Intuit Inc. (NASDAQ: INTU) today announced it has signed a definitive agreement to acquire Denver-based The Flagship Group. The Flagship Group is the holding company of American Fundware, Inc., a leading provider of accounting and business management software solutions for nonprofit organizations, universities and individual government agencies. The acquisition, when completed, will further broaden Intuit's "Right for My Business" strategy, enabling Intuit to provide solutions for the specific needs of the 1.6 million nonprofit organizations in the U.S.
"American Fundware is a great match for Intuit and our strategy to provide superior end-to-end business management solutions for organizations in specific vertical industries," said Steve Bennett, Intuit's president and chief executive officer. "By focusing exclusively on providing comprehensive and customized solutions that are right for the public sector, American Fundware has developed a strong, loyal and growing customer base."
American Fundware is the second acquisition Intuit has made this fiscal year to expand its portfolio of "Right for My Business" vertical business management solutions. In November 2001, Intuit established its construction business solutions division through its purchase of OMware, Inc., a provider of business management solutions for construction companies. "Since the acquisition, customer interest and demand for the Intuit Master Builder product are up significantly. This growth validates how much Intuit's strong brand and national presence can build the revenues of the firms we acquire," said Bennett.
According to Bennett, approximately 265,000 Quicken® and QuickBooks® customers are nonprofit organizations - or more than 16 percent of total U.S. nonprofits. "Many smaller nonprofit organizations with annual budgets of $1 million or less already rely on Intuit's products to simplify their finances," he said. "With American Fundware, we will now be able to meet the needs of larger and more complex organizations." Bennett noted that Intuit plans to leverage both companies' expertise to introduce a public sector accounting solution for organizations that don't need the full functionality of American Fundware's existing products.
American Fundware, a privately held company founded in 1976, is a recognized leader in public sector accounting and business management software. The FundWare suite of products deliver specialized mission-oriented functionality the public sector demands, including general ledger, project and grant accounting, budget management and advanced allocations, as well as the standard accounting modules. FundWare is available in two editions to serve the needs of both mid-size and large organizations, with an average sales price of $12,000-$15,000.
FundWare is ranked #1 by the Nonprofit Financial Center in its independent review of 19 accounting software packages. It has received the top rating from CPA Software News in its annual review of nonprofit software packages.
"For more than 25 years, we've delivered industry-leading solutions that are right for the public sector," said Michael Potts, American Fundware's chief executive officer. "This combination will enable us to take full advantage of Intuit's strong brand and distribution channel to fuel additional growth. At the same time, it will enable us to bring a broader range of solutions to help our customers be even more successful."
Intuit currently plans to operate American Fundware as a separate business unit led by Michael Potts, and will continue to offer its current products and services under the Intuit brand and FundWare product names. Potts will become a vice president at Intuit reporting to Steve Bennett, and virtually all of American Fundware's 80 employees will be asked to stay with the business. American Fundware will continue to be based in Denver.
Under the terms of the agreement, Intuit will acquire all of the outstanding shares of The Flagship Group for approximately $22 million in Intuit stock and $4 million in cash. Intuit expects American Fundware to contribute between $15 million and $20 million in revenue in fiscal year 2003, which begins Aug. 1, 2002, and expects no material impact on pro forma EPS in fiscal 2003. The acquisition is expected to close in the fourth quarter of Intuit's fiscal 2002 (May 1, 2002 - July 31, 2002), so the company does not expect the acquisition to have a material impact on fiscal 2002 results. The acquisition is subject to customary closing conditions, including the approval of The Flagship Group's shareholders.
Intuit's policy is to not confirm, update or otherwise comment on its financial projections except in compliance with Regulation FD. The projections in the guidance provided above are forward-looking statements and are subject to a number of risks and uncertainties as described in "Cautions about Forward-Looking Statements" below.
About Intuit Inc.
Intuit Inc. (NASDAQ: INTU) is the leading provider of financial software and Web-based services for consumers, small businesses and accounting professionals. Its flagship products and services, including Quicken®, QuickBooks®, Quicken TurboTax® and Quicken Loans® simplify personal finance, small business management and payroll processing, tax preparation and filing and home loans.
Founded in 1983, Intuit has annual revenue of more than $1 billion and reaches 25 million customers with nearly 6,000 employees in 13 states and four countries. More information can be found at www.Intuit.com.
