1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 3, 1995
-----------------------------
COMSHARE, INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 0-4096 38-1804887
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
555 Briarwood Circle, Ann Arbor, MI 48108
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 994-4800
Wolverine Tower, 3001 S. State Street, Ann Arbor, MI 48108
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
2
ITEM 5. OTHER EVENTS.
The Company recorded a non-cash charge of $23.2 million during the three
months ended December 31, 1995 to write off certain capitalized software. Total
capitalized software was $32.4 million at September 30, 1995. The Company
estimates this charge will reduce net income for the three months ended
December 31, 1995 by $15.5 million after taxes. The write-off is a result
of strong customer interest in Commander Decision, a significantly enhanced
version of Commander OLAP, which substantially reduced the realizable value of
the Company's older Commander desktop products, and the Company's acceleration
of its product development cycles in response to changes in the technological
environment in the decision support application software market.
The write-off principally reflects the Company's decision, following
its recent Users Conference, to focus its sales efforts on Commander Decision,
which is expected to be commercially released by December 31, 1995. The Company
will no longer market the front-ends offered with Commander OLAP upon the
commercial release of Commander Decision. Commander Decision was introduced at
the Company's recent Users Conference and generated greater interest than
originally anticipated by the Company. This strong customer interest, combined
with the Company's recent decision to offer the new Commander Decision end-user
front-end to existing maintenance-paying Commander OLAP customers at no charge,
is expected to result in rapid migration from Commander OLAP front-ends to the
Commander Decision front-end.
The write-off also reflects the reduction of the estimated useful service
life of the Company's products and the amortization period for its capitalized
software costs, prompted by the Company's acceleration of its product
development cycle. Beginning October 1, 1995, the Company will amortize its
capitalized software development costs using the straight-line method over a
two-year service life. This reduction in the software amortization period to two
years and a review of projected revenues over this service life resulted in the
write-off of unamortized capitalized software development costs.
These accelerated product development cycles are intended to allow the
Company to maintain technology leadership. Ongoing efforts in this regard are
also partially in response to increased interest in OLAP technologies recently
exhibited in the decision support software market, exemplified by recent
acquisitions and adoptions of OLAP technologies by various software vendors,
including Informix Corporation's acquisition of Stanford Technology Group, Inc.
announced in October 1995 and Oracle Corporation's acquisition of Express
software in July 1995.
The $23.2 million write-off is consistent with the Company's practice of
continually evaluating events which indicate potential impairment of its
capitalized software asset and routinely reviewing the amortization policy for
software development costs. The Company will critically evaluate the
capitalization of development costs in light of rapid technological changes and
shortened product life cycles and expects that shortened product life cycles
will reduce the portion of development costs which it will capitalize in future
periods, as compared with fiscal 1995.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
COMSHARE, INCORPORATED
Date: November 8, 1995 By:/s/ Kathryn A. Jehle
----------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant
Secretary