-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JvzGyYJZSYj0NPLdBpQ9PreiGptwZaA7QJ50przZSOTuAoKdshQ6M8m4rkh0qubs B13vUg6tMwuWT5cNXLN0pQ== 0001015402-98-000021.txt : 19980212 0001015402-98-000021.hdr.sgml : 19980212 ACCESSION NUMBER: 0001015402-98-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980211 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCURRENT COMPUTER CORP/DE CENTRAL INDEX KEY: 0000749038 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 042735766 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13150 FILM NUMBER: 98531616 BUSINESS ADDRESS: STREET 1: 2101 WEST CYPRESS CREEK ROAD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 9549741700 MAIL ADDRESS: STREET 1: CONCURRENT COMPUTER CORP STREET 2: 2101 WEST CYPRESS CREEK RD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended December 31, 1997 or Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from ____ to ____ Commission File No. 0-13150 _____________ CONCURRENT COMPUTER CORPORATION Delaware 04-2735766 (State of Incorporation) (I.R.S. Employer Identification No.) 2101 West Cypress Creek Road, Ft. Lauderdale, FL 33309 Telephone: (954) 974-1700 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ --- Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of February 6, 1998 were 47,301,531. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 28, DECEMBER 31, DECEMBER 28, 1997 1996 1997 1996 -------------- -------------- -------------- -------------- Net sales Computer systems . . . . . . . . . . $ 9,759 $ 12,870 $ 18,625 $ 26,244 Service and other. . . . . . . . . . 11,257 13,755 22,996 28,138 -------------- -------------- -------------- -------------- Total. . . . . . . . . . . . . . . 21,016 26,625 41,621 54,382 Cost of sales Computer systems . . . . . . . . . . 4,516 6,796 8,793 13,905 Service and other. . . . . . . . . . 5,737 7,156 12,182 14,914 Transition . . . . . . . . . . . . . - 64 - 802 -------------- -------------- -------------- -------------- Total. . . . . . . . . . . . . . . 10,253 14,016 20,975 29,621 -------------- -------------- -------------- -------------- Gross margin . . . . . . . . . . . . . 10,763 12,609 20,646 24,761 Operating expenses: Research and development . . . . . . 2,694 3,443 5,514 6,799 Selling, general and administrative. 5,870 7,797 11,894 15,028 Transition/restructuring . . . . . . - 872 (607) 2,106 Post-retirement benefit reversal . . - (1,200) - (2,181) -------------- -------------- -------------- -------------- Total operating expenses . . . . . . . 8,564 10,912 16,801 21,752 Operating income . . . . . . . . . . . 2,199 1,697 3,845 3,009 Interest expense . . . . . . . . . . . (188) (532) (450) (1,191) Interest income. . . . . . . . . . . . 36 29 58 81 Other non-recurring charge . . . . . . - 2,192 420 (1,876) Other income (expense) - net . . . . . (41) (161) (242) (420) -------------- -------------- -------------- -------------- Income (loss) before provision . . . . 2,006 3,225 3,631 (397) for income taxes Provision for income taxes . . . . . . 583 530 908 970 -------------- -------------- -------------- -------------- Net income (loss). . . . . . . . . . . $ 1,423 $ 2,695 $ 2,723 $ (1,367) Preferred stock dividends and accretion of preferred shares. . . . - - (18) - -------------- -------------- -------------- -------------- Net income (loss) available to . . . . $ 1,423 $ 2,695 $ 2,705 $ (1,367) ============== ============== ============== ============== common shareholders Basic income (loss) per share. . . . . $ 0.03 $ 0.06 $ 0.06 $ (0.03) ============== ============== ============== ============== Diluted income per share . . . . . . . $ 0.03 $ 0.06 $ 0.06 ============== ============== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) DECEMBER 31, JUNE 30, 1997 1997 -------------- ---------- ASSETS Current assets: Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 4,992 $ 4,024 Trading securities . . . . . . . . . . . . . . . . . . . . . - 2,718 Accounts receivable - net. . . . . . . . . . . . . . . . . . 19,665 25,720 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 7,262 8,399 Prepaid expenses and other current assets. . . . . . . . . . 1,705 2,286 -------------- ---------- Total current assets . . . . . . . . . . . . . . . . . . . 33,624 43,147 Property, plant and equipment - net. . . . . . . . . . . . . . 13,032 14,207 Facilities held for disposal . . . . . . . . . . . . . . . . . - 4,700 Other long-term assets . . . . . . . . . . . . . . . . . . . . 1,377 1,474 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,033 $ 63,528 ============== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . . . . . . $ 4,478 $ 5,399 Current portion of long-term debt. . . . . . . . . . . . . . 1,529 1,668 Revolving credit facility. . . . . . . . . . . . . . . . . . - 3,118 Accounts payable and accrued expenses. . . . . . . . . . . . 14,123 23,866 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 3,100 4,402 -------------- ---------- Total current liabilities. . . . . . . . . . . . . . . . . 23,230 38,453 Long term debt . . . . . . . . . . . . . . . . . . . . . . . . 434 4,493 Other long-term liabilities. . . . . . . . . . . . . . . . . . 1,574 1,219 Total liabilities. . . . . . . . . . . . . . . . . . . . . 25,238 44,165 -------------- ---------- Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . - 1,243 Stockholders' equity: Common stock . . . . . . . . . . . . . . . . . . . . . . . . 472 461 Capital in excess of par value . . . . . . . . . . . . . . . 94,728 92,650 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (71,882) (74,587) Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (58) (58) Cumulative translation adjustment. . . . . . . . . . . . . . (465) (346) Total stockholders' equity . . . . . . . . . . . . . . . . 22,795 18,120 -------------- ---------- Total liabilities and stockholders' equity . . . . . . . . . . $ 48,033 $ 63,528 ============== ========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) SIX MONTHS ENDED DECEMBER 31, DECEMBER 28, 1997 1996 ------------------ -------------- Cash flows provided by (used by) operating activities: Net income (loss). . . . . . . . . . . . . . . . . . . . . . . $ 2,723 $ (1,367) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Unrealized loss on CyberGuard Stock. . . . . . . . . . . . . - 2,666 Realized loss on CyberGuard Stock. . . . . . . . . . . . . . (420) (735) Gain on sale of facility . . . . . . . . . . . . . . . . . . (706) - Depreciation, amortization and other . . . . . . . . . . . . 2,962 2,409 Other non-cash expenses. . . . . . . . . . . . . . . . . . . 857 2,025 Decrease (increase) in current assets: Accounts receivable. . . . . . . . . . . . . . . . . . . . 6,055 775 Inventories. . . . . . . . . . . . . . . . . . . . . . . . 1,137 (2,215) Prepaid expenses and other current assets. . . . . . . . . (65) 318 Decrease in current liabilities other than debt obligations. (11,061) (5,957) Decrease in other long-term assets . . . . . . . . . . . . . 69 1,745 Increase (decrease) in other long-term liabilities . . . . . 355 (2,360) ------------------ -------------- Total adjustments to net income (loss) . . . . . . . . . . . . (817) (1,329) ------------------ -------------- Net cash provided by (used by) operating activities. . . . . . . 1,906 (2,696) ------------------ -------------- Cash flows provided by investing activities: Net additions to property, plant and equipment . . . . . . . . (1,470) (2,435) Net proceeds from sale of trading securities . . . . . . . . . 2,668 4,308 Proceeds from sale of facility . . . . . . . . . . . . . . . . 5,406 - Net cash provided by investing activities. . . . . . . . . . . . 6,604 1,873 ------------------ -------------- Cash flow used by financing activities: Net proceeds (payments) of notes payable . . . . . . . . . . . (292) 410 Net payments of revolving credit facility. . . . . . . . . . . (3,118) (970) Repayment of long-term debt. . . . . . . . . . . . . . . . . . (4,194) (612) Net proceeds from sale and issuance of common stock . . . . . . . . . . . . . . . . . . 457 1,161 ------------------ -------------- Net cash used by financing activities. . . . . . . . . . . . . . (7,147) (11) ------------------ -------------- Effect of exchange rates on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (395) (56) ------------------ -------------- Increase (decrease) in cash and cash equivalents . . . . . . . . $ 968 $ (890) ================== ============== Cash paid during the period for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 422 $ 961 ================== ============== Income taxes (net of refunds). . . . . . . . . . . . . . . . $ 668 $ 615 ================== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The foregoing financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal recurring nature. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The results of interim periods are not necessarily indicative of the results to be expected for the full fiscal year. 2. CHANGES IN ACCOUNTING POLICY Post-retirement Benefits Other Than Pensions On July 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Post-retirement Benefits Other Than Pensions" ("FAS No. 106"). This standard requires companies to accrue post-retirement benefits throughout the employees' active service periods until they attain full eligibility for those benefits. The transition obligation (the accumulated post-retirement benefit obligation at the date of adoption) may be recognized either immediately or by amortization over the longer of the average remaining service period of active employees or 20 years. In connection with the adoption of this standard in fiscal year 1994, the Company recorded a non-cash charge of $3.0 million representing the immediate recognition of the accumulated post-retirement benefit obligation at the date of the adoption. As a result of the Acquisition as defined in Management's Discussion and Analysis, the Company terminated the retirement benefits of current employees and former employees who are not yet retired. In the quarter and six months ended December 28, 1996, curtailment gains of $1.2 million and $2.2 million, respectively, were recognized. The total year-to-date curtailment gain during fiscal year 1997 was $2.5 million. The Company believes there will be no material expenses in connection with this Plan. Stock-Based Compensation Prior to July 1, 1996, the Company accounted for its stock option plan in accordance with the provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. During fiscal year 1997, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("FAS No. 123"), which permits entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB Opinion No. 25 and provide pro forma net income and pro forma earnings per share disclosures (which for the Company would include employee stock option grants made in fiscal year 1996 and future years) as if the fair-value-based method defined in SFAS No. 123 had been applied. The Company has elected to continue to apply the provisions of APB Opinion No. 25 and provide the pro forma disclosure provisions of SFAS No. 123. 3. EARNINGS (LOSS) PER SHARE In the quarter ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS No. 128"), which supersedes APB Opinion No. 15, "Earnings Per Share", and specifies the computation, presentation, and disclosure requirements for earnings per share ("EPS") for entities with publicly held common stock or potential common stock. FAS No. 128 replaces primary and fully diluted EPS with basic and diluted EPS, respectively. It also requires dual presentation of Basic EPS and Diluted EPS on the face of the income statement and requires a reconciliation of the numerator and denominator of the Basic EPS computation to the numerator and denominator of the Diluted EPS computation. Basic EPS, unlike Primary EPS, excludes all dilution while Diluted EPS, like Fully Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The number of shares used in computing basic and fully diluted earnings per share for the three months ended December 31, 1997 was 47,022,000 and 48,100,000, respectively. The number of shares used in computing basic and diluted earnings per share for the three months ended December 28, 1996 was 44,466,000 and 45,317,000, respectively. The number of shares used in computing basic and fully diluted earnings per share for the six months ended December 31, 1997 was 46,598,000 and 47,364,000, respectively. The number of shares used on computing net loss per share for the six months ended December 28, 1996 was 43,417,000. 4. TRADING SECURITIES As of June 30, 1996, the Company held 683,173 shares of CyberGuard stock with a market value of $14.75 per share. During the quarter ended September 30, 1996 the Company sold 91,500 shares at $10.645 per share, resulting in a realized loss of $376 thousand. The value of the stock as of September 30, 1996 was $8.50 per share, resulting in an unrealized loss of $3.7 million for the quarter then ended. During the quarter ended December 28, 1996, the Company sold 261,500 shares at an average price of $12.748 per share resulting in a realized gain of $1.1 million, and sold a call option on an additional 300,000 shares. As of December 28, 1996, the value of the stock was $11.625, resulting in an unrealized gain for the quarter of $1.0 million. During the remainder of fiscal year 1997, the Company sold 24,995 shares leaving 305,178 shares at June 30, 1997, valued at $2.7 million or $8.91 per share. During the quarter ended September 30, 1997, 259,352 shares of CyberGuard stock were sold, resulting in a realized gain for the period of $358 thousand. On September 4, 1997, the remaining 45,826 shares valued at $10.25 per share were issued as bonuses to Company employees. This resulted in a realized gain of $62 thousand. 5. INVENTORIES Inventories are valued at the lower of cost or market, with cost being determined by using the first-in, first-out ("FIFO") method. The components of inventories are as follows: (DOLLARS IN THOUSANDS)
DECEMBER 31, JUNE 30, 1997 1997 ------------- --------- Raw Materials . $ 5,012 $ 5,823 Work-in-process 1,458 2,191 Finished Goods. 792 385 ------------- --------- $ 7,262 $ 8,399 ============= =========
6. ACCUMULATED DEPRECIATION Accumulated depreciation for property, plant and equipment at December 31, 1997 and June 30, 1997 was $22,371,000 and $23,062,000 respectively. The decrease primarily reflects exchange rate fluctuations. 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES (DOLLARS IN THOUSANDS)
DECEMBER 31, JUNE 30, 1997 1997 ------------- --------- Accounts payable, trade . . . $ 4,535 $ 7,451 Accrued payroll, vacation and other employee expenses . . 4,332 5,891 Restructuring reserve . . . . 736 2,876 Other accrued expenses. . . . 4,520 7,648 ------------- --------- $ 14,123 $ 23,866 ============= =========
8. SALE OF FACILITY During fiscal year 1996, in connection with the Acquisition (as hereinafter defined) and the resulted planned disposition of the Company's Oceanport, New Jersey facility, the book value of land and building related to this facility was written down by $6.8 million to its estimated fair value of $4.7 million, based on a valuation by independent appraisers, and classified as a facility held for sale. In the quarter ended September 30, 1997, the sale of this facility was finalized. $5.5 million less closing costs of $0.1 million was received by the Company and applied against the Company's debt. The Company realized a gain of $0.7 million that is reflected in the statement of operations in the six months ended December 31, 1997. 9. PROVISION FOR RESTRUCTURING The Company recorded a restructuring provision of $24.5 million during the year ended June 30, 1996. This charge included the estimated costs related to the rationalization of facilities, workforce reductions, asset writedowns and other costs. The balance of the restructuring reserve at June 30, 1996 was $13.0 million. During fiscal year 1997, expenditures related to this restructuring amounted to approximately $10.1 million leaving a balance $2.9 million at June 30, 1997. During the quarter and six months ended December 31, 1997, restructuring expenditures amounted to $0.7 million and $2.1 million, respectively, representing workforce reductions and lease terminations. The balance of the restructuring reserve at December 31, 1997 was $0.7 million. On May 5, 1992, the Company had entered into an agreement with the Industrial Development Authority (the "IDA") to maintain a presence in Ireland through April 30, 1998. In connection with the Acquisition, the Company closed its Ireland operations in December 1996. As a result of the closing, the Company may be required to repay grants to the IDA. Current negotiations with the IDA indicate that the potential liability is approximately $150,000 (100,000 Irish Pounds). MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On June 27, 1996, the Company acquired the Real-Time Division of Harris Computer Systems Corporation ("HCSC"), along with 683,178 shares of newly issued shares of HCSC, which was renamed CyberGuard Corporation, in exchange for 10,000,000 shares of Concurrent common stock, 1,000,000 shares of convertible exchangeable preferred stock of Concurrent with a 9% cumulative annual dividend payable quarterly in arrears and a mandatory redemption value of $6,263,000 and the assumption of certain liabilities related to the HCSC Real-Time Division ("Acquisition"). The aggregate purchase price of the Acquisition was approximately $18.7 million. The Acquisition has been accounted for as a purchase effective June 30, 1996. RESULTS OF OPERATIONS THE QUARTER ENDED DECEMBER 31, 1997 COMPARED WITH THE QUARTER ENDED DECEMBER 28, 1996. Net Sales. Net sales decreased to $21.0 million for the quarter ended December 31, 1997 from $26.6 million in the comparable period a year ago. The Company considers its computer systems and service business to be one class of products. Net product sales were $9.8 million for the quarter ended December 31, 1997 as compared with $12.9 million for the quarter ended December 28, 1996. Sales of proprietary systems continue to decline, and the selling price of open systems is significantly lower than that of proprietary products. Maintenance sales decreased from $13.8 million in the quarter ended December 28, 1996 to $11.3 million in the quarter ended December 31, 1997 continuing the decline experienced over the past years as customers move from proprietary systems to open systems which require less maintenance. Gross Margin. Gross margin decreased $1.8 million during the current quarter to $10.8 million (51.2% as a percentage of sales) compared with $12.6 million (47.4%) for the three months ended September 30, 1996. The improved margin resulted from increased efficiencies and economies of scale brought about by combining the Company's manufacturing and maintenance facilities with those of HCSC. The overall decrease in gross margin reflects the Company's lower sales this quarter. Operating Income. Operating income increased $0.5 million to $2.2 million in the current quarter compared with an income of $1.7 million in the quarter ended December 28, 1996. Expenses decreased $2.3 million in the current quarter compared with the quarter ended December 28, 1996, which is primarily due to continued cost reduction efforts and the reduction of transition costs as the transition process relating to the Acquisition has been completed. This was partially offset by an increase resulting from the reversal of a $1.2 million post-retirement benefit accrual that occurred in the quarter ended December 28, 1996. Net Income. Net income decreased from $2.7 million in the quarter ended December 28, 1996 to $1.4 million in the current quarter. The decrease of $1.3 million is due to the $2.2 million gain on CyberGuard stock in the prior quarter. This was offset by the increase in operating income discussed above and a reduction in interest expense due to decreased borrowings. THE SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED WITH THE SIX MONTHS ENDED DECEMBER 28, 1996. Net Sales. Net sales decreased to $41.6 million for the six months ended December 31, 1997 from $54.4 million in the comparable period a year ago. The Company considers its computer systems and service business to be one class of products. Net product sales were $18.6 million for the six months ended December 31, 1997 as compared with $26.2 million for the six months ended December 28, 1996. Sales of proprietary systems continue to decline, while open system products are increasing. Maintenance sales decreased from $28.1 million in the six months ended December 28, 1996 to $23.0 million for the comparable six months of 1997, continuing the decline experienced over the past years as customers move from proprietary to open systems which require less maintenance. Gross Margin. Gross margin as a percentage of sales increased to 49.6% in the current six month period from 45.5% for the six months ended December 28, 1996. This increase reflects the Company's increased efficiencies and cost improvement efforts. Operating Income. Operating income increased $0.8 million to a profit of $3.8 million compared with an income of $3.0 million in the six months ended December 28, 1996. Expenses decreased $5.0 million in the current six months compared with the six months ended December 28, 1996 which is primarily due to continued cost reduction efforts, the reduction of transition costs as the transition process relating to the Acquisition has been completed and a gain on the sale of the building recorded as an offset to restructuring expense in the current six months. This was partially offset by an increase resulting from the reversal of a $2.2 million post-retirement benefit accrual that occurred in the six months ended December 28, 1996. Net Income. Net income increased from a loss of $1.4 million in the six months ended December 28, 1996 to an income of $2.7 million in the current six months. This increase of $4.1 million is due to the $0.8 million increase in operating income discussed above, the $0.4 million gain on CyberGuard stock in the current six months as compared to the $1.9 million loss on CyberGuard stock in the prior year, and a significant decrease in interest expense resulting from decreased borrowings. LIQUIDITY AND CAPITAL RESOURCES The Company sold its Oceanport, New Jersey facility in July 1997 for $5.5 million. The net proceeds for the sale ($5.4 million) were used to reduce debt. During the first quarter of fiscal year 1998, the Company sold 259,352 shares of CyberGuard stock for $2.7 million which was used in operations. The Company's liquidity is dependent on many factors, including sales volume, operating profit ratio, debt service and the efficiency of asset use and turnover. The future liquidity of the Company depends to a significant extent on (i) the actual versus anticipated decline in sales of proprietary systems and service maintenance revenue; (ii) revenue growth from open systems; and (iii) ongoing cost control actions. Liquidity will also be affected by: (i) timing of shipments which predominately occur during the last month of the quarter; (ii) the percentage of sales derived from outside the United States where there are generally longer accounts receivable collection cycles and which receivables are not included in the Company's borrowing base under its revolving credit facility; (iii) the sales level in the United States where related accounts receivable are included in the borrowing base of the Company's revolving credit facility; (iv) the number of countries in which the Company will operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, such as cash held on deposit to secure office leases. The Company believes that it will be able to fund fiscal year 1998 operations through its operating results and existing financing facilities. There is no assurance that the Company's plans will be achieved. On June 28, 1996, the Company entered into a new agreement providing for a $19.9 million credit facility which matures August 1, 1999. The facility includes a $7.2 million term loan (the "Term Loan") and a $12.7 million revolving credit facility (the "Revolver"). The Revolver represents a $4.7 million increase to the maximum revolver amount, subject to certain restrictions. At December 31, 1997, the outstanding balances under the Term Loan and the Revolver were $1.8 million and $0, respectively. Both the Term Loan and the Revolver bear interest at the prime rate plus 2.0%. The Term Loan is payable in 28 monthly installments of approximately $139,000 each, commencing October 1, 1996 and ending January 1, 1999, with the final balance payable August 1, 1999. The Revolver may be repaid and reborrowed, subject to certain collateral requirements, at any time during the term ending August 1, 1999. The Company has pledged substantially all of its domestic assets as collateral for the Term Loan and the Revolver. The Company may repay the Term Loan at any time without penalty. Certain early termination fees apply if the Company terminates the facility in its entirety prior to August 1, 1999. The Company's joint venture agreement regarding its Japanese subsidiary has been renewed through June 1998. In the event such agreement is not further extended, the Company could be required to satisfy the then outstanding amount of demand notes which are guaranteed by the Company ($2.5 million at December 31, 1997). There can be no assurance that the agreement will be extended or, in the event the agreement is not extended, that the Company will be able to fully satisfy its demand note requirements. The Company had cash and cash equivalents on hand of $5.0 million representing an increase from $4.0 million as of June 30, 1997 primarily due to the sale of the Oceanport building and the sale of the remaining CyberGuard stock. Accounts receivable decreased by $6.1 million due to improved collections. Accounts payable and accrued expenses decreased by $9.7 million primarily due to reductions in spending, timely vendor payments, and a reduction of the restructure reserve. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This Form 10-Q contains forward-looking statements that are subject to risks and uncertainties. Statements indicating that the Company "expects," "estimates" or "believes" are forward-looking as are all other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important factors that could cause actual results or events to differ materially from those anticipated by the forward-looking statements contained herein. Such factors include, but are not limited to: the growth rates of the Company's market segments; the positioning of the Company's products in those segments; the Company's ability to effectively manage its business, and the growth of its business, in a rapidly changing environment; the timing of new product introductions; inventory risks due to changes in market conditions; the competitive environment in the computer industry; the Company's ability to establish successful strategic relationships; and general economic conditions. SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 28, DECEMBER 31, DECEMBER 28, 1997 1996 1997 1996 ------------- ------------- ------------- ------------- Net sales Computer systems . . . . . . . . . . 46.4% 48.3% 44.7% 48.3% Service and other. . . . . . . . . . 53.6% 51.7% 55.3% 51.7% ------------- ------------- ------------- ------------- Total. . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% Cost of sales Computer systems . . . . . . . . . . 46.3% 52.8% 47.2% 53.0% Service and other. . . . . . . . . . 51.0% 52.0% 53.0% 53.0% Transition . . . . . . . . . . . . . 0.0% 0.5% 0.0% 3.1% ------------- ------------- ------------- ------------- Total. . . . . . . . . . . . . . . 48.8% 52.6% 50.4% 54.5% ------------- ------------- ------------- ------------- Gross margin . . . . . . . . . . . . . 51.2% 47.4% 49.6% 45.5% Operating expenses: Research and development . . . . . . 12.8% 12.9% 13.2% 12.5% Selling, general and administrative. 27.9% 29.3% 28.6% 27.6% Transition/restructuring . . . . . . 0.0% 3.3% (1.5%) 3.9% Post-retirement benefit reversal . . 0.0% (4.5%) 0.0% (4.0%) ------------- ------------- ------------- ------------- Total operating expenses . . . . . . . 40.7% 41.0% 40.4% 40.0% Operating income (loss). . . . . . . . 10.5% 6.4% 9.2% 5.5% Interest expense . . . . . . . . . . . (0.9%) (2.0%) (1.1%) (2.2%) Interest income. . . . . . . . . . . . 0.2% 0.1% 0.1% 0.1% Other non-recurring charge . . . . . . 0.0% 8.2% 1.0% (3.4%) Other income (expense) - net . . . . . (0.2%) (0.6%) (0.6%) (0.8%) ------------- ------------- ------------- ------------- Income (loss) before provision . . . . 9.5% 12.1% 8.7% (0.7%) for income taxes Provision for income taxes . . . . . . 2.8% 2.0% 2.2% 1.8% ------------- ------------- ------------- ------------- Net income (loss). . . . . . . . . . . 6.8% 10.1% 6.5% (2.5%) ============= ============= ============= =============
PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On December 19, 1997, the United States filed suit against the Company in the United States District Court for the Eastern District of Virginia, alleging that the Company filed false and/or fraudulent claims in connection with the pricing of the Company's spare parts in 1991 under the Company's subcontract to Unisys Corporation as prime contractor for the U.S. Department of Commerce's Next Generation Weather Radar (NEXRAD) program. The government is seeking treble its unspecified damages, all allowable civil penalties, fees, and costs. The Company denies these allegations and intends to vigorously defend against these claims. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Matters as specified in the Company's Proxy Statement dated October 1, 1997 were considered and approved by the Company's stockholders at the Annual Meeting of Stockholders held on October 30, 1997. The results of such matters were as follows: Proposal 1: Election of Directors.
Total Votes --------------- Total Votes For Against or Withheld --------------- ------------------- Michael A. Brunner. . 41,357,476 286,243 Morton E. Handel. . . 41,327,688 316,051 C. Shelton James. . . 41,353,526 290,193 Michael F. Maguire. . 41,382,134 261,585 Richard P. Rifenburgh 41,312,969 330,750 E. Courtney Siegel. . 41,270,440 373,279
Proposal 2: Ratification of the selection by the Board of Directors of KPMG Peat Marwick LLP as the Company's independent auditors for the fiscal year ending June 30, 1998.
Total Votes Number of Total Votes For Against or Withheld Abstentions - --------------- ------------------- ----------- 41,343,021. . . 160,869 139,829
Proposal 3: Amendment of the Concurrent Computer Corporation 1991 Restated Stock Option Plan.
Total Votes Number of Total Votes For Against or Withheld Abstentions - --------------- ------------------- ----------- 34,951,374. . . 5,813,134 442,134
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K (a) Exhibits: (10) 1991 Restated Stock Option Plan (12) Statement on computation of per share earnings (27) Financial Data Schedule (b) Reports on Form 8-K. On January 6, 1998, the Company filed a Current Report on Form 8-K with respect to the lawsuit described in Part II, Item 1 of this Report on Form 10-Q. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report for the quarter ended December 31, 1997 to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 9, 1998 CONCURRENT COMPUTER CORPORATION By: /s/ E. Courtney Siegel ----------------------------- E. COURTNEY SIEGEL Chairman of the Board, President and Chief Executive Officer By: /s/ Daniel S. Dunleavy ----------------------------- DANIEL S. DUNLEAVY Executive Vice President, Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer) EX-10 2 1991 RESTATED STOCK OPTION PLAN As amended as of October 30, 1997 CONCURRENT COMPUTER CORPORATION EXHIBIT 10 1991 RESTATED STOCK OPTION PLAN SECTION 1. Purpose. The purpose of the Concurrent Computer Corporation ------- 1991 Restated Stock Option Plan is to advance the interests of Concurrent Computer Corporation (the "Company") by enabling officers, employees, non-employee directors and consultants of the Company and its Affiliates to participate in the Company's future and to enable the Company to attract and retain such persons by offering them proprietary interests in the Company. SECTION 2. Amendment and Restatement of Prior Plans. The Concurrent --------------------------------------------- Computer Corporation 1982 Stock Option Plan ("1982 Plan") and the Concurrent Computer Corporation 1984 Non-Qualified Common Stock Option Plan ("NSO Plan") are hereby amended and restated on a combined basis into the Plan. SECTION 3. Definitions. For purposes of the Plan, the following terms are ----------- defined as set forth below: a. "Affiliate" means a corporation or other entity controlled directly, or --------- indirectly through one or more intermediaries, by the Company and designated by the Committee as such. b. "Award" means an award granted to a Participant in the form of a Stock ----- Appreciation Right, Stock Option, or Restricted Stock, or any combination of the foregoing. c. "Board" means the Board of Directors of the Company. ----- d. "Cause" shall have the meaning set forth in Section 10. ----- e. "Change in Control" shall have the meaning set forth in Section 13. ------------------- f. "Code" means the Internal Revenue Code of 1986, as amended from time to ---- time, and any successor thereto. g. "Commission" means the Securities and Exchange Commission or any successor ---------- agency. h. "Committee" means the Committee referred to in Section 6. --------- i. "Common Stock" means common stock, $.01 per share par value, of the ------ ----- Company. --- j. "Company" means Concurrent Computer Corporation, a Delaware corporation. ------- k. "Disability" means permanent and total disability as determined under ---------- procedures established by the Committee for purposes of the Plan. - l. "Disinterested Person" shall mean a director who is not, during the one --------------------- year prior to service as an administrator of the Plan, or during such service, granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any of its affiliates, except as permitted by Rule 16b-3(c)(2), as promulgated by the Commission under the Exchange Act, or as such term is defined under any successor rule adopted by the Commission. m. "Exchange Act" means the Securities Exchange Act of 1934, as amended from ------------- time to time, and any successor thereto. n. "Fair Market Value" means the average, as of any given date, between the ------------------- highest and lowest reported closing bid and asked prices of the Stock on NASDAQ or the closing sale price as of any given date if the Stock is listed on a national securities exchange or quoted on the NASDAQ National Market System. If there is no regular public trading market for such Stock under circumstances specified above, the Fair Market Value of the Stock shall be determined by the Committee in good faith. o. "Incentive Stock Option" means any Stock Option intended to be and ------------------------ designated as an "incentive stock Option" within the meaning of Section 422 of the Code. p. "Non-Qualified Stock Option" means any Stock Option that is not an ---------------------------- Incentive Stock Option. q. "Normal Retirement" means retirement from active employment with the ------------------ Company or an Affiliate at or after age 65 or at such other age as may be specified by the Committee. r. "Participant" means an employee or non-employee director or consultant of ----------- the Company or of an Affiliate to whom an Award has been granted which has not terminated, expired or been fully exercised. s. "Plan" means the Concurrent Computer Corporation 1991 Restated Stock Option ---- Plan, as set forth herein and as hereinafter amended from time to time. t. "Restricted Period" means the period of time, which may be a single period ----------------- or multiple periods, during which Restricted Stock awarded to a Participant remains subject to the restrictions imposed on such Stock, as determined by the Committee. u. "Restrictions" means the restrictions and conditions imposed on Restricted ------------ Stock awarded to a Participant, as determined by the Committee, which must be satisfied in order for the Restricted Stock to vest, in whole or in part, in the Participant. v. "Restricted Stock" means an Award of Stock on which are imposed Restriction ---------------- Period(s) and Restrictions whereby the Participant's rights to full enjoyment of the Stock are conditioned upon the future performance of substantial services by any individual or are otherwise subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code, as amended. w. "Restricted Stock Agreement" means a written agreement between a ---------------------------- Participant and the Company evidencing an award of Restricted Stock. x. "Restricted Stock Award Date" means the date on which the Committee awarded --------------------------- Restricted Shares to the Participant. y. "Retirement" means Normal Retirement or early retirement if the Company's ---------- Profit Sharing and Savings Plan provides for same. z. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission granted ----------- under Section 16(b) of the Exchange Act, as amended from time to time. aa. "Stock" means the Common Stock. ----- bb. "Stock Appreciation Right" means a right granted under Section 11. -------------------------- cc. "Stock Option" or "Option" means an Option granted under Section 8 or 10. ------------ ------ dd. "Termination of Employment" means the termination of the Participant's --------------------------- employment with the Company and any Affiliate. A Participant employed by an Affiliate shall also be deemed to incur a Termination of Employment if the Affiliate ceases to be an Affiliate and the Participant does not immediately thereafter become an employee of the Company or another Affiliate. In addition, certain other terms used herein have definitions given to them in the first place in which they are used. SECTION 4. Effective Date. The effective date of the Plan shall be the -------------- date upon which the Plan is approved by the stockholders of the Company. SECTION 5. Stock Subject to Plan. The total number of shares of Stock --------------------- reserved and available for distribution pursuant to Awards under the Plan shall be 9,000,000 shares of Stock. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares. If any shares of Stock that have been Optioned cease to be subject to a Stock Option, if any shares of Stock that are subject to any Award are forfeited or if any Award otherwise terminates without a distribution being made to the Participant in the form of Stock, such shares shall again be available for distribution in connection with Awards under the Plan. In addition, any Stock purchased by a Participant upon exercise of an Option under the Plan which is subsequently repurchased by the Company pursuant to the terms of such Option may again be the subject of an Option under the Plan. In the event of any merger, reorganization, consolidation, recapitalization (including but not limited to the issuance of Stock or any securities convertible into Stock in exchange for securities of the Company), stock dividend, stock split or reverse stock split, extraordinary distribution with respect to the Stock or other similar change in corporate structure affecting the Stock, such substitution or adjustments shall be made in the aggregate number of shares reserved for issuance under the Plan, in the number and Option price of shares subject to outstanding Stock Options and Stock Appreciation Rights, and in the number of shares subject to other outstanding Awards granted under the Plan as may be determined to be appropriate by the Committee, in its sole discretion; provided, however, that the number of shares subject to any Award shall always be a whole number. Such adjusted Option price shall also be used to determine the amount payable by the Company upon the exercise of any Stock Appreciation Right associated with any Stock Option. SECTION 6. Administration. -------------- The Plan shall be administered by the Stock Award Committee ("Committee") of the Board or such other committee of the Board, composed of not less than three Disinterested Persons, each of whom shall be appointed by and serve at the pleasure of the Board. If at any time no Committee shall be in place, the functions of the Committee specified in the Plan shall be exercised by the Board. The Committee shall have plenary authority to grant Awards to officers, employees, non-employee directors and consultants of the Company or an Affiliate. Among other things, the Committee shall have the authority, subject to the terms of the Plan: (a) to select the officers, employees, non-employee directors and consultants to whom Awards may from time to time be granted; (b) to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights and Restricted Stock, or any combination thereof are to be granted hereunder; (c) to determine the number of shares of Stock to be covered by each Award granted hereunder; (d) to determine the terms and conditions of any Award granted hereunder (including, but not limited to, the Option price, any vesting restriction or limitation, any repurchase rights in favor of the Company and any vesting acceleration or forfeiture waiver regarding any Award and the shares of Stock relating thereto, based on such factors as the Committee shall determine); (e) to adjust the terms and conditions, at any time or from time to time, of any Award, including with respect to performance goals and measurements applicable to performance-based Awards pursuant to the terms of the Plan; (f) to determine under what circumstances an Award may be settled in cash or Stock; (g) if appropriate, to determine Fair Market Value; and (h) to substitute new Stock Options for previously granted Stock Options, including previously granted Stock Options having higher Option prices. The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan. The Committee may act only by a majority of its members then in office, except that the members thereof may authorize any one or more of their number or any officer of the Company to execute and deliver documents on behalf of the Committee. Any determination made by the Committee pursuant to the provisions of the Plan with respect to any Award shall be made in its sole discretion at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Participants. SECTION 7. Eligibility. ----------- Officers, employees, non-employee directors, and consultants of the Company and its Affiliates (but excluding members of the Committee other than as expressly provided by Section 8) who are responsible for or contribute to the management, growth and profitability of the business of the Company and its Affiliates are eligible to be granted Awards under the Plan. Any person who files with the Committee, in a form satisfactory to the Committee, a written waiver of eligibility to receive any Award under the Plan shall not be eligible to receive an Award under the Plan for the duration of the waiver. SECTION 8. Options Granted to Non-Employee Directors. --------------------------------------------- The provisions of this Section 8 govern the granting and terms of Options for any director of the Company who is not an employee of the Company or any of its Affiliates ("Eligible Director"). No Option may be granted to Eligible Directors other than pursuant to this Section 8. Upon the initial election of an Eligible Director to the Board, without further action by the Board or the stockholders of the Company, such Eligible Director shall be automatically granted Options to purchase 20,000 shares of stock (subject to adjustment in accordance with the provisions of Section 5 of the Plan). On the date of each annual meeting of stockholders of the Company, each Eligible Director who has previously been awarded an Option under the preceding sentence shall be granted automatically, without further action by the Board or the stockholders of the Company, Options to purchase 10,000 shares of stock (subject to adjustment in accordance with the provisions of Section 5 of the Plan). The purchase price per share deliverable upon the exercise of such Options under this Section 8 shall be 100% of the Fair Market Value of such shares as of the date of such Option. Each Option granted under this Section 8 shall become immediately exercisable and no Option shall be exercisable after the expiration of ten (10) years from the date of grant. Each Option granted pursuant to this Section 8 shall be exercisable during the period the Eligible Director remains a member of the Board and for a period of three (3) years following retirement, provided that only those Options exercisable at the date of retirement may be exercised during the period following retirement, and, provided further, that in no event shall any such Option be exercisable beyond the tenth (10th) anniversary of the date of grant. SECTION 9. Duration of the Plan. ----------------------- The Plan shall terminate ten (10) years from the effective date specified in Section 4 of the Plan, unless terminated earlier pursuant to Section 14 hereto, and no Options may be granted thereafter. SECTION 10. Stock Options. -------------- Stock Options granted under the Plan may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve. The Committee shall have the authority to grant any optionee Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options (in each case with or without Stock Appreciation Rights). Incentive Stock Options may be granted only to employees of the Company and its subsidiaries (within the meaning of Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. Stock Options shall be evidenced by Option agreements, the terms and provisions of which may differ. An Option agreement shall indicate on its face whether it is an agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a Stock Option shall occur on the date the Committee by resolution selects an individual to be a participant in any grant of a Stock Option, determines the number of shares of Stock to be subject to such Stock Option to be granted to such individual and specifies the terms and provisions of the Option agreement. The Company shall notify a Participant of any grant of a Stock Option, and a written Option agreement or agreements shall be duly executed and delivered by the Company to the Participant. Such agreement or agreements shall become effective upon execution by the participant. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered nor shall any discretion or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422. Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions as the Committee shall deem desirable: (a) Option Price. The Option price per share of Stock purchasable under an ------------- Option shall be determined by the Committee and set forth in the Option agreement, and shall not be less than the Fair Market Value of the Stock subject to the Option on the date of grant in the case of Incentive Stock Options and not less than 50% of the Fair Market Value of the Stock subject to the Option on the date of grant in the case of Non-Qualified Stock Options. (b) Option Term. The term of each Stock Option shall be fixed by the ------------ Committee, but no Incentive Stock Option shall be exercisable more than 10 years after the date of grant; and no Non-Qualified Stock Option shall be exercisable more than 10 years and one day after the date the Stock Option is granted. (c) Exercisability. Subject to Section 13, Stock Options shall otherwise be -------------- exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine. In addition, the Committee may at any time accelerate the exercisability of any Stock Option. (d) Method of Exercise. Subject to the provisions of this Section 10, Stock -------------------- Options may be exercised, in whole or in part, at any time during the Option period by giving written notice of exercise to the Company specifying the number of shares of Stock subject to the Stock Option to be purchased. Such notice shall be accompanied by payment in full of the purchase price by certified or bank check or such other instrument as the Company may accept. If approved by the Committee, payment in full or in part may also be made in the form of unrestricted Stock already owned by the optionee of the same class as the Stock subject to the Stock Option provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares of Stock of the same class as the Stock subject to the Stock Option shall be authorized only at the time the Stock Option is granted. An optionee shall have all of the rights of a stockholder of the Company holding the class or series of Stock that is subject to such Stock Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the optionee has given written notice of exercise, and has paid in full for such shares. In the discretion of the Committee, payment for any Stock subject to an Option may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The value of previously owned Stock exchanged in full or partial payment for the shares purchased upon the exercise of an Option shall be equal to the aggregate Fair Market Value of such shares on the date of the exercise of such Option. (e) Non-transferability of Options. No Stock Option shall be transferable ------------------------------ by the optionee other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee or by the guardian or legal representative of the optionee, it being understood that the terms "holder" and "optionee" include the guardian and legal representative of the optionee named in the Option agreement and any person to whom an Option is transferred by will or the laws of descent and distribution. (f) Termination by Death. If an optionee's employment terminates by reason -------------------- of death, any Stock Option held by such optionee may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Committee may determine, for a period of one year and one day (or such other period as the Committee may specify) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. (g) Termination by Reason of Disability. If any optionee's employment --------------------------------------- terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of termination or on such accelerated basis as the Committee may determine, for a period of one year and one day (or such shorter period as the Committee may specify at grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such one year and one day period (or such shorter period ending upon the expiration of the stated term of the Stock Option), any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such one year and one day period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of one year and one day from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option. (h) Other Termination. Unless otherwise determined by the Committee ------------------ and subject to the provisions of Section 13 of the Plan, if an optionee incurs a Termination of Employment for any reason other than death or Disability, any Stock Option held by such optionee shall thereupon terminate, except that such Stock Option, to the extent then exercisable, may be exercised for the lesser of three months and one day from the date of such Termination of Employment or the balance of such Stock Option's term if such Termination of Employment of the optionee is involuntary and without Cause. Unless otherwise determined by the Committee, for the purposes of the Plan "Cause" shall have the same meaning as that set forth in any employment or severance agreement, in effect between the Company and the Participant. Otherwise, it shall mean (1) the conviction of the optionee for committing a felony under Federal law or the law of the state in which such action occurred, (2) dishonesty in the course of fulfilling the optionee's employment duties or (3) willful and deliberate failure on the part of the optionee to perform his employment duties in any material respect. (i) Cashing Out of Option. On receipt of written notice of exercise, the --------------------- Committee may elect to cash out all or part of any Stock Option to be exercised by paying the optionee an amount, in cash or Stock, equal to the excess of the Fair Market Value of the Stock that is the subject of the Option over the Option price times the number of shares of Stock subject to the Option on the effective date of such cash out. Cash outs relating to Options held by optionees who are actually or potentially subject to Section 16(b) of the Exchange Act shall comply with the "window period" provisions of Rule 16b-3, to the extent applicable, and, in the case of cash outs of Non-Qualified Stock Options held by such optionees, the Committee may determine Fair Market Value with reference to the pricing provision of Section 11(b)(ii)(2). SECTION 11. Stock Appreciation Rights. --------------------------- (a) Grant and Exercise. Stock Appreciation Rights may be granted in ------------------ conjunction with all or part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. A Stock Appreciation Right shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option. A Stock Appreciation Right may be exercised by an optionee in accordance with Section 11(b) by surrendering the applicable portion of the related Stock Option in accordance with procedures established by the Committee. Upon such exercise and surrender, the optionee shall be entitled to receive an amount determined in the manner prescribed in Section 11(b). Stock Options which have been so surrendered shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised. (b) Terms and Conditions. Stock Appreciation Rights shall be subject to -------------------- such terms and conditions as shall be determined by the Committee, including the following: (i) Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Stock Options to which they relate are exercisabIe in accordance with the provisions of Section 10 and this Section 11; provided, however, that a Stock Appreciation Right shall not be exercisable during the first six months of its term by an optionee who is actually or potentially subject to Section 16(b) of the Exchange Act, except that this limitation shall not apply in the event of death or Disability of the optionee prior to the expiration of the six- month period. (ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to receive an amount in cash, shares of Stock or both equal in value to the excess of the Fair Market Value of one share of Stock over the option price per share specified in the related Stock Option multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment. In the case of Stock Appreciation Rights relating to Stock Options held by optionees who are actually or potentially subject to Section 16 (b) of the Exchange Act, the Committee: (1) may require that such Stock Appreciation Rights be exercised only in accordance with the applicable "window period" provisions of Rule 16b- 3; and (2) in the case of Stock Appreciation Rights relating to Non-Qualified Stock Options, may provide that the amount to be paid upon exercise of such Stock Appreciation Rights during a Rule 16b-3 "window period" shall be based on the highest mean sales price of the Stock on NASDAQ, or on such national securities exchange upon which the Stock may be traded, on any day during such "window period". (iii) Stock Appreciation Rights shall be transferable only when and to the extent that the underlying Stock Option would be transferable under Section 10 (e). (iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of determining the number of shares of Stock available for issuance under the Plan in accordance with Section 5 of the Plan, but only to the extent of the number of shares resulting from dividing the value of the Stock Appreciation Right at the time of exercise by the Fair Market Value of one share of Stock determined in accordance with this Section 11. SECTION 12. Terms of Restricted Stock Awards. ------------------------------------ Subject to and consistent with the provisions of the Plan, with respect to each Award of Restricted Stock to a Participant, the Committee shall determine: (a) the terms and conditions of the Restricted Stock Agreement between the Company and the Participant evidencing the Award; (b) the Restriction Period for all or a portion of the Award; (c) the Restrictions applicable to the Award, including, but not limited to, continuous employment with the Company for a specified term or the attainment of specific corporate, divisional or individual performance standards or goals, which Restriction Period and Restrictions may differ with respect to each Participant; (d) whether the Participant shall receive the dividends and other distributions paid with respect to an award of the Restricted Stock as declared and paid to the holders of the stock during the Restriction Period or shall be withheld by the Company for the account of the Participant until the Restriction Periods have expired or the Restrictions have been satisfied, and whether interest shall be paid on such dividends and other distributions withheld, and if so, the rate of interest to be paid; (e) the percentage of the Award which shall vest in the Participant in the event of death, Disability or Retirement prior to the expiration of the Restriction Period or the satisfaction of the Restrictions applicable to an award of Restricted Stock; and (f) notwithstanding the Restriction Period and the Restrictions imposed on the Restricted Shares, as set forth in a Restricted Stock Agreement, whether to shorten the Restriction Period or waive any Restrictions, if the Committee concludes that it is in the best interests of the Company to do so. Upon an award of Restricted Stock to a Participant, the stock certificate representing the Restricted Stock shall be issued and transferred to and in the name of the Participant, whereupon the Participant shall become a stockholder of the Company with respect to such Restricted Stock and shall be entitled to vote the Stock. Such stock certificates shall be held in custody by the Company, together with stock powers executed by the Participant in favor of the Company, until the Restriction Period expires and the Restrictions imposed on the Restricted Stock are satisfied. SECTION 13. Change of Control. ------------------- Upon the occurrence of an event of "Change of Control", as defined below and subject to such additional conditions and restrictions as the Committee may determine at the time of the granting of the Award: (a) any and all outstanding Options shall become immediately exercisable; (b) the Restriction Period and Restrictions imposed on the Restricted Stock shall lapse, and the Restricted Stock shall vest in the Participant to the extent determined by the Committee; and (c) within ten business days after the occurrence of a Change of Control, the certificates representing the Restricted Stock so vested, without any restrictions or legend thereon, other than as required by law, shall be delivered to the Participant, and any dividends and distributions paid with respect to the Restricted Stock which were escrowed during the Restriction Period and the earnings thereon shall be paid to the Participant. A "Change of Control" shall occur when, in addition to the occurrence of such other events as the Committee may determine at the time of the grant of the Award: (a) any "Person" (which term, when used in this Section 13, shall mean two or more persons acting as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the issuer or shall have such other meaning assigned to it in a successor provision to Section 13(d) of the Exchange Act) is or becomes the "Beneficial Owner" (which term, when used in this Section 13, shall include any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power which includes the power to vote or to direct the voting of such security; and/or (ii) investment power which includes the power to dispose or to direct the disposition of such security, or such other meaning assigned to it in a successor provision to Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of Voting Stock (as defined below) representing twenty percent or more of the votes entitled to be cast by the holders of all then outstanding Shares of the Company; or (b) the stockholders of the Company approve a definitive agreement or plan to merge or consolidate the Company with or into another corporation, or to sell, or otherwise dispose of, all or substantially all of the Company's property and assets, or to liquidate the Company or the business of the Company for which the Participant's services are principally performed is disposed of by the Company pursuant to a sale of assets (including stock of a subsidiary of the Company), a merger or consolidation or otherwise; or (c) the individuals who are Continuing Directors of the Company (as defined below) cease for any reason to constitute at least a majority of the Board of the Company. The term "Continuing Director" means (i) any member of the Board who is a member of the Board on February 1, 1992, or (ii) any person who subsequently becomes a member of the Board whose nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors. The term "Voting Stock" means all capital stock of the Company which by its terms may be voted on all matters submitted to stockholders of the Company generally. SECTION 14. Amendments and Termination. ---------------------------- The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would (i) impair the rights of an Award theretofore granted without the Participant's consent, except such an amendment made to cause the Plan to qualify for the exemption provided by Rule 16b-3, or (ii) disqualify the Plan from the exemption provided by Rule 16b-3. In addition, no such amendment shall be made without the approval of the Company's stockholders to the extent such approval is required by law or agreement. The Committee may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any holder without the holder's consent except such an amendment made to cause the Plan or Award to qualify for the exemption provided by Rule 16b-3. The Committee may also substitute new Stock Options for previously granted Stock Options, including previously granted Stock Options having higher Option prices. Subject to the above provisions, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments and to grant Awards which qualify for beneficial treatment under such rules without shareholder approval. SECTION 15. General Provisions. ------------------- (a) Nothing contained in the Plan shall prevent the Company or an Affiliate from adopting other or additional compensation arrangements for its employees. (b) The Plan shall not confer upon any employee any right to continued employment nor shall it interfere in any way with the right of the Company or an Affiliate to terminate the employment of any employee at any time. (c) No later than the date as of which an amount first becomes includible in the gross income of the Participant for Federal income tax purposes with respect to any Award under the Plan, the Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Stock, including Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant. (d) The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of the participant's death are to be paid. (e) Agreements entered into by the Company and Participants relating to Awards under the Plan, in such form as may be approved by the Committee from time to time, to the extent consistent with or permitted by the Plan shall control with respect to the terms and conditions of the subject Award. If any provisions of the Plan or any agreement entered into pursuant to the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of the Plan or the subject agreement. (f) The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware. SECTION 16. Certain Awards --------------- The approval by the stockholders of the Company of the Plan shall be deemed approval by said stockholders of the terms and conditions of the Awards (including but not limited to terms and conditions relating to the Option price, exercisability, vesting and acceleration of vesting, including acceleration upon a change of control as defined in the option agreements evidencing the Awards) previously made to non-employee Directors of the Company which are designated on Annex A hereto and ratification of the terms and conditions of the other Awards previously made which are designated on Annex A hereto. EX-12 3 STMNT PER SHARE EARNINGS
CONCURRENT COMPUTER CORPORATION EXHIBIT 12 BASIC AND DILUTED EARNINGS PER SHARE COMPUTATION THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1997 DECEMBER 31, 1997 ----------------- ------------------- FULLY FULLY BASIC DILUTED BASIC DILUTED ------- -------- -------- --------- Average outstanding shares: . . . . 47,021 47,021 46,599 46,599 Primary options outstanding . . . . - - - - Fully diluted options outstanding . - 1,079 - 765 ------- -------- -------- --------- Equivalent Shares . . . . . . . . . 47,021 48,100 46,599 47,364 ======= ======== ======== ========= Net income. . . . . . . . . . . . . $ 1,423 $ 1,423 $ 2,723 $ 2,723 Preferred stock dividends and accretion of preferred shares - - (18) (18) ------- -------- -------- --------- Net income available to common stockholders. . . . . . . . . . . $ 1,423 $ 1,423 $ 2,705 $ 2,705 ======= ======== ======== ========= Earnings per share. . . . . . . . . $ 0.03 $ 0.03 $ 0.06 $ 0.06 ======= ======== ======== =========
EX-27 4
5 This schedule contains summary financial information extracted from the Company's consolidated balance sheet at December 31, 1997 and Consolidated Statement of Operations for the six months ended December 31, 1997, and is qualified in its entirety by reference to such financial statements. 1000 6-MOS JUN-30-1997 JUL-01-1997 DEC-31-1997 0 0 20394 729 7262 33624 35403 22371 48033 23230 434 472 0 0 22323 48033 18625 41621 8793 20975 0 0 450 3631 908 2723 0 0 0 2723 .06 .06
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