-----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, CIk+ahCyZdAIrPr0l05g7UuREEXxKCmjihJ4LiRsLBep2DK2G2nztzPlEMmX5NfU G+FHiwR9PnPt7oJfDtX0pw== 0001015402-99-000123.txt : 19990211 0001015402-99-000123.hdr.sgml : 19990211 ACCESSION NUMBER: 0001015402-99-000123 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCURRENT COMPUTER CORP/DE CENTRAL INDEX KEY: 0000749038 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 042735766 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13150 FILM NUMBER: 99528831 BUSINESS ADDRESS: STREET 1: 2101 WEST CYPRESS CREEK ROAD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 BUSINESS PHONE: 9549741700 MAIL ADDRESS: STREET 1: CONCURRENT COMPUTER CORP STREET 2: 2101 WEST CYPRESS CREEK RD CITY: FT LAUDERDALE STATE: FL ZIP: 33309 FORMER COMPANY: FORMER CONFORMED NAME: MASSACHUSETTS COMPUTER CORP DATE OF NAME CHANGE: 19881018 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of --- the Securities Exchange Act of 1934 For the Quarter Ended December 31, 1998 or Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from ____ to ____ Commission File No. 0-13150 _____________ CONCURRENT COMPUTER CORPORATION Delaware 04-2735766 (State of Incorporation) (I.R.S. Employer Identification No.) 2101 West Cypress Creek Road, Ft. Lauderdale, FL 33309 Telephone: (954) 974-1700 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ --- Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of February 5, 1999 was 47,942,504. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1998 1997 1998 1997 -------- -------- -------- -------- (UNAUDITED) (UNAUDITED) Net sales: Computer systems . . . . . . . . . . . . . $ 9,068 $ 9,759 $15,796 $18,625 Service and other. . . . . . . . . . . . . 10,113 11,257 20,259 22,996 -------- -------- -------- -------- Total. . . . . . . . . . . . . . . . . . 19,181 21,016 36,055 41,621 Cost of sales: Computer systems . . . . . . . . . . . . . 4,244 4,516 7,258 8,793 Service and other. . . . . . . . . . . . . 5,103 5,737 10,214 12,182 -------- -------- -------- -------- Total. . . . . . . . . . . . . . . . . . 9,347 10,253 17,472 20,975 -------- -------- -------- -------- Gross margin . . . . . . . . . . . . . . . . 9,834 10,763 18,583 20,646 Operating expenses: Research and development . . . . . . . . . 2,545 2,694 5,249 5,514 Selling, general and administrative. . . . 6,750 5,870 12,583 11,894 Restructuring. . . . . . . . . . . . . . . - - - (607) -------- -------- -------- -------- Total operating expenses . . . . . . . . . . 9,295 8,564 17,832 16,801 -------- -------- -------- -------- Operating income . . . . . . . . . . . . . . 539 2,199 751 3,845 Interest expense . . . . . . . . . . . . . . (71) (188) (149) (450) Interest income. . . . . . . . . . . . . . . 41 36 93 58 Other income (expense) - net . . . . . . . . 492 (41) (120) 178 -------- -------- -------- -------- Income before provision for income taxes . . 1,001 2,006 575 3,631 Provision for income taxes . . . . . . . . . 86 583 86 908 -------- -------- -------- -------- Net income . . . . . . . . . . . . . . . . . $ 915 $ 1,423 $ 489 $ 2,723 Preferred stock dividends and accretion of mandatory redeemable preferred shares. . . - - - (18) -------- -------- -------- -------- Net income available to common shareholders. $ 915 $ 1,423 $ 489 $ 2,705 ======== ======== ======== ======== Basic and diluted net income per share . . . $ 0.02 $ 0.03 $ 0.01 $ 0.06 ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) DEC. 31, JUNE 30, 1998 1998 ------------ ---------- ASSETS (UNAUDITED) Current assets: Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 5,777 $ 5,733 Accounts receivable - net. . . . . . . . . . . . . . . . . . 16,675 18,571 Notes receivable - net . . . . . . . . . . . . . . . . . . . 722 425 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 6,183 6,263 Prepaid expenses and other current assets. . . . . . . . . . 1,466 1,487 ------------ ---------- Total current assets . . . . . . . . . . . . . . . . . . . 30,823 32,479 Property, plant and equipment - net. . . . . . . . . . . . . . 12,993 12,419 Other long-term assets . . . . . . . . . . . . . . . . . . . . 1,212 1,337 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 45,028 $ 46,235 ============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . . . . . . $ 440 $ 365 Revolving credit facility. . . . . . . . . . . . . . . . . . 922 1,123 Accounts payable and accrued expenses. . . . . . . . . . . . 10,866 13,321 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 3,249 4,018 ------------ ---------- Total current liabilities. . . . . . . . . . . . . . . . . 15,477 18,827 Other long-term liabilities. . . . . . . . . . . . . . . . . . 2,095 1,898 Total liabilities. . . . . . . . . . . . . . . . . . . . . 17,572 20,725 ------------ ---------- Stockholders' equity: Common stock . . . . . . . . . . . . . . . . . . . . . . . . 479 476 Capital in excess of par value . . . . . . . . . . . . . . . 97,523 97,136 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (70,702) (71,191) Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (58) (58) Cumulative translation adjustment. . . . . . . . . . . . . . 214 (853) Total stockholders' equity . . . . . . . . . . . . . . . . 27,456 25,510 ------------ ---------- Total liabilities and stockholders' equity . . . . . . . . . . $ 45,028 $ 46,235 ============ ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) SIX MONTHS ENDED DECEMBER 31, 1998 1997 --------- --------- (UNAUDITED) Cash flows provided by operating activities: Net income. . . . . . . . . . . . . . . . . . . . . . $ 489 $ 2,723 Adjustments to reconcile net income to net cash provided by operating activities: Realized gain on trading securities . . . . . . . . - (420) Gain on sale of facility. . . . . . . . . . . . . . - (706) Loss on dissolution of subsidiary . . . . . . . . . 429 - Depreciation, amortization and other. . . . . . . . 2,551 2,962 Other non-cash expenses . . . . . . . . . . . . . . 12 857 Decrease (increase) in assets: Accounts and notes receivable . . . . . . . . . . 1,592 6,055 Inventories . . . . . . . . . . . . . . . . . . . 75 1,137 Prepaid expenses and other current assets . . . . (433) (65) Other long-term assets. . . . . . . . . . . . . . 98 69 Increase (decrease) in liabilities: Accounts payable, accrued expenses and other current liabilities . . . . . . . . . (3,224) (11,061) Other long-term liabilities . . . . . . . . . . . 197 355 --------- --------- Total adjustments to net income . . . . . . . . . . . 1,297 (817) --------- --------- Net cash provided by operating activities . . . . . . . 1,786 1,906 --------- --------- Cash flows (used in) provided by investing activities: Net additions to property, plant and equipment. . . . (2,238) (1,470) Proceeds from sale of facility. . . . . . . . . . . . - 5,406 Proceeds from sale of trading securities. . . . . . . - 2,668 --------- --------- Net cash (used in) provided by investing activities . . (2,238) 6,604 --------- --------- Cash flows provided by (used in) financing activities: Payments of notes payable . . . . . . . . . . . . . . (5) (292) Proceeds of revolving credit facility . . . . . . . . 28,054 36,476 Payments of revolving credit facility . . . . . . . . (28,255) (39,594) Repayment of long-term debt . . . . . . . . . . . . . - (4,194) Proceeds from sale and issuance of common stock . . . 390 457 --------- --------- Net cash provided by (used in) financing activities . . 184 (7,147) --------- --------- Effect of exchange rates on cash and cash equivalents . 312 (395) --------- --------- Increase in cash and cash equivalents . . . . . . . . . $ 44 $ 968 ========= ========= Cash paid during the period for: Interest. . . . . . . . . . . . . . . . . . . . . . $ 148 $ 422 ========= ========= Income taxes (net of refunds) . . . . . . . . . . . $ 318 $ 668 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Concurrent Computer Corporation ("Concurrent" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with 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 condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission. The results of interim periods are not necessarily indicative of the results to be expected for the full fiscal year. 2. EARNINGS PER SHARE In the quarter ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS No. 128"), which supersedes APB Opinion No. 15, "Earnings Per Share", and specifies the computation, presentation, and disclosure requirements for earnings per share ("EPS") for entities with publicly held common stock or potential common stock. FAS No. 128 replaces primary and fully diluted EPS with basic and diluted EPS, respectively. It also requires dual presentation of basic EPS and diluted EPS on the face of the income statement and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS is computed by dividing income after deduction of preferred stock dividends by the weighted average number of common shares outstanding during each year. Diluted EPS is computed by dividing income after deduction of preferred stock dividends by the weighted average number of shares including common share equivalents. Under the treasury stock method, incremental shares representing the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued are included in the computation. The number of shares used in computing basic and diluted EPS for the three months ended December 31, 1998 was 47,852,000 and 49,214,000, respectively. The number of shares used in computing basic and fully diluted EPS for the three months ended December 31, 1997 was 47,022,000 and 48,100,000, respectively. The number of shares used in computing basic and fully diluted EPS for the six months ended December 31, 1998 was 47,763,000 and 49,220,000, respectively. The number of shares used in computing basic and fully diluted EPS for the six months ended December 31, 1997 was 46,598,000 and 47,364,000, respectively. 3. INVENTORIES Inventories are valued at the lower of cost or market, with cost being determined by using the first-in, first-out ("FIFO") method. The components of inventories are as follows: (DOLLARS IN THOUSANDS)
DEC. 31, JUNE 30, 1998 1998 --------- --------- Raw materials . $ 4,831 $ 4,780 Work-in-process 925 959 Finished goods. 427 524 --------- --------- $ 6,183 $ 6,263 ========= =========
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows: (DOLLARS IN THOUSANDS)
DEC. 31, JUNE 30, 1998 1998 --------- --------- Accounts payable, trade . . . $ 3,687 $ 4,946 Accrued payroll, vacation and other employee expenses . . 3,764 4,695 Restructuring reserve . . . . 349 661 Other accrued expenses. . . . 3,066 3,019 --------- --------- $ 10,866 $ 13,321 ========= =========
5. PROVISION FOR RESTRUCTURING As of June 30, 1998, the Company's restructuring reserve consisted of $177,000 of accrued severance payments and $484,000 of estimated payments to be made to the Industrial Development Authority of Ireland (the "IDA") during fiscal year 1999. On May 5, 1992, the Company entered into an agreement with the IDA to maintain a presence in Ireland through April 30, 1998. The Company closed its Ireland operations in December 1996. As a result of the closing, the Company is required to repay grants to the IDA of approximately $500,000. During the first quarter of fiscal year 1999, the severance payments were made and taken against the restructuring reserve, leaving $484,000 as of September 30, 1998. During the second quarter of fiscal year 1999, IDA payments of $135,000 were made, leaving $349,000 of restructuring reserve as of December 31, 1998. 6. DISSOLUTION OF SUBSIDIARY During the quarter ended September 30, 1998, the Company dissolved one of its French subsidiaries, Concurrent Computer Corporation France (the "French Branch"). The Company continues to operate in France through its other French subsidiary, Concurrent Computer Corporation S.A. In connection with the dissolution of the French Branch, all of its assets and liabilities were assumed by the Company. A loss of $429,000, representing the write off of the French Branch's cumulative translation adjustment, was recorded as other expense in the condensed consolidated statement of operations. 7. COMPREHENSIVE INCOME Effective July 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income" ("FAS No. 130"). FAS No. 130 requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company's total comprehensive is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1998 1997 1998 1997 ------ ------- ------ ------- Net income. . . . . . . . . . . . . . . . . . $ 915 $1,423 $ 489 $2,723 Other comprehensive income (loss): Foreign currency translation gains (losses) $ 247 $ (104) $1,067 $ (119) ------ ------- ------ ------- Total comprehensive income. . . . . . . . . . $1,162 $1,319 $1,556 $2,604 ====== ======= ====== =======
8. YEAR 2000 The Company converted its computer systems and believes such systems are Year 2000 compliant. The Year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. The Company has expensed all costs associated with these systems changes. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THE QUARTER ENDED DECEMBER 31, 1998 COMPARED WITH THE QUARTER ENDED DECEMBER 31, 1997. Net Sales. Net sales decreased to $19.2 million for the quarter ended December 31, 1998 from $21.0 million in the comparable period a year ago. The Company considers its computer systems and service business to be one class of products. Net product sales were $9.1 million for the quarter ended December 31, 1998 as compared with $9.8 million for the quarter ended December 31, 1997. Sales of proprietary systems continue to decline, and the selling price of open systems is significantly lower than the selling price of proprietary products. Maintenance sales decreased from $11.3 million in the quarter ended December 31, 1997 to $10.1 million in the quarter ended December 31, 1998, continuing the decline experienced over the past years as customers move from proprietary systems to open systems which require less maintenance. Gross Margin. Gross margin decreased approximately $1.0 million during the current quarter to $9.8 million compared to $10.8 million for the three months ended December 31, 1997. The decrease reflects the Company's lower sales this quarter. The gross margin as a percentage of sales for the quarter ended December 31, 1998 is consistent with the quarter ended December 31, 1997. Operating Income. Operating income decreased $1.7 million to $0.5 million in the current quarter compared with an income of $2.2 million in the quarter ended December 31, 1997 due to the decrease in gross margin discussed above and a $0.7 million increase in operating expenses. The increase in operating expenses is largely due to increased legal expenses relating to subsequently resolved lawsuits, and an increase in marketing expenses primarily relating to Interactive Video on Demand ("IVOD") products. Net Income. Net income decreased from $1.4 million in the quarter ended December 31, 1997 to $0.9 million in the current quarter. The decrease of $0.5 million is due to the $1.7 million decrease in operating income which was partially offset by a $0.5 million increase in other income (expense) - net, a $0.5 million decrease in the income tax provision, and a $0.1 million decrease in interest expense. The increase in other income (expense) - net is primarily due to an exchange gain resulting from the settlement of a subsidiary's short term loan to the Company; the decrease in the income tax provision resulted from an income shift towards subsidiaries with net operating losses sufficient to offset the gains; and the decrease in interest expense resulting from decreased borrowings. THE SIX MONTHS ENDED DECEMBER 31, 1998 COMPARED WITH THE SIX MONTHS ENDED DECEMBER 31, 1997. Net Sales. Net sales decreased to $36.1 million for the six months ended December 31, 1998 from $41.6 million in the comparable period a year ago. The Company considers its computer systems and service business to be one class of products. Net product sales were $15.8 million for the six months ended December 31, 1998 as compared with $18.6 million for the six months ended December 31, 1997. Sales of proprietary systems continue to decline, and the selling price of open systems is significantly lower than that of proprietary products. In the first quarter of fiscal year 1999, International Sales were low due to the economic crisis in Asia, as well as a slow summer in Europe due to vacation periods. During that period, US sales were also lower than expected due to delays in government programs. Maintenance sales decreased from $23.0 million in the six months ended December 31, 1997 to $20.3 million for the comparable six months of 1998, continuing the decline experienced over the past years as customers move from proprietary to open systems which require less maintenance. Gross Margin. Gross margin decreased $2.0 million during the current six-month period to $18.6 million compared to $20.6 million for the six months ended December 31, 1997. The decrease reflects the Company's lower sales this quarter. The gross margin as a percentage of sales increased from 50% in the six months ended December 31, 1997 to 52% in the current six months due to the Company's ongoing cost reduction efforts. Operating Income. Operating income decreased $3.0 million to a profit of $0.8 million in the current six-month period compared with an income of $3.8 million in the six months ended December 31, 1997 due to the decrease in gross margin discussed above and a $1.0 million increase in operating expenses. The increase in operating expenses is largely due to a $0.6 million gain on the sale of the building recorded as an offset to restructuring expense in the prior six month period, increased legal expenses in the current period relating to subsequently resolved lawsuits, and an increase in marketing expenses in the current six months primarily relating to IVOD products. This increase was partially offset by a slight decrease in research and development costs resulting from cost reduction efforts. Net Income. Net income decreased from a profit of $2.7 million in the six months ended December 31, 1997 to an income of $0.5 million in the current six months. This decrease of $2.2 million is primarily due to the $3.0 million decrease in operating income discussed above and a $0.3 million decrease in other income (expense) - net. The decrease in other income (expense) - net is primarily due to a $0.1 million loss in the current six months consisting of a $0.4 million loss due to the dissolution of the Company's French Branch (defined in Note 6 to the condensed consolidated financial statements) and a $0.3 exchange gain resulting from the settlement of a subsidiary's short term loan to the Company, as compared to a $0.2 million gain in the six months ended December 31, 1997 primarily due to a gain on the sale of trading securities. These decreases to net income were partially offset by a $0.8 million decrease in the tax provision resulting from an income shift towards subsidiaries with net operating losses sufficient to offset the gains and a $0.3 million decrease in interest expense resulting from decreased borrowings. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity is dependent on many factors, including sales volume, operating profit ratio, debt service and the efficiency of asset use and turnover. The future liquidity of the Company depends to a significant extent on (i) the actual versus anticipated decline in sales of proprietary systems and service maintenance revenue; (ii) revenue growth from open systems; and (iii) ongoing cost control actions. Liquidity will also be affected by: (i) timing of shipments which predominately occur during the last month of the quarter; (ii) the percentage of sales derived from outside the United States where there are generally longer accounts receivable collection cycles and which receivables are not included in the Company's borrowing base under its revolving credit facility; (iii) the sales level in the United States where related accounts receivable are included in the borrowing base of the Company's revolving credit facility; and (iv) the number of countries in which the Company will operate, which may require maintenance of minimum cash levels in each country and, in certain cases, may restrict the repatriation of cash, such as cash held on deposit to secure office leases. The Company believes that it will be able to fund fiscal 1999 operations through its operating results and existing financing facilities. On March 1, 1998, the Company entered into a new agreement providing for an $8 million revolving credit facility through August 1, 2000. At December 31, 1998, the outstanding balance under the revolving credit facility was $0.9 million. The entire outstanding balance of the revolving credit facility has been classified as a current liability at December 31, 1998. The revolving credit facility bears interest at the prime rate plus .75% (8.5% at December 31, 1998). The revolving credit facility may be repaid and reborrowed, subject to certain collateral requirements, at any time prior to its maturity. The Company has pledged substantially all of its domestic assets as collateral for the revolving credit facility. Certain early termination fees apply if the Company terminates the facility in its entirety prior to June 30, 1999. The Company had debt to outside financial institutions of $1.4 million at December 31, 1998 as compared to $1.5 million at June 30, 1998. The Company and Nippon Steel Corporation ("NSC") terminated the joint venture in Concurrent Nippon Corporation ("CNC") in the quarter ended June 30, 1998, and the Company acquired 100% of the stock in CNC. In connection with this transaction, NSC paid the Company $1.2 million and the Company paid off debt owed to certain Japanese banks on behalf of CNC. The Company had cash and cash equivalents on hand of $5.8 million at December 31, 1998 representing a slight increase from $5.7 million as of June 30, 1998 primarily due to timing differences. YEAR 2000 The Company has been aggressively addressing Year 2000 issues related to the processing of date-sensitive data. A cross-functional team was assembled, and a determination was made as to which systems were Year 2000 non-compliant. The Company believes that all of the Company's critical financial, manufacturing, R&D and other systems are fully compliant. Concurrent has reviewed customer and supplier relationships, and has a Year 2000 software product available which many of its customers have implemented. While the Company is taking all reasonable efforts, including direct mailings and internet web site offerings, to make information on the Year 2000 readiness of its products available to its customers, this information may not reach all customers, particularly third-party customers. Although the Company believes it has addressed Year 2000 readiness issues related to its products, there may be disruptions and/or product failures that are unforeseen. The Company is requesting assurances from its major suppliers that they are addressing these issues and that products procured by the Company will function properly in the Year 2000. It is expected that certain critical suppliers may be unwilling or unable to provide such assurances. As a result, it is difficult for the Company to assess the impact on its business of such entities' failure to be Year 2000 compliant. Although Concurrent will incur additional time and effort in Year 2000 compliance, these costs are not expected to be material. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain matters discussed in this Form 10-Q may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Concurrent Computer Corporation cautions investors that any forward-looking statements made herein are not guarantees of future performance and that a variety of factors could cause its actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties which could affect Concurrent Computer Corporation's performance or results include, without limitation, changes in product demand; economic conditions; various inventory risks due to changes in market conditions; uncertainties relating to the development and ownership of intellectual property; uncertainties relating to the ability of Concurrent Computer Corporation and other companies to enforce their intellectual property rights; the pricing and availability of equipment, materials and inventories; technological developments; delays in testing of new products; rapid technology changes; the highly competitive environment in which Concurrent Computer Corporation operates; the entry of new well-capitalized competitors into Concurrent Computer Corporation's markets, and other risks and uncertainties. SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 1998 1997 1998 1997 ------ ------ ------ ------ Net sales: Computer systems . . . . . . . . . . . 47.3% 46.4% 43.8% 44.7% Service and other. . . . . . . . . . . 52.7% 53.6% 56.2% 55.3% ------ ------ ------ ------ Total. . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% Cost of sales: Computer systems . . . . . . . . . . . 46.8% 46.3% 45.9% 47.2% Service and other. . . . . . . . . . . 50.5% 51.0% 50.4% 53.0% Total. . . . . . . . . . . . . . . . 48.7% 48.8% 48.5% 50.4% ------ ------ ------ ------ Gross margin . . . . . . . . . . . . . . 51.3% 51.2% 51.5% 49.6% Operating expenses: Research and development . . . . . . . 13.3% 12.8% 14.6% 13.2% Selling, general and administrative. . 35.2% 27.9% 34.9% 28.6% Restructuring. . . . . . . . . . . . . 0.0% 0.0% 0.0% (1.5%) ------ ------ ------ ------ Total operating expenses . . . . . . . . 48.5% 40.7% 49.5% 40.4% ------ ------ ------ ------ Operating income . . . . . . . . . . . . 2.8% 10.5% 2.1% 9.2% Interest expense . . . . . . . . . . . . (0.4%) (0.9%) (0.4%) (1.1%) Interest income. . . . . . . . . . . . . 0.2% 0.2% 0.3% 0.1% Other income (expense) - net . . . . . . 2.6% (0.2%) (0.3%) 0.4% ------ ------ ------ ------ Income before provision for income taxes 5.2% 9.5% 1.6% 8.7% Provision for income taxes . . . . . . . 0.4% 2.8% 0.2% 2.2% ------ ------ ------ ------ Net income . . . . . . . . . . . . . . . 4.8% 6.8% 1.4% 6.5% ====== ====== ====== ======
PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Matters as specified in the Company's Proxy Statement dated October 1, 1998 were considered and approved by the Company's stockholders at the Annual Meeting of Stockholders held on October 30, 1998. The results of such matters were as follows: Proposal 1: Election of Directors.
Total Votes Total Votes For Against or Withheld --------------- ------------------- Michael A. Brunner. . 42,878,717 186,699 Morton E. Handel. . . 42,866,117 199,499 C. Shelton James. . . 42,859,555 205,863 Richard P. Rifenburgh 42,878,717 186,699 E. Courtney Siegel. . 42,739,815 265,601
Proposal 2: Ratification of the selection by the Board of Directors of KPMG Peat Marwick LLP as the Company's independent auditors for the fiscal year ending June 30, 1999.
Total Votes Number of Total Votes For Against or Withheld Abstentions - --------------- ------------------- ----------- 42,703,984. . . 55,834 305,598
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K (a) Exhibits: (11) 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 December 31, 1998 to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 10, 1999 CONCURRENT COMPUTER CORPORATION By: /s/ Daniel S. Dunleavy --------------------------- DANIEL S.DUNLEAVY Executive Vice President, Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer) EX-11 2
CONCURRENT COMPUTER CORPORATION EXHIBIT 11 BASIC AND DILUTED EARNINGS PER SHARE COMPUTATION THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 1998 DECEMBER 31, 1998 ----------------- ----------------- BASIC DILUTED BASIC DILUTED ------- -------- ------- -------- Average outstanding shares: . . . . 47,852 47,852 47,763 47,763 Diluted options outstanding . . . . - 1,362 - 1,457 ------- -------- ------- -------- Equivalent Shares . . . . . . . . . 47,852 49,214 47,763 49,220 ======= ======== ======= ======== Net income. . . . . . . . . . . . . $ 915 $ 915 $ 489 $ 489 Preferred stock dividends and accretion of preferred shares - - - - ------- -------- ------- -------- Net income available to common stockholders. . . . . . . . . . . $ 915 $ 915 $ 489 $ 489 ======= ======== ======= ======== Earnings per share. . . . . . . . . $ 0.02 $ 0.02 $ 0.01 $ 0.01 ======= ======== ======= ========
EX-27 3
5 This schedule contains summary financial information extracted from the Companys Consolidated Balance Sheet at December 31, 1998 and Consolidated Statement of Operations for the six months ended December 31, 1998, and is qualified in its entirety by reference to such financial statements. 1000 6-MOS JUN-30-1999 JUL-01-1999 DEC-31-1999 5777 0 17833 436 6183 30823 36235 23242 45028 15477 922 479 0 0 26977 45028 15796 36055 7258 17472 0 7 149 575 86 489 0 0 0 489 .01 .01
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