Net revenue for the current quarter ended January 31, 1997 increased 21% to $266.0 million from $219.0 million in the year ago quarter. Net revenue in the year ago quarter reflected net revenue from continuing operations and did not include $2.7 million in net revenue attributable to the Company's former online banking and bill payment transaction processing business, which was sold to CheckFree Corporation in January 1997. (See Intuit's Form 10-K for the fiscal year ended 1996.)

The Company reported net income of $115.9 million, or $2.44 per share, during the current quarter. The results for the current quarter included a gain on the sale of discontinued operations of $71.2 million, net of tax, in connection with the sale of Intuit's online banking and bill payment transaction processing business to CheckFree Corporation (see Sale of Intuit Services Corporation). For the corresponding year ago quarter, the Company reported net income of $21.9 million, or $0.46 per share. Results included acquisition-related charges, net of tax, totaling $7.6 million in the current quarter and $16.8 million in the year ago quarter. Results for the year ago quarter also included a loss from discontinued operations of $2.2 million arising from the online banking and bill payment business..

The Company's net income, excluding both the acquisition-related expenses and the gain on the sale of discontinued operations, increased 28% to $52.3 million, or $1.10 per share, for the current quarter. This compares to net income, excluding acquisition related charges and a loss from discontinued operations of $40.8 million, of $0.85 per share, for the year ago quarter.

As previously reported, Intuit's revenue and profitability are typically highest in the January quarter, reflecting the highly seasonal nature of the Company's tax return preparation products. Significantly lower levels of revenue are generated in the April, July and October quarters, although operating expenses to develop new products and services and updated versions of existing products continue during these periods. As a result, the Company typically produces more than 100% of its annual profits in the January quarter.

Business Review and Forward Looking Comments
Scott D. Cook, Chairman of the Board, commented: "Overall revenue for the Company increased 21% compared to the same period last year. Continuing strong growth in our Business Products Group was accelerated by the December launch of QuickBooks® 5.0 and QuickBooks Pro™ 5.0. Financial Supplies continued to outperform the average revenue growth rate for the Company. Our Personal Tax Group launched its tax products slightly ahead of last year's timing, with seasonally strong shipments up over the prior year. Intuit's fastest growth was in our Internet businesses, including InsureMarket SM and Quicken Financial Network™, albeit from a very small base in the year ago quarter."

Intuit's largest business, tax, released its final products for the tax season during the quarter. "While initial results of the tax launch are encouraging and we have received strong support from our retailers," continued Mr. Cook, "it is still too early to predict results for our full tax season." TurboTax® captured the top spot on PC Data's January retail best-seller list, excluding games, and Intuit products occupied three of the top five spots. TurboTax won all major trade press awards, including PC Magazine's "Editor's Choice", PC World's "Top Honors" and PC Computing's "Useability Lab Approved" awards. In additon, Intuit introduced TurboTax 1040EZ Online (http://www.qfn.com/taxcenter/), a completely Internet/Java-based tax solution for 1040EZ filers, at the end of the quarter. More than 20 million Americans file 1040EZ tax returns.

Small business, Intuit's second largest business, continues to deliver the strongest revenue growth rate of the Company's software businesses. QuickBooks 5.0 and QuickBooks Pro 5.0 were released in late December, accelerating QuickBook's already strong growth. With more than 70% share of retail sales in its category and more than a million users, QuickBooks was rated the "best small-office accounting package" by PC Computing.

Quicken®, remains the most popular personal finance software in the market today with more than 80% share of retail sales in its category. Quicken for Windows retail unit sell-through rose 14% versus the year ago quarter according to PC Data. Direct sales of Quicken grew much more strongly, driven by upgrades and sales to OEM consumers, and are now a significant portion of Quicken sales. Combining the direct and retail channels, the Company estimates that Quicken's strong share of sales is essentially unchanged. Despite Quicken Windows progress, total personal finance group revenues declined slightly, reflecting lower Quicken for Macintosh® sales, a lower average selling price and lower sales of non-Quicken software products. The Company is cautious about further growth in personal finance, as we expect softness in consumer software during the remainder of the year.

Revenue for the Company's Parsons subsidiary grew modestly in the current quarter versus the year ago quarter, an improvement over the October quarter's slight decline. This improvement is largely attributable to the introduction of Parsons' line of tax products for the 1996 tax season. Parsons continues to experience lower direct mail response rates on its overall product offerings. The Company expects softness in consumer software will cause this trend to continue through the remainder of the fiscal year.

Canadian sales increased significantly in the current quarter compared to the year ago quarter. Canada's QuickTax™ product, which was released in the second fiscal quarter this year, was released in the third fiscal quarter last year. In addition, the Company launched the first release of QuickBooks designed for Canada during the current quarter. Overall International revenues, however, were essentially flat for the current quarter when compared with the year ago quarter, when German sales were skewed to the first half of the year.

Continuing its strategy of building a strong presence in small business accounting products for international markets, Intuit announced plans for its Japanese subsidiary, Milkyway KK, to acquire Nihon Micom Co. Ltd., also located in Japan. Nihon Micom has developed a strong small business accounting product line, including a series of recently released upgrades, that is becoming increasingly popular in the retail channel. The price of the planned acquisition is approximately $39 million. The transaction is expected to close during the fiscal quarter ending April 30, 1997.

Internet Initiatives
A small but growing part of Intuit's business is related to electronic connectivity and the World Wide Web. Revenue for the current quarter includes a $10 million service and license fee for providing connectivity to Quicken for CheckFree customers.

Intuit made significant progress in its efforts to develop a widely used open communication standard with a joint announcement by Intuit, Microsoft and CheckFree creating a single, unified technical specification, called Open Financial Exchange™. Open Financial Exchange will enable financial institutions to exchange financial data over the Internet with Web users and users of personal finance, accounting and tax software. "Convergence around a unified specification will accelerate the adoption of electronic financial connectivity and represents a dramatic benefit for financial services providers and their customers," said William H. Harris, executive vice president of Intuit. Accelerating the adoption of electronic financial connectivity is expected to open the door for consumers to manage their personal finances online with the institution of their choice, growing the market for the types of Web-based consumer and small business financial services that Intuit is developing.

Traffic continues to grow rapidly on Intuit's Quicken Financial Network (http://www.qfn.com/) Web site. Intuit's combined Web sites currently rank among the 50 most frequented Web sites accessed from consumers' homes, according to PC Meter, an independent Internet usage measurement service. QFN provides customers a variety of financial news, information, products and services, such as Intuit's InsureMarket and NETworth™ Web sites. Intuit recently announced the addition of two new insurance companies, Transamerica Occidental Life Insurance Company and Western Security Life, to InsureMarket's list of carriers. They will join other firms already announced: MetLife, State Farm Insurance, The Allstate Insurance Company, John Hancock Financial Services, Lincoln Benefit Life, TIG Insurance Company and Zurich Direct.

Sale of Intuit Services Corporation
On January 27, 1997, Intuit completed the sale of its online banking and bill payment processing unit known as Intuit Services Corporation, or ISC, to CheckFree Corporation. CheckFree acquired ISC in exchange for 12.6 million shares of CheckFree common stock, representing 23% of CheckFree's 54.2 million shares outstanding. Intuit recorded a gain on the sale of discontinued operations of $71.2 million, net of tax, in connection with this transaction in the current quarter. The Company's investment in CheckFree shares is reflected in marketable securities on Intuit's Balance Sheet.

In early February, 1997 Intuit completed the planned sale of two million shares of CheckFree common stock, reducing its ownership interest in CheckFree to approximately 19.6% of CheckFree's outstanding shares and allowing Intuit to account for its investment in CheckFree using the cost method of accounting. Intuit received approximately $29 million in February in connection with the sale of these shares. Intuit continues to hold an investment in CheckFree Corporation of 10.6 million shares.

Six Month Review and Fiscal Year Outlook
For the six months ended January 31, 1997, net revenue was $368.5 million, compared to $321.2 million for the same period last year. Net revenue in the six months ended January 31, 1996 reflected net revenue from continuing operations and did not include $4.1 million in net revenue attributable to the Company's former online banking and bill payment transaction processing business which was sold to CheckFree Corporation.

The Company reported net income of $87.6 million, or $1.85 per share, during the six months ended January 31, 1997 compared with net income of $1.6 million, or $0.03 per share, for the six months ended January 31, 1996. The results for the six months ended January 31, 1997 included a gain on the sale of discontinued operations of $71.2 million, net of tax, in connection with the sale of Intuit's online banking and bill payment transaction processing business to CheckFree Corporation. Results for the six months ended January 31, 1996 included a loss from discontinued operations of $3.8 million, net of tax, arising from the online banking and bill payment business. Excluding acquisition related charges and a gain on the sale of discontinued operations, net of tax, the Company earned a profit of $38.3 million for the six months ended January 31, 1997. Excluding acquisition related charges and a loss from operations of discontinued operations, net of tax, the Company earned a profit of $31.7 million for the six months ended January 31, 1996.

Earnings per share before acquisition related charges and gain on the sale of discontinued operations, net of tax, were $0.81 for the six months ended January 31, 1997, compared to earnings per share before acquisition related charges and loss from operations of discontinued operations, net of tax, of $0.67 per share for the six months ended January 31, 1996.

Despite 21% revenue growth in the most recent quarter, Intuit's outlook for the second half of fiscal 1997 is cautious. The Company believes there is likely to be continued softness in the consumer software market during the second half of its fiscal year. Mr. Cook commented, "While we now expect revenue growth to be somewhat lower than originally anticipated, we are managing our expenses and investment spending to deliver earnings per share for our shareholders which are in line with the current range of analysts' expectations for the full fiscal year."

The foregoing paragraph contains specific forward looking statements. There can be no assurance that the Company will meet the revenue, earnings per share or other expectations discussed herein, or that the Company will not encounter difficulties in its efforts to meet these expectations. The Company's revenues are difficult to predict with certainty and its expenses are largely fixed over the near term. Accordingly, it may not be possible to achieve expense savings in time to achieve earnings per share targets through expense reductions alone.