Back to GetFilings.com



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 March 31, 2003

 

¨   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 by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

 

Yes  ¨    No  þ

 

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 May 14, 2003


Common Stock

  

1,000 shares

 



Table of Contents

 

COOPERATIVE COMPUTING, INC.

INDEX

 

    

PAGE


FORWARD-LOOKING STATEMENTS

  

3

PART I—FINANCIAL INFORMATION

  

4

Note to Financial Information

  

4

ITEM 1.—FINANCIAL STATEMENTS

  

5

Consolidated Balance Sheets as of September 30, 2002 and March 31, 2003

  

5

Consolidated Statements of Operations for the three and six months ended March 31, 2002 and March 31, 2003

  

6

Consolidated Statements of Cash Flows for the six months ended March 31, 2002 and March 31, 2003

  

7

Notes to Consolidated Financial Statements

  

8

ITEM 2.—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  

12

ITEM 3.—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  

17

ITEM 4.—CONTROLS AND PROCEDURES

  

17

PART II—OTHER INFORMATION

    

ITEM 1.—LEGAL PROCEEDINGS

  

18

ITEM 2.—CHANGES IN SECURITIES AND USE OF PROCEEDS

  

18

ITEM 3.—DEFAULTS UPON SENIOR SECURITIES

  

18

ITEM 4.—SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  

18

ITEM 5.—OTHER INFORMATION

  

18

ITEM 6.—EXHIBITS AND REPORTS ON FORM 8-K

  

18

SIGNATURE

  

19

SECTION 302 CERTIFICATIONS

  

20

 

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

 

The consolidated financial statements filed on Form 10-K and Form 10-Q prior to September 30, 2002 included the accounts of Cooperative Computing Holding Company, Inc. (“Holding”) and its wholly owned subsidiary Cooperative Computing, Inc. (“CCITRIAD” or the “Company”). Holding has no assets or liabilities other than (1) its wholly owned subsidiary CCITRIAD and (2) its Redeemable Class A Common Stock, the net proceeds of which were contributed in full to CCITRIAD. The difference between the financial statements of Holding and those of CCITRIAD relate solely to the Class A Common Stock. The Class A Common Stock is an obligation of Holding and not of the registrant and the registrant does not guarantee the Class A Common Stock. Prior years’ financial presentation resulted in the inclusion of the accretion of Holding’s Redeemable Common Stock of $3.9 million and $8.0 million for the three and six months ended March 31, 2002, respectively, as well as its net loss to shareholders of $1.3 million and $3.9 million for the three and six months ended March 31, 2002, respectively. Additionally, Holding’s balances for the Redeemable Class A Common Stock of $59.1 million as of March 31, 2002, and for stockholders’ deficit of $79.7 million as of March 31, 2002 were depicted. The cash flow for both companies was identical in each year presented. CCITRIAD, as the registrant, is presented in the following unaudited interim financial statements.

 

4


Table of Contents

 

Item 1. Financial Statements.

 

COOPERATIVE COMPUTING, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

    

September 30,

2002


    

March 31,

2003


 
           

(Unaudited)

 

ASSETS:

                 

Current assets:

                 

Cash and cash equivalents

  

$

398

 

  

$

7,733

 

Trade accounts receivable, net of allowance for doubtful accounts of $6,751 and $6,657 at September 30, 2002 and March 31, 2003, respectively

  

 

29,013

 

  

 

28,073

 

Inventories, net

  

 

2,380

 

  

 

2,643

 

Investment in leases, net

  

 

2,820

 

  

 

2,415

 

Deferred income taxes

  

 

8,303

 

  

 

9,003

 

Prepaid expenses and other current assets

  

 

4,122

 

  

 

3,452

 

    


  


Total current assets

  

 

47,036

 

  

 

53,319

 

Service parts, net

  

 

1,780

 

  

 

1,553

 

Property and equipment, net

  

 

6,480

 

  

 

6,550

 

Long-term investment in leases

  

 

4,468

 

  

 

3,458

 

Capitalized computer software costs, net

  

 

10,257

 

  

 

9,460

 

Databases, net

  

 

12,094

 

  

 

10,785

 

Goodwill

  

 

87,159

 

  

 

87,159

 

Other assets

  

 

16,513

 

  

 

16,201

 

    


  


Total assets

  

$

185,787

 

  

$

188,485

 

    


  


LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT):

                 

Current liabilities:

                 

Accounts payable

  

$

8,095

 

  

$

7,821

 

Payroll related accruals

  

 

13,564

 

  

 

13,012

 

Deferred revenue

  

 

12,529

 

  

 

12,911

 

Current portion of long-term debt

  

 

8,828

 

  

 

9,084

 

Accrued income taxes

  

 

3,969

 

  

 

1,218

 

Accrued expenses and other current liabilities

  

 

8,940

 

  

 

8,866

 

    


  


Total current liabilities

  

 

55,925

 

  

 

52,912

 

Long-term debt

  

 

129,169

 

  

 

124,920

 

Deferred income taxes and other liabilities

  

 

15,546

 

  

 

16,082

 

    


  


Total liabilities

  

 

200,640

 

  

 

193,914

 

Stockholder’s equity (deficit):

                 

Common Stock:

                 

Par value $0.01; authorized, issued and outstanding 1,000 shares at September 30, 2002 and March 31, 2003

  

 

—  

 

  

 

—  

 

Additional paid-in capital

  

 

113,155

 

  

 

113,155

 

Retained deficit

  

 

(127,236

)

  

 

(118,038

)

Other accumulated comprehensive income:

                 

Cumulative translation adjustment

  

 

(772

)

  

 

(546

)

    


  


Total stockholder’s equity (deficit)

  

 

(14,853

)

  

 

(5,429

)

    


  


Total liabilities and stockholders’ deficit

  

$

185,787

 

  

$

188,485

 

    


  


 

See accompanying notes

 

5


Table of Contents

 

COOPERATIVE COMPUTING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In thousands)

 

    

Three Months Ended March 31,


    

Six months Ended March 31,


 
    

2002


    

2003


    

2002


    

2003


 

Revenues:

                                   

Systems

  

$

16,934

 

  

$

17,392

 

  

$

31,515

 

  

$

35,105

 

Services and finance

  

 

40,025

 

  

 

38,668

 

  

 

80,063

 

  

 

78,607

 

    


  


  


  


Total revenues

  

 

56,959

 

  

 

56,060

 

  

 

111,578

 

  

 

113,712

 

Cost of revenues:

                                   

Systems

  

 

11,097

 

  

 

9,859

 

  

 

20,184

 

  

 

19,884

 

Services and finance

  

 

17,795

 

  

 

17,911

 

  

 

37,120

 

  

 

35,456

 

    


  


  


  


Total cost of revenues

  

 

28,892

 

  

 

27,770

 

  

 

57,304

 

  

 

55,340

 

    


  


  


  


Gross margin

  

 

28,067

 

  

 

28,290

 

  

 

54,274

 

  

 

58,372

 

Operating expenses:

                                   

Sales and marketing

  

 

8,487

 

  

 

8,237

 

  

 

17,525

 

  

 

15,537

 

Product development

  

 

4,602

 

  

 

4,090

 

  

 

8,251

 

  

 

7,816

 

General and administrative

  

 

7,170

 

  

 

6,586

 

  

 

14,239

 

  

 

13,343

 

    


  


  


  


Total operating expenses

  

 

20,259

 

  

 

18,913

 

  

 

40,015

 

  

 

36,696

 

    


  


  


  


Operating income

  

 

7,808

 

  

 

9,377

 

  

 

14,259

 

  

 

21,676

 

Interest expense

  

 

(3,506

)

  

 

(3,339

)

  

 

(7,563

)

  

 

(6,798

)

Equity gain (loss) in affiliate

  

 

(200

)

  

 

67

 

  

 

(400

)

  

 

59

 

Foreign exchange gain (loss)

  

 

44

 

  

 

12

 

  

 

(98

)

  

 

13

 

Other income, net

  

 

54