-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EwfhrAQ9UNDtqr+rlx3/1+DvO7+o2L9JdF9KE0/l0FvqklImYbKFgaKEz+sJ2PGC v5hkXHK6VqhwrX++/Fj3Yg== 0000931763-99-002288.txt : 19990812 0000931763-99-002288.hdr.sgml : 19990812 ACCESSION NUMBER: 0000931763-99-002288 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990528 ITEM INFORMATION: FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERCEPT GROUP INC CENTRAL INDEX KEY: 0001054930 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 582237359 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-14213 FILM NUMBER: 99683496 BUSINESS ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORCROSS STATE: GA ZIP: 30071 BUSINESS PHONE: 7702489600 MAIL ADDRESS: STREET 1: 3150 HOLCOMB BRIDGE ROAD SUITE 200 CITY: NORCROSS STATE: GA ZIP: 30071 8-K/A 1 THE INTERCEPT GROUP SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 28, 1999 ------------ THE INTERCEPT GROUP, INC. ------------------------- (Exact Name of Registrant as Specified in its Charter) Georgia 01-14213 58-2237359 - ----------------- ------------- ------------------ (State or Other (Commission (I.R.S. Employer Jurisdiction of File Number) Identification No.) Incorporation) 3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia 30071 - ------------------------------------------------------ ------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (770) 248-9600 -------------- N/A ------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. The registrant hereby amends its report on Form 8-K filed on June 11, 1999 by deleting the text under Item 7 and replacing it with the following text. (a) Financial Statements of Business Acquired. Included as Exhibit 99.1 hereto and incorporated herein by reference. (b) Pro Forma Financial Information. Included as Exhibit 99.2 hereto and incorporated herein by reference. (c) Exhibits. Item No. Exhibit List 2.1 Acquisition and Merger Agreement dated May 28, 1999 by and between The InterCept Group, Inc., LEV Acquisition Corp., L.E. Vickers & Associates, Inc., Data Equipment Services, Inc., and certain shareholders of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc.* 99.1 The following financial statements of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. together with the report by Arthur Andersen LLP for the periods stated therein: Balance Sheets as of December 31, 1998 and May 31, 1999 (unaudited). Statements of Income for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Statements of Stockholders' Equity for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Statements of Cash Flows for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Notes to Financial Information. 99.2 The following unaudited pro forma condensed consolidated financial statements of The InterCept Group, Inc., L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998. Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 1999. Notes to Pro Forma Condensed Consolidated Financial Information. * Previously filed with the registrant's Current Report on Form 8-K filed June 11, 1999. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. THE INTERCEPT GROUP, INC. By: /s/ Scott R. Meyerhoff ----------------------------------------- Scott R. Meyerhoff Chief Financial Officer Dated: August 10, 1999 3 EXHIBIT LIST Exhibit No. Description - ----------- ----------- 2.1 Acquisition and Merger Agreement dated May 28, 1999 by and between The InterCept Group, Inc., LEV Acquisition Corp., L.E. Vickers & Associates, Inc., Data Equipment Services, Inc., and certain shareholders of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc.* 99.1 The following financial statements of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. together with the report by Arthur Andersen LLP for the periods stated therein: Balance Sheets as of December 31, 1998 and May 31, 1999 (unaudited). Statements of Income for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Statements of Stockholders' Equity for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Statements of Cash Flows for the year ended December 31, 1998 and the five months ended May 31, 1999 (unaudited). Notes to Financial Information. 99.2 The following unaudited pro forma condensed consolidated financial statements of The InterCept Group, Inc., L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1998. Pro Forma Condensed Consolidated Statement of Operations for the six months ended June 30, 1999. Notes to Pro Forma Condensed Consolidated Financial Information. * Previously filed with the registrant's Current Report on Form 8-K filed June 11, 1999. 4 EX-99.1 2 COMBINED FINANCIAL STATEMENTS Exhibit 99.1 L.E. Vickers and Associates, Inc. and Data Equipment Services, Inc. Combined Financial Statements as of December 31, 1998 and May 31, 1999 Together With Auditors' Report REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To L.E. Vickers and Associates, Inc. and Data Equipment Services, Inc.: We have audited the accompanying combined balance sheet of L.E. VICKERS AND ASSOCIATES, INC. (a Tennessee corporation) and DATA EQUIPMENT SERVICES, INC. (a Tennessee S Corporation) as of December 31, 1998 and the related combined statements of operations, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Companies' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of L.E. Vickers and Associates, Inc. and Data Equipment Services, Inc. as of December 31, 1998 and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. Atlanta, Georgia June 30, 1999 L.E. VICKERS AND ASSOCIATES, INC. AND DATA EQUIPMENT SERVICES, INC. COMBINED BALANCE SHEETS DECEMBER 31, 1998 AND MAY 31, 1999 ASSETS
1998 1999 ---------- ---------- (Unaudited) CURRENT ASSETS: Cash $ 254,973 $ 400,527 Accounts receivable, net of allowance for doubtful accounts of $40,000 in 1998 and 1999 150,565 366,881 Unbilled receivables 307,828 303,000 Deferred tax assets 60,314 39,566 Inventory, prepaid expenses, and other 83,457 70,055 ---------- ---------- Total current assets 857,137 1,180,029 PROPERTY AND EQUIPMENT, net 699,554 580,879 ---------- ---------- $1,556,691 $1,760,908 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Note payable to shareholder $ 105,745 $ 745 Accounts payable and accrued liabilities 136,492 252,430 Income taxes payable 14,904 86,673 Deferred revenue 40,472 24,122 ---------- ---------- Total current liabilities 297,613 363,970 LONG-TERM LIABILITIES: Deferred tax liability 52,926 42,338 ---------- ---------- Total liabilities 350,539 406,308 ---------- ---------- COMMITMENTS AND CONTINGENCIES (NOTE 6) SHAREHOLDERS' EQUITY: Common stock of Data Equipment Services, Inc., no par value, 1,000 shares authorized, 100 shares issued and outstanding in 1998 and 1999, and common stock of L.E. Vickers and Associates, Inc., no par value, 2,000 shares authorized, 1,000 shares issued and outstanding in 1998 and 1999 1,000 1,000 Retained earnings 1,205,152 1,353,600 ---------- ---------- Total shareholders' equity 1,206,152 1,354,600 ---------- ---------- $1,556,691 $1,760,908 ========== ==========
The accompanying notes are an integral part of these combined balance sheets. L.E. VICKERS AND ASSOCIATES, INC. AND DATA EQUIPMENT SERVICES, INC. COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE FIVE MONTHS ENDED MAY 31, 1999
1998 1999 ----------- ----------- (Unaudited) REVENUES: Service fee income $3,410,868 $1,479,876 Equipment and product sales 442,132 119,231 ---------- ---------- Total revenues 3,853,000 1,599,107 ---------- ---------- COSTS OF SERVICES: Cost of service fee income 1,126,924 476,857 Cost of equipment and product sales 388,680 94,125 ---------- ---------- Total costs of services 1,515,604 570,982 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES 2,087,079 665,110 DEPRECIATION AND AMORTIZATION 277,835 123,100 ---------- ---------- Total operating expenses 3,880,518 1,359,192 ---------- ---------- OPERATING (LOSS) INCOME BEFORE INCOME TAX (BENEFIT) PROVISION (27,518) 239,915 INCOME TAX (BENEFIT) PROVISION (9,496) 91,467 ---------- ---------- NET (LOSS) INCOME $ (18,022) $ 148,448 ========== ==========
The accompanying notes are an integral part of these combined statements. L.E. VICKERS AND ASSOCIATES, INC. AND DATA EQUIPMENT SERVICES, INC. COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE FIVE MONTHS ENDED MAY 31, 1999
Common Stock Retained --------------------- Shares Amount Earnings Total ------ ------ -------- ---------- BALANCE, December 31, 1997 1,100 $1,000 $1,223,174 $1,224,174 Net loss 0 0 (18,022) (18,022) ----- ------ ---------- ---------- BALANCE, December 31, 1998 1,100 1,000 1,205,152 1,206,152 Net income 0 0 148,448 148,448 ----- ------ ---------- ---------- BALANCE, May 31, 1999 (unaudited) 1,100 $1,000 $1,353,600 $1,354,600 ===== ====== ========== ==========
The accompanying notes are an integral part of these combined statements. L.E. VICKERS AND ASSOCIATES, INC. AND DATA EQUIPMENT SERVICES, INC. COMBINED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE FIVE MONTHS ENDED MAY 31, 1999
1998 1999 ---------- ----------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (18,022) $ 148,448 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 277,835 123,100 Deferred income tax (benefit) provision (38,272) 10,160 Changes in current assets and liabilities: Accounts receivable (101,523) (211,488) Other current assets 49,593 13,402 Accounts payable and accrued liabilities 24,090 187,707 Deferred revenue 5,051 (16,350) --------- ---------- Net cash provided by operating activities 198,752 254,979 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment, net (259,987) (4,425) CASH FLOWS FROM FINANCING ACTIVITIES: (Payments on) proceeds from note with shareholder 105,745 (105,000) --------- ---------- NET INCREASE IN CASH 44,510 145,554 CASH, beginning of period 210,463 254,973 --------- ---------- CASH, end of period $ 254,973 $ 400,527 ========= ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ 15,217 $ 8,928 ========= =========
The accompanying notes are an integral part of these combined statements. L.E. VICKERS AND ASSOCIATES, INC. AND DATA EQUIPMENT SERVICES, INC. NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND MAY 31, 1999 (All amounts dated as of and for the five months ended 5/31/99 are unaudited) 1. ORGANIZATION AND NATURE OF BUSINESS L.E. Vickers and Associates, Inc. and Data Equipment Services, Inc. (collectively, the "Companies") were established for the purpose of providing core data processing, check imaging, and item capture services to financial institutions, primarily community banks in Tennessee. The Companies, which are under common ownership also sell and provide maintenance on banking equipment. The Companies are being acquired in a transaction accounted for as a purchase by The InterCept Group, Inc. ("InterCept") (Note 9). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The combined financial statements include the accounts of L.E. Vickers and Associates, Inc. and Data Equipment Services, Inc. after elimination of all significant intercompany accounts and transactions. The financial statements have been prepared to be included in a Form 8-K filing in conjunction with the acquisition of the Companies by InterCept, as noted above. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The interim financial information is unaudited. However, in the opinion of management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Property and Equipment Property and equipment are recorded at cost at the acquisition date. The Companies provide for depreciation using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance costs are expensed, and major betterments are capitalized. Property, plant, and equipment consisted of the following at December 31, 1998 and May 31, 1999:
Useful Life 1998 1999 ---------------- ------------ ------------ (Unaudited) Machinery and equipment Five to ten years $ 1,678,399 $ 1,682,205 Vehicles Five years 101,654 101,654 Furniture and fixtures Seven years 68,518 69,137 Software Five years 92,799 92,799 ----------- ----------- 1,941,370 1,945,795 Less accumulated depreciation (1,241,816) (1,364,916) ----------- ----------- $ 699,554 $ 580,879 =========== ===========
Long-Lived Assets The Companies review the carrying values assigned to long-lived assets based on expectations of undiscounted future cash flows and operating income generated by the long-lived assets in determining whether the carrying amount of such assets is recoverable. Income Taxes Deferred income taxes for L.E. Vickers & Associates, Inc. are recorded using enacted tax laws and rates for the years in which the taxes are expected to be paid. Deferred income taxes are provided for items when there is a temporary difference in recording such items for financial reporting and income tax reporting. The shareholders of Data Equipment Services, Inc. have elected that the company be taxed under the S corporation provisions of the Internal Revenue Code for federal income tax purposes. Under this election, Data Equipment Services, Inc. has no federal income tax liability as its income is passed through to and the related income tax liability becomes the responsibility of the shareholders. Revenue Recognition Revenues are recognized as the services are provided. Unbilled receivables represent revenues earned for services but not yet billed. Deferred income represents services billed in advance; revenue is recognized over the term of the service period. Comprehensive Income Comprehensive income, defined as the total of net income and all other nonowner changes in equity, was equal to net income for the year ended December 31, 1998 and the five months ended May 31, 1999. 3. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of financial instruments classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, and accounts payable, approximates carrying value due to the short-term maturity of the instruments. 4. INCOME TAXES The differences between the income tax expense and the amount computed by applying the statutory federal income tax rate to the net income for the year ended December 31, 1998 and the five months ended May 31, 1999 are due to nondeductible meals and entertainment expenses and excluded S corporation earnings of Data Equipment Services, Inc. The tax effects of temporary differences between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases, which give rise to deferred tax assets and liabilities, as of December 31, 1998 and May 31, 1999 are as follows:
1998 1999 --------- ---------- (Unaudited) Deferred tax assets: Accounts receivable reserves $ 15,200 $ 15,200 Deferred revenue 15,379 9,166 Other 29,735 15,200 -------- -------- Total deferred tax assets 60,314 39,566 Deferred tax liabilities: Accelerated depreciation (52,926) (42,338) -------- -------- Net deferred tax assets (liabilities) 7,388 (2,772) Noncurrent net deferred tax liabilities 52,926 42,338 -------- -------- Current net deferred tax assets $ 60,314 $ 39,566 -------- --------
5. EMPLOYEE BENEFITS The Companies have a defined contribution 401(k) benefit plan which covers substantially all employees, subject to certain minimum age and service requirements. The plan provides for voluntary contributions by employees as well as both matching and additional discretionary contributions by the Companies. For the year ended December 31, 1998 and the five months ended May 31, 1999, the Companies contributed approximately $118,000 and $30,000, respectively, to the plan. 6. COMMITMENTS The Companies lease certain equipment and facilities under operating leases. Future minimum payments on these leases at December 31, 1998 are approximately as follows: 1999 $ 97,000 2000 12,000 2001 6,000 -------- $115,000 ========
Rent expense for all operating leases was approximately $161,000 and $86,000 for the year ended December 31, 1998 and the five months ended May 31, 1999, respectively. 7. RELATED-PARTY TRANSACTIONS Selling, general, and administrative expenses for 1998 include approximately $97,000 paid to the owner of the Companies and members of his family for rent and other expenses. During 1998, the Companies generated revenues of approximately $389,000 from a bank in which the owner of the Companies has a 10% ownership interest. 8. CUSTOMER CONCENTRATION For the year ended December 31, 1998, two customers each made up 10% of the Companies' sales. No other customer contributed greater than 10% for that period. 9. SUBSEQUENT EVENT On May 28, 1999, InterCept entered into a merger and acquisition agreement with the Companies and issued 500,481 shares of InterCept common stock in exchange for all of the outstanding common stock of the Companies. EX-99.2 3 CONSOLIDATED STATEMENT OF INCOME
Exhibit 99.2 The InterCept Group, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Income As of December 31, 1998 (b) L.E. Vickers (a) & Associates, Historical Data Equipment Pro Forma Pro Forma Consolidated Services Adjustments Consolidated Revenues 28,901,604 3,853,000 - 32,754,604 Cost of services 12,031,532 1,515,604 - 13,547,136 Selling, general and administrative expense 11,222,008 2,087,079 - 13,309,087 Depreciation and amortization 1,336,620 277,835 272,124 (c) 1,886,579 ------------------------------------------------------------ Total operating expense 24,590,160 3,880,518 272,124 28,742,802 Operating income 4,311,444 (27,518) (272,124) 4,011,802 Interest expense (344,163) - - (344,163) Interest and other income, net 160,718 - - 160,718 ------------------------------------------------------------ Income before provision for income taxes and minority interest 4,127,999 (27,518) (272,124) 3,828,357 Provision for income taxes 1,564,242 (9,496) - 1,554,746 Minority interest (88,908) - - (88,908) ------------------------------------------------------------ Net loss before preferred dividends 2,474,849 (18,022) (272,124) 2,184,703 Preferred dividends (16,000) - - (16,000) ------------------------------------------------------------ Net loss attributable to common shareholders 2,458,849 (18,022) (272,124) 2,168,703 =========== ======== ============ Pro forma net loss per share 0.30 0.25 =========== ============ Pro forma weighted average common and common equivalent shares outstanding 8,246,514 8,746,995 (a) Represents the historical condensed statement of operations of The InterCept Group, Inc. ("InterCept" or the "Company") for the year ended December 31, 1998 contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. (b) Represents the historical statement of operations of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. as of December 31, 1998 included herein. (c) Reflects the amortization of intangibles related to the acquisition of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. as if it had occurred on January 1, 1998.
The InterCept Group, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Income As of June 30, 1999 (b) L.E. Vickers (a) & Associates, Historical Data Equipment Pro Forma Pro Forma Consolidated Services Adjustments Consolidated Revenues 18,664,105 1,599,107 - 20,263,212 Cost of services 7,201,964 570,982 - 7,772,946 Selling, general and administrative expense 7,082,883 665,110 - 7,747,993 Depreciation and amortization 1,108,797 123,100 113,385 (c) 1,345,282 -------------------------------------------------------------- Total operating expense 15,393,644 1,359,192 113,385 16,866,221 Operating income 3,270,461 239,915 (113,385) 3,396,991 Interest expense (13,699) - - (13,699) Interest and other income, net 76,677 - - 76,677 -------------------------------------------------------------- Income before provision for income taxes and minority interest 3,333,439 239,915 (113,385) 3,459,969 Provision for income taxes 1,271,705 91,467 - 1,363,172 Minority interest (58,231) - - (58,231) -------------------------------------------------------------- Net income attributable to common shareholders 2,003,503 148,448 (113,385) 2,038,566 ========================================= ============= Pro forma net loss per share 0.20 0.20 ============ ============= Pro forma weighted average common and common equivalent shares outstanding 9,801,568 10,115,056 (a) Represents the historical condensed unaudited statement of operations of The InterCept Group, Inc. ("InterCept" or the "Company") for the six months ended June 30, 1999 contained in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999. (b) Represents the historical statement of operations of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. as of May 31, 1999 included herein. (c) Reflects the amortization of intangibles related to the acquisition of L.E. Vickers & Associates, Inc. and Data Equipment Services, Inc. as if it had occurred on January 1, 1999.
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