EX-99.2 5 v466996_ex99-2.htm EXHIBIT 99.2

Exhibit 99.2

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Financial Statements

 

On May 15, 2017, Concurrent Computer Corporation (“Concurrent” or the “Company”) completed the sale of certain assets primarily related to its “Linux and Real-Time” business (the “Disposition”) to Real Time, Inc. (“Buyer”), a wholly-owned subsidiary of Battery Ventures, for a purchase price of $35.0 million, subject to adjustment based on the level of working capital as of the closing date. The Company received $30.2 million in cash on May 15, 2017 (subject to an adjustment for estimated working capital) and will receive an additional $2.8 million upon receipt of French regulatory approval for the European operations of the Company’s “Linux and Real-Time” business. The Disposition was completed in accordance with the asset purchase agreement between Concurrent and Buyer, dated May 15, 2017.

 

The following unaudited pro forma condensed consolidated financial statements give effect to the Disposition, the receipt of net proceeds from the Disposition, and the other assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. These adjustments are based upon information and assumptions available at the time of the filing of this financial information on Form 8-K.

 

The unaudited pro forma financial information is based on financial statements prepared in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. The unaudited pro forma condensed consolidated financial statements were based on and derived from the Company’s historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the Disposition, factually supportable, and with respect to the Unaudited Pro Forma Condensed Consolidated Statements of Operations, expected to have a continuing impact on the consolidated results. Actual adjustments, however, may differ materially from the information presented.

 

The unaudited pro forma financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission. The unaudited pro forma financial information is not necessarily indicative of the financial position or results of operations that would have actually occurred had the Disposition occurred on the dates indicated. In addition, these unaudited pro forma condensed consolidated financial statements should not be considered to be indicative of the future financial performance and results of operations of the Company.

 

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2016 gives effect to the Disposition and adjustments as if it occurred on the date of the balance sheet.

 

The unaudited pro forma condensed consolidated statements of operations for the fiscal years ended June 30, 2015 and 2016 and six months ended December 31, 2016, give effect to the Disposition and adjustments as if they had occurred on July 1, 2014 and carried forward through the latest period presented.

 

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company’s historical audited consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended June 30, 2016 and its Quarterly Report on Form 10-Q for the three months ended December 31, 2016.

 

The unaudited condensed consolidated pro forma financial statements are prepared in accordance with Article 11 of Regulation S-X.

 

 

 

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of December 31, 2016

 

   As Reported   Sale of
Real-time
Business
   Proceeds
from Sale
   Pro Forma 
                 
ASSETS
Current assets:                    
Cash and cash equivalents  $18,804   $-   $25,291(b)  $44,095 
Accounts receivable, net   7,896    5,250(a)   -    2,646 
Inventories   2,001    815(a)   -    1,186 
Prepaid expenses and other current assets   1,220    293(a)   4,800(b)   5,727 
Total current assets   29,921    6,358    30,091    53,654 
                     
Property and equipment, net   2,763    397(a)   -    2,366 
Deferred income taxes, net   820    784(a)   -    36 
Other long-term assets, net   1,281    667(a)   -    614 
Total assets  $34,785   $8,206   $30,091   $56,670 
                     
                      LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:                    
Accounts payable and accrued expenses  $5,908   $2,454(a)  $993(c)  $4,447 
Deferred revenue   6,605    4,575(a)   -    2,030 
Total current liabilities   12,513    7,029    993    6,477 
                     
Long-term liabilities:                    
Deferred revenue   708    635(a)   -    73 
Pension liability   3,558    -    -    3,558 
Other long-term liabilities   2,001    897(a)   -    1,104 
Total liabilities   18,780    8,561    993    11,212 
                     
Commitments and contingencies                    
                     
Stockholders' equity:                    
Series preferred stock   -    -    -    - 
Class A preferred stock   -    -    -    - 
Common stock   93    -    -    93 
Capital in excess of par value   211,521    -    -    211,521 
Accumulated deficit   (194,625)   (2,727)(a)   29,098(c)   (162,800)
Treasury stock, at cost;  37,788 shares   (255)   -    -    (255)
Accumulated other comprehensive income (loss)   (729)   2,372(a)   -    (3,101)
Total stockholders' equity   16,005    (355)   29,098    45,458 
Total liabilities and stockholders' equity  $34,785   $8,206   $30,091   $56,670 

   

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Statement of Operations

For the Six Months Ended December 31, 2016

 

   As Reported   Sale of
Real-Time
Business
   Pro Forma 
Revenues:               
Product  $18,105   $10,749(d)  $7,356 
Service   10,558    5,558(d)   5,000 
Total revenues   28,663    16,307    12,356 
                
Cost of sales:               
Product   7,869    4,722(d)   3,147 
Service   4,162    1,787(d)   2,375 
Total cost of sales   12,031    6,509    5,522 
Gross margin   16,632    9,798    6,834 
                
Operating expenses:               
Sales and marketing   8,843    3,091(d)   5,752 
Research and development   6,123    2,066(d)   4,057 
General and administrative   4,657    283(d)   4,374 
Total operating expenses   19,623    5,440    14,183 
Operating income (loss)   (2,991)   4,358    (7,349)
                
Interest income   40    (4)(d)   44 
Interest expense   (4)   -    (4)
Other income (loss), net   170    (37)(d)   207 
Income (loss) before income taxes   (2,785)   4,317    (7,102)
                
Provision (benefit) for income taxes   231    230(d)   1 
Net income (loss)  $(3,016)  $4,087   $(7,103)
                
Net income (loss) per share               
Basic  $(0.33)       $(0.77)
Diluted  $(0.33)       $(0.77)
Weighted average shares outstanding - basic   9,216,967         9,216,967 
Weighted average shares outstanding - diluted   9,216,967         9,216,967 
                
Cash dividends declared per common share  $0.24        $0.24 

  

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Statement of Operations

For the Year Ended June 30, 2016

 

   As Reported   Sale of
Real-Time
Business
   Pro Forma 
Revenues:               
Product  $41,454   $19,410(d)  $22,044 
Service   19,695    9,732(d)   9,963 
Total revenues   61,149    29,142    32,007 
                
Cost of sales:               
Product   17,074    8,560(d)   8,514 
Service   7,819    3,326(d)   4,493 
Total cost of sales   24,893    11,886    13,007 
Gross margin   36,256    17,256    19,000 
                
Operating expenses:               
Sales and marketing   15,748    5,835(d)   9,913 
Research and development   14,288    3,813(d)   10,475 
General and administrative   8,375    570(d)   7,805 
Gain on sale of product line, net   (4,100)   -    (4,100)
Total operating expenses   34,311    10,218    24,093 
Operating income (loss)   1,945    7,038    (5,093)
                
Interest income   167    (2)(d)   169 
Interest expense   (2)   167(d)   (169)
Other income (loss), net   703    302(d)   401 
Income (loss) before income taxes   2,813    7,505    (4,692)
                
Provision (benefit) for income taxes   13,926    501(d)   13,425 
Net income (loss)  $(11,113)  $7,004   $(18,117)
                
Net income (loss) per share               
Basic  $(1.21)       $(1.98)
Diluted  $(1.21)       $(1.98)
Weighted average shares outstanding - basic   9,154,437         9,154,437 
Weighted average shares outstanding - diluted   9,154,437         9,154,437 
                
Cash dividends declared per common share  $0.48        $0.48 

 

See accompanying notes to these unaudited pro forma condensed consolidated financial statements

 

 

 

 

Concurrent Computer Corporation

Unaudited Pro Forma Condensed Statement of Operations

For the Year Ended June 30, 2015

 

   As Reported   Sale of
Real-Time
Business
   Pro Forma 
Revenues:               
Product  $43,926   $19,470(d)  $24,456 
Service   20,533    9,222(d)   11,311 
Total revenues   64,459    28,692    35,767 
                
Cost of sales:               
Product   18,807    9,031(d)   9,776 
Service   9,262    3,507(d)   5,755 
Total cost of sales   28,069    12,538    15,531 
Gross margin   36,390    16,154    20,236 
                
Operating expenses:               
Sales and marketing   14,530    6,012(d)   8,518 
Research and development   13,588    3,435(d)   10,153 
General and administrative   7,741    613(d)   7,128 
Gain on sale of intangible assets, net   (664)   -    (664)
Total operating expenses   35,195    10,060    25,135 
Operating income (loss)   1,195    6,094    (4,899)
                
Interest income   12    (1)(d)   13 
Interest expense   -    13(d)   (13)
Other income (loss), net   (618)   (653)(d)   35 
Income (loss) before income taxes   589    5,453    (4,864)
                
Provision (benefit) for income taxes   778    2,652(d)   (1,874)
Net income (loss)  $(189)  $2,801   $(2,990)
                
Net income (loss) per share               
Basic  $(0.02)       $(0.33)
Diluted  $(0.02)       $(0.33)
Weighted average shares outstanding - basic   9,067,697         9,067,697 
Weighted average shares outstanding - diluted   9,067,697         9,067,697 
                
Cash dividends declared per common share  $0.48        $0.48 

 

 

See accompanying notes to these unaudited pro forma condensed consolidated financial statements


 

 

 

Concurrent Computer Corporation

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

1.Basis of Presentation

 

The unaudited pro forma condensed consolidated statements of operations for the years ended June 30, 2015 and 2016 were derived from the historical audited consolidated financial statements for the years ended June 30, 2015 and 2016 included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2016. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2016 and the unaudited pro forma condensed consolidated statement of operations for the six months ended December 31, 2016 were derived from the unaudited condensed consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q as of and for the three months ended December 31, 2016.

 

2.Disposition of Real-Time Business

 

On May 15, 2017, the Company completed the sale of certain assets primarily related to its “Linux and Real-Time” business (the “Disposition”) to Real Time, Inc. (“Buyer”), a wholly-owned subsidiary of Battery Ventures, for a purchase price of $35.0 million, subject to adjustment based on the level of working capital as of the closing date. Proceeds from the sale are payable to the Company as follows: (1) a $30.2 million payment received by the Company at closing (subject to an adjustment for estimated working capital), (2) a $2.8 million payment to the Company concurrently with the transfer of the equity interests of Concurrent High Performance Solutions Europe and (3) $2.0 million (the “Escrow Amount”) placed in escrow to satisfy the Company’s post-closing indemnity obligations (which amount will be released to the Company on or before May 15, 2018 less any portion of the escrow used to make indemnification or purchase price adjustment payments to the Purchaser). Transaction costs of consisting of investment banking fees, legal, tax, accounting and other professional fees, employee bonuses and other costs are approximately $3.8 million; taxes are estimated at $1.0 million; and the net book value of assets being transferred in the Disposition was $(2.7) million as of December 31, 2016. The resulting gain of approximately $31.8 million will be reflected in the Company’s unaudited condensed consolidated financial statements for the three months ended June 30, 2017.

 

3.Pro Forma Adjustments

 

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2016 reflect the following adjustments:

 

(a)Represents the unaudited amounts of Real-Time assets and liabilities which were sold or transferred to the Buyer as if the Disposition had occurred on December 31, 2016.

 

(b)Reflects the proceeds received at closing from the Disposition. The sale price of $35.0 million was reduced by (1) $2.8 million to be withheld until after French regulatory approval is obtained, (2) $2.0 million withheld as the Escrow Amount, (3) approximately $1.1 million for a pre-closing adjustment of estimated working capital and (4) approximately $3.8 million for estimated transaction expenses assumed to be paid at closing.

 

(c)Reflects the excess of the proceeds identified in (b) above over the net book value of Real-Time net assets sold of $(2.7) million at December 31, 2016, less proceeds from sale for tax liabilities. The Company is in a net operating loss position offset with a full valuation allowance in the U.S. where the predominance of the net assets for the Real-Time business were sold. As a result, the Company expects to utilize its existing net operating losses to offset the gain on sale resulting from the Disposition. No income tax payable was recognized for the Disposition except for projected U.S. federal alternative minimum tax, U.S. state income tax and other jurisdictional transfer taxes are estimated at $1.0 million in the aggregate.

  

 

 

 

The unaudited pro forma condensed consolidated statements of operations for the six months ended December 31, 2016 and the years ended June 30, 2015 and 2016 reflect the following adjustments:

 

(d)The elimination of operating results of the Real-Time business in the unaudited condensed consolidated statements of operations for the Company for the six months ended December 31, 2016 and the years ended June 30, 2015 and 2016 as if the Disposition had occurred on July 1, 2014. Adjustments to income taxes reflects the estimated income tax expense using the applicable statutory rates of the Company calculated on a jurisdictional basis related to the elimination of operating results of the Real-Time business due to the Disposition. In jurisdictions where we have a full valuation allowance on our deferred tax assets, that rate has been adjusted to zero.