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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



|þ |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------



For the quarterly period ended March 31, 2003



| ̈ |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------



Commission File Number 333-49389



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Cooperative Computing, Inc.

(Exact name of Registrant as specified in its charter)



|Delaware                                                       |  | 94-2160013                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              
|804 Las Cimas Parkway, Suite 200                               |  |                                     
|Austin, Texas                                                  |  | 78746                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



(512)
328-2300

(Registrants telephone number, including area code)



Indicate by check 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  þ    No ̈



Indicate by check whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).



Yes ̈No  þ



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable
date:



|Class        |  | Outstanding at May 14, 2003
|------------ |  | ---------------------------
|Common Stock |  | 1,000 shares               



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COOPERATIVE COMPUTING, INC.

INDEX



|                                                                                                           |  | PAGE
|---------------------------------------------------------------------------------------------------------- |  | ----
|FORWARD-LOOKING STATEMENTS                                                                                 |  | 3   
|                                                                                                          
|PART IFINANCIAL INFORMATION                                                                               |  | 4   
|                                                                                                          
|Note to Financial Information                                                                              |  | 4   
|                                                                                                          
|ITEM 1.FINANCIAL STATEMENTS                                                                               |  | 5   
|                                                                                                          
|Consolidated Balance Sheets as of September 30, 2002 and March 31, 2003                                    |  | 5   
|                                                                                                          
|Consolidated Statements of Operations for the three and six months ended March 31, 2002 and March 31, 2003 |  | 6   
|                                                                                                          
|Consolidated Statements of Cash Flows for the six months ended March 31, 2002 and March 31, 2003           |  | 7   
|                                                                                                          
|Notes to Consolidated Financial Statements                                                                 |  | 8   
|                                                                                                          
|ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS              |  | 12  
|                                                                                                          
|ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                         |  | 17  
|                                                                                                          
|ITEM 4.CONTROLS AND PROCEDURES                                                                            |  | 17  
|                                                                                                          
|PART IIOTHER INFORMATION                                                                                  |  |     
|                                                                                                          
|ITEM 1.LEGAL PROCEEDINGS                                                                                  |  | 18  
|                                                                                                          
|ITEM 2.CHANGES IN SECURITIES AND USE OF PROCEEDS                                                          |  | 18  
|                                                                                                          
|ITEM 3.DEFAULTS UPON SENIOR SECURITIES                                                                    |  | 18  
|                                                                                                          
|ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                |  | 18  
|                                                                                                          
|ITEM 5.OTHER INFORMATION                                                                                  |  | 18  
|                                                                                                          
|ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K                                                                   |  | 18  
|                                                                                                          
|SIGNATURE                                                                                                  |  | 19  
|                                                                                                          
|SECTION 302 CERTIFICATIONS                                                                                 |  | 20  



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FORWARD-LOOKING STATEMENTS



INFORMATION SET FORTH IN THIS QUARTERLY REPORT ON FORM 10-Q REGARDING EXPECTED OR POSSIBLE FUTURE EVENTS, INCLUDING STATEMENTS OF THE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE GROWTH, OPERATIONS, PRODUCTS AND SERVICES AND
STATEMENTS RELATING TO FUTURE ECONOMIC PERFORMANCE, IS FORWARD-LOOKING AND SUBJECT TO RISKS AND UNCERTAINTIES. FOR THOSE STATEMENTS, THE COMPANY CLAIMS THE PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS PROVIDED FOR BY SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT OF THE COMPANY, WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY UNCERTAIN. THEREFORE, UNDUE RELIANCE
SHOULD NOT BE PLACED UPON SUCH ESTIMATES AND STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES OR STATEMENTS WILL BE REALIZED, AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING
STATEMENTS. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE THE FOLLOWING: (1) INCREASED COMPETITION; (2) RAPID TECHNOLOGICAL CHANGE; (3) INCREASED COSTS; (4) RISKS ASSOCIATED WITH THE INTRODUCTION OF NEW PRODUCTS AND PRODUCT UPGRADES AND DEPENDENCE
ON PROPRIETARY TECHNOLOGY; (5) THE LOSS OR RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (6) THE INABILITY OF THE COMPANY TO SUCCESSFULLY INTEGRATE BUSINESSES ACQUIRED IN THE FUTURE AND TO REALIZE ANTICIPATED REVENUE AND COST SAVINGS OPPORTUNITIES; (7)
INCREASES IN THE COMPANYS COST OF BORROWINGS OR UNAVAILABILITY OF ADDITIONAL DEBT OR EQUITY CAPITAL; AND (8) CHANGES IN GENERAL ECONOMIC CONDITIONS IN THE MARKETS IN WHICH THE COMPANY MAY, FROM TIME TO TIME, COMPETE. MANY OF SUCH FACTORS WILL
BE BEYOND THE CONTROL OF THE COMPANY AND ITS MANAGEMENT. IN ADDITION, OTHER FACTORS THAT COULD AFFECT THE FUTURE RESULTS OF THE COMPANY AND COULD CAUSE THOSE RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS ARE
DISCUSSED AT GREATER LENGTH UNDER MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND APPEAR ELSEWHERE IN THIS QUARTERLY REPORT. THESE RISKS, UNCERTAINTIES AND OTHER FACTORS SHOULD NOT BE
CONSTRUED AS EXHAUSTIVE, AND THE COMPANY DOES NOT UNDERTAKE, AND SPECIFICALLY DISCLAIMS ANY OBLIGATION TO UPDATE, ANY FORWARD-LOOKING STATEMENTS TO REFLECT OCCURRENCES OR UNANTICIPATED EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH STATEMENTS.



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PART 1. FINANCIAL INFORMATION



The consolidated financial statements filed on Form 10-K and Form 10-Q prior to September 30, 2002 included the accounts of Cooperative Computing Holding Company, Inc. (Holding) and its wholly owned subsidiary
Cooperative Computing, Inc. (CCITRIAD or the Company). Holding has no assets or liabilities other than (1) its wholly owned subsidiary CCITRIAD and (2) its Redeemable Class A Common Stock, the net proceeds of which were
contributed in full to CCITRIAD. The difference between the financial statements of Holding and those of CCITRIAD relate solely to the Class A Common Stock. The Class A Common Stock is an obligation of Holding and not of the registrant and the
registrant does not guarantee the Class A Common Stock. Prior years financial presentation resulted in the inclusion of the accretion of Holdings Redeemable Common Stock of $3.9 million and $8.0 million for the three and six months ended
March 31, 2002, respectively, as well as its net loss to shareholders of $1.3 million and $3.9 million for the three and six months ended March 31, 2002, respectively. Additionally, Holdings balances for the Redeemable Class A Common Stock of
$59.1 million as of March 31, 2002, and for stockholders deficit of $79.7 million as of March 31, 2002 were depicted. The cash flow for both companies was identical in each year presented. CCITRIAD, as the registrant, is presented in the
following unaudited interim financial statements.



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Item 1. Financial Statements.



COOPERATIVE COMPUTING, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)



|                                                                                                                                              |  | September 30, 2002 |          |   | March 31, 2003 |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | -------- | - | -------------- | -
|                                                                                                                                              |  |                    |          |   | (Unaudited)    |  
|ASSETS:                                                                                                                                       |  |                    |          |   |                |  
|Current assets:                                                                                                                               |  |                    |          |   |                |  
|Cash and cash equivalents                                                                                                                     |  | $                  | 398      |   |                | $
|Trade accounts receivable, net of allowance for doubtful accounts of $6,751 and $6,657
at September 30, 2002 and March 31, 2003, respectively |  |                    | 29,013   |   |                |  
|Inventories, net                                                                                                                              |  |                    | 2,380    |   |                |  
|Investment in leases, net                                                                                                                     |  |                    | 2,820    |   |                |  
|Deferred income taxes                                                                                                                         |  |                    | 8,303    |   |                |  
|Prepaid expenses and other current assets                                                                                                     |  |                    | 4,122    |   |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total current assets                                                                                                                          |  |                    | 47,036   |   |                |  
|                                                                                                                                             
|Service parts, net                                                                                                                            |  |                    | 1,780    |   |                |  
|Property and equipment, net                                                                                                                   |  |                    | 6,480    |   |                |  
|Long-term investment in leases                                                                                                                |  |                    | 4,468    |   |                |  
|Capitalized computer software costs, net                                                                                                      |  |                    | 10,257   |   |                |  
|Databases, net                                                                                                                                |  |                    | 12,094   |   |                |  
|Goodwill                                                                                                                                      |  |                    | 87,159   |   |                |  
|Other assets                                                                                                                                  |  |                    | 16,513   |   |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total assets                                                                                                                                  |  | $                  | 185,787  |   |                | $
|                                                                                                                                              |  |                    |          |   |                |  
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT):                                                                                               |  |                    |          |   |                |  
|Current liabilities:                                                                                                                          |  |                    |          |   |                |  
|Accounts payable                                                                                                                              |  | $                  | 8,095    |   |                | $
|Payroll related accruals                                                                                                                      |  |                    | 13,564   |   |                |  
|Deferred revenue                                                                                                                              |  |                    | 12,529   |   |                |  
|Current portion of long-term debt                                                                                                             |  |                    | 8,828    |   |                |  
|Accrued income taxes                                                                                                                          |  |                    | 3,969    |   |                |  
|Accrued expenses and other current liabilities                                                                                                |  |                    | 8,940    |   |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total current liabilities                                                                                                                     |  |                    | 55,925   |   |                |  
|                                                                                                                                             
|Long-term debt                                                                                                                                |  |                    | 129,169  |   |                |  
|Deferred income taxes and other liabilities                                                                                                   |  |                    | 15,546   |   |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total liabilities                                                                                                                             |  |                    | 200,640  |   |                |  
|                                                                                                                                             
|Stockholders equity (deficit):                                                                                                               |  |                    |          |   |                |  
|Common Stock:                                                                                                                                 |  |                    |          |   |                |  
|Par value $0.01; authorized, issued and outstanding 1,000 shares at September 30, 2002
and March 31, 2003                                     |  |                    |         |   |                |  
|Additional paid-in capital                                                                                                                    |  |                    | 113,155  |   |                |  
|Retained deficit                                                                                                                              |  |                    | (127,236 | ) |                |  
|Other accumulated comprehensive income:                                                                                                       |  |                    |          |   |                |  
|Cumulative translation adjustment                                                                                                             |  |                    | (772     | ) |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total stockholders equity (deficit)                                                                                                          |  |                    | (14,853  | ) |                |  
|                                                                                                                                              |  |                    |          |   |                |  
|Total liabilities and stockholders deficit                                                                                                   |  | $                  | 185,787  |   |                | $
|                                                                                                                                              |  |                    |          |   |                |  



See
accompanying notes



5



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COOPERATIVE COMPUTING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(In
thousands)



|                                        |  | Three Months Ended March 31, |        |   | Six months Ended March 31, |  
|--------------------------------------- |  | ---------------------------- | ------ | - | -------------------------- | -
|                                        |  | 2002                         |        |   | 2003                       |  
|Revenues:                               |  |                              |        |   |                            |  
|Systems                                 |  | $                            | 16,934 |   |                            | $
|Services and finance                    |  |                              | 40,025 |   |                            |  
|                                        |  |                              |        |   |                            |  
|Total revenues                          |  |                              | 56,959 |   |                            |  
|Cost of revenues:                       |  |                              |        |   |                            |  
|Systems                                 |  |                              | 11,097 |   |                            |  
|Services and finance                    |  |                              | 17,795 |   |                            |  
|                                        |  |                              |        |   |                            |  
|Total cost of revenues                  |  |                              | 28,892 |   |                            |  
|                                        |  |                              |        |   |                            |  
|Gross margin                            |  |                              | 28,067 |   |                            |  
|Operating expenses:                     |  |                              |        |   |                            |  
|Sales and marketing                     |  |                              | 8,487  |   |                            |  
|Product development                     |  |                              | 4,602  |   |                            |  
|General and administrative              |  |                              | 7,170  |   |                            |  
|                                        |  |                              |        |   |                            |  
|Total operating expenses                |  |                              | 20,259 |   |                            |  
|                                        |  |                              |        |   |                            |  
|Operating income                        |  |                              | 7,808  |   |                            |  
|Interest expense                        |  |                              | (3,506 | ) |                            |  
|Equity gain (loss) in affiliate         |  |                              | (200   | ) |                            |  
|Foreign exchange gain (loss)            |  |                              | 44     |   |                            |  
|Other income, net                       |  |                              | 54     |   |                            |  
|                                        |  |                              |        |   |                            |  
|Income before income taxes              |  |                              | 4,200  |   |                            |  
|Income tax expense                      |  |                              | 1,611  |   |                            |  
|                                        |  |                              |        |   |                            |  
|Net income                              |  | $                            | 2,589  |   |                            | $
|                                        |  |                              |        |   |                            |  
|                                       
|Comprehensive income:                   |  |                              |        |   |                            |  
|Net income                              |  | $                            | 2,589  |   |                            | $
|Foreign currency translation adjustment |  |                              | (86    | ) |                            |  
|                                        |  |                              |        |   |                            |  
|Comprehensive income                    |  | $                            | 2,503  |   |                            | $
|                                        |  |                              |        |   |                            |  



See
accompanying notes



6



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COOPERATIVE COMPUTING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In
thousands)



|                                                                                  |  | Six months Ended March 31, |        
|--------------------------------------------------------------------------------- |  | -------------------------- | -------
|                                                                                  |  | 2002                       |        
|OPERATING ACTIVITIES                                                              |  |                            |        
|Net income                                                                        |  | $                          | 3,920  
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                            |        
|Depreciation                                                                      |  |                            | 3,691  
|Amortization                                                                      |  |                            | 5,499  
|Deferred income taxes                                                             |  |                            |       
|Equity (gain) loss in affiliate                                                   |  |                            | 400    
|Equity gain from partnerships                                                     |  |                            | (122   
|Lease loss provision                                                              |  |                            | 1,850  
|Provision for doubtful accounts                                                   |  |                            | 5,662  
|Other, net                                                                        |  |                            | 165    
|Changes in assets and liabilities:                                                |  |                            |        
|Trade accounts receivable                                                         |  |                            | (2,786 
|Inventories                                                                       |  |                            | (352   
|Investment in leases                                                              |  |                            | 1,225  
|Prepaid expenses and other assets                                                 |  |                            | 1,968  
|Accounts payable                                                                  |  |                            | (226   
|Deferred revenue                                                                  |  |                            | 590    
|Accrued expenses and other current liabilities                                    |  |                            | 1,875  
|                                                                                  |  |                            |        
|Net cash provided by operating activities                                         |  |                            | 23,359 
|                                                                                 
|INVESTING ACTIVITIES                                                              |  |                            |        
|Purchase of property and equipment                                                |  |                            | (2,549 
|Capitalized computer software costs and databases                                 |  |                            | (3,431 
|Purchase of service parts                                                         |  |                            | (951   
|Equity distributions from partnerships                                            |  |                            | 64     
|                                                                                  |  |                            |        
|Net cash used in investing activities                                             |  |                            | (6,867 
|                                                                                 
|FINANCING ACTIVITIES                                                              |  |                            |        
|Proceeds from debt facility                                                       |  |                            |       
|Payment on long-term debt facilities                                              |  |                            | (20,389
|                                                                                  |  |                            |        
|Net cash used in financing activities                                             |  |                            | (20,389
|                                                                                  |  |                            |        
|Net increase (decrease) in cash and cash equivalents                              |  |                            | (3,897 
|Cash and cash equivalents, beginning of period                                    |  |                            | 3,897  
|                                                                                  |  |                            |        
|Cash and cash equivalents, end of period                                          |  | $                          |       
|                                                                                  |  |                            |        
|Supplemental disclosures of cash flow information                                 |  |                            |        
|Cash paid during the period for:                                                  |  |                            |        
|Interest                                                                          |  | $                          | 6,930  
|                                                                                  |  |                            |        
|Income taxes                                                                      |  | $                          | 1,620  
|                                                                                  |  |                            |        



See
accompanying notes



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COOPERATIVE COMPUTING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2003

(UNAUDITED)



|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------



The accompanying unaudited consolidated financial statements of CCITRIAD have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2003 may not be indicative of the results for the full fiscal year ending September 30, 2003.



Certain amounts in the three and six months ended March 31, 2002
have been reclassified to conform to the presentation for the three and six months ended March 31, 2003.



|2. |  | LEASE RECEIVABLES
|-- |  | -----------------



Activity in the following servicing and recourse obligation liability accounts (recorded in other liabilities in the Companys balance sheet) was as
follows (in thousands):



|                              |  | LEASE SERVICING OBLIGATION |      |   | RECOURSE OBLIGATION |  
|----------------------------- |  | -------------------------- | ---- | - | ------------------- | -
|Balance at September 30, 2002 |  | $                          | 439  |   |                     | $
|Newly-created liabilities     |  |                            | 3    |   |                     |  
|Recoveries                    |  |                            |     |   |                     |  
|Charges and lease write-offs  |  |                            | (168 | ) |                     |  
|                              |  |                            |      |   |                     |  
|Balance at March 31, 2003     |  | $                          | 274  |   |                     | $
|                              |  |                            |      |   |                     |  



|3. |  | INCOME TAXES
|-- |  | ------------



The Company recorded income tax expense for the six months ended March 31, 2003 at an effective rate of 39.3%, which is based on the Companys anticipated results for the full fiscal year. The
Companys income tax expense differs from the amount computed by applying the statutory rate to income before income taxes due to the impact of permanent differences, such as meals and entertainment expense, and amortization of certain acquired
intangibles.



4. COMMON STOCK OPTION PLAN



During the quarter ended March 31, 2003, Holding, the Companys parent
company, approved the grant of 435,650 options to the employees of the company at an exercise price equal to the then estimated fair market value of $2.50 per share under the Cooperative Computing Holding Company, Inc. 2000 Stock Option Plan.



The Company uses the intrinsic value method in accounting for
employee stock options. Because the exercise price of the employee stock options is greater than or equal to the market price of the underlying stock, as determined by Holdings Board of Directors, on the date of grant, no compensation expense
is recognized.



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The Companys pro forma
information follows (amounts in thousands):



|                                                       |  | Three months ended March 31, |       | Six months ended March 31,
|------------------------------------------------------ |  | ---------------------------- | ----- | --------------------------
|                                                       |  | 2002                         |       | 2003                      
|Net income reported                                    |  | $                            | 2,589 |                           
|Pro forma stock-based compensation expense, net of tax |  |                              | 76    |                           
|                                                       |  |                              |       |                           
|Pro forma net income (loss)                            |  | $                            | 2,513 |                           
|                                                       |  |                              |       |                           



|5. |  | DEBT
|-- |  | ----



On December 3, 2002, the Company replaced the Restated Senior Credit Facilities with a new three-year credit agreement comprised of a $35.0 million term loan facility and a $17.5 million revolving
credit facility. The term loan facility is payable in quarterly installments from March 31, 2003 through December 31, 2005 and bears interest at CCITRIADs option either at (i) a margin of 3.5% applied to the greatest of (a) the Prime Rate, (b)
the Base CD Rate plus 1% and (c) the Federal Funds Effective Rate plus 0.5% or (ii) a margin of 4.5% applied to the Eurodollar Base Rate divided by the product of one minus the Eurocurrency Reserve Requirements. In March, June and September 2003
each quarterly installment is $2.0 million. The revolving credit facility provides for maximum borrowings of $17.5 million (including letters of credit up to a maximum of $10.0 million) and matures in December 2005. The new credit agreement includes
restrictions on certain activities and financial covenant tests.



|6. |  | RECENT ACCOUNTING PRONOUNCEMENTS
|-- |  | --------------------------------



In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations(SFAS 143). The statement is effective for
financial statements for fiscal years beginning after June 15, 2002. The new statement establishes accounting standards for recognition of a liability for an asset retirement obligation and the associated asset retirement cost. The Company does not
anticipate any material impact from this statement on its financial position or results of operations.



In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal ofLong-Lived Assets(SFAS 144). The statement broadens the presentation of
discontinued operations to include more disposal transactions, and establishes a single accounting model for long-lived assets to be disposed of by sale. SFAS 144 is effective for financial statements for fiscal years beginning after December 15,
2001. Management does not expect any material impact from adoption of this statement on the Companys financial position or results of operations.



In June 2002, the FASB issued SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections(SFAS 145). The new statement requires sale-leaseback accounting for those lease modifications that have economic effects similar to sale-leaseback transactions. It also provides new guidance for debt extinguishment
transactions that are part of an entitys recurring operations. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Management does not expect any material impact from adoption of this statement on the Companys financial
position or results of operations.



In June 2002, the FASB issued
SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, effective for exit or disposal activities initiated after December 31, 2002. The statement requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. The Company does not anticipate any material impact from this statement on its financial position or results of operations.



In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation  Transition
andDisclosure, effective for fiscal years ending after December 15, 2002. This statement amends SFAS 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. The statement also requires prominent disclosures about the method of accounting for stock-based employee compensation and its effect on reported results.



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The Company does not anticipate any material impact from this statement on its financial position or
results of operations.



In January 2003, the FASB issued
Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin (ARB) No. 51, (the Interpretation). The Interpretation requires a variable interest entity to be consolidated by a company
if that company is subject to a majority of the risk of loss from the variable interest entitys activities or entitled to receive a majority of the entitys residual returns or both. A company that consolidates a variable interest entity
is called the primary beneficiary of that entity. The Interpretation also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation
requirements apply immediately to variable interest entities created after January 31, 2003 and apply to existing variable interest entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The Company is evaluating the applicability of the Interpretation on its financial position and results of
operations.



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|7. |  | SEGMENT REPORTING
|-- |  | -----------------



The Companys business operations are organized into two operating units, the Automotive group and the Hardlines and Lumber group, as shown below.
Additionally, a breakdown by geographic area of total revenues and total assets is disclosed. The Americas geographic area covers the United States and Canada. The Europe geographic area covers the United Kingdom, Ireland and France.



|                                             |  | Three Months Ended March 31, |         |   | Six months Ended March 31, |  
|-------------------------------------------- |  | ---------------------------- | ------- | - | -------------------------- | -
|                                             |  | 2002                         |         |   | 2003                       |  
|                                             |  | (in thousands)               |        
|Systems revenues:                            |  |                              |         |   |                            |  
|Automotive                                   |  | $                            | 6,971   |   |                            | $
|Hardlines and Lumber                         |  |                              | 9,963   |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total systems revenues:                      |  |                              | 16,934  |   |                            |  
|                                            
|Services and finance revenues:               |  |                              |         |   |                            |  
|Automotive                                   |  |                              | 24,788  |   |                            |  
|Hardlines and Lumber                         |  |                              | 15,237  |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total services and finance revenues:         |  |                              | 40,025  |   |                            |  
|                                            
|Systems costs of revenues:                   |  |                              |         |   |                            |  
|Automotive                                   |  |                              | 5,169   |   |                            |  
|Hardlines and Lumber                         |  |                              | 5,928   |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total systems costs of revenues:             |  |                              | 11,097  |   |                            |  
|                                            
|Services and finance cost of revenues:       |  |                              |         |   |                            |  
|Automotive                                   |  |                              | 11,067  |   |                            |  
|Hardlines and Lumber                         |  |                              | 6,728   |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total services and finance cost of revenues: |  |                              | 17,795  |   |                            |  
|                                            
|Sales and marketing:                         |  |                              |         |   |                            |  
|Automotive                                   |  |                              | 3,938   |   |                            |  
|Hardlines and Lumber                         |  |                              | 4,549   |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total sales and marketing:                   |  |                              | 8,487   |   |                            |  
|                                            
|Product development:                         |  |                              |         |   |                            |  
|Automotive                                   |  |                              | 3,637   |   |                            |  
|Hardlines and Lumber                         |  |                              | 965     |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total product development:                   |  |                              | 4,602   |   |                            |  
|                                            
|General and administrative                   |  |                              | 7,170   |   |                            |  
|Interest expense                             |  |                              | (3,506  | ) |                            |  
|Other income (expense), net                  |  |                              | (102    | ) |                            |  
|                                             |  |                              |         |   |                            |  
|Income (loss) before income taxes            |  | $                            | 4,200   |   |                            | $
|                                             |  |                              |         |   |                            |  
|                                            
|Revenues:                                    |  |                              |         |   |                            |  
|Americas                                     |  | $                            | 55,731  |   |                            | $
|Europe                                       |  |                              | 1,228   |   |                            |  
|                                             |  |                              |         |   |                            |  
|Total revenues                               |  | $                            | 56,959  |   |                            | $
|                                             |  |                              |         |   |                            |  
|                                            
|Assets:                                      |  |                              |         |   |                            |  
|Americas                                     |  | $                            | 190,773 |   |                            | $
|Europe                                       |  |                              | 4,627   |   |                            |  
|                                             |  |                              |         |   |                            |  
|                                             |  | $                            | 195,400 |   |                            | $
|                                             |  |                              |         |   |                            |  



11



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.



The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the unaudited historical
consolidated financial statements and notes thereto, which are included elsewhere herein.



General



CCITRIAD is a leading designer
and provider of management information systems and services for the automotive parts aftermarket and the Hardlines and Lumber industry. The automotive parts aftermarket consists of the production, sale and installation of both new and remanufactured
parts used in the maintenance and repair of automobiles and light trucks. The Hardlines and Lumber industry consists of the sale of products and services for residential and commercial building construction, maintenance and repair, lawn and garden,
and agribusiness.



The Companys products are designed to
improve the operating efficiency and profitability of distributors and retailers through enhanced information, control and inventory management. The Companys products enable users to conduct computerized identification, location and selection
of parts, to manage inventory and to obtain sales history and point-of-sale information. The system offerings are enhanced by extensive information services featuring specialized database products and by customer support and maintenance services.
Interconnectivity throughout the distribution channel is provided by the Companys network of electronically linked customers, which adds to the efficiency and functionality of the Companys products and enhances customer profitability.



The Company is a leading provider of industry-specific
management information solutions to every level of the wholesale distribution channel in the automotive parts aftermarket, which includes manufacturers, warehouse distributors, parts sales outlets and service dealers. By servicing all of these
levels, the Company has acquired substantial industry knowledge to improve and support the information products and services that are made available to its customers. For the Hardlines and Lumber industry, the Company provides point of sale movement
information services to manufacturers.



Historical Results of
Operations



Three Months Ended March 31, 2003 Compared to
Three Months ended March 31, 2002



Revenues
for the three months ended March 31, 2003 were $56.1 million, a decrease of $0.9 million, or 2%, from the $57.0 million recorded in the prior years period. Automotive group revenues for the second quarter were $28.4 million, a decrease
of $3.4 million, or 11%, as compared to the quarter ended March 31, 2002, primarily due to a decrease in systems revenue. The Hardlines and Lumber groups revenues were $27.7 million for the three months ended March 31, 2002, an increase of
$2.5 million, or 10%.



Systems revenues for the three months
ended March 31, 2003 were $17.4 million, compared to $16.9 million for the three months ended March 31, 2002, an increase of $0.5 million, or 3%. Systems revenues for the Automotive group for the three months ended March 31, 2003 decreased $3.0
million to $3.9 million, as compared to last year, a decrease of 43%. The revenue decrease was primarily due to a higher number of customers upgrading their store systems in the previous year. Systems revenues for the Hardlines and Lumber group for
the three months ended March 31, 2003 increased $3.5 million to $13.5 million, or 35%, as compared to the three months ended March 31, 2002. The revenue increase was largely due to completion of contract development work and an increase of sales of
add-on products to existing customers.



Services and finance
revenues were $38.7 million for the three months ended March 31, 2003, compared to $40.0 million for the three months ended March 31, 2002, a decrease of $1.3 million, or 3%. For the three months ended March 31, 2003, services and finance revenues
for the Automotive group decreased $0.3 million, or 1%, to $24.5 million. The Automotive groups revenue decrease was predominantly due to lower customer support revenues.



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In the three months ended March 31, 2003, the Hardlines and Lumber groups services and finance
revenues decreased $1.0 million, or 7%, to $14.2 million, as compared to the three months ended March 31, 2002. The decrease was chiefly due to lower information product sales to manufacturers as a result of reduced sources of point of sale data
available in the market, which we expect to continue.



Cost of
revenue was $27.8 million for the three months ended March 31, 2003, compared to $28.9 million for the three months ended March 31, 2002, a decrease of $1.1 million, or 4%. For the three months ended March 31, 2003, cost of revenues for the
Automotive group decreased $2.7 million, or 17%, to $13.5 million. For the quarter ended March 31, 2003, cost of revenues for the Hardlines and Lumber group increased $1.6 million, or 13%, to $14.3 million, as compared to the three months ended
March 31, 2002.



Cost of systems revenue was $9.9 million for the
three months ended March 31, 2003, compared to $11.1 million for the three months ended March 31, 2002, a decrease of $1.2 million, or 11%. Cost of systems revenues for the Automotive group for the three months ended March 31, 2003 decreased $2.6
million, or 50%, to $2.6 million compared to the three months ended March 31, 2002. The decrease in cost of systems revenues was mainly due to the decrease in systems sales. Cost of systems revenues as a percentage of systems revenues for the
Automotive group was 67% and 74% for the three months ended March 31, 2003 and 2002, respectively. The decreased cost percentage was principally due to a more profitable systems mix being sold in the quarter ended March 31, 2003. Cost of systems
revenues for the Hardlines and Lumber group for the three months ended March 31, 2003 increased $1.3 million to $7.3 million compared to the three months ended March 31, 2002, an increase of 22%. The increase in cost of systems revenue was mostly
due to the increase in systems sales. Cost of systems revenue as a percentage of systems for the Hardlines and Lumber group was 54% and 60% for the three months ended March 31, 2003 and 2002, respectively. The decreased cost percentage was primarily
due to a more profitable product mix sold in the quarter ended March 31, 2003.



Cost of revenues for services and finance was $17.9 million for the three months ended March 31, 2003, compared to $17.8 million for the three months ended March 31, 2002, an increase of $0.1 million, or 1%. Cost of revenues for
services and finance for the Automotive group for the three months ended March 31, 2003 decreased $0.2 million, or 2%, to $10.9 million, compared to the three months ended March 31, 2002. Cost of revenues for services and finance for the Automotive
group was down largely due to reduced utilization of hardware support services and to lower bad debt expense. Cost of revenues for services and finance for the Hardlines and Lumber group for the three months ended March 31, 2003 increased $0.3
million, or 4%, to $7.0 million, compared to the three months ended March 31, 2002. Cost of revenues of services and finance for the Hardlines and Lumber group increased predominantly due to greater utilization of hardware support services. As a
percentage of automotive services revenues, cost of revenues for services and finance for the Automotive group remained unchanged at 45% for the three months ended March 31, 2003 and 2002, respectively. As a percentage of Hardlines and Lumber group
services revenues, cost of revenues for services and finance for the Hardlines and Lumber group was 49% and 44% for the three months ended March 31, 2003 and 2002, respectively. The percentage fluctuations are chiefly due to the decreased
information product sales to manufacturers noted above and increased hardware support services.



Sales and marketing expense for the three months ended March 31, 2003 decreased $0.3 million, or 3%, to $8.2 million, as compared to the three months ended March 31, 2002. Sales and marketing expense
for the Automotive group for the three months ended March 31, 2003 decreased $0.3 million, or 7%, to $3.7 million, as compared to the three months ended March 31, 2002. As a percentage of automotive revenue, sales and marketing expense for the
Automotive group was 13% and 12% for the three months ended March 31, 2003 and 2002, respectively. The decrease in the sales and marketing expense for the Automotive group was mainly related to lower bad debt expense offset by higher personnel
costs. Sales and marketing expense for the Hardlines and Lumber group for the three months ended March 31, 2003 remained constant at $4.5 million, as compared to the three months ended March 31, 2002. As a percentage of Hardlines and Lumber group
revenue, sales and marketing expense for the Hardlines and Lumber group was 16% and 18% for the three months ended March 31, 2003 and 2002, respectively.



Product development expenses for the three months ended March 31, 2003 decreased $0.5 million, or 11%, to $4.1 million, as compared to the three months
ended March 31, 2002. As a percentage of revenue, product development



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expense was 7% and 8% for the three months ended March 31, 2003 and March 31, 2002, respectively. Product
development expenses for the Automotive group for the three months ended March 31, 2003 decreased $0.6 million, or 16%, to $3.1 million. The decrease was principally due to a greater amount of capitalized software in the current year, due to certain
projects being expensed in the prior year. As a percentage of Automotive group revenue, product development expenses for the Automotive group remained constant at 11% for the three months ended March 31, 2003 and 2002, respectively. Product
development expenses for the Hardlines and Lumber group for the three months ended March 31, 2003 increased $0.1 million, or 7%, to $1.0 million for the three months ended March 31, 2003. As a percentage of Hardlines and Lumber group revenue,
product development expense for the Hardlines and Lumber group remained constant at 4% for the three months ended March 31, 2003 and 2002.



General and administrative expense for the three months ended March 31, 2003 was $6.6 million, a decrease of $0.6 million, or 8%, as compared to the three
months ended March 31, 2002. The decrease was largely due to lower facility expense. As a percentage of revenues, general and administrative expense was 12% and 13% for the three months ended March 31, 2003 and 2002, respectively.



Interest expense for the three months ended March 31, 2003 was $3.3 million
compared to $3.5 million for the three months ended March 31, 2002, a decrease of $0.2 million, or 5%. Interest was down due to a lower principal balance. See Liquidity and Capital Resources.



As a result of the above factors, the Company realized net income of $3.7
million for the three months ended March 31, 2003, compared to net income of $ 2.6 million for the three months ended March 31, 2002, an improvement of $1.1 million, or 43%.



Six months Ended March 31, 2003 Compared to Six months Ended March 31, 2002



Revenues for the six months ended March 31, 2003 were $113.7 million,
compared to $111.6 million for the six months ended March 31, 2002, an increase of $2.1 million, or 2%. For the six months ended March 31, 2003, revenues for the Automotive group decreased $4.0 million, or 6%, to $58.1 million, as compared to the
six months ended March 31, 2002. For the six months ended March 31, 2003, revenues for the Hardlines and Lumber group increased $6.1 million, or 12%, to $55.6 million, as compared to the six months ended March 31, 2002.



Systems revenues for the six months ended March 31, 2003 were $35.1 million,
compared to $31.5 million for the six months ended March 31, 2002, an increase of $3.6 million, or 11%. Systems revenues for the Automotive group for the six months ended March 31, 2003 decreased $3.4 million, or 28%, to $8.9 million, as compared to
the six months ended March 31, 2002. This decrease was mainly due to a higher number of customers upgrading their store systems in the previous year. Systems revenues for the Hardlines and Lumber group for the six months ended March 31, 2003
increased $7.0 million, or 37%, to $26.2 million as compared to the six months ended March 31, 2002, principally due to completion of contract development work and an increase in sales of add-on products to existing customers.



Services and finance revenues were $78.6 million for the six months ended
March 31, 2003, compared to $80.1 million for the six months ended March 31, 2002, a decrease of $1.5 million, or 2%. Services and finance revenues for the Automotive group for the six months ended March 31, 2003 decreased $0.5 million, or 1%, to
$49.2 million, as compared to the six months ended March 31, 2002. The decrease in automotive services and finance revenues was mainly due to lower customer support revenues. Services and finance revenues for the Hardlines and Lumber group for the
six months ended March 31, 2003 decreased $1.0 million, or 3%, to $29.4 million, as compared to the six months ended March 31, 2002. This decrease was primarily due to lower information product sales to manufacturers as a result of reduced sources
of point of sale data available in the market, which we expect to continue.



Cost of revenues was $55.3 million for the six months ended March 31, 2003, compared to $57.3 million for the six months ended March 31, 2002, a decrease of $2.0 million, or 3%. For the six months ended March 31, 2003, cost of
revenues for the Automotive group decreased $4.8 million, or 15%, to $27.2 million, as compared to the six months ended March 31, 2002. For the six months ended March 31, 2003, cost of revenues for the Hardlines and Lumber group increased $2.8
million, or 11%, to $28.1 million, as compared to the six months ended March 31, 2002.



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Cost of systems revenues was
$19.9 million for the six months ended March 31, 2003, compared to $20.2 million for the six months ended March 31, 2002, a decrease of $0.3 million, or 1%. Cost of systems revenues for the Automotive group for the six months ended March 31, 2003
decreased $3.1 million, or 35%, to $5.7 million, as compared to the six months ended March 31, 2002. The decrease was largely due to the decrease in systems sales. Cost of systems revenues as a percentage of systems revenues for the Automotive group
was 64% and 71% for the six months ended March 31, 2003 and 2002, respectively. Cost of systems revenues for the Hardlines and Lumber group for the six months ended March 31, 2003 was $14.2 million for the six months ended March 31, 2003, compared
to $11.4 million for the six months ended March 31, 2002, an increase of $2.8 million, or 24%. The increase in cost of systems revenue was predominantly due to the increase in system sales. The cost of systems revenues as a percentage of systems
revenues for the Hardlines and Lumber group was 54% and 60% for the six months ended March 31, 2003 and 2002, respectively. The changes in cost percentages for both the automotive and the Hardlines and Lumber groups were chiefly due to a more
profitable product mix sold in the period ended March 31, 2003.



Cost of revenues for services and finance was $35.5 million for the six months ended March 31, 2003, compared to $37.1 million for the six months ended March 31, 2002, a decrease of $1.7 million, or 4%. Cost of revenues for services
and finance for the Automotive group for the six months ended March 31, 2003 decreased $1.7 million, or 7%, to $21.6 million, compared to the six months ended March 31, 2002. Cost of revenues of services and finance for the Automotive group
decreased mainly due to greater database capitalization, lower bad debt expense and reduced facility costs. Cost of revenues of services and finance for the Hardlines and Lumber group for the six months ended March 31, 2003 remained constant at
$13.9 million compared to the six months ended March 31, 2002. As a percentage of services revenues, cost of revenues for services and finance for the Automotive group was 44% and 47% for the six months ended March 31, 2003 and 2002, respectively.
As a percentage of services revenues, cost of revenues for services and finance for the Hardlines and Lumber group was 47% and 46% for the six months ended March 31, 2003 and 2002, respectively.



Sales and marketing expense for the six months ended March 31, 2003 decreased
$2.0 million, or 11%, to $15.5 million, as compared to the six months ended March 31, 2002. Sales and marketing expense for the Automotive group for the six months ended March 31, 2003 decreased $1.2 million, or 15%, to $6.9 million, as compared to
the six months ended March 31, 2002. As a percentage of automotive revenue, sales and marketing expense for the Automotive group was 12% and 13% for the six months ended March 31, 2003 and 2002, respectively. The decrease in automotive sales and
marketing expense was related principally to lower bad debt expense. Sales and marketing expense for the Hardlines and Lumber group for the six months ended March 31, 2003 decreased $0.8 million, or 8%, to $8.6 million, as compared to the six months
ended March 31, 2002. The decrease in sales and marketing expense in the Hardlines and Lumber group was related primarily to lower bad debt expense. As a percentage of Hardlines and Lumber group revenue, sales and marketing expense for the Hardlines
and Lumber group was 16% and 19% for the six months ended March 31, 2003 and 2002.



Product development expenses for the six months ended March 31, 2003 decreased $0.4 million to $7.8 million, as compared to the six months ended March 31, 2002. Product development expenses for the Automotive group for the
six months ended March 31, 2003 decreased $0.6 million, or 9%, to $5.8 million. The decrease was largely due to lower facility costs and to greater software capitalization, due to certain projects being expensed in the prior year. As a percentage of
Automotive group revenue, product development expenses for the Automotive group remained unchanged at 10% for the six months ended March 31, 2003 and 2002, respectively. Product development expenses for the Hardlines and Lumber group for the six
months ended March 31, 2003 increased $0.2 million, or 9%, to $2.0 million. The increase was predominantly due to less software capitalized this year than last year. As a percentage of Hardlines and Lumber group revenue, product development expenses
for the Hardlines and Lumber group remained constant at 4% for the six months ended March 31, 2003 and 2002.



General and administrative expense for the six months ended March 31, 2003 decreased $0.9 million, or 6%, to $13.3 million, as compared to the six months ended March 31, 2002. As a percentage of
revenues, general and administrative expense was 12% and 13% for the six months ended March 31, 2003 and 2002, respectively. The decrease was chiefly due to lower facility and communication costs.



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Interest expense for the six
months ended March 31, 2003 was $6.8 million compared to $7.6 million for the six months ended March 31, 2002, a decrease of $0.8 million, or 10%. The decrease was due to a lower principal balance.See Liquidity and Capital
Resources.



As a result of the above factors, the Company
realized net income of $9.2 million for the six months ended March 31, 2003, compared to net income of $3.9 million for the six months ended March 31, 2002, an improvement of $5.3 million, or 135%.



Liquidity and Capital Resources



On December 3, 2002, the Company replaced the Restated Senior Credit
Facilities with a new three-year credit agreement comprised of a $35.0 million term loan facility and a $17.5 million revolving credit facility. The term loan facility is payable in quarterly installments from March 31, 2003 through December 31,
2005 and bears interest at CCITRIADs option either at (i) a margin of 3.5% applied to the greatest of (a) the Prime Rate, (b) the Base CD Rate plus 1% and (c) the Federal Funds Effective Rate plus 0.5% or (ii) a margin of 4.5% applied to the
Eurodollar Base Rate divided by the product of one minus the Eurocurrency Reserve Requirements. In March, June and September 2003 each quarterly installment is $2.0 million. The revolving credit facility provides for maximum borrowings of $17.5
million (including letters of credit up to a maximum of $10.0 million) and matures in December 2005.



As of March 31, 2003, the Company had $134.0 million in outstanding indebtedness, a decrease of $4.0 million from September 30, 2002. The Companys outstanding indebtedness under its New Senior
Credit Facility at March 31, 2003 included no borrowings on the Companys $17.5 million senior secured revolving credit facility and $33.0 million of senior secured term loans. At March 31, 2003, a balance of $100.0 million on the Notes, due in
2008, bearing interest at 9% was outstanding. The remaining $1.0 million was related to lease financing and the debt matures in varying amounts over the next four years. A portion of the Companys debt bears interest at floating rates;
therefore, its financial condition is and will be affected by changes in prevailing rates.



The Companys New Senior Credit Facility imposes certain restrictions on the Company, the most significant of which include limitations on additional indebtedness, liens, guarantees, payment or
declaration of dividends, sale of assets, investments, capital expenditures, and transactions with affiliates. Under the Companys New Senior Credit Facility, the Company is obligated to meet certain tests relating to certain financial amounts
and ratios defined in the new credit agreement. At March 31, 2003, the Company was in compliance with these covenants.



In addition to servicing its debt obligations, the Company requires substantial liquidity for capital expenditures and working capital needs. At March 31,
2003, working capital was $0.4 million compared to $(8.9) million at September 30, 2002. The increase in working capital primarily relates to increased system sales and operational efficiencies resulting in an increase in net income and cash. For
the six months ended March 31, 2003, the Companys capital expenditures were $6.6 million, including $3.9 million for capitalized computer software and database costs.



The Company believes that cash flows from operations, together with the amounts available under its New Senior Credit
Facility, will be sufficient to fund its working capital and debt service requirements for the foreseeable future. The Companys ability to meet its working capital and debt service requirements, however, is subject to future economic
conditions and to financial, business and other factors, many of which are beyond the Companys control. If the Company is not able to meet such requirements, it may be required to seek additional financing. There can be no assurance that the
Company will be able to obtain financing from other sources on terms acceptable to the Company, if at all.



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Item 3. Quantitative and Qualitative Disclosures about Market Risk.



Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in the Companys Annual Report on Form 10-K for the fiscal year ended September
30, 2002. There have been no material changes in the quarter ended March 31, 2003.



Item 4. Controls and Procedures.



An
evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer (CEO) and Principal Financial Officer (CFO), of the effectiveness of the design and operation of the
Companys disclosure controls and procedures within 90 days of the filing date of this quarterly report on Form 10-Q. Additionally, the internal controls were evaluated in conjunction with the year-end audit and no material weaknesses were
identified. Based on those evaluations, the Companys management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures were effective. There have been no significant changes in the Companys
internal controls or in other factors that could significantly affect these internal controls subsequent to the date of their evaluation.



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##### Table of Contents



PART II. OTHER INFORMATION



Item 1. Legal Proceedings.



The Company
is involved in litigation arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, although there can be no assurances, the Company does not anticipate that the resolution of these matters will
have a material adverse effect on the Companys results of operation or financial position.



The Company is a defendant in a lawsuit that was filed by Preston Staats, a director of the Company, on December 9, 2002, in the United States District Court for the Western District of Texas, Austin
Division. The suit alleges that Mr. Staats was constructively terminated by the Company in violation of the Age Discrimination in Employment Act and that such alleged termination constituted a breach of contract. The lawsuit seeks monetary damages
in excess of $75,000 as well as attorneys fees, court costs, and interest. The Company has filed appropriate responsive pleadings, including an Answer and a Motion to Partially Dismiss, and intends to defend itself vigorously.



Item 2. Changes in Securities and Use of Proceeds.



None



Item 3. Defaults Upon Senior Securities.



None



Item 4. Submission of Matters to a Vote of Security Holders.



None



Item 5. Other Information.



None



Item 6. Exhibits and Reports on Form 8-K.



| | (a) |  | Exhibits
| | --- |  | --------



99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Michael A. Aviles.

99.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Greg Petersen.



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------



No reports on Form 8-K have been filed during the three months ended March 31, 2003.



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SIGNATURE



Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, on the 14th day of May 2003.



COOPERATIVE COMPUTING, INC.By:

/s/ GREG PETERSENGreg Petersen Senior Vice President, Finance and Administration




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CERTIFICATION



I, Michael A. Aviles,
certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Cooperative Computing, Inc.;
| | -- |  | ----------------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|     
|-----
|Date:
|     
|     



Chairman of the Board,

President and Chief Executive Officer



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CERTIFICATION



I, Greg Petersen, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Cooperative Computing, Inc.;
| | -- |  | ----------------------------------------------------------------------------------



| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|     
|-----
|Date:
|     
|     



Senior Vice President,

Finance and Administration



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