 |
|
|
 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
|
|
13. LONG-TERM OBLIGATIONS AND COMMITMENTS
Long-Term Obligations
Long-term obligations were as follows at the dates indicated:
| |
JULY 31, |
|
| (In thousands) |
2003 |
2004 |
|
| Mountain View vacancy reserve |
$ |
9,701 |
|
$ |
8,940 |
|
 |
| Other vacancy reserves |
|
3,778 |
|
|
2,573 |
|
|
| CBS Employer Services acquisition accrual |
|
17,505 |
|
|
51 |
|
|
Capital lease obligations:
monthly installments through 2007; interest rate 2.66% |
|
- |
|
|
5,771 |
|
|
| Deferred rent |
|
- |
|
|
3,479 |
|
|
| Other |
|
861 |
|
|
309 |
|
|
| Total long-term obligations |
|
31,845 |
|
|
21,123 |
|
|
| Less current portion (included in other current liabilities) |
|
(2,580 |
) |
|
(4,729 |
) |
|
| Long-term obligations due after one year |
$ |
29,265 |
|
$ |
16,394 |
|
|
|
|
Reserve for Vacant Facilities
During fiscal 2002, we concluded that we would not occupy two vacant leased buildings in Mountain View, California and that we would be unable to recover a substantial portion of our lease obligations by subleasing the vacant space. In that period, we recorded a $13.2 million reserve that was equal to the remaining future lease commitments for these facilities, net of estimated future sublease income. During fiscal 2003, we decided that based on corporate growth requirements and the current real estate market in the San Francisco Bay Area, we would reoccupy one of the two vacant buildings and that the reserve for the other vacant building should be increased to reflect our revised estimate of future sublease income for that facility. We recorded a net adjustment of $0.5 million to the reserve that, along with the reversal of reserves related to various smaller facilities, resulted in a total credit for vacant facilities of $1.1 million on our statement of operations in fiscal 2003. During fiscal 2004, based on the current real estate market in the San Francisco Bay Area, we recorded a $0.7 million increase to the reserve for the remaining Mountain View building to reflect our revised estimate of future sublease income for that facility. Our actual future cash payments may exceed the total Mountain View reserve balance at July 31, 2004 by a maximum
of $1.9 million if we are unable to sublease the remaining reserved Mountain View property. The lease related to this facility ends in fiscal 2010.
Activity in this reserve for vacant facilities during fiscal 2002, 2003 and 2004 was as follows:
| |
FISCAL |
|
| (In thousands) |
2002 |
2003 |
2004 |
|
| Beginning balance |
$ |
- |
|
$ |
12,478 |
|
$ |
9,701 |
|
|
| Additions to reserve |
|
13,237 |
|
|
1,352 |
|
|
729 |
|
|
| Cash lease payments applied against the reserve |
|
(759 |
) |
|
(2,257 |
) |
|
(1,339 |
) |
|
| Release of reserve |
|
- |
|
|
(1,872 |
) |
|
(151 |
) |
|
| Ending balance |
$ |
12,478 |
|
$ |
9,701 |
|
$ |
8,940 |
|
|
|
|
The short-term and long-term components of this reserve and their location on our balance sheet were as follows at the dates indicated.
| |
JULY 31, |
|
| (In thousands) |
2003 |
2004 |
|
| Short-term portion of reserves in other current liabilities |
$ |
1,394 |
|
$ |
1,374 |
|
|
| Long-term portion of reserves in long-term obligations |
|
8,307 |
|
|
7,566 |
|
|
| Total reserves |
$ |
9,701 |
|
$ |
8,940 |
|
|
|
|
CBS Employer Services Acquisition Accrual
We acquired CBS Employer Services, Inc. in the fourth quarter of fiscal 2002. See Note 7. In connection with this acquisition, we recorded a total accrual of $26.4 million that included $21.6 million for purchase price deferrals and $4.8 million for restructuring and transaction costs. In fiscal 2003 we reduced the restructuring accrual by $3.4 million and reduced the goodwill related to this acquisition by the same amount to reflect revisions to our restructuring plan. Activity in this reserve during fiscal 2002, 2003 and 2004 was as follows:
| (In thousands) |
BEGINNING
BALANCE |
ADDITIONS TO
RESERVE |
CASH
PAYMENTS |
ADJUSTMENTS |
ENDING
BALANCE |
|
Fiscal 2002
Non-compete clause |
$ |
- |
|
$ |
1,700 |
|
$ |
- |
|
$ |
- |
|
$ |
1,700 |
|
|
| Purchase price deferrals |
|
- |
|
|
14,043 |
|
|
(900 |
) |
|
- |
|
|
13,143 |
|
|
| Shareholder escrow |
|
- |
|
|
5,800 |
|
|
- |
|
|
- |
|
|
5,800 |
|
|
| Restructuring and transaction costs |
|
- |
|
|
4,818 |
|
|
(102 |
) |
|
- |
|
|
4,716 |
|
|
| |
$ |
- |
|
$ |
26,361 |
|
$ |
(1,002 |
) |
$ |
- |
|
$ |
25,359 |
|
|
|
|
Fiscal 2003
Non-compete clause |
$ |
1,700 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
1,700 |
|
|
| Purchase price deferrals |
|
13,143 |
|
|
- |
|
|
(796 |
) |
|
959 |
|
|
13,306 |
|
|
| Shareholder escrow |
|
5,800 |
|
|
- |
|
|
(3,301 |
) |
|
- |
|
|
2,499 |
|
|
| Restructuring and transaction costs |
|
4,716 |
|
|
- |
|
|
(1,335 |
) |
|
(3,381 |
) |
|
- |
|
|
| |
$ |
25,359 |
|
$ |
- |
|
$ |
(5,432 |
) |
$ |
(2,422 |
) |
$ |
17,505 |
|
|
|
|
Fiscal 2004
Non-compete clause |
$ |
1,700 |
|
$ |
- |
|
$ |
(1,700 |
) |
$ |
- |
|
$ |
- |
|
|
| Purchase price deferrals |
|
13,306 |
|
|
- |
|
|
(12,953 |
) |
|
(353 |
) |
|
- |
|
|
| Shareholder escrow |
|
2,499 |
|
|
- |
|
|
(2,448 |
) |
|
- |
|
|
51 |
|
|
| Restructuring and transaction costs |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
| |
$ |
17,505 |
|
$ |
- |
|
$ |
(17,101 |
) |
$ |
(353 |
) |
$ |
51 |
|
|
|
|
At July 31, 2003, the $17.5 million balance in this reserve was in long-term obligations on our balance sheet. At July 31, 2004, the balance in this reserve was in other current liabilities on our balance sheet.
Capital Lease Obligations
Future minimum lease payments under capital lease obligations at July 31, 2004 were as follows:
| FISCAL YEAR ENDING JULY 31, (Dollars in thousands) |
CAPITAL LEASE OBLIGATIONS |
|
| 2005 |
$ 2,660 |
|
| 2006 |
2,660 |
|
| 2007 |
629 |
|
| |
5,949 |
|
| Less amount representing interest |
(178) |
|
| Total |
$ 5,771 |
|
|
|
Operating Leases
Intuit leases office facilities and equipment under various operating lease agreements. Our facilities leases provide for annual rent increases of up to 10% and many contain renewal options. Annual minimum commitments under these leases are shown in the table below. The table includes the lease for our vacant facility and excludes any potential future sublease income for that facility. See "Reserve for Vacant Facilities" above.
| FISCAL YEAR ENDING JULY 31, (Dollars in thousands) |
COMMITMENTS |
|
| 2005 |
$ 27,798 |
|
| 2006 |
25,767 |
|
| 2007 |
24,578 |
|
| 2008 |
18,838 |
|
| 2009 |
17,560 |
|
| Thereafter |
61,133 |
|
| |
$ 175,674 |
|
|
|
Lease expense totaled $23.9 million in fiscal 2002, $27.3 million in fiscal 2003 and $26.7 million in fiscal 2004. Lease expense does not include a charge for vacant facilities of $13.2 million in fiscal 2002, a credit for vacant facilities of $1.1 million in fiscal 2003 and a charge for vacant facilities of $0.7 million in fiscal 2004. See "Reserve for Vacant Facilities" above.
|
|
|
