• 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 Part I, 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 second quarter and first six months 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. 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. The timing and composition of new customer offerings that include both product and service elements can materially shift revenue between quarters. 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 six months of fiscal 2009 was $1.3 billion, a decrease of 1% compared with the first six months of fiscal 2008. QuickBooks segment revenue increased 2%, Payroll and Payments segment revenue was up 15%, Accounting Professionals revenue increased 14%, and Financial Institutions revenue grew 4% while Consumer Tax revenue decreased 23% and Other Businesses revenue declined 12%.
We deferred approximately $70 million in Consumer Tax revenue from the second quarter of fiscal 2009 to the third quarter of fiscal 2009 as a result of our decision to include federal electronic filing services with our TurboTax desktop software for the 2008 tax year. We expect to recognize substantially all of this revenue in the third quarter of fiscal 2009. In our Accounting Professionals segment, about $12 million in revenue shifted from the third quarter of fiscal 2009 to the second quarter of fiscal 2009 because we began offering certain services separately from our professional tax software in fiscal 2009. We generally offered these services in combination with our professional tax software in fiscal 2008. Excluding the $58 million net impact of these revenue shifts, total net revenue for the first six months of fiscal 2009 increased 4% compared with the same period of fiscal 2008. We believe that slower small business spending negatively affected sales to new QuickBooks customers; the overall reduction in consumer spending negatively affected credit and debit card transaction processing volume in our Payments business as well as Quicken sales; and the generally slow real estate market negatively affected Intuit Real Estate Solutions software license sales.
Operating income from continuing operations of $33.5 million for the first six months of fiscal 2009 decreased $36.9 million or 52% compared with $70.4 million for the first six months of fiscal 2008. Fiscal 2009 revenue declined $7.4 million, including the impact of the revenue shifts in our tax businesses described in the paragraph above, and total costs and expenses increased $29.5 million. Total costs and expenses increased about $42 million due to our acquisitions of Homestead and ECHO and about $14 million due to higher advertising and other marketing expenses to support the launch and subsequent promotion of QuickBooks 2009. Partially offsetting these increases, total costs and expenses decreased about $25 million as a result of certain compensation-related items. These factors are described in more detail under "Cost of Revenue" and "Operating Expenses" later in this Item 2.
Net income from continuing operations of $32.9 million for the first six months of fiscal 2009 declined $35.5 million or 52% compared with $68.4 million for the first six months of fiscal 2008. Interest and other income decreased in the first six months of fiscal 2009 due to lower interest income and a decline in the value of assets associated with our executive deferred compensation plan. Declines in the value of assets associated with our executive deferred compensation plan were offset by amounts recorded in operating expenses in connection with

declines in the related liabilities. In the first six months of fiscal 2008 we recorded a pre-tax gain of $38.0 million on the sale of certain outsourced payroll assets; there was no comparable transaction in fiscal 2009. Due to all of the foregoing factors, diluted net income per share from continuing operations of $0.10 in the first six months of fiscal 2009 decreased 50% compared with $0.20 in the same period of fiscal 2008.
We ended the second quarter of fiscal 2009 with cash, cash equivalents and investments totaling $548 million, a decrease of $280 million from July 31, 2008. At January 31, 2009, we also held $251 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 Part I, Item 1 of this report and "Liquidity and Capital Resources - Auction Rate Securities" later in this Item 2 for more information. In the first six months of fiscal 2009 we generated $78 million in cash from the issuance of common stock under employee stock plans. During the same period we used $57 million in cash for operations, $200 million in cash for the repurchase of 7.4 million shares of our common stock under our stock repurchase programs and $117 million in cash for capital expenditures. At January 31, 2009, we had authorization from our Board of Directors to expend up to an additional $400 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 six 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 Part I, 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 Part I, 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,                                                                                                 YTD                YTD
except per                                          Q2               Q2               $               %                Q2                 Q2                $                %
share amounts)                                     FY09             FY08            Change          Change            FY09               FY08             Change          Change

Total net revenue                               $  791.0         $  834.9         $  (43.9 )           (5 %)      $  1,272.4         $  1,279.8         $   (7.4 )           (1 %)
Operating income from continuing operations        109.6            173.6            (64.0 )          (37 %)            33.5               70.4            (36.9 )          (52 %)
Net income from continuing operations               85.0            116.0            (31.0 )          (27 %)            32.9               68.4            (35.5 )          (52 %)
Diluted net income per share from
continuing operations                           $   0.26         $   0.34         $  (0.08 )          (24 %)      $     0.10         $     0.20         $  (0.10 )          (50 %)

Current Fiscal Quarter
Total net revenue decreased $43.9 million or 5% in the second quarter of fiscal 2009 compared with the second quarter of fiscal 2008. QuickBooks segment revenue decreased 2%, Payroll and Payments segment revenue increased 14%, Consumer Tax revenue decreased 25%, Accounting Professionals revenue increased 14%, Financial Institutions revenue increased 5% and Other Businesses revenue decreased 21% in the second quarter of fiscal 2009.
As discussed in "Executive Overview - Overview of Financial Results" above, we deferred approximately $70 million in Consumer Tax revenue from the second quarter of fiscal 2009 to the third quarter of fiscal 2009 and about $12 million in Accounting Professionals revenue shifted from the third quarter of fiscal 2009 to the second quarter of fiscal 2009. Excluding the $58 million net impact of these revenue shifts, total net revenue for the second quarter of fiscal 2009 increased 2% compared with the second quarter of fiscal 2008. Also as discussed above, we believe that factors associated with the current economic environment negatively affected revenue for the second quarter of fiscal 2009 in certain areas of our business, particularly our QuickBooks segment, our Payroll and Payments segment, and our Other Businesses segment.
Operating income from continuing operations of $109.6 million decreased $64.0 million or 37% in the second quarter of fiscal 2009 compared with $173.6 million in the same quarter of fiscal 2008. The decline in operating income was due to $43.9 million in lower revenue and $20.1 million in higher costs and expenses. In the second quarter of fiscal 2009, total costs and expenses increased about $18 million due to our acquisitions of Homestead and ECHO and about $6 million due to higher advertising and other marketing expenses to support the launch and subsequent promotion of QuickBooks 2009. See "Cost of Revenue" and "Operating Expenses" later in this Item 2 for more information. Net income from continuing operations of $85.0 million decreased $31.0 million or 27% in the second quarter of fiscal 2009 compared with $116.0 million in the same quarter of fiscal 2008. We recorded a pre-tax gain of $14.0 million on the sale of certain outsourced payroll assets to ADP in the second quarter of fiscal 2008; there was no comparable transaction in the second quarter of fiscal 2009. See "Dispositions and Discontinued Operations" later in this Item 2 for more information. Our effective tax rate was 18% for the second quarter of fiscal 2009 and 35% for the second quarter of 2008. See "Income Taxes" later in this Item 2 for more information about our effective tax rates for these periods. Due to all of the foregoing factors, diluted net income per share from continuing operations decreased 24% to $0.26 in the second quarter of fiscal 2009 compared with $0.34 in the same quarter of fiscal 2008.

Fiscal Year to Date
Total net revenue decreased $7.4 million or 1% in the first six months of fiscal 2009 compared with the first six months of fiscal 2008. QuickBooks segment revenue increased 2%, Payroll and Payments segment revenue was up 15%, Accounting Professionals revenue increased 14%, and Financial Institutions revenue grew 4% while Consumer Tax revenue decreased 23% and Other Businesses revenue declined 12%.
As discussed in "Executive Overview - Overview of Financial Results" above, we deferred approximately $70 million in Consumer Tax revenue from the second quarter of fiscal 2009 to the third quarter of fiscal 2009 and about $12 million in Accounting Professionals revenue shifted from the third quarter of fiscal 2009 to the second quarter of fiscal 2009. Excluding the $58 million net impact of these revenue shifts, total net revenue for the first six months of fiscal 2009 increased 4% compared with the same period of fiscal 2008. Also as discussed above, we believe that factors associated with the current economic environment negatively affected revenue for the first six months of fiscal 2009 in certain areas of our business, particularly our QuickBooks segment, our Payroll and Payments segment, and our Other Businesses segment. See "Total Net Revenue by Business Segment" later in this Item 2 for more information. Operating income from continuing operations of $33.5 million for the first six months of fiscal 2009 decreased $36.9 million or 52% compared with $70.4 million for the same period of fiscal 2008. The decline in operating income was due to $7.4 million in lower revenue and $29.5 million in higher costs and expenses. Total costs and expenses increased about $42 million due to our acquisitions of Homestead and ECHO and about $14 million due to higher advertising and other marketing expenses to support the launch and subsequent promotion of QuickBooks 2009. Partially offsetting these increases, total costs and expenses decreased about $25 million as a result of certain compensation-related items. See "Cost of Revenue" and "Operating Expenses" later in this Item 2 for more information. Net income from continuing operations of $32.9 million decreased $35.5 million or 52% in the first six months of fiscal 2009 compared with $68.4 million in the same period of fiscal 2008. Interest and other income decreased to $4.3 million in the first six months of fiscal 2009 from $22.1 million in the first six months of fiscal 2008. This total decrease in interest and other income of $17.8 million was due in part to lower interest rates and lower average invested balances that resulted in $7.9 million lower interest income. Another $10.3 million of the decrease in interest and other income in the first six months of fiscal 2009 compared with the same period of fiscal 2008 was due to a $11.7 million decline in the value of assets associated with our executive deferred compensation plan, compared with a $1.4 million decline in the value of those assets in the first six months of fiscal 2008. These declines in the value of assets associated with our executive deferred compensation plan were offset by amounts recorded in operating expenses in connection with declines in the related liabilities. We recorded a pre-tax gain of $38.0 million on the sale of certain outsourced payroll assets to ADP in the first six months of fiscal 2008; there was no comparable transaction in the same period of fiscal 2009. See "Dispositions and Discontinued Operations" later in this Item 2 for more information. Due to certain discrete tax items, we recorded a tax benefit of $18.5 million on pre-tax income of $15.0 million for the first six months of fiscal 2009. Our effective tax rate for the first six months of 2008 was 33%. See "Income Taxes"later in this Item 2 for more information about our effective tax rates for these periods.
Due to all of the foregoing factors, diluted net income per share from continuing operations of $0.10 in the first six months of fiscal 2009 decreased 50% compared with $0.20 in the same period of fiscal 2008.

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 Part I, Item 1 of this
report for descriptions of product revenue and service and other revenue for
each segment.

                                              % of                          % of                                        % of                         % of
                                             Total                         Total                          YTD          Total           YTD          Total
                                Q2            Net             Q2            Net             %             Q2            Net            Q2            Net             %
(Dollars in millions)          FY09         Revenue          FY08         Revenue        Change          FY09         Revenue         FY08         Revenue        Change

QuickBooks
Product revenue             $    113.3                    $    132.8                                   $   218.7                    $   246.1
Service and other revenue         50.8                          35.0                                        97.3                         64.6

Subtotal                         164.1             21 %        167.8             20 %          (2 %)       316.0             25 %       310.7             24 %           2 %


Payroll and Payments
Product revenue                   59.2                          53.9                                       117.6                        107.4
Service and other revenue         98.7                          84.1                                       192.4                        161.9

Subtotal                         157.9             20 %        138.0             16 %          14 %        310.0             24 %       269.3             21 %          15 %


Consumer Tax
Product revenue                   89.9                         181.1                                        94.0                        184.0
Service and other revenue         97.4                          67.2                                       107.5                         77.6

Subtotal                         187.3             24 %        248.3             30 %         (25 %)       201.5             16 %       261.6             21 %         (23 %)


Accounting Professionals
Product revenue                  130.8                         114.5                                       150.0                        131.2
Service and other revenue          2.3                           2.2                                         4.6                          3.9

Subtotal                         133.1             17 %        116.7             14 %          14 %        154.6             12 %       135.1             11 %          14 %


Financial Institutions
Product revenue                      -                           0.2                                         0.2                          0.3
Service and other revenue         76.0                          72.1                                       150.5                        144.2

Subtotal                          76.0              9 %         72.3              9 %           5 %        150.7             12 %       144.5             11 %           4 %


Other Businesses
Product revenue                   41.7                          58.3                                        75.0                         90.4
Service and other revenue         30.9                          33.5                                        64.6                         68.2

Subtotal                          72.6              9 %         91.8             11 %         (21 %)       139.6             11 %       158.6             12 %         (12 %)


Total Company
Product revenue                  434.9                         540.8                                       655.5                        759.4
Service and other revenue        356.1                         294.1                                       616.9                        520.4

Total net revenue           $    791.0            100 %   $    834.9            100 %          (5 %)   $ 1,272.4            100 %   $ 1,279.8            100 %          (1 %)

QuickBooks
QuickBooks segment total net revenue decreased $3.7 million or 2% in the second quarter of fiscal 2009 and increased $5.3 million or 2% in the first six months of fiscal 2009 compared with the same periods of fiscal 2008. Excluding revenue from Homestead, which we acquired in December 2007, QuickBooks segment total net revenue decreased 6% in the second quarter of fiscal 2009 and decreased 3% in the first six months of fiscal 2009 compared with the same periods of fiscal 2008. Total QuickBooks software unit sales, including activations of our free Simple Start offering, were up 5% in the second quarter of fiscal 2009 and increased 2% in the first six months of fiscal 2009 compared with the same periods of fiscal 2008. Revenue per QuickBooks unit was lower in the second quarter of fiscal 2009 due to price promotion programs in some of our sales channels. In the first six months of fiscal 2009, QuickBooks Online subscriptions grew 9% and active Enterprise Solutions customers were up 21% compared with the same period of fiscal 2008.

Payroll and Payments
Payroll and Payments total net revenue increased $19.9 million or 14% in the second quarter of fiscal 2009 compared with the second quarter of fiscal 2008. In our Payroll business, revenue increased due to 2% growth in the customer base and price increases. In our Payments business, revenue increased due to 14% . . .