-----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, J3WCFcjZtckvBV7fuPXrNBlY4dN4YbIIUs5grHKuTUSfmSN3cuzyOhuhXyrX9CoE wGU/RrsSni+/7qpIN/+OMw== 0000950135-03-003837.txt : 20030715 0000950135-03-003837.hdr.sgml : 20030715 20030715080226 ACCESSION NUMBER: 0000950135-03-003837 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030715 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORD COMMUNICATIONS INC CENTRAL INDEX KEY: 0000915290 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 042710876 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23067 FILM NUMBER: 03786195 BUSINESS ADDRESS: STREET 1: 600 NICKERSON RD CITY: MARLBORO STATE: MA ZIP: 01752 BUSINESS PHONE: 5084604646 MAIL ADDRESS: STREET 1: 600 NICKERSON RD CITY: MARLBORO STATE: MA ZIP: 01752 8-K 1 b47211cce8vk.txt CONCORD COMMUNICATIONS, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 15, 2003 Concord Communications, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Massachusetts 0-23067 04-2710876 - ---------------------------- ------------ ------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 400 Nickerson Road, Marlboro, Massachusetts 01752 - ------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (508) 460-4646 -------------- Not applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 5. OTHER EVENTS. On July 14, 2003, Concord Communications, Inc. ("Concord") entered into an Agreement and Plan of Reorganization dated as of July 14, 2003 (the "Merger Agreement"), by and among Concord, Sunburst Acquisition Corporation, a Maryland corporation and a wholly owned subsidiary of Concord, and netViz Corporation ("netViz"), a Maryland corporation. The Merger has been approved by the Boards of Directors of Concord and netViz, is subject to customary conditions to closing and is intended to qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. On July 11, 2003, Concord entered into a license agreement with Tavve Software Company ("Tavve") whereby Concord licensed components of Tavve's technology. On July 15, 2003, Concord issued a press release announcing that it had entered into a definitive agreement to acquire netViz Corporation and that it had licensed technology from Tavve Software Company. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. Exhibit Number Description -------------- ----------- 99.1 Form of press release dated July 15, 2003. 99.2 Form of press release dated July 15, 2003. ITEM 9. REGULATION FD DISCLOSURE. (ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.) This Current Report on Form 8-K of Concord is intended, with respect to Exhibit Number 99.2, to be furnished under "Item 12. Results of Operations and Financial Condition" but is instead furnished under "Item 9. Regulation FD Disclosure" in accordance with Securities and Exchange Commission Release No. 33-8126. The following information, including the Exhibit Number 99.2 attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. On July 15, 2003, Concord issued a press release announcing its results of operations for the quarterly period ending June 30, 2003. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONCORD COMMUNICATIONS, INC. Date: July 15, 2003 By: /s/ Melissa H. Cruz ---------------------------------------------- Melissa H. Cruz Executive Vice President of Business Services, Chief Financial Officer and Treasurer EXHIBIT INDEX Exhibit Number Description -------------- ----------- 99.1 Form of press release dated July 15, 2003. 99.2 Form of press release dated July 15, 2003. EX-99.1 3 b47211ccexv99w1.txt FORM OF PRESS RELEASE JULY 15, 2003 Contact: Kathy Keating Gillian Farquhar Concord Communications, Inc. Greenough Communications Group kkeating@concord.com gillian@greenoughcom.com 508-486-4632 (o) 617-275-6514 (o) 508-904-1203 (m) 617-694-7335 (m) CONCORD TO ACQUIRE TECHNOLOGIES; SETS PLAN TO REDEFINE IT MANAGEMENT LANDSCAPE Integration of netViz data-driven visualization software and Tavve root cause analysis and discovery technology to enrich eHealth(R) Suite MARLBORO, MASS. -- JULY 15, 2003 -- Concord Communications, Inc. (Nasdaq: CCRD) today announced that is has signed a definitive agreement to acquire netViz Corporation. netViz's software enables users to visualize business processes and allows them to map relationships within the supporting technology infrastructure through data-driven icons. Additionally, Concord has licensed Tavve's root cause analysis and discovery of layer 2 and 3 network topology as part of its strategic initiative to build upon Concord's leadership position in optimizing application availability and performance across networks and systems. The integration of these technologies, with Concord's flagship product, the eHealth Suite, will fundamentally redefine the IT management landscape by providing a new, more automated means of application service optimization. Concord's new roadmap will enable enterprises and service providers to employ data-driven icons to visualize and take action on the critical relationships between business processes, application services, and network and system infrastructures. This competitive differentiator will allow customers to measure the performance and availability of application services, map the dependencies between business processes, and manage the complete application service. Integrating netViz and Tavve technologies will further increase the eHealth Suite's value proposition by capturing the business context of information and delivering IT knowledge while ensuring a low total cost of ownership. Currently, Concord's eHealth Suite is used by approximately 3,000 organizations worldwide to optimize application performance and availability across networks and systems. These new technologies will build upon the eHealth Suite's ability to deliver an average ROI of 251 percent within the first year as proven through research conducted by IDC. - more - Page 2 "Today's acquisition news signifies another milestone in Concord's prosperous history. It is clear that Concord's future success will be the result of our continued commitment to delivering quality products and services that are in high demand by leading organizations worldwide," said Jack Blaeser, CEO and president, Concord. "Concord's enhancements to the eHealth Suite through netViz and Tavve technology is a direct response to customer requirements for managing application service delivery from a business perspective." netViz, based in Gaithersburg, Maryland, develops software to visualize the relationship between business processes and technology infrastructures. netViz is widely used at more than 3,800 leading organizations including Federal Express, Pfizer Pharmaceuticals, and the United States Marine Corps. Upon completion of the acquisition, expected to close in the third quarter, netViz will operate as a Concord subsidiary. The company will continue to develop, enhance and market its core product offerings in addition to being integrated into the eHealth Suite over time. Concord's license of Tavve technology will further increase the value of the eHealth Suite through the future integration of network topology discovery and root cause analysis. This will allow customers to uncover the connections between layer 2 and 3 network devices, more easily identify the cause of an outage by suppressing downstream alarms, and automatically populate new visualizations with network dependencies. Tavve is a provider of network management software tools. "netViz's core strength and unique value proposition is the ability to allow the end user to visually display the entire IT infrastructure and glean critical information about its performance for improved business efficiencies," said Vo Tran, CEO, netViz. "Backed by the strength of Concord to grow our existing business and inspired by the roadmap of the eHealth Suite, netViz is in an enviable position as the IT management landscape rapidly shifts and Concord's strategy sets the industry agenda." At consummation of the netViz acquisition, Tran will be appointed vice president of netViz product management, reporting directly to Concord CTO and Executive Vice President Fred Engel. CONFERENCE CALL Concord will hold a conference call on July 15, 2003 to discuss Q2 earnings, product direction and future expectations at 8:30 a.m. ET. The phone number for the call is 800-473-6123 (domestic) and 973-582-2710 (international). The call will be available for approximately two weeks. The number for the replay is 877-519-4471 for U.S./Canada and 973-341-3080 for Page 3 international callers. The access code is 4035473. The information in this press release and call replay is posted at www.concord.com ABOUT NETVIZ CORPORATION netViz Corporation is a private company based in Gaithersburg, Maryland. Version 1.0 of its flagship product, netViz, shipped in 1993. netViz 6.0 began shipping in March 2002. netViz software is used by more than 3,800 public and private organizations around the globe for WAN and LAN mapping, workflow documentation, database visualization and conceptual design modeling. netViz licensees include Accenture, AT&T, Bell South, British Telecom, Canon, Cisco Systems, Comdisco, ConAgra, Federal Express, First Data Corporation, General Electric, Hewlett-Packard, IBM, Intel, Motorola, NASA, Perot Systems, Siemens, Sprint, Verizon and Zenith Electronics, as well as numerous domestic and international government agencies. ABOUT TAVVE SOFTWARE COMPANY Tavve Software Company is headquartered in Research Triangle Park, NC, with customers worldwide. Tavve Software develops and markets unique network management software tools focused on fault management, root cause analysis, performance reporting, automated network mapping, and remote network management. Tavve's mission is to provide real-time, scalable, distributed network management tools to assist and support NOC managers. For more information on Tavve, visit www.tavve.com. ABOUT CONCORD COMMUNICATIONS Concord Communications, Inc. (Nasdaq: CCRD) is an industry leader in optimizing application performance and availability across networks and systems. Concord's approximately 3000 customers worldwide use the eHealth(R) Suite as the software solution to manage their IT infrastructure to drive profitable business operations, reduce costs, and increase competitive positioning. Concord is headquartered in Marlboro, Mass. For more information on Concord, call 1-800-851-8725 or visit Concord on the Web at www.concord.com. Concord Communications, Inc., the Concord logo and eHealth are trademarks of Concord Communications, Inc. All other trademarks are the property of their respective owners. SAFE HARBOR Forward-looking statements made in this press release, including forward-looking statements regarding the acquisitions, the benefits of the technologies acquired and to be acquired, Concord's market position, and Concord's views as to market acceptance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are Page 4 cautioned that all forward-looking statements involve risks and uncertainties, and actual results could differ materially from the forward-looking statements contained herein. Risks and uncertainties include, without limitation, Concord's inability to consummate the netViz acquisition; Concord's inability to successfully integrate the acquired technologies; the magnitude and duration of the current domestic financial crisis and economic slowdown and specifically their impact on the software, networking and telecommunications industries; Concord's customers' ability to obtain funding, specifically in light of the aforementioned financial and economic climate, and the resulting potential delay of customer purchasing decisions; risks of continued operating losses; the ability to attract and retain quality professional employees; uncertainties involving intellectual property rights and litigation; litigation in general; risks in technology development and commercialization; risks in product development and market acceptance of and demand for the Company's products; risks associated with competition and competitive pricing pressures; risks associated with international sales, including foreign currency risks; and other risks detailed in the Company's filings with the Securities and Exchange commission, including but not limited to, the Company's annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of all these factors. The information contained in this press release is applicable only today and should thereafter be considered historical and will no longer constitute the Company's current expectations. There can be no assurance that the contemplated advantage of the acquisitions will be achieved. The Company undertakes no obligation to update information contained in this press release. # # # EX-99.2 4 b47211ccexv99w2.txt FORM OF PRESS RELEASE JULY 15, 2003 Raymond Ruddy Director, Investor Relations Concord Communications (508) 303-4350 rruddy@concord.com - ------------------ CONCORD'S SECOND QUARTER REVENUE AND EARNINGS INCREASE Acquisition of netViz and license of Tavve source code to enrich eHealth(R) Suite MARLBORO, MA, JULY 15, 2003-- Concord Communications, Inc. (NASDAQ: CCRD), an industry leader in optimizing application performance and availability across networks and systems, today announced its financial results for the second quarter ended June 30, 2003. Revenue increased to $25.6 million, up from $24.1 million in the first quarter of 2003. Pro forma earnings per share were $0.06, up 2 cents from pro forma earnings per share of $.04 in the first quarter of 2003. GAAP earnings per share were $0.07. In addition to reporting positive earnings growth, Concord also signed an agreement to acquire netViz Corporation, a profitable software provider. netViz software enables users to visualize business processes and allows them to map relationships within the supporting technology infrastructure through data-driven icons. Concord also announced that it has licensed source-code from Tavve Software. This technology will provide eHealth(R) Suite users with discovery of Layer 2 and 3 network topology, root cause analysis and downstream alarm suppression. "In addition to executing strongly last quarter, we are acquiring powerful and unique technologies," explained Jack Blaeser, Concord's CEO and president. "We will combine netViz's data-driven visualization and advanced root cause technology with Concord's rich integrated IT management solution to enable application service optimization. Customers will be able to visualize and take action on the dependencies between business processes, application services and network and system infrastructures, allowing them to Measure IT, Map IT and Manage IT." More detail on these transactions is available in a simultaneous press release. CASH, DSO AND OTHER METRICS CONTINUED TO IMPROVE o Cash grew $4 million to $80.9 million. o Deferred revenue increased to $27.7 million, up from $25.7 million in the prior quarter. o Gross margin was 81.5%, net margin was 4.7%. o DSO was 65 days, down from 70 days in Q1. o Average deal size for new customers increased to $130,000 from $124,000 in Q1 as these customers chose the eHealth(R)Suite to manage larger IT infrastructures. o Number of deals over $100,000 stayed consistent at 36. MARKET SEGMENT MIX RETURNED TO HISTORICAL AVERAGES o 52% of revenue came from enterprise customers like Commerce Insurance and Royal Bank Financial Group. This mix was up 18 points from the previous quarter. o 32% of revenue came from managed service provider customers. These customers included Telecom Italia and Radianz. 16% of revenue came from carrier infrastructure customers including Echostar and Comcast. Combined, these two groups provided 48% of revenue. o International was 44% of revenue. Customers include UAE Air Force, GE Finance and Siemens Power Generation. EXISTING CUSTOMERS EXPANDED USE OF THE EHEALTH(R) SUITE o 81% of quarterly revenues were generated from installed base from customers like BT Global Services and Verizon Wireless. Of the revenue from existing customers, 42% was from existing customers expanding deployment of their existing Concord products across a larger portion of their IT infrastructure and 58% was from customers expanding toward an end-to-end solution by purchasing new applications in the eHealth(R) Suite. o 19% of quarterly revenues came from 38 new customers. New customers included DHL, The United States Joint Chiefs of Staff and Neustar. GUIDANCE ESTABLISHED Concord is establishing guidance for Q3 between $26.5 -- $27.0 million in revenue, and pro forma earnings per share between $0.06 and $0.07. CONFERENCE CALL Concord will hold a conference call today, July 15, 2003, to discuss results, product direction and future expectations at 8:30 a.m. ET. The phone number for the call is 800-473-6123 (domestic) and 973-582-2710 (international). The call will be available for approximately two weeks. The number for the replay is 877-519-4471 for U.S./Canada and 973-341-3080 for international callers. The access code is 4035473. The information in this press release, call replay, and reconciliation of non-GAAP financials is posted at www.concord.com. ABOUT CONCORD COMMUNICATIONS Concord Communications, Inc. (Nasdaq: CCRD) is an industry leader in optimizing application performance and availability across networks and systems. Concord's almost 3000 customers worldwide use the eHealth(R) Suite as the software solution to manage their IT infrastructure to drive profitable business operations, reduce costs, and increase competitive positioning. Concord is headquartered in Marlboro, Mass. For more information on Concord, call 1-800-851-8725 or visit Concord on the Web at www.concord.com. Concord Communications, Inc., the Concord logo and eHealth are trademarks of Concord Communications, Inc. All other trademarks are the property of their respective owners. SAFE HARBOR Forward-looking statements made in this press release, including forward-looking statements regarding the incorporation of acquired technology and revenue and profit expectations, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements involve risks and uncertainties, and actual results could differ materially from the forward-looking statements contained herein. Risks and uncertainties include, without limitation, the magnitude and duration of the current domestic financial crisis and economic slowdown and specifically their impact on the software, networking and telecommunications industries; our customers' ability to obtain funding, specifically in light of the aforementioned financial and economic climate, and the resulting potential delay of customer purchasing decisions; risks of continued operating losses; the ability to attract and retain quality professional employees; uncertainties involving intellectual property rights and litigation; litigation in general; risks in technology development and commercialization; risks in product development and market acceptance of and demand for the Company's products; risks associated with competition and competitive pricing pressures; risks associated with international sales, including foreign currency risks; and other risks detailed in the Company's filings with the Securities and Exchange Commission, including but not limited to, the Company's annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of all these factors. The information contained in this press release is applicable only today and should thereafter be considered historical and will no longer constitute the Company's current expectations. The Company undertakes no obligation to update information contained in this press release. The information in this press release will be posted at www.concord.com.
Concord Cummunications, Inc. [CONCORD LOGO] Condensed Consolidated Statements of Operations (Unaudited, in thousands, except share data) ------------------------------------------------------------- Three Months Ended Six Months Ended ---------------------------- ------------------------- June 30, June 30, June 30, June 30, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Revenues: Product $ 13,153 $ 12,258 $ 26,063 $ 26,319 Services 12,462 10,693 23,670 20,870 ----------- ----------- ----------- ----------- Total revenues 25,615 22,951 49,733 47,189 ----------- ----------- ----------- ----------- Cost of revenues 4,728 4,116 9,359 8,501 ----------- ----------- ----------- ----------- Gross profit 20,887 18,835 40,374 38,688 ----------- ----------- ----------- ----------- Operating expenses: Research and development 5,423 5,445 10,850 11,187 Selling and marketing 12,579 11,890 23,944 24,024 General and administrative 2,060 1,772 4,305 3,827 Equity-based compensation expense 14 27 34 60 ----------- ----------- ----------- ----------- Total operating expenses 20,076 19,134 39,133 39,098 ----------- ----------- ----------- ----------- Income (loss) from operations 811 (299) 1,241 (410) Other income, net 563 786 1,056 1,534 ----------- ----------- ----------- ----------- Income before income taxes 1,374 487 2,297 1,124 ----------- ----------- ----------- ----------- Provision for income taxes 177 92 263 240 ----------- ----------- ----------- ----------- Net income $ 1,197 $ 395 $ 2,034 $ 884 =========== =========== =========== =========== Net income per common and potential common share: Basic $ 0.07 $ 0.02 $ 0.12 $ 0.05 Diluted $ 0.07 $ 0.02 $ 0.11 $ 0.05 Fully-taxed pro forma diluted without unusual items** $ 0.06 $ 0.02 $ 0.09 $ 0.05 ** excludes equity-based compensation expense and assumes a 28% pro-forma tax rate. Weighted average common shares outstanding 17,372,070 17,017,410 17,313,416 16,974,305 Diluted weighted average common and potential common shares outstanding 18,022,181 17,861,027 17,767,593 17,969,848
PRO FORMA FINANCIAL RESULTS We prepare and release quarterly unaudited financial statements prepared in accordance with generally accepted accounting principles ("GAAP"). We also disclose and discuss certain pro forma financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls. We believe that current shareholders and potential investors in our company use multiples of pro-forma EPS in making investment decisions about our company. We use pro-forma EPS to evaluate the results of our ongoing operations. This measure, and other pro-forma information, should not be considered an alternative to measurements required by accounting principles generally accepted in the United States of America ("U.S. GAAP") such as net income and net cash provided by operations and should not be considered measures of our liquidity. In addition, our non-GAAP measures may not be comparable to similar measures reported by other companies. Our key non-GAAP measure is: Pro-forma EPS Pro-forma EPS is calculated by dividing pro-forma net income by the diluted number of shares. Pro-forma Net Income excludes certain non-cash and special charges, consisting primarily of non-cash compensation charges and transaction costs associated with acquisitions. This proforma calculation also substitutes current period GAAP tax provisions with a "pro forma" tax rate. We have significant deferred tax assets and have not recorded significant federal tax provision. The tax provision relates mostly to state and foreign taxes only. RECONCILIATION The table below reconciles Operating Income to Pro-forma Net Income for the first quarter ended 2003 vs. 2002:
Three Months Ended Six Months Ended ----------------------------- ----------------------------- In thousands, except per share data June 30, June 30, June 30, June 30, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Reconciliation of GAAP & Proforma Net Income: Net income $ 1,197 $ 395 $ 2,034 $ 884 Add: Provision for income taxes 177 92 263 240 Equity-based compensation expense 14 27 34 60 ----------- ----------- ----------- ----------- Proforma income before income taxes 1,388 514 2,331 1,184 ----------- ----------- ----------- ----------- Proforma income taxes (Pro-forma rate: 28%) 389 144 653 332 ----------- ----------- ----------- ----------- Proforma net income $ 999 $ 370 $ 1,678 $ 852 =========== =========== =========== =========== Pro forma net income per diluted share: $ 0.06 $ 0.02 $ 0.09 $ 0.05 Diluted weighted average common and potential common shares outstanding 18,022,181 17,861,027 17,767,593 17,969,848
Q3 2003 GUIDANCE The table below reconciles Pro-forma EPS guidance to estimated GAAP EPS for Q3 2003:
Guidance for Quarter ended September 30, 2003 -------------- Proforma EPS guidance $0.06 - $0.07 Estimated: Income taxes 0.02 Equity-based compensation expense (0.00) Estimated charges for netViz acquisition (0.03) Estimated costs of Tavve technology (0.05) ------------- Estimated GAAP EPS $0.00 - 0.01 =============
Concord Communications, Inc. [CONCORD LOGO] Condensed Consolidated Balance Sheets As of (Unaudited, in thousands) ------------------------------------- June 30, December 31, 2003 2002 -------- ------------ Assets Current assets: Cash, cash equivalents and marketable securities $ 80,901 $ 73,670 Accounts receivable, net 18,576 17,417 Other current assets 2,141 2,882 -------- -------- Total current assets 101,618 93,969 Equipment and improvements, net 7,457 8,245 Deferred tax and other assets 3,821 3,716 -------- -------- Total Assets $112,896 $105,930 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 13,053 $ 13,646 Deferred revenue 27,750 23,348 -------- -------- Total current liabilities 40,803 36,994 Common stock, deferred compensation, unrealized gain on marketable securities and additional paid-in capital 102,536 101,413 Accumulated deficit (30,443) (32,477) -------- -------- Total stockholders' equity 72,093 68,936 -------- -------- Total Liabilities and Stockholders' Equity $112,896 $105,930 ======== ========
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