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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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, 2000
[ ] 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
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Commission File Number 0-4096
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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
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<S> <C>
Securities registered pursuant to Section 12(g) of the Act: Common Stock $1.00 Par Value
Rights to Purchase Preferred Shares
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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. [X]
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant as of August 31, 2000 based on $4.75 per share, the last sale price
for the Common Stock on such date as reported on the Nasdaq National Market(R),
was approximately $48,484,000.
As of August 31, 2000 the Registrant had 9,786,151 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 -----------------------------
2000 Annual Meeting of Shareholders III
(The "2000 Proxy Statement")
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UNDERTAKING
The Company will furnish any exhibit to this report on Form 10-K to a
shareholder upon payment of 10(cent) per page for photo copying, postage and
handling expenses and upon written request made to:
Investor Relations
Comshare, Incorporated
555 Briarwood Circle
Ann Arbor, MI 48108
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PART I
ITEM 1. BUSINESS
This Business section contains forward-looking statements that involve
uncertainties. Actual results could differ materially from those in the forward
looking statements due to a number of uncertainties, including, but not limited
to those discussed below, particularly in "Business - Uncertainties Related to
Forward Looking Statements."
GENERAL
Comshare, Incorporated and its subsidiaries (collectively referred to as
"Comshare" or the "Company") develop, market and support management planning and
control application software. Management planning and control is the process
that encompasses planning, budgeting, financial consolidation, management
reporting and analysis. The Company's management planning and control
applications are designed to help management effectively implement its strategy.
The Company targets its products and services for chief financial officers and
the finance function across a broad range of industries, offering them software
solutions that will help them add value to their organizations and increase
their efficiency.
The Company is focused on serving the emerging market for integrated
management planning and control software. The market for planning, budgeting,
consolidation and reporting applications has been served by point solutions that
the Company believes do not effectively support a management process that should
be highly integrated and is frequently iterative. Many companies do not
integrate their strategic planning with their budgeting and operating planning
processes, and find strategies are not effectively implemented. Many companies
use spreadsheets for budgeting, and face the difficult task of maintaining
complicated spreadsheet applications and the accompanying data integrity
problems. Despite the investments made in data warehouse solutions and
Enterprise Resource Planning ("ERP") systems, many companies still have not
fulfilled the need to provide broadly-deployed financial information to
managers.
Comshare's software is differentiated by its web-based architecture
designed to support enterprise applications, its use of mainstream database
technology, and its robust multi-dimensional guided analysis capabilities. With
the release of the next version of the software, the Company will offer a fully
integrated suite of management planning and control products. The Company's
software products enable the enterprise-wide integration of data from multiple
data sources, complementing underlying ERP systems. The Company delivers
complete software solutions by providing implementation, consulting, training
and support services in addition to its software products.
BUSINESS STRATEGY
The Company's objective is to be a leading software provider of management
planning and control applications. The key elements of the Company's strategy
include the following:
ESTABLISH COMSHARE AS A LEADER IN THE MANAGEMENT PLANNING AND CONTROL MARKET.
1. Offer an integrated software solution for management planning and control,
replacing the disparate systems for planning, budgeting, financial
consolidation, management reporting and analysis. An integrated software
solution eliminates the wasted time spent rekeying data, reconciling
separate systems and the accompanying data integrity problems, freeing up
finance staff time to focus on value-added activities. An integrated
software solution also enables management to more quickly respond to
changes in the business environment, to adjust plans, change tactics and
reallocate resources.
2. Provide web-architected software that has been designed to support
enterprise-wide deployments. While the Company also offers client/server
based software solutions, increasingly customers are adopting web-based
solutions. The Company built an underlying architecture that fully supports
web deployments on an enterprise basis. The advantages to the customer
include lower cost of maintenance and deployment, because no software
beyond a browser is required on the desktop. Historically the Company has
focused on mid to large sized, complex organizations, so the underlying
architecture was designed to be scaleable for enterprise-wide deployments.
3. Offer customers their choice of mainstream databases underlying the
applications. Increasingly customers have standardized on a certain
database technology and prefer to purchase applications that utilize that
technology. Comshare provides multidimensional software solutions on both
relational and OLAP database platforms.
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4. Differentiate Comshare products with best-of-breed financial functionality
and analytical capability. Drawing upon years of experience in the business
intelligence market, Comshare products offer advanced visualization
features that enable managers to easily identify exceptions in large
amounts of information. This allows management to plan and budget more
effectively, analyze performance and improve decision-making.
5. Distribute worldwide to a range of customers from medium-sized to the
largest companies, through multiple channels. Customers in over 35
countries have purchased Comshare products, and Comshare supports worldwide
deployment by global companies through a network of direct and indirect
channels.
PRODUCTS
The Company offers management planning and control software applications
("MPC") designed for use by customers in a broad range of industries and
primarily targets the finance organizations of large to medium-sized
corporations.
Comshare's software products are generally licensed to end-use customers
under non-exclusive perpetual license agreements. Software license fees for the
Company's software applications vary widely depending upon the product, platform
and number of users supported. In addition to the sale of the software license,
customers typically purchase product maintenance for the first year of the
license. Customers may continue product maintenance thereafter for an annual
fee, normally ranging from 15 to 20 percent of the license fee. In addition,
customers frequently purchase additional software to expand the number of users
for an application or to add additional application components.
The Company currently offers MPC applications for planning, budgeting,
financial consolidation and management reporting and analysis: Comshare
BudgetPLUS ("BudgetPLUS"), Comshare Planning ("Planning"), Comshare Decision
("Decision"), and Comshare FDC ("FDC"). Comshare MPC is the integration of all
of these components. Customers can buy some or all depending on their needs. In
addition, the Company supports a number of legacy products.
1. BUDGETPLUS
Comshare's flagship application is BudgetPLUS, a web-architected budgeting,
management reporting and analysis application. BudgetPLUS is designed to shorten
budget cycles, reduce the time and cost of budgeting, deliver financial
information and improve management decision-making.
BudgetPLUS supports enterprise-wide budgeting by offering the flexibility
of a spreadsheet combined with the control and accounting intelligence of a
general ledger package. BudgetPLUS provides a single financial database that
integrates budgeted, actual and forecasted financial information to enhance the
integrity and usability of the data. Easy ad-hoc analysis and reporting across
the enterprise is available to business managers and analysts, either through
the use of a web-browser or on a client/server basis.
Data collection for budgeting and forecasting occurs either through a
web-browser or the use of Excel spreadsheets in a secure environment, enabling
the budget process to be distributed out to business managers, yet with a
centrally administered database for easy consolidation and reporting. BudgetPLUS
provides the ability to customize data entry screens; load bulk transaction
data; track multiple versions of budgeted, actual and forecasted financial
information; translate currencies; perform consolidations and quickly handle
reorganizations.
BudgetPLUS also offers management reporting and analysis capabilities that
allow enterprise-wide reporting of actual, budget and forecasted information.
Because BudgetPLUS is built using the Comshare Application Architecture,
end-users have the same robust advanced visualization and proactive alerting
features available to users of the Decision product, described below.
Customers have their choice of databases when licensing BudgetPLUS, which
allows them to select the database that fits their technology standards.
BudgetPLUS supports both relational and OLAP database technology platforms,
including Microsoft SQL Server, Oracle, IBM DB2 OLAP Server, and Hyperion's
Essbase.
BudgetPLUS is available in both web-based and client/server versions, and
customers may implement a mixed environment of both web and client/server.
2. DECISION
Decision is the latest generation in a long line of the Company's business
intelligence products that allow customers to develop customized reporting and
analysis applications.
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Decision provides advanced development and analytical features for creating
customized OLAP reporting and analysis applications such as product and customer
profitability analysis, sales analysis, balanced scorecards and other
performance measurement applications.
Decision capitalizes on the increased use of multi-dimensional analysis by
business professionals to solve business problems. Using multi-dimensional
analysis, business professionals view information in a way that is consistent
with their perspective on the underlying business (e.g., across time periods,
business measures, geographies, products and markets). Decision includes
software necessary to deliver an enterprise-wide reporting and analysis
application, including software which 1) gathers and consolidates data from
multiple, disparate data sources, 2) uses server-based technology to facilitate
computer-intensive functions such as sorting and ad-hoc calculations and 3)
provides analysis capabilities and front end presentation for end-users.
Decision offers advanced visualization and proactive alerting capabilities
to help end-users focus on important exceptions in large amounts of information.
End-users can use this exception alerting capability to define the data to be
monitored and the acceptable data ranges that they want to be alerted on.
The Company views the web as an important technology platform for the types
of applications that Decision supports, and Decision is available on both web
and client/server platforms. Decision supports Essbase, Microsoft SQL Server
Analysis Services, IBM DB2 OLAP Server databases, as well as other OLAP
databases that support the Microsoft OLE DB for OLAP standard.
3. FDC
FDC is a statutory consolidation and management reporting application that
collects and consolidates financial data from different general ledgers and
other sources within a multi-divisional or multi-location organization. It
produces consolidated financial reports for management, public and statutory
reporting. With FDC, customers can reduce their financial closing time and
provide financial results more quickly, thus freeing up time for improved
financial analysis.
FDC offers the financial intelligence and control found in general ledgers.
Information can be integrated from multiple general ledger systems without
re-entering data. FDC handles currency translations, intercompany eliminations
and account reclassifications.
A major strength of FDC is its ability to be distributed across multiple
geographically dispersed operations. This allows distributed operations to
collect, report and analyze their data, while making sure that information for
corporate financial consolidations is timely and accurate.
A management reporting and analysis module for FDC provides both
client/server and web-enabled management reporting and analysis, with all of the
reporting capabilities of Decision. This allows key financial performance
reporting and analysis to be broadly deployed to management and business
analysts, thus eliminating time-consuming custom reports.
4. LEGACY PRODUCTS
Because Comshare has been in business for thirty-five years, the Company
has a number of older products that it continues to support. Comshare continues
to support Commander OLAP, the predecessor to Decision, older desktop EIS and
modeling products, third party databases, and System W and IFPS products for use
on mainframe computers. Customers use System W and IFPS for applications similar
to those developed with Decision, although the multi-dimensional database
resides on the mainframe rather than on the server. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
IMPLEMENTATION AND CONSULTING SERVICES
Implementation and consulting services are offered for all of the Company's
software products and include application design and modification, installation
assistance, implementation and troubleshooting support.
Comshare complements its services through partnership arrangements with
value added consultants and has a certification process to recognize consultants
qualified in the use of Comshare applications. The certification process is also
designed to help Comshare's customers receive quality service, support, training
and project oversight and to help Comshare monitor the services provided by its
certified consultants.
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In addition, distributors and resellers of the Company offer implementation
and consulting services for their direct customers, similar to the services
offered by the Company.
SOFTWARE MAINTENANCE AND SUPPORT
The Company provides customer telephone helpline support staffed with
experienced professionals. Customers under maintenance agreements receive
product enhancements and updates, bug fixes and access to Comshare's telephone
helpline and helpline web site. Maintenance customers pay an annual maintenance
fee, which is typically 15 to 20 percent of the software license fee.
CUSTOMER TRAINING
Comshare offers a training program to customers and third party
consultants. Training classes are provided by the Company at customer sites and
at its local sales offices. The Company's training program is designed for
end-users and system support staff and includes a variety of training classes
covering software application use, application building and system
administration.
CUSTOMERS
Comshare and its distributors are currently providing maintenance at over
2,180 corporate and public sector customer sites in 41 countries. Comshare's
diversified customer base includes many Fortune 1000 and Financial Times 1000
industrial companies as well as large and mid-sized companies in the
communications, financial services, health care, retail and transportation
industries, and many governmental and other public sector organizations.
SALES AND MARKETING
Comshare's products and services are sold on a worldwide basis by direct
sales operations, an extensive worldwide distributor network and a reseller
channel that targets mid-sized companies. Comshare distributors and resellers
leverage the Company's software and application expertise and offer presale and
postsale implementation, consulting, customer support and services.
The Company sells and markets its software products and services in the
U.S., Canada and the U.K. through its direct sales organizations. Direct sales
operations are organized geographically.
The Company has an extensive distributor network covering 38 countries not
directly served by the Company. The Company has selected established software
application vendors to act as distributors to market, implement and support
Comshare's products in their respective geographic areas. Revenue from the
Company's distributors was $16.0 million, or approximately 26% of total revenue,
in fiscal 2000.
The Company has a group of 10 resellers that focus on sales in the middle
market enterprises in the US, UK and Canada.
To generate sales, the Company conducts comprehensive marketing programs
that include direct mail, a corporate Web site, public relations, advertising,
seminars, trade shows, teleweb briefings and ongoing customer communication
programs. The sales cycle begins with the generation of a sales lead or request
for proposal from a prospect. After a lead is qualified, the Company's sales
force analyzes the prospect's needs and makes one or more presentations. After
obtaining a preliminary commitment, the Company often develops customized
demonstrations to illustrate how the Company's products will satisfy a
customer's specific needs. The sales cycle varies in length from customer to
customer, but typically ranges from six to nine months.
RESEARCH AND PRODUCT DEVELOPMENT
The Company's product development strategies are to: (1) provide a suite of
integrated applications for management planning and control; (2) deliver the
integrated suite on a common application architecture; (3) deploy the
applications on industry standard databases; (4) employ Microsoft standards and
(5) differentiate Comshare products by their ease of implementation, deployment
and use.
Management planning and control applications encompass a closed-loop set of
processes that enable an enterprise to plan, budget, execute, report, evaluate,
analyze and respond to strategic initiatives. Towards this end, Comshare is
currently developing and delivering a set of integrated budgeting and planning,
financial consolidation, and management reporting and analysis applications in
support of these closed-loop processes.
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The integrated suite of applications rests on the Comshare Application
Architecture ("CAA"). This architecture is a multi-tiered design with a back-end
database tier, an application server tier consisting of an innovative set of
application objects and components and a client-side presentation tier. The CAA
enables Comshare's applications to run on a variety of back-end databases and
supports both client/server and web desktops. BudgetPLUS and Decision are fully
web-enabled.
To broaden the market potential for BudgetPLUS, the Company developed
relational technology versions that run on mainstream relational databases.
During fiscal 2000, an IBM DB2 relational version of BudgetPLUS was released.
All of Comshare's products run on Windows NT on the server and Windows NT,
Windows '98 and Windows 2000 on the desktop. Comshare's web-based offerings
utilize Microsoft's Internet Information Server (IIS) and support both
Microsoft's Internet Server Application Programming Interface (ISAPI) and Active
Server Page (ASP) technologies. The Company plans to continue to focus on
Microsoft's platforms and to replace proprietary components over time with
Microsoft technologies.
Comshare's applications are distinguished by their innovative guided
analysis capabilities that enable customers to quickly and easily identify
problem areas hidden within very large multi-dimensional databases.
During the fiscal years ended June 30, 2000, 1999 and 1998, worldwide
internal research and product development expenses were (in thousands):
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Internal research and product development $ 9,070 $ 9,059 $ 12,398
As a % of total revenue 14.8% 14.2% 14.2%
</TABLE>
Internal research and product development was consistent as a percentage of
revenue over the past three years. The decrease in the dollar amount spent on
internal research and product development from fiscal 1998 to 1999 was primarily
due to the sale of the Company's Retail Business.
The markets for the Company's products are characterized by rapid
technological advances, evolving industry standards, changes in customer
requirements and frequent introductions and enhancements of competitive
products. The Company's success and future financial performance will depend on
its ability to keep pace with these changes and to anticipate these changes as
they occur and to enhance its existing products and develop new products in a
timely and cost-effective manner. There can be no assurance that the Company
will be able to successfully accomplish future technological or product
transitions, that the Company will not experience significant delays in
developing new products or enhancements required to accomplish such transitions
or that the Company will have sufficient financial resources available to
finance such efforts. There can be no assurance as to the impact that any such
transition would have on the Company's revenue or profitability. In addition,
there can be no assurance that the Company's new products and enhancements will
adequately address the changing needs of the marketplace and achieve market
acceptance or that developments by others will not render the Company's products
obsolete or non-competitive.
The foregoing statements regarding the Company's product development
efforts contain "forward looking statements" within the meaning of the
Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those in the forward looking statements due to a number of
uncertainties, including, but not limited to, those described above and under
"Business - Uncertainties Relating to Forward Looking Statements."
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company's success is dependent on its proprietary technology. The
Company does not hold any material patents and seeks to protect its technology
primarily through trademarks, copyrights, employee and third party
non-disclosure agreements and trade secret laws, which afford only limited
protection.
Comshare distributes its software products under software license
agreements that generally grant customers a non-exclusive license to use the
Company's products. The Company considers its software products to be valuable
and unique assets and actively attempts to protect them contractually, generally
by restricting usage to internal operations and prohibiting the unauthorized
reproduction or transfer to third parties. The Company also believes that the
nature of its customers and the provision of continuing maintenance and support
services reduce the risk of unauthorized reproduction.
The Company has registered certain of its trademarks and copyrights. The
Company is the owner of various trademarks, including Comshare(R), Comshare
BudgetPLUS, Comshare Decision, Comshare EIS, Guided Analysis,
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Comshare FDC, The Decision Support Company(R), Overview and Comshare Application
Architecture, as well as various other trademarks associated with its legacy
products. The Company's software contains the statutory copyright notices.
The laws of some foreign countries do not protect the Company's proprietary
rights to the same extent as do the laws of the United States. In addition,
certain provisions of the Company's contracts prohibiting unauthorized
reproduction may be unenforceable under the laws of certain foreign countries.
There can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or development by others of similar or superior technology. Although
the Company believes that its products and technology do not infringe on any
existing proprietary rights of others, there can be no assurance that third
parties will not assert infringement claims in the future or that any such
claims will not require the Company to enter into license arrangements or result
in litigation, regardless of the merits of such claims. No assurance can be
given that any necessary licenses will be available or that, if available, such
licenses can be obtained on commercially reasonable terms. Should litigation
with respect to any such claims commence, such litigation could be extremely
expensive and time consuming.
LICENSED TECHNOLOGIES
The Company licenses certain software programs and tools from third parties
and incorporates them into the Company's products. These licenses are
non-exclusive and provide for varying royalty payments and expiration dates. In
addition, the Company resells certain third party databases. The Company
believes that the inclusion of third party software programs and tools in its
products reduces product development risk and time to market.
Examples of third party software tools that are either incorporated into or
used with Comshare's products include Hyperion Solutions Corporation's
("Hyperion") Essbase, Inxight's Hyperbolic Tree, Pervasive Software, Inc.'s
("Pervasive") Pervasive.SQL 2000 database, Strategic Mapping, Inc.'s Atlas View
SDK, Tidestone Technologies, Inc.'s Formula One, Advanced Visual Systems'
OpenViz, and Quadbase Systems, Inc.'s EspressChart.
Comshare resells Hyperion's Essbase database in connection with Comshare's
Decision and BudgetPLUS products. Essbase sales represent a significant
percentage of Comshare's Decision sales. Comshare's worldwide license to resell
Essbase expires December 31, 2002, although the license may be terminated
earlier in the event of an uncured material breach. The license agreement
provides that Comshare and its distributors may continue to maintain and support
its customer base after termination of the license agreement.
COMPETITION
The markets for Comshare's software products are highly competitive and
characterized by continued change and rapid technological advancements. In
general, the Company competes principally on the basis of: (1) software
application utility, which includes the extent to which its product offerings
meet specific end-user needs; (2) functionality, which includes the breadth and
depth of features and functions, ease-of-use and deployment; (3) service and
support, which includes the range and quality of technical support, training and
consulting services; (4) vendor reputation; (5) product architecture, which
includes database platform, distributed/network architecture (such as web
support) and ease of integration with other applications and (6) product pricing
in relation to perceived value. The Company believes it competes favorably with
respect to these factors, although it may be at a competitive disadvantage
against certain of its competitors because of their significantly larger market
presence and greater financial, technical, marketing and other resources.
The analytical applications software market is highly competitive, highly
fragmented and subject to rapid change and evolving industry standards. The
Company competes primarily with Adaytum Software, Inc. and Hyperion Solutions.
The Company also competes with a variety of additional software companies,
third party professional service organizations that develop custom software and
with internal information technology departments, which develop financial
analytic applications. Among the Company's current and potential competitors are
a number of large software companies, including ERP software developers,
developers of spreadsheets, database query and reporting tools, transaction
processing-based applications and database technologies, that may elect to
increase the financial analytic capabilities of their current products or that
may develop or acquire products that compete with the Company's products.
Increased competition could result in price reductions, reduced operating
margins and loss of market share. In addition, many of the Company's current and
potential competitors have significantly greater financial, technical, marketing
and other resources than the Company. As a result, they may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of products than the Company. There can be no assurance that the Company
will be able to compete successfully against current and future competitors.
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INTERNATIONAL OPERATIONS
The Company derived 47.9%, 50.4% and 52.2% of its total revenue from
outside North America in fiscal 2000, 1999, and 1998, respectively, and expects
that revenue generated outside North America will continue to represent a
significant portion of the Company's total revenue. This international business
is subject to various risks inherent in international activities, including the
impact on the Company's operations of, and the burdens of complying with, a wide
variety of laws, regulations, rules and policies of local foreign governments,
such as those relating to currency controls, hiring and termination of
employees, import restrictions and the protection of proprietary rights.
The Company's international operations also expose the Company to
constantly fluctuating currency rates. Currency fluctuations have in the past
adversely affected, and may in the future adversely affect, the Company's
reported revenue, expenses and shareholders' equity. The Company's international
sales are primarily denominated in foreign currencies. As a result, an increase
in the value of the U.S. dollar relative to foreign currencies has the effect of
reducing the Company's reported revenue and profits from international sales
denominated in such currencies. Conversely, a weakening in the value of the U.S.
dollar relative to foreign currencies has the effect of increasing the Company's
reported revenue and profits from international sales denominated in such
currencies. Currency exchange rate fluctuations can also result in gains and
losses from foreign currency exchange transactions. The Company, at various
times, has entered into forward exchange contracts to hedge exposures related to
foreign currency exchange transactions. Because the Company only selectively
hedges against certain large transactions that present the most exposure to
exchange rate fluctuations, the Company's results of operations will continue to
be impacted by fluctuations in foreign currency exchange rates, which at times
could be material. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 of the Notes to
Consolidated Financial Statements.
For a description of certain financial information regarding the Company by
geographic area, see Note 10 of the Notes to Consolidated Financial Statements.
EMPLOYEES
Comshare employed 334 full-time employees as of June 30, 2000 including:
106 in sales and marketing, 68 in consulting and implementation services, 71 in
research and product development and 89 in customer support and administration.
None of the Company's employees is represented by a collective bargaining
agreement, nor has the Company experienced any work stoppages. The Company
considers its relations with its employees to be good.
MISCELLANEOUS
Compliance with federal, state and local laws and ordinances that regulate
the discharge of materials into the environment has not had, and is not expected
to have, a material effect upon the capital expenditures, earnings or
competitive position of Comshare.
UNCERTAINTIES RELATING TO FORWARD LOOKING STATEMENTS
"Item 1. Business" and other parts of this Form 10-K Report contain
"forward-looking statements" within the meaning of the Securities Exchange Act
of 1934, as amended. Actual results could differ materially from those in the
forward looking statements due to a number of uncertainties, including, but not
limited to, those discussed in this section and in "Research and Product
Development", "Intellectual Property and Proprietary Rights," "Licensed
Technologies," "Competition" and "International Operations" above and in "Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations - Market Sensitivity Analysis." 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; 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;
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
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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.
ITEM 2. PROPERTIES
Comshare leases sales offices and general office space in 10 major cities
throughout the United States, Canada and the United Kingdom. Comshare's primary
leased locations are identified in the following table:
<TABLE>
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Approximate Lease
Area in Principal Expiration
Location Square Feet Activity Date
-------- ----------- -------- ----
<S> <C> <C> <C>
Ann Arbor, 70,000 Headquarters, February 2005 *
Michigan Administration, Sales,
Marketing, Research
and Product Development
and Customer Support
London, 34,000 Sales, Marketing January 2008
England and Implementation
Services
</TABLE>
* Comshare has the option to cancel in February 2002.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
10
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's common stock is traded on the Nasdaq National Market(R) under
the symbol "CSRE."
The following table sets forth, for the periods indicated, the high and low
per share closing sales prices for the Company's common stock as reported on the
Nasdaq National Market(R).
<TABLE>
<CAPTION>
FISCAL YEAR MARKET PRICES
-------------
ENDING JUNE 30 HIGH LOW
-------------- ---- ---
<S> <C> <C>
1998 First Quarter 12.38 8.00
Second Quarter 8.19 4.81
Third Quarter 9.81 6.13
Fourth Quarter 8.88 7.00
1999 First Quarter 7.88 2.88
Second Quarter 5.25 3.00
Third Quarter 3.88 2.97
Fourth Quarter 3.38 3.00
2000 First Quarter 3.50 2.75
Second Quarter 6.56 2.75
Third Quarter 6.50 3.50
Fourth Quarter 4.80 3.53
2001 First Quarter 5.13 4.13
(through August 31, 2000)
</TABLE>
At August 31, 2000, there were approximately 906 holders of record of the
Company's common stock.
DIVIDEND POLICY
The Company has not paid dividends on its common stock since incorporation.
It is the Company's present policy to retain earnings for use in the Company's
business. Accordingly, the Company does not anticipate that cash dividends will
be paid in the foreseeable future. The Company's credit agreement contains
covenants which prohibit the payment of cash dividends on the common stock. See
Note 3 of the Notes to Consolidated Financial Statements regarding restrictions
on the payment of dividends.
11
<PAGE> 12
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data for the five fiscal years ended June 30 are
derived from the audited Consolidated Financial Statements of the Company. This
information should be read in conjunction with "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements and related Notes included elsewhere in this
annual report on Form 10-K.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
(IN THOUSANDS)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenue $ 61,323 $ 63,972 $ 87,203 $ 89,801 $ 115,353
Income (loss) from operations
before restructuring and
unusual charges (363) (2,985) (4,034) (19,727) 6,375
Loss from operations (363) (3,952) (14,724) (25,972) (16,792)
Net income (loss) 679 (1,136) 5,266 (17,117) (9,891)
Per common share -
Basic EPS $ 0.07 $ (0.12) $ 0.53 $ (1.75) $ (1.09)
Average shares 9,664 9,700 9,903 9,770 9,048
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
(IN THOUSANDS)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Cash & cash equivalents $ 29,506 $ 32,212 $ 49,311 $ 11,823 $ 27,637
Total assets 60,146 63,455 88,692 80,751 98,238
Long-term debt 599 1,198 1,434 343 1,913
Total shareholders' equity $ 30,891 $ 31,266 $ 38,405 $ 31,959 $ 48,664
ADDITIONAL DATA:
Number of employees at year end 334 353 405 579 695
</TABLE>
NOTES: (1) The income (loss) from operations for the fiscal years ended June
30, 1999, 1998, 1997 and 1996 includes restructuring and unusual
charges of $967,000, $10,690,000, $6,245,000 and $23,167,000,
respectively. See Note 2 of the Notes to Consolidated Financial
Statements for information regarding restructuring and unusual
charges.
(2) Net loss for the fiscal year ended June 30, 1999 includes a
$1,102,000 income tax benefit, recognizing the availability of
an income tax refund.
(3) Net income for the fiscal year ended June 30, 1998, includes an
after-tax gain of $19,986,000 from the sale of the Company's
Retail Business. The Retail Business accounted for approximately
$17,800,000 of the Company's 1998 revenue
(4) The fiscal year ended June 30, 1996 includes a $1,200,000 tax
benefit which related to the settlement of certain tax issues and
the amendment of certain tax returns to claim credits which had
previously not been claimed.
12
<PAGE> 13
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:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
------------- --------- ---------
<S> <C> <C> <C>
REVENUE
Software licenses 38.2 % 36.4 % 36.3 %
Software maintenance 38.0 41.0 38.4
Implementation, consulting and other services 23.8 22.6 25.3
------------- --------- ---------
TOTAL REVENUE 100.0 100.0 100.0
COSTS AND EXPENSES
Selling and marketing 39.4 40.2 45.0
Cost of revenue and support 35.7 37.9 33.1
Internal research and product development 14.8 14.2 14.2
General and administrative 10.7 12.4 12.3
Restructuring and unusual charges - 1.5 12.3
------------- --------- ---------
TOTAL COSTS AND EXPENSES 100.6 106.2 116.9
------------- --------- ---------
LOSS FROM OPERATIONS (0.6) (6.2) (16.9)
OTHER INCOME (EXPENSE)
Interest income 2.5 3.0 0.7
Interest expense (0.1) (0.1) (0.6)
Gain on sale of Retail Business - - 40.6
Exchange loss (0.1) (0.1) (0.1)
------------- --------- ---------
TOTAL OTHER INCOME 2.3 2.8 40.6
INCOME (LOSS) BEFORE TAXES 1.7 (3.4) 23.7
------------- --------- ---------
Provision (benefit) for income taxes 0.6 (1.6) 17.7
------------- --------- ---------
NET INCOME (LOSS) 1.1 % (1.8)% 6.0 %
============= ========= =========
</TABLE>
13
<PAGE> 14
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. The following table
shows revenue reflecting the Company's French and German operations as
distributors during the fiscal year ended June 30, 1999 for the fiscal years
ended June 30, 2000 and 1999 ("on a comparable basis"):
<TABLE>
<CAPTION>
In thousands 2000 1999
---- ----
% OF % OF INCREASE
REVENUE TOTAL REVENUE REVENUE TOTAL REVENUE (DECREASE)
------- ------------- ------- ------------- ----------
<S> <C> <C> <C> <C> <C>
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%)
</TABLE>
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 reflected
primarily the growth of the Company's BudgetPLUS 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.
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
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.
14
<PAGE> 15
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 our 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. 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.
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.
COMPARISON OF FISCAL YEAR ENDED JUNE 30, 1999 TO FISCAL YEAR ENDED JUNE 30, 1998
Revenues
Total revenue decreased 26.6% in fiscal 1999 compared with fiscal 1998
primarily due to the Company's sale of its Retail Business during June 1998, as
well as the sale of the Company's French and German operations and their
conversion to distributor operations, during the quarter ended December 31,
1998. As a result of the sales of these operations, software licenses revenue,
software maintenance revenue and implementation, consulting and other services
revenue decreased. Without revenue from the Retail Business and reflecting
revenue from the Company's French and German operations as distributors in both
fiscal 1998 and 1999 ("on a comparable basis"), total revenue was $62.6 million
in fiscal 1999 and $63.5 million in fiscal 1998. The decrease in comparable
revenue from fiscal 1998 to fiscal 1999 was primarily due to decreased
implementation, consulting and other services revenue in fiscal 1999.
On a comparable basis, software licenses revenues were $23.0 million and
$23.3 million for the fiscal years ended June 30, 1999 and 1998, respectively.
Licenses of the Company's flagship product, BudgetPLUS, increased 50% in fiscal
1999 to $5.7 million. Sales of the Company's older legacy desktop products,
however, declined and more than offset the growth in BudgetPLUS license fees.
On a comparable basis, software maintenance revenues were $25.7 million and
$25.5 million for the fiscal years ended June 30, 1999 and 1998, respectively.
During fiscal 1999, the Company experienced growth in maintenance revenue from
newer products such as BudgetPLUS and Decision. This increase was offset
primarily by a decline in maintenance revenue from older legacy desktop and
mainframe products.
On a comparable basis, implementation, consulting and other services
revenues were $13.9 million and $14.7 million for the fiscal years ended June
30, 1999 and 1998, respectively. The decrease in implementation, consulting and
other services revenue for fiscal 1999 compared to fiscal 1998 was primarily due
to several large implementation and consulting engagements during fiscal 1998,
which were not recurring in fiscal 1999.
Expenses
Total costs and expenses before restructuring and unusual charges decreased
from fiscal 1998 to fiscal 1999. The decrease was primarily due to the Company's
sale of its Retail Business and the sale of the Company's French and German
operations and their conversion to distributor operations. The remaining
decrease was primarily due to streamlining of the sales management structure,
consolidation of financial functions and lower facility costs, offset by
increased customer service costs.
Selling and marketing expenses decreased in fiscal 1999 compared to fiscal
1998, primarily due to the sales of the Retail Business and French and German
operations. To a lesser extent, the decrease was the result of streamlining the
Company's sales management structure.
15
<PAGE> 16
Cost of revenue and support expenses decreased in fiscal 1999 compared to
fiscal 1998, primarily due to the sales of the Retail Business and French and
German operations, offset by additional expenses associated with the Company's
customer services program in fiscal 1999.
Internal research and product development expenses decreased in fiscal 1999
compared to fiscal 1998, primarily due to the Company's sale of its Retail
Business. As a percentage of total revenue, product development expenses were
relatively flat between fiscal 1999 and fiscal 1998, as there was no reduction
in product development spending for the Company's financial applications.
General and administrative expenses decreased in fiscal 1999 compared to
fiscal 1998. The decrease was primarily due to the consolidation of
administrative functions at the Company's headquarters and reduced legal
expenses.
In fiscal 1999, the Company recorded a $1.0 million pre-tax restructuring
charge related to staff reduction related to the consolidation of the Company's
financial and marketing activities and the consolidation of certain facilities.
The restructuring charges included total staff reductions of 14 employees.
In fiscal 1998, the Company recorded a $10.7 million pre-tax charge for
restructuring and unusual charges related to the write off of capitalized
software, termination costs for certain executives, staff reduction and facility
costs related to the consolidation of the Company's helpline activities and
planned actions to reduce facility and other costs. The restructuring charges
included total staff reductions of 27 employees.
Due to the cash received from the sale of the Retail Business in June 1998,
the Company had higher average cash balances in fiscal 1999 as compared to
fiscal 1998, resulting in increased interest income in fiscal 1999.
Interest expense decreased in fiscal 1999 as compared to fiscal 1998 due to
decreased average borrowings during fiscal 1999.
On June 4, 1998, the Company sold certain software products, accounts
receivable, customer contracts, intellectual property, intangibles, permits and
business records related to its Arthur (TM) strategic merchandise management
applications for the retail industry and its Boost Sales and Margin Planning
software product for the consumer packaged goods industry to JDA Software, Inc.
for $44.0 million in cash and the assumption of certain liabilities related to
the Retail Business. The Company also received $1.0 million of prepaid
royalties. The sale of the Retail Business resulted in a pre-tax gain of
$35,386,000 and an after-tax gain of $19,986,000.
FOREIGN CURRENCY
In fiscal 2000, 1999 and 1998, 47.9%, 50.4% and 52.7%, 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 $54,000 foreign exchange loss in fiscal 2000 principally reflected
the weakening of certain foreign currencies against the British pound during the
twelve months ended June 30, 2000. The Company had exchange losses of $56,000
and $71,000 in fiscal 1999 and 1998, respectively, principally due to the
weakening of certain foreign currencies against the British pound.
Foreign currency fluctuations in fiscal 2000, 1999 and 1998 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 2000, the decrease in total revenue, at actual
exchange rates, was $0.4 million greater than at comparable exchange rates. The
decrease in total expenses in fiscal 2000, at actual exchange rates, was $0.1
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 less than at comparable exchange
rates. In fiscal 1999, the decrease in total revenue, at actual exchange rates,
was $0.3 million greater than at comparable exchange rates. The decrease in
total expenses in fiscal 1999, at actual exchange rates, was $0.6 million
greater 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 in
fiscal 1999, 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 2000, 1999 or 1998.
16
<PAGE> 17
INCOME TAXES
The Company recorded a tax provision on pretax income in fiscal 2000 at an
effective rate of 35%. In fiscal 1999, taxes were provided at 35% on income
before restructuring costs, and no tax benefit was recognized on restructuring
costs. The income tax provision in fiscal 1998 of $15.5 million was related to
the Company's sale of its Retail Business, and no tax benefit was recognized on
the Company's operating loss or restructuring charges in that year.
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, 2000, cash and cash equivalents were $29.5 million, compared
with cash and cash equivalents of $32.2 million at June 30, 1999. The decrease
in cash and cash equivalents was principally due to payment of fiscal 1999 and
prior years' restructuring related items and other cash used in operating
activities.
Net cash used in operating activities was $0.9 million in fiscal 2000
compared with $12.9 million in fiscal 1999. The decrease in net cash used in
operating activities was primarily due to the payment of income taxes during
fiscal 1999 and other expenses related to the sale of the Company's Retail
Business and restructuring related items from prior years which did not impact
fiscal 2000.
Net cash used in investing activities was $0.5 million in fiscal 2000,
compared to $1.2 million in fiscal 1999. The decrease in cash related to
investing activities for the year ended June 30, 2000 compared to the year ended
June 30, 1999, was primarily due to reduced capital expenditures in fiscal 2000.
At June 30, 2000, the Company did not have material capital expenditure
commitments. In fiscal 2001, property and equipment purchases are expected to be
comparable to fiscal 2000.
Net cash used in financing activities was $0.8 million in fiscal 2000,
compared with $2.6 million in fiscal 1999. The decrease in cash used in
financing activities was primarily due to a stock repurchase program which was
completed in fiscal 1999 which did not impact fiscal 2000.
Working capital as of June 30, 2000 was $25.5 million, compared with $24.5
million as of June 30, 1999. The increase in working capital was primarily due
to an increase in accounts receivable offset by a reduction of cash and cash
equivalents during the year ended June 30, 2000. In addition, accrued
liabilities were reduced as a result of payments made on fiscal 1999
restructuring items. Total assets were $60.1 million at June 30, 2000, compared
with $63.5 million at June 30, 1999. 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, 2001. 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, 2000 under this credit agreement were $10 million, of
which $0.6 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, 2000, the interest rate on borrowings
denominated in Japanese yen, which were used to hedge receivables, was 2.04%.
17
<PAGE> 18
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, 2000 and June 30, 1999, the Company had forward contracts of
approximately $5.6 million and $2.9 million (notional amounts), respectively,
denominated in foreign currencies. The contracts outstanding at June 30, 2000
mature through October 13, 2000 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, 2000 and 1999.
Gains and losses on the forward contracts are largely offset by gains and
losses on the underlying exposure. The Company conducts business in
approximately 7 foreign currencies, predominately British pounds, the Euro and
Japanese yen. A hypothetical 10 percent appreciation of the U.S. dollar from
June 30, 2000 market rates would increase the unrealized value of the Company's
forward contracts by an immaterial amount and a hypothetical 10 percent
depreciation of the U.S. dollar from June 30, 2000 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.
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, 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; 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; the ability of the
Company to generate sufficient future taxable income or to execute available tax
strategies required to realize deferred tax assets; 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
18
<PAGE> 19
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Market Sensitivity Analysis."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedule filed herewith are set forth on the
Index to Consolidated Financial Statements and Schedule on page 23 and are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference
to the Company's 2000 Proxy Statement under the captions "Election of Directors"
and "Further Information-Executive Officers."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference
to the Company's 2000 Proxy Statement under the caption "Executive
Compensation."
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is incorporated herein by reference to
the Company's 2000 Proxy Statement under the captions "Further
Information-Principal Shareholders" and "Further Information-Stock Ownership of
Management."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is incorporated herein by reference to
the Company's 2000 Proxy Statement under the captions "Certain Relationships and
Related Transactions."
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:
19
<PAGE> 20
The Financial Statements filed with this report are listed in the
Index to Consolidated Financial Statements and Schedule, which
appears on page 23.
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 23.
3. The exhibits filed with this report are listed in the Exhibits which
appears on page 46. 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:
EXHIBIT NO. DESCRIPTION
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended and restated on November 6, 1997.
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 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.
10.04 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall, effective July 1, 1994, as amended -
incorporated by reference to Exhibit 10.10 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1994.
10.05 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall.
10.06 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 -- incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1994.
10.07 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.
10.08 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.
10.09 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated,
effective March 31, 1992, as amended -- incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K Report for the fiscal year
ended June 30, 1994.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
20
<PAGE> 21
10.14 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.
10.15 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.
10.16 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.
10.17 Executive Bonus Program, effective October 1, 1997 -- incorporated by
reference to Exhibit 10.1 to the Registrant's Form 10-Q Report for the
quarter ended December 31, 1997.
10.18 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.
10.19 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.
10.20 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Kathryn A. Jehle --
incorporated by reference to Exhibit 10.20 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 Kathryn A. Jehle -- 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 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.
10.23 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.
10.24 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.
10.25 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.
10.26 Comshare, Incorporated Change in Control Severance Agreement dated as
of June 1, 1998, between Comshare, Incorporated and Norman Neuman --
incorporated by reference to Exhibit 10.23 to the Registrant's Form
10-K Report for the fiscal year ended June 30, 1998.
10.27 First Amendment to Comshare, Incorporated Change in Control Severance
Agreement dated as of November 30, 1999, between Comshare Incorporated
and Norman R. Neuman, Jr. -- incorporated by reference to Exhibit 10.04
to the Registrant's Form 10-Q Report for the quarter ended December 31,
1999.
10.28 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.
10.29 First Amendment to Global Employee Stock Option Plan -- incorporated by
reference to Exhibit 10.04 to the Registrant's Form 10-Q for the
quarter ended September 30, 1999.
10.30 Summary of 1998 Senior Executive Incentive Plan -- incorporated by
reference to Exhibit 10.26 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1998.
21
<PAGE> 22
10.31 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.
10.32 Summary of 2000 Senior Executive Incentive Plan.
10.33 Summary of 2001 Senior Executive Incentive Plan.
(b) Reports on Form 8-K.
Since the end of the fiscal quarter ended March 31, 2000 the Registrant has not
filed any reports on Form 8-K.
22
<PAGE> 23
COMSHARE, INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants 24
Consolidated Statements of Operations for
the Fiscal Years Ended June 30, 2000, 1999 and 1998 25
Consolidated Statements of Comprehensive Income for
the Fiscal Years Ended June 30, 2000, 1999 and 1998 26
Consolidated Balance Sheets as of June 30, 2000 and 1999 27-28
Consolidated Statements of Cash Flows for the
Fiscal Years Ended June 30, 2000, 1999 and 1998 29
Consolidated Statements of Shareholders' Equity
for the Fiscal Years Ended June 30, 2000, 1999 and 1998 30
Notes to Consolidated Financial Statements 31-43
SCHEDULE
II. Consolidated Schedule of Valuation & Qualifying Accounts 44
</TABLE>
23
<PAGE> 24
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, 2000 and
1999, and the related consolidated statements of operations, comprehensive
income, shareholders' equity and cash flows for each of the three years in the
period ended June 30, 2000. 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, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2000 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 25, 2000.
24
<PAGE> 25
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
------------ ------------ -------------
<S> <C> <C> <C>
REVENUE
Software licenses $ 23,446 $ 23,299 $ 31,679
Software maintenance 23,261 26,228 33,490
Implementation, consulting and other services 14,616 14,445 22,034
------------ ------------ -------------
TOTAL REVENUE 61,323 63,972 87,203
COSTS AND EXPENSES
Selling and marketing 24,169 25,724 39,217
Cost of revenue and support 21,911 24,215 28,883
Internal research and product development 9,070 9,059 12,398
General and administrative 6,536 7,959 10,739
Restructuring and unusual charges - 967 10,690
------------ ------------ -------------
TOTAL COSTS AND EXPENSES 61,686 67,924 101,927
LOSS FROM OPERATIONS (363) (3,952) (14,724)
OTHER INCOME (EXPENSE)
Interest income 1,530 1,901 632
Interest expense (68) (63) (488)
Gain on sale of Retail Business - - 35,386
Exchange loss (54) (56) (71)
------------ ------------ -------------
TOTAL OTHER INCOME 1,408 1,782 35,459
INCOME (LOSS) BEFORE TAXES 1,045 (2,170) 20,735
Provision (benefit) for income taxes 366 (1,034) 15,469
------------ ------------ -------------
NET INCOME (LOSS) $ 679 $ (1,136) $ 5,266
============ ============ =============
SHARES USED IN BASIC EPS COMPUTATION 9,664 9,700 9,903
============ ============ =============
SHARES USED IN DILUTED EPS COMPUTATION 9,791 9,700 10,074
============ ============ =============
NET INCOME (LOSS) PER COMMON SHARE - BASIC EPS $ 0.07 $ (0.12) $ 0.53
============ ============ =============
NET INCOME (LOSS) PER COMMON SHARE - DILUTED EPS $ 0.07 $ (0.12) $ 0.50
============ ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
25
<PAGE> 26
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
------------ ------------ -------------
<S> <C> <C> <C>
Net income (loss) $ 679 $ (1,136) $ 5,266
Other comprehensive loss:
Currency translation adjustment (702) (848) (11)
Increase in pension liability,
net of tax (1,020) (3,262) -
------------ ------------ -------------
Other comprehensive loss, net of tax (1,722) (4,110) (11)
------------ ------------ -------------
COMPREHENSIVE INCOME (LOSS) $ (1,043) $ (5,246) $ 5,255
============ ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
26
<PAGE> 27
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF JUNE 30,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 29,506 $ 32,212
Accounts receivable, less allowance for
doubtful accounts of $1,230 and $1,327
as of June 30, 2000 and 1999, respectively 17,328 14,723
Deferred income taxes 759 654
Prepaid expenses and other current assets 2,297 4,585
------------ ------------
TOTAL CURRENT ASSETS 49,890 52,174
Computers and other equipment 8,508 11,099
Leasehold improvements 2,774 2,893
------------ ------------
Property and equipment, at cost 11,282 13,992
Less - Accumulated depreciation 9,397 11,354
------------ ------------
Property and equipment, net 1,885 2,638
Goodwill, net of accumulated
amortization of $1,853 and $1,571 as of
June 30, 2000 and 1999, respectively 1,047 1,330
Deferred income taxes 5,845 5,067
Other assets 1,479 2,246
------------ ------------
TOTAL ASSETS $ 60,146 $ 63,455
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
27
<PAGE> 28
COMSHARE, INCORPORATED
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF JUNE 30,
2000 1999
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ - $ 882
Accounts payable 2,252 3,808
Accrued liabilities -
Payroll 2,240 1,864
Taxes 1,154 808
Other 6,583 8,747
------------ ------------
Total accrued liabilities 9,977 11,419
Deferred revenue 12,178 11,611
------------ ------------
TOTAL CURRENT LIABILITIES 24,407 27,720
Long-term debt 599 1,198
Other liabilities 4,249 3,271
------------ ------------
TOTAL LIABILITIES 29,255 32,189
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
9,771,962 shares as of June 30, 2000
and 9,642,033 as of June 30, 1999. 9,772 9,642
Capital contributed in excess of par value 38,790 38,650
Retained deficit (7,807) (8,486)
Accumulated other comprehensive income:
Pension liability, net of tax (4,282) (3,262)
Cumulative translation adjustment (5,582) (4,880)
------------ ------------
30,891 31,664
Less - Notes receivable - 398
------------ ------------
Total shareholders' equity 30,891 31,266
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 60,146 $ 63,455
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
28
<PAGE> 29
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
------------ ------------ -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 679 $ (1,136) $ 5,266
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 1,288 1,982 9,023
Gain on sale of Retail Business - - (35,386)
Noncash restructuring and unusual charges - 641 10,176
Changes in operating assets and liabilities:
Accounts receivable (2,929) 6,360 2,848
Prepaid expenses and other assets 752 312 (75)
Accounts payable (3,647) (6,303) 1,864
Accrued liabilities 844 (8,468) (3,539)
Deferred revenue 735 (3,312) (4,928)
Income taxes payable 2,288 (2,836) (52)
Deferred income taxes (883) 2,142 14,602
Other liabilities (41) (2,242) (556)
------------ ------------ -------------
Net cash used in operating activities (914) (12,860) (757)
INVESTING ACTIVITIES
Additions to computer software - - (6,546)
Payments for property and equipment (505) (1,578) (601)
Proceeds from sale of Retail Business and prepaid royalties - - 45,000
Other - 378 1,103
------------ ------------ -------------
Net cash provided by (used in) investing activities (505) (1,200) 38,956
FINANCING ACTIVITIES
Net repayments under debt agreements,
capital lease agreements and notes payable (1,462) (747) (2,023)
Stock options exercised - - 753
Common stock repurchased and retired - (2,835) -
Employee stock purchases 270 626 423
Other 397 315 268
------------ ------------ -------------
Net cash used in financing activities (795) (2,641) (579)
EFFECT OF EXCHANGE RATE CHANGES (492) (398) (132)
------------ ------------ -------------
NET INCREASE (DECREASE) IN CASH (2,706) (17,099) 37,488
CASH AT BEGINNING OF PERIOD 32,212 49,311 11,823
------------ ------------ -------------
CASH AT END OF PERIOD $ 29,506 $ 32,212 $ 49,311
============ ============ =============
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 49 $ 88 $ 215
============ ============ =============
Cash paid for taxes $ 819 $ 3,863 $ 862
============ ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
29
<PAGE> 30
COMSHARE, INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
------------ ------------- ------------
<S> <C> <C> <C>
COMMON STOCK
------------
Balance beginning of year $ 9,642 $ 10,003 $ 9,871
Employee Stock Purchases 130 207 61
1994 Executive Stock Purchase Program - 50 -
Retirement of shares - - (9)
Stock repurchased - (618) -
Stock options exercised - - 80
------------ ------------- ------------
Balance end of year 9,772 9,642 10,003
------------ ------------- ------------
CAPITAL CONTRIBUTED IN EXCESS OF PAR
------------------------------------
Balance beginning of year 38,650 40,335 39,528
Employee Stock Purchases 140 419 362
1994 Executive Stock Purchases - 113 -
Retirement of shares - - (240)
Stock repurchased - (2,217) -
Stock options exercised - - 685
------------ ------------- ------------
Balance end of year 38,790 38,650 40,335
------------ ------------- ------------
RETAINED DEFICIT
----------------
Balance beginning of year (8,486) (7,350) (12,363)
Net income (loss) 679 (1,136) 5,266
Retirement of shares - - (253)
------------ ------------- ------------
Balance end of year (7,807) (8,486) (7,350)
------------ ------------- ------------
ACCUMULATED OTHER COMPREHENSIVE INCOME
--------------------------------------
Balance beginning of year (8,142) (4,032) (4,021)
Comprehensive income (1,722) (4,110) (11)
------------ ------------- ------------
Balance end of year (9,864) (8,142) (4,032)
------------ ------------- ------------
LESS - NOTES RECEIVABLE
-----------------------
Balance beginning of year 398 551 1,056
Payments on executive loans (398) (153) (505)
------------ ------------- ------------
Balance end of year - 398 551
------------ ------------- ------------
TOTAL SHAREHOLDERS' EQUITY $ 30,891 $ 31,266 $ 38,405
============ ============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
30
<PAGE> 31
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 2,100 corporate and public sector
customer sites. The Company markets its products through a direct sales force
and channel partners in the United States, Canada and the United Kingdom and has
an extensive distributor network in 38 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 revenue. The Company recognizes software
license revenue in accordance with Statement of Position (SOP) 97-2 "Software
Revenue Recognition" and related interpretation. 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. Implementation services revenue is recognized
as the services are performed.
EXPENSE CLASSIFICATION. Selling and marketing expenses primarily include
employee costs, travel costs, facilities expenses and advertising. Cost of
revenue and support includes personnel and other costs related to implementation
services revenue, customer support costs, direct cost of producing software and
royalty expense for products licensed from others for use in the Company's
product offerings.
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.
Gains and losses on the forward contracts are recognized concurrently with the
gains and losses from the underlying transactions. The forward exchange
contracts used are classified as "held for purposes other than trading." The
Company does not use any other types of derivative financial instruments to
hedge such exposures, nor does it use derivatives for speculative purposes. At
June 30, 2000 and 1999, the Company had forward foreign currency exchange
contracts of $5.6 million and $2.9 million (notional amounts), respectively. The
contracts outstanding at June 30, 2000 mature through October 13, 2000 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, 2000 and 1999. The Financial
Accounting Standards Board has issued SFAS No. 137, a deferral of SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. As of June 30, 2000, the Company has adopted this statement
and quantified the impact, determining that there was no material effect on the
financial statements.
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.
31
<PAGE> 32
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
OTHER ASSETS. The Company evaluates long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. There was no adjustment to the Company's financial
statements as a result of this evaluation.
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. In fiscal 1998,
the Company adopted SFAS No. 128, "Earnings per Share."
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 2000, 1999
and 1998 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. The Company adopted this Statement
for the fiscal year ended June 30, 1999. 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.
RECLASSIFICATIONS. Certain amounts in the 1998 and 1999 financial statements
have been reclassified to conform with 2000 presentations.
32
<PAGE> 33
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2. RESTRUCTURING AND UNUSUAL CHARGES
At June 30, 2000, the Company had $1.3 million of accruals remaining that
related to prior fiscal year restructuring charges. Of this, $0.9 million is
related to facilities and the remaining amounts are related to employee
severance agreements.
In 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 charges included total staff reductions of 14 employees.
In fiscal 1998, the Company recorded a $10.7 million pre-tax charge for
restructuring and unusual charges related to the write-off of capitalized
software, termination costs for certain executives, staff reduction and facility
costs related to the consolidation of the Company's helpline activities and
planned actions to reduce facility and other costs. The restructuring charges
included total staff reductions of 27 employees.
3. BORROWINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
2000 1999
------------ -------------
<S> <C> <C>
Line of credit and overdraft facilities $ 599 $ 1,518
Capital lease obligations - 562
------------ -------------
Total debt outstanding 599 2,080
Less: current portion - 882
------------ -------------
Long-term debt $ 599 $ 1,198
============ =============
</TABLE>
The Company has a $10 million credit agreement which matures on September
30, 2001. 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, 2000 under the credit agreement were $10 million, of
which $0.6 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, 2000, the interest rate on borrowings
denominated in Japanese yen, which was used to hedge receivables, was 2.04%.
The Company's United Kingdom subsidiary entered into a $1.2 million loan
agreement, which matured on May 31, 2000. The Company had outstanding borrowings
under this agreement of $434,000 at June 30, 1999, which were classified as a
capital lease.
33
<PAGE> 34
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, 2000. 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 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.
COMMON STOCK
The shareholders approved the 1994 Executive Stock Purchase Program (the
"1994 Plan"), which enables certain executives to purchase the Company's common
stock at then current market prices directly from the Company. A total of
300,000 shares of the Company's common stock has been reserved for issuance
under the 1994 Plan. There were no shares purchased under this program during
fiscal 2000 and 50,000 were purchased in fiscal 1999.
Prior to fiscal 1998, executives eligible under the 1994 Plan were able to
purchase shares directly from the Company via a promissory note. The promissory
note is secured by the related common stock issued by the Company and matures
four years from the date of issuance. Interest is at the prime rate plus 1% and
may be deferred until the promissory note matures. For the year ended June 30,
1997, a total of 30,813 shares at prices ranging from $11.50 to $16 were issued
in exchange for notes totaling $413,000. The aggregate principal balance of
these promissory notes outstanding and due to the Company was $398,000 at June
30, 1999 all of which was paid during fiscal year 2000.
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, 2000, the Company has reserved 440,000 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
440,000 and 241,379 at June 30, 2000, respectively, and no further grants can be
made under the 1988 Plan.
34
<PAGE> 35
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
1994 DIRECTORS STOCK OPTION PLAN
The Directors Plan provides for the grant of options to purchase up to
150,000 shares of the Company's common stock to non-employee directors of the
Company. Options under the Directors Plan are granted at 100% of 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, 2000 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 84,500 and 22,500 at June 30, 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, 2000, the Company had reserved 167,200 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 167,200 and 61,580, respectively, at June 30, 2000.
1998 GLOBAL EMPLOYEE STOCK OPTION PLAN
The 1998 Plan provides for the issuance of options to purchase 900,000
shares of the Company's common stock to all employees including officers, key
employees and non-officer employees of the Company, which includes any
outstanding options under the 1997 plan. Options under the 1998 Plan are 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 10 years.
At June 30, 2000, the Company has reserved 1,398,400 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 Stock Option Plan was 764,776
and 154,233 under the 1998 Plan respectively, at June 30, 2000.
SUMMARY OF ACTIVITY
Stock option activity under all plans is summarized below:
35
<PAGE> 36
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
2000 1999 1998
------------------------ ------------------------ -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------ ---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,496,847 $ 6.20 976,234 $ 10.51 675,384 $ 13.45
Granted 212,900 4.18 858,200 3.48 772,150 7.61
Exercised (975) - - - (79,625) 4.63
Cancelled (252,296) 6.53 (337,587) 11.86 (391,675) 10.95
------------ ------------ -----------
Outstanding at end of year 1,456,476 $ - 1,496,847 $ 6.20 976,234 $ 10.51
============ ============ ===========
Options exercisable at end of year 479,692 241,027 182,260
Weighted average fair value of
options granted during the year $ 2.48 $ 2.04 $ 3.69
</TABLE>
A summary of outstanding and exercisable stock options as of June 30, 2000 is as
follows:
<TABLE>
<CAPTION>
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
--------------- -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 3.00 to $ 3.06 70,126 8.99 $ 3.06 5,832 $ 3.05
3.09 to 3.09 443,400 8.98 3.09 111,338 3.09
3.44 to 5.06 341,950 6.93 4.09 60,024 4.09
5.13 to 7.75 345,900 2.99 7.05 146,067 7.33
8.00 to 27.25 255,100 1.86 12.13 156,431 13.86
------------- ------------ -------------- -------------- --------------- -------------- --------------
$ 3.00 to $ 27.25 1,456,476 5.83 $ 5.85 479,692 $ 8.02
============== ============== =============== ============== ==============
</TABLE>
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, 2000, 1999 and 1998, 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, 2000, 1999 and 1998
consistent with the provisions of SFAS 123, net income and net income per share
would have been reduced to the pro forma amounts indicated below (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Net income (loss) - as reported $ 679 $ (1,136) $ 5,266
Net income (loss) - pro forma $ (250) $ (1,630) $ 4,774
Net income (loss) per share - as reported $ 0.07 $ (0.12) $ 0.53
Net income (loss) per share - pro forma $ (0.03) $ (0.17) $ 0.48
</TABLE>
36
<PAGE> 37
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
STOCK OPTION PLANS:
Expected life (years) 4.82 4.84 3.32
Risk free interest rate 6.25 % 5.42 % 5.65 %
Expected stock price volatility 0.85 0.85 0.65
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 6.25 % 5.42 % 5.65 %
Expected stock price volatility 0.85 0.85 0.65
Expected dividend yield 0.00 % 0.00 % 0.00 %
</TABLE>
6. EMPLOYEE STOCK PURCHASE PLAN
Under the Employee Stock Purchase Plan (the "ESPP"), 744,125 shares of the
Company's common stock have been reserved for issuance. 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.
Substantially all employees are eligible to participate in the ESPP. Under the
ESPP, 233,541, 148,716, and 60,576 shares were issued in fiscal 2000, 1999 and
1998, respectively.
7. BENEFIT PLANS
The Company has a profit sharing plan covering substantially all United
States employees. The profit sharing plan provides for a minimum annual Company
contribution of 2% of an employee's qualified compensation and matching
contributions based on employee 401(k) contributions. 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 above, are
discretionary and are determined by the Board of Directors. The total
contributions for both plans were $733,000, $642,000 and $589,000 in fiscal
2000, 1999 and 1998, 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):
37
<PAGE> 38
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
CHANGE IN BENEFIT OBLIGATION
<S> <C> <C>
Benefit obligation at beginning of year $ 23,640 $ 21,099
Interest cost 1,408 1,357
Actuarial gain 693 2,919
Benefits paid (464) (1,735)
-------- --------
Benefit obligation at end of year 25,277 23,640
======== ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 21,398 21,167
Actual return on plan assets 1,734 3,024
Actuarial loss (798) (1,058)
Benefits paid (464) (1,735)
-------- --------
Fair value of plan assets at end of year 21,870 21,398
======== ========
Funded status (3,407) (2,242)
Unrecognized actuarial loss 5,685 4,564
-------- --------
Net amount recognized 2,278 2,322
======== ========
AMOUNTS RECOGNIZED IN THE ACCOMPANYING
CONSOLIDATED FINANCIAL STATEMENTS:
Prepaid benefit cost 2,278 2,322
Accrued benefit liability (5,685) (4,564)
Accumulated other comprehensive income 5,685 4,564
-------- --------
Net amount recognized $ 2,278 $ 2,322
======== ========
WEIGHTED -AVERAGE ASSUMPTIONS AS OF JUNE 30:
Discount rate 6.00 % 6.25 %
Expected return on plan assets 7.50 % 7.50 %
COMPONENTS OF NET PERIODIC BENEFIT COST:
Interest cost $ 1,408 $ 1,357
Expected return on plan assets (1,528) (1,491)
Recognized actuarial loss 76 5
-------- --------
Net periodic benefit cost $ (44) $ (129)
======== ========
</TABLE>
38
<PAGE> 39
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):
<TABLE>
<CAPTION>
2000 1999 1998
----------- ----------- ----------
<S> <C> <C> <C>
Income (loss) before provision (benefit) for income taxes:
Domestic $ (4,156) $ (5,558) $ 23,217
Foreign 5,201 3,388 (2,482)
-------- -------- --------
$ 1,045 $ (2,170) $ 20,735
======== ======== ========
Domestic provision (benefit) for income taxes:
Current $ (600) $ (2,888) $ 3,650
Deferred (764) (1,176) 11,800
Foreign provision for income taxes:
Current 821 713 -
Deferred 909 2,317 19
-------- -------- --------
Provision (benefit) for income taxes $ 366 $ (1,034) $ 15,469
======== ======== ========
</TABLE>
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):
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Federal statutory provision (benefit) $ 366 $ (760) $ 7,257
Non-deductible meals and entertainment 91 121 119
State income taxes, net of federal tax benefit - - 33
Change in valuation reserve (335) (2,112) 9,084
Tax rate difference 268 (135) (850)
Effect of sale of foreign subsidiaries - 1,813 -
Other, net (24) 39 (174)
-------- -------- --------
Actual income tax provision (benefit) $ 366 $ (1,034) $ 15,469
======== ======== ========
</TABLE>
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):
39
<PAGE> 40
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
2000 1999
------------- ------------
<S> <C> <C>
Deferred income tax assets:
Research and development $ 1,650 $ 1,902
Tax credits 1,773 384
Depreciation and amortization 253 356
Net operating loss 5,345 4,672
Employee benefits 549 521
Accrued liabilities 547 997
Capitalized software 2,155 2,563
Other 3,608 3,916
-------- --------
$ 15,880 $ 15,311
Valuation allowance (8,231) (8,566)
-------- --------
$ 7,649 $ 6,745
Deferred income tax liabilities:
Employee benefits (730) (698)
Other (315) (326)
-------- --------
(1,045) (1,024)
-------- --------
Net deferred income tax asset $ 6,604 $ 5,721
======== ========
</TABLE>
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, 2000, for income tax purposes, certain of the Company's foreign
subsidiaries had available net operating loss carryforwards of approximately $12
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):
40
<PAGE> 41
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEARS ENDING JUNE 30,
-------------------------------------------------
<S> <C>
2001 $ 4,500
2002 4,120
2003 3,455
2004 3,156
2005 2,540
Thereafter 2,687
--------
Total minimum payments $ 20,458
========
</TABLE>
Minimum payments under operating leases have not been reduced by minimum
sublease rentals of $6.9 million due in the future under non-cancelable
subleases.
Total rental expense was $5.2 million, $6.1 million and $9.2 million for
the fiscal years ended June 30, 2000, 1999, and 1998, 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 that 10% of the Company's total
revenue in the fiscal years ended June 30, 2000, 1999 and 1998. 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.
Geographic segment information is as follows:
41
<PAGE> 42
COMSHARE, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JUNE 30,
-------------------------------------------
2000 1999 1998
----------- ----------- ------------
<S> <C> <C> <C>
Revenue from external customers:
United States $ 31,928 $ 31,744 $ 41,709
United Kingdom 13,418 12,492 19,276
Other countries 15,977 19,736 26,218
-------- -------- --------
TOTAL REVENUE $ 61,323 $ 63,972 $ 87,203
======== ======== ========
Operating income (loss):
United States $ 333 $ (1,590) $ 2,935
United Kingdom 1,200 420 2,545
Other countries 10,197 10,023 7,315
-------- -------- --------
TOTAL OPERATING INCOME 11,730 8,853 12,795
Unallocated expenses (10,685) (11,023) (27,446)
Gain on sale of Retail Business - - 35,386
-------- -------- --------
INCOME (LOSS) BEFORE TAXES $ 1,045 $ (2,170) $ 20,735
======== ======== ========
Identifiable assets:
United States $ 48,237 $ 52,874 $ 59,242
United Kingdom and other countries 11,909 10,581 29,450
-------- -------- --------
TOTAL IDENTIFIABLE ASSETS $ 60,146 $ 63,455 $ 88,692
======== ======== ========
</TABLE>
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, 1999 include approximately
$1.0 million of restructuring and unusual related expenses. Unallocated amounts
in the fiscal year ended June 30, 1998 include $10.7 million of restructuring
and unusual related expenses.
42
<PAGE> 43
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):
<TABLE>
<CAPTION>
INCOME NET
(LOSS) NET INCOME
FROM INCOME (LOSS)
REVENUE OPERATIONS (LOSS) PER SHARE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
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)
======== ======== ======== =======
1998
First Quarter $ 20,962 $ (3,438) $ (3,505) $ (0.36)
Second Quarter 23,334 74 83 0.01
Third Quarter 23,298 56 73 0.01
Fourth Quarter 19,609 (11,416) 8,615 0.87
-------- -------- -------- -------
Year Ended June 30 $ 87,203 $(14,724) $ 5,266 $ 0.53
======== ======== ======== =======
</TABLE>
During the quarter ended June 30, 1999, the Company recorded approximately
$1.0 million of restructuring charges related to staff reduction due to the
consolidation of the Company's financial and marketing activities and the
consolidation of certain facilities.
During the quarter ended June 30, 1998, the Company realized an after-tax
gain of $20.0 million from the sale of the Company's Retail Business. The
Company also recorded $9.1 million of restructuring and unusual charges.
12. LITIGATION
The Company is a party to various litigation in the normal course of
business. Management does not anticipate that the outcome of this litigation
will have a materially adverse effect on the financial position of the Company.
43
<PAGE> 44
COMSHARE, INCORPORATED
SCHEDULE II
CONSOLIDATED SCHEDULE
OF VALUATION & QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED TO (DEDUCTIONS) BALANCE
DESCRIPTION BEGINNING COSTS AND FROM TRANSLATION OTHER END OF
OF PERIOD EXPENSES RESERVE ADJUSTMENTS RELATED PERIOD
------------ ------------ ------------ -------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
for the years ended June 30:
2000 $ 1,327 $ - $ (96) $ (1) $ - $ 1,230
======= ======= ======= ======= ======= =======
1999 $ 1,830 $ 302 $ (816) $ 11 $ - $ 1,327
======= ======= ======= ======= ======= =======
1998 $ 1,053 $ 762 $ 29 $ (14) $ - $ 1,830
======= ======= ======= ======= ======= =======
</TABLE>
44
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Comshare, Incorporated
DATE: SEPTEMBER 28, 2000 By: /s/ Kathryn A. Jehle
--------------------
Kathryn A. Jehle
Senior Vice President,
Chief Financial Officer,
Treasurer, Assistant Secretary
and a Director
Pursuant to the requirement of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Company in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------- ---------------------------------- ----------------------
<S> <C> <C>
/s/ Dennis G. Ganster President, Chief Executive September 28, 2000
---------------------- Officer and a Director ----------------------
Dennis G. Ganster (Principal Executive Officer)
/s/ Kathryn A. Jehle Senior Vice President, September 28, 2000
--------------------- Chief Financial Officer, ----------------------
Kathryn A. Jehle Treasurer, Assistant Secretary
and a Director
(Principal Financial Officer)
/s/ Brian J. Jarzynski Corporate Controller and September 28, 2000
----------------------- Chief Accounting Officer ----------------------
Brian J. Jarzynski (Principal Accounting Officer)
/s/ Daniel T. Carroll Chairman of the Board September 28, 2000
---------------------- and a Director ----------------------
Daniel T. Carroll
/s/ Geoffrey B. Bloom Director September 28, 2000
---------------------- ----------------------
Geoffrey B. Bloom
/s/ Richard L. Crandall Director September 28, 2000
------------------------ ----------------------
Richard L. Crandall
/s/ Alan G. Merten Director September 28, 2000
------------------- ----------------------
Alan G. Merten
/s/ John F. Rockart Director September 28, 2000
-------------------- ----------------------
John F. Rockart
</TABLE>
45
<PAGE> 46
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.01 Asset Purchase Agreement by and among JDA Software Group, Inc., and JDA
Software, Inc., and Comshare, Incorporated, dated as of June 4, 1998 -
incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K
Report filed June 19, 1998.
2.02 Software License Agreement by and between JDA Software, Inc., and
Comshare, Incorporated, dated as of June 4, 1998 - incorporated by
reference to Exhibit 2.2 to the Registrant's Form 8-K Report filed June
19, 1998.
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 Bylaws of the Registrant, as amended - incorporated by reference to
Exhibit 3.02 to the Registrant's Form 10-K Report for the fiscal year
ended June 30, 1998.
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__, 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 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.
4.06 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.
10.01 Benefit Adjustment Plan of Comshare, Incorporated, effective June 1,
1986, as amended and restated November 6, 1997.
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 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.
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10.04 Amended and Restated Employee Agreement between Comshare, Incorporated
and Richard L. Crandall, effective July 1, 1994, as amended -
incorporated by reference to Exhibit 10.10 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1994.
10.05 Non-Competition Agreement between Comshare, Incorporated and Richard L.
Crandall.
10.06 Letter Agreement from Comshare, Incorporated to Kathryn A. Jehle
regarding terms of employment dated April 18, 1994 - incorporated by
reference to Exhibit 10.12 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1994.
10.07 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.
10.08 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.
10.09 Trust Agreement between Comshare, Incorporated and Vanguard Fiduciary
for maintaining the Profit Sharing Plan of Comshare, Incorporated,
effective March 31, 1992, as amended - incorporated by reference to
Exhibit 10.15 to the Registrant's Form 10-K Report for the fiscal year
ended June 30, 1994.
10.10 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.
10.11 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.
10.12 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.
10.13 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
10.14 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.
10.15 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.
10.16 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.
10.17 Executive Bonus Program, effective October 1, 1997 - incorporated by
reference to Exhibit 10.1 to the Registrant's Form 10-Q Report for the
quarter ended December 31, 1997.
10.18 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.
10.19 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.
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<PAGE> 48
10.20 Comshare, Incorporated Change in Control Severance Agreement dated as of
June 1, 1998 between Comshare, Incorporated and Kathryn A. Jehle -
incorporated by reference to Exhibit 10.20 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 Kathryn A. Jehle - 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
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.
10.23 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.
10.24 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.
10.25 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.
10.26 Comshare, Incorporated Change in Control Severance Agreement dated as of
June 1, 1998, between Comshare, Incorporated and Norman Neuman -
incorporated by reference to Exhibit 10.23 to the Registrant's Form 10-K
Report for the fiscal year ended June 30, 1998.
10.27 First Amendment to Comshare, Incorporated Change in Control Severance
Agreement dated as of November 30, 1999, between Comshare, Incorporated
and Norman R. Neuman, Jr. - incorporated by reference to Exhibit 10.02
to the Registrant's Form 10-Q Report for the quarter ended December 31,
1999.
10.28 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.
10.29 First Amendment to Global Employee Stock Option Plan - incorporated by
reference to Exhibit 10.04 to the Registrant's Form 10-Q for the quarter
ended September 30, 1999.
10.30 Summary of 1998 Senior Executive Incentive Plan - incorporated by
reference to Exhibit 10.26 to the Registrant's Form 10-K Report for the
fiscal year ended June 30, 1998.
10.31 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.
10.32 Summary of 2000 Senior Executive Incentive Plan.
10.33 Summary of 2001 Senior Executive Incentive Plan.
10.34 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.
10.35 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.
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<PAGE> 49
10.36 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.)
10.37 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.)
10.38 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.)
10.39 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.
27.00 Financial Data Schedule.
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,
1999.
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