• Significant changes since our most recent Annual Report on Form 10-K in the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments underlying our financial statements.

• Results of Operations that includes a more detailed discussion of our revenue and expenses.

• Liquidity and Capital Resources which discusses key aspects of our statements of cash flows, changes in our balance sheets and our financial commitments.

You should note that this MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please see Item 1A in Part II of this Quarterly Report on Form 10-Q 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 1 of this report and our Annual Report on Form 10-K for the fiscal year ended July 31, 2008. In December 2007 we acquired Homestead Technologies Inc. for total consideration of approximately $170 million and in February 2008 we acquired Electronic Clearing House, Inc. for a total purchase price of approximately $131 million. Accordingly, we have included the results of operations for these two companies in our consolidated results of operations from their respective dates of acquisition. We also sold our Intuit Distribution Management Solutions business in August 2007 for approximately $100 million in cash and recorded a net gain on disposal of $27.5 million. We accounted for this business as a discontinued operation and have accordingly reclassified our statements of operations for all periods prior to the sale. Unless otherwise noted, the following discussion pertains only to our continuing operations. 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 the first quarter of fiscal 2009 as well as our future prospects. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Quarterly Report on Form 10-Q.
About Intuit
Intuit is a leading provider of business and financial management solutions for small and medium sized businesses, financial institutions, consumers and accounting professionals. We organize our portfolio of businesses into four principal categories - Small Business, Tax, Financial Institutions and Other Businesses. These categories include six financial reporting segments. Small Business: This category includes two segments - QuickBooks, and Payroll and Payments.
• Our QuickBooks segment includes QuickBooks financial and business management software and services, technical support, financial supplies, and Web site design and hosting services for small businesses.

• Our Payroll and Payments segment includes small business payroll products and services. This segment also includes merchant services provided by our Innovative Merchant Solutions business that include credit and debit card processing, electronic check conversion and automated clearing house services.

Tax: This category also includes two segments - Consumer Tax and Accounting Professionals.
• Our Consumer Tax segment includes TurboTax income tax preparation products and services for consumers and small businesses.

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

Financial Institutions: This segment consists primarily of outsourced online banking services for banks and credit unions provided by our Digital Insight business.
Other Businesses: This segment includes Quicken personal finance products and services, Intuit Real Estate Solutions, and our business in Canada. Seasonality and Trends
Our QuickBooks, Consumer Tax and Accounting Professionals businesses are highly seasonal. Some of our other offerings are also seasonal, but to a lesser extent. Revenue from our QuickBooks software products tends to be highest during our second and third fiscal quarters, although the timing of new product releases or changes in our offerings can materially shift revenue between quarters. Sales of income tax preparation products and services are heavily concentrated in the period from November through April. In our Consumer Tax business, a greater proportion of our revenue has been occurring later in this seasonal period due in part to the growth in sales of TurboTax Online, for which revenue is recognized upon printing or electronic filing of a tax return. The seasonality of our Consumer Tax and Accounting Professionals revenue is also affected by the timing of the availability of tax forms from taxing agencies and the ability of those agencies to receive electronic tax return submissions. Delays in the availability of tax forms or the ability of taxing agencies to receive submissions can cause revenue to shift from our second fiscal quarter to our third fiscal quarter. These seasonal patterns mean that our total net revenue is usually highest during our second quarter ending January 31 and third quarter ending April 30. We typically report losses in our first quarter ending October 31 and fourth quarter ending July 31, when revenue from our tax businesses is minimal while operating expenses continue at relatively consistent levels. We believe the seasonality of our revenue is likely to continue in the future. In our MD&A we often focus on year-to-date results for our seasonal businesses as they are generally more meaningful than quarterly results. Overview of Financial Results
Total net revenue for the first three months of fiscal 2009 was $481.4 million, up 8% compared with the first three months of fiscal 2008. The fiscal 2009 revenue increase was driven by revenue growth in our Payroll and Payments segment and our QuickBooks segment. Excluding the impact of our acquisitions of Homestead Technologies Inc. (Homestead) and Electronic Clearing House, Inc. (ECHO), total net revenue for the first three months of fiscal 2009 increased 4% compared with the same period of fiscal 2008.
Operating loss from continuing operations of $76.0 million for the first three months of fiscal 2009 improved 26% compared with a loss of $103.2 million for the first three months of fiscal 2008. Fiscal 2009 revenue growth of about $36 million was partially offset by about $9 million in higher total costs and expenses. Total costs and expenses increased about $24 million due to our acquisitions of Homestead and ECHO and about $10 million due to higher advertising and other marketing expenses to support the launch of QuickBooks 2009. Total costs and expenses decreased about $28 million as a result of certain compensation-related items and, to a lesser extent, from restructuring decisions we made in the fourth quarter of fiscal 2008 in connection with a reallocation of resources to key growth businesses. These factors are described in more detail under "Cost of Revenue" and "Operating Expenses" later in this Item 2.
Net loss from continuing operations of $52.1 million for the first three months of fiscal 2009 increased from $47.6 million for the first three months of fiscal 2008. Interest and other income (expense) decreased from income of $17.2 million in the first three months of fiscal 2008 to expense of $1.9 million in the first three months of fiscal 2009 due to lower interest rates and lower average invested balances affecting interest income and to a decline in the value of assets associated with our executive deferred compensation plan. In the first three months of fiscal 2008 we recorded a pre-tax gain of $24.0 million on the sale of certain outsourced payroll assets; there was no comparable transaction in fiscal 2009. Our effective tax rates for the first quarters of fiscal 2009 and 2008 were approximately 42% and 38%.
Average shares outstanding declined during the first three months of fiscal 2009 as a result of repurchases of 6.0 million shares of common stock under our stock repurchase programs, partially offset by the issuance of 4.6 million shares in connection with our employee stock plans. Due to the foregoing factors, diluted net loss per share from continuing operations of $0.16 for the first three months of fiscal 2009 increased from $0.14 for the same period of fiscal 2008.

We ended the first quarter of fiscal 2009 with cash, cash equivalents and investments totaling $458.6 million, a decrease of $369.2 million from July 31, 2008. At October 31, 2008, we also held $285.1 million in municipal auction rate securities that we classified as long-term investments on our balance sheet. See Note 8 to the financial statements in Item 1 of this report for more information. In the first three months of fiscal 2009 we generated $63.3 million in cash from the issuance of common stock under employee stock plans. During the same period we used $165.2 million in cash for the repurchase of 6.0 million shares of our common stock under our stock repurchase programs, $199.7 million in cash for operations and $67.2 million in cash for capital expenditures. At October 31, 2008, we had authorization from our Board of Directors to expend up to an additional $434.8 million for stock repurchases through May 15, 2011. See "Liquidity and Capital Resources" later in this Item 2 for more information. Critical Accounting Policies and Estimates In preparing our financial statements, we 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 balance sheet. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ended July 31, 2008 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. Except for the change to our fair value measurement policy that is discussed in "Fair Value Measurements - Adoption of SFAS 157" below, we believe that during the first three months of fiscal 2009 there were no significant changes in those critical accounting policies and estimates. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Quarterly Report on Form 10-Q with the Audit Committee of our Board of Directors.
Fair Value Measurements - Adoption of SFAS 157 On August 1, 2008 we adopted Statement of Financial Accounting Standards (SFAS) No.157, "Fair Value Measurements," for financial assets and financial liabilities and for non-financial assets and non-financial liabilities that we recognize or disclose at fair value on a recurring basis. See Note 1 and Note 8 to the financial statements in Item 1 of this report for more information. SFAS 157 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. Significant judgment is required to estimate the fair value of assets and liabilities, particularly when observable inputs are not available. For example, we use a discounted cash flow model to estimate the fair value of our municipal auction rate securities because current market data is generally unavailable. See Note 8 to the financial statements in Item 1 of this report for more information. Changes in our estimates of the fair values of our assets and liabilities could result in material increases or decreases in our net income in the period in which the change occurs.

Results of Operations
Financial Overview

(Dollars in millions,
except per                                   Q1                Q1                $                %
share amounts)                              FY09              FY08            Change           Change

Total net revenue                        $  481.4         $   444.9         $   36.5               8 %
Operating loss from continuing
operations                                  (76.0 )          (103.2 )           27.2             (26 %)
Net loss from continuing operations         (52.1 )           (47.6 )           (4.5 )             9 %
Diluted net loss per share from
continuing operations                    $  (0.16 )       $   (0.14 )       $  (0.02 )            14 %

Total net revenue increased $36.5 million or 8% in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. Total net revenue was higher in the first quarter of fiscal 2009 due to 16% revenue growth in our Payroll and Payments segment and 6% revenue growth in our QuickBooks segment. Excluding the impact of our acquisitions of Homestead and ECHO, total net revenue for the first quarter of fiscal 2009 increased 4% compared with the same period of fiscal 2008. Payroll and Payments segment revenue for the first quarter of fiscal 2009 increased 9% when adjusted for our acquisition of ECHO and QuickBooks segment revenue increased 1% when adjusted for our acquisition of Homestead. See "Total Net Revenue by Business Segment" later in this Item 2 for more information.
Operating loss from continuing operations improved $27.2 million or 26% in the first three months of fiscal 2009 compared with the same quarter of fiscal 2008. Higher revenue in the first quarter of fiscal 2009 was partially offset by $9.3 million in higher total costs and expenses. Total costs and expenses increased about $24 million due to our acquisitions of Homestead and ECHO and about $10 million due to higher advertising and other marketing expenses to support the launch of QuickBooks 2009. Total costs and expenses decreased about $28 million as a result of certain compensation-related items and, to a lesser extent, from lower employee and facilities expenses that resulted from restructuring decisions we made in the fourth quarter of fiscal 2008 in connection with a reallocation of resources to key growth businesses. See "Cost of Revenue" and "Operating Expenses" later in this Item 2 for more information. Net loss from continuing operations increased $4.5 million or 9% in the first three months of fiscal 2009 compared with the first three months of fiscal 2008. Interest and other income (expense) decreased from income of $17.2 million in the first three months of fiscal 2008 to expense of $1.9 million in the first three months of fiscal 2009. This total decrease in income of $19.1 million was due in part to lower interest rates and lower average invested balances that resulted in $4 million lower interest income. Another $12 million of the decrease in interest and other income (expense) in the first three months of fiscal 2009 compared with the same period of fiscal 2008 was due to a $9 million decline in the value of assets associated with our executive deferred compensation plan, compared with a $3 million increase in the value of those assets in the first three months of fiscal 2008. These amounts were offset by amounts recorded in operating expenses in connection with changes in the related liabilities. We recorded a pre-tax gain of $24.0 million on the sale of certain outsourced payroll assets to ADP in the first three months of fiscal 2008; there was no comparable transaction in fiscal 2009. See "Dispositions and Discontinued Operations" later in this Item 2 for more information. Our effective tax rates for the first quarters of fiscal 2009 and 2008 were approximately 42% and 38%. See "Income Taxes" later in this Item 2 for more information.

Total Net Revenue by Business Segment
The table below and the discussion of net revenue by business segment that
follows it are organized in accordance with our six reportable business
segments. See Note 5 to the financial statements in Item 1 of this report for
descriptions of product revenue and service and other revenue for each segment.

                                               % of                      % of
                                               Total                     Total
                                   Q1           Net          Q1           Net           %
     (Dollars in millions)        FY09        Revenue       FY08        Revenue      Change

     QuickBooks
     Product revenue             $ 105.4                   $ 113.3
     Service and other revenue      46.5                      29.6

     Subtotal                      151.9            32 %     142.9            32 %         6 %


     Payroll and Payments
     Product revenue                58.3                      53.5
     Service and other revenue      93.7                      77.8

     Subtotal                      152.0            32 %     131.3            30 %        16 %


     Consumer Tax
     Product revenue                 4.2                       2.8
     Service and other revenue      10.1                      10.5

     Subtotal                       14.3             3 %      13.3             3 %         7 %


     Accounting Professionals
     Product revenue                19.1                      16.8
     Service and other revenue       2.3                       1.6

     Subtotal                       21.4             4 %      18.4             4 %        16 %


     Financial Institutions
     Product revenue                 0.2                       0.1
     Service and other revenue      74.5                      72.1

     Subtotal                       74.7            15 %      72.2            16 %         3 %


     Other Businesses
     Product revenue                33.4                      32.1
     Service and other revenue      33.7                      34.7

     Subtotal                       67.1            14 %      66.8            15 %         0 %


     Total Company
     Product revenue               220.6                     218.6
     Service and other revenue     260.8                     226.3

     Total net revenue           $ 481.4           100 %   $ 444.9           100 %         8 %

QuickBooks
QuickBooks segment total net revenue increased $9.0 million or 6% in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. Excluding about $8 million in revenue from Homestead, which we acquired in December 2007, QuickBooks segment total net revenue increased 1% in the first quarter of fiscal 2009. Total QuickBooks software unit sales, including activations of our free Simple Start offering, were down 3% in the first quarter of fiscal 2009 compared with the same period of fiscal 2008. Revenue growth in that period was driven by a 9% increase in QuickBooks Online subscribers and a 22% increase in the number of active QuickBooks Enterprise Solutions customers. Payroll and Payments
Payroll and Payments total net revenue increased $20.7 million or 16% in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. In our Payments business, revenue increased 24% due to 18% growth in our core merchant services customer base and about $9 million in revenue from ECHO, which we acquired in February 2008. Transaction volume per customer was down 4% compared with the first quarter of fiscal 2008, reflecting an overall reduction in consumer spending. Payroll revenue was up 11% in the first quarter of fiscal 2009 compared with the same quarter of fiscal 2008 due to 3% growth in the customer base and price increases. Excluding the ECHO revenue, Payroll and Payments segment revenue increased approximately 9% in the fiscal 2009 quarter. Consumer Tax
Due to the seasonal nature of our Consumer Tax business, we typically generate nominal revenue from consumer and small business tax products and services in our first fiscal quarter compared with our second and third fiscal quarters. We do not believe that Consumer Tax net revenue results for the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008 are indicative of revenue trends for the full fiscal year. We will not have substantially complete results for the 2008 tax season until the third quarter of fiscal 2009. Accounting Professionals
Due to the seasonal nature of our Accounting Professionals business, we typically generate nominal revenue from professional tax products and services in our first fiscal quarter compared with our second and third fiscal quarters. We do not believe that Accounting Professionals net revenue results for the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008 are indicative of revenue trends for the full fiscal year. We will not have substantially complete results for the 2008 tax season until the third quarter of fiscal 2009.
Financial Institutions
Financial Institutions total net revenue increased $2.5 million or 3% in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008 due to 8% growth in Internet banking end users and 18% growth in bill-pay end users. Growth in the Internet banking and bill-pay customer bases was partially offset by lower revenue per user.
Other Businesses
Other Businesses total net revenue was flat in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. In the first quarter of fiscal 2009, revenue from our business in Canada increased 8% while revenue from Quicken and our Intuit Real Estate Solutions business was flat. The stronger U.S. dollar contributed to slower Canadian revenue growth and lowered Other Businesses segment revenue growth by approximately two percentage points in the first quarter of fiscal 2009 compared with the same period of fiscal 2008.

Cost of Revenue

                                                            % of                      % of
                                                Q1         Related        Q1         Related
(Dollars in millions)                          FY09        Revenue       FY08        Revenue

Cost of product revenue                       $  33.4            15 %   $  33.7            15 %
Cost of service and other revenue               111.7            43 %      97.5            43 %
Amortization of purchased intangible assets      15.2           n/a        12.8           n/a

Total cost of revenue                         $ 160.3            33 %   $ 144.0            32 %

Costs of revenue as a percentage of related revenue and of total revenue were consistent in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. This reflected a relatively constant mix of revenue across segments and no significant changes in cost structures.

Operating Expenses

                                                     % of                     % of
                                                    Total                    Total
                                         Q1          Net          Q1          Net
         (Dollars in millions)          FY09       Revenue       FY08       Revenue

         Selling and marketing         $ 186.2           39 %   $ 169.7           38 %
         Research and development        136.2           28 %     149.3           34 %
         General and administrative       65.1           13 %      77.1           17 %
         Acquisition-related charges       9.6            2 %       8.0            2 %

         Total operating expenses      $ 397.1           82 %   $ 404.1           91 %

Total operating expenses as a percentage of total net revenue decreased to 82% in the first quarter of fiscal 2009 from 91% in the first quarter of fiscal 2008. Total operating expenses in the first quarter of fiscal 2009 included an increase of approximately $15 million for Homestead and ECHO operating expenses and an increase of approximately $10 million for advertising and other marketing expenses to support the launch of QuickBooks 2009. These increases were more than offset by a total of $28 million in lower compensation-related expenses. These reductions in compensation-related expenses included a $16 million decrease due to changes in estimates for our stock compensation and 401(k) benefits plans and a $12 million decrease due to a decline in the value of liabilities associated with our executive deferred compensation plan. Our selling and marketing expenses increased about $17 million in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. Our acquisitions of Homestead and ECHO added about $9 million to selling and marketing expenses and increases in advertising and other marketing expenses to support the launch of QuickBooks 2009 added about $10 million. These increases were partially offset by lower compensation expenses as described above. We spent about $13 million less on research and development expenses in the first quarter of fiscal 2009 than we did in the same quarter of fiscal 2008. More than half of this decline was due to lower compensation expenses as described above.
Our general and administrative expenses decreased about $12 million in the first quarter of fiscal 2009 compared with the first quarter of fiscal 2008. The majority of the decline in general and administrative expenses was due to decreases in compensation expenses as described above. To a lesser extent, the decrease in general and administrative expenses was a result of restructuring decisions we made in the fourth quarter of fiscal 2008 in connection with a reallocation of resources to key growth businesses. These decisions resulted in a reduction in our workforce and the closure of certain facilities. See Note 6 to the financial statements in Item 1 of this report for more information.

Segment Operating Income (Loss)
Segment operating income or loss is segment net revenue less segment cost of revenue and operating expenses. See "Executive Overview - Seasonality and Trends" earlier in this Item 2 for a description of the seasonality of our business. Segment expenses do not include certain costs, such as corporate selling and marketing, product development, and general and administrative expenses and share-based compensation expenses, which are not allocated to specific segments. These unallocated costs totaled $117.5 million in the first quarter of fiscal 2009 and $144.8 million in the first quarter of fiscal 2008. Segment expenses also do not include amortization of purchased intangible . . .