1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORT) APRIL 6, 2000
JDA SOFTWARE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-27876 86-0787377
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.
14400 NORTH 87TH STREET, SCOTTSDALE, ARIZONA 85260-3649
(ADDRESS OF PRINCIPLE EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (480) 308-3000
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
(b) PRO FORMA FINANCIAL INFORMATION
(c) EXHIBITS
2.1* ASSET PURCHASE AGREEMENT DATED AS OF FEBRUARY 24,
2000, BY AND AMONG JDA SOFTWARE GROUP, PRICER AB AND
INTACTIX INTERNATIONAL, INC.
99.1* PRESS RELEASE ISSUED FEBRUARY 24, 2000.
99.1** PRESS RELEASE ISSUED APRIL 7, 2000.
* INCORPORATED BY REFERENCE TO THE SAME NUMBERED EXHIBIT TO THE COMPANY'S
CURRENT REPORT ON FORM 8-K DATED FEBRUARY 24, 2000, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2000.
** INCORPORATED BY REFERENCE TO THE SAME NUMBERED EXHIBIT TO THE COMPANY'S
CURRENT REPORT ON FORM 8-K DATED APRIL 6, 2000, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION ON APRIL 13, 2000.
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.
JDA SOFTWARE GROUP, INC.
DATE: JUNE 19, 2000 BY: /S/ KRISTEN L. MAGNUSON
-------------------------
KRISTEN L. MAGNUSON
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND TREASURER
3
ITEM 7(a). FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Consolidated Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
4
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Intactix International, Inc.:
We have audited the accompanying consolidated balance sheets of Intactix
International, Inc. and Subsidiaries (the Company), a wholly-owned subsidiary of
Pricer AB, as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholder's deficiency and comprehensive income
(loss) and cash flows for the years 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 audits.
We conducted our audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Intactix International, Inc. and subsidiaries as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company has incurred recurring losses
from operations and has a net stockholder's deficiency, which conditions raise
substantial doubt about their ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ KPMG LLP
Dallas, Texas
June 9, 2000
5
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Consolidated Balance Sheets
December 31, 1999 and 1998
(In thousands, except share and per share amounts)
ASSETS 1999 1998
Current assets:
Cash and cash equivalents $ 8,171 $ 1,218
Trade accounts receivable, less allowance for doubtful accounts of $711 in 1999
and $522 in 1998 5,327 6,826
Prepaid expenses and other current assets 520 974
-------- --------
Total current assets 14,018 9,018
Equipment, furniture and fixtures, net (note 3) 1,795 2,470
Goodwill and other intangible assets, less accumulated amortization of $66,256 in 1999
and $62,489 in 1998 12,084 15,851
-------- --------
Total assets $ 27,897 $ 27,339
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current
liabilities:
Accounts payable $ 848 $ 1,329
Deferred revenue 4,914 5,031
Due to Parent Company (note 8) 68,854 64,880
Other current liabilities 1,576 1,489
-------- --------
Total current liabilities 76,192 72,729
Other noncurrent liabilities 53 81
Stockholder's deficiency:
Common stock - $.01 par value; 1,000 shares authorized, issued and outstanding 10 10
Additional paid-in capital 39,453 32,490
Accumulated other comprehensive income (loss) 285 (224)
Accumulated deficit (88,096) (77,747)
-------- --------
Total stockholder's deficiency (48,348) (45,471)
-------- --------
Commitments and contingencies (notes 2 and 6)
Total liabilities and stockholder's deficiency $ 27,897 $ 27,339
======== ========
See accompanying notes to consolidated financial statements.
2
6
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Consolidated Statements of Operations
Years ended December 31, 1999 and 1998
(In thousands)
1999 1998
Revenues:
License $ 10,209 $ 9,164
Maintenance, service and other 13,498 13,919
-------- --------
Total revenues 23,707 23,083
-------- --------
Operating expenses:
Cost of maintenance, service and other revenues 1,606 3,088
General and administrative 20,158 21,405
Sales and marketing 3,475 4,657
Impairment of goodwill 2,930 36,500
Amortization and depreciation 1,979 4,353
-------- --------
Total operating expenses 30,148 70,003
-------- --------
Loss from operations (6,441) (46,920)
Interest and other expense, net 3,908 3,377
-------- --------
Net loss $(10,349) $(50,297)
======== ========
See accompanying notes to consolidated financial statements.
3
7
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Consolidated Statements of Stockholder's Deficiency
and Comprehensive Income (Loss)
Years ended December 31, 1999 and 1998
(In thousands, except share amounts)
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
--------------------------------- PAID-IN COMPREHENSIVE ACCUMULATED
SHARES AMOUNT CAPITAL INCOME (LOSS) DEFICIT TOTAL
------ ------ ------- ------------- ------- -----
Balance, December 31, 1997 1,000 $ 10 32,490 -- (27,450) 5,050
Comprehensive income (loss):
Net loss -- -- -- -- (50,297) (50,297)
Foreign currency translation adjustment -- -- -- (224) -- (224)
-------
Total comprehensive income (loss): -- -- -- -- -- (50,521)
------- ------- ------- ------- ------- -------
Balance, December 31, 1998 1,000 $ 10 32,490 (224) (77,747) (45,471)
Capital contribution -- -- 6,963 -- -- 6,963
Comprehensive income (loss):
Net loss -- -- -- -- (10,349) (10,349)
Foreign currency translation adjustment -- -- -- 509 -- 509
-------
Total comprehensive income (loss) (9,840)
------- ------- ------- ------- ------- -------
Balance, December 31, 1999 1,000 $ 10 39,453 285 (88,096) (48,348)
======= ======= ======= ======= ======= =======
See accompanying notes to consolidated financial statements.
4
8
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Consolidated Statements of Cash Flows
Years ended December 31, 1999 and 1998
(In thousands)
1999 1998
Cash flows used in operating activities:
Net loss $(10,349) $(50,297)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Goodwill impairment and depreciation and amortization 4,909 40,853
Disposal of property and equipment 83 589
Changes in operating assets and liabilities:
Trade accounts receivable, net 1,652 1,065
Prepaid expenses and other assets 523 1,613
Accounts payable and accrued expenses 88 (1,662)
Accrued Interest on Borrowing from Parent 3,193 3,225
Deferred revenue (105) 804
-------- --------
Net cash used in operating activities (6) (3,810)
-------- --------
Cash flows used in investing activities - purchases of equipment,
furniture and fixtures (485) (1,549)
-------- --------
Cash flows provided by financing activities:
Payments on revolving line of credit (256) (2,274)
Capital Contribution from Parent 6,963 --
Borrowing from Parent 781 7,829
Principal payments under capital lease obligations (44) --
-------- --------
Net cash provided by financing activities 7,444 5,555
-------- --------
Increase in cash and cash equivalents 6,953 196
Cash and cash equivalents, beginning of year 1,218 1,022
-------- --------
Cash and cash equivalents, end of year $ 8,171 $ 1,218
======== ========
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 10 $ 192
======== ========
See accompanying notes to consolidated financial statements.
5
9
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DESCRIPTION OF BUSINESS
Intactix International, Inc. and subsidiaries (Intactix or the
Company) was incorporated in Delaware and is a wholly-owned
subsidiary of Pricer AB, a Swedish corporation (the Parent). The
Company develops and markets productivity software, hardware and
consulting services to the space management industry. The Company
principally derives its revenues from software licensing fees,
consulting and software maintenance primarily in North America and
Europe.
On April 6, 2000, JDA Software Group, Inc. acquired substantially
all of the assets and assumed certain liabilities of the Company
for a cash purchase price of $20.5 million.
(b) BASIS OF PRESENTATION
The accompanying consolidated financial statements of Intactix
have been prepared using Pricer AB's historical cost basis in the
assets and liabilities of the Company. Such historical cost basis
reflects the acquisition of Intactix by Pricer AB in June 1997.
(c) REVENUE RECOGNITION
The Company's software products are licensed to customers through
the Company's direct sales force. Software license revenue is
recognized when the following criteria have been met: (a) a
written contract for the license of software has been executed,
(b) the Company has delivered the products to the customer, (c)
the fee is fixed or determinable and (d) collectibility is
probable.
Revenue from maintenance contracts is recognized ratably over the
term of the agreement and is generally billed on an annual basis.
Revenue from consulting, customer training and other services is
recognized as the service is performed.
(d) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial
statements of Intactix International, Inc. and its subsidiaries,
all of which are wholly-owned. All significant intercompany
balances and transactions have been eliminated in consolidation.
(e) CASH EQUIVALENTS
For purposes of the consolidated statement of cash flows, the
Company considers all highly liquid investments with remaining
maturity of three months or less at the date of purchase to be
cash equivalents.
6 (Continued)
10
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(f) EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures are stated at cost. Depreciation
is calculated on the straight-line method over the estimated
useful lives of the assets, which range from three to seven years.
(g) GOODWILL
Goodwill, which represents the excess of purchase price over fair
value of net assets acquired, is amortized on a straight-line
basis over the expected periods to be benefited, generally 20
years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured
based on projected discounted future operating cash flows using a
discount rate reflecting the Company's average cost of funds.
During 1998 and 1999, the Company recorded a $36.5 million and a
$2.9 million write down, respectively, to the carrying amount of
goodwill in order to reflect only that portion of the goodwill
balance deemed recoverable by expected future cash flows and
giving consideration to the transaction discussed in Note 1(a).
(h) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company reviews its long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted cash flows
expected to be generated by the asset. If such assets are
considered to be impaired, the impairment is measured by the
amount by which the carrying amount of the assets exceeds the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less cost to sell.
(i) RESEARCH AND DEVELOPMENT COSTS
Research and development costs incurred prior to the establishment
of technological feasibility are expensed as incurred. Certain
software development costs incurred after technological
feasibility are capitalizable subject to an evaluation of the
recoverability of any capitalized costs based on amounts expected
to be realized from sales of the related products. To date, the
Company has not capitalized any costs incurred subsequent to the
establishment of technological feasibility as such amounts have
been immaterial.
(j) CONCENTRATION OF CREDIT RISK
The Company licenses its space management software products
primarily to customers in the grocery/retail industry located
principally in North America and Europe. The Company performs
ongoing credit evaluations of its customers' financial condition
but does not require collateral or other security to support its
trade accounts receivable. Revenues from transactions with
customers in North America and Europe accounted for 96% and 98% of
total
7 (Continued)
11
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
revenues generated in 1999 and 1998, respectively. No single
customer accounted for more than 10% of consolidated revenues in
1999 or 1998.
(k) INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
(l) 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, 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.
(m) TRANSLATION OF FOREIGN CURRENCIES
All balance sheet accounts for foreign operations, where
functional currencies are not the US dollar, are translated at the
year end exchange rate and statement of operations items are
translated at the weighted average exchange rates for the year.
Translation gains and losses are not included in the determination
of net income, but are reflected as a component of accumulated
other comprehensive income.
(n) STOCK COMPENSATION
Eligible employees of the Company participate in stock
compensation plans of the Parent. The Parent has elected to follow
APB Opinion 25, Accounting for Stock Issued to Employees and
related interpretations in its primary consolidated financial
statements and, accordingly, no compensation expense has been
recorded in its consolidated financial statements, or the
consolidated financial statements of the Company, related to stock
option grants.
(2) OPERATIONS, LIQUIDITY AND GOING CONCERN
The Company has generated operating and net losses in 1999 and 1998,
reflecting in part, the Company's ongoing investment in product
development. Historically, the Company has relied on funding by its
Parent, Pricer AB, in order to sustain operations. The absence of
committed financing and the recurring losses from operations raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans are principally predicated upon the Company's
acquisition by a strategic partner. On February 24, 2000, the Company
entered into a definitive
8 (Continued)
12
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
agreement with JDA Software Group, Inc. (JDA), an international provider
of enterprise retail software solutions, pursuant to which JDA has agreed
to purchase substantially all of the assets of the Company for a cash
purchase price of $20.5 million and the assumption of certain
liabilities. This transaction closed on April 6, 2000.
(3) EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures consist of the following as of December
31, 1999 and 1998 (in thousands):
1999 1998
------- -------
Computer equipment and software $ 3,033 2,774
Furniture and fixtures 1,777 1,707
------- -------
4,810 4,481
Less accumulated depreciation (3,015) (2,011)
------- -------
Equipment, furniture and fixtures, net $ 1,795 2,470
======= =======
(4) SEGMENT REPORTING
The Company operates in one industry segment. The table below presents
the Company's operating information as of and for the years ended
December 31, 1999 and 1998 by geographic area (in thousands).
Revenue: 1999 1998
-------- --------
United States $ 11,517 12,878
United Kingdom 3,671 4,647
Rest of World 8,519 5,558
======== ========
Consolidated revenue $ 23,707 23,083
======== ========
Loss from operations:
United States $ (4,779) (44,971)
United Kingdom (1,570) (1,837)
Rest of World (92) (112)
======== ========
Consolidated loss from operations $ (6,441) (46,920)
======== ========
Assets:
United States $ 22,981 22,517
United Kingdom 3,588 3,519
Rest of World 1,328 1,303
======== ========
Consolidated assets $ 27,897 27,339
======== ========
9 (Continued)
13
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(5) INCOME TAXES
Income tax expense (benefit) differed from the amounts computed by
applying the U.S. Federal income tax rate of 35 percent to pretax loss as
follows:
1999 1998
---- ----
(In thousands)
Computed "expected" tax benefit $ (3,622) $ (17,604)
Goodwill amortization and impairment 1,317 12,775
Meals and entertainment 24 24
Other 128 8
Increase in valuation allowance 2,153 4,797
---------- ----------
$ -- $ --
========== ==========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below.
December 31, December 31,
1999 1998
---- ----
(In thousands)
Deferred tax assets:
Net operating loss carryforwards $ 9,832 $7,797
Allowance for doubtful accounts 249 183
------- -------
Total gross deferred tax assets 10,081 7,980
Deferred tax liabilities:
Section 481(a) adjustment -- (44)
Fixed assets (85) (93)
------- -------
Net deferred tax asset before
valuation allowance 9,996 7,843
Valuation allowance (9,996) (7,843)
------- -------
Net deferred tax asset $ -- --
======= =======
As of December 31, 1999, the Company has net operating loss carryforwards
of approximately $21 million, which begin to expire in 2012.
10 (Continued)
14
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
The Company believes that as a result of the Pricer AB acquisition in
1997, the Company has undergone an ownership change within the meaning of
Section 382 of the Internal Revenue Code (IRC). As a result, the
Company's ability to utilize its operating loss carryforwards incurred
prior to the ownership change are limited on an annual basis to an amount
equal to the value of the Company, as defined by the IRC, as of the date
of the change in ownership, multiplied by the applicable long-term tax
exempt rate.
(6) COMMITMENTS AND CONTINGENCIES
(a) LEASES
The Company leases its offices under operating leases, which
expire through 2003. Future minimum annual rent payments for
leases having initial or remaining noncancelable lease terms in
excess of one year are as follows (in thousands):
1999
----
2000 $1,148
2001 822
2002 117
2003 77
-------
$2,164
=======
Rent expense for the years ended December 31, 1999 and 1998
amounted to $ 1,185,399 and $ 1,311,708, respectively.
(b) CONTINGENCIES
The Company is, from time to time, subjected to certain claims,
assertions or litigation by outside parties as part of its ongoing
business operations. The results of any such contingencies are not
expected to have a material adverse effect on the financial
condition or operations of the Company.
(7) STOCK OPTION PLANS
Eligible employees of the Company have been granted stock options of the
Parent under its stock option plans. The Parent applies APB Opinion 25
and related interpretations in accounting for its plans. Accordingly, no
compensation cost has been recognized related to stock option grants
since the intrinsic value of stock options awarded is zero at the date of
grant.
In 1997, the Parent granted employees of the Company 930,500 and 49,450
options to acquire Pricer AB Class B shares with exercise prices of
$40.59 and $5.68 per share, respectively. The exercise prices per share
of such options were equal to the market values of Pricer AB shares on
the dates of grant. As of December 31, 1999, all such options were fully
vested. The options expire on various dates up to ten years from the date
of grant.
11 (Continued)
15
INTACTIX INTERNATIONAL, INC.
AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of Pricer AB)
Notes to Consolidated Financial Statements
December 31, 1999 and 1998
(8) RELATED PARTY TRANSACTIONS
In June 1997, the Company signed a loan agreement with the Parent to
enable intercompany transactions and borrowings between the Company and
the Parent. The borrowings are not for any specified term and have been
used to provide financing for the Company's operations. The Company
accrues interest on the borrowings based on LIBOR on the first banking
day of each month (5.8% and 5.1% as of December 31, 1999 and 1998). The
Company paid $6.6 million in accrued interest to the Parent in January
2000 under this arrangement.
On April 5, 2000, the Parent forgave $51 million of InterCompany
borrowings. The forgiveness of this InterCompany debt has been recorded
as a contribution of capital.
(9) REVOLVING LINE OF CREDIT
The Company established a line of credit with a financial institution in
1997. The line of credit was collateralized by eligible trade
receivables, as defined. The agreement required the Company to maintain
certain financial ratios and tangible net worth levels and restricts the
amount of capital expenditures. The line of credit bore interest at prime
plus .75% (7.75% at December 31, 1998). Borrowings of $241,103 were
outstanding at December 31, 1998. The Company was in default of certain
financial covenants during 1998. The Company reached an agreement with
the financial institution under which it agreed to accelerate payments on
amounts borrowed. During January of 1999 the outstanding balance was paid
in full.
12
16
INTACTIX INTERNATIONAL, INC.
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited interim financial statements of Intactix
International, Inc. ("Intactix") have been prepared from the internal accounting
records of Intactix and include certain reclassifications to conform with the
historical JDA Software Group, Inc. format. The unaudited consolidated balance
sheet as of March 31, 2000 was derived from Intactix's internal accounting
records as of the date of acquisition on April 6, 2000. The Company believes
there were no significant changes in any of the balance sheet accounts from
March 31, 2000 through April 6, 2000 other than the contribution of $51.0
million in capital to Intactix from its parent company, Pricer AB, on April 5,
2000 through the cancellation of $51.0 million of intercompany loans and the
conversion of such amounts to additional capital in Intactix. This transaction
has been reflected in the balance sheet as of March 31, 2000. In the opinion of
management, all adjustments and reclassifications considered necessary for a
fair and comparable presentation have been included and are of a normal
recurring nature.
The unaudited consolidated balance sheet of Intactix as of March 31,
2000, together with the unaudited consolidated statements of income (loss) and
cash flows for the three months ended March 31, 2000 and March 31, 1999 should
be read in conjunction with the separate historical financial statements and
notes thereto of Intactix as of December 31, 1999 and 1998, and the unaudited
consolidated pro forma financial information and notes thereto, both of which
are contained elsewhere herein.
17
INTACTIX INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
March 31,
2000
-----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,866
Accounts receivable, net 6,049
Prepaid expenses and other current assets 499
--------
Total current assets 8,414
PROPERTY AND EQUIPMENT, net 1,589
GOOD WILL AND OTHER INTANGIBLES 11,196
--------
Total assets $ 21,199
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 295
Accrued expenses and other liabilities 2,614
Deferred revenue 5,769
Due to Parent Company - Pricer AB 12,090
--------
Total current liabilities 20,768
STOCKHOLDERS' EQUITY:
Common stock 10
Additional paid in capital 90,453
Accumulated deficit (90,544)
Accumulated other comprehensive income 512
--------
Total stockholders' equity 431
--------
Total liabilities and stockholders' equity $ 21,199
========
18
INTACTIX INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
REVENUES:
Software licenses $ 2,486 $ 2,865
Consulting, maintenance and other services 3,751 3,719
------- -------
Total revenues 6,237 6,584
COST AND EXPENSES:
Software licenses 35 17
Consulting, maintenance and other services 2,225 2,112
Product development 718 959
Sales and marketing 2,917 2,195
General and administrative 813 1,467
Amortization of intangibles 871 822
------- -------
Total costs and expenses 7,579 7,572
LOSS FROM OPERATIONS (1,342) (988)
Other expense, net (1,139) (725)
------- -------
LOSS BEFORE INCOME TAXES (2,481) (1,713)
Income tax benefit (33) (19)
------- -------
NET LOSS ($2,448) ($1,694)
======= =======
BASIC AND DILUTED LOSS PER SHARE ($ 2.45) ($ 1.69)
======= =======
SHARES USED TO COMPUTE:
Basic earnings per share 1,000 1,000
======= =======
Diluted earnings per share 1,000 1,000
======= =======
19
INTACTIX INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
OPERATING ACTIVITIES:
Net loss ($ 2,448) ($ 1,694)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,179 1,090
Changes in operating assets and liabilities:
Trade accounts receivable, net (722) (404)
Prepaid expenses and other assets 21 (209)
Accounts payable and accrued expenses 432 233
Deferred revenue 855 264
-------- --------
Net cash used in operating activities (683) (720)
-------- --------
INVESTING ACTIVITIES:
Purchases of equipment, furniture and fixtures (85) (238)
FINANCING ACTIVITIES:
Net (payments) borrowings on intercompany loans with Pricer AB (5,764) 388
-------- --------
Net cash (used in) provided by financing activities (5,764) 388
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 227 366
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS (6,305) (204)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,171 1,218
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,866 $ 1,014
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 6,600 $ 2
======== ========
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
Conversion of intercompany loans with Pricer AB to additional paid in capital $ 51,000
========
20
ITEM 7(b). PRO FORMA FINANCIAL INFORMATION.
On April 6, 2000, JDA Software Group, Inc. ("JDA" or the Company)
acquired certain assets of Intactix International, Inc. ("Intactix") from Pricer
AB, a Swedish corporation, for $20.5 million in cash and assumed certain trade,
leasehold and other accrued liabilities pursuant to an Asset Purchase Agreement
dated February 24, 2000 (the "Acquisition"). Intactix is a leading provider of
space management solutions for the retail industry and consumer product goods
manufacturers. The Intactix products provide planogramming tools that allow
users to build, analyze and distribute graphical diagrams for space management,
store layout planning and shelf assortment. The purchase price was determined
through an arms-length negotiation between the parties, and was allocated to the
underlying assets, namely the intellectual property and other intangibles, based
on the Company's estimate of fair values and remaining economic lives supported
by the results of an independent third party appraisal. The excess of the
purchase price over the fair value of the assets is being amortized over a
period of ten years.
The Acquisition has been accounted for in the pro forma consolidated
financial information using the purchase method of accounting. The unaudited
consolidated pro forma balance sheet combines the historical balance sheet of
JDA as of March 31, 2000 with the opening balance sheet of Intactix recorded at
the time of acquisition. The unaudited consolidated pro forma statements of
income (loss) combine the historical statements of income (loss) of JDA and
Intactix for the year ended December 31, 1999 and the three months ended March
31, 2000, giving effect to the Acquisition as if it had occurred at the
beginning of each period.
The detailed assumptions used to prepare the pro forma consolidated
financial information are contained in the notes to the unaudited consolidated
pro forma financial information. Pro forma adjustments for the acquisition of
Intactix are based upon preliminary estimates, available information and certain
assumptions that the management of the Company deems appropriate. Final
adjustments may differ from the pro forma adjustments presented herein. The
unaudited consolidated pro forma financial information does not purport to
represent the results of operations or the financial position of the Company
that actually would have resulted had the Acquisition occurred as of the dates
indicated, nor should it be taken as indicative of the future results of the
operations or future financial position of the Company.
The unaudited consolidated pro forma financial information should be
read in conjunction with the separate historical financial statements and notes
thereto reported by the Company in its annual report on Form 10-K for the year
ended December 31, 1999 and in its quarterly report on Form 10-Q for the quarter
ended March 31, 2000, and the financial statements of Intactix International,
Inc. and Subsidiaries for the years ended December 31, 1999 and 1998 (which are
contained elsewhere herein).
21
JDA SOFTWARE GROUP, INC.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 2000
(IN THOUSANDS)
Historical
-----------------------
Pro Forma
JDA Intactix Adjustments Pro Forma
--- -------- ----------- ---------
ASSETS (1)
CURRENT ASSETS:
Cash and cash equivalents $ 72,377 $ 1,866 ($ 20,543) $ 53,700
Marketable securities 20,579 20,579
Accounts receivable, net 36,839 6,049 (695) 42,193
Income tax receivable 1,516 1,516
Deferred tax asset 2,329 2,329
Prepaid expenses and other current assets 5,681 499 827 7,007
--------- --------- --------- ---------
Total current assets 139,321 8,414 (20,411) 127,324
PROPERTY AND EQUIPMENT, net 23,179 1,589 (1,055) 23,713
GOODWILL AND OTHER INTANGIBLES 30,541 11,196 14,726 56,463
DEFERRED TAX ASSET 5,933 5,933
MARKETABLE SECURITIES 2,376 2,376
--------- --------- --------- ---------
Total assets $ 201,350 $ 21,199 ($ 6,740) $ 215,809
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,231 $ 295 ($ 64) $ 2,462
Accrued expenses and other liabilities 11,614 2,614 5,821 20,049
Deferred revenue 8,115 5,769 24 13,908
Due to Parent Company 12,090 (12,090)
--------- --------- --------- ---------
Total current liabilities 21,960 20,768 (6,309) 36,419
STOCKHOLDERS' EQUITY:
Preferred stock 0 0 0
Common stock 242 10 (10) 242
Additional paid in capital 178,596 90,453 (90,453) 178,596
Retained earnings (deficit) 2,125 (90,544) 90,544 2,125
Accumulated other comprehensive income (loss) (1,573) 512 (512) (1,573)
--------- --------- --------- ---------
Total stockholders' equity 179,390 431 (431) 179,390
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 201,350 $ 21,199 ($ 6,740) $ 215,809
========= ========= ========= =========
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
22
JDA SOFTWARE GROUP, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
-------------------------
Pro Forma
JDA Intactix Adjustments Pro Forma
--- -------- ----------- ---------
REVENUES:
Software licenses $ 36,798 $ 10,209 $ 47,007
Consulting, maintenance and other services 105,865 13,498 119,363
--------- --------- --------- ---------
Total revenues 142,663 23,707 0 166,370
COST AND EXPENSES:
Software licenses 1,955 138 (1) 2,093
Consulting, maintenance and other services 70,607 1,606 6,309 (1), (3) 78,522
Product development 25,000 3,556 (1), (3) 28,556
Sales and marketing 24,639 3,475 5,600 (1), (3) 33,714
General and administrative 17,195 20,158 (15,778)(1), (3) 21,575
Impairment of goodwill 0 2,930 (2,930)(2) 0
Amortization of intangibles 4,409 1,979 (1,145)(1) 7,571
2,328 (2)
Restructuring and asset disposition charge 2,111 2,111
--------- --------- --------- ---------
Total costs and expenses 145,916 30,148 (1,922) 174,142
INCOME (LOSS) FROM OPERATIONS (3,253) (6,441) 1,922 (7,772)
Other income (expense), net 3,814 (3,908) 1,679 (1),(4) 1,585
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 561 (10,349) 3,601 (6,187)
Income tax provision (benefit) 224 0 (2,699)(5) (2,475)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 337 ($ 10,349) $ 6,300 ($ 3,712)
========= ========= ========= =========
BASIC AND DILUTED EARNINGS(LOSS) PER SHARE $ 0.01 ($0.16)
========= =========
SHARES USED TO COMPUTE:
Basic earnings per share 23,758 23,758
========= =========
Diluted earnings per share 23,758 23,758
========= =========
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
23
JDA SOFTWARE GROUP, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
----------------------
Pro Forma
JDA Intactix Adjustments Pro Forma
--- -------- ----------- ---------
REVENUES:
Software licenses $ 15,502 $ 2,486 $ 17,988
Consulting, maintenance and other services 23,698 3,751 27,449
-------- -------- -------- --------
Total revenues 39,200 6,237 0 45,437
COST AND EXPENSES:
Software licenses 891 35 926
Consulting, maintenance and other services 17,319 2,225 (74)(3) 19,470
Product development 6,155 718 (39)(3) 6,834
Sales and marketing 6,462 2,917 (65)(3) 9,314
General and administrative 4,009 813 (45)(3) 4,777
Amortization of intangibles 1,092 871 (81)(2) 1,882
Restructuring and asset disposition charge 828 828
-------- -------- -------- --------
Total costs and expenses 36,756 7,579 (304) 44,031
INCOME (LOSS) FROM OPERATIONS 2,444 (1,342) 304 1,406
Other income (expense), net 1,192 (1,139) 757(4) 810
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 3,636 (2,481) 1,061 2,216
Income tax provision (benefit) 1,418 (33) (521)(5) 864
-------- -------- -------- --------
NET INCOME (LOSS) $ 2,218 ($ 2,448) $ 1,582 $ 1,352
======== ======== ======== ========
BASIC EARNINGS(LOSS) PER SHARE $ 0.09 $ 0.06
======== ========
DILUTED EARNING(LOSS) PER SHARE $ 0.09 $ 0.05
SHARES USED TO COMPUTE:
Basic earnings per share 24,079 24,079
======== ========
Diluted earnings per share 25,315 25,315
======== ========
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
24
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS)
The following explanations describe the assumptions used in determining the pro
forma adjustments necessary to present a pro forma consolidated balance sheet as
of March 31, 2000 and the pro forma consolidated statements of income (loss) of
the Company for the year ended December 31, 1999 and the three months ended
March 31, 2000.
PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma consolidated balance sheet as of March 31, 2000 includes the
unaudited balance sheet of Intactix as of the date of the date of acquisition on
April 6, 2000. The Company believes there were no significant changes in any of
the balance sheet accounts from March 31, 2000 through April 6, 2000 other than
the contribution of $51.0 million in capital to Intactix from its parent
company, Pricer AB, on April 5, 2000 through the cancellation of $51.0 million
of intercompany loans and the conversion of such amounts to additional capital
in Intactix. This transaction has been reflected in the balance sheet as of
March 31, 2000.
1. Entry records the opening balance sheet of Intactix under the purchase method
of accounting as follows:
Working Capital $ 724
Fixed Assets 534
In-process Research and Development 200
Developed Software and Other Intangibles 24,200
Goodwill 1,522
Acquisition Reserves (6,680)
--------
Net cash used to purchase Intactix $(20,500)
--------
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
The pro forma consolidated statements of income for the year ended December 31,
1999 and three months ended March 31, 2000 do not include the effect of a
$200,000 one-time charge for purchased in-process technology. In-process
technology includes the value of products acquired from Intactix that were in
the development stage and for which technological feasibility had not been
established. The Company does not believe these products have any alternative
future use.
1. Entry records a reclassification of the costs and expenses reported in
the Intactix financial statements to conform with the JDA Software
Group, Inc. format.
2. Entry records the decrease in amortization expense arising from the
purchase accounting adjustments as follows:
Amortization Year Ended Three Months Ended
Period 12-31-99 3-31-00
------ -------- -------
Developed Software 7 Years $ 1,600 $ 400
Customer List 13 Years 877 219
Assembled Workforce 3 Years 533 133
Goodwill 10 Years 152 38
------- -------
$ 3,162 $ 790
Less amounts recorded in the historical
financial statements of Intactix for impairment
of goodwill and amortization of intangibles (3,764) (871)
------- -------
Purchase accounting adjustment $ (602) $ (81)
------- -------
25
3. Entry records the decrease in depreciation expense resulting from the
purchase accounting adjustments as follows:
Remaining Year Ended Three Months Ended
Useful Life 12-31-99 3-31-00 .
Depreciation on Property &
Equipment acquired 1.5 Years $ 342 $ 85
Less amounts recorded in the
historical financial statements
of Intactix for depreciation $(1,145) $ (308)
------- -------
Purchase accounting adjustment $ (803) $ (223)
------- -------
4. Entry reverses the intercompany interest charges shown in the Intactix
financial statements and records the opportunity costs related to
interest that would be forfeited on invested cash balances used to
effect the Acquisition as of January 1, 1999 and January 1, 2000, as
appropriate.
5. Entry records the income tax effect on the net loss of Intactix and the
purchase accounting adjustments at a blended rate of 40% for the year
ended December 31, 1999 and 39% for the three months ended March 31,
2000.