<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended JANUARY 31, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period from
____________ to ____________.
COMMISSION FILE NUMBER 0-21180
INTUIT INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0034661
(State of incorporation) (IRS employer identification no.)
2535 GARCIA AVENUE, MOUNTAIN VIEW, CA 94043
(Address of principal executive offices)
(650) 944-6000
(Registrant's telephone number, including area code)
Indicate by a check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
48,043,158 shares of Common Stock, $0.01 par value, as of February 28, 1998
<PAGE> 2
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FORM 10-Q
INTUIT INC.
INDEX
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<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements
Condensed Consolidated Balance Sheets as of
July 31, 1997 and January 31, 1998............................. 3
Condensed Consolidated Statements of Operations for
the three and six months ended January 31, 1997 and 1998....... 4
Condensed Consolidated Statements of Cash Flows for
the six months ended January 31, 1997 and 1998................. 5
Notes to Condensed Consolidated Financial
Statements..................................................... 6
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 12
PART II OTHER INFORMATION
ITEM 4: Submission of Matters to a Vote of Security Holders.................. 20
ITEM 6: Exhibits and Reports on Form 8-K..................................... 21
Signatures........................................................... 22
</TABLE>
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<PAGE> 3
INTUIT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1998
------------ ------------
(In thousands, except par value) (Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 46,780 $ 105,532
Short-term investments ........................................... 158,319 143,179
Marketable securities ............................................ 190,800 394,049
Accounts receivable, net ......................................... 42,190 170,277
Inventories ...................................................... 3,295 4,811
Prepaid expenses ................................................. 13,393 18,622
------------ ------------
Total current assets ..................................... 454,777 836,470
Property and equipment, net ........................................ 83,404 70,574
Purchased intangibles, net ......................................... 19,836 13,676
Goodwill, net ...................................................... 26,935 19,190
Investments ........................................................ 41,150 2,000
Restricted investments ............................................. 34,766 32,493
Other assets ....................................................... 2,808 2,678
------------ ------------
Total assets ....................................................... $ 663,676 $ 977,081
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................. $ 35,688 $ 59,535
Accrued compensation and related liabilities ..................... 22,458 20,595
Deferred revenue ................................................. 22,732 38,602
Income taxes payable ............................................. 3,811 16,940
Deferred income taxes ............................................ 27,310 92,147
Other accrued liabilities ........................................ 99,583 156,267
------------ ------------
Total current liabilities ................................ 211,582 384,086
Long-term deferred income taxes .................................... 589 300
Long-term notes payable ............................................ 36,444 31,253
Commitments and contingencies.......................................
Stockholders' equity:...............................................
Preferred stock, $0.01 par value..................................
Authorized -- 3,000 shares......................................
Issued and outstanding - none .................................. -- --
Common stock, $0.01 par value.....................................
Authorized -- 250,000 shares...................................
Issued and outstanding - 46,942 and 47,833 shares, respectively 469 478
Additional paid-in capital ....................................... 558,391 577,542
Net unrealized gain on marketable securities ..................... 20,668 117,929
Cumulative translation adjustment and other ...................... (1,236) (361)
Accumulated deficit .............................................. (163,231) (134,146)
------------ ------------
Total stockholders' equity ............................... 415,061 561,442
------------ ------------
Total liabilities and stockholders' equity ......................... $ 663,676 $ 977,081
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1998 1997 1998
-------- -------- -------- --------
(In thousands, except per share amounts;unaudited)
<S> <C> <C> <C> <C>
Net revenue ........................................................ $265,978 $237,513 $368,484 $333,471
Costs and expenses:
Cost of goods sold:
Product ........................................................ 58,621 45,479 85,666 67,875
Amortization of purchased software and other ................... 114 650 154 1,353
Customer service & technical support .............................. 40,559 37,511 68,071 65,432
Selling & marketing ............................................... 53,235 46,990 90,636 78,939
Research & development ............................................ 22,930 26,634 45,391 52,778
General & administrative .......................................... 10,718 9,698 22,624 18,207
Charge for purchased research and development ..................... -- -- 4,929 --
Amortization of goodwill and purchased intangibles ................ 6,192 4,920 16,494 8,861
-------- -------- -------- --------
Total costs & expenses ................................... 192,369 171,882 333,965 293,445
-------- -------- -------- --------
Income from operations ................................... 73,609 65,631 34,519 40,026
Interest and other income and expense, net ......................... 1,758 2,241 3,806 4,271
Gain on disposal of business ....................................... -- -- -- 4,321
-------- -------- -------- --------
Income from continuing operations before income tax ................ 75,367 67,872 38,325 48,618
Income tax provision ............................................... 30,667 26,028 21,929 19,533
-------- -------- -------- --------
Net income from continuing operations after tax .................... 44,700 41,844 16,396 29,085
Gain on sale of discontinued operations, net of tax ................ 71,240 -- 71,240 --
-------- -------- -------- --------
Net income ......................................................... $115,940 $ 41,844 $ 87,636 $ 29,085
======== ======== ======== ========
Basic net income per share from continuing operations .............. $ 0.96 $ 0.88 $ 0.36 $ 0.61
Basic net income per share from sale of discontinued operations .... 1.54 -- 1.54 --
-------- -------- -------- --------
Basic net income per share ......................................... $ 2.50 $ 0.88 $ 1.90 $ 0.61
======== ======== ======== ========
Shares used in per share amounts ................................... 46,391 47,560 46,220 47,322
======== ======== ======== ========
Diluted net income per share from continuing operations............. $ 0.94 $ 0.85 $ 0.35 $ 0.59
Diluted net income per share from sale of discontinued operations... 1.50 -- 1.50 --
-------- -------- -------- --------
Diluted net income per share........................................ $ 2.44 $ 0.85 $ 1.85 $ 0.59
======== ======== ======== ========
Shares used in per share amounts ................................... 47,631 49,438 47,484 48,929
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
INTUIT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
(In thousands; unaudited) 1997 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .................................................. $ 87,636 $ 29,085
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Net gain on sale of discontinued operations ............ (71,240) --
Loss from discontinued operations offset against gain .. (9,668) --
Gain on disposal of business, net of tax ............... -- (1,621)
Gain on sale of facility ............................... -- (1,501)
Charge for purchased research and development .......... 4,929 --
Amortization of goodwill and other purchased intangibles 17,732 9,466
Depreciation ........................................... 15,974 14,969
Changes in assets and liabilities:
Accounts receivable ................................. (100,380) (128,087)
Inventories ......................................... 20 (2,291)
Prepaid expenses .................................... (2,101) (1,262)
Deferred income tax assets and liabilities .......... (2,349) (290)
Accounts payable .................................... 29,566 23,847
Accrued compensation and related liabilities ........ 4,501 (1,727)
Deferred revenue .................................... 10,621 15,907
Accrued acquisition liabilities ..................... (2,875) (31,476)
Other accrued liabilities ........................... 80,590 78,261
Income taxes payable ................................ 31,360 16,314
--------- ---------
Net cash provided by operating activities ......... 94,316 19,594
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of facility .............................. -- 9,025
Purchase of property and equipment .......................... (13,354) (23,506)
Business acquisitions and disposition, net of cash
acquired .................................................. (982) --
Proceeds from business sold ................................. -- 26,350
(Increase) decrease in other assets ......................... (2,114) 2,398
Purchase of short-term investments .......................... (129,256) (89,057)
Purchase of long-term investments ........................... -- (2,000)
Liquidation and maturity of short-term investments .......... 107,813 106,470
--------- ---------
Net cash provided by (used in) investing activities (37,893) 29,680
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt ........................ (503) (3,797)
Net proceeds from issuance of common stock .................. 4,355 13,275
--------- ---------
Net cash provided by financing activities ......... 3,852 9,478
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ..................... 60,275 58,752
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .............. 44,584 46,780
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................... $ 104,859 $ 105,532
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 6
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INTUIT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Intuit Inc. ("Intuit" or the "Company") is a leading developer of small business
accounting, tax preparation and consumer finance software. Intuit develops,
markets and supports software products and services that enable individuals,
professionals and small businesses to automate commonly performed financial
tasks and better organize, understand, manage and plan their financial lives.
Principal products include small business accounting software, personal and
professional tax preparation software, consumer finance and Internet-based
products and services. In addition, the Company provides services and financial
supplies, such as invoice forms and checks. Intuit markets its products through
distributors and retailers, by direct sales to OEMs and individual users and
through the Internet. Intuit's customers are located primarily in North America,
Europe and Asia.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and include all adjustments (consisting of normal recurring
adjustments) that the Company considers necessary for a fair presentation of the
operating results for the periods shown. Results of operations for the three and
six months ended January 31, 1998 are not necessarily indicative of the results
to be expected for the fiscal year ending July 31, 1998 or any other future
period. These condensed consolidated financial statements and notes thereto
should be read in conjunction with the audited consolidated financial statements
for the fiscal year ended July 31, 1997 included in the Company's Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
Principles of Consolidation
The consolidated financial statements include the accounts of Intuit and its
wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Significant estimates are used in determining both the collectibility of
accounts receivable and reserves for returns and exchanges, and in assessing the
carrying value of goodwill and purchased intangibles. Actual results could
differ from those estimates.
Net Revenue
Desktop software product revenue is generally recognized at the time products
are shipped, net of allowances for estimated future returns and for excess
quantities in distribution channels, provided that no significant vendor
obligations exist and collections of accounts receivable are probable. Reserves
are provided for quantities of current product versions that are considered
excess and for inventories of all previous versions of products at the time new
product versions are introduced. Advance payments are recorded as deferred
revenue until the products are shipped or services are provided. Rebate costs
are provided at the time revenue is recognized. Intuit provides warranty
reserves for the estimated cost of replacing defective products at the time
revenue is recognized.
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<PAGE> 7
For other types of revenue (such as subscription revenues, Internet-based
advertising and transaction revenue and fees for services such as electronic
filing), Intuit recognizes revenue as fees are earned or services are provided.
Customer Service and Technical Support
Customer service and technical support costs include order-processing, customer
inquiries and telephone assistance. The costs of post-contract customer support
are included in customer service and technical support expenses and are not
included in cost of goods sold.
Cash, Cash Equivalents and Short-Term Investments
Intuit considers all highly liquid investments purchased with a maturity of
three months or less at the date of acquisition to be cash equivalents. Both
cash equivalents and short-term investments are considered available-for-sale
securities and are carried at amortized cost, which approximates fair value. The
following is a summary of the estimated fair value of cash, cash equivalents and
short-term investments:
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1998
--------- ---------
(In thousands) (Unaudited)
<S> <C> <C>
Cash and cash equivalents:
Cash .................................... $ 20,188 $ 18,862
Money market funds ...................... 3,369 15,312
Commercial paper ........................ 4,292 --
Municipal bonds ......................... -- 42,533
U.S. Government securities............... 18,931 26,825
Corporate notes ......................... -- 2,000
--------- ---------
$ 46,780 $ 105,532
========= =========
Short-term investments:
Certificates of deposit ................. $ 5,075 $ 68
Corporate notes ......................... 37,811 9,014
Municipal bonds ......................... 140,245 166,590
U.S. Government securities............... 9,954 --
Restricted investments .................. (34,766) (32,493)
--------- ---------
$ 158,319 $ 143,179
========= =========
</TABLE>
The estimated fair value of cash equivalents and short-term investments by
contractual maturity is as follows:
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1998
--------- ---------
(In thousands) (Unaudited)
<S> <C> <C>
Due within one year........................ $ 155,832 $ 178,590
Due after one year ........................ 63,845 83,752
Restricted investments .................... (34,766) (32,493)
--------- ---------
$ 184,911 $ 229,849
========= =========
</TABLE>
For information about restricted investments, see Note 5 of Notes to Condensed
Consolidated Financial Statements. Realized gains and losses from sales of each
type of security for the three and six months ended January 31, 1998 were
immaterial.
Marketable Securities
Marketable securities are carried at fair value and unrealized gains and losses,
net of tax, are included in stockholders' equity. Following is a summary of
marketable securities held at January 31, 1998:
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<PAGE> 8
<TABLE>
<CAPTION>
GROSS UNREALIZED
-------------------
COST GAIN LOSS FAIR VALUE
-------- -------- -------- ----------
(In thousands; unaudited)
<S> <C> <C> <C> <C>
Checkfree Corporation common stock ................... $156,350 $106,000 $ -- $262,350
Excite, Inc. common stock ............................ 39,150 84,825 -- 123,975
Verisign, Inc. common stock .......................... 2,000 4,375 -- 6,375
Concentric Network Corporation common stock........... -- 1,349 -- 1,349
-------- -------- -------- --------
$197,500 $196,549 $ -- $394,049
======== ======== ======== ========
</TABLE>
Marketable securities in Checkfree Corporation ("Checkfree") were obtained as
a result of Intuit's sale of its on-line banking and bill payment transaction
processing business to Checkfree in January 1997. For more information on
this sale, see Note 3 of Notes to Condensed Consolidated Financial
Statements.
The Company accounts for its investment in Checkfree as an available-for-sale
equity security, which accordingly is carried at market value. Checkfree
common stock is quoted on the Nasdaq Stock Market under the symbol CKFR. The
closing price of Checkfree common stock at January 31, 1998 was $24.75 per
share. At January 31, 1998, the Company held 10.6 million shares, or
approximately 19%, of Checkfree's outstanding common stock. The $106.0
million unrealized gain at January 31, 1998 and the $34.4 million unrealized
gain at July 31, 1997, on these available-for-sale securities has been
reported as a separate component of stockholders' equity (net of tax).
The Company acquired 2.9 million shares of common stock of Excite, Inc.
("Excite") in June 1997 in connection with entering into an agreement with
Excite to jointly develop, promote and distribute a new on-line financial
channel. Prior to January 1998, these shares were valued at cost, or $39.2
million, due to restrictions that prevented the sale of any of the shares. At
January 31, 1998, remaining restrictions on these shares will now expire
within 12 months. As a result, the Company now carries its investment in
Excite as an available-for-sale equity security at market value, or $124.0
million, reflecting an unrealized gain of $84.8 million, which has been
included as a separate component of stockholders' equity (net of tax).
Excite's common stock is quoted on the Nasdaq Stock Market under the symbol
XCIT. The closing price of Excite common stock at January 31, 1998, was
$42.75 per share. At January 31, 1998, the Company held approximately 15% of
the outstanding common stock of Excite.
Goodwill and Intangible Assets
Components of intangible assets are as follows:
<TABLE>
<CAPTION>
NET BALANCE AT
LIFE IN JULY 31, JANUARY 31,
YEARS 1997 1998
------- ------- -------
(In thousands) (Unaudited)
<S> <C> <C> <C>
Goodwill ..................................... 3 $26,935 $19,190
Customer lists ............................... 3-5 3,144 1,594
Covenant not to compete ...................... 4-5 2,125 467
Purchased technology ......................... 1-5 7,517 6,055
Other intangibles............................. 1-10 7,050 5,560
</TABLE>
Other intangibles include items such as trade names, logos and other
identified intangible assets. The balances presented above are net of total
accumulated amortization of $147.1 million and $88.7 million at July 31, 1997
and January 31, 1998, respectively. The accumulated amortization balance at
July 31, 1997 included $67.8 million relating to the acquisition of Parsons
Technology, Inc. ("Parsons") in September 1994.
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<PAGE> 9
Concentration of Credit and Valuation Risk
Intuit's revenues are concentrated in the personal computer software industry,
which is highly competitive and rapidly changing. Significant technological
changes in the industry or in customer requirements, or the emergence of
competitive products or services with new capabilities or technologies, could
adversely affect Intuit's operating results.
Intuit is subject to concentration of credit and/or valuation risk because it
holds short-term investments, marketable securities and trade accounts
receivable. Intuit holds shares of Checkfree common stock as marketable
securities, representing approximately 19% of Checkfree's outstanding common
stock at January 31, 1998. Intuit also holds approximately 15% of Excite's
outstanding common stock as of January 31, 1998. The Company's ability to
dispose of both the Checkfree and Excite stock is restricted by volume trading
limitations and other contractual arrangements. No Excite shares may be sold
prior to December 1998. If marketable securities experience a permanent decline
in value below cost, the Company will report the decline in earnings. Intuit's
remaining investment portfolio is diversified and generally consists of
short-term investment-grade securities. The Company performs ongoing customer
credit evaluations to decrease the credit risk associated with accounts
receivable. Generally, no collateral is required. Intuit maintains reserves for
estimated credit losses and such losses have historically been within
management's expectations.
Recent Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting comprehensive income in a
financial statement. Comprehensive income items include changes in equity
(net assets) not included in net income. Examples are foreign currency
translation adjustments and unrealized gains/losses on available for sale
securities. The disclosure prescribed by SFAS 130 is required beginning with the
quarter ending October 31, 1998.
In June 1997, FASB issued SFAS 131, "Disclosures About Segments of an Enterprise
and Related Information." This statement establishes standards for the way
companies report information about operating segments in financial statements.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. The Company has not yet
determined the impact, if any, of adopting this standard. The disclosures
prescribed by SFAS 131 are required in fiscal year 1999.
In October 1997, FASB approved the new American Institute of Certified Public
Accountants Statement of Position, "Software Revenue Recognition" ("SOP 97-2").
SOP 97-2 will be effective for the Company beginning in the first quarter of
fiscal 1999. The Company does not believe the adoption of SOP 97-2 will have a
significant impact on its revenue recognition policy.
Reclassifications
Certain previously reported amounts have been reclassified to conform to the
current presentation format.
2. ACQUISITIONS
In September 1996, Intuit completed its acquisition of GALT Technologies, Inc.,
a provider of mutual fund information on the World Wide Web. The acquisition was
treated as a purchase for accounting purposes. Under the terms of the
acquisition agreement, Intuit issued 212,053 shares of Intuit common stock and
options to purchase approximately 33,686 shares of Intuit common stock to GALT
stockholders and option holders, respectively, at the date of acquisition. Of
the purchase price of $14.6 million, approximately $8.5 million was allocated to
identified intangible assets and goodwill, which is being amortized over a
period not to exceed three years. Approximately $4.9 million of in-process
research and development was expensed in the quarter ended January 31, 1997. Pro
forma information for GALT has not been presented because it is not material.
-9-
<PAGE> 10
In March 1997, Intuit KK, a wholly owned subsidiary of Intuit, completed its
acquisition of Nihon Micom Co. Ltd. ("Nihon Micom"), a Japanese small business
accounting software company, for cash. The acquisition was treated as a purchase
for accounting purposes. The purchase price of the acquisition was approximately
$39.9 million. In addition, liabilities of approximately $9.6 million were
assumed. Approximately $32.8 million was allocated to identified intangible
assets and goodwill, which is being amortized over a period not to exceed three
years. An in-process research and development charge of $6.1 million was
expensed in the quarter ended April 30, 1997. Under the terms of the agreement,
Intuit issued options to purchase 89,170 shares of Intuit common stock to
employees of Nihon Micom on the date of acquisition. Pro forma information for
Nihon Micom has not been presented because it is not material.
3. DISCONTINUED OPERATIONS AND DIVESTITURES
On January 27, 1997, Intuit completed the sale of its on-line banking and bill
payment transaction-processing subsidiary, Intuit Services Corporation ("ISC"),
to Checkfree in exchange for 12.6 million shares of Checkfree common stock. The
closing price of Checkfree common stock was $14.75 per share on January 24,
1997, the last business day prior to closing. As a result of the divestiture,
Intuit recorded a gain on sale of discontinued operations of $71.2 million, net
of tax, in the quarter ended January 31, 1997. This gain was recorded net of
certain contingent items relating to the divested business. In February 1997,
Intuit sold two million shares of the acquired Checkfree common stock.
On August 7, 1997, the Company completed the sale of Parsons, its consumer
software and direct marketing subsidiary, to Broderbund Software, Inc. for
approximately $31 million. Net assets acquired by Broderbund as a result of the
sale were approximately $17 million and direct costs incurred by Intuit relating
to the sale were approximately $9.5 million. As a result of the divestiture, the
Company recorded a pre-tax gain of $4.3 million and a related tax provision of
$2.7 million in the quarter ended October 31, 1997.
The following information shows pro forma net revenue, net income from
continuing operations and diluted net income per share from continuing
operations of Intuit as if the disposition of Parsons had taken place as of the
beginning of fiscal 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, 1997 JANUARY 31, 1997
------------------------ -----------------------
EXCLUDING AS EXCLUDING AS
PARSONS REPORTED PARSONS REPORTED
---------- -------- --------- ---------
(In thousands, except per share amounts; unaudited)
<S> <C> <C> <C> <C>
Net revenue ............................................. $243,751 $265,978 $328,532 $368,484
Net income from continuing operations ................... 44,130 44,700 16,288 16,396
Diluted net income per share from continuing operations.. $ 0.93 $ 0.94 $ 0.34 $ 0.35
</TABLE>
4. OTHER ACCRUED LIABILITIES
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1997 1998
-------- --------
(In thousands) (Unaudited)
<S> <C> <C>
Reserve for returns and exchanges ....................... $ 36,310 $ 76,372
Acquisition and disposition related items................ 38,866 16,890
Rebates ................................................. 2,876 21,003
Post-contract customer support .......................... 4,233 10,651
Other accruals .......................................... 17,298 31,351
-------- --------
$ 99,583 $156,267
======== ========
</TABLE>
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<PAGE> 11
5. NOTES PAYABLE AND COMMITMENTS
In March 1997, Intuit's Japanese subsidiary, Intuit KK, entered into a
three-year loan agreement with Japanese banks for approximately $30.3 million
used to fund its acquisition of Nihon Micom. The interest rate is variable based
on the Tokyo interbank offered rate or the short-term prime rate offered in
Japan. At January 31, 1998, the interest rate was approximately 1.4%. The fair
value of the loan approximates cost as the interest rate on the borrowings is
adjusted periodically to reflect market rates (which are currently significantly
lower in Japan than in the United States). Intuit has guaranteed the loan and
has pledged approximately $32.5 million, or 110% of the loan balance, of
short-term investments to be restricted as security for the borrowings at
January 31, 1998.
6. INCOME TAXES
The Company computes the provision for income taxes by applying the estimated
annual effective tax rate to recurring operations and amortization of intangible
assets, excluding the write-off of in-process research and development and the
amortization of goodwill.
7. LITIGATION
Intuit is subject to legal proceedings and claims that arise in the course of
its business. Intuit believes that the ultimate amount of liability, if any, for
any pending actions (either alone or combined) will not materially affect its
financial position, results of operations or liquidity. However, the ultimate
outcome of any litigation is uncertain. An unfavorable outcome could have a
material negative impact. In addition, any litigation, regardless of outcome,
can have an adverse impact on Intuit because of defense costs, diversion of
management resources and other factors.
8. SUBSEQUENT EVENTS
On February 17, 1998, the Company announced a three-year agreement with America
Online, Inc. ("AOL"). Under the terms of the agreement, Intuit will be the
exclusive provider of tax preparation and filing, multi-carrier life and auto
insurance, and multi-lender mortgage services on both the AOL service and
AOL.com, which is AOL's default site for Internet access by AOL members. In
addition, on AOL.com, Intuit will be the primary source of financial content for
the Personal Finance Web Channel. Under terms of the agreement, Intuit
guarantees payments to AOL totaling $30 million over three years, of which
approximately $16 million was paid upon signing. This initial payment will be
expensed in the third quarter of fiscal 1998. The remainder of the guaranteed
payments will be expensed over the expected term of the agreement. AOL will also
be eligible for revenue sharing once certain revenue thresholds in the agreement
have been met.
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<PAGE> 12
- --------------------------------------------------------------------------------
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
CAUTIONS ABOUT FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements about future financial
results and other events that have not yet occurred. Forward-looking statements
include, but are not limited to, statements regarding prospects for our
QuickBooks, TurboTax and Quicken '98 products (including the expected launch of
a new QuickBooks product) and our Internet-based businesses, and expected trends
in certain expenses. Actual results may differ significantly from our current
expectations because of risks and uncertainties about the future. Such risks
include, but are not limited to, intense competition and pricing pressures;
uncertain growth of the markets for the Company's offerings; possible delays in
product launch dates; possible product errors or other events that lead to
greater demand for customer service and technical support (and therefore greater
cost to the Company); the adequacy of our product return reserves; risks
associated with regulated businesses such as insurance and mortgage lending; the
Company's ability to adapt and expand its product, service and content offerings
for the Internet environment; rapidly changing technology and customer demands;
the timing and consumer acceptance of new products and services; the cost of
implementing the Company's Internet strategy; the success of relationships
between the Company and third parties that are significant to the Company's
Internet strategy; and uncertainty as to the timing and amount of potential
Internet-related revenue and profit. In addition, the Company will not
necessarily update the information in this Form 10-Q if any forward-looking
statements later turn out to be inaccurate. Additional information on factors
that could affect future results and events is included in our report on Form
10-K for the fiscal year ended July 31, 1997 and our Form 10-Q for the quarter
ended October 31, 1997, filed with the Securities and Exchange Commission.
OVERVIEW
Intuit's mission is to revolutionize the way individuals and small businesses
manage their finances. To achieve this goal, we create, sell and support small
business accounting, tax preparation and consumer finance software products,
financial supplies (such as computer checks, invoices and envelopes), and
Internet-based products and services. Our revenues come primarily from the
United States, Japan, Germany, Canada and the United Kingdom through both retail
distribution channels and direct customer sales. While software and related
products and services now provide most of our revenue, Internet-based revenue is
growing and has become an important part of our business strategy. We continue
to devote significant financial resources to developing Internet-related
products and services.
Our business is very seasonal. Our tax products sell from December through April
due to the tax return filing season. Consumer finance software products
(primarily Quicken) sell best in our second and third fiscal quarters.
Consequently, our financial results are usually strongest during the quarters
ending January 31 and April 30 and we have historically experienced operating
losses for the quarters ending July 31 and October 31. Operating results can
also fluctuate for other reasons such as changes in product release dates,
non-recurring events such as acquisitions and product price cuts in quarters
with relatively high fixed expenses. Because of these factors, we believe that
quarter to quarter comparisons can be less reliable and that annual comparisons
are generally more meaningful when measuring how we've performed.
We recognize revenue for our desktop software products when products are
shipped, less reserves for expected returns from both the retail and direct
distribution channels. These reserves are difficult to estimate, especially for
seasonal products. If actual returns are significantly higher than our estimated
reserves, this could have a material negative impact on our revenue and
operating results. See Note 1 of the Notes to Condensed Consolidated Financial
Statements regarding net revenue.
-12-
<PAGE> 13
RESULTS OF OPERATIONS
The following is selected consolidated statement of operations information for
the three and six-month periods ended January 31, 1997 and 1998. Investors
should be aware that the following pro forma operating results for the three and
six-month periods ended January 31, 1997 exclude results for our Parsons
subsidiary (except for results of the tax business, which we retained after the
sale) that was sold on August 7, 1997. These pro forma tables are being
presented for comparative purposes to allow investors to analyze results on a
more consistent basis and are not prepared in accordance with generally accepted
accounting principles (GAAP). For results that include Parsons activity for
fiscal 1997, investors should refer to our Condensed Consolidated Statements of
Operations on page four. For additional pro forma information about 1997 results
without Parsons, see Note 3 of the Notes to Condensed Consolidated Financial
Statements.
NET REVENUE
<TABLE>
<CAPTION>
Three Months Ended January 31, Six Months Ended January 31,
(Dollars in millions; unaudited) 1997 Change 1998 1997 Change 1998
------------------------------- ------------------------------
(Pro forma) (Pro forma)
<S> <C> <C> <C> <C> <C> <C>
Software .................. $218.7 (3)% $211.2 $285.4 0% $285.3
% of revenue .............. 90% 89% 87% 86%
Supplies .................. $ 25.1 5% $ 26.3 $ 43.1 12% $ 48.2
% of revenue .............. 10% 11% 13% 14%
Total ..................... $243.8 (3)% $237.5 $328.5 2% $333.5
</TABLE>
Small Business Division. Small business division revenues come primarily from
the following sources:
o QuickBooks product line
o Supplies products (including checks, invoices and envelopes)
o Tax table services
o Support fees charged to customers for telephone assistance
Overall, revenue for the division was down 8% and up 5% for the three and
six-month periods ended January 31, 1998, respectively, compared to the same
periods a year ago. These results were driven by QuickBooks product sales, which
were down 25% and 7% for the same periods. This decline in QuickBooks revenue
from last year was expected because we had a QuickBooks product release in the
second quarter of fiscal 1997 but no release so far in fiscal 1998. We expect
that our QuickBooks multiple-user product will be released in the fourth quarter
of fiscal 1998.
With the QuickBooks multi-user product, we will be targeting the multi-user
market for the first time. While this is an opportunity for future sales growth,
there are also risks. For example, the multi-user version of QuickBooks is
currently expected to have a higher sale price than single-user versions. This
may impact the distribution channels we use for the product. There is also a
risk that the multi-user release date could be delayed. In addition, customer
service and technical support costs may be higher due to the complexity of the
product. If these or other risks occur, our operating results could suffer.
Domestic supplies revenues, which are part of the small business division, grew
by 14% and 13% for the three and six-month periods ended January 31, 1998,
respectively, due primarily to our increasing base of small business owners. The
supplies business is unlike our software business. It is a more consistent
source of revenue that comes from our existing base of customers who use
QuickBooks and Quicken to run their small businesses. While customers may go
long periods of time without buying a new version of software, they will often
buy supplies in-between software purchases. This relatively steady revenue
stream has grown as our customer base of small business owners has increased.
-13-
<PAGE> 14
Tax table service revenue and fees charged for providing telephone support to
QuickBooks customers also increased for the three and six-month periods ended
January 31, 1998. Together with supplies growth, this helped to offset the
decrease in QuickBooks sales.
Tax Division. Tax division revenues come primarily from the following sources:
o TurboTax and MacInTax personal tax preparation product line
o Professional tax preparation products
o Electronic tax return filing fees
Overall, tax division revenues for the three and six months ended January 31,
1998 were down 6% and 8% respectively, compared to last year. This was driven in
part by a delay in recognizing a portion of revenue associated with a free
electronic filing service we offered to customers who bought our deluxe Federal
TurboTax products. Most customers will receive this free service from us in our
third fiscal quarter and we have to wait until then to recognize the portion of
tax product revenue that we've allocated to electronic filing. Last year we
didn't have this free offer so there was no deferral of revenue. The
year-over-year revenue decrease was also due to the fact that most of our
TurboTax state tax products were released in January (second quarter) in fiscal
1997, but in February (third quarter) this year. In addition, despite one-time
discount offers, not all of the tax customers from our divested Parsons
subsidiary have been converted to our TurboTax products.
To date, our new TurboTax product line is selling well through retail channels.
However, it's too early to predict results for the entire tax season. We expect
to face intense competition during the remainder of the tax season (particularly
from H&R Block's TaxCut product, which has been aggressively priced in the
past), and this could impact sales. In addition, though we believe our reserves
for returned products will be adequate to cover retailers' returns of unsold
products during the next two quarters, higher than expected returns could have a
negative impact on sales for the season.
Our professional tax product sales increased by 8% for the three and six months
ended January 31, 1998 compared to the same periods last year. We experienced
this growth primarily because we have been successful in retaining our customers
from last year and in many cases upgrading them to higher priced products. We
have also been successful in converting many professional tax customers who
formerly purchased products from our divested Parsons subsidiary.
Consumer Finance Division. Consumer finance division revenues come primarily
from the following sources:
o Quicken product line
o Advertising and sponsorship fees from our Quicken.com website
o Fees earned for connecting insurance brokers with insurance
customers through our Quicken InsureMarket service offered through
Quicken.com
o Fees earned for connecting mortgage lenders with mortgage customers
through our QuickenMortgage service offered through Quicken.com
o Fees earned for connecting Quicken customers with Checkfree's bill
payment services
Total revenue for the consumer finance division was up 11% for the three and
six-month periods ended January 31, 1998 compared to the same periods a year
ago. Results include $10 million in royalty revenue from Checkfree in the
second quarter of fiscal 1997 and in the first quarter of fiscal 1998.
Our Quicken product line sales were up 51% and down 1% for the three and
six-month periods ended January 31, 1998 respectively, compared to the same
periods last year. In the first quarter of this year, the quantity of Quicken we
shipped to retailers was lower compared to last year because we thought the
20% revenue decline we experienced in the prior year might continue. In the
second quarter, we responded to stronger than expected demand by increasing our
shipments to retailers. This resulted in the high growth rate we experienced
this quarter. For the six-month period, sales are roughly flat reflecting lower
overall unit sales offset by a more favorable sales mix toward our higher-priced
deluxe
-14-
<PAGE> 15
products. However, it is too early to predict results for the rest of the
fiscal year.
Internet-based revenues are up over 200% for the three and six-month periods
ended January 31, 1998 compared to the same periods a year ago. While Internet
revenues are growing rapidly, they represent less than 5% of our total
year-to-date revenue. The Internet is a relatively new source of revenue for us.
We earn fees from companies who advertise on Quicken.com and from certain
financial service providers, such as mortgage lenders and insurance brokers, who
obtain customers through Quicken.com. Our goal is to generate increasing traffic
to Quicken.com so that our advertising rates and other fees will increase. One
way we attract more customers is to expand and improve the content on
Quicken.com. For example, during fiscal 1998, we launched our QuickenMortgage
on-line mortgage service and our TurboTax on-line product. Another way we
generate traffic is by collaborating with third party on-line service and
content providers to deliver financial content to their customers through
co-branded content or links to the Quicken.com site. For example, we have an
agreement with Excite under which all Internet users who enter the Excite
Business and Investing channel are sent to a Quicken.com website that is
co-branded (with Excite). This has significantly increased traffic to
Quicken.com. In exchange, we share profits generated from Quicken.com with
Excite.
In October 1997, we entered into an exclusive relationship with CNN to provide
Quicken.com on FN, a co-branded personal finance area on CNNfn.com. In February
1998, we entered into an agreement with AOL under which Intuit will be the
exclusive U.S. provider of tax preparation and filing, and multi-carrier life
and auto insurance, and multi-lender mortgage services on both the AOL service
and AOL.com, which is AOL's default site for Internet access by AOL members. In
addition, on AOL.com, we will be the primary source of financial content for the
Personal Finance Web Channel.
We expect Internet revenues to remain insignificant at least through the
remainder of the fiscal year. Like other companies establishing Internet-based
businesses, we face several significant risks. We are operating in an
environment where the technology, customer demands and other factors are rapidly
changing. We face intense competition from a wide range of companies. The
barriers to entry are low. Consumers may be slow to accept the Internet as a way
to buy goods and services. While we believe that Internet revenues will continue
to grow, the rate of growth cannot be reasonably estimated and there can be no
assurance that growth will occur.
International Division. International division revenues come primarily from the
following sources:
o Japanese small business products (Obanto, Kobanto)
o German Quicken, QuickBooks and Tax products
o Canadian Quicken, QuickBooks and Tax products
o United Kingdom Quicken, QuickBooks, and Tax products
We also operate in smaller European, Asian and Latin American markets. For our
international division, revenues were up by 12% and 9% for the three and
six-month periods ended January 31, 1998, respectively, compared to the same
periods last year. Excluding the impact of our Nihon Micom acquisition, revenues
would have been roughly flat for the three and six-month periods ended January
31, 1998. Despite a recent economic slowdown in Japan, unit sales of our small
business products have increased this year. This growth was partially offset by
the negative impact of a weak Japanese currency. In Europe, we experienced a
delay in releasing our German Quicken product, which contributed to lower sales
compared to last year. In Canada, sales have been roughly flat year-over-year.
In Europe, we are in the process of focusing our product development efforts
toward small business products in selected larger markets. As a result, we will
be devoting fewer resources to consumer finance and tax products, and to
smaller geographic markets. This shift in strategy may negatively impact our
international revenue for the remainder of the fiscal year.
-15-
<PAGE> 16
COST OF GOODS SOLD
<TABLE>
<CAPTION>
Three Months Ended January 31, Six Months Ended January 31,
(Dollars in millions; unaudited) 1997 Change 1998 1997 Change 1998
--------------------------------- --------------------------------
(Pro forma) (Pro forma)
<S> <C> <C> <C> <C> <C> <C>
Product............................. $ 53.2 (14)% $ 45.5 $ 76.2 (11)% $ 67.9
% of revenue ....................... 22% 19% 23% 20%
Amortization of purchased
software & other ................ $ 0.1 100 % $ 0.7 $ 0.1 100 % $ 1.4
% of revenue ....................... 0% 0% 0% 0%
Total .............................. $ 53.3 (13)% $ 46.2 $ 76.3 (9)% $ 69.3
% of revenue ....................... 22% 19% 23% 21%
</TABLE>
There are two components of cost of goods sold. The largest is the direct cost
of manufacturing and shipping products. The second component is the amortization
of purchased software, which is the cost of products obtained through business
acquisitions. Excluding the operating results of our divested Parsons subsidiary
for fiscal 1997, total cost of goods sold decreased to 19% and 21% of revenue
for the three and six months ended January 31, 1998 respectively. This compares
to 22% and 23% for the same periods of the prior year. The improvement in cost
of goods sold resulted from customers buying more of our CD ROM products, which
cost less to manufacture and ship than disk-based products. We have also
improved the efficiency of our order-taking process in the financial supplies
business, which has reduced costly re-orders. While we will continue our efforts
to decrease cost of goods sold as a percentage of net revenue, we believe it is
unlikely that these costs will continue to decrease at current rates. There can
also be no assurance that margins will continue at their current rates. If there
are errors in current or future products, we could experience increases in cost
of goods sold and an adverse effect on operating results. Specifically, the
impact of the August 1997 tax law changes on our tax preparation products and
the release of our multi-user version of QuickBooks may increase the risk of
product errors for the remainder of fiscal 1998.
OPERATING EXPENSES
<TABLE>
<CAPTION>
Three Months Ended January 31, Six Months Ended January 31,
(Dollars in millions; unaudited) 1997 Change 1998 1997 Change 1998
------------------------------------ ------------------------------------
(Pro forma) (Pro forma)
<S> <C> <C> <C> <C> <C> <C>
Customer service
& technical support............... $ 38.7 (3)% $ 37.5 $ 64.7 1 % $ 65.4
% of revenue......................... 16% 16% 20% 20%
Selling & marketing.................. $ 43.5 8 % $ 47.0 $ 71.4 11 % $ 78.9
% of revenue......................... 18% 20% 22% 24%
Research & development............... $ 20.6 29 % $ 26.6 $ 41.7 27 % $ 52.8
% of revenue......................... 8% 11% 13% 16%
General and administrative........... $ 10.0 (3)% $ 9.7 $ 21.2 (14)% $ 18.2
% of revenue......................... 4% 4% 6% 5%
Charge for purchased R&D............. $ 0.0 0 % $ 0.0 $ 4.9 (100)% $ 0.0
% of revenue......................... 0% 0% 1% 0%
Amortization of goodwill
and purchased intangibles......... $ 5.0 (2)% $ 4.9 $ 13.9 (36)% $ 8.9
% of revenue........................ 2% 2% 4% 3%
</TABLE>
-16-
<PAGE> 17
Customer Service and Technical Support. Excluding the operating results of our
divested Parsons subsidiary for fiscal 1997, customer service and technical
support stayed flat at 16% and 20% of revenue for the three and six months ended
January 31, 1998 and 1997 respectively, compared to the same periods of the
prior year. In the current year, we have benefited from cost reductions due to
the restructuring and consolidation of our technical support facilities in the
United States and Europe in the fourth quarter of fiscal 1997. These savings
have been offset by an increase in expenses for supporting international product
launches in the current fiscal year. While we anticipate that service and
support expenses will stay relatively flat or decrease as a percentage of sales
because of the 1997 restructuring and other cost-saving initiatives, there is a
risk that these expenses could increase. For example, our new multi-user
QuickBooks product may result in higher customer service and technical support
expenses since customers are likely to need considerably more assistance with
this more complex product.
Selling and Marketing. Excluding the operating results of our divested Parsons
subsidiary for fiscal 1997, selling and marketing expenses increased to 20% and
24% of revenue for the three and six months ended January 31, 1998,
respectively. This compares to 18% and 22% for the same periods of the prior
year. In the current fiscal year, we incurred additional expenses for
international product launches compared to last year. We also experienced
increased spending in support of our TurboTax product launch.
Research and Development. Excluding the operating results of our divested
Parsons subsidiary for fiscal 1997, research and development expenses increased
to 11% and 16% of revenue for the three and six months ended January 31, 1998
respectively. This compares to 8% and 13% for the same periods of the prior
year. These increases reflect our continuing investment in Internet-related
initiatives, significant expenses related to the development of our QuickBooks
multi-user product and higher development costs for our Japanese small business
products. We are spending more to improve and expand our Internet-based products
and services to attract more customer traffic to Quicken.com. The development of
QuickBooks multi-user also contributed to increasing costs since it has been
more expensive to develop than our less complex single-user products. We believe
that research and development expenses related to Internet-based products and
services will continue to increase as a percentage of net revenue for the
remainder of the fiscal year. This could have an adverse effect on our operating
results, particularly if revenue from these products and services does not meet
expectations.
General and Administrative. Excluding the operating results of our divested
Parsons subsidiary for fiscal 1997, general and administrative expenses were 4%
and 5% of revenue for the three and six months ended January 31, 1998
respectively. This compares to 4% and 6% for the same periods of the prior year.
Charge for Purchased Research and Development. When acquiring a company, we
often have to record a one-time charge for purchased research and development.
This charge represents the value of products we acquire that aren't yet complete
enough to be considered technologically feasible. We recorded such a charge of
$4.9 million in the first quarter of fiscal 1997 when we acquired GALT
Technologies Inc. There were no such charges for the three and six months ended
January 31, 1998.
Other Acquisition Costs. Other acquisition costs include the amortization of
goodwill and purchased intangibles that are recorded as part of an acquisition.
Excluding the operating results of our Parsons subsidiary for fiscal 1997, these
costs decreased to $4.9 million in the second quarter of fiscal 1998 compared to
$5.0 million in the second quarter of fiscal 1997. For the six months ended
January 31, 1998, these costs were $8.9 million compared to $13.9 million for
the same period of the prior year. This decrease was due to the fact that a
majority of the intangibles related to the December 1993 Chipsoft acquisition
became fully amortized during fiscal 1997. For future periods, acquisition costs
will continue to have an impact on our results. If there are no additional
acquisitions, future amortization will reduce net income by approximately $13.0
million, $11.0 million, $5.3 million and $0.5 million for the years ending July
31, 1998 through 2001, respectively. If we complete additional acquisitions in
the future, additional amortization could result.
OTHER INCOME
For the three and six months ended January 31, 1998, interest and other income
and expense, net, remained essentially flat as a percentage of revenue compared
to the same periods of the prior year. The $4.3 million gain on
-17-
<PAGE> 18
disposal of business in the six months ended January 31, 1998 resulted from the
sale of Parsons, our direct marketing subsidiary, in August 1997.
INCOME TAXES
For the three and six months ended January 31, 1998, we recorded tax expense of
$26.0 and $19.5 million respectively, on pretax income of $67.9 and $48.6
million, respectively. As of January 31, 1998, we have reserved $4.2 million for
certain tax assets of our international subsidiaries. This was based on our
belief that we may not receive the tax benefit of certain loss carryforwards in
these foreign countries.
DISCONTINUED OPERATIONS
We sold our ISC subsidiary to Checkfree Corporation in the second quarter of
fiscal 1997. This resulted in a $71.2 million gain, net of tax.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1998, our cash, cash equivalents and short-term investments were
$248.7 million, a $43.6 million increase from July 31, 1997. Because of the
seasonality of our business, liquidity generally improves in our second and
third fiscal quarters. This is because cash receipts are generated from the sale
of our tax products and other product releases that typically occur during the
first two quarters of our fiscal year.
During the six months ended January 31, 1998, our operations provided $19.6
million in cash compared to $94.3 million for the six months ended January 31,
1997. This year was lower than last year because of substantial cash payments we
made for expenses related to the ISC and Parsons sales, as well as restructuring
charges. We also experienced a significant increase in accounts receivable
balances due to the seasonal nature of our business and the concentration of
product releases in our fiscal second quarter.
Investing activities provided $29.7 million in cash for the six months ended
January 31, 1998, compared to cash used of $37.9 million for the same period a
year ago. During the current year, we received $26.4 million in cash proceeds
from the sale of our Parsons subsidiary and $9.0 million from the sale of our
technical support site in New Mexico. In addition, we liquidated $17.4 million
net short-term investments. This was offset by purchases of property and
equipment of $23.5 million. Last year's use of cash was driven by $21.4 million
in net purchases of short-term investments.
The $9.5 million in cash provided from financing activities is primarily due to
proceeds from the exercise of employee stock options. This was offset in part by
repayment of the loan for our technical support site in New Mexico, which we
sold in November 1997.
In the normal course of business, we enter into leases for new or expanded
facilities in both domestic and international locations. During 1996, we began
the move of our headquarters from Menlo Park, California to larger facilities in
Mountain View, California. We expect the move to be complete by the end of
calendar year 2000. We borrowed $30.3 million from Japanese banks in March 1997
in connection with our acquisition of Nihon Micom. We have guaranteed the loan
and pledged approximately $32.5 million, or 110% of the loan balance, of
short-term investments to be restricted as security for the borrowings at
January 31, 1998. In February 1998, we entered into an agreement with America
Online (AOL) that obligates us to pay AOL a minimum of $30 million over the
three-year term of the agreement. Of this amount, $16 million was paid to AOL in
February 1998. We currently do not have any other significant capital
expenditure commitments, though we may require additional cash for strategic
projects in the future.
We believe that our cash, cash equivalents and short-term investments will be
sufficient to meet anticipated seasonal working capital and capital expenditure
requirements for at least the next twelve months.
-18-
<PAGE> 19
YEAR 2000
Intuit is in the process of evaluating its internal computer systems, as well as
the software products it sells, to determine whether modifications will be
required to prevent problems related to the Year 2000. Based on preliminary
assessments, we believe that costs required to achieve Year 2000 compliance
(including costs incurred to date) will not be material. However, actual costs
may increase depending on the outcome of our continuing evaluations.
-19-
<PAGE> 20
- --------------------------------------------------------------------------------
PART II: OTHER INFORMATION
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
At the Company's Annual Meeting of Stockholders on January 16, 1998, Intuit's
stockholders approved the following proposals:
1. Proposal to re-elect the Company's six incumbent directors:
<TABLE>
<CAPTION>
For Withheld
---------------------- ---------------------
<S> <C> <C>
Christopher W. Brody 43,092,870 436,219
William V. Campbell 43,095,420 433,669
Scott D. Cook 43,095,420 433,669
L. John Doerr 43,095,420 433,669
Michael R. Hallman 43,095,220 433,869
Burton J. McMurtry 43,095,420 433,669
</TABLE>
2. Proposal to amend the Company's 1993 Equity Incentive Plan to increase
the number of shares of common stock available for issuance thereunder
by 2,105,000 shares:
<TABLE>
<S> <C>
For 28,035,137
Against 15,400,786
Abstain 93,166
</TABLE>
3. Proposal to amend the Company's 1996 Employee Stock Purchase Plan to
increase the number of shares of common stock available for issuance
thereunder by 200,000 shares:
<TABLE>
<S> <C>
For 42,466,605
Against 989,607
Abstain 72,877
</TABLE>
4. Proposal to amend the Company's 1996 Directors Stock Option Plan to
increase the number of shares of common stock available for issuance
thereunder by 45,000 shares:
<TABLE>
<S> <C>
For 35,374,987
Against 8,041,885
Abstain 112,217
</TABLE>
5. Proposal to ratify the selection of Ernst & Young LLP as the Company's
independent auditors for fiscal 1998.
<TABLE>
<S> <C>
For 43,414,765
Against 54,851
Abstain 59,473
</TABLE>
-20-
<PAGE> 21
- --------------------------------------------------------------------------------
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(A) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REPORT:
10.01 Intuit Inc. 1993 Equity Incentive Plan, as amended through
January 16, 1998
10.02 Intuit Inc. 1996 Employee Stock Purchase Plan, as amended
through January 16, 1998
10.03 Intuit Inc. 1996 Directors Stock Option Plan, as amended through
January 16, 1998
11.01 Computation of Net Income Per Share
27.01 Financial Data Schedule (filed in electronic version only)
(B) REPORTS ON FORM 8-K:
The Company has not filed any reports on Form 8-K since the beginning
of the fiscal quarter ended January 31, 1998.
-21-
<PAGE> 22
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTUIT INC.
(REGISTRANT)
Date: March 13, 1998 By:______________________________________
Greg J. Santora
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
-22-
<PAGE> 23
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.01 1993 Equity Incentive Plan, as amended
through January 16, 1998
10.02 1996 Employee Stock Purchase Plan, as amended
through January 16, 1998
10.03 1996 Directors Stock Option Plan, as amended
through January 16, 1998
11.01 Computation of Net Income Per Share
27.01 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.01
INTUIT INC.
1993 EQUITY INCENTIVE PLAN
As Adopted February 1, 1993
and Amended and Restated through January 16, 1998
1. PURPOSE. The purpose of the Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock,
Stock Bonuses and Performance Awards. Capitalized terms not defined in the text
are defined in Section 24.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2
and 19, the total number of Shares reserved and available for grant and issuance
pursuant to Awards under the Plan shall be 13,105,000 Shares. Subject to
Sections 2.2 and 19, Shares shall again be available for grant and issuance in
connection with future Awards under the Plan that: (a) are subject to issuance
upon exercise of an Option but cease to be subject to such Option for any reason
other than exercise of such Option or (b) are subject to an Award that otherwise
terminates without Shares being issued and for which the participant did not
receive any benefits of ownership (other than voting rights).
2.2 Adjustment of Shares. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under the Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards shall be
proportionately adjusted, subject to any required action by the Board or the
shareholders of the Company and compliance with applicable securities laws;
provided, however, that fractions of a Share shall not be issued but shall
either be paid in cash at Fair Market Value or shall be rounded up to the
nearest Share, as determined by the Committee; and provided, further, that the
Exercise Price of any Option may not be decreased to below the par value of the
Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a
_______________
* Reflects 8/4/95 stock split
<PAGE> 2
Parent or Subsidiary of the Company. All other Awards may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent, Subsidiary or Affiliate of the Company;
provided such consultants, contractors and advisors render bona fide services
not in connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Award under the Plan. Each
person is eligible to receive up to an aggregate maximum of 2,000,000 Shares
over the term of the Plan.
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered
by the Committee. Subject to the general purposes, terms and conditions of the
Plan, the Committee shall have full power to implement and carry out the Plan.
The Committee shall have the authority to:
(a) construe and interpret the Plan, any Award Agreement
and any other agreement or document executed pursuant
to the Plan;
(b) prescribe, amend and rescind rules and regulations
relating to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination, or in tandem with, in replacement of, or
as alternatives to, other Awards under the Plan or any
other incentive or compensation plan of the Company or
any Parent, Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable
for the administration of the Plan.
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<PAGE> 3
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under the
Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under the Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two or more members
of the Board are Outside Directors, the Committee shall be comprised of at least
two members of the Board, all of whom are Outside Directors and Disinterested
Persons. The Company will take appropriate steps to comply with the
disinterested director requirements of Section 16(b) of the Exchange Act,
including but not limited to, the appointment by the Board of a Committee
consisting of not less than two persons (who are members of the Board), each of
whom is a Disinterested Person. It is the intent of the Company that the Plan
and Awards hereunder satisfy and be interpreted in a manner, that, in the case
of Participants who are or may be Insiders, satisfies the applicable
requirements of Rule 16b-3 (or its successor) of the Exchange Act. If any
provision of the Plan or of any Award would otherwise conflict with the intent
expressed in this Section 4.3, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict.
5. OPTIONS. The Committee may grant Options to eligible persons
and shall determine whether such Options shall be Incentive Stock Options within
the meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period during which the Option may be exercised, and all other terms and
conditions of the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under the
Plan shall be evidenced by an Award Agreement which shall expressly identify the
Option as an ISO or NQSO ("Stock Option Agreement"), and be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee shall from time to time approve, and which shall comply with and be
subject to the terms and conditions of the Plan.
5.2 Date of Grant. The date of grant of an Option shall
be the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of the Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 Exercise Period. Options shall be exercisable
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement; provided, however, that no Option shall be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Parent or Subsidiary of the
Company ("Ten Percent Shareholder") shall be exercisable after the expiration of
five (5) years from the date the Option
3
<PAGE> 4
is granted. The Committee also may provide for the exercise of Options to become
exercisable at one time or from time to time, periodically or otherwise, in such
number or percentage as the Committee determines.
5.4 Exercise Price. The Exercise Price shall be
determined by the Committee when the Option is granted and may be at less than
Fair Market Value (but not less than the par value of the Shares) if permitted
by the Exchange Act; provided, that (i) the Exercise Price of an ISO shall be
not less than 100% of the Fair Market Value of the Shares on the date of grant
and (ii) the Exercise Price of any ISO granted to a Ten Percent Shareholder
shall not be less than 110% of the Fair Market Value of the Shares on the date
of grant. Payment for the Shares purchased may be made in accordance with
Section 8 of the Plan.
5.5 Method of Exercise. Options may be exercised only
by delivery to the Company of a written exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to information
and other matters, if any, as may be required or desirable by the Company to
comply with applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except
death or Disability, then Participant may exercise such
Participant's Options only to the extent that such
Options would have been exercisable upon the
Termination Date no later than three (3) months after
the Termination Date (or such longer time period not
exceeding five years as may be determined by the
Committee), but in any event, no later than the
expiration date of the Options.
(b) If the Participant is terminated because of death or
Disability (or the Participant dies within three months
of such termination), then Participant's Options may be
exercised only to the extent that such Options would
have been exercisable by Participant on the Termination
Date and must be exercised by Participant (or
Participant's legal representative or authorized
assignee) no later than (i) twelve (12) months after
the Termination Date in the case of disability or (ii)
eighteen (18) months after the Termination Date in the
case of death (or such longer time period not exceeding
five years as may be determined by the Committee), but
in any event no later than the expiration date of the
Options.
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<PAGE> 5
5.7 Limitations on Exercise. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise of
an Option; provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
(under the Plan or under any other incentive stock option plan of the Company or
any Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000.
If the Fair Market Value of Shares on the date of grant with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year exceeds $100,000, the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year shall be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year shall
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of the Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such
different limit shall be automatically incorporated herein and shall apply to
any Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor; provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of the Plan for Options
granted on the date the action is taken to reduce the Exercise Price; and
provided, further, that the Exercise Price shall not be reduced below the par
value of the Shares, if any.
5.10 No Disqualification. Notwithstanding any other
provision in the Plan, no term of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee shall determine to whom an offer will be made, the number of
Shares the person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares shall be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:
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<PAGE> 6
6.1 Restricted Stock Awards. All purchases under a
Restricted Stock Award made pursuant to the Plan shall be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that shall be in such form
(which need not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. The offer of Restricted Stock shall be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer shall terminate, unless otherwise determined by the Committee.
6.2 Purchase Price. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award shall be determined by the Committee and
may be at less than Fair Market Value (but not less than the par value of the
Shares) on the date the Restricted Stock Award is granted. Payment of the
Purchase Price may be made in accordance with Section 9 of the Plan.
6.3 Terms of Restricted Stock Awards. Restricted Stock
Awards shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Award Agreement (the "Restricted
Stock Award Agreement") that shall be in such form (which need not be the same
for each Participant) as the Committee shall from time to time approve, and
shall comply with and be subject to the terms and conditions of the Plan.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
having different performance goals and other criteria; provided, however that
the maximum Restricted Stock Award for each Participant with respect to any
Performance Period shall be thirty percent (30%) of the Shares reserved for
issuance under this Plan.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award
of Shares for services rendered to the Company or any Parent, Subsidiary or
Affiliate of the Company. No payment for the Shares shall be required. A Stock
Bonus may be awarded for past services already rendered to the Company, or any
Parent, Subsidiary or Affiliate of the Company pursuant to an Award Agreement
(the "Stock Bonus Agreement") that shall be in such form (which need not be the
same for each Participant) as the Committee shall from time to time approve, and
shall
6
<PAGE> 7
comply with and be subject to the terms and conditions of the Plan. No payment
for the Shares shall be required.
7.2 Terms of Stock Bonuses. Stock Bonus Awards shall be
subject to such restrictions as the Committee shall impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Award Agreement (the "Stock Bonus Agreement") that
shall be in such form (which need not be the same for each Participant) as the
Committee shall from time to time approve, and shall comply with and be subject
to the terms and conditions of the Plan. Stock Bonuses may vary from Participant
to Participant and between groups of Participants. Prior to the grant of a Stock
Bonus, the Committee shall: (a) determine the nature, length and starting date
of any Performance Period for the Stock Bonus; (b) select from among the
Performance Factors to be used to measure performance goals; and (c) determine
the number of Shares that may be awarded to the Participant. Prior to the
payment of any Stock Bonus, the Committee shall determine the extent to which
such Stock Bonus has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and having different performance
goals and other criteria; provided, however that the maximum Stock Bonus for
each Participant with respect to any Performance Period shall be be thirty
percent (30%) of the Shares reserved for issuance under this Plan.
7.3 Form of Payment. A Stock Bonus may be paid in the
form of cash, whole Shares, or a combination thereof, based on the Fair Market
Value on the date of payment, either in a lump sum payment or in installments,
all as the Committee shall determine, and to the extent applicable, shall be
subject to such conditions or restrictions as may be required to qualify for the
maximum exemption from Section 16 of the Exchange Act.
7.4 Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant shall be entitled to payment (whether in Shares, cash or otherwise)
with respect to the Stock Bonuses only to the extent earned as of the date of
Termination in accordance with the Stock Bonus Award Agreement, unless the
Committee shall determine otherwise.
8. PERFORMANCE AWARDS
8.1 Performance Awards. A Performance Award shall
consist of the grant to the Participant of a specified number of Performance
Units (the "Performance Unit"). The grant of a Performance Unit to a Participant
will entitle the Participant to receive a specified dollar value, variable under
conditions specified in the Performance Award, if the performance goals
specified in the Performance Award are achieved and the other terms and
conditions of the Performance Award are satisfied.
8.2 Terms of Performance Awards. Performance Awards shall be
evidenced by an Award Agreement (the "Performance Award Agreement") that shall
be in such form
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<PAGE> 8
(which need not be the same for each Participant) as the Committee shall from
time to time approve, and shall comply with and be subject to the terms and
conditions of the Plan. Performance Awards shall be subject to such conditions
as the Committee may impose. Prior to the grant of a Performance Award, the
Committee shall: (a) specify the number of Performance Units granted to the
Participant; (b) specify the threshold and maximum dollar values of Performance
Units and the corresponding performance goals; (c) determine the nature, length
and starting date of any Performance Period for the Performance Award; and (d)
select from among the Performance Factors to be used to measure performance
goals. Prior to the payment of any Performance Award, the Committee shall
determine the extent to which such Performance Units have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Performance Awards that are subject to different Performance
Periods and having different performance goals and other criteria; provided,
however, that the maximum amount of any Performance Award for each Participant
with respect to any Performance Period shall be the lesser of two hundred and
fifty percent (250%) of the Participant's base salary at the time of the
Performance Award or one million dollars.
8.3 Form of Payment. Performance Awards may be paid currently
or on a deferred basis with such reasonable interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash,
whole Shares, or a combination thereof, based on the Fair Market Value on the
date of payment, either in a lump sum payment or in installments, all as the
Committee shall determine.
8.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
shall be entitled to payment with respect to the Performance Awards only to the
extent earned as of the date of Termination in accordance with the Performance
Award Agreement, unless the Committee shall determine otherwise.
9. PAYMENT FOR SHARE PURCHASES.
9.1 Payment. Payment for Shares purchased pursuant to
the Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of Shares that either: (1) have been owned
by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use
of a promissory note, such note has been fully paid
with respect to such Shares); or (2) were obtained by
Participant in the public market;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of the
Code; provided,
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<PAGE> 9
however, that Participants who are not employees of the
Company shall not be entitled to purchase Shares with a
promissory note unless the note is adequately secured
by collateral other than the Shares; provided, further,
that the portion of the Purchase Price equal to the par
value of the Shares, if any, must be paid in cash.
(d) by waiver of compensation due or accrued to Participant
for services rendered;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from
Participant and a broker-dealer that is a
member of the National Association of
Securities Dealers (an "NASD Dealer") whereby
the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares
so purchased in order to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from Participant
and an NASD Dealer whereby Participant
irrevocably elects to exercise the Option and
to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such
Shares to forward the exercise price directly
to the Company;
or
(g) by any combination of the foregoing.
9.2 Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under the Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
10. WITHHOLDING TAXES.
10.1 Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under the Plan, the Company may require
the Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever,
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<PAGE> 10
under the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements.
10.2 Stock Withholding. When, under applicable tax
laws, a Participant incurs tax liability in connection with the exercise or
vesting of any Award that is subject to tax withholding and the Participant is
obligated to pay the Company the amount required to be withheld, the Committee
may allow the Participant to satisfy the minimum withholding tax obligation by
electing to have the Company withhold from the Shares to be issued that number
of Shares having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). All elections by a Participant to have Shares
withheld for this purpose shall be made in writing in a form acceptable to the
Committee and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, then except as provided below, the election
shall be irrevocable as to the particular Shares as to
which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Committee;
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the
election may not be made within six (6) months of the
date of grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the Exchange Act,
and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election
may be revoked at any time at least six (6) months
prior to the Tax Date) or (B) the exercise of the
Option or election to use stock withholding must be
made in the ten (10) day period beginning on the third
day following the release of the Company's quarterly or
annual summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six
(6) months after the delivery of Shares under Section
83(b) of the Code, the Participant shall receive the
full number of Shares with respect to which the
exercise occurs, but such Participant shall be
unconditionally obligated to tender back to the Company
the proper number of Shares on the Tax Date.
11. PRIVILEGES OF STOCK OWNERSHIP.
11.1 Voting and Dividends. No Participant shall have
any of the rights of a shareholder with respect to any Shares until the Shares
are issued to the Participant. After Shares are issued to the Participant, the
Participant shall be a shareholder and have all the rights of a shareholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are
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<PAGE> 11
Restricted Stock, then any new, additional or different securities the
Participant may become entitled to receive with respect to such Shares by virtue
of a stock dividend, stock split or any other change in the corporate or capital
structure of the Company shall be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant shall have no right to
retain such dividends or distributions with respect to Shares that are
repurchased at the Participant's original Purchase Price pursuant to Section 13.
11.2 Financial Statements. The Company shall provide
financial statements to each Participant prior to such Participant's purchase of
Shares under the Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company shall not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
12. TRANSFERABILITY. Awards granted under the Plan, and any
interest therein, shall not be transferable or assignable by Participant, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution or as consistent with
the specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award shall be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
13. RESTRICTIONS ON SHARES. At the discretion of the Committee,
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
a right to repurchase a portion of or all Shares held by a Participant following
such Participant's Termination at any time within ninety (90) days after the
later of Participant's Termination Date and the date Participant purchases
Shares under the Plan, for cash or cancellation of purchase money indebtedness
with respect to Shares that are not "Vested" (as defined in the Award
Agreement), at the Participant's original Purchase Price; provided, that the
right to repurchase at the original Purchase Price lapses at the rate of at
least 20% per year over 5 years from the date the Shares were purchased, and if
the right to repurchase is assignable, the assignee must pay the Company, upon
assignment of the right to repurchase, cash equal to the excess of the Fair
Market Value of the Shares over the original Purchase Price.
14. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed.
15. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any
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<PAGE> 12
Participant who is permitted to execute a promissory note as partial or full
consideration for the purchase of Shares under the Plan shall be required to
pledge and deposit with the Company all or part of the Shares so purchased as
collateral to secure the payment of Participant's obligation to the Company
under the promissory note; provided, however, that the Committee may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company shall have full recourse against the
Participant under the promissory note notwithstanding any pledge of the
Participant's Shares or other collateral. In connection with any pledge of the
Shares, Participant shall be required to execute and deliver a written pledge
agreement in such form as the Committee shall from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
prorata basis as the promissory note is paid.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
shall not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in the Plan, the Company shall have no
obligation to issue or deliver certificates for Shares under the Plan prior to
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) completion of any registration
or other qualification of such shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company shall be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company shall have no liability for any inability or failure to
do so.
17. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Participant's employment or other relationship at any
time, with or without cause.
18. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Option previously granted with payment in cash, Shares or
other consideration, based on such terms and conditions as the Committee and the
Participant shall agree.
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<PAGE> 13
19. CORPORATE TRANSACTIONS.
19.1 Assumption or Replacement of Awards by Successor.
In the event of (a) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company and the Awards granted under the Plan are assumed or replaced by the
successor corporation, which assumption shall be binding on all Participants),
(b) a dissolution or liquidation of the Company, (c) the sale of substantially
all of the assets of the Company, or (d) any other transaction which qualifies
as a "corporate transaction" under Section 424(a) of the Code wherein the
shareholders of the Company give up all of their equity interest in the Company
(except for the acquisition, sale or transfer of all or substantially all of the
outstanding shares of the Company), any or all outstanding Awards may be assumed
or replaced by the successor corporation, which assumption or replacement shall
be binding on all Participants. In the alternative, the successor corporation
may substitute equivalent Awards or provide substantially similar consideration
to Participants as was provided to shareholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant. In the event such successor
corporation, if any, refuses to assume or substitute the Options, as provided
above, pursuant to a transaction described in this Subsection 19.1, such Options
shall expire on such transaction at such time and on such conditions as the
Board shall determine.
19.2 Other Treatment of Awards. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
19, in the event of the occurrence of any transaction described in Section 19.1,
any outstanding Awards shall be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, sale of assets or
other "corporate transaction."
19.3 Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.
13
<PAGE> 14
20. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall become
effective on the date that it is adopted by the Board (the "Effective Date").
The Plan shall be approved by the shareholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
months before or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to the Plan; provided, however, that: (a) no Option
may be exercised prior to initial shareholder approval of the Plan; (b) no
Option granted pursuant to an increase in the number of Shares approved by the
Board shall be exercised prior to the time such increase has been approved by
the shareholders of the Company; and (c) in the event that shareholder approval
is not obtained within the time period provided herein, all Awards granted
hereunder shall be canceled, any Shares issued pursuant to any Award shall be
canceled and any purchase of Shares hereunder shall be rescinded. After the
Company becomes subject to Section 16(b) of the Exchange Act, the Company will
comply with the requirements of Rule 16b-3 (or its successor), as amended, with
respect to shareholder approval.
21. TERM OF PLAN. The Plan will terminate ten (10) years from
the Effective Date or, if earlier, the date of shareholder approval.
22. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to the Plan; provided, however, that the Board shall not, without the approval
of the shareholders of the Company, amend the Plan in any manner that requires
such shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or pursuant to the Exchange Act
or Rule 16b-3 (or its successor), as amended, thereunder; provided, further,
that no amendment may be made to outstanding Awards without the consent of the
Participant.
23. NONEXCLUSIVITY OF THE PLAN; UNFUNDED PLAN. Neither the
adoption of the Plan by the Board, the submission of the Plan to the
shareholders of the Company for approval, nor any provision of the Plan shall be
construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options and bonuses otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases. The Plan shall be unfunded. Neither the
Company nor the Board shall be required to segregate any assets that may at any
time be represented by Awards made pursuant to the Plan. Neither the Company,
the Committee, nor the Board shall be deemed to be a trustee of any amounts to
be paid under the Plan.
24. DEFINITIONS. As used in the Plan, the following terms shall
have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the
14
<PAGE> 15
management and policies of the corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Award" means any award under the Plan, including any
Option, Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the Board
to administer the Plan, or if no committee is appointed, the Board.
"Company" means Intuit, a corporation organized under
the laws of the State of Delaware, or any successor corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"Disinterested Person" means a director who has not,
during the period that person is a member of the Committee and for one year
prior to service as a member of the Committee, been granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rules as promulgated by the SEC under Section 16(b) of
the Exchange Act, as such Rules are amended from time to time and as interpreted
by the SEC.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of
a share of the Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the NASDAQ
National Market System, its last reported sale price on
the NASDAQ National Market System or, if no such
reported sale takes place on such date, the average of
the closing bid and asked prices;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, the last
reported sale price or, if no such reported sale
15
<PAGE> 16
takes place on such date, the average of the closing
bid and asked prices on the principal national
securities exchange on which the Common Stock is listed
or admitted to trading;
(c) if such Common Stock is publicly traded but is not
quoted on the NASDAQ National Market System nor listed
or admitted to trading on a national securities
exchange, the average of the closing bid and asked
prices on such date, as reported by The Wall Street
Journal, for the over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in good faith.
"Insider" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock are subject
to Section 15 of the Exchange Act.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
"Outside Director" means any outside director as
defined in Section 162(m) of the Code and the regulations issued thereunder.
"Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under the Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award
under the Plan.
"Performance Award" means an award of Shares, or cash
in lieu of Shares, pursuant to Section 8.
"Performance Factors" means the factors selected by the
Committee from among the following measures to determine whether the performance
goals established by the Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or
earnings before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
16
<PAGE> 17
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total shareholder return and/or total shareholder
return growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
"Performance Period" means the period of service
determined by the Committee, not to exceed five years, during which years of
service or performance is to be measured for Restricted Stock Awards, Stock
Bonuses or Performance Awards.
"Plan" means this Intuit 1993 Equity Incentive Plan, as
amended from time-to-time.
"Restricted Stock Award" means an award of Shares
pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock
$0.01 par value, reserved for issuance under the Plan, as adjusted pursuant to
Sections 2 and 17, and any successor security.
"Stock Bonus" means an award of Shares, or cash in lieu
of Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"Termination" or "Terminated" means, for purposes of
the Plan with respect to a Participant, that the Participant has ceased to
provide services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate
17
<PAGE> 18
of the Company, except in the case of sick leave, military leave, or any other
leave of absence approved by the Committee; provided, that such leave is for a
period of not more than ninety (90) days, or reinstatement upon the expiration
of such leave is guaranteed by contract or statute. The Committee shall have
sole discretion to determine whether a Participant has ceased to provide
services and the effective date on which the Participant ceased to provide
services (the "Termination Date").
18
<PAGE> 1
EXHIBIT 10.02
INTUIT INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
As Adopted on October 7, 1996
As Amended Through January 16, 1998
1. ESTABLISHMENT OF PLAN. Intuit Inc., a Delaware corporation (the
"Company"), proposes to grant options for purchase of the Company's Common
Stock, $0.01 par value, to eligible employees of the Company and its
Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase
Plan (this "Plan"). For purposes of this Plan, "Parent Corporation" and
"Subsidiary" (collectively, "Subsidiaries") shall have the same meanings as
"parent corporation" and "subsidiary corporation" in Sections 424(e) and 424(f),
respectively, of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company intends this Plan to qualify as an "employee stock purchase plan" under
Section 423 of the Code (including any amendments to or replacements of such
Section), and this Plan shall be so construed. Any term not expressly defined
in this Plan but defined for purposes of Section 423 of the Code shall have the
same definition herein. A total of 500,000 shares of the Company's Common Stock
is reserved for issuance under this Plan. Such number shall be subject to
adjustments effected in accordance with Section 14 of this Plan.
2. PURPOSE. The purpose of this Plan is to provide employees of the
Company, or of any Subsidiary designated by the Board of Directors of the
Company (the "Board") as eligible to participate in this Plan, with a convenient
means of acquiring an equity interest in the Company through payroll deductions,
to enhance such employees' sense of participation in the affairs of the Company
and Subsidiaries, and to provide an incentive for continued employment.
3. ADMINISTRATION. This Plan shall be administered by a committee
appointed by the Board (the "Committee"). If two or more members of the Board
are "Outside Directors" within the meaning of Code Section 162(m), the Committee
will be comprised of at least two (2) members of the Board, all of whom are
Outside Directors. As used in this Plan, references to the "Committee" shall
mean either such committee or the Board if no committee has been established.
Subject to the provisions of this Plan and the limitations of Section 423 of the
Code or any successor provision in the Code, all questions of interpretation or
application of this Plan shall be determined by the Committee and its decisions
shall be final and binding upon all participants. Members of the Committee shall
receive no compensation for their services in connection with the administration
of this Plan, other than standard fees as established from time to time by the
Committee for services rendered by Committee members serving on Board
committees. All expenses incurred in connection with the administration of this
Plan shall be paid by the Company.
4. ELIGIBILITY. Any employee of the Company, or of any Subsidiary
designated by the Board as eligible to participate in this Plan, is eligible to
participate in an Offering Period (as hereinafter defined) under this Plan
except the following:
(a) employees who are not employed by the Company or Subsidiaries
fifteen (15) days before the beginning of such Offering Period;
(b) employees who are customarily employed for less than twenty (20)
hours per week;
(c) employees who are customarily employed for less than five (5)
months in a calendar year;
(d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Subsidiaries or who, as a result of being granted an option under this Plan
with respect to such Offering Period, would own stock or hold options to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or any of its
Subsidiaries.
An individual who provides services to the Company, or any designated
Subsidiary, as an independent contractor shall not be considered an "employee"
for purposes of this Section 4 or this Plan, and shall not be eligible to
participate in the Plan, except during such periods as the Company or the
designated Subsidiary, as applicable, is required to withhold U.S. federal
employment taxes for the individual. This exclusion from participation shall
apply even if the individual is reclassified as an employee, rather than an
independent contractor, for any purpose other than U.S. federal employment tax
withholding.
<PAGE> 2
Intuit Inc.
1996 Employee Stock Purchase Plan
5. OFFERING DATES. The offering periods of this Plan (each, an
"Offering Period") shall be of six (6) months duration commencing on December 16
and June 16 of each year and ending on June 15 and December 15 of each year;
provided, however, that the first Offering Period shall commence on January 1,
1997 and end on June 30, 1997, and the Second Offering Period shall commence on
July 1, 1997 and end on December 15, 1997. The first business day of each
Offering Period is referred to as the "Offering Date". The last business day of
each Offering Period is referred to as the "Purchase Date". The Board shall have
the power to change the duration of Offering Periods with respect to future
offerings without stockholder approval if such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering Period
to be affected.
6. PARTICIPATION IN THIS PLAN. Eligible employees may become
participants in an Offering Period under this Plan on the first Offering Date
after satisfying the eligibility requirements by delivering a subscription
agreement to the Company not later than fifteen (15) days before such Offering
Date unless a later time for filing the subscription agreement authorizing
payroll deductions is set by the Committee for all eligible employees with
respect to a given Offering Period. An eligible employee who does not deliver a
subscription agreement to the Company by such date after becoming eligible to
participate in such Offering Period shall not participate in that Offering
Period or any subsequent Offering Period unless such employee enrolls in this
Plan by filing a subscription agreement with the Company not later than fifteen
(15) days preceding a subsequent Offering Date. Once an employee becomes a
participant in an Offering Period, such employee will automatically participate
in the Offering Period commencing immediately following the last day of the
prior Offering Period unless the employee withdraws or is deemed to withdraw
from this Plan or terminates further participation in the Offering Period as set
forth in Section 11 below. Such participant is not required to file any
additional subscription agreement in order to continue participation in this
Plan.
7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of shares of Common Stock of the Company
determined by dividing (a) the amount accumulated in such employee's payroll
deduction account during such Offering Period by (b) the lower of (i)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Offering Date (but in no event less than the par value of a
share of the Company's Common Stock), or (ii) eighty-five percent (85%) of the
fair market value of a share of the Company's Common Stock on the Purchase Date
(but in no event less than the par value of a share of the Company's Common
Stock); provided, however, that the number of shares of the Company's Common
Stock subject to any option granted pursuant to this Plan shall not exceed the
maximum number of shares which may be purchased pursuant to Section 10(b) or
10(c) below with respect to the applicable Offering Period. The fair market
value of a share of the Company's Common Stock shall be determined as provided
in Section 8 hereof.
8. PURCHASE PRICE. The purchase price per share at which a share of
Common Stock will be sold in any Offering Period shall be eighty-five percent
(85%) of the lesser of:
(a) The fair market value on the Offering Date; or
(b) The fair market value on the Purchase Date;
provided, however, that in no event may the purchase price per share of the
Company's Common Stock be below the par value per share of the Company's Common
Stock.
For purposes of this Plan, the term "Fair Market Value" means as
of any date, the value of a share of the Company's Common Stock determined as
follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its last reported sale price on the
Nasdaq National Market or, if no such reported sale
takes place on such date, the average of the closing
bid and asked prices;
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<PAGE> 3
Intuit Inc.
1996 Employee Stock Purchase Plan
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its last
reported sale price or, if no such reported sale takes
place on such date, the average of the closing bid and
asked prices on the principal national securities
exchange on which the Common Stock is listed or
admitted to trading;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market or listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on such
date, as reported in The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board in
good faith.
9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE
OF SHARES.
(a) The purchase price of the shares is accumulated by regular
payroll deductions made during each Offering Period. The deductions are made as
a percentage of the participant's compensation in one percent (1%) increments
not less than two percent (2%), nor greater than ten percent (10%) or such lower
limit set by the Committee. Compensation shall mean base salary. Payroll
deductions shall commence on the first payday following the Offering Date and
shall continue to the end of the Offering Period unless sooner altered or
terminated as provided in this Plan.
(b) A participant may lower (but not increase) the rate of payroll
deductions during an Offering Period by filing with the Company a new
authorization for payroll deductions, in which case the new rate shall become
effective for the next payroll period commencing more than fifteen (15) days
after the Company's receipt of the authorization and shall continue for the
remainder of the Offering Period unless changed as described below. Such change
in the rate of payroll deductions may be made at any time during an Offering
Period, but not more than one (1) change may be made effective during any
Offering Period. A participant may increase or decrease the rate of payroll
deductions for any subsequent Offering Period by filing with the Company a new
authorization for payroll deductions not later than fifteen (15) days before the
beginning of such Offering Period.
(c) All payroll deductions made for a participant are credited to
his or her account under this Plan and are deposited with the general funds of
the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.
(d) On each Purchase Date, so long as this Plan remains in effect
and provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of this Plan. Any cash remaining in a participant's account after such purchase
of shares shall be carried forward, without interest, into the next Offering
Period; provided, however, that in the event that this Plan has been
oversubscribed, all funds not used to purchase shares on the Purchase Date shall
be returned to the participant, without interest. No Common Stock shall be
purchased on a Purchase Date on behalf of any employee whose participation in
this Plan has terminated prior to such Purchase Date.
(e) As promptly as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.
(f) During a participant's lifetime, such participant's option to
purchase shares hereunder is exercisable only by him or her. The participant
will have no interest or voting right in shares covered by his or her option
until
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<PAGE> 4
Intuit Inc.
1996 Employee Stock Purchase Plan
such option has been exercised. Shares issued for the benefit of a
participant under this Plan will be issued in the name of the participant or in
the name of the participant and his or her spouse.
10. LIMITATIONS ON SHARES TO BE PURCHASED.
(a) No participant shall be entitled to purchase stock under this
Plan at a rate which, when aggregated with his or her rights to purchase stock
under all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan.
(b) No more than two hundred percent (200%) of the number of
shares determined by using eighty-five percent (85%) of the fair market value of
a share of the Company's Common Stock on the Offering Date as the denominator
may be purchased by a participant on any single Purchase Date.
(c) No participant shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any single Purchase Date. Not less
than thirty (30) days prior to the commencement of any Offering Period, the
Committee may, in its sole discretion, set a maximum number of shares which may
be purchased by any employee at any single Purchase Date (hereinafter the
"Maximum Share Amount"). In no event shall the Maximum Share Amount exceed the
amounts permitted under Section 10(b) above. If a new Maximum Share Amount is
set, then all participants must be notified of such Maximum Share Amount not
less than fifteen (15) days prior to the commencement of the next Offering
Period. Once the Maximum Share Amount is set, it shall continue to apply with
respect to all succeeding Offering Periods unless revised by the Committee as
set forth above.
(d) If the number of shares to be purchased on a Purchase Date by
all employees participating in this Plan exceeds the number of shares then
available for issuance under this Plan, then the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected
thereby.
(e) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end of the
applicable Offering Period, without interest.
11. WITHDRAWAL.
(a) Each participant may withdraw from an Offering Period under
this Plan by signing and delivering to the Company a written notice to that
effect on a form provided for such purpose. Such withdrawal may be elected at
any time at least fifteen (15) days prior to the end of an Offering Period.
(b) Upon withdrawal from this Plan, the accumulated payroll
deductions shall be returned to the withdrawn participant, without interest, and
his or her interest in this Plan shall terminate. In the event a participant
voluntarily elects to withdraw from this Plan, he or she may not resume his or
her participation in this Plan during the same Offering Period, but he or she
may participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth above for initial participation in
this Plan.
12. TERMINATION OF EMPLOYMENT. Termination of a participant's
employment for any reason, including retirement, death or the failure of a
participant to remain an eligible employee, immediately terminates his or her
participation in this Plan. In such event, the payroll deductions credited to
the participant's account will be returned to him or her or, in the case of his
or her death, to his or her legal representative, without interest. For purposes
of this Section 12, an employee will not be deemed to have terminated employment
or failed to remain in the continuous employ of the Company in the case of sick
leave, military leave, or any other leave of absence approved
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<PAGE> 5
Intuit Inc.
1996 Employee Stock Purchase Plan
by the Committee; provided that such leave is for a period of not more than
ninety (90) days or reemployment upon the expiration of such leave is guaranteed
by contract or statute.
13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest
in this Plan is terminated by withdrawal, termination of employment or
otherwise, or in the event this Plan is terminated by the Board, the Company
shall promptly deliver to the participant all payroll deductions credited to
such participant's account. No interest shall accrue on the payroll deductions
of a participant in this Plan.
14. CAPITAL CHANGES. Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock covered by each option
under this Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under this Plan but have
not yet been placed under option (collectively, the "Reserves"), as well as the
price per share of Common Stock covered by each option under this Plan which has
not yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock of the
Company resulting from a stock split or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without receipt of any
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration"; and provided further, that the price per
share of Common Stock shall not be reduced below its par value per share. Such
adjustment shall be made by the Board, whose determination shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that the options
under this Plan shall terminate as of a date fixed by the Board and give each
participant the right to exercise his or her option as to all of the optioned
stock, including shares which would not otherwise be exercisable. In the event
of a proposed sale of all or substantially all of the assets of the Company, or
the merger or consolidation of the Company with or into another corporation,
each option under this Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the participant
shall have the right to exercise the option as to all of the optioned stock. If
the Board makes an option exercisable in lieu of assumption or substitution in
the event of a merger, consolidation or sale of assets, the Board shall notify
the participant that the option shall be fully exercisable for a period of
twenty (20) days from the date of such notice, and the option will terminate
upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation; provided, that the price per share of Common Stock shall not
be reduced below its par value per share.
15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and
without effect.
16. REPORTS. Individual accounts will be maintained for each
participant in this Plan. Each participant shall receive promptly after the end
of each Offering Period a report of his or her account setting forth the total
payroll deductions accumulated, the number of shares purchased, the per share
price thereof and the remaining cash balance, if any, carried forward to the
next Offering Period.
-5-
<PAGE> 6
Intuit Inc.
1996 Employee Stock Purchase Plan
17. NOTICE OF DISPOSITION. Each participant shall notify the Company if
the participant disposes of any of the shares purchased in any Offering Period
pursuant to this Plan if such disposition occurs within two (2) years from the
Offering Date or within one (1) year from the Purchase Date on which such shares
were purchased (the "Notice Period"). Unless such participant is disposing of
any of such shares during the Notice Period, such participant shall keep the
certificates issued to him or her that represent shares purchased hereunder in
his or her name (and not in the name of a nominee) during the Notice Period. The
Company may, at any time during the Notice Period, place a legend or legends on
any certificate representing shares acquired pursuant to this Plan requesting
the Company's transfer agent to notify the Company of any transfer of the
shares. The obligation of the participant to provide such notice shall continue
notwithstanding the placement of any such legend on the certificates.
18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant
of any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Subsidiary, or restrict the right of the Company or
any Subsidiary to terminate such employee's employment.
19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have
equal rights and privileges with respect to this Plan so that this Plan
qualifies as an "employee stock purchase plan" within the meaning of Section 423
or any successor provision of the Code and the related regulations. Any
provision of this Plan which is inconsistent with Section 423 or any successor
provision of the Code shall, without further act or amendment by the Company or
the Board, be reformed to comply with the requirements of Section 423. This
Section 19 shall take precedence over all other provisions in this Plan.
20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with this Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. TERM; STOCKHOLDER APPROVAL. This Plan shall become effective on the
date that it is adopted by the Board. This Plan shall be approved by the
stockholders of the Company, in any manner permitted by applicable corporate
law, within twelve (12) months before or after the date this Plan is adopted by
the Board. No purchase of shares pursuant to this Plan shall occur prior to such
stockholder approval. This Plan shall continue until the earlier to occur of (a)
termination of this Plan by the Board (which termination may be effected by the
Board at any time), (b) issuance of all of the shares of Common Stock reserved
for issuance under this Plan, or (c) ten (10) years from the adoption of this
Plan by the Board.
22. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under this Plan in the event of such participant's death
subsequent to the end of an Offering Period but prior to delivery to him of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under this
Plan in the event of such participant's death prior to a Purchase Date.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under this
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities
-6-
<PAGE> 7
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange or automated quotation system upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
24. APPLICABLE LAW. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of California.
25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time
amend, terminate or extend the term of this Plan, except that any such
termination cannot affect options previously granted under this Plan, nor may
any amendment make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the stockholders of the Company obtained in accordance with
Section 21 hereof within twelve (12) months of the adoption of such amendment
(or earlier if required by Section 21) if such amendment would:
(a) increase the number of shares that may be issued under this
Plan;
(b) change the designation of the employees (or class of
employees) eligible for participation in this Plan; or
(c) constitute an amendment for which stockholder approval is
required by any stock exchange or automated quotation system upon which the
shares may then be listed.
-7-
<PAGE> 1
EXHIBIT 10.03
INTUIT INC.
1996 DIRECTORS STOCK OPTION PLAN
As Adopted October 7, 1996
As Amended through January 16, 1998
1. PURPOSE. This 1996 Directors Stock Option Plan (this "Plan") is
established to provide equity incentives for non-employee members of the Board
of Directors of Intuit Inc. (the "Company"), who are described in Section 6.1
below, by granting such persons options to purchase shares of stock of the
Company.
2. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date (the "Effective Date") on which it is adopted by the Board of
Directors of the Company (the "Board"). This Plan shall be approved by the
stockholders of the Company, consistent with applicable laws, within twelve (12)
months after the date this Plan is adopted by the Board. Options ("Options") may
be granted under this Plan after the Effective Date provided that, in the event
that stockholder approval is not obtained within the time period provided
herein, this Plan, and all Options granted hereunder, shall terminate. No Option
that is issued as a result of any increase in the number of shares authorized to
be issued under this Plan shall be exercised prior to the time such increase has
been approved by the stockholders of the Company and all such Options granted
pursuant to such increase shall similarly terminate if such stockholder approval
is not obtained.
3. TYPES OF OPTIONS AND SHARES. Options granted under this Plan shall
be non-qualified stock options ("NQSOs"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "Shares") are
shares of the Common Stock of the Company.
4. NUMBER OF SHARES. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "Maximum Number") is 165,000
Shares, subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the term
of this Plan, the Company shall reserve and keep available such number of Shares
as shall be required to satisfy the requirements of outstanding Options granted
under this Plan; provided, however, that if the aggregate number of Shares
subject to outstanding Options granted under this Plan plus the aggregate number
of Shares previously issued by the Company pursuant to the exercise of Options
granted under this Plan equals or exceeds the Maximum Number, then
notwithstanding anything herein to the contrary, no further Options may be
granted under this Plan until the Maximum Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.
5. ADMINISTRATION. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "Committee"). As used in this Plan, references to the Committee shall
mean either such Committee or the Board if no Committee has been established.
The interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option.
6. ELIGIBILITY AND AWARD FORMULA.
6.1 Eligibility. Options shall be granted only to directors of the
Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below (each
such person referred to as an "Optionee").
6.2 Initial Grant. Each Optionee who on or after the Effective Date
is or becomes a member of the Board will automatically be granted an Option for
15,000 Shares (the "Initial Grant") on the later of the date that
<PAGE> 2
Intuit Inc.
1996 Directors Stock Option Plan
the Plan is approved by the stockholders of the Company or the date such
Optionee first becomes a member of the Board.
6.3 Succeeding Grants. On each anniversary of an Initial Grant, if
the Optionee then is still a member of the Board and has served continuously as
a member of the Board since the date of the Optionee's Initial Grant, the
Optionee will automatically be granted an Option for 7,500 Shares (a "Succeeding
Grant").
7. TERMS AND CONDITIONS OF OPTIONS. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant ("Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. Options granted under this Plan shall be
exercisable as they vest. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "Start Date" for such
Option. Each Initial Grant and Succeeding Grant will vest as to twenty-five
percent (25%) of the Shares upon the first anniversary of the Start Date for
such Grant and an additional 2.0833% of the Shares each month thereafter, so
long as the Optionee continuously remains a director or a consultant of the
Company, until the Option is exercisable with respect to 100% of the Shares.
7.3 Exercise Price. The exercise price of an Option shall be the
Fair Market Value (as defined in Section 17.4) of the Shares at the time that
the Option is granted.
7.4 Termination of Option. Except as provided below in this
Section, each Option shall expire ten (10) years after its Start Date (the
"Expiration Date"). The Option shall cease to vest and unvested Options shall
expire when the Optionee ceases to be a member of the Board or a consultant of
the Company. The date on which the Optionee ceases to be a member of the Board
or a consultant of the Company shall be referred to as the "Termination Date."
An Option may be exercised after the Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to be a
member of the Board or consultant of the Company for any reason except death or
disability, then each vested Option (as defined in Section 7.2 of this Plan)
then held by such Optionee may be exercised by the Optionee within seven (7)
months after the Termination Date, but in no event later than the Expiration
Date.
(b) Death or Disability. If the Optionee ceases to be a
member of the Board or consultant of the Company because of the death of the
Optionee or the disability of the Optionee within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), then
each vested Option (as defined in Section 7.2 of this Plan) then held by such
Optionee may be exercised by the Optionee (or the Optionee's legal
representative) within twelve (12) months after the Termination Date, but in no
event later than the Expiration Date.
8. EXERCISE OF OPTIONS.
8.1 Exercise Period. Subject to the provisions of Section 8.5
below, Options shall be exercisable as they vest.
8.2 Notice. Options may be exercised only by delivery to the
Company of an exercise agreement in a form approved by the Committee stating the
number of Shares being purchased, the restrictions imposed on the Shares and
such representations and agreements regarding the Optionee's investment intent
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.3 Payment. Payment for the Shares purchased upon exercise of
an Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by the Optionee for more than
six (6) months (and which have been paid for within the meaning of Securities
and
-2-
<PAGE> 3
Intuit Inc.
1996 Stock Option Plan
Exchange Commission ("SEC") Rule 144 and, if such shares were purchased from
the Company by use of a promissory note, such note has been fully paid with
respect to such shares) or were obtained by the Optionee in the open public
market, having a Fair Market Value equal to the exercise price of the Option;
(c) by waiver of compensation due or accrued to the Optionee for services
rendered; (d) provided that a public market for the Company's stock exists,
through a "same day sale" commitment from the Optionee and a broker-dealer that
is a member of the National Association of Securities Dealers (an "NASD Dealer")
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased to pay for the exercise price and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; (e) provided that a public market for
the Company's stock exists, through a "margin" commitment from the Optionee and
an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (f) by any combination of
the foregoing.
8.4 Withholding Taxes. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.
8.5 Limitations on Exercise. Notwithstanding the exercise
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:
(a) An Option shall not be exercisable until such time as
this Plan (or, in the case of Options granted pursuant to an amendment
increasing the number of shares that may be issued pursuant to this Plan, such
amendment) has been approved by the stockholders of the Company in accordance
with Section 15 below.
(b) An Option shall not be exercisable unless such
exercise is in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and all applicable state securities laws, as they are in
effect on the date of exercise.
(c) The Committee may specify a reasonable minimum number
of Shares that may be purchased upon any exercise of an Option, provided that
such minimum number will not prevent the Optionee from exercising the full
number of Shares as to which the Option is then exercisable.
9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or by the Optionee's
guardian or legal representative, unless otherwise permitted by the Committee.
No Option may be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent and distribution.
10. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any of the
rights of a stockholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
of exercise, except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial statements of the Company, at such time
after the close of each fiscal year of the Company as they are released by the
Company to its stockholders.
11. ADJUSTMENT OF OPTION SHARES. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or stockholders of the Company and compliance with applicable securities
laws; provided, however, that no fractional shares shall be issued upon exercise
of any Option and any resulting fractions of a Share shall be rounded up to the
nearest whole Share.
12. NO OBLIGATION TO CONTINUE AS DIRECTOR. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
-3-
<PAGE> 4
Intuit Inc.
1996 Directors Stock Option Plan
13. COMPLIANCE WITH LAWS. The grant of Options and the issuance of
Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act, compliance with all other applicable state
securities laws and compliance with the requirements of any stock exchange or
national market system on which the Shares may be listed. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration or qualification requirement of any state securities laws,
stock exchange or national market system.
14. ACCELERATION OF OPTIONS UPON CERTAIN CORPORATE TRANSACTIONS. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Options granted under this Plan are assumed or replaced by the
successor corporation, which assumption will be binding on all Optionees), (c) a
merger in which the Company is the surviving corporation but after which the
stockholders of the Company (other than any stockholder which merges (or which
owns or controls another corporation which merges) with the Company in such
merger) own less than 50% of the shares or other equity interests in the
Company, (d) the sale of substantially all of the assets of the Company, or (e)
the acquisition, sale or transfer of a majority of the outstanding shares of the
Company by tender offer or similar transaction, the vesting of all options
granted pursuant to this Plan will accelerate and the options will become
exercisable in full prior to the consummation of such event at such times and on
such conditions as the Committee determines, and if such options are not
exercised prior to the consummation of the corporate transaction, they shall
terminate in accordance with the provisions of this Plan.
15. AMENDMENT OR TERMINATION OF PLAN. The Committee may at any time
terminate or amend this Plan (but may not terminate or amend the terms of any
outstanding option without the consent of the Optionee); provided, however, that
the Committee shall not, without the approval of the stockholders of the
Company, increase the total number of Shares available under this Plan (except
by operation of the provisions of Sections 4 and 11 above) or change the class
of persons eligible to receive Options. In any case, no amendment of this Plan
may adversely affect any then outstanding Options or any unexercised portions
thereof without the written consent of the Optionee.
16. TERM OF PLAN. Options may be granted pursuant to this Plan from
time to time within a period of ten (10) years from the Effective Date.
17. CERTAIN DEFINITIONS. As used in this Plan, the following terms
shall have the following meanings:
17.1 "Parent" means any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
17.2 "Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
17.3 "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
17.4 "Fair Market Value" means, as of any date, the value of a
share of the Company's Common Stock determined as follows:
-4-
<PAGE> 5
Intuit Inc.
1996 Directors Stock Option Plan
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its last reported sale price on the
Nasdaq National Market or, if no such reported sale
takes place on such date, the average of the closing
bid and asked prices;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, its last
reported sale price or, if no such reported sale takes
place on such date, the average of the closing bid and
asked prices on the principal national securities
exchange on which the Common Stock is listed or
admitted to trading;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on such
date, as reported in The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the
Committee in good faith.
-5-
<PAGE> 1
EXHIBIT 11.01
- --------------------------------------------------------------------------------
INTUIT INC.
COMPUTATION OF NET INCOME PER SHARE
(In thousands, except per share amounts; unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1998 1997 1998
-------- -------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC:
Weighted average common shares outstanding 46,391 47,560 46,220 47,322
- ------------------------------------------------------------------------------------------------------------------------------
Net income $115,940 $ 41,844 $ 87,636 $ 29,085
- ------------------------------------------------------------------------------------------------------------------------------
Per share amount $ 2.50 $ 0.88 $ 1.90 $ 0.61
- ------------------------------------------------------------------------------------------------------------------------------
DILUTED:
Weighted average common shares outstanding 46,391 47,560 46,220 47,322
Equivalent shares issuable upon exercise of
options 1,240 1,878 1,264 1,607
- ------------------------------------------------------------------------------------------------------------------------------
Shares used in per share amounts 47,631 49,438 47,484 48,929
- ------------------------------------------------------------------------------------------------------------------------------
Net income $115,940 $ 41,844 $ 87,636 $ 29,085
- ------------------------------------------------------------------------------------------------------------------------------
Per share amount $ 2.44 $ 0.85 $ 1.85 $ 0.59
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 105,532
<SECURITIES> 537,228
<RECEIVABLES> 175,427
<ALLOWANCES> (5,150)
<INVENTORY> 4,811
<CURRENT-ASSETS> 836,470
<PP&E> 123,330
<DEPRECIATION> (52,756)
<TOTAL-ASSETS> 977,081
<CURRENT-LIABILITIES> 384,086
<BONDS> 31,253
0
0
<COMMON> 478
<OTHER-SE> 560,964
<TOTAL-LIABILITY-AND-EQUITY> 977,081
<SALES> 237,513
<TOTAL-REVENUES> 237,513
<CGS> 45,479
<TOTAL-COSTS> 46,129
<OTHER-EXPENSES> 125,753
<LOSS-PROVISION> 747
<INTEREST-EXPENSE> 153
<INCOME-PRETAX> 67,872
<INCOME-TAX> 26,028
<INCOME-CONTINUING> 41,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,844
<EPS-PRIMARY> 0.88<F1>
<EPS-DILUTED> 0.85
<FN>
<F1>For Purposes of This Exhibit, Primary means Basic.
</FN>
</TABLE>
