8-K/A: Current report filing
Published on November 15, 1996
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):
SEPTEMBER 3, 1996
INTUIT INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-21180 77-0034661
(State of incorporation) (Commission file no.) (I.R.S. employer
identification no.)
2535 GARCIA AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043
(Address of principal executive offices, including zip code)
(415) 944-6000
(Registrant's telephone number, including area code)
CONTENTS
Item 2: Acquisition or Disposition of Assets ....................... 3
Item 7: Financial Statements and Exhibits .......................... 3
(a) Financial Statements of Galt Technologies.......... 3
(b) Pro Forma Financial Information.................... 15
(c) Exhibits........................................... 19
Signatures ......................................................... 20
2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 18, 1996, Intuit Inc. (the "Company") filed a Form 8-K to
report its completion of the acquisition of GALT Technologies, Inc.
("GALT"). Pursuant to Item 7 of Form 8-K, the Company indicated that it
would file certain financial information no later than November 15, 1996. This
Amendment No. 1 is being filed in order to file such financial information
and to include certain exhibits that were not included with the original
Form 8-K filing, as indicated in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF GALT TECHNOLOGIES, INC.
3
Galt Technologies, Inc.
Audited Financial Statements
Year ended December 31, 1995 and
for the period September 1, 1993 (inception)
through December 31, 1994
4
Report of Independent Auditors
Board of Directors
Galt Technologies, Inc.
We have audited the accompanying balance sheets of Galt Technologies, Inc. as of
December 31, 1995 and 1994, and the related statements of operations, redeemable
preferred stock, common stock and accumulated deficit, and cash flows for the
year ended December 31, 1995 and for the period September 1, 1993 (inception)
through December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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 audits provide 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 Galt Technologies, Inc. at
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the year ended December 31, 1995 and for the period September 1, 1993
(inception) through December 31, 1994, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
March 8, 1996
5
Galt Technologies, Inc.
Balance Sheets
See accompanying notes.
6
Galt Technologies, Inc.
Statements of Operations
See accompanying notes.
7
Galt Technologies, Inc.
Statements of Redeemable Preferred Stock,
Common Stock and Accumulated Deficit
Year ended December 31, 1995 and
for the period September 1, 1993 (inception)
through December 31, 1994
See accompanying notes.
8
Galt Technologies, Inc.
Statements of Cash Flows
See accompanying notes.
9
Galt Technologies, Inc.
Notes to Financial Statements
December 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE COMPANY
Galt Technologies, Inc. (the Company) specializes in electronic information
distribution and communications systems for the mutual fund industry.
On October 24, 1995, the Company entered into an agreement with Intuit, Inc.
(Intuit) to be acquired in a tax-free plan of reorganization which was approved
by the Company's stockholders during March 1996. The closing of the transaction
will take place on or before September 30, 1996. All Common Stock and preferred
stock of the Company will be converted into common stock of Intuit. Outstanding
employee stock options will be assumed by Intuit, Inc. and converted into
options to purchase Intuit's common stock. In the event of a material breach of
the agreement by Intuit, the agreement will automatically terminate, and Intuit
will be required to pay $4 million to the Company. Additionally, the parties
entered into a service agreement whereby the Company became the exclusive
provider of mutual fund marketing and transactions services to Intuit.
The Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Four customers comprised
34% and 61% of the Company's revenues for the year ended December 31, 1995 and
for the period September 1, 1993 (inception) through December 31, 1994,
respectively, and a different single customer comprised 17% and 63% of accounts
receivable at December 31, 1995 and 1994, respectively.
FIXED ASSETS
Fixed assets are recorded at cost and depreciated over their estimated useful
lives of three to five years using an accelerated method. All ordinary
maintenance and repairs are charged to operations as incurred.
DEFERRED REVENUES
The Company periodically receives payment in advance for future services. These
funds are recorded as deferred revenues and amortized over the period services
are performed.
10
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under this method, deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. Significant components of the
Company's deferred income tax assets as of December 31, 1995 and 1994 are as
follows:
The Company has not recorded future income tax benefits for any temporary
differences or for the net operating loss carryforward because of the
uncertainty of realization.
As of December 31, 1995, the Company had approximately $1,400,000 of net
operating loss carryforwards for federal and state tax purposes. These
carryforwards may offset future taxable income through 2010 subject to certain
limits. Prior to October 7, 1994, the Company was a Subchapter S Corporation. As
a result, all net losses prior to this date were not included in determining the
tax net operating loss carryforward.
11
3. CREDIT AGREEMENT
The Company entered into a credit agreement (the Credit Agreement) with Intuit
in which Intuit agreed to make loans to the Company on a revolving basis not to
exceed $3,011,096. Amounts borrowed under the Credit Agreement bear interest at
the prime rate plus 2% and were payable on September 30, 1996. Borrowings under
the Credit Agreement were secured by substantially all of the assets of the
Company. Outstanding borrowings under the Credit Agreement were $1,400,000 at
December 31, 1995.
In January 1996, the Company entered into a new revolving credit facility for
$3.5 million with a bank. Proceeds from the new agreement were used to pay off
the outstanding balance on the Credit Agreement. The maturity date of the new
agreement is the earliest of: 1) the consummation of the merger with Intuit, 2)
September 30, 1996, or 3) such earlier date on which all loans may become due
and payable pursuant to the terms of the agreement. The new agreement limits the
Company's monthly losses during 1996. Net losses for each calendar month ending
on or before June 30, 1996 cannot be more than $350,000 and for each calendar
month ending thereafter, $275,000. The bank has a first security interest in all
of the assets of the Company, and a collateral assignment of the Company's
rights under the merger agreement with Intuit.
4. CAPITAL STOCK
COMMON STOCK
No dividends may be declared on Common Stock until all preferred cumulative
dividends have been paid.
The shares held by the officers of the corporation are restricted in that the
Company, preferred stockholders or other officers may purchase these shares upon
termination, except in the case of death, disability or termination by the
Company other than for cause. The sales price is fixed at the lower of $.941 per
share or the book value per share of the Company. These restrictions lapse
ratably over the next four years allowing the stockholders the ability to sell
the shares to a willing buyer at a fair price.
In December 1994, the Company's Board of Directors declared a ten-for-one stock
split in the form of a stock dividend.
12
4. CAPITAL STOCK (CONTINUED)
PREFERRED STOCK
Under a Preferred Stock Purchase Agreement (the Agreement), the holders of the
shares of preferred stock are entitled to cumulative annual dividends of $0.753
per share payable when authorized by the Board of Directors, upon liquidation or
upon redemption. Each share of the preferred stock may be converted to ten
shares of Common Stock. The stock may be converted to Common Stock at any time
by the stockholder, or automatically if the Company conducts an initial public
offering for $7,500,000 or more. Each preferred stockholder has the right to
vote as if their shares of preferred stock had been converted to Common Stock at
the then current conversion rate.
The preferred stock also carries other provisions including preemptive rights
and antidilution protection.
The Agreement provides for preferences upon liquidation. In general, the
preferred stock has a preference at liquidation equal to the purchase price plus
any accrued, unpaid dividends whether or not declared. The remaining proceeds
are distributed ratably to the common and preferred stockholders.
If no initial public offering occurs, the shares are required to be redeemed at
the liquidation value of the preferred stock plus accrued dividends based upon
the following redemption schedule:
September 30, 1999 -- up to one third of the preferred stock
September 30, 2000 -- up to two thirds of the preferred stock
September 30, 2001 -- any request from the preferred stockholders
The Company will only redeem eligible shares for which it has funds to redeem.
Any unredeemed shares are eligible for redemption the following period.
5. OPERATING LEASES
The Company leases its facilities and certain office equipment under operating
lease agreements. Future minimum lease payments under these leases consist of
the following:
Total rent expense charged to operations was approximately $35,500 and $12,150
for the year ended December 31, 1995 and for the period September 1, 1993
(inception) through December 31, 1994, respectively.
13
6. STOCK OPTION AND WARRANTS
The Company adopted the Galt Technologies, Inc. 1995 Stock Option Plan in which
the Company granted or committed options to purchase 139,135 shares of Common
Stock at $.20 per share. The Company reserved 166,303 shares of Common Stock for
issuance under the Plan.
The Company entered into notes payable with stockholders and individuals
aggregating $605,000. The Company repaid all outstanding principal and interest,
and warrants granted under the notes were exercised to purchase 592,455 shares
of Common Stock at $0.941 per share.
14
(B) PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL INFORMATION
Pro forma financial information is set forth herein to give effect to the
acquisition of Galt Technologies, Inc. by Intuit Inc. as if the merger had taken
place at July 31, 1996 for purposes of the Unaudited Pro Forma Condensed
Combining Balance Sheet and at July 31, 1995 for purposes of the Unaudited Pro
Forma Condensed Combining Statement of Operations for the year ended July 31,
1996. The Unaudited Pro Forma Condensed Combining Statement of Operations does
not purport to represent what the Company's results of operations would actually
have been if such transaction had in fact occurred on such dates and does not
purport to project the results of operations of the Company for the current year
or for any future period. The adjustments in the Unaudited Pro Forma Condensed
Combining Financial Information are based on available information and on
certain assumptions which management believes are reasonable. All information
contained herein should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto of Intuit and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in Intuit's
1996 Annual Report, the Financial Statements and Notes thereto of Galt included
in this Form 8-K/A, and the Notes to the Unaudited Pro Forma Condensed Combining
Financial information.
15
INTUIT INC. AND
GALT TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
See accompanying notes.
16
INTUIT INC. AND
GALT TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINING INCOME STATEMENT
See accompanying notes.
17
INTUIT INC. AND
GALT TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING
BALANCE SHEET AND STATEMENT OF OPERATIONS
The following pro forma adjustments are required to allocate the purchase price
and acquisition cost to the assets acquired from Galt Technologies, Inc. based
on their fair value, as determined by Intuit and to reflect the write-off of
purchased research and development identified in the purchase price allocation.
(a) Reflects the allocation of the purchase price, based on fair market
values, to the historical balance sheet.
(b) Reflects the write-off of purchased research and development identified in
the purchase price allocation. The pro forma statements of operations
exclude the write-off of purchased research and development due to its
non-recurring nature.
(c) Reflects the elimination of Galt Technologies, Inc.'s equity accounts.
(d) Reflects an increase in common stock for the shares issued in connection
with the purchase price of Galt Technologies, Inc. for the net assets
acquired.
(e) Reflects the amortization of intangibles associated with the purchase of
Galt Technologies, Inc. as if the merger was completed as of August 1,
1995, the beginning of the earliest period presented. Amortization is
over the estimated useful lives of the assets acquired (generally three
years).
18
(C) EXHIBITS
2.01 Agreement and Plan of Reorganization dated as of October 24, 1995 by
and between the Company and GALT, as amended by Stipulation and
Amendment No. 1 dated November 3, 1995 and Amendment No. 2 dated
January 7, 1996 (filed as Exhibit 2.02 to the Company's Form 10-K
for the fiscal year ended July 31, 1996 (file no. 0-21180) (the
"1996 Form 10-K) and incorporated by reference)
2.02 Agreement of Merger dated as of September 3, 1996 by and between
the Company, Intuit Merger Sub, Inc. and GALT (filed as Exhibit
2.02 to the 1996 Form 10-K and incorporated by reference)
23.01 Consent of Ernst & Young LLP, Independent Auditors
19
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, thereunto duly authorized.
INTUIT INC.
Date: November 15 , 1996 /s/ James J. Heeger
-------------------- -------------------------------------------------
James J. Heeger
Senior Vice President and Chief Financial Officer
20
EXHIBIT INDEX
Exhibit Document
2.01 Agreement and Plan of Reorganization dated as of October 24, 1995 by
and between the Company and GALT, as amended by Stipulation and
Amendment No. 1 dated November 3, 1995 and Amendment No. 2 dated
January 7, 1996 (filed as Exhibit 2.02 to the Company's Form 10-K
for the fiscal year ended July 31, 1996 (file no. 0-21180) (the
"1996 Form 10-K) and incorporated by reference)
2.02 Agreement of Merger dated as of September 3, 1996 by and between
the Company, Intuit Merger Sub, Inc. and GALT (filed as Exhibit
2.02 to the 1996 Form 10-K and incorporated by reference)
23.01 Consent of Ernst & Young LLP, Independent Auditors