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þ
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended October 31, 2014
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from ____________ to ____________ .
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Delaware
(State of incorporation)
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77-0034661
(IRS employer identification no.)
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2700 Coast Avenue, Mountain View, CA 94043
(Address of principal executive offices)
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(650) 944-6000
(Registrant’s telephone number, including area code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
Number
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EX-10.01
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EX-31.01
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EX-31.02
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EX-32.01
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EX-32.02
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EX-101.INS XBRL Instance Document
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EX-101.SCH XBRL Taxonomy Extension Schema
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EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase
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EX-101.LAB XBRL Taxonomy Extension Label Linkbase
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EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase
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EX-101.DEF XBRL Taxonomy Extension Definition Linkbase
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Three Months Ended
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||||||
(In millions, except per share amounts)
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October 31,
2014 |
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October 31,
2013 |
||||
Net revenue:
|
|
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|
||||
Product
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$
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233
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$
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229
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Service and other
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439
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393
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Total net revenue
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672
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622
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Costs and expenses:
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Cost of revenue:
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||||
Cost of product revenue
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34
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29
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Cost of service and other revenue
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131
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108
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Amortization of acquired technology
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10
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6
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Selling and marketing
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281
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258
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Research and development
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200
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176
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General and administrative
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124
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118
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Amortization of other acquired intangible assets
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6
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4
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Total costs and expenses
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786
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|
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699
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||
Operating loss from continuing operations
|
(114
|
)
|
|
(77
|
)
|
||
Interest expense
|
(7
|
)
|
|
(8
|
)
|
||
Interest and other income, net
|
—
|
|
|
5
|
|
||
Loss before income taxes
|
(121
|
)
|
|
(80
|
)
|
||
Income tax benefit
|
(37
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)
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(23
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)
|
||
Net loss from continuing operations
|
(84
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)
|
|
(57
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)
|
||
Net income from discontinued operations
|
—
|
|
|
46
|
|
||
Net loss
|
$
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(84
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)
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|
$
|
(11
|
)
|
|
|
|
|
||||
Basic net loss per share from continuing operations
|
$
|
(0.29
|
)
|
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$
|
(0.20
|
)
|
Basic net income per share from discontinued operations
|
—
|
|
|
0.16
|
|
||
Basic net loss per share
|
$
|
(0.29
|
)
|
|
$
|
(0.04
|
)
|
Shares used in basic per share calculations
|
286
|
|
|
288
|
|
||
|
|
|
|
||||
Diluted net loss per share from continuing operations
|
$
|
(0.29
|
)
|
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$
|
(0.20
|
)
|
Diluted net income per share from discontinued operations
|
—
|
|
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0.16
|
|
||
Diluted net loss per share
|
$
|
(0.29
|
)
|
|
$
|
(0.04
|
)
|
Shares used in diluted per share calculations
|
286
|
|
|
288
|
|
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|
|
|
|
||||
Dividends declared per common share
|
$
|
0.25
|
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|
$
|
0.19
|
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Three Months Ended
|
||||||
(In millions)
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October 31,
2014 |
|
October 31,
2013 |
||||
|
|
|
|
||||
Net loss
|
$
|
(84
|
)
|
|
$
|
(11
|
)
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
||||
Unrealized gains on available-for-sale debt securities
|
—
|
|
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2
|
|
||
Unrealized losses on available-for-sale equity securities
|
—
|
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(1
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)
|
||
Foreign currency translation losses
|
(5
|
)
|
|
(2
|
)
|
||
Total other comprehensive loss, net
|
(5
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)
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|
(1
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)
|
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Comprehensive loss
|
$
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(89
|
)
|
|
$
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(12
|
)
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(In millions)
|
October 31,
2014 |
|
July 31,
2014 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
542
|
|
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$
|
849
|
|
Investments
|
1,047
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1,065
|
|
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Accounts receivable, net
|
140
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|
|
134
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|
||
Income taxes receivable
|
91
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|
|
35
|
|
||
Deferred income taxes
|
140
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|
|
133
|
|
||
Prepaid expenses and other current assets
|
119
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|
|
116
|
|
||
Current assets before funds held for customers
|
2,079
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|
2,332
|
|
||
Funds held for customers
|
358
|
|
|
289
|
|
||
Total current assets
|
2,437
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|
|
2,621
|
|
||
Long-term investments
|
31
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|
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31
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|
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Property and equipment, net
|
629
|
|
|
606
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|
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Goodwill
|
1,639
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|
1,635
|
|
||
Acquired intangible assets, net
|
186
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199
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|
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Other assets
|
116
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|
|
109
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Total assets
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$
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5,038
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$
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5,201
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
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|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
198
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$
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161
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Accrued compensation and related liabilities
|
139
|
|
|
278
|
|
||
Deferred revenue
|
511
|
|
|
526
|
|
||
Other current liabilities
|
154
|
|
|
167
|
|
||
Current liabilities before customer fund deposits
|
1,002
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1,132
|
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Customer fund deposits
|
358
|
|
|
289
|
|
||
Total current liabilities
|
1,360
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|
1,421
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|
||
Long-term debt
|
499
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499
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|
||
Long-term deferred revenue
|
52
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|
|
10
|
|
||
Other long-term obligations
|
200
|
|
|
193
|
|
||
Total liabilities
|
2,111
|
|
|
2,123
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital
|
3,687
|
|
|
3,561
|
|
||
Treasury stock, at cost
|
(6,544
|
)
|
|
(6,430
|
)
|
||
Accumulated other comprehensive loss
|
(7
|
)
|
|
(2
|
)
|
||
Retained earnings
|
5,791
|
|
|
5,949
|
|
||
Total stockholders’ equity
|
2,927
|
|
|
3,078
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,038
|
|
|
$
|
5,201
|
|
(In millions, except shares in thousands)
|
Shares of
Common
Stock
|
|
Common
Stock and
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
|||||||||||
Balance at July 31, 2014
|
284,950
|
|
|
$
|
3,561
|
|
|
$
|
(6,430
|
)
|
|
$
|
(2
|
)
|
|
$
|
5,949
|
|
|
$
|
3,078
|
|
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(84
|
)
|
|
(89
|
)
|
|||||
Issuance of stock under employee stock plans
|
1,787
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|||||
Stock repurchases under stock repurchase programs
|
(1,318
|
)
|
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
—
|
|
|
(114
|
)
|
|||||
Cash dividends declared ($0.25 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
(74
|
)
|
|||||
Tax benefit from share-based compensation plans
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Share-based compensation expense
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||
Balance at October 31, 2014
|
285,419
|
|
|
$
|
3,687
|
|
|
$
|
(6,544
|
)
|
|
$
|
(7
|
)
|
|
$
|
5,791
|
|
|
$
|
2,927
|
|
(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
|
|
|
Three Months Ended
|
||||||
(In millions)
|
October 31,
2014 |
|
October 31,
2013 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(84
|
)
|
|
$
|
(11
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
36
|
|
|
39
|
|
||
Amortization of acquired intangible assets
|
18
|
|
|
11
|
|
||
Share-based compensation expense
|
61
|
|
|
47
|
|
||
Pre-tax gain on sale of discontinued operations
|
—
|
|
|
(40
|
)
|
||
Deferred income taxes
|
(6
|
)
|
|
77
|
|
||
Tax benefit from share-based compensation plans
|
18
|
|
|
33
|
|
||
Excess tax benefit from share-based compensation plans
|
(18
|
)
|
|
(33
|
)
|
||
Other
|
12
|
|
|
5
|
|
||
Total adjustments
|
121
|
|
|
139
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(4
|
)
|
|
(11
|
)
|
||
Income taxes receivable
|
(56
|
)
|
|
(143
|
)
|
||
Prepaid expenses and other assets
|
(3
|
)
|
|
(44
|
)
|
||
Accounts payable
|
32
|
|
|
32
|
|
||
Accrued compensation and related liabilities
|
(139
|
)
|
|
(103
|
)
|
||
Deferred revenue
|
28
|
|
|
(29
|
)
|
||
Other liabilities
|
(13
|
)
|
|
(20
|
)
|
||
Total changes in operating assets and liabilities
|
(155
|
)
|
|
(318
|
)
|
||
Net cash used in operating activities
|
(118
|
)
|
|
(190
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale debt securities
|
(365
|
)
|
|
(163
|
)
|
||
Sales of available-for-sale debt securities
|
147
|
|
|
71
|
|
||
Maturities of available-for-sale debt securities
|
229
|
|
|
79
|
|
||
Net change in money market funds and other cash equivalents held
to satisfy customer fund obligations
|
(69
|
)
|
|
7
|
|
||
Net change in customer fund deposits
|
69
|
|
|
(7
|
)
|
||
Purchases of property and equipment
|
(55
|
)
|
|
(47
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
(9
|
)
|
|
(9
|
)
|
||
Proceeds from divestiture of businesses
|
—
|
|
|
1,025
|
|
||
Other
|
(8
|
)
|
|
(7
|
)
|
||
Net cash provided by (used in) investing activities
|
(61
|
)
|
|
949
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net proceeds from issuance of stock under employee stock plans
|
47
|
|
|
72
|
|
||
Purchases of treasury stock
|
(114
|
)
|
|
(1,400
|
)
|
||
Cash dividends paid to stockholders
|
(74
|
)
|
|
(55
|
)
|
||
Excess tax benefit from share-based compensation plans
|
18
|
|
|
33
|
|
||
Net cash used in financing activities
|
(123
|
)
|
|
(1,350
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
(5
|
)
|
|
(1
|
)
|
||
Net decrease in cash and cash equivalents
|
(307
|
)
|
|
(592
|
)
|
||
Cash and cash equivalents at beginning of period
|
849
|
|
|
1,009
|
|
||
Cash and cash equivalents at end of period
|
$
|
542
|
|
|
$
|
417
|
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
|
Three Months Ended
|
||||||
(In millions, except per share amounts)
|
October 31,
2014 |
|
October 31,
2013 |
||||
Numerator:
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(84
|
)
|
|
$
|
(57
|
)
|
Net income from discontinued operations
|
—
|
|
|
46
|
|
||
Net loss
|
$
|
(84
|
)
|
|
$
|
(11
|
)
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Shares used in basic per share amounts:
|
|
|
|
||||
Weighted average common shares outstanding
|
286
|
|
|
288
|
|
||
|
|
|
|
||||
Shares used in diluted per share amounts:
|
|
|
|
||||
Weighted average common shares outstanding
|
286
|
|
|
288
|
|
||
Dilutive common equivalent shares from stock options
|
|
|
|
||||
and restricted stock awards
|
—
|
|
|
—
|
|
||
Dilutive weighted average common shares outstanding
|
286
|
|
|
288
|
|
||
|
|
|
|
||||
Basic and diluted net loss per share:
|
|
|
|
||||
Basic net loss per share from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
(0.20
|
)
|
Basic net income per share from discontinued operations
|
—
|
|
|
0.16
|
|
||
Basic net loss per share
|
$
|
(0.29
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
||||
Diluted net loss per share from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
(0.20
|
)
|
Diluted net income per share from discontinued operations
|
—
|
|
|
0.16
|
|
||
Diluted net loss per share
|
$
|
(0.29
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
||||
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
|
16
|
|
|
17
|
|
||
|
|
|
|
||||
Weighted average stock options and restricted stock units excluded from
computation due to anti-dilutive effect
|
2
|
|
|
3
|
|
2.
|
Fair Value Measurements
|
•
|
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.
|
|
October 31, 2014
|
|
July 31, 2014
|
||||||||||||||||||||||||||||
(In millions)
|
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
|
$
|
431
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
431
|
|
|
$
|
652
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
652
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
—
|
|
|
647
|
|
|
—
|
|
|
647
|
|
|
—
|
|
|
701
|
|
|
—
|
|
|
701
|
|
||||||||
Corporate notes
|
—
|
|
|
565
|
|
|
—
|
|
|
565
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
466
|
|
||||||||
U.S. agency securities
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||||||
Municipal auction rate securities
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
||||||||
Total available-for-sale securities
|
—
|
|
|
1,222
|
|
|
21
|
|
|
1,243
|
|
|
—
|
|
|
1,209
|
|
|
21
|
|
|
1,230
|
|
||||||||
Total assets measured at fair value on a recurring basis
|
$
|
431
|
|
|
$
|
1,222
|
|
|
$
|
21
|
|
|
$
|
1,674
|
|
|
$
|
652
|
|
|
$
|
1,209
|
|
|
$
|
21
|
|
|
$
|
1,882
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Senior notes (1)
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
—
|
|
|
$
|
556
|
|
|
$
|
—
|
|
|
$
|
556
|
|
(1)
|
Carrying value on our balance sheet at
October 31, 2014
was
$499
million and at
July 31, 2014
was
$499
million. See Note 6.
|
|
October 31, 2014
|
|
July 31, 2014
|
||||||||||||||||||||||||||||
(In millions)
|
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
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
507
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
507
|
|
In funds held for customers
|
183
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|
145
|
|
|
—
|
|
|
—
|
|
|
145
|
|
||||||||
Total cash equivalents
|
$
|
431
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
431
|
|
|
$
|
652
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
652
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
In investments
|
$
|
—
|
|
|
$
|
1,047
|
|
|
$
|
—
|
|
|
$
|
1,047
|
|
|
$
|
—
|
|
|
$
|
1,065
|
|
|
$
|
—
|
|
|
$
|
1,065
|
|
In funds held for customers
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
144
|
|
||||||||
In long-term investments
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
||||||||
Total available-for-sale securities
|
$
|
—
|
|
|
$
|
1,222
|
|
|
$
|
21
|
|
|
$
|
1,243
|
|
|
$
|
—
|
|
|
$
|
1,209
|
|
|
$
|
21
|
|
|
$
|
1,230
|
|
3.
|
Cash and Cash Equivalents, Investments and Funds Held for Customers
|
|
October 31, 2014
|
|
July 31, 2014
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Classification on balance sheets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
542
|
|
|
$
|
542
|
|
|
$
|
849
|
|
|
$
|
849
|
|
Investments
|
1,046
|
|
|
1,047
|
|
|
1,064
|
|
|
1,065
|
|
||||
Funds held for customers
|
358
|
|
|
358
|
|
|
289
|
|
|
289
|
|
||||
Long-term investments
|
31
|
|
|
31
|
|
|
31
|
|
|
31
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
1,977
|
|
|
$
|
1,978
|
|
|
$
|
2,233
|
|
|
$
|
2,234
|
|
|
October 31, 2014
|
|
July 31, 2014
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Type of issue:
|
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents
|
$
|
725
|
|
|
$
|
725
|
|
|
$
|
994
|
|
|
$
|
994
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
647
|
|
|
647
|
|
|
700
|
|
|
701
|
|
||||
Corporate notes
|
564
|
|
|
565
|
|
|
466
|
|
|
466
|
|
||||
U.S. agency securities
|
10
|
|
|
10
|
|
|
42
|
|
|
42
|
|
||||
Municipal auction rate securities
|
21
|
|
|
21
|
|
|
21
|
|
|
21
|
|
||||
Total available-for-sale debt securities
|
1,242
|
|
|
1,243
|
|
|
1,229
|
|
|
1,230
|
|
||||
Other long-term investments
|
10
|
|
|
10
|
|
|
10
|
|
|
10
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
1,977
|
|
|
$
|
1,978
|
|
|
$
|
2,233
|
|
|
$
|
2,234
|
|
|
October 31, 2014
|
|
July 31, 2014
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Due within one year
|
$
|
399
|
|
|
$
|
399
|
|
|
$
|
363
|
|
|
$
|
363
|
|
Due within two years
|
471
|
|
|
472
|
|
|
443
|
|
|
443
|
|
||||
Due within three years
|
292
|
|
|
292
|
|
|
303
|
|
|
303
|
|
||||
Due after three years
|
80
|
|
|
80
|
|
|
120
|
|
|
121
|
|
||||
Total available-for-sale debt securities
|
$
|
1,242
|
|
|
$
|
1,243
|
|
|
$
|
1,229
|
|
|
$
|
1,230
|
|
4.
|
Discontinued Operations
|
5.
|
Current Liabilities
|
(In millions)
|
October 31,
2014 |
|
July 31,
2014 |
||||
Reserve for product returns
|
$
|
19
|
|
|
$
|
24
|
|
Reserve for rebates
|
15
|
|
|
23
|
|
||
Current portion of license fee payable
|
10
|
|
|
10
|
|
||
Current portion of deferred rent
|
7
|
|
|
7
|
|
||
Interest payable
|
3
|
|
|
10
|
|
||
Executive deferred compensation plan liabilities
|
71
|
|
|
63
|
|
||
Other
|
29
|
|
|
30
|
|
||
Total other current liabilities
|
$
|
154
|
|
|
$
|
167
|
|
6.
|
Long-Term Obligations
|
(In millions)
|
October 31,
2014 |
|
July 31,
2014 |
||||
Total deferred rent
|
$
|
61
|
|
|
$
|
62
|
|
Total license fee payable
|
42
|
|
|
41
|
|
||
Long-term income tax liabilities
|
33
|
|
|
32
|
|
||
Long-term deferred income tax liabilities
|
62
|
|
|
61
|
|
||
Other
|
21
|
|
|
14
|
|
||
Total long-term obligations
|
219
|
|
|
210
|
|
||
Less current portion (included in other current liabilities)
|
(19
|
)
|
|
(17
|
)
|
||
Long-term obligations due after one year
|
$
|
200
|
|
|
$
|
193
|
|
7.
|
Income Taxes
|
8.
|
Stockholders’ Equity
|
|
Three Months Ended
|
||||||
(In millions, except per share amounts)
|
October 31,
2014 |
|
October 31,
2013 |
||||
Cost of revenue
|
$
|
2
|
|
|
$
|
2
|
|
Selling and marketing
|
18
|
|
|
15
|
|
||
Research and development
|
20
|
|
|
14
|
|
||
General and administrative
|
21
|
|
|
16
|
|
||
Total share-based compensation expense
|
61
|
|
|
47
|
|
||
Income tax benefit
|
(19
|
)
|
|
(15
|
)
|
||
Increase in net loss from continuing operations
|
$
|
42
|
|
|
$
|
32
|
|
Increase in net loss per share:
|
|
|
|
||||
Basic
|
$
|
0.15
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
0.15
|
|
|
$
|
0.11
|
|
(Shares in thousands)
|
Shares
Available
for Grant
|
|
Balance at July 31, 2014
|
24,203
|
|
Options granted
|
—
|
|
Restricted stock units granted (1)
|
(604
|
)
|
Share-based awards canceled/forfeited/expired (1)(2)
|
1,791
|
|
Balance at October 31, 2014
|
25,390
|
|
(1)
|
RSUs granted from the pool of shares available for grant under our 2005 Equity Incentive Plan 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.
|
|
Options Outstanding
|
|||||
(Shares in thousands)
|
Number
of Shares
|
|
Weighted
Average
Exercise
Price
Per Share
|
|||
Balance at July 31, 2014
|
10,938
|
|
|
$
|
52.67
|
|
Options granted
|
—
|
|
|
—
|
|
|
Options exercised
|
(1,085
|
)
|
|
47.78
|
|
|
Options canceled or expired
|
(291
|
)
|
|
63.73
|
|
|
Balance at October 31, 2014
|
9,562
|
|
|
$
|
52.89
|
|
|
|
|
|
|||
Exercisable at October 31, 2014
|
5,252
|
|
|
$
|
40.48
|
|
|
Restricted Stock Units
|
|||||
(Shares in thousands)
|
Number
of Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Nonvested at July 31, 2014
|
9,455
|
|
|
$
|
62.46
|
|
Granted
|
263
|
|
|
82.98
|
|
|
Vested
|
(709
|
)
|
|
53.93
|
|
|
Forfeited
|
(718
|
)
|
|
55.31
|
|
|
Nonvested at October 31, 2014
|
8,291
|
|
|
$
|
64.46
|
|
9.
|
Litigation
|
10.
|
Segment Information
|
•
|
QuickBooks financial and business management online services and desktop software; QuickBooks technical support; and financial supplies.
|
•
|
QuickBooks Accountant, QuickBooks Accountant Plus, and QuickBooks Online Accountant as well as the QuickBooks ProAdvisor Program and Cloud ProAdvisor Program, all of which are intended for the accounting professionals who serve small businesses.
|
•
|
Small business payroll products and services, including online payroll offerings such as Quickbooks Online Payroll and Intuit Online Payroll; desktop payroll offerings such as QuickBooks Basic Payroll and QuickBooks Enhanced Payroll; and full service payroll offerings such as Intuit Full Service Payroll and QuickBooks Assisted Payroll.
|
•
|
Payment processing services for small businesses, including merchant services such as credit and debit card processing; Web-based transaction processing services for online merchants; secure online payments for small businesses and their customers through the Intuit Payment Network; GoPayment mobile payment processing services; and QuickBooks Point of Sale solutions.
|
•
|
Demandforce, which provides online marketing and customer communication solutions for small businesses, and QuickBase.
|
•
|
Consumer Tax includes TurboTax income tax preparation products and services and electronic tax filing services.
|
•
|
Consumer Ecosystem includes our personal finance offerings, Quicken, Mint and Check.
|
|
Three Months Ended
|
||||||
(In millions)
|
October 31,
2014 |
|
October 31,
2013 |
||||
Net revenue:
|
|
|
|
||||
Small Business segment
|
$
|
548
|
|
|
$
|
520
|
|
|
|
|
|
||||
Consumer segment:
|
|
|
|
||||
Consumer Tax
|
57
|
|
|
42
|
|
||
Consumer Ecosystem
|
31
|
|
|
35
|
|
||
Total Consumer segment
|
88
|
|
|
77
|
|
||
|
|
|
|
||||
Professional Tax segment
|
36
|
|
|
25
|
|
||
Total net revenue
|
$
|
672
|
|
|
$
|
622
|
|
|
|
|
|
||||
Operating loss from continuing operations:
|
|
|
|
||||
Small Business segment
|
$
|
192
|
|
|
$
|
190
|
|
Consumer segment
|
(34
|
)
|
|
(24
|
)
|
||
Professional Tax segment
|
(3
|
)
|
|
(9
|
)
|
||
Total segment operating income
|
155
|
|
|
157
|
|
||
Unallocated corporate items:
|
|
|
|
||||
Share-based compensation expense
|
(61
|
)
|
|
(47
|
)
|
||
Other common expenses
|
(192
|
)
|
|
(177
|
)
|
||
Amortization of acquired technology
|
(10
|
)
|
|
(6
|
)
|
||
Amortization of other acquired intangible assets
|
(6
|
)
|
|
(4
|
)
|
||
Total unallocated corporate items
|
(269
|
)
|
|
(234
|
)
|
||
Total operating loss from continuing operations
|
$
|
(114
|
)
|
|
$
|
(77
|
)
|
•
|
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.
|
•
|
QuickBooks financial and business management online services and desktop software for small businesses and the accounting professionals who serve small businesses.
|
•
|
Small business payroll and employee management products and services.
|
•
|
Payment processing services for small businesses, including merchant services such as credit and debit card processing; Web-based transaction processing services for online merchants; secure online payments for small businesses and their customers through the Intuit Payment Network; and GoPayment mobile payment processing services.
|
•
|
Demandforce, which provides online marketing and customer communication solutions for small businesses.
|
•
|
Consumer Tax includes TurboTax income tax preparation products and services.
|
•
|
Consumer Ecosystem includes our personal finance offerings, Quicken, Mint, and Check.
|
•
|
Focus on the product – we call it “Delivering awesome product experiences.”
Computing devices are moving to 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 desktop computer. We also believe that a key factor in growing our customer base is delivering an amazing first-use experience so our customers can get the value they expect from our offerings as quickly and 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 allows small business customers all over the world to localize, configure, and add value to the offering.
|
•
|
Leveraging our data for our customers' benefit – we call it “Using data to create delight.”
Our customers generate 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.
|
(Dollars in millions, except per share amounts)
|
Q1
FY15 |
|
Q1
FY14 |
|
$
Change
|
|
%
Change
|
|||||||
Total net revenue
|
$
|
672
|
|
|
$
|
622
|
|
|
$
|
50
|
|
|
8
|
%
|
Operating loss from continuing operations
|
(114
|
)
|
|
(77
|
)
|
|
(37
|
)
|
|
48
|
%
|
|||
Net loss from continuing operations
|
(84
|
)
|
|
(57
|
)
|
|
(27
|
)
|
|
47
|
%
|
|||
Basic and diluted net loss per share from continuing operations
|
$
|
(0.29
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.09
|
)
|
|
45
|
%
|
(Dollars in millions)
|
Q1
FY15 |
|
Q1
FY14 |
|
%
Change
|
|||||
Product revenue
|
$
|
187
|
|
|
$
|
192
|
|
|
(3
|
)%
|
Service and other revenue
|
361
|
|
|
328
|
|
|
10
|
%
|
||
Total segment revenue
|
$
|
548
|
|
|
$
|
520
|
|
|
5
|
%
|
% of total revenue
|
82
|
%
|
|
84
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Segment operating income
|
$
|
192
|
|
|
$
|
190
|
|
|
1
|
%
|
% of related revenue
|
35
|
%
|
|
37
|
%
|
|
|
(Dollars in millions)
|
Q1
FY15 |
|
Q1
FY14 |
|
%
Change
|
|||||
Product revenue
|
$
|
16
|
|
|
$
|
19
|
|
|
(15
|
)%
|
Service and other revenue
|
72
|
|
|
58
|
|
|
24
|
%
|
||
Total segment revenue
|
$
|
88
|
|
|
$
|
77
|
|
|
15
|
%
|
% of total revenue
|
13
|
%
|
|
12
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Segment operating loss
|
$
|
(34
|
)
|
|
$
|
(24
|
)
|
|
40
|
%
|
% of related revenue
|
(39
|
)%
|
|
(32
|
)%
|
|
|
(Dollars in millions)
|
Q1
FY15 |
|
Q1
FY14 |
|
%
Change
|
|||||
Product revenue
|
$
|
30
|
|
|
$
|
18
|
|
|
66
|
%
|
Service and other revenue
|
6
|
|
|
7
|
|
|
(8
|
)%
|
||
Total segment revenue
|
$
|
36
|
|
|
$
|
25
|
|
|
46
|
%
|
% of total revenue
|
5
|
%
|
|
4
|
%
|
|
|
|||
|
|
|
|
|
|
|||||
Segment operating loss
|
$
|
(3
|
)
|
|
$
|
(9
|
)
|
|
(66
|
)%
|
% of related revenue
|
(8
|
)%
|
|
(35
|
)%
|
|
|
(Dollars in millions)
|
Q1
FY15 |
|
% of
Related
Revenue
|
|
Q1
FY14 |
|
% of
Related
Revenue
|
||||||
Cost of product revenue
|
$
|
34
|
|
|
15
|
%
|
|
$
|
29
|
|
|
13
|
%
|
Cost of service and other revenue
|
131
|
|
|
30
|
%
|
|
108
|
|
|
27
|
%
|
||
Amortization of acquired technology
|
10
|
|
|
n/a
|
|
|
6
|
|
|
n/a
|
|
||
Total cost of revenue
|
$
|
175
|
|
|
26
|
%
|
|
$
|
143
|
|
|
23
|
%
|
(Dollars in millions)
|
Q1
FY15 |
|
% of
Total
Net
Revenue
|
|
Q1
FY14 |
|
% of
Total
Net
Revenue
|
||||||
Selling and marketing
|
$
|
281
|
|
|
42
|
%
|
|
$
|
258
|
|
|
41
|
%
|
Research and development
|
200
|
|
|
30
|
%
|
|
176
|
|
|
28
|
%
|
||
General and administrative
|
124
|
|
|
18
|
%
|
|
118
|
|
|
19
|
%
|
||
Amortization of other acquired intangible assets
|
6
|
|
|
1
|
%
|
|
4
|
|
|
1
|
%
|
||
Total operating expenses
|
$
|
611
|
|
|
91
|
%
|
|
$
|
556
|
|
|
89
|
%
|
|
Three Months Ended
|
||||||
(In millions)
|
October 31,
2014 |
|
October 31,
2013 |
||||
Interest income
|
$
|
2
|
|
|
$
|
1
|
|
Net gain on executive deferred compensation plan assets
|
1
|
|
|
3
|
|
||
Other
|
(3
|
)
|
|
1
|
|
||
Total interest and other income, net
|
$
|
—
|
|
|
$
|
5
|
|
(Dollars in millions)
|
October 31,
2014 |
|
July 31,
2014 |
|
$
Change
|
|
%
Change
|
|||||||
Cash, cash equivalents, and investments
|
$
|
1,589
|
|
|
$
|
1,914
|
|
|
$
|
(325
|
)
|
|
(17
|
)%
|
Long-term investments
|
31
|
|
|
31
|
|
|
—
|
|
|
—
|
%
|
|||
Long-term debt
|
499
|
|
|
499
|
|
|
—
|
|
|
—
|
%
|
|||
Working capital
|
1,077
|
|
|
1,200
|
|
|
(123
|
)
|
|
(10
|
)%
|
|||
Ratio of current assets to current liabilities
|
1.8 : 1
|
|
|
1.8 : 1
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||
(Dollars in millions)
|
October 31,
2014 |
|
October 31,
2013 |
|
$
Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(118
|
)
|
|
$
|
(190
|
)
|
|
$
|
72
|
|
Investing activities
|
(61
|
)
|
|
949
|
|
|
(1,010
|
)
|
|||
Financing activities
|
(123
|
)
|
|
(1,350
|
)
|
|
1,227
|
|
|||
Effect of exchange rate changes on cash
|
(5
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||
Total decrease in cash and cash equivalents
|
$
|
(307
|
)
|
|
$
|
(592
|
)
|
|
$
|
285
|
|
•
|
our expectations and beliefs regarding future conduct and growth of the business;
|
•
|
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 we will continue to generate significant cash from operations in the future;
|
•
|
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 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 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
|
•
|
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.
|
•
|
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, uncertain or more stringent user protection, data protection, privacy and other laws; and
|
•
|
risks related to other government regulation or required compliance with local laws.
|
•
|
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;
|
•
|
failure to successfully further develop an acquired business or technology and any resulting impairment of amounts currently capitalized as intangible assets;
|
•
|
in the case of foreign acquisitions and investments, the impact of particular economic, tax, currency, political, legal and regulatory risks associated with specific countries.
|
•
|
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.
|
•
|
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.
|
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, 2014 through August 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
1,870,088,800
|
|
September 1, 2014 through September 30, 2014
|
|
1,037,522
|
|
|
$
|
86.41
|
|
|
1,037,522
|
|
|
$
|
1,780,436,914
|
|
October 1, 2014 through October 31, 2014
|
|
280,700
|
|
|
$
|
85.04
|
|
|
280,700
|
|
|
$
|
1,756,565,937
|
|
Total
|
|
1,318,222
|
|
|
$
|
86.12
|
|
|
1,318,222
|
|
|
|
|
|
INTUIT INC.
(Registrant)
|
|
||
Date:
|
November 21, 2014
|
By:
|
/s/ R. NEIL WILLIAMS
|
|
|
|
|
|
R. Neil Williams
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer)
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Incorporated by
Reference
|
|
|
|
|
|
|
|
10.01+
|
|
Intuit Inc. Amended and Restated 2005 Equity Incentive Plan Grant Agreement - Restricted Stock Unit (Performance-Based Vesting QBO Subscriptions)
|
|
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
|
|
|
|
|
+
|
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.
|
1.
|
In the event of your Termination before the Vesting Date, the following provisions will govern the vesting of this Award:
|
(a)
|
Termination Generally
. In the event of your Termination before the Vesting Date for any reason other than as expressly set forth in the other subsections of this Section 1, including, without limitation, your Termination by the Company for Cause or your resignation for Good Reason (each as defined in Section 1(d)), this Award will terminate without having vested as to any of the Shares and you will have no right or claim to anything under this Award.
|
(b)
|
Retirement
. In the event of your Retirement before the Vesting Date, a pro rata portion of this Award will vest on the Vesting Date based on the achievement of the Threshold Goal and actual level of achievement of the QBO Goals, as certified by the Committee. The pro rata portion will be a percentage equal to your number of full months of service since the first date of the Performance Period
divided
by twelve months, rounded down to the nearest whole Share. Shares will be distributed to you at the same time as other Participants after the Vesting Date. “Retirement” means the Termination of your employment with the Company after you have reached age
|
(c)
|
Death or Disability
. In the event of your death or Disability before the Vesting Date, and after you have been actively employed by the Company for one year or more, this Award will vest immediately as to 100% of the Target Shares on your Termination Date. “Disability” is defined in Section 27(i) of the Plan.
|
(d)
|
Involuntary Termination
. In the event of your Involuntary Termination before the Vesting Date, a pro rata portion of this Award will vest immediately on your Termination Date based on the Target Shares. The pro rata portion will be a percentage equal to your number of full months of service since the first date of the Performance Period
divided
by twelve months, rounded down to the nearest whole Share. Shares will be distributed to you as soon as reasonably possible after the effective date of a waiver and general release of claims executed by you in favor of the Company and certain
related persons determined by the Company in the form presented by the Company (“Release”). If you do not execute the Release within forty-five (45) days following your Termination Date, then you will not be entitled to the receipt of any Shares under this Section 1(d). Involuntary Termination means, for purposes of this Agreement, either (A) your Termination by the Company without Cause, or (B) your resignation for Good Reason. “Cause” means, for purposes of this Agreement, (i) gross negligence or willful misconduct in the performance of your duties to the Company (other than as a result of a Disability) that has resulted or is likely to result in material damage to the Company, after a written demand for substantial performance is delivered to you by the Chief Executive Officer which specifically identifies the manner in which you have not substantially performed your duties and you have been provided with a reasonable opportunity of not less than 30 days to cure any alleged gross negligence or willful misconduct; (ii) commission of any act of fraud with respect to the Company; or (iii) conviction of a felony or a crime involving moral turpitude. No act or failure to act by you will be considered “willful” if done or omitted by you in good faith with reasonable belief that your action or omission was in the best interests of the Company. “Good Reason” means, for the purposes of this Agreement, your resignation within sixty (60) days after the occurrence any of the following events without your consent: (i) a material reduction in your duties that is inconsistent with your position at the time of the Date of Grant, (ii) any material reduction in your base annual salary or target annual bonus (other than in connection with a general decrease in the salary or target bonuses for all officers of Intuit), or (iii) a requirement by Intuit that you relocate your principal office to a facility more than 50 miles from your principal office on the Date of Grant; provided however, that with regard to (i) through (iii) you must provide Intuit with written notice of the event allegedly constituting “Good Reason,” and Intuit will have 15 days from the date it receives such written notice to cure such event. Notwithstanding anything in this Section 1(d) to the contrary, if you are a “covered employee” under Section 162(m)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) either on the Date of Grant or at any time during the Performance Period, then your Award will not be treated as described above in this Section 1(d), but instead, a pro rata portion of this Award will vest on the Vesting Date based on the achievement of the Threshold Goal and actual level of achievement of the QBO Goals, as certified by the Committee. The pro rata portion will be a percentage equal to your number of full months of service since the first date of the Performance Period
divided
by twelve months, rounded down to the nearest whole Share. Shares will be distributed to you at the same time as other Participants after the Vesting Date, provided that the Release has become effective. If you do not execute the Release before the time that Shares are distributed to other Participants, then you will not be entitled to the receipt of any Shares under this Section 1(d).
|
(e)
|
Termination on or Within One Year After Corporate Transaction
. In the event of your Involuntary Termination (including your Termination without Cause by the Company’s successor) on or within one year following the date of a Corporate Transaction and before the Vesting Date, this Award will vest immediately on your Termination Date as to a pro rata portion of the Target Shares. The pro rata portion will be a percentage equal to your number of full months of service since the first date of the Performance Period
divided
by twelve months, rounded down to the nearest whole Share.
|
(f)
|
Corporate Transaction
. In the event of a Corporate Transaction before the Vesting Date, the Threshold Goal will be deemed to be achieved and the QBO Goals will be deemed to be achieved at 100% of the Target level as set forth in
Exhibit A
. The Vesting Date still will apply, and Shares will be distributed as soon as reasonably possible after the Vesting Date. For avoidance of doubt, this provision is intended to result in you earning the Target Shares, without Committee certification, provided that you are employed on the Vesting Date following a Corporate Transaction. In the event of an intervening Termination before the Vesting Date, the applicable provisions of Sections 1(a) through 1(e) will govern.
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(g)
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Recoupment
. In the event that the Company issues a restatement of its financial results after the distribution of Shares, which restatement either (i) causes the Threshold Goal not to be achieved or (ii) decreases the level of achievement of the QBO Goals from the level(s) previously certified by the Committee, then you will be required to deliver to the Company, within 30 days after your receipt of written notification by the Company, an amount in cash or equivalent value in Shares (or a combination of the two) equal to the net proceeds realized by you on the issuance and, if applicable, subsequent sale of any Shares that would not have vested or been issued based on the restated financial results. This section 1(g) only will apply to you if it is determined by the Committee in good faith that fraud or misconduct engaged in by you (directly or indirectly) was a significant contributing factor to this restatement of financial results.
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2.
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Issuance of Shares
. Except as described in the next sentence, Shares will be distributed as soon as reasonably possible after the Vesting Date (but in no event later than March 15th after the calendar year in which the Vesting Date occurs). In the event of a Termination pursuant to Sections 1(c) through 1(e) (other than with respect to a “covered employee” under Section 1(d)), Shares will be distributed as soon as reasonably possible after the Termination Date or, if later, the date that the Release becomes effective in accordance with Section 1(d) (but in no event later than March 15th after the calendar year in which the Termination Date or the effective date of the Release occurs). Until the date the Shares are issued to you, you will have no rights as a stockholder of the Company.
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3.
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Rights as a Stockholder; Dividend Equivalent Rights
. You shall have no voting or other rights as a stockholder with respect to the Shares of Common Stock underlying the Award until such Shares of Common Stock have been issued to you. Notwithstanding the preceding sentence, you shall be entitled to receive payment of the equivalent of any and all dividends declared by the Company on its Common Stock on each date on which dividends are paid on and after the date of grant of the Award in an amount equal to the amount of such dividends multiplied by the number of Shares of Common Stock underlying the then outstanding portion of the Award. These dividend equivalents shall be paid upon the later of (a) the date dividends are paid to the common stockholders of the Company, or (b) the date the Restricted Stock Units with respect to which such dividend equivalents are payable become vested (it being understood that no dividend equivalents will be paid with respect to Shares underlying any Restricted Stock Units that do not vest, but that dividend equivalent rights equal to the dividends declared on the Company’s Common Stock from and after the date of grant of the unvested Restricted Stock Units shall be paid as and when such Restricted Stock Units vest).
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4.
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Withholding Taxes
. This Award is generally taxable for purposes of United States federal income and employment taxes on vesting based on the Fair Market Value on the Vesting Date. To the extent required by applicable federal, state or other law, you will make arrangements satisfactory to the Company for the payment and satisfaction of any income tax, social security tax, payroll tax, payment on account or other tax related to withholding obligations that arise under this Award and, if applicable, any sale of Shares. The Company will not be required to issue Shares pursuant to this Award or to recognize any purported transfer of Shares until such obligations are satisfied. Unless otherwise agreed to by the Company and you, these obligations will be satisfied by the Company withholding a number of Shares that would otherwise be issued under this Award that the Company determines has a Fair Market Value sufficient to meet the tax withholding obligations. “Fair Market Value” is defined in Section 27(
l
) of the Plan.
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5.
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Disputes
. Any question concerning the interpretation of this Agreement, any adjustments to made thereunder, and any controversy that may arise under this Agreement, will be determined by the Committee in accordance with its authority under Section 4 of the Plan. Such decision by the Committee will be final and binding.
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6.
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Other Matters
.
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(a)
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The Award granted to an employee in any one year, or at any time, does not obligate the Company or any Subsidiary or other affiliate of the Company to grant an award in any future year or in any given amount and should not create an expectation that the Company (or any Subsidiary or other affiliate) might grant an award in any future year or in any given amount.
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(b)
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Nothing contained in this Agreement creates or implies an employment contract or term of employment or any promise of specific treatment on which you may rely.
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(c)
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Notwithstanding anything to the contrary in this Agreement, the Company may reduce your Award if you change classification from a full-time employee to a part-time employee.
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(d)
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This Award is not part of your employment contract (if any) with the Company, your salary, your normal or expected compensation, or other remuneration for any purposes, including for purposes of computing benefits, severance pay or other termination compensation or indemnity.
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(e)
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Because this Agreement relates to terms and conditions under which you may be issued Shares of Common Stock of Intuit Inc., a Delaware corporation, an essential term of this Agreement is that it will be governed by the laws of the State of Delaware, without regard to choice of law principles of Delaware or other jurisdictions. Any action, suit, or proceeding relating to this Agreement or the Award granted hereunder will be brought in the state or federal courts of competent jurisdiction in Santa Clara County in the State of California.
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(f)
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This Award, and any issuance of Shares thereunder, is intended to comply and will be interpreted in accordance with Section 409A of the Code.
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1.
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I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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1.
|
I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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