Discontinued Operations
Intuit Financial Services
On July 1, 2013 we signed a definitive agreement to sell our Intuit Financial Services (IFS) business and on August 1, 2013 we completed the sale for approximately $1.025 billion in cash. We expect to record a pre-tax gain on disposal of approximately $49 million in the first quarter of fiscal 2014. The decision to sell the IFS business was a result of management's desire to focus resources on our offerings for small businesses, consumers, and accounting professionals. The IFS business comprised substantially all of our former Financial Services reporting segment.
We determined that our IFS business became a long-lived asset held for sale in the fourth quarter of fiscal 2013. A long-lived asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell. Since the carrying value of IFS at July 31, 2013 was less than the estimated fair value less cost to sell, no adjustment to the carrying value of this long-lived asset was necessary at that date.
We also classified our IFS business as discontinued operations in the fourth quarter of fiscal 2013 and have therefore segregated its operating results and net assets from continuing operations in our statements of operations and on our balance sheets for all periods presented. Because operating cash flows from the IFS business were not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.
See the table later in this Note for more information on the IFS operating results. The carrying amounts of the major classes of assets and liabilities of IFS at July 31, 2013 and July 31, 2012 were as shown in the following table. These carrying amounts approximated fair value.
|
| | | | | | | |
| July 31, |
(In millions) | 2013 | | 2012 |
Accounts receivable | $ | 40 |
| | $ | 41 |
|
Other current assets | 4 |
| | 5 |
|
Property and equipment, net | 31 |
| | 24 |
|
Goodwill | 914 |
| | 914 |
|
Purchased intangible assets, net | 4 |
| | 6 |
|
Other assets | 6 |
| | 12 |
|
Total assets | 999 |
| | 1,002 |
|
| | | |
Accounts payable | 15 |
| | 18 |
|
Accrued compensation | 21 |
| | 17 |
|
Deferred revenue | 3 |
| | 4 |
|
Long-term obligations | 9 |
| | 10 |
|
Total liabilities | 48 |
| | 49 |
|
Net assets | $ | 951 |
| | $ | 953 |
|
Intuit Health
In July 2013 management having the authority to do so formally approved a plan to sell our Intuit Health business and on August 19, 2013 we completed the sale for cash consideration that was not significant. Intuit Health was part of our Other Businesses reporting segment. The decision to sell the Intuit Health business was a result of management's desire to focus resources on its offerings for small businesses, consumers, and accounting professionals.
We determined that our Intuit Health business became a long-lived asset held for sale in the fourth quarter of fiscal 2013. A long-lived asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell. Since the carrying value of Intuit Health at July 31, 2013 was less than the estimated fair value less cost to sell, no adjustment to the carrying value of this long-lived asset was necessary at that date.
We also classified our Intuit Health business as discontinued operations in the fourth quarter of fiscal 2013 and have segregated its operating results in our statements of operations for all periods presented. See the table later in this Note for more information. We have not segregated the net assets of Intuit Health on our balance sheets for any period presented. Net assets held for sale at July 31, 2013 consisted primarily of operating assets and liabilities that were not material. Net assets held for sale at July 31, 2012 consisted primarily of goodwill of $38 million, intangible assets of $9 million, and operating assets and liabilities that were not material. Because operating cash flows from the Intuit Health business were also not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.
Intuit Websites
In July 2012 management having the authority to do so formally approved a plan to sell our Intuit Websites business, which was a component of our Financial Management Solutions reporting segment. The decision was the result of a shift in our strategy for helping small businesses to establish an online presence. On August 10, 2012 we signed a definitive agreement to sell our Intuit Websites business and on September 17, 2012 we completed the sale for approximately $60 million in cash. We recorded a gain on disposal of approximately $32 million, net of income taxes.
We determined that our Intuit Websites business became a long-lived asset held for sale in the fourth quarter of fiscal 2012. A long-lived asset classified as held for sale is measured at the lower of its carrying amount or fair value less cost to sell. Since the carrying value of Intuit Websites at July 31, 2012 was less than the estimated fair value less cost to sell, no adjustment to the carrying value of this long-lived asset was necessary at that date.
We also classified our Intuit Websites business as discontinued operations in the fourth quarter of fiscal 2012 and have segregated its operating results in our statements of operations for all periods presented. See the table later in this Note for more information. Net assets held for sale at July 31, 2012 consisted primarily of operating assets and liabilities that were not material, so we have not segregated them on our balance sheets. Because operating cash flows from the Intuit Websites business were also not material for any period presented, we have not segregated them from continuing operations on our statements of cash flows.
Net Income (Loss) from Discontinued Operations
Net revenue from discontinued operations, income or loss from discontinued operations before income taxes, and the components of net income (loss) from discontinued operations were as follows for the periods indicated:
|
| | | | | | | | | | | |
| Twelve Months Ended July 31, |
(In millions) | 2013 | | 2012 | | 2011 |
Net revenue from discontinued operations: | | | | | |
Intuit Financial Services | $ | 325 |
| | $ | 326 |
| | $ | 311 |
|
Intuit Health | 16 |
| | 18 |
| | 12 |
|
Intuit Websites | 10 |
| | 76 |
| | 79 |
|
Total net revenue from discontinued operations | $ | 351 |
| | $ | 420 |
| | $ | 402 |
|
| | | | | |
Income (loss) from discontinued operations before income taxes: | | | | | |
Intuit Financial Services | $ | 52 |
| | $ | 41 |
| | $ | 21 |
|
Intuit Health | (71 | ) | | (29 | ) | | (67 | ) |
Intuit Websites | — |
| | (18 | ) | | (30 | ) |
Total loss from discontinued operations before income taxes | $ | (19 | ) | | $ | (6 | ) | | $ | (76 | ) |
| | | | | |
Net income (loss) from discontinued operations: | | | | | |
Net income from Intuit Financial Services operations | $ | 34 |
| | $ | 23 |
| | $ | 14 |
|
Net gain on disposal of Intuit Financial Services discontinued operations | 8 |
| | — |
| | — |
|
Net loss from Intuit Health operations | (57 | ) | | (20 | ) | | (50 | ) |
Net gain on disposal of Intuit Health discontinued operations | 18 |
| | — |
| | — |
|
Net loss from Intuit Websites operations | — |
| | (11 | ) | | (18 | ) |
Net gain on disposal of Intuit Websites discontinued operations | 32 |
| | 36 |
| | — |
|
Total net income (loss) from discontinued operations | $ | 35 |
| | $ | 28 |
| | $ | (54 | ) |
The net gains on disposal of Intuit Financial Services and Intuit Health for the twelve months ended July 31, 2013 and of Intuit Websites for the twelve months ended July 31, 2012 were comprised of tax benefits from the anticipated sales of those businesses. See Note 11, “Income Taxes,” for more information.
