-----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, V7IBjsgr2buT8jLBrumDxSLZOWPHEru7/sNXgyxwmdf6ESRmotOGFrXIybbAuq8s 1P6pf/Yf62fdPEOQtct+EQ== 0001015402-99-000524.txt : 19990518 0001015402-99-000524.hdr.sgml : 19990518 ACCESSION NUMBER: 0001015402-99-000524 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: 99627112 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 March 31, 1999 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 12, 1999 was 48,265,848. PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 1999 1998 -------- -------- -------- -------- Net sales: Computer systems . . . . . . . . . . . . . $ 8,566 $ 9,544 $24,362 $28,169 Service and other. . . . . . . . . . . . . 9,110 10,850 29,369 33,846 -------- -------- -------- -------- Total. . . . . . . . . . . . . . . . . . 17,676 20,394 53,731 62,015 Cost of sales: Computer systems . . . . . . . . . . . . . 3,403 5,123 10,661 13,916 Service and other. . . . . . . . . . . . . 5,016 5,670 15,230 17,852 -------- -------- -------- -------- Total. . . . . . . . . . . . . . . . . . 8,419 10,793 25,891 31,768 -------- -------- -------- -------- Gross margin . . . . . . . . . . . . . . . . 9,257 9,601 27,840 30,247 Operating expenses: Research and development . . . . . . . . . 2,371 2,739 7,620 8,253 Selling, general and administrative. . . . 6,324 5,845 18,907 17,739 Restructuring. . . . . . . . . . . . . . . - - - (607) -------- -------- -------- -------- Total operating expenses . . . . . . . . . . 8,695 8,584 26,527 25,385 -------- -------- -------- -------- Operating income . . . . . . . . . . . . . . 562 1,017 1,313 4,862 Interest expense . . . . . . . . . . . . . . (45) (159) (194) (609) Interest income. . . . . . . . . . . . . . . 34 51 127 109 Other non-recurring gain (loss). . . . . . . - - (88) 420 Other income (expense) - net . . . . . . . . (205) 120 (237) (122) -------- -------- -------- -------- Income before provision for income taxes . . 346 1,029 921 4,660 Provision for income taxes . . . . . . . . . 52 24 138 932 -------- -------- -------- -------- Net income . . . . . . . . . . . . . . . . . $ 294 $ 1,005 $ 783 $ 3,728 Preferred stock dividends and accretion of mandatory redeemable preferred shares. . . - - - (18) -------- -------- -------- -------- Net income available to common shareholders. $ 294 $ 1,005 $ 783 $ 3,710 ======== ======== ======== ======== Basic and diluted net income per share . . . $ 0.01 $ 0.02 $ 0.02 $ 0.08 ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
CONCURRENT COMPUTER CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) MARCH 31, JUNE 30, 1999 1998 ------------ ---------- ASSETS (UNAUDITED) Current assets: Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 5,607 $ 5,733 Accounts and notes receivable - net. . . . . . . . . . . . . 16,203 18,996 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 5,832 6,263 Prepaid expenses and other current assets. . . . . . . . . . 1,599 1,487 ------------ ---------- Total current assets . . . . . . . . . . . . . . . . . . . 29,241 32,479 Property, plant and equipment - net. . . . . . . . . . . . . . 12,503 12,419 Other long-term assets . . . . . . . . . . . . . . . . . . . . 1,104 1,337 Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 42,848 $ 46,235 ============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . . . . . . $ - $ 365 Revolving credit facility. . . . . . . . . . . . . . . . . . - 1,123 Accounts payable and accrued expenses. . . . . . . . . . . . 9,512 13,321 Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 3,598 4,018 ------------ ---------- Total current liabilities. . . . . . . . . . . . . . . . . 13,110 18,827 Other long-term liabilities. . . . . . . . . . . . . . . . . . 1,968 1,898 ------------ ---------- Total liabilities. . . . . . . . . . . . . . . . . . . . . 15,078 20,725 ------------ ---------- Stockholders' equity: Common stock . . . . . . . . . . . . . . . . . . . . . . . . 481 476 Capital in excess of par value . . . . . . . . . . . . . . . 98,100 97,136 Accumulated deficit after eliminating accumulated deficit of $81,826 at December 31, 1991, date of quasi-reorganization (70,408) (71,191) Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (58) (58) Cumulative translation adjustment. . . . . . . . . . . . . . (345) (853) ------------ ---------- Total stockholders' equity . . . . . . . . . . . . . . . . 27,770 25,510 ------------ ---------- Total liabilities and stockholders' equity . . . . . . . . . . $ 42,848 $ 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) (UNAUDITED) NINE MONTHS ENDED MARCH 31, 1999 1998 ----------- --------- Cash flows provided by operating activities: Net income. . . . . . . . . . . . . . . . . . . . . . $ 783 $ 3,728 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. . . . . . . . 3,701 4,317 Other non-cash expenses . . . . . . . . . . . . . . 19 1,027 Decrease (increase) in assets: Accounts and notes receivable . . . . . . . . . . 2,782 4,189 Inventories . . . . . . . . . . . . . . . . . . . 423 1,703 Prepaid expenses and other current assets . . . . (753) (775) Other long-term assets. . . . . . . . . . . . . . 192 83 Increase (decrease) in liabilities: Accounts payable, accrued expenses and other current liabilities . . . . . . . . . (4,229) (9,197) Other long-term liabilities . . . . . . . . . . . 70 297 ----------- --------- Total adjustments to net income . . . . . . . . . . . 2,634 518 ----------- --------- Net cash provided by operating activities . . . . . . . 3,417 4,246 ----------- --------- Cash flows (used in) provided by investing activities: Net additions to property, plant and equipment. . . . (2,957) (1,977) Proceeds from sale of facility. . . . . . . . . . . . - 5,406 Proceeds from sale of trading securities. . . . . . . - 2,668 ----------- --------- Net cash (used in) provided by investing activities . . (2,957) 6,097 ----------- --------- Cash flows used in financing activities: Payments of notes payable . . . . . . . . . . . . . . (425) (462) Proceeds of revolving credit facility . . . . . . . . 39,995 48,965 Payments of revolving credit facility . . . . . . . . (41,118) (52,083) Repayment of long-term debt . . . . . . . . . . . . . - (6,161) Proceeds from sale and issuance of common stock . . . 969 679 ----------- --------- Net cash used in financing activities . . . . . . . . . (579) (9,062) ----------- --------- Effect of exchange rates on cash and cash equivalents . (7) (428) ----------- --------- (Decrease) increase in cash and cash equivalents. . . . $ (126) $ 853 =========== ========= Cash paid during the period for: Interest. . . . . . . . . . . . . . . . . . . . . . $ 190 $ 594 =========== ========= Income taxes (net of refunds) . . . . . . . . . . . $ 875 $ 891 =========== =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. CONCURRENT COMPUTER CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Concurrent Computer Corporation ("Concurrent" or the "Company") have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The foregoing financial information 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 March 31, 1998, 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 giving effect to all dilutive potential shares that were outstanding during the period, as calculated under the treasury stock method. The number of shares used in computing basic and diluted EPS for the three months ended March 31, 1999 was 48,043,000 and 50,981,000, respectively. The number of shares used in computing basic and fully diluted EPS for the three months ended March 31, 1998 was 47,260,000 and 49,058,000, respectively. The number of shares used in computing basic and fully diluted EPS for the nine months ended March 31, 1999 was 47,855,000 and 49,186,000, respectively. The number of shares used in computing basic and fully diluted EPS for the nine months ended March 31, 1998 was 46,816,000 and 48,641,000, respectively. 3. INVENTORIES Inventories are valued at the lower of cost or market, with cost being determined by using the first-in, first-out ("FIFO") method. The components of inventories are as follows: (DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30, 1999 1998 ---------- --------- Raw materials . $ 4,610 $ 4,780 Work-in-process 804 959 Finished goods. 418 524 ---------- --------- $ 5,832 $ 6,263 ========== =========
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES The components of accounts payable and accrued expenses are as follows: (DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30, 1999 1998 ---------- --------- Accounts payable, trade . . . $ 3,169 $ 4,946 Accrued payroll, vacation and other employee expenses . . 3,519 4,695 Restructuring reserve . . . . 213 661 Other accrued expenses. . . . 2,611 3,019 ---------- --------- $ 9,512 $ 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 and third quarters of fiscal year 1999, IDA payments of $135,000 and $136,000, respectively, were made leaving $213,000 of restructuring reserve as of March 31, 1999. 6. 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 NINE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 1999 1998 ------ ------- ------ ------- Net income. . . . . . . . . . . . . . . . . . $ 294 $1,005 $ 783 $3,728 Other comprehensive income (loss): Foreign currency translation gains (losses) (559) (26) 508 (145) ------ ------- ------ ------- Total comprehensive income. . . . . . . . . . $(265) $ 979 $1,291 $3,583 ====== ======= ====== =======
7. 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 MARCH 31, 1999 COMPARED WITH THE QUARTER ENDED MARCH 31, 1998. Net Sales. Net sales decreased to $17.7 million for the quarter ended March 31, 1999 from $20.4 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 $8.6 million for the quarter ended March 31, 1999 as compared with $9.5 million for the quarter ended March 31, 1998. 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 $10.9 million in the quarter ended March 31, 1998 to $9.1 million in the quarter ended March 31, 1999, 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 $0.3 million during the current quarter to $9.3 million (52% as a percentage of sales) compared to $9.6 million (47%) for the three months ended March 31, 1998. The overall decrease in gross margin reflects the Company's lower sales this quarter. The improved margin percentage resulted from a more favorable product mix, changes in pricing structure, the move toward open systems which have a higher margins than proprietary systems, and the Company's ongoing cost reduction efforts. Operating Income. Operating income decreased $0.4 million to $0.6 million in the current quarter compared with an income of $1.0 million in the quarter ended March 31, 1998 due to the decrease in gross margin discussed above and a $0.1 million increase in operating expenses. The increase in operating expenses is largely due to the increase in marketing expenses primarily relating to Interactive Video on Demand ("IVOD") products. Net Income. Net income decreased from $1.0 million in the quarter ended March 31, 1998 to $0.3 million in the current quarter. The decrease of $0.7 million is primarily due to the $0.4 million decrease in operating income, and a $0.3 million decrease in other income (expense) - net due to miscellaneous adjustments. THE NINE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE NINE MONTHS ENDED MARCH 31, 1998. Net Sales. Net sales decreased to $53.7 million for the nine months ended March 31, 1999 from $62.0 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 $24.4 million for the nine months ended March 31, 1999 as compared with $28.2 million for the nine months ended March 31, 1998. Sales of proprietary systems continue to decline, and the selling price of open systems is significantly lower than that of proprietary products. Furthermore, in the first quarter of fiscal year 1999, international sales decreased due to the economic crisis in Asia. Maintenance sales decreased from $33.8 million in the nine months ended March 31, 1998 to $29.4 million for the comparable nine months of 1999, 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 $2.4 million during the current nine-month period to $27.8 million compared to $30.2 million for the nine months ended March 31, 1998. The decrease reflects the Company's lower sales this quarter. The gross margin as a percentage of sales increased from 49% in the nine months ended March 31, 1998 to 52% in the current nine months. The improved margin percentage resulted from a more favorable product mix, changes in pricing structure, the move toward open systems which have a higher margins than proprietary systems, and the Company's ongoing cost reduction efforts. Operating Income. Operating income decreased $3.5 million to a profit of $1.3 million in the current nine-month period compared with an income of $4.8 million in the nine months ended March 31, 1998 due to the $2.4 million decrease in gross margin discussed above and a $1.1 million increase in operating expenses. The increase in operating expenses is largely due to a $0.6 million gain on the sale of the Company's Oceanport, New Jersey building recorded as an offset to restructuring expense in the prior nine month period, increased legal expenses in the current period relating to subsequently resolved lawsuits, and an increase in marketing expenses in the current nine 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 $3.7 million in the nine months ended March 31, 1998 to an income of $0.8 million in the current nine months. This decrease of $2.9 million is primarily due to the $3.5 million decrease in operating income discussed above, a $0.5 decrease in other non-recurring gain (loss) and a $0.1 million decrease in other income (expense) - - net. The decrease in other non-recurring gain (loss) is primarily due to a $0.1 million loss in the current nine months consisting of a $0.4 million loss due to the dissolution of the Company's French Branch and a $0.3 exchange gain resulting from the settlement of a subsidiary's short term loan to the Company, as compared to a $0.4 million gain in the nine months ended March 31, 1998 due to a gain on the sale of trading securities. The decrease in other income (expense) - net is primarily due to miscellaneous adjustments. 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 $0.4 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 ongoing 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 March 31, 1999, the outstanding balance under the revolving credit facility was $0. The revolving credit facility bears interest at the prime rate plus .75% (8.5% at March 31, 1999). 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 $0 at March 31, 1999 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 $5.6 million at March 31, 1999 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. The additional costs to be incurred in achieving Year 2000 compliance 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 NINE MONTHS ENDED MARCH 31, MARCH 31, 1999 1998 1999 1998 ------ ------ ------ ------ Net sales: Computer systems. . . . . . . . . . . . 48.5% 46.8% 45.3% 45.4% Service and other . . . . . . . . . . . 51.5% 53.2% 54.7% 54.6% ------ ------ ------ ------ Total . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% Cost of sales: Computer systems. . . . . . . . . . . . 39.7% 53.7% 43.8% 49.4% Service and other . . . . . . . . . . . 55.1% 52.3% 51.9% 52.7% Total . . . . . . . . . . . . . . . . 47.6% 52.9% 48.2% 51.2% ------ ------ ------ ------ Gross margin. . . . . . . . . . . . . . . 52.4% 47.1% 51.8% 48.8% Operating expenses: Research and development. . . . . . . . 13.4% 13.4% 14.2% 13.3% Selling, general and administrative . . 35.8% 28.7% 35.2% 28.6% Restructuring . . . . . . . . . . . . . 0.0% 0.0% 0.0% (1.0%) ------ ------ ------ ------ Total operating expenses. . . . . . . . . 49.2% 42.1% 49.4% 40.9% ------ ------ ------ ------ Operating income. . . . . . . . . . . . . 3.2% 5.0% 2.4% 7.8% Interest expense. . . . . . . . . . . . . (0.3%) (0.8%) (0.4%) (1.0%) Interest income . . . . . . . . . . . . . 0.2% 0.3% 0.2% 0.2% Other non-recurring gain (loss) . . . . . 0.0% 0.0% (0.2%) 0.7% Other income (expense) - net. . . . . . . (1.2%) 0.6% (0.4%) (0.2%) ------ ------ ------ ------ Income before provision for income taxes. 2.0% 5.0% 1.7% 7.5% Provision for income taxes. . . . . . . . 0.3% 0.1% 0.3% 1.5% ------ ------ ------ ------ Net income. . . . . . . . . . . . . . . . 1.7% 4.9% 1.5% 6.0% ====== ====== ====== ======
PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K (a) Exhibits: * 10.1(a) Employment Agreement dated as of November 17, 1998 between the Company and Steve G. Nussrallah. * 10.1(b) Amendment to Employment Agreement dated as of January 1, 1999 between the Company and E. Courtney Siegel. (11) Statement on computation of per share earnings. (27) Financial Data Schedule. (b) Reports on Form 8-K. None. _________________________________________________________ * Management contract or compensatory plan or arrangement. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report for the quarter ended March 31, 1999 to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 1999 CONCURRENT COMPUTER CORPORATION By: /s/ Daniel S. Dunleavy --------------------------- DANIEL S. DUNLEAVY President, Real-Time Division and Acting Chief Financial Officer (Principal Financial and Accounting Officer) EX-10.1 2 10.1(A) AND 10.1(B) CONCURRENT COMPUTER CORPORATION EXHIBIT 10.1(A) EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of the 17th day of November, 1998 by and between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Company"), and STEVE G. NUSSRALLAH ("Employee"). WHEREAS, the Company, through its Board of Directors, desires to retain the services of Employee, and Employee desires to be retained by the Company, on the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby ---------- accepts employment, as President, Video-On-Demand Division of the Company upon the terms of and subject to this Agreement. 2. TERM. The term ("Term") of this Agreement shall commence and this ---- Agreement shall become effective on November 17, 1998, and shall continue until otherwise terminated by either party at any time in accordance with the terms hereof. 3. DUTIES. During his employment hereunder from the date hereof through ------ December 31, 1998, Employee shall perform such duties as shall be assigned to Employee by the President and Chief Executive Officer of the Company on a part-time basis. Commencing January 1, 1999 through December 31, 1999, Employee shall serve as the President, Video-On-Demand Division of the Company. Employee shall have general and active charge of the business and affairs of the Video-On-Demand (VOD) Division and, in such capacity, shall have responsibility for the day-to-day operations of the VOD Division, subject to the authority and control of the President and Chief Executive Officer of the Company. Commencing January 1, 2000, provided that the Company shall have disposed of its real-time computer business, Employee shall serve as the President and Chief Executive Officer of the Company, and the Company shall take such actions as necessary to cause his nomination as a member of the Board of Directors of the Company. In such capacity, Employee shall have general and active charge of the business and affairs of the Company, and responsibility for the day-to-day operations of the Company, subject to the authority and control of the Board of Directors of the Company. Throughout the term of employment hereunder, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, as appropriate to his duties and responsibilities hereunder, except for reasonable vacations and illness or other disability, but nothing in this Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than two (at any time) "for profit" organizations involving no conflict of interest with the interests of the Company (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld), or from engaging in charitable and community activities, or from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement. 4. COMPENSATION. ------------ a. Salary: Employee shall be paid an initial salary of $250,000 per year, payable in equal installments not less than monthly. Commencing January 1, 2000, Employee shall be paid a salary of $280,000 per year payable in equal installments not less than monthly. The Employee's salary shall be reviewed at least annually. b. Stock Option/Bonus: In addition to salary, Employee shall be entitled to participate in the Company's Stock Option Plan (the "Stock Option Plan") and Employee shall be initially granted, subject to the approval of the Company's shareholders of an amendment to the Stock Option Plan providing for, among other things, an increase in the share authorization thereunder, an option to purchase 1,000,000 shares of common stock of the Company (such number to be subject to adjustment as provided in section 5, paragraph 3, of the Stock Option Plan). The per share exercise price of the option shall be the fair market value of the Company's common stock as of the date of grant ($2.75), and the option shall vest in three equal annual installments over a three-year period. The Employee shall be additionally granted a long-term option to purchase up to 250,000 shares of common stock of the Company, at an exercise price equal to the fair market value of a share of common stock as of the date of grant ($2.75), and the option shall vest in its entirety on November 17, 2001. Further, Employee shall be provided with an annual bonus opportunity with an initial target bonus for Employee of $150,000, representing 60% of Employee's annual salary as set forth in Paragraph 4.a., above (hereafter the "Executive Bonus Plan"), the actual amount to be paid depending upon the degree of achievement of various objectives. Commencing January 1, 2000, Employee shall be provided with an annual bonus opportunity of 65% of Employee's annual salary as set forth in Paragraph 4.a above, the actual amount to be paid depending upon the degree of achievement of various objectives. The objectives for each year and other terms and conditions of the bonus opportunity shall be established by the Board of Directors or a committee thereof and shall be reasonably consistent with the business plan of the Company for such year, or portion thereof, established in advance. The target bonus opportunity may be increased to no more than an additional 100% for superior performance as defined and determined under the Executive Bonus Plan. c. Insurance: During his employment hereunder, Employee shall be entitled to participate in such health, life, disability and other insurance programs, if any, that the Company may offer to other key executive employees of the Company from time to time. d. Other Benefits: During his employment hereunder, Employee shall be entitled to such other benefits, if any, that the Company may offer to other key executive employees of the Company from time to time. Certain other benefits are described on Schedule A hereto. In addition, the Company and Employee shall enter into an Indemnification Agreement in the form the Company may enter into with other key executive employees of the Company from time to time. e. Vacation: Employee shall be entitled to four weeks vacation leave (in addition to holidays) in each calendar year during the Term, or such additional amount as may be set forth in the vacation policy that the Company shall establish from time to time. f. Expense Reimbursement: Employee shall, upon submission of appropriate supporting documentation, be entitled to reimbursement of reasonable out-of-pocket expenses incurred in the performance of his duties hereunder in accordance with policies established by the Company. Such expenses shall include, without limitation, reasonable entertainment expenses, gasoline and toll expenses and cellular phone use charges, if such charges are directly related to the business of the Company. 5. GROUNDS FOR TERMINATION. The Company may terminate this Agreement ------------------------- for Cause. As used herein, "Cause" shall mean any of the following: (a) the Employee has committed a willful serious act against the Company intended to enrich himself at the expense of the Company, such as embezzlement, or has been convicted of a felony involving moral turpitude; or (b) Employee has (i) willfully and grossly neglected his duties hereunder, or (ii) intentionally failed to observe specific directives or policies of the President and Chief Executive Officer or the Board of Directors, which directives or policies were consistent with his positions, duties and responsibilities hereunder, and which failure had, or continuing failure will have, a material adverse effect on the Company. Prior to any such termination, Employee shall be given written notice by the Board of Directors that the Company intends to terminate his employment for Cause under this Section 5, which written notice shall specify the particular acts or omissions on the basis of which the Company intends to so terminate Employee's employment, and Employee (with his counsel, if he so chooses) shall be given the opportunity, within 15 days of his receipt of such notice, to have a meeting with the Board of Directors to discuss such acts or omissions and be given reasonable time to remedy the situation. In the event of such termination, the Employee shall be promptly furnished written specification of the basis therefor in reasonable detail. 6. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at any ------------------------- time with Good Reason. "Good Reason" shall exist if: a. the Company demotes or otherwise elects or appoints the Employee to lesser offices than set forth in Section 3, or fails to elect or appoint him to such; b. the Company causes a material change in the nature or scope of the authorities, powers, functions, duties or responsibilities attached to the Employee's positions as described in Section 3; c. the Company causes Employee to relocate more than 50 miles from Atlanta, Georgia; d. the Company decreases the Employee's compensation below the levels provided for by the terms of Section 4 (taking into account increases made from time to time in accordance with Section 4); e. the Company materially reduces the Employee's benefits under any employee benefit plan, program or arrangement of the Company (other than a change that affects all employees similarly situated) from the level in effect upon the Employee's commencement or participation; f. the Company commits any other material breach of the provisions of this Agreement (except those set forth in Paragraph 4.a) and employee provides at least 15 days' prior written notice to at least two members of the Company's Board of Directors of the existence of such breach and his intention to terminate this Agreement (no such termination shall be effective if such breach is cured during such period); g. the Company fails to comply with the provisions of Paragraph 4.a. for an uninterrupted 10 day period; or h. in the event the Company fails to dispose of its real-time computer business by January 1, 2000, the Company fails to complete a public offering in respect of the Video-On-Demand Division by June 2000. 7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION FOR CAUSE OR ------------------------------------------------------------------ EMPLOYEE CONVENIENCE. - --------------------- a. In the event Employee's employment with the Company (including its subsidiaries) is terminated by the Company for Cause as provided in Paragraph 5 then, on or before Employee's last day of employment with the Company, the provisions of this Paragraph 7.a shall apply. These same provisions shall apply if the Employee terminates his employment other than in accordance with the provisions of Paragraph 6 hereof. i. Compensation: The Company shall pay in a lump sum to employee such amount of compensation due Employee for services rendered to the Company, as well as compensation for unused vacation time, as has accrued but remains unpaid. Any and all other rights to compensation of any kind granted to Employee under this Agreement shall terminate as of the date of termination, except as may be otherwise required by statute. ii. Noncompetition/Nonsolicitation Period: The provisions of Paragraphs 13 and 14 shall continue to apply with respect to Employee for a period of one year following the date of termination. b. In the event Employee's employment with the Company (including its subsidiaries) is terminated by the Company for any reason other than for Cause as provided in Paragraph 5 and other than as a consequence of Employee's death, disability, or normal retirement under the Company's retirement plans and practices, then the following provisions apply. These same provisions shall apply if Employee terminates his employment in accordance with the provisions of Paragraph 6 hereof. i. Salary and Bonus Payments: On or before Employee's last day of employment with the Company, the Company shall promptly pay in a lump sum to Employee as compensation for services rendered to the Company a cash amount equal to twice the amount of Employee's annual base salary and twice the target bonus under the Executive Bonus Plan as in effect immediately prior to his date of termination. At the election of the Company, the cash amount referred to in this subparagraph 7.b.i may be paid to Employee in periodic installments in accordance with the normal salary payment procedures of the Company. ii. Vesting of Options and Rights: Notwithstanding the vesting period provided for in the Stock Option Plan and related stock option agreements between the Company and Employee for stock options ("options") and stock appreciation rights ("rights") granted Employee by the Company, at least one-third of the options and stock appreciation rights shall be exercisable upon termination of employment. In addition, Employee shall have the right to exercise such options and rights for the shorter of (a) one year following his termination of employment or (b) with respect to each option, the remainder of the period of exercisability under the terms of the appropriate documents that grant such options. iii. Benefit Plan Coverage: The Company shall maintain in full force and effect for Employee and his dependents for two years after the date of termination, all life, health, accident, and disability benefit plans and other similar employee benefit plans, programs and arrangements in which Employee or his dependents were entitled to participate immediately prior to the date of termination, in such amounts as were in effect immediately prior to the date of termination, provided that such continued participation is possible under the general terms and provisions of such benefit plans, programs and arrangements. In the event that participation in any benefit plan, program or arrangement described above is barred, or any such benefit plan, program or arrangement is discontinued or the benefits thereunder materially reduced, the Company shall arrange to provide Employee and his dependents for two years after the date of termination with benefits substantially similar to those that they were entitled to receive under such benefit plans, programs and arrangements immediately prior to the date of termination. If immediately prior to the date of termination the Company provided Employee with any club memberships, Employee shall be entitled to continue such memberships at his sole expense. Notwithstanding any time period for continued benefits stated in this subparagraph 7.b.iii, all benefits in this subparagraph 7.b.iii will terminate on the date that Employee becomes an employee of another employer and eligible to participate in the employee benefit plans of such other employer. To the extent that Employee was required to contribute amounts for the benefits described in this subparagraph 7.b.iii prior to his termination, he shall continue to contribute such amounts for such time as these benefits continue in effect after termination. iv. Savings and Other Plans: Except as otherwise more specifically provided herein or under the terms of the respective plans relating to termination of employment, Employee's active participation in any applicable savings, retirement, profit sharing or supplemental employment retirement plans or any deferred compensation or similar plan of the Company or any of its subsidiaries shall continue only through the last day of his employment. All other provisions, including any distribution and/or vested rights under such plans, shall be governed by the terms of those respective plans. v. Noncompetition/Nonsolicitation Period: The provisions of Paragraph 13 and 14 shall continue, beyond the time periods set forth in such paragraphs, to apply with respect to employee for the shorter of (x) twenty-four (24) months following the date of termination or (y) until such time as the Company has failed to comply with the provisions of subparagraph 7.b.i for an uninterrupted 10-day period and such failure is not cured within 15 days after written notice of such failure is delivered to at least two non-employee directors of the Company, provided, that in such circumstances, Employee shall remain entitled to exercise his rights under this Agreement. c. The provisions of this Paragraph 7 shall apply if Employee's employment is terminated prior to a Change of Control or more than three years after the occurrence of a Change of Control (as defined in Paragraph 8.c). From the occurrence of any Change of Control until the third anniversary of such Change of Control, the provisions of Paragraph 8 shall apply in place of this Paragraph 7; provided, however, that in the event Employee terminates his employment with the Company after a Change in Control other than in accordance with the provisions of Paragraph 6 hereof, then the provisions of Paragraph 8 hereof shall not apply and the provisions of Paragraph 7.a. shall apply. Termination upon death, disability and retirement are covered by Paragraphs 9, 10 and 11, respectively. 8. PAYMENT AND OTHER PROVISIONS FOR TERMINATION OTHER THAN FOR CAUSE. -------------------------------------------------------------------- a. Salary, Performance Award and Bonus Payments: In the event Employee's employment with the Company is terminated (other than as a consequence of his death or disability, or of his normal retirement under the Company's retirement plans and practices) either (i) by the Company for any reason other than for Cause in accordance with Paragraph 5, or (ii) by Employee in accordance with the provisions of Paragraph 6 hereof, then Employee shall be entitled to receive from the Company, the following: i. Base Salary: In the event of any such termination within the first year of employment hereunder, Employee's annual base salary as in effect at the date of termination, multiplied by two, shall be paid on the date of termination; and in the event of any such termination thereafter, Employee's annual base salary as in effect at the date of termination, multiplied by three, shall be paid on the date of termination; ii. Target bonus: In the event of any such termination within the first year of employment hereunder, the amount of the Employee's target bonus under the Executive Bonus Plan for the fiscal year in which the date of termination occurs, multiplied by two, shall be paid on the date of termination; and in the event of termination thereafter, the amount of Employee's target bonus under the Executive Bonus Plan for the fiscal year in which the date of termination occurs, multiplied by three, shall be paid on the date of termination; and iii. Other Benefits: All benefits under Paragraphs 7.b.ii, 7.b.iii and 7.b.iv shall be extended to Employee as described in such paragraphs, except that notwithstanding the vesting period provided for in the Stock Option Plan and any related stock option agreements between the Company and Employee for stock options ("options") and stock appreciation rights ("rights") granted employee by the Company, all options and rights shall be fully vested and exercisable upon termination of employment and the period of exercise of options and rights described in the last sentence of Paragraph 7.b.ii shall be the shorter of (a) three years following his termination of employment or (b) with respect to each option, the remainder of the period of exercisability under the terms of the appropriate documents that grant such options. b. Noncompetition/Nonsolicitation Period: In the event of a termination under the circumstances described in Paragraph 8.a, the provision of Paragraphs 13 and 14 shall be without force and effect and shall not apply to Employee. c. For purposes of this Agreement, the term "Change of Control" shall mean: i. The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Rule 13d-3 promulgated under the Exchange Act or any successor provision)(any of the foregoing described in this Paragraph 8.c.i. hereafter a "Person") of 33% or more of either (a) the then outstanding shares of Capital Stock of the Company (the "Outstanding Capital Stock") or (b) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"), provided, however, that any acquisition by ------------------ (x) the Company or any of it subsidiaries, or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1(b) under the Exchange Act, to file a statement on Schedule 13D with respect to its beneficial ownership of Voting Securities, whether or not such Person shall have filed a statement on Schedule 13G, unless such Person shall have filed a statement on Schedule 13D with respect to beneficial ownership of 33% or more of the Voting Securities or (z) any corporation with respect to which, following such acquisition, more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the Outstanding Capital Stock and Voting Securities, as the case may be, shall not constitute a Change of Control; or ii. Individuals who, as of November 17, 1998, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to November 17, 1998 whose election or nomination for election by the Company's shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A, or any successor section, promulgated under the Exchange Act); or iii. Approval by the shareholders of the Company of a reorganization, merger or consolidation (a "Business Combination"), in each case, with respect to which all or substantially all holders of the Outstanding Capital Stock and Voting Securities immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from the Business Combination; or iv. (a) a complete liquidation or dissolution of the Company or (b) a sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors is then owned beneficially, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Capital Stock and Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Capital Stock and Voting Securities, as the case may be, immediately prior to such sale or disposition. d. For purposes of this Agreement, the term "Change of Control" shall not mean a sale or other disposition of all or substantially all of the assets of the Real-Time Division of the Company within the first year of the Term of this Agreement. 9. TERMINATION BY REASON OF DEATH. If Employee shall die while ----------------------------------- employed by the Company both prior to termination of employment and during the effective term of this Agreement, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid and prorated amount of targeted bonus under the Executive Bonus Plan through the month in which his death occurs, plus six additional months of the fixed salary and targeted bonus. All benefits under Paragraphs 7.b.ii and 7.b.iv shall be extended to Employee's estate as described in such paragraphs. In addition, Employee's eligible dependents shall receive continued benefit plan coverage under Paragraph 7.b.iii for six months from the date of Employee's death. 10. TERMINATION BY DISABILITY. Employee's employment hereunder may be --------------------------- terminated by the Company for disability. In such event, all Employee's rights under this Agreement shall terminate with the payment of such amounts of annual base salary as have accrued but remain unpaid as of the thirtieth (30th) day after such notice is given except that all benefits under Paragraphs 7.b.ii, ------ 7.b.iii and 7.b.iv shall be extended to Employee as described in such paragraphs, provided, however, that with respect to Paragraph 7.b.iii, the ------------------- period for continued benefit plan coverage shall be limited to six months from the date of termination. In addition, the noncompetition and nonsolicitation provisions of Paragraphs 13 and 14 shall continue to apply for a period of six months from the date of termination for disability. For purposes of this Agreement, "disability" is defined to mean that, as a result of Employee's incapacity due to physical or mental illness: a. Employee shall have been absent from his duties as an officer of the Company on a substantially full-time basis for six (6) consecutive months; and b. Within thirty (30) days after the Company notifies Employee in writing that it intends to replace him, Employee shall not have returned to the performance of his duties as an officer for the Company on a full-time basis. Such notice may be given by the Company at any time after Employee has been absent for a total of four consecutive months. 11. RETIREMENT. Employee shall be entitle to participate in the ---------- Company's Retirement Savings Plan and any other retirement plan hereafter made available to senior executive officers of the Company in accordance with the provisions thereof as in effect from time to time. 12. INDEMNIFICATION. If litigation shall be brought to enforce or --------------- interpret any provision contained herein, the non-prevailing party shall indemnify the prevailing party for reasonable attorneys' fees (including those for negotiations, trial and appeals) and disbursements incurred by the prevailing party in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the prevailing party calculated at the generally prevailing Nations Bank of Florida, N.A. (or any successor thereto) base rate of interest charge to its commercial customers in effect from time to time from the date that payments(s) to him should have been made under this Agreement. 13. NONCOMPETITION. -------------- a. At all times during Employee's employment hereunder, and for such additional periods as may otherwise be set forth in this Agreement in reference to this Paragraph 13, Employee shall not, directly or indirectly, engage in any business, enterprise or employment, whether as owner, operator, shareholder, director, partner, creditor, consultant, agent or any capacity whatsoever that manufactures products designed to compete directly with products of the Company or markets such products anywhere in the world where the Company (i) is engaged in business or (ii) has evidenced an intention of engaging in business. Employee acknowledges that he has read the foregoing and agrees that the nature of the geographical restrictions are reasonable given the international nature of the Company's business. In the event that these geographical or temporal restrictions are judicially determined to be unreasonable, the parties agree that the restrictions shall be judicially reformed to the maximum restrictions which are reasonable. b. Notwithstanding the provisions of the preceding Subparagraph, the Employee may accept employment with a company that would be deemed to be a competitor of the Company as described in the previous subparagraph ("Competitor"), so long as (i) the Competitor has had annual revenues of at least $1 billion in each of the prior two fiscal years, (ii) the Competitor's revenues for products and maintenance in direct competition with the Company do not exceed 50% of its total revenues, and (iii) the Employee's responsibilities are solely for divisions or subsidiaries of the Competitor that do not compete with the Company. 14. NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times during the ------------------------------------------- Employee's employment hereunder, and for such additional periods as may otherwise be set forth in this Agreement, in reference to this Paragraph 14, the Employee shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (a) attempt to employ, employ or enter into any contractual arrangement with any employee or former employee of the Company, its affiliates, subsidiaries or predecessors in interest, unless such employee or former employee has not been employed by the Company, its affiliates, subsidiaries or predecessors in interest, during the six months prior to the Employee's attempt to employ him, or (b) call on or solicit any of the actual or targeted prospective customers of the Company or its affiliates, subsidiaries or predecessors in interest with respect to any matters related to or competitive with the business of the Company. 15. CONFIDENTIALITY. --------------- a. Nondisclosure: The Employee acknowledges and agrees that the Confidential Information (as defined below) is a valuable, special and unique asset of the Company's business. Accordingly, except in connection with the performance of his duties hereunder, the Employee shall not at any time during or subsequent to the term of his employment hereunder disclose, directly or indirectly, to any person, firm, corporation, partnership, association or other entity any proprietary or confidential information relating to the Company or any information concerning the Company's financial condition or prospects, the Company's customers, the design, development, manufacture, marketing or sale of the Company's products or the Company's methods of operating its business (collectively, "Confidential Information"). Confidential Information shall not include information which, at the time of disclosure, is known or available to the general public by publications or otherwise through no act or failure to act on the part of Employee. b. Return of Confidential Information: Upon termination of Employee's employment, for whatever reason and whether voluntary or involuntary, or at any time at the request of the Company, Employee shall promptly return all Confidential Information in the possession or under the control of Employee to the Company and shall not retain any copies or other reproductions or extracts thereof. Employee shall at any time at the request of the Company destroy or have destroyed all memoranda, notes, reports, and documents, whether in "hard copy" form or as stored on magnetic or other media, and all copies and other reproductions and extracts thereof, prepared by Employee and shall provide the Company with a certificate that the foregoing materials have in fact been returned or destroyed. c. Books and Records: All books, records and accounts whether prepared by Employee or otherwise coming into Employee's possession, shall be the exclusive property of the Company and shall be returned immediately to the Company upon termination of Employee's employment hereunder or upon the Company's request at any time. 16. INJUNCTION/SPECIFIC PERFORMANCE/SETOFF. Employee acknowledges that --------------------------------------- a breach of any of the provisions of Paragraphs 13, 14, or 15 hereof would in immediate and irreparable injury to the Company which cannot be adequately or result reasonably compensated at law. Therefore, Employee agrees that the Company shall be entitled, if any such breach shall occur or be threatened or attempted, to a decree of specific performance and to a temporary and permanent injunction, without the posting of a bond, enjoining and restraining such breach by Employee or his agents, either directly or indirectly, and that such right to injunction shall be cumulative to whatever other remedies for actual damages to which the Company is entitled. Employee further agrees that the Company may set off against or recoup from any amounts due under this Agreement to the extent of any losses incurred by the Company as a result of any breach by Employee of the provisions of Paragraphs 13, 14 or 15 hereof. 17. SEVERABILITY. Any provision in this Agreement that is prohibited or ------------ unenforceable in any jurisdiction shall, as to such jurisdiction, by ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or enenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 18. SUCCESSORS: This Agreement shall be binding upon Employee and inure ---------- to the benefit of the Company and any permitted successor of the Company. Neither this Agreement nor any rights arising hereunder may be assigned or pledged by Employee or anyone claiming through Employee; or by the Company, except to any corporation which is the successor in interest to the Company by reason of a merger, consolidation or sale of substantially all of the assets of the Company. The foregoing sentence shall not be deemed to have any effect upon the rights of Employee upon a Change of Control. 19. CONTROLLING LAW: This Agreement shall in all respects be governed ---------------- by, and construed in accordance with, the laws of the State of Georgia. 20. NOTICES: Any notice required or permitted to be given hereunder ------- shall be written and sent by registered or certified mail, telecommunicated or hand delivered at the address set forth herein or to any other address of which notice is given: TO THE COMPANY: CONCURRENT COMPUTER CORPORATION 2101 WEST CYPRESS CREEK ROAD FT. LAUDERDALE, FLORIDA 33309 TO THE EMPLOYEE: STEVE G. NUSSRALLAH 605 Buttercup Trace ------------------- ALPHARETTA, GEORIGA 30022 21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement ----------------- between the parties hereto on the subject matter hereof and may not be modified without the written agreement of both parties hereto. 22. WAIVER. A waiver by any party of any of the terms and conditions ------ hereof shall not be construed as a general waiver by such party. 23. COUNTERPARTS. This Agreement may be executed in counterparts, ------------ each of which shall be deemed an original and both of which together shall constitute a single agreement. 24. INTERPRETATION. In the event of a conflict between the provisions -------------- of this Agreement and any other agreement or document defining rights and duties of Employee or the Company upon Employee's termination, the rights and duties set forth in this Agreement shall control. 25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 7.b provides that ---------------------------------- certain payments and other benefits shall be received by Employee upon the termination of Employee by the Company other than for Cause and states that these same provisions shall apply if Employee terminates his employment in accordance with the provisions of paragraph 6 hereof. It is the intention of this Agreement that if the Company terminates Employee other than for Cause (and other than as a consequence of Employee's death, disability or normal retirement) or if Employee terminates his employment in accordance with the provisions of paragraph 6 hereof, then the payments and other benefits set forth in Paragraph 7.b shall constitute the sole and exclusive remedies of Employee. This Paragraph 25 shall have no effect upon the provisions of Paragraph 8 of this Agreement. IN WITNESS WHEREOF, this Employment Agreement has been executed by the parties as of the date first above written. CONCURRENT COMPUTER CORPORATION EMPLOYEE - ------------------------------- -------- /s/ E. Courtney Siegel /s/ Steve G. Nussrallah - ------------------------- ------------------------ E. Courtney Siegel Steve G. Nussrallah Chairman, President and Chief Executive Officer SCHEDULE A OTHER BENEFITS 1. Use of golf club membership maintained by the Company at a private country club to be designated by Employee. 2. Commencing January 1,2000, first class tickets on airlines when travelling on Company business. CONCURRENT COMPUTER CORPORATION Exhibit 10.1(b) AMENDMENT TO EMPLOYMENT AGREEMENT THIS AMENDMENT (the "Amendment") to that certain Employment Agreement dated as of March 25, 1996 (the "Agreement") is made and entered into as of the 1st day of January, 1999, by and between Concurrent Computer Corporation (the "Company") and E. Courtney Siegel (the "Employee"). WHEREAS, in an effort to provide for a smooth succession of the President and Chief Executive Officer of the Company, the Company, through its Board of Directors, plans to offer employment in said positions to Steve G. Nussrallah to be effective January 1, 2000, provided that the Company disposes of its -------- real-time business; WHEREAS, the Company, through its Board of Directors, and the Employee, desire to amend the terms and conditions set forth in the Agreement to define Employee's position and responsibilities and compensation in respect thereof for services to be rendered following the disposition of the real-time business and the election of Mr. Nussrallah to the positions of President and Chief Executive Officer (the "Succession"); NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. AMENDMENTS ---------- a. Paragraph 1 of the Agreement is amended by adding the following sentence as the ultimate sentence thereof: Effective upon the Succession, but no earlier than January 1, 2000, Employee shall cease to serve as President and Chief Executive Officer, but shall continue as an employee of the Company and shall serve as Chairman of the Board of the Company. b. Paragraph 3 of the Agreement is amended to read in its entirety as follows: 3. DUTIES. ------ a. During his employment hereunder (unless and until Subparagraph b. hereof becomes applicable), Employee shall serve as the Chairman of the Board, President and Chief Executive Officer of the Company and the Company will take such actions as necessary to cause his nomination as a member of the Board of Directors of the Company. Employee shall have general and active charge of the business and affairs of the Company and, in such capacity, shall have responsibility for the day-to-day operations of the Company, subject to the authority and control of the Board of Directors of the Company. Employee shall report directly to the authority and control of the Board of Directors of the Company. Throughout the term of employment under this subparagraph, the Employee shall devote his full time and undivided attention during normal business hours to the business and affairs of the Company, as appropriate to his duties and responsibilities hereunder, except for reasonable vacations and illness or other disability, but nothing in this Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than two (at any time) "for profit" organizations involving no conflict of interest with the interests of the Company (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld), or from engaging in charitable and community activities, or from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement. b. Effective upon the Succession, but no earlier than January 1, 2000, Employee shall serve as Chairman of the Board. Employee shall have the responsibility for review of the operations of the Company working directly with the President and Chief Executive Officer. His responsibilities shall include: review of the Company's business plans on at least a monthly basis; management of the investment portfolio of the Company; active involvement with the Company's large shareholders and analysts; active involvement with all merger and acquisition activity; active involvement with large customers; and such other duties as shall be requested by the Board of Directors of the Company. Employee shall report directly to the Board of Directors of the Company. Throughout the term of employment under this subparagraph, the Employee shall devote his full time and undivided attention during normal business hours for three or four days per week to the business and affairs of the Company, as appropriate to his duties and responsibilities hereunder, except for reasonable vacations and illness or other disability, but nothing in this Agreement shall preclude the Employee from devoting reasonable periods required for serving as a director or member of any advisory committee of not more than four (at any time) "for profit" organizations involving no conflict of interest with the interests of the Company (subject to approval by the Board of Directors, which approval shall not be unreasonably withheld), or from engaging in charitable and community activities, or from managing his personal investments, provided such activities do not materially interfere with the performance of his duties and responsibilities under this Agreement. c. Subparagraph 4.a. of the Agreement is amended to read in its entirety as follows: 4. COMPENSATION. ------------- a. Salary: During his employment as President and Chief Executive Officer of the Company, Employee shall be paid an initial salary of $300,000 per year, payable in equal installments not less than monthly. Effective upon the Succession, but no earlier than January 1, 2000, Employee shall be paid a salary of $200,000 per year, payable in equal installments not less than monthly. The Employee's salary shall be reviewed at least annually by the Board of Directors or any Committee of the Board delegated the authority to review executive compensation. 2. MISCELLANEOUS ------------- a. This Amendment shall be construed in accordance with the laws of the State of Florida. b. Except as amended hereby, the terms and conditions of the Agreement shall remain in effect. IN WITNESS WHEREOF, the Company and the Employee have caused this Amendment to be executed as of the date first above written. CONCURRENT COMPUTER CORPORATION EMPLOYEE By: /s/ Michael A. Brunner By: /s/ E. Courtney Siegel ------------------------- ------------------------- Michael A. Brunner Director Chairman, Compensation Committee EX-11 3
CONCURRENT COMPUTER CORPORATION EXHIBIT 11 BASIC AND DILUTED EARNINGS PER SHARE COMPUTATION THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, 1999 MARCH 31, 1999 ----------------- ----------------- BASIC DILUTED BASIC DILUTED ------- -------- ------- -------- Average outstanding shares:. . 48,043 48,043 47,855 47,855 Dilutive options outstanding . - 2,938 - 1,331 ------- -------- ------- -------- Equivalent Shares. . . . . . . 48,043 50,981 47,855 49,186 ======= ======== ======= ======== Net income available to common stockholders . . . . . . . . $ 294 $ 294 $ 783 $ 783 ======= ======== ======= ======== Earnings per share . . . . . . $ 0.01 $ 0.01 $ 0.02 $ .02 ======= ======== ======= ========
EX-27 4
5 This schedule contains summary financial information extracted from the Company's Consolidated Balance Sheet at March 31, 1999 and Consolidated Statement of Operations for the nine months ended March 31, 1999, and is qualified in its entirety by reference to such financial statements. 1000 9-MOS JUN-30-1999 JUL-01-1998 MAR-31-1999 5607 0 16631 428 5832 29241 35352 22849 42848 13110 0 481 0 0 27289 42848 24362 53731 10661 25891 0 11 194 921 138 783 0 0 0 783 .02 .02
-----END PRIVACY-ENHANCED MESSAGE-----