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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 April 30, 2016
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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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Nine Months Ended
|
||||||||||||
(In millions, except per share amounts)
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April 30,
2016 |
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April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
459
|
|
|
$
|
442
|
|
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$
|
994
|
|
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$
|
865
|
|
Service and other
|
1,845
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1,693
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2,946
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|
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2,631
|
|
||||
Total net revenue
|
2,304
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|
2,135
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3,940
|
|
|
3,496
|
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||||
Costs and expenses:
|
|
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|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
||||||||
Cost of product revenue
|
30
|
|
|
33
|
|
|
99
|
|
|
108
|
|
||||
Cost of service and other revenue
|
181
|
|
|
161
|
|
|
465
|
|
|
419
|
|
||||
Amortization of acquired technology
|
5
|
|
|
8
|
|
|
17
|
|
|
22
|
|
||||
Selling and marketing
|
423
|
|
|
413
|
|
|
1,023
|
|
|
1,008
|
|
||||
Research and development
|
228
|
|
|
206
|
|
|
646
|
|
|
583
|
|
||||
General and administrative
|
149
|
|
|
131
|
|
|
386
|
|
|
365
|
|
||||
Amortization of other acquired intangible assets
|
3
|
|
|
3
|
|
|
6
|
|
|
9
|
|
||||
Goodwill impairment charge
|
—
|
|
|
114
|
|
|
—
|
|
|
114
|
|
||||
Total costs and expenses
|
1,019
|
|
|
1,069
|
|
|
2,642
|
|
|
2,628
|
|
||||
Operating income from continuing operations
|
1,285
|
|
|
1,066
|
|
|
1,298
|
|
|
868
|
|
||||
Interest expense
|
(10
|
)
|
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(7
|
)
|
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(26
|
)
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(21
|
)
|
||||
Interest and other income (expense), net
|
2
|
|
|
1
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(7
|
)
|
|
3
|
|
||||
Income before income taxes
|
1,277
|
|
|
1,060
|
|
|
1,265
|
|
|
850
|
|
||||
Income tax provision
|
429
|
|
|
404
|
|
|
419
|
|
|
335
|
|
||||
Net income from continuing operations
|
848
|
|
|
656
|
|
|
846
|
|
|
515
|
|
||||
Net income (loss) from discontinued operations
|
178
|
|
|
(155
|
)
|
|
173
|
|
|
(164
|
)
|
||||
Net income
|
$
|
1,026
|
|
|
$
|
501
|
|
|
$
|
1,019
|
|
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$
|
351
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net income per share from continuing operations
|
$
|
3.30
|
|
|
$
|
2.37
|
|
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$
|
3.21
|
|
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$
|
1.82
|
|
Basic net income (loss) per share from discontinued operations
|
0.70
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|
|
(0.56
|
)
|
|
0.65
|
|
|
(0.58
|
)
|
||||
Basic net income per share
|
$
|
4.00
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$
|
1.81
|
|
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$
|
3.86
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|
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$
|
1.24
|
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Shares used in basic per share calculations
|
257
|
|
|
277
|
|
|
264
|
|
|
282
|
|
||||
|
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||||||||
Diluted net income per share from continuing operations
|
$
|
3.26
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|
|
$
|
2.33
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|
|
$
|
3.17
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|
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$
|
1.79
|
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Diluted net income (loss) per share from discontinued operations
|
0.68
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|
(0.55
|
)
|
|
0.64
|
|
|
(0.57
|
)
|
||||
Diluted net income per share
|
$
|
3.94
|
|
|
$
|
1.78
|
|
|
$
|
3.81
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|
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$
|
1.22
|
|
Shares used in diluted per share calculations
|
260
|
|
|
282
|
|
|
267
|
|
|
288
|
|
||||
|
|
|
|
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||||||||
Cash dividends declared per common share
|
$
|
0.30
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$
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0.25
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$
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0.90
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$
|
0.75
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Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
1,026
|
|
|
$
|
501
|
|
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$
|
1,019
|
|
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$
|
351
|
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gains (losses)
|
16
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2
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4
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|
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(18
|
)
|
||||
Total other comprehensive income (loss), net
|
16
|
|
|
2
|
|
|
4
|
|
|
(18
|
)
|
||||
Comprehensive income
|
$
|
1,042
|
|
|
$
|
503
|
|
|
$
|
1,023
|
|
|
$
|
333
|
|
(In millions)
|
April 30,
2016 |
|
July 31,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,289
|
|
|
$
|
808
|
|
Investments
|
324
|
|
|
889
|
|
||
Accounts receivable, net
|
214
|
|
|
91
|
|
||
Income taxes receivable
|
4
|
|
|
84
|
|
||
Deferred income taxes
|
—
|
|
|
231
|
|
||
Prepaid expenses and other current assets
|
108
|
|
|
94
|
|
||
Current assets of discontinued operations
|
—
|
|
|
26
|
|
||
Current assets before funds held for customers
|
1,939
|
|
|
2,223
|
|
||
Funds held for customers
|
372
|
|
|
337
|
|
||
Total current assets
|
2,311
|
|
|
2,560
|
|
||
Long-term investments
|
28
|
|
|
27
|
|
||
Property and equipment, net
|
989
|
|
|
682
|
|
||
Goodwill
|
1,282
|
|
|
1,266
|
|
||
Acquired intangible assets, net
|
57
|
|
|
87
|
|
||
Long-term deferred income taxes
|
165
|
|
|
5
|
|
||
Other assets
|
108
|
|
|
106
|
|
||
Long-term assets of discontinued operations
|
—
|
|
|
235
|
|
||
Total assets
|
$
|
4,940
|
|
|
$
|
4,968
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
500
|
|
|
$
|
—
|
|
Accounts payable
|
270
|
|
|
190
|
|
||
Accrued compensation and related liabilities
|
228
|
|
|
283
|
|
||
Deferred revenue
|
854
|
|
|
691
|
|
||
Income taxes payable
|
442
|
|
|
7
|
|
||
Other current liabilities
|
199
|
|
|
143
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
93
|
|
||
Current liabilities before customer fund deposits
|
2,493
|
|
|
1,407
|
|
||
Customer fund deposits
|
372
|
|
|
337
|
|
||
Total current liabilities
|
2,865
|
|
|
1,744
|
|
||
Long-term debt
|
500
|
|
|
500
|
|
||
Long-term deferred revenue
|
174
|
|
|
152
|
|
||
Other long-term obligations
|
153
|
|
|
172
|
|
||
Long-term obligations of discontinued operations
|
—
|
|
|
68
|
|
||
Total liabilities
|
3,692
|
|
|
2,636
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital
|
4,334
|
|
|
4,010
|
|
||
Treasury stock, at cost
|
(9,865
|
)
|
|
(7,675
|
)
|
||
Accumulated other comprehensive loss
|
(26
|
)
|
|
(30
|
)
|
||
Retained earnings
|
6,805
|
|
|
6,027
|
|
||
Total stockholders’ equity
|
1,248
|
|
|
2,332
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,940
|
|
|
$
|
4,968
|
|
(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, 2015
|
277,706
|
|
|
$
|
4,010
|
|
|
$
|
(7,675
|
)
|
|
$
|
(30
|
)
|
|
$
|
6,027
|
|
|
$
|
2,332
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
1,019
|
|
|
1,023
|
|
|||||
Issuance of stock under employee stock plans
|
2,767
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|||||
Stock repurchases under stock repurchase programs
|
(24,085
|
)
|
|
—
|
|
|
(2,190
|
)
|
|
—
|
|
|
—
|
|
|
(2,190
|
)
|
|||||
Dividends and dividend rights declared ($0.90 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(241
|
)
|
|
(241
|
)
|
|||||
Tax benefit from share-based compensation plans
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Share-based compensation expense
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|||||
Balance at April 30, 2016
|
256,388
|
|
|
$
|
4,334
|
|
|
$
|
(9,865
|
)
|
|
$
|
(26
|
)
|
|
$
|
6,805
|
|
|
$
|
1,248
|
|
(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 income
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
351
|
|
|
333
|
|
|||||
Issuance of stock under employee stock plans
|
4,431
|
|
|
129
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
129
|
|
|||||
Stock repurchases under stock repurchase programs
|
(13,723
|
)
|
|
—
|
|
|
(1,236
|
)
|
|
—
|
|
|
—
|
|
|
(1,236
|
)
|
|||||
Dividends and dividend rights declared ($0.75 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
|
(218
|
)
|
|||||
Tax benefit from share-based compensation plans
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|||||
Share-based compensation expense
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|||||
Balance at April 30, 2015
|
275,658
|
|
|
$
|
3,925
|
|
|
$
|
(7,666
|
)
|
|
$
|
(20
|
)
|
|
$
|
6,082
|
|
|
$
|
2,321
|
|
|
Nine Months Ended
|
||||||
(In millions)
|
April 30,
2016 |
|
April 30,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
1,019
|
|
|
$
|
351
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
145
|
|
|
115
|
|
||
Amortization of acquired intangible assets
|
30
|
|
|
55
|
|
||
Goodwill impairment charge
|
—
|
|
|
263
|
|
||
Share-based compensation expense
|
200
|
|
|
184
|
|
||
Pre-tax gain on sale of discontinued operations
|
(354
|
)
|
|
—
|
|
||
Deferred income taxes
|
40
|
|
|
(3
|
)
|
||
Tax benefit from share-based compensation plans
|
30
|
|
|
51
|
|
||
Excess tax benefit from share-based compensation plans
|
(30
|
)
|
|
(51
|
)
|
||
Other
|
11
|
|
|
(3
|
)
|
||
Total adjustments
|
72
|
|
|
611
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(125
|
)
|
|
(76
|
)
|
||
Income taxes receivable
|
79
|
|
|
27
|
|
||
Prepaid expenses and other assets
|
(15
|
)
|
|
18
|
|
||
Accounts payable
|
77
|
|
|
125
|
|
||
Accrued compensation and related liabilities
|
(69
|
)
|
|
(29
|
)
|
||
Deferred revenue
|
213
|
|
|
407
|
|
||
Income taxes payable
|
435
|
|
|
224
|
|
||
Other liabilities
|
25
|
|
|
64
|
|
||
Total changes in operating assets and liabilities
|
620
|
|
|
760
|
|
||
Net cash provided by operating activities
|
1,711
|
|
|
1,722
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale debt securities
|
(589
|
)
|
|
(785
|
)
|
||
Sales of available-for-sale debt securities
|
990
|
|
|
534
|
|
||
Maturities of available-for-sale debt securities
|
160
|
|
|
406
|
|
||
Net change in money market funds and other cash equivalents held
to satisfy customer fund obligations
|
(35
|
)
|
|
(41
|
)
|
||
Net change in customer fund deposits
|
35
|
|
|
41
|
|
||
Purchases of property and equipment
|
(449
|
)
|
|
(183
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
—
|
|
|
(95
|
)
|
||
Proceeds from divestiture of businesses
|
463
|
|
|
—
|
|
||
Other
|
3
|
|
|
28
|
|
||
Net cash provided by (used in) investing activities
|
578
|
|
|
(95
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings under revolving credit facilities
|
995
|
|
|
—
|
|
||
Repayments on borrowings under revolving credit facilities
|
(995
|
)
|
|
—
|
|
||
Proceeds from long-term debt
|
500
|
|
|
—
|
|
||
Net proceeds from issuance of stock under employee stock plans
|
89
|
|
|
129
|
|
||
Cash paid for purchases of treasury stock
|
(2,190
|
)
|
|
(1,234
|
)
|
||
Dividends and dividend rights paid
|
(238
|
)
|
|
(212
|
)
|
||
Excess tax benefit from share-based compensation plans
|
30
|
|
|
51
|
|
||
Other
|
(5
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
(1,814
|
)
|
|
(1,266
|
)
|
||
Effect of exchange rates on cash and cash equivalents
|
6
|
|
|
(17
|
)
|
||
Net increase in cash and cash equivalents
|
481
|
|
|
344
|
|
||
Cash and cash equivalents at beginning of period
|
808
|
|
|
849
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,289
|
|
|
$
|
1,193
|
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions, except per share amounts)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
848
|
|
|
$
|
656
|
|
|
$
|
846
|
|
|
$
|
515
|
|
Net income (loss) from discontinued operations
|
178
|
|
|
(155
|
)
|
|
173
|
|
|
(164
|
)
|
||||
Net income
|
$
|
1,026
|
|
|
$
|
501
|
|
|
$
|
1,019
|
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Shares used in basic per share amounts:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
257
|
|
|
277
|
|
|
264
|
|
|
282
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Shares used in diluted per share amounts:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
257
|
|
|
277
|
|
|
264
|
|
|
282
|
|
||||
Dilutive common equivalent shares from stock options
|
|
|
|
|
|
|
|
||||||||
and restricted stock awards
|
3
|
|
|
5
|
|
|
3
|
|
|
6
|
|
||||
Dilutive weighted average common shares outstanding
|
260
|
|
|
282
|
|
|
267
|
|
|
288
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic net income per share from continuing operations
|
$
|
3.30
|
|
|
$
|
2.37
|
|
|
$
|
3.21
|
|
|
$
|
1.82
|
|
Basic net income (loss) per share from discontinued operations
|
0.70
|
|
|
(0.56
|
)
|
|
0.65
|
|
|
(0.58
|
)
|
||||
Basic net income per share
|
$
|
4.00
|
|
|
$
|
1.81
|
|
|
$
|
3.86
|
|
|
$
|
1.24
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share from continuing operations
|
$
|
3.26
|
|
|
$
|
2.33
|
|
|
$
|
3.17
|
|
|
$
|
1.79
|
|
Diluted net income (loss) per share from discontinued operations
|
0.68
|
|
|
(0.55
|
)
|
|
0.64
|
|
|
(0.57
|
)
|
||||
Diluted net income per share
|
$
|
3.94
|
|
|
$
|
1.78
|
|
|
$
|
3.81
|
|
|
$
|
1.22
|
|
|
|
|
|
|
|
|
|
||||||||
Shares excluded from computation of diluted net income
per share:
|
|
|
|
|
|
|
|
||||||||
Weighted average stock options and restricted stock units excluded from computation due to anti-dilutive effect
|
2
|
|
|
—
|
|
|
2
|
|
|
2
|
|
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 unobservable 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 values are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.
|
|
April 30, 2016
|
|
July 31, 2015
|
||||||||||||||||||||||||||||
(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
|
$
|
729
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
729
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
695
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Municipal bonds
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
506
|
|
|
—
|
|
|
506
|
|
||||||||
Corporate notes
|
—
|
|
|
241
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
546
|
|
|
—
|
|
|
546
|
|
||||||||
U.S. agency securities
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||||
Municipal auction rate securities
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||||
Total available-for-sale securities
|
—
|
|
|
499
|
|
|
15
|
|
|
514
|
|
|
—
|
|
|
1,064
|
|
|
15
|
|
|
1,079
|
|
||||||||
Total assets measured at fair value on a recurring basis
|
$
|
729
|
|
|
$
|
499
|
|
|
$
|
15
|
|
|
$
|
1,243
|
|
|
$
|
695
|
|
|
$
|
1,064
|
|
|
$
|
15
|
|
|
$
|
1,774
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Senior notes (1)
|
$
|
—
|
|
|
$
|
520
|
|
|
$
|
—
|
|
|
$
|
520
|
|
|
$
|
—
|
|
|
$
|
531
|
|
|
$
|
—
|
|
|
$
|
531
|
|
(1)
|
Carrying value on our balance sheets at
April 30, 2016
was
$500
million and at
July 31, 2015
was
$500
million. See Note 5,
“Current Liabilities – Short-Term Debt,”
for more information.
|
|
April 30, 2016
|
|
July 31, 2015
|
||||||||||||||||||||||||||||
(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
|
$
|
532
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
532
|
|
|
$
|
533
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
533
|
|
In funds held for customers
|
197
|
|
|
—
|
|
|
—
|
|
|
197
|
|
|
162
|
|
|
—
|
|
|
—
|
|
|
162
|
|
||||||||
Total cash equivalents
|
$
|
729
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
729
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
695
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
In investments
|
$
|
—
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
889
|
|
|
$
|
—
|
|
|
$
|
889
|
|
In funds held for customers
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
||||||||
In long-term investments
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
15
|
|
||||||||
Total available-for-sale securities
|
$
|
—
|
|
|
$
|
499
|
|
|
$
|
15
|
|
|
$
|
514
|
|
|
$
|
—
|
|
|
$
|
1,064
|
|
|
$
|
15
|
|
|
$
|
1,079
|
|
3.
|
Cash and Cash Equivalents, Investments and Funds Held for Customers
|
|
April 30, 2016
|
|
July 31, 2015
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Classification on balance sheets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,289
|
|
|
$
|
1,289
|
|
|
$
|
808
|
|
|
$
|
808
|
|
Investments
|
324
|
|
|
324
|
|
|
890
|
|
|
889
|
|
||||
Funds held for customers
|
372
|
|
|
372
|
|
|
337
|
|
|
337
|
|
||||
Long-term investments
|
28
|
|
|
28
|
|
|
27
|
|
|
27
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
2,013
|
|
|
$
|
2,013
|
|
|
$
|
2,062
|
|
|
$
|
2,061
|
|
|
April 30, 2016
|
|
July 31, 2015
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Type of issue:
|
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents
|
$
|
1,486
|
|
|
$
|
1,486
|
|
|
$
|
970
|
|
|
$
|
970
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
175
|
|
|
175
|
|
|
507
|
|
|
506
|
|
||||
Corporate notes
|
241
|
|
|
241
|
|
|
546
|
|
|
546
|
|
||||
U.S. agency securities
|
83
|
|
|
83
|
|
|
12
|
|
|
12
|
|
||||
Municipal auction rate securities
|
15
|
|
|
15
|
|
|
15
|
|
|
15
|
|
||||
Total available-for-sale debt securities
|
514
|
|
|
514
|
|
|
1,080
|
|
|
1,079
|
|
||||
Other long-term investments
|
13
|
|
|
13
|
|
|
12
|
|
|
12
|
|
||||
Total cash and cash equivalents, investments, and funds
held for customers
|
$
|
2,013
|
|
|
$
|
2,013
|
|
|
$
|
2,062
|
|
|
$
|
2,061
|
|
|
April 30, 2016
|
|
July 31, 2015
|
||||||||||||
(In millions)
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Due within one year
|
$
|
189
|
|
|
$
|
189
|
|
|
$
|
434
|
|
|
$
|
435
|
|
Due within two years
|
125
|
|
|
125
|
|
|
443
|
|
|
442
|
|
||||
Due within three years
|
75
|
|
|
75
|
|
|
156
|
|
|
156
|
|
||||
Due after three years
|
125
|
|
|
125
|
|
|
47
|
|
|
46
|
|
||||
Total available-for-sale debt securities
|
$
|
514
|
|
|
$
|
514
|
|
|
$
|
1,080
|
|
|
$
|
1,079
|
|
4.
|
Discontinued Operations
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Net revenue from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Demandforce
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
49
|
|
|
$
|
89
|
|
QuickBase
|
14
|
|
|
18
|
|
|
54
|
|
|
52
|
|
||||
Quicken
|
8
|
|
|
13
|
|
|
34
|
|
|
38
|
|
||||
Total net revenue from discontinued operations
|
$
|
22
|
|
|
$
|
59
|
|
|
$
|
137
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from discontinued operations before income taxes:
|
|
|
|
|
|
|
|
||||||||
Demandforce
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
(10
|
)
|
|
$
|
(46
|
)
|
QuickBase
|
4
|
|
|
3
|
|
|
10
|
|
|
10
|
|
||||
Quicken
|
(1
|
)
|
|
(146
|
)
|
|
(2
|
)
|
|
(139
|
)
|
||||
Total income (loss) from discontinued operations before income taxes
|
$
|
3
|
|
|
$
|
(161
|
)
|
|
$
|
(2
|
)
|
|
$
|
(175
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Net loss from Demandforce operations
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
$
|
(6
|
)
|
|
$
|
(28
|
)
|
Net income from QuickBase operations
|
2
|
|
|
1
|
|
|
6
|
|
|
6
|
|
||||
Net loss from Quicken operations
|
—
|
|
|
(147
|
)
|
|
—
|
|
|
(142
|
)
|
||||
Net gain on disposal of Demandforce, QuickBase, and Quicken
|
176
|
|
|
—
|
|
|
173
|
|
|
—
|
|
||||
Total net income (loss) from discontinued operations
|
$
|
178
|
|
|
$
|
(155
|
)
|
|
$
|
173
|
|
|
$
|
(164
|
)
|
5.
|
Current Liabilities
|
(In millions)
|
April 30,
2016 |
|
July 31,
2015 |
||||
Reserve for product returns
|
$
|
32
|
|
|
$
|
12
|
|
Reserve for rebates
|
26
|
|
|
12
|
|
||
Current portion of license fee payable
|
10
|
|
|
10
|
|
||
Current portion of deferred rent
|
7
|
|
|
8
|
|
||
Interest payable
|
4
|
|
|
10
|
|
||
Executive deferred compensation plan liabilities
|
67
|
|
|
63
|
|
||
Other
|
53
|
|
|
28
|
|
||
Total other current liabilities
|
$
|
199
|
|
|
$
|
143
|
|
6.
|
Long-Term Obligations and Commitments
|
(In millions)
|
April 30,
2016 |
|
July 31,
2015 |
||||
Total deferred rent
|
$
|
57
|
|
|
$
|
49
|
|
Total license fee payable
|
36
|
|
|
34
|
|
||
Long-term income tax liabilities
|
51
|
|
|
45
|
|
||
Long-term deferred income tax liabilities
|
5
|
|
|
50
|
|
||
Other
|
22
|
|
|
13
|
|
||
Total long-term obligations
|
171
|
|
|
191
|
|
||
Less current portion (included in other current liabilities)
|
(18
|
)
|
|
(19
|
)
|
||
Long-term obligations due after one year
|
$
|
153
|
|
|
$
|
172
|
|
7.
|
Income Taxes
|
8.
|
Stockholders’ Equity
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions, except per share amounts)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Cost of revenue
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
4
|
|
Selling and marketing
|
18
|
|
|
17
|
|
|
55
|
|
|
50
|
|
||||
Research and development
|
21
|
|
|
19
|
|
|
63
|
|
|
56
|
|
||||
General and administrative
|
24
|
|
|
21
|
|
|
73
|
|
|
62
|
|
||||
Total share-based compensation expense
|
65
|
|
|
59
|
|
|
197
|
|
|
172
|
|
||||
Income tax benefit
|
(20
|
)
|
|
(18
|
)
|
|
(60
|
)
|
|
(54
|
)
|
||||
Decrease in net income from continuing operations
|
$
|
45
|
|
|
$
|
41
|
|
|
$
|
137
|
|
|
$
|
118
|
|
Decrease in net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.18
|
|
|
$
|
0.15
|
|
|
$
|
0.52
|
|
|
$
|
0.42
|
|
Diluted
|
$
|
0.17
|
|
|
$
|
0.15
|
|
|
$
|
0.51
|
|
|
$
|
0.41
|
|
(Shares in thousands)
|
Shares
Available
for Grant
|
|
Balance at July 31, 2015
|
17,183
|
|
Options granted
|
(9
|
)
|
Restricted stock units granted (1)
|
(1,219
|
)
|
Share-based awards canceled/forfeited/expired (1)(2)
|
3,544
|
|
Balance at April 30, 2016
|
19,499
|
|
(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, 2015
|
8,713
|
|
|
$
|
69.13
|
|
Granted
|
9
|
|
|
94.88
|
|
|
Exercised
|
(1,567
|
)
|
|
45.72
|
|
|
Canceled or expired
|
(328
|
)
|
|
75.18
|
|
|
Balance at April 30, 2016
|
6,827
|
|
|
$
|
74.24
|
|
|
|
|
|
|||
Exercisable at April 30, 2016
|
3,802
|
|
|
$
|
58.37
|
|
|
Restricted Stock Units
|
|||||
(Shares in thousands)
|
Number
of Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Nonvested at July 31, 2015
|
8,916
|
|
|
$
|
76.64
|
|
Granted
|
530
|
|
|
96.36
|
|
|
Vested
|
(910
|
)
|
|
71.74
|
|
|
Forfeited
|
(1,463
|
)
|
|
72.77
|
|
|
Nonvested at April 30, 2016
|
7,073
|
|
|
$
|
79.55
|
|
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, 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 QuickBooks Assisted Payroll and Intuit Full Service 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 Commerce Network; GoPayment mobile payment processing services; and QuickBooks Point of Sale solutions.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Small Business segment
|
$
|
580
|
|
|
$
|
516
|
|
|
$
|
1,690
|
|
|
$
|
1,560
|
|
Consumer Tax segment
|
1,598
|
|
|
1,489
|
|
|
1,930
|
|
|
1,759
|
|
||||
Professional Tax segment
|
126
|
|
|
130
|
|
|
320
|
|
|
177
|
|
||||
Total net revenue
|
$
|
2,304
|
|
|
$
|
2,135
|
|
|
$
|
3,940
|
|
|
$
|
3,496
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Small Business segment
|
$
|
217
|
|
|
$
|
166
|
|
|
$
|
627
|
|
|
$
|
524
|
|
Consumer Tax segment
|
1,293
|
|
|
1,188
|
|
|
1,327
|
|
|
1,178
|
|
||||
Professional Tax segment
|
86
|
|
|
83
|
|
|
199
|
|
|
43
|
|
||||
Total segment operating income
|
1,596
|
|
|
1,437
|
|
|
2,153
|
|
|
1,745
|
|
||||
Unallocated corporate items:
|
|
|
|
|
|
|
|
||||||||
Share-based compensation expense
|
(65
|
)
|
|
(59
|
)
|
|
(197
|
)
|
|
(172
|
)
|
||||
Other common expenses
|
(238
|
)
|
|
(187
|
)
|
|
(635
|
)
|
|
(560
|
)
|
||||
Amortization of acquired technology
|
(5
|
)
|
|
(8
|
)
|
|
(17
|
)
|
|
(22
|
)
|
||||
Amortization of other acquired intangible assets
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(9
|
)
|
||||
Goodwill impairment charge
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
(114
|
)
|
||||
Total unallocated corporate items
|
(311
|
)
|
|
(371
|
)
|
|
(855
|
)
|
|
(877
|
)
|
||||
Total operating income from continuing operations
|
$
|
1,285
|
|
|
$
|
1,066
|
|
|
$
|
1,298
|
|
|
$
|
868
|
|
•
|
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.
|
•
|
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. Our TurboTax solutions, for example, let customers prepare
|
•
|
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)
|
Q3
FY16 |
|
Q3
FY15 |
|
$
Change
|
|
%
Change
|
|
YTD
Q3 FY16 |
|
YTD
Q3 FY15 |
|
$
Change
|
|
%
Change
|
||||||||||||||
Total net revenue
|
$
|
2,304
|
|
|
$
|
2,135
|
|
|
$
|
169
|
|
|
8
|
%
|
|
$
|
3,940
|
|
|
$
|
3,496
|
|
|
$
|
444
|
|
|
13
|
%
|
Operating income from continuing operations
|
1,285
|
|
|
1,066
|
|
|
219
|
|
|
21
|
%
|
|
1,298
|
|
|
868
|
|
|
430
|
|
|
50
|
%
|
||||||
Net income from continuing operations
|
848
|
|
|
656
|
|
|
192
|
|
|
29
|
%
|
|
846
|
|
|
515
|
|
|
331
|
|
|
64
|
%
|
||||||
Diluted net income per share from continuing operations
|
$
|
3.26
|
|
|
$
|
2.33
|
|
|
$
|
0.93
|
|
|
40
|
%
|
|
$
|
3.17
|
|
|
$
|
1.79
|
|
|
$
|
1.38
|
|
|
77
|
%
|
(Dollars in millions)
|
Q3
FY16 |
|
Q3
FY15 |
|
%
Change
|
|
YTD
Q3 FY16 |
|
YTD
Q3 FY15 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
172
|
|
|
$
|
162
|
|
|
6
|
%
|
|
$
|
516
|
|
|
$
|
529
|
|
|
(2
|
)%
|
Service and other revenue
|
408
|
|
|
354
|
|
|
15
|
%
|
|
1,174
|
|
|
1,031
|
|
|
14
|
%
|
||||
Total segment revenue
|
$
|
580
|
|
|
$
|
516
|
|
|
12
|
%
|
|
$
|
1,690
|
|
|
$
|
1,560
|
|
|
8
|
%
|
% of total revenue
|
25
|
%
|
|
24
|
%
|
|
|
|
43
|
%
|
|
45
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
217
|
|
|
$
|
166
|
|
|
31
|
%
|
|
$
|
627
|
|
|
$
|
524
|
|
|
20
|
%
|
% of related revenue
|
38
|
%
|
|
32
|
%
|
|
|
|
37
|
%
|
|
34
|
%
|
|
|
(Dollars in millions)
|
Q3
FY16 |
|
Q3
FY15 |
|
%
Change
|
|
YTD
Q3 FY16 |
|
YTD
Q3 FY15 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
195
|
|
|
$
|
186
|
|
|
4
|
%
|
|
$
|
218
|
|
|
$
|
203
|
|
|
7
|
%
|
Service and other revenue
|
1,403
|
|
|
1,303
|
|
|
8
|
%
|
|
1,712
|
|
|
1,556
|
|
|
10
|
%
|
||||
Total segment revenue
|
$
|
1,598
|
|
|
$
|
1,489
|
|
|
7
|
%
|
|
$
|
1,930
|
|
|
$
|
1,759
|
|
|
10
|
%
|
% of total revenue
|
69
|
%
|
|
70
|
%
|
|
|
|
49
|
%
|
|
50
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
1,293
|
|
|
$
|
1,188
|
|
|
9
|
%
|
|
$
|
1,327
|
|
|
$
|
1,178
|
|
|
13
|
%
|
% of related revenue
|
81
|
%
|
|
80
|
%
|
|
|
|
69
|
%
|
|
67
|
%
|
|
|
(Dollars in millions)
|
Q3
FY16 |
|
Q3
FY15 |
|
%
Change
|
|
YTD
Q3 FY16 |
|
YTD
Q3 FY15 |
|
%
Change
|
||||||||||
Product revenue
|
$
|
92
|
|
|
$
|
94
|
|
|
(2
|
)%
|
|
$
|
260
|
|
|
$
|
133
|
|
|
95
|
%
|
Service and other revenue
|
34
|
|
|
36
|
|
|
(5
|
)%
|
|
60
|
|
|
44
|
|
|
38
|
%
|
||||
Total segment revenue
|
$
|
126
|
|
|
$
|
130
|
|
|
(3
|
)%
|
|
$
|
320
|
|
|
$
|
177
|
|
|
81
|
%
|
% of total revenue
|
6
|
%
|
|
6
|
%
|
|
|
|
8
|
%
|
|
5
|
%
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment operating income
|
$
|
86
|
|
|
$
|
83
|
|
|
3
|
%
|
|
$
|
199
|
|
|
$
|
43
|
|
|
366
|
%
|
% of related revenue
|
68
|
%
|
|
64
|
%
|
|
|
|
62
|
%
|
|
24
|
%
|
|
|
(Dollars in millions)
|
Q3
FY16 |
|
% of
Related
Revenue
|
|
Q3
FY15 |
|
% of
Related
Revenue
|
|
YTD
Q3 FY16 |
|
% of
Related
Revenue
|
|
YTD
Q3 FY15 |
|
% of
Related
Revenue
|
||||||||||||
Cost of product revenue
|
$
|
30
|
|
|
7
|
%
|
|
$
|
33
|
|
|
7
|
%
|
|
$
|
99
|
|
|
10
|
%
|
|
$
|
108
|
|
|
12
|
%
|
Cost of service and other revenue
|
181
|
|
|
10
|
%
|
|
161
|
|
|
10
|
%
|
|
465
|
|
|
16
|
%
|
|
419
|
|
|
16
|
%
|
||||
Amortization of acquired technology
|
5
|
|
|
n/a
|
|
|
8
|
|
|
n/a
|
|
|
17
|
|
|
n/a
|
|
|
22
|
|
|
n/a
|
|
||||
Total cost of revenue
|
$
|
216
|
|
|
9
|
%
|
|
$
|
202
|
|
|
9
|
%
|
|
$
|
581
|
|
|
15
|
%
|
|
$
|
549
|
|
|
16
|
%
|
(Dollars in millions)
|
Q3
FY16 |
|
% of
Total
Net
Revenue
|
|
Q3
FY15 |
|
% of
Total
Net
Revenue
|
|
YTD
Q3 FY16 |
|
% of
Total
Net
Revenue
|
|
YTD
Q3 FY15 |
|
% of
Total
Net
Revenue
|
||||||||||||
Selling and marketing
|
$
|
423
|
|
|
18
|
%
|
|
$
|
413
|
|
|
19
|
%
|
|
$
|
1,023
|
|
|
26
|
%
|
|
$
|
1,008
|
|
|
29
|
%
|
Research and development
|
228
|
|
|
10
|
%
|
|
206
|
|
|
10
|
%
|
|
646
|
|
|
16
|
%
|
|
583
|
|
|
17
|
%
|
||||
General and administrative
|
149
|
|
|
7
|
%
|
|
131
|
|
|
7
|
%
|
|
386
|
|
|
10
|
%
|
|
365
|
|
|
10
|
%
|
||||
Amortization of other acquired intangible assets
|
3
|
|
|
—
|
%
|
|
3
|
|
|
—
|
%
|
|
6
|
|
|
—
|
%
|
|
9
|
|
|
—
|
%
|
||||
Goodwill impairment charge
|
—
|
|
|
—
|
%
|
|
114
|
|
|
5
|
%
|
|
—
|
|
|
—
|
%
|
|
114
|
|
|
3
|
%
|
||||
Total operating expenses
|
$
|
803
|
|
|
35
|
%
|
|
$
|
867
|
|
|
41
|
%
|
|
$
|
2,061
|
|
|
52
|
%
|
|
$
|
2,079
|
|
|
59
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions)
|
April 30,
2016 |
|
April 30,
2015 |
|
April 30,
2016 |
|
April 30,
2015 |
||||||||
Interest income
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
6
|
|
Net gain (loss) on executive deferred compensation plan assets
|
4
|
|
|
2
|
|
|
(2
|
)
|
|
3
|
|
||||
Other
|
(3
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
Total interest and other income (expense), net
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
(7
|
)
|
|
$
|
3
|
|
(Dollars in millions)
|
April 30,
2016 |
|
July 31,
2015 |
|
$
Change
|
|
%
Change
|
|||||||
Cash, cash equivalents, and investments
|
$
|
1,613
|
|
|
$
|
1,697
|
|
|
$
|
(84
|
)
|
|
(5
|
)%
|
Long-term investments
|
28
|
|
|
27
|
|
|
1
|
|
|
4
|
%
|
|||
Short-term debt
|
500
|
|
|
—
|
|
|
500
|
|
|
NM
|
|
|||
Long-term debt
|
500
|
|
|
500
|
|
|
—
|
|
|
—
|
%
|
|||
Working capital (deficit)
|
(554
|
)
|
|
816
|
|
|
(1,370
|
)
|
|
NM
|
|
|||
Ratio of current assets to current liabilities
|
0.8 : 1
|
|
|
1.5 : 1
|
|
|
|
|
|
|
Nine Months Ended
|
||||||||||
(Dollars in millions)
|
April 30,
2016 |
|
April 30,
2015 |
|
$
Change
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
1,711
|
|
|
$
|
1,722
|
|
|
$
|
(11
|
)
|
Investing activities
|
578
|
|
|
(95
|
)
|
|
673
|
|
|||
Financing activities
|
(1,814
|
)
|
|
(1,266
|
)
|
|
(548
|
)
|
|||
Effect of exchange rate changes on cash
|
6
|
|
|
(17
|
)
|
|
23
|
|
|||
Total increase in cash and cash equivalents
|
$
|
481
|
|
|
$
|
344
|
|
|
$
|
137
|
|
•
|
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 business;
|
•
|
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;
|
•
|
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 work with the broader industry and government to protect our customers from fraud;
|
•
|
our expectation that we will be able to protect our customers’ data and prevent third parties from using stolen customer information to perpetrate fraud in our tax and other offerings;
|
•
|
our expectation that Small Business product revenue will decline and Small Business service revenue will increase;
|
•
|
our expectation that we will generate significant cash from operations;
|
•
|
our expectation that connected services revenue as a percentage of our total revenue will continue to grow;
|
•
|
our expectations regarding the development of future products, services, business models and technology platforms and our research and development efforts;
|
•
|
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 intention not to sell our municipal auction rate securities or investments and our belief that it is more likely than not that we will not be required to sell them before recovery at par;
|
•
|
our belief that the investments we hold are not other-than-temporarily impaired;
|
•
|
our belief that we take prudent measures to mitigate investment related risks;
|
•
|
our belief that our exposure to currency exchange fluctuation risk will not be significant in the future;
|
•
|
our assessments and estimates that determine our effective tax rate;
|
•
|
our expectation that we will pay approximately
$390
million in income taxes in the fourth quarter of fiscal 2016;
|
•
|
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 intent to permanently reinvest a significant portion of our earnings from foreign operations, and 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, 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 the payment of cash dividends;
|
•
|
our assessments and beliefs regarding the future outcome of pending legal proceedings and inquiries by regulatory authorities, the liability, if any, that Intuit may incur as a result of those proceedings and inquiries, and the impact of any potential losses associated with such proceedings or inquiries on our financial statements.
|
•
|
different or more restrictive privacy, data protection and other laws that could require us to make changes to our products, services and operations;
|
•
|
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;
|
•
|
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;
|
•
|
trade barriers and changes in trade regulations;
|
•
|
political or social unrest, economic instability, repression, or human rights issues; 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
|
||||||
February 1, 2016 through February 29, 2016
|
|
4,390,133
|
|
|
$
|
93.31
|
|
|
4,390,133
|
|
|
$
|
490,203,055
|
|
March 1, 2016 through March 31, 2016
|
|
560,544
|
|
|
$
|
98.46
|
|
|
560,544
|
|
|
$
|
435,011,584
|
|
April 1, 2016 through April 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
435,011,584
|
|
Total
|
|
4,950,677
|
|
|
$
|
93.89
|
|
|
4,950,677
|
|
|
|
|
|
INTUIT INC.
(Registrant)
|
|
||
Date:
|
May 24, 2016
|
By:
|
/s/ R. NEIL WILLIAMS
|
|
|
|
|
|
R. Neil Williams
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer (Authorized Officer and Principal Financial Officer)
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Incorporated by
Reference
|
|
|
|
|
|
|
|
3.02
|
|
Amended and Restated Bylaws, as amended through May 5, 2016
|
|
|
|
8-K filed 5/9/2016
|
|
|
|
|
|
|
|
10.01+
|
|
Third Amended and Restated Management Stock Purchase Program
|
|
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.
|
(a)
|
Purchased Restricted Stock Units. On the date that amounts subject to a Bonus Deferral Commitment hereunder would otherwise become payable (the “Purchase Date”), the Company shall withhold such payment and instead award to the Participant on the Purchase Date pursuant to Sections 7 and 8 of the Plan Restricted Stock Units (“Purchased RSUs”) covering a number of Shares having an aggregate Fair Market Value on the Purchase Date equal to the amount of the Bonus Compensation elected to be deferred (rounded down to the nearest whole Share).
|
(b)
|
Matching Restricted Stock Units. In addition to the Purchased RSUs and subject to the limitations set forth in Section 4.3(c) of this MSPP, on the Purchase Date, the Company shall also award to the Participant pursuant to the Plan Restricted Stock Units (“Matching RSUs”) covering a number of Shares equal to the number of Shares subject to the Purchased RSUs awarded to the Participant on the Purchase Date pursuant to Section 4.2(a) of this MSPP.
|
(c)
|
Vesting. Unless otherwise provided for in the terms of an Award Agreement, all Purchased RSUs shall be fully vested as of the applicable Purchase Date.
|
(d)
|
Employment Required. Notwithstanding anything herein to the contrary, a Participant must be employed by the Company on the Purchase Date in order to receive an award of Restricted Stock Units under the MSPP.
|
(a)
|
Minimum and Maximum Deferral. The deferral amount for a Bonus Deferral Commitment must be between five percent (5%) and fifteen percent (15%) of any such Bonus Compensation to be paid or payable during the Deferral Period.
|
(b)
|
Maximum Match. In addition to the limit set forth in Section 4.3(b) above, the maximum number of Shares that may be subject to Matching RSUs that may be issued to a Participant in respect of Purchased RSUs purchased in any one calendar year shall be as follows (in each case, based on the Participant’s position on the applicable Purchase Date):
|
(1)
|
if the Participant is employed on the Purchase Date at the Director level, 300 Shares;
|
(2)
|
if the Participant is employed on the Purchase Date at the Vice President level, 750 Shares;
|
(3)
|
if the Participant is employed on the Purchase Date at the Senior Vice President level or above (other than the Company’s Chief Executive Officer), 1,500 Shares; and
|
(4)
|
if the Participant is employed on the Purchase Date as the Company’s Chief Executive Officer, 3,000 Shares; and
|
(c)
|
Changes in Limits. The Committee may amend the MSPP to change the maximum limits set forth in this Section 4.3 (or implement new minimum or maximum limits) from time to time by giving written notice to all Participants. No such change may affect a Bonus Deferral Commitment made prior to the Committee’s action unless otherwise required by law.
|
(a)
|
Within sixty (60) days after receipt of the notice of the denial of a claim, such claimant or duly authorized representative may request, by mailing or delivery of such written notice to the Committee, a reconsideration by the Committee of the decision denying the claim
.
If the claimant or duly authorized representative fails to request such a reconsideration within such sixty (60) day period, it shall be conclusively determined for all purposes of the MSPP that the denial of such claim by the Committee is correct
.
If such claimant or duly authorized representative requests a reconsideration within such sixty (60) day period, the claimant or duly authorized representative shall have thirty (30) days after filing a request for reconsideration to submit additional written material in support of the claim, review pertinent documents, and submit issues and comments in writing.
|
(b)
|
After such reconsideration request, the Committee shall determine within sixty (60) days of receipt of the claimant’s request for reconsideration whether such denial of the claim was correct and shall notify such claimant in writing of its determination. The written notice of the Committee’s decision shall be in writing and shall include specific reasons for the decision, shall be written in a manner reasonably calculated to be understood by the claimant, and shall identify specific references to the pertinent Plan provisions on which the decision is based. In the event of special circumstances determined by the Committee, the time for the Committee to make a decision may be extended by an additional sixty (60) days upon written notice to the claimant prior to the commencement of the extension.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intuit Inc.;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
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
|
b.
|
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.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|