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