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Previous: INTRANET SOLUTIONS INC, 8-K/A, EX-99.2, 2000-09-22 |
Next: MUNICIPAL INVT TR FD INTERM TERM SER 209 DEFINED ASSET FDS, 497, 2000-09-22 |
<PAGE> 1
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined statements of operations
reflect the pro forma consolidated results of operations of IntraNet Solutions,
Inc. ("IntraNet Solutions") for the year ended March 31, 2000, and three months
ended June 30, 2000 with those of Information Exchange Division (two operating
units of Inso Corporation) ("Information Exchange") for the year ended January
31, 2000, and three months ended April 30, 2000 after giving effect to the
Agreement and Plan of Merger (the "Merger Agreement") between IntraNet
Solutions, IntraNet Chicago Acquisition Corporation, IntraNet Kansas City
Acquisition Corporation, Inso Chicago Corporation, Inso Kansas City Corporation
and Inso Corporation, dated as of July 10, 2000, under the assumptions set forth
in the accompanying notes. The unaudited pro forma condensed combined balance
sheet combines the June 30, 2000 unaudited historical consolidated condensed
balance sheet of IntraNet Solutions with the April 30, 2000 unaudited historical
condensed balance sheet of Information Exchange after giving effect to the
Merger Agreement, under the assumptions set forth in the accompanying notes. The
pro forma condensed combined financial statements should be read in conjunction
with the accompanying explanatory notes, the Merger Agreement, the historical
financial statements and related notes of IntraNet Solutions previously filed
and the financial statements of Information Exchange, appearing elsewhere in
this Current Report on Form 8-K.
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<PAGE> 2
8
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
IntraNet Information Pro forma Pro forma
ASSETS Solutions Exchange adjustments combined
--------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,629 $ 4,019 $ - $ 8,648
Short-term investments 149,826 - (55,000)(a) 94,826
Accounts receivable, net 9,499 9,167 - 18,666
Notes receivable 126 - - 126
Inventories 55 - - 55
Prepaid royalties 1,154 - - 1,154
Prepaid expenses and other current assets 1,722 184 - 1,906
---------- -------- ----------- ----------
Total current assets 167,011 13,370 (55,000) 125,381
PROPERTY AND EQUIPMENT, NET 1,133 1,631 201 (a) 2,965
OTHER ASSETS - - - -
Accounts receivable, net of current maturities - 510 - 510
Product development costs, net - 4,902 (2,325)(a) 2,577
Other investments 1,049 - - 1,049
Prepaid royalties, net of current 2,106 - - 2,106
Prepaid expenses and other, net of current 131 - - 131
Goodwill, net - 1,509 (1,509)(a) 12,182
12,182 (a)
Deferred taxes - 1,370 (1,370)(a) -
Other intangibles - - 22,800 (a) 22,800
Other 401 - - 401
---------- -------- ----------- ----------
$ 171,831 $ 23,292 $ (25,021) $ 170,102
========== ======== =========== ==========
CURRENT LIABILITIES
Current maturities of long-term obligations $ 46 $ 77 $ - $ 123
Accounts payable 1,152 210 1,745 (a) 3,107
Deferred revenues 1,484 4,470 - 5,954
Accrued compensation 839 1,111 - 1,950
Accrued expenses 1,083 477 - 1,560
Deferred taxes - 525 (525)(a) -
---------- -------- ----------- ----------
Total current liabilities 4,604 6,870 1,220 12,694
Long-term obligations, net of current maturities - 123 - 123
Deferred revenue, net of current portion 89 458 - 547
---------- -------- ----------- ----------
Total liabilities 4,693 7,451 1,220 13,364
COMMITMENTS AND CONTINGENCIES - - - -
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock 213 - - 213
Additional paid-in capital 176,469 - - 176,469
Retained earnings (accumulated deficit) (9,544) 15,841 (1,509)(a) (19,944)
(10,400)(a)
(13,487)(a)
(845)(a)
---------- -------- ----------- ----------
167,138 15,841 (26,241) 156,738
---------- -------- ----------- ----------
$ 171,831 $ 23,292 $ (25,021) $ 170,102
========== ======== =========== ==========
</TABLE>
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<PAGE> 3
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 2000
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
IntraNet Information Pro forma Pro forma
Solutions Exchange adjustments combined
-------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Product licenses $17,480 $23,847 $ - $ 41,327
Services 4,880 3,154 - 8,034
------- ------- -------- --------
Total revenues 22,360 27,001 - 49,361
Cost of revenues:
Product licenses 1,708 2,037 (775)(e) 2,970
Services 2,400 977 - 3,377
------- ------- -------- --------
Total cost of revenues 4,108 3,014 (775) 6,347
------- ------- -------- --------
Gross profit 18,252 23,987 775 43,014
Operating expenses:
Sales and marketing 10,536 6,802 - 17,338
General and administrative 3,853 4,882 11,544 (b) 19,420
67 (c)
(926)(d)
Research and development 2,878 4,752 - 7,630
Acquisition costs 1,972 - - 1,972
In-process research and development - - 10,400 (a) 10,400
------- ------- --------- --------
Total operating expenses 19,239 16,436 21,085 56,760
------- ------- -------- --------
Income (loss) from operations (987) 7,551 (20,310) (13,746)
Other:
Interest income (expense), net 1,466 - - 1,466
Other - 49 - 49
------- ------- -------- --------
Income (loss) before income taxes 479 7,600 (20,310) (12,231)
Income taxes - 3,020 (3,020)(f) -
------- ------- -------- --------
Net income (loss) $ 479 $ 4,580 $(17,290) $(12,231)
======= ======= ======== ========
</TABLE>
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<PAGE> 4
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS - CONTINUED
YEAR ENDED MARCH 31, 2000
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
IntraNet Information Pro forma Pro forma
Solutions Exchange adjustments combined
--------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net income per common share
Basic $ 0.03 $ (0.74)
======= =======
Diluted $ 0.03 $ (0.74)
======= =======
Weighted average common shares outstanding
Basic 16,462 16,462
======= =======
Diluted 18,057 16,462
======= =======
</TABLE>
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<PAGE> 5
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
IntraNet Information Pro forma Pro forma
Solutions Exchange adjustments combined
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
Revenues:
Product licenses $ 7,447 $5,277 $ - $12,724
Services 2,015 593 - 2,608
-------- ------ ------- -------
Total revenues 9,462 5,870 - 15,332
Cost of revenues:
Product licenses 665 565 (194) (e) 1,036
Services 1,158 162 - 1,320
-------- ------ ------- -------
Total cost of revenues 1,823 727 (194) 2,356
-------- ------ ------- -------
Gross profit 7,639 5,143 194 12,976
Operating expenses:
Sales and marketing 4,419 1,996 - 6,415
General and administrative 1,427 1,174 2,886 (b) 5,262
17 (c)
(242)(d)
Research and development 1,054 1,290 - 2,344
-------- ------ ------- -------
Total operating expenses 6,900 4,460 2,661 14,021
-------- ------ ------- -------
Income (loss) from operations 739 683 (2,467) (1,045)
Other:
Interest income (expense), net 2,250 - - 2,250
Other - 25 - 25
-------- ------ ------- -------
Income before income taxes 2,989 708 (2,467) 1,230
Income taxes - 286 (286)(f) -
-------- ------ ------- -------
Net income $ 2,989 $ 422 $(2,181) $ 1,230
======== ====== ======= =======
Net income per common share
Basic $ 0.14 $ 0.06
======== =======
Diluted $ 0.13 $ 0.05
======== =======
Weighted average common shares outstanding
Basis 21,195 21,195
======== =======
Diluted 23,092 23,092
======== =======
</TABLE>
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<PAGE> 6
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
NOTE A - BASIS OF PRESENTATION
On July 10, 2000 (the "Effective Date"), IntraNet Solutions, Inc. ("IntraNet
Solutions") completed its acquisition of Information Exchange Division (a
division of Inso Corporation) (Information Exchange) for $55 million in cash.
Pursuant to the terms of the Agreement and Plan of Merger (the "Merger
Agreement") among IntraNet Solutions, IntraNet Chicago Acquisition
Corporation, IntraNet Kansas City Acquisition Corporation, Inso Chicago
Corporation, Inso Kansas City Corporation and Inso Corporation, dated as of
July 10, 2000, Information Exchange became a wholly owned division of
IntraNet Solutions.
The unaudited pro forma condensed combined financial statements are presented
for illustrative purposes only, giving effect to the merger accounted for by
the purchase method as of June 30, 2000 for the accompanying condensed
combined balance sheet and as of April 1, 1999 for the accompanying proforma
condensed combined statements of operations for the years ended March 31,
2000 and the three months ended June 30, 2000, respectively.
NOTE B - PRO FORMA ADJUSTMENTS
(a) Acquisition and purchase accounting adjustments as follows:
<TABLE>
<S> <C>
Cash $ 55,000
Direct acquisition costs 1,745
--------
Total acquisition costs 56,745
Book value of net assets acquired (15,841)
Elimination of previous goodwill
on the books of Information Exchange 1,509
Elimination of net deferred tax asset 845
Additional value assigned to equipment (201)
Reduction in value of product development costs 2,325
In-process research and development expensed (10,400)
Value assigned to other intangibles (22,800)
--------
Excess of cost over net assets acquired $ 12,182
========
</TABLE>
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<PAGE> 7
INTRANET SOLUTIONS, INC. AND INFORMATION EXCHANGE DIVISION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
NOTE B - PRO FORMA ADJUSTMENTS - Continued
(b) Additional amortization expense related to goodwill and other intangibles
over four years for the non-compete agreement and over three years for
the remaining goodwill and intangibles relating to Information Exchange.
(c) Additional depreciation over three years relating to $201 estimated
increase in fair value of equipment acquired.
(d) Elimination of amortization of previous goodwill recorded on the books of
Information Exchange.
(e) Elimination of amortization relating to $2,325 decrease in fair value of
product development costs.
(f) Elimination of income tax expense due to application of net operating
loss carryforwards.
NOTE C - NON-RECURRING CHARGE
The Merger Agreement provides that a one-time bonus be paid to certain
employees of Information Exchange in the amount of $470. This payment was not
reflected as a proforma adjustment since it is a non-recurring charge.
However, the payment will be reflected in IntraNet Solution's second quarter
results of operations.
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