Long-Term Obligations and Commitments

12 Months Ended

Jul. 31, 2020

Long-Term Obligations and Commitments [Abstract]

8. Long-Term Obligations and Commitments

Senior Unsecured Notes

In June 2020 we issued four series of senior unsecured notes (together, the Notes) pursuant to a public debt offering. The proceeds from the issuance were $1.98 billion, net of debt discount of $2 million and debt issuance costs of $15 million.

The carrying value of the Notes was as follows at the date indicated:



	July 31,			Effective
(In millions)	2020			Interest Rate
Senior unsecured notes issued June 2020:
0.650% notes due July 2023	$	500		0.837%
0.950% notes due July 2025	500			1.127%
1.350% notes due July 2027	500			1.486%
1.650% notes due July 2030	500			1.767%
Total senior unsecured notes	2,000
Unamortized discount and debt issuance costs	(17		)
Net carrying value senior unsecured notes	$	1,983

Interest is payable semiannually on January 15 and July 15 of each year, beginning on January 15, 2021. The discount and debt issuance costs are amortized to interest expense over the term of the Notes under the effective interest method. As the first interest payment on the Notes is January 15, 2021, we paid no interest on the Notes during the twelve months ended July 31, 2020.

The Notes are senior unsecured obligations of Intuit and rank equally with all existing and future unsecured and unsubordinated indebtedness of Intuit and are redeemable by us at any time, subject to a make-whole premium. Upon the occurrence of change of control transactions that are accompanied by certain downgrades in the credit ratings of the Notes, we will be required to repurchase the Notes at a repurchase price equal to 101% of the aggregate outstanding principal plus any accrued and unpaid interest to but not including the date of repurchase. The indenture governing the Notes requires us to comply with certain covenants. For example, the Notes limit our ability to create certain liens and enter into sale and leaseback transactions. As of July 31, 2020 we were compliant with all covenants governing the Notes.

Secured Revolving Credit Facility

On February 19, 2019 a subsidiary of Intuit entered into a two-year $300 million secured revolving credit facility with a lender. The revolving credit facility is secured by cash and receivables of the subsidiary and is non-recourse to Intuit Inc. Advances under this secured revolving credit facility are used to fund a portion of our loans to qualified small businesses and accrue interest at LIBOR plus 2.39%. Unused portions of the credit facility accrue interest at a rate of 0.5%. On March 2, 2020, we amended the secured revolving credit facility to extend the commitment term from February 19, 2021 to February 19, 2022

and the final maturity date from August 19, 2021 to August 19, 2022. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As of July 31, 2020 we were compliant with all required covenants. At July 31, 2020, $48 million was outstanding under this facility, with a weighted-average interest rate of 5.74%, which includes the unused facility fee. The outstanding balance is secured by cash and receivables of the subsidiary totaling $144 million. Interest on the facility is payable monthly. We paid $3 million and $1 million for interest on the secured revolving credit facility during the twelve months ended July 31, 2020 and 2019.

Future principal payments for long-term debt at July 31, 2020 were as shown in the table below.



(In millions)
Fiscal year ending July 31,
2021	$	—
2022	—
2023	548
2024	—
2025	500
Thereafter	1,000
Total commitments	$	2,048

Other Long-Term Obligations

Other long-term obligations were as follows at the dates indicated:



	July 31,
(In millions)	2020			2019
Long-term income tax liabilities	$	10		$	89
Total deferred rent	—			47
Total dividend payable	12			11
Other	30			12
Total long-term obligations	52			159
Less current portion (included in other current liabilities)	(10		)	(14		)
Long-term obligations due after one year	$	42		$	145

Unconditional Purchase Obligations

In the ordinary course of business we enter into certain unconditional purchase obligations with our suppliers. These are agreements to purchase products and services that are enforceable, legally binding, and specify terms that include fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the payments.

Annual minimum commitments under purchase obligations at July 31, 2020 were as shown in the table below.



(In millions)	Purchase Obligations
Fiscal year ending July 31,
2021	$	135
2022	49
2023	19
2024	—
2025	—
Thereafter	—
Total commitments	$	203