-----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, F6mdXmHE/GWvcxG4OmfF1GXsLQDEwEPvuo9ZuDRD6/QsehMJbKzaQf6E8h/qal7R 9QALj2zUMsF5fgMDP/6Z3w== 0001015402-01-500928.txt : 20010507 0001015402-01-500928.hdr.sgml : 20010507 ACCESSION NUMBER: 0001015402-01-500928 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010504 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: 1623182 BUSINESS ADDRESS: STREET 1: 4375 RIVER GREEN PARKWAY CITY: DULUTH STATE: GA ZIP: 30097 BUSINESS PHONE: 6782584000 MAIL ADDRESS: STREET 1: 4375 RIVER GREEN PARKWAY CITY: DULUTH STATE: GA ZIP: 30097 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 10-Q 1 doc1.txt 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 March 31, 2001 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.) 4375 River Green Parkway, Duluth, GA 30096 Telephone: (678) 258-4000 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 April 30, 2001 was 55,057,413.
PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 -------- -------- -------- --------- Revenues: Product sales Real-time systems $ 6,028 $ 6,367 $17,477 $ 20,220 Video-on-demand systems 10,349 3,703 17,618 6,912 -------- -------- -------- --------- Total product sales 16,377 10,070 35,095 27,132 Service and other 5,704 6,950 17,831 22,494 -------- -------- -------- --------- Total 22,081 17,020 52,926 49,626 Cost of sales Real-time and video-on-demand systems 8,744 5,235 18,945 14,068 Service and other 3,127 3,995 9,518 12,375 -------- -------- -------- --------- Total 11,871 9,230 28,463 26,443 -------- -------- -------- --------- Gross margin 10,210 7,790 24,463 23,183 Operating expenses: Sales and marketing 4,059 4,728 12,198 14,978 Research and development 2,925 2,685 8,374 7,316 General and administrative 2,320 2,476 8,100 6,232 Cost of purchased in-process research and development - - - 14,000 Relocation and restructuring - - - 2,367 -------- -------- -------- --------- Total operating expenses 9,304 9,889 28,672 44,893 -------- -------- -------- --------- Operating income (loss) 906 (2,099) (4,209) (21,710) Interest income - net 60 53 77 136 Other non-recurring income - - - 761 Other expense - net (14) (19) (106) (124) -------- -------- -------- --------- Income (loss) before income taxes 952 (2,065) (4,238) (20,937) Provision for income taxes 150 150 450 450 -------- -------- -------- --------- Net income (loss) $ 802 $(2,215) $(4,688) $(21,387) ======== ======== ======== ========= Net income (loss) per share Basic $ 0.01 $ (0.04) $ (0.09) $ (0.42) ======== ======== ======== ========= Diluted $ 0.01 $ (0.04) $ (0.09) $ (0.42) ======== ======== ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -1-
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DOLLARS IN THOUSANDS) MARCH 31, JUNE 30, 2001 2000 ----------- ---------- Current assets: Cash and cash equivalents $ 5,998 $ 10,082 Accounts receivable - net 18,686 12,907 Inventories 9,155 5,621 Prepaid expenses and other current assets 2,270 2,381 ----------- ---------- Total current assets 36,109 30,991 Property, plant and equipment - net 10,437 11,314 Purchased developed computer software 1,631 1,773 Goodwill - net 2,707 2,943 Other long-term assets - net 337 1,019 ----------- ---------- Total assets $ 51,221 $ 48,040 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 13,877 $ 13,297 Deferred revenue 6,531 2,608 ----------- ---------- Total current liabilities 20,408 15,905 Other long-term liabilities 2,681 2,902 ----------- ---------- Total liabilities 23,089 18,807 Stockholders' equity: Common stock 550 538 Capital in excess of par value 130,386 125,740 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (100,643) (95,955) Treasury stock (58) (58) Accumulated other comprehensive loss (2,103) (1,032) ----------- ---------- Total stockholders' equity 28,132 29,233 ----------- ---------- Total liabilities and stockholders' equity $ 51,221 $ 48,040 =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -2-
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (DOLLARS IN THOUSANDS) NINE MONTHS ENDED MARCH 31, 2001 2000 -------- --------- OPERATING ACTIVITIES Net loss $(4,688) $(21,387) Adjustments to reconcile net loss to net cash used in operating activities: Write-off of in-process research and development - 14,000 Accrual of non-cash warrants 759 - Depreciation, amortization and other 3,701 4,143 Other non cash expenses 1,821 1,001 Changes in operating assets and liabilities (net of effect of business acquired): Accounts receivable (6,282) (2,326) Inventories (4,847) (523) Prepaid expenses and other current assets 111 (558) Other long-term assets 530 (483) Accounts payable and accrued expenses 580 1,941 Deferred revenue 3,923 (565) Other long-term liabilities (168) (133) -------- --------- Total adjustments to net loss 128 16,497 -------- --------- Net cash used in operating activities (4,560) (4,890) INVESTING ACTIVITIES Net additions to property, plant and equipment (2,467) (3,297) Proceeds from sale of facility - 1,223 Other - 76 -------- --------- Net cash used in investing activities (2,467) (1,998) FINANCING ACTIVITIES Net repayment of capital lease obligation (53) - Proceeds from sale and issuance of common stock 3,892 6,552 -------- --------- Net cash provided by financing activities 3,839 6,552 Effect of exchange rates on cash and cash equivalents (896) (443) -------- --------- Decrease in cash and cash equivalents (4,084) (779) Cash and cash equivalents at beginning of period 10,082 6,872 -------- --------- Cash and cash equivalents at end of period $ 5,998 $ 6,093 ======== ========= Cash paid during the period for: Interest $ 249 $ 163 ======== ========= Income taxes (net of refunds) $ 612 $ 230 ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. -3- CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Concurrent Computer Corporation ("Concurrent" or the "Company") 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 accounting principles generally accepted in the United States of America. 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 condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto 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. BASIC AND DILUTED NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each year. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares including common share equivalents. Under the treasury stock method, incremental shares representing the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued are included in the computation. The number of shares used in computing basic and diluted net income per share for the three months ended March 31, 2001 was 55,021,000 and 57,125,000, respectively. The number of shares used in computing basic and diluted net loss per share for the nine months ended March 31, 2001 was 54,558,000. Because of the losses for the nine months ended March 31, 2001, the common share equivalents were anti-dilutive and were not considered in the diluted earnings per share calculations. The number of shares used in computing basic and diluted net loss per share for the three months ended March 31, 2000 and the nine months ended March 31, 2000 was 53,503,000 and 51,335,000, respectively. Because of the losses for these periods, the common share equivalents were anti-dilutive and were not considered in the diluted earnings per share calculations. 3. 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) MARCH 31, JUNE 30, 2001 2000 --------- -------- Raw materials $ 7,102 $ 4,333 Work-in-process 1,461 947 Finished goods 592 341 --------- -------- $ 9,155 $ 5,621 ========= ======== -4- 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows: (DOLLARS IN THOUSANDS) MARCH 31, JUNE 30, 2001 2000 --------- -------- Accounts payable, trade $ 5,577 $ 4,484 Accrued payroll, vacation and other employee expenses 5,769 6,292 Other accrued expenses 2,531 2,521 --------- -------- $ 13,877 $ 13,297 ========= ======== 5. COMPREHENSIVE INCOME (LOSS) The Company's total comprehensive income (loss) is as follows: (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 ------ -------- -------- --------- Net income (loss) $ 802 $(2,215) $(4,688) $(21,387) Other comprehensive income (loss) (626) (436) (1,071) (329) ------ -------- -------- --------- Total comprehensive income (loss) $ 176 $(2,651) $(5,759) $(21,716) ====== ======== ======== =========
6. SEGMENT INFORMATION The Company operates its business in two divisions: real-time and video-on-demand ("VOD"). Its Real-Time Division is a leading provider of high-performance, real-time computer systems, solutions and software for commercial and government markets focusing on strategic market areas that include hardware-in-the-loop and man-in-the-loop simulation, data acquisition, industrial systems, and software and embedded applications. Its VOD Division is a leading supplier of digital video server systems to a wide range of industries serving a variety of markets, including the broadband/cable, hospitality, intranet/distance learning, and other related markets. Shared expenses are primarily allocated based on either revenues or headcount. There were no material intersegment sales or transfers. Corporate costs include costs related to the offices of the Chief Executive Officer, Chief Financial Officer, Investor Relations and other administrative costs including annual audit and tax fees, Board of Director fees and similar costs. -5-
The following summarizes the operating income (loss) by segment for the three month periods ended March 31, 2001 and March 31, 2000, respectively: (DOLLARS IN THOUSANDS) THREE MONTHS ENDED MARCH 31, 2001 (UNAUDITED) --------------------------------------------- REAL-TIME VOD CORPORATE TOTAL ---------- ----------- ----------- -------- Revenues: Product sales $ 6,028 $ 10,349 $ - $16,377 Service and other 5,704 - - 5,704 ---------- ----------- ----------- -------- Total 11,732 10,349 - 22,081 Cost of sales Systems 3,392 5,352 - 8,744 Service and other 3,127 - - 3,127 ---------- ----------- ----------- -------- Total 6,519 5,352 - 11,871 ---------- ----------- ----------- -------- Gross margin 5,213 4,997 - 10,210 Operating expenses Sales and marketing 1,913 2,027 119 4,059 Research and development 880 2,045 - 2,925 General and administrative 495 513 1,312 2,320 ---------- ----------- ----------- -------- Total operating expenses 3,288 4,585 1,431 9,304 ---------- ----------- ----------- -------- Operating income (loss) $ 1,925 $ 412 $ (1,431) $ 906 ========== =========== =========== ======== THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED) ---------------------------------------------- REAL-TIME VOD CORPORATE TOTAL ---------- ----------- ----------- -------- Revenues: Product sales $ 6,367 $ 3,703 $ - $10,070 Service and other 6,950 - - 6,950 ---------- ----------- ----------- -------- Total 13,317 3,703 - 17,020 Cost of sales Systems 2,921 2,314 - 5,235 Service and other 3,995 - - 3,995 ---------- ----------- ----------- -------- Total 6,916 2,314 - 9,230 ---------- ----------- ----------- -------- Gross margin 6,401 1,389 - 7,790 Operating expenses Sales and marketing 2,737 1,903 88 4,728 Research and development 1,094 1,591 - 2,685 General and administrative 446 290 1,740 2,476 ---------- ----------- ----------- -------- Total operating expenses 4,277 3,784 1,828 9,889 ---------- ----------- ----------- -------- Operating income (loss) $ 2,124 $ (2,395) $ (1,828) $(2,099) ========== =========== =========== ========
-6-
The following summarizes the operating income (loss) by segment for the nine month periods ended March 31, 2001 and March 31, 2000, respectively: (DOLLARS IN THOUSANDS) NINE MONTHS ENDED MARCH 31, 2001 (UNAUDITED) -------------------------------------------- REAL-TIME VOD CORPORATE TOTAL ---------- -------- ----------- -------- Revenues: Product sales $ 17,477 $17,618 $ - $35,095 Service and other 17,831 - - 17,831 ---------- -------- ----------- -------- Total 35,308 17,618 - 52,926 Cost of sales Systems 9,284 9,661 - 18,945 Service and other 9,518 - - 9,518 ---------- -------- ----------- -------- Total 18,802 9,661 - 28,463 ---------- -------- ----------- -------- Gross margin 16,506 7,957 - 24,463 Operating expenses Sales and marketing 5,700 6,059 439 12,198 Research and development 2,553 5,821 - 8,374 General and administrative 1,269 1,306 5,525 8,100 ---------- -------- ----------- -------- Total operating expenses 9,522 13,186 5,964 28,672 ---------- -------- ----------- -------- Operating income (loss) $ 6,984 $(5,229) $ (5,964) $(4,209) ========== ======== =========== ========
NINE MONTHS ENDED MARCH 31, 2000 (UNAUDITED) REAL-TIME VOD CORPORATE TOTAL ---------- --------- ----------- --------- Revenues: Product sales $ 20,220 $ 6,912 $ - $ 27,132 Service and other 22,494 - - 22,494 ---------- --------- ----------- --------- Total 42,714 6,912 - 49,626 Cost of sales Systems 9,316 4,752 - 14,068 Service and other 12,375 - - 12,375 ---------- --------- ----------- --------- Total 21,691 4,752 - 26,443 ---------- --------- ----------- --------- Gross margin 21,023 2,160 - 23,183 Operating expenses Sales and marketing 9,087 5,676 215 14,978 Research and development 3,269 4,047 - 7,316 General and administrative 1,459 888 3,885 6,232 Cost of purchased in-process research and development - 14,000 - 14,000 Relocation and restructuring 1,208 1,159 - 2,367 ---------- --------- ----------- --------- Total operating expenses 15,023 25,770 4,100 44,893 ---------- --------- ----------- --------- Operating income (loss) $ 6,000 $(23,610) $ (4,100) $(21,710) ========== ========= =========== =========
-7- 7. RESTRUCTURING AND RELOCATION In August 1999, the Company relocated its Corporate Headquarters and its VOD Division to Duluth, Georgia. In connection with this move, the Company incurred employee relocation costs of $769,000, which is recorded as an operating expense in the condensed consolidated statement of operations for the nine months ended March 31, 2000. In addition to the VOD Division relocation discussed above, management decided in the first quarter of fiscal year 2000 to "right-size" the Real-Time Division to bring its expenses in line with its anticipated revenues. In connection with these events, the Company recorded a $1.6 million operating expense in the condensed consolidated statement of operations for the nine months ended March 31, 2000. This expense represents workforce reductions of approximately 38 employees in all areas of the Company. 8. SALE OF SUBSIDIARY On September 8, 1999, the Company entered into an agreement to sell the stock of Concurrent Vibrations, a wholly owned subsidiary of Concurrent Computer Corporation S.A., to Data Physics, Inc. The transaction, which had an effective date of August 31, 1999, resulted in a gain of $761,000. This gain is recorded in other non-recurring items in the condensed consolidated statement of operations for the nine months ended March 31, 2000. 9. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by Statement No. 137 and No. 138, which provides a comprehensive and consistent standard for the recognition and measurement of derivatives and hedging activities. Derivative instruments will be recognized in the balance sheet at fair value, and changes in the fair values of such instruments must be recognized currently in earnings unless specific hedge accounting criteria are met. SFAS 133 was effective for the Company on July 1, 2000. As the Company does not have any hedging and derivative positions, adoption of these pronouncements did not have a material effect on the Company's financial position. In December 1999, the SEC issued Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. The Company will adopt SAB 101 as required in the fourth fiscal quarter of 2001. The adoption of this pronouncement is not expected to have a material impact on the operations of the Company. 10. ACQUISITION OF VIVID TECHNOLOGY On October 28, 1999, the Company acquired Vivid Technology, Inc. ("Vivid") for total consideration of $19.8 million, consisting of 2,233,689 shares of common stock valued at $16.8 million, $0.2 million of acquisition costs, and 378,983 shares reserved for future issuance upon exercise of stock options with a value of $2.8 million. The acquisition was treated as a purchase for accounting purposes, and, accordingly, the assets and liabilities were recorded based on their fair values at the date of the acquisition. The purchase price allocation and the respective useful lives of the intangible assets are as follows:
(DOLLARS IN THOUSANDS) Allocation Life ----------- -------- Working Capital $ 72 Fixed Assets 257 Other Long-Term Assets 13 Developed Completed Computer Software Technology 1,900 10 yrs Employee Workforce 400 3 yrs Goodwill 3,153 10 yrs In-Process Computer Software Technology 14,000
-8- Amortization of intangible assets is on a straight line basis over the assets' estimated useful life. Vivid's operations are included in the condensed consolidated statements of operations from the date of acquisition. At the acquisition date, Vivid had one product under development that had not demonstrated technological or commercial feasibility. This product was the Vivid interactive video-on-demand integrated system. The in-process technology has no alternative use in the event that the proposed product does not prove to be feasible. This development effort falls within the definition of In-Process Research and Development ("IPR&D") contained in Statement of Financial Accounting Standards ("SFAS") No. 2 and was expensed in the nine months ended March 31, 2000 as a one-time charge. Consistent with the Company's policy for internally developed software, the Company determined the amounts to be allocated to IPR&D based on whether technological feasibility had been achieved and whether there was any alternative future use for the technology. As of the date of the acquisition, the Company concluded that the IPR&D had no alternative future use after taking into consideration the potential for usage of the software in different products, resale of the software and internal usage. The following unaudited proforma information presents the results of operations of the Company as if the acquisition had taken place on July 1, 1999 and includes the one-time charge related to the write-off of the purchased IPR&D of $14 million in the nine month period ended March 31, 2000: (DOLLARS IN THOUSANDS) NINE MONTHS ENDED MARCH 31, 2000 ----------------- Revenues $ 49,980 ================= Net loss $ (22,083) ================= Basic net loss per share $ (0.42) ================= Diluted net loss per share $ (0.42) ================= 11. Issuance of Non-Cash Warrants On March 29, 2001, the Company entered into a definitive purchase agreement with Comcast Cable providing for the purchase of VOD equipment. In connection with the purchase agreement, the Company issued warrants to purchase 50,000 shares of its common stock, exercisable at $5.196 per share over a four year term. The exercise price is subject to adjustment for stock splits, combinations, stock dividends, mergers, and other similar recapitalization events. The exercise price is also subject to adjustment for issuance of additional equity securities at a purchase price less than the then current fair market value of the Company's common stock. In addition, the Company is generally obligated to issue new warrants to purchase shares of its common stock to Comcast at the end of each quarter through March 31, 2004, based upon performance goals measured by the number of subscribers to Comcast's cable service with the ability to utilize the Company's VOD systems. The Company will also issue additional warrants to purchase shares of its common stock, if at the end of any quarter the total number of Comcast cable subscribers with the ability to utilize its VOD system exceeds specified threshold levels. Based upon the information currently available, the Company does not expect the warrants to be issued to Comcast to exceed 1% of its outstanding shares of common stock. The exercise price of warrants to be issued to Comcast will equal the average closing price of the Company's common stock for the 30 trading days prior to the applicable warrant issuance date and will be exercisable over a four-year term. -9- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES The following table sets forth selected operating data as a percentage of net sales for certain items in the Company's consolidated statements of operations for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2001 2000 2001 2000 -------- -------- -------- -------- (Unaudited) (Unaudited) Net sales: Product sales (% of total sales): Real-time systems 27.3% 37.4% 33.0% 40.7% Video-on-demand systems 46.9 21.8 33.3 13.9 -------- -------- -------- -------- Total product sales 74.2 59.2 66.3 54.7 Service and other 25.8 40.8 33.7 45.3 -------- -------- -------- -------- Total 100.0 100.0 100.0 100.0 Cost of sales (% of respective sales category): Real-time and video-on-demand systems 53.4 52.0 54.0 51.9 Service and other 54.8 57.5 53.4 55.0 -------- -------- -------- -------- Total 53.8 54.2 53.8 53.3 -------- -------- -------- -------- Gross margin 46.2 45.8 46.2 46.7 Operating expenses: Sales and marketing 18.4 27.8 23.0 30.2 Research and development 13.2 15.8 15.8 14.7 General and administrative 10.5 14.5 15.3 12.6 Cost of purchased in-process research and - - - - Development - - - 28.2 Relocation and restructuring - - - 4.8 -------- -------- -------- -------- Total operating expenses 42.1 58.1 54.2 90.5 -------- -------- -------- -------- Operating income (loss) 4.1 (12.3) (8.0) (43.7) Interest income - net 0.3 0.3 0.1 0.3 Other non-recurring income - - - 1.5 Other expense - net (0.1) (0.1) (0.2) (0.2) -------- -------- -------- -------- Income (loss) before income taxes 4.3 (12.1) (8.0) (42.2) Provision for income taxes 0.7 0.9 0.9 0.9 -------- -------- -------- -------- Net income (loss) 3.6% (13.0)% (8.9)% (43.1)% ======== ======== ======== ========
-10- RESULTS OF OPERATIONS THE QUARTER ENDED MARCH 31, 2001 COMPARED TO THE QUARTER ENDED MARCH 31, 2000 Product Sales. Total product sales were $16.4 million for the three months ended March 31, 2001, an increase of $6.3 million or 62.6% from $10.1 million for the three months ended March 31, 2000. Sales of Real-Time products decreased slightly to $6.0 million in the three month period ended March 31, 2001 from $6.4 million in the three month period ended March 31, 2000, continuing the gradual decline in sales of real-time computer systems. Sales of VOD products increased to $10.3 million in the three month period ended March 31, 2001 from $3.7 million in the three month period ended March 31, 2000. The increase is primarily due to sales of video systems to a new customer, Comcast Cable Communications, in connection with their planned roll-out of Video-on-Demand. Service and Other Sales. Real-time service revenues decreased to $5.7 million or 17.9% for the three months ended March 31, 2001 from $7.0 million for the three months ended March 31, 2000. The decline resulted from customers switching from proprietary systems to Concurrent's open systems which are less expensive to maintain, and the cancellation of other proprietary computer maintenance contracts as the machines are removed from service. Gross Margin. Gross margin increased 31.1% to $10.2 million for the three months ended March 31, 2001 from $7.8 million for the three months ended March 31, 2000. The gross margin as a percentage of sales increased to 46.2% in the three month period ended March 31, 2001 compared to 45.8% in the three month period ended March 31, 2000. The gross margin on real-time service revenue increased to 45.2% for the three months ended March 31, 2001 compared to 42.5% for the three months ended March 31, 2000, due to cost reduction efforts made in previous quarters. The gross margin on sales of VOD products increased to 48.3% in the three month period ended March 31, 2001 from 37.5% in the three month period ended March 31, 2000 principally due to cost efficiencies in the Company's new MediaHawk Model 2000 server solution and increased economies of scale. Sales and Marketing. Sales and marketing expenses decreased as a percentage of sales to 18.4% for the three months ended March 31, 2001 as compared to 27.8% for the three months ended March 31, 2000. These expenses decreased to $4.1 million in the three month period ended March 31, 2001 from $4.7 million in the three month period ended March 31, 2000 primarily due to the decrease in the Real-Time Division's worldwide sales and marketing personnel. Research and Development. Research and development expenses decreased as a percentage of sales to 13.2% in the three month period ended March 31, 2001 from 15.8% in the three month period ended March 31, 2000. These expenses increased to $2.9 million in the three month period ended March 31, 2001 from $2.7 million in the three month period ended March 31, 2000 primarily due to the growth in the VOD Division research and development personnel. This increase was partially offset by cost reduction efforts in the Real-Time Division. General and Administrative. General and administrative expenses decreased to 10.5% of sales in the three month period ended March 31, 2001 from 14.5% in the three month period ended March 31, 2000. These expenses decreased to $2.3 million in the three month period ended March 31, 2001 from $2.5 million in the three month period ended March 31, 2000 primarily due to a non-recurring $0.7 million severance charge recorded in the three month period ended March 31, 2000. This decrease was partially offset by an increase in the provision for bad debts. Income Taxes. The Company recorded income tax expense for foreign subsidiaries of $150,000 in each of the three month periods ended March 31, 2001 and March 31, 2000. The Company had pre-tax income of $1.0 million in the three month period ended March 31, 2001 and a pre-tax loss of $2.1 million in the three month period ended March 31, 2000. -11- Net Income (Loss). The Company recorded net income of $0.8 million or basic and diluted earnings per share of $0.01 for the three months ended March 31, 2001 compared to a net loss of $2.2 million or basic and diluted loss per share of $0.04 for the three months ended March 31, 2000. THE NINE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE NINE MONTHS ENDED MARCH 31, 2000 Product Sales. Total product sales were $35.1 million for the nine months ended March 31, 2001, an increase of $8.0 million or 29.3% from $27.1 million for the nine months ended March 31, 2000. Sales of VOD products increased to $17.6 million in the nine month period ended March 31, 2001 from $6.9 million in the nine month period ended March 31, 2000. The increase in VOD product sales was primarily due to higher sales of video systems to domestic cable operators, including Time Warner, Comcast Cable Communications and Cox Communications. Sales of Real-Time products decreased to $17.5 million in the nine month period ended March 31, 2001 from $20.2 million in the nine month period ended March 31, 2000 continuing the decline in sales of real-time computer systems resulting from the move by our customers to less expensive off the shelf systems from the legacy proprietary systems sold by Concurrent and decreased governmental spending outside of the United States. Service and Other Sales. Real-time service revenues decreased to $17.8 million or 20.7% for the nine months ended March 31, 2001 from $22.5 million for the nine months ended March 31, 2000. The decline resulted from customers switching from proprietary systems to Concurrent's open systems which are less expensive to maintain, and the cancellation of other proprietary computer maintenance contracts as the machines are removed from service. Gross Margin. Gross margin increased 5.5% to $24.5 million for the nine months ended March 31, 2001 from $23.2 million for the nine months ended March 31, 2000. The gross margin as a percentage of sales decreased to 46.2% in the nine month period ended March 31, 2001 from 46.7% in the nine month period ended March 31, 2000. The gross margin on real-time service revenue increased to 46.6% for the nine months ended March 31, 2001 compared to 45.0% for the nine months ended March 31, 2000, due to cost reduction efforts made in previous quarters. The gross margin on sales of VOD products increased to 45.2% in the nine month period ended March 31, 2001 from 31.3% in the nine month period ended March 31, 2000 principally due to cost efficiencies in the Company's new MediaHawk Model 2000 server solution and increased economies of scale. Sales and Marketing. Sales and marketing expenses decreased as a percentage of sales to 23.0% for the nine months ended March 31, 2001 as compared to 30.2% for the nine months ended March 31, 2000. These expenses decreased to $12.2 million in the nine month period ended March 31, 2001 from $15.0 million in the nine month period ended March 31, 2000 primarily due to the decrease in the Real-Time Division's worldwide sales and marketing personnel which was partially offset by the increase in the number of worldwide sales and marketing personnel and related activities in the Company's VOD Division. Research and Development. Research and development expenses increased as a percentage of sales to 15.8% in the nine month period ended March 31, 2001 from 14.7% in the nine month period ended March 31, 2000. These expenses increased to $8.4 million in the nine month period ended March 31, 2001 from $7.3 million in the nine month period ended March 31, 2000 primarily due to the growth in the VOD Division research and development personnel and the additional development personnel as a result of the acquisition of Vivid in October of 1999. These increases were partially offset by cost reduction efforts in the Real-Time Division. General and Administrative. General and administrative expenses increased to 15.3% of sales in the nine month period ended March 31, 2001 from 12.6% in the nine month period ended March 31, 2000. These expenses increased to $8.1 million in the nine month period ended March 31, 2001 from $6.2 million in the nine month period ended March 31, 2000 primarily due to a $1.2 million severance charge recorded in the nine month period ended March 31, 2001 related to the resignation of the Company's Chief Executive Officer in October, 2000 as well as increases in the provision for bad debts and accounting related fees. These increases were partially offset by a $0.7 million severance charge recorded in the nine month period ended March 31, 2000. -12- Other. Included in operating expenses in the nine month period ended March 31, 2000 is a $14.0 million non-cash charge for the write-off of in-process research and development in connection with the acquisition of Vivid and a $2.4 million restructuring and relocation provision for personnel reduction costs in the Real-Time Division and the relocation of the corporate headquarters and VOD Division offices to Duluth, Georgia. Income Taxes. The Company recorded income tax expense for foreign subsidiaries of $450,000 in each of the nine month periods ended March 31, 2001 and March 31, 2000 on pre-tax losses of $4.2 million and $20.9 million, respectively, due to the inability to recognize the future tax benefit of the respective period's net operating loss. Net Loss. The company recorded a net loss of $4.7 million or basic and diluted loss per share of $0.09 for the nine months ended March 31, 2001 compared to a net loss of $21.4 million or basic and diluted loss per share of $0.42 for the nine months ended March 31, 2000. ACQUISITION OF VIVID TECHNOLOGY, INC. On October 28, 1999, the Company acquired Vivid Technology, Inc., a former competitor in the video-on-demand industry. Vivid's interactive stand-alone video-on-demand system ("the Vivid VOD system") was specifically being designed to integrate with the most popular digital set-top boxes used by General Instruments, a division of Motorola. The Vivid VOD system was also expected to be compatible with the digital set-top boxes used by other leading cable operators such as Philips, Panasonic and Sony. The Vivid VOD system was based on a cluster of Microsoft Windows NT computers with proprietary hardware and software added to provide high video streaming capacity and fault tolerance. The Vivid VOD system was also being designed to eventually provide VOD service including pause, rewind, and fast forward VCR-like functions. The Vivid VOD system would also provide necessary back office support software for video content management, video selection graphical user interface, subscriber management, purchase management, billing interfaces, content provider account settlement and consumer marketing feedback. In addition, the Vivid VOD system was being designed to support other interactive applications such as on-line banking, home shopping, merchandising and on-demand/addressable advertising. The in-process computer software technology was estimated to be 80% complete at the date of acquisition and was estimated to cost an additional $650,000 to complete the VOD system technology project in December of 2000. A variety of tasks were yet to be completed which would be required in order for the Vivid VOD system to be deployed on a commercial basis: - The Content Manager, which is used to load movies from studios, did not have the functionality necessary to create a royalty payment affidavit which is required for the cable operators to pay the required royalties to the movie studios. Also, the Content Manager, which had been implemented using a SQL data base, needed to be ported to other relational data bases such as Oracle to support high end data base applications. - The Resource Manager had been alpha tested; however, an advanced beta test had not been completed which would validate its ability to scale up to the required number of subscribers or connections in an actual commercial deployment. - The Subscriber Manager, which had been implemented using a SQL data base, needed to be ported to other relational data bases such as Oracle to support high end data base applications. - The Set Top VOD application needed to be tested under advanced beta test conditions to ensure that the back channel key stroke system performance can fulfill operational requirements. -13- - The Hub Server, or video pump, needed to be tested under full load in an operational environment to ensure stability over an extended period of time. The random conditions resulting from the in home use of tens of thousands of subscribers can only be simulated in an advanced beta test which has yet to be performed. The method used to allocate the purchase consideration to IPR&D was the modified income approach. Under the income approach, fair value reflects the present value of the projected free cash flows that will be generated by the IPR&D project and that is attributable to the acquired technology, if successfully completed. The modified income approach takes the income approach, modified to include the following factors: - Analysis of the stage of completion of each project; - Exclusion of value related to research and development yet-to-be completed as part of the on-going IPR&D projects; and - The contribution of existing products/technologies. The projected revenues used in the income approach were based upon the incremental revenues likely to be generated upon completion of the project and the beginning of commercial sales of the Vivid VOD system, as estimated by Company management to begin in the quarter ending December 31, 2000. The projections assumed that the Vivid VOD system would be successful and the products' development and commercialization were as set forth by management. The discount rate used in this analysis was an after-tax rate of 28%. Subsequent to the acquisition date, the Company decided to merge the Vivid VOD system and the Concurrent VOD system into one standard VOD platform. The Company began shipping the new hardware platform at the end of the quarter ended September 30, 2000. Initially, the new hardware platform has two software alternatives, one which is compatible with digital set-top boxes used by General Instruments, using core software technology developed by and purchased from Vivid, and one which is compatible with digital set-top boxes used by Scientific-Atlanta, Inc. The merger of these two software solutions into one standard solution is expected to be complete by the end of calendar 2001. -14- LIQUIDITY AND CAPITAL RESOURCES The liquidity of the Company is dependent on many factors, including sales volume, operating profit, debt service and the efficiency of asset use and turnover. The future liquidity of the Company will be affected by, among other things: - The actual versus anticipated decline in sales of real-time proprietary systems and service maintenance revenue; - Revenue growth from VOD systems; - Ongoing cost control actions and expenses, including for example, research and development and capital expenditures; - The margins on the VOD and real-time businesses; - Timing of product shipments which occur primarily during the last month of the quarter; - 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 borrowing base of the revolving credit facility; and - The number of countries in which the Company operates, 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 used cash of $4.6 million and $4.9 million in operating activities during the nine month periods ended March 31, 2001 and March 31, 2000, respectively, primarily due to the losses generated by the Company's VOD business. On November 3, 2000, the Company entered into a $15 million revolving credit facility with Wachovia Bank which expires June 30, 2002 and replaces the previous credit facility which expired on October 31, 2000. Borrowings under the facility are limited to 85% of eligible accounts receivable and bear interest at between prime and prime plus .75% or between LIBOR plus 2.25% and LIBOR plus 3.00% depending on the Company's ratio of Consolidated Funded Debt (as defined in the credit facility) to EBITDA. The Company has pledged substantially all of its assets as collateral for the facility. No borrowings were outstanding at March 31, 2001 under the credit facility. The amount of cash available to borrow under the credit facility was approximately $11.2 million at March 31, 2001. The credit facility contains financial covenants which limit the ratio of total liabilities to tangible net worth and which require the Company to achieve on a quarterly basis minimum EBITDA in each of the Company's operating divisions. The Company was in compliance with these covenants at March 31, 2001. The Company invested $2.5 and $3.3 million in property, plant and equipment during the nine month periods ended March 31, 2001 and March 31, 2000, respectively. Current year capital expenditures primarily relate to computer equipment and development equipment for the Company's VOD Division. The Company received $3.9 million in proceeds from the issuance of common stock to employees and directors who exercised stock options during the nine month period ended March 31, 2001 compared to $6.6 million during the nine month period ended March 31, 2000. At March 31, 2001, the Company's working capital was $15.7 million, and the Company did not have any material commitments for capital expenditures. The Company believes that existing cash balances, the available credit facility and funds generated by operations will be sufficient to meet the Company's anticipated working capital and capital expenditure requirements for the next twelve months. On March 29, 2001, the Company entered into a definitive purchase agreement with Comcast Cable providing for the purchase of VOD equipment. In connection with the purchase agreement, the Company issued warrants to purchase 50,000 shares of its common stock, exercisable at $5.196 per share over a four year term. The exercise price is subject to adjustment for stock splits, combinations, stock dividends, mergers, and other similar recapitalization events. The exercise price is also subject to adjustment for issuances of additional equity securities at a purchase price less than the then current fair -15- market value of the Company's common stock. In addition, the Company is generally obligated to issue new warrants to purchase shares of its common stock to Comcast at the end of each quarter through March 31, 2004, based upon performance goals measured by the number of subscribers to Comcast's cable service with the ability to utilize the Company's VOD systems. The Company will also issue additional warrants to purchase shares of its common stock, if at the end of any quarter the total number of Comcast cable subscribers with the ability to utilize its VOD system exceeds specified threshold levels. Based upon the information currently available, the Company does not expect the warrants to be issued to Comcast to exceed 1% of its outstanding shares of common stock. The exercise price of warrants to be issued to Comcast will equal the average closing price of the Company's common stock for the 30 trading days prior to the applicable warrant issuance date and will be exercisable over a four-year term. -16- CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made in this report, and other written or oral statements made by or on behalf of Concurrent or its representatives, may constitute "forward-looking statements" within the meaning of the federal securities laws. When used in this report, the words "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Statements regarding future events and developments and Concurrent's future performance, as well as its expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. The risks and uncertainties which could affect the Company's performance or results include, without limitation: - changes in product demand; - economic conditions; - various inventory risks due to changes in market conditions; - uncertainties relating to the development and ownership of intellectual property; - uncertainties relating to the ability of the Company and other companies to enforce their intellectual property rights; - the pricing and availability of equipment, materials and inventories; - the limited operating history of the VOD segment; - the concentration of the Company's customers; - failure to effectively manage growth; - delays in testing and introductions of new products; - rapid technology changes; - the highly competitive environment in which the Company operates; - the entry of new well-capitalized competitors into the Company's markets and other risks and uncertainties. Other important risk factors are discussed in Item 5 of Concurrent's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and other documents as filed from time to time with the Securities and Exchange Commission. These statements are based on current expectations and speak only as of the date of such statements. Concurrent undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. -17- ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates. The Company is exposed to the impact of interest rate changes on its short-term cash investments, which are backed by U.S. government obligations, and other investments in respect of institutions with the highest credit ratings, all of which have maturities of 3 months or less. These short-term investments carry a degree of interest rate risk. The Company believes that the impact of a 10% increase or decline in interest rates would not be material to its investment income. The Company conducts business in the United States and around the world. The most significant foreign currency transaction exposures relate to the United Kingdom, those Western European countries that use the Euro as a common currency, Australia and Japan. The Company does not hedge against fluctuations in exchange rates and believes that a hypothetical 10% upward or downward fluctuation in foreign currency exchange rates relative to the United States dollar would not have a material impact on future earnings, fair values, or cash flows. -18- PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: (10.1) Video-On-Demand Purchase Agreement, dated March 29, 2001, by and between Concurrent Computer Corporation and Comcast Cable Communications of Pennsylvania, Inc. (portions of the exhibit have been omitted pursuant to a request for confidential treatment) (11) Statement on computation of per share earnings (b) Reports on Form 8-K. None. -19- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report for the quarter ended March 31, 2001 to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 2, 2001 CONCURRENT COMPUTER CORPORATION By: /s/ Steven R. Norton ------------------------- Steven R. Norton Chief Financial Officer (Principal Financial and Accounting Officer) -20- EX-10.1 2 doc2.txt CONFIDENTIAL TREATMENT REQUESTED Portions marked with "****" have been omitted and filed separately with the Securities and Exchange Commission. VIDEO-ON-DEMAND PURCHASE AGREEMENT This Video-On-Demand Purchase Agreement (this "Agreement") is made this 29th day of March, 2001, by and between Concurrent Computer Corporation, a Delaware corporation ("Concurrent"), having a place of business at 4375 RiverGreen Parkway, Duluth, Georgia 30096, and Comcast Cable Communications of Pennsylvania, Inc., a Pennsylvania corporation ("Comcast") having a place of business at 1500 Market Street, Philadelphia, PA 19102 setting forth the terms and conditions governing the sale and licensing from time to time by Concurrent to Comcast of the VOD Products (defined below). 1. VOD PRODUCTS; ORDERING PROCESS AND PROCEDURE 1.1 Attachment A of this Agreement identifies Concurrent's (i) video-on-demand ("VOD") equipment (the "Equipment") and (ii) VOD business management software including, but not limited to, all required third party software (the "Software") (collectively, the Equipment and Software described in (i) and (ii) are the "VOD Products"). The VOD Products include all equipment required to design, install, operate and maintain a fully functional, highly reliable commercial Concurrent VOD system. Complete system configurations and detailed bills of materials will be determined on a system specific basis and included in the terms of an Order (defined below). 1.2 All purchases by Comcast hereunder shall be pursuant to a purchase order issued by Comcast and accepted by Concurrent ("Order"). Concurrent shall accept an Order by written acknowledgment or by commencement of performance. Comcast may issue Orders by mail or by facsimile. All Orders shall be subject to the terms of this Agreement, whether or not this Agreement is referenced in such Order. No other terms shall apply to an Order, unless agreed upon by both parties in writing. 2. PRICES 2.1 All prices and license fees listed on Attachment B are for delivery FOB Ft. Lauderdale, Florida (the "FOB Point") and are net of all taxes, duties and other governmental charges. All transportation, rigging and draying charges shall be paid by Comcast. There shall be added to the prices and license fees all taxes, duties and other governmental charges, however designated, levied or based on the sale or license of the VOD Products or their use, including, without limitation, state and local privilege or excise taxes based on gross revenue and import or export duties, and any taxes, duties or other governmental charges or amounts in lieu thereof paid or payable by Concurrent in respect of the foregoing, exclusive, however, of taxes based on Concurrent's income. Any personal property taxes assessable on the VOD Products after delivery to the carrier shall be borne by Comcast. Freight charges for shipments outside the continental United States shall be on a prepaid or collect basis only. 2.2 The pricing specified in this Agreement includes all reasonable parameters required to correctly design, install, operate and maintain a fully functional, highly reliable commercial Concurrent VOD system including, but not limited to, media asset loading and management, video storage/pump, DVB/ASI and QAM output, server interconnect equipment/Ethernet hubs, and all software. Equipment that is required to correctly design, install, operate and maintain a fully functional, highly reliable commercial Concurrent VOD system, that is not included in Attachment B to this Agreement, is the responsibility of Concurrent at Concurrent's expense. Comcast is not responsible for additional costs required to provide a fully functional system except when Comcast requests additional functionality from Concurrent. If Comcast requests additional functionality from Concurrents standard product, then Comcast and Concurrent shall agree, in writing, to the additional products and pricing prior to accepting any changes in pricing. 3. PAYMENT TERMS 3.1 Payment for all VOD Products and services ordered shall be made in United States Dollars in two (2) installments as follows: (a) **** with Comcast's Order; and (b) **** within thirty (30) days after the date of delivery as evidenced by Concurrent's notice of delivery and invoice. 3.2 All payments are to be paid to Concurrent at the address set forth in Concurrent's invoice. 4. DEPLOYMENT COMMITMENT 4.1 Subject to Concurrent's obligation to provide Comcast a fully functional, highly reliable commercial VOD System and to fulfill the conditions precedent set forth in Section 5.1 below, Comcast shall purchase, between the date of the signing of this Agreement and two years after the date of the signing of this Agreement (unless such two-year period is extended pursuant to Section 5.2 below), sufficient quantities of VOD Product to be deployed to two-way capable digital headends, that in the aggregate serve **** basic cable subscribers. 5. DEVELOPMENT, DEPLOYMENT AND DELIVERY COMMITMENTS 5.1 On or prior to September 30, 2001, Concurrent shall complete the following: **** **** **** 5.2 If Concurrent does not complete all of the actions listed in subparagraphs (a), (b) and (c) of Section 5.1 on or before September 30, 2001, Comcast shall have the right, which may be exercised at any time before the earlier of the close of business on December 31, 2001 and the Completion Date, to terminate this Agreement pursuant to Section 19.2 ("Section 19.2 Termination"). In the event of a Section 19.2 Termination, all outstanding Orders shall terminate as of the effective date of termination of this Agreement and any deposits with respect to such orders shall be returned, and Comcast shall be permitted to move any VOD Products purchased by Comcast as of the date of such termination to a system that meets the requirements of Section 5.1 and to install such VOD Products on such system, at Concurrent's sole cost and expense. If Comcast does not exercise its right to terminate this Agreement pursuant to Section 19.2, and Concurrent has not completed all of the actions listed in subparagraphs (a), (b) and (c) of Section 5.1 on or before December 31, 2001, then this Agreement shall automatically terminate (unless termination is waived by Comcast) without any further action by either party hereto, on December 31, 2001. If Comcast waives its right to terminate this Agreement pursuant to Section 19.2, the time periods for Comcast to earn Warrants pursuant to the WIA and to fulfill the purchase commitment set forth in Section 4.1, above, shall be extended by the number of days elapsed between March 31, 2001 and the Completion Date. The date on which Concurrent completes all of the actions listed in subparagraphs (a), (b) and (c) of Section 5.1 is referred to herein as the "Completion Date". -2- 6. TITLE AND RISK OF LOSS Title to the Equipment shall pass to Comcast upon delivery at the FOB Point. Title to Software shall not pass to Comcast at any time, but shall remain with Concurrent or its licensor. To the extent possible, all Software shall be delivered electronically; otherwise, the VOD Products shall be packaged in accordance with standard commercial practices for domestic shipment and shall be shipped by means deemed most appropriate by Concurrent unless shipping instructions are otherwise specified in writing by Comcast. Comcast shall be responsible for all risk of loss or damage or destruction to the VOD Products from and after delivery of the VOD Products by Concurrent to the carrier at the FOB Point. 7. INSTALLATION Concurrent shall install the VOD Products in accordance with its standard installation procedures and shall perform installation tests using the System Acceptance Test Procedures (the "SAT"), an example of which is set forth in Attachment C. Concurrent shall provide a written certification to Comcast of the successful completion of the SAT. Comcast shall provide a suitable installation environment with all necessary facilities, as recommended by Concurrent, on or before the scheduled date of delivery of the VOD Products. Concurrent shall be given reasonable access to the VOD Products upon arrival of the VOD Products at Comcast's installation site for the purpose of installation and testing of the VOD Products. The "Installation Date" shall be the date Concurrent furnishes Comcast with its certification of its successful completion of the SAT. If Comcast has not provided Concurrent with a suitable installation environment or installation support as required herein which results in a delay in commencement of installation, the Installation Date shall be the thirtieth (30th) day following delivery of the VOD Products to Comcast's installation site. 8. PROGRAM MANAGEMENT; MAINTENANCE SERVICE; TRAINING 8.1 Concurrent shall assign and dedicate a contact person [program manager] to manage the development, deployment and integration of the VOD Products. 8.2 Concurrent shall provide to Comcast maintenance service and technical support on all VOD Products through the Initial Warranty Period (defined in Section 15 below) in accordance with the terms set forth in Attachment D, including without limitation the escalation procedures outlined in Attachment D. Thereafter, Concurrent shall offer Comcast maintenance service for the VOD Products in accordance with Section 8.4 below. 8.3 Concurrent shall provide, at no additional cost to Comcast, one (1) initial training session for each system where the Product is deployed. Additional training sessions may be purchased at the then-current training price. All training sessions shall be held at such times and in such places as is mutually agreed between Concurrent and Comcast, and all materials used at such training sessions may be duplicated by Comcast for the sole purpose of training additional personnel of Comcast. 8.4 After the Initial Warranty Period (which may be extended pursuant to Section15.4), Concurrent shall charge an annual maintenance fee equal to the product of (x) five percent (5%) and (y) the aggregate purchase price of all VOD Products delivered by Concurrent to Comcast (the "Maintenance Fee"). In consideration of receipt of the Maintenance Fee, Concurrent shall provide to Comcast the following: (a) twenty-four (24) hours a day, seven (7) days a week telephone support; (b) software patches/bug fixes as requested; (c) software upgrades within a commercially reasonable time after such upgrades become available to Concurrent; and (d) factory parts return/replacement (advance exchange program). -3- 9. DOCUMENTATION Two (2) sets of manuals for each Product will be provided by Concurrent on or before the Installation Date at no cost to Comcast. Additional copies of such manuals are available from Concurrent at prevailing prices. 10. HARDWARE AND SOFTWARE INTEGRATION Concurrent shall provide to Comcast, at no additional charge, from the date of the full execution of this Agreement until March 31, 2003, all reasonable hardware and software integration services required to provide the fully functional VOD Products, as described in Attachment A, including, but not limited to, the following integration: **** 11. APPLICATION INTEGRATION Concurrent shall make available to Comcast an application integration laboratory for Comcast and Concurrent to jointly develop new products such as User Interface design, interactive advertising with streaming media, Internet Protocol media storage and streaming, time shifted programming and personal video recording/streaming to a television through a set top box. 12. CANCELLATION OF AN ORDER 12.1 Except as otherwise provided in Section 19.2 below, Comcast may not cancel any Order after the date which is thirty (30) days prior to the delivery date for the VOD Products as specified in such Order (the "Order Cancellation Deadline"). If Comcast cancels an Order prior to the Order Cancellation Deadline, Concurrent shall use commercially reasonable efforts to use the VOD Products specified in such Order to fulfill other Orders from Comcast or other customers; provided that to the extent that Concurrent cannot use the VOD Products specified in such Order to fulfill other Orders from Comcast or other customers within a reasonable time frame, Comcast shall, except as otherwise provided in Section 19.2 below, pay or reimburse Concurrent for all costs and expenses incurred by Concurrent in connection with such Equipment which are not recovered by Concurrent within such period. In the event of any such cancellation of an Order prior to the Order Cancellation Deadline, Concurrent shall use commercially reasonable efforts to mitigate all such costs and expenses. 12.2 Acceptance of goods for return after delivery to Comcast shall be made only with prior written authorization by Concurrent and in accordance with Concurrent's standard policies relevant to restocking charges; provided, however, that defective or damaged goods shall not be subject to any restocking charges. 13. CHANGES 13.1 Concurrent reserves the right, at its option, to modify or change the Equipment in whole or in part, at any time prior to delivery thereof, in order to include electrical or mechanical improvements deemed appropriate without incurring any responsibility to modify or change any Equipment previously delivered to Comcast hereunder. -4- 13.2 Comcast reserves the right, at its option, to review all major changes of the VOD Product, including changes to hardware and software, prior to acceptance of new products and modifications of existing products using such changes. 14. LICENSE OF SOFTWARE 14.1 The Software provided hereunder is furnished to Comcast under a nontransferable, nonexclusive license for use solely on the Equipment on which first installed for the sole purpose of operating the Product. In the event Concurrent furnishes to Comcast media containing additional software programs or routines not specified as Software licensed hereunder, Comcast shall make no attempt to copy or otherwise use or disclose any such additional software program or routines for any purpose. 14.2 Comcast shall not remove any copyright, trademark, proprietary rights, legal or warning notice included on or embedded in any part of the Software. 14.3 Comcast shall not sell, license, sublicense, rent, lease or otherwise transfer or assign the Software, whether by operation of law or otherwise, without the prior written consent of Concurrent, except that Comcast may transfer the Software to an affiliate of Comcast, provided that the Equipment on which such Software is used is also transferred to such affiliate and such affiliate agrees in writing to be bound by the Software license terms set forth in this Agreement. 14.4 No reproduction rights in or to the Software or related documentation are granted to Comcast under this Agreement. Comcast agrees that it shall not, and shall not permit any other person to, except for archival purposes, copy, reproduce, duplicate by any means, or translate into a machine language the Software or any portion thereof without the prior written approval of Concurrent. Comcast also agrees that it shall not, and shall not permit any other person to, compile, decompile, or reverse engineer the Software (except and only to the extent that such activity is expressly permitted by applicable law notwithstanding this limitation), or otherwise permit the unauthorized use of the Software. 14.5 The license granted hereunder to the Software shall be effective from the date of delivery of the Software and shall remain in force until terminated as provided herein. Concurrent reserves the right to terminate any license of the Software upon written notice to Comcast in the event that (i) Comcast shall fail to pay any portion of the purchase price or license fee for the VOD Products when due, or (ii) Comcast shall make any improper use, transfer, duplication or disclosure of the Software or in any other way breach this Agreement, provided that Comcast shall have thirty (30) days from the date of such notice to cure such breach. If the breach is not cured within the applicable cure period and the license is terminated in accordance with this Section14.5, Comcast shall immediately return the applicable Software and related documentation and any copies thereof to Concurrent. Comcast's right to cure any breach in accordance with this Section 14.5 shall not affect Concurrent's right to obtain injunctive relief immediately upon the occurrence of any such breach. 15. WARRANTY/INFRINGEMENT INDEMNITY 15.1 Concurrent warrants that the Equipment shall be fully functional and free from defects in material and workmanship, and shall materially conform to the functional specifications set forth in Attachment A, for a period of **** from the Installation Date (the "Initial Warranty Period"). The foregoing warranty shall not apply unless the VOD Products are operated in accordance with Concurrent's manuals furnished with the VOD Products. Written notice of any claimed defect must be given within thirty (30) days after such defect is first discovered. Concurrent's obligation under such warranty is limited, at its option, to the repair or replacement of the Equipment or components or parts thereof which do not comply with such warranty. Such repair or replacement shall be made at Concurrent's designated plant or repair facility, and shall be at Concurrent's expense; provided, however, that all transportation and inspection charges covering any such returned Equipment or component or part that proves -5- not to be defective in accordance with the terms of such warranty shall be paid by Comcast. No Equipment shall be returned to Concurrent until Comcast receives written instructions regarding return procedures. The warranty in this Section 15.1 shall not extend to any labor charges for physical removal and/or replacement of defective Equipment or components or parts thereof. 15.2 Concurrent warrants that the Software furnished hereunder shall perform in material conformance with its published specifications for a period of **** from the Installation Date. In the event of any failure to so perform, Concurrent shall, at the request of Comcast, use reasonable commercial efforts to repair or circumvent any defect affecting such performance; provided that such reparation or circumvention shall be Comcast's sole remedy for any such failure of the Software to perform in accordance with the warranty in this Section15.2. It is understood that Concurrent does not warrant that the Software will be error-free. 15.3 Notwithstanding anything herein to the contrary, VOD Products that are not manufactured or developed by Concurrent, but are supplied or sublicensed by Concurrent, and which are wholly or partially integrated into a system are warranted only to the extent, and subject to the terms, of the original warranty given by the manufacturer of such VOD Products to Concurrent. Comcast shall give prompt written notice to Concurrent of any defect or failure of such VOD Products and provide proof thereof. 15.4 Comcast shall have the right at any time it places an Order to purchase a twelve (12) month extension to the warranty in Section 15.1 for the Equipment purchased in such Order at an additional cost equal to the product of (x) **** and (y) the purchase price set forth in the Order for such Equipment. 15.5 The warranties set forth in this Agreement shall not apply to VOD Products requiring adjustments, correction, repair or replacement, or increase in service time, caused by: (a) electrical work external to the VOD Products, or the attachment or use of accessories or other devices, including networking devices, not furnished, approved or recommended by Concurrent; or failure to properly maintain the same; (b) accident, transportation, neglect or misuse; (c) alterations, including, but not limited to, any deviation from circuit or network designs or structural equipment recommended by Concurrent, installation or removal of Product features not recommended by Concurrent, and all other modifications not recommended by Concurrent, which are performed by any person other than those authorized by Concurrent; (d) failure to provide and maintain a suitable installation environment with all facilities specified by Concurrent (including, but not limited to, failure of, or failure to provide, adequate electrical power, air-conditioning, humidity control) or from use of supplies or materials not meeting Concurrent's specifications; (e) repair or replacement of consumable supplies or parts which have reached the end of their useful life; or (f) the use of a Product for other than the purposes for which it is designed. 15.6 CONCURRENT MAKES NO REPRESENTATION OR WARRANTY OTHER THAN THOSE SET FORTH IN THIS AGREEMENT. THE WARRANTIES SET FORTH IN THIS AGREEMENT ARE EXPRESSLY MADE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. -6- 15.7 Concurrent shall, at its expense, defend, indemnify and hold harmless Comcast from and against any claim of infringement of any United States patents or copyrights by any VOD Products manufactured or developed by Concurrent, provided that (i) Concurrent is promptly informed in writing of such claim and furnished a copy of each communication, notice or other action relating to the alleged infringement, (ii) Concurrent shall have control over the defense and negotiations for a settlement or compromise, (iii) Concurrent is given all reasonable authority, information and assistance from Comcast necessary to defend or settle such suit or proceeding (at Concurrent's expense), and (iv) Comcast incurs no obligation or liability without the prior written consent of Concurrent. The foregoing obligation of Concurrent does not apply to VOD Products or portions or components thereof (a) which are modified by persons or entities other than Concurrent (or persons or entities employed or contracted by Concurrent) if the alleged infringement relates to such modification unless such modification was recommended or approved by Concurrent or (b) combined with other products, processes or materials not supplied or recommended by Concurrent where the alleged infringement relates to such combination. If any claim that Concurrent is obligated to defend has occurred or, in Concurrent's opinion, is likely to occur, Concurrent may, at its option, either (i) procure for Comcast the right to continue to use the applicable VOD Product or (ii) replace or modify the VOD Product so it becomes non-infringing. 16. LIMITATION OF LIABILITY Except for Concurrent's obligations under Section 15.7 above, and except for personal injury or tangible property damage caused by the gross negligence or willful misconduct of Concurrent in the performance of services hereunder, Concurrent's liability in contract, tort or otherwise arising out of or in connection with the performance of any Product, shall not exceed the purchase price or license fee paid by Comcast with respect to such Product that is the subject of the claim. IN NO EVENT SHALL CONCURRENT OR ITS DEVELOPERS OR AFFILIATES OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES BE LIABLE FOR SPECIAL, INDIRECT, EXEMPLARY, INCIDENTAL, MULTIPLE, CONSEQUENTIAL, OR TORT DAMAGES (INCLUDING ANY DAMAGES RESULTING FROM LOSS OF USE, LOSS OF DATA, LOSS OF PROFITS, LOSS OF SAVINGS, LOSS OF BUSINESS OR OTHER ECONOMIC LOSS) ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF ANY PRODUCT, COMCAST'S INABILITY TO USE SUCH PRODUCT OR CONCURRENT'S PERFORMANCE OF SERVICES HEREUNDER, EVEN IF CONCURRENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 17. INSURANCE Concurrent will provide the following insurance coverage at its own expense throughout the term of this Agreement: (a) Workers' compensation insurance, as required by law, and employer's liability insurance with at least a **** limit, each occurrence. (b) Personal injury, bodily injury, and property damage liability insurance, including automobile coverage, with personal injury and bodily injury limits of not less than **** each occurrence, and property damage of at least **** each. All such insurance shall be carried by companies with an A.M. Best rating of at least "A". All policies of insurance shall: (i) name Comcast, its officers, directors, affiliates, subsidiaries, employees and agents as additional insured parties; (ii) contain a statement that said policy is primary coverage to Comcast and its officers, directors, affiliates, subsidiaries, employees and agents and that any coverage maintained by -7- Comcast is non-contributory, for claims or losses resulting from the negligence of Concurrent; and (iii) provide that such policy will not be cancelled or amended except after thirty (30) days advance written notice to Comcast, mailed to the address indicated herein. 18. CONFIDENTIALITY 18.1 It is anticipated that each party may be required to exchange certain confidential information ("Information") to the other in the course of performing this Agreement. From the date of disclosure, and until **** years following such date, the recipient of Information ("Recipient") shall maintain the Information in confidence and use the Information solely to perform its obligations or enforce its rights under this Agreement, using at least the same degree of care as it employs to protect its own confidential information of a similar nature, but not less than a reasonable standard of care, provided that the Information is identified in writing as confidential at the time of disclosure, or if orally disclosed, is identified as confidential at the time of disclosure and confirmed in writing within twenty (20) days after such oral disclosure. Recipient shall have no obligation hereunder with respect to any Information that is: (a) generally known to the public at the time of disclosure, or becomes known to the public without breach of this Agreement; (b) known to the Recipient prior to the disclosure, or is independently developed by the Recipient without reference to or use of any other portion of the Information; (c) obtained by the Recipient in good faith from a third party not under obligation of secrecy to the disclosing party (hereafter referred to as "Disclosing Party"); or (d) the subject of a court or government agency order to disclose, provided that the Recipient gives prompt written notice to the Disclosing Party to allow the Disclosing Party to contest such order. The Recipient shall have the burden of proving that any of the above exceptions apply by means of documentary evidence available at the time Recipient claims the exception first became applicable. 18.2 Title to all tangible forms of the Information, and all copies thereof, shall be and remain with Disclosing Party. Recipient shall not copy or otherwise reproduce, in whole or in part, any Information without the prior written authorization of Disclosing Party, except as may be reasonably necessary to fulfill the purpose of this Agreement. Recipient shall not disclose any Information to any third party other than its officers, directors, employees, agents and representatives having a need to know such Information to support performance of this Agreement, provided that each such party given access to any such Information is subject to a written confidentiality agreement whose terms are substantially similar to this Section 18.2. Recipient shall promptly return or destroy all tangible forms of the Information, and copies thereof, upon Disclosing Party's request or termination of this Agreement, and if such Information is destroyed, shall promptly provide evidence reasonably satisfactory to the Disclosing Party of such destruction. 18.3 It is understood, however, that Concurrent has performed substantial development relating to the design and manufacture of digital video and other products, and that Concurrent has relationships with other companies which may be competitors of Comcast. It is further understood that Comcast has relationships with other companies that may be competitors of Concurrent. Neither this Agreement, nor receipt of Information hereunder, shall limit either party's independent development, manufacture or marketing of products or systems involving technology or ideas similar to the VOD Products or other products or systems disclosed in any Information or otherwise, nor will this Agreement or receipt of Information hereunder prevent either party from entering into discussions or agreements for the purchase or licensing of products or systems similar to the VOD Products with third parties, including competitors of the other party. -8- 19. TERM AND TERMINATION 19.1 This Agreement will become effective as of the date first above written and, unless earlier terminated in accordance with this Agreement, will continue, unless extended pursuant to the following sentences, until March 31, 2004. At the sole option of Comcast, this Agreement may be extended for one (1) term of **** years (the "Optional Extension"), by giving notice of extension to Concurrent at least thirty (30) days prior to March 31, 2004. If Comcast exercises its right to the Optional Extension, the terms and conditions of this Agreement shall be extended for **** years, and thereafter will automatically renew, on each anniversary of March 31, for successive one-year periods (each such period, an "Evergreen Year"), unless either party gives written notice of termination at least ninety (90) days prior to the beginning of a new Evergreen Year. 19.2 If Concurrent does not complete the actions listed in subparagraphs (a), (b) and (c) of Section 5.1 on or before September 30, 2001, Comcast shall have the right, in its sole discretion, which may be exercised by written notice to Concurrent at any time before the earlier of the close of business on December 31, 2001 or the Completion Date, to terminate this Agreement, or if Comcast does not so terminate this Agreement and Concurrent does not complete the actions listed in subparagraphs (a), (b) and (c) of Section 5.1 on or before December 31, 2001, this Agreement shall automatically terminate (unless termination is waived by Comcast) without any further action by either party hereto, on December 31, 2001. 19.3 Either party shall be in default of this Agreement if such party: a) fails to make any payment required to be made hereunder when such payment is due and such failure continues for fifteen (15) business days after receipt of written notice of such failure; b) fails to perform any of its material obligations under this Agreement (other than a payment obligation) and such failure continues for thirty (30) calendar days after receipt of written notice of such failure, or if such failure cannot be cured within such thirty (30) day period, but the defaulting party diligently pursues a cure of such default during such thirty (30) day period and thereafter, such failure continues for sixty (60) calendar days after receipt of written notice of such failure; c) assigns this Agreement, or any obligation or right under this Agreement, to a third party that is not an Affiliate of such party; or d) becomes insolvent or makes an assignment for the benefit of creditors, or a receiver or similar officer is appointed to take charge of all or part of that party's assets. In the event of a default, the non-defaulting party may terminate the Agreement and any outstanding Orders by written notice to the defaulting party. 19.4 Termination or expiration of this Agreement shall not relieve either party of any of its then-accrued obligations, including without limitation the obligation to pay for delivered VOD Products or for any then-applicable cancellation charges pursuant to this Agreement. For avoidance of doubt, Comcast shall have no obligations under the deployment commitment in Section 4.1 after termination or expiration of this Agreement. 20. MOST FAVORED CUSTOMER PROVISION -9- 20.1 (a) Subject to Sections 20.1(b) and 20.1(c) hereof, each of Comcast and its Affiliates is hereby accorded the right to receive "most favored customer" terms and conditions from Concurrent and any of its Affiliates with respect to the purchase or licensing of VOD Products and the purchasing of services. **** **** **** **** 20.2 Comcast may, upon reasonable notice to Concurrent, instruct an external independent auditor reasonably satisfactory to Concurrent to audit the relevant books and records of Concurrent to ensure compliance with Section 20.1; provided that such audit shall not be conducted more frequently than annually and shall be conducted at a place and time during normal business hours reasonably acceptable to Concurrent and shall be conducted in such a manner as not to unreasonably interfere with the normal business operations of Concurrent; and provided further that Comcast and its independent auditors shall enter into confidentiality agreements reasonably satisfactory to Concurrent with respect to the review in such audit of information relating to Concurrent's contractual relationship with any third party. In the event that Concurrent violates the provisions of Section 20.1 in any material respect, Concurrent agrees to (i) pay the reasonable expenses of the independent auditor, (ii) adjust the terms and conditions of this Agreement to give retroactive and prospective effect to the non-economic terms of the superior agreement, in accordance with the requirements of this Agreement, (iii) refund overpaid amounts to Comcast or its Affiliate, as the case may be, or apply a credit in the amount of the overpaid amounts against future license fees (at the election of Comcast or the Affiliate) and (iv) immediately grant to Comcast the improved terms or other benefits to which Comcast is entitled. 20.3 For the purposes of this Agreement the term "Affiliate" shall mean an "affiliate," as such term is defined under Rule 405 promulgated under the Securities Act of 1933, as amended (the "Securities Act"). 21. WARRANTS Simultaneously with the execution of this Agreement, and without any additional consideration therefor, Concurrent and Comcast shall enter into that certain Warrant Issuance Agreement (the "WIA"), of even date herewith, pursuant to which Concurrent shall issue to Comcast Concurrent Holding, Inc. (the "Holder") certain warrants, upon the terms and subject to the conditions set forth in such Warrant Issuance Agreement. 22. PUBLIC ANNOUNCEMENT Concurrent and Comcast shall agree on the form and content of any public announcement that shall be made concerning this Agreement and the transactions contemplated hereby, and neither Concurrent nor Comcast shall make any such public announcement without the prior written consent of the other, except as required by law. 23. GENERAL 23.1 Force Majeure. Neither party shall be liable for delays in performance ------------- of its obligations hereunder (other than payment obligations) arising out of or resulting from causes beyond such party's control. Such causes include, but are not restricted to, acts of God, any government authority, or the public enemy, fires, floods, epidemics, quarantine restrictions, strike, freight embargoes, shortages of materials, unusually severe weather, and default or delay of suppliers. In the event of such delay, the date by which performance of any such obligation hereunder is required shall be extended for a period equal to the time lost by reason of the delay. -10- 23.2 Governing Law. This Agreement shall be governed by the laws of the -------------- State of Delaware, without regard to its conflict of laws rules, except that the United Nations Convention on the International Sale of Goods shall not apply to this Agreement. 23.3 Survival. In addition to any provision of this Agreement which by its -------- nature is intended to survive expiration or termination of this Agreement, Sections 6, 12, 14, 15, 16, 18, 19, 20, 21, 22 and this Section 23.3 shall survive the termination or expiration of this Agreement. 23.4 Assignment. The rights and obligations set forth herein may not be ---------- assigned or delegated by Concurrent without Comcast's written consent, except that Concurrent may assign, without the written consent of Comcast, all or any part of this Agreement to (i) the purchaser of substantially all of the assets of Concurrent, or (ii) the purchaser of all or substantially all of the assets of the VOD division or the VOD line of business of Concurrent or (iii) in the case of a consolidation or merger in which Concurrent is not the surviving entity, to the surviving entity of such consolidation or merger. Comcast may assign, in whole or in part, its rights and obligations hereunder to any person or entity provided that (a) Comcast furnishes to Concurrent prior to such assignment written notice of the name and address of such assignee and a description of the rights or obligations assigned and such other information as Concurrent may reasonably request and (b) the assignee agrees in writing reasonably acceptable to Concurrent concurrently with such assignment to be bound by the terms of this Agreement with respect to the rights or obligations assigned. Notwithstanding the foregoing, (x) no assignment by a party of any rights or obligations hereunder shall relieve such party of any of its obligations hereunder and (y) Comcast may not assign any of its rights or obligations hereunder to ****, unless with respect to provision (y) of this Section 23.4, such corporation is: (i) an Affiliate of Comcast, (ii) the purchaser of substantially all of the assets of Comcast or an Affiliate thereof, (iii) the purchaser of all or substantially all of the assets of a division or line of business of Comcast or an Affiliate thereof, or (iv) in the case of a consolidation or merger in which Comcast or such Affiliate is not the surviving entity, to the surviving entity of such consolidation or merger. Additionally, this Agreement may not be assigned to any party (other than to an Affiliate of the assignor) at any time on or before ****, except in conjunction with the assignment of the WIA. Any attempted assignment by a party of any rights or obligations hereunder in violation of this Section 23.4 shall be null and void. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. 23.5 Independent Contractors. Comcast and Concurrent are independent ------------------------ contractors and have no power, right or authority to bind the other party or to assume or to create an obligation or responsibility, express or implied, on behalf of the other party. Nothing in this Agreement shall be construed as creating a partnership relationship between Comcast and Concurrent or as creating the relationship of employer and employee, master and servant, or principal and agent between the parties hereto. 23.6 Waiver and Severability. Any failure or delay by either party in ------------------------- exercising any right or remedy provided by or relating to this Agreement in one or many instances does not constitute a waiver and shall not prohibit that party from exercising such right or remedy at a later time within applicable statute of limitations. If any provision of this Agreement is deemed invalid by a court of competent jurisdiction, it shall, to that extent only, be deemed omitted from this Agreement. 23.7 Notice. Any notice required or permitted by this Agreement shall be in ------ writing and shall be hand delivered, or sent by prepaid registered or certified mail, return receipt requested (if available), or sent by pre-paid courier service, in each case addressed to the other party at the address shown at the beginning of this Agreement or at such address for which such party gives notice hereunder. Copies of all notices to Comcast shall be sent to the attention of Comcast's General Counsel at the same address. Delivery shall be deemed completed upon receipt or refusal to accept such notice. -11- 23.8 Entire Agreement. This Agreement, including all of its referenced ----------------- Attachments, constitutes the entire agreement between the parties with respect to its subject matter. This Agreement and such Attachments supersede any terms or conditions contained on Comcast's purchase order, sales acknowledgment or invoice and supersede all previous oral or written communications between the parties regarding the sale or license of the VOD Products. Except as otherwise provided herein, this Agreement may not be modified except by a written document signed by an authorized representative of the party against which enforcement is sought. 23.9 Dispute Resolution. Any dispute arising out of or related to the ------------------- performance, breach or interpretation of this Agreement shall be submitted to non-binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association. -12- This Agreement is executed by each party's duly authorized representative as of the date first above written. CONCURRENT COMPUTER CORPORATION By: /s/ Steven R. Norton ----------------------------------------------- Name: Steven R. Norton Title: Executive Vice President and CFO COMCAST CABLE COMMUNICATIONS OF PENNSYLVANIA, INC. By: /s/ Mark Hess ----------------------------------------------- Name: Mark Hess Title: Vice President of Digital TV ATTACHMENT A THE MEDIAHAWK 2000 VIDEO-ON-DEMAND SYSTEM The MediaHawk VOD System is an end-to-end solution consisting of: - - THE MEDIAHAWK 2000 VIDEO SERVER - - THE MEDIAHAWK BUSINESS MANAGEMENT SYSTEM 8.5 MEDIAHAWK 2000 VIDEO SERVER ------------------------------ Concurrent's MediaHawk 2000 is a scalable, high performance video server designed for the unique and demanding requirements of interactive video-on-demand applications. It is fully integrated with Scientific Atlanta's and Motorola's digital cable head-end, transport networks, and set top boxes as well a wide variety of third party VOD hardware and software products. Its flexible design provides for both centralized and distributed arrangements, allowing servers to be placed at the most appropriate and cost effective locations. Each chassis can be configured to support up to 320 interactive video streams at 3.8 Mbps or as few as 80 streams. When multiple servers are used the system can be scaled to thousands of streams, supporting hundreds of thousands of subscribers. Video content for each server is maintained on a high capacity, fiber channel disk array containing up to 24 disk drives. Each chassis can store up to 22,200 minutes of content (3.8 Mbps) or 222 full-length movies that are accessible to all sessions simultaneously. The MediaHawk disk arrays are arranged in a RAID level 5 configuration (4 groups of 6 drives), delivering a high degree of fault tolerance. Other fault tolerant features such as redundant power supplies, intelligent fans, and cross video module polling make the MediaHawk 2000 an extremely reliable solution. To address space concerns, MediaHawk's small footprint and slim height allow operators to place a great deal of power where space is limited. For example, four MediaHawk servers offering 1280 streams and storing 888 titles at 3.8 Mbps can fit in a single RETMA rack. Finally, the MediaHawk 2000 Video Server is cost effective, offering superior price/performance and ensuring an optimal return on investment. In Summary, the MediaHawk 2000 Server offers: - High scalability: Scales from 80 streams to thousands of streams - Multi-Platform Integration: Supports both the SA and Motorola platform using the same hardware - Flexible Implementation: Supports both centralized and distributed environments - High Density: A single chassis offers 320 streams and 22,200 minutes of storage (Encoded at 3.8 Mbps) - Fault Tolerance: Intelligent monitoring, RAID 5 level support, and no single points of failure - Small Footprint: Dimensions (17.7W x 17.5H x 28D) - Cost Effectiveness: Superior price/performance (a) MEDIAHAWK 2000 OUTPUT OPTIONS -------------------------------- - -------------------------------------------------------------------------------- 64 QAM OUTPUTS Concurrent's MediaHawk Servers are available with 64 QAM outputs. The 64 QAM outputs are ITU-T J.83 -B and DigiCipher II compliant, with Forward Error Correction RS (128,122), Interleaver (I=128), and Trellis Coding. The data rate for 64 QAM is approximately 27 Mbps on a 6 MHz bandwidth carrier output centered at 44 MHz IF frequency at 30 dB power level. Each MediaHawk server can be equipped with up to 32 QAM outputs. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 256 QAM OUTPUTS Concurrent's MediaHawk Servers are available with 256 QAM IF outputs. The 256 QAM outputs are ITU-T J.83-B standard and offer Forward Error Correction with programmable interleaver depth. The data rate for 256 QAM is 38.8 Mbps on a 6 MHz bandwidth carrier output. Each MediaHawk server can be equipped with up to 32 QAM outputs. - -------------------------------------------------------------------------------- DVB-ASI OUTPUTS Concurrent's MediaHawk Servers are available with DVB-ASI outputs. Our DVB-ASI output is capable of delivering up to 4 multiplexes. The maximum data rate for each output is 160 Mbps. Each MediaHawk server can be equipped with up to 8 DVB-ASI outputs. - -------------------------------------------------------------------------------- UP-CONVERTERS Concurrent's MediaHawk Servers are designed to support integrated up-converters. This feature will not be available until the middle of 2001. The MediaHawk's QAM outputs have been tested with the following brands of third party up-converters: Motorola C8U, Scientific Atlanta, WaveComm, Barco. - -------------------------------------------------------------------------------- 3 MEDIAHAWK 2000 PHYSICAL SPECIFICATIONS - -------------------------------------------------------------------------------- Mechanical Dimensions: 17.7 inches wide x 17.5 inches high x 28.0 inches Deep - -------------------------------------------------------------------------------- Clearances required: 4.0" front (intake air) , 0" top, 0" bottom, 4" rear (exhaust air and cables) - -------------------------------------------------------------------------------- Maximum Weight 100 Lbs - -------------------------------------------------------------------------------- Maximum Power Consumption 9.0 Amps @ 115VAC 4.5 Amps @ 230VAC - -------------------------------------------------------------------------------- Heat Dissipated 3500 BTU/hr. (Note that 1 ton of air conditioning = 12,000 BTU/hr.) - -------------------------------------------------------------------------------- Temperature (Operating): 50 to 95 degrees F (10 to 35 degrees C) - -------------------------------------------------------------------------------- Temperature (Storage) -40 to 149 degrees F (-40 to 65 degrees C) - -------------------------------------------------------------------------------- Humidity (Operating): 20-80% non-condensing - -------------------------------------------------------------------------------- Humidity( Storage): 10-90% non-condensing - -------------------------------------------------------------------------------- Altitude (Operating): 0 to 10,000 feet - -------------------------------------------------------------------------------- Altitude (Storage) 0 to 30,000 feet - -------------------------------------------------------------------------------- Shock (Storage) 5Gs, 11 msec - -------------------------------------------------------------------------------- Vibration(Storage) 1.0Gs 20-2000Hz random - -------------------------------------------------------------------------------- Input Voltage 90 to 264 VAC, 47 to 63Hz autoselecting (system chassis) 48VDC (optional, consult factory) (system chassis) - -------------------------------------------------------------------------------- AC Voltage Frequency 47 to 63 Hz - -------------------------------------------------------------------------------- 4 BUSINESS MANAGEMENT SYSTEM -------------------------- CONCURRENT'S SA BASED VOD SOLUTION features the PRASARA Business Management System (BMS), a comprehensive content, subscriber, order, billing, and royalty payment system designed to satisfy the needs of cable system operators. The PRASARA BMS contains the following modules: 1. CUSTOMER ACCESS MANAGEMENT SYSTEM The BMS Customer Access Management System (CAMS) collects and maintains relevant information about subscribers, including demographics, consumer preferences, credit card information, and billing data. This enables cable service providers to track the services and features preferred by customers, maintain transactional records, and accurately bill subscribers. 2. PROVIDER ACCOUNT MANAGEMENT SYSTEM The BMS Provider Account Management System (PAMS) collects and maintains pertinent information about content providers, business affiliates, and their associated products. PAMS maintains the information necessary to generate royalty or commission affidavits for the providers and to communicate with legacy accounting systems to report revenue. PAMS includes a product management tool that enables easy maintenance (activate/deactivate, change price) of the provider's products and services. 3. CONTENT MANAGEMENT SYSTEM The Content Management System (CMS) is used to manage the interactive media assets (video, audio, etc.) that will be offered using the VOD system. The CMS identifies and tracks media assets through the content staging and loading procedures and ensures that content usage complies with the contractual rules defined in the PAMS. 4. ORDER MANAGEMENT SYSTEM The BMS Order Management System (OMS) provides the cable service provider with the ability to process subscribers' orders and ensure the accurate routing of fulfillment information. For example, when a subscriber orders VOD content the OMS will receive the order from the set top box, populate the BMS database tables, generate a corresponding fulfillment record, and update the cable billing system via the billing interface. The OMS also supports the integration of ITV and e-commerce applications. 5. PROPAGATION MANAGER The Propagation Manager is used to distribute content to or remove content from remote servers from a central operations center. The Propagation Manager works in cooperation with the Content Management System (CMS) and the Provider Account Management System (PAMS) to ensure that availability windows are adhered to by pro-actively prompting the administrator to add or remove content. Content can be propagated to all servers simultaneously or to specific servers, providing the cable system operator a high degree of flexibility. 6. HEALTH MONITOR The Health Monitor alerts administrators in the event of a system failure. CONCURRENT'S MOTOROLA BASED VOD SOLUTION features the Vivid Business Management Tool (BMT), a comprehensive content, subscriber, order, billing, and royalty payment system designed to satisfy the needs of cable system operators. The Vivid BMT contains the following modules: 1. CSR CONSOLE The CSR console allows the entry and maintenance of subscriber information, including demographics, consumer preferences, credit card information, and billing data. This enables cable service providers to track the services and features preferred by customers, maintain transactional records, and accurately bill subscribers. 9. SYSTEM MANAGER The System Manager is used to enter standard and custom genres, movie packages, leases, and menu system types that are used to specify the characteristics of media assets when their descriptions are added to the database. 10. DEVICE MANAGER The Device Manager is used to enter information about the VOD hardware and applications at the network center. This information enables the modular system components to work together. The Device Manager also contains a health-monitoring tool that alerts administrators in the event of server component or system failure. 11. CONTENT MANAGER The Content Manager is used to enter and maintain the interactive media assets (video, audio, etc.) that will be offered using the VOD system. It is also used to collect and maintain content provider information and to generate royalty or commission affidavits. Content propagation and removal are also controlled using the content manager. 12. USAGE TOOLS The Vivid Business Management Tool contains a variety of usage tools that allow cable system operators to analyze customer usage patterns and buy rates, as well as other pertinent marketing information related to VOD services. This information can be helpful in evaluating the effectiveness of various marketing schemes and determining the optimal cycle for refreshing media assets. 13. SUPPORTED BILLING SYSTEM INTERFACES -------------------------------------- The Vivid BMT is integrated with a number of common cable billing systems including Convergys, CSG, and DST/Innovis (CableData). 5 TRAINING COURSE DESCRIPTIONS MEDIAHAWK MODEL 2000 SYSTEM OPERATION AND MAINTENANCE This course is designed to introduce the system operator to Concurrent Computer Corporation's MediaHawk Model 2000 video server. A general overview is followed by detailed instruction on the installation, operation and maintenance of the video server. Lecture material is reinforced with practical hands-on lab exercises. After successful completion of the course, the student will be able to identify, configure, and understand the function of all major hardware assemblies, boot and configure the MediaHawk video server's VOD Kernel, identify problems, perform fault isolation and system recovery procedures, and perform subassembly removal and replacement. Certification by this course provides eligibility for the user to request repair or exchange of MediaHawk subassemblies through the Concurrent Computer Corporation Repair Center. Prerequisites: Students are expected to have practical experience with computer system technology and the use of basic system commands in a DOS or Unix based operating system. Experience with basic hand tools and electronic test equipment. Course Number: MH2008 Course Length: **** Cost: **** Location: Atlanta, GA MEDIAHAWK BROADBAND VOD BACKOFFICE BUSINESS MANAGEMENT SYSTEM (BMS) This course is designed to familiarize systems and business operations staff and customer service representatives with the MediaHawk BackOffice BMS. A brief overview of MediaHawk BackOffice BMS components is augmented by a comprehensive review of system modules and hands-on lab. The course instills proficiency in establishing and managing user roles, user access, table maintenance, subscriber account information, purchases and credits, content management, reports, general subscriber menus and troubleshooting. Prerequisites: Students are expected to be comfortable working within a Windows environment. Course Number: MH2009 Course Length: **** Cost: **** Location: Atlanta, GA 6 MEDIAHAWK MODEL 2000 TOTAL SOLUTION This course is a combined System Operation and Maintenance, and MediaHawk BackOffice BMS and is designed to represent a Total Solution for the MediaHawk Model 2000 Video-On-Demand System. Course Number: MH2010 Course Length: **** Cost: **** Location: Atlanta, GA ON-SITE AND CUSTOM COURSES The flexibility of on-site classes is provided by the Training Center for those customers who want to enroll a group of students in the same course. The customer can realize a substantial savings in travel costs. Instead of a customer having to pay for multiple students' travel expenses to Concurrent, they need only cover the instructor's cost of travel and expenses to their site. Even greater savings are realized for larger classes. Besides the differences in travel costs, savings are also realized in tuition costs when the maximum class size is utilized. In addition to these reductions in cost, there are several intangible benefits from choosing on-site courses: Employees will be trained on the Concurrent VOD Products for which they will be responsible. Multiple employees will not be absent from the customer's facility simultaneously. Optimum scheduling can be achieved based on customer requirements. On-site instruction includes one set of training materials, which may be reproduced by the customer for the number of students enrolled in the class. Should the implementation of a Video-On-Demand system require training which is not one of the regularly scheduled courses as listed in the published schedule, a customized course can be prepared and taught at the Training Center or on-site. This customized course can take the form of modifying the format of an existing course or developing a completely new course. 7 ATTACHMENT B The pricing specified in this Agreement includes all reasonable parameters required to correctly design, install, operate and maintain a fully functional, highly reliable commercial Concurrent VOD system including, but not limited to, media asset loading and management, video storage/pump, DVB/ASI and QAM output, server interconnect equipment/Ethernet hubs, and all software. Equipment that is required (other than WAN networking DWDM and Comcast head-end equipment required to operate a video distribution system), that was not included in the product and price description in this Agreement, is the responsibility of Concurrent at Concurrent's expense. Comcast is not responsible for additional costs required to provide a fully functional system except when Comcast requests additional functionality from Concurrent. If Comcast requests additional functionality from Concurrent's standard product, then Comcast and Concurrent shall agree, in writing, to the additional products and pricing prior to accepting any changes in pricing. 1. PRODUCT DISCOUNT SCHEDULE Product Discount Schedule applies to all Hardware and Software List Pricing. Future pricing extended to Comcast shall be the lesser of: the pricing that Concurrent offers to its MFN customers OR the Concurrent list pricing minus the Product Discount associated with the appropriate volume level per the Discount Schedule below. 1. **** VOD Capable Subscribers - **** additional product discount; 2. **** VOD Capable Subscribers - **** additional product discount; 3. **** VOD Capable Subscribers - **** additional product discount; and 4. **** VOD Capable Subscribers - **** additional product discount. 2. HARDWARE AND SOFTWARE LIST PRICING CONCURRENT LIST PRICE PER STREAM FOR SYSTEMS BETWEEN 320 AND 10,000 STREAMS: 14. CONFIGURATION 1: MOTOROLA - -------------------------------------------------------------------------------- Servers configured for use with Motorola DCT with QAM256 IF outputs, 3.75Mb/s content, 400 hours of storage using 4 analog channels, includes all Backoffice Hardware and software, streams available in 320 stream increments, 3 year warranty, installation included: - -------------------------------------------------------------------------------- 8 - -------------------------------------------------------------------------------- **** **** - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONFIGURATION 2: MOTOROLA Servers configured for use with Motorola DCT with QAM256 IF outputs, 3.0Mb/s content, 400 hours of storage using 4 analog channels, includes all Backoffice Hardware and software, streams available in 384 stream increments, 3 year warranty, installation included: **** **** - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONFIGURATION 3: SCIENTIFIC ATLANTA Servers configured for use with Scientific Atlanta Explorer with DVB-ASI outputs, 3.75Mb/s content, 400 hours of storage using 4 analog channels, includes all Backoffice Hardware and software, streams available in 320 stream increments, 3 year warranty, installation included: **** **** - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONFIGURATION 4: SCIENTIFIC ATLANTA Servers configured for use with Scientific Atlanta Explorer with DVB-ASI outputs, 3.0Mb/s content, 400 hours of storage using 4 analog channels, includes all Backoffice Hardware and software, streams available in 384 stream increments, 3 year warranty, installation included: **** **** - -------------------------------------------------------------------------------- Hardware and Software List pricing hereunder includes: Installation Training **** Warranty and Maintenance Media Hawk Base System 9 Propagation/Library Server Streaming Units Storage Units Control PC's All Software, including licenses 3. MAINTENANCE After the **** Initial Warranty Period (as may be extended pursuant to The Agreement Section 1 Concurrent shall charge an annual maintenance fee equal to the product of (x) **** and (y) the aggregate purchase price of all VOD Products delivered by Concurrent to Comcast (the "Maintenance Fee" 4. OTHER CHARGES Shipping, Taxes and Insurance are not included Traveling expenses for initial installation not included
DETAILED PRODUCT LIST AND PRICING: MARCH 2001 - --------------------------------------------------- Propagation MEDIAHALWK MODEL 2000 BASED SYSTEMS - ---------------------------------------------------------------------------------------- MODEL NUMBER BRIEF DESCRIPTION PRICE - ------------------ ------------------------------------------------------------- ----- MH2-1CCCC-1CCCC-A1 MH2000 Base System Video server 32 QAM outputs **** - ------------------ ------------------------------------------------------------- ----- MH2-1CCC0-1CCC0-A1 MH2000 Base System Video server 24 QAM outputs **** - ------------------ ------------------------------------------------------------- ----- MH2-1CC00-1CC00-A1 MH2000 Base System Video server 16 QAM outputs **** - ------------------ ------------------------------------------------------------- ----- MH2-1C000-1C000-A1 MH2000 Base System Video server 8 QAM outputs **** - ------------------ ----- MH2-19999-19999-A1 MH2000 Base System with 8 DVB-ASI Streaming Units **** - ------------------ ------------------------------------------------------------- ----- MH2-19990-19990-A1 MH2000 Base System with 6 DVB-ASI Streaming Units **** - ------------------ ------------------------------------------------------------- ----- MH2-19900-19900-A1 MH2000 Base System with 4 DVB-ASI Streaming Units **** - ------------------ ------------------------------------------------------------- ----- MH2-19000-19000-A1 MH2000 Base System with 2 DVB-ASI Streaming Units **** - ------------------ ------------------------------------------------------------- ----- MH2-08000-08000-A1 MH2000 Base System with two Gigabit Ethernet Streaming Units **** - ------------------ ------------------------------------------------------------- ----- MEDIAHALWK MODEL 2000 PROPOGATION/LIBRARY SERVER OPTIONS - ---------------------------------------------------------------------------------------- MODEL NUMBER BRIEF DESCRIPTION PRICE - ------------------ ------------------------------------------------------------- ----- MH2-CP0210-PROP MH2000 Gigabit Ethernet, 66MHz Propogation Unit w/Driver **** - ------------------ ------------------------------------------------------------- ----- MH2-CP0300-PROP MH2000 IP-over-ATM/OC3c Multi-Mode Propogation Unit w/Driver **** - ------------------ ------------------------------------------------------------- ----- MEDIAHALWK MODEL 2000 STREAMING UNITS - ---------------------------------------------------------------------------------------- MODEL NUMBER BRIEF DESCRIPTION PRICE - ------------------ ------------------------------------------------------------- ----- MH2-CP0210-OUT MH2000 Gigabit Ethernet, 66MHz Streaming Unit w/Driver **** - ------------------ ------------------------------------------------------------- ----- MH2-CP0275 MH2000 DVB-ASI Streaming Unit w/Driver **** - ------------------ ------------------------------------------------------------- ----- MH2-CP0410 MH2000 Quad QAM256/ATSC Streaming Unit w/Driver **** - ------------------ ------------------------------------------------------------- ----- MEDIAHALWK MODEL 2000 STORAGE UNITS - ---------------------------------------------------------------------------------------- MODEL NUMBER BRIEF DESCRIPTION PRICE - ------------------ ------------------------------------------------------------- ----- MH2-RB5936-SU MH2000 36GB Fibre-Channel Storage Unit (5+1) **** - ------------------ ------------------------------------------------------------- ----- MEDIAHALWK MODEL 2000 CONTROL PCS (MOTOROLA/GI OPTIONS) - ---------------------------------------------------------------------------------------- MODEL NUMBER BRIEF DESCRIPTION PRICE - ------------------ ------------------------------------------------------------- ----- MH2-NCRM-GI-A1 Net Center Resource Manager - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-NCRM-RKMM-A1 NCRM Monitor, Keyboard & Mouse Kit - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-CMSRM-GI-A1 Content Management Station - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-CMS-RKMM-A1 CMS Monitor, Keyboard & Mouse Kit - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-CMSTW-GI-A1 Content Management Station - Tower **** - ------------------ ------------------------------------------------------------- ----- MH2-CMS-KMM-A1 CMS Monitor, Keyboard & Mouse Kit - Tower **** - ------------------ ------------------------------------------------------------- ----- MH2-CSRC-GI-A1 CSR Console - Desktop **** - ------------------ ------------------------------------------------------------- ----- MH2-CSRC-KMM-A1 CSR Monitor, Keyboard & Mouse Kit - Desktop **** - ------------------ ------------------------------------------------------------- ----- MH2-HERM-GI-A1 Headend Resource Manager - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-HERM-RKMM-A1 HERM Monitor, Keyboard & Mouse Kit - Rackmount **** - ------------------ ------------------------------------------------------------- ----- MH2-KVMSWITCH-A1 KVM Switch, monitor, keyboard and mouse. **** - ------------------ ------------------------------------------------------------- -----
11 ATTACHMENT C Concurrent Computer Corporation VOD System Acceptance Test Procedures(FAT/SAT) For COMCAST 14.1 Scope This functional test procedures document is used to validate and document the performance and functionality of the Concurrent Computer Corporation VOD System deployed for COMCAST. These procedures are completed and documented during FAT at Concurrent Computer Corp. staging facility by Concurrent test personnel. Optionally, a customer representative can attend and participate in the FAT. The procedures will be run again at the customer site (SAT) after installation, but prior to providing VOD service to actual subscribers. Tests of the following categories are performed: 1) Settop configuration 2) Content loading, preprocessing, and distribution 3) Menu generation and activation for: a) Movie title b) Movie description c) Movie rating d) Movie price e) Movie genre f) Movie lease length g) Movie activation/deactivation date and time 4) VOD functionality including: a) Purchasing 12 b) Customer PIN codes, rating restrictions, lease period validation c) Play, rewind, fast forward, pause, index, stop 5) Video Server Capacity 6) QAM Output level verification 7) Billing System Interface 8) **** The CCUR VOD System is considered fully installed and tested upon successful completion of these tests during SAT. 13 14.2 Purpose The purpose of the VOD Acceptance tests is to: 1. Verify proper installation and operation of the CCUR headend components. 2. Assure that the performance characteristics established by the CCUR VOD equipment are not degraded by other system components or by system interconnections. 3. In some cases special accessory devices may be required by unusual local conditions or may be otherwise specified by the customer. Where such is the case, these devices will be checked for proper installation and normal operation, but they are specifically excluded from the guaranteed system specifications for the test categories below. Examples of such items include traps, output combining or input splitting filters, input and output bandpass filters, and output post amplifiers. 14 15. TEST SYSTEM PREPARATION **** (p. 15-25 omitted pursuant to Confidential Treatment Request) 15 16. POWER FAIL AND RECOVERY TESTS **** 17. INTERACTIVE PERFORMANCE VERIFICATION TEST **** 18. MOVIE QUALITY TEST **** 19. QAM TEST **** ATTACHMENT D PRODUCT WARRANTY ---------------- **** 17 EX-11 3 doc3.txt CONCURRENT COMPUTER CORPORATION EXHIBIT 11 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE COMPUTATION
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, 2001 MARCH 31, 2001 BASIC DILUTED BASIC DILUTED ------- -------- -------- --------- Average outstanding shares 55,021 55,021 54,558 54,558 Dilutive effect of options and warrants - 2,104 - - ------- -------- -------- --------- Equivalent shares 55,021 57,125 54,558 54,558 ======= ======== ======== ========= Net income (loss) available to common Stockholders $ 802 $ 802 $(4,688) $ (4,688) ======= ======== ======== ========= Earnings (loss) per share $ 0.01 $ 0.01 $ (0.09) $ (0.09) ======= ======== ======== =========
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, 2000 MARCH 31, 2000 BASIC DILUTED BASIC DILUTED -------- --------- --------- --------- Average outstanding shares 53,503 53,503 51,335 51,335 Dilutive effect of options and warrants - - - - -------- --------- --------- --------- Equivalent shares 53,503 53,503 51,335 51,335 ======== ========= ========= ========= Net income (loss) available to common stockholders $(2,215) $ (2,215) $(21,387) $(21,387) ======== ========= ========= ========= Earnings (loss) per share $ (0.04) $ (0.04) $ (0.42) $ (0.42) ======== ========= ========= =========
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