<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------------------
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
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 (I.R.S. Employer
incorporation or organization) Identification No.)
555 BRIARWOOD CIRCLE, ANN ARBOR, MICHIGAN 48108
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 994-4800
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (DECEMBER 31, 1995).
OUTSTANDING AT
CLASS OF COMMON STOCK DECEMBER 31, 1995
--------------------- -----------------
$1.00 PAR VALUE 9,596,567 SHARES
<PAGE> 2
COMSHARE, INCORPORATED
INDEX
Page No.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of
December 31, 1995 and June 30, 1995........................... 3
Condensed Consolidated Statement of Income for the
Three and Six Months Ended December 31, 1995 and 1994......... 5
Condensed Consolidated Statement of Cash Flows for the
Six Months Ended December 31, 1995 and 1994................... 6
Notes to Condensed Consolidated Financial Statements............ 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................... 9
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........ 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................... 14
SIGNATURE........................................................... 15
INDEX TO EXHIBITS................................................... 16
2
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
ASSETS (unaudited) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $22,540 $ 1,398
Accounts receivable, net 37,744 29,531
Deferred income taxes 783 783
Prepaid expenses 4,400 4,098
------- -------
Total current assets 65,467 35,810
PROPERTY AND EQUIPMENT, at cost 28,200 27,076
Less - accumulated depreciation 24,215 23,663
------- -------
Property and equipment, net 3,985 3,413
COMPUTER SOFTWARE, net 9,138 32,676
GOODWILL, net 2,124 2,246
DEFERRED INCOME TAXES 6,279 -
OTHER ASSETS 5,464 5,165
------- -------
$92,457 $79,310
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) (audited)
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 244 $ --
Accounts payable 13,625 11,342
Accrued liabilities 6,487 6,418
Income taxes 2,117 1,602
Deferred revenue 19,138 18,599
------- -------
Total current liabilities 41,611 37,961
LONG-TERM DEBT 347 5,436
OTHER LIABILITIES 3,573 3,365
SHAREHOLDERS' EQUITY
Common stock, $1.00 par value;
authorized 20,000,000 shares;
outstanding 9,596,567 shares as of
December 31, 1995 and 8,221,234
shares as of June 30, 1995 9,597 8,221
Capital contributed in excess of par 37,579 13,199
Retained earnings 3,940 15,500
Currency translation adjustments (3,256) (3,239)
------- -------
47,860 33,681
Less - Notes receivable 934 1,133
------- -------
Total shareholders' equity 46,926 32,548
------- -------
$92,457 $79,310
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited; in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
<S> <C> <C> <C> <C>
1995 1994 1995 1994
REVENUE
Software licenses $17,234 $13,018 $31,154 $23,024
Software maintenance 9,247 9,237 18,262 18,209
Implementation, consulting
and other services 5,702 5,401 11,420 10,581
------- ------- ------- -------
TOTAL REVENUE 32,183 27,656 60,836 51,814
COSTS AND EXPENSES
Selling and marketing 13,023 11,514 25,061 21,746
Cost of revenue and support 7,798 5,979 14,488 11,361
Internal research and product development 4,088 4,031 8,086 8,101
Internally capitalized software (1,076) (2,940) (3,434) (6,019)
Software amortization 1,127 3,262 3,743 6,647
General and administrative 3,035 2,964 6,076 5,714
Unusual charge 23,167 - 23,167 -
------- ------- ------- -------
TOTAL COSTS AND EXPENSES 51,162 24,810 77,187 47,550
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS (18,979) 2,846 (16,351) 4,264
OTHER INCOME (EXPENSE)
Interest income (expense), net 54 (175) (87) (341)
Exchange gain (loss) (23) (6) (112) (43)
------- ------- ------- -------
TOTAL OTHER INCOME (EXPENSE) 31 (181) (199) (384)
------- ------- ------- -------
INCOME (LOSS) BEFORE TAXES (18,948) 2,665 (16,550) 3,880
Provision (benefit) for income taxes (6,084) 984 (5,196) 1,448
------- ------- ------- -------
NET INCOME (LOSS) $(12,864) $1,681 $(11,354) $2,432
========= ======= ========= ======
WEIGHTED AVERAGE NUMBER OF COMMON
AND DILUTIVE COMMON EQUIVALENT SHARES 8,678 8,325 8,456 8,283
======== ======= ======== ======
NET INCOME (LOSS) PER COMMON SHARE ($1.48) $0.20 ($1.34) $0.29
========= ======= ========= ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
COMSHARE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited; in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (11,354) $ 2,431
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 4,828 8,042
Provision for losses on accounts receivable 49 (72)
Write-off of capitalized software 23,167 -
Loss on sale of property and equipment - 11
Changes in operating assets and liabilities:
Accounts receivable (8,284) (696)
Prepaid expenses (362) 190
Accounts payable 2,391 (173)
Accrued liabilities 549 (1,063)
Deferred revenue 630 (1,265)
Deferred income taxes (6,593) 804
Other liabilities 513 83
------------ --------
Net cash provided by operating activities 5,534 8,292
INVESTING ACTIVITIES
Additions to computer software (3,485) (6,019)
Payments for property and equipment (1,440) (433)
Other (542) (652)
---------- ---------
Net cash used in investing activities (5,467) (7,104)
FINANCING ACTIVITIES
Net borrowings under notes payable 244 159
Repayments under long-term debt (5,006) (2,748)
Stock options exercised 164 41
Issuance of common stock 25,196 -
Other 388 132
---------- ---------
Net cash provided by financing activities 20,986 2,416
EFFECT OF EXCHANGE RATE CHANGES 89 (12)
---------- ---------
NET INCREASE (DECREASE) IN CASH 21,142 (1,240)
BALANCE AT BEGINNING OF PERIOD 1,398 1,774
---------- ---------
BALANCE AT END OF PERIOD $ 22,540 $ 534
========== =========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 246 $ 270
========== =========
Cash paid for income taxes $ 890 $ 119
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
COMSHARE, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - GENERAL INFORMATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's latest annual
report on Form 10-K.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring items except as discussed in Note F below, required to present
fairly its consolidated balance sheet as of December 31, 1995, the consolidated
statements of operations for the three and six months ended December 31, 1995
and 1994 and cash flows for the six months ended December 31, 1995 and 1994.
The Company changed its presentation of cash flows from operating
activities from the direct method to the indirect method.
The Company considers all highly liquid debt instruments with a maturity
of ninety days or less at the time of acquisition to be cash equivalents.
The prior period condensed consolidated financial statements have been
reclassified to conform with the current presentation.
The results of operations for the three and six months ended December 31,
1995 and 1994 are not necessarily indicative of the results to be expected in
future quarters or the full fiscal year. The software industry is generally
characterized by seasonal trends. Such trends may cause higher revenue in the
Company's last fiscal quarter as a result of efforts to exceed sales quotas,
and in the second fiscal quarter as many customers complete annual budgetary
cycles. In addition, lower revenue in the first quarter may be principally due
to the impact of slower sales during the summer months, particularly in Europe.
NOTE B - COMPUTER SOFTWARE
The costs of developing and purchasing new software products and
enhancements to existing software products are capitalized after technological
feasibility and realizability are established. In the first quarter of fiscal
1996, capitalized development costs were amortized using the straight-line
method over a four-year service life. Beginning October 1, 1995, capitalized
development costs were amortized using the straight-line method over a two-year
service life. The policy is reevaluated and adjusted as necessary at the end
of each accounting period.
NOTE C - BORROWINGS
At December 31, 1995 and June 30, 1995, the permitted borrowings available
under the Company's amended and restated domestic credit agreement were
$10,000,000 and $14,000,000, of which $0 and $3,500,000 were outstanding,
respectively.
Separately, certain of the Company's subsidiaries entered into local
currency credit agreements or overdraft facilities in various currencies with
banks providing permitted borrowings totaling $4,374,500 at December 31, 1995.
The Company had outstanding borrowings of $347,000 in Swedish kroner and
$244,000 in British pounds at December 31, 1995. The credit agreements expire
on October 1, 1997. The interest rates generally vary with the banks' base
rate. Most of such borrowings are guaranteed by the Company.
7
<PAGE> 8
COMSHARE, INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
NOTE D - FINANCIAL INSTRUMENTS
The Company at various times has entered 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. The Company only uses forward exchange
contracts to hedge against large selective transactions that present the most
exposure to exchange rate fluctuations. The Company entered into several
forward contracts on December 29, 1995 which mature on or before January 31,
1996, by purchasing a $1,000,000 contract for British pounds, a $735,000
contract for Japanese yen and a $651,000 contract for German marks. The
Company also entered into a forward contract on December 29, 1995 by selling a
$500,000 contract for Canadian dollars with a maturity date of January 31,
1996. The carrying value of these contracts approximates the fair market
value.
NOTE E - SHAREHOLDERS' EQUITY
On October 9, 1995, the Board of Directors declared a three-for-two stock
split of the Company's Common Stock distributable to shareholders of record on
November 13, 1995. Capital in excess of par value was charged and common stock
was credited for the par value of $2,749,000 issued in connection with the
split. This stock split was effective November 20, 1995 after the Company
received approval from its shareholders at the Annual Shareholders Meeting held
November 18, 1995 which increased the number of authorized shares of Common
Stock from 10,000,000 to 20,000,000 shares. All share and per share data
included in the condensed consolidated financial statements and accompanying
notes have been adjusted to reflect this stock split.
In December 1995, the Company completed a public offering of its Common
Stock which resulted in the issuance of 1,293,750 shares at $21.00 per share.
NOTE F - UNUSUAL CHARGE
During the second quarter ended December 31, 1995, the Company recorded a
$23.2 million non-cash charge to write off certain capitalized software. The
net after tax charge was $15.5 million. The write-off resulted from the strong
customer interest in Commander Decision, the Company's newest generation
product for customizable decision support applications, 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
market.
The write-off principally reflects the Company's decision, following its
Users Conference held during the second quarter, to focus its sales efforts on
Commander Decision, which was released in December 1995. The Company will no
longer market the front-ends offered with Commander OLAP with the release of
Commander Decision. Commander Decision was introduced at the Company's 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 products and the amortization period for its capitalized
software costs, prompted by the Company's acceleration of its product
development cycle. The reduction of the software amortization period to two
years and a review of projected revenues over this two year service life
resulted in the write-off of unamortized capitalized software development
costs.
8
<PAGE> 9
ITEM 2. - 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.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------- -----------------
<S> <C> <C> <C> <C>
1995 1994 1995 1994
REVENUE ------------------ -----------------
Software licenses
Client/Server 52.0% 44.2% 49.5% 40.7%
Mainframe 1.6 2.9 1.7 3.7
------------------ -----------------
Total software license fee revenue 53.6 47.1 51.2 44.4
Software maintenance
Client/Server 19.5 17.5 19.7 18.0
Mainframe 9.2 15.9 10.3 17.2
------------------- -----------------
Total software maintenance revenue 28.7 33.4 30.0 35.1
Implementation and consulting services 17.7 19.5 18.8 20.4
------------------- -----------------
Total revenue 100.0 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 40.5 41.6 41.2 42.0
Cost of revenue and support 24.2 21.6 23.8 21.9
Internal research and product development 12.7 14.6 13.3 15.6
Internally capitalized software (3.3) (10.6) (5.6) (11.6)
Software amortization 3.5 11.8 6.2 12.8
General and administrative 9.4 10.7 10.0 11.0
Unusual charge 72.0 - 38.1 -
------------------- -----------------
Total costs and expenses 159.0 89.7 126.9 91.8
INCOME (LOSS) FROM OPERATIONS (59.0) 10.3 (26.9) 8.2
OTHER INCOME (EXPENSE)
Net interest income (expense) 0.2 (0.6) 0.1 (0.7)
Exchange gain (loss) (0.1) (0.0) (0.2) (0.1)
-------------------- -----------------
Total other income (expense) 0.1 (0.6) (0.3) (0.8)
INCOME (LOSS) BEFORE INCOME TAXES (58.9) 9.7 (27.2) 7.5
Benefit (provision) for income taxes 18.9 (3.6) 8.5 (2.8)
-------------------- -----------------
NET INCOME (LOSS) (40.0)% 6.1% (18.7)% 4.7%
==================== =================
</TABLE>
9
<PAGE> 10
<TABLE>
<CAPTION>
REVENUE
Three Months Ended Percent Six Months Ended Percent
December 31, Change December 31, Change
-------------------------- -------------------------
1995 1994 1995 1994
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Software licenses
Client/Server $16,736 $12,229 36.9% $30,131 $21,092 42.9%
Mainframe 498 789 (36.8) 1,023 1,932 (47.1)
------------ ------------ ------------ ------------
Total software license fee revenue 17,234 13,018 32.4 31,154 23,024 35.3
============ ============ ============ ============
Software maintenance
Client/Server 6,274 4,848 29.4 11,991 9,307 28.8
Mainframe 2,973 4,389 (32.3) 6,271 8,902 (29.6)
------------ ------------ ------------ ------------
Total software maintenance revenue 9,247 9,237 0.1 18,262 18,209 0.3
Implementation and consulting services 5,702 5,401 5.6 11,420 10,581 7.9
------------ ------------ ------------ ------------
TOTAL REVENUE $32,183 $27,656 16.4% $60,836 $51,814 17.4%
============ ============ ============ ============
</TABLE>
The growth in total revenue for the three and six months ended December
31, 1995 was primarily attributable to the strong increase in client/server
software license and maintenance revenue.
Total software license revenue increased for the three and six months
ended December 31, 1995 as shown below:
<TABLE>
<CAPTION>
Three Months Ended Percent Six Months Ended Percent
December 31, Change December 31, Change
-------------------------- --------------------------
1995 1994 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SOFTWARE LICENSE REVENUE:
EIS $11,150 $7,798 43.0% $19,180 $13,560 41.4%
Financial reporting applications 3,230 3,089 4.6 6,507 5,121 27.1
Retail decision support applications 2,854 2,130 34.0 5,467 4,343 25.9
------------ ------------ ------------ ------------
TOTAL SOFTWARE LICENSE REVENUE $17,234 $13,018 32.4% $31,154 $23,024 35.3%
============ ============ ============ ============
</TABLE>
Software license revenue increased in all three decision support market
areas for the three and six month periods ending December 31, 1995 compared
with the corresponding periods a year ago. The software license revenue growth
in the three and six months ended December 31, 1995 primarily reflected the
continued strong demand for the Company's EIS Commander OLAP product and the
recently released enhanced version of Arthur Planning products. In addition,
the increase in software license fee revenue for the Company's financial
reporting products in the three and six months ended December 31, 1995 was
principally due to sales of enhanced versions of Commander FDC and Commander
Budget products.
Software maintenance revenue was flat compared with last year as a result
of client/server maintenance growth being offset by the mainframe maintenance
decline. The increase in client/server software maintenance revenue was
principally due to the increase in client/server license revenue during the
most recent twelve months. The decrease in mainframe software maintenance
revenue in the three and six months ended December 31, 1995 reflected mainframe
maintenance cancellations and continued customer migration to client/server
platforms. Mainframe software revenue is expected to continue to decline.
Implementation, consulting and other service revenue has benefited from
the growth in client/server software license revenue in all three decision
support markets.
10
<PAGE> 11
<TABLE>
<CAPTION>
COSTS AND EXPENSES
Three Months Ended Percent Six Months Ended Percent
December 31, Change December 31, Change
-------------------------- -----------------------
1995 1994 1995 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COST AND EXPENSES
Selling and marketing $13,023 $11,514 13.1% $25,061 $21,746 15.2%
Cost of revenue and support 7,798 5,979 30.4 14,488 11,361 27.5
Internal research and product development 4,088 4,031 1.4 8,086 8,101 (0.2)
Internally capitalized software (1,076) (2,940) (63.4) (3,434) (6,019) (42.9)
Software amortization 1,127 3,262 (65.5) 3,743 6,647 (43.7)
General and administrative 3,035 2,964 2.4 6,076 5,714 6.3
Total costs and expenses ________ ________ ________ ________
before unusual charge 27,995 24,810 12.8 54,020 47,550 13.6
Unusual charge 23,167 - * 23,167 - *
------------ ------------ -------------- --------------
TOTAL COSTS AND EXPENSES $51,162 $24,810 106.2% $77,187 $47,550 62.3%
============ ============ ============== ==============
</TABLE>
* % not meaningful.
Total operating expenses increased in the three and six months ended
December 31, 1995 primarily as a result of the $23.2 million non-cash charge to
write off capitalized software. Excluding the software write-off charge,
total operating expenses for the second quarter increased 12.8% compared with
the same period last year, in support of total revenue growth of 16.4%.
Excluding the software write-off charge, total operating expenses for the six
months ended December 31, 1995 increased 13.6% compared with the same period
last year, in support of total revenue growth of 17.4%. The operating profit
margin, excluding the software write-off charge, for the three months ended
December 31, 1995 was 13.0% compared with 10.3% for the three months ended
December 31, 1994. The operating profit margin, excluding the software
write-off charge, for the six months ended December 31, 1995 was 11.2%
compared with 8.2% for the same period a year ago.
Selling and marketing expense increased in the three and six months ended
December 31, 1995 principally due to increased employee related costs, and to a
lesser extent travel related costs, incurred in support of the significant
increase in software license revenue.
The increase in cost of revenue and support in the three and six months
ended December 31, 1995 was primarily attributable to increased royalty fees
payable to Arbor Software Corporation ("Arbor") as a result of increased
software license revenue from certain Comshare products which use Arbor's
Essbase and higher employee-related costs and, to a lesser extent, outside
service costs related to implementation and consulting services revenue.
Internally capitalized software decreased in the three and six months
ended December 31, 1995 primarily due to the increased levels of development
costs that were not capitalizable. Software amortization expense decreased in
the three and six months ended December 31, 1995 principally due to the reduced
levels of capitalized software following the $23.2 million write-off of
capitalized software.
During the second quarter ended December 31, 1995 , the Company recorded a
$23.2 million non-cash charge to write off certain capitalized software. The
write-off had a $15.5 negative after tax impact on net income. The write-off
is a result of strong customer interest in the Company's newest generation
product, Commander Decision, for customizable decision support applications,
which substantially reduced the realizable value of the Company's older desktop
products. The write-off also reflects the reduction of the estimated useful
service life of the Company's products and the amortization period of its
capitalized software costs, prompted by the Company's acceleration of its
product development cycles in response to changes in the technological
environment in the decision support applications market. See Note F of Notes
to Condensed Consolidated Financial Statements.
11
<PAGE> 12
<TABLE>
<CAPTION>
NONOPERATING INCOME AND EXPENSE
Three Months Ended Percent Six Months Ended Percent
December 31, Change December 31, Change
-------------------------- --------------------------
1995 1994 1995 1994
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OTHER INCOME (EXPENSE)
Net interest income (expense) $ 54 $ (175) * $ (87) $ (341) *
Exchange gain (loss) (23) (6) * (112) (43) *
------- ------ ------- ------
TOTAL OTHER INCOME (EXPENSE) 31 (181) * (199) (384) *
======= ====== ====== ======
</TABLE>
* % not meaningful.
Interest income net of interest expense in the three and six months ended
December 31, 1995 increased due to investment of the net proceeds received from
the public offering (see Note E of Notes to Condensed Consolidated Financial
Statements) and the reduced loan balances outstanding.
PROVISION FOR INCOME TAXES
The effective income tax rate in the three and six months ended December
31, 1995 was 32.1% and 31.4%, respectively, compared with 36.9% and 37.3% for
the same periods a year ago. The lower tax rate on the net loss before taxes
for the three and six months ended December 31, 1995 was primarily due to the
lower tax benefits from the software write-off.
FOREIGN CURRENCY
In the three and six months ended December 31, 1995, 54.5% and 54.3% of
the Company's total revenue was from outside North America compared with 55.5%
in the three and six months ended December 31, 1994. Most of the Company's
international revenue is denominated in foreign currencies. The Company
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.
During the three and six months ended December 31, 1995 foreign currency
fluctuations on revenue denominated in a foreign currency were offset by
currency fluctuations on expenses denominated in a foreign currency. At actual
exchange rates, the increase in total revenue was $80,000 more than at
comparable exchange rates. At actual exchange rates, the increase in total
expenses was $114,000 more than at comparable exchange rates. As a result of
the changes in the foreign currency exchange rates, the increase in the net
loss before taxes was $34,000 more at actual exchange rates, than at comparable
exchange rates. For the six months ended December 31, 1995, at actual exchange
rates, the increase in total revenue was $555,000 more than at comparable
exchange rates. At actual exchange rates, the increase in total expenses was
$707,000 more than at comparable exchange rates. As a result of the changes in
the foreign currency exchange rates, the increase in the net loss before taxes
was $152,000 more at actual exchange rates, than at comparable exchange rates.
The Company had several forward contracts totaling $2.9 million
outstanding at December 31, 1995. See Note D of Notes to Condensed
Consolidated Financial Statements.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, cash and cash equivalents were $22.5 million and
available borrowings under the Company's lines of credit were $13.8 million,
compared with cash of $1.4 million and available borrowings under the Company's
lines of credit of $12.2 million at June 30, 1995. The increase in cash was
principally attributed to the $25.2 million in net proceeds received from the
public offering completed during the second quarter. In November 1995, the
Company reduced permitted borrowings under its lines of credit by $4.0 million.
The Company completed in the second quarter a public offering of 1,293,750
newly issued shares of Common Stock offered by the Company. The Company used
approximately $5.0 million of the net proceeds from the public offering to
reduce long-term debt. The Company expects to use the remaining net proceeds
from the offering for working capital and general corporate purposes. Pending
such uses, the Company invested the net proceeds from the public offering in
investment grade, short-term, interest bearing instruments.
Net cash provided by operating activities was $5.5 million in the six
months ended December 31, 1995, compared with $8.3 million in the six months
ended December 31, 1994. The decrease in net cash provided by operating
activities was principally due to the increase in accounts receivable balances,
which increased primarily as a result of the growth in revenue. The positive
cash flow generated in the six months ended December 31, 1995 and 1994 was
principally due to net income, excluding the non-cash write-off of software.
Net cash used in investing activities was $5.5 million in the six months
ended December 31, 1995, compared with $7.1 million in the six months ended
December 31, 1994. The decrease in net cash used in investing activities was
primarily due to a decrease in the amount of capitalized internally developed
software costs, discussed previously, partially offset by an increase in
property and equipment purchases. At December 31, 1995, the Company did not
have any material capital expenditure commitments.
Working capital as of December 31, 1995 was $23.9 million, compared with a
negative $2.2 million as of June 30, 1995. The $26.1 million increase from
June 30, 1995 to December 31, 1995 was primarily due to the increases in cash
and cash equivalents and accounts receivable. Deferred revenue as of December
31, 1995 was $19.1 million, compared with $18.6 million as of June 30, 1995.
Deferred revenue, which is included in current liabilities, principally relates
to prepaid maintenance contracts.
Total assets were $92.5 million at December 31, 1995, compared with total
assets of $79.3 million at June 30, 1995. The primary contributing factors to
the increase from June 30, 1995 to December 31, 1995 were the increases in
cash and cash equivalents and accounts receivable offset by the decrease in
computer software (net of long-term deferred income taxes), which decreased
as a result of the write-off of capitalized software.
The Company believes that the combination of present cash balances, future
operating cash flows and credit facilities will be sufficient to meet the
Company's currently anticipated cash requirements for at least the next twelve
months.
13
<PAGE> 14
PART II - OTHER INFORMATION
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its Annual Meeting of Shareholders on November 18, 1995.
There were two matters voted on:
(1) The election of nine directors.
(2) A proposal to amend the Articles of Incorporation to
increase the number of shares of Common stock authorized for
issuance from 10,000,000 to 20,000,000.
The following table sets forth the results of the matters voted on.
All director nominees were elected and the proposal was passed.
<TABLE>
<CAPTION>
Voted For Votes Against Abstained Broker Non-votes
--------- ------------- --------- ----------------
(1) Election of Directors
Nominees:
<S> <C> <C> <C> <C>
Geoffrey B. Bloom 4,840,874 29,010 - -
Daniel T. Carroll 4,842,374 27,510 - -
Richard L. Crandall 4,847,612 22,272 - -
Stanley R. Day 4,842,624 27,260 - -
W. John Driscoll 4,847,424 22,460 - -
Alan G. Merten 4,844,324 25,560 - -
George R. Mrkonic 4,839,698 30,186 - -
John F. Rockart 4,846,724 23,160 - -
T. Wallace Wrathall 4,836,199 33,685 - -
(2) Amend the Articles of Incorporation 4,765,827 68,291 35,766 -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) The exhibits included herewith are set forth on the Index to
Exhibits.
(b.) Reports on Form 8-K.
1.) Form 8-K filed November 3, 1995 regarding the
Company recording a non-cash charge of $23.2 million
during the three months ended December 31, 1995 to write
off certain capitalized software.
14
<PAGE> 15
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.
Date: FEBRUARY 14, 1996 COMSHARE, INCORPORATED
(Registrant)
/s/ Kathryn A. Jehle
-------------------------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer and Assistant Secretary
15
<PAGE> 16
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3(i) Restated Articles of Incorporation of the Registrant.
4.05 Third Amendment to Comshare, Incorporated Amended and Restated
Credit Agreement between Comshare, Incorporated and NBD Bank,
formerly known as NBD Bank, N.A., Michigan dated November 19, 1995.
27 Financial Data Schedule.
16
<PAGE> 1
EXHIBIT 3(i)
RESTATED ARTICLES OF INCORPORATION
FOR
COMSHARE, INCORPORATED
Pursuant to the provisions of Act 284, Public Acts of 1972, the
undersigned corporation executes the following Restated Articles of
Incorporation:
1. The present name of the corporation is: COMSHARE,
INCORPORATED.
2. The identification number assigned by the Bureau is:
085-703.
3. All former names of the corporation are: Com-Share,
Incorporated.
4. The date of filing the original Articles of
Incorporation was: February 15, 1966.
The following Restated Articles of Incorporation supersede the
Articles of Incorporation as amended and shall be the Articles of Incorporation
for the corporation.
ARTICLE I
The name of the corporation is COMSHARE, INCORPORATED.
ARTICLE II
The purpose or purposes for which the Corporation is organized
is to engage in any activity within the purposes for which corporations may be
organized under the Business Corporation Act of the State of Michigan.
ARTICLE III
The total authorized capital stock is:
(i) 20,000,000 shares of common stock, $1.00 par value; and
(ii) 5,000,000 shares of preferred stock, no par value.
A statement of the designation, relative rights, preferences and limitations of
the shares of each class is as follows:
<PAGE> 2
PREFERRED STOCK
Issuance in Series:
The shares of Preferred Stock may be issued upon resolution of
the Board of Directors and without action or approval by the shareholders, in
one or more series, with the rights, preferences, privileges and restrictions of
each such series to be fixed by the resolution of the Board of Directors
establishing such series. The Preferred Stock in each series will rank equally
and be substantially identical in all respects, except that with respect to
each series the Board of Directors may fix, among other things, the voting
rights, if any, the dividends payable thereon, the times and prices of
redemption, if any, the amount payable upon liquidation, the retirement or
sinking fund, if any, the conversion rights, if any, the restrictions, if any,
on the payment of dividends or to retirements of junior stock, the limitations,
if any, on the creation of indebtedness or the issuance of stock of equal or
prior rank, and the number of shares to comprise each series.
Dividend Rights:
The Board of Directors is authorized to determine whether, and
the terms and conditions upon which, the shares of Preferred Stock of each
series will be entitled to receive dividends, and whether such dividends shall
be cumulative.
Redemption Provisions:
The Board of Directors is authorized to determine whether, and
the terms and conditions upon which, the shares of Preferred Stock of each
series will have redemption rights. The shares of Preferred Stock of each
series, if redeemable, will be redeemable at a time so fixed and determined, in
whole or in part, and by lot or in such other manner as the Board of Directors
may determine.
Sinking Fund:
The Board of Directors is authorized to determine whether, and
the terms and conditions upon which, the shares of Preferred Stock of each
series shall be entitled to the benefits of a retirement or sinking fund.
Conversion Rights:
The Board of Directors is authorized to determine whether, and
the terms and conditions upon which, the shares of Preferred Stock of each
series shall have conversion or exchange rights.
Voting Rights:
The Board of Directors is authorized to determine whether, and
the terms and conditions upon which, the shares of Preferred Stock of each
series shall have voting rights.
General:
<PAGE> 3
The Board of Directors is authorized to determine any other
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions relating to the Preferred Stock, or
any series thereof, as shall not be inconsistent with this Article III or
Michigan law. The terms of any series of Preferred Stock may be amended
without consent of the holders of any other series of Preferred Stock or of the
Common Stock, provided such amendment does not substantially adversely affect
the holders of such other series of Preferred Stock or the Common Stock.
Reissue of Reacquired Shares; Issuance of Additional Shares of Same Series:
Shares of any series of Preferred Stock which have been issued
and reacquired in any manner and not held as treasury shares, including shares
redeemed by purchase (whether through the operation of a retirement or sinking
fund or otherwise), will have the status of authorized and unissued Preferred
Stock and may be reissued as a part of the series of which they were originally
a part or may be reclassified into and reissued as part of the new series.
Amendment to Articles of Incorporation:
Any resolution of the Board of Directors establishing and
designating a series of Preferred Stock and fixing and determining the relevant
rights and preferences thereof shall be appropriately filed with the Department
of Commerce of the State of Michigan as an amendment to the Articles of
Incorporation.
COMMON STOCK
Subject to the preferences accorded the holders of Preferred
Stock pursuant to the Articles of Incorporation or action of the Board of
Directors taken with respect to such preferences, holders of Common Stock are
entitled to receive such dividends as may be declared by the Board of Directors
of the Corporation from time to time. Subject to the preferences provided in
the Articles of Incorporation or action of the Board of Directors taken with
respect to such preferences, in the event of any liquidation, dissolution or
winding up of the Corporation, the holders of Common Stock will be entitled to
receive pro rata all the remaining assets of the Corporation available for
distribution.
Holders of Common Stock shall have equal voting and other rights
share for share, and each holder of Common Stock is entitled to one vote per
share. Except to the extent required by law, no holder of Common Stock shall
have the right in voting for directors to cumulate his shares and give one
candidate as many votes as will equal the number of directors to be elected
multiplied by the number of shares of his stock, or to distribute his votes on
the same principle among as many candidates as he shall determine. Except as
otherwise stated herein, the shares of Common Stock shall have the rights and
privileges provided by Michigan law.
PREFERRED AND COMMON STOCK
No holder of any shares of any class of stock of this
corporation shall have any preemptive or preferential right to subscribe for,
or to purchase any part of a new or additional issue of stock or any other
reacquired shares of stock of any class whatsoever or of any securities
convertible into stock of any class whatsoever, whether now or hereafter
authorized and whether issued for cash or other consideration.
<PAGE> 4
ARTICLE IV
The address of the current registered office is 30600 Telegraph
Road, Bingham Farms, Michigan 48025. The name of the current resident agent is
The Corporation Company.
ARTICLE V
Whenever a compromise or arrangement or any plan of
reorganization of this corporation is proposed between this corporation and its
creditors or any class of them and/or between this corporation and its
shareholders or any class of them, any court of equity jurisdiction within the
state of Michigan, may on the application of this corporation or of any
creditor or any shareholder thereof, or on the application of any receiver or
receivers appointed for this corporation, order a meeting of the creditors or
class of creditors, and/or of the shareholders or class of shareholders, as the
case may be, to be affected by the proposed compromise or arrangement or
reorganization, to be summoned in such manner as said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the shareholders or class of shareholders, as the
case may be, to be affected by the proposed compromise or arrangement or
reorganization, agree to any compromise or arrangement or to any reorganization
of this corporation as a consequence of such compromise or arrangement, said
compromise or arrangement and said reorganization shall, if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the shareholders or class of
shareholders, as the case may be, and also on this corporation.
ARTICLE VI
(a) No director of the Corporation shall be personally
liable to the Corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, provided that the foregoing shall not
eliminate or limit the liability of a director for any of the following: (i)
breach of the director's duty of loyalty to the Corporation or its
shareholders; (ii) acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law; (iii) a violation of
Section 551(1) of the Michigan Business Corporation Act; (iv) a transaction
from which the director derived an improper personal benefit; or (v) an act or
omission occurring before the date on which the Article VI became effective.
If the Michigan Business Corporation Act hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability contained herein, shall be limited to the fullest extent
permitted by the amended Michigan Business Corporation Act. No amendment or
repeal of this Article VI shall apply to or have any effect on the liability
or alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such amendment or
repeal.
(b)(1) Each individual who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding,
<PAGE> 5
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that such individual, or an individual of
whom such individual is the legal representative, (i) is or was a director or
officer of the Corporation, or (ii) is or was serving (at such time as such
individual is or was a director or officer of the Corporation) at the request
of the Corporation as a director, officer, partner, trustee, administrator,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans (hereinafter "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, partner,
trustee, administrator, employee or agent or in any other capacity while
serving as a director, officer, partner, trustee, administrator, employee or
agent, shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the Michigan Business Corporation Act, as the same exists
or may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith and
such indemnification shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of such indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
paragraph (b)(2) hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such indemnitee only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition (hereinafter "advances"); provided,
however, that the payment of such expenses incurred by an indemnitee in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such indemnitee, to repay
all advances if it shall ultimately be determined by final judicial decision
that such indemnitee is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors or by
action of any person to whom the Board of Directors has delegated such
authority, provide indemnification to other employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification.
(b)(2) If a claim under paragraph (b)(1) of this Section is not
paid in full by the Corporation within thirty days after a written claim has
been received by the Corporation, the indemnitee may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit or in a suit brought by the
Corporation to recover advances, the indemnitee shall be entitled to be paid
also the expense of prosecuting or defending such claim. In any action brought
by the indemnitee to enforce a right hereunder (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking has been tendered to the
Corporation) it shall be a defense that, and in any action
<PAGE> 6
brought by the Corporation to recover advances the Corporation shall be
entitled to recover such advances if, the indemnitee has not met the applicable
standard of conduct set forth in the Michigan Business Corporation Act.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
prior to the commencement of such action that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the applicable
standard of conduct set forth in the Michigan Business Corporation Act, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the indemnitee has not met
such applicable standard of conduct, shall be a defense to an action brought by
the indemnitee or create a presumption that the indemnitee has not met the
applicable standard of conduct. In any action brought by the indemnitee to
enforce a right hereunder or by the Corporation to recover payments by the
Corporation of advances, the burden of proof shall be on the Corporation.
(b)(3) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Articles of Incorporation, Bylaw, agreement, vote of shareholders or
disinterested directors or otherwise.
(b)(4) The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Michigan Business Corporation Act.
These Restated Articles of Incorporation were duly adopted on
the 5th day of February, 1996, in accordance with the provisions of Section 642
of the Act and were duly adopted by the Board of Directors without a vote of
the shareholders.
Signed the 5th day of February, 1996
/s/ Kathryn A. Jehle
---------------------------------------
Kathryn A. Jehle
Senior Vice President and
Chief Financial Officer
<PAGE> 1
EXECUTION COPY
EXHIBIT 4.05
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as
of November 19, 1995 (this "Amendment"), is among COMSHARE, INCORPORATED, a
Michigan corporation (the "Company"), the Banks set forth on the signature
pages hereof (collectively, the "Banks") and NBD BANK, formerly known as NBD
Bank, N.A., as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the Banks and the Agent are parties to an Amended
and Restated Credit Agreement, dated as of October 31, 1994, as amended by a
First Amendment to Credit Agreement dated May 19, 1995 and a Second Amendment
to Credit Agreement dated July 31, 1995 (the "Credit Agreement").
B. The Company has requested that the Agent and the Banks amend
the Credit Agreement as set forth herein, and the Agent and the Banks have
agreed to do so.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. The Credit Agreement is amended as follows:
1.1 The definition of "Adjusted Tangible Net Worth" in Section 1.1
is amended by adding the following to the end thereof:
"and plus (c) to the extent deducted in determining the
Consolidated Net Worth of the Company and its Subsidiaries,
the amount of the 1995 Write Off."
1.2 The definition of "EBIT" in Section 1.1 is amended by adding
the following to the end thereof:
"and (iv) the 1995 Write Off."
1.3 The following definition is hereby added to Section 1.1 in
appropriate alphabetical order:
<PAGE> 2
"1995 Write Off" shall mean the amount of the non-cash write
off of capitalized software by the Company to be taken in the
fourth calendar quarter of 1995, and it is acknowledged and
agreed by the Company that the pre-tax amount of such write off
shall not exceed $25,000,000.
1.4 Reference in Section 5.2(b) to "2.95" shall be deleted and
"2.5" shall be substituted in place thereof.
1.5 Clause (vi) of Section 5.2(c) is restated in its entirety to
read as follows:
(vi) As of the last day of any fiscal quarter thereafter,
the sum of $28,755,000 plus (x) 50% of the Consolidated Net
Income of the Company and its Subsidiaries, such Consolidated
Net Income to be added as of the end of each fiscal quarter
commencing with the fiscal quarter ending December 31, 1995,
provided that if such Consolidated Net Income is less than zero
for any fiscal quarter, the amount added for such fiscal
quarter shall be zero, and plus (y) 100% of the proceeds (net
of any investment banking fees, attorneys' fees,
accountants' fees, underwriting discounts and commissions and
other customary fees and other costs and expenses actually
incurred in connection with any offering of capital stock) of
any capital stock or other equity securities (including without
limitation any securities exchangeable for or convertible into
capital stock and any warrants, rights or other options to
purchase or otherwise acquire capital stock, excluding,
however, any of the foregoing, including any capital stock or
other equity securities, which are sold to any director,
officer or other employee of the Company pursuant to any stock
option plan or other benefit or compensation plan for any
director, officer or employee of the Company) of the Company
offered or otherwise sold at any time after November 1, 1995.
1.6 It is acknowledged by all parties hereto that the Commitment of
Society Bank is hereby terminated and Society Bank shall no longer be a party
to the Credit Agreement. Society Bank is signing this Amendment for the
purpose of agreeing that it shall no longer be a party to the Credit Agreement,
and the Company and NBD Bank shall be the only remaining parties at this time,
to the Credit Agreement. On or within five days of the date hereof, the
Company shall pay any amounts that may be owing to Society Bank pursuant to the
Credit Agreement.
1.7 From and after the date hereof and until such time any other
lender, if any, other than NBD Bank, becomes a Bank under the Credit Agreement,
all references in the Credit Agreement to "each Bank", "Banks", "such Bank",
"Required Banks" or any similar references shall be deemed to refer to NBD Bank
only.
THIRD AMENDMENT TO CREDIT AGREEMENT Page 2
<PAGE> 3
ARTICLE II. REPRESENTATIONS. The Company represents and warrants to the
Agent and the Banks that:
2.1 The execution, delivery and performance of this Amendment is
within its powers, has been duly authorized and is not in contravention with
any law, of the terms of its Articles of Incorporation or By-laws, or any
undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of
the Company enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments herein contained, the
warranties contained in Article IV of the Credit Agreement are true on and as
of the date hereof with the same force and effect as if made on and as of the
date hereof.
2.4 No Event of Default or Default exists or has occurred and is
continuing on the date hereof.
ARTICLE III. MISCELLANEOUS.
3.1 The Company agrees to pay an amendment fee in the amount of
$6,500 to NBD Bank on the date hereof.
3.2 References in the Credit Agreement or in any note, certificate,
instrument or other document to the Credit Agreement shall be deemed to be
references to the Credit Agreement as amended hereby and as further amended
from time to time.
3.3 The Company agrees to pay and to hold the Agent and the Banks
harmless for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees of counsel to the Agent in
connection with preparing this Amendment and the related documents and
releasing the liens and security interests.
3.4 Except as expressly amended hereby, the Company agrees that the
Credit Agreement, the Notes, the Security Documents and all other documents and
agreements (which have not been previously terminated) executed by the Company
in connection with the Credit Agreement in favor of the Agent or the Banks are
ratified and confirmed and shall remain in full force and effect and that it
has no set off, counterclaim or defense with respect to any of the foregoing.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement.
3.5 This Amendment may be signed upon any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
THIRD AMENDMENT TO CREDIT AGREEMENT Page 3
<PAGE> 4
IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed and delivered as of the date set forth above.
COMSHARE, INCORPORATED
By: Kathryn Jehle
------------------------------
Its: Senior Vice President and
Chief Financial Officer
-------------------------
NBD BANK, formerly known as NBD Bank, N.A.,
Individually as a Bank and as Agent
By: Kelly J. Cotton
------------------------------
Its: Vice President
-------------------------
SOCIETY BANK
By: Michael F. Nold
------------------------------
Michael F. Nold
Its: Executive Vice President
-------------------------
THIRD AMENDMENT TO CREDIT AGREEMENT Page 4
<PAGE> 5
NOTICE OF WAIVER
To: Comshare, Incorporated
555 Briarwood Circle
Ann Arbor, Michigan 48108
Under Section 5.2(i) of the Amended and Restated Credit Agreement among
Comshare, Incorporated, NBD Bank and Society Bank, Michigan and NBD Bank, as
agent, dated October 31, 1994 (as amended, the "Agreement"), Comshare is
prohibited from making any payments to shareholders in the form of dividends
(other than soley in stock), redemptions or purchases of stock.
Comshare, Incorporated intends to declare a three-for-two split (the
"Split") subject to approval of its shareholders at the annual meeting on
November 18, 1995, payable on November 20, 1995. In connection with the Split,
Comshare intends to pay shareholders in cash for any fractional shares (all such
payments referred to as the "Cash Redemptions").
The Banks hereby waive Section 5.2(i) of the Agreement for the sole
purpose of permitting the Cash Redemptions, provided that (a) the aggregate
amount of the Cash Redemptions does not exceed $500,000 and (b) at the time
such Cash Redemptions are to be paid, no Default or Event of Default exists or
would be caused thereby.
Except as modified hereby, the Agreement and all agreement and
documents executed in connection thereby are hereby ratified and confirmed and
shall continue in full force and effect. The terms used but not defined herein
shall have their respective meanings ascribed thereto in the Agreement.
NBD BANK, as a Bank and as Agent SOCIETY BANK, MICHIGAN
By: Kelly J. Cotton By: Michael F. Nold
--------------------------- ---------------------------
Its: Vice President Its: Executive Vice President
------------------------- ------------------------
Accepted and agreed:
COMSHARE, INCORPORATED CSI INTERNATIONAL HOLDINGS, INC.
By: Kathryn Jehle By: Kathryn Jehle
--------------------------- ---------------------------
Its: Senior Vice President and Its: Vice President and
Chief Financial Officer Treasurer
------------------------- ------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 22,540,000
<SECURITIES> 0
<RECEIVABLES> 37,744,000 <F1>
<ALLOWANCES> 927,000
<INVENTORY> 0
<CURRENT-ASSETS> 65,467,000
<PP&E> 28,200,000
<DEPRECIATION> 24,215,000
<TOTAL-ASSETS> 92,457,000
<CURRENT-LIABILITIES> 41,611,000
<BONDS> 0
<COMMON> 9,597,000
0
0
<OTHER-SE> 37,329,000
<TOTAL-LIABILITY-AND-EQUITY> 92,457,000
<SALES> 0
<TOTAL-REVENUES> 60,836,000
<CGS> 0
<TOTAL-COSTS> 77,187,000
<OTHER-EXPENSES> (65,000) <F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 264,000
<INCOME-PRETAX> (16,550,000)
<INCOME-TAX> (5,196,000)
<INCOME-CONTINUING> (11,354,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,354,000)
<EPS-PRIMARY> (1.34) <F3>
<EPS-DILUTED> 0
<FN>
<F1>
Accounts receivable are stated at net of allowance for doubtful accounts.
<F2>
Other expense is comprised of $177,000 of interest income and $112,000 of
exchange loss.
<F3>
The EPS primary is based upon the daily weighted average number of common
shares outstanding during the period.
</FN>
</TABLE>
