<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
___________________________
FORM 8-K/A
(AMENDMENT NO. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 1995
Commission File Number: 0-26026
___________________________
INTERACTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2925769
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5095 MURPHY CANYON ROAD, SAN DIEGO, CA 92123
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 560-8525
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The undersigned Registrant hereby amends and restates Item 7(b) of its Current
Report on Form 8-K, as originally filed with the Securities and Exchange
Commission on March 12, 1996 to read in full as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION
The Registrant has attached the following financial
statements reflecting the Registrant's best estimate of the
pro forma effect of the acquisition of JIT on the Registrant.
The following unaudited pro forma Financial Statements are
attached:
Introductory Statement
Pro Forma Combined Balance Sheet as of December 31, 1995
Pro Forma Combined Statements of Operations for the years
ended December 31, 1995 and 1994
Notes to the Pro Forma Combined Balance Sheet and Statements
of Operations
2
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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: February 20, 1997 INTERACTIVE GROUP, INC.
By: /s/ Michael D. Reynolds
-----------------------------------
Michael D. Reynolds
Chief Financial Officer
3
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
UNAUDITED PRO FORMA FINANCIAL INFORMATION:
Introductory Statement F-10
Pro Forma Combined Balance Sheet F-11
Pro Forma Statements of Operations F-12
Notes to Pro Forma Combined Financial Statements F-14
</TABLE>
4
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INTERACTIVE GROUP, INC. AND JUST IN TIME ENTERPRISE SYSTEMS, INC.
PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
On December 31, 1995, Interactive Group, Inc. (the "Company") acquired all of
the outstanding shares of Just In Time Enterprise Systems, Inc. ("JIT"). The
following unaudited pro forma combined financial statements give effect to the
acquisition by the Company of JIT accounted for under the purchase method of
accounting. The pro forma combined balance sheet assumes the acquisition took
place on January 1, 1994 and combines the Company's December 31, 1995 balance
sheet with JIT's balance sheet as of the same date. The pro forma combined
statements of operations for the years ended December 31, 1994 and 1995
combines the Company's historical statements of operations for the years ended
December 31, 1994 and 1995 with the corresponding JIT historical statements of
operations.
The unaudited pro forma combined statements of operations are not necessarily
indicative of the operating results that would have been achieved had the
acquisition by the Company of JIT been in completed as of the beginning of each
of the periods presented, and should not be construed as being indicative of
future operations of the combined company.
F-10
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INTERACTIVE GROUP, INC. AND JUST IN TIME ENTERPRISE SYSTEMS, INC.
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Just In Time
Interactive Enterprise Pro Forma
Group, Inc. Systems, Inc. Adjustments Pro Forma
Dec. 31, 1995 Dec. 31, 1995 (Notes 1, 2 & 3) Combined
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 5,967 $ - $ (1,316) $ 4,651
Accounts receivable, net 10,699 2,278 - 12,977
Deferred income taxes 398 - - 398
Prepaid expenses and other current assets 914 200 - 1,114
-------- -------- -------- --------
17,978 2,478 (1,316) 19,140
Property and equipment, net 1,467 983 (120) 2,330
Deferred income taxes 1,267 - 66 1,333
Intangible assets - - 1,472 1,472
Deposits and other assets 329 - - 329
-------- -------- -------- --------
Total assets $ 21,041 $ 3,461 $ 102 $ 24,604
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current liabilities:
Accounts payable $ 3,273 $ 1,563 $ 19 $ 4,855
Accrued expenses 3,443 1,021 462 4,926
Current Portion of obligations under capital leases 68 336 - 404
Short-term borrowings 533 - - 533
Deferred revenue and customer deposits 2,056 1,591 - 3,647
-------- -------- -------- --------
9,373 4,511 481 14,365
Obligations under capital leases, net of
current portion 70 101 - 171
Long-term obligations, less current portion - - 2,500 2,500
Amounts due to parent - 14,658 (14,658) -
Stockholders' equity (deficit):
Common stock 4 - - 4
Additional paid-in capital 6,462 - - 6,462
Retained earnings (accumulated deficit) 5,115 (15,809) 11,779 1,085
Cumulative foreign currency translation adjustments 17 - - 17
-------- -------- -------- --------
Total stockholders' equity (deficit) 11,598 (15,809) 11,779 7,568
-------- -------- -------- --------
Total liabilities and stockholders'
equity (deficit) $ 21,041 $ 3,461 $ 102 $ 24,604
======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma combined financial information
F-11
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INTERACTIVE GROUP, INC. AND JUST IN TIME ENTERPRISE SYSTEMS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited)
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
----------------------------
Just In Time
Interactive Enterprise Pro Forma
Group, Inc. Systems, Inc. Adjustments Note Combined
----------- ------------- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
Revenues $ 32,993 $ 15,810 $ - $ 48,803
Cost of revenues 15,231 13,738 171 2 29,140
-------- -------- -------- --------
Gross margin 17,762 2,072 (171) 19,663
Operating expenses:
Research and development 1,588 2,920 56 2 4,564
Selling, general and administrative 13,891 5,528 57 2 19,476
Write-off of software license 235 - 235
Compensation expense associated
with employee stock bonus 871 - - 871
Purchased research and development 3,250 - (3,250) -
Restructuring charge 0 2,651 - 2,651
-------- -------- -------- --------
Total 19,835 11,099 (3,137) 27,797
Income (loss) from operations (2,073) (9,027) 2,966 (8,134)
Other income (expense), net 87 (17) (291) 5(g) (221)
-------- -------- -------- --------
Income (loss) before income taxes (1,986) (9,044) 2,675 (8,355)
Provision (benefit) for income taxes (848) (206) 1,142 4 88
-------- -------- -------- --------
Net income (loss) $ (1,138) $ (8,838) $ 1,533 $ (8,443)
======== ======== ======== ========
Net loss per share ($2.07)
Weighted average shares outstanding 4,084,000
</TABLE>
See accompanying notes to unaudited pro forma combined financial information
F-12
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INTERACTIVE GROUP, INC. AND JUST IN TIME ENTERPRISE SYSTEMS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
----------------------------
Just In Time
Interactive Enterprise Pro Forma
Group, Inc. Systems, Inc. Adjustments Note Combined
----------- ------------- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
Revenues $ 28,625 $ 16,822 $ - $ 45,447
Cost of revenues 13,597 11,285 171 2 25,053
-------- -------- ------ --------
Gross margin 15,028 5,537 (171) 20,394
Operating expenses:
Research and development 1,320 4,533 56 2 5,909
Selling, general and administrative 10,847 7,799 57 2 18,703
-------- -------- ------ --------
Total 12,167 12,332 113 24,612
Income (loss) from operations 2,861 (6,795) (284) (4,218)
Other income (expense), net (80) (32) (306) 5(h) (418)
-------- -------- ------ --------
Income (loss) before income taxes 2,781 (6,827) (590) (4,636)
Provision (benefit) for income taxes 972 (11) (207) 4 755
-------- -------- ------ --------
Net income (loss) $ 1,809 $ (6,816) $ (384) $ (5,391)
======== ======== ====== ========
Net loss per share ($ 1.46)
Weighted average shares outstanding 3,685,000
</TABLE>
See accompanying notes to unaudited pro forma combined financial information
F-13
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INTERACTIVE GROUP, INC. AND JUST IN TIME ENTERPRISE SYSTEMS, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
(UNAUDITED)
NOTE 1:
The pro forma combined balance sheet reflects the acquisition of all of the
capital stock of JIT in exchange for $1.5 million of cash, $2.5 million note
payable, and net liabilities of $4.3 million. In addition, $1.2 million of
contingent consideration is payable based on a percentage of future revenues
generated from the JIT software. The initial purchase price of $8.3 million
was allocated as follows based upon a valuation of the tangible and intangible
assets, including acquired technology and in-process research and development,
by an independent appraiser, as well as management's best estimates (in
thousands).
<TABLE>
<S> <C>
Current assets $2,165
Fixed assets 863
Trademarks and trade names 457
Assembled work force 790
Customer base 440
Developed technology 353
In-process technology 3,250
------
$8,318
</TABLE>
NOTE 2:
The allocation of the purchase price was applied to the historical balance
sheet or historical statements of operations of the Company and JIT to arrive
at the pro forma combined balance sheet and statements of operations. The
trademarks, assembled work force, customer base, and developed technology
(total of $2,040,000) are being amortized over estimated useful lives ranging
from 5 to 10 years. The pro forma combined statements of operations for the
years ended December 31, 1994 and 1995 reflect amortization expense of $284,000
for each period, with the amortization being charged to cost of revenues,
$171,000; research and development expense, $56,000; and selling, general and
administrative expense, $57,000. Intangible assets reflect the $2,040,000 shown
above.
NOTE 3:
Interest income has been reduced in the pro forma combined statement of
operations to reflect the net decrease in cash of $1.5 million and $1.2
million that would have been available to invest during the years ended
December 31, 1994 and 1995, respectively, had the transaction occurred on
January 1, 1994. The assumed interest rate used to calculate interest income
was 5% per annum. For the years ended December 31, 1994 and 1995 the reduction
was $75,000 and $60,000, respectively, for each period. Interest expense has
been increased in the pro forma combined statements of operations to reflect
the $2.5 million note payable that would have been incurred had the transaction
been effected on January 1, 1994. The assumed interest rate used to calculate
interest expense was 9.25% per annum. For the years ended December 31, 1994
and 1995 the interest expense reflected was $231,000 for each period.
NOTE 4:
The provisions for income taxes have been adjusted for each year presented by
the Company's effective tax rate to reflect the impact of the combined
operations on the results of the periods presented. . The effective tax rates
for the years ended December 31, 1994 and December 31, 1995 were 35% and 42.7%,
respectively.
F-14
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NOTE 5:
The following reconciliations provide detail for certain adjustments to the
proforma balance sheet and statements of operation:
<TABLE>
<S> <C> <C> <C>
(a) (1,500) Cash to purchase JIT Note 1
(75) Reduction of interest revenue 1994 Note 3
(60) Reduction of interest revenue 1995 Note 3
--------
(1,635) Adjustment to cash
(b) 863 Fixed assets assumed in purchase price Note 1
(983) Fixed asssets per balance sheet
-----
(120) Adjustment to fixed assets
(c) 207 Provision for income tax adjustment to 1994 income statement
(1,142) Provision for income tax adjustment to 1995 income statement
------
(935) Adjustment to deferred income taxes
(d) 457 Trademarks and tradenames Note 1
790 Assembled workforce Note 1
440 Customer base Note 1
353 Developed technology Note 1
------
2,040 Adjustment to intangibles
(e) 19 Elimination of costs to acquire JIT
(f) 15,809 JIT accumulated deficit
(1,717) Proforma adjustments to 1995 operations statement, net of purchased research and development
(383) Proforma adjustments to 1994 operations statement
568 Amortization of intangible assets Note 2
(3,250) Retained earnings adjustment related to in-process research and development write-off
-------
11,027 Adjustment to retained earnings
(g) (231) Additional interest expense Note 3
(60) Reduction of interest revenue Note 3
------
(291) Adjustment to 1995 other income (expense)
(h) (231) Additional interest expense Note 3
(75) Reduction of interest revenue Note 3
------
(306) Adjustment to 1994 other income (expense)
</TABLE>
F-15
