d8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): December 21,
2007
CHORDIANT
SOFTWARE,
INC.
(Exact
name of Registrant as specified in its charter)
Delaware
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93-1051328
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(State
or other jurisdiction of incorporation)
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(I.R.S.
Employer Identification
No.)
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Commission
file number:
000-29357
20400
Stevens Creek Boulevard, Suite 400
Cupertino,
CA 95014
(Address
of principal executive offices and zip code)
Registrant's
telephone number, including area code: (408) 517-6100
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into Material Definitive Agreement
Agreement
withVodafone Group Services Limited.
On
December 21, 2007, Chordiant Software, Inc. (“Chordiant” or the “Company”)
entered into a Global Framework Agreement (the “Agreement”) with a new customer,
Vodafone Group Services Limited (“VGSL”). Amounts due under the Agreement
aggregate €18.1 million Euro (or approximately $26.1 million U.S. Dollars at the
exchange rate upon signing).
The
material terms of the Agreement are:
1.
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The
Company has agreed to provide perpetual enterprise licenses and support
for certain Decision Management and Marketing Director product suites
(the
“Software”) for up to eighteen Vodafone group companies (“VGCs”) located
in Europe, Asia, Africa and Australia/New Zealand. Each such
license to the Software will be effective upon the signing of an
agreement
between the Company and each VGC, the form of which license agreement
is
attached to the Agreement. Two of the eighteen VGCs have
entered into such license agreements as of December 21,
2007.
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2.
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In
consideration for the Company entering into the Agreement, VGSL has
committed to make payments to the Company of €14,878,000 in license fees
and €3,231,700 in support fees, less the amounts separately paid by the
VGCs under the following schedule:
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(amounts
in millions of Euro)
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VGSL
Commitment Date
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License
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Support
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Total
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September
1, 2008
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€
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7.3
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€
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1.0
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€
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8.3
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December
1, 2008
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3.3
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—
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3.3
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April
1, 2009
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4.3
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2.2
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6.5
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Total
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€
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14.9
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€
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3.2
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€
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18.1
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3.
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VGSL
may transfer a license from one VGC to another VGC and will be required
to
pay a supplemental license fee if the number of end user customers
of the
transferee VGC are substantially greater than those of the VGC that
originally entered into the license. Additionally, VGSL will be
required to pay a supplemental license fee if the number of end user
customers of a licensed VGC are substantially increased through a
merger.
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4.
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The
Company has offered pricing under which other subsidiaries and partner
organizations of VGSL can license the Software. The pricing is valid
through December of 2009.
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5.
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After
April 1, 2010 VGSL may acquire an additional one year of support,
for an
annual support fee of not less than the previous year’s support fee,
subject to certain adjustments for continued participation of the
VGCs and
inflation.
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Anticipated
Accounting Treatment for Financial Reporting Purposes
Statement
of Operations Presentation:
As
the individual VGCs enter into license agreements and provide Chordiant with
purchase orders, the Software will be delivered and invoiced to the VGC and
the
associated license revenue is expected to be recognized in the period that
amounts become due and payable. To the extent that aggregate orders from the
VGCs do not reach the agreed upon levels as of September 1, 2008, December
1,
2008 and April 1, 2009, any shortfall will be due and payable by VGSL and
Chordiant will bill VGSL for such shortfall. Because support and
maintenance is being provided to the customer at a cost below estimated fair
value during the initial stages of the Agreement, a portion of the license
fees
stipulated in the Agreement are expected to be reallocated and characterized
as
support fees in the Company’s financial statements.
Assuming
that the VGCs do not place any orders under the Agreement and VGSL payments
become due and payable to the Company at the dates specified under the
Agreement, it is expected that the minimum amounts of revenue to be recognized
under the Agreement would be approximately as follows:
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(amounts
in millions of Euro)
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Fiscal
Year ending September 30
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2008
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2009
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2010
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Total
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License
revenue
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€
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6.3
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€
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6.8
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€
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—
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€
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13.1
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Support
revenue
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1.7
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2.2
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1.1
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5.0
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Total
revenue
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€
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8.0
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€
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9.0
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€
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1.1
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€
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18.1
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Translated
to U.S. Dollars, at an exchange rate existing when the Agreement was signed
in
December 2007, the approximate amounts would be as follows:
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(amounts
in millions of U.S. Dollars)
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Fiscal
Year ending September 30
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2008
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2009
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2010
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Total
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License
revenue
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$
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9.1
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$
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9.8
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$
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—
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$
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18.9
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Support
revenue
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2.4
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3.2
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1.6
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7.2
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Total
revenue
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$
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11.5
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$
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13.0
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$
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1.6
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$
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26.1
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Changes
in exchange rates may impact the amounts recognized as revenue in each
period.
To
the extent that VGCs place orders in advance of the commitment dates, the timing
of the license revenue recognition could be accelerated compared to the amounts
listed above. To the extent that other VGSL subsidiaries or partners order
product, or supplemental license fees become due under the agreement or the
VGCs
renew support contracts after March 31, 2010, the aggregate amounts recorded
as
revenue may be higher compared to the amounts listed above.
Balance
Sheet Presentation:
Amounts
due under the Agreement will not be invoiced until purchase orders are placed
or
until the amounts are billable to VGSL. Accordingly, prior to the
date that invoices are generated, such amounts will not be recorded as accounts
receivable or deferred revenue in the Company’s consolidated balance
sheet.
Item
2.02 Results of Operations and Financial Condition
On
December 27, 2007, the Company issued a press release announcing the Agreement
with VGSL and preliminary selected financial results for the quarter ending
December 31, 2007. A copy of the press release is attached as Exhibit 99.1
to
this current report on Form 8-K and is incorporated by reference
herein.
While
the Agreement with VGSL represents a transaction expected to impact, in a
material way, fiscal years 2008, 2009 and, to a lesser degree, 2010, the
purchase orders placed by the individual VGCs during the quarter ended December
31, 2007 represent less than 14% of the amounts to be billed under the
Agreement. The impact of the revenues expected under the Agreement on
Chordiant’s financial position for the remaining nine months of the fiscal year
ending September 30, 2008 is expected to be significant.
Item
9.01 Financial Statements and Exhibits.
(c)
Exhibits
99.1
Press release dated December 27, 2007
Safe
Harbor Statement
This
current report on Form 8-K includes "forward-looking statements" that are
subject to risks, uncertainties and other factors that could cause actual
results or outcomes to differ materially from those contemplated by the
forward-looking statements. Forward-looking statements in this report are
generally identified by words, such as “believes,” “expects,” “will,” “plans,”
“guidance,” “outlook,” and similar expressions which are intended to identify
forward-looking statements. There are a number of important factors
that could cause the results or outcomes discussed herein to differ materially
from those indicated by these forward-looking statements, including, among
others, whether the individual VGCs will enter into license agreements with
Chordiant or deploy Chordiant’s Software, whether Chordiant will be able to
achieve its revenue and expense targets, or whether new accounting
interpretations will occur affecting the periods in which Chordiant may
recognize revenue generated by the Agreement. Further information on potential
factors that could affect Chordiant are included in risks detailed from time
to
time in Chordiant's Securities and Exchange Commission filings, including,
without limitation, Chordiant's Annual Report on Form 10-K for the period ended
September 30, 2007. This filing is available on a Web site maintained
by the Securities and Exchange Commission at http://www.sec.gov. Chordiant
does
not undertake an obligation to update forward-looking or other statements in
this release.
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 hereunto
duly authorized.
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Dated:
December 27, 2007
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CHORDIANT
SOFTWARE, INC
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By:
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/s/ PETER
S. NORMAN
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Peter
S. Norman
Chief
Financial Officer and Principal
Accounting
Officer
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