Form: 8-K

Current report filing

May 18, 1998

Documents

PRO FORMA FINANCIAL INFORMATION

Published on May 18, 1998


EXHIBIT 99.04


UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL INFORMATION


The following pro forma condensed combining statements of operations
are set forth herein to give effect to the net proceeds to the Company from the
sale of 8,400,000 shares of Common Stock at an assumed offering price of $45.875
per share and the acquisition of Lacerte by Intuit as if such acquisition had
occurred as of the beginning of each period presented by combining the
statements of operations data of (i) the Company for the year ended July 31,
1997 and Lacerte for the twelve month period from October 1, 1996 through
September 30, 1997 and (ii) the Company for the six months ended January 31,
1998 and Lacerte for the six months ended March 31, 1998, respectively. The pro
forma condensed combining balance sheet data gives effect to the acquisition of
Lacerte by Intuit as if such acquisition had occurred on January 31, 1998. The
pro forma combined consolidated financial information does not reflect any
potential cost savings which may be obtained following the Pending Acquisition.
The pro forma adjustments and assumptions are based on estimates, evaluations
and other data currently available. In particular, such adjustments include
information based upon the Company's preliminary allocation of the purchase
price for the Pending Acquisition, which is subject to adjustment based upon the
Company's further analysis. The pro forma condensed combining statements of
operations is provided for illustrative purposes only and is not necessarily
indicative of the combined results of operations that would have been reported
had the Pending Acquisition occurred on August 1, 1996, nor does it represent a
forecast of the combined future results of operations for any future period. All
information contained herein should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto of the Company and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in the Company's Form 10-K for the year ended July 31, 1997, the
Financial Statements and Notes thereto of Lacerte included in the Company's Form
8-K dated May 18, 1998 and the Notes to the unaudited pro forma condensed
combining financial information.



INTUIT LACERTE
FOR THE SIX FOR THE SIX
MONTHS MONTHS
ENDED ENDED PRO FORMA
JANUARY 31, MARCH 31, -------------------------
UNAUDITED PRO FORMA CONDENSED 1998 1998 ADJUSTMENTS COMBINED
COMBINING INCOME STATEMENT DATA: ----------- ----------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATE)

Net revenue............................ $333,471 $ 64,208 $ -- $397,679
Costs and expenses:
Cost of goods sold:
Product........................... 67,875 3,185 -- 71,060
Amortization of purchased software
and other....................... 1,353 -- -- 1,353
Customer service and technical
support........................... 65,432 3,523 -- 68,955
Selling and marketing................ 78,939 2,442 -- 81,381
Research and development............. 52,778 8,925 -- 61,703
General and administrative........... 18,207 9,150 -- 27,357
Other acquisition costs, including
amortization of goodwill and
purchased intangibles............. 8,861 -- 61,316(e) 70,177
-------- -------- -------- --------
Total costs and expenses........ 293,445 27,225 61,316 381,986
-------- -------- -------- --------
Income (loss) from
operations................... 40,026 36,983 (61,316) 15,693
Interest and other income and expense,
net.................................. 4,271 331 -- 4,602
Gain on disposal of business........... 4,321 -- -- 4,321
-------- -------- -------- --------
Net income (loss) before income taxes.. 48,618 37,314 (61,316) 24,616
Provision for (benefit from) income
taxes................................ 19,533 71 (9,672)(f) 9,932
-------- -------- -------- --------
Net income (loss)...................... $ 29,085 $ 37,243 $(51,644) $ 14,684
======== ======== ======== ========
Basic net income per share............. $ 0.61 $ 0.26
======== ========
Shares used in computing basic net
income per share..................... 47,322 8,400(a) 55,722
======== ======== ========
Diluted net income per share........... $ 0.59 $ 0.26
======== ========
Shares used in computing diluted net
income per share..................... 48,929 8,400(a) 57,329
======== ======== ========


See accompanying notes.



INTUIT LACERTE
FOR THE YEAR FOR THE YEAR PRO FORMA
ENDED ENDED -------------------------
UNAUDITED PRO FORMA CONDENSED JUL. 31, 1997 SEPT. 30, 1997 ADJUSTMENTS COMBINED
COMBINING INCOME STATEMENT DATA: ------------- -------------- ----------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net revenue........................ $598,925 $ 69,474 $ -- $668,399
Costs and expenses:
Cost of goods sold:
Product....................... 137,281 4,417 -- 141,698
Amortization of purchased
software and other.......... 1,489 -- -- 1,489
Customer service and technical
support....................... 119,762 5,768 -- 125,530
Selling and marketing............ 162,047 4,499 -- 166,546
Research and development......... 93,018 14,091 -- 107,109
General and administrative....... 37,460 15,620 -- 53,080
Charge for purchased research and
development................... 11,009 -- -- 11,009
Other acquisition costs,
including amortization of
goodwill and purchased
intangibles................... 26,543 -- 122,632(e) 149,175
Restructuring costs.............. 10,356 -- -- 10,356
-------- -------- -------- --------
Total costs and
expenses............... 598,965 44,395 122,632 765,992
-------- -------- -------- --------
Income (loss) from
operations............. (40) 25,079 (122,632) (97,593)
Interest and other income and
expense, net..................... 9,849 471 -- 10,320
-------- -------- -------- --------
Income (loss) from continuing
operations before income taxes... 9,809 25,550 (122,632) (87,273)
Provision for (benefit from) income
taxes............................ 12,741 322 (39,155)(f) (26,092)
-------- -------- -------- --------
Income (loss) from continuing
operations....................... (2,932) 25,228 (83,477) (61,181)
Gain from sale of discontinued
operations, net of income tax
provision of $52,617,000......... 71,240 -- -- 71,240
-------- -------- -------- --------
Net income (loss).................. $ 68,308 $ 25,228 $(83,477) $ 10,059
======== ======== ======== ========
Basic loss per share from
continuing operations............ $ (0.06) $ (1.12)
Basic income per share from sale of
discontinued operations.......... 1.53 1.30
-------- --------
Basic net income per share......... $ 1.47 $ 0.18
======== ========
Shares used in computing basic net
loss per share................... 46,424 8,400(a) 54,824
======== ======== ========
Diluted loss per share from
continuing operations............ $ (0.06) $ (1.12)
Diluted income per share from sale
of discontinued operations....... 1.50 1.28
-------- --------
Diluted net income per share....... $ 1.44 $ 0.18
======== ========
Shares used in computing net income
(loss) per share................. 47,448 8,400(a) 55,848
======== ======== ========


See accompanying notes.



INTUIT LACERTE PRO FORMA
JANUARY 31, MARCH 31, ---------------------------
UNAUDITED PRO FORMA CONDENSED 1998 1998 ADJUSTMENTS COMBINED
COMBINING BALANCE SHEET DATA: ----------- --------- ----------- ----------
(IN THOUSANDS)

ASSETS
Current assets:
Cash and cash equivalents....... $105,532 $ 6,621 $ 370,677(a)
(400,000)(b) $ 82,830
Short-term investments.......... 143,179 -- -- 143,179
Marketable securities........... 394,049 -- -- 394,049
Accounts receivable, net........ 170,277 8,513 -- 178,790
Notes
receivable -- shareholders... -- 3,068 -- 3,068
Inventories..................... 4,811 -- -- 4,811
Prepaid expenses................ 18,622 163 -- 18,785
-------- -------- --------- ----------
Total current assets.... 836,470 18,365 (29,323) 825,512
Property and equipment, net....... 70,574 2,966 -- 73,540
Intangibles from Lacerte
Acquisition..................... -- -- 394,822(b)
(20,300)(c) 374,522
Purchased intangibles, net........ 13,676 1,104 -- 14,780
Goodwill, net..................... 19,190 -- 19,190
Investments....................... 2,000 -- -- 2,000
Restricted investments............ 32,493 -- -- 32,493
Other assets...................... 2,678 386 -- 3,064
-------- -------- --------- ----------
Total assets............ $977,081 $ 22,821 $ 345,199 $1,345,101
======== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable................ $ 59,535 $ 771 $ -- $ 60,306
Accrued compensation and related
liabilities.................. 20,595 1,703 -- 22,298
Deferred revenue................ 38,602 1,002 -- 39,604
Income taxes payable............ 16,940 -- (7,714)(c) 9,226
Deferred income taxes........... 92,147 -- -- 92,147
Other accrued liabilities....... 156,267 4,167 10,000(b) 170,434
-------- -------- --------- ----------
Total current
liabilities........... 384,086 7,643 2,286 394,015
Deferred income taxes............. 300 -- -- 300
Long-term notes payable........... 31,253 -- -- 31,253
Commitments and contingencies
Stockholders' equity:
Preferred stock................. -- -- -- --
Common stock.................... 478 -- 84(a) 562
Additional paid-in capital........ 577,542 12 370,593(a)
(12)(d) 948,135
Net unrealized gain on marketable
securities...................... 117,929 -- -- 117,929
Cumulative translation adjustment
and other....................... (361) -- -- (361)
Retained earnings (accumulated
deficit)........................ (134,146) 15,166 (15,166)(d)
7,714(c)
(20,300)(c) (146,732)
-------- -------- --------- ----------
Total stockholders'
equity................ 561,442 15,178 342,913 919,533
-------- -------- --------- ----------
Total liabilities and
stockholders'
equity................ $977,081 $ 22,821 $ 345,199 $1,345,101
======== ======== ========= ==========


See accompanying notes.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS

Note 1. The unaudited pro forma condensed combining balance sheet of Intuit
and Lacerte has been prepared as if the Pending Acquisition, which is being
accounted for as a purchase, was completed as of January 31, 1998. Based on an
aggregate purchase price of $400 million, plus $10 million of direct and
indirect acquisition costs, and approximately $8 million in liabilities assumed,
a total of $418 million was allocated to the Lacerte March 31, 1998 balance
sheet. Actual balance sheets of Intuit and Lacerte will be combined at the
effective date of the Pending Acquisition.

The preliminary allocation of the purchase price among the identifiable
tangible and intangible assets was based on a preliminary appraisal of the fair
market value of those assets. Such preliminary purchase price allocation is
subject to adjustment based upon the Company's further analysis, which
adjustment could be material in amount. Specifically, purchased research and
development was identified and valued through interviews concerning each Lacerte
developmental project. Expected future cash flows of each developmental project
were discounted to present value taking into account risks associated with the
inherent difficulties and uncertainties in completing the project, and thereby
achieving technological feasibility, and risks related to the viability of and
potential changes in future target markets.

The above preliminary analysis and valuation resulted in a value of
approximately $20 million for purchased research and development which has not
yet reached technological feasibility and does not have alternative future uses.
Therefore, in accordance with generally accepted accounting principles, this
amount has been written off as a pro forma adjustment.

Using the same methodology, other intangibles were identified and
preliminarily valued. Expected future cash flows associated with these
intangibles were discounted to present value taking into account risks related
to the characteristics of each item. The amounts preliminarily identified as
intangible assets as well as goodwill arising from the transaction are expected
to be amortized over estimated useful lives ranging from three to five years.

Note 2. The Intuit statement of operations for the year ended July 31, 1997
has been combined with the Lacerte statement of income for the year ended
September 30, 1997. Additionally, the Intuit statement of operations for the six
month period ended January 31, 1998 has been combined with Lacerte's statement
of income for the six month period ended March 31, 1998. This method of
combining the two companies is for the presentation of unaudited pro forma
condensed combining financial statements only. Actual statements of operations
of Intuit and Lacerte will be combined from the effective date of the Pending
Acquisition with no retroactive restatement. The unaudited pro forma condensed
combining financial statements, including the notes thereto, should be read in
conjunction with the historical consolidated financial statements of Intuit and
the combined financial statements of Lacerte for the indicated periods.

Note 3. The unaudited pro forma condensed combining statements of
operations for Intuit and Lacerte have been prepared as if the Pending
Acquisition was completed as of the beginning of each period presented. The
unaudited pro forma combined net loss per share is based on the weighted average
number of common shares of Intuit Common Stock outstanding during the period,
adjusted to give effect to 8,400,000 shares of the Company's Common Stock
assumed to be issued pursuant to the Company's planned public offering, the
proceeds of which are to be used to fund the purchase price for the Pending
Acquisition.

Note 4. Lacerte has elected under the Internal Revenue Code to be an "S"
corporation. In lieu of federal corporate income taxes, the stockholders of an
"S" corporation are taxed on their proportionate shares of the Company's taxable
income. Therefore, no provision or liability for federal income taxes has been
included in Lacerte's financial statements, as the tax effects of the Company's
activities accrue to the individual stockholders. The unaudited pro forma
condensed combining statements of operations include pro forma adjustments to
adjust Lacerte's earnings as if they were subject to the corporate tax treatment
of a "C" corporation.

Note 5. The unaudited pro forma condensed combining statements of
operations for Intuit and Lacerte do not include the approximate $20 million
charge for acquired in-process research and development arising from the Pending
Acquisition, as it is a material nonrecurring charge. This charge will be
included in the actual consolidated statements of operations of Intuit in the
fiscal quarter in which the Pending Acquisition closes.

Note 6. The following pro forma adjustments are reflected in the unaudited
pro forma condensed combining financial information and are required to allocate
the preliminary purchase price and acquisition costs to the net assets to be
acquired from Lacerte based on their fair value, as determined by a preliminary
appraisal, and to reflect the write-off of purchased research and development
identified in the purchase price allocation:

(a) Reflects $370,677,000 of net proceeds to the Company from the sale of
8,400,000 shares of Common Stock at an assumed public offering price of $45.875
per share after deducting the estimated underwriting discount and offering
expenses.

(b) Reflects the allocation of the purchase price, based on fair market
values, to the historical balance sheet.

(c) Reflects the write-off of purchased research and development identified
in the purchase price allocation and the related pro forma tax effects. The pro
forma statements of operations exclude the write-off of purchased research and
development due to its non-recurring nature.

(d) Reflects the elimination of Lacerte's equity accounts.

(e) Reflects the amortization of intangibles associated with the purchase
of Lacerte as if the acquisition was completed as of the beginning of each
period presented. Amortization is over the estimated useful lives of the assets
acquired (generally between three and five years).

(f) Reflects the effect of treating Lacerte as an "S" corporation versus a
"C" corporation for federal and state tax purposes.