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Table of Contents
 
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
 

Table of Contents
 
COOPERATIVE COMPUTING, INC.
 
INDEX
 
    
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

Table of Contents
 
FORWARD-LOOKING STATEMENTS
 
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

Table of Contents
 
PART 1.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements.
 
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(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

Table of Contents
 
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(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)
   
$