On a GAAP basis, the Company reported a third quarter net loss of $2.2 million, or $0.05 per share, which included an accounting charge of $16.2 million in connection with a three-year agreement with America Online, Inc. Complete quarterly financial results on a GAAP and pro forma basis are set forth on Tables A and B.

Intuit in a separate press release announced today that it has reached a definitive agreement to acquire Lacerte Software Corporation, the Dallas-based developer of professional tax preparation software.

Business Highlights
"Over the past three quarters, we have built Intuit into a strong and well positioned company, committed to improving financial performance," said Bill Campbell, President and CEO. "And, we are successfully transitioning our leadership on the desktop to the exciting and challenging Internet arena."

Bill Harris, Executive Vice President, commented, "The third quarter marked the culmination of our peak season in which we improved our operating and financial performance by driving increased revenue per customer and creating demand for higher-end products. In addition, we increased our pro forma profitability with targeted productivity initiatives."

"We also saw our desktop software leadership continue across all our markets during the quarter. We extended our reach into new markets and drove additional growth by capitalizing on the strong brand identities and the cross-product integration of our businesses, " said Scott D. Cook, Chairman of the Board.

Financial Review
As the Company has previously discussed, Intuit's quarterly revenue pattern within any given year varies from year to year. Therefore, annual results may provide a more meaningful comparison of operating results than quarter-over-quarter comparisons. In particular, there is no seasonal pattern for the Company's QuickBooks product launches. For example, last year the third quarter benefited from the launch of QuickBooks 5.0 in the second quarter, while this year's third quarter received no such benefit. QuickBooks 6.0 is anticipated to launch at the end of the fourth quarter of fiscal 1998.

As noted before, Intuit's financial results reflect the highly seasonal nature of its tax and Quicken products. Historically, revenue is highest in the January quarter. The Company experiences significantly lower revenue levels in the April, July, and October quarters, while operating expenses to develop and manage its products and services continue during these periods.

The GAAP financial results are prepared in accordance with generally accepted accounting principles and are shown in Table A. Pro forma financial information shown in Table B excludes discontinued operations, acquisition-related charges, restructuring costs, accounting charges related to a three-year agreement with America Online announced in February 1998, and the Parsons business sold in August 1997. Pro forma results measure the performance of Intuit's core business because they include current business operations and exclude the charges noted above.

Pro Forma Revenue and Profitability Up Strongly From Prior Year
For the third quarter of fiscal 1998, net revenue of $142.0 million was up approximately 21% compared to the pro forma results for the corresponding quarter of the prior year. The year-over-year pro forma comparison benefited from the timing shift of tax revenue from the second quarter into the third quarter due in part to the deferred accounting recognition of electronic filing service revenue. Third fiscal quarter revenue increased 4% compared to GAAP revenue for the corresponding quarter of the prior year.

Pro forma earnings for the third fiscal quarter were $10.2 million, or $0.20 per share. These pro forma earnings were up 58% from the comparable pro forma earnings of $6.4 million reported for the corresponding quarter of fiscal 1997. The higher profitability was driven primarily by increased revenue and lower manufacturing and support costs. On a GAAP basis, the Company reported a third quarter net loss of $2.2 million, or $0.05 per share, down from net income of $.5 million, or $0.01 per share, reported the prior year. The current period included an accounting charge of $16.2 million in connection with a three-year agreement with America Online, Inc.

Tax Completes Successful Season
Intuit just completed a successful tax season. Revenue for the tax business increased in the third quarter compared to the same quarter a year ago. The Company uses annual results to measure the performance of its tax business because timing can create revenue fluctuations between quarters as it did in the second and third quarters of this year.

Intuit also experienced growth in its Internet-based tax offerings. The number of personal federal tax returns filed electronically increased by 143% to a total of approximately 650,000 for the season to date. Sales of state downloads also increased during the quarter. In February, Intuit launched TurboTax Online. This Internet-based service enabled people to prepare and file federal 1040 and California state returns, all online, although the number of actual returns prepared online was small relative to those prepared using desktop software.

Quicken Grows Year-Over-Year Revenue
Third quarter Quicken revenue increased 12% over the prior year. The revenue growth was the result of the Company's strategic efforts to encourage a more frequent upgrade pattern as well as convert customers to higher-end products, such as Quicken Deluxe and Quicken Home and Business, thereby increasing revenue per customer. During the third quarter, Intuit saw over 75% of its customers select high-end products. The Company's Quicken product remains the clear market leader in the personal finance software category. At the end of March, Quicken 98 continued to command over 80% share of retail dollar sales in its category, according to PC Data.

While the market response to Quicken 98 is encouraging, there can be no assurance that present revenue levels will continue in the future.

Intuit Launched First Website For Small Businesses
During the third quarter, Intuit launched its new small business Website, Quicken.com Small Business (www.quicken.com/small_business). This site extends Quicken.com's coverage by addressing the specific needs of small businesses. One of the first small business offerings on the site is Business Cash Finder(www.cashfinder.com), an Internet-based solution. Cash Finder launched with 10 initial lenders, nearly double the number of initial lenders on the Company's mortgage site, which demonstrates the growing support of financial institutions.

Demand for the Company's current small business products remained solid and the QuickBooks product continued to lead the market with approximately 80% share of dollars at retail for March 1998 as measured by PC Data. Third quarter revenue was down compared to the same quarter of the prior year, which included a post-launch uplift from QuickBooks 5.0. Multi-user QuickBooks (6.0) is expected to be launched in the fourth quarter of fiscal 1998.

Internet Business Ramping
Intuit continues to experience positive traffic trends. In April, average page views-per-month for Quicken.com totaled approximately 76,000,000, up 75%, from January levels. The Company is realizing synergy from the integration of its products across platforms. Today, an increasing percentage, 70%, of traffic to the Company's insurance marketspace is coming from Quicken.com. According to MediaMetrix (PC Meter), Quicken.com's Web household reach rose to 4.3 in March, up from 2.3 a year earlier.

During the third quarter, Intuit added to the breadth and depth of Quicken.com. QuickenMortgage released version 2.0 which expanded the QuickenMortgage offering to include online mortgage applications, five new lenders raising the total to 11, and direct access to over 500,000 home real estate listings in the US.

The Company has recently added new functionality and a new look to its Quicken.com site. Among the new features added were:

• On-screen customized Alerts for news and stock related activity
• Portfolio analysis including risk/return modeling
• Quick quotes for stocks
• New area on DRIPs
• Bond research and quotes

During the quarter, Intuit announced a multi-year agreement with America Online that is designed to drive increased traffic to Quicken.com. Under the terms of the agreement, Intuit is the exclusive provider of tax preparation and filing, and multi-carrier life and auto insurance, and multi-lender mortgage services on both the AOL service and AOL.com. In addition, on AOL.com, Intuit is the primary source of financial content for the Personal Finance Web Channel. Under the terms of the agreement, Intuit guarantees payments to AOL totaling $30 million over three years, of which $16 million was paid in the third fiscal quarter.

While the Internet presents many opportunities for Intuit, Quicken.com revenue represents less than 5% of overall revenue. We remind investors that potential Internet-related revenue and profits may be difficult to predict or achieve and may be impacted by seasonal trends.

New Market Directions
On March 24, the Company announced a venture with TCI, Bank of America and @Home to develop a system to deliver financial services to consumers over their television sets. Anticipated in calendar 1999, this new system would enable cable customers to access the financial planning and management tools available to desktop software and Internet users today.

On March 30, Intuit and MECA Software, L.L.C. announced an exclusive agreement under which MECA will develop and market customized versions of Quicken for individual financial institutions. Consumers will be able to benefit from these versions of Quicken, which are linked with the services offered by their chosen financial institution.