Press Releases

Intuit Signs Agreement To Sell Its Quicken Loans Business
Mountain View, Calif., - June 20, 2002 - Intuit Inc. (NASDAQ: INTU) today announced it has signed a definitive agreement to sell its Quicken Loans mortgage business. When the transaction closes, Quicken Loans will become a wholly owned subsidiary of a newly created company and will continue to offer residential home mortgages and home equity loans under the Quicken Loans brand. The new company's investors will be led by Dan Gilbert, chairman of Quicken Loans and founder of Rock Financial Corp. (the predecessor of Quicken Loans), which Intuit acquired in December 1999. Intuit will hold a 12.5 percent equity interest in the new company.

Intuit expects to treat the sale of the Quicken Loans business as a discontinued operation for accounting purposes. Accordingly, after the closing Intuit will amend its financial results for fiscal years 2000, 2001 and 2002 to reflect the exclusion of the results of the discontinued business.
 
Intuit Updates FY 02 and Raises FY 03 Revenue and Profit Growth Rate Guidance
Intuit has updated its guidance for fiscal 2002, as shown below, to reflect both the sale of Quicken Loans as well as stronger-than-expected performance in its small business and tax businesses in the fourth quarter.

Intuit's previous revenue guidance for fiscal 2002, provided on May 15, 2002, was $1.501 billion-$1.511 billion, or growth of 19-20 percent over fiscal 2001. Due to the stronger-than-expected fourth-quarter performance of Intuit's small business and tax businesses, the company expects additional fiscal 2002 revenue of approximately $25 million and additional pro forma operating income of approximately $14 million. The sale of Quicken Loans will represent a reduction in fiscal 2002 revenue of approximately $180 million and a reduction in pro forma operating income of approximately $65 million. Updated fiscal 2002 guidance is:

  • Revenue of approximately $1.355 billion, up 18 percent from fiscal 2001;
  • Pro forma operating income of about $275 million, up 45 percent from fiscal 2001;
  • Pro forma operating income of about $275 million, up 45 percent from fiscal 2001; Pro forma earnings per share of $0.95, up 25 percent from fiscal 2001.

The table at the end of the press release provides more details about Intuit's pro forma financial information and its historical performance without Quicken Loans.
 
New Fiscal 2003 Guidance
Intuit has raised its revenue and profit growth rate guidance for fiscal 2003 to reflect greater anticipated strength in the company's portfolio of businesses and the impact of the sale of Quicken Loans. New fiscal 2003 guidance is:
  • Revenue of $1.650 billion-$1.725 billion, growth of 22-28 percent from fiscal 2002;
  • Pro forma operating income of $385 million-$405 million, growth of 40-47 percent from fiscal 2002;
  • Pro forma earnings per share of $1.25-$1.31, growth of 32-38 percent from fiscal 2002.
 
Sale of Quicken Loans Better Aligns Business Portfolio to Drive Growth
"Intuit acquired Rock Financial and entered the mortgage origination business when consumer 'e-finance' services were central to Intuit's strategy," said Steve Bennett, Intuit's president and chief executive officer. "Since then, Intuit has focused more on driving growth in small business and tax — businesses where we have strong leadership positions in large and growing markets." Bennett noted that by exiting the mortgage origination business, which is cyclical and produces less predictable earnings, Intuit will be better positioned to drive sustained increases in annual revenue and profits.

"Quicken Loans is a great business and has produced strong results for Intuit over the last two fiscal years," said Bennett. "They have outstanding products and services and an experienced and talented management team, but the business is no longer a good strategic fit for Intuit."

Over the past two years, Intuit has made a number of moves to realign its business portfolio. Intuit has exited two other non-strategic consumer e-businesses — online insurance and online bill management. At the same time, Intuit has moved aggressively to execute its "Right for My Business" small business strategy and to expand its tax business.

In fiscal 2002, Intuit has made three acquisitions and announced a fourth to execute its "Right for My Business" strategy to penetrate the large, under-served small business markets both through new QuickBooks products and services as well as acquisitions to drive new growth platforms. It has acquired two companies that provide business management solutions for specific vertical industries — OMware, Inc., which provides solutions for the construction industry, and American Fundware, which provides business management software solutions to public sector organizations. Earlier this month, Intuit announced a third such acquisition, Management Reports, Inc., which provides business management software solutions for commercial and residential property managers. In early June, Intuit also acquired CBS Payroll, which provides a full-service outsourced payroll solution, as part of its strategy to serve larger small businesses and provide solutions beyond accounting.

In April 2001, Intuit acquired Tax and Accounting Software Solutions, which helped drive strong growth in Intuit's professional tax business in fiscal 2002.
 
A Leader in Direct-to-Consumer Home Loans
Quicken Loans is a leading provider of direct-to-consumer home loans, offering mortgages in all 50 states on the Internet through Quickenloans.com and in Michigan through three Rock Financial branches. The company provides a wide variety of home financing options including conventional, government, alternative and jumbo loans, as well as home equity loans and home equity lines of credit. Quicken Loans also provides title insurance and settlement services nationally.

"The Quicken Loans leadership team is excited about the opportunity to continue to revolutionize the home mortgage experience, with a strong brand, industry-leading technology and a great selection of products and services," said Quicken Loans' Gilbert. "We've had great growth and success as part of Intuit during the past three years. This is the best team of mortgage professionals in the business, and we're very excited about the opportunity to take it to the next level as an independent company."

Gilbert, a former executive officer of Intuit, will serve as chairman of the new company, which has not yet been named. Bill Emerson, chief executive officer of Quicken Loans and an executive officer of Intuit, will serve as chief executive officer. Patrick McInnis, president of Quicken Loans, will be the president. Emerson will participate with Gilbert as an investor in the new company buying Quicken Loans.

The new company will retain all of the 1,000 Quicken Loans employees and will continue to be based in Livonia, Mich. Intuit will continue to offer Quicken Loans products and services on Quicken.com and through Quicken and TurboTax software.
 
Terms of Agreement
Based on the terms of the agreement, Intuit will receive cash, a note and multi-year licensing fees in exchange for all of the outstanding stock of Intuit's Quicken Loans Inc. and Title Source Inc. subsidiaries. Intuit will also receive a 12.5 percent equity interest in the new company. The new company will license from Intuit use of the Quicken Loans trademark for its residential home loan and home equity loan products. In addition, the two parties have entered into a five-year distribution agreement through which Quicken Loans will provide mortgage services on Quicken.com. Intuit has also agreed to continue providing a line of credit to fund mortgage loans for a transition period of up to six months after the transaction closes. Such funding is customary in the mortgage origination market

Intuit purchased the Quicken Loans business in December 1999. Because the transaction was accounted for as a pooling of interests, Intuit's current balance sheet reflects the current net value of the tangible assets it acquired, rather than the purchase price paid. Accordingly, there will be no write-off of intangible assets (such as goodwill) associated with the sale of the business. Intuit expects to recognize a small gain on divestiture that will be reflected in its GAAP (Generally Accepted Accounting Principles) financial results, because the consideration Intuit will receive exceeds the book value of the assets being sold. The transaction is expected to close within 90 days.
 
About Intuit Inc.

Intuit Inc. (NASDAQ: INTU) is the leading provider of financial software and Web-based services for consumers, small businesses and accounting professionals. Its flagship products and services, including Quicken®, QuickBooks®, Quicken TurboTax® and Quicken Loans® simplify personal finance, small business management and payroll processing, tax preparation and filing and home loans.

Founded in 1983, Intuit has annual revenue of more than $1.3 billion and reaches 25 million customers with nearly 6,000 employees in 13 states and four countries. More information can be found at www.Intuit.com.
 
Intuit’s Policy on Providing Guidance; Cautions about Forward Looking Statements

Intuit's policy is to not confirm, update or otherwise comment on its financial projections except in compliance with Regulation FD. The projections in the guidance provided above are forward-looking statements and are subject to a number of risks and uncertainties as described below.

This press release contains forward-looking statements about events that have not yet occurred. For example, statements about future financial performance and statements in the future tense are forward-looking statements. Actual results may differ materially from the company's expectations because of risks and uncertainties about the future. Intuit will not necessarily update information in this press release if any forward-looking statement later turns out to be inaccurate. Risks and uncertainties affecting the proposed sale of the Quicken Loans business include the following:

  • The closing of the transaction is subject to standard closing conditions, including but not limited to various regulatory approvals.
  • Intuit faces a number of risks if the business of the new company is not financially successful for any reason, including rising interest rates or other changes in the economic environment that impact mortgage lending. Those risks include, but are not limited to (a) inability of the new company to meet its payment obligations to Intuit under the transition period line of credit, the note relating to the purchase and the distribution and license agreements between the parties; and (b) a decline in value of the new company that could require Intuit to take an impairment charge relating to its 12.5 percent equity interest in the new company.
  • If the new company violates the trademark license governing its use of the Quicken Loans or Quicken Mortgage names, it could result in serious and irreparable harm to Intuit's reputation and the value of its Quicken-related brands.
  • As part of the transaction, Intuit will enter into a noncompete agreement with the new company that could limit Intuit's future business opportunities in unanticipated ways.


Risks and uncertainties affecting the company's financial guidance include the following:

  • The company's revenue and earnings are highly seasonal, which causes significant quarterly fluctuations in its revenue and net income.
  • Acquisition-related charges can substantially reduce the company's net income, and cause significant fluctuations in net income. The company plans to adopt new Financial Accounting Standards Board guidelines relating to accounting for goodwill in fiscal 2003. Under the new guidelines, the company's acquisition-related charges may be less predictable in any given reporting period, as the company could incur less frequent, but larger, impairment charges related to goodwill.
  • It is too early to ensure that the company's "Right for My Business" strategy will generate substantial and sustained revenue growth in the small business accounting and business management segments.
  • The company faces competitive pressures in all of its businesses, and particularly in its consumer tax preparation software and services business. This can have a negative impact on the company's revenue, profitability and market position. In particular, if federal and/or state government agencies are ultimately successful in their efforts to provide tax preparation and filing services to consumers, it could have a significant negative impact on the company's financial results in future years.
  • The company does not expect that the revenue and profit growth rates experienced by its payroll businesses during the past two years will be sustainable long-term, either on a year-over-year basis or on a sequential quarter basis.
  • The company relies heavily on third-party vendors in connection with its primary retail desktop software product launches and replenishing product in the retail channel after the primary launch. If a vendor fails to perform, it could have severe negative consequences for the company's software businesses.
  • · Integrating acquired businesses creates challenges for the company's operational, financial and management information systems, as well as for its product development processes. If the company is unable to adequately address these and other issues presented by growth through acquisitions, the company may not fully realize the intended benefits (including financial benefits) of its acquisitions. If the company fails to maintain reliable and responsive service levels for its electronic tax offerings, it could lose revenue and customers.
  • The company faces risks relating to customer privacy and security and increasing government regulation, which could hinder the growth of its businesses.
  • Despite the company's efforts to adequately staff and equip its customer service and technical support operations, it cannot always respond promptly to customer requests for assistance.
  • Actual product returns may exceed the company's product return reserves, particularly for the company's tax preparation software.
  • A continuation of the recent general decline in economic conditions could lead to significantly reduced demand for the company's products and services.
  • The company's business operations depend on the efficient and uninterrupted operation of a large number of computer and communications hardware and software systems, which are vulnerable to damage or interruption from electrical power interruptions, telecommunication failures, earthquakes, fires, floods, terrorist activities and their aftermath, and other similar events. Any significant interruptions in the company's ability to conduct its business operations would reduce its revenue and operating income.
 
Additional information about factors that could affect future results and events is included in Intuit's fiscal 2001 Form10-K and subsequent reports filed with the Securities and Exchange Commission, and at www.intuit.com/company/investors/considerations.html