Sharpens Strategic Focus with Plans to
Divest Demandforce, QuickBase and Quicken; Increases Dividend 20
Percent
Intuit Inc. (Nasdaq:INTU) announced financial results for the
fourth quarter and full-year fiscal 2015. The company’s fiscal year
ended July 31.
“We closed out our fiscal year 2015 on a strong note, with
excellent momentum in each of our core businesses as we continue to
see the benefits of our ongoing transformation into a global cloud
company. For the full fiscal year, total revenue and earnings per
share both came in above the high end of our guidance range, before
reclassifying our planned divestitures,” said Brad Smith, Intuit’s
president and chief executive officer.
“In particular, our small business momentum continues to build
and our QuickBooks Online ecosystem growth is accelerating, driving
value for customers and Intuit. And we delivered great tax products
this season.”
Financial Highlights
Intuit’s performance during the fourth quarter and fiscal
year:
- Reported fiscal 2015 revenue of $4.2
billion.
- In the U.S., TurboTax Online units
increased 11 percent, and total TurboTax units grew 7 percent,
excluding the Free File Alliance.
- Increased total QuickBooks Online
subscribers by 57 percent for the year.
- Reached 1.075 million QuickBooks Online
subscribers through the end of the quarter.
- Increased its commitment to return
capital to shareholders with a 20 percent increase in its cash
dividend.
Unless otherwise noted, all growth rates refer to the current
period versus the comparable prior-year period, and the business
metrics and associated growth rates refer to worldwide business
metrics.
Divestitures and Portfolio Management
Intuit today announced its intent to divest Demandforce,
QuickBase and Quicken to focus on and invest in businesses that
strengthen the ecosystem and align with two strategic goals: to be
the operating system behind small business success, and to do the
nations’ taxes in the U.S. and Canada.
“Divesting Demandforce, QuickBase and Quicken enables both
Intuit and these businesses to focus on meeting the needs of their
respective customers, while allowing Intuit to accelerate our
ability to deliver on our objectives,” said Neil Williams, chief
financial officer. “We are confident about finding the right
outcome for each business. Until then, we will continue to sell and
support all of our current products; we will not waver in our
commitment to customers’ success.”
As a result of this decision, revenue in fiscal 2016 will be
reduced by approximately $250 million and non-GAAP earnings per
share will be reduced by approximately $0.10, as the company
reports these held-for-sale assets as discontinued operations.
Business Segment Results
The segment results reflect the treatment of assets held for
sale as discontinued operations.
Small Business
- Total Small Business segment revenue
declined 5 percent for the quarter, and 2 percent for the year,
reflecting the changes in desktop offerings that resulted in
ratable revenue recognition.
- QuickBooks total paying customers grew
7 percent for the year, accelerating from last year.
- The QuickBooks Online Ecosystem
continues to build momentum, with revenue growth of approximately
25 percent for the year, driven by strong customer acquisition.
- Added 110,000 QuickBooks Online
subscribers in the quarter, reaching 1,075,000 paying subscribers
worldwide.
- Increased QuickBooks Online subscribers
outside the U.S. by over 135 percent, to 198,000.
- Ended with 25,000 QuickBooks
Self-Employed subscribers, up from 15,000 last quarter.
- Online payroll customers grew 18
percent.
- Online active payments customers grew 5
percent, and online payments charge volume grew 19 percent for the
year.
Consumer and Professional
Tax
- Consumer Tax revenue grew 8 percent for
the fiscal year.
- ProTax revenue declined 33 percent for
the year, in line with expectations. As previously disclosed,
approximately $150 million in fiscal 2015 revenue shifted to fiscal
2016 due to changes in current desktop offerings that affected the
timing of revenue recognition.
Snapshot of Fourth-quarter Results
GAAP Non-GAAP Q4
Q4 Q4 Q4
FY ’15 FY ’14 Change
FY ’15
FY ’14
Change Revenue $696 $649
7% $696 $649 7%
OperatingIncome(Loss)
($130) ($55) 136% ($16) $9 NM
EPS $0.05 ($0.10) NM ($0.05)
$0.01 NM Dollars are in millions, except earnings per share
(EPS). See “About Non-GAAP Financial Measures” below for more
information regarding financial measures not prepared in accordance
with Generally Accepted Accounting Principles (GAAP). Q4 FY15
results reflect the impact of changes to certain desktop software
offerings; revenue for those offerings is recognized as services
are delivered, rather than up front. Q4 FY15 GAAP results also
reflect a $34 million intangible asset impairment charge and the
treatment of assets held for sale as discontinued operations.
Snapshot of FY ’15 Full-year Results
GAAP Non-GAAP
FY ’15
FY ’14
Change
FY ’15
FY ’14
Change Revenue $4,192 $4,243
(1%) $4,192 $4,243 (1%)
OperatingIncome
$738 $1,300 (43%) $1,141 $1,516
(25%)
EPS $1.28 $3.12 (59%) $2.59
$3.40 (24%) Dollars are in millions, except earnings
per share (EPS). See “About Non-GAAP Financial Measures” below for
more information regarding financial measures not prepared in
accordance with Generally Accepted Accounting Principles (GAAP).
Fiscal 2015 results reflect the impact of changes to certain
desktop software offerings; revenue for those offerings is
recognized as services are delivered, rather than up front. Fiscal
2015 GAAP results also reflect $148 million in goodwill and
intangible asset impairment charges and the treatment of assets
held for sale as discontinued operations.
Capital Allocation Summary
- Ended the fourth quarter with
approximately $1.7 billion in cash and investments.
- Paid out $283 million in dividends and
repurchased $1.25 billion of shares in fiscal 2015. The company has
$2.6 billion remaining on its authorization and continues to be in
the market each quarter.
- Received board approval for a $0.30 per
share dividend for the fiscal first quarter, payable on Oct. 19.
This represents a 20 percent increase versus last year and reflects
the company’s large and growing cash position, as well as more
recurring and predictable revenue streams.
Forward-looking Guidance
“Looking ahead to fiscal 2016, our customer growth is
accelerating, active use is improving, and global adoption is
hitting its stride. I’m encouraged about the strategic choices we
are making for the future and our commitment to winning in the
cloud,” Smith said. “We are creating a clear value proposition for
our small business and tax customers, and we continue to innovate
and to take share in large addressable markets. We are investing in
the areas with the biggest long-term payoff, setting Intuit up for
strong customer and revenue growth for fiscal 2016 and beyond.”
Intuit announced guidance for fiscal year 2016, which ends July
31. The company expects:
- Revenue of $4.525 billion to $4.600
billion, growth of 8 to 10 percent.
- GAAP operating income of $1.115 billion
to $1.145 billion, growth of 51 to 55 percent.
- Non-GAAP operating income of $1.450
billion to $1.480 billion, growth of 27 to 30 percent.
- GAAP diluted EPS of $2.50 to $2.55,
versus $1.28 in fiscal 2015, which included goodwill and intangible
asset impairment charges.
- Non-GAAP diluted EPS of $3.40 to $3.45,
growth of 31 to 33 percent.
The company expects the following segment revenue growth for
fiscal year 2016:
- Small Business Group: 7 to 9 percent.
- Total Small Business, including
Consumer Ecosystem (Mint, Mint Bills and OFX): 5 to 7 percent.
- Consumer Tax Group: 5 to 7
percent.
- Professional Tax: 48 to 51 percent.
- For the fiscal first quarter, the
company expects Professional Tax revenue of approximately $100
million.
For the first quarter of fiscal 2016, Intuit expects:
- Revenue of $660 million to $680
million, growth of 8 to 11 percent.
- GAAP operating loss of $95 million to
$100 million, compared to an operating loss of $109 million in the
year-ago quarter.
- Non-GAAP operating loss of $5 million
to $10 million, compared to an operating loss of $42 million in the
year-ago quarter.
- GAAP net loss per share of $0.26 to
$0.27, compared to a net loss per share of $0.29 in the year-ago
quarter.
- Non-GAAP loss per share of $0.03 to
$0.04, compared to a loss per share of $0.11 in the year-ago
quarter.
Conference Call and Replay Information
Intuit executives will discuss the financial results on a
conference call today at 1:30 p.m. Pacific time. To hear the call,
dial 866-348-8108 in the United States or 908-982-4619 from
international locations. No reservation or access code is needed.
The conference call can also be heard live at
http://investors.intuit.com/events.cfm. Prepared remarks for the
call will be available on Intuit’s website after the call ends.
Replay Information
A replay of the conference call will be available for one week
by calling 888-266-2081, or 703-925-2533 from international
locations. The access code for this call is 1661060.
The audio webcast will remain available on Intuit’s website for
one week after the conference call.
About Intuit Inc.
Intuit Inc. creates business and financial management solutions
that simplify the business of life for small businesses, consumers
and accounting professionals.
Its flagship products and services include QuickBooks®, Quicken®
and TurboTax®, which make it easier to manage small businesses and
payroll processing, personal finance, and tax preparation and
filing. Mint.com provides a fresh, easy and intelligent way for
people to manage their money, while Demandforce® offers marketing
and communication tools for small businesses. ProSeries® and
Lacerte® are Intuit's leading tax preparation offerings for
professional accountants.
Founded in 1983, Intuit had revenue of $4.2 billion in its
fiscal year 2015. The company has approximately 8,000 employees
with major offices in the United States, Canada, the United
Kingdom, India and other locations. More information can be found
at www.intuit.com.
Intuit and the Intuit logo, among others, are registered
trademarks and/or registered service marks of Intuit Inc. in the
United States and other countries.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
Generally Accepted Accounting Principles, please see the section of
the accompanying tables titled "About Non-GAAP Financial Measures"
as well as the related Table B1, Table B2, and Table E. A copy of
the press release issued by Intuit today can be found on the
investor relations page of Intuit's Web site.
Cautions About Forward-looking Statements
This press release contains forward-looking statements,
including forecasts of expected growth and future financial results
of Intuit and its reporting segments; Intuit’s prospects for the
business in fiscal 2016 and beyond; expectations regarding Intuit’s
growth outside the US; expectations regarding timing and growth of
revenue for each of Intuit’s reporting segments and from current or
future products and services; expectations regarding customer
growth; expectations regarding changes to our products and their
impact on Intuit’s business; expectations regarding the amount and
timing of any future dividends or share repurchases; expectations
regarding availability of our offerings; expectations regarding the
impact of our strategic decisions on Intuit’s business; and all of
the statements under the heading “Forward-looking Guidance”.
Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results to differ materially from the expectations expressed
in the forward-looking statements. These factors include, without
limitation, the following: inherent difficulty in predicting
consumer behavior; difficulties in receiving, processing, or filing
customer tax submissions; consumers may not respond as we expected
to our advertising and promotional activities; product
introductions and price competition from our competitors can have
unpredictable negative effects on our revenue, profitability and
market position; governmental encroachment in our tax businesses or
other governmental activities or public policy affecting the
preparation and filing of tax returns could negatively affect our
operating results and market position; we may not be able to
successfully innovate and introduce new offerings and business
models to meet our growth and profitability objectives, and current
and future offerings may not adequately address customer needs and
may not achieve broad market acceptance, which could harm our
operating results and financial condition; business interruption or
failure of our information technology and communication systems may
impair the availability of our products and services, which may
damage our reputation and harm our future financial results; as we
upgrade and consolidate our customer facing applications and
supporting information technology infrastructure, any problems with
these implementations could interfere with our ability to deliver
our offerings; any failure to properly use and protect personal
customer information and data could harm our revenue, earnings and
reputation; if we are unable to develop, manage and maintain
critical third party business relationships, our business may be
adversely affected; increased government regulation of our
businesses may harm our operating results; if we fail to process
transactions effectively or fail to adequately protect against
potential fraudulent activities, our revenue and earnings may be
harmed; related publicity regarding such fraudulent activity could
cause customers to lose confidence in using our software and
adversely impact our results; any significant offering quality
problems or delays in our offerings could harm our revenue,
earnings and reputation; our participation in the Free File
Alliance may result in lost revenue opportunities and
cannibalization of our traditional paid franchise; the continuing
global economic downturn may continue to impact consumer and small
business spending, financial institutions and tax filings, which
could negatively affect our revenue and profitability;
year-over-year changes in the total number of tax filings that are
submitted to government agencies due to economic conditions or
otherwise may result in lost revenue opportunities; our revenue and
earnings are highly seasonal and the timing of our revenue between
quarters is difficult to predict, which may cause significant
quarterly fluctuations in our financial results; our financial
position may not make repurchasing shares advisable or we may issue
additional shares in an acquisition causing our number of
outstanding shares to grow; our inability to adequately protect our
intellectual property rights may weaken our competitive position
and reduce our revenue and earnings; our acquisition and
divestiture activities may disrupt our ongoing business, may
involve increased expenses and may present risks not contemplated
at the time of the transactions; our use of significant amounts of
debt to finance acquisitions or other activities could harm our
financial condition and results of operation; and litigation
involving intellectual property, antitrust, shareholder and other
matters may increase our costs. More details about the risks that
may impact our business are included in our Form 10-K for fiscal
2014 and in our other SEC filings. You can locate these reports
through our website at http://investors.intuit.com. Forward-looking
statements are based on information as of August 20, 2015 and we do
not undertake any duty to update any forward-looking statement or
other information in these materials.
TABLE A
INTUIT INC.
GAAP CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
July 31,2015
July 31,2014
July 31,2015
July 31,2014
Net revenue: Product $ 281 $ 262 $ 1,146 $ 1,459 Service and other
415 387 3,046 2,784 Total net revenue
696 649 4,192 4,243 Costs and expenses:
Cost of revenue: Cost of product revenue 31 32 139 137 Cost of
service and other revenue 137 128 556 466 Amortization of acquired
technology 8 6 30 18 Selling and marketing 280 229 1,288 1,157
Research and development 215 197 798 714 General and administrative
118 110 483 444 Amortization of other acquired intangible assets 3
2 12 7 Goodwill and intangible asset impairment charges 34 —
148 — Total costs and expenses [A] 826
704 3,454 2,943 Operating income (loss) from
continuing operations (130 ) (55 ) 738 1,300 Interest expense (6 )
(7 ) (27 ) (31 ) Interest and other income, net (2 ) 23 1
31 Income (loss) from continuing operations before
income taxes (138 ) (39 ) 712 1,300 Income tax provision (benefit)
[B] (36 ) (11 ) 299 447 Net income (loss) from
continuing operations (102 ) (28 ) 413 853 Net income (loss) from
discontinued operations [C] 116 (1 ) (48 ) 54 Net
income (loss) $ 14 $ (29 ) $ 365 $ 907
Basic net income (loss) per share from continuing operations $
(0.37 ) $ (0.10 ) $ 1.47 $ 2.99 Basic net income (loss) per share
from discontinued operations 0.42 — (0.17 ) 0.19
Basic net income (loss) per share $ 0.05 $ (0.10 ) $
1.30 $ 3.18 Shares used in basic per share
calculations 277 284 281 285
Diluted net income (loss) per share from continuing operations $
(0.37 ) $ (0.10 ) $ 1.45 $ 2.94 Diluted net income (loss) per share
from discontinued operations 0.42 — (0.17 ) 0.18
Diluted net income (loss) per share $ 0.05 $ (0.10 )
$ 1.28 $ 3.12 Shares used in diluted per share
calculations 277 284 286 291
Dividends declared per common share $ 0.25 $ 0.19 $
1.00 $ 0.76
See accompanying Notes.
INTUIT INC.
NOTES TO TABLE A
[A]
The following table summarizes the total
share-based compensation expense that we recorded in continuing
operations for the periods shown.
Three Months Ended Twelve Months Ended
(in millions)
July 31,2015
July 31,2014
July 31,2015
July 31,2014
Cost of revenue $ 2 $ 2 $ 6 $ 7 Selling and marketing 19 14 69 53
Research and development 24 18 80 59 General and administrative 25
18 87 67 Total share-based compensation
expense $ 70 $ 52 $ 242 $ 186
[B]
We compute our annual provision for income
taxes by applying the annual effective tax rate to income from
recurring operations and adding the effects of any discrete income
tax items specific to the period. Our effective tax rate for the
twelve months ended July 31, 2015 was approximately 42%.
Excluding the effects of the goodwill impairment charge, which was
not tax deductible, our effective tax rate was approximately 36%
and did not differ significantly from the federal statutory rate of
35%. Our effective tax rate for the twelve months ended
July 31, 2014 was approximately 34% and did not differ
significantly from the statutory rate of 35%.
[C]
In the fourth quarter fiscal 2015 we
determined that our Demandforce, QuickBase, and Quicken businesses
became long-lived assets held for sale and we accounted for them as
discontinued operations.We have segregated the operating results
for these three businesses in our statements of operations for all
periods presented. Net revenue from these businesses totaled $236
million for the twelve months ended July 31, 2015 and $263 million
for the twelve months ended July 31, 2014. Net loss from
discontinued operations for the twelve months ended July 31, 2015
includes a net loss from discontinued operations of $172 million
partially offset by $124 million in tax benefits from the
anticipated sale of these businesses. For the twelve months ended
July 31, 2014, we recorded net income from discontinued operations
of $8 million.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.On August 19, 2013 we completed the sale of our Intuit Health
business for cash consideration that was not significant and
recorded a loss on disposal that was offset by a related income tax
benefit of approximately $14 million, resulting in a net gain on
disposal of approximately $10 million in the first quarter of
fiscal 2014.We have reclassified our balance sheets for all periods
presented to reflect these businesses as discontinued operations.
Because the cash flows of these businesses were not material for
any period presented, we have not segregated them from continuing
operations on our statements of cash flows.
TABLE B1
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES
(In millions, except per share
amounts)
(Unaudited)
Fiscal 2015 Q1 Q2
Q3 Q4 Full Year GAAP
operating income (loss) from continuing operations $ (109 ) $
(89 ) $ 1,066 $ (130 ) $ 738 Amortization of acquired technology 7
7 8 8 30 Amortization of other acquired intangible assets 3 3 3 3
12 Professional fees for business combinations — 1 1 — 2 Goodwill
and intangible asset impairment charges — — 114 34 148 Gain on sale
of long-lived assets — — (30 ) (1 ) (31 ) Share-based compensation
expense 57 56 59 70 242
Non-GAAP operating income (loss) from continuing operations
$ (42 ) $ (22 ) $ 1,221 $ (16 ) $ 1,141
GAAP net income (loss) $ (84 ) $ (66 ) $ 501 $ 14 $ 365
Amortization of acquired technology 7 7 8 8 30 Amortization of
other acquired intangible assets 3 3 3 3 12 Professional fees for
business combinations — 1 1 — 2 Goodwill and intangible asset
impairment charges — — 114 34 148 Gain on sale of long-lived assets
— — (30 ) (1 ) (31 ) Share-based compensation expense 57 56 59 70
242 Net (gain) loss on debt securities and other investments 1 — 3
2 6 Income tax effects and adjustments (19 ) (25 ) (10 ) (29 ) (83
) Net (income) loss from discontinued operations $ 3 $ 6
$ 155 $ (116 ) $ 48
Non-GAAP net income
(loss) $ (32 ) $ (18 ) $ 804 $ (15 ) $ 739
GAAP diluted net income (loss) per share $ (0.29 ) $ (0.23 )
$ 1.78 $ 0.05 $ 1.28 Amortization of acquired technology 0.02 0.02
0.03 0.03 0.10 Amortization of other acquired intangible assets
0.01 0.01 0.01 0.01 0.04 Professional fees for business
combinations — — — — 0.01 Goodwill and intangible asset impairment
charges — — 0.40 0.12 0.52 Gain on sale of long-lived assets — —
(0.11 ) — (0.11 ) Share-based compensation expense 0.20 0.20 0.21
0.25 0.85 Net (gain) loss on debt securities and other investments
— — 0.01 0.01 0.02 Income tax effects and adjustments (0.06 ) (0.08
) (0.03 ) (0.10 ) (0.29 ) Net (income) loss from discontinued
operations 0.01 0.02 0.55 (0.42 ) 0.17
Non-GAAP diluted net income (loss) per share $ (0.11 ) $
(0.06 ) $ 2.85 $ (0.05 ) $ 2.59
Shares used
in diluted per share calculation 286 285 282
277 286
See “About Non-GAAP Financial Measures”
immediately following Table E for information on these measures,
the items excluded from the most directly comparable GAAP measures
in arriving at non-GAAP financial measures, and the reasons
management uses each measure and excludes the specified amounts in
arriving at each non-GAAP financial measure.
TABLE B2
INTUIT INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES
(In millions, except per share
amounts)
(Unaudited)
Fiscal 2014 Q1 Q2
Q3 Q4 Full Year GAAP
operating income (loss) from continuing operations $ (77 ) $
(55 ) $ 1,487 $ (55 ) $ 1,300 Amortization of acquired technology 4
4 4 6 18 Amortization of other acquired intangible assets 1 2 2 2 7
Professional fees for business combinations — 1 — 4 5 Share-based
compensation expense 43 47 44 52 186
Non-GAAP operating income (loss) from continuing
operations $ (29 ) $ (1 ) $ 1,537 $ 9 $ 1,516
GAAP net income (loss) $ (11 ) $ (37 ) $ 984 $
(29 ) $ 907 Amortization of acquired technology 4 4 4 6 18
Amortization of other acquired intangible assets 1 2 2 2 7
Professional fees for business combinations — 1 — 4 5 Share-based
compensation expense 43 47 44 52 186 Net (gain) loss on debt
securities and other investments (2 ) 1 — (21 ) (22 ) Income tax
effects and adjustments (11 ) (18 ) (19 ) (12 ) (60 ) Net (income)
loss from discontinued operations (46 ) (5 ) (4 ) 1 (54 )
Non-GAAP net income (loss) $ (22 ) $ (5 ) $ 1,011 $ 3
$ 987
GAAP diluted net income (loss) per
share $ (0.04 ) $ (0.13 ) $ 3.39 $ (0.10 ) $ 3.12 Amortization
of acquired technology 0.01 0.01 0.01 0.02 0.06 Amortization of
other acquired intangible assets — 0.01 0.01 0.01 0.02 Professional
fees for business combinations — — — 0.01 0.02 Share-based
compensation expense 0.15 0.17 0.15 0.18 0.64 Net (gain) loss on
debt securities and other investments — — — (0.07 ) (0.07 ) Income
tax effects and adjustments (0.04 ) (0.06 ) (0.06 ) (0.04 ) (0.21 )
Net (income) loss from discontinued operations (0.16 ) (0.02 )
(0.01 ) — (0.18 )
Non-GAAP diluted net income (loss) per
share $ (0.08 ) $ (0.02 ) $ 3.49 $ 0.01 $ 3.40
Shares used in diluted per share calculation
288 284 290 290 291
See “About Non-GAAP Financial Measures”
immediately following Table E for information on these measures,
the items excluded from the most directly comparable GAAP measures
in arriving at non-GAAP financial measures, and the reasons
management uses each measure and excludes the specified amounts in
arriving at each non-GAAP financial measure.When reported on August
21, 2014, fourth quarter results included an accrual for a loss
contingency that was resolved before we filed our fiscal 2014 Form
10-K. We have adjusted our fiscal fourth quarter and full-year 2014
operating income and earnings per share accordingly, resulting in a
GAAP and non-GAAP operating income increase of approximately $16
million, and a GAAP and non-GAAP earnings per share increase of
approximately $0.03.
TABLE C
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
July 31,2015
July 31,2014
ASSETS Current assets: Cash and cash equivalents $ 808 $ 849
Investments 889 1,065 Accounts receivable, net 91 115 Income taxes
receivable 84 35 Deferred income taxes 231 124 Prepaid expenses and
other current assets 94 115 Current assets of discontinued
operations 26 29 Current assets before funds held for
customers 2,223 2,332 Funds held for customers 337 289 Total
current assets 2,560 2,621 Long-term investments 27 31
Property and equipment, net 682 589 Goodwill 1,266 1,323 Acquired
intangible assets, net 87 133 Other assets 111 108 Long-term assets
of discontinued operations 235 396 Total assets $ 4,968
$ 5,201 LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 190 $ 145 Accrued compensation and
related liabilities 283 262 Deferred revenue 691 495 Other current
liabilities 150 150 Current liabilities of discontinued operations
93 80 Current liabilities before customer fund deposits
1,407 1,132 Customer fund deposits 337 289 Total current
liabilities 1,744 1,421 Long-term debt 500 499 Long-term
deferred revenue 152 3 Other long-term obligations 172 166
Long-term obligations of discontinued operations 68 34 Total
liabilities 2,636 2,123 Stockholders’ equity 2,332
3,078 Total liabilities and stockholders’ equity $ 4,968
$ 5,201
TABLE D
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In millions)
(Unaudited)
Twelve Months Ended July 31, 2015
July 31, 2014 Cash flows from operating activities:
Net income $ 365 $ 907
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 157 144 Amortization of acquired intangible assets 74
53 Goodwill and intangible asset impairment charges 297 —
Share-based compensation expense 257 204 Pre-tax gain on sale of
discontinued operations (1) — (40 ) Net realized gain on sale of
available-for-sale equity securities — (21 ) Deferred income taxes
(100 ) 93 Tax benefit from share-based compensation plans 85 82
Excess tax benefit from share-based compensation plans (85 ) (82 )
Other 4 24 Total adjustments 689 457
Changes in operating assets and liabilities: Accounts receivable 24
(5 ) Income taxes receivable (49 ) 27 Prepaid expenses and other
assets 22 (14 ) Accounts payable 35 15 Accrued compensation and
related liabilities 24 43 Deferred revenue 398 15 Other liabilities
(4 ) 1 Total changes in operating assets and liabilities 450
82
Net cash provided by operating activities
1,504 1,446 Cash flows from
investing activities: Purchases of available-for-sale debt
securities (939 ) (1,334 ) Sales of available-for-sale debt
securities 620 346 Maturities of available-for-sale debt securities
475 567
Net change in money market funds and other
cash equivalents held to satisfy customer fund obligations
(49 ) (54 ) Net change in customer fund deposits 49 54 Proceeds
from the sale of available-for-sale equity securities — 26
Purchases of property and equipment (261 ) (186 ) Acquisitions of
businesses, net of cash acquired (95 ) (471 ) Proceeds from
divestiture of businesses — 1,025 Other 18 (22 )
Net cash
used in investing activities (182 ) (49
) Cash flows from financing activities: Net proceeds
from issuance of stock under employee stock plans 107 165 Cash paid
for purchases of treasury stock (1,245 ) (1,577 ) Dividends and
dividend rights paid (283 ) (220 ) Excess tax benefit from
share-based compensation plans 85 82 Other (1 ) (1 )
Net cash
used in financing activities (1,337 )
(1,551 ) Effect of exchange rates on cash and cash
equivalents (26 ) (6 )
Net decrease in cash and cash
equivalents (41 ) (160 ) Cash and
cash equivalents at beginning of period 849 1,009
Cash and cash equivalents at end of period $
808 $ 849
(1)
Because the cash flows of our discontinued
operations were not material for any period presented, we have not
segregated the cash flows of those businesses on these statements
of cash flows. We have presented the effect of the gains on
disposals of discontinued operations on these statements of cash
flow.
TABLE E
INTUIT INC.
RECONCILIATION OF FORWARD-LOOKING GUIDANCE
FOR NON-GAAP FINANCIAL MEASURES
TO PROJECTED GAAP REVENUE, OPERATING
INCOME (LOSS), AND EPS
(In millions, except per share
amounts)
(Unaudited)
Forward-Looking Guidance GAAP
Range of Estimate
Non-GAAP
Range of Estimate
From To Adjmts From
To Three Months Ending October 31, 2015 Revenue $ 660
$ 680 $ — $ 660 $ 680 Operating loss $ (100 ) $ (95 ) $ 90 [a] $
(10 ) $ (5 ) Diluted loss per share $ (0.27 ) $ (0.26 ) $ 0.23 [b]
$ (0.04 ) $ (0.03 )
Twelve Months Ending July 31,
2016 Revenue $ 4,525 $ 4,600 $ — $ 4,525 $ 4,600 Operating
income $ 1,115 $ 1,145 $ 335 [c] $ 1,450 $ 1,480 Diluted earnings
per share $ 2.50 $ 2.55 $ 0.90 [d] $ 3.40 $ 3.45
See “About Non-GAAP Financial Measures”
immediately following this Table E for information on these
measures, the items excluded from the most directly comparable GAAP
measures in arriving at non-GAAP financial measures, and the
reasons management uses each measure and excludes the specified
amounts in arriving at each non-GAAP financial measure.
[a]
Reflects estimated adjustments for
share-based compensation expense of approximately $77 million;
amortization of acquired technology of approximately $8 million;
and amortization of other acquired intangible assets of
approximately $5 million.
[b]
Reflects the estimated adjustments in item
[a], income taxes related to these adjustments, and other income
tax effects related to the use of the long-term non-GAAP tax
rate.
[c]
Reflects estimated adjustments for
share-based compensation expense of approximately $288 million;
amortization of acquired technology of approximately $27 million;
and amortization of other acquired intangible assets of
approximately $20 million.
[d]
Reflects the estimated adjustments in item
[c], income taxes related to these adjustments, and other income
tax effects related to the use of the long-term non-GAAP tax
rate.
INTUIT INC.ABOUT NON-GAAP FINANCIAL
MEASURES
The accompanying press release dated August 20, 2015 contains
non-GAAP financial measures. Table B1, Table B2 and Table E
reconcile the non-GAAP financial measures in that press release to
the most directly comparable financial measures prepared in
accordance with Generally Accepted Accounting Principles (GAAP).
These non-GAAP financial measures include non-GAAP operating income
(loss), non-GAAP net income (loss) and non-GAAP net income (loss)
per share.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. These non-GAAP financial measures
do not reflect a comprehensive system of accounting, differ from
GAAP measures with the same names and may differ from non-GAAP
financial measures with the same or similar names that are used by
other companies.
We compute non-GAAP financial measures using the same consistent
method from quarter to quarter and year to year. We may consider
whether other significant items that arise in the future should be
excluded from our non-GAAP financial measures.
We exclude the following items from all of our non-GAAP
financial measures:
- Share-based compensation expense
- Amortization of acquired
technology
- Amortization of other acquired
intangible assets
- Goodwill and intangible asset
impairment charges
- Professional fees for business
combinations
We also exclude the following items from non-GAAP net income
(loss) and diluted net income (loss) per share:
- Gains and losses on debt and equity
securities and other investments
- Income tax effects and adjustments
- Discontinued operations
We believe that these non-GAAP financial measures provide
meaningful supplemental information regarding Intuit’s operating
results primarily because they exclude amounts that we do not
consider part of ongoing operating results when planning and
forecasting and when assessing the performance of the organization,
our individual operating segments or our senior management. Segment
managers are not held accountable for share-based compensation
expense, amortization, or the other excluded items and,
accordingly, we exclude these amounts from our measures of segment
performance. We believe that our non-GAAP financial measures also
facilitate the comparison by management and investors of results
for current periods and guidance for future periods with results
for past periods.
The following are descriptions of the items we exclude from our
non-GAAP financial measures.
Share-based compensation expenses. These consist of non-cash
expenses for stock options, restricted stock units and our Employee
Stock Purchase Plan. When considering the impact of equity awards,
we place greater emphasis on overall shareholder dilution rather
than the accounting charges associated with those awards.
Amortization of acquired technology and amortization of other
acquired intangible assets. When we acquire an entity, we are
required by GAAP to record the fair values of the intangible assets
of the entity and amortize them over their useful lives.
Amortization of acquired technology in cost of revenue includes
amortization of software and other technology assets of acquired
entities. Amortization of other acquired intangible assets in
operating expenses includes amortization of assets such as customer
lists, covenants not to compete and trade names.
Goodwill and intangible asset impairment charges. We exclude
from our non-GAAP financial measures non-cash charges to adjust the
carrying values of goodwill and other acquired intangible assets to
their estimated fair values.
Professional fees for business combinations. We exclude from our
non-GAAP financial measures the professional fees we incur to
complete business combinations. These include investment banking,
legal and accounting fees.
Gains and losses on debt and equity securities and other
investments. We exclude from our non-GAAP financial measures gains
and losses that we record when we sell or impair available-for-sale
debt and equity securities and other investments.
Income tax effects and adjustments. During fiscal 2014, we
excluded from our non-GAAP financial measures the income tax
effects of the non-GAAP pre-tax adjustments described above, as
well as income tax effects related to business combinations. This
was consistent with how we were evaluating our operating results
and planning, forecasting, and evaluating future periods during
that fiscal year.
During fiscal 2015, we began using a long-term non-GAAP tax rate
for evaluating operating results and for planning, forecasting, and
analyzing future periods. This long-term non-GAAP tax rate
excludes the income tax effects of the non-GAAP pre-tax adjustments
described above, assumes the federal research and experimentation
credit is continuously in effect, and eliminates the effects of
non-recurring and period specific items which can vary in size and
frequency. Based on our current long-term projections, we are using
a long-term non-GAAP tax rate of 34% which is consistent with the
average of our normalized fiscal year tax rate over a four year
period that includes the past three fiscal years plus the current
fiscal year. We will evaluate this long-term non-GAAP tax rate on
an annual basis and whenever any significant events occur which may
materially affect this long-term rate. This long-term non-GAAP tax
rate could be subject to change for various reasons including
significant changes in our geographic earnings mix or fundamental
tax law changes in major jurisdictions in which we operate.
Operating results and gains and losses on the sale of
discontinued operations. From time to time, we sell or otherwise
dispose of selected operations as we adjust our portfolio of
businesses to meet our strategic goals. In accordance with GAAP, we
segregate the operating results of discontinued operations as well
as gains and losses on the sale of these discontinued operations
from continuing operations on our GAAP statements of operations but
continue to include them in GAAP net income or loss and net income
or loss per share. We exclude these amounts from our non-GAAP
financial measures.
The reconciliations of the forward-looking non-GAAP financial
measures to the most directly comparable GAAP financial measures in
Table E include all information reasonably available to Intuit at
the date of this press release. These tables include adjustments
that we can reasonably predict. Events that could cause the
reconciliation to change include acquisitions and divestitures of
businesses, goodwill and other asset impairments, and sales of
available-for-sale debt securities and other investments.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150820006114/en/
InvestorsIntuit Inc.Matt Rhodes,
650-944-2536matthew_rhodes@intuit.comorMediaIntuit Inc.Diane
Carlini, 650-944-6251diane_carlini@intuit.com
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