-----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, FyU/vt/SBi6X7cjA8fah66XV+fPUA3zFWme/h0efolvT7Hczit20D+SnVXz1Neex UOZNBJkAod4/PzZd3Le7Ag== 0001015402-01-501855.txt : 20010717 0001015402-01-501855.hdr.sgml : 20010717 ACCESSION NUMBER: 0001015402-01-501855 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20010716 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/A SEC ACT: SEC FILE NUMBER: 000-13150 FILM NUMBER: 1682060 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/A 1 doc1.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q/A (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, 2000 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 May 8, 2000 was 53,860,762. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2000 1999 2000 1999 ------------ -------- --------- -------- (Unaudited) (Unaudited) RESTATED RESTATED (see (see Note 12) Note 12) Net sales: Product sales Real-time systems $ 6,367 $ 8,215 $ 20,220 $23,779 Video-on-demand systems 3,703 351 6,912 583 ------------ -------- --------- -------- Total product sales 10,070 8,566 27,132 24,362 Service and other 6,950 9,110 22,494 29,369 ------------ -------- --------- -------- Total 17,020 17,676 49,626 53,731 Cost of sales Real-time and video-on-demand systems 5,235 3,403 14,068 10,661 Service and other 3,995 5,016 12,375 15,230 ------------ -------- --------- -------- Total 9,230 8,419 26,443 25,891 ------------ -------- --------- -------- Gross margin 7,790 9,257 23,183 27,840 Operating expenses: Sales and marketing 4,728 4,880 14,978 13,846 Research and development 2,685 2,371 7,316 7,620 General and administrative 2,707 1,444 6,617 5,061 Cost of purchased in process computer software technology - - 14,000 - Relocation and restructuring - - 2,367 - ------------ -------- --------- -------- Total operating expenses 10,120 8,695 45,278 26,527 ------------ -------- --------- -------- Operating income (loss) (2,330) 562 (22,095) 1,313 Interest income (expense) - net 53 (11) 136 (67) Other non-recurring income (expense) - - 761 (88) Other income (expense) - net (19) (205) (124) (237) ------------ -------- --------- -------- Income (loss) before income taxes (2,296) 346 (21,322) 921 Provision for income taxes 150 52 450 138 ------------ -------- --------- -------- Net income (loss) $ (2,446) $ 294 $(21,772) $ 783 ============ ======== ========= ======== Net income (loss) per share Basic $ (0.05) $ 0.01 $ (0.42) $ 0.02 ============ ======== ========= ======== Diluted $ (0.05) $ 0.01 $ (0.42) $ 0.02 ============ ======== ========= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) MARCH 31, JUNE 30, 2000 1999 ASSETS (Unaudited) ------------ ---------- RESTATED (see Note 12) Current assets: Cash and cash equivalents $ 6,093 $ 6,872 Accounts receivable - net 17,240 14,879 Inventories 4,764 4,641 Prepaid expenses and other current assets 871 1,053 ------------ ---------- Total current assets 28,968 27,445 ------------ ---------- Property, plant and equipment - net 11,533 10,936 Facilities held for sale - 1,223 Purchased developed computer software 1,821 - Goodwill 12,293 - Other long-term assets 1,764 965 ------------ ---------- Total assets $ 56,379 $ 40,569 ============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 11,298 $ 8,973 Deferred revenue 3,213 3,778 ------------ ---------- Total current liabilities 14,511 12,751 ------------ ---------- Other long-term liabilities 1,674 1,807 ------------ ---------- Total liabilities 16,185 14,558 ------------ ---------- Stockholders' equity: Common stock 537 485 Capital in excess of par value 135,148 98,916 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (94,628) (72,856) Treasury stock (58) (58) Accumulated other comprehensive loss (805) (476) ------------ ---------- Total stockholders' equity 40,194 26,011 ------------ ---------- Total liabilities and stockholders' equity $ 56,379 $ 40,569 ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) NINE MONTHS ENDED MARCH 31, 2000 1999 -------------------- (Unaudited) RESTATED (see Note 12) OPERATING ACTIVITIES Net income (loss) $(21,772) $ 783 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Write-off of in-process software technology 14,000 - Loss on dissolution of subsidiary - 429 Depreciation, amortization and other 4,528 3,701 Other non cash expenses 1,001 19 Changes in operating assets and liabilities: Accounts receivable (2,326) 2,782 Inventories (523) 423 Prepaid expenses and other current assets (558) (753) Other long-term assets (483) 192 Accounts payable and accrued expenses 1,941 (3,809) Deferred revenue (565) (420) Other long-term liabilities (133) 70 --------- --------- Total adjustments to net income (loss) 16,882 2,634 --------- --------- Net cash provided by (used in) operating activities (4,890) 3,417 INVESTING ACTIVITIES Net additions to property, plant and equipment (3,297) (2,957) Proceeds from sale of facility 1,223 - Other 76 - --------- --------- Net cash used in investing activities (1,998) (2,957) FINANCING ACTIVITIES Payments of notes payable - (425) Proceeds from borrowings under revolving credit facility - 39,995 Repayments of borrowings under revolving credit facility - (41,118) Proceeds from sale and issuance of common stock 6,552 969 --------- --------- Net cash provided by (used in) financing activities 6,552 (579) Effect of exchange rates on cash and cash equivalents (443) (7) --------- --------- Decrease in cash and cash equivalents (779) (126) Cash and cash equivalents at beginning of period 6,872 5,733 --------- --------- Cash and cash equivalents at end of period $ 6,093 $ 5,607 ========= ========= Cash paid during the period for: Interest $ 163 $ 190 ========= ========= Income taxes (net of refunds) $ 230 $ 875 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 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 generally accepted accounting principles. The foregoing financial information is unaudited but 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 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 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 potential common shares issuable are anti-dilutive and are not considered in the diluted EPS calculations. The number of shares used in computing basic and diluted net income per share for the three months ended March 31, 1999 was 48,043,000 and 50,981,000, respectively. The number of shares used in computing basic and diluted EPS for the nine months ended March 31, 1999 was 47,855,000 and 49,186,000, respectively. 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, 2000 1999 Raw materials $ 3,403 $ 3,103 Work-in-process 1,022 1,175 Finished goods 339 363 ---------- --------- $ 4,764 $ 4,641 ========== ========= 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows: (DOLLARS IN THOUSANDS) MARCH 31, JUNE 30, 2000 1999 Accounts payable, trade $ 3,383 $ 2,941 Accrued payroll, vacation and other employee expenses 5,103 4,314 Restructuring reserve 321 90 Other accrued expenses 2,491 1,628 ---------- --------- $ 11,298 $ 8,973 ---------- --------- 5. COMPREHENSIVE INCOME (LOSS) Effective July 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("FAS No. 130"). FAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company's total comprehensive income (loss) is as follows:
(DOLLARS IN THOUSANDS) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2000 1999 2000 1999 -------- ------ --------- ------ Net income (loss) $(2,446) $ 294 $(21,772) $ 783 Other comprehensive income (loss): Foreign currency translation gains (losses) (436) (559) (329) 508 -------- ------ --------- ------ Total comprehensive income (loss) $(2,882) $(265) $(22,101) $1,291 ======== ====== ========= ======
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. The accounting policies of the divisions are the same as those described in the summary of significant accounting policies in the consolidated financial statements and related footnotes for the fiscal year ended June 30, 1999 included in the Company's Annual Report on Form 10-K. Shared expenses are primarily allocated based 50 percent on revenues and 50 percent on headcount. There were no material intersegment sales or transfers. The following summarizes the operating income (loss) by segment for the three-month and nine-month periods ended March 31, 2000:
THREE MONTHS ENDED MARCH 31, 2000 NINE MONTHS ENDED MARCH 31, 2000 REAL-TIME VOD TOTAL REAL-TIME VOD TOTAL ------------ ------------ -------- ---------- --------- --------- Net sales: Product sales $ 6,367 $ 3,703 $10,070 $ 20,220 $ 6,912 $ 27,132 Service and other 6,950 - 6,950 22,494 - 22,494 ------------ ------------ -------- ---------- --------- --------- Total 13,317 3,703 17,020 42,714 6,912 49,626 Cost of sales: Systems 2,921 2,314 5,235 9,316 4,752 14,068 Service and other 3,995 - 3,995 12,375 - 12,375 ------------ ------------ -------- ---------- --------- --------- Total 6,916 2,314 9,230 21,691 4,752 26,443 ------------ ------------ -------- ---------- --------- --------- Gross margin 6,401 1,389 7,790 21,023 2,160 23,183 Operating expenses Sales and marketing 2,768 1,960 4,728 9,163 5,815 14,978 Research and development 1,094 1,591 2,685 3,269 4,047 7,316 General and administrative 1,397 1,310 2,707 3,642 2,975 6,617 Purchased in process computer software technology - - - - 14,000 14,000 Relocation and restructuring - - - 1,208 1,159 2,367 ------------ ------------ -------- ---------- --------- --------- Total operating expenses 5,259 4,861 10,120 17,282 27,996 45,278 ------------ ------------ -------- ---------- --------- --------- Operating income (loss) $ 1,142 $ (3,472) $(2,330) $ 3,741 $(25,836) $(22,095) ============ ============ ======== ========== ========= =========
It is impracticable to attain comparable information for the three-month and nine-month periods ended March 31, 1999. 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 quarter ended September 30, 1999. In addition to the relocation discussed above, management decided in the first quarter 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 restructuring provision as an operating expense in the quarter ended September 30, 1999. This expense represents workforce reductions of approximately 38 employees in all areas of the Company. Cash expenditures of $1.3 million were made against this provision during the nine months ended March 31, 2000 leaving a $0.3 million restructuring accrual at March 31, 2000. 8. DISSOLUTION OF SUBSIDIARY During the quarter ended September 30, 1998, the Company dissolved its subsidiary Concurrent Computer Corporation France (the "French Branch"). In connection with the dissolution, all assets and liabilities of the French Branch were assumed by the Company. A loss of $429,000, representing the write off of the French Branch's cumulative translation adjustment, was recorded as other non-recurring charges in the condensed consolidated statement of operations. The Company continues to operate a French Subsidiary, Concurrent Computer Corporation S.A. 9. 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 in the quarter ended September 30, 1999. 10. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," which will require that all derivative financial instruments be recognized as either assets or liabilities in the balance sheet. SFAS 133 will be effective for the Company's first quarter of fiscal 2001. The company's current investment policy does not allow for the use of hedging instruments. In anticipation of the adoption of SFAS 133, the Company is currently reviewing all outstanding contracts for evidence of embedded derivatives. Based on the procedures undertaken through this point, management does not believe that adoption of SFAS 133 will have a material impact on its results of operations. In March 2000, the FASB issued Interpretation No. 44 "Accounting of Certain Transactions involving Stock Compensation - an Interpretation of APB No. 25" (FIN 44"). FIN 44 clarifies the application of APB No. 25 for (a) the definition of employee for purposes of applying APB No. 25, (b) the criteria for determining whether a plan qualifies as a noncompensatory plan, (c) the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock compensation awards in a business combination. We adopted FIN 44 on July 1, 2000, and the adoption did not have a material effect on the financial position or operations of the Company. 11. ACQUISITION OF VIVID TECHNOLOGY On October 28, 1999, the Company acquired Vivid Technology ("Vivid") for total consideration of $29.4 million, consisting of 2,233,689 shares of common stock valued at $24.7 million, $0.5 million of acquisition costs, and 378,983 shares reserved for future issuance upon exercise of stock options with a value of $4.2 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: 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 12,808 10 yrs In-Process Computer Software Technology 14,000 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 quarter ended December 31, 1999 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, 1998 and includes the one-time charge related to the write-off of the purchased IPR&D of $14 million in both periods:
Nine Months Nine Months Ended Ended Mar. 31, 2000 Mar. 31, 1999 --------------- --------------- Revenues $ 49,980 $ 54,232 =============== =============== Net income (loss) $ (22,775) $ (15,067) =============== =============== Basic and Diluted Net Income (loss) Per Share $ (0.44) $ (0.30) =============== ===============
12. RESTATEMENT Subsequent to the issuance of the Company's financial statements for the quarter ended March 31, 2000, management changed the measurement date used to value the shares issued in conjunction with the Company's acquisition of Vivid Technology in accordance with APB 16: Business Combinations. As a result, the financial statements as of March 31, 2000 and for the three and nine month periods ended March 31, 2000 have been restated from the amounts previously reported. AS OF MARCH 31, 2000 AS PREVIOUSLY REPORTED AS RESTATED ---------------- ------------- Goodwill, net $ 3,022 $ 12,293 Capital in excess of par 125,492 135,148 Accumulated deficit (94,243) (94,628) THREE MONTHS ENDED MARCH 31, 2000 AS PREVIOUSLY REPORTED AS RESTATED ---------------- ------------- General and administrative expenses $ 2,476 $ 2,707 Operating loss (2,099) (2,330) Loss before income taxes (2,065) (2,296) Net loss (2,215) (2,446) Net loss per share basic and diluted $ (0.04) $ (0.05) NINE MONTHS ENDED MARCH 31, 2000 AS PREVIOUSLY REPORTED AS RESTATED ---------------- ------------- General and administrative expenses $ 6,232 $ 6,617 Operating loss (21,710) (22,095) Loss before income taxes (20,937) (21,322) Net loss (21,387) (21,772) Net loss per share basic and diluted $ (0.42) $ (0.42) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Subsequent to the issuance of the Company's financial statements for the quarter ended March 31, 2000, management changed the measurement date used to value the shares issued in conjunction with the Company's acquisition of Vivid Technology in accordance with APB 16: Business Combinations. As a result, the financial statements as of March 31, 2000 and for the three and nine month periods ended March 31, 2000 have been restated from the amounts previously reported. The accompanying discussion and analysis gives effect to that restatement. 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, 2000 1999 2000 1999 Net Sales: Product sales: Real-time systems 37.4 % 46.5 % 40.7 % 44.3 % Video-on-demand systems 21.8 2.0 13.9 1.1 ----- ----- ----- ----- Total product sales 59.2 48.5 54.7 45.3 Service and other 40.8 51.5 45.3 54.7 ----- ----- ----- ----- Total 100.0 100.0 100.0 100.0 Cost of sales (% of respective sales category): Real-time and video-on-demand systems 52.0 39.7 51.9 43.8 Service and other 57.5 55.1 55.0 51.9 ----- ----- ----- ----- Total 54.2 47.6 53.3 48.2 ----- ----- ----- ----- Gross margin 45.8 52.4 46.7 51.8 Operating expenses: Sales and marketing 27.8 27.6 30.2 25.8 Research and development 15.8 13.4 14.7 14.2 General and administrative 15.9 8.2 13.3 9.4 Cost of purchased in process computer software technology - - 28.2 - ----- ----- ----- ----- Relocation and restructuring - - 4.8 - Total operating expenses 59.5 49.2 91.2 49.4 ----- ----- ----- ----- Operating income (loss) (13.7) 3.2 (44.5) 2.4 Interest income (expense) - net 0.3 (0.1) 0.3 (0.1) Other non-recurring income (expense) - - 1.5 (0.2) Other income (expense) - net (0.1) (1.2) (0.2) (0.4) ----- ----- ----- ----- Income (loss) before income taxes (13.5) 2.0 (43.0) 1.7 Provision for income taxes 0.9 0.3 0.9 0.3 ----- ----- ----- ----- Net income (loss) (14.4)% 1.7 % (43.9) % 1.5 % ===== ===== ===== =====
RESULTS OF OPERATIONS THE QUARTER ENDED MARCH 31, 2000 COMPARED TO THE QUARTER ENDED MARCH 31, 1999 Product Sales. Total product sales were $10.1 million for the three months ended March 31, 2000 as compared with $8.6 million for the three months ended March 31, 1999. Sales of VOD products increased to $3.7 million in the three-month period ended March 31, 2000 from $0.4 million in the three months ended March 31, 1999. The increase in VOD product sales, which is primarily due to higher sales of video systems to domestic multiple system operators, was partially offset by a decrease in sales of real-time products of $1.8 million resulting from declining sales of proprietary systems and the lower selling price of open systems as compared with proprietary products. Service and Other Sales. Service revenues decreased to $7.0 million in the three months ended March 31, 2000 from $9.1 million in the three months ended March 31, 1999, continuing the decline experienced over the past years as the Company's real-time customers move from proprietary systems to open systems which require less maintenance. Gross Margin. Gross margin decreased by $1.5 million to $7.8 million for the three months ended March 31, 2000 as compared to $9.3 million for the three months ended March 31, 1999. The gross margin as a percentage of sales decreased to 45.8% in the three-month period ended March 31, 2000 from 52.4% in the three months ended March 31, 1999 which is primarily due to the lower margin realized in the early stages of the VOD business and two large real-time system sales to small customers in the prior year with unusually high margins. The gross margin on real-time service revenue decreased to 42.5% in the three months ended March 31, 2000 compared to 44.9% in the three months ended March 31, 1999 primarily due to the cancellation of some of the larger, more profitable maintenance contracts by certain customers. Sales and Marketing. Sales and marketing expenses as a percentage of sales was 27.8% for the three months ended March 31, 2000 as compared to 27.6% for the three months ended March 31, 1999. These expenses decreased 3.1% to $4.7 million in 2000 from $4.9 million in 1999 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 Xstreme division. Research and Development. Research and development expenses increased as a percentage of sales to 15.8% in the three-month period ended March 31, 2000 from 13.4% in the three-month period ended March 31, 1999. These expenses increased 13.2% to $2.7 million in 2000 from $2.4 million in 1999 primarily due to the growth in the Xstreme division research and development personnel and the additional development personnel as a result of the acquisition of Vivid Technology in October of 1999. These increases were partially offset by deliberate cost reduction efforts in the Real-Time division and a reduction in expenses relating to Concurrent Vibrations, one of our French subsidiaries, which was sold in the first quarter of fiscal year 2000. General and Administrative. General and administrative expenses increased to 15.9% of sales in the three-month period ended March 31, 2000 from 8.2% in the three-month period ended March 31, 1999. These expenses increased 87.5% to $2.7 million in 2000 from $1.4 million in 1999 primarily due to a $0.7 million severance charge recorded in the period ended March 31, 2000 and the increase in Xstreme division management and other executive corporate administrative personnel. Income Taxes. We recorded income tax expense of $0.2 million in the three-month period ended March 31, 2000 on a pre-tax loss of $2.3 million. The expense is higher than the amount calculated using the domestic statutory tax rate of 35% due to the inability to recognize the tax benefit of the current period net operating loss and the non-deductible amortization of intangible assets acquired from Vivid Technology. Net Income (loss). We recorded a net loss of $2.4 million or $0.05 per share for the three months ended March 31, 2000 compared to net income of $0.3 million or $0.01 per share for the three months ended March 31, 1999. THE NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE NINE MONTHS ENDED MARCH 31, 1999 Product Sales. Total product sales were $27.1 million for the nine months ended March 31, 2000 as compared with $24.4 million for the nine months ended March 31, 1999. Sales of VOD products increased to $6.9 million in the nine-month period ended March 31, 2000 from $0.6 million in the nine months ended March 31, 1999. The increase in VOD product sales, which is primarily due to higher sales of video systems to domestic multiple system operators, was partially offset by a decrease in sales of real-time products of $3.6 million resulting from declining sales of proprietary systems and the lower selling price of open systems as compared with proprietary products. Service and Other Sales. Service revenues decreased to $22.5 million in the nine months ended March 31, 2000 from $29.4 million in the nine months ended March 31, 1999, continuing the decline experienced over the past years as the Company's real-time customers move from proprietary systems to open systems which require less maintenance and the removal of certain larger proprietary systems from service by certain customers. Gross Margin. Gross margin decreased by $4.6 million to $23.2 million for the nine months ended March 31, 2000 as compared to $27.8 million for the nine months ended March 31, 1999. The gross margin as a percentage of sales decreased to 46.7% in the nine-month period ended March 31, 2000 from 51.8% in the nine months ended March 31, 1999 which is primarily due to the lower margin realized in the early stages of the VOD business and a decrease in the gross margin on real-time service revenue to 45.0% in the nine months ended March 31, 2000 compared to 48.1% in the nine months ended March 31, 1999. The decrease in the gross margin on service revenue is the result of the cancellation by certain customers of some of our larger and more profitable maintenance contracts as they move from proprietary systems to less complicated open systems. Sales and Marketing. Sales and marketing expenses increased as a percentage of total sales to 30.2% in the nine-month period ended March 31, 2000 from 25.8% in the nine-month period ended March 31, 1999. These expenses increased 8.2% to $15.0 million in the nine months ended March 31, 2000 from $13.8 million in the nine months ended March 31, 1999. The increase is principally the result of an increase in the number of worldwide sales and marketing personnel in the Company's Xstreme division, increased participation in trade show and other marketing activities, and a non-cash compensation expense of $0.4 million recorded in the second quarter of fiscal year 2000. Research and Development. Research and development expenses increased as a percentage of sales to 14.7% in the nine-month period ended March 31, 2000 from 14.2% in the nine-month month period ended March 31, 1999. These expenses decreased 4.0% to $7.3 million in the nine months ended March 31, 2000 from $7.6 million in the nine months ended March 31, 1999 primarily due to deliberate cost reduction efforts in the Real-Time division and a reduction in expenses relating to Concurrent Vibrations, one of our French subsidiaries, which was sold in the first quarter of fiscal year 2000. These decreases were partially offset by the build-up in the research and development personnel in the Xstreme division focusing on the video server hardware and software development and the additional development personnel as part of the acquisition of Vivid Technology in October of 1999. General and Administrative. General and administrative expenses increased to 13.3% of sales in the nine-month period ended March 31, 2000 from 9.4% in the nine-month period ended March 31, 1999. These expenses increased 30.7% to $6.6 million in the nine months ended March 31, 2000 from $5.1 million in the nine months ended March 31, 1999 primarily due to a $0.7 million severance charge, the increase in Xstreme division management and other corporate executive administrative personnel, and the move of the corporate headquarters and Xstreme division to Atlanta, Georgia. 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 computer software technology in connection with the acquisition of Vivid Technology 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 Xstreme division offices to Atlanta, Georgia. Included in other non-recurring items in the nine-month period ended March 31, 2000 is a $0.8 million gain related to the sale of the stock of Concurrent Vibrations, one of our French subsidiaries, to Data Physics, Inc. Income Taxes. We recorded income tax expense of $0.5 million in the nine-month period ended March 31, 2000 on a pre-tax loss of $21.3 million due to the inability to recognize the tax benefit of the current period net operating loss and the non-deductible write-off of acquired in-process research and development and amortization of other assets acquired in the acquisition of Vivid Technology. Net Income (loss). We recorded a net loss of $21.8 million or $0.42 per share for the nine months ended March 31, 2000 compared to net income of $0.8 million or $0.02 per share for the nine months ended March 31, 1999. ACQUISITION OF VIVID TECHNOLOGY, INC. On October 28, 1999, the Company acquired Vivid Technology, Inc. ("Vivid"), 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 Corporation. 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, does 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 has been implemented using a SQL data base, will need to be ported to other relational data bases such as Oracle to support high end data base applications. - The Resource Manager has been alpha tested; however, an advanced beta test has 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 has been implemented using a SQL data base, will need to be ported to other relational data bases such as Oracle to support high end data base applications. - The Set top VOD application will need to be tested under advanced beta test conditions to ensure that the back channel key stroke system performance can fulfill operational requirements. - The Hub Server, or video pump, will need 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 in-process research and development ("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 expects to begin shipping the new hardware platform during the quarter ending September 30, 2000. Initially, the new hardware platform will have two software alternatives, one which will be compatible with digital set-top boxes used by the General Instrument division of Motorola, Inc., using core software technology developed by and purchased from Vivid Technology, and the other will be compatible with digital set-top boxes used by Scientific-Atlanta, Inc. All of the above tasks are still required to be completed prior to commercial sale of the new server. At March 31, 2000, the Vivid related technology was estimated to be 88% complete and estimated to cost an additional $355,000 to complete the project in December of 2000. Beginning in the first half of calendar 2001, the Company expects to also merge the software solutions into one standard solution which will be compatible with either General Instrument or Scientific-Atlanta set-top boxes. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity is dependent on many factors, including sales volume, operating profit, debt service and the efficiency of asset use and turnover. The Company's future liquidity depends on and 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 the Company's expenses, including, for example, research and development and capital expenditures; - the margins on the Company's 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 under the Company's revolving credit facility; - the sales level in the United States where related accounts receivable are included in the borrowing base of the Company's revolving credit facility; and - the number of countries in which we operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, such as cash held on deposit to secure office leases. We used cash of $4.9 million in operating activities in the first nine months of fiscal year 2000 compared to generating cash of $3.4 million in the first nine months of fiscal year 1999 primarily due to the loss generated by the Company's VOD business. We have an agreement providing for an $8.0 million revolving credit facility through August 1, 2000. We currently are evaluating the Company's options with regard to extending this credit facility. At March 31, 2000, no amounts were outstanding under the revolving credit facility. Borrowings under the revolving credit facility bear interest at the prime rate plus .75% and are secured by substantially all of the Company's domestic assets. We invested $3.3 and $3.0 million in property, plant and equipment during the nine-month periods ended March 31, 2000 and March 31, 1999, respectively. Current year capital expenditures primarily relate to computer equipment, development and loaner equipment for the Company's VOD division and leasehold improvements for the Company's Duluth, Georgia facility and the Company's Real-Time division's new administrative offices. We received $6.6 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, 2000 compared to $1.0 million during the nine-month period ended March 31, 1999. At March 31, 2000, the Company's working capital was $14.5 million, and we did not have any material commitments for capital expenditures. We believe that the Company's existing cash balances, 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. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain matters discussed in this Form 10-Q may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Concurrent cautions investors that any forward-looking statements made herein are not guarantees of future performance and that a variety of factors could cause its actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties which could affect Concurrent'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 Concurrent and other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; technological developments; delays in testing of new products; rapid technology changes; the highly competitive environment in which Concurrent operates; the entry of new well-capitalized competitors into Concurrent's markets, and other risks and uncertainties. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK We are exposed to market risk from changes in interest rates and foreign currency exchange rates. We are exposed to the impact of interest rate changes on the Company's 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 three months or less. These short-term investments carry a degree of interest rate risk. We believe that the impact of a 10% increase or decline in interest rates would not be material to the Company's investment income. We conduct business in the United States and around the world. The Company's 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. We currently do not hedge against fluctuations in exchange rates. We believe 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 the Company's future earnings, fair values or cash flows. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: (11) Statement on computation of per share earnings (27) Financial Data Schedule (b) Reports on Form 8-K. On January 4, 2000 the Company filed a Form 8-K containing a press release relating to the promotion of Steve Nussrallah to the position of President and Chief Executive Officer of the Company. On January 11, 2000 the Company filed a Form 8-K/A containing certain financial statements related to the Company's acquisition of Vivid Technology. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to the quarterly report for the quarter ended March 31, 2000 to be signed on its behalf by the undersigned thereunto duly authorized. Date: July 16, 2001 CONCURRENT COMPUTER CORPORATION By: /s/ Steven R. Norton ------------------------------------------- Steven R. Norton Chief Financial Officer (Principal Financial and Accounting Officer) EX-11 2 doc2.txt
CONCURRENT COMPUTER CORPORATION EXHIBIT 11 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE COMPUTATION THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, 2000 MARCH 31, 2000 ------------------- ------------------ BASIC/DILUTED BASIC/DILUTED ------------------- ------------------ Average outstanding shares 53,503 51,335 Dilutive options outstanding, net - - ------------------- ------------------ Equivalent Shares 53,503 51,335 =================== ================== Net income (loss) available to common stockholders (2,446) (21,772) =================== ================== Earnings (loss) per share $ (0.05) $ (0.42) =================== ==================
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, 1999 MARCH 31, 1999 ----------------- ----------------- BASIC DILUTED BASIC DILUTED ------- -------- ------- -------- Average outstanding shares 48,043 48,043 47,855 47,855 Dilutive options outstanding, net - 2,938 - 1,331 ------- -------- ------- -------- Equivalent Shares 48,043 50,981 47,855 49,186 ======= ======== ======= ======== Net income $ 294 $ 294 $ 783 $ 783 ======= ======== ======= ======== Earnings per share $ 0.01 $ 0.01 $ 0.02 $ 0.02 ======= ======== ======= ========
EX-27 3 doc3.txt WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 [LEGEND] This schedule contains summary financial information extracted from the Companys Consolidated Balance Sheet at March 31, 2000 and Consolidated Statement of Operations for the nine months ended March 31, 2000, and is qualified in its entirety by reference to such financial statements. [/LEGEND] 1000 3-MOS DEC-31-1999 JAN-01-2000 MAR-31-2000 6093 0 17529 289 4764 28968 35974 24441 56379 14511 0 0 0 537 39657 56379 27132 49626 14068 26443 0 70 76 (21322) 450 (21772) 0 0 0 (21772) (.42) (.42)
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