Form: 8-K/A

Current report filing

September 8, 1998

Documents

PRO FORMA FINANCIAL INFORMATION

Published on September 8, 1998



EXHIBIT 99.03



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 9,000,000 shares of Common Stock at a public offering
price of $47.375 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 nine months ended April
30, 1998 and Lacerte for the nine months ended March 31, 1998. The pro forma
condensed combining balance sheet data gives effect to the acquisition of
Lacerte by Intuit as if such acquisition had occurred on April 30, 1998. The pro
forma combined consolidated financial information does not reflect any potential
cost savings which may be obtained following the acquisition. The pro forma
adjustments and assumptions are based on estimates, evaluations and other data
currently available. 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
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.





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INTUIT INC. AND
LACERTE SOFTWARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET DATA




PRO FORMA
INTUIT LACERTE -------------------------
APRIL 30, 1998 MARCH 31, 1998 ADJUSTMENTS COMBINED
-------------- -------------- ----------- --------
ASSETS (in thousands)

Current assets:
Cash and cash equivalents................ $ 63,191 $ 6,621 $ 410,275 (a)
(400,000)(b) $ 80,087
Short-term investments................... 184,067 -- -- 184,067
Marketable securities.................... 479,227 -- 479,227
Accounts receivable, net................. 118,676 8,513 -- 127,189
Note receivable.......................... 50,000 3,068 -- 53,068
Inventories.............................. 2,015 -- -- 2,015
Prepaid expenses.........................
23,310 163 -- 23,473
----------- -------- --------- ---------
Total current assets............. 920,486 18,365 10,275 949,126
Property and equipment, net................ 69,575 2,966 -- 72,541
Intangibles from Lacerte corporation....... 394,822 (b)
(53,800)(c) 341,022
Purchased intangibles...................... 11,737 1,104 -- 12,841
Goodwill................................... 16,166 -- -- 16,166
Investments................................ 11,000 -- -- 11,000
Restricted investments..................... 31,053 -- -- 31,053
Other assets............................... 13,397 386 -- 13,783
----------- -------- --------- ---------
Total assets............................... $ 1,073,414 $ 22,821 $ 351,297 $1,447,532
=========== ======== ========= ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................ $ 48,218 $ 771 $ -- $ 48,989
Accrued compensation and related
liabilities .......................... 22,761 1,703 -- 24,464
Deferred revenue ........................ 28,820 1,002 -- 29,822
Income taxes payable .................... 6,213 -- (7,714)(c) (1,501)
Deferred income taxes ................... 126,219 -- -- 126,219
Other accrued liabilities ............... 165,059 4,167 10,000 (b) 179,226
----------- -------- --------- ----------
Total current liabilities ....... 397,290 7,643 2,286 407,219
Deferred income taxes ..................... 117 -- -- 117
Long-term notes payable ................... 39,173 -- -- 39,173
Stockholders' equity:
Redeemable preferred stock .............. -- -- -- --
Common stock ............................ 487 -- 90 (a) 577
Additional paid-in capital .............. 603,425 12 410,185 (a)
(12)(d) 1,013,610
Net unrealized gain on marketable
securities ............................ 169,035 -- -- 169,035
Cumulative translation adjustment
and other ............................. 239 -- -- 239
Retained earnings (accumulated deficit).. (136,352) 15,166 (15,166)(d)
7,714 (c)
(53,800)(c) (182,438)
--------- ----------
Total stockholders' equity....... 636,834 15,178 349,011 1,001,023
----------- -------- --------- ----------
Total liabilities and stockholders'
equity .................................. $ 1,073,414 $ 22,821 $ 351,297 $1,447,532
=========== ======== ========= ==========



See accompanying notes.



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INTUIT INC. AND
LACERTE SOFTWARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINING INCOME STATEMENT DATA



INTUIT LACERTE
FOR THE YEAR FOR THE YEAR PRO FORMA
ENDED ENDED -------------------------
JUL. 31, 1997 SEPT. 30, 1997 ADJUSTMENTS COMBINED
------------- -------------- ----------- --------
(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.



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INTUIT INC. AND
LACERTE SOFTWARE CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINING INCOME STATEMENT





INTUIT LACERTE
FOR THE NINE FOR THE NINE
MONTHS MONTHS
ENDED ENDED PRO FORMA
APRIL 30, MARCH 31, -------------------------
1998 1998 ADJUSTMENTS COMBINED
----------- ------------ ----------- ---------
(in thousands, except per share data)


Net revenue .................................... $ 475,467 $ 69,152 $ -- $ 544,619
Costs and expenses:
Cost of goods sold:
Product ................................... 97,206 4,417 -- 101,623
Amortization of purchased software and
other ................................. 1,941 -- -- 1,941
Customer service and technical support ....... 91,821 5,768 -- 97,589
Selling and marketing ........................ 134,006 4,499 -- 138,505
Research and development ..................... 78,159 14,091 -- 92,250
General and administrative ................... 27,387 15,482 -- 42,869
Charge for purchased research and
development ............................... -- --
Other acquisition costs ...................... -- --
Amortization of goodwill and purchased
intangibles ............................... 12,230 -- 85,371(e) 97,601
--------- --------- --------- ---------
Total costs and expenses ............. 442,750 44,257 85,371 572,378
--------- --------- --------- ---------
Loss from operations ................. 32,717 24,895 (85,371) (27,759)
Interest and other income and expense, net ..... 7,375 471 -- 7,846
--------- --------- --------- ---------
Gain on disposal of business ................... 4,321 -- -- 4,321
Income (loss) from continuing operations
before income taxes .......................... 44,413 25,366 (85,371) (15,592)
Provision for income taxes ..................... 17,534 9,132 -- 26,666
--------- --------- --------- ---------
Net income ..................................... $ 26,879 16,234 (85,371) (42,258)
========= ========= ========= =========
Basic net income per share ..................... $ 0.56 (.74)
========= =========
Shares used in per share amounts ............... 47,618 9,000(d) 56,618
========= =========
Diluted net income per share ................... $ 0.54 (.74)
========= =========

Shares used in computing net loss per share .... 49,560 9,000(d) 56,618
========= =========



See accompanying notes.

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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 Acquisition, which has been
accounted for as a purchase, was completed as of April 30, 1998. Based on an
aggregate purchase price of $400 million, plus $10 million of acquisition costs,
and approximately $8 million in liabilities assumed, a total of $418 million was
allocated to the Lacerte March 31, 1998 balance sheet.

The allocation of the purchase price among the identifiable tangible
and intangible assets was based on an appraisal of the fair market value of
those assets. 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 analysis and valuation resulted in a value of approximately
$53.8 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
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 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
nine month period ended April 30, 1998 has been combined with Lacerte's
statement of income for the nine 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 have been combined from the effective date of the
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 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 9,000,000 shares of the Company's Common Stock issued pursuant to the
Company's May 1998 public offering, the proceeds of which were used to fund the
purchase price for the Acquisition.

NOTE 4. Lacerte had 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 accrued 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.



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NOTE 5. The unaudited pro forma condensed combining statements of
operations for Intuit and Lacerate do not include the $53.8 million charge for
acquired in-process research and development arising from the Acquisition, as it
is a material nonrecurring charge. This charge has been included in the actual
consolidated statements of operations of Intuit in the fiscal quarter ended July
31, 1998 (the fiscal quarter in which the Acquisition was consummated).

NOTE 6. The following pro forma adjustments are reflected in the
unaudited pro forma condensed combining financial information and are required
to allocate the purchase price and acquisition costs to the net assets 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 the sale of 9,000,000 shares of Common Stock in May 1998
at a public offering price of $47.375 per share after deducting the underwriting
discount and estimated offering expenses for net proceeds to the Company of
$410,275,000.

(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.



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