Exhibit 99(a)(6)
Dear Covansys Employee:
As you are probably aware, the deadline for electing to participate in, or for modifying or rescinding your election to participate in the Covansys Corporation Offer to Exchange Outstanding Options is December 13, 2002 (unless this deadline is extended by Covansys prior to that time). After the deadline, your election to participate in the program will be irrevocable.
The following is revised information regarding the Offer to Exchange.
| 1). The deadline for electing to participate in, modify or rescind your election to participate in the Covansys Corporation to Exchange Outstanding Options has been extended from 5:00 p.m. Eastern Time, USA on December 13, 2002 until 11:59 p.m. Eastern Time, USA on December 13, 2002. | |
| 2). Covansys has revised the Offer to Exchange to provide that optionees that choose not to exchange their options in the Offer are not required to advise us that they are declining the Offer to Exchange, further, they are not required to indicate that they are declining the Offer on the Letter or Transmittal. | |
| 3). Covansys has revised the Offer to Exchange to indicate that any waiver of an offer condition will apply to all similarly situated options and optionees. | |
| 4). Set forth below is a selected summary of our financial information. The selected historical statement of operations data for the years ended December 31, 2001 and 2000 and the selected historical balance sheet data as of December 31, 2001 and December 31, 2000 have been derived from the consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2001. The selected historical statement of operations data for the nine months ended September 30, 2002 and 2001 and the selected historical balance sheet data as of September 30, 2002 and 2001 have been derived from the financial statements included in our quarterly report on Form 10-Q for the quarter ended September 30, 2002. |
COVANSYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | September 30, | ||||||||||||||||||
| 2000 | 2001 | 2001 | 2002 | ||||||||||||||||
| (unaudited) | |||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
ASSETS | |||||||||||||||||||
| Current assets: | |||||||||||||||||||
| Cash and cash equivalents | $ | 140,123 | $ | 123,755 | $ | 110,002 | $ | 97,902 | |||||||||||
| Accounts Receivable, net | 82,203 | 69,391 | 78,189 | 72,389 | |||||||||||||||
| Revenue earned in excess of billings, net | 22,347 | 30,755 | 25,645 | 37,463 | |||||||||||||||
| Deferred taxes | 13,158 | 7,824 | 17,258 | 7,824 | |||||||||||||||
| Prepaid expenses and other | 4,143 | 5,101 | 5,024 | 6,092 | |||||||||||||||
| Total current assets | 261,974 | 236,826 | 236,118 | 221,670 | |||||||||||||||
| Property and equipment, net | 34,169 | 32,560 | 33,706 | 35,851 | |||||||||||||||
| Computer software, net | 3,409 | 1,981 | 2,632 | 7,549 | |||||||||||||||
| Goodwill, net | 11,398 | 10,691 | 10,855 | 17,572 | |||||||||||||||
| Deferred taxes | — | 2,891 | — | 2,891 | |||||||||||||||
| Other assets, net | 19,951 | 12,674 | 12,998 | 12,784 | |||||||||||||||
| Total assets | $ | 330,901 | $ | 297,623 | $ | 296,309 | $ | 298,317 | |||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||
| Current liabilities: | |||||||||||||||||||
| Accounts Payable | $ | 13,715 | $ | 10,127 | $ | 11,446 | $ | 9,922 | |||||||||||
| Accrued payroll and related costs | 27,581 | 29,650 | 27,695 | 22,965 | |||||||||||||||
| Other accrued liabilities | 11,991 | 9,495 | 7,570 | 18,680 | |||||||||||||||
| Deferred revenue | 1,787 | 397 | 392 | 736 | |||||||||||||||
| Total current liabilities | 55,074 | 49,669 | 47,103 | 52,303 | |||||||||||||||
| Deferred taxes | 2,969 | — | 639 | — | |||||||||||||||
| Other liabilities | 92 | 225 | — | 218 | |||||||||||||||
| Commitments and contingencies | |||||||||||||||||||
| Convertible redeemable preferred stock, no par value, 200,000 shares issued and outstanding as of December 31, 2000 and 2001, September 30, 2001 and 2002 | 155,660 | 159,924 | 158,846 | 163,208 | |||||||||||||||
| Shareholders’ equity: | |||||||||||||||||||
| Preferred stock, no par value, 1,000,000 shares authorized, 200,000 issued as convertible redeemable preferred stock | — | — | — | — | |||||||||||||||
| Common stock, no par value, 200,000,000 shares authorized, 29,577,428 and 28,254,850 shares issued and outstanding as of December 31, 2000 and 2001, respectively and 28,488,695 and 27,586,825 shares issued and outstanding as of September 30, 2001 and 2002, respectively | — | — | — | — | |||||||||||||||
| Additional paid-in capital | 122,139 | 108,946 | 110,826 | 103,992 | |||||||||||||||
| Retained earnings (deficit) | 2,553 | (12,230 | ) | (12,828 | ) | (12,923 | ) | ||||||||||||
| Stock subscriptions receivable | (3,176 | ) | (2,362 | ) | (2,538 | ) | (2,341 | ) | |||||||||||
| Accumulated other comprehensive loss | (4,410 | ) | (6,549 | ) | (5,739 | ) | (6,140 | ) | |||||||||||
| Total shareholders’ equity | 117,106 | 87,805 | 89,721 | 82,588 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 330,901 | $ | 297,623 | $ | 296,309 | $ | 298,317 | |||||||||||
COVANSYS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended | Nine Months Ended | ||||||||||||||||
| December 31, | September 30, | ||||||||||||||||
| 2000 | 2001 | 2001 | 2002 | ||||||||||||||
| (unaudited) | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenues | $ | 419,641 | $ | 404,734 | $ | 309,219 | $ | 284,699 | |||||||||
| Cost of revenues | 308,299 | 290,651 | 223,394 | 211,154 | |||||||||||||
| Gross profit | 111,342 | 114,083 | 85,825 | 73,545 | |||||||||||||
| Selling, general and administrative expenses | 143,467 | 115,011 | 87,308 | 71,769 | |||||||||||||
| Restructuring, merger costs and other | 21,507 | 23,665 | 19,317 | 1,407 | |||||||||||||
| Income (loss) from continuing operations | (53,632 | ) | (24,593 | ) | (20,800 | ) | 369 | ||||||||||
| Other expense (income) | (6,060 | ) | (5,531 | ) | (4,229 | ) | (2,456 | ) | |||||||||
| Income (loss) from continuing operations before provision (benefit) for income taxes | (47,572 | ) | (19,062 | ) | (16,571 | ) | 2,825 | ||||||||||
| Provision (benefit) for income taxes | (11,255 | ) | (8,544 | ) | (4,376 | ) | 233 | ||||||||||
| Net income (loss) from operations, net of income taxes | (36,317 | ) | (10,518 | ) | (12,195 | ) | 2,592 | ||||||||||
| Loss from discontinued operations, net of income taxes | (1,692 | ) | — | — | — | ||||||||||||
| Gain on sale of discontinued operations, net of income taxes | 6,072 | — | — | — | |||||||||||||
| Net income (loss) | (31,937 | ) | (10,518 | ) | (12,195 | ) | 2,592 | ||||||||||
| Beneficial conversion feature | 23,651 | — | |||||||||||||||
| Convertible redeemable preferred stock dividends | 2,569 | 4,265 | 3,184 | 3,284 | |||||||||||||
| Net income (loss) available for common shareholders | $ | (58,157 | ) | $ | (14,783 | ) | $ | (15,379 | ) | $ | (692 | ) | |||||
| Basic earnings (loss) per share | |||||||||||||||||
| Weighted average shares outstanding | 32,892 | 28,704 | 28,821 | 27,837 | |||||||||||||
| Basic earnings (loss) per share from continuing operations | $ | (1.10 | ) | $ | (0.37 | ) | $ | (0.42 | ) | $ | 0.09 | ||||||
| Basic loss per share from discontinued operations | (0.05 | ) | — | — | — | ||||||||||||
| Basic earnings per share from gain on sale of discontinued operations | 0.18 | — | — | — | |||||||||||||
| Basic loss per share from beneficial conversion feature and dividends | (0.80 | ) | (0.14 | ) | (0.11 | ) | (0.12 | ) | |||||||||
| Basic earnings (loss) per share | $ | (1.77 | ) | $ | (0.51 | ) | $ | (0.53 | ) | $ | (0.03 | ) | |||||
| Diluted earnings (loss) per share | |||||||||||||||||
| Weighted average shares outstanding | 32,892 | 28,704 | 28,821 | 27,837 | |||||||||||||
| Diluted effect of stock options | — | — | — | — | |||||||||||||
| Diluted weighted average shares outstanding | 32,892 | 28,704 | 28,821 | 27,837 | |||||||||||||
| Diluted earnings (loss) per share from continuing operations | $ | (1.10 | ) | $ | (0.37 | ) | $ | (0.42 | ) | $ | 0.09 | ||||||
| Diluted loss per share from discontinued operations | (0.05 | ) | — | — | — | ||||||||||||
| Diluted earnings per share from gain on sale of discontinued operations | 0.18 | — | — | — | |||||||||||||
| Diluted loss per share from beneficial conversion feature and dividends | (0.80 | ) | (0.14 | ) | (0.11 | ) | (0.12 | ) | |||||||||
| Diluted earnings (loss) per share | $ | (1.77 | ) | $ | (0.51 | ) | $ | (0.53 | ) | $ | (0.03 | ) | |||||