<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
___________________________
Date of report (Date of earliest event reported): July 31, 2000
___________________________
DIGITAL INSIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
Commission File Number: 0-27459
Delaware 77-0493142
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26025 Mureau Road, Calabasas, California 91302
(Address of principal executive offices, including zip code)
(818) 871-0000
(Registrant's telephone number, including area code)
________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 2000, Digital Insight Corporation completed its acquisition of
all of the outstanding shares of AnyTime Access, Inc., a company based in
Sacramento, California that provides solutions that allow credit unions, banks
and other financial institutions to outsource certain customer communication and
other administrative functions associated with consumer loan originations. In
the acquisition, Digital Insight issued 2,121,862 shares of its common stock --
in the form of 2,001,186 shares of Digital Insight's common stock, 68,347 shares
underlying options to purchase Digital Insight's common stock and 52,329 shares
underlying warrants to purchase Digital Insight's common stock -- in exchange
for all of the outstanding shares, options and warrants of AnyTime Access. Upon
closing of the acquisition, Digital Insight also issued to certain employees of
AnyTime Access options to purchase an aggregate of 15,072 shares of Digital
Insight's common stock at an exercise price of $0.19 per share.
The acquisition was consummated by means of a reverse-triangular merger.
ATA Acquisition Corp., a wholly-owned subsidiary of Digital Insight, merged with
and into AnyTime Access, with AnyTime Access as the surviving corporation in the
merger. Each outstanding share of common stock of ATA Acquisition Corp. was
converted into one share of common stock of AnyTime Access. AnyTime Access, the
surviving corporation, thus became a wholly-owned subsidiary of Digital Insight.
The purchase price was determined through arms-length negotiations between
Digital Insight and AnyTime Access, taking into account the value of companies
comparable to AnyTime Access. Both Digital Insight and AnyTime Access engaged
financial advisors to assist them in determining a fair and reasonable price for
the acquisition.
The assets acquired by Digital Insight include leases of two office spaces
in Sacramento, California. Digital Insight intends to continue occupying these
office spaces.
The acquisition is to be accounted for using the purchase method of
accounting.
The Agreement and Plan of Merger, listed as Exhibit 2.1 to this Current
Report on Form 8-K, is incorporated herein by reference to the exhibits filed
with Digital Insight's Current Report on Form 8-K filed with the SEC on April
14, 2000. The First Amendment to Agreement and Plan of Merger, listed as Exhibit
2.2 to this Current Report on Form 8-K, is incorporated herein by reference to
the exhibits filed with Digital Insight's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000. The Second Amendment to Agreement and Plan of
Merger and Third Amendment to Agreement and Plan of Merger, listed as Exhibits
2.3 and 2.4 to this Current Report on Form 8-K, are incorporated herein by
reference to the exhibits filed with Digital Insight's Registration Statement on
Form S-1 (File No. 333-41196), which was declared effective on July 31, 2000.
The foregoing description of the Agreement and Plan of Merger and the three
amendments is qualified in its entirety by reference to the Agreement and the
amendments.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
The financial statements of AnyTime Access are included with this Current
Report on Form 8-K as pages F-1 through F-14.
<PAGE>
(b) Pro Forma Financial Information.
Pro forma financial information for the transaction described in this
Current Report on Form 8-K is included with this Current Report on Form 8-K as
pages F-15 through F-20.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of March 30, 2000, by and
among Digital Insight Corporation, ATA Acquisition Corp. and
AnyTime Access, Inc. (incorporated herein by reference to the
exhibits filed with the Registrant's Current Report on Form 8-K,
filed with the SEC on April 14, 2000).
2.2 First Amendment to Agreement and Plan of Merger, dated as of May
2, 2000, by and among Digital Insight Corporation, ATA
Acquisition Corp. and AnyTime Access, Inc. (incorporated herein
by reference to the exhibits filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2000).
2.3 Second Amendment to Agreement and Plan of Merger, dated as of May
25, 2000, by and among Digital Insight Corporation, ATA
Acquisition Corp. and AnyTime Access, Inc. (incorporated herein
by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1 (File No. 333-41196), which
was declared effective on July 31, 2000).
2.4 Third Amendment to Agreement and Plan of Merger, dated as of June
13, 2000, by and among Digital Insight Corporation, ATA
Acquisition Corp. and AnyTime Access, Inc. (incorporated herein
by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1 (File No. 333-41196), which
was declared effective on July 31, 2000).
<PAGE>
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.
Date: August 11, 2000 DIGITAL INSIGHT CORPORATION
By: /s/ Kevin McDonnell
------------------------------------
Kevin McDonnell
Senior Vice President, Finance &
Administration, Chief Financial
Officer and Secretary
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
AnyTime Access, Inc.
We have audited the accompanying consolidated balance sheet of AnyTime
Access, Inc. (the Company) and its subsidiary as of December 31, 1999 and the
related consolidated statements of operations, shareholders' deficit and cash
flows for the year then ended. 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of AnyTime
Access, Inc. and its subsidiary as of December 31, 1999, and the results of
their operations and their cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
As described in Note 10 to the financial statements, on March 30, 2000, the
Company agreed to enter into a transaction to be acquired.
/s/ Deloitte & Touche LLP
Sacramento, California
March 30, 2000
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
AnyTime Access, Inc.
We have audited the accompanying consolidated balance sheet of AnyTime
Access, Inc. as of December 31, 1998, and the related consolidated statements
of operations, shareholders' deficit and cash flows for the years ended
December 31, 1998 and 1997. 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 audit.
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 consolidated financial position of AnyTime
Access, Inc. as of December 31, 1998, and the results of its consolidated
operations and its cash flows for the years ended December 31, 1998 and 1997
in conformity with generally accepted accounting principles.
Since the date of completion of our audit of the accompanying consolidated
financial statements and initial issuance of our report thereon dated March
17, 1999 (except for the second paragraph of Note 3, as to which the date is
July 1, 1999), which report contained an explanatory paragraph regarding the
Company's ability to continue as a going concern, the Company, as discussed in
Note 6, has completed additional issuances of its equity securities in 1999
which resulted in net proceeds of approximately $15.4 million. Therefore, the
conditions that raised substantial doubt about whether the Company will
continue as a going concern no longer exist.
/s/ Ernst & Young LLP
March 17, 1999,
except for the second paragraph
of Note 3 as to which the date
is July 1, 1999 and Note 6 as to
which the date is July 7, 2000
F-2
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31,
------------------ March 31,
1998 1999 2000
-------- -------- -----------
(Unaudited)
ASSETS
------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and equivalents......................... $ 676 $ 6,113 $ 3,500
Accounts receivable, net of allowance for
doubtful accounts of $54 in 1998............ 1,019 917 1,487
Prepaid expenses............................. 232 339 802
-------- -------- -------
Total current assets....................... 1,927 7,369 5,789
PROPERTY AND EQUIPMENT, net.................... 3,184 3,299 3,195
OTHER ASSETS................................... 157 170 166
-------- -------- -------
TOTAL.......................................... $ 5,268 $ 10,838 $ 9,150
======== ======== =======
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accrued liabilities.......................... $ 317 $ 818 669
Accounts payable............................. 626 485 526
Short-term borrowings........................ 400 -- --
Accrued payroll and related obligations...... 326 407 474
Current portion of capital lease
obligations................................. 1,250 1,002 1,002
-------- -------- -------
Total current liabilities.................. 2,919 2,712 2,671
CAPITAL LEASE OBLIGATIONS...................... 1,179 309 41
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
24,064,683 shares authorized; 13,315,479,
20,827,074 and 20,827,074 shares issued and
outstanding as of December 31, 1998 and
1999, and March 31, 2000 respectively,
liquidation preference of $30,799 at
December 31, 1999........................... 14,971 32,915 33,540
SHAREHOLDERS' DEFICIT:
Common stock, stated value $.025 per share;
50,000,000 shares authorized; 5,464,403,
6,289,288 and 6,279,956 shares issued and
outstanding as of December 31, 1998, 1999
and March 31, 2000 (unaudited),
respectively................................ 137 157 157
Additional paid-in capital................... 2,967 3,648 4,145
Accumulated deficit.......................... (16,839) (28,194) (30,260)
Deferred compensation--stock options......... -- (518) (992)
Notes receivable from shareholders........... (66) (191) (152)
-------- -------- -------
Total shareholders' deficit................ (13,801) (25,098) (27,102)
-------- -------- -------
TOTAL.......................................... $ 5,268 $ 10,838 $ 9,150
======== ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended Three Months
December 31, Ended
------------------------- March 31,
1997 1998 1999 2000
------- ------- ------- ------------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES............................... $ 4,538 $ 9,298 $10,384 $ 3,013
COST OF REVENUES....................... 3,995 7,379 7,978 2,052
------- ------- ------- -------
GROSS MARGIN........................... 543 1,919 2,406 961
OPERATING EXPENSES:
Technology development and
integration......................... 1,225 2,611 4,641 917
Customer production information...... 532 1,253 1,993 374
Sales and marketing.................. 1,770 3,080 2,803 630
General and administrative........... 1,307 1,693 2,425 500
------- ------- ------- -------
Loss from operations............... (4,291) (6,718) (9,456) (1,460)
OTHER INCOME (EXPENSE):
Noncash interest charges............. (72) (2,673) (150) (18)
Interest expense..................... (178) (426) (207) (25)
Interest income...................... 140 50 195 62
Other (net).......................... -- -- 18 --
------- ------- ------- -------
NET LOSS............................... $(4,401) $(9,767) $(9,600) $(1,441)
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
Years Ended December 31, 1998 and 1999 and the three months ended March 31,
2000 (unaudited) (in thousands, except share amounts)
<TABLE>
<CAPTION>
Common Stock Additional Shareholder
------------------ Paid-in Accumulated Notes Deferred
Shares Amount Capital Deficit Receivable Compensation Total
---------- ------ ---------- ----------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, December 31,
1996................... 4,727,266 $119 $ 179 $ (1,569) $ (50) $ -- $ (1,321)
Stock options exercised
for note receivable
from
officer/shareholder.... 400,000 10 -- -- (10) -- --
Sale of Series B
Redeemable Convertible
Preferred Stock........ -- -- -- -- -- -- --
Accretion of Series A
and Series B Redeemable
Convertible Preferred
Stock discount......... -- -- -- (448) -- -- (448)
Warrants issued......... -- -- 164 -- -- -- 164
Net loss................ -- -- -- (4,401) -- -- (4,401)
---------- ---- ------ -------- ----- ----- --------
BALANCES, December 31,
1997................... 5,127,266 129 343 (6,418) (60) -- (6,006)
Exercise of stock
options................ 155,324 4 11 -- -- -- 15
Stock options exercised
for shareholder notes
receivable............. 250,000 6 -- -- (6) -- --
Common shares canceled.. (68,187) (2) 2 -- -- -- --
Accretion of redeemable
preferred stock........ -- -- -- (654) -- -- (654)
Issuance of Series B
Redeemable Convertible
Preferred Stock
warrants.............. -- -- 2,611 -- -- -- 2,611
Net loss................ -- -- -- (9,767) -- -- (9,767)
---------- ---- ------ -------- ----- ----- --------
BALANCES, December 31,
1998................... 5,464,403 137 2,967 (16,839) (66) -- (13,801)
Exercise of stock
options................ 356,718 9 12 -- -- -- 21
Stock options exercised
for shareholder note
receivable............. 400,000 10 115 -- (125) -- --
Issuance of common
stock.................. 136,334 3 -- -- -- -- 3
Common shares canceled.. (68,167) (2) 2 -- --
Deferred stock
compensation........... -- -- 552 -- -- (552) --
Amortization of deferred
stock compensation..... -- -- -- -- -- 34 34
Accretion of redeemable
preferred stock........ -- -- -- (1,755) -- -- (1,755)
Net loss................ -- -- -- (9,600) -- -- (9,600)
---------- ---- ------ -------- ----- ----- --------
BALANCES, December 31,
1999................... 6,289,288 157 3,648 (28,194) (191) (518) (25,098)
Exercise of stock
options................ 149,418 4 1 -- -- -- 5
Stock options execised
for note receivable.... 60,000 1 14 -- (15) -- --
Common shares
cancelled.............. 218,750 (5) (49) -- 54 -- --
Deferred stock
compensation........... -- -- 531 -- -- (531) --
Amortization of deferred
stock compensation..... -- -- -- -- -- 57 57
Accretion of redeemable
preferred stock
(unaudited)............ -- -- -- (625) -- -- (625)
Net loss (unaudited).... -- -- -- (1,441) -- -- (1,441)
---------- ---- ------ -------- ----- ----- --------
BALANCES, March 31, 2000
(unaudited)............ $6,279,956 $157 $4,145 $(30,260) $(152) $(992) $(27,102)
========== ==== ====== ======== ===== ===== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three
Years Ended December Months
31, Ended
------------------------- March 31,
1997 1998 1999 2000
------- ------- ------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................... $(4,401) $(9,767) $(9,600) $(1,441)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization......... 555 1,262 1,435 375
Noncash interest charges.............. 94 2,673 134 18
Loss on disposal of equipment......... -- -- 116 --
Amortization of deferred stock
compensation......................... -- -- 34 57
Effect of changes in assets and
liabilities:
Accounts receivable, net............. (596) (274) 102 (570)
Prepaid expenses and other assets.... (47) (123) (120) (459)
Accounts payable..................... 105 289 (141) 41
Accrued payroll and related
obligations......................... 188 104 81 67
Accrued liabilities.................. 2 189 501 (149)
------- ------- ------- -------
Net cash used in operating
activities......................... (4,100) (5,647) (7,458) (2,061)
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.... (379) (480) (1,669) (271)
Proceeds from sale of equipment........ -- -- 3 --
------- ------- ------- -------
Net cash used in investing
activities......................... (379) (480) (1,666) (271)
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholder notes
payable............................... 1,000 5,000 780 29
Net proceeds from issuance of
redeemable convertible preferred
stock................................. 6,000 -- 13,409 --
Net proceeds from issuance of common
stock and stock option exercise....... -- 15 24 (24)
Proceeds (payments) from short-term
borrowings............................ -- 400 (400) --
Collection of preferred stock
subscription receivable............... -- -- 2,000 --
Payments on capital lease obligations.. (267) (943) (1,252) (286)
------- ------- ------- -------
Net cash provided by financing
activities......................... 6,733 4,472 14,561 (281)
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS............................ 2,254 (1,655) 5,437 (2,613)
CASH AND EQUIVALENTS, beginning of
period................................. 77 2,331 676 6,113
------- ------- ------- -------
CASH AND EQUIVALENTS, end of period..... $ 2,331 $ 676 $ 6,113 $ 3,500
======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest................. $ 167 $ 410 $ 364 $ 48
SUPPLEMENTAL DISCLOSURES OF NONCASH
TRANSACTIONS:
Property and equipment acquired under
capital lease......................... $ 1,765 $ 1,664 $ -- $ --
Conversion of shareholder notes payable
into shares of Redeemable Convertible
Preferred Stock....................... $ -- $ 5,000 $ 780 $ --
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All information for the three months ended March 31, 2000 is unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--AnyTime Access, Inc., (the "Company") was incorporated in
California in September 1990. The Company is a provider of services that allow
credit unions, banks and insurance companies to outsource their consumer loan
origination and processing functions.
Basis of Presentation--The accompanying consolidated financial statements
for 1999 include the Company and its wholly-owned subsidiary, AnyTime Access
Acceptance, which was formed during 1999. All significant intercompany
balances and transactions have been eliminated.
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
the disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.
Cash and Equivalents--The Company considers highly liquid investments with
remaining maturities of three months or less when acquired to be cash
equivalents. Cash and equivalents include cash on hand, demand deposits and
money market funds.
Certain Significant Risks and Uncertainties--The Company operates in a
dynamic industry, and accordingly, can be affected by a variety of factors.
For example, management of the Company believes that changes in any of the
following areas could have a negative effect on the Company in terms of its
future financial position and results of operations: ability to obtain
additional financing; regulatory changes; fundamental changes in the
technology underlying the Company's products; market acceptance of the
Company's products under development; development of sales channels;
litigation or other claims against the Company; the hiring, training and
retention of key employees; successful and timely completion of product
development efforts; and new product introductions by competitors.
Concentration of Credit Risk and Major Customers--The Company sells its
services to financial institutions including credit unions, banks and
insurance companies. During the years ended December 31, 1998 and 1999, one
customer accounted for 15% and 16% of revenues, respectively. The loss of this
customer or any substantial reduction in business with this customer could
have a material adverse affect on the Company's operating results.
The Company periodically evaluates the credit worthiness of its customers
using publicly available data. The Company believes that adequate provision
for uncollectible accounts receivable has been provided for by the Company.
Property and Equipment--Property and equipment consists of office furniture
and equipment, leasehold improvements and software purchased or developed for
internal use. The Company capitalizes costs associated with software developed
or obtained for internal use when the preliminary project stage is completed
and it is deemed probable that the project will be completed and used for the
intended function. Office furniture and equipment and software are depreciated
on a straight-line basis over the estimated useful lives of the assets or the
lease term, whichever is shorter. Leasehold improvements are depreciated on a
straight-line basis over the lease term or the estimated useful life of the
improvement, whichever is shorter. The estimated useful lives range from three
to five years.
Revenue Recognition--Revenues consist primarily of loan application fees,
which the Company charges its customers on a per loan application basis. Such
fees are recognized at the time loan applications are processed.
F-7
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
Income Taxes--Deferred taxes are recognized based on the expected future tax
consequences of temporary differences between the amounts carried on the
financial statements and the tax bases of those assets and liabilities. A
valuation allowance is established to reduce deferred tax assets to an amount
the realization of which is more likely than not.
Stock-Based Compensation--The Company accounts for its stock-based awards
using the intrinsic value method of accounting in accordance with Accounting
Principles Board Opinion 25, "Accounting for Stock Issued to Employees" and
related interpretations. As such, deferred compensation is recorded on the
date of issuance or grant of stock options on any excess of the current
estimated fair value of the underlying stock over the purchase or exercise
price. Amortization of deferred compensation is charged to operations over the
vesting period of the options. The Company has adopted the disclosure
provisions of Statement of Financial Accounting Standards No. 123, ("SFAS No.
123"), "Accounting for Stock-Based Compensation," which permits entities to
provide pro forma net loss and net loss per share disclosure for stock-based
compensation as if the minimum value method defined in SFAS no. 123 had been
applied.
Recent Accounting Pronouncement
Statement of Financial Accounting Standard (SFAS) No. 133 "Accounting for
Derivative Instruments and Hedging Activities," as amended, is effective for
fiscal years beginning after June 15, 2000. SFAS No. 133 requires that all
derivative instruments be measured at fair value and recognized in the balance
sheet as either assets or liabilities. The Company does not expect the
implementation of SFAS No. 133 to have a material effect on its financial
statements.
Reclassifications--Certain amounts in the 1997 and 1998 financial statements
have been reclassified to conform with the 1999 presentation.
2. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------- March 31,
1998 1999 2000
------ ------- -----------
(in thousands) (unaudited)
<S> <C> <C> <C>
Furniture and office equipment................ $4,086 $ 4,893 $5,070
Software...................................... 915 1,623 1,717
Leasehold improvements........................ 291 252 252
------ ------- ------
5,292 6,768 7,039
Less: Accumulated depreciation and
amortization................................. (2,108) (3,469) (3,844)
------ ------- ------
$3,184 $ 3,299 $3,195
====== ======= ======
</TABLE>
Amortization of property and equipment acquired under capital leases and
leasehold improvements has been included with depreciation and amortization
expense.
3. LINE OF CREDIT
In June 1998, the Company entered into a revolving line of credit agreement
(the "Agreement") with a bank. Borrowings under the Agreement were secured by
substantially all of the Company's assets and accrued interest at the prime
rate plus .5%. At December 31, 1998, the Company had $400,000 outstanding
under the line of credit. In August 1999, the outstanding balance was repaid
and the line of credit terminated.
F-8
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
In May 1999, the Company entered into a bridge loan agreement (the "Bridge
Loan") with a bank. As amended, the Bridge Loan provided for borrowings up to
$1,500,000 and accrued interest at prime plus 3.0%. In connection with the
Bridge Loan, the Company issued detachable warrants to the bank, exercisable
for ten years, to purchase 16,500 shares of the Company's Series B Redeemable
Convertible Preferred Stock at a price of $2.25 per share. The estimated fair
value of the warrants as of the date of issue was insignificant. In August
1999, in conjunction with the sale of the Company's Series C Preferred Stock,
the outstanding balance of the Bridge Loan was paid in full.
4. CAPITAL LEASE OBLIGATIONS
The Company leases office and computer equipment under capital lease
arrangements which have terms of three to five years.
In 1996, the Company entered into a master lease agreement. The initial
lease obligation of $2,000,000 was discounted by $398,000 representing the
estimated fair value of Series A and B Preferred Stock warrants issued
pursuant to the master lease agreement (Note 6). The discount is amortized on
a straight-line basis over the life of the leases. The unamortized discount as
of December 31, 1999 was $37,000.
Future minimum lease payments under capital leases are as follows (in
thousands):
<TABLE>
<S> <C>
Years ending December 31:
2000............................................................... $1,039
2001............................................................... 318
------
Total minimum lease payments......................................... 1,357
Less: amount representing interest/discounts......................... (46)
------
Present value of future minimum lease payments....................... 1,311
Less: current portion................................................ 1,002
------
Long-term portion.................................................... $ 309
======
</TABLE>
5. COMMITMENTS--OPERATING LEASES
The Company leases office space and equipment under operating leases
expiring through 2002. Aggregated annual minimum rental payments are $713,000
in 2000, $236,000 in 2001 and $14,000 in 2002. Rental expense recorded under
all operating leases was $247,000, 704,000 and $719,000 during the years ended
December 31, 1997, 1998 and 1999, respectively.
6. STOCKHOLDERS' EQUITY
Common Stock
The Company's common stock includes a liquidation preference of $.025 per
share, including any declared, unpaid dividends, subordinate to the
liquidation preferences of preferred stockholders.
Common Stock Warrants
In 1997, the Company issued warrants to purchase 150,000 shares of the
Company's common stock at $2.25 per share. The warrants are exercisable and
expire on the earlier of the fifth anniversary of the date of grant or
F-9
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
completion of an initial public offering exceeding a specified value. The
estimated fair value of the warrants as of the date of issuance was
insignificant.
Redeemable Convertible Preferred Stock
Redeemable Convertible Preferred Stock consisted of the following (including
accretion to redemption value) as of December 31, 1998 and 1999 and March 31,
2000 (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------- March 31,
1998 1999 2000
------- ------- -----------
(unaudited)
<S> <C> <C> <C>
Series A Redeemable Convertible Preferred Stock
("Series A") 7,743,256 shares authorized;
7,093,256 issued and outstanding................ $ 2,139 $ 2,301 $ 2,340
Series B Redeemable Convertible Preferred Stock
("Series B") 6,304,927 shares authorized; 1999:
6,233,818 issued and outstanding 1998:
6,222,223....................................... 14,832 16,031 16,341
Series C Redeemable Convertible Preferred Stock
("Series C"), 10,016,500 shares authorized;
1999: 7,500,000 issued and outstanding.......... -- 14,583 14,859
------- ------- -------
16,971 32,915 33,540
Less Preferred Stock Subscription Receivable..... (2,000) -- --
------- ------- -------
$14,971 $32,915 $33,540
======= ======= =======
</TABLE>
During 1999, the Company sold 7,110,000 shares of Series C in a private
placement for net proceeds (after offering fees and expenses) of $13,383,000.
Also during 1999, the Company issued 390,000 shares of Series C in a non-cash
transaction in lieu of payments of notes payable to shareholder in the amount
of $780,000.
The Company also sold 11,595 shares of Series B in 1999 for net proceeds of
$26,000.
On December 23, 1998, $5,000,000 in short-term convertible notes payable to
a shareholder were converted to 2,222,222 shares of Series B. Also on that
date, the same shareholder purchased 888,889 shares of Series B in exchange
for a receivable totaling $2,000,000. The stock purchase receivable was
collected in full on February 17, 1999.
Significant terms of the outstanding Preferred Stock are as follows:
Voting Rights--The holders of shares of Series A, B and C are entitled to
voting rights equal to the number of shares of common stock issuable upon
their conversion. In addition, holders of preferred stock are entitled to
certain protective voting rights including restrictions on the sale of the
Company without the approval of two-thirds of preferred stockholders voting
as a class.
Liquidation Preferences--In the event of liquidation or dissolution of
the Company, the preferred shareholders are entitled to priority over
common shareholders with respect to distribution of company assets or
payments to shareholders. The liquidation preference is equal to $0.25,
$2.25 and $2.00 per share for Series A, B and C, respectively. In addition,
the liquidation preference will include any declared and unpaid dividends
at the date of liquidation or dissolution. The aggregate liquidation
preferences as of December 31, 1999 for all series of preferred stock was
$30,799,000.
Redemption--The preferred stock is mandatorily redeemable upon the
request of a majority of the holders of Series A, B and C at any time
following the sixth anniversary of the date of issuance and will be
F-10
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
made in three annual installments. The redemption prices for Series A, B
and C are $0.40, $3.60 and $3.20 per share, respectively, plus any declared
and unpaid dividends. The excess of the preferred stock's redemption price
over its carrying value is being accreted by periodic charges to the
accumulated deficit, using the interest method, during the six years after
the date of issuance.
Conversion Rights--Each share of Series A, B and C is convertible into
shares of common stock at a conversion rate of 1:1 as of December 31, 1999,
subject to adjustment. In the event of an initial public offering which
meets certain size requirements, all shares of all series of preferred
stock will automatically convert into shares of common stock at the then
applicable conversion ratio. Those shares of preferred will automatically
convert upon election of 67% of Series A, B and C voting together as a
single class.
Dividends--The holders of Series A, B and C shall be entitled to receive
noncumulative dividends, payable in the amount of $0.015, $0.135 and $0.16
per share, respectively, when and as declared by the board of directors of
the Company. No dividends had been declared on Series A, B or C through
December 31, 1999.
Other--All shares of preferred stock are subject to certain transfer
restrictions and are entitled to certain registration rights.
Preferred Stock Warrants
In July and October 1996 and April 1997, the Company issued warrants to
purchase 60,000, 280,000 and 240,000 shares of the Company's Series A,
respectively. These warrants are exercisable for ten years after the date of
issuance or five years after an initial public offering, whichever is longer.
All are exercisable at a price of $0.25 per share as of December 31, 1999. The
estimated fair value of the warrants as of their dates of issuance was $8,000,
$171,000 and $146,000, respectively. These amounts have been included in
additional paid-in capital.
In September 1997 and March and August 1998, the Company issued warrants to
purchase 17,777, 26,666 and 26,666 shares of the Company's Series B. The
warrants are exercisable for ten years after the dates of issuance or five
years after an initial public offering, whichever is longer, at a price of
$2.25 per share. The estimated fair values of the warrants as of the dates of
issuance were $18,000, $27,500 and $27,500, respectively. These amounts have
been included in additional paid-in capital.
The Company issued warrants to purchase 888,889 shares and 1,333,333 shares
of Series B in July and October 1998, respectively, in connection with loans
from a principal shareholder. The warrants were subsequently canceled and were
not outstanding as of December 31, 1998. Management of the Company estimated
that the aggregate fair value of the warrants as of the dates of issue was
$2,556,000, which amount was recorded on a noncash interest charge in the 1998
statement of operations. The valuation was based on the Black-Scholes model.
Stock Option Plans
As of December 31, 1999, a total of 5,000,000 shares of common stock were
reserved for issuance upon exercise of stock options granted under the
Company's 1996 and 1997 Incentive Stock Option Plans ("the Plans"). The Plans
provide for the grant of Incentive and Nonstatutory Stock Options to employees
and consultants of the Company. Generally, incentive stock options granted
under the Plans vest over a 48-month period and are exercisable for ten years
from the date of grant. The exercise price of option grants must be at least
equal to the estimated fair market value of common stock at the date of grant,
as determined at the time of grant by the Company's Board of Directors. Under
the 1997 Plan, in the event of a merger of the Company with
F-11
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding option or stock purchase right shall be assumed
or an equivalent option or right substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute the option or stock
purchase right, the optionee shall fully vest in and have the right to
exercise the option or stock purchase right as to all of the optioned stock,
including shares as to which the optionee would not otherwise be vested or
exercisable.
Under the 1996 Stock Option Plan, in the event of a merger of the company
with or into another corporation, each outstanding option may be assumed or an
equivalent option may be substituted by such successor corporation or a parent
or subsidiary of such successor corporation. If, in such event, the option is
not assumed or substituted, the option shall terminate as of the date of the
closing of the merger.
The following table summarizes stock options available for grant during the
years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
1997 1998 1999
---------- -------- ----------
<S> <C> <C> <C>
Balance, beginning of year................. 2,500,000 849,500 920,947
Options granted............................ (1,973,000) (553,167) (1,257,166)
Options canceled........................... 322,500 624,614 354,698
---------- -------- ----------
Options available for future grant......... 849,500 920,947 18,479
========== ======== ==========
</TABLE>
A summary of the status of the Plans is presented below:
<TABLE>
<CAPTION>
1997 1998 1999
------------------- ------------------- -------------------
Weighted Weighted Weighted
Shares Average Shares Average Shares Average
Under Exercise Under Exercise Under Exercise
Option Price Option Price Option Price
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of year................ 500,000 $0.025 1,750,500 $0.102 1,273,729 $0.129
Granted................. 1,973,000 0.097 553,167 $0.222 1,257,166 $0.382
Exercised............... (400,000) 0.025 (405,324) $0.053 (756,718) $0.192
Canceled................ (322,500) 0.046 (624,614) $0.187 (354,698) $0.249
--------- --------- ---------
Outstanding, end of
year................... 1,750,500 0.102 1,273,729 $0.129 1,419,479 $0.307
========= ========= =========
</TABLE>
The following table summarizes information about stock options as of
December 31, 1999:
<TABLE>
<CAPTION>
Options
Options Outstanding Exercisable
------------------------------------------------
Weighted
Average Weighted Weighted
Shares Remaining Average Shares Average
Under Contractual Exercise Under Exercise
Option Life Prices Option Prices
--------- ----------- -------- ------- --------
<S> <C> <C> <C> <C>
419,855 7.4 $0.025 358,251 $0.025
899,624 9.1 $0.250 143,226 $0.250
100,000 9.8 $2.000 -- $2.000
--------- --- ------ -------
1,419,479 8.7 $0.307 501,477 $0.090
========= === ====== =======
</TABLE>
F-12
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
Stock option activity for the three months ended March 31, 2000 is as
follows:
<TABLE>
<S> <C>
Plan option shares increased by an additional.................. 500,000
Options Granted................................................ (411,500)
Options Canceled............................................... 170,270
Options available for future grants............................ 277,249
</TABLE>
Deferred Stock Compensation--The Company applies Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," ("APB 25") and
related interpretations in accounting for its stock option plans. The Company
recorded deferred compensation related to option grants totaling $552,000 and
an additional $531,000 (unaudited) for the three months ended March 31, 2000
which will be amortized ratably over the vesting periods of the related stock
options. Amortization amounted to $34,000 in 1999 and $57,000 (unaudited) for
the three months ended March 31, 2000.
Pro forma information is required by Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," ("SFAS 123"), which also requires
that the information be determined as if the Company had accounted for its
employees stock options granted subsequent to December 31, 1994 under the fair
value method of SFAS No. 123. The fair value of these options was estimated at
the date of grant using the Minimum Value Method with a risk-free interest
rate of 6.7% and 6.1% for 1999 and 1998, respectively, with no dividends
expected. The weighted average expected life of options granted in 1999 and
1998 was ten years. For purpose of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the vesting period of the
options. The effect of applying the Minimum Value method required by SFAS No.
123 to the Company's employee stock options grants results in pro forma net
losses that are not materially different from the amounts reported.
7. RELATED PARTY TRANSACTIONS
In conjunction with the exercise of options to purchase 3,150,000 shares of
common stock, the Company received four full recourse notes receivable
("Notes") totaling $191,250 from shareholders who are also members of
management. Principal and interest on the Notes are due and payable on dates
ranging from March 2000 to December 2002. The Notes are secured by the common
stock purchased and have been reflected as increases to the shareholders'
deficit on the accompanying balance sheets.
8. INCOME TAXES
The Company has available approximately $21,788,000 and $6,932,000 of
federal and state net operating loss carryforwards ("NOL's") as of December
31, 1999. The federal NOL's expire between the years 2006 and 2014 and the
state NOL's expire between 2000 and 2004. Future utilization of the Company's
NOL's may be subject to annual limitations due to the ownership change
provisions of Section 382 of the Internal Revenue Code of 1986, as amended.
As of December 31, 1998 and 1999, the Company had net deferred tax assets of
approximately $4,895,000 and $8,615,000, respectively, which resulted
primarily from net operating loss carryforwards and the use of differing
accounting methods for financial reporting and income tax purposes. The
Company has fully reserved all net deferred tax assets because of uncertainty
as to the ultimate realization of such assets. The valuation allowance
increased by $2,895,000 and $3,720,000 during 1998 and 1999, respectively.
F-13
<PAGE>
ANYTIME ACCESS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(All information for the three months ended March 31, 2000 is unaudited)
9. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution plan ("the Plan") covering
substantially all employees who have both reached age 21 and completed 6
months of service. The Company may match a portion of the employee's
contribution. The Company may also make discretionary profit sharing
contributions. Employees are 100% vested in the amounts they contribute to the
Plan. Matching and discretionary contributions vest on a graduated scale
beginning at two years with full vesting after 6 years of service. The Company
made no contributions during the years ended December 31, 1998 and 1999.
10. SUBSEQUENT EVENT
On March 30, 2000, the Company agreed to sell all of the Company's
outstanding common and preferred stock to Digital Insight Corporation
("Digital Insight") in exchange for shares of Digital Insight's common stock.
The sale is subject to customary closing conditions, including approval of the
Company's shareholders.
F-14
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
On July 31, 2000, Digital Insight completed its acquisition of all of the
outstanding shares of AnyTime Access, Inc., a company based in Sacramento,
California that provides solutions that allow credit unions, banks and other
financial institutions to outsource certain customer communication and other
administrative functions associated with consumer loan originations. In the
acquisition, Digital Insight issued 2,121,862 shares of its common stock -- in
the form of 2,001,186 shares of Digital Insight's common stock, 68,347 shares
underlying options to purchase Digital Insight's common stock and 52,329 shares
underlying warrants to purchase Digital Insight's common stock -- in exchange
for all of the outstanding shares, options and warrants of AnyTime Access. Upon
closing of the acquisition, Digital Insight also issued to certain employees of
AnyTime Access options to purchase an aggregate of 15,072 shares of Digital
Insight's common stock at an exercise price of $0.19 per share. The acquisition
is to be accounted for using the purchase method of accounting. The purchase
price will be allocated to the estimated fair value of assets acquired and
liabilities assumed. The estimated fair value of the assets acquired and
liabilities assumed approximate the historical cost basis, and the preliminary
purchase price allocation indicates goodwill and identifiable intangible assets
of approximately $108.0 million, which Digital Insight estimates will be
amortized over an aggregate life of five years. In addition, deferred
compensation in the amount of $2.2 million will be recorded for the unvested
stock options to be assumed in connection with the acquisition and will be
amortized over the estimated service period of the employees.
On June 21, 2000, Digital Insight completed its acquisition of the outstanding
shares of 1View Network Corporation ("1View"), a company based in San Francisco,
California that provides electronic information aggregation solutions for the
financial services market. The purchase price was comprised of $5 million in
cash and 1.1 million shares of common stock and shares underlying options to
purchase common stock in exchange for all the outstanding shares and options of
1View. Digital Insight's common stock to effect the acquisition was valued at
approximately $46.2 million. The acquisition is to be accounted for using the
purchase method of accounting. The purchase price will be allocated to the
estimated fair value of assets acquired and liabilities assumed. The estimated
fair value of the assets acquired and liabilities assumed approximated the
historical cost basis, and the preliminary purchase price allocation indicates
goodwill of approximately $36.9 million which will be amortized on a straight-
line basis over an estimated life of three years. In addition, deferred
compensation will be recorded in the amount of $6.6 million for the unvested
stock options to be issued in connection with the acquisition and will be
amortized over the estimated service period of the employees. If 1View does not
meet certain performance objectives by September 2000, the former majority
stockholder of 1View has agreed to return to Digital Insight $3.0 million in
cash and 178,112 shares of Digital Insight's common stock valued at $7.5 million
which are being held in escrow pending the resolution of the contingency.
Accordingly, this portion of the purchase price will be accounted for as
contingent purchase consideration upon resolution of the future performance
requirements.
The following unaudited pro forma condensed consolidated balance sheet
assumes that the acquisitions of AnyTime Access and 1View were consummated as
of March 31, 2000 and present a preliminary allocation of the purchase prices
over historical net book values and are for illustrative purposes only. Actual
fair values will be based on financial information as of the acquisition
dates. The following unaudited pro forma consolidated statements of operations
for the year ended December 31, 1999 and the three months ended March 31, 2000
give effect to the acquisitions as if they had occurred on January 1, 1999 and
2000, respectively.
The unaudited pro forma condensed consolidated financial information is not
necessarily indicative of the results that would have occurred if the
acquisitions had occurred as of the beginning of the periods presented and
should not be construed as being representative of future operating results or
financial position.
F-15
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Digital 1View AnyTime
Insight Network Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
----------- ----------- -------- ----------- ------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash, cash equivalents
and short-term
investments.......... $ 57,467 $ 96 $ 3,500 $ (5,000)(1) $ 56,063
Accounts receivable,
net.................. 8,975 140 1,487 10,602
Accumulated
implementation
costs................ 33 -- -- 33
Other current assets.. 2,312 2 802 3,000 (1) 6,116
-------- ------- -------- -------- --------
Total current
assets............. 68,787 238 5,789 (2,000) 72,814
Property and equipment,
net.................... 15,400 337 3,195 18,932
Goodwill and intangible
assets................. -- -- -- 144,937 (2) 144,937
Other assets............ 521 118 166 805
-------- ------- -------- -------- --------
$ 84,708 $ 693 $ 9,150 $142,937 $237,488
======== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accounts payable...... $ 4,021 $ 280 $ 526 $ -- $ 4,827
Accrued compensation
and related
benefits............. 2,128 126 474 2,728
Current portion of
capital lease
obligation and long-
term debt............ 355 -- 1,002 1,357
Convertible notes and
loan payable......... -- 1,352 -- (1,352)(3) --
Customer deposits and
deferred revenue..... 7,316 50 -- 7,366
Other accruals........ 3,739 376 669 6,559 (4) 11,343
-------- ------- -------- -------- --------
Total current
liabilities........ 17,559 2,184 2,671 5,207 27,621
Long term portion of
capital lease
obligation and long-
term debt............ 998 -- 41 1,039
Stockholders' equity
(deficit):
Preferred stock....... -- -- 33,540 (33,540)(5) --
Common stock and
additional paid-in
capital.............. 116,831 5,908 4,302 (10,210)(5) 268,249
142,677 (6)
8,741 (7)
Notes receivable from
stockholders......... (219) -- (152) 152 (5) (219)
Deferred stock-based
compensation......... (2,950) (5,225) (992) 6,217 (5) (11,691)
(8,741)(7)
Accumulated deficit... (47,511) (2,174) (30,260) 32,434 (5) (47,511)
-------- ------- -------- -------- --------
Total stockholders'
equity (deficit)... 66,151 (1,491) 6,438 137,730 208,828
-------- ------- -------- -------- --------
$ 84,708 $ 693 $ 9,150 $142,937 $237,488
======== ======= ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-16
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For The Three Months Ended March 31, 2000
(in thousands, except per share data)
<TABLE>
<CAPTION>
Digital Insight 1View Network AnyTime Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
--------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Implementation fees... $ 3,078 $ -- $ -- $ -- $ 3,078
Service fees.......... 7,341 -- -- 7,341
Transaction fees and
other................ -- 621 3,013 3,634
-------- ------- ------- -------- --------
Total revenues........ 10,419 621 3,013 -- 14,053
-------- ------- ------- -------- --------
Cost of revenues:
Implementation........ 2,380 -- -- 2,380
Service............... 3,709 -- -- 3,709
Transaction fees and
other................ -- 333 2,052 2,385
-------- ------- ------- -------- --------
Total cost of
revenues............. 6,089 333 2,052 -- 8,474
-------- ------- ------- -------- --------
Gross profit............ 4,330 288 961 -- 5,579
-------- ------- ------- -------- --------
Operating expenses:
Sales, general and
administrative....... 9,016 762 1,447 11,225
Research and
development.......... 3,718 299 917 4,934
Amortization of stock-
based compensation... 329 376 57 1,914 (8) 2,676
Amortization of
goodwill and
intangibles.......... -- -- -- 8,477 (9) 8,477
Merger related
expenses............. 12,658 -- -- 12,658
-------- ------- ------- -------- --------
Total operating
expense.............. 25,721 1,437 2,421 10,391 39,970
-------- ------- ------- -------- --------
Loss from operations.... (21,391) (1,149) (1,460) (10,391) (34,391)
Interest and other
income, net............ 995 (13) 19 -- 1,001
-------- ------- ------- -------- --------
Net loss ............... $(20,396) $(1,162) $(1,441) $(10,391) $(33,390)
======== ======= ======= ======== ========
Basic and diluted net
loss per share......... $ (0.89)
========
Shares used in computing
basic and diluted net
loss per share......... 22,803
========
Pro forma basic and
diluted net loss per
share.................. $ (1.31)(10)
========
Shares used in computing
pro forma basic and
diluted net loss per
share.................. 25,420 (10)
========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-17
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Digital Insight 1View Network AnyTime Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
--------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Implementation fees... $ 9,351 $ -- $ -- $ -- $ 9,351
Service fees.......... 16,894 -- -- 16,894
Transaction fees and
other................ -- 976 10,384 11,360
-------- ------- ------- -------- --------
Total revenues.......... 26,245 976 10,384 -- 37,605
-------- ------- ------- -------- --------
Cost of revenues:
Implementation........ 5,548 -- -- 5,548
Service............... 10,056 -- -- 10,056
Transaction fees and
other................ -- 577 7,978 8,555
-------- ------- ------- -------- --------
Total cost of revenues.. 15,604 577 7,978 -- 24,159
-------- ------- ------- -------- --------
Gross profit............ 10,641 399 2,406 -- 13,446
-------- ------- ------- -------- --------
Operating expenses:
Sales, general and
administrative....... 21,211 898 7,187 29,296
Research and
development.......... 7,668 216 4,641 12,525
Amortization of stock-
based compensation... 1,221 293 34 7,655 (8) 9,203
Amortization of
goodwill and
intangibles.......... -- -- -- 33,908 (9) 33,908
-------- ------- ------- -------- --------
Total operating
expense................ 30,100 1,407 11,862 41,563 84,932
-------- ------- ------- -------- --------
Loss from operations.... (19,459) (1,008) (9,456) (41,563) (71,486)
Interest and other
income, net............ 1,441 (4) (144) -- 1,293
-------- ------- ------- -------- --------
Net loss ............... (18,018) (1,012) (9,600) (41,563) (70,193)
Accretion on redeemable
convertible preferred
stock.................. (136) -- -- -- (136)
-------- ------- ------- -------- --------
Net loss attributable to
common stockholders.... $(18,154) $(1,012) $(9,600) $(41,563) $(70,329)
======== ======= ======= ======== ========
Basic and diluted net
loss per share......... $ (1.26)
========
Shares used in computing
basic and diluted net
loss per share......... 14,389
========
Pro forma basic and
diluted net loss per
common share........... $ (1.00) $ (3.38)(10)
======== ========
Shares used in computing
pro forma basic and
diluted net loss per
share.................. 18,216 20,833 (10)
======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-18
<PAGE>
DIGITAL INSIGHT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(Dollars in thousands)
The pro forma adjustments give effect to the acquisitions of 1View and
AnyTime Access as if the transactions were consummated on March 31, 2000. The
estimated fair value per share of the Digital Insight stock assumed to be
issued to effect the acquisitions was approximately $42 per share and $53 per
share for 1View and AnyTime Access, respectively. The fair values were based
on the average trading price for the public announcement dates and the four
days prior to and after those dates. The pro forma balance sheet adjustments
are as follows:
(1) To reflect the $5,000 cash consideration paid for 1View. $3,000 of the
cash consideration was deposited in escrow and is contingent upon certain
performance goals that must be achieved by September 2000 and will be
accounted for as contingent consideration upon resolution of the
performance goals.
(2) To reflect goodwill and intangible assets created as a result of the
acquisitions as follows:
<TABLE>
<CAPTION>
AnyTime
1View Access Total
------- -------- --------
<S> <C> <C> <C>
Estimated fair value of the assumed issuance
of 629,313 (excluding 178,112 contingent
shares in escrow) and 1,987,557 shares of the
Company's common stock for the acquisitions
of 1View and AnyTime Access, respectively.... $26,452 $105,341 $131,793
Estimated fair value of 136,183 and 97,837
shares underlying vested stock options (net
of estimated proceeds on exercise) assumed
upon the acquisitions of 1View convertible
notes and AnyTime Access, respectively....... 5,720 5,164 10,884
Additional cash consideration excluding cash
in escrow ................................... 2,000 -- 2,000
Direct transaction costs ..................... 2,600 3,959 6,559
Conversion of 1View convertible notes and
shareholder loan............................. (1,352) -- (1,352)
Net assets acquired........................... 1,491 (6,438) (4,947)
------- -------- --------
Estimated goodwill and intangibles created.... $36,911 $108,026 $144,937
======= ======== ========
</TABLE>
(3) To reflect conversion of 1View convertible notes and loan from shareholder
upon consummation of the acquisition of 1View.
(4) To reflect the accrual of the estimated direct acquisition costs of $2,600
and $3,959 related to the acquisitions of 1View and AnyTime Access,
respectively.
(5) To eliminate the historical stockholders equity of 1View and AnyTime
Access.
(6) To reflect the increase in additional paid-in capital for the step-up in
basis and deferred stock-based compensation related to the acquisitions as
follows:
<TABLE>
<CAPTION>
AnyTime
1View Access Total
------- -------- --------
<S> <C> <C> <C>
Estimated fair value of the assumed issuance of
shares underlying the Company's common stock and
vested stock options for the 1View and AnyTime
Access acquisitions ............................. $32,172 $110,505 $142,677
Estimated fair value of 156,376 and 41,365 shares
underlying vested stock options (net of estimated
proceeds on exercise) assumed upon acquisitions
of 1View and AnyTime Access, respectively,
recorded as deferred stock-based compensation.... 6,568 2,173 8,741
------- -------- --------
$38,740 $112,678 $151,418
======= ======== ========
</TABLE>
(7) To reflect deferred stock-based compensation for the assumed issuance of
shares underlying unvested stock options for 1View and AnyTime Access.
F-19
<PAGE>
DIGITAL INSIGHT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION--(Continued)
(Dollars in thousands)
The pro forma statement of operations adjustments to give effect to the
acquisitions of AnyTime Access and 1View as if the acquisitions occurred on
January 1, 1999 and 2000, respectively, are as follows:
(8) To reflect the amortization of stock-based compensation created as a result
of the acquisitions as follows:
<TABLE>
<CAPTION>
Amortization
For The Three
Annual Months Ended
Amortization March 31, 2000
------------ --------------
<S> <C> <C>
1View............................................ $6,568 $1,642
AnyTime Access................................... 1,087 272
------ ------
$7,655 $1,914
====== ======
</TABLE>
(9) To reflect the amortization of goodwill and intangible assets created as a
result of the acquisitions as follows:
<TABLE>
<CAPTION>
Estimated
Amortization
Goodwill and Estimated Estimated For The Three
Intangible Aggregate Annual Months Ended
Assets Life Amortization March 31, 2000
------------ --------- ------------ --------------
<S> <C> <C> <C> <C>
1View..................... $ 36,911 3 years $12,303 $3,076
AnyTime Access............ 108,026 5 years 21,605 5,401
-------- ------- ------
$144,937 $33,908 $8,477
======== ======= ======
</TABLE>
(10) To reflect the pro forma basic and diluted net loss per common share
assuming the issuance of 629,313 (excluding 178,112 contingent shares in
escrow) and 1,987,557 shares of common stock to effect the acquisitions
of 1View and AnyTime Access, respectively. Vested and unvested stock
options were excluded from the computation as they have an antidilutive
effect.
F-20
