-----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, S0gSEzWumZFodfuH1eCTGXmxb3QjkTQ0Hd4NvExHiokUoiNftYmearNaz8mgW2VS B0Ki5mPvEURFrCb/Di0xEw== 0001015402-04-004609.txt : 20041105 0001015402-04-004609.hdr.sgml : 20041105 20041105085631 ACCESSION NUMBER: 0001015402-04-004609 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041105 DATE AS OF CHANGE: 20041105 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: 1934 Act SEC FILE NUMBER: 000-13150 FILM NUMBER: 041121168 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 UNITED STATES 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 Quarterly Period Ended September 30, 2004 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 (Exact name of registrant as specified in its charter) Delaware 04-2735766 (State of Incorporation) (I.R.S. Employer Identification No.) 4375 River Green Parkway, Suite 100, Duluth, GA 30096 (Address of principal executive offices) Telephone: (678) 258-4000 (Registrant's telephone number, including area code) 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 --- --- Indicate by a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No --- --- Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of October 29, 2004 was 62,917,829.
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 SEPTEMBER 30, 2004 2003 ----------- ----------- Revenues: Product ISD systems $ 5,533 $ 4,394 VOD systems 6,054 9,147 ----------- ----------- Total product revenues 11,587 13,541 Service ISD systems 3,274 4,146 VOD systems 2,469 1,215 ----------- ----------- Total service revenues 5,743 5,361 ----------- ----------- Total revenues 17,330 18,902 Cost of sales: Product ISD systems 2,457 1,356 VOD systems 4,210 3,657 ----------- ----------- Total product cost of sales 6,667 5,013 Service ISD systems 2,003 2,184 VOD systems 1,521 755 ----------- ----------- Total service cost of sales 3,524 2,939 ----------- ----------- Total cost of sales 10,191 7,952 ----------- ----------- Gross margin 7,139 10,950 Operating expenses: Sales and marketing 4,477 4,080 Research and development 5,180 4,668 General and administrative 2,506 2,169 ----------- ----------- Total operating expenses 12,163 10,917 ----------- ----------- Operating income (loss) (5,024) 33 Recovery of minority investment - 1,060 Interest income - net 92 60 Other expense - net (35) (134) ----------- ----------- Income (loss) before income taxes (4,967) 1,019 Provision for income taxes 54 407 ----------- ----------- Net income (loss) $ (5,021) $ 612 =========== =========== Net income (loss) per share Basic $ (0.08) $ 0.01 =========== =========== Diluted $ (0.08) $ 0.01 =========== =========== Weighted average shares outstanding - basic 62,852 62,369 =========== =========== Weighted average shares outstanding - diluted 62,852 63,006 =========== ===========
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) SEPTEMBER 30, JUNE 30, 2004 2004 --------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 18,779 $ 27,928 Accounts receivable, less allowance for doubtful accounts of $200 at September 30, 2004 and June 30, 2004 11,421 10,192 Inventories - net 7,378 9,617 Deferred tax asset - net 539 517 Prepaid expenses and other current assets 1,913 861 --------------- --------------- Total current assets 40,030 49,115 Property, plant and equipment - net 10,851 11,569 Purchased developed computer software - net 966 1,013 Goodwill 10,744 10,744 Investment in minority owned company 553 553 Other long-term assets - net 1,450 1,548 --------------- --------------- Total assets $ 64,594 $ 74,542 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 11,004 $ 12,069 Deferred revenue 6,607 10,668 --------------- --------------- Total current liabilities 17,611 22,737 Long-term liabilities: Deferred revenue 3,986 4,117 Deferred tax liability 291 278 Pension liability 1,442 1,372 Other 301 312 --------------- --------------- Total liabilities 23,631 28,816 Stockholders' equity: Common stock 629 628 Capital in excess of par value 174,375 174,338 Accumulated deficit (133,747) (128,712) Treasury stock - (42) Unearned compensation (335) (351) Accumulated other comprehensive income (loss) 41 (135) --------------- --------------- Total stockholders' equity 40,963 45,726 --------------- --------------- Total liabilities and stockholders' equity $ 64,594 $ 74,542 =============== ===============
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) THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ------------------------ OPERATING ACTIVITIES Net income (loss) $ (5,021) $ 612 Adjustments to reconcile net income (loss) to net cash used in operating activities: Reduction in accrual of non-cash warrants - (970) Depreciation and amortization 1,421 1,257 Provision for (reversal of) inventory reserves (10) 461 Reversal of provision for bad debts - (311) Non-cash income tax provision - 336 Recovery of minority investment - (1,060) Other non cash expenses 7 128 Changes in operating assets and liabilities: Accounts receivable (1,229) (2,653) Inventories 2,249 230 Prepaid expenses and other current assets (1,052) (718) Other long-term assets 97 144 Accounts payable and accrued expenses (1,065) (3,497) Deferred revenue (4,192) 473 Pension liability 70 225 Other long-term liabilities 13 (55) ----------- ----------- Total adjustments to net income (loss) (3,691) (6,010) ----------- ----------- Net cash used in operating activities (8,712) (5,398) INVESTING ACTIVITIES Net additions to property, plant and equipment (650) (1,198) Repayment of note receivable from minority owned company - 1,060 ----------- ----------- Net cash used in investing activities (650) (138) FINANCING ACTIVITIES Net repayment of capital lease obligation (24) (22) Proceeds from sale of treasury stock 28 - Proceeds from sale and issuance of common stock 38 8 ----------- ----------- Net cash provided by (used in) financing activities 42 (14) Effect of exchange rates on cash and cash equivalents 171 34 ----------- ----------- Decrease in cash and cash equivalents (9,149) (5,516) Cash and cash equivalents at beginning of period 27,928 30,697 ----------- ----------- Cash and cash equivalents at end of period $ 18,779 $ 25,181 =========== =========== Cash paid during the period for: Interest $ 2 $ 3 =========== =========== Income taxes (net of refunds) $ 134 $ 78 =========== ===========
The accompanying notes are an integral part of the condensed consolidated financial statements. 3 CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. OVERVIEW OF BUSINESS AND BASIS OF PRESENTATION Concurrent Computer Corporation ("Concurrent") is a leading supplier of high-performance computer systems, software, and services and operates in two divisions, the Video-On-Demand ("VOD") division, located in Duluth, Georgia, and the Integrated Solutions Division ("ISD"), located in Pompano Beach, Florida. Concurrent's VOD division provides VOD systems consisting of hardware and software as well as integration services, primarily to residential cable companies that have upgraded their networks to support interactive, digital services. Concurrent's Integrated Solutions Division provides high-performance, real-time computer systems to commercial and government customers for use in applications such as simulation and data acquisition. Concurrent provides sales and support from offices and subsidiaries throughout North America, Europe, Asia, and Australia. The condensed, consolidated interim financial statements of Concurrent are unaudited and reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of Concurrent's financial position, results of operations and cash flows at the dates and for the periods indicated. These financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended June 30, 2004. There have been no significant changes to Concurrent's Accounting Policies as disclosed in the Annual Report on Form 10-K for the year ended June 30, 2004. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The results reported in these condensed, consolidated quarterly financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Concurrent assesses credit risk through ongoing credit evaluations of customers' financial condition and collateral is generally not required. As of both September 30, 2004 and June 30, 2004, there were two customers that each accounted for more than 10% of trade receivables. At September 30, 2004, one customer accounted for $2,532,000 or 22% of trade receivables and the other accounted for $1,467,000 or 13% of trade receivables. At June 30, 2004, one customer accounted for $2,715,000 or 26% of trade receivables and the other accounted for $1,089,000 or 10% of trade receivables. Recently Issued Accounting Pronouncements In March 2004, the Emerging Issues Task Force (EITF) ratified its consensus related to the application guidance within EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." EITF Issue No. 03-1 applies to investments in debt and equity securities within the scope of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and equity securities that are not subject to the scope of SFAS No. 115 and not accounted for under the equity method under Accounting Principles Board Opinion 18, "The Equity Method of Accounting for Investments in Common Stock" and related interpretations. EITF Issue No. 03-1 requires that a three-step model be applied in determining when an investment is considered impaired, whether that impairment is other than temporary and the measurement of an impairment loss. The recognition and measurement guidance within EITF Issue No. 03-1 has been applied by 4 Concurrent to other-than-temporary impairment evaluations beginning July 1, 2004. The adoption of EITF Issue No. 03-1 is not expected to have a material impact on Concurrent's financial position or results of operations. 2. BASIC AND DILUTED NET INCOME PER SHARE Basic net income (loss) per share is computed in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," by dividing net income (loss) by the weighted average number of common shares outstanding during each period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares including dilutive 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. Common share equivalents of 5,851,000 and 5,635,000 for the three month periods ended September 30, 2004 and 2003, respectively, were excluded from the calculation as their effect was antidilutive. The following table presents a reconciliation of the numerators and denominators of basic and diluted net income (loss) per share for the periods indicated:
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SEPTEMBER 30, ----------------------- 2004 2003 ----------- ---------- Basic and diluted earnings per share (EPS) calculation: Net income (loss) $ (5,021) $ 612 =========== ========== Basic weighted average number of shares outstanding 62,852 62,369 Effect of dilutive securities: Employee stock options - 637 ----------- ---------- Diluted weighted average number of shares outstanding 62,852 63,006 =========== ========== Basic EPS $ (0.08) $ 0.01 =========== ========== Diluted EPS $ (0.08) $ 0.01 =========== ==========
3. STOCK-BASED COMPENSATION At September 30, 2004, Concurrent had stock-based employee compensation plans which are described in Note 14 in our annual report on Form 10-K for the year ended June 30, 2004. Concurrent accounts for these plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. For the three months ended September 30, 2004 and 2003, Concurrent recognized $16,000 and $32,000, respectively, of stock compensation expense for the issuance of restricted stock awards. There is no other expense for stock options issued in the reported net income (loss) for the quarters ended September 30, 2004 and 2003. 5 In accordance with SFAS No. 148, "Accounting for Stock Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123," the following table illustrates the effect on net income (loss) and earnings (loss) per share if Concurrent had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation:
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ----------- ----------- Net income (loss) as reported $ (5,021) $ 612 Deduct: Total stock-based employee compensation expense determined under the fair value method, net of related taxes (1,047) (1,057) ----------- ----------- Pro forma net loss $ (6,068) $ (445) =========== =========== Net income (loss) per share: Basic- as reported $ (0.08) $ 0.01 =========== =========== Basic-pro forma $ (0.10) $ (0.01) =========== =========== Diluted-as reported $ (0.08) $ 0.01 =========== =========== Diluted-pro forma $ (0.10) $ (0.01) =========== ===========
The weighted-average assumptions used for the three months ended September 30, 2004, and 2003 were: expected dividend yield of 0.0% for both periods; risk-free interest rate of 3.6% and 2.9%, respectively; expected life of 6 years for both periods; and an expected volatility of 104.7% and 110.0%, respectively. 4. REVENUE RECOGNITION AND RELATED MATTERS VOD and ISD system revenues are recognized based on the guidance in American Institute of Certified Public Accountants Statement of Position ("SOP") 97-2, "Software Revenue Recognition" ("SOP 97-2") and related amendments, SOP 98-4, "Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue Recognition" and SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions". Concurrent recognizes revenue from VOD and ISD systems when persuasive evidence of an arrangement exists, the system has been shipped, the fee is fixed or determinable and collectibility of the fee is probable. Under multiple element arrangements, Concurrent allocates revenue to the various elements based on vendor-specific objective evidence ("VSOE") of fair value. Concurrent's VSOE of fair value is determined based on the price charged when the same element is sold separately. If evidence of fair value does not exist for all elements in a multiple element arrangement, Concurrent recognizes revenue using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement is recognized as revenue. 6 5. INVENTORIES Inventories are stated at the lower of cost or market, with cost being determined by using the first-in, first-out method. Concurrent establishes excess and obsolete inventory reserves based upon historical and anticipated usage. The components of inventories are as follows (dollars in thousands):
SEPTEMBER 30, JUNE 30, 2004 2004 -------------- -------------- Raw materials, net $ 5,113 $ 7,361 Work-in-process 1,313 1,229 Finished goods 952 1,027 -------------- -------------- $ 7,378 $ 9,617 ============== ==============
At September 30, 2004 and June 30, 2004, some portion of Concurrent's inventory was in excess of the current requirements based upon the planned level of sales for future years. Accordingly, Concurrent had inventory valuation allowances for raw materials of $2.3 million and $3.0 million to reduce the value of the inventory to its estimated net realizable value at September 30, 2004 and June 30, 2004, respectively. 6. INVESTMENTS IN AND RECEIVABLE FROM MINORITY OWNED COMPANIES In March 2002, Concurrent purchased a 14.4% equity ownership interest in Thirdspace Living Limited ("Thirdspace"). Concurrent invested cash of $4 million and the equivalent of $3 million in its common stock in exchange for 1,220,601 series C shares of Thirdspace. In addition to the equity investment, Concurrent also loaned Thirdspace $6 million in exchange for two $3 million long term notes receivable. In fiscal year 2003, Concurrent recorded a $13.0 million net impairment charge due to an other than temporary decline in the market value of the investment in Thirdspace. In May 2003, Thirdspace sold the majority of its assets to Alcatel Telecom Ltd. As a result of the sale of these certain assets, Concurrent received proceeds that were recorded as a reduction to the impairment loss in the line item "Recovery of minority investment." In the first quarter of fiscal 2004, Concurrent received $1.1 million in proceeds as a result of the sale of certain assets of Thirdspace. During the remainder of fiscal 2004, Concurrent received an additional $2.0 million in proceeds as a result of the sale of the majority of Thirdspace's remaining assets. Thirdspace's only significant remaining asset after the sale is a right to 40% of amounts recovered by nCube Corporation ("nCube"), if any, from the lawsuit brought by nCube against SeaChange International, Inc., alleging patent infringement. The likelihood of collecting this asset, and the amount and timing of such collection, is uncertain. Pursuant to the sale of the assets of Thirdspace to Alcatel, Concurrent believes that it has the right to the first approximately $3.0 million of such recovery, if any. Beyond any such recovery, Concurrent does not anticipate further cash proceeds related to the liquidation of Thirdspace's remaining assets. In April 2002, Concurrent invested cash of $500,000 in Everstream Holdings, Inc. ("Everstream") in exchange for 480,770 shares of Series C Preferred stock, giving Concurrent a 4.9% ownership interest. Everstream is a privately held company specializing in broadband advertising systems, operations and data warehousing software and related integration services. Concurrent is accounting for its investment in the Series C Preferred stock of Everstream using the cost method because Concurrent does not believe it exercises significant influence on Everstream. This investment is reviewed annually for impairment, and as of June 30, 2004, there has been no evidence of permanent impairment of the Everstream investment. Furthermore, Concurrent is not aware of any events or circumstances subsequent to June 30, 2004 that would require more frequent testing of impairment of Concurrent's investment in Everstream. 7 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows (in thousands):
SEPTEMBER 30, JUNE 30, 2004 2004 -------------- -------------- Accounts payable, trade $ 2,753 $ 3,487 Accrued payroll, vacation, severance and other employee expenses 5,122 5,420 Warranty accrual 777 1,122 Other accrued expenses 2,352 2,040 -------------- -------------- $ 11,004 $ 12,069 ============== ==============
Concurrent's estimate of warranty obligations is based on historical experience and expectation of future conditions. The changes in the warranty accrual during the period ended September 30, 2004 were as follows (in thousands):
Balance at June 30, 2004 $1,122 Charged to costs and expenses 41 Deductions (386) ------- Balance at September 30, 2004 $ 777 =======
8. COMPREHENSIVE INCOME Concurrent's total comprehensive income (loss) is as follows (in thousands):
THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ----------- ---------- Net income (loss) $ (5,021) $ 612 Other comprehensive income: Foreign currency translation gain 176 85 ----------- ---------- Total comprehensive income (loss) $ (4,845) $ 697 =========== ==========
9. SEGMENT INFORMATION Concurrent operates its business in two divisions: ISD and VOD, in accordance with SFAS 131, "Disclosure about Segments of an Enterprise and Related Information". Concurrent's Integrated Solutions 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. Concurrent's VOD division is a leading supplier of digital video server systems primarily to the broadband cable television market. Shared expenses are primarily allocated based on either revenues or headcount. Corporate costs include costs related to the offices of the Chief Executive Officer, Chief Financial Officer, General Counsel, Investor Relations, Human Resources, Accounting and other administrative costs including annual audit and tax fees, board of director fees and similar costs. 8 The following summarizes the operating income (loss) by segment for the three month periods ended September 30, 2004 and September 30, 2003, respectively (dollars in thousands):
THREE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED) ----------------------------------------------------------- INTEGRATED SOLUTIONS VOD CORPORATE TOTAL ------------- -------------- -------------- ------------ Revenues: Product $ 5,533 $ 6,054 $ - $ 11,587 Service 3,274 2,469 - 5,743 ------------- -------------- -------------- ------------ Total 8,807 8,523 - 17,330 Cost of sales: Product 2,457 4,210 - 6,667 Service 2,003 1,521 - 3,524 ------------- -------------- -------------- ------------ Total 4,460 5,731 - 10,191 ------------- -------------- -------------- ------------ Gross margin 4,347 2,792 - 7,139 Operating expenses: Sales and marketing 1,935 2,429 113 4,477 Research and development 1,575 3,605 - 5,180 General and administrative 364 399 1,743 2,506 ------------- -------------- -------------- ------------ Total operating expenses 3,874 6,433 1,856 12,163 ------------- -------------- -------------- ------------ Operating income (loss) $ 473 $ (3,641) $ (1,856) $ (5,024) ============= ============== ============== ============
THREE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED) ---------------------------------------------------------- INTEGRATED SOLUTIONS VOD CORPORATE TOTAL ------------- ------------- -------------- ------------ Revenues: Product $ 4,394 $ 9,147 $ - $ 13,541 Service 4,146 1,215 - 5,361 ------------- ------------- -------------- ------------ Total 8,540 10,362 - 18,902 Cost of sales: Product 1,356 3,657 - 5,013 Service 2,184 755 - 2,939 ------------- ------------- -------------- ------------ Total 3,540 4,412 - 7,952 ------------- ------------- -------------- ------------ Gross margin 5,000 5,950 - 10,950 Operating expenses Sales and marketing 1,807 2,156 117 4,080 Research and development 1,482 3,186 - 4,668 General and administrative 419 173 1,577 2,169 ------------- ------------- -------------- ------------ Total operating expenses 3,708 5,515 1,694 10,917 ------------- ------------- -------------- ------------ Operating income (loss) $ 1,292 $ 435 $ (1,694) $ 33 ============= ============= ============== ============
9 10. ISSUANCE AND ACCRUAL OF NON-CASH WARRANTS Comcast Cable Communications Inc. Warrants On March 29, 2001, Concurrent entered into a definitive purchase agreement with Comcast Cable, providing for the purchase of VOD equipment. As part of that agreement Concurrent agreed to issue warrants to purchase shares of its common stock based upon the volume of purchases of Concurrent's products. Through March 31, 2004, the expiration date of the agreement, Comcast earned a total of 268,543 warrants, which have all been issued and expire at various dates through June 4, 2008. These warrants are exercisable over a four year term and have exercise prices between $2.62 and $15.02. All of these warrants are outstanding as of September 30, 2004. Concurrent recognized the value of the warrants over the term of the agreement as Comcast purchased additional VOD servers from Concurrent and made the service available to its customers. As this agreement expired during fiscal 2004, Concurrent did not recognize any increase in, or reduction to, revenue during the three months ended September 30, 2004. For the three months ended September 30, 2003, Concurrent recognized $351,000 as a reduction in revenue for the warrants that were earned during that quarter. For the three months ended September 30, 2003, the value of the warrants was determined using the Black-Scholes valuation model. The weighted-average assumptions used for the three months ended September 30, 2003 were: expected dividend yield of 0%; risk-free interest rate of 2.4%; expected life of 4 years; and an expected volatility of 112%. The exercise prices of the warrants are subject to adjustment for stock splits, combinations, stock dividends, mergers, and other similar recapitalization events. The exercise prices are also subject to adjustment for issuance of additional equity securities at a purchase price less than the then current fair market value of Concurrent's Common Stock. The exercise prices of the warrants issued to Comcast equaled the average closing price of Concurrent's Common Stock for the 30 trading days prior to the applicable warrant issuance date and will be exercisable over a four-year term. As the agreement with Comcast expired on March 31, 2004, Concurrent is no longer obligated to issue any additional warrants to Comcast. The warrants issued to Comcast did not exceed 1% of Concurrent's outstanding shares of Common Stock. Scientific Atlanta, Inc. Warrants In accordance with a five year definitive agreement with Scientific Atlanta, Inc. ("SAI") executed in August of 1998, Concurrent agreed to issue warrants to SAI upon achievement of pre-determined revenue targets. Concurrent accrued for this cost as a part of cost of sales at the time of recognition of applicable revenue. Concurrent issued warrants to purchase 261,164 of its common stock to SAI upon reaching the first $30 million threshold on April 1, 2002, exercisable at $7.106 per share over a four-year term, all of which are still outstanding as of September 30, 2004. The five year definitive agreement with SAI expired on August 17, 2003, and at that time Concurrent had not reached the second $30 million threshold of revenue using the SAI platform. As a result, Concurrent was not obligated to issue a warrant under the agreement regarding the second $30 million threshold, and accordingly, reversed $1.3 million of expense in the three months ended September 30, 2003, which had been previously accrued in anticipation of reaching the next $30 million threshold. This reversal was recorded in VOD product cost of sales. 10 11. RETIREMENT PLANS The following table provides a detail of the components of net periodic benefit cost for the three months ended September 30, 2004 and 2003 (in thousands):
THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ----------- ----------- Service cost $ 6 $ 87 Interest cost 49 276 Expected return on plan assets (21) (190) Amortization of unrecognized net transition obligation 8 (17) Amortization of unrecognized prior service benefit - 6 Recognized actuarial loss 1 94 ----------- ----------- Net periodic benefit cost $ 43 $ 256 =========== ===========
Concurrent contributed $16,000 to its defined benefit plan during the three months ended September 30, 2004 and expects to make similar contributions during the remaining quarters of fiscal 2005. Concurrent maintains a retirement savings plan available to U.S. employees that qualifies as a defined contribution plan under Section 401(k) of the Internal Revenue Code. During the three months ended September 30, 2004 and 2003, Concurrent contributed $271,000 and $242,000 to this plan, respectively. Concurrent also maintains a defined contribution plan ("the stakeholder plan") for its U.K. based employees. Concurrent also has agreements with certain of its U.K. based employees to make supplementary contributions to the plan over the next five years, contingent upon their continued employment with Concurrent. During the three months ended September 30, 2004 and 2003, Concurrent contributed $133,000 and $4,000 to this plan, respectively. 12. COMMITMENTS AND CONTINGENCIES Concurrent, from time to time, is involved in litigation incidental to the conduct of its business. Concurrent believes that such pending litigation will not have a material adverse effect on Concurrent's results of operations or financial condition. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and the related Notes thereto which appear elsewhere herein. Except for the historical financial information, many of the matters discussed in this Item 2 may be considered "forward-looking" statements that reflect our plans, estimates and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the "Cautionary Note to Forward-Looking Statements," elsewhere herein and in other filings made with the Securities and Exchange Commission. OVERVIEW During the quarter ended September 30, 2004, we used approximately $9.1 million in cash and cash equivalents and ended the quarter with $18.8 million in cash and cash equivalents. The increased net cash usage during the quarter is the result of the increased net loss and the recognition of revenue during the quarter on shipments for which the cash was received in the prior quarter. In an attempt to reduce the cash used and reduce our breakeven point, we undertook actions during the quarter to reduce operating expenses that included the termination of approximately 12% of our workforce and reducing our capital expenditures to primarily those with impact on near term revenues. We are also in discussions with a bank regarding a new credit facility. See further discussions in the "Liquidity and Capital Resources" section of this document. Other trends in the business are detailed in our latest Form 10-K filed September 7, 2004. There were no changes during the recent quarter in our critical accounting policies. 12 SELECTED OPERATING DATA AS A PERCENTAGE OF TOTAL REVENUE The following table sets forth selected operating data as a percentage of total revenue, unless otherwise indicated, for certain items in our consolidated statements of operations for the periods indicated.
THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ---------------------- (Unaudited) Revenues: Product (% of total sales): ISD systems 31.9% 23.2% VOD systems 35.0 48.4 ---------- ---------- Total product revenues 66.9 71.6 Service: ISD systems 18.9 21.9 VOD systems 14.2 6.4 ---------- ---------- Total service revenues 33.1 28.4 ---------- ---------- Total revenues 100.0 100.0 Cost of sales (% of respective sales category): Product: ISD systems 44.4 30.9 VOD systems 69.5 40.0 ---------- ---------- Total product cost of sales 57.5 37.0 Service: ISD systems 61.2 52.7 VOD systems 61.6 62.1 ---------- ---------- Total service cost of sales 61.4 54.8 ---------- ---------- Total cost of sales 58.8 42.1 ---------- ---------- Gross margin 41.2 57.9 Operating expenses: Sales and marketing 25.8 21.6 Research and development 29.9 24.7 General and administrative 14.5 11.4 ---------- ---------- Total operating expenses 70.2 57.7 ---------- ---------- Operating income (loss) (29.0) 0.2 Recovery of minority investment - 5.6 Interest income - net 0.5 0.3 Other expense - net (0.2) (0.7) ---------- ---------- Income (loss) before income taxes (28.7) 5.4 Provision for income taxes 0.3 2.2 ---------- ---------- Net income (loss) (29.0)% 3.2% ========== ==========
13
RESULTS OF OPERATIONS THE THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2003 THREE MONTHS ENDED SEPTEMBER 30, ------------------------ $ % (DOLLARS IN THOUSANDS) 2004 2003 CHANGE CHANGE ----------- ----------- -------- --------- Product revenues $ 11,587 $ 13,541 $(1,954) (14.4)% Service revenues 5,743 5,361 382 7.1 % ----------- ----------- -------- --------- Total revenues 17,330 18,902 (1,572) (8.3)% Product cost of sales 6,667 5,013 1,654 33.0 % Service cost of sales 3,524 2,939 585 19.9 % ----------- ----------- -------- --------- Total cost of sales 10,191 7,952 2,239 28.2 % ----------- ----------- -------- --------- Product gross margin 4,920 8,528 (3,608) (42.3)% Service gross margin 2,219 2,422 (203) (8.4)% ----------- ----------- -------- --------- Total gross margin 7,139 10,950 (3,811) (34.8)% Operating expenses: Sales and marketing 4,477 4,080 397 9.7 % Research and development 5,180 4,668 512 11.0 % General and administrative 2,506 2,169 337 15.5 % ----------- ----------- -------- --------- Total operating expenses 12,163 10,917 1,246 11.4 % ----------- ----------- -------- --------- Operating income (loss) (5,024) 33 (5,057) NM Recovery of minority investment - 1,060 (1,060) (100.0)% Interest income - net 92 60 32 53.3 % Other expense - net (35) (134) 99 (73.9)% ----------- ----------- -------- --------- Income (loss) before income taxes (4,967) 1,019 (5,986) NM Provision for income taxes 54 407 (353) (86.7)% ----------- ----------- -------- --------- Net income (loss) $ (5,021) $ 612 $(5,633) NM =========== =========== ======== =========
(1) NM denotes percentage is not meaningful Product Sales. Total product sales for the three months ended September 30, 2004 were $11.6 million, a decrease of $1.9 million, or 14.4%, from $13.5 million for the three months ended September 30, 2003. The decrease in product sales resulted from the $3.0 million, or 33.8%, decrease in VOD product sales to $6.1 million in the first quarter of fiscal 2005 from $9.1 million in the first quarter of fiscal 2004. The decrease in VOD product sales was due to the sale of our VOD solutions to five new markets in the first quarter of fiscal 2004, compared to zero new market deployments in the first quarter of fiscal 2005. These reductions in domestic VOD product revenue were partially offset by increases in international sales volume during the first quarter of fiscal 2005 which resulted in a $0.6 million increase in VOD product revenue in Europe and Asia compared to the first quarter of the prior year. Fluctuation in VOD revenue is often due to the fact that we have a small base of large customers making periodic large purchases that account for a significant percentage of revenue. Although we have lost market share with certain customers over the past year, we believe that we will be able to maintain or increase our share of the North American cable market and also capture a meaningful share of the video-over-DSL market in both the United States and internationally in part through our partnership with Alcatel. We also anticipate that the erosion of the price per stream that has occurred over the past 5 years will not be as significant going forward. Partially offsetting the decrease in VOD product sales, ISD product sales increased $1.1 million, or 25.9%, to $5.5 million in the first quarter of fiscal 2005 from $4.4 million in the first quarter of fiscal 2004. The increase in ISD product sales is primarily due to an increase in international revenue, particularly from strong sales in Europe and Asia. Over the past year, our Integrated Solutions Division has integrated software 14 applications from strategic partnerships that we believe will enable it to expand beyond its traditional customer base. Based on this initiative, we expect to maintain market share in our traditional ISD markets and expect to capture market share in new markets needing ISD solutions. Service Revenue. Service revenue increased $0.3 million, or 7.1%, to $5.7 million for the three months ended September 30, 2004 from $5.4 million for the three months ended September 30, 2003. VOD service revenue increased $1.3 million, or 103.2%, to $2.5 million in the first quarter of fiscal 2005 from $1.2 million in the first quarter of fiscal 2004, as the VOD division continues to recognize maintenance, installation, and training revenue on our expanding base of VOD market deployments. As the warranty and maintenance agreements that typically accompany the initial sale and installation of our VOD systems expire, we expect to sell new, long-term service and support agreements. Because of these anticipated new agreements, our expanding deployment base and increasing software component of our total VOD solution, we expect sales of these VOD services to continue to increase. The increase in VOD service revenue was partially offset by a $0.9 million, or 21.0%, decrease in ISD service revenue to $3.3 million in the first quarter of fiscal 2005 from $4.2 million in the first quarter of fiscal 2004. ISD service revenue continued to decline primarily due to the cancellation of maintenance contracts as legacy machines were removed from service and, to a lesser extent, from customers purchasing our new products that produce significantly less service revenue. We expect this trend of declining ISD service revenue to continue into the foreseeable future. Product Gross Margin. Product gross margin was $4.9 million for the three months ended September 30, 2004, a decrease of $3.6 million, or 42.3%, from $8.5 million for the three months ended September 30, 2003. Product gross margin as a percentage of product sales decreased to 42.5% in the first quarter of fiscal 2005 from 63.0% in the first quarter of fiscal 2004 primarily because the VOD division's product gross margin decreased to 30.5% from 60.0% of VOD product revenue for the same respective periods. The decrease in VOD product gross margin is due to changes in product mix and an incentive discount provided to one of our North America cable customers who upgraded its older VOD systems to our fourth generation architecture. In addition, prior year margins were favorably affected by approximately 14% due to the Scientific Atlanta, Inc. warrant expense reversal of $1.3 million. The gross margin on sales of ISD product decreased to 55.6% of ISD product revenue in the first quarter of fiscal 2005 from 69.1% of ISD product revenue in the first quarter of fiscal 2004 due to a less favorable product mix, as compared to the same period of the prior fiscal year. Service Gross Margin. The gross margin on service sales decreased $0.2 million, or 8.4%, to $2.2 million, or 38.6% of service revenue in the three months ended September 30, 2004 from $2.4 million, or 45.2% of service revenue in the three months ended September 30, 2003. The decrease in overall service margins is due to the decrease in ISD service margins to 38.8% of ISD service revenues in the first quarter of fiscal 2005 from 47.3% of service revenues during the first quarter of fiscal 2004. Declining ISD margins are primarily due to declining service revenues from contractual maintenance obligations and due to an increase in severance expense during the quarter. Severance expense of $0.2 million recorded in the first quarter of fiscal 2005 results from a reduction in service personnel as ISD has scaled down the infrastructure that is necessary to fulfill these declining contractual obligations. The decline in contractual obligations results from the cancellation of maintenance contracts as legacy machines are removed from service and replaced with machines that are simpler to maintain. We will continue to scale down its service infrastructure in response to this trend of declining ISD contractual service obligations. The decrease in ISD service margins was partially offset by an increase in VOD service margins. VOD service margins increased to 38.4% of VOD service revenues during the three months ended September 30, 2004 from 37.9% in the first quarter of the prior fiscal year as the VOD division continues to build its VOD deployment base. Although our VOD service revenue continues to increase, our VOD customer service and support costs have also increased 101% over the prior year as required to provide the necessary services. Sales and Marketing. Sales and marketing expenses increased as a percentage of sales to 25.8% in the three months ended September 30, 2004 from 21.6% in the three months ended September 30, 2003. These expenses increased $0.4 million, or 9.7%, to $4.5 million during the three months ended September 30, 2004 from $4.1 million in the same period of the prior year, primarily due to $0.2 million of domestic and international severance expense related to a reduction in force initiative during the first quarter of 2005 in the VOD division. 15 Additionally, ISD incurred an additional $0.1 million of expense due to commissions on increased international sales in Europe and Asia, and also due to the reduction in force initiative during the first quarter of 2005. Research and Development. Research and development expenses increased as a percentage of sales to 29.9% in the three months ended September 30, 2004 from 24.7% in the three months ended September 30, 2003. These expenses increased $0.5 million, or 11.0%, to $5.2 million in first quarter of fiscal 2005 from $4.7 million in the first quarter of fiscal 2004. The increase in research and development expense is due to a $0.4 million increase in VOD salaries and related costs resulting from new software development staff over the past year. The VOD division added development staff and subcontractors to meet the increasing software development requirements for customers' business management functionality, resource management and client system monitoring as a result of increases in both our customer base and deployment base. In addition to the increase in personnel costs, the VOD division incurred an additional $0.1 million in fixed asset depreciation expense related to purchases of product development and testing equipment, compared to the same period of the prior year. We expect that VOD software development costs will begin to stabilize and flatten over the next few years, as we reduce our number of software platforms and as we stabilize our software in the field. ISD's research and development expenses increased $0.1 million primarily due to domestic severance expense related to the reduction in force initiative during the first quarter of 2005. General and Administrative. General and administrative expenses increased as a percentage of sales to 14.5% in the three months ended September 30, 2004 from 11.4% in the three months ended September 30, 2003. These expenses increased $0.3 million, or 15.5%, to $2.5 million in the three months ended September 30, 2004 from $2.2 million in same period of the prior year. This increase in general and administrative expense is due to a prior year $0.3 million bad debt reversal that did not recur in the current quarter. Recovery of Minority Investment. During the first quarter of fiscal year 2004 we received $1.1 million in cash from continued monetization of the Thirdspace assets and settlement of its liabilities. No similar recovery was obtained in the first quarter of fiscal 2005. Provision for Income Taxes. We recorded income tax expense for our domestic and foreign subsidiaries of $54,000 in the first quarter of fiscal year 2005, which is related primarily to foreign withholding taxes and income earned in foreign locations, which cannot be offset by net operating loss carryforwards. For the first quarter of fiscal 2004, we recorded income tax expense for our domestic and foreign subsidiaries of $407,000. This expense was primarily attributable to U.S. federal income tax that was offset by net operating losses originating prior to our quasi-reorganization in November 1991. For accounting purposes, the benefit from the utilization of the pre quasi-reorganization net operating losses must be recognized directly in equity rather than through the income statement. Net Income (Loss). The net loss for the three months ended September 30, 2004 was $5.0 million or $0.08 per basic and diluted share compared to net income for the three months ended September 30, 2003 of $0.6 million or $0.01 per basic and diluted share. LIQUIDITY AND CAPITAL RESOURCES Our liquidity is dependent on many factors, including sales volume, operating profit and the efficiency of asset use and turnover. Our future liquidity will be affected by, among other things: - revenue growth from new VOD market deployments and the pace at which domestic and international cable companies and telephone companies implement VOD technology; - revenue growth from expansions of previously deployed VOD systems; - the actual versus anticipated decline in revenue from maintenance of ISD proprietary systems; - revenues from ISD systems; - ongoing cost control actions and expenses, including for example, research and development and capital expenditures; - the margins on our VOD and ISD businesses; - our ability to raise additional capital, if necessary; - our ability to obtain bank financing, if necessary; - timing of product shipments which occur primarily during the last month of the quarter; 16 - the percentage of sales derived from outside the United States where there are generally longer accounts receivable collection cycles; - 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; and - the success of the fourth generation VOD platform and our ISD Linux products. We used $8.7 million of cash from operating activities during the three months ended September 30, 2004 compared to using $5.4 million of cash during the same period of the prior year. The decrease in cash from operations was primarily due to changes in working capital and operating losses during the current quarter. We invested $0.7 million in property, plant and equipment during the three months ended September 30, 2004 compared to $1.2 million during the three months ended September 30, 2003. Capital additions during each of these periods related primarily to product development and testing equipment, demonstration equipment and equipment loans to our customers for our VOD division. We expect a similar mix of capital additions during the remainder of this fiscal year. In the prior fiscal year, we received $1.1 million from the continued liquidation of Thirdspace during the three months ended September 30, 2003. As part of our cost reduction initiative implemented during the first quarter of fiscal 2005, we anticipate reducing our breakeven point. If revenues do not reach these breakeven levels or our cost reduction efforts are not as successful as planned, then we will continue to use cash. Our working capital has declined from $43.5 million at June 30, 2002 to $22.4 million at September 30, 2004. We expect that our working capital will continue to decrease during the second quarter of fiscal year 2005. If our VOD revenue does not increase and stabilize in future periods, we will continue to use cash in operating activities, which will cause working capital to further decline. If this situation continues, we may need to raise additional funds through a public offering of stock or debt, or through a credit facility with a bank. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Our only significant contractual obligations and commitments relate to certain operating leases for sales, service and manufacturing facilities in the United States, Europe and Asia. There have been no material changes to our contractual obligations during the quarter ended September 30, 2004. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made or incorporated by reference in this release may constitute "forward-looking statements" within the meaning of the federal securities laws. When used or incorporated by reference in this release, the words "believes," "expects," "estimates," "anticipates," and similar expressions, are intended to identify forward-looking statements. Statements regarding future events and developments, our future performance, market share, and new market growth, as well as our 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 our financial condition or results of operations include, without limitation: our ability to keep our customers satisfied; availability of video-on-demand content; delays or cancellations of customer orders; 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 our ability and the ability of other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; the concentration of our customers; failure to effectively manage growth; delays in testing and introductions of new products; rapid technology changes; system errors or failures; reliance on a limited number of suppliers; uncertainties associated with international business activities, including foreign regulations, trade controls, taxes, and currency fluctuations; the highly competitive environment in which we operate and predatory pricing pressures; failure to effectively service the installed base; the entry of new well-capitalized competitors into our markets; the success of new products in both the VOD and ISD divisions; the availability of Linux software in 17 light of issues raised by SCO group; capital spending patterns by a limited customer base; and customer obligations that could impact revenue recognition. Other important risk factors are discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2004. Our forward-looking statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 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 our 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 our investment income. We conduct business in the United States and around the world. Our most significant foreign currency transaction exposure relates to the United Kingdom, those Western European countries that use the Euro as a common currency, Australia, and Japan. We do not hedge against fluctuations in exchange rates and 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 future earnings, fair values, or cash flows. ITEM 4. CONTROLS AND PROCEDURES As required by Securities and Exchange Commission rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no significant changes to our internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Disclosure controls and procedures are our controls and other procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act are accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, we may be involved in litigation relating to claims arising out of our ordinary course of business. We are not presently involved in any material litigation, but are involved in various other legal proceedings. We believe that any liability that may arise as a result of these proceedings will not have a material adverse effect on our financial condition. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits:
3.1 - Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Registration Statement on Form S-2 (No. 33-62440)). 18 3.2 - Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant's Quarterly report on Form 10-Q for the quarter ended March 31, 2003). 3.3 - Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2002). 3.4 - Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002). 3.5 - Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002). 4.1 - Form of Common Stock Certificate (incorporated by reference to the Registrant's Quarterly report on Form 10-Q for the quarter ended March 31, 2003). 4.2 - Form of Rights Certificate (incorporated by reference to the Registrant's Current Report on Form 8- K/A filed August 12, 2002). 4.3 - Amended and Restated Rights Agreement dated as of August 7, 2002 between the Registrant and American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to the Registrant's Current Report on Form 8-K/A filed on August 12, 2002). 11.1* - Statement Regarding Computation of Per Share Earnings. 31.1**- Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2**- Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1**- Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2**- Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Data required by Statement of Financial Accounting Standards No. 128, "Earnings per Share," is provided in the Notes to the condensed consolidated financial statements in this report. ** Filed herewith. (b) Reports on Form 8-K. The following reports on Form 8-K were furnished during the period covered by this report: - Current Report on Form 8-K furnished on July 1, 2004, announcing the fourth quarter 2004 earnings release date and providing updated earnings guidance. - Current Report on Form 8-K furnished on August 12, 2004, relating to results of operations and financial condition as of and for the quarter and year ended June 30, 2004. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 5, 2004 CONCURRENT COMPUTER CORPORATION By: /s/ Steven R. Norton ---------------------- Steven R. Norton Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 20
EXHIBIT INDEX ------------- 3.1 - Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Registration Statement on Form S-2 (No. 33-62440)). 3.2 - Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant's Quarterly report on Form 10-Q for the quarter ended March 31, 2003). 3.3 - Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2002). 3.4 - Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002). 3.5 - Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002). 4.1 - Form of Common Stock Certificate (incorporated by reference to the Registrant's Quarterly report on Form 10-Q for the quarter ended March 31, 2003). 4.2 - Form of Rights Certificate (incorporated by reference to the Registrant's Current Report on Form 8- K/A filed August 12, 2002). 4.3 - Amended and Restated Rights Agreement dated as of August 7, 2002 between the Registrant and American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to the Registrant's Current Report on Form 8-K/A filed on August 12, 2002). 11.1* - Statement Regarding Computation of Per Share Earnings. 31.1**- Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2**- Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1**- Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2**- Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Data required by Statement of Financial Accounting Standards No. 128, "Earnings per Share," is provided in the Notes to the condensed consolidated financial statements in this report. ** Filed herewith. 21 EX-31.1 2 doc2.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION ------------- I, T. Gary Trimm, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Concurrent Computer Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 5, 2004 /s/ T. Gary Trimm ------------------- Name: T. Gary Trimm Title: President and Chief Executive Officer (Principal Executive Officer) 1 EX-31.2 3 doc3.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION ------------- I, Steven R. Norton, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Concurrent Computer Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 5, 2004 /s/ Steven R. Norton ---------------------- Name: Steven R. Norton Title: Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 1 EX-32.1 4 doc4.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Concurrent Computer Corporation (the "Corporation") for the quarter ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the President and Chief Executive Officer of the Corporation certifies that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Corporation. November 5, 2004 /s/ T. Gary Trimm ------------------- T. Gary Trimm President and Chief Executive Officer (Principal Executive Officer) 1 EX-32.2 5 doc5.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Concurrent Computer Corporation (the "Corporation") for the quarter ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Executive Vice President and Chief Financial Officer of the Corporation certifies that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Corporation. November 5, 2004 /s/ Steven R. Norton ---------------------- Steven R. Norton Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 1 -----END PRIVACY-ENHANCED MESSAGE-----