intuit report

1

University of O regon Investment G roup

October 14th, 2011 Technology

Covering Analyst: Aia Tulepbergenova

Investment Thesis

G R O WIN G T R E ND F O R T H E SO F T W A R E PUB L ISH IN G INDUST R Y

SO FTWARE PUBLISHING INDUSTRY EXPECTS STRONG GROWTH IN THE NEXT YEARS. DEMAND F OR SO FTWARE PROGRAMS WILL INCREASE . BUSINESSES WILL BE MORE ENTHUSIASTIC ABOUT ACQUIRING SO FTWARE TO INCREASE PRODUCITIVITY AND E F F ICIENCY, MANAGE SUPPLY CHAIN AND DESIGN NEW PRODUCTS

ST R O N G IN T E RN A T I O N A L E XPA NSI O N ST R A T E G Y

INTUIT PLANS TO EXPAND ITS OPERATIONS TO MORE COUNTRIES TO GET LOWER LABOR COSTS, MORE FAVORABLE REGULATIONS, AND DIVERSE WORK F ORCE ENVIRONMENT

R & D IN V EST M E N T

INTUIT PLANS TO INVEST MORE F UNDS IN ITS R&D DEPARTMENT TO DESIGN BETTER PRODUCTS AND ENHANCE THE E F F ICIECNY F OR CURRENT ONES.

3-Year Stock Chart

T icker : IN T U

Current Price: $52.00

Recommendation: Buy

Implied Price: $60.00

Key Statistics

Trading Statistics

Margins and Ratios

52 Week Price Range

50-Day Moving Average

Net Margin

EBITDA Margin

Gross Margin 83.02%

$47.54

$39.87 - $56.46 $XX$XX.XX

53.73%

16.46%

Estimated Beta .87

Market Capitalization 14,826 M

Diluted Shares Outstanding

304

Average Volume (3-Month) 3,963,920

Institutional Ownership 90.20%

Insider Ownership 6.15%

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October 14th, 2011 University of O regon Investment G roup

Business Overview

Intuit is a leading provider of financial management, tax and online banking solutions for consumers, small and mid-sized businesses, accountants and financial institutions. Intuit was founded by Scott Cook and Tom Proulx in 1983. It went public in 1993.

IQWXLWVKHDGTXDUWHUVDUHORFDWHGLQ0RXQWDLQ9LHZ&$,WDOVRRSHUDWHVacross the United States and in such countries as Canada, United Kingdom, India, Singapore, Japan, Hong Kong and Australia.

Intuit consists of such segments as Small Business Group that includes Financial Management, Employee Management, and Payment Solutions; Consumer Tax, Accounting Professionals, Financial Services and other Businesses. F inancial Management Solutions segment includes QuickBooks financial and business management software and services; technical support; financial supplies; and Intuit Websites (that provides website design and hosting services for small and medium-sized businesses). Financial Management Solutions segment revenue increased 6% due to strength in Intuit Websites and higher average selling prices for QuickBooks.

Employee Management Solutions segment provides payroll products and services for small businesses.

Payment Solutions segment includes small business payroll products and services. It also encompasses merchant services, such as credit and debit card processing, provided by Innovative Merchant Solutions business. Payment Solutions segment revenue increased 8% due to growth in the merchant customer base, partially offset by lower transaction volume per merchant.

Consumer Tax segment includes TurboTax consumer and small business tax return preparation products and services. Consumer Tax segment revenue increased 15% due to 19% growth in TurboTax Online units.

Accounting Professionals segment includes Lacerte, ProSeries and ProLine Tax Online professional tax products and services. This segment also includes QuickBooks Premier Accountant Edition and the QuickBooks ProAdvisor Program for accounting professionals.

F inancial Services segment consists primarily of outsourced online banking applications and services for banks and credit unions provided by the Digital Insight business. This segment was formed in the third quarter of fiscal 2007 after February 2007 acquisition of Digital Insight. Financial Services segment revenue increased 7% due to growth in bill-pay end users and transaction volumes and higher FinanceWorks revenue.

O ther Businesses segment includes Quicken personal finance products and services, Intuit Real Estate Solutions. It also incorporates businesses in Canada and the United Kingdom. Other Businesses segment revenue increased 22% due to higher Quicken revenue and a favorable currency

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impact in the Canadian business.

According to the official website for Intuit, QuickBooks, Consumer Tax and Accounting Professionals offerings are highly seasonal. Revenue from the QuickBooks software products tends to be highest during the second and the third fiscal quarters. Sales of income tax preparation products and services are heavily concentrated in the period from November through April.

As for the Consumer Tax business, a greater proportion of revenue tends to occur later in the seasonal period due to the growth in sales of TurboTax Online. As a result, the total net revenue is usually the highest during the second and third quarters. Intuit typically experiences some losses in the first quarter ending October 31 and the fourth quarter ending July 31. According WR,QWXLWVZHEVLWHLWLVH[SHFWHGWKDWthe seasonality of the revenue and profitability is likely to continue in the future.

Business G rowth Strategies

Intuit plans to accelerate the entry into new businesses. Intuit has a three-point growth strategy such as: Growth in the core business Intuit is going to continue grow through its core business offerings such as TurboTax, Quicken, QuickBooks, ProSeries and Lacerte. Intuit also plans to offer relevant products that will encourage existing customers to further XSJUDGH PRUH IHDWXUH-rich versions that meet their personal and business QHHGV Building adjacent businesses and entering new geographies Intuit plans to pursue new partnerships and acquire more companies. The Intuit Payment Network, for example, increases the value of QuickBooks by giving businesses an electronic alternative to accepting checks for payment. Intuit Health provides clinical, administrative and financial services that also connect providers and patients. Accelerating the transition to connected services Intuit maintains the Connected Services strategy. This way, the company assures to provide new ways for people and businesses to connect with each other and use their data to full advantage (it can be on desktop, the Web or mobile devices). Intuit ProLine Tax Online lets accounting professionals prepare and file tax returns for consumer and small business clients online rather than on the desktop. Through this strategy, the company intends to delight customers by offering easy-to-use connected services that can solve many problems. These growth strategies recognize the emergence and influence of the digital JHQHUDWLRQ WKH LQFUHDVLQJ UHOHYDQFH RI VRFLDO QHWZRUNV DQG FXVWRPHUVgrowing reliance on the Web, mobile devices and information-based technology to manage important tasks. It also acknowledges the potential of new market opportunities in rapidly developing economies. The end result is a global market that is shifting from traditional services that are paper-based, human-produced to the one where people embrace the benefits of connected services.

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Industry Overview The Software Publishing industry experienced dynamic growth in the five years to 2011, and is expected to achieve annual revenue growth of 2.3% to $156.3 billion. According to the official website of IBISWorld, it is expected that the revenue will grow as businesses and consumers step up their investments in software, computers and smartphones. Businesses will continue to use information technology to increase efficiency. A major IHDWXUHIRU2EDPDVDGPLQLVWUDWLRQKHDOWKFDUHUHIRUPSODQSDVVHGLQLVtax incentives for health insurers to switch from paper based record systems to digital records. In 2012, this industry is expected to grow by 4.8% to $163.8 billion. Despite the long-term growth potential, recent economic conditions affected growth in 2009. These conditions led to a 3.6% decline in industry revenue in 2009. Experts are predicting the industry revenue to increase by 2.4% in the next couple of years beginning 2011. Overall, the industry continues to be successful. Its lifecycle is identified to be growing in the future. More powerful and less expensive computers have a positive impact on software publishing market. During the past five years, large software publishers eagerly bought smaller publishers with specialties in growing software niches. In 2006, Oracle Corp. bought Siebel Systems, a maker of customer relationship management (CRM) software, for $5.9 billion. Microsoft Corp. was similarly aggressive, acquiring a number of companies that developed software relevant to search engines and web-based software platforms. As continued technological development drives innovation during the next five years, acquisition activity within this industry will grow more robust.

The main key external drivers for industry growth are corporate profit, percentage of households with at least one computer, video games console sales, and per capita disposable income.

Corporate Profit Businesses account for the majority of spending on software. Various organizations are driven to invest in new software and take some time to transition to make the profit strong. This driver is expected to increase during 2011. Video Game Console Sales Increased sales of video game console systems implies for higher video game sales that will directly affect the software publishers. This driver is expected to decrease during 2011-2012 period. Per capita disposable income The more income the consumers have, the higher demand for software is. This driver is expected to increase at an average rate. Percentage of households with at least one computer A lot of software is designed to run on PCs. The higher the rate of computer ownership, the larger the demand for particular software is. This driver is expected to grow during 2011-2012.

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Successful software companies earn profit margins of about 20.2% after tax, income tax accounts for additional 10% of industry revenue. Software publishers that release successful software can enjoy strong cash flow for a long time. The industry is also highly labor-intensive. It operates in a market that emphasizes innovation, ease of use, and technological capability. These companies spend large shares of their budgets on advertising. Industry top performers spend about 20% of their budget on marketing and further promotion. The largest software companies often buy ads during the Super Bowl Season. Different companies tend to integrate advertising from multiple media sources including TV, search engine ads, print ads, online banner ads, radio an other types of promotions. Product innovation also plays a key role in the industry development. Software publishers invest more than 12% of revenue on Research and development and patent acquisition.

Macro factors Faster computers and strong Internet connections resulted in more powerful Software. They are also allowing large scale outsourcing of software development. $OORIWKHLQGXVWU\VPDMRUFRPSDQLHVRSHUDWHDEURDGLQPDQ\cases, a software development team in another country collaborates with the team in the United States. Globalization in this industry in on its rise. Most of the times, sales to customers outside of the Unites States represent about half of their total sales. Many industry players made acquisitions and formed alliances to achieve great economies of scale. It is important to note that international trade regulations do not directly affect the industry trends as software is generally transferred electronically instead of physical shipments via media. Growth in developing countries and improving technologies, particularly those related to semiconductors and telecommunications, is creating expanded markets for software publishers. The technological growth will continue through the five years to 2016, contributing to a projected 2.5% annual growth in industry revenue to $176.8 billion. Most of the major US software publishers have operations in such countries as India, China, Brazil, Finland, Russia, and others. Some of the reasons include lower labor costs, more favorable regulations, and diverse workforce.

Competition Competition in this Industry is High and the trend in Increasing. The initial price and long-term cost of ownership of software can be a major competitive factor in this industry. To remain competitive, companies must constantly innovate through the introduction of new products and enhancement of existing ones.

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Product performance, reliability, and many security features are crucial for the success in this industry. Brand names and reputation can also play a big UROHLQWKHFRPSDQ\VVXFFHVV

Among the top competitors in the industry are Microsoft, Oracle, IBM, Symantec, SAP, H&R Block, Intuit, Adobe and many others. The barriers to entry are medium and steady. Patents on intellectual property are widely used to limit competition. Software companies should be aware of antitrust regulations. Scarcity of highly skilled and creative programmers may become a limiting factor for software publishers, resulting in high wages and big compensation packets for employees.

Open standards are particularly important product feature in modern software publishing. Most customers use software produced by several different publishers; open standards encourage compatibility with software from other publishers and any software developed internally by a customer.

To remain competitive in this high-technology industry, companies must constantly innovate through the introduction of new products or through the enhancement of existing products. This requires high levels of expenditure for research and development and skilled employees. Patents can protect intellectual property and provide barriers to competitors. Software has a relatively short product life cycle.

Management and Employee Relations Brad Smith President and Chief Executive O fficer Brad Smith became Intuit's president and chief executive officer in January 2008, culminating a five-year rise through the company where he successfully led several of its major businesses. Before being named CEO, Smith served as a senior vice president and general manager of Intuit's Small Business Division. At this position, Smith was responsible for the company's small business division that included the portfolio of QuickBooks, Quicken and Payroll products, serving 7 million small businesses. Before moving to the small business division, he led the company's Consumer Tax Group in San Diego from March 2004 through May 2005. The group produces TurboTax, the nation's leading consumer tax preparation software. Smith joined the company in February 2003 as the vice president and general manager of Intuit's Accountant Central and Developer Network in Plano, Texas. Previously, he was senior vice president of marketing and business development at ADP. Smith also held various sales, marketing and general management positions with Pepsi, Seven-Up and Advo, Inc. Smith earned his master's degree in management from Aquinas College in Michigan and a bachelor's degree in business administration from Marshall University in West Virginia.

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Scott Cook Founder and Chairman of the Executive Committee Scott Cook co-founded Intuit Inc. in 1983 and currently serves as the chairman of the Executive Committee. Before founding Intuit, Cook managed consulting assignments in banking and technology for Bain & Company, a corporate strategy consulting firm. He previously worked for Procter & Gamble, the household products giant, in various marketing positions, including brand manager, for four years. Cook is a member of the board of directors of eBay; Procter & Gamble; the Asia Foundation; the Harvard Business School Dean's Advisory Board; the Center for Brand and Product Management at the University of Wisconsin; and the Intuit Scholarship Foundation. Cook earned an MBA from Harvard University and received a bachelor's degree from the University of Southern California.

Bill Campbell Chairman of the Board Bill Campbell assumed his role as chairman of the board of directors in August 1998. He previously served as Intuit's president and chief executive officer from 1994 to 1998 and as chief executive officer from September 1999 until January 2000. For the three years before joining Intuit, Campbell was the president and chief executive officer of GO Corp., a pen-based computing software company. Previously, he founded and served as president and chief executive officer of Claris Corp., which was purchased by Apple Computer Inc. in 1990. Before starting Claris, Campbell was Apple's executive vice president, group executive of the United States. He joined Apple in July 1983 as vice president of marketing and added the title of vice president of sales in January 1984.

Before entering the technology industry, Campbell was the head football coach at Columbia University for six years, and has been chairman of the university's Board of Trustees since 2005. He is also a director of the National Football Foundation and Hall of Fame. Campbell holds a bachelor's degree in economics and a master's degree from Columbia University.

Management Guidance ,QWXLWVPDQDJHPHQW WHDPH[SHFWV WRJURZIXUWKHU LQWHUQDWLRQDOO\7KH\DUHespecially looking into expanding the business in developing economies. The management believes that currency fluctuations will not be significant in the future; thus, this factor will not prevent them from expanding further. Intuit is also going to heavily emphasize its Research and Development Department. Enhancing existing products and services and developing new

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products and services will offer increased ease of use, ZLOO be customized for specific customer categories, be Web-based or mobile, and feature improved integration with other Intuit and third party products and services and other internal information systems. Management Team also expects to continue to focus significant research and development efforts on ongoing projects to update the technology platforms. Management team predicts the current seasonality and profitability trend to continue in the future. Intuit typically reports losses in the first quarter ending October 31 and fourth quarter ending July 31, when revenue from the tax businesses is minimal and operating expenses continue to perform at consistent levels. Intuit has recently joined the Free File Alliance. This organization serves as a coalition of industry-leading tax software companies partnered with the IRS to help millions of Americans prepare and e-file their federal tax returns for free. Approximately 20 states have also adopted Free File Alliance public-private agreements while approximately 20 other states offer some form of direct government tax preparation and filing services free to TXDOLILHG WD[SD\HUV,W LVDJUHDWRSSRUWXQLW\ WRH[SDQG,QWXLWVEXVLQHVVDQGexpand its recognition; however, future administrative, regulatory or legislative activity in this area could harm the Consumer Tax business. As Intuit is looking forward to delivering more online products, its infrastructure will become more critical in the future. It is also important to note that IntuLWVLQFUHDVLQJSUHVHQFHRQOLQH will make the company a subject to many laws and regulations that apply to the Internet, behavioral tracking, telemarketing, email activities, data hosting and retention, financial and health information, and credit reporting. Management expects that additional laws are likely to be passed in the future, which could result in significant limitations on or changes to the ways in which the company will be allowed to collect, use, host, store or transmit the personal data. Recent News September 26, 2011 Intuit released the 2012 versions of QuickBooks New features in the QuickBooks 2012 Pro, Premier and Mac editions help entrepreneurs save time managing their finances so they can focus on running their businesses. September 12, 2011 Intuit Health Patient Portal Streamlines Patient F low Through Forms Integration with NextGen EMR Doctors can easily and quickly view patients' complete and accurate online medical history before their appointment. The Intuit Health patient portal currently enables 4.2 million patients and 47,000 providers nationwide to easily and securely communicate and accomplish important tasks online. Patient demand, provider need and government incentives have driven 1.5 million new patients and 18,250 providers to start using the portal to in just the last 12 months. July 20, 2011 Intuit has been included in the top 100 innovative companies across the world, according to Forbes magazine. It has been ranked as 84 before

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Microsoft (86) and Boston Scientific (91). The first in the list was Salesfrorce.com. ConAgra Foods concluded the list of 100.

Catalysts

Upside Increasing growth trend for the software publishing industry As the economy recovers from the recession, more people are going to purchase PCs. As a result, the demand for software programs is going to increase. Future Acquisitions Strategy Intuit plans to acquire more companies that fit with strategy and provide strong growth opportunities

International Expansion ,QWXLWVFXUUHQWDQGIXWXUHRSHUDWLRQVDEURDG will open up more opportunities for business expansion, generating more revenue, attracting more diverse and bigger target market.

Investment in R&D Intuit plans to spend more funds on its research and development strategies. Improving current processes and developing more advanced software will provide the means for Intuit to stay ahead of competition.

Downside Intense Competition ,QWXLWV FRPSHWLWRUV LQFOXGH ODUJH FRUSRUDWLRQV DQG HPHUJLQJ VWDUW-ups. The SRVVLEOH ULVNV DVVRFLDWHG ZLWK WKLV IDFWRU LV WKDW ,QWXLWV competitors may introduce superior products and services, reduce prices, have greater technical, marketing and other resources. Increased government regulations 0DQ\ RI ,QWXLWV RSHUDWLRQV are in highly regulated areas, including the tax, payroll, payments, financial services, prepaid debit card and healthcare businesses. With increasing presence online and international expansion, Intuit will be required to follow more strict rules and regulations for import and export, tax specifics, and geopolitical events.

Seasonality of the business ,QWXLWVEXVLQHVVLVhighly seasonal which puts a lot of risk on its performance during that period; as a result, the quarterly results may fluctuate significantly. Intuit usually reports losses in the first quarter ending October 31 and fourth quarter ending July 31. Comparable Analysis

For my comparable analysis, I used such companies as SAP, H&R Block, and Advent Software.

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SAP

SAP is headquartered in Walldorf, Germany. Founded in 1972, SAP became the market leader in enterprise application software. SAP stands for "Systems, Applications, and Products in Data Processing". SAP has been an industry leader for several years.

Since its founding, SAP applications and services enable more than 172,000 customers worldwide to operate profitably, adapt continuously, and grow sustainably. SAP has more than 54,000 employees and sales and development locations in more than 50 countries worldwide. It primarily operates in Asia Pacific Japan, Europe, Middle East, Africa, and Americas.

SAP is listed on several exchanges, including the Frankfurt stock exchange and NYSE, under the symbol "SAP."

H &R Block

H&R Block is one of the world's largest tax services providers, which utilizes more than 100,000 highly trained tax professionals and prepares more than 550 million tax returns worldwide since 1955.

Brothers Henry W. Bloch and Richard A. Bloch founded the company in 1955

The company provides tax return preparation services in-person, through +5%ORFN$W+RPHRQOLQH DQGGHVNWRS VRIWZDUHSURGXFWV DQG WKURXJKother channels. H&R Block is considered as one of the leading providers of business services and offers financial products to support its tax business through the H&R Block Bank.

$PRQJ WKH NH\ IDFWRUV IRU WKH FRPSDQ\V VXFFHVV LV VXSHULRU FXVWRPHUservice. According to the official website of H&5 %ORFN WKH FRPSDQ\ is dedicated to being the most trusted, state-of-the-art tax preparation firm at the best value.

Advent Software

Advent Software was founded in 1983 by Stephanie DiMarco. Advent contains products that are based on the client relationship management and partnership accounting. Advent has gained a significant market share by providing trusted, quality solutions to investment management firms, wealth managers, broker-dealers, registered investment advisors, and family offices.

In 1995 Advent introduced Geneva, its first solution for the global investment accounting industry, providing a comprehensive solution that meets the complex needs of investment managers worldwide. Geneva helps firms account for high volume, traditional, derivative, domestic, and global investment strategies.

In 1998 Advent Software was established in Europe, serving new markets in Europe, the Middle East, and Asia and putting Advent on the map as a global

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solution provider. Nowadays, Advent continues to operate all over the world.

In 2005 Advent introduced the next-generation portfolio management solution, Advent Portfolio Exchange. APX was the first solution to integrate portfolio accounting, reporting, performance analytics, and client relationship management, effectively linking portfolio managers, operations, and client service staff on a single database platform.

Discounted Cash F low Analysis

Beta

I used multiple criteria to calculate Intuit Beta. First, I regressed it against the S&P 500. I calculated Vasicek Beta 5 year monthly and 1 year weekly which gave me .80 and .91 respectively. Then, I decided to perform the calculation of Hamada Beta 5 year monthly and 1 year weekly which resulted in .91 and 1.07. To get the closest calculation and best representation for Intuit, I decided to use the average of all betas, which has been calculated as .87.

Revenue Model I created my revenue model based on business segments that Intuit has, such as small business group (financial management, employee management, and payment solutions), consumer tax, accounting professionals, financial services, and other businesses. $FFRUGLQJWRPDQDJHPHQWVJXLGDQFHWKHfollowing growth will be present: Small Business Group: 10-12% Consumer Tax: 10-13% Accounting Professionals: 6-8% Financial Services: 6-10% Other Businesses: 10-15% I projected my revenue model based on these assumptions. I also took into consideration industry data and future growth opportunities. I used a percent of revenue model to project the items in DCF.

COGS As Intuit plans to expand further internationally, I projected Cost of Goods Sold to increase as a percentage of revenue at an average of 13-14%. Research and Development Management is going to heavily invest in R&D department to keep up with increasing competition and develop more products and services. SG&A Management projected SG&A to grow in the future due to upcoming acquisitions and international expansion. I projected SG&A as a

percentage of revenue for approximately 52-53%.

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Net Working Capital I projected Net Working Capital to increase around 21.01% in 2013 as a percentage of revenue, then continue at a slower rate. Intuit will need the excess of capital as it expands further after 2011. Acquisitions As I have mentioned earlier, Intuit is going to acquire more companies at an average rate of 2% for the next 10 years. Intuit plans to acquire more companies internationally as well as domestically.

Recommendation Intuit is the company that has a strong growth strategy and future performance. Consumers are and will be willing to purchase more VRIWZDUHSURJUDPV:LWKLQFUHDVLQJSUHVHQFHRIHOHFWURQLFGDWDWUDQVPLVVLRQDQGVWRUDJH,QWXLWVSURJUDPVZLOOILWWKHQHHGV of every consumer both in the USA and abroaG,QWXLWVLQYHVWPHQWLQ5''HSDUWPHQWDVVXUHVWKDWWKHEHWWHUDQGPRUHGHYHORSHGproducts will be designed, produced, and distributed around the world. I highly recommend a BUY for all portfolios.

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Appendix 1 Comparables Analysis

Comparables Analysis INTU SAP HRB ADVS

($ in millions) Intuit SAP H&R Block, Inc. Advent Software,

Inc.Stock Characteristics Max Min Weight Avg. Median 45.00% 35.00% 20.00%Current Price $52.59 $13.76 $32.70 $21.10 $52.00 $52.59 $13.76 $21.1050 Day Moving Average 51.10 13.80 32.16 21.67 47.15 51.10 13.80 21.67200 Day Moving Average 58.28 15.46 36.69 25.25 50.05 58.28 15.46 25.25Beta 1.13 0.59 0.90 0.90 0.87 1.13 0.59 0.90SizeShort-Term Debt 500.00 0.00 9.94 0.00 500.00 0.00 28.40 0.00Long-Term Debt 1,049.00 0.00 385.15 40.00 498.00 40.00 1,049.00 0.00Cash and Cash Equivalent 4,720.00 81.95 2,727.34 1,677.00 722.00 4,720.00 1,677.00 81.95Non-Controlling Interest 23.00 0.00 10.35 0.00 0.00 23.00 0.00 0.00Preferred Stock 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Diluted Basic Shares 1,190.00 52.28 652.95 305.70 304.00 1,190.00 305.70 52.28Market Capitalization 62,582.10 1,103.11 29,854.82 4,206.43 15,808.02 62,582.10 4,206.43 1,103.11Enterprise Value 57,925.10 1,021.16 27,532.92 3,606.83 16,084.02 57,925.10 3,606.83 1,021.16Profitability MarginsGross Margin 83.02% 40.01% 61.05% 72.04% 83.02% 72.04% 40.01% 73.11%EBIT Margin 53.28% 11.70% 22.14% 19.61% 53.28% 28.74% 19.61% 11.70%EBITDA Margin 53.73% 17.84% 26.62% 22.81% 53.73% 33.49% 22.81% 17.84%Net Margin 16.46% 7.44% 11.04% 9.97% 16.46% 14.32% 7.44% 9.97%Operating ResultsRevenue $13,385.00 $302.94 $7,402.39 $3,767.30 $3,851.00 $13,385.00 $3,767.30 $302.94Gross Profit 9,766.00 223.90 4,967.04 1,507.31 3,197.00 9,766.00 1,507.31 223.90EBIT 3,847.00 35.45 1,996.85 738.88 2,052.00 3,847.00 738.88 35.45EBITDA 4,483.00 54.05 2,328.86 859.14 2,069.00 4,483.00 859.14 54.05Net Income 1,917.00 30.20 966.73 280.12 634.00 1,917.00 280.12 30.20Valuation EV/Revenue 4.33x 0.96x 2.96x 3.37x 4.18x 4.33x 0.96x 3.37xEV/Gross Profit 5.93x 2.39x 4.42x 4.56x 5.03x 5.93x 2.39x 4.56xEV/EBIT 28.80x 4.88x 14.25x 15.06x 7.84x 15.06x 4.88x 28.80xEV/EBITDA 18.89x 4.20x 11.06x 12.92x 7.77x 12.92x 4.20x 18.89xEV/Net Income 33.81x 12.88x 24.87x 30.22x 25.37x 30.22x 12.88x 33.81x

Multiple Implied Price WeightEV/Revenue 36.55 30.00%EV/Gross Profit 45.56 30.00%EV/EBITDA 74.38 40.00%

Price Target $54.38Current Price 52.00Undervalued 4.59%

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Appendix 2 Discounted Cash F lows Analysis

Discounted Cash Flow Analysis($ in millions) 2008A 2009A 2010ATotal Revenue $2,993.00 $3,109.00 $3,455.00% YoY Growth 3.88% 11.13%Cost of Goods Sold 351.78 402.18 439.00% Revenue 11.75% 12.94% 12.71%Gross Profit $2,641.22 $2,706.82 $3,016.00Gross Margin 88.25% 87.06% 87.29%Selling General and Administrative Expense 1,760.40 1,781.50 1,897.00

2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E$3,822.10 $4,239.96 $4,710.87 $5,182.06 $5,661.14 $6,139.83 $6,614.20 $7,071.58 $7,516.97 $7,934.54

10.63% 10.93% 11.11% 10.00% 9.24% 8.46% 7.73% 6.92% 6.30% 5.56%530.00 585.12 654.81 725.49 793.13 860.80 927.97 992.85 1,055.38 1,114.80

13.87% 13.80% 13.90% 14.00% 14.01% 14.02% 14.03% 14.04% 14.04% 14.05%$3,292.10 $3,654.85 $4,056.06 $4,456.57 $4,868.02 $5,279.03 $5,686.23 $6,078.73 $6,461.59 $6,819.74

86.13% 86.20% 86.10% 86.00% 85.99% 85.98% 85.97% 85.96% 85.96% 85.95%2,020.00 2,232.34 2,489.69 2,741.31 2,997.57 3,254.11 3,506.19 3,750.06 3,987.75 4,210.86

% Revenue 58.82% 57.30% 54.91%Depreciation and Amortization 216.46 274.67 256.00% Revenue 7.23% 8.83% 7.41%Other Expense 56.00 0.00 0.00% Revenue 1.87% 0.00% 0.00%

52.85% 52.65% 52.85% 52.90% 52.95% 53.00% 53.01% 53.03% 53.05% 53.07%241.00 269.66 304.32 345.13 388.35 411.37 444.47 476.62 508.15 537.966.31% 6.36% 6.46% 6.66% 6.86% 6.70% 6.72% 6.74% 6.76% 6.78%23.00 33.92 40.04 46.64 53.78 61.40 69.45 77.79 86.45 95.21

0.60% 0.80% 0.85% 0.90% 0.95% 1.00% 1.05% 1.10% 1.15% 1.20%Earnings Before Interest & Taxes $608.36 $650.65 $863.00% Revenue 20.33% 20.93% 24.98%Interest Expense 52.29 51.00 61.00% Revenue 1.75% 1.64% 1.77%Net Interest (Income) 99.50 22.60 13.00% Revenue NA 3.32% .73% .38%Earnings Before Taxes 655.57 622.25 815.00% Revenue 21.90% 20.01% 23.59%Less Taxes (Benefits)Income tax provision 245.50 206.00 276.00Tax Rate 37.45% 33.11% 33.87%Net Income $410.07 $416.25 $539.00Net Margin NA 13.70% 13.39% 15.60%Add Back: Depreciation and Amortization 216.46 274.67 256.00Add Back: Interest Expense*(1-Tax Rate) 32.71 34.12 40.34Operating Cash Flow $659.24 $725.04 $835.34% Revenue 22.03% 23.32% 24.18%Current Assets 1,773.50 1,967.80 2,295.00% Revenue 59.25% 63.29% 66.43%Current Liabilities 1,467.20 1,083.80 1,221.00% Revenue 49.02% 34.86% 35.34%Net Working Capital $306.30 $884.00 $1,074.00% Revenue 10.23% 28.43% 31.09%Change in Working Capital 694.3 577.7 190Capital Expenditures 306.10 182.00 130.00% Revenue 10.23% 5.85% 3.76%Acquisitions 264.53 161.00 218.00% Revenue 8.84% 5.18% 6.31%Unlevered Free Cash Flow ($605.69) ($195.66) $297.34Discounted Free Cash Flow

EBITDA 824.8 925.3 1119.0EBITDA Margin 27.56% 29.76% 32.39%

$1,008.10 $1,118.93 $1,222.00 $1,323.50 $1,428.31 $1,552.15 $1,666.12 $1,774.26 $1,879.24 $1,975.7026.38% 26.39% 25.94% 25.54% 25.23% 25.28% 25.19% 25.09% 25.00% 24.90%

60.00 67.84 77.73 88.10 99.07 110.52 122.36 134.36 146.58 158.691.57% 1.60% 1.65% 1.70% 1.75% 1.80% 1.85% 1.90% 1.95% 2.00%30.00 33.92 40.04 46.64 53.78 61.40 69.45 77.79 86.45 95.21.78% .80% .85% .90% .95% 1.00% 1.05% 1.10% 1.15% 1.20%

978.10 1,085.01 1,184.31 1,282.04 1,383.02 1,503.03 1,613.20 1,717.69 1,819.11 1,912.2325.59% 25.59% 25.14% 24.74% 24.43% 24.48% 24.39% 24.29% 24.20% 24.10%332.00 367.71 396.09 429.32 462.48 496.05 541.63 574.50 609.92 640.15

33.94% 33.89% 33.44% 33.49% 33.44% 33.00% 33.57% 33.45% 33.53% 33.48%$646.10 $717.30 $788.22 $852.72 $920.53 $1,006.98 $1,071.58 $1,143.18 $1,209.18 $1,272.0716.90% 16.92% 16.73% 16.46% 16.26% 16.40% 16.20% 16.17% 16.09% 16.03%241.00 269.66 304.32 345.13 388.35 411.37 444.47 476.62 508.15 537.9639.63 44.85 51.73 58.59 65.94 74.04 81.28 89.42 97.43 105.57

$926.73 $1,031.81 $1,144.27 $1,256.44 $1,374.83 $1,492.40 $1,597.33 $1,709.23 $1,814.77 $1,915.6024.25% 24.34% 24.29% 24.25% 24.29% 24.31% 24.15% 24.17% 24.14% 24.14%

2,254.00 2,590.62 2,930.16 3,199.92 3,526.89 3,858.88 4,193.40 4,522.27 4,841.68 5,130.4858.97% 61.10% 62.20% 61.75% 62.30% 62.85% 63.40% 63.95% 64.41% 64.66%

1,804.03 1,717.19 1,940.41 2,167.66 2,404.29 2,646.88 2,893.71 3,139.07 3,460.06 3,703.0547.20% 40.50% 41.19% 41.83% 42.47% 43.11% 43.75% 44.39% 46.03% 46.67%$449.97 $873.43 $989.75 $1,032.27 $1,122.60 $1,212.00 $1,299.69 $1,383.20 $1,381.62 $1,427.4211.77% 20.60% 21.01% 19.92% 19.83% 19.74% 19.65% 19.56% 18.38% 17.99%$0.97 423.46 116.32 42.51 90.34 89.40 87.69 83.51 -1.58 45.81213.00 233.20 259.10 285.01 311.36 337.69 363.78 388.94 413.43 436.405.57% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50%

0.00 84.80 94.22 103.64 113.22 122.80 132.28 141.43 150.34 158.690.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

$712.77 $290.35 $674.64 $825.27 $859.91 $942.51 $1,013.58 $1,095.35 $1,252.57 $1,274.70269.35 580.57 658.83 636.82 647.51 645.97 647.59 686.98 648.55

1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00

1249.1 1388.6 1526.3 1668.6 1816.7 1963.5 2110.6 2250.9 2387.4 2513.732.68% 32.75% 32.40% 32.20% 32.09% 31.98% 31.91% 31.83% 31.76% 31.68%

U O I G 15


Appendix 3 Revenue Model

Revenue Model($ in millions) 2008A 2009A 2010AFinancial Management Solutions 592 579 611% Growth (2.20%) 5.53%Employee Management Solutions 337 365 418% Growth 8.31% 14.52%Payment Solutions 254 291 313% Growth 14.57% 7.56%Consumer Tax 929 996 1146% Growth 7.21% 15.06%Accounting Professionals 327 352 373% Growth 7.65% 5.97%Financial Services 298 311 332% Growth 4.36% 6.75%Other Businesses 256 215 262% Growth (16.02%) 21.86%Total Revenue 2993 3109 3455% Growth 3.88% 11.13%

2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E672 741 817 890 962 1029 1091 1145 1191 1227

10.00% 10.20% 10.30% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00%457 502.7 554.0 603.8 652.1 697.8 739.7 776.6 807.7 831.9

9.33% 10.00% 10.20% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00%348 387.0 430.3 473.3 516.0 557.2 599.0 635.0 676.2 713.4

11.18% 11.20% 11.20% 10.00% 9.00% 8.00% 7.50% 6.00% 6.50% 5.50%1298 1470.4 1665.6 1857.2 2052.2 2247.2 2438.2 2621.0 2791.4 2944.9

13.26% 13.28% 13.28% 11.50% 10.50% 9.50% 8.50% 7.50% 6.50% 5.50%399 426.9 457.7 489.7 526.9 564.9 603.3 641.9 680.4 717.8

6.97% 7.00% 7.20% 7.00% 7.60% 7.20% 6.80% 6.40% 6.00% 5.50%346 365.0 386.9 408.2 428.6 447.9 465.8 482.1 496.6 509.0

4.22% 5.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50%302 347.3 399.4 459.3 523.6 595.9 677.5 769.6 873.5 990.6

15.27% 15.00% 15.00% 15.00% 14.00% 13.80% 13.70% 13.60% 13.50% 13.40%3822 4240 4711 5182 5661 6140 6614 7072 7517 7935

10.63% 10.93% 11.11% 10.00% 9.24% 8.46% 7.73% 6.92% 6.30% 5.56%

U O I G 16


Appendix 4 Working Capital Model

Working Capital Model($ in millions)Total Revenue

Current AssetsCash & Cash Equivalents% of RevenueAccounts Receivable(includes accts receivables, net and other receivables)Days A/R Outstanding % of Revenue

2008A 2009A 2010A$2,993.00 $3,109.00 $3,455.00

$827.80 $1,347.00 $1,622.0027.66% 43.33% 46.95%$187.80 $213.30 $162.00

6.27% 6.86% 4.69%

2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E$3,822.10 $4,239.96 $4,710.87 $5,182.06 $5,661.14 $6,139.83 $6,614.20 $7,071.58 $7,516.97 $7,934.54

$1,421.00 $1,568.79 $1,747.73 $1,927.73 $2,111.61 $2,296.30 $2,480.32 $2,658.91 $2,833.90 $2,991.3237.18% 37.00% 37.10% 37.20% 37.30% 37.40% 37.50% 37.60% 37.70% 37.70%$243.00 $279.84 $325.05 $316.11 $356.65 $399.09 $443.15 $487.94 $526.94 $556.21

24.09 25.19 22.27 23.06 23.73 24.46 25.19 25.66 25.596.36% 6.60% 6.90% 6.10% 6.30% 6.50% 6.70% 6.90% 7.01% 7.01%

Prepaid Expenses and Other Current Assets% of RevenueOther Assets (investments, income tax receivables, deferred income taxes, funds held from customers)% of Revenue

757.90 407.50 511.0025.32% 13.11% 14.79%

0.00 0.00 0.000.00% 0.00% 0.00%

590.00 $678.39 $763.16 $849.86 $939.75 $1,031.49 $1,124.41 $1,216.31 $1,307.95 $1,396.4815.44% 16.00% 16.20% 16.40% 16.60% 16.80% 17.00% 17.20% 17.40% 17.60%

0.00 $63.60 $94.22 $106.23 $118.88 $132.01 $145.51 $159.11 $172.89 $186.460.00% 1.50% 2.00% 2.05% 2.10% 2.15% 2.20% 2.25% 2.30% 2.35%

Total Current Assets% of Revenue

1773.5 1967.8 2295.059.25% 63.29% 66.43%

2254.0 2590.6 2930.2 3199.9 3526.9 3858.9 4193.4 4522.3 4841.7 5130.558.97% 61.10% 62.20% 61.75% 62.30% 62.85% 63.40% 63.95% 64.41% 64.66%

Current LiabilitiesAccounts Payable% of RevenueAccrued Charges (Accrued compensation and related liabilities)

115.20 105.00 143.003.85% 3.38% 4.14%268.10 211.70 249.00

128.03 144.16 161.11 178.26 195.88 213.67 231.50 248.92 266.10 282.473.35% 3.40% 3.42% 3.44% 3.46% 3.48% 3.50% 3.52% 3.54% 3.56%215.00 237.44 264.75 292.27 320.42 348.74 377.01 404.49 431.47 457.03

% of RevenueIncome Taxes Payable % of RevenueDeferred Revenue% of RevenueCurrent Portion of Long Term Debt% of RevenueOther Liabilities% of RevenueTotal Current Liabilities% of Revenue

8.96% 6.81% 7.21%16.20 0.40 14.00

0.54% 0.01% 0.41%359.94 378.15 387.00

12.03% 12.16% 11.20%0.40 0.00 0.00

0.01% 0.00% 0.00%707.36 388.55 428.00

23.63% 12.50% 12.39%1467.20 1083.80 1221.0049.02% 34.86% 35.34%

5.58% 5.60% 5.62% 5.64% 5.66% 5.68% 5.70% 5.72% 5.74% 5.76%0.00 233.20 263.81 295.38 328.35 362.25 396.85 431.37 466.05 499.88

0.00% 5.50% 5.60% 5.70% 5.80% 5.90% 6.00% 6.10% 6.20% 6.30%406.00 466.40 520.55 572.62 625.56 678.45 730.87 781.41 830.63 876.77

10.54% 11.00% 11.05% 11.05% 11.05% 11.05% 11.05% 11.05% 11.05% 11.05%500.00 0 0 0 0 0 0 0 $75.17 $79.35

13.08% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.00% 1.00%555.00 635.99 730.18 829.13 934.09 1043.77 1157.48 1272.88 1390.64 1507.56

14.41% 15.00% 15.50% 16.00% 16.50% 17.00% 17.50% 18.00% 18.50% 19.00%1804.03 1717.19 1940.41 2167.66 2404.29 2646.88 2893.71 3139.07 3460.06 3703.0547.20% 40.50% 41.19% 41.83% 42.47% 43.11% 43.75% 44.39% 46.03% 46.67%

U O I G 17


Appendix 5 Discounted Cash F lows Analysis Assumptions

Discounted Free Cash Flow Assumptions ConsiderationsTax Rate 33.48% Terminal Growth Rate 3.00%Risk Free Rate 2% Terminal Value 27,369Beta 0.87 PV of Terminal Value 13,925Market Risk Premium 7.00% Sum of PV Free Cash Flows 5,422% Equity 93.67% Firm Value 19,347% Debt 6.33% Total Debt 998Cost of Debt 5.58% Cash & Cash Equivalents 722CAPM 8.07% Market Capitalization 18349WACC 7.80% Fully Diluted Shares 304

Implied Price 60Current Price 52Undervalued 16.07%

U O I G 18


Appendix 6

Year Company's Name1993 ChipSoft, Inc. (TurboTax product line)1998 Lacerte Software Corporation and Lacerte Educational Services Corporation (Professional tax)1999 TaxByte, Inc. (Professional tax)1999 Computing Resources, Inc. (Payroll services)1999 Compucraft Tax Services, LLC (Professional tax)1999 Boston Light Software Corporation (Small business services)1999 SecureTax, Inc. (Professional tax)1999 Turning Mill Software, Inc. (Small business services)1999 Rock Financial Corporation (Quicken Loans)2000 Greenpoint Software Ltd. (Professional tax - Canada)2000 EmployeeMatters, Inc. (Employee administration services)2001 Tax and Accounting Software Corporation (Professional tax)2002 CBS Employer Services (Payroll services)2002 Management Reports Inc. (Property manager solutions)2002 Eclipse, Inc. (Wholesale durable goods distributors management software)2003 Income Dynamics, Inc (Consumer tax)2003 Innovative Merchant Solutions (Small business services)2005 MyCorporation.com (Online business incorporation services)2006 StepUp Commerce Inc. (Online shopping services)2007 Digital Insight Corp. (On-demand banking services)2007 Homestead Technologies Inc. (Web site and Web store solutions)2008 Electronic Clearing House Inc. (Electronic payment processing solutions)2009 PayCycle, Inc. (online payroll for small business)2010 Medfusion (Online patient-to-provider healthcare communications)

Significant Company Acquisitions

U O I G 19


Appendix 7

Sources

SEC Filings Intuit Investor Relations page (http://investors.intuit.com/) Intuit presentations Earnings call transcripts IBIS World Lexis Nexis S&P Net Advantage Factset

intuit report

Documents

e f f iciecny f

e f f iciency

financial services

t e rn

e n t intuit plans

t e g y intuit plans

r e pub

f unds