SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2001
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
-------- --------
Commission File Number 0-4096
COMSHARE, INCORPORATED
(Exact name of registrant as specified in its charter)
MICHIGAN 38-1804887
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 994-4800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock $1.00
Par Value
Rights to Purchase Preferred Shares
Indicate by check mark 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 [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of August 31, 2001 based on $3.24 per share, the last sale price
for the Common Stock on such date as reported on the Nasdaq National Market(R),
was approximately $32,778,000.
As of August 31, 2001 the Registrant had 10,116,716 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K Report
-------- into which it is incorporated
Portions of Proxy Statement for the -----------------------------
2001 Annual Meeting of Shareholders III
(The "2001 Proxy Statement")
This Form 10-K/A-1 is being filed to amend Part II, Item 7.
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" (specifically, "Results of Operations - Expenses/Interest Income"
for each of the comparisons of fiscal years ended June 30, 2001 to June 30, 2000
and June 30, 2000 to June 30, 1999 and "Liquidity and Capital Resources") and
Part IV, Item 14. "Exhibits, Consolidated Financial Statement Schedules and
Reports on Form 8-K" (specifically Notes 1 and 2 of the Company's Notes to
Consolidated Financial Statements) of the Company's Annual Reports on Form 10-K
for the fiscal year ended June 30, 2001.
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain financial data
as a percentage of total revenue:
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
------------- --------- ---------
REVENUE
Software licenses 35.3% 38.2% 36.4%
Software maintenance 37.5 38.0 41.0
Implementation, consulting and other services 27.2 23.8 22.6
------------ -------- --------
TOTAL REVENUE 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 37.9 39.4 40.2
Cost of revenue and support 38.9 35.7 37.9
Internal research and product development 14.1 14.8 14.2
General and administrative 9.5 10.7 12.4
Restructuring and unusual charges 1.4 - 1.5
------------ -------- --------
TOTAL COSTS AND EXPENSES 101.8 100.6 106.2
------------ -------- --------
LOSS FROM OPERATIONS (1.8) (0.6) (6.2)
OTHER INCOME (EXPENSE)
Interest income 2.2 2.5 3.0
Interest expense - (0.1) (0.1)
Exchange loss (0.2) (0.1) (0.1)
------------ -------- --------
TOTAL OTHER INCOME 2.0 2.3 2.8
INCOME (LOSS) BEFORE TAXES 0.2 1.7 (3.4)
------------ -------- --------
Provision (benefit) for income taxes 0.1 0.6 (1.6)
------------ -------- --------
NET INCOME (LOSS) 0.1% 1.1% (1.8)%
============ ======== ========
2
COMPARISON OF FISCAL YEAR ENDED JUNE 30, 2001 TO FISCAL YEAR ENDED JUNE 30, 2000
Revenues
TWELVE MONTHS ENDED PERCENT
JUNE 30, CHANGE
----------------------- -------
2001 2000
---- ----
(in thousands)
MPC REVENUE
Software licenses $ 17,714 $ 14,430 22.8 %
Software maintenance 13,967 7,740 80.5
Implementation, consulting and
other services 15,871 12,977 22.3
-------- --------
TOTAL MPC REVENUE $ 47,552 $ 35,147 35.3 %
======== ========
LEGACY REVENUE
Software licenses $ 4,470 $ 9,016 (50.4)%
Software maintenance 9,607 15,521 (38.1)
Implementation, consulting and
other services 1,212 1,639 (26.1)
-------- --------
TOTAL LEGACY REVENUE $ 15,289 $ 26,176 (41.6)%
======== ========
TOTAL REVENUE
Software licenses $ 22,184 $ 23,446 (5.4)%
Software maintenance 23,574 23,261 1.3
Implementation, consulting and
other services 17,083 14,616 16.9
-------- --------
TOTAL REVENUE $ 62,841 $ 61,323 2.5 %
======== ========
Comshare's MPC suite of products is comprised of Comshare MPC (formerly
BudgetPLUS), FDC and Decision.
The increase in revenue from the year ended June 30, 2000 was primarily
due to a 35.3% growth in MPC revenue, offset by a decline of 41.6% in legacy
revenue. MPC revenue was $47.6 million for the year ended June 30, 2001,
representing 75.7% of total revenue.
The 5.4% decline in license fees reflects the decline in legacy
revenues. MPC license fees, which grew 22.8% from the year ended June 30, 2000,
represented 79.9% of total license fees for the year ended June 30, 2001. The
increase in MPC license fees was largely offset by a decline in legacy product
license fees of 50.4% from the year ended June 30, 2000 to the year ended June
30, 2001. MPC license fees were $17.7 million and $14.4 million for the fiscal
years ended June 30, 2001 and 2000, respectively. License fees in the Company's
direct operations, which include North America and the United Kingdom, grew 3.6%
to $15.2 million for the fiscal year ended June 30, 2001, primarily due to the
growth in MPC license fees. Direct license fee growth was slightly offset by the
decline in distributor license fees of 1.8% to $6.9 million for the same time
period, reflecting a decline in the Company's legacy products, which are
concentrated in the distributor operations.
Software maintenance revenues increased 1.3% in the year ended June 30,
2001 due to the impact of the growth in MPC license fees. During the year ended
June 30, 2001, the Company experienced 80.5% growth in maintenance revenues for
the Company's MPC products to $14.0 million, or 59.2% of total maintenance.
Maintenance revenues for the Company's MPC products for the year ended June 30,
2000 were $7.7 million. The growth in MPC product maintenance reflected the
license fee growth of the MPC applications in the years ended June 30, 2001 and
2000. The increase in MPC
3
maintenance revenues was offset by a decline in the Company's older legacy
products, which declined 38.1%, primarily due to mainframe and desktop
maintenance cancellations and continued customer migration to other platforms.
Implementation, consulting and other services revenues grew 16.9% for
the year ended June 30, 2001, compared to the year ended June 30, 2000,
primarily due to the growth in license fees in the Company's direct operations.
Implementation services revenue from direct operations grew 17.1% for the year
ended June 30, 2001. This growth was slightly offset by a decline in distributor
implementation services revenue. In addition, there were a number of extensive
custom applications which contributed to the growth in implementation services
revenue. During the year ended June 30, 2001, 92.9% of total implementation
services revenue was related to the MPC products. The Company experienced an
increase of 22.3% of revenue associated with implementation, consulting and
other services related to the Company's MPC products. Implementation, consulting
and other services revenues for MPC products were $15.9 million and $13.0
million for the fiscal years ended June 30, 2001 and 2000, respectively.
Expenses/Interest Income
Total costs and expenses increased to $64.0 million from $61.7 million
for the fiscal years ended June 30, 2001 and 2000, respectively. The increase of
$2.3 million is primarily due to increased cost of revenue and support expenses,
and a restructuring charge of $0.9 million taken in the third quarter of fiscal
2001 which was related to a reduction in personnel costs and other expenses.
Selling and marketing expenses decreased 1.7% to $23.8 million from
$24.2 million for the fiscal years ended June 30, 2001 and 2000, respectively.
The decrease was primarily a result of a reorganization of sales operations,
partially offset by an increase in promotional marketing costs.
Cost of revenue and support expenses increased 11.9% to $24.5 million
from $21.9 million for the fiscal years ended June 30, 2001 and 2000,
respectively. The increase was attributable to increased costs associated with
third party implementations due to the increased level of services provided
during the period, offset by a reduction in database royalty expense resulting
from lower sales of Essbase.
Internal research and product development expenses decreased 3.3% to
$8.8 million from $9.1 million for the fiscal years ended June 30, 2001 and
2000, respectively. Internal research and product development expenses, as a
percentage of total revenue, decreased to 14.1% from 14.8% for the same periods,
respectively, reflecting no significant change in the Company's product
development spending for financial applications.
General and administrative expenses decreased 7.7% to $6.0 million from
$6.5 million for the fiscal years ended June 30, 2001 and 2000, respectively.
The decrease is attributable to continued cost reduction actions taken to lower
administration costs, combined with a reduction in the costs of third party
services.
In March 2001, the Company implemented a restructuring plan to reduce
personnel costs, to bring costs more in line with revenues and improve the
financial performance of the Company. The restructuring plan was undertaken in
response to the slowdown in the economy, which has resulted in the acceleration
of the decline in the Company's revenues from its legacy products which
negatively affects the Company's ability to generate operating profits.
Restructuring and related charges of $0.9 million were expensed in the quarter
ended March 31, 2001. The restructuring charge consisted entirely of employee
severance costs. The amounts reserved, amounts charged against the reserve as of
June 30, 2001 and the balance of the reserve as of June 30, 2001 are as follows:
--------------------------------- -------------------------- ---------------------- -------------------------
RESTRUCTURING COMPONENTS BEGINNING RESERVE CHARGES TO RESERVES BALANCE AT
(IN THOUSANDS) (IN THOUSANDS) JUNE 30, 2001
(IN THOUSANDS)
--------------------------------- -------------------------- ---------------------- -------------------------
Employee severance $892 $(248) $644
--------------------------------- -------------------------- ---------------------- -------------------------
Employee groups impacted by the restructuring include marketing and field
operations in the Company's North American and United Kingdom offices. A total
of thirteen people or 4% of the worldwide headcount were affected by this
restructuring plan. All separations were completed prior to June 30, 2001. Total
cash expenditures relating to the restructuring charge are expected to be $0.9
million, funded from the Company's available cash. Cash expenditures are
expected to be paid over a 24-month period, primarily during the first six
months of that period. As of June 30, 2001, remaining cash expenditures are
estimated to be approximately $0.6 million.
The Company substantially completed the initiatives in its March 2001
restructuring plan during the third and fourth quarters of the fiscal year 2001
and began to realize the benefits of this plan in the third quarter, with the
full benefit
4
of the plan expected to be realized by the first quarter of fiscal 2002. Because
of planned investments in MPC products, the Company does not expect the
personnel cost reduction actions to reduce the Company's total expenses. The
Company does not believe that the personnel reductions had or will have a
material negative effect on its operations because they were made in areas where
the Company believes fewer employees are required to support the Company's
current level of revenues. The Company's expectations as to the impact of its
cost reduction actions and the impact of those actions on its operations are
"forward looking statements" within the meaning of the Securities and Exchange
Act of 1934, as amended. Such expectations are subject to a number of
uncertainties, including the risk that the personnel reductions may adversely
affect the Company's ability to effectively market its products and other
uncertainties described in "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Safe Harbor Statement."
Interest income decreased 6.7% to $1.4 million from $1.5 million for
the fiscal years ended June 30, 2001 and 2000, respectively. Lower average cash
balances during fiscal 2001, combined with reduced interest rates, resulted in
this decrease in interest income for the year ended June 30, 2001.
COMPARISON OF FISCAL YEAR ENDED JUNE 30, 2000 TO FISCAL YEAR ENDED JUNE 30, 1999
Revenues
Total revenue was affected by the sale of the Company's French and
German operations during the quarter ended December 31, 1998, and by the change
in the Company's product mix to its MPC applications from its legacy products.
To better reflect revenue from the Company's operations on a comparable basis,
the following table shows revenue for the fiscal years ended June 30, 2000 and
1999 reflecting the Company's French and German operations as distributors
during the fiscal year ended June 30, 1999.
In thousands 2000 1999
---- ----
% OF % OF INCREASE
REVENUE TOTAL REVENUE REVENUE TOTAL REVENUE (DECREASE)
------- ------------- ------- ------------- ----------
License Fees $ 23.4 38.2% $ 23.0 36.7% 1.7%
Maintenance $ 23.3 38.0% $ 25.7 41.1% (9.3%)
Implementation Services $ 14.6 23.8% $ 13.9 22.2% 5.0%
------ ---- ------ ---- ---
Total Revenue $ 61.3 100.0% $ 62.6 100.0% (2.1%)
The decrease in comparable revenue from the year ended June 30, 1999
was primarily due to a 35.0% decline in legacy revenue, largely offset by a
57.4% growth in MPC revenue. MPC revenue was $35.1 million for the year ended
June 30, 2000, representing 57.4% of total revenue.
The 1.7% growth in comparable license fees was primarily due to an
increase in license fee revenues of the Company's MPC products of 114.9%, to
$14.4 million for the year ended June 30, 2000. MPC license fee growth primarily
reflected the growth of the Company's Budgeting product, particularly the
relational version. MPC license fees represented 61.5% of total license fees for
the year ended June 30, 2000. The increase in MPC license fees was largely
offset by a decline in legacy product license fees, which declined 44.8% for the
year ended June 30, 2000 versus the year ended June 30, 1999.
On a comparable basis, software maintenance revenues decreased 9.3% in
the year ended June 30, 2000 due to the decline in legacy product maintenance.
During the year ended June 30, 2000, the Company experienced 20.3% growth in
maintenance revenues of the Company's MPC products to $7.7 million, or 33.0% of
total maintenance. The growth in MPC product maintenance reflected the license
fee growth of the MPC applications in the years ended June 30, 2000 and 1999.
The increase in MPC maintenance revenues was more than offset by a decline in
the Company's older legacy products, which declined 19%, primarily due to
mainframe and desktop maintenance cancellations and continued customer migration
to other platforms. On a comparable basis, legacy software maintenance
represented 67.1% of total software maintenance revenue for the year ended June
30, 2000 as compared to 75.2% for the year ended June 30, 1999.
On a comparable basis, implementation, consulting and other services
revenues grew 5.0% primarily due to the growth in license fees in the Company's
direct operations. During the year ended June 30, 2000, 89.0% of total
implementation services revenue was related to the MPC products. The Company
experienced an increase of 41.3% of revenue associated with implementation,
consulting and other services related to the Company's MPC products.
5
Implementation, consulting and other services revenues for MPC products were
$13.0 million and $9.2 million for the fiscal years ended June 30, 2000 and
1999, respectively.
Expenses/Interest Income
Total costs and expenses decreased to $61.7 million from $67.9 million
for the fiscal years ended June 30, 2000 and 1999, respectively. On a comparable
basis, total costs and expenses were $64.7 million for fiscal 1999. The decrease
of $3.0 million is primarily due to reduced marketing expenditures, facility
costs, decreased database royalties, and a restructuring charge taken in the
prior fiscal year. In fiscal 1999, the Company recorded a $1.0 million pre-tax
restructuring charge related to staff reduction as a result of the consolidation
of the Company's financial and marketing activities and the consolidation of
certain facilities.
On a comparable basis, selling and marketing expenses decreased 5.8% to
$24.2 million from $25.7 million for the fiscal years ended June 30, 2000 and
1999, respectively. The decrease was primarily a result of reduced spending in
marketing and reduced costs associated with consolidating the worldwide sales
organization.
On a comparable basis, cost of revenue and support expenses decreased
6.4% to $21.9 million from $23.4 million for the fiscal years ended June 30,
2000 and 1999, respectively. The decrease is attributable to decreased costs
associated with cost of sales and reduced database royalties in fiscal 2000.
On a comparable basis, internal research and product development
expenses remained flat at $9.1 million for the fiscal years ended June 30, 2000
and 1999 and relatively flat as a percentage of total revenue. Internal research
and product development expenses, as a percentage of total revenue, increased to
14.8% from 14.4% for the same periods, respectively, reflecting no significant
change in the Company's product development spending for financial applications.
On a comparable basis, general and administrative expenses remained
flat at $6.5 million for the fiscal years ended June 30, 2000 and 1999.
In the fourth quarter of fiscal 1999, the Company recorded a $1.0
million pre-tax charge for restructuring related to the consolidation of the
Company's financial and marketing activities and the consolidation of certain
facilities. The restructuring was undertaken to centralize the Company's
financial and marketing activities and to reduce employee and facility costs in
order to improve financial performance. Components of the restructuring charge
reserve, amounts charged against the reserve as of June 30, 2001 and the balance
of the reserve as of June 30, 2001 are as follows:
---------------------------- -------------------------- -------------------------- --------------------------
RESTRUCTURING BEGINNING CHARGES TO BALANCE AT
COMPONENTS RESERVE RESERVE JUNE 30, 2001
(IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
---------------------------- -------------------------- -------------------------- --------------------------
Employee severance $581 $(581) $0
---------------------------- -------------------------- -------------------------- --------------------------
Lease exit costs $349 $(349) $0
---------------------------- -------------------------- -------------------------- --------------------------
Other $37 $(37) $0
---------------------------- -------------------------- -------------------------- --------------------------
Total $967 $(967) $0
===
---------------------------- -------------------------- -------------------------- --------------------------
Employee groups impacted by the Company's restructuring plan included:
marketing, human resources, and finance and administration from the Company's
Ann Arbor location and finance and administration personnel from the Company's
United Kingdom location. A total of 14 people were affected by this
restructuring plan. Total cash expenditures relating to the restructuring charge
are expected to be $1.0 million, substantially all of which had been expended at
June 30, 2001 from the Company's available cash.
The Company completed the initiatives in its restructuring plan by the
first quarter of fiscal 2000. The Company began to realize the benefits of these
cost reductions in the first quarter of fiscal 2000, with the full benefit of
the plan realized by the second quarter of fiscal 2000. The restructuring charge
had the impact of reducing selling and marketing expenses and general and
administrative expenses, which reductions were partially offset by increased
costs incurred to support the growth of revenues from the Company's MPC
products. The Company believes that the personnel reductions and consolidation
of the Company's financial and marketing activities had a positive material
effect on its operations by reducing overall operating costs and improving the
efficiency and consistency of the Company's marketing efforts. The Company's
expectation as to cost reduction and consolidation actions on its operations are
"forward looking statements" within the meaning of the Securities and Exchange
Act of 1934, as amended. Such expectations are subject to a number of
uncertainties including the risk that the personnel reductions and
consolidations may adversely affect the Company's ability to effectively market
its products and other uncertainties in ""Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Safe Harbor
Statement."
6
Interest income decreased 21.1% to $1.5 million from $1.9 million for
the fiscal years ended June 30, 2000 and 1999. The Company had lower average
cash balances in fiscal 2000 as compared to fiscal 1999, resulting in decreased
interest income for the year ended June 30, 2000.
FOREIGN CURRENCY
In fiscal 2001, 2000 and 1999, 42.8%, 47.9% and 50.4%, respectively, of the
Company's total revenue was from outside North America. Most of the Company's
international revenue is denominated in foreign currencies. Comshare recognizes
currency transaction gains and losses in the period of occurrence. As currency
rates are constantly changing, these gains and losses can, at times, fluctuate
greatly. The Company's $114,000 foreign exchange loss in fiscal 2001 principally
reflected the weakening of certain foreign currencies against the British pound
during the twelve months ended June 30, 2001. The Company had exchange losses of
$54,000 and $56,000 in fiscal 2000 and 1999, respectively, principally due to
the weakening of certain foreign currencies against the British pound.
Foreign currency fluctuations in fiscal 2001, 2000 and 1999 impacted
operating income as currency fluctuations on revenue denominated in a foreign
currency were partially offset by currency fluctuations on expenses denominated
in a foreign currency. In fiscal 2001, the increase in total revenue, at actual
exchange rates, was $1.6 million less than at comparable exchange rates. The
increase in total expenses in fiscal 2001, at actual exchange rates, was $1.4
million less than at comparable exchange rates. As a result of the changes in
the foreign currency exchange rates, the decrease in net income before taxes in
fiscal 2001, at actual exchange rates, was $0.2 more than at comparable exchange
rates. In fiscal 2000, the decrease in total revenue, at actual exchange rates,
was $0.7 million greater than at comparable exchange rates. The decrease in
total expenses in fiscal 2000, at actual exchange rates, was $0.4 million
greater than at comparable exchange rates. As a result of the changes in the
foreign currency exchange rates, the increase in net income before taxes in
fiscal 2000, at actual exchange rates, was $0.3 million less than at comparable
exchange rates.
Inflation did not have a material impact on the Company's revenue or income
from operations in fiscal 2001, 2000 or 1999.
INCOME TAXES
The Company recorded a tax provision on pretax income in fiscal 2001, 2000
and 1999 at an effective rate of 35%. In fiscal 2001 and 1999, no tax benefit
was recognized on restructuring costs.
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax assets
will be realized. This assessment could be impacted by a combination of
continuing operating losses and a determination that the tax strategy is no
longer sufficient to realize some or all of the deferred tax assets.
The foregoing statements regarding the realization of deferred tax assets
are "forward looking statements" within the meaning of the Securities Exchange
Act of 1934, as amended. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Safe Harbor Statement" for discussion of
uncertainties relating to such statements.
A comparative analysis of the factors influencing the effective income tax
rate is presented in Note 8 of the Notes to Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2001, cash and cash equivalents were $24.1 million, compared
with cash and cash equivalents of $29.5 million at June 30, 2000. The decrease
in cash and cash equivalents was principally due to payment of fiscal 2001 and
prior years' restructuring related items, income tax payments, and other cash
used in operating activities, combined with increased days sales outstanding in
accounts receivable, due to the general slowdown in the economy.
Net cash used in operating activities was $5.3 million in fiscal 2001
compared with $0.9 million in fiscal 2000. The increase in net cash used in
operating activities was primarily due to the payment of income taxes in fiscal
2001 (whereas fiscal 2000 benefited from a tax refund) and the payment of fiscal
2001 and earlier years' restructuring costs and related items.
7
Net cash used in investing activities was $0.4 million in fiscal 2001,
compared to $0.5 million in fiscal 2000. The decrease in cash related to
investing activities was largely due to reduced capital expenditures in fiscal
2001. At June 30, 2001, the Company did not have material capital expenditure
commitments. In fiscal 2002, property and equipment purchases are expected to be
comparable to fiscal 2001.
Net cash provided by financing activities was $0.4 million in fiscal 2001,
compared with net cash used in financing activities of $0.8 million in fiscal
2000. The increase in cash related to financing activities was principally due
to lower bank borrowings and capital lease obligations as of June 30, 2001,
compared to the prior year and increased stock purchases under the Company's
Employee Stock Purchase Plan.
Working capital as of June 30, 2001 was $24.3 million, compared with $24.9
million as of June 30, 2000. The decrease in working capital was primarily due
to the decline in cash and cash equivalents combined with an increase in
accounts payable. These amounts were offset by an increase in accounts
receivable, which was due to the increase in revenue combined with increased
days sales outstanding, and a reduction in accrued liabilities due to payments
made on third quarter fiscal 2001 and prior year's restructuring reserves. Total
assets were $59.3 million at June 30, 2001, compared with $62.4 million at June
30, 2000. The decrease in total assets was primarily due to the decrease in cash
and cash equivalents during the fiscal year.
The Company has a $10 million credit agreement which matures on September
30, 2003. Borrowings are secured by accounts receivable and the credit agreement
contains covenants regarding, among other things, earnings, leverage, net worth
and payment of dividends. Under the terms of the credit agreement, the Company
is not permitted to pay cash dividends on its common stock. Permitted borrowings
available as of June 30, 2001 under this credit agreement were $10 million, of
which $0.2 million was outstanding. Borrowings available at any time are based
on the lower of $10 million or a percentage of worldwide eligible accounts
receivable and cash. At June 30, 2001, the interest rate on borrowings
denominated in Japanese yen, which were used to hedge receivables, was 1.83%.
As of June 30, 2001, the Company had $1.4 million of accruals remaining for
cash restructuring expenses payable over the next 24 months, primarily during
the next three months.
The Company believes that the combination of present cash balances and
amounts available under credit facilities will be sufficient to meet the
Company's currently anticipated cash requirements for at least the next twelve
months. The foregoing statement is a "forward looking statement" within the
meaning of the Securities Exchange Act of 1934, as amended. The extent to which
such sources will be sufficient to meet the Company's anticipated cash
requirements is subject to a number of uncertainties including the ability of
the Company's operations to generate sufficient cash to support operations, and
other uncertainties described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Safe Harbor Statement."
MARKET SENSITIVITY ANALYSIS
The Company is exposed to market risk from changes in foreign exchange and
interest rates. To reduce the risk from changes in foreign exchange rates, the
Company selectively uses financial instruments. The Company does not hold or
issue financial instruments for trading purposes.
FOREIGN CURRENCY
The Company at various times denominates borrowings in foreign currencies
and enters into forward exchange contracts to hedge exposures related to foreign
currency transactions. The Company does not use any other types of derivatives
to hedge such exposures nor does it speculate in foreign currency. In general,
the Company uses forward exchange contracts to hedge against large selective
transactions that present the most exposure to exchange rate fluctuations. At
June 30, 2001 and June 30, 2000, the Company had forward contracts of
approximately $1.7 million and $5.6 million (notional amounts), respectively,
denominated in foreign currencies. The contracts outstanding at June 30, 2001
mature through September 14, 2001 and are intended to hedge various foreign
currency commitments due from the Company's distributors. Due to the short-term
nature of these financial instruments, the fair value of these contracts is not
materially different than their notional amounts at June 30, 2001 and 2000.
Gains and losses on the forward contracts are largely offset by gains and
losses on the underlying exposure. The Company conducts business in
approximately six foreign currencies, predominately British pounds, the Euro and
Japanese yen. A hypothetical 10 percent appreciation of the U.S. dollar from
June 30, 2001 market rates would increase the unrealized value of the Company's
forward contracts by an immaterial amount and a hypothetical 10 percent
depreciation
8
of the U.S. dollar from June 30, 2001 market rates would decrease the unrealized
value of the Company's forward contracts by an immaterial amount. In either
scenario, the gains or losses on the forward contracts are largely offset by the
gains or losses on the underlying transactions, and so would have an immaterial
impact on the Company's results of operations.
INTEREST RATES
The Company maintains its cash and cash equivalents in highly liquid
investments with maturities of ninety days or less. The Company has the ability
to hold its fixed income investments until maturity, and therefore the Company
would not expect its operating results or cash flows to be affected to any
significant degree by the effect of a hypothetical 10 percent change in market
interest rates on its cash and cash equivalents.
SAFE HARBOR STATEMENT
Certain information in this Form 10-K Report contains "forward looking
statements" within the meaning of the Securities Exchange Act of 1934, as
amended, including those concerning the Company's future results, new market and
business opportunities, strategy and product releases. Actual results could
differ materially from those in the forward looking statements due to a number
of uncertainties, including, but not limited to: the demand for the Company's
products and services; the size, timing and recognition of revenue from
significant orders; increased competition and pricing pressures from
competitors; the Company's success in and expense associated with developing,
introducing and shipping new products; new product introductions and
announcements by the Company's competitors; the level of interest and success of
the Company's distributors in marketing and selling the Company's products;
changes in Company strategy; product life cycles; the cost and continued
availability of third party software and technology incorporated into the
Company's products, including the impact of the expiration of the license for
Essbase in December 2002; the impact of rapid technological advances, evolving
industry standards and changes in customer requirements, including the impact on
the Company's revenues of Microsoft's OLAP database; the overall competition for
key employees; cancellations of maintenance and support agreements; software
defects; changes in operating expenses; fluctuations in foreign exchange rates;
the ability of the Company to generate sufficient future taxable income or to
execute available tax strategies required to realize deferred tax assets; and
economic conditions generally or in specific industry segments. In addition, a
significant portion of the Company's revenue in any quarter is typically derived
from non-recurring license fees, a substantial portion of which is booked in the
last month of a quarter. Since the purchase of the Company's products is
relatively discretionary and generally involves a significant commitment of
capital, in the event of any downturn in any potential customer's business or
the economy in general, purchases of the Company's products may be deferred or
cancelled. Further, the Company's expense levels are based, in part, on its
expectations as to future revenue and a significant portion of the Company's
expenses do not vary with revenue. As a result, if revenue is below
expectations, results of operations are likely to be materially, adversely
affected.
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
1. Consolidated Financial Statements:
The Financial Statements filed with this report are listed in the
Index to Consolidated Financial Statements and Schedule, which
appears on page 12.
2. Consolidated Financial Statement Schedule:
The Financial Statement Schedule filed with this report is listed in
the Index to Consolidated Financial Statements and Schedule, which
appears on page 12.
3. The exhibits filed with this report are listed in the Exhibits Index
which appears on page 35. The following are the Company's management
contracts and compensatory plans and arrangements, which are required
to be filed as exhibits to this Form 10-K Report:
9
EXHIBIT NO. DESCRIPTION
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June
1, 1986, as amended and restated on November 6, 1997 -
incorporated by reference to Exhibit 10.01 to the Registrant's
Form 10-K Report for the fiscal year ended June 30, 1999.
10.02 First Amendment to the Benefit Adjustment Plan of Comshare,
Incorporated - incorporated by reference to Exhibit 10.01 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
1999.
10.03 Second Amendment to the Benefit Adjustment Plan of Comshare,
Incorporated - incorporated by reference to Exhibit 10.05 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.04 Comshare, Incorporated 1988 Stock Option Plan, as amended -
incorporated by reference to Exhibit 10.21 to the Registrant's
Form 10-K Report for the fiscal year ended June 30, 1990 and
Exhibit 10.22 to the Registrant's Form 10-Q Report for the
quarter ended September 30, 1994.
10.05 Third Amendment to Comshare, Incorporated 1988 Stock Option Plan,
as amended - incorporated by reference to Exhibit 10.06 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.06 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by
reference to Exhibit 10.22 to the Registrant's Form 10-Q Report
for the quarter ended March 31, 1997.
10.07 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated
by reference to Exhibit 10.31 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1993.
10.08 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's
Form 10-Q Report for the quarter ended September 30, 1994.
10.09 Employee Stock Purchase Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.20 to the Registrant's
Form 10-Q Report for the quarter ended September 30, 1994.
10.10 First Amendment to Employee Stock Purchase Plan - incorporated by
reference to Exhibit 10.01 to Registrant's Form 10-Q for the
quarter ended September 30, 1999.
10.11 Second Amendment to Employee Stock Purchase Plan - incorporated
by reference to Exhibit 10.02 to Registrant's Form 10-Q for the
quarter ended September 30, 1999.
10.12 Third Amendment to Employee Stock Purchase Plan - incorporated by
reference to Exhibit 10.03 to Registrant's Form 10-Q for the
quarter ended September 30, 1999.
10.13 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's
Form 10-Q Report for the quarter ended September 30, 1994.
10.14 First Amendment to Directors Stock Option Plan - incorporated by
reference to Exhibit 10.05 to Registrant's Form 10-Q for the
quarter ended September 30, 1999.
10.15 Second Amendment to Directors Stock Option Plan - incorporated by
reference to Exhibit 10.07 to Registrant's Form 10-Q for the
quarter ended March 31, 2001.
10.16 Comshare, Incorporated Change in Control Severance Agreement
dated as of June 1, 1998, between Comshare, Incorporated and
Dennis G. Ganster - incorporated by reference to Exhibit 10.19 to
the Registrant's Form 10-K Report for the fiscal year ended June
30, 1998.
10.17 First Amendment to Comshare, Incorporated Change in Control
Severance Agreement dated as of November 30, 1999, between
Comshare, Incorporated and Dennis G. Ganster - incorporated by
reference to Exhibit 10.03 to the Registrant's Form 10-Q Report
for the quarter ended December 31, 1999.
10
10.18 Comshare, Incorporated Change in Control Severance Agreement
dated as of June 1, 1998, between Comshare, Incorporated and
David King - incorporated by reference to Exhibit 10.21 to the
Registrant's Form 10-K Report for the fiscal year ended June 30,
1998.
10.19 First Amendment to Comshare, Incorporated Change in Control
Severance Agreement dated as of November 30, 1999, between
Comshare, Incorporated and David King - incorporated by reference
to Exhibit 10.01 to the Registrant's Form 10-Q Report for the
quarter ended December 31, 1999.
10.20 Comshare, Incorporated Change in Control Severance Agreement
dated as of June 1, 1998, between Comshare, Incorporated and
Stanley Starkey - incorporated by reference to Exhibit 10.22 to
the Registrant's Form 10-K Report for the fiscal year ended June
30, 1998.
10.21 First Amendment to Comshare, Incorporated Change in Control
Severance Agreement dated as of November 30, 1999, between
Comshare, Incorporated and Stanley R. Starkey - incorporated by
reference to Exhibit 10.05 to the Registrant's Form 10-Q Report
for the quarter ended December 31, 1999.
10.22 Comshare, Incorporated Change in Control Severance Agreement
dated as of February 9, 2001, between Comshare, Incorporated and
Brian Hartlen - incorporated by reference to Exhibit 10.01 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.23 Comshare, Incorporated Change in Control Severance Agreement
dated as of February 16, 2001, between Comshare, Incorporated and
Brian Jarzynski - incorporated by reference to Exhibit 10.02 to
the Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.24 Comshare, Incorporated 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.25 to the Registrant's
Form 10-K Report for the fiscal year ended June 30, 1998.
10.25 First Amendment to 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.04 to the Registrant's
Form 10-Q Report for the quarter ended September 30, 1999.
10.26 Second Amendment to 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.08 to the Registrant's
Form 10-Q Report for the quarter ended March 31, 2001.
10.27 Letter of Understanding, dated February 8, 2001, between
Comshare, Incorporated and Norm Neuman, Jr., and Norman J.
Neuman, Jr. Notices of Grant of Stock Options and Option
Agreements - incorporated by reference to Exhibit 10.03 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.28 Kathryn A. Jehle Notices of Grant of Stock Options and Option
Agreements - incorporated by reference to Exhibit 10.04 to the
Registrant's Form 10-Q Report for the quarter ended March 31,
2001.
10.29 Summary of 1999 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.27 to the Registrant's Form 10-K Report
for the fiscal year ended June 30, 1998.
10.30 Summary of 2000 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.32 to the Registrant's Form 10-K Report
for the fiscal year ended June 30, 2000.
10.31 Summary of 2001 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.33 to the Registrant's Form 10-K Report
for the fiscal year ended June 30, 2000.
(b) Reports on Form 8-K.
Since the end of the fiscal quarter ended March 31, 2001 the Registrant has not
filed any reports on Form 8-K.
11
COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
PAGE
----
Report of Independent Public Accountants 13
Consolidated Statements of Operations for
the Fiscal Years Ended June 30, 2001, 2000 and 1999 14
Consolidated Statements of Comprehensive Loss for
the Fiscal Years Ended June 30, 2001, 2000 and 1999 15
Consolidated Balance Sheets as of June 30, 2001 and 2000 16-17
Consolidated Statements of Cash Flows for the
Fiscal Years Ended June 30, 2001, 2000 and 1999 18
Consolidated Statements of Shareholders' Equity
for the Fiscal Years Ended June 30, 2001, 2000 and 1999 19
Notes to Consolidated Financial Statements 20-32
SCHEDULE
II. Consolidated Schedule of Valuation & Qualifying Accounts 33
12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Comshare, Incorporated:
We have audited the accompanying consolidated balance sheets of COMSHARE,
INCORPORATED (a Michigan corporation) and subsidiaries as of June 30, 2001 and
2000, and the related consolidated statements of operations, comprehensive loss,
cash flows and shareholders' equity for each of the three years in the period
ended June 30, 2001. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Comshare, Incorporated and
subsidiaries as of June 30, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2001 in conformity with accounting principles generally accepted in the United
States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
July 27, 2001 (except with respect to the
information contained in Note 1 and Note 2,
as to which the date is December 27, 2001).
13
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
------------ ------------- ------------
REVENUE
Software licenses $22,184 $ 23,446 $ 23,299
Software maintenance 23,574 23,261 26,228
Implementation, consulting and other services 17,083 14,616 14,445
----------- ------------ -----------
TOTAL REVENUE 62,841 61,323 63,972
COSTS AND EXPENSES
Selling and marketing 23,750 24,169 25,724
Cost of revenue and support 24,476 21,911 24,215
Internal research and product development 8,838 9,070 9,059
General and administrative 6,001 6,536 7,959
Restructuring and unusual charges 892 - 967
----------- ------------ -----------
TOTAL COSTS AND EXPENSES 63,957 61,686 67,924
LOSS FROM OPERATIONS (1,116) (363) (3,952)
OTHER INCOME (EXPENSE)
Interest income 1,364 1,530 1,901
Interest expense (6) (68) (63)
Exchange loss (114) (54) (56)
----------- ------------ -----------
TOTAL OTHER INCOME 1,244 1,408 1,782
INCOME (LOSS) BEFORE TAXES 128 1,045 (2,170)
Provision (benefit) for income taxes 45 366 (1,034)
----------- ------------ -----------
NET INCOME (LOSS) $ 83 $ 679 $ (1,136)
=========== ============ ===========
SHARES USED IN BASIC EPS COMPUTATION 9,865 9,664 9,700
=========== ============ ===========
SHARES USED IN DILUTED EPS COMPUTATION 9,935 9,791 9,700
=========== ============ ===========
NET INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED EPS $ 0.01 $ 0.07 $ (0.12)
=========== ============ ===========
The accompanying notes are an integral part of these consolidated statements.
14
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(IN THOUSANDS)
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
---- ---- ----
Net income (loss) $ 83 $ 679 $(1,136)
Other comprehensive loss:
Currency translation adjustment (295) (702) (848)
Decrease (increase) in pension liability,
net of tax 198 (1,020) (3,262)
----- ------- -------
Other comprehensive loss, net of tax (97) (1,722) (4,110)
----- ------- -------
COMPREHENSIVE LOSS $ (14) $(1,043) $(5,246)
===== ======= =======
The accompanying notes are an integral part of these consolidated statements.
15
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
AS OF JUNE 30,
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $24,106 $ 29,506
Accounts receivable, less allowance for
doubtful accounts of $1,269 and $1,230
as of June 30, 2001 and 2000, respectively 19,541 17,328
Deferred income taxes 767 759
Prepaid expenses and other current assets 1,411 1,697
----------- -----------
TOTAL CURRENT ASSETS 45,825 49,290
Computers and other equipment 6,716 8,508
Leasehold improvements 2,649 2,774
----------- -----------
Property and equipment, at cost 9,365 11,282
Less - Accumulated depreciation 7,955 9,397
----------- -----------
Property and equipment, net 1,410 1,885
Goodwill, net of accumulated
amortization of $1,923 and $1,853 as of
June 30, 2001 and 2000, respectively 977 1,047
Deferred income taxes 7,355 6,445
Other assets 3,710 3,757
----------- -----------
TOTAL ASSETS $59,277 $ 62,424
=========== ===========
The accompanying notes are an integral part of these consolidated balance
sheets.
16
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
AS OF JUNE 30,
2001 2000
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,047 $ 2,252
Accrued liabilities -
Payroll 2,379 2,240
Taxes 1,370 1,154
Other 3,537 6,583
----------- -----------
Total accrued liabilities 7,286 9,977
Deferred revenue 11,166 12,178
----------- -----------
TOTAL CURRENT LIABILITIES 21,499 24,407
Long-term debt 164 599
Other liabilities 5,950 6,527
----------- -----------
TOTAL LIABILITIES 27,613 31,533
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock, no par value;
authorized 5,000,000 shares; none issued - -
Common stock, $1 par value;
authorized 20,000,000 shares; issued and outstanding
10,104,626 shares as of June 30, 2001
and 9,771,962 as of June 30, 2000. 10,105 9,772
Capital contributed in excess of par value 39,244 38,790
Retained deficit (7,724) (7,807)
Accumulated other comprehensive income:
Pension liability, net of tax (4,084) (4,282)
Cumulative translation adjustment (5,877) (5,582)
----------- -----------
Total shareholders' equity 31,664 30,891
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $59,277 $ 62,424
=========== ===========
The accompanying notes are an integral part of these consolidated balance
sheets.
17
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
------------ ------------ -------------
OPERATING ACTIVITIES
Net income (loss) $ 83 $ 679 $ (1,136)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 906 1,288 1,982
Changes in operating assets and liabilities:
Accounts receivable (2,580) (2,929) 6,360
Prepaid expenses and other assets 305 3,040 (2,524)
Deferred income taxes (918) (883) 2,142
Accounts payable 829 (3,647) (6,303)
Accrued liabilities (2,541) 844 (7,827)
Deferred revenue (813) 735 (3,312)
Other liabilities (577) (41) (2,242)
----------- ----------- ------------
Net cash used in operating activities (5,306) (914) (12,860)
INVESTING ACTIVITIES
Payments for property and equipment (267) (505) (1,578)
Other (170) - 378
----------- ----------- ------------
Net cash used in investing activities (437) (505) (1,200)
FINANCING ACTIVITIES
Net repayments under debt agreements,
capital lease agreements and notes payable (423) (1,462) (747)
Common stock repurchased and retired - - (2,835)
Employee stock purchases 787 270 626
Other - 397 315
----------- ----------- ------------
Net cash provided by (used in) financing activities 364 (795) (2,641)
EFFECT OF EXCHANGE RATE CHANGES (21) (492) (398)
----------- ----------- ------------
NET DECREASE IN CASH (5,400) (2,706) (17,099)
CASH AT BEGINNING OF PERIOD 29,506 32,212 49,311
----------- ----------- ------------
CASH AT END OF PERIOD $24,106 $ 29,506 $ 32,212
=========== =========== ============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 6 $ 49 $ 88
=========== =========== ============
Cash paid for taxes $ 976 $ 819 $ 3,863
=========== =========== ============
The accompanying notes are an integral part of these consolidated statements.
18
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
------------ ------------- ------------
COMMON STOCK
Balance beginning of year $ 9,772 $ 9,642 $ 10,003
Employee Stock Purchases 333 130 207
1994 Executive Stock Purchase Program - - 50
Stock repurchased - - (618)
----------- ------------ -----------
Balance end of year 10,105 9,772 9,642
----------- ------------ -----------
CAPITAL CONTRIBUTED IN EXCESS OF PAR VALUE
Balance beginning of year 38,790 38,650 40,335
Employee Stock Purchases 454 140 419
1994 Executive Stock Purchases - - 113
Stock repurchased - - (2,217)
----------- ------------ -----------
Balance end of year 39,244 38,790 38,650
----------- ------------ -----------
RETAINED DEFICIT
Balance beginning of year (7,807) (8,486) (7,350)
Net income (loss) 83 679 (1,136)
----------- ------------ -----------
Balance end of year (7,724) (7,807) (8,486)
----------- ------------ -----------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance beginning of year (9,864) (8,142) (4,032)
Comprehensive income (97) (1,722) (4,110)
----------- ------------ -----------
Balance end of year (9,961) (9,864) (8,142)
----------- ------------ -----------
LESS - NOTES RECEIVABLE
Balance beginning of year - 398 551
Payments on executive loans - (398) (153)
----------- ------------ -----------
Balance end of year - - 398
----------- ------------ -----------
TOTAL SHAREHOLDERS' EQUITY $31,664 $ 30,891 $ 31,266
=========== ============ ===========
The accompanying notes are an integral part of these consolidated statements.
19
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY. Comshare, Incorporated (the "Company") develops, markets and
supports management planning and control applications software. The Company also
provides maintenance, training, consulting and support services. Comshare is
currently providing maintenance at over 2,350 corporate and public sector
customer sites. The Company markets its products through a direct sales force in
the United States, Canada and the United Kingdom and has an extensive
distributor network in 41 other countries. The Company was incorporated in
Michigan in February, 1966 and commenced operations at that time.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its subsidiaries, all of which are wholly owned. All
material intercompany accounts and transactions have been eliminated.
REVENUE. The Company's revenue consists of software licenses, software
maintenance and implementation services. The Company recognizes software license
revenue from licensing of software products to end users when persuasive
evidence of an arrangement exists, delivery has occurred, the sales price is
fixed or determinable and collectibility is probable, in accordance with the
American Institute of Certified Public Accountants' ("AICPA") Statement of
Position ("SOP") 97-2 "Software Revenue Recognition" and related
interpretations.
Software maintenance revenue, whether bundled with a product license or priced
separately, is recorded as deferred revenue on the balance sheet when invoiced
and is recognized over the term of the maintenance contract which is generally
twelve months.
Implementation services revenue is recognized as the services are performed.
Implementation services are not considered essential to the functionality of the
software.
For contracts with multiple elements (e.g., delivered and undelivered products,
maintenance, and implementation services), the Company allocates revenue to the
delivered element of the contract using the residual method, in accordance with
SOP-98-9, "Modifications of SOP 97-2 with Respect to Certain Transactions."
Under this method, revenue is allocated to the undelivered elements based on
vendor specific objective evidence ("VSOE") and the remaining revenue is
allocated to the delivered element. VSOE of fair value for annual maintenance
contracts is established with the optional stated future renewal rates included
in the contracts. VSOE of fair value for the implementation services element is
based upon the standard hourly rates the Company charges for service when such
services are sold separately.
Revenue from the Company's resellers is recognized when the reseller reports the
sale of the product to the end user to the Company. The Company's agreements
with its customers and resellers customarily do not contain product return
rights.
EXPENSE CLASSIFICATION. Selling and marketing expenses primarily include
employee costs and travel costs, facilities expenses and advertising. Cost of
revenue and support includes personnel and other costs related to implementation
service revenue, customer support costs, direct cost of producing software and
royalty expenses for products licensed from others for use in the Company's
product offerings. The Company generally pays royalties only on licensed
products it sells, and does not have any minimum or other ongoing material
royalty payment commitments.
FOREIGN CURRENCY TRANSLATION. All assets and liabilities of the Company's
foreign operations are translated at current exchange rates and revenue and
expenses are translated at monthly exchange rates. Resulting translation
adjustments are reflected as a separate component of shareholders' equity.
Foreign currency transaction gains and losses are included in net income.
FINANCIAL INSTRUMENTS. The Company, at various times, enters into forward
exchange contracts to hedge certain exposures related to identifiable foreign
currency transactions that are relatively certain as to both timing and amount.
On July 1, 2000, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 133, as amended by SFAS No. 137 and SFAS No. 138 and has quantified
the impact, determining that there was no material effect on the financial
statements. The Company uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange rates. The use of these financial
instruments mitigates the Company's exposure to these risks with the intent of
reducing the risks and variability of the Company's operating results.
Initially, upon adoption of SFAS No. 133, and prospectively, on the date a
derivative contract is entered into, the Company designates the derivative as a
hedge. The ineffective portion of the hedge is recorded in earnings and
reflected in the consolidated statement of operations as exchange gain or loss
within other income (expense). The Company formally documents its hedge
relationships, including the identification of the hedging instruments and the
hedged items, as well as its risk management objectives and strategies for
undertaking the
20
hedge transaction. At June 30, 2001 and 2000, the Company had forward foreign
currency exchange contracts of $1.7 million and $5.6 million (notional amounts),
respectively. The contracts outstanding at June 30, 2001 mature through
September 14, 2001 and are intended to hedge various foreign currency
commitments due from foreign subsidiaries and the Company's distributors. Due to
the short-term nature of these financial instruments, the fair value of these
contracts is not materially different than their notional amount at June 30,
2001 and 2000.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents includes highly liquid
investments with maturities of ninety days or less.
COMPUTER SOFTWARE. Product upgrades for the Company's products have been
released regularly with an almost continuous product development cycle. Based on
these continuous product life cycles, the time between establishing
technological feasibility and general release to the public is very short. As a
result, software costs qualifying for capitalization are not significant.
Accordingly, the Company does not capitalize software development costs and does
not anticipate capitalization of software costs in future periods.
DEPRECIATION. The cost of depreciable assets is charged to operations
on a straight-line basis. Principal service lives for computers and
other equipment are three to five years. Leasehold improvements are
amortized over the expected life of the asset or term of the lease,
whichever is shorter.
GOODWILL. Goodwill represents the unamortized cost in excess of fair
value of net assets acquired and is amortized on a straight-line basis
over forty years. On an ongoing basis, management reviews the valuation
and amortization of goodwill. As part of this review, the Company
considers the value of future cash flows attributable to the acquired
operations in evaluating potential impairment of goodwill. There was no
adjustment to the Company's financial statements as a result of this
evaluation. In June 2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards No. 141, "Business
Combinations" ("SFAS 141") and No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS No. 141 requires all business combinations
initiated after June 2001 to be accounted for under the purchase method
of accounting. Under SFAS No. 142, goodwill is no longer subject to
amortization over its estimated useful life. Companies will, however,
be required to perform an annual fair-value-based analysis to determine
whether the value of goodwill has been impaired. The Company will adopt
SFAS No. 142 for the Company's fiscal year beginning July 1, 2002.
Although management has not fully assessed the impact of these
pronouncements, the Company will cease recognizing approximately
$17,500 of quarterly goodwill amortization beginning in the first
quarter of fiscal year 2003.
INCOME TAXES. The Company accounts for estimated income taxes under the
provisions of SFAS No. 109, "Accounting for Income Taxes." This
statement provides for an asset and liability approach under which
deferred income taxes are provided based upon enacted tax laws and
rates applicable to the periods in which the taxes become payable.
EARNINGS PER SHARE. Earnings per share of common stock is based on the
daily weighted average number of shares of common stock outstanding
considering the dilutive effect of outstanding stock options when
appropriate.
STOCK PLANS. The Company accounts for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board
Opinion (APB) No. 25 "Accounting for Stock Issued to Employees," and
related interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price
of the stock at grant date over the amount an employee must pay to
acquire the stock. The Company has provided pro forma disclosure of the
fair value of stock options granted during fiscal 2001, 2000 and 1999
in accordance with the requirements of SFAS No. 123, "Accounting for
Stock-Based Compensation." See Note 5 of Notes to Consolidated
Financial Statements.
ACCOUNTING FOR PENSIONS. The Financial Accounting Standards Board has
issued SFAS No. 132 "Employers' Disclosures about Pensions and Other
Post-retirement Benefits," which requires additional information on
changes in benefit obligations and fair values of plan assets. See Note
7 of Notes to Consolidated Financial Statements.
USE OF ESTIMATES. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the period. Actual
results may differ from these estimates.
21
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
RECLASSIFICATIONS. Certain amounts in the 1999 and 2000 financial statements
have been reclassified to conform with 2001 presentations.
2. RESTRUCTURING AND UNUSUAL CHARGES
In March 2001, the Company implemented a restructuring plan to reduce
personnel costs. Restructuring and related charges of $0.9 million were expensed
in the quarter ended March 31, 2001. Employee groups impacted by the
restructuring include marketing and field operations in the Company's North
American and United Kingdom offices. A total of thirteen people or 4% of the
worldwide headcount were affected by this restructuring plan. All separations
were completed prior to June 30, 2001.
--------------------------------- -------------------------- ---------------------- -------------------------
RESTRUCTURING COMPONENTS BEGINNING RESERVE CHARGES TO RESERVES BALANCE AT
(IN THOUSANDS) (IN THOUSANDS) JUNE 30, 2001
(IN THOUSANDS)
--------------------------------- -------------------------- ---------------------- -------------------------
Employee severance $892 $(248) $644
--------------------------------- -------------------------- ---------------------- -------------------------
Total cash expenditures relating to the restructuring charge are expected
to be $0.9 million. Such cash expenditures are expected to be funded from the
Company's available cash, over a 24-month period primarily during the first six
months of that period.
As of June 30, 2001, remaining cash expenditures associated with employee
separations are estimated to be approximately $0.6 million. The Company
substantially completed the initiatives in its restructuring plan during the
third and fourth quarters of the fiscal year 2001. Because of planned
investments in MPC products, the Company does not expect the personnel cost
reduction actions to reduce the Company's total expenses.
In the fourth quarter of fiscal 1999, the Company recorded a $1.0 million
pre-tax charge for restructuring related to the consolidation of the Company's
financial and marketing activities and the consolidation of certain facilities.
Employee groups impacted by the Company's restructuring plan included:
marketing, human resources, and finance and administration from the Company's
Ann Arbor location and finance and administration personnel from the Company's
United Kingdom location. A total of 14 people were affected by this
restructuring plan. Substantially all of the cash associated with this charge
had been expended at June 30, 2001.
---------------------------- -------------------------- -------------------------- --------------------------
RESTRUCTURING BEGINNING CHARGES TO BALANCE AT
COMPONENTS RESERVE RESERVE JUNE 30, 2001
(IN THOUSANDS) (IN THOUSANDS) (IN THOUSANDS)
---------------------------- -------------------------- -------------------------- --------------------------
Employee severance $581 $(581) $0
---------------------------- -------------------------- -------------------------- --------------------------
Lease exit costs $349 $(349) $0
---------------------------- -------------------------- -------------------------- --------------------------
Other $37 $(37) $0
---------------------------- -------------------------- -------------------------- --------------------------
Total $967 $(967) $0
---------------------------- -------------------------- -------------------------- --------------------------
As of June 30, 2001, the Company had $1.4 million of accruals remaining
from restructuring charges. Of this $1.4 million, $0.4 is related to facilities
and the remaining amounts are related to employee severance agreements.
At June 30, 2000, the Company had $1.7 million of accruals remaining that
related to restructuring charges. Of this, $0.9 million is related to facilities
and the remaining amounts are related to employee severance agreements.
22
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
3. BORROWINGS
The Company has a $10 million credit agreement which matures on September
30, 2003. Borrowings are secured by accounts receivable and the credit agreement
contains covenants regarding among other things, earnings, leverage, net worth
and payment of dividends. Under the terms of the credit agreement, the Company
is not permitted to pay cash dividends on its common stock. Permitted borrowings
available as of June 30, 2001 under the credit agreement were $10 million, of
which $0.2 million was outstanding. At June 30, 2000, $0.6 of the permitted
borrowings available were outstanding. Borrowings available at any time are
based on the lower of $10 million or a percentage of worldwide eligible accounts
receivable and cash. The interest rate on borrowings denominated in Japanese
yen, which was used to hedge receivables, was 1.83% and 2.04% for fiscal years
ended June 30, 2001 and 2000, respectively.
4. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000,000 shares of
no par value preferred stock. The shares can be issued in one or more series
with full, limited or no voting powers and with such special rights,
qualifications, limitations and restrictions as may be adopted by the Board of
Directors.
In September 1996, the Company's Board of Directors approved a Shareholder
Rights Plan ("Rights Plan"). Under the Rights Plan, the Company declared a
dividend of one preferred stock purchase right on each outstanding share of
common stock. Under certain conditions, each right may be exercised to purchase
one one-hundredth share of Series A Preferred Stock at an exercise price of
$110. Of the 5,000,000 preferred shares the Company is authorized to issue,
200,000 shares have been designated Series A Preferred. The Series A Preferred
has certain dividend, voting and liquidation preferences. No preferred shares
have been issued as of June 30, 2001. The rights may only be exercised beginning
ten business days following a public announcement that a person or group
acquires 15% or more of the Company's common stock (subject to certain
exceptions) or beginning ten business days (or under certain circumstances at a
later date) following the commencement or announcement of a tender or exchange
offer which would cause that result. In addition, under certain circumstances,
the rights will entitle shareholders (other than the acquirer) to purchase the
Company's common stock, or stock of the acquirer, at a discount to market
prices. The rights, which do not have voting rights, expire on September 30,
2006.
5. STOCK OPTIONS
The Company has four stock option plans: The 1988 Stock Option Plan (the
"1988 Plan"), the 1994 Directors Stock Option Plan (the "Directors Plan"), the
1997 Global Employee Stock Option Plan (the "1997 Plan") and the 1998 Global
Employee Stock Option Plan (the "1998 Plan").
1988 STOCK OPTION PLAN
The 1988 Plan, which expired on June 26, 1998, provided for the grant of
both incentive stock options and non-qualified options to officers and key
employees. Options under the 1988 Plan were granted at 100% of market price on
the date of grant, are exercisable at the rate of 25% per year after one year
from the date of grant and have a term of five years.
At June 30, 2001, the Company has reserved 384,500 shares of common stock
for the exercise of employee stock options under the 1988 Stock Option Plan. The
number of options outstanding and exercisable under the 1988 Plan was 306,252
and 241,379 at June 30, 2001 and 2000, respectively, and no further grants can
be made under the 1988 Plan.
1994 DIRECTORS STOCK OPTION PLAN
The Directors Plan provides for the grant of options to purchase up to
200,000 shares of the Company's common stock to non-employee directors of the
Company. Options under the Directors Plan are granted at 100% of
23
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
the market price on the date of grant, are exercisable at a rate of 25% per year
after one year from the date of grant and have a term of five years.
At June 30, 2001 the Company has reserved 196,250 shares of common stock
for the exercise of directors' stock options. The number of options outstanding
and exercisable under the Directors Plan was 28,625 and 22,500 at June 30, 2001
and 2000, respectively.
1997 GLOBAL EMPLOYEE STOCK OPTION PLAN
The 1997 Plan provides for the issuance of options to purchase 500,000
shares of the Company's common stock to non-officer employees of the Company.
Options under the 1997 Plan were granted at 100% of the market price on the date
of grant, exercisable at a rate of 25% per year after one year from the date of
grant and have a term of five years. With the adoption of the 1998 Global
Employee Stock Option Plan by shareholders on November 23, 1998, no future
grants under the 1997 Plan are permitted.
At June 30, 2001, the Company has reserved 144,476 shares of common stock
for the exercise of employee stock options under the 1997 Plan. The number of
options outstanding and exercisable under the 1997 Global Employee Stock Option
Plan was 88,944 and 61,580 at June 30, 2001 and 2000, respectively.
1998 GLOBAL EMPLOYEE STOCK OPTION PLAN
The 1998 Plan provides for the issuance of options to purchase 1,400,000
shares of the Company's common stock to all employees including officers, key
employees and non-officer employees of the Company. Options under the 1998 Plan
are granted at 100% of the market price on the date of grant and are exercisable
at a rate of 25% per year after one year from the date of grant and have a term
of 5 or 10 years.
At June 30, 2001, the Company has reserved 1,390,100 shares of common stock
for the exercise of employee stock options under the 1998 Plan. The number of
options outstanding and exercisable under the 1998 Plan was 291,269 and 154,233,
at June 30, 2001 and 2000, respectively.
SUMMARY OF ACTIVITY
Stock option activity under all plans is summarized below:
2001 2000 1999
------------------------ ------------------------ -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------ ---------- ------------ ---------- ------------ ----------
Outstanding at beginning of year 1,456,476 $ 5.85 1,496,847 $ 6.20 976,234 $10.51
Granted 256,900 3.69 212,900 4.18 858,200 3.48
Exercised (9,150) 3.32 (975) - - -
Cancelled (217,225) 7.57 (252,296) 6.53 (337,587) 11.86
------------ ------------ ------------
Outstanding at end of year 1,487,001 $ 5.24 1,456,476 $ 5.85 1,496,847 $ 6.20
============ ============ ============
Options exercisable at end of year 715,090 479,692 241,027
Weighted average fair value of
options granted during the year $ 2.12 $ 2.48 $ 2.04
24
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A summary of outstanding and exercisable stock options as of June 30, 2001 is as
follows:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- ---------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------- -------------- -------------- --------------- -------------- --------------
$ 2.75 to $ 3.06 138,475 6.06 $ 2.97 18,812 $ 3.06
3.09 to 3.09 363,000 7.98 3.09 183,976 3.09
3.13 to 4.44 349,550 6.03 3.83 82,105 3.60
4.63 to 7.75 438,376 2.27 6.48 264,494 6.83
8.00 to 27.25 197,600 1.03 10.52 165,703 10.95
- ------------- ------------ -------------- -------------- --------------- -------------- --------------
$ 2.75 to $ 27.25 1,487,001 4.74 $ 5.24 715,090 $ 6.36
============== ============== =============== ============== ==============
PRO FORMA DISCLOSURE UNDER SFAS 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION"
Using the intrinsic value method of accounting for the value of stock
options and shares of the Company's stock under the Employee Stock Purchase Plan
(Note 6) granted during the fiscal years ended June 30, 2001, 2000 and 1999, no
compensation cost was recorded in the accompanying Consolidated Statement of
Operations. Had compensation costs been determined based on the fair value at
the date of grant for awards in fiscal years ended June 30, 2001, 2000 and 1999
consistent with the provisions of SFAS 123, net loss and net loss per share
would have been reduced (increased) to the pro forma amounts indicated below (in
thousands, except per share amounts):
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
--------------- -------------- ----------
Net income (loss) - as reported $ 83 $ 679 $(1,136)
Net income (loss) - pro forma $ (670) $ (250) $(1,630)
Net income (loss) per share - as reported $ 0.01 $ 0.07 $ (0.12)
Net income (loss) per share - pro forma $ (0.07) $ (0.03) $ (0.17)
The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model. Because the SFAS 123 method of
accounting has not been applied to options granted prior to July 1, 1995, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years. The following weighted average assumptions were used
in valuing the option grants:
25
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FISCAL YEARS ENDED JUNE 30,
2001 2000 1999
------------ ----------- ---------
STOCK OPTION PLANS:
Expected life (years) 4.82 4.82 4.84
Risk free interest rate 4.95 % 6.25 % 5.42 %
Expected stock price volatility 0.83 0.85 0.85
Expected dividend yield 0.00 % 0.00 % 0.00 %
EMPLOYEE STOCK PURCHASE PLAN:
Expected life (years) 0.50 0.50 0.50
Risk free interest rate 4.95 % 6.25 % 5.42 %
Expected stock price volatility 0.83 0.85 0.85
Expected dividend yield 0.00 % 0.00 % 0.00 %
6. EMPLOYEE STOCK PURCHASE PLAN
Under the Employee Stock Purchase Plan (the "ESPP"), 2,519 shares of the
Company's common stock have been reserved for purchase as of June 30, 2001. The
ESPP allows participating employees to purchase shares of the Company's common
stock through payroll deductions at 85% of the lower of fair market value at the
beginning or the end of the six month period beginning either July 1 or January
1. Non-employee directors have the right to purchase the Company's common stock
in lieu of cash for directors' fees at a purchase price equal to 100% of fair
market value on the date of issuance, which shall be February 15 or August 15.
Substantially all employees are eligible to participate in the ESPP. Under the
ESPP, 322,763, 233,541, and 148,716 shares were purchased and issued in fiscal
2001, 2000 and 1999, respectively.
7. BENEFIT PLANS
The Company has a profit sharing plan covering substantially all United
States employees. The profit sharing plan provides for Company matching of 100%
of contributions based on eligibility rules for employees making 401(k)
contributions up to 6% of their compensation. The Company also has a deferred
compensation plan for United States officers for the payment of benefits which
would not otherwise be eligible under its tax-qualified retirement plans. The
Company's contributions, other than the matching contributions to the profit
sharing plan, are discretionary and are determined by the Board of Directors.
The total contributions for both plans were $617,000, $733,000 and $642,000 in
fiscal 2001, 2000 and 1999, respectively.
A subsidiary in the United Kingdom maintains a defined contribution plan
for substantially all United Kingdom employees. The plan provides a minimum
annual Company contribution of 2.5% of the employee's compensation and matching
contributions up to an additional 2.5% of compensation, based on employee
contributions.
The United Kingdom subsidiary also has a defined benefit plan, which
covered substantially all of its employees hired prior to January 1, 1994. This
plan was frozen on April 1, 1997, with no further benefits accruing under the
plan. The components of pension expense for the fiscal years ended June 30 are
as follows (in thousands):
26
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2001 2000
------------ ------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 25,277 $ 23,640
Interest cost 1,401 1,408
Actuarial gain/(loss) (4,476) 693
Benefits paid (456) (464)
------------ ------------
Benefit obligation at end of year 21,746 25,277
============ ============
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 21,870 21,398
Actual return on plan assets (1,444) 1,734
Actuarial loss (1,277) (798)
Benefits paid (456) (464)
------------ ------------
Fair value of plan assets at end of year 18,693 21,870
============ ============
Funded status (3,053) (3,407)
Unrecognized actuarial loss 5,381 5,685
------------ ------------
Net amount recognized 2,328 2,278
============ ============
AMOUNTS RECOGNIZED IN THE ACCOMPANYING
CONSOLIDATED FINANCIAL STATEMENTS:
Prepaid benefit cost 2,328 2,278
Accrued benefit liability (5,381) (5,685)
Accumulated other comprehensive income 5,381 5,685
------------ ------------
Net amount recognized $ 2,328 $ 2,278
============ ============
WEIGHTED - AVERAGE ASSUMPTIONS AS OF JUNE 30: 2001 2000 1999
------------ ------------ ------------
Discount rate 6.50 % 6.00 % 6.25%
Expected return on plan assets 7.50 % 7.50 % 7.50%
COMPONENTS OF NET PERIODIC BENEFIT COST:
Interest cost $ 1,401 $ 1,408 $ 1,357
Expected return on plan assets (1,520) (1,528) (1,491)
Recognized actuarial loss 109 76 5
------------ ------------ ------------
Net periodic benefit cost $ (10) $ (44) $ (129)
============ ============ ============
27
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. INCOME TAXES
A summary of income (loss) before provision (benefit) for income taxes and
components of the provision (benefit) for income taxes for the fiscal years
ended June 30 is as follows (in thousands):
2001 2000 1999
----------- ----------- ----------
Income (loss) before provision (benefit) for income taxes:
Domestic $ (6,194) $(4,156) $(5,558)
Foreign 6,322 5,201 3,388
----------- ----------- ----------
$ 128 $ 1,045 $(2,170)
=========== =========== ==========
Domestic benefit for income taxes:
Current $ (976) $ (600) $(2,888)
Deferred (1,159) (764) (1,176)
Foreign provision (benefit) for income taxes:
Current 2,539 821 713
Deferred (359) 909 2,317
----------- ----------- ----------
Provision (benefit) for income taxes $ 45 $ 366 $(1,034)
=========== =========== ==========
The differences between the United States Federal statutory income tax
provision (benefit) and the consolidated income tax provision (benefit) for the
fiscal years ended June 30 are summarized as follows (in thousands):
Federal statutory provision (benefit) $ 45 $ 366 $ (760)
Non-deductible meals and entertainment 59 91 121
Change in valuation reserve (315) (335) (2,112)
Tax rate difference (276) 268 (135)
Effect of sale of foreign subsidiaries - - 1,813
Unutilized foreign tax credits 224 - -
Settlement of prior year taxes 310 - -
Other, net (2) (24) 39
----------- ----------- ----------
Actual income tax provision (benefit) $ 45 $ 366 $(1,034)
=========== =========== ==========
Deferred income taxes represent temporary differences in the
recognition of certain items for income tax and financial reporting purposes.
The components of the net deferred income tax asset as of June 30 are summarized
as follows (in thousands):
28
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2001 2000
------------- ------------
Deferred income tax assets:
Research and development $ 3,423 $ 1,650
Tax credits 85 1,773
Depreciation and amortization 165 253
Net operating loss 7,196 5,345
Employee benefits 480 549
Accrued liabilities 472 547
Capitalized software 1,754 2,155
Other 3,473 3,608
------------- ------------
$17,048 $15,880
Valuation allowance (7,915) (8,231)
------------- ------------
$ 9,133 $ 7,649
Deferred income tax liabilities:
Employee benefits (686) (730)
Other (325) (315)
------------- ------------
(1,011) (1,045)
------------- ------------
Net deferred income tax asset $ 8,122 $ 6,604
============= ============
Realization of deferred tax assets associated with the Company's future
deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards is dependent upon generating sufficient taxable income
prior to their expiration. Although realization of the deferred tax assets is
not assured, management believes it is more likely than not that the deferred
tax assets will be realized through future taxable income or by using a tax
strategy currently available to the Company. On a quarterly basis, management
will assess whether it remains more likely than not that the deferred tax assets
will be realized. This assessment could be impacted by a determination that the
tax strategy is no longer sufficient to realize some or all of the deferred tax
assets.
At June 30, 2001, for income tax purposes, the Company had available net
operating loss carryforwards of approximately $7.2 million, which do not expire.
In addition, the Company has general business credits, which will expire between
2010 and 2019.
9. LEASES
The Company leases office space, transportation and computer equipment
under non-cancelable operating leases. Initial lease terms vary in length and
several of the leases contain renewal options. Future minimum lease payments
under all non-cancelable operating leases are as follows (in thousands):
29
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FISCAL YEARS ENDING JUNE 30,
- --------------------------------------------------------------
2002 $ 4,792
2003 3,981
2004 3,451
2005 2,584
2006 1,161
Thereafter 1,548
-------------
Total minimum payments $ 17,517
=============
Minimum payments under non-cancelable operating leases have not been
reduced by minimum sublease rentals of $5.8 million due in the future under
non-cancelable subleases.
Total rental expense was $4.2 million, $5.2 million and $6.1 million for
the fiscal years ended June 30, 2001, 2000, and 1999, respectively.
10. SEGMENT REPORTING
The Company has only one reportable segment - the development, marketing
and support of management planning and control applications software. Revenue is
derived from the licensing of software, software maintenance, and the provision
of product implementation and support services.
No single customer accounted for more than 10% of the Company's total
revenue in the fiscal years ended June 30, 2001, 2000 and 1999. In addition, the
Company is not dependent on any single customer or group of customers.
The accounting policies for the geographic information are the same as
those described in Note 1 of the Notes to Consolidated Financial Statements.
Segment information for revenue is disclosed based on the geographic location of
the customer. Geographic segment information is as follows:
30
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FISCAL YEARS ENDED JUNE 30,
----------------------------------------------
2001 2000 1999
------------ ------------ ------------
Revenue from external customers:
United States $ 35,927 $ 31,928 $31,744
United Kingdom 12,112 13,418 12,492
Other countries 14,802 15,977 19,736
------------ ------------ ------------
TOTAL REVENUE $ 62,841 $ 61,323 $63,972
============ ============ ============
Operating income (loss):
United States $ (3,345) $ 333 $(1,590)
United Kingdom 4,123 1,200 420
Other countries 9,644 10,197 10,023
------------ ------------ ------------
Total operating income 10,422 11,730 8,853
Unallocated expenses (10,294) (10,685) (11,023)
------------ ------------ ------------
INCOME (LOSS) BEFORE TAXES $ 128 $ 1,045 $(2,170)
============ ============ ============
Identifiable assets:
United States $ 50,511 $ 50,515 $59,242
United Kingdom and other countries 8,766 11,909 29,450
------------ ------------ ------------
TOTAL IDENTIFIABLE ASSETS $ 59,277 $ 62,424 $88,692
============ ============ ============
Unallocated expenses consist of general corporate expenses, internal
research and product development expenses, interest expense and interest income.
Unallocated amounts in the fiscal year ended June 30, 2001 include approximately
$0.9 million of restructuring and unusual related expenses. Unallocated amounts
in the fiscal year ended June 30, 1999 include approximately $1.0 million of
restructuring and unusual related expenses.
31
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
11. QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows (unaudited and in
thousands except per share data):
INCOME NET
(LOSS) NET INCOME
FROM INCOME (LOSS)
REVENUE OPERATIONS (LOSS) PER SHARE
----------- -------------- ----------- ------------
2001
First Quarter $ 15,443 $ (287) $ 78 $ 0.01
Second Quarter 14,825 (304) 5 -
Third Quarter 15,877 (868) (517) (0.05)
Fourth Quarter 16,696 343 517 0.05
----------- -------------- ----------- ------------
Year Ended June 30 $ 62,841 $ (1,116) $ 83 $ 0.01
=========== ============== =========== ============
2000
First Quarter $ 14,506 $ (178) $ 52 $ 0.01
Second Quarter 15,023 (250) 59 0.01
Third Quarter 15,028 (170) 161 0.02
Fourth Quarter 16,766 235 407 0.04
----------- -------------- ----------- ------------
Year Ended June 30 $ 61,323 $ (363) $ 679 $ 0.07
=========== ============== =========== ============
1999
First Quarter $ 17,159 $ (409) $ 52 $ 0.01
Second Quarter 16,925 (379) 80 0.01
Third Quarter 14,798 (1,782) (1,422) (0.15)
Fourth Quarter 15,090 (1,382) 154 0.02
----------- -------------- ----------- ------------
Year Ended June 30 $ 63,972 $ (3,952) $(1,136) $ (0.12)
=========== ============== =========== ============
The Company recorded a $0.9 million restructuring charge in the
third quarter ending March 31, 2001. This charge reflected certain cost
reduction actions by the Company, taken to reduce personnel costs and other
expenses.
During the quarter ended June 30, 1999, the Company recorded approximately
$1.0 million of restructuring charges related to staff reductions due to the
consolidation of the Company's financial and marketing activities and the
consolidation of certain facilities.
12. LITIGATION
The Company is a party to various disputes and litigation in the normal
course of business. Management does not anticipate that the outcome of any such
disputes or litigation will have a materially adverse effect on the financial
position of the Company.
32
COMSHARE, INCORPORATED
SCHEDULE II
CONSOLIDATED SCHEDULE
OF VALUATION & QUALIFYING ACCOUNTS
ADDITIONS
BALANCE CHARGED TO (DEDUCTIONS) BALANCE
DESCRIPTION BEGINNING COSTS AND FROM TRANSLATION OTHER END OF
OF PERIOD EXPENSES RESERVE ADJUSTMENTS RELATED PERIOD
------------ ------------ ------------ -------------- --------- ----------
Allowance for doubtful accounts
for the years ended June 30:
2001 $ 1,230 $ - $ 36 $ 3 $ - $ 1,269
============ ============ ============ ============== ========= ==========
2000 $ 1,327 $ - $ (96) $ (1) $ - $ 1,230
============ ============ ============ ============== ========= ==========
1999 $ 1,830 $ 302 $ (816) $ 11 $ - $ 1,327
============ ============ ============ ============== ========= ==========
ADDITIONS
BALANCE CHARGED TO (DEDUCTIONS) BALANCE
DESCRIPTION BEGINNING COSTS AND FROM TRANSLATION OTHER END OF
OF PERIOD EXPENSES RESERVE ADJUSTMENTS RELATED PERIOD
------------ ------------ ------------ -------------- --------- ----------
Restructuring Reserves
for the years ended June 30:
2001 $ 1,730 $ 892 $(1,210) $ - $ - $ 1,412
============ ============ ============ ============== ========= ==========
2000 $ 4,288 $ - $(2,558) $ - $ - $ 1,730
============ ============ ============ ============== ========= ==========
1999 $ 7,074 $ 967 $(3,753) $ - $ - $ 4,288
============ ============ ============ ============== ========= ==========
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment No. 1 to the
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
Comshare, Incorporated
DATE: DECEMBER 28, 2001 By: /s/ Brian Jarzynski
-------------------
Brian Jarzynski
Vice President,
Chief Financial Officer and
Treasurer
34
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
3.01 Restated Articles of Incorporation of the Registrant, as amended -
incorporated by reference to Exhibit 3.01 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1998.
3.02 Restated Bylaws of the Registrant - incorporated by reference to
Exhibit 3.02 to the Registrant's Form 8-K Report filed March 9, 2001.
4.01 Specimen form of Common Stock Certificate - incorporated by reference
to Exhibit 4(c) to the Registrant's Form S-1 Registration Statement No.
2-29663.
4.02 Credit agreement dated September 23, 1997, among Comshare,
Incorporated, its Borrowing Subsidiary (as defined therein) and Harris
Trust and Savings Bank - incorporated by reference to Exhibit 4.02 to
the Registrant's Form 10-K Report for the fiscal year ended June 30,
1997.
4.03 First Amendment to Credit Agreement, dated September 23, 1998, between
the Registrant, Comshare, Limited and Harris Trust and Savings Bank -
incorporated by reference to Exhibit 4.01 to the Registrant's Form 10-Q
Report for the quarter ended September 30, 1998.
4.04 Second Amendment and Waiver to Credit Agreement, dated October 10,
1999, between the Registrant, Comshare Limited and Harris Trust and
Savings Bank - incorporated by reference to Exhibit 4.01 to the
Registrant's Form 10-Q Report for the quarter ended September 30, 1999.
4.05 Third Amendment and Waiver to Credit Agreement, dated June 29, 2000,
between the Registrant, Comshare Limited and Harris Trust and Savings
Bank - incorporated by reference to Exhibit 4.01 to the Registrant's
Form 10-Q Report for the quarter ended September 30, 2000.
4.06 Fourth Amendment and Waiver to Credit Agreement, dated October 31,
2000, between the Registrant, Comshare Limited and Harris Trust and
Savings Bank - incorporated by reference to Exhibit 4.02 to the
Registrant's Form 10-Q Report for the quarter ended September 30, 2000.
4.07 Fifth Amendment to Credit Agreement, dated May 15, 2001, between the
Registrant, Comshare Limited and Harris Trust and Savings Bank.*
4.08 Sixth Amendment to Credit Agreement, dated September 17, 2001, between
the Registrant, Comshare Limited and Harris Trust and Savings Bank.*
4.09 Rights Agreement, dated as of September 16, 1996, between Comshare,
Incorporated and Key Bank National Association, as Rights Agent -
incorporated by reference to Exhibit 2 to the Registrant's Registration
Statement on Form 8-A, filed on September 17, 1996.
4.10 Form of certificate representing Rights (included as Exhibit B to the
form of Rights Agreement filed as Exhibit 4.04). Pursuant to the Rights
Agreement, Rights Certificates will not be mailed until after the
earlier of (i) the tenth business day (or such later date as may be
determined by the Board of Directors, with the concurrence of a
majority of the Continuing Directors, prior to such time as any person
becomes an Acquiring Person) after the date of the commencement of, or
first public announcement of the intent to commence, a tender or
exchange offer by any person or group of affiliated or associated
persons (other than the Company or certain entities affiliated with or
associated with the Company), if, upon consummation thereof, such
person or group of affiliated or associated persons would be the
beneficial owner of 15% or more of such outstanding shares of common
stock - incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A, filed on September 17, 1996.
4.11 Agreement among Computershare Investor Services, Inc., Harris Trust and
Savings Bank and the Registrant.*
35
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended and restated on November 6, 1997 - incorporated by
reference to Exhibit 10.01 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1999.
10.02 First Amendment to the Benefit Adjustment Plan of Comshare,
Incorporated - incorporated by reference to Exhibit 10.01 to the
Registrant's Form 10-Q Report for the quarter ended March 31, 1999.
10.03 Second Amendment to the Benefit Adjustment Plan of Comshare,
Incorporated - incorporated by reference to Exhibit 10.05 to the
Registrant's Form 10-Q Report for the quarter ended March 31, 2001.
10.04 Comshare, Incorporated 1988 Stock Option Plan, as amended -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1990 and Exhibit 10.22
to the Registrant's Form 10-Q Report for the quarter ended September
30, 1994.
10.05 Third Amendment to the Comshare, Incorporated 1988 Stock Option Plan,
as amended - incorporated by reference to Exhibit 10.06 to the
Registrant's Form 10-Q Report for the quarter ended March 31, 2001.
10.06 Stock Option Agreement, effective as of March 10, 1997, between
Comshare, Incorporated and Daniel T. Carroll - incorporated by
reference to Exhibit 10.22 to the Registrant's Form 10-Q Report for the
quarter ended March 31, 1997.
10.07 Trust Agreement under the Benefit Adjustment Plan of Comshare,
Incorporated, effective April 25, 1988, as amended - incorporated by
reference to Exhibit 10.31 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1993.
10.08 1994 Executive Stock Purchase Program of Comshare, Incorporated -
incorporated by reference to Exhibit 10.19 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.09 Employee Stock Purchase Plan of Comshare, Incorporated - incorporated
by reference to Exhibit 10.20 to the Registrant's Form 10-Q Report for
the quarter ended September 30, 1994.
10.10 First Amendment to Employee Stock Purchase Plan - incorporated by
reference to Exhibit 10.01 to Registrant's Form 10-Q for the quarter
ended September 30, 1999.
10.11 Second Amendment to Employee Stock Purchase Plan - incorporated by
reference to Exhibit 10.02 to Registrant's Form 10-Q for the quarter
ended September 30, 1999
10.12 Third Amendment to Employee Stock Purchase Plan - incorporated by
reference to Exhibit 10.03 to Registrant's Form 10-Q for the quarter
ended September 30, 1999.
10.13 1994 Directors Stock Option Plan of Comshare, Incorporated -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1994.
10.14 First Amendment to Directors Stock Option Plan - incorporated by
reference to Exhibit 10.05 to Registrant's Form 10-Q for the quarter
ended September 30, 1999.
10.15 Second Amendment to Directors Stock Option Plan - incorporated by
reference to Exhibit 10.07 to the Registrant's Form 10-Q for the
quarter ended March 31, 2001.
10.16 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Dennis G. Ganster -
incorporated by reference to Exhibit 10.19 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1998.
10.17 First Amendment to Comshare, Incorporated Change in Control Severance
Agreement dated as of November 30, 1999, between Comshare, Incorporated
and Dennis G. Ganster - incorporated by reference to Exhibit 10.03 to
the Registrant's Form 10-Q Report for the quarter ended December 31,
1999.
36
10.18 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and David King -
incorporated by reference to Exhibit 10.21 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1998.
10.19 First Amendment to Comshare, Incorporated Change in Control Severance
Agreement dated as of November 30, 1999, between Comshare, Incorporated
and David King - incorporated by reference to Exhibit 10.02 to the
Registrant's Form 10-Q Report for the quarter ended December 31, 1999.
10.20 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Stanley Starkey -
incorporated by reference to Exhibit 10.22 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1998.
10.21 First Amendment to Comshare, Incorporated Change in Control Severance
Agreement dated as of November 30, 1999, between Comshare, Incorporated
and Stanley R. Starkey - incorporated by reference to Exhibit 10.02 to
the Registrant's Form 10-Q Report for the quarter ended December 31,
1999.
10.22 Comshare, Incorporated Change in Control Severance Agreement dated as
of February 9, 2001, between Comshare, Incorporated and Brian Hartlen -
incorporated by reference to Exhibit 10.01 to the Registrant's Form
10-Q Report for the quarter ended March 31, 2001.
10.23 Comshare, Incorporated Change in Control Severance Agreement dated as
of February 16, 2001, between Comshare, Incorporated and Brian
Jarzynski - incorporated by reference to Exhibit 10.02 to the
Registrant's Form 10-Q Report for the quarter ended March 31, 2001.
10.24 Comshare, Incorporated 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.25 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1998.
10.25 First Amendment to 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.04 to the Registrant's Form
10-Q Report for the quarter ended September 30, 1999.
10.26 Second Amendment to 1998 Global Employee Stock Option Plan -
incorporated by reference to Exhibit 10.08 to the Registrant's Form
10-Q Report for the quarter ended March 31, 2001.
10.27 Letter of Understanding, dated February 8, 2001, between Comshare,
Incorporated and Norman Neuman, Jr., and Norman Neuman, Jr. Notices of
Grant of Stock Options and Option Agreements - incorporated by
reference to Exhibit 10.03 to the Registrant's Form 10-Q Report for the
quarter ended March 31, 2001.
10.28 Kathryn A. Jehle Notices of Grant of Stock Options and Option
Agreements - incorporated by reference to Exhibit 10.04 to the
Registrant's Form 10-Q Report for the quarter ended March 31, 2001.
10.29 Summary of 1999 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.27 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1998.
10.30 Summary of 2000 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.32 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 2000.
10.31 Summary of 2001 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.33 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 2000.
10.32 Lease dated September, 1994, between Comshare, Incorporated, Tenant and
MGI Holding, Inc., Landlord for office space located at 555 Briarwood
Circle, Ann Arbor, Michigan 48108 - incorporated by reference to
Exhibit 10.18 to the Registrant's Form 10-Q Report for the quarter
ended September 30, 1994
10.33 Agreement between Taurusbuild Limited, Comshare and Svenska
Handelsbanken related to the lease of office space for the Company's
London office facility - incorporated by reference to Exhibit 10.17 of
the Registrant's Form 10-K Report for the fiscal year ended June 30,
1994.
37
10.34 Software License Agreement by and between Arbor Software Corporation
and Comshare, Incorporated dated December 23, 1993 - incorporated by
reference to Exhibit 10.20 to Amendment Number 3 to the Registrant's
Form 10-K Report, filed November 8, 1995, for the fiscal year ended
June 30, 1995. (Portions of this exhibit have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment pursuant to Rule 24b-2.)
10.35 First Amendment to License Agreement by and between Arbor Software
Corporation and Comshare, Incorporated dated March 1, 1994 -
incorporated by reference to Exhibit 10.20 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1995. (Portions of this
exhibit have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment
pursuant to Rule 24b-2.)
10.36 Second Amendment to License Agreement by and between Arbor Software
Corporation and Comshare, Incorporated - incorporated by reference to
Exhibit 10 of the Registrant's Form 8-K Report filed on December 24,
1997. (Portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to Rule 24b-02.)
10.37 Third Amendment to License Agreement by and between Hyperion and
Comshare, Incorporated- incorporated by reference to Exhibit 10.33 to
the Registrants Form 10-K Report for the fiscal year ended June 30,
1998. (Portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment pursuant to Rule 24b-02.)
21.01 Subsidiaries of the Registrant.*
23.01 Consent of Independent Public Accountants.
99.00 Amended and Restated Profit Sharing Plan of Comshare, Incorporated,
Form 11-K Annual Report - filed pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended, for the fiscal year ended
June 30, 2001.
* Filed with Registrant's Form 10-K for the fiscal year ended June 30, 2001.
38