Long-Term Obligations and Commitments

12 Months Ended

Jul. 31, 2019

Long-Term Obligations and Commitments [Abstract]

8. Long-Term Obligations and Commitments

Long-Term Debt

On May 2, 2019 we entered into an amended and restated credit agreement with certain institutional lenders for a credit facility with an aggregate principal amount of $1.4 billion, which includes a $400 million unsecured term loan. This agreement amended and restated our prior unsecured revolving credit facility dated February 1, 2016. Under this agreement we may, subject to certain customary conditions, on one or more occasions increase commitments under the term loan in an amount not to exceed $400 million in the aggregate. The term loan accrues interest at rates that are equal to, at our election, either Bank of America's alternate base rate plus a margin that ranges from 0.0% to 0.125% or LIBOR plus a margin that ranges from 0.625% to 1.125%. Actual margins under either election will be based on our senior debt credit ratings. The amended and restated credit agreement includes customary affirmative and negative covenants. See Note 7, “Current Liabilities – Unsecured Revolving Credit Facility,” for more information. The term loan is subject to quarterly principal payments of $12.5 million, with the balance payable on February 1, 2021. At July 31, 2019, $388 million was outstanding under the term loan, of which $50 million was classified as short-term debt. The carrying value of the term loan approximates its fair value. Interest on the term loan is payable monthly. We paid $15 million for interest on the term loan during the twelve months ended July 31, 2019, $13 million during the twelve months ended July 31, 2018, and $11 million during the twelve months ended July 31, 2017.

Secured Revolving Credit Facility

On February 19, 2019 a subsidiary of Intuit entered into a $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. The secured revolving credit facility is available for use for a term of two years and accrues interest at LIBOR plus 2.39%. Unused portions of the credit facility accrue interest at a rate of 0.5%. Outstanding advances mature on August 19, 2021 and payments made prior to February 19, 2020 are subject to a 1% prepayment fee. The agreement includes certain affirmative and negative covenants, including financial covenants that require the subsidiary to maintain specified financial ratios. As of July 31, 2019 we were compliant with all required covenants. At July 31, 2019, $48 million was outstanding under this facility, with a weighted-average interest rate of 7.75%, which includes the unused facility fee. The outstanding balance is secured by cash and receivables of the subsidiary totaling $89 million. Interest on the facility is payable monthly. We paid $1 million for interest on the secured revolving credit facility during the twelve months ended July 31, 2019.

Other Long-Term Obligations

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



	July 31,
(In millions)	2019			2018
Long-term income tax liabilities	$	89		$	61
Total deferred rent	47			47
Total license fee payable	—			9
Total dividend payable	11			14
Other	12			15
Total long-term obligations	159			146
Less current portion (included in other current liabilities)	(14		)	(27		)
Long-term obligations due after one year	$	145		$	119

In May 2009 we entered into an agreement to license certain technology for $20 million in cash and $100 million payable over ten fiscal years. The total present value of the arrangement at inception was approximately $89 million. The total license fee payable as of July 31, 2018 in the table above includes imputed interest through that date. During the fourth quarter of fiscal 2019 we paid the final $10 million payment under the agreement.

Operating Lease Commitments and Unconditional Purchase Obligations

We lease office facilities and equipment under non-cancellable operating lease arrangements. Our facilities leases generally provide for periodic rent increases and many contain escalation clauses and renewal options. The leases for our corporate headquarters campus in Mountain View, California expire in 2024 and 2026, with options to extend the lease terms for an additional ten years at rates to be determined in accordance with the agreements.

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 and operating leases at July 31, 2019 were as shown in the table below.



(In millions)	Purchase Obligations		Operating Lease Commitments		Sublease Income		Net Operating Lease Commitments
Fiscal year ending July 31,
2020	$	302	$	68	$	23	$	45
2021	65		61		21		40
2022	9		55		10		45
2023	—		51		1		50
2024	—		50		1		49
Thereafter	—		67		1		66
Total commitments	$	376	$	352	$	57	$	295

Rent expense net of sublease income totaled $42 million for the twelve months ended July 31, 2019, $38 million for the twelve months ended July 31, 2018, and $34 million for the twelve months ended July 31, 2017. Rent expense includes base contractual rent and contractual variable expenses such as building maintenance, utilities, property taxes and insurance. Sublease income totaled $24 million for the twelve months ended July 31, 2019, $23 million for the twelve months ended July 31, 2018, and $22 million for the twelve months ended July 31, 2017.