DFAN14A: Definitive additional proxy soliciting materials filed by non-management including Rule 14(a)(12) material
Published on November 30, 2006
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Definitive Proxy Statement | |
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Definitive Additional Materials | |
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Soliciting Material Pursuant to §240.14a-12 |
Digital Insight Corporation
(Name of Registrant as Specified in its Charter)
Intuit Inc.
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Filed by Intuit Inc.
Pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Digital Insight Corporation
Commission File No.: 000-27459
Pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Digital Insight Corporation
Commission File No.: 000-27459
The
following is a copy of prepared remarks for a conference call held on
November 30, 2006 announcing Intuit Inc.'s definitive agreement
to acquire Digital Insight Corporation. These prepared remarks were
posted on Intuit's website at www.intuit.com.
Intuit Digital Insight Acquisition Announcement
Teleconference Speaker Remarks
Teleconference Speaker Remarks
Good morning, and thank you for joining us for this exciting announcement. Im here with Steve
Bennett, Intuits President and Chief Executive Officer, Intuits CFO, Kiran Patel, Jeff Stiefler,
Chairman, President and CEO of Digital Insight, and Paul Pucino, CFO of Digital Insight.
Before we get started, Id like to remind everyone that our remarks will include forward-looking
statements. There are a number of factors that could cause Intuits results to differ materially
from our expectations. You can learn more about these risks in the press release we issued earlier
this morning, and in Intuit and Digital Insight Forms 10-Q, 10-K and our other SEC filings. Those
documents are available on the Investor Relations page of Intuits website at intuit.com, or
Digital Insights website at digitalinsight.com. We assume no obligation to update any
forward-looking statement.
After this call concludes, a copy of our prepared remarks will be available on our web site.
Steve Bennett
Hello everyone. Thanks for joining us as we enter the next chapter in Intuits growth story, with
the planned acquisition of Digital Insight. This transaction will bring together Digital Insight,
a leading provider of online banking services to financial institutions and Intuit, the leading
provider of financial software to millions of small businesses and consumers.
As we get started, let me share my perspective about why were so enthusiastic about this
acquisition.
This transaction is all about increasing revenue growth rates... Digital Insights and ultimately
Intuits... by enabling financial institutions to reap greater benefits from online banking. How?
By dramatically improving online banking capabilities and ease of use so financial institutions
attract more new users and generate more revenue from existing clients.
Here are some key thoughts on where we see growth coming from...
Powerful, expanded functionality specifically for small businesses...most of whom are not
well-served by todays online banking offerings.
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Integrating leading small business solutions like QuickBooks Online Edition, Payroll and Payments
to make it easier for small business customers to do mission critical tasks.
Enhanced consumer solutions by combining key elements of the functionality of Quicken and online
banking.
Finally... we believe that as we change the game in online banking solutions, we will raise the bar
and become the logical choice for more financial institutions.
We aim to build a business case where outsourcing to Intuit is a better solution and generates more
value than what financial institutions can build or license themselves.
Lets talk about how this fits into the bigger picture at Intuit. Intuits strategy for growth is
to be in good businesses with strategies to win... growth businesses, high profit businesses and
attractive new markets with large unmet/underserved needs that we can solve well.
We then apply customer-driven innovation to solve important customer problems... with right for me
solutions that are easier and a better value than other alternatives.
Digital Insight clearly fits our strategy. Its a growth business with a strategy to win in an
expanding category. Yet ... like in small business and tax... there are large unmet/underserved needs
that we can solve well by combining the strengths of both companies.
Lets talk for a second about those strengths...we have broad reach and large customer bases...
together we currently serve more than 5000 financial institutions, more than 25 million consumers,
and nearly 7 million small businesses.
The acquisition combines Intuits core competence of customer-driven innovation, strong brands and
leadership in small business and consumer products and services with Digital Insights
best-in-class distribution and OnDemand model.
Weve been working as partners during the past year to pursue the online banking opportunity.
Despite the fact that online banking is growing, todays solutions dont meet the needs of most
small businesses and many consumers. We see that as a big opportunity.
Intuit research indicates that 22 million small and simple businesses are looking for an easier
solution to invoicing and managing cash flow... in fact... millions of small businesses are still using
pencil and paper to do these mission critical
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tasks... and they dont like their method... indicated
by a Net Promoter score of negative 74.
Our research also indicates that both consumers and small business are embracing online banking due
to its inherent ease-of-use from zero-data-entry and real-time display of balances and
transactions. These characteristics drive its popularity a Net Promoter score of 43 among small
and simple businesses, for example.
Intuits skills will build on these online banking strengths, integrating with the work flows and
extending the functionality to bring more value to consumers. For example, helping them predict
their household cash flow and maximize the amount they can save each month, features of todays
Quicken desktop software that have gained it a large and loyal following of 15 million users.
So whats in this for financial institutions? By partnering with Intuit to offer more compelling
online banking solutions for their small business and consumer customers, financial institutions
will benefit in several ways.
Financial institutions tell us that online banking capability is important strategically... it helps
them acquire and retain customers. Online banking customers are less likely to change banks, have
a lower cost to serve, and generate more revenue than other customers. They are looking for strong
partners that can help them win in the marketplace.
Thats what Intuit wants to do. We want to be even stronger partners with financial institutions to
deliver next generation online banking solutions that accelerate adoption rates and to create
additional services that better serve their customers and create additional revenue opportunities.
Whats in it for Intuit? The acquisition of Digital Insight will create a sizeable third engine to
accelerate Intuits long-term growth and will strengthen our mix of recurring revenue and
software-as-a-service.
We have the opportunity and plan to work very hard to supercharge an already growing online banking
market.
Before we get into more details, Ill turn the call over to Jeff for his thoughts.
Jeff Stiefler
Thanks, Steve.
This is really a remarkable day in the history of what has been a remarkable company. Since its
founding 11 years ago, Digital Insight has been focused
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around the core belief that the online
channel would become the most important delivery channel for financial services and that we could
lead the development of online delivery for banks and credit unions.
We have leveraged that belief into a business that is, by any qualitative or quantitative measure,
the industry leader. We are the outsourced provider of internet banking services to 1,760 financial
institutions and the 38 million customers they serve. More than 7 million of those customers use
our online banking services and 1.7 million pay their bills online. 90% of our revenue is
recurring, billed monthly, and secured by long-term contracts and our operating systems and
infrastructure are highly scalable and leveragable.
As a result, we have delivered consistent and rapid top and bottom line growth, expanding margins,
and significant cash flow for the past 11 years.
And our prospects for future growth have never been brighter. The market for online banking and
bill pay is still at an early development stage. We believe that if we do nothing more than drive
higher adoption of online banking and bill pay usage within our base of existing financial
institution clients, we will have an exciting growth business. Like most of Intuits businesses,
our primary competitorand opportunityis non-consumption.
Beyond driving adoption, we have built the industrys preeminent distribution channel to community
and regional financial institutions. Were beginning to leverage that asset by partnering with
providers of other financial technology solutions to deliver new capabilities to our clients. And
were adding new and larger financial institution clients at a faster rate than ever before, many
of which were signing in partnership with core processors, with whom weve built very effective
working relationships.
Given this record of success and positive outlook, the obvious question is: Why not continue to
operate independently? The answer is deceptively simple: We decided that we would be better able
to serve the needs of our clients by joining forces with the right partner than we could on our own
and that the right partner was Intuit.
We believe that, together, Intuit and Digital Insight have an unmatched combination of assets and
competencies that will allow us to lead the development and delivery of next generation online
banking. There are a number of particularly valuable elements to this combination, including:
Ø | DIs delivery system and Intuits financial management content | ||
Ø | DIs deep knowledge of and strong reputation with financial institutions and Intuits strong brand franchise with consumers and small businesses | ||
Ø | DIs ability to build and manage big, complex operating systems and Intuits ability to build and deliver simple, easy-to-use solutions |
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It is precisely this set of capabilities that is required to deliver next generation online banking
which will be characterized, we believe, by several attributes: (1) a personalized, intelligent
user experience that looks and feels much more like Amazon or E-Bay than todays financial
institutions; (2) highly customized, segment-specific solutions to end users most important
problems (3) delivery systems that can be tailored to meet the needs of different sizes and types
of financial institutions and (4) actionable management information and decision support tools that
help financial institution clients compete and win.
To the degree we can lead this evolution, which I believe we can do with Intuit far better than we
could do on our own, we can create competitive advantage for our clients. To the degree we do that,
we will be able to create the next wave of growth for our business. That was the first
consideration in our decision process.
The second, and equally important consideration, related to our beliefs about organizational
compatibilitythe social issues. We really have a tremendous advantage here relative to most
transactions. As Steve mentioned, weve been working together during the past year on what we
believe is a killer app for the segment of 22 million small businesses with small and simple
needs. This effort has given us the opportunity to build a very high level of mutual trust and
respect between the two organizations and persuade ourselves that we have the kind of common
culture and value systems required for the building of effective, long-term working relationships.
In short, I and my Digital Insight colleagues could not be more excited or enthusiastic about
becoming part of Intuit. This is really a great day for all of us.
With that, Ill turn things back to Steve.
Steve Bennett
Thanks Jeff. You can see why were so excited about this announcement. And why Im thrilled to
have Jeff and his terrific team join Intuit. Before I get to closing thoughts Kiran will walk
through some of the transaction details.
Kiran Patel
Thanks Steve.
As we said in our press release earlier this morning, Intuit and Digital Insight have signed a
definitive agreement for Intuit to acquire Digital Insight. Under the terms of the agreement,
Intuit will pay $39 per share in cash. The total purchase price is approximately $1.35 billion on
a fully-diluted basis.
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The transaction is subject to regulatory review, Digital Insight shareholder approval and other
customary closing conditions.
The transaction is expected to close during the first quarter of calendar 2007, at which time we
will update our financial guidance to reflect the impact of Digital Insight on Intuit revenue and
earnings.
We expect the acquisition to be two to three cents per share dilutive in fiscal 2007, slightly
accretive in fiscal 2008 and even more accretive longer-term.
As Steve mentioned earlier, the synergies in this transaction are all about growth. We believe
they will come in several forms... more financial institutions selecting the Digital Insight
offering... higher adoption of online banking from existing FI clients... and higher cross sell of
existing Intuit offerings through the Digital Insight platform
We plan to finance the transaction with a combination of existing cash balances and up to $1
billion of debt financing. We believe this represents an efficient deployment of capital given our
balance sheet and strong cash flow generation. There are no financing contingencies and we have
bridge commitments in place with lenders.
Now, Ill turn the call back to Steve for his final thoughts.
Steve Bennett
Thanks Kiran. I hope you have a better understanding of why were so enthusiastic about this
acquisition.
Im excited about the long term growth opportunities in Small Business and Tax ... now Digital
Insight gives us a significant third growth engine... Financial Institutions. We also believe that if
we are able to solve important problems well in healthcare, we have the possibility to create a
fourth growth engine.
Thanks for being with us today... now lets get to your questions.
Cautions About Forward-Looking Statements
This presentation includes forward-looking statements which are subject to safe harbors created
under the U.S. federal securities laws. All statements included in this presentation that address
activities, events or developments that Intuit and Digital Insight expect, believe or anticipate
will or may occur in the future are forward looking statements, including: statements about the
potential benefits of
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the proposed transaction to Intuit, including the ability to address new
markets, offer new solutions, and increase revenue growth rates; the potential benefits of the
proposed acquisition to financial institutions and their customers and to small businesses; the
expected opportunities and results of the business in the future; the expected closing of the
proposed transaction; the expected financial impact of the transaction on Intuit; and Intuits
plans for financing the transaction. All forward-looking statements are based on the opinions and
estimates of management at the time the statements are made and are subject to risks and
uncertainties that could cause actual results to differ materially from those anticipated in the
forward-looking statements. These risks and uncertainties include: the risk that the transaction is
not consummated or is not consummated within the expected timeframe; the risk that the expected
benefits of the proposed acquisition are not realized; the risk that disruption from the
transaction may make it more difficult to maintain relationships with customers, employees,
partners or suppliers; the risk that future products and services may not be successful or achieve
broad market acceptance; and the risk that Intuit will not be able to successfully integrate
Digital Insights market opportunities, technology, personnel and operations and achieve planned
synergies. For information regarding other related risks, see discussion of risks and other factors
in documents filed by Intuit and Digital Insight with the Securities and Exchange Commission (SEC)
from time to time, including Digital Insights Annual Report on Form 10-K for the year ended
December 31, 2005 and report on Form 10-Q for the quarter ended September 30, 2006 as well as
Intuits Form 10-K for the year ended July 31, 2006. Forward-looking statements represent the
judgment of the management of Intuit and Digital Insight as of the date of this release, and Intuit
and Digital Insight disclaim any intent or obligation to update any forward-looking statements.
Accretion and dilution calculated on non GAAP basis
In estimating future accretion and dilution on a non GAAP basis, Intuit excludes share-based
compensation expenses, amortization of purchased intangible assets, acquisition-related charges,
net gains on marketable equity securities and other investments, gains and losses on disposals of
businesses, certain discrete tax items and amounts related to discontinued operations from its GAAP
earnings per share.
Additional Information About the Proposed Transaction and Where You Can Find It
In connection with the proposed transaction, Digital Insight intends to file a proxy statement and
other relevant materials with the Securities and Exchange Commission (SEC). BEFORE MAKING ANY
VOTING DECISION WITH RESPECT TO THE PROPOSED TRANSACTION, STOCKHOLDERS OF DIGITAL INSIGHT ARE URGED
TO READ THE PROXY STATEMENT, WHEN
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IT BECOMES AVAILABLE, AND THE OTHER RELEVANT MATERIALS FILED BY
DIGITAL INSIGHT WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. The proxy statement and other relevant materials, when available, and any other
documents filed by Digital Insight with the SEC, may be obtained free of charge at the SECs
website at www.sec.gov. In addition, stockholders of Digital Insight may obtain free copies of the
documents filed with the SEC by contacting Digital Insights Investor Relations at 26025 Mureau
Road, Calabasas, California 91302, Telephone: (818) 878-6615. You may also read and copy any
reports, statements and other information filed by Digital Insight with the SEC at the SEC public
reference room at 100 F Street, N.E. Room 1580, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 or visit the SECs website for further information on its public reference room.
Digital Insight and its executive officers and directors may be deemed to be participants in the
solicitation of proxies from Digital Insight stockholders in favor of the proposed transaction.
Certain executive officers and directors of Digital Insight have interests in the transaction that
may differ from the interests of stockholders generally, including without limitation acceleration
of vesting of stock options, benefits conferred under retention, severance and change in control
arrangements, and continuation of director and officer insurance and indemnification. These
interests will be described in the proxy statement when it becomes available.
In addition, Intuit and its executive officers and directors may be deemed to be participants in
the solicitation of proxies from Digital Insights stockholders in favor of the approval of the
proposed transaction. Information concerning Intuits directors and executive officers is set forth
in Intuits proxy statement for its 2006 annual meeting of stockholders, which was filed with the
SEC on November 3, 2006, and annual report on Form 10-K filed with the SEC on September 15, 2006.
These documents are available free of charge at the SECs web site at www.sec.gov or by going to
Intuits Investor Relations Website at http://www.intuit.com/about_intuit/investors.
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