Financial Review
For the fourth quarter in a row, Intuit reported solid growth in pro forma net revenue compared to the corresponding quarter of the prior year. For fiscal 1998, first quarter, pro forma net revenue was $96.0 million, up 13% from the corresponding quarter of the prior year. For fiscal 1997, first quarter pro forma net revenue was $84.8 million. Pro forma figures reflect the results from ongoing operations. Due to the high level of acquisition and disposition activity, the financial community generally views pro forma results as a more appropriate measure of the Company's ongoing performance. The pro forma figures do not include acquisition-related charges or the results of Parsons Technology Inc. (Parsons) which was sold on August 7, 1997.

Consistent with expected seasonal patterns, the Company reported a pro forma net loss per share of $0.26, for the first quarter of fiscal 1998. This represents an improvement versus the $0.31 pro forma net loss per share reported for the corresponding prior year quarter. (See Table B).

Including acquisition-related charges and results from Parsons through August 7, 1997 in order to follow generally accepted accounting principles, the Company reported net revenue of $96.0 million for the first fiscal quarter ended October 31, 1997. For the corresponding prior year quarter, the Company reported net revenue of $102.5 million, which included $17.7 million associated with the Parsons operations. Results for the first fiscal quarter reflected a net loss of $12.8 million, or $0.27 per share, and included acquisition-related charges of $4.6 million. Results for the corresponding prior year quarter reflected a net loss of $28.3 million, or $0.61 per share, and included acquisition-related charges of $15.3 million.

As previously indicated, the Company typically experiences lower revenue and operating losses for the October fiscal quarter due to the seasonal nature of its tax return preparation products. During this period, few people buy tax return preparation software while operating expenses necessary to develop and support the updated versions continue.

Business Highlights
Scott D. Cook, Chairman of the Board, commented, "I am pleased with the accomplishments we have made during the past quarter. Our Small Business Division performed strongly, as demand for existing products continued to be robust. Positive initial response to our new version of Quicken supports our strategy to connect our desktop software to the power of the Internet. We also achieved major milestones in our Internet electronic commerce business, enhancing Quicken.com as the objective source to make the most of your money."

During the quarter, Intuit saw strong growth in retail demand for its QuickBooks product, as more and more small businesses sought help in managing and automating their monthly financial activity. QuickBooks maintained its share of retail sales to over 80%. The next version of QuickBooks is anticipated to launch at the end of the fiscal year. In contrast, last year the new version of QuickBooks launched mid-fiscal year, in December, aiding sales through that winter. Therefore, the next two quarters' results will be negatively impacted by this difference in product launch timing when compared against fiscal 1997.

Quicken.com (www.quicken.com) now offers the most comprehensive financial experience on the Web with a broad and rich array of financial services. In the first quarter, the Company added new features, content, and commentary from the nation's premier financial information providers, including Reuters, Morningstar, ValueLine, IPO Maven and Briefing.com to its Quicken.com website. Also available is information from financial experts including Marshall Loeb and Jane Bryant Quinn. There is a rich directory with reviews of the best financial sites on the Web. Also in the first quarter, the InsureMarket site on Quicken.com added three new carriers bringing the total to nine companies. All of these combine to establish Quicken.com as the objective source to make the most of your money.

Then, on November 4, Intuit added QuickenMortgage to Quicken.com. QuickenMortgage is a Web service offering consumers one-stop shopping for mortgages from six of the nation's leading lenders, including Chase Manhattan Mortgage Corporation and Countrywide Home Loans. Customers can now make apples-to-apples comparisons of different mortgage loan products customized to their personal requirements. For mortgage lenders, QuickenMortgage is a new distribution channel to find and acquire new customers.

In its first full week of operation, QuickenMortgage had more than 500,000 page views and over 10,000 visitors who pre-qualified online, a number of whom submitted their information to participating lenders. In addition, traffic volume on Quicken.com has more than doubled to 39 million page views per month since the beginning of the first quarter.

One source of new Web traffic is the new finance channel, Excite Business & Investing by Quicken.com, launched in October. This Web channel combines the depth of Quicken.com's financial tools and information with Excite's strong market presence to reach more than one quarter of the people on the Internet. While the Internet presents many opportunities, we remind investors that potential Internet-related revenue and profits may be difficult to predict or achieve.

Quicken '98 hit the streets on October 23, 1997. Featured in Quicken '98, the embedded browser technology links people directly to the wealth of services on Quicken.com. Quicken '98 provides OFX-based download connections to the highest number of brokers available in any software package. With improved Internet integration, investors may also place trades directly with selected financial institutions, including E-Schwab, DLJ Direct and E*Trade. Early response to Quicken 98 is encouraging, although it is too soon to assess the entire season.

Internationally, the Canadian team has had several early successes. In the first quarter, they began shipping Quicken for Quebec. This product is the first major personal finance software in French to be distributed in Quebec. Together with Rogers Communication, owner of the largest news magazine and business publication in Canada, Intuit launched a new Internet site, Quicken.ca, combining Canadian-specific content from Rogers with decision tools from Intuit.

In Japan, the Company completed the development of the first small business accounting software for Windows replacing the DOS product in the high-end Obanto line. This new product was released in early November. Intuit now has Windows 95 products available across the entire product line in Japan.

"On August 7, 1997, the Company completed the sale of its consumer software and direct marketing subsidiary, Parsons Technology, to Broderbund Software, Inc. Parsons' consumer software business was not central to our strategic focus on financial services over the Internet."