Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
þ |
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2002
¨ |
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 333-49389
Cooperative Computing, Inc.
(Exact name of
Registrant as specified in its charter)
| Delaware |
|
94-2160013 |
| (State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
| |
| 804 Las Cimas Parkway, Suite 200 |
|
|
| Austin, Texas |
|
78746 |
| (Address of principal executive offices) |
|
(Zip Code) |
(512) 328-2300
(Registrant’s telephone number, including area code)
Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock,
as of the latest practicable date:
| Class
|
|
Outstanding at August 14, 2002
|
| Common Stock |
|
1,000 shares |
COOPERATIVE COMPUTING, INC.
| |
|
PAGE
|
| |
| |
|
3 |
| |
| |
|
4 |
| |
| |
|
4 |
| |
| COOPERATIVE COMPUTING HOLDING COMPANY, INC. |
|
|
| |
| |
|
4 |
| |
| |
|
5 |
| |
| |
|
6 |
| |
| |
|
7 |
| |
| |
|
10 |
| |
| |
|
14 |
| |
| PART II—OTHER INFORMATION |
|
|
| |
| |
|
15 |
| |
| |
|
15 |
| |
| |
|
15 |
| |
| |
|
15 |
| |
| |
|
15 |
| |
| |
|
15 |
| |
| |
|
16 |
2
INFORMATION SET FORTH IN THIS QUARTERLY REPORT ON FORM
10-Q REGARDING EXPECTED OR POSSIBLE FUTURE EVENTS, INCLUDING STATEMENTS OF THE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE GROWTH, OPERATIONS, PRODUCTS AND SERVICES AND STATEMENTS RELATING TO FUTURE ECONOMIC PERFORMANCE, IS FORWARD-LOOKING AND
SUBJECT TO RISKS AND UNCERTAINTIES. FOR THOSE STATEMENTS, THE COMPANY CLAIMS THE PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS PROVIDED FOR BY SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT OF THE COMPANY, WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY UNCERTAIN. THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES AND STATEMENTS. NO ASSURANCE
CAN BE GIVEN THAT ANY OF SUCH ESTIMATES OR STATEMENTS WILL BE REALIZED, AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE THE
FOLLOWING: (1) INCREASED COMPETITION; (2) RAPID TECHNOLOGICAL CHANGE; (3) INCREASED COSTS; (4) RISKS ASSOCIATED WITH THE INTRODUCTION OF NEW PRODUCTS AND PRODUCT UPGRADES AND DEPENDENCE ON PROPRIETARY TECHNOLOGY; (5) THE LOSS OR RETIREMENT OF KEY
MEMBERS OF MANAGEMENT; (6) THE INABILITY OF THE COMPANY TO SUCCESSFULLY INTEGRATE BUSINESSES ACQUIRED IN THE FUTURE AND TO REALIZE ANTICIPATED REVENUE AND COST SAVINGS OPPORTUNITIES; (7) INCREASES IN THE COMPANY’S COST OF BORROWINGS OR
UNAVAILABILITY OF ADDITIONAL DEBT OR EQUITY CAPITAL; AND (8) CHANGES IN GENERAL ECONOMIC CONDITIONS IN THE MARKETS IN WHICH THE COMPANY MAY, FROM TIME TO TIME, COMPETE. MANY OF SUCH FACTORS WILL BE BEYOND THE CONTROL OF THE COMPANY AND ITS
MANAGEMENT. IN ADDITION, OTHER FACTORS THAT COULD AFFECT THE FUTURE RESULTS OF THE COMPANY AND COULD CAUSE THOSE RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS ARE DISCUSSED AT GREATER LENGTH UNDER
“MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” AND APPEAR ELSEWHERE IN THIS QUARTERLY REPORT. THESE RISKS, UNCERTAINTIES AND OTHER FACTORS SHOULD NOT BE CONSTRUED AS EXHAUSTIVE, AND THE COMPANY
DOES NOT UNDERTAKE, AND SPECIFICALLY DISCLAIMS ANY OBLIGATION TO UPDATE, ANY FORWARD-LOOKING STATEMENTS TO REFLECT OCCURRENCES OR UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS.
3
COOPERATIVE COMPUTING HOLDING COMPANY,
INC.
(in thousands, except share data)
| |
|
September 30, 2001
|
|
|
June 30, 2002
|
|
| ASSETS: |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
3,897 |
|
|
$ |
946 |
|
| Trade accounts receivable, net of allowance for doubtful accounts of $4,353 and $7,096 at September 30, 2001 and June
30, 2002, respectively |
|
|
35,679 |
|
|
|
29,627 |
|
| Inventories, net |
|
|
2,391 |
|
|
|
2,765 |
|
| Investment in leases, net |
|
|
3,735 |
|
|
|
3,139 |
|
| Deferred income taxes |
|
|
5,991 |
|
|
|
3,491 |
|
| Prepaid expenses and other current assets |
|
|
5,126 |
|
|
|
4,609 |
|
| |
|
|
|
|
|
|
|
|
| Total current assets |
|
|
56,819 |
|
|
|
44,577 |
|
| |
| Service parts, net |
|
|
2,868 |
|
|
|
1,749 |
|
| Property and equipment, net |
|
|
6,504 |
|
|
|
6,065 |
|
| Long-term investment in leases |
|
|
8,621 |
|
|
|
4,621 |
|
| Capitalized computer software costs, net |
|
|
12,927 |
|
|
|
11,294 |
|
| Databases, net |
|
|
12,350 |
|
|
|
11,981 |
|
| Goodwill |
|
|
100,572 |
|
|
|
87,159 |
|
| Other assets |
|
|
22,126 |
|
|
|
17,874 |
|
| |
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
222,787 |
|
|
$ |
185,320 |
|
| |
|
|
|
|
|
|
|
|
| |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT: |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
9,458 |
|
|
$ |
8,552 |
|
| Payroll related accruals |
|
|
12,923 |
|
|
|
13,801 |
|
| Deferred revenue |
|
|
12,153 |
|
|
|
12,525 |
|
| Current portion of long-term debt |
|
|
10,737 |
|
|
|
14,776 |
|
| Accrued expenses and other current liabilities |
|
|
8,791 |
|
|
|
13,640 |
|
| |
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
54,062 |
|
|
|
63,294 |
|
| |
| Long-term debt |
|
|
166,020 |
|
|
|
129,280 |
|
| Deferred income taxes and other liabilities |
|
|
27,416 |
|
|
|
10,403 |
|
| |
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
247,498 |
|
|
|
202,977 |
|
| Redeemable Class A Common Stock, including $26,104 and $38,560 in accumulated accretion at September 30, 2001 and June
30, 2002, respectively |
|
|
51,104 |
|
|
|
63,560 |
|
| |
| Stockholders’ deficit: |
|
|
|
|
|
|
|
|
| Common Stock: |
|
|
|
|
|
|
|
|
| Par value $.000125, authorized 50,000,000 shares, issued and outstanding 35,220,000 at September 30, 2001 and June 30,
2002 |
|
|
4 |
|
|
|
4 |
|
| Additional paid-in capital |
|
|
87,934 |
|
|
|
87,934 |
|
| Retained deficit |
|
|
(162,490 |
) |
|
|
(168,572 |
) |
| Other accumulated comprehensive income: |
|
|
|
|
|
|
|
|
| Cumulative translation adjustment |
|
|
(1,263 |
) |
|
|
(583 |
) |
| |
|
|
|
|
|
|
|
|
| Total stockholders’ deficit |
|
|
(75,815 |
) |
|
|
(81,217 |
) |
| |
|
|
|
|
|
|
|
|
| Total liabilities and stockholders’ deficit |
|
$ |
222,787 |
|
|
$ |
185,320 |
|
| |
|
|
|
|
|
|
|
|
See accompanying notes
4
(UNAUDITED)
(in thousands)
| |
|
Three Months Ended June 30,
|
|
|
Nine Months Ended June 30,
|
|
| |
|
2001
|
|
|
2002
|
|
|
2001
|
|
|
2002
|
|
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Systems |
|
$ |
13,233 |
|
|
$ |
14,392 |
|
|
$ |
40,531 |
|
|
$ |
45,860 |
|
| Services and finance |
|
|
39,419 |
|
|
|
40,000 |
|
|
|
119,325 |
|
|
|
120,110 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
52,652 |
|
|
|
54,392 |
|
|
|
159,856 |
|
|
|
165,970 |
|
| Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Systems |
|
|
7,628 |
|
|
|
8,783 |
|
|
|
24,543 |
|
|
|
27,090 |
|
| Services and finance |
|
|
18,857 |
|
|
|
19,639 |
|
|
|
59,594 |
|
|
|
58,636 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total cost of revenues |
|
|
26,485 |
|
|
|
28,422 |
|
|
|
84,137 |
|
|
|
85,726 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
26,167 |
|
|
|
25,970 |
|
|
|
75,719 |
|
|
|
80,244 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales and marketing |
|
|
8,965 |
|
|
|
8,565 |
|
|
|
29,809 |
|
|
|
26,091 |
|
| Product development |
|
|
5,228 |
|
|
|
4,397 |
|
|
|
14,124 |
|
|
|
12,648 |
|
| General and administrative |
|
|
9,526 |
|
|
|
5,835 |
|
|
|
29,062 |
|
|
|
20,073 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
23,719 |
|
|
|
18,797 |
|
|
|
72,995 |
|
|
|
58,812 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
2,448 |
|
|
|
7,173 |
|
|
|
2,724 |
|
|
|
21,432 |
|
| Interest expense |
|
|
(4,296 |
) |
|
|
(3,310 |
) |
|
|
(13,842 |
) |
|
|
(10,874 |
) |
| Equity loss in affiliate |
|
|
(411 |
) |
|
|
(200 |
) |
|
|
(411 |
) |
|
|
(600 |
) |
| Foreign exchange gain (loss) |
|
|
11 |
|
|
|
(24 |
) |
|
|
43 |
|
|
|
(122 |
) |
| Gain on Disposal of Assets |
|
|
— |
|
|
|
211 |
|
|
|
— |
|
|
|
211 |
|
| Other income, net |
|
|
329 |
|
|
|
275 |
|
|
|
400 |
|
|
|
666 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
|
(1,919 |
) |
|
|
4,125 |
|
|
|
(11,086 |
) |
|
|
10,713 |
|
| Income tax (benefit) expense |
|
|
(238 |
) |
|
|
1,671 |
|
|
|
(1,374 |
) |
|
|
4,339 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
|
(1,681 |
) |
|
|
2,454 |
|
|
|
(9,712 |
) |
|
|
6,374 |
|
| Accretion of redeemable stock |
|
|
(3,333 |
) |
|
|
(4,499 |
) |
|
|
(9,227 |
) |
|
|
(12,456 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss attributable to common stock |
|
$ |
(5,014 |
) |
|
$ |
(2,045 |
) |
|
$ |
(18,939 |
) |
|
$ |
(6,082 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(1,681 |
) |
|
$ |
2,454 |
|
|
$ |
(9,712 |
) |
|
$ |
6,374 |
|
| Foreign currency translation adjustment |
|
|
(419 |
) |
|
|
486 |
|
|
|
(730 |
) |
|
|
680 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) |
|
$ |
(2,100 |
) |
|
$ |
2,940 |
|
|
$ |
(10,442 |
) |
|
$ |
7,054 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes
5
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
(UNAUDITED)
(in thousands)
| |
|
Nine Months Ended June
30,
|
|
| |
|
2001
|
|
|
2002
|
|
| OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(9,712 |
) |
|
$ |
6,374 |
|
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
6,101 |
|
|
|
5,301 |
|
| Amortization |
|
|
16,841 |
|
|
|
9,343 |
|
| Deferred income taxes |
|
|
4 |
|
|
|
2,500 |
|
| Equity loss from affiliate |
|
|
411 |
|
|
|
600 |
|
| Equity gain from partnerships |
|
|
(310 |
) |
|
|
(130 |
) |
| Lease loss provision |
|
|
4,324 |
|
|
|
2,635 |
|
| Provision for doubtful accounts |
|
|
5,482 |
|
|
|
8,016 |
|
| Gain on sale of assets |
|
|
— |
|
|
|
(211 |
) |
| Other, net |
|
|
(437 |
) |
|
|
649 |
|
| Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
| Trade accounts receivable |
|
|
(7,922 |
) |
|
|
(1,964 |
) |
| Inventories |
|
|
528 |
|
|
|
(374 |
) |
| Investment in leases |
|
|
(2,063 |
) |
|
|
1,961 |
|
| Prepaid expenses and other assets |
|
|
1,303 |
|
|
|
1,973 |
|
| Accounts payable |
|
|
1,054 |
|
|
|
(906 |
) |
| Deferred revenue |
|
|
417 |
|
|
|
372 |
|
| Accrued expenses and other current liabilities |
|
|
(1,602 |
) |
|
|
2,064 |
|
| |
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
|
14,419 |
|
|
|
38,203 |
|
| |
| INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Purchase of property and equipment |
|
|
(2,593 |
) |
|
|
(2,997 |
) |
| Property and equipment sale proceeds |
|
|
— |
|
|
|
874 |
|
| Capitalized computer software costs and databases |
|
|
(6,572 |
) |
|
|
(5,279 |
) |
| Purchase of service parts |
|
|
(1,881 |
) |
|
|
(1,151 |
) |
| Equity distributions from partnerships |
|
|
292 |
|
|
|
100 |
|
| |
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
|
(10,754 |
) |
|
|
(8,453 |
) |
| |
| FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Proceeds from debt facility |
|
|
31,275 |
|
|
|
1,500 |
|
| Payment on long-term debt facilities |
|
|
(33,897 |
) |
|
|
(34,201 |
) |
| |
|
|
|
|
|
|
|
|
| Net cash used in financing activities |
|
|
(2,622 |
) |
|
|
(32,701 |
) |
| |
|
|
|
|
|
|
|
|
| Net increase (decrease) in cash and cash equivalents |
|
|
1,043 |
|
|
|
(2,951 |
) |
| Cash and cash equivalents, beginning of period |
|
|
679 |
|
|
|
3,897 |
|
| |
|
|
|
|
|
|
|
|
| Cash and cash equivalents, end of period |
|
$ |
1,722 |
|
|
$ |
946 |
|
| |
|
|
|
|
|
|
|
|
| Supplemental disclosures of cash flow information |
|
|
|
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
|
|
|
| Interest |
|
$ |
9,751 |
|
|
$ |
7,750 |
|
| |
|
|
|
|
|
|
|
|
| Income taxes |
|
$ |
389 |
|
|
$ |
1,796 |
|
| |
|
|
|
|
|
|
|
|
| Non cash financing activity: |
|
|
|
|
|
|
|
|
| Accretion of Class A Common Stock |
|
$ |
9,227 |
|
|
$ |
12,456 |
|
| |
|
|
|
|
|
|
|
|
See accompanying notes
6
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
June 30, 2002
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Cooperative Computing Holding Company, Inc. (“Holding”, or the
“Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended June
30, 2002 may not be indicative of the results for the full fiscal year ending September 30, 2002. Holding has no assets or liabilities other than (1) its investment in its wholly owned subsidiary, Cooperative Computing, Inc. (“CCI”) and
(2) its Redeemable Class A Common Stock, the net proceeds of which were contributed in full to a subsidiary; accordingly, these consolidated financial statements represent the operations of CCI and its subsidiaries.
Certain amounts in the nine months ended June 30, 2001 have been reclassified to conform to the presentation for the nine months ended
June 30, 2002.
2. LEASE RECEIVABLES
Activity in the following servicing and recourse obligation liability accounts (recorded in other liabilities in the Company’s balance sheet) was as follows (in
thousands):
| |
|
LEASE SERVICING OBLIGATION
|
|
|
RECOURSE OBLIGATION
|
|
| Balance at September 30, 2001 |
|
$ |
833 |
|
|
$ |
5,950 |
|
| Newly-created liabilities |
|
|
4 |
|
|
|
2,635 |
|
| Charges and lease write-offs |
|
|
(312 |
) |
|
|
(2,682 |
) |
| |
|
|
|
|
|
|
|
|
| Balance at June 30, 2002 |
|
$ |
525 |
|
|
$ |
5,903 |
|
| |
|
|
|
|
|
|
|
|
3. INCOME TAXES
The Company recorded income tax expense for the nine months ended June 30, 2002 at an effective rate of 40.5%, which is based on the
Company’s anticipated results for the full fiscal year. The Company’s income tax expense differs from the amount computed by applying the statutory rate to income before income taxes due to the impact of permanent differences, such as
meals and entertainment expense, and amortization of certain acquired intangibles.
4. COMMON STOCK OPTION PLAN
In July 2002, the Company approved the grant of 20,800 options at an exercise price equal to the estimated
fair market value of $1.00 per share.
7
5. GOODWILL AND OTHER INTANGIBLES
The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, effective October 1, 2001 (“SFAS 142”). SFAS 142
discontinues the amortization of goodwill and requires future periodic testing of goodwill for impairment. In addition, SFAS 142 requires reassessment of the useful lives of previously recognized intangible assets.
With the adoption of the Statement, the Company ceased amortization of goodwill as of October 1, 2001. The following table presents the
consolidated results of the Company on a comparable basis (in thousands):
| |
|
Three Months Ended June 30,
|
|
Nine Months Ended June 30,
|
| |
|
2001
|
|
|
2002
|
|
2001
|
|
|
2002
|
| Reported net income (loss) |
|
$ |
(1,681 |
) |
|
$ |
2,454 |
|
$ |
(9,712 |
) |
|
$ |
6,374 |
| Goodwill amortization, net of tax |
|
|
2,487 |
|
|
|
— |
|
|
8,102 |
|
|
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income (loss) |
|
$ |
806 |
|
|
$ |
2,454 |
|
$ |
(1,610 |
) |
|
$ |
6,374 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to June 30, 2002, the Company completed a preliminary
goodwill impairment test as required by SFAS 142. This test involved the use of estimates related to the fair market value of the business with which the goodwill is associated. Based on this impairment test, there was no impairment of goodwill as
of October 1, 2001.
In addition, the intangible asset established for trademarks and tradenames is subject to
amortization in accordance with SFAS 142. The gross carrying amount related to trademarks and tradenames was $14,991,000 while the associated accumulated amortization balance at September 30, 2001 and June 30, 2002 was $6,834,000 and $7,505,000,
respectively. The aggregate amortization expense was $224,000 and $671,000 for the three and nine months ended June 30, 2001 and 2002, respectively. Estimated amortization expense for the next five fiscal years is approximately $894,000 in 2002 and
2003, $856,000 in 2004, and $787,000 in 2005 and 2006.
6. RELATED PARTY TRANSACTIONS
In fiscal 2001, the Company provided certain services to Internet Autoparts, Inc. (“IAP”), an entity in which the
Company has an approximate one-third interest. In May 2002, the Company refunded approximately $507,000 to IAP upon the conclusion of the service arrangement.
7. RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001, the
FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS 143”). The statement is effective for financial statements for fiscal years beginning after June 15, 2002. The new statement establishes accounting
standards for recognition of a liability for an asset retirement obligation and the associated asset retirement cost. The Company does not anticipate any material impact from this statement on its financial position or results of operations.
In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal ofLong-Lived
Assets (“SFAS 144”). The statement broadens the presentation of discontinued operations to include more disposal transactions, and establishes a single accounting model for long-lived assets to be disposed of by sale. SFAS 144 is
effective for financial statements for fiscal years beginning after December 15, 2001. Management does not expect any material impact from adoption of this statement on the Company’s financial position or results of operations.
In June 2002, the FASB issued SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No.
13, and Technical Corrections (“SFAS 145”). The new statement requires sale-leaseback accounting for those lease modifications that have economic effects similar to sale-leaseback transactions. It also provides new guidance for debt
extinguishment transactions that are part of an entity’s recurring operations. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Management does not expect any material impact from adoption of this statement on the
Company’s financial position or results of operations.
8
8. SEGMENT REPORTING
The Company’s business operations are organized into two divisions, the automotive division and the hardlines and lumber division, as shown below. Additionally, a
breakdown by geographic area of total revenues and total assets is disclosed. The Americas geographic area covers the United States and Canada. The Europe geographic area covers the United Kingdom, Ireland and France.
| |
|
(in thousands)
|
|
| |
|
Three Months Ended June
30,
|
|
|
Nine Months Ended June
30,
|
|
| |
|
2001
|
|
|
2002
|
|
|
2001
|
|
|
2002
|
|
| Systems revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
$ |
5,115 |
|
|
$ |
4,108 |
|
|
$ |
16,000 |
|
|
$ |
16,422 |
|
| Hardlines and lumber |
|
|
8,118 |
|
|
|
10,284 |
|
|
|
24,531 |
|
|
|
29,438 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total systems revenues: |
|
|
13,233 |
|
|
|
14,392 |
|
|
|
40,531 |
|
|
|
45,860 |
|
| |
| Services and finance revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
|
24,703 |
|
|
|
24,669 |
|
|
|
75,052 |
|
|
|
74,458 |
|
| Hardlines and lumber |
|
|
14,716 |
|
|
|
15,331 |
|
|
|
44,273 |
|
|
|
45,652 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total services and finance revenues: |
|
|
39,419 |
|
|
|
40,000 |
|
|
|
119,325 |
|
|
|
120,110 |
|
| |
| Systems costs of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
|
3,556 |
|
|
|
3,187 |
|
|
|
10,535 |
|
|
|
11,583 |
|
| Hardlines and lumber |
|
|
4,072 |
|
|
|
5,596 |
|
|
|
14,008 |
|
|
|
15,507 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total systems costs of revenues: |
|
|
7,628 |
|
|
|
8,783 |
|
|
|
24,543 |
|
|
|
27,090 |
|
| |
| Services and finance cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
|
11,484 |
|
|
|
11,146 |
|
|
|
36,948 |
|
|
|
34,044 |
|
| Hardlines and lumber |
|
|
7,373 |
|
|
|
8,493 |
|
|
|
22,646 |
|
|
|
24,592 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total services and finance cost of revenues: |
|
|
18,857 |
|
|
|
19,639 |
|
|
|
59,594 |
|
|
|
58,636 |
|
| |
| Sales and marketing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
|
4,789 |
|
|
|
4,025 |
|
|
|
16,903 |
|
|
|
12,131 |
|
| Hardlines and lumber |
|
|
4,176 |
|
|
|
4,540 |
|
|
|
12,906 |
|
|
|
13,960 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total sales and marketing: |
|
|
8,965 |
|
|
|
8,565 |
|
|
|
29,809 |
|
|
|
26,091 |
|
| |
| Product development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Automotive |
|
|
4,275 |
|
|
|
3,501 |
|
|
|
11,196 |
|
|
|
9,903 |
|
| Hardlines and lumber |
|
|
953 |
|
|
|
896 |
|
|
|
2,928 |
|
|
|
2,745 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total product development: |
|
|
5,228 |
|
|
|
4,397 |
|
|
|
14,124 |
|
|
|
12,648 |
|
| |
| General and administrative |
|
|
9,526 |
|
|
|
5,835 |
|
|
|
29,062 |
|
|
|
20,073 |
|
| Interest expense |
|
|
(4,296 |
) |
|
|
(3,310 |
) |
|
|
(13,842 |
) |
|
|
(10,874 |
) |
| Other income (expense), net |
|
|
(71 |
) |
|
|
262 |
|
|
|
32 |
|
|
|
155 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) before income taxes |
|
$ |
(1,919 |
) |
|
$ |
4,125 |
|
|
$ |
(11,086 |
) |
|
$ |
10,713 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Americas |
|
$ |
51,343 |
|
|
$ |
52,957 |
|
|
$ |
155,868 |
|
|
$ |
161,941 |
|
| Europe |
|
|
1,309 |
|
|
|
1,435 |
|
|
|
3,988 |
|
|
|
4,029 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
$ |
52,652 |
|
|
$ |
54,392 |
|
|
$ |
159,856 |
|
|
$ |
165,970 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Americas |
|
$ |
226,754 |
|
|
$ |
180,481 |
|
|
$ |
226,754 |
|
|
$ |
180,481 |
|
| Europe |
|
|
5,239 |
|
|
|
4,839 |
|
|
|
5,239 |
|
|
|
4,839 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
231,993 |
|
|
$ |
185,320 |
|
|
$ |
231,993 |
|
|
$ |
185,320 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the unaudited historical consolidated financial statements and notes
thereto, which are included elsewhere herein.
General
Cooperative Computing, Inc., a Delaware corporation (hereinafter referred to as the “Company” or “CCI”), designs and provides management information
systems and services for the automotive parts aftermarket and the hardlines and lumber industry. The automotive parts aftermarket consists of the production, sale and installation of both new and remanufactured parts used in the maintenance and
repair of automobiles and light trucks. The hardlines and lumber industry consists of the sale of products and services for residential and commercial building construction, maintenance and repair, lawn and garden, and agribusiness.
Historical Results of Operations
Three Months Ended June 30, 2002 Compared to Three Months ended June 30, 2001
Revenues for the three months ended June 30, 2002 were $54.4 million, an increase of $1.7 million, or 3%, from the $52.7 million recorded in the prior year’s period. Automotive division revenues for the third quarter were
$28.8 million, a decrease of $1.1 million, or 4%, as compared to the quarter ended June 30, 2001. The hardlines and lumber division’s revenues were $25.6 million for the three months ended June 30, 2001, an increase of $2.8 million, or 12%.
Systems revenues for the three months ended June 30, 2002 were $14.4 million, compared to $13.2 million for the
three months ended June 30, 2001, an increase of $1.2 million, or 9%. Systems revenues for the automotive division for the three months ended June 30, 2002 decreased $1.0 million to $4.1 million, as compared to last year, a decrease of 20%. The
revenue decrease was primarily due to lower sales of store systems. Systems revenues for the hardlines and lumber division for the three months ended June 30, 2002 increased $2.2 million to $10.3 million, or 27%, as compared to the three months
ended June 30, 2001. The revenue increase was primarily due to additional sales of systems and products to the current customer base.
Services and finance revenues were $40.0 million for the three months ended June 30, 2002, compared to $39.4 million for the three months ended June 30, 2001, an increase of $0.6 million, or 1%. For the three months ended
June 30, 2002, services and finance revenues for the automotive division remained constant at $24.7 million, while the hardlines and lumber division’s revenues increased $0.6 million from $14.7 million to $15.3 million, as compared to the three
months ended June 30, 2001.
Cost of revenue was $28.4 million for the three months ended June 30, 2002, compared
to $26.5 million for the three months ended June 30, 2001, an increase of $1.9 million, or 7%. For the three months ended June 30, 2002, cost of revenues for the automotive division decreased $0.7 million, or 5%, to $14.3 million. For the quarter
ended June 30, 2002, cost of revenues for the hardlines and lumber division increased $2.6 million, or 23%, to $14.1 million, respectively, as compared to the three months ended June 30, 2001.
Cost of systems revenue was $8.8 million for the three months ended June 30, 2002, compared to $7.6 million for the three months ended June 30, 2001, an increase of
$1.2 million, or 15%. Cost of systems revenues for the automotive division for the three months ended June 30, 2002 decreased $0.3 million, or 10%, to $3.2 million compared to the three months ended June 30, 2001. The decrease in cost of systems
revenues is primarily due to the decrease in systems sales. Cost of systems revenues as a percentage of systems revenues for the automotive division was 78% and 70% for the three months ended June 30, 2002 and 2001, respectively. The increased cost
percentage is primarily due to a different systems mix being sold in the quarter ended June 30, 2002. Cost of systems revenues for the hardlines and lumber division for the three months ended June 30, 2002 increased $1.5 million to $5.6 million
compared to the three months ended June 30,
10
2001, an increase of 37%. The increase in cost of systems revenue is primarily due to the increase in systems sales. Cost of systems revenue as
a percentage of systems for the hardlines and lumber division was 54% and 50% for the three months ended June 30, 2002 and 2001, respectively. The increased cost percentage is primarily due to a different product mix sold in the quarter ended June
30, 2002.
Cost of revenues for services and finance was $19.6 million for the three months ended June 30, 2002,
compared to $18.9 million for the three months ended June 30, 2001, an increase of $0.7 million, or 4%. Cost of revenues for services and finance for the automotive division for the three months ended June 30, 2002 decreased $0.3 million to $11.1
million, compared to the three months ended June 30, 2001. Cost of revenues for services and finance for the automotive division is down primarily due to more efficient use of the Company’s hardware support services and lower freight costs.
Cost of revenues for services and finance for the hardlines and lumber division for the three months ended June 30, 2002 increased $1.0 million to $8.5 million, compared to the three months ended June 30, 2001. Cost of revenues of services and
finance for the hardlines and lumber division increased primarily due to greater demand for the Company’s hardware support services and higher freight and amortization expense. As a percentage of automotive services revenues, cost of revenues
for services and finance for the automotive division was 45% and 46% for the three months ended June 30, 2002 and 2001, respectively. As a percentage of hardlines and lumber division services revenues, cost of revenues for services and finance for
the hardlines and lumber division was 55% and 50% for the three months ended June 30, 2002 and 2001, respectively. The percentage fluctuations are primarily due to the factors mentioned above.
Sales and marketing expense for the three months ended June 30, 2002 decreased $0.4 million, or 4%, to $8.6 million, as compared to the three months ended June 30,
2001. Sales and marketing expense for the automotive division for the three months ended June 30, 2002 decreased $0.8 million to $4.0 million, as compared to the three months ended June 30, 2001. As a percentage of automotive revenue, sales and
marketing expense for the automotive division was 14% and 16% for the three months ended June 30, 2002 and 2001, respectively. The decrease in the sales and marketing expense for the automotive division is primarily due to the Company outsourcing
its leasing activity and lower personnel costs, offset slightly by increased professional fees. Sales and marketing expense for the hardlines and lumber division for the three months ended June 30, 2002 increased $0.4 million to $4.5 million, as
compared to the three months ended June 30, 2001. The increase in sales and marketing expense in the hardlines and lumber division is primarily due to higher personnel costs due to the increased systems sales. As a percentage of hardlines and lumber
division revenue, sales and marketing expense for the hardlines and lumber division remained constant at 18% for the three months ended June 30, 2002 and 2001, respectively.
Product development expenses for the three months ended June 30, 2002 decreased $0.8 million, or 16%, to $4.4 million, as compared to the three months ended June 30, 2001.
As a percentage of revenue, product development expense was 8% and 10% for the three months ended June 30, 2002 and June 30, 2001, respectively. Product development expenses for the automotive division for the three months ended June 30, 2002
decreased $0.8 million to $3.5 million. The decrease is primarily due to lower personnel costs. As a percentage of automotive division revenue, product development expenses for the automotive division were 12% and 14% for the three months ended June
30, 2002 and 2001, respectively. Product development expenses for the hardlines and lumber division for the three months ended June 30, 2002 remained constant at $0.9 million for the three months ended June 30, 2002. As a percentage of hardlines and
lumber division revenue, product development expense for the hardlines and lumber division was 3% and 4% for the three months ended June 30, 2002 and 2001.
General and administrative expense for the three months ended June 30, 2002 was $5.8 million, a decrease of $3.7 million, or 39%, as compared to the three months ended June 30, 2001. The decrease was
primarily due to the October 1, 2001 adoption of the new accounting guidance regarding amortization of goodwill and also due to lower facility and communication expense. As a percentage of revenues, general and administrative expense was 11% and 18%
for the three months ended June 30, 2002 and 2001, respectively.
Interest expense for the three months ended June
30, 2002 was $3.3 million compared to $4.3 million for the three months ended June 30, 2001, a decrease of $1.0 million, or 23%. Interest was down due to a combination of lower interest rates and a lower principal balance. See “Liquidity
and Capital Resources.”
11
As a result of the above factors, the Company realized net income of $2.5 million
for the three months ended June 30, 2002, compared to a net loss of $1.7 million for the three months ended June 30, 2001, an improvement of $4.2 million.
Nine Months Ended June 30, 2002 Compared to Nine Months Ended June 30, 2001
Revenues for the nine months ended June 30, 2002 were $166.0 million, compared to $159.9 million for the nine months ended June 30, 2001, an increase of $6.1 million, or 4%. For the nine months ended
June 30, 2002, revenues for the automotive division decreased $0.2 million, or less than one percent, to $90.9 million, as compared to the nine months ended June 30, 2001. For the nine months ended June 30, 2002, revenues for the hardlines and
lumber division increased $6.3 million, or 9%, to $75.1 million, as compared to the nine months ended June 30, 2001.
Systems revenues for the nine months ended June 30, 2002 were $45.9 million, compared to $40.5 million for the nine months ended June 30, 2001, an increase of $5.4 million, or 13%. Systems revenues for the automotive division for the
nine months ended June 30, 2002 increased $0.4 million, or 3%, to $16.4 million, as compared to the nine months ended June 30, 2001. This increase was primarily due to current customers purchasing systems and products. Systems revenues for the
hardlines and lumber division for the nine months ended June 30, 2002 increased $5.0 million, or 20%, to $29.4 million as compared to the nine months ended June 30, 2001, primarily due to additional systems and products sold to the current customer
base.
Services and finance revenues were $120.1 million for the nine months ended June 30, 2002, compared to
$119.3 million for the nine months ended June 30, 2001, an increase of $0.8 million, or 1%. Services and finance revenues for the automotive division for the nine months ended June 30, 2002 decreased $0.6 million to $74.5 million, as compared to the
nine months ended June 30, 2001. Services and finance revenues for the hardlines and lumber division for the nine months ended June 30, 2002 increased $1.4 million to $45.7 million, as compared to the nine months ended June 30, 2001. This increase
was primarily due to increased customer service revenue.
Cost of revenues was $85.7 million for the nine months
ended June 30, 2002, compared to $84.1 million for the nine months ended June 30, 2001, an increase of $1.6 million, or 2%. For the nine months ended June 30, 2002, cost of revenues for the automotive division decreased $1.8 million, or 4%, to $45.6
million, as compared to the nine months ended June 30, 2001. For the nine months ended June 30, 2002, cost of revenues for the hardlines and lumber division increased $3.4 million, or 9%, to $40.1 million, as compared to the nine months ended June
30, 2001.
Cost of systems revenues was $27.1 million for the nine months ended June 30, 2002, compared to $24.5
million for the nine months ended June 30, 2001, an increase of $2.6 million, or 11%. Cost of systems revenues for the automotive division for the nine months ended June 30, 2002 increased $1.1 million to $11.6 million, as compared to the nine
months ended June 30, 2001. The increase was primarily due to the increase in systems sales. Cost of systems revenues as a percentage of systems revenues for the automotive division was 71% and 66% for the nine months ended June 30, 2002 and 2001,
respectively. Cost of systems revenues for the hardlines and lumber division for the nine months ended June 30, 2002 was $15.5 million for the nine months ended June 30, 2002, compared to $14.0 million for the nine months ended June 30, 2001, an
increase of $1.5 million, or 11%. The increase in cost of systems revenue was primarily due to the increase in system sales. The cost of systems revenues as a percentage of systems revenues for the hardlines and lumber division was 52% and 57% for
the nine months ended June 30, 2002 and 2001, respectively.
Cost of revenues for services and finance was $58.6
million for the nine months ended June 30, 2002, compared to $59.6 million for the nine months ended June 30, 2001, a decrease of $1.0 million, or 2%. Cost of revenues for services and finance for the automotive division for the nine months ended
June 30, 2002 decreased $2.9 million to $34.0 million, compared to the nine months ended June 30, 2001. Cost of revenues of services and finance for the automotive division decreased primarily due to more efficient use of the Company’s hardware
support services and to lower amortization and freight expense. Cost of revenues of services and finance for the hardlines and lumber division for the nine months ended June 30, 2002 increased $1.9 million, or 8%, to $24.6 million compared to the
nine months ended June 30, 2001. Cost of revenues for services and finance for the hardlines and lumber division increased primarily due to higher demand for the
12
Company’s hardware services. As a percentage of services revenues, cost of revenues for services and finance for the automotive division
was 46% and 49% for the nine months ended June 30, 2002 and 2001, respectively. As a percentage of services revenues, cost of revenues for services and finance for the hardlines and lumber division was 54% and 51% for the nine months ended June 30,
2002 and 2001, respectively.
Sales and marketing expense for the nine months ended June 30, 2002 decreased $3.7
million, or 12%, to $26.1 million, as compared to the nine months ended June 30, 2001. Sales and marketing expense for the automotive division for the nine months ended June 30, 2002 decreased $4.8 million to $12.1 million as compared to the nine
months ended June 30, 2001. As a percentage of automotive revenue, sales and marketing expense for the automotive division was 13% and 19% for the nine months ended June 30, 2002 and 2001, respectively. The decrease in automotive sales and marketing
expense is related primarily to lower personnel, travel costs, and the outsourcing of the Company’s leasing program. Sales and marketing expense for the hardlines and lumber division for the nine months ended June 30, 2002 increased $1.1
million to $14.0 million, as compared to the nine months ended June 30, 2001. The increase in sales and marketing expense in the hardlines and lumber division was due to a higher bad debt accrual and higher personnel costs, both due to the increased
systems sales. As a percentage of hardlines and lumber division revenue, sales and marketing expense for the hardlines and lumber division remained constant at 19% for the nine months ended June 30, 2002 and 2001.
Product development expenses for the nine months ended June 30, 2002 decreased $1.5 million to $12.6 million, as compared to the nine
months ended June 30, 2001. As a percentage of revenue, product development expenses were 8% and 9% for the nine months ended June 30, 2002 and 2001, respectively. Product development expenses for the automotive division for the nine months ended
June 30, 2002 decreased $1.3 million to $9.9 million. The decrease was primarily due to lower personnel costs offset slightly by lower software capitalization. As a percentage of automotive division revenue, product development expenses for the
automotive division were 11% and 12% for the nine months ended June 30, 2002 and 2001, respectively. Product development expenses for the hardlines and lumber division for the nine months ended June 30, 2002 decreased $0.2 million to $2.7 million.
The decrease was primarily due to lower personnel costs. As a percentage of hardlines and lumber division revenue, product development expenses for the hardlines and lumber division remained at 4% for the nine months ended June 30, 2002 and 2001.
General and administrative expense for the nine months ended June 30, 2002 decreased $9.0 million to $20.1
million as compared to the nine months ended June 30, 2001. As a percentage of revenues, general and administrative expense was 12% and 18% for the nine months ended June 30, 2002 and 2001, respectively. The decrease was primarily due to the October
1, 2001 adoption of the new accounting guidance regarding amortization of goodwill and also to lower facility and communication costs.
Interest expense for the nine months ended June 30, 2002 was $10.9 million compared to $13.8 million for the nine months ended June 30, 2001, a decrease of $2.9 million, or 21%. The decrease was due to lower interest rates
and a lower principal balance. See “Liquidity and Capital Resources.”
Income tax expense for the
nine months ended June 30, 2002 was $4.3 million versus an income tax benefit of $1.4 million for the nine months ended June 30, 2001. The effective tax rate in 2002 differs from the statutory rate as a result of foreign and state income taxes. The
effective tax rate for 2001 differs from the statutory rate principally because of expenses which are not deductible for tax purposes, principally goodwill amortization.
As a result of the above factors, the Company realized net income of $6.4 million for the nine months ended June 30, 2002, compared to a net loss of $9.7 million for the
nine months ended June 30, 2001, an improvement of $16.1 million.
13
Liquidity and Capital Resources
As of June 30, 2002, the Company had $144.1 million in outstanding indebtedness, a decrease of $32.7 million from September 30, 2001. The Company’s outstanding
indebtedness under its Restated Senior Credit Facilities at June 30, 2002 included $6.0 million borrowed on the Company’s $47.5 million senior secured revolving credit facility and $36.8 million of senior secured term loans. Remaining
indebtedness consists of $100.0 million of Senior Subordinated Notes, due 2008, bearing interest at 9%, and $1.3 million in debt which matures in varying amounts over the next five years. The Company’s Restated Senior Credit Facilities impose
certain restrictions on the Company, the most significant of which include limitations on additional indebtedness, liens, guarantees, payment or declaration of dividends, sale of assets, investments, capital expenditures, and transactions with
affiliates. The Company’s various borrowings under its Restated Senior Credit Facilities have cross-default provisions. At June 30, 2002, the Company was in compliance with these restrictions.
The $36.8 million term loan facility requires repayment of $2.5 million per quarter in fiscal year 2002. The revolving credit facility is
due on March 31, 2003. Accordingly, the June 30, 2002 current portion of long term debt is comprised of the $6.0 million revolving credit facility balance, $8.5 million of the term loan facility and $0.3 million of other debt. The Company
anticipates refinancing its revolving credit facility prior to maturity, although there can be no assurances that the Company will be successful in refinancing its revolving credit facility on acceptable terms, if at all. All senior term loan
borrowings under the Restated Senior Credit Facilities are due to be repaid by March 31, 2004. A portion of the Company’s debt bears interest at floating rates; therefore, its financial condition is and will be affected by changes in prevailing
rates.
In addition to servicing its debt obligations, the Company requires liquidity for capital expenditures and
working capital needs. For the nine months ended June 30, 2002, the Company’s capital expenditures were $9.4 million, which included $5.3 million for capitalized computer software costs and databases.
The Company believes that cash flows from operations, together with the amounts available under the Company’s Restated Senior Credit
Facilities, will be sufficient to fund its working capital and debt service requirements (including the contingent liabilities associated with the remaining customer leasing operations). The Company’s ability to meet its working capital and
debt service requirements, however, is subject to future economic conditions and to financial, business and other factors, many of which are beyond the Company’s control. If the Company is not able to meet such requirements, it may be required
to seek additional financing. There can be no assurance that the Company will be able to obtain financing from other sources on terms acceptable to the Company, if at all.
Reference is made to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2001. There have been no
material changes in the quarter ended June 30, 2002.
14
The Company is involved in
litigation arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, although there can be no assurances, the Company does not anticipate that the resolution of these matters will have a
material adverse effect on the Company’s results of operation or financial position.
None
None
None
None
(a) Exhibits
99.1 Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the three months ended June 30, 2002.
15
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 thereunto duly authorized, on the 14th day of August, 2002.
| COOPERATIVE COMPUTING, INC. |
| |
| By: |
|
/s/ GREG
PETERSEN
|
| |
|
Greg Petersen Senior Vice
President, Finance and Administration |
16