INTUIT INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide readers of our consolidated financial statements with the perspectives of management. This should allow the readers of this report to obtain a comprehensive understanding of our businesses, strategies, current trends, and future prospects. Our MD&A includes the following sections: • Executive Overview: High level discussion of our operating results and some of the trends that affect our business. • Critical Accounting Policies and Estimates: Policies and estimates that we believe are important to understanding the assumptions and judgments underlying our financial statements.
• Results of Operations: A more detailed discussion of our revenue and expenses.
• Liquidity and Capital Resources: Discussion of key aspects of our consolidated statements of cash flows, changes in our consolidated balance sheets, and our financial commitments. You should note that this MD&A contains forward-looking statements that involve risks and uncertainties. Please see the section entitled "Forward-Looking Statements" immediately preceding Part I for important information to consider when evaluating such statements. You should read this MD&A in conjunction with the financial statements and related notes in Item 8 of this Annual Report. Due to the COVID-19 pandemic we continue to conduct business with substantial modifications to employee work locations and employee travel, among other modifications. InJune 2021 a small number of employees started returning to work locations on a limited basis. While we have not experienced significant disruptions to our operations from the COVID-19 pandemic, we are unable to predict the full impact that the COVID-19 pandemic will have on our operations and future financial performance, including demand for our offerings, impact to our customers and partners, actions that may be taken by governmental authorities, and other factors identified in "Risk Factors" in Item 1A of Part I of this Report. InApril 2020 , Intuit was approved as a non-bankSmall Business Administration lender for the Paycheck Protection Program (PPP). The PPP was authorized under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide small businesses loans to pay payroll and group health costs, salaries and commissions, mortgage and rent payments, utilities, and interest on other debt which is designed to provide assistance to small businesses during the COVID-19 pandemic. InAugust 2020 , we reorganized certain technology and customer success functions that support and benefit our overall platform. Additionally, certain legal, facility and employee service costs are now managed at the corporate level. As a result, these costs are no longer included in segment operating income and are now included in other corporate expenses. For the twelve months endedJuly 31, 2020 and 2019, we reclassified$180 million and$172 million from Small Business & Self-Employed,$121 million and$78 million from Consumer, and$13 million and$12 million from ProConnect to other corporate expenses. InAugust 2020 , we also renamed our Strategic Partner segment as the ProConnect segment. This segment continues to serve professional accountants. In fiscal 2021 we acquired Credit Karma. We have included their results of operations in our consolidated results of operations from the date of acquisition. Credit Karma operates as a separate reportable segment. Segment operating income for Credit Karma includes all direct expenses related to selling and marketing, product development, and general and administrative, which is different from our other reportable segments. See Note 6 in Item 8 of this Annual Report for more information. EXECUTIVE OVERVIEW This overview provides a high level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important in order to understand our financial results for fiscal 2021 as well as our future prospects. This summary is not intended to be exhaustive, nor is it a substitute for the detailed discussion and analysis provided elsewhere in this Annual Report on Form 10-K. Industry Trends and Seasonality Industry Trends Artificial Intelligence (AI) is transforming multiple industries, including financial technology. Disruptive start-ups, emerging ecosystems and mega-platforms are harnessing new technology to create personalized experiences, deliver data-driven insights and increase speed of service. These shifts are creating a more dynamic and highly competitive environment where customer expectations are shifting around the world as more services become digitized and the array of choices continues to increase. Intuit Fiscal 2018 Form 10-K 34 -------------------------------------------------------------------------------- Tables of Contents Seasonality Our Consumer and ProConnect offerings have a significant and distinct seasonal pattern as sales and revenue from our income tax preparation products and services are typically concentrated in the period from November through April. This seasonal pattern typically results in higher net revenues during our second and third quarters endingJanuary 31 andApril 30 , respectively. Due to the COVID-19 pandemic, the timing of tax filing seasons for fiscal 2021 and fiscal 2020 varied significantly. In fiscal 2019, theIRS began accepting returns onJanuary 28, 2019 and the tax filing deadline wasApril 15, 2019 . In fiscal 2020, theIRS began accepting returns onJanuary 27, 2020 and the tax filing deadline wasJuly 15, 2020 . In fiscal 2021, theIRS began accepting returns onFebruary 12, 2021 and the tax filing deadline wasMay 17, 2021 . These changes to the tax filing seasons impacted our quarterly financial results during fiscal 2021 and fiscal 2020. We expect the seasonality of our Consumer and ProConnect businesses to continue to have a significant impact on our quarterly financial results in the future. Key Challenges and Risks Our growth strategy depends upon our ability to initiate and embrace disruptive technology trends, to enter new markets, and to drive broad adoption of the products and services we develop and market. Our future growth also increasingly depends on the strength of our third-party business relationships and our ability to continue to develop, maintain, and strengthen new and existing relationships. To remain competitive and continue to grow, we are investing significant resources in our product development, marketing, and sales capabilities, and we expect to continue to do so in the future. As we offer more online services, the ongoing operation and availability of our platforms and systems and those of our external service providers is becoming increasingly important. Because we help customers manage their financial lives, we face risks associated with the hosting, collection, use, and retention of personal customer information and data. We are investing significant management attention and resources in our information technology infrastructure and in our privacy and security capabilities, and we expect to continue to do so in the future. For our consumer and professional tax offerings, we have implemented additional security measures and are continuing to work with state and federal governments to implement industry-wide security and anti-fraud measures, including sharing information regarding suspicious filings. We received ISO 27001 certification for a portion of our systems and we continue to invest in security measures and to work with the broader industry and government to protect our customers against this type of fraud. Additionally, Credit Karma's security measures are regularly reviewed and updated. For a complete discussion of the most significant risks and uncertainties affecting our business, please see "Forward-Looking Statements" immediately preceding Part I and "Risk Factors" in Item 1A of Part I of this Report Intuit Fiscal 2021 Form 10-K 35 -------------------------------------------------------------------------------- Tables of Contents Overview of Financial Results The most important financial indicators that we use to assess our business are revenue growth for the company as a whole and for each reportable segment; operating income growth for the company as a whole; earnings per share; and cash flow from operations. We also track certain non-financial drivers of revenue growth and, when material, identify them in the applicable discussions of segment results below. Service offerings are a significant part of our business. Our total service and other revenue was$7.9 billion or 82% of our total revenue in fiscal 2021 and we expect our total service and other revenue to continue to grow in the future. Key highlights for fiscal 2021 include the following: Small Business &
Self-Employed
Revenue of revenue of Consumer revenue of$9.6 B$4.7 B$3.6 B up 25% from fiscal 2020 up 16% from fiscal 2020 up 14% from fiscal 2020 Operating income of Net income of Diluted net income per share of$2.5 B$2.1 B$7.56 up 15% from fiscal 2020 up 13% from fiscal 2020 up 9% from fiscal 2020 We ended fiscal 2021 with cash, cash equivalents and investments totaling$3.9 billion . CRITICAL ACCOUNTING POLICIES AND ESTIMATES In preparing our consolidated financial statements in accordance withU.S. generally accepted accounting principles (GAAP), we are required to make estimates, assumptions, and judgments that can have a significant impact on our net revenue, operating income or loss and net income or loss, as well as on the value of certain assets and liabilities on our consolidated balance sheets. We believe that the estimates, assumptions, and judgments involved in the following accounting policies have the greatest potential impact on our consolidated financial statements, so we consider these to be our critical accounting policies: •Revenue Recognition •Business Combinations •Goodwill, Acquired Intangible Assets, and Other Long-Lived Assets - Impairment Assessments •Legal Contingencies •Accounting for Income Taxes - Estimates of Deferred Taxes, Valuation Allowances, and Uncertain Tax Positions Our senior management has reviewed the development and selection of these critical accounting policies and their disclosure in this Annual Report on Form 10-K with theAudit and Risk Committee of our Board of Directors. Revenue Recognition We derive our revenue primarily from the sale of online services such as tax, accounting, payroll, merchant payment processing, delivery of qualified links and packaged desktop software products and desktop software subscriptions. Our contracts with customers often include promises to transfer multiple products and services. In determining how revenue should be recognized, a five-step process is used, which requires judgment and estimates within the revenue recognition process. The primary judgments include identifying the performance obligations in the contract and determining whether the performance obligations are distinct. If any of these judgments were to change it could cause a material increase or decrease in the amount Intuit Fiscal 2021 Form 10-K 36 -------------------------------------------------------------------------------- Tables of Contents of revenue we report in a particular period. For additional information, see "Revenue Recognition" in Note 1 to the financial statements in Item 8 of this Annual Report. Business Combinations As described in "Description of Business and Summary of Significant Accounting Policies - Business Combinations," in Note 1 to the financial statements in Item 8 of this Annual Report, under the acquisition method of accounting we generally recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree at their fair values as of the date of acquisition. We measure goodwill as the excess of consideration transferred, which we also measure at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method of accounting requires us to exercise judgment and make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities related to uncertain tax positions, and contingencies. This method also requires us to refine these estimates over a one-year measurement period to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could materially decrease our operating income and net income and result in lower asset values on our consolidated balance sheet. Significant estimates and assumptions that we must make in estimating the fair value of acquired technology, customer lists, and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed.Goodwill , Acquired Intangible Assets and Other Long-Lived Assets - Impairment Assessments We estimate the fair value of acquired intangible assets and other long-lived assets that have finite useful lives whenever an event or change in circumstances indicates that the carrying value of the asset may not be recoverable. We test for potential impairment of goodwill and other intangible assets that have indefinite useful lives annually in our fourth fiscal quarter or whenever indicators of impairment arise. The timing of the annual test may result in charges to our consolidated statement of operations in our fourth fiscal quarter that could not have been reasonably foreseen in prior periods. As described in "Description of Business and Summary of Significant Accounting Policies -Goodwill , Acquired Intangible Assets and Other Long-Lived Assets," in Note 1 to the financial statements in Item 8 of this Annual Report, in order to estimate the fair value of goodwill we use a weighted combination of a discounted cash flow model (known as the income approach) and comparisons to publicly traded companies engaged in similar businesses (known as the market approach). The income approach requires us to use a number of assumptions, including market factors specific to the business, the amount and timing of estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for the business, and a rate of return that considers the relative risk of achieving the cash flows and the time value of money. We evaluate cash flows at the reporting unit level. Although the assumptions we use in our discounted cash flow model are consistent with the assumptions we use to generate our internal strategic plans and forecasts, significant judgment is required to estimate the amount and timing of future cash flows from each reporting unit and the relative risk of achieving those cash flows. When using the market approach, we make judgments about the comparability of publicly traded companies engaged in similar businesses. We base our judgments on factors such as size, growth rates, profitability, risk, and return on investment. We also make judgments when adjusting market multiples of revenue, operating income, and earnings for these companies to reflect their relative similarity to our own businesses. See Note 5 to the financial statements in Item 8 of this Annual Report for a summary of goodwill by reportable segment. We estimate the recoverability of acquired intangible assets and other long-lived assets that have finite useful lives by comparing the carrying amount of the asset to the future undiscounted cash flows that we expect the asset to generate. In order to estimate the fair value of those assets, we estimate the present value of future cash flows from those assets. The key assumptions that we use in our discounted cash flow model are the amount and timing of estimated future cash flows to be generated by the asset over an extended period of time and a rate of return that considers the relative risk of achieving the cash flows and the time value of money. Significant judgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cash flows. We also make judgments about the remaining useful lives of acquired intangible assets and other long-lived assets that have finite lives. See Note 5 to the financial statements in Item 8 of this Annual Report for a summary of cost, accumulated amortization and weighted average life in years for our acquired intangible assets. Assumptions and estimates about future values and remaining useful lives are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. For example, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units, we may be required to record future impairment charges for goodwill and Intuit Fiscal 2021 Form 10-K 37 -------------------------------------------------------------------------------- Tables of Contents acquired intangible assets. Impairment charges could materially decrease our future net income and result in lower asset values on our consolidated balance sheet. During the fourth quarters of fiscal 2021, fiscal 2020, and fiscal 2019 we performed our annual goodwill impairment tests. Using the methodology described in "Description of Business and Summary of Significant Accounting Policies -Goodwill , Acquired Intangible Assets and Other Long-Lived Assets," in Note 1 to the financial statements in Item 8 of this Annual Report, we determined that the estimated fair values of all of our reporting units exceeded their carrying values and that they were not impaired. In addition, during this analysis we concluded that the estimated fair values of all of our reporting units substantially exceeded their carrying values. Legal Contingencies We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. We review the status of each significant matter quarterly and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we record a liability and an expense for the estimated loss. If we determine that a loss is possible and the range of the loss can be reasonably determined, then we disclose the range of the possible loss. Significant judgment is required in the determination of whether a potential loss is probable, reasonably possible, or remote as well as in the determination of whether a potential exposure is reasonably estimable. Our accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Potential legal liabilities and the revision of estimates of potential legal liabilities could have a material impact on our financial position and results of operations. See Note 13 to the financial statements in Item 8 of this Annual Report for more information. Accounting for Income Taxes - Estimates of Deferred Taxes, Valuation Allowances, and Uncertain Tax Positions We estimate our income taxes based on the various jurisdictions where we conduct business. Significant judgment is required in determining our worldwide income tax provision. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by theUnited States Internal Revenue Service or other taxing jurisdictions. We estimate our current tax liability and assess temporary differences that result from differing treatments of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which we show on our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be realized. To the extent we believe that realization is not likely, we establish a valuation allowance. When we establish a valuation allowance or increase this allowance in an accounting period, we record a corresponding tax expense in our consolidated statement of operations. We record a valuation allowance to reflect uncertainties about whether we will be able to utilize our deferred tax assets before they expire. We assess the need for an adjustment to the valuation allowance on a quarterly basis. The assessment is based on our estimates of future sources of taxable income in the jurisdictions in which we operate and the periods over which our deferred tax assets will be realizable. While we have considered future taxable income in assessing the need for a valuation allowance for the periods presented, we could in the future be required to increase the valuation allowance to take into account additional deferred tax assets that we may be unable to realize. An increase in the valuation allowance could have an adverse impact on our income tax provision and net income in the period in which we record the change. We recognize and measure benefits for uncertain tax positions using a two-step approach. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained upon audit, including resolution of any related appeals or litigation processes. For tax positions that are more likely than not of being sustained upon audit, the second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Significant judgment is required to evaluate uncertain tax positions. We evaluate our uncertain tax positions on a quarterly basis. Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law, correspondence with tax authorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions could result in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on our effective tax rate and operating results. See Note 10 to the financial statements in Item 8 of this Annual Report for more information. Intuit Fiscal 2021 Form 10-K 38
-------------------------------------------------------------------------------- Tables of Contents RESULTS OF OPERATIONS A discussion regarding our financial condition and results of operations for fiscal 2021 compared to fiscal 2020 is presented below. A discussion regarding our financial condition and results of operations for fiscal 2020 compared to fiscal 2019 can be found under Item 7 of Part II in our Annual Report on Form 10-K for the fiscal year endedJuly 31, 2020 , filed with theSEC onAugust 31, 2020 , which is available free of charge on theSEC's website at www.sec.gov and on the Investor Relations section of our corporate website at investors.intuit.com. Financial Overview (Dollars in millions, except per Fiscal Fiscal Fiscal 2021-2020 2020-2019 share amounts) 2021 2020 2019 % Change % Change Total net revenue$9,633 $7,679 $6,784 25 % 13 % Operating income 2,500 2,176 1,854 15 % 17 % Net income 2,062 1,826 1,557 13 % 17 % Diluted net income per share$7.56 $6.92 $5.89 9 % 17 % Total net revenue increased$2.0 billion or 25% in fiscal 2021 compared with fiscal 2020. The acquisition of Credit Karma contributed$865 million to total revenue in fiscal 2021. Our Small Business & Self-Employed segment revenue increased 16% primarily due to growth in our Online Ecosystem revenue. Our Consumer segment revenue increased 14% primarily due to a shift in mix to our higher priced offerings including TurboTax Live and growth in TurboTax federal units. See "Segment Results" later in this Item 7 for more information. Operating income increased$324 million or 15% in fiscal 2021 compared with fiscal 2020. The increase was due to the higher revenue described above partially offset by an increase in expenses primarily for staffing, marketing, share-based compensation, and amortization of other acquired intangible assets. See "Operating Expenses" later in this Item 7 for more information. Net income increased$236 million or 13% in fiscal 2021 compared with fiscal 2020 due to the increase in operating income described above, a$30 million gain from the sale of a note receivable that was previously written off, and a$17 million gain on other long-term investments. These increases were partially offset by a higher tax expense for the period. Diluted net income per share increased 9% to$7.56 for fiscal 2021 due to the increase in net income, which was partially offset by an increase in the weighted average shares outstanding due to the shares issued as part of the acquisition of Credit Karma in the second quarter of fiscal 2021. Segment Results The information below is organized in accordance with our four reportable segments. All of our segments operate and sell to customers primarily inthe United States . Total international net revenue was less than 5% of consolidated total net revenue for the twelve months endedJuly 31, 2021 , 2020 and 2019. InAugust 2020 , we reorganized certain technology and customer success functions that support and benefit our overall platform. Additionally, certain legal, facility and employee service costs are now managed at the corporate level. As a result, these costs are no longer included in segment operating income and are now included in other corporate expenses. For the twelve months endedJuly 31, 2020 and 2019, we reclassified$180 million and$172 million from Small Business & Self-Employed,$121 million and$78 million from Consumer, and$13 million and$12 million from ProConnect to other corporate expenses. InAugust 2020 , we also renamed our Strategic Partner segment as the ProConnect segment. This segment continues to serve professional accountants. InDecember 2020 we acquired Credit Karma in a business combination and it operates as a separate reportable segment. We have included the results of operations of Credit Karma in our consolidated statements of operations from the date of acquisition. See Note 6 to the financial statements in Item 8 of this Annual Report for more information. Segment operating income for Credit Karma includes all direct expenses, which is different from our other reportable segments where we do not fully allocate corporate expenses. Segment operating income is segment net revenue less segment cost of revenue and operating expenses. For our Small Business & Self-Employed, Consumer, and ProConnect reportable segments, we include expenses such as corporate selling and marketing, product development, and general and administrative, which are not allocated to specific segments, in unallocated corporate items as part of other corporate expenses. For Credit Karma, segment expenses include all direct expenses related to selling and marketing, product development, and general and administrative. Unallocated corporate items for all segments include share-based compensation, amortization of acquired technology, amortization of other acquired intangible assets, and goodwill and intangible asset impairment charges. These unallocated costs for all segments totaled$2.9 billion in fiscal 2021,$2.3 billion in fiscal 2020, and$2.0 billion in fiscal 2019. Unallocated costs increased in fiscal 2021 Intuit Fiscal 2021 Form 10-K 39 -------------------------------------------------------------------------------- Tables of Contents compared with fiscal 2020 due to increased corporate product development, selling and marketing, and general and administrative expenses in support of the growth of our businesses, higher share-based compensation expenses, higher amortization of acquired technology, and higher amortization of other acquired intangible assets. See Note 14 to the financial statements in Item 8 of this Annual Report for reconciliations of total segment operating income to consolidated operating income for each fiscal year presented. Intuit Fiscal 2021 Form 10-K 40
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Small Business & Self-Employed [[Image Removed: intu-20210731_g3.jpg]]
[[Image Removed: intu-20210731_g4.jpg]] Small Business & Self-Employed segment revenue includes both Online Ecosystem and Desktop Ecosystem revenue. Our Online Ecosystem includes revenue from QuickBooks Online, QuickBooks Live, QuickBooks Online Advanced and QuickBooks Self-Employed financial and business management offerings; small business payroll services, including QuickBooks Online Payroll, Intuit Online Payroll, Intuit Full Service Payroll; merchant payment processing services for small businesses who use online offerings; QuickBooks Commerce, QuickBooks Cash, and financing for small businesses. Our Desktop Ecosystem includes revenue from our QuickBooks Desktop packaged software products (Desktop Pro, Desktop for Mac, Desktop Premier, andQuickBooks Point of Sale); QuickBooks Desktop software subscriptions (QuickBooks Desktop Pro Plus, QuickBooks Desktop Premier Plus, and QuickBooks Enterprise, and ProAdvisor Program memberships for the accounting professionals who serve small businesses); desktop payroll products (QuickBooks Basic Payroll, QuickBooks Assisted Payroll and QuickBooks Enhanced Payroll); merchant payment processing services for small businesses who use desktop offerings; financial supplies; and financing for small businesses. Segment product revenue is derived from revenue related to software license and version protection for our QuickBooks Desktop products and subscriptions, license and related updates for our desktop payroll products and financial supplies, which are all part of our Desktop Ecosystem. Segment service and other revenue is derived from our Online Ecosystem revenue; and Desktop Ecosystem revenue related to support and connected services for our QuickBooks Desktop and desktop payroll products and subscriptions and merchant payment processing services. Fiscal Fiscal Fiscal 2021-2020 2020-2019 (Dollars in millions) 2021 2020 2019 % Change % Change Product revenue$ 1,085 $ 1,032 $ 1,036 Service and other revenue 3,603 3,018 2,497 Total segment revenue$ 4,688 $ 4,050 $ 3,533 16 % 15 % % of total revenue 49 % 53 % 52 % Segment operating income$ 2,590 $ 2,091 $ 1,722 24 % 21 % % of related revenue 55 % 52 % 49 %
Revenue classified by significant product and service offerings was as follows:
Fiscal Fiscal Fiscal 2021-2020 2020-2019
(Dollars in millions) 2021 2020 2019 % Change % Change
Net revenue:
QuickBooks Online Accounting $ 1,699 $ 1,354 $ 980 25 % 38 %
Online Services 1,051 828 683 27 % 21 %
Total Online Ecosystem 2,750 2,182 1,663 26 % 31 %
QuickBooks Desktop Accounting 789 755 732 5 % 3 %
Desktop Services and Supplies 1,149 1,113 1,138 3 % (2 %)
Total Desktop Ecosystem 1,938 1,868 1,870 4 % - %
Total Small Business & Self-Employed $ 4,688 $ 4,050 $ 3,533 16 % 15 %
Intuit Fiscal 2021 Form 10-K 41
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Revenue for our Small Business & Self-Employed segment increased$638 million or 16% in fiscal 2021 compared with fiscal 2020. The increase was primarily due to growth in Online Ecosystem revenue. Fiscal 2021 and 2020 revenue includes$20 million and$30 million , respectively, of nonrecurring revenue related to the Payroll Protection Program, of which$12 million and$16 million , respectively, related to our Online Ecosystem and$8 million and$14 million , respectively, related to our Desktop Ecosystem. Online Ecosystem Online Ecosystem revenue increased$568 million or 26% in fiscal 2021 compared with fiscal 2020. QuickBooks Online Accounting revenue increased 25% in fiscal 2021 compared with fiscal 2020 primarily due to an increase in customers, a shift in mix to our higher priced offerings and higher effective prices. Online Services revenue increased 27% in fiscal 2021 compared with fiscal 2020 primarily due to an increase in revenue from our payments and payroll offerings. Online payments revenue increased due to an increase in customers and an increase in charge volume per customer. Online payroll revenue increased due to an increase in customers and a shift in mix to our full service offering. Desktop Ecosystem Desktop Ecosystem revenue increased$70 million in fiscal 2021 compared with fiscal 2020 primarily due to growth in our QuickBooks Desktop Enterprise subscription offering due to an increase in customers and higher revenue for our desktop payments offering due to higher charge volume. Also, during fiscal 2021 there was an increase in revenue from license updates as a result of price increases that occurred during fiscal 2020. These increases were partially offset by a decline in desktop unit revenue. Small Business & Self-Employed segment operating income increased$499 million or 24% in fiscal 2021 compared with fiscal 2020 primarily due to the increase in revenue described above, partially offset by higher expenses. We incurred higher expenses for marketing, outside services, and sales related expenses, which were partially offset by a decrease in depreciation. InAugust 2020 , we reorganized certain technology and customer success functions that support and benefit our overall platform. Additionally, certain legal, facility and employee service costs are now managed at the corporate level. As a result, these costs are no longer included in segment operating income and are now included in other corporate expenses. For the twelve months endedJuly 31, 2020 and 2019, we reclassified$180 million and$172 million from Small Business & Self-Employed to other corporate expenses. Intuit Fiscal 2021 Form 10-K 42
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Consumer [[Image Removed: intu-20210731_g5.jpg]]
[[Image Removed: intu-20210731_g6.jpg]]
Consumer segment product revenue is derived primarily from TurboTax desktop tax
return preparation software and related form updates.
Consumer segment service and other revenue is derived primarily from TurboTax
Online and TurboTax Live offerings, electronic tax filing services and connected
services, and also from our Mint offering.
Fiscal Fiscal Fiscal 2021-2020 2020-2019
(Dollars in millions) 2021 2020 2019 % Change % Change
Product revenue $ 201 $ 203 $ 201
Service and other revenue 3,362 2,933 2,574
Total segment revenue $ 3,563 $ 3,136 $ 2,775 14 % 13 %
% of total revenue 37 % 41 % 41 %
Segment operating income $ 2,237 $ 2,063 $ 1,820 8 % 13 %
% of related revenue 63 % 66 % 66 %
Revenue for our Consumer segment increased $427 million or 14% in fiscal 2021
compared with fiscal 2020 primarily due to a shift in mix to our higher priced
product offerings including TurboTax Live and a 6% growth in TurboTax federal
units.
Consumer segment operating income increased $174 million or 8% in fiscal 2021
compared with fiscal 2020 due to the higher revenue described above, which was
partially offset by higher expenses for staffing, marketing, and outside
services.
In August 2020 , we reorganized certain technology and customer success functions
that support and benefit our overall platform. Additionally, certain legal,
facility and employee service costs are now managed at the corporate level. As a
result, these costs are no longer included in segment operating income and are
now included in other corporate expenses. For the twelve months ended July 31,
2020 and 2019, we reclassified $121 million and $78 million from Consumer to
other corporate expenses.
Intuit Fiscal 2021 Form 10-K 43
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Credit Karma [[Image Removed: intu-20210731_g7.jpg]]
[[Image Removed: intu-20210731_g8.jpg]]
Credit Karma revenue is derived from cost-per-action transactions, which include
the delivery of qualified links that result in completed actions such as credit
card issuances and personal loan funding; and cost-per-click and cost-per-lead
transactions, which include user clicks on advertisements or advertisements that
allow for the generation of leads, and primarily relate to mortgage and
insurance businesses.
Fiscal Fiscal Fiscal 2021-2020 2020-2019
(Dollars in millions) 2021 2020 2019 % Change % Change
Product revenue $ - $ - $ -
Service and other revenue 865 - -
Total segment revenue $ 865 $ - $ - N/A N/A
% of total revenue 9 % - % - %
Segment operating income $ 182 $ - $ - N/A N/A
% of related revenue 21 % N/A N/A
On December 3, 2020 we acquired Credit Karma. Our results of operations include
the operations of Credit Karma beginning on the date of acquisition.
Credit Karma contributed $865 million in revenue in fiscal 2021. Revenue is
primarily generated from cost-per-action transactions which are related to
credit card issuances and personal loan funding.
Segment operating income was $182 million in fiscal 2021. Expenses were
primarily related to staffing and marketing.
Intuit Fiscal 2021 Form 10-K 44
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ProConnect [[Image Removed: intu-20210731_g9.jpg]]
[[Image Removed: intu-20210731_g10.jpg]]
ProConnect segment product revenue is derived primarily from Lacerte, ProSeries,
and ProFile desktop tax preparation software products and related form updates.
ProConnect segment service and other revenue is derived primarily from
ProConnect Tax Online tax products, electronic tax filing service, connected
services, and bank products.
Fiscal Fiscal Fiscal 2021-2020 2020-2019
(Dollars in millions) 2021 2020 2019 % Change % Change
Product revenue $ 412 $ 400 $ 386
Service and other revenue 105 93 90
Total segment revenue
5 % 4 %
% of total revenue 5 % 6 % 7 %
Segment operating income $ 372 $ 346 $ 330 8 % 5 %
% of related revenue 72 % 70 % 69 %
In August 2020 , we renamed our Strategic Partner segment as the ProConnect
segment. This segment continues to serve professional accountants.
Revenue for our ProConnect segment increased $24 million or 5% in fiscal 2021
compared with fiscal 2020 primarily due to a higher average revenue per customer
and customer growth.
ProConnect segment operating income increased $26 million or 8% in fiscal 2021
compared with fiscal 2020 primarily due to the higher revenue described above
and slightly lower spending.
In August 2020 , we reorganized certain technology and customer success functions
that support and benefit our overall platform. Additionally, certain legal,
facility and employee service costs are now managed at the corporate level. As a
result, these costs are no longer included in segment operating income and are
now included in other corporate expenses. For the twelve months ended July 31,
2020 and 2019, we reclassified $13 million and $12 million from ProConnect to
other corporate expense
Intuit Fiscal 2021 Form 10-K 45
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Cost of Revenue
% of % of % of
Fiscal Related Fiscal Related Fiscal Related
(Dollars in millions) 2021 Revenue 2020 Revenue 2019 Revenue
Cost of product revenue $ 69 4 % $ 72 4 % $ 77 5 %Cost of service and other revenue 1,564 20 % 1,284
21 % 1,070 21 %
Amortization of acquired technology 50 n/a 22 n/a 20 n/a
Total cost of revenue $ 1,683 17 % $ 1,378 18 % $ 1,167 17 %
Our cost of revenue has three components: (1) cost of product revenue, which
includes the direct costs of manufacturing and shipping or electronically
downloading our desktop software products; (2) cost of service and other
revenue, which includes the direct costs associated with our online and service
offerings, such as costs for data processing and storage capabilities from cloud
providers, customer support costs, and costs for the tax and bookkeeping experts
that support our TurboTax Live and QuickBooks Live offerings, costs related to
credit score providers, and depreciation expense for developed technology; and
(3) amortization of acquired technology, which represents the cost of amortizing
developed technologies that we have obtained through acquisitions over their
useful lives.
Cost of product revenue as a percentage of product revenue was relatively
consistent in fiscal 2021 compared with fiscal 2020. We expense costs of product
revenue as they are incurred for delivered software and we do not defer any of
these costs when product revenue is deferred.
Cost of service and other revenue as a percentage of service and other revenue
decreased slightly in fiscal 2021 compared with fiscal 2020. The acquisition of
Credit Karma contributed $209 million to cost of service and other revenue for
fiscal 2021. The decrease in cost of service and other revenue as a percentage
of service and other revenue is primarily due to the increase in revenue
described above. Additionally, during fiscal 2021 we experienced an increase in
customer success costs for TurboTax Live due to customer growth, partially
offset by a decrease in depreciation expense.
Operating Expenses
% of % of % of
Total Total Total
Fiscal Net Fiscal Net Fiscal Net
(Dollars in millions) 2021 Revenue 2020 Revenue 2019 Revenue
Selling and marketing $ 2,644 28 % $ 2,048 27 % $ 1,927 28 %
Research and development 1,678 17 % 1,392 18 % 1,233 18 %
General and administrative 982 10 % 679 9 % 597 9 %
Amortization of other acquired
intangible assets 146 2 % 6 - % 6 - %
Total operating expenses $ 5,450 57 % $ 4,125 54 % $ 3,763 55 %
Total operating expenses as a percentage of total net revenue increased in
fiscal 2021 compared to fiscal 2020. Total net revenue increased $2.0 billion or
25% and total operating expenses increased $1.3 billion or 32%, which includes
$616 million of operating expenses related to Credit Karma. Total share-based
compensation expense increased $309 million ; total staffing increased $396
million , including $246 million related to Credit Karma; total marketing
increased $383 million , including $197 million related to Credit Karma; and
total amortization of other acquired intangible assets increased $140 million ,
which was primarily related to Credit Karma.
Non-Operating Income and Expenses
Interest Expense
Interest expense of $29 million in fiscal 2021 consisted primarily of interest
on our senior unsecured notes, secured revolving credit facility, unsecured term
loan, and unsecured revolving credit facility. Interest expense of $14 million
in fiscal 2020 consisted primarily of interest on our unsecured term loan,
unsecured revolving credit facility, secured revolving credit facility, and
senior unsecured notes. See Note 7 and Note 8 to the financial statements in
Item 8 of this Annual Report for more information.
Intuit Fiscal 2021 Form 10-K 46
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Interest and Other Income, Net
(In millions) Fiscal 2021 Fiscal 2020 Fiscal 2019
Interest income (1) $ 11 $ 39 $ 46
Net gain on executive deferred compensation plan assets (2) 28 5 3
Other (3) 46 (8) (7)
Total interest and other income, net $ 85 $ 36 $ 42
(1) Interest income decreased in fiscal 2021 compared to fiscal 2020 due to
lower average invested balances and lower average interest rates.
(2) In accordance with authoritative guidance, we record gains and losses
associated with executive deferred compensation plan assets in interest and
other income and gains and losses associated with the related liabilities in
operating expenses. The total amounts recorded in operating expenses for each
period are approximately equal to the total amounts recorded in interest and
other income in those periods.
(3) In fiscal 2021 we recorded a $30 million gain from the sale of a note
receivable that was previously written off and gains on other long-term
investments of $17 million .
Income Taxes
Our effective tax rates for fiscal 2021 and fiscal 2020 were approximately 19%
and 17%, respectively. Excluding the tax benefits related to share-based
compensation, our effective tax rate for fiscal 2021 was approximately 24%. This
rate differed from the federal statutory rate of 21% primarily due to state
income taxes and non-deductible share-based compensation, which were partially
offset by the benefit we received from the federal research and experimentation
credit. Excluding the tax benefits related to share-based compensation, our
effective tax rate for fiscal 2020 was approximately 21%. This rate did not
differ significantly from the federal statutory rate of 21% as state income
taxes and non-deductible share-based compensation were substantially offset by
the benefit we received from the federal research and experimentation credit.
See Note 10 to the financial statements in Item 8 of this Annual Report for more
information about our effective tax rates.
At July 31, 2021 , we had net deferred tax liabilities of $517 million which
included a valuation allowance for state research and experimentation tax credit
carryforwards, foreign loss carryforwards, foreign intangible deferred tax
assets and state operating and capital loss carryforwards. See "Critical
Accounting Policies and Estimates" earlier in this Item 7 and Note 10 to the
financial statements in Item 8 of this Annual Report for more information.
In the current global tax policy environment, the U.S. and other domestic and
foreign governments continue to consider, and in some cases enact, changes in
corporate tax laws. As changes occur, we account for finalized legislation in
the period of enactment.
Intuit Fiscal 2021 Form 10-K 47
-------------------------------------------------------------------------------- Tables of Contents LIQUIDITY AND CAPITAL RESOURCES
Overview
AtJuly 31, 2021 , our cash, cash equivalents and investments totaled$3.9 billion , a decrease of$3.2 billion fromJuly 31, 2020 due to the factors described in "Statements of Cash Flows" below. Our primary sources of liquidity have been cash from operations, which includes the collection of accounts receivable for products and services, the issuance of senior unsecured notes, and borrowings under our credit facilities. Our primary uses of cash have been for research and development programs, selling and marketing activities, repurchases of our common stock under our stock repurchase programs, the payment of cash dividends, debt service costs and debt repayment, acquisitions of businesses, and capital projects. As discussed in "Executive Overview - Industry Trends and Seasonality" earlier in this Item 7, our business is subject to significant seasonality. The balance of our cash, cash equivalents and investments generally fluctuates with that seasonal pattern. We believe the seasonality of our business is likely to continue in the future. The following table summarizes selected measures of our liquidity and capital resources at the dates indicated: July 31, July 31, $ % (Dollars in millions) 2021 2020 Change Change Cash, cash equivalents and investments$ 3,870 $ 7,050 $ (3,180) (45) % Long-term investments 43 19 24 126 % Short-term debt - 1,338 (1,338) (100) % Long-term debt 2,034 2,031 3 - % Working capital 2,502 4,451 (1,949) (44) % Ratio of current assets to current liabilities 1.9 : 1 2.3 : 1 We have historically generated significant cash from operations and we expect to continue to do so during fiscal 2022. Our cash, cash equivalents, and investments totaled$3.9 billion atJuly 31, 2021 , none of those funds were restricted, and approximately 92% of those funds were located in theU.S. OnDecember 3, 2020 we acquired Credit Karma. The fair value of the purchase consideration totaled$7.2 billion and included$3.4 billion in cash, 10.6 million shares of Intuit common stock with a fair value of$3.8 billion and assumed equity awards for services rendered through the acquisition date of$47 million . See "Business Combinations" below for more information. In the fourth quarter of fiscal 2020, we borrowed the full$1 billion under our unsecured revolving credit facility which we repaid InAugust 2020 . The unsecured revolving credit facility is available to us for general corporate purposes. In the fourth quarter of fiscal 2020, we also issued$2 billion in senior unsecured notes for general corporate purposes, which was used to fund a portion of the acquisition of Credit Karma. See "Commitments for Senior Unsecured Notes" later in this Item 7 for more information. Based on past performance and current expectations, we believe that our cash and cash equivalents, investments, and cash generated from operations will be sufficient to meet anticipated seasonal working capital needs, capital expenditure requirements, contractual obligations, commitments, debt service requirements, and other liquidity requirements associated with our operations for at least the next 12 months. We believe that our financial resources will allow us to manage any impact of COVID-19 on our business operations for the foreseeable future, which could include potential reductions in revenue and delays in payments from customers and partners. We expect to return excess cash generated by operations to our stockholders through payment of cash dividends, after taking into account our operating and strategic cash needs. Our secured revolving credit facility is available to fund a portion of our loans to qualified small businesses. AtJuly 31, 2021 ,$48 million was outstanding under the secured revolving credit facility. See "Credit Facilities" later in this Item 7 for more information. We evaluate, on an ongoing basis, the merits of acquiring technology or businesses, or establishing strategic relationships with and investing in other companies. Our strong liquidity profile enables us to quickly respond to these kinds of opportunities. Intuit Fiscal 2021 Form 10-K 48
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Statements of Cash Flows
The following table summarizes selected items from our consolidated statements
of cash flows for fiscal 2021, fiscal 2020, and fiscal 2019. See the financial
statements in Item 8 of this Annual Report for complete consolidated statements
of cash flows for those periods.
Fiscal Fiscal Fiscal
(Dollars in millions) 2021 2020 2019
Net cash provided by (used in):
Operating activities $ 3,250 $ 2,414 $ 2,324
Investing activities (3,965) (97) (635)
Financing activities (3,176) 2,034 (965)Effect of exchange rates on cash, cash equivalents, restricted cash, and restricted cash equivalents
13 (6) (3)
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
$ (3,878)
During fiscal 2021 we generated$3.3 billion in cash from operations and$196 million from the issuance of common stock under employee stock plans. During the same period we used$3.1 billion for the acquisitions of businesses,$1.3 billion for the repayment of debt,$1.0 billion for the repurchase of shares of our common stock under our stock repurchase programs,$710 million for the net purchases of investments,$646 million for the payment of cash dividends,$383 million for payments for employee taxes withheld upon vesting of restricted stock units,$125 million for capital expenditures, and$96 million for net originations of term loans. During fiscal 2020 we generated$2.4 billion in cash from operations. We also received$2 billion from the issuance of senior unsecured notes,$1 billion from borrowings under our unsecured revolving credit facility,$44 million for net principal repayments of term loans, and$25 million from the net sales and maturities of investments. During the same period we used$561 million for the payment of cash dividends,$323 million for the repurchase of shares of our common stock under our stock repurchase programs,$137 million for capital expenditures,$50 million for the repayment of debt, and$33 million from the issuance of common stock under employee stock plans, net of payments for employee taxes withheld upon vesting of restricted stock units. Stock Repurchase Programs and Dividends on Common Stock As described in Note 11 to the financial statements in Item 8 of this Annual Report, during fiscal 2021 and fiscal 2020 we continued to repurchase shares of our common stock under a series of repurchase programs that our Board of Directors has authorized. AtJuly 31, 2021 , we had authorization from our Board of Directors to expend up to an additional$1.3 billion for stock repurchases. OnAugust 20, 2021 our Board approved a new stock repurchase program under which we are authorized to repurchase up to an additional$2 billion of our common stock. We currently expect to continue repurchasing our common stock on a quarterly basis; however, future stock repurchases under the current program are at the discretion of management, and authorization of future stock repurchase programs is subject to the final determination of our Board of Directors. We have continued to pay quarterly cash dividends on shares of our outstanding common stock. During fiscal 2021 we declared cash dividends that totaled$2.36 per share of outstanding common stock or approximately$651 million . InAugust 2021 our Board of Directors declared a quarterly cash dividend of$0.68 per share of outstanding common stock payable onOctober 18, 2021 to stockholders of records at the close of business onOctober 11, 2021 . We currently expect to continue paying comparable cash dividends on a quarterly basis; however, future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors. Business Combinations OnDecember 3, 2020 we acquired Credit Karma for total consideration of$8.1 billion which included assumed equity awards and restricted shares subject to a revest provision. The fair value of the purchase consideration totaled$7.2 billion and included$3.4 billion in cash, 10.6 million shares of Intuit common stock with a fair value of$3.8 billion and assumed equity awards for services rendered through the acquisition date of$47 million . We also issued shares of common stock with a fair value of$275 million which are restricted due to a revest provision, and will be expensed over a service period of three years. The share-based compensation expense related to these restricted shares is non-deductible for income tax purposes. Additionally, we assumed equity awards for future services with a fair value of$663 million that are being charged to expense over the remaining service periods, which average approximately three years. The fair value of the stock consideration is based on theDecember 2, 2020 closing price of Intuit common stock of$355.49 . As part of the merger agreement, following the close of the transaction, we issued approximately$300 million of restricted stock units to the employees of Credit Karma, which will be charged to expense over a service period of four years. Intuit Fiscal 2021 Form 10-K 49
-------------------------------------------------------------------------------- Tables of Contents Credit Karma operates as a separate reportable segment. We have included the financial results of Credit Karma in the consolidated financial statements from the date of acquisition. See Note 6 to the financial statements in Item 8 of this Annual Report for more information. Commitments for Senior Unsecured Notes InJune 2020 , we issued$2 billion of senior unsecured notes comprised of the following: •$500 million of 0.650% notes dueJuly 2023 ; •$500 million of 0.950% notes dueJuly 2025 ; •$500 million of 1.350% notes dueJuly 2027 ; and •$500 million of 1.650% notes dueJuly 2030 (together, the Notes). Interest is payable semiannually onJanuary 15 andJuly 15 of each year. AtJuly 31, 2021 , our maximum commitment for interest payments under the Notes was$140 million through the maturity dates. The Notes are senior unsecured obligations of Intuit and rank equally with all existing and future unsecured and unsubordinated indebtedness of Intuit and are redeemable by us at any time, subject to a make-whole premium. Upon the occurrence of change of control transactions that are accompanied by certain downgrades in the credit ratings of the Notes, we will be required to repurchase the Notes at a repurchase price equal to 101% of the aggregate outstanding principal plus any accrued and unpaid interest to but not including the date of repurchase. The indenture governing the Notes requires us to comply with certain covenants. For example, the Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As ofJuly 31, 2021 we were compliant with all covenants governing the Notes. See Note 8 to the financial statements in Item 8 of this Annual Report for more information. Credit Facilities Unsecured Revolving Credit Facility and Term Loan OnMay 2, 2019 we entered into an amended and restated credit agreement with certain institutional lenders for a credit facility with an aggregate principal amount of$1.4 billion , including a$1 billion unsecured revolving credit facility that matures onMay 2, 2024 and a$400 million unsecured term loan that matured onFebruary 1, 2021 . Under the amended and restated credit agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the unsecured revolving credit facility in an amount not to exceed$250 million in the aggregate and may extend the maturity date up to two times. Advances under the unsecured revolving credit facility accrue interest at rates that are equal to, at our election, eitherBank of America's alternate base rate plus a margin that ranges from 0.0% to 0.1% or theLondon Interbank Offered Rate (LIBOR) plus a margin that ranges from 0.69% to 1.1%. Actual margins under either election will be based on our senior debt credit ratings. InMay 2020 , we borrowed the full$1 billion under the unsecured revolving credit facility and during the first quarter of fiscal 2021 we repaid the outstanding balance. AtJuly 31, 2021 , no amounts were outstanding under the unsecured revolving credit facility. We currently believe that the credit facility will be available to us should we choose to borrow under it. We monitor counterparty risk associated with the institutional lenders that are providing the credit facility. OnFebruary 1, 2021 , we paid the$325 million remaining balance of the term loan upon maturity and atJuly 31, 2021 , no amount was outstanding.The term loan accrued interest at rates that are equal to, at our election, eitherBank of America's alternate base rate plus a margin that ranges from 0.0% to 0.125% or LIBOR plus a margin that ranges from 0.625% to 1.125%. Under this agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the term loan in an amount not to exceed$400 million in the aggregate. This option continues to be available to us through the maturity of the amended and restated credit agreement. The amended and restated credit agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total gross debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 as of any date and a ratio of annual EBITDA to annual interest expense of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. As ofJuly 31, 2021 we were compliant with all required covenants. Secured Revolving Credit Facility OnFebruary 19, 2019 a subsidiary of Intuit entered into a$300 million secured revolving credit facility with a lender to fund a portion of our loans to qualified small businesses. The revolving credit facility is secured by cash and receivables of the subsidiary and is non-recourse toIntuit Inc. We have entered into several amendments to the secured revolving credit facility, most recently onJuly 16, 2021 , primarily to extend the commitment term and maturity date. Under the amended agreement,$150 million of the facility is committed and$150 million is uncommitted. Advances accrue interest at LIBOR plus 1.5%. Unused portions of the committed credit facility accrue interest at a rate ranging from 0.25% to 0.75%, depending on the total unused committed balance. The commitment term is throughJuly 17, 2023 and the final maturity date isJanuary 17, 2024 . The amended agreement allows for the transition of the benchmark interest rate used to calculate finance charges from Intuit Fiscal 2021 Form 10-K 50 -------------------------------------------------------------------------------- Tables of Contents LIBOR to the Secured Overnight Finance Rate (SOFR) plus related benchmark adjustments that represent the prevailing market convention for dollar-denominated syndicated credit facilities. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As ofJuly 31, 2021 we were compliant with all required covenants. AtJuly 31, 2021 ,$48 million was outstanding under this facility and the weighted-average interest rate was 3.21%, which includes the interest on the unused committed portion. The outstanding balance is secured by cash and receivables of the subsidiary totaling$199 million . Cash Held by Foreign Subsidiaries Our cash, cash equivalents and investments totaled$3.9 billion atJuly 31, 2021 . Approximately 8% of those funds were held by our foreign subsidiaries and subject to repatriation tax considerations. These foreign funds were located primarily inCanada , theUnited Kingdom , andIndia . As a result of the 2017 Tax Act we do not expect to pay incrementalU.S. taxes on repatriation. We have recorded income tax expense forCanada andIndia withholding taxes on earnings that are not permanently reinvested. In the event that funds from foreign operations are repatriated tothe United States , we would pay withholding taxes at that time. CONTRACTUAL OBLIGATIONS The following table summarizes our known contractual obligations to make future payments atJuly 31, 2021 : Payments Due by Period Less than 1-3 3-5 More than (In millions) 1 year years years 5 years Total Amounts due under executive deferred compensation plan$ 153 $ - $ - $ -$ 153 Senior unsecured notes - 500 500 1,000 2,000 Secured revolving credit facility - 48 - - 48 Interest and fees due on debt 25 48 35 40 148 Operating leases (1) 76 159 107 139 481 Purchase obligations (2) 205 215 111 - 531 Total contractual obligations (3)$ 459 $
970
(1)Includes operating leases for facilities and equipment. Amounts do not include$41 million of future sublease income or$43 million in minimum lease payments for leases signed but not yet commenced. We had no significant finance leases atJuly 31, 2021 . See Note 9 to the financial statements in Item 8 of this Annual Report for more information. (2)Represents agreements to purchase products and services that are enforceable, legally binding and specify terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the payments. (3)Other long-term obligations on our consolidated balance sheet atJuly 31, 2021 included long-term income tax liabilities of$24 million which related primarily to unrecognized tax benefits. We have not included this amount in the table above because we cannot make a reasonably reliable estimate regarding the timing of settlements with taxing authorities, if any.
RECENT ACCOUNTING PRONOUNCEMENTS
For a description of recent accounting pronouncements and the potential impact
of these pronouncements on our consolidated financial statements, see Note 1 to
the financial statements in Item 8 of this Annual Report.
Intuit Fiscal 2021 Form 10-K 51
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