<PAGE>
Exhibit 99.2
Inso Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet and Statements of
Operations
Background Information
On July 10, 2000, Inso Corporation ("Inso" or, the "Company") sold its
Information Exchange Division ("IED") to IntraNet Solutions, Inc. ("IS") for a
stated purchase price of $55,000,000, less amounts for retained rights under
license and subject to adjustment based on the net working capital of the IED
business on the closing date. The net working capital adjustment shall be
calculated and settled in the form of a cash payment by the party owing the
adjustment amount within 50 days of the closing date. The Company currently
estimates that a net payment of approximately $2,000,000 will be due and payable
to IS at the settlement date.
The transaction was in the form of a merger of two wholly owned subsidiaries of
IS with Inso's subsidiaries Inso Chicago Corporation and Inso Kansas City
Corporation which comprised the IED business. Inso received $48,000,000 of the
proceeds in cash at the time of the closing. An additional $5,500,000 has been
placed in an escrow account, and, subject to the Company's indemnification
obligations under the agreement, shall be released to the Company on the first
anniversary of the closing date. Including the portion of the proceeds held in
the escrow account, the Company expects its net proceeds from the transaction,
net of income taxes, the net working capital adjustment and transaction-related
expenditures, to be approximately $48,000,000 and the Company's net gain from
the transaction is expected to approximate $38,000,000.
Basis of Accompanying Unaudited Pro Forma Condensed Consolidated Financial
Statements
The unaudited pro forma financial information set forth below includes an
Unaudited Pro Forma Condensed Consolidated Balance Sheet at April 30, 2000 and
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three
months ended April 30, 2000 and the twelve months ended January 31, 2000. The
Unaudited Pro Forma Condensed Consolidated Balance Sheet assumes that the sale
of the IED business, as described in the introductory paragraph, to IS occurred
on April 30, 2000. The Unaudited Pro Forma Condensed Consolidated Statements of
Operations for the three months ended April 30, 2000 and the twelve months ended
January 31, 2000 give effect to the disposition as if it had taken place on
February 1, 1999. The Company's historical results as of and for the three
months ended April 30, 2000 are derived from the Company's unaudited condensed
consolidated financial statements included in its Form 10-Q for the quarter
ended April 30, 2000, and the Company's historical operating results for the
year ended January 31, 2000 are derived from the Company's 2000 Annual Report on
Form 10-K.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet includes the
estimated gain resulting from the disposition of the IED business. However, the
Unaudited Pro Forma Condensed
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Consolidated Statements of Operations do not reflect the gain from this sale, or
other non-recurring charges that may result from the transaction.
Management believes that the assumptions used in preparing these unaudited pro
forma condensed consolidated financial statements provide a reasonable basis for
presenting all of the significant effects of the sale. These unaudited pro
forma condensed consolidated financial statements do not purport to be
indicative of the results which actually would have been obtained if the sale
had been effected on the date indicated or of those results which may be
achieved in the future. The adjustments in the pro forma financial information
are based on available information and on certain assumptions which management
believes are reasonable. The pro forma condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements included in the Inso Corporation 2000 Annual Report on Form 10-K for
the year ended January 31, 2000 and Company's unaudited condensed consolidated
financial statements included in its Form 10-Q for the three months ended April
30, 2000 filed with the Securities and Exchange Commission.
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Inso Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet and Statements
of Operations
A summary of the IED balances and pro forma adjustments is set forth below:
a) To record cash proceeds of $48,000,000 received by the Company from
Intranet Solutions, Inc. ("IS") as a result of the sale.
b) To record the disposition of assets and liabilities of the IED business
as a result of the sale.
c) To record the $5,500,000 escrow amount receivable by the Company from IS
on the one-year anniversary of the closing date.
d) To record the estimated net working capital deficit and preliminary
estimate of direct transaction costs and transaction related compensation
associated with the sale.
e) To reflect the anticipated gain on the sale of the IED business, as of
April 30, 2000, net of estimated taxes of $1,000,000:
(amounts in thousands)
Net proceeds $ 53,500
Net assets of disposed business (12,167)
Transaction related expenditures (4,300)
Estimated income tax expense (1,000)
--------
Net gain $ 36,133
========
f) To remove the net revenue and associated expenses of the IED business
which was sold.
g) To remove the restructuring expenses recorded by the Company in the
fiscal year ended January 31, 2000 associated with the IED business.
h) As a result of the tax filing arrangements of Inso Corporation and its
subsidiaries, income earned by the subsidiaries of the IED business are
offset by losses generated by other Inso subsidiaries for federal tax
purposes, and for certain states. For the period ended April 30, 2000, no
provision has been reflected in the pro forma financial information for
the IED business as a result of these filing arrangements, as there was
no material state tax liability in those states in which income could not
be offset. Similarly, for the period ended January 31, 2000, no federal
provision has been reflected for IED. The tax provision reflected for the
IED business for the period ended January 31, 2000 represents taxes due
in certain state jurisdictions for which no offset was made.
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INSO CORPORATION
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(amounts in thousands, except share amounts)
<TABLE>
<CAPTION>
Inso Divested Inso
Historical IED Pro Forma Pro forma
April 30, 2000 Business Adjustments April 30, 2000
-------------- -------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 28,541 $48,000 a $ 76,541
Marketable securities 3,858 - 3,858
Accounts receivable, net 13,554 9,168 b 4,386
Receivables from asset sales 5,723 5,500 c 11,223
Prepaid expenses and other current assets 1,439 184 b - 1,255
--------- ------- ------- -----------
Total current assets 53,115 9,352 53,500 97,263
Property and equipment, net 4,631 1,490 b 3,141
Product development costs, net 9,981 4,896 b 5,085
Excess of costs over net assets acquired, net 1,798 1,798 b 0
Other intangible assets, net 865 862 b 3
Long-term accounts receivable, net 810 510 b 300
Licensed technology and advances, net 2,096 4 b - 2,092
--------- ------- ------- -----------
TOTAL ASSETS $ 73,296 $18,912 $53,500 $ 107,884
========= ======= ======= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 552 $ 212 b $ 340
Accrued liabilities 8,537 271 b 2,300 d 11,566
1,000 e
Accrued salaries, commissions and bonuses 6,381 1,130 b 1,900 d 7,151
Unearned revenue 7,319 4,470 b 2,849
Royalties payable and other current liabilities 117 81 b - 36
--------- ------- ------- -----------
Total current liabilities 22,906 6,164 5,200 21,942
Other liabilities, long term 1,216 123 b 1,093
Unearned revenue, non-current portion 458 458 b -
Commitments and contingencies
Stockholders' equity 48,716 12,167 e 48,300 e 84,849
--------- ------- ------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 73,296 $18,912 $53,500 $ 107,884
========= ======= ======= ===========
</TABLE>
See notes to Unaudited Pro forma Condensed Consolidated Balance Sheet
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INSO CORPORATION
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Inso Inso
Historical Pro forma
Three Months Three Months
Ended Divested Ended
April 30, 2000 IED Business April 30, 2000
-------------- ------------ --------------
<S> <C> <C> <C>
Total revenue $ 10,290 $ 5,870 f $ 4,420
Total cost of revenue 2,911 727 f 2,184
-------- ------- --------
Gross profit 7,379 5,143 2,236
Operating expenses:
Sales & marketing 5,168 1,977 f 3,191
Product development 3,809 1,416 f 2,393
Amortization of intangible assets 321 321 f -
General and administrative 3,683 672 f 3,011
Restructuring expenses and special charges 1,835 - 1,835
-------- ------- --------
Total operating expenses 14,816 4,386 10,430
-------- ------- --------
Operating (loss) income (7,437) 757 (8,194)
Net investment and other income 665 25 f 640
-------- ------- --------
(Loss) income before income taxes (6,772) 782 (7,554)
Income tax provision - - h -
-------- ------- --------
Net (loss) income ($6,772) $ 782 ($7,554)
======== ======= ========
Earnings (loss) per share ($0.41) $ 0.05 ($0.46)
======== ======= ========
Weighted average shares outstanding 16,596 16,596 16,596
</TABLE>
See notes to Unaudited Pro forma Condensed Consolidated Statements of Operations
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INSO CORPORATION
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Inso Inso
Historical Pro forma
Year Ended Divested Year Ended
January 31, 2000 IED Business January 31, 2000
---------------- ------------ -----------------
<S> <C> <C> <C>
Total revenue $ 64,680 $26,255 f $ 38,425
Total cost of revenue 22,210 2,576 f 19,634
--------- ------- ---------
Gross profit 42,470 23,679 18,791
Operating expenses:
Sales & marketing 24,559 6,863 f 17,696
Product development 26,079 6,142 f 19,937
Amortization of intangible assets 4,248 1,483 f 2,765
General and administrative 21,527 2,985 f 18,542
Restructuring expenses 11,068 265 g 10,803
Restatement expenses and special charges 28,103 - 28,103
--------- ------- ---------
Total operating expenses 115,584 17,738 97,846
--------- ------- ---------
Operating (loss) income (73,114) 5,941 (79,055)
Non-operating income (expense):
Net investment and other income 1,721 56 f 1,665
Gain on sale, net 12,212 - 12,212
Write down of investment in Information Please, LLC (2,655) - (2,655)
--------- ------- ---------
(Loss) income before income taxes (61,836) 5,997 (67,833)
Income tax provision 474 160 h 314
--------- ------- ---------
Net (loss) income ($62,310) $ 5,837 ($68,147)
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Earnings (loss) per share ($3.98) $ 0.37 ($4.35)
========= ======= =========
Weighted average shares outstanding 15,668 15,668 15,668
</TABLE>
See notes to Unaudited Pro forma Condensed Consolidated Statements of Operations
