIVE NUMBERS
PROVIDES CONSISTENCY IN ITS FINANCIAL REPORTING. INTUIT COMPUTES PRO FORMA
FINANCIAL MEASURES USING THE SAME CONSISTENT METHOD FROM QUARTER TO QUARTER AND
YEAR TO YEAR.
THE RECONCILIATIONS OF THE FORWARD-LOOKING PRO FORMA FINANCIAL MEASURES TO GAAP
IN THIS TABLE D INCLUDE ALL INFORMATION REASONABLY AVAILABLE TO INTUIT AT THE
DATE OF THIS PRESS RELEASE. THE ADJUSTMENTS IN THIS TABLE ARE THOSE THAT
MANAGEMENT CAN PREDICT. INTUIT'S PRO FORMA FINANCIAL MEASURES EXCLUDE
ACQUISITION-RELATED CHARGES, DISCONTINUED OPERATIONS AND GAINS AND LOSSES ON
MARKETABLE SECURITIES. EVENTS THAT COULD CAUSE THE RECONCILIATION TO CHANGE
INCLUDE ACQUISITIONS AND DIVESTITURES OF BUSINESSES, GOODWILL AND OTHER ASSET
IMPAIRMENTS AND SALES OF MARKETABLE SECURITIES.
INTUIT FACTS ... Intuit Inc.
Investor Relations (650) 944-3560 NASDAQ: INTU
Corporate Metrics
(MILLIONS)
Q3 FY03 FY03 YTD
------- --------
Capital expenditures $15.6 $70.6
Depreciation $19.0 $55.1
Q3 FY03 Q3 FY02
------- -------
Full time employees 6,827 5,211
Q3 FY03
-------
Common stock outstd. 205.2M
Financial Outlook(A)
(actual) (actual) (actual) (GUIDANCE) (GUIDANCE) (GUIDANCE) (actuals)
(MILLIONS) Q1 FY03 Q2 FY03 Q3 FY03 Q4 FY03 FY03 FY04 FY02
------- ------- ------- ---------- ---------- ---------- --------
QuickBooks $38.1 $93.5 $55.2 $53 - $58
Small Business Services $100.8 $120.7 $114.7 $112 - $120
TurboTax $6.1 $95.3 $313.1 $5 - $8
Prof. Accounting Solutions $7.3 $151.2 $81.2 $6 - $8
Business Verticals $18.8 $24.0 $25.7 $24 - $28
All Other $41.8 $73.4 $44.8 $30 - $33
------ ------ -------
Total Revenue $212.9 $558.1 $634.7 $240 - $250 $1,646 - $1,656 $1,850 - $1,950 $1,312.2
% of change YOY 34% 17% 29% 28 - 34% 25% - 26% 12% - 18% 20%
Operating Income(B) $(75.2) $184.4 $320.6 $(35) - $(30) $395 - $400 $480 - $510 $273.5
% of change YOY N/A 12% 47% N/A 44% - 46% 21% - 28% 51%
Interest & Other Income $8.8 $7.8 $8.2 $8 - $10 $33 - $35 $20-$25 $27.3
% of change YOY (11%) 2% 14% 204% - 280% 21% - 28% (41%)-(26%) (53%)
EPS(B) $(0.21) $0.61 $1.05 $(0.09) - $(0.06) $1.36 - $1.39 $1.57 - $1.67 $0.92
% of change YOY N/A 15% 52% N/A 48% - 51% 14% - 21% 26%
Shares 208.0 212.5 210.4 204 - 207 210 - 211 210 - 215 217.8
Tax Rate 33% 33% 33% 33% 33% 34% 33%
Business Metrics
QUICKBOOKS
- ----------
QuickBooks retail unit share YTD: 78%(C)
QuickBooks retail dollar share YTD: 87%(C)
QuickBooks units sold Q3: 321K(D)
High end units sold Q3: 35K(E)
IDN applications at the end of Q3: 255
SMALL BUSINESS SERVICES
- -----------------------
Payroll Cust. @ Q3 FY02 Q3 FY03
- --------------- ------- -------
DIY (Basic) 661K 711K
Outsourced 48K 66K
TAX
- ---
TurboTax retail unit share YTD: 70.6%(C)
TurboTax retail dollar share YTD: 79.2%(C)
TurboTax desktop units YTD Q3: 6.1M, up 12% YOY(D)
TurboTax Fed web units paid YTD Q3: 2.4M, up 12% YOY
TurboTax Fed web units unpaid YTD Q3: 1.2M, up 17% YOY
Professional Accounting Tax customers: 96.7K
Efile returns: 20.5M, up 19% YOY
Segment Composition
SMALL BUSINESS SERVICES INCLUDES:
- ---------------------------------
QuickBooks Support Services
Financial Supplies Group
Information Technology Solutions
Intuit Developer Network (IDN)
Payroll
VERTICALS INCLUDES:
- -------------------
Intuit Construction Business Solutions
Intuit Public Sector Solutions
Intuit MRI Real Estate Solutions
Intuit Eclipse Distribution Management Solutions
(A) This contains forward looking information that is subject to risks and
uncertainties. Actual results may differ materially due to the factors
included in Intuit's May 14, 2003 earnings press release and SEC filings
and at www.intuit.com/company/investors/considerations.html.
(B) These are Pro forma, or Non-GAAP, financial measures. They exclude
acquisition related costs, pre-tax gains and losses related to marketable
securities and other investments, and other similar items. See Tables B1,
B2 and D of accompanying press release. FY02 adjusted for sale of Quicken
Loans and Intuit KK.
(C) Source: QuickBooks - NPD Group NPD Techworld Weekly Retail Software Report
FY YTD thru week of 4/13/03 based on Intuit's categorization of
accounting. Tax (Federal) - NPD Group NPD Techworld Monthly Retail
Software Report 11/02-3/03 plus NPD Weekly Retail Software Report for
weeks beginning 4/6/03-4/16/03 with adjustments for major accounts not
included in the two weeks of weekly report data.
(D) End-user purchases -- or products customers have bought and paid for at
both retail and direct.
(E) Includes Premier and above based on end user purchases -- or products
customers have bought and paid for at both retail and direct.