-----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, Mpjm9kRET+3V8iQopWdBxH/lmds4Ws7ZgdAX/RQ+KhKv+h2x891dP/r1shbcLfwm oz9zurkAhnUFCQOUyZiTFA== 0001015402-97-000102.txt : 19970513 0001015402-97-000102.hdr.sgml : 19970513 ACCESSION NUMBER: 0001015402-97-000102 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970329 FILED AS OF DATE: 19970512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCURRENT COMPUTER CORP/DE CENTRAL INDEX KEY: 0000749038 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 042735766 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13150 FILM NUMBER: 97601045 BUSINESS ADDRESS: STREET 1: 2101 WEST CYPRESS CREEK ROAD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 9549741700 MAIL ADDRESS: STREET 1: CONCURRENT COMPUTER CORP STREET 2: 2101 WEST CYPRESS CREEK RD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q (Mark One) X Quarterly Report Pursuant toSection 13 or 15(d) of --- the Securities Exchange Act of 1934 For the Quarter Ended March 29, 1997 or Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from ____ to ____ Commission File No. 0-13150 _____________ CONCURRENT COMPUTER CORPORATION Delaware 04-2735766 (State of Incorporation) (I.R.S. Employer Identification No.) 2101 West Cypress Creek Road, Ft. Lauderdale, FL 33309 Telephone: (954) 974-1700 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of May 8, 1997 were 46,541,573. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 29, MARCH 31, MARCH 29, MARCH 31, 1997 1996 1997 1996 -------- -------- -------- --------- Net Sales: Computer systems $16,440 $13,831 $42,196 $ 35,696 Service and other 12,215 12,342 40,841 41,412 -------- -------- -------- --------- Total 28,655 26,173 83,037 77,108 Cost of sales: Computer systems 8,529 7,766 22,199 20,129 Service and other 6,593 7,517 21,742 24,297 Transition 171 0 973 0 -------- -------- -------- --------- Total 15,293 15,283 44,914 44,426 -------- -------- -------- --------- Gross Margin 13,362 10,890 38,123 32,682 Operating expenses: Research and development 3,439 2,809 10,238 9,863 Selling, general and administrative 6,432 6,666 19,279 21,937 Transition/restructuring 71 0 2,177 1,300 -------- -------- -------- --------- Total operating expenses 9,942 9,475 31,694 33,100 -------- -------- -------- --------- Operating income (loss) 3,420 1,415 6,429 (418) Interest expense (549) (531) (1,740) (1,851) Interest income 71 12 152 193 Other non-recurring charge 0 0 0 (1,700) Other income (expense) - net (261) 37 (2,557) (480) -------- -------- -------- --------- Income (loss) before provision for income taxes 2,681 933 2,284 (4,256) Provision for income taxes 401 400 1,371 1,400 -------- -------- -------- --------- Net income (loss) $ 2,280 $ 533 $ 913 ($5,656) ======== ======== ======== ========= Net income (loss) per share $ 0.05 $ 0.02 $ 0.02 ($0.19) ======== ======== ======== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) MARCH 29, JUNE 30, 1997 1996 ----------- ---------- ASSETS Current Assets: Cash and cash equivalents $ 2,709 $ 3,562 Trading securities 2,730 10,077 Accounts receivable - net 30,428 27,948 Inventories 10,475 11,683 Prepaid expenses and other current assets 2,124 2,384 ----------- ---------- Total current assets 48,466 55,654 Property, plant and equipment - net 15,325 16,453 Facilities held for disposal 4,700 4,700 Other long-term assets 1,468 3,407 ----------- ---------- Total assets $ 69,959 $ 80,214 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable 4,870 5,013 Current portion of long-term debt 1,669 1,241 Revolving credit facilities 5,238 5,014 Accounts payable and accrued expenses 28,931 40,638 Deferred revenue 4,816 4,573 ----------- ---------- Total current liabilities 45,524 56,479 Long-term debt 5,016 6,603 Other long-term liabilities 1,631 4,454 Class B 9% cumulative convertible, redeemable, exchangeable preferred stock, mandatory redemption value of $6,263,000; $.01 par value per share, 1,000,000 authorized; 640,804.6 issued and outstanding at March 29, 1997 3,828 5,610 Stockholders' equity: Common stock 460 412 Capital in excess of par value 90,321 84,252 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (75,827) (76,740) Treasury stock (58) (58) Cumulative translation adjustment (936) (798) ----------- ---------- Total stockholders' equity 13,960 7,068 ----------- ---------- Total liabilities and stockholders' equity $ 69,959 $ 80,214 =========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) NINE MONTHS ENDED MARCH 29, MARCH 31, 1997 1996 ----------- ----------- Cash flows provided by (used by) operating activities: Net profit (loss) $ 913 ($5,656) Adjustments to reconcile net profit (loss) to net cash provided by (used by) operating activities: Unrealized loss on CyberGuard stock 2,622 0 Realized gain on CyberGuard stock (755) 0 Depreciation, amortization and other 4,102 9,041 Other non-cash expenses 2,537 1,996 Increase (decrease) to restructuring reserve (8,587) 1,300 Other non-recurring charges 0 1,700 Decrease (increase) in current assets: Accounts receivable (2,480) (307) Inventories 883 (486) Prepaid expenses and other current assets 260 (664) Decrease in current liabilities other than debt obligations and restructuring reserve (1,467) (6,806) Decrease in other long-term assets 1,898 980 Decrease in other long-term liabilities (2,823) (98) ----------- Total adjustments to net profit (loss) (3,810) 6,656 ----------- ----------- Net cash provided by (used by) operating activities (2,897) 1,000 ----------- ----------- Cash flows provided by (used by) investing activities: Net additions to property, plant and equipment (2,566) (2,023) Net proceeds from sale of trading securities 4,590 0 Net proceeds from sale of facility 0 2,300 ----------- ----------- Net cash provided by investing activities 2,024 277 ----------- ----------- Cash flows provided by (used by) financing activities: Net proceeds (payments) of notes payable (143) 427 Net proceeds (payments) of revolving credit facility 224 (1,918) Repayment of long-term debt (1,159) (3,075) Net proceeds from sale and issuance of common stock 1,236 110 ----------- ----------- Net cash provided by (used by) financing activities 158 (4,456) ----------- ----------- Effect of exchange rate changes on cash and cash equivalents (138) 529 ----------- ----------- Decrease in cash and cash equivalents ($853) ($2,650) =========== =========== Cash paid during the period for: Interest $ 1,948 $ 1,259 =========== =========== Income taxes (net of refunds) $ 1,079 $ 1,541 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. CONCURRENT COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The foregoing financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. All such adjustments are of a normal recurring nature. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The results of interim periods are not necessarily indicative of the results to be expected for the full fiscal year. 2. CHANGES IN ACCOUNTING POLICY Post-retirement Benefits Other Than Pensions On July 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Post-retirement Benefits Other Than Pensions" (FAS No. 106). This standard requires companies to accrue post-retirement benefits throughout the employees' active service periods until they attain full eligibility for those benefits. The transition obligation (the accumulated post-retirement benefit obligation at the date of adoption) may be recognized either immediately or by amortization over the longer of the average remaining service period of active employees or 20 years. In connection with the adoption of this standard in fiscal year 1994, the Company recorded a non-cash charge of $3.0 million representing the immediate recognition of the accumulated post-retirement benefit obligation at the date of the adoption. As a result of the Acquisition as defined in Management's Discussion and Analysis, the Company terminated the retirement benefits of current employees and former employees who are not yet retired. In the current quarter, a curtailment gain of $0.3 million, representing the remaining balance of the reserve, was recognized. The total year-to-date curtailment gain is $2.5 million. The Company believes there will be no material expenses in connection with this Plan. Stock-Based Compensation On July 1, 1996, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (FAS No. 123). This standard established a fair value method for accounting for stock-based compensation plans based upon the fair value of stock options and similar instruments, but does not require the adoption of this preferred method. The adoption of this standard will not impact results of operations, financial position or cash flows. INCOME (LOSS) PER SHARE Income (loss) per share for the three and nine months ended March 29, 1997 is based on the weighted average number of shares of common stock outstanding. The number of shares used in computing primary and fully diluted earnings per share are as follows:
(SHARES AND DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 29, 1997 MARCH 29, 1997 -------------- -------------- FULLY FULLY PRIMARY DILUTED PRIMARY DILUTED -------- -------- -------- -------- Average outstanding shares: 45,439 45,439 43,930 43,930 Primary options outstanding 589 589 Fully diluted options outstanding 723 723 -------- -------- Equivalent Shares 46,028 46,162 44,519 44,653 ======== ======== ======== ======== Earnings $ 2,280 $ 2,280 $ 913 $ 913 Earnings per share $ 0.05 $ 0.05 $ 0.02 $ 0.02 ======== ======== ======== ========
For the quarter and nine months ended March 31, 1996 equivalent shares were 31,272,000 and 30,482,000 respectively, resulting in earnings (loss) per share of $.02 and ($.19) respectively. 3. TRADING SECURITIES As of June 30, 1996, the Company held 683,178 shares of CyberGuard stock with a market value of $14.75 per share. During the quarter ended September 27, 1996 the Company sold 91,500 shares at $10.645 per share, resulting in a realized loss of $376 thousand. In addition, the value of the stock at the end of the quarter ended September 27, 1996 was $8.50 per share, resulting in an unrealized loss of $3.7 million. During the quarter ended December 28, 1997, the Company sold 261,500 shares at an average price of $12.748 per share, resulting in a realized gain of $1.1 million. The market price at December 28, 1996 was $11.625, which resulted in an unrealized gain of $1.0 million for the quarter. The Company also sold a call option on an additional 300,000 shares on which revenue was deferred. During the quarter ended March 29, 1997, the Company sold 22,500 shares at $12.514 per share, resulting in a realized gain of $20,000. As of March 29, the Company held 307,678 shares, including the 300,000 shares subject to the call option. The market value of these shares was $2,730,642 or $8.875 per share at March 29, 1997. The unrealized loss was netted against the proceeds of the call option, leaving a balance of $279 thousand deferred revenue. 4. 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 29, JUNE 30, 1997 1996 ---------- --------- Raw Materials $ 8,380 $ 8,789 Work-in-process 316 352 Finished Goods 1,779 2,542 ---------- --------- $ 10,475 $ 11,683 ========== =========
5. ACCUMULATED DEPRECIATION Accumulated depreciation for property, plant and equipment at March 29, 1997 and June 30, 1996 was $39,691,000 and $44,213,000 respectively. The change reflects the disposal of fully depreciated assets. 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
(DOLLARS IN THOUSANDS) MARCH 29, JUNE 30, 1997 1996 ---------- --------- Accounts payable, trade $ 9,492 $ 9,453 Accrued payroll, vacation and other employee expenses 7,283 7,934 Restructuring reserve 4,388 12,975 Other accrued expenses 7,768 10,276 ---------- --------- TOTAL ACCOUNTS PAYABLE AND ACCRUALS $ 28,931 $ 40,638 ========== =========
7. SALE/LEASEBACK On September 27, 1996, the Company entered into a Purchase and Sale Agreement providing for the sale/leaseback of its Oceanport, New Jersey facility. The transaction is contingent upon the buyer's ability to lease approximately 100,000 square feet of the 280,000 square foot building. The transaction was expected to close during the December, 1996 or January, 1997 timeframe. The contract has been extended in exchange for non-refundable monetary consideration. It is expected that this transaction will close by May 15, 1997. The $5.0 million sales price will be reduced by estimated selling costs of approximately $0.3 million. In accordance with the terms of the agreement under the New Term Loan, which is defined in Management's Discussion and Analysis of Financial Condition and Results of Operations, the Company is required to prepay the New Term Loan in an amount equal to 75% of the net proceeds of the sale of the facility. Accordingly, the net proceeds will be applied to the remaining outstanding balance of the New Term Loan (approximately $3.5 million). The remainder of the net proceeds will be available for working capital purposes. However, there can be no assurance that the transaction will be completed as contemplated. 8. PROVISION FOR RESTRUCTURING The Company recorded a restructuring provision of $24.5 million during the year ended June 30, 1996. This charge included the estimated costs related to the rationalization of facilities, workforce reductions, asset writedowns and other costs. The balance of the restructuring reserve at June 30, 1996 was $13.0 million. During the quarter and nine months ended March 29, 1997, cash payments related to the 1996 restructuring amounted to approximately $1.6 million and $7.6 million respectively and other non-cash charges represented $1.0 million for the quarter and nine months, of which approximately $6.4 million related to employee termination costs. On May 5, 1992, the Company entered into an agreement with the Industrial Development Authority (IDA) in Ireland to maintain a presence in Ireland through April 30, 1998. In connection with the Acquisition, the Company has decided to close its Ireland operations. As a result, the Company may be required to pay approximately $575,000 (360,000 Irish pounds) to the IDA which is provided for in the restructuring provision. The Company is currently in negotiations with the IDA. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On June 27, 1996, the Company acquired the Real-Time Division of Harris Computer Systems Corporation ("HCSC"), along with 683,178 shares of newly issued shares of HCSC, which was renamed CyberGuard Corporation, in exchange for 10,000,000 shares of Concurrent common stock, 1,000,000 shares of convertible exchangeable preferred stock of Concurrent with a 9% cumulative annual dividend payable quarterly in arrears and a mandatory redemption value of $6,263,000 and the assumption of certain liabilities related to the HCSC Real-Time Division ("Acquisition"). The aggregate purchase price of the Acquisition was approximately $18.7 million. The Acquisition has been accounted for as a purchase effective June 30, 1996. RESULTS OF OPERATIONS THE QUARTER ENDED MARCH 29, 1997 COMPARED WITH THE QUARTER ENDED MARCH 31, 1996. Net Sales. Net sales increased to $28.7 million for the quarter ended March 29, 1997 from $26.2 million in the comparable period a year ago. The strengthening of the US dollar against foreign currencies negatively impacted revenue by approximately $0.9 million for the quarter compared with the quarter ending December 28, 1996. The Company considers its computer systems and service business to be one class of products. Net product sales were $16.4 million for the quarter ended March 29, 1997 as compared with $13.8 million for the quarter ended March 31, 1996. Sales of proprietary systems continue to decline, while sales of open systems products are increasing. Maintenance sales remained virtually unchanged at $12.2 million in the current quarter compared with $12.3 million in the third quarter of 1996. Gross Margin. Gross margin as a percentage of sales increased to 46.6% in the current quarter from 41.6% for the quarter ended March 31, 1996. The increase reflects the Company's higher product sales this quarter and its continued cost improvement efforts. Operating Income. Operating income increased $2.0 million to a profit of $3.4 million compared with a profit of $1.4 million in the quarter ended March 31, 1996. Expenses increased $0.5 million in the current quarter compared with the quarter ended March 31, 1996, which primarily represents $0.3 million lower selling, general and administrative due to the gain recognized from the discontinuation of the Post Retirement Benefit Plan, $0.6 million higher research and development costs, and $0.1 million of transition costs incurred during the quarter. Net Income. Net income increased from a gain of $0.5 million in the quarter ended March 31, 1996 to a profit of $2.3 million in the current quarter. The increase of $1.8 million was due to improvement of net product sales discussed above. Currency translation negatively impacted net income for the quarter by approximately $0.1 million. NINE MONTHS ENDED MARCH 29, 1997 COMPARED WITH THE NINE MONTHS ENDED MARCH 31, 1996. Net Sales. Net sales increased to $83.0 million for the nine months ended March 29, 1997 from $77.1 million in the comparable period a year ago. The Company considers its computer systems and service business to be one class of products. Net product sales were $42.2 million for the nine months ended March 29, 1997 as compared with $35.7 million for the nine months ended March 31, 1996. Sales of proprietary systems continue to decline, while open systems products are increasing. Maintenance sales were $40.8 million for the nine months ended March 31, 1997 representing a slight decline from $41.4 million for the comparable nine months of 1996. This decline is consistent with the decline experienced in the industry over the past years as customers move from proprietary to open systems which require less maintenance. Gross Margin. Gross margin increased $5.4 million during the current nine-month period to $38.1 million (45.9% as a percentage of sales) compared with $32.7 million (42.4%) for the nine months ended March 31, 1996. The increase reflects the Company's higher product sales this quarter and its continued cost improvement efforts. Operating Income. Operating income increased $6.8 million to a profit of $6.4 million compared with a loss of $0.4 million in the nine months ended March 31, 1996, primarily due to better margins as discussed above. Expenses decreased $1.4 million in the current nine months compared with the nine months ended March 31, 1996, which is primarily due to the recognition of a $2.5 million gain on discontinued post-retirement benefits for current and former employees as a result of the Acquisition. This gain was partially offset by $0.9 million higher transition and restructuring costs. Net Income. Net income increased by $6.6 million from a loss of $5.7 million in the nine months ended March 31, 1996 to a gain of $0.9 million in the current nine months. The gain is virtually all due to operations, discussed above. Interest and other non-recurring charges were similar in both periods. One time charges, namely the loss on the sale of CyberGuard stock, negatively impacted earnings by $2.6 million in the current nine months. LIQUIDITY AND CAPITAL RESOURCES The Acquisition and related business integration and consolidation is expected to improve the Company's liquidity through improved operating performance, additional borrowing availability, and the planned disposition of its Oceanport, New Jersey facility. The Company's liquidity is dependent on many factors, including sales volume, operating profit ratio, debt service and the efficiency of asset use and turnover. The future liquidity of the Company depends to a significant extent on (i) the actual versus anticipated decline in sales of proprietary systems and service maintenance revenue; (ii) revenue growth from open systems; (iii) both the related costs and the length of time to realize the anticipated benefits from the combination of the real-time businesses of the Company and HCSC; and (iv) ongoing cost control actions. Liquidity will also be affected by: (i) timing of shipments which predominately occur during the last month of the quarter; (ii) the percentage of sales derived from outside the United States where there are generally longer accounts receivable collection cycles and which receivables are not included in the Company's borrowing base under its revolving credit facility; (iii) the sales level in the United States where related accounts receivable are included in the borrowing base of the Company's revolving credit facility; (iv) the number of countries in which the Company will operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, such as cash held on deposit to secure office leases. The Company believes that it will be able to fund the acquisition costs, as well as fiscal year 1997 operations, through its operating results, existing financing facilities and the planned disposition of its Oceanport, New Jersey facility. There is no assurance that the Company's plans will be achieved. On June 28, 1996, the Company entered into a new agreement providing for a $19.9 million credit facility which matures August 1, 1999. The facility includes a $ 7.2 million term loan (the "New Term Loan") and a $12.7 million revolving credit facility (the "New Revolver"). The New Revolver represents a $4.7 million increase to the maximum revolver amount, subject to certain restrictions. In addition, the Company can borrow up to $3.0 million in standby letters of credit (the "LOC's") in connection with overseas lines of credit. The LOC's mature July 31, 1997 at which time the Company must extend the expiration date of the LOC's to August 1, 1999, or obtain alternative financing or guaranties in lieu thereof. At March 29, 1997, the outstanding balances under the New Term Loan and the New Revolver were $6.4 million and $5.2 million, respectively. The entire outstanding balance of the New Revolver has been classified as a current liability at March 29, 1997. Both the New Term Loan and the New Revolver bear interest at the prime rate plus 2.0%. The New Term Loan is payable in 28 monthly installments of approximately $139,000 each, commencing October 1, 1996 and ending January 1, 1999, with the final balance of approximately $3.3 million payable August 1, 1999. The New Revolver may be repaid and reborrowed, subject to certain collateral requirements, at any time during the term ending August 1, 1999. The Company has pledged substantially all of its domestic assets as collateral for the New Term Loan and the New Revolver. The Company may repay the New Term Loan at any time without penalty. In the event of a sale or sale/leaseback of its Oceanport facility, the Company is required to make a prepayment of the New Term Loan up to an amount equal to 75% of the net sale proceeds. Certain early termination fees apply if the Company terminates the facility in its entirety prior to August 1, 1999. The Company's joint venture agreement regarding its Japanese subsidiary has been renewed through June, 1997. In the event such agreement is not further extended, the Company could be required to satisfy the then outstanding amount of demand notes which are guaranteed by the Company ($2,477,174 at March 29, 1997). There can be no assurance that the agreement will be extended and, in the event the agreement is not extended, the Company may be required to extend its guarantees, or repay the demand notes and seek alternative financing. The Company expects to extend the joint venture agreement. The Company had cash and cash equivalents on hand of $2.7 million representing a decrease from $3.6 million as of June 30, 1996. In addition, the Company holds 307,678 shares of CyberGuard stock, which were valued at approximately $2.7 million ($8.875 per share) on March 29, 1997. Accounts payable and accrued expenses decreased by $11.7 million due primarily to the reduction of the restructure reserve. Other long-term liabilities decreased by $2.8 million due primarily to the reduction in the post-retirement benefit obligation resulting from the plan termination. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This Form 10-Q contains forward-looking statements that are subject to risks and uncertainties. Statements indicating that the Company "expects," "estimates" or "believes" are forward-looking as are all other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important factors that could cause actual results or events to differ materially from those anticipated by the forward-looking statements contained herein. Such factors include, but are not limited to: the growth rates of the Company's market segments; the positioning of the Company's products in those segments; the Company's ability to effectively manage its business, and the growth of its business, in a rapidly changing environment; the timing of new product introductions; inventory risks due to changes in market conditions; the competitive environment in the computer industry; the Company's ability to establish successful strategic relationships; and general economic conditions.
SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES THREE MONTHS ENDED NINE MONTHS ENDED MARCH 29, MARCH 31, MARCH 29, MARCH 31, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net Sales: Computer systems 57.4% 52.8% 50.8% 46.3% Service and other 42.6% 47.2% 49.2% 53.7% ---------- ---------- ---------- ---------- Total 100.0% 100.0% 100.0% 100.0% Cost of sales (% of respective sales category): Computer systems 51.9% 56.1% 52.6% 56.4% Service and other 54.0% 60.9% 53.2% 58.7% Transition N/A 0.0% N/A 0.0% Total 53.3% 58.4% 54.1% 57.6% ---------- ---------- ---------- ---------- Gross Margin 46.6% 41.6% 45.9% 42.4% ---------- ---------- ---------- ---------- Operating expenses: Research and development 12.0% 10.7% 12.3% 12.8% Selling, general and administrative 22.4% 25.5% 23.2% 28.4% Transition/restructuring 0.2% 0.0% 2.6% 1.7% ---------- ---------- ---------- ---------- Total operating expenses 34.7% 36.2% 38.2% 42.9% ---------- ---------- ---------- ---------- Operating income (loss) 11.9% 5.4% 7.7% (0.5%) Interest expense (1.9%) (2.0%) (2.1%) (2.4%) Interest income 0.2% 0.0% 0.2% 0.3% Other non-recurring charge 0.0% 0.0% 0.0% (2.2%) Other income (expense) - net (0.9%) 0.1% (3.1%) (0.6%) ---------- ---------- ---------- ---------- Income (loss) before provision for income taxes 9.4% 3.6% 2.8% (5.5%) Provision for income taxes 1.4% 1.5% 1.7% 1.8% ---------- ---------- ---------- ---------- Net income (loss) 8.0% 2.0% 1.1% (7.3%) ========== ========== ========== ==========
PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K (a) Exhibits: (10) Amendment No. Fourteen to the Loan and Security Agreement dated as of January 15, 1997 between the Company and Foothill Capital Corporation (11) Amendment No. Fifteen to the Loan and Security Agreement dated as of April 4, 1997 between the Company and Foothill Capital Corporation (12) Statement on computation of per share earnings (27) Financial Data Schedule (b) Reports on Form 8-K. None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report for the quarter ended March 29, 1997 to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 9, 1997 CONCURRENT COMPUTER CORPORATION By: /s/ E. Courtney Siegel ----------------------------- E. COURTNEY SIEGEL President and Chief Executive Officer By: /s/ Daniel S. Dunleavy ----------------------------- DANIEL S. DUNLEAVY Vice President, Chief Financial Officer and Chief Administrative Officer (Principal Financial and Accounting Officer) EX-10 2 AMND 14 LOAN SECUR AGMT CONCURRENT COMPUTER CORPORATION EXHIBIT 10 AMENDMENT NO. FOURTEEN TO THE LOAN AND SECURITY AGREEMENT CONCURRENT COMPUTER CORPORATION This Amendment No. Fourteen To The Loan And Security Agreement (this "Amendment") is entered into as of this 15th day of January, 1997, by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Borrower"), with its chief executive office located at 2101 W. Cypress Creek Road, Fort Lauderdale, Florida 33309 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACTS ----- FACT ONE: Foothill and Borrower have previously entered into that ---------- certain Loan And Security Agreement, dated as of June 29, 1995 (as amended and supplemented, the "Agreement"). FACT TWO: Foothill and Borrower desires to further amend the ---------- Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified. NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. Subsection (g) of the Definition "Eligible Accounts" under Section ----------------- 1.1 of the Agreement, is hereby amended in its entirety to read as follows: "(g) Accounts with respect to an Account Debtor whose total obligations owing to Borrower exceed ten percent (10%) of all Eligible Accounts, to the extent of the obligations owing by such Account Debtor in excess of such percentage, and with respect to Lockheed Martin Marietta Corp. whose total obligations owing to Borrower exceed thirty-five percent (35%); provided, however that -------- ------- accounts owed by the Illinois Department of Public Aid, Loral, Airinc, Boeing Co., Grumman Aircraft, Hughes Aircraft, Hughes Training Inc., ABB Combustion Engineering, and other accounts that may be approved from time to time by Foothill may be eligible up to a maximum, per Account Debtor, of fifteen percent (15%) of all Eligible Accounts, so long as they are otherwise eligible hereunder;". 2. Foothill shall charge Borrower's loan account a fee in the amount of Five Hundred Dollars ($500.00). Said fee shall be fully-earned, non-refundable, and due and payable on the date Borrower's loan account is charged. 3. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION CONCURRENT COMPUTER CORPORATION By /S/ Lisa M. Gonzales By /S/ Robert Fitzpatrick Lisa M. Gonzales Robert Fitzpatrick Its Assistant Vice President Its Vice President & Treasurer ------------------------ -------------------------- EX-11 3 AMND 15 LOAN SECUR AGMT CONCURRENT COMPUTER CORPORATION EXHIBIT 11 AMENDMENT NO. FIFTEEN TO THE LOAN AND SECURITY AGREEMENT CONCURRENT COMPUTER CORPORATION This Amendment No. Fifteen To The Loan And Security Agreement (this "Amendment") is entered into as of this 4th day of April, 1997, by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Borrower"), with its chief executive office located at 2101 W. Cypress Creek Road, Fort Lauderdale, Florida 33309 and FOOTHILL CAPITAL CORPORATION, a California corporation ("Foothill"), with a place of business located at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the following facts: FACTS ----- FACT ONE: Foothill and Borrower have previously entered into that ---------- certain Loan And Security Agreement, dated as of June 29, 1995 (as amended and supplemented, the "Agreement"). FACT TWO: Foothill and Borrower desires to further amend the ---------- Agreement as provided herein. Terms defined in the Agreement which are used herein shall have the same meanings as set forth in the Agreement, unless otherwise specified. NOW, THEREFORE, Foothill and Borrower hereby modify and amend the Agreement as follows: 1. Subsection (g) of the Definition "Eligible Accounts" under Section ----------------- 1.1 of the Agreement, is hereby amended in its entirety to read as follows: "(g) Accounts with respect to an Account Debtor whose total obligations owing to Borrower exceed ten percent (10%) of all Eligible Accounts, to the extent of the obligations owing by such Account Debtor in excess of such percentage, and with respect to Lockheed Martin Marietta Corp. whose total obligations owing to Borrower exceed thirty-five percent (35%), and with respect to Harris Corporation, whose total obligations to Borrower exceed thirty percent (30%) from March 24, 1997 through June 30, 1997 and shall revert to ten percent (10%); provided, however that accounts owed by the Illinois Department of -------- ------- Public Aid, Loral, Airinc, Boeing Co., Grumman Aircraft, Hughes Aircraft, Hughes Training Inc., ABB Combustion Engineering, and other accounts that may be approved from time to time by Foothill may be eligible up to a maximum, per Account Debtor, of fifteen percent (15%) of all Eligible Accounts, so long as they are otherwise eligible hereunder;". 2. Foothill shall charge Borrower's loan account a fee in the amount of One Thousand Two Hundred Fifty Dollars ($1,250.00). Said fee shall be fully-earned, non-refundable, and due and payable on the date Borrower's loan account is charged. 3. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Agreement, the terms and provisions of this Amendment shall govern. In all other respects, the Agreement, as supplemented, amended and modified, shall remain in full force and effect. IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of the day and year first written above. FOOTHILL CAPITAL CORPORATION CONCURRENT COMPUTER CORPORATION By By Lisa M. Gonzales Robert Fitzpatrick Its Assistant Vice President Its Vice President & Treasurer ------------------------ -------------------------- EX-12 4 STMT COMP OF PER SHARE EARN CONCURRENT COMPUTER CORPORATION EXHIBIT 12
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE COMPUTATION THREE MONTHS ENDED NINE MONTHS ENDED MARCH 29, MARCH 31, MARCH 29, MARCH 31, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net income (loss) $ 2,280 $ 533 $ 913 ($5,656) Weighted average number of common shares 45,439 30,568 43,930 30,482 Increase in weighted average number of common shares upon assumed conversion of preferred stock -- -- -- -- Increase in weighted average number of common shares upon assumed conversion of stock options 723 704 723 -- Total 46,162 31,272 44,653 30,482 Net income (loss) per share Primary $ 0.05 $ 0.02 $ 0.02 ($0.19) ========== ========== ========== ========== Fully Diluted $ 0.05 $ 0.02 $ 0.02 ($0.19) ========== ========== ========== ==========
EX-27 5
5 This schedule contains summary financial information extracted from the Company's consolidated balance sheet at March 29, 1997 and Consolidated Statement of Operations for the nine months ended March 29, 1997, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS JUN-30-1997 JUN-30-1996 MAR-29-1997 2709 2730 32253 1825 10475 48466 55016 39691 69959 45524 5016 460 3828 0 13500 69959 42196 83037 22199 44914 0 17 1740 2284 1371 913 0 0 0 913 .02 .02
-----END PRIVACY-ENHANCED MESSAGE-----