-----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, DYPmg6pKRRdExj/+Q2PBupDidYcvngb5fh2y6wmMXpsrqFW4A1a1lTKz2P6C/gwn D+vrTqvl6PjlaKKMe8MKPA== 0001157523-05-000854.txt : 20050201 0001157523-05-000854.hdr.sgml : 20050201 20050201080020 ACCESSION NUMBER: 0001157523-05-000854 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050201 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050201 DATE AS OF CHANGE: 20050201 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: 05563788 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 a4811614.txt CONCORD COMMUNICATIONS, INC. 8-K UNITED STATES 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 February 1, 2005 Date of Report (Date of earliest event reported) Concord Communications, Inc. (Exact name of registrant as specified in charter) - -------------------------------------------------------------------------------- Massachusetts 0-23067 04-2710876 ------------- ------- ---------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) 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) - -------------------------------------------------------------------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under Exchange Act (17 CFR 240.13e-4(c)) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Item 2.02. Results of Operations and Financial Condition. On February 1, 2005, Concord issued a press release announcing its results of operations for the quarterly period ending December 31, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The following information, including the Exhibit Number 99.1 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. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description -------------- ----------- 99.1 Press release dated February 1, 2005 - -------------------------------------------------------------------------------- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. CONCORD COMMUNICATIONS, INC. By: /s/ Melissa H. Cruz ---------------------------------------------- Date: February 1, 2005 Melissa H. Cruz Executive Vice President of Business Services, Chief Financial Officer and Treasurer EX-99.1 2 a4811614ex991.txt CONCORD COMMUNICATIONS, INC. EXHIBIT 99.1 Exhibit 99.1 Concord Reports Fourth Quarter Financial Results; Company Enjoys Successful Quarter While Broadening Product Portfolio MARLBORO, Mass.--(BUSINESS WIRE)--Feb. 1, 2005--Concord Communications, Inc. (NASDAQ: CCRD), a global provider of Business Service Management (BSM) software solutions, today announced its financial results for the fourth quarter ended December 31, 2004. Revenue was $28.7 million, up from $26.9 million in the third quarter of 2004, and up from $27.8 million in the fourth quarter of 2003. Pro forma earnings per share were $0.07, compared to pro forma earnings per share of $0.02 in the prior quarter and pro forma earnings per share of $0.11 in the fourth quarter of 2003. GAAP loss per share was $0.03, compared to GAAP earnings per share of $0.01 in the prior quarter and GAAP diluted earnings per share of $0.27 in the fourth quarter of 2003. (See the table below for reconciliation between GAAP and pro forma earnings per share). "The past several weeks has been an exciting time in our history," stated Jack Blaeser, President and CEO of Concord Communications. "Our two strategic acquisitions - one closed, one pending - are decisive moves toward executing our corporate growth strategy. While we worked toward these important deals, we also continued to demonstrate our ability to drive organic growth by delivering both a solid quarter and an important new product release - eHealth(R) Suite 5.7. In addition, I am pleased by the speed with which our new Executive Vice President of Worldwide Field Operations, Ted Williams, has assumed leadership of our sales and service organizations." Fourth Quarter Results Acquisitions - Closed and Pending - to Expand Product Offering -- Aprisma Management Technologies - Concord's vision of managing IT services end-to-end, including networks, systems, and applications will be broadened with the addition of SPECTRUM's functionality. Post acquisition, Concord's capabilities will include patented event correlation, root cause analysis, technology relationship mapping, topology discovery and display, and service modeling. -- Vitel Software - With the acquisition of Vitel Software, Concord becomes the only software company to proactively manage the performance of voice networks that are based on next-generation voice over IP, legacy TDM technology, or both. Number of Large eHealth(R) Suite Deals Increases, Revenue Grows -- The number of eHealth(R) Suite deals over $100,000 increased to 46, from 40 in the previous quarter. -- The average deal size for new eHealth(R) Suite customer accounts was $124,000. New customers include Walgreens, the largest drugstore chain in the U.S.; Meritz Securities, a securities trading firm based in Korea, and COPEL, a Brazilian utility company. -- In addition, in Q4 total revenue grew 7%, while license revenue grew 14% sequentially from Q3. Continued Execution in Target Market Segments -- BSM - Concord's Business Service Console continued to drive customer interest, including organizations such as Northwestern Medical Faculty Foundation in Chicago, CheckFree Corporation in Georgia, Bayer Business Services in Germany, and SPT, a service provider in Australia. -- Voice - Vitel attracted new business for its voice network performance management solution from organizations like the City of Toronto and saw existing customers, like Glaxo Smith Kline, purchase more modules to expand management of its hybrid voice network and voice mail system. -- Mobile Wireless - Concord continued to see customer traction from major mobile wireless carriers such as Verizon Wireless and Alltel. Market Segments -- Telco infrastructure customers, like Verizon Wireless and Alltel, accounted for 33% of revenue. -- Managed service provider customers, such as GCI, accounted for 27% of revenue. -- Enterprise customers, such as Government of British Columbia and Sutter Health, accounted for 40% of revenue. -- International customers, such as Cegetel in France, Telstra in Australia, and Fidelity in the UK, accounted for 33% of revenue. Balance Sheet and Other Income -- Total cash, composed of cash, cash equivalents and marketable securities, was $159.5 million at year-end. -- Deferred revenue was $27.2 million. -- DSO was 76 days. Future Expectations First quarter 2005 revenue, including revenue generated during the stub period from our anticipated acquisition of Aprisma, is expected to be between $31 million and $33 million. GAAP loss per share is expected to be between $0.10 and $0.15 and pro forma EPS is expected to be approximately breakeven. A reconciliation of GAAP and pro forma guidance is provided in the table below. Conference Call Concord will hold a conference call today, February 1, 2005, to discuss results, product direction and future expectations at 8:30 a.m. ET. The number for the call is 877-780-2271 (domestic) and 973-582-2757 (international). The call will be available for approximately two weeks. The number for the replay is 877-519-4471 (domestic) and 973-341-3080 (international). The access code is 5610646. 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) provides an integrated solution that enables companies to map their IT services to business needs, measure their actual end-user experience, and manage their applications, systems, and networks. More than 3,000 companies worldwide rely on Concord's eHealth(R) Suite, and its components, to optimize IT services to drive business success. Based in Marlboro, Massachusetts, USA, Concord maintains offices around the globe, and can be found on the web at www.concord.com. Concord Communications, Inc., the Concord logo, and eHealth(R) are trademarks of Concord Communications, Inc. All other trademarks are the property of their respective owners. Forward-looking statements made in this press release, including forward-looking statements regarding revenue and profit and loss expectations, market information and statements regarding our acquisitions and the expected benefits therefrom, are made pursuant to the safe harbor provisions Section 21E of the Securities Exchange Act of 1934. 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, continuation of the slower than expected economic recovery in certain of our markets; the failure to consummate the Aprisma acquisition; our customers' ability to obtain funding, specifically in light of the aforementioned economic climate, and the resulting potential delay or cancellation of pending customer purchases; risks of operating losses including the cost of development and sale of our products; the integration of acquired products and technologies; the ability to attract and retain key employees; issues that impact the use of our intellectual property; risks associated with our debt service obligations; market acceptance of, and demand for, our products; risks associated with competition, including competition in the business service management market and the network, system, and application fault and performance markets; risks associated with international sales, including foreign currency risks and longer payment cycles; 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. 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 and to assist in historical comparisons. 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 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 and 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, considered non-recurring, which consist primarily of non-cash and cash compensation expenses, in-process-research-and-development costs, acquisition related costs and amortization of intangible assets. In the quarter ending March 31, 2005, pro forma net income also excludes acquisition related expenses related to the acquisitions of Vitel (closed) and Aprisma (pending); and acquisition-related compensation charges stemming from Aprisma. This pro forma calculation also substitutes current period GAAP tax provisions with a pro forma tax rate of 28%. From a tax return perspective, and thus cash flow perspective, we do not believe Concord will pay significant state or federal income taxes for at least 2 years. We will continue incurring small foreign, federal minimum and state minimum tax payments. We will continue providing pro forma guidance and results at a 28% tax rate to normalize our results against historical reported results, and such pro forma guidance and results are provided for comparative purposes only. CONCORD COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share and share data) Three Months Ended Twelve Months Ended ---------------------------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004 2003 ---------------------------------------------- Revenues: License revenues $14,395 $14,520 $49,973 $54,267 Service revenues 14,346 13,250 56,215 49,796 ---------------------------------------------- Total revenues 28,741 27,770 106,188 104,063 ---------------------------------------------- Costs of Revenues: Cost of license revenues 918 1,020 3,490 3,117 Cost of service revenues 4,526 3,954 17,267 16,127 ---------------------------------------------- Total cost of revenues 5,444 4,974 20,757 19,244 ---------------------------------------------- Gross profit 23,297 22,796 85,431 84,819 ---------------------------------------------- Operating Expenses: Research and development 6,139 6,020 23,881 22,767 Sales and marketing 12,919 11,918 49,435 48,352 General and administrative 2,148 2,573 10,412 9,035 Stock-based compensation 3,298 12 3,298 60 Acquisition related charges - - - 40 Acquired in-process research and development - - 100 994 ---------------------------------------------- Total operating expenses 24,504 20,523 87,126 81,248 ---------------------------------------------- Operating (loss) income (1,207) 2,273 (1,695) 3,571 ---------------------------------------------- Other Income: Interest income 1,204 679 4,471 2,808 Interest expense (820) (225) (3,283) (244) Other expense 83 58 (139) (480) ---------------------------------------------- Total other income, net 467 512 1,049 2,084 ---------------------------------------------- (Loss) income before income taxes (740) 2,785 (646) 5,655 Benefit from income taxes (125) (2,370) (112) (2,015) ---------------------------------------------- Net (loss) income $(615) $5,155 $(534) $7,670 ============================================== Net (loss) income per common and potential common share: Basic ($0.03) $0.29 ($0.03) $0.44 ============================================== Diluted ($0.03) $0.27 ($0.03) $0.42 ============================================== Weighted average common and potential common shares outstanding: Basic 18,397,560 18,000,086 18,280,294 17,533,509 ============================================== Diluted 18,397,560 19,080,522 18,280,294 18,207,541 ============================================== CONCORD COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share data) Dec. 31, Dec. 31, 2004 2003 ------------------ ASSETS Current Assets: Cash and cash equivalents $15,816 $69,436 Marketable securities 143,639 92,455 Restricted cash 66 194 Accounts receivable, net of allowance of $423 and $1,050 at December 31, 2004 and December 31, 2003, respectively 24,183 22,194 Deferred tax assets 1,763 4,638 Prepaid expenses and other current assets 8,170 4,851 ------------------ Total current assets 193,637 193,768 Equipment and improvements, net 6,226 6,697 Goodwill 6,225 6,225 Other intangible assets, net 2,191 3,004 Deferred tax assets 12,211 4,962 Unamortized debt issuance costs and other long-term assets 3,001 3,770 ------------------ Total assets $223,491 $218,426 ================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $6,334 $5,218 Accrued expenses 12,171 12,627 Deferred revenue 27,207 26,490 ------------------ Total current liabilities 45,712 44,335 Convertible senior notes 86,250 86,250 ------------------ Total liabilities 131,962 130,585 ------------------ Stockholders' Equity: Common stock, $0.01 par value: Authorized - 50,000,000 shares; Issued and outstanding - 18,449,964 and 18,121,211 shares at December 31, 2004 and December 31, 2003, respectively 184 181 Additional paid-in capital 117,113 111,651 Accumulated other comprehensive income (427) 816 Accumulated deficit (25,341) (24,807) ------------------ Total stockholders' equity 91,529 87,841 ------------------ Total liability and stockholders' equity $223,491 $218,426 ================== CONCORD COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Twelve Months Ended Ended ---------------- ---------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004 2003 ---------------- ---------------- Cash Flows from Operating Activities: Net income $(615) $5,155 $(534) $7,670 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,173 1,257 4,528 5,223 Gain on disposal or sale of equipment and improvements (3) (14) (3) (14) Stock-based compensation 3,298 12 3,298 60 Amortization of debt issuance costs 170 59 793 59 Deferred income taxes (806) (2,624) (767) (2,624) Changes in assets and liabilities: Accounts receivable (2,015) (2,393) (1,989) (4,473) Prepaid expenses and other current assets (4,043) (2,559) (3,322) (1,892) Other assets (13) 26 59 (56) Accounts payable 3,787 2,121 1,116 1,591 Accrued expenses 161 743 (456) 2,292 Deferred revenue (930) 52 718 2,551 ---------------- ---------------- Net cash provided by operating activities 164 1,835 3,441 10,387 ---------------- ---------------- Cash Flows from Investing Activities: Purchases of equipment and improvements (874) (768) (3,228) (3,203) Proceeds from sale of equipment and improvements 3 - 3 - Purchases of marketable securities (8,466)(31,803) (86,716)(58,895) Proceeds from maturities and sale of marketable securities 4,463 6,319 33,485 27,860 Deposit of restricted cash - - (65) - Release of restricted cash - 195 194 645 Additions for Capitilized Software (99) - (99) - Acquisition of business - net of cash acquired - (13) - (4,981) ---------------- ---------------- Net cash used for investing activities (4,973)(26,070) (56,426)(38,574) ---------------- ---------------- Cash Flows from Financing Activities: Procees from convertible senior notes - 86,250 - 86,250 Cash used to repurchase stock options (3,298) - (3,298) - Debt issuance costs - (3,519) - (3,519) Proceeds from issuance of common stock 989 2,790 2,663 4,530 ---------------- ---------------- Net cash (used in) provided by financing activities (2,309) 85,521 (635) 87,261 ---------------- ---------------- Net (decrease) increase in cash and cash equivalents (7,118) 61,286 (53,620) 59,074 Cash and cash equivalents, beginning of period 22,934 8,150 69,436 10,362 ---------------- ---------------- Cash and cash equivalents, end of period $15,816 $69,436 $15,816 $69,436 ================ ================ Supplemental Disclosure of Cash Flow Information: Cash paid for income taxes $107 $161 $659 $513 Supplemental Disclosure of Noncash Investing Transactions: Retirements of fully depreciated equipment and improvements $- $4,615 $- $4,615 Unrealized loss on available-for- sale securities $(735) $(966) $(2,048)$(1,592) Common Stock issued to acquire business $- $4,968 $- $4,968 CONCORD COMMUNICATIONS, INC. TABLE OF RECONCILIATION FROM GAAP TO PRO FORMA (Unaudited) (In thousands, except share data) Three Months Ended Twelve Months Ended ---------------------- ----------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004 2003 ---------------------- ----------------------- Reconciliation of GAAP & Pro Forma Net Income: Net (loss) income $(615) $5,155 $(534) $7,670 Add: Provision for income taxes (125) (2,370) (112) (2,015) From Cost of revenues netViz technology amortization 133 133 532 266 From Operating expenses Amortization expenses, relating to the netViz acquisition and equity- based compensation charges 70 82 280 200 Acquired in-process research and development - - 100 994 net Viz acquistion relates expenses - - - 40 Compensation expenses related to stock option tender offer 3,298 - 3,298 - Change in allowance for bad debt (907) - (907) - ---------------------- ----------------------- Pro forma income before income taxes 1,854 3,000 2,657 7,155 ---------------------- ----------------------- Pro forma income taxes (Pro forma rate: 28%) 519 840 744 2,003 ---------------------- ----------------------- Pro forma net income $1,335 $2,160 $1,913 $5,152 ====================== ======================= Pro forma net income per diluted share: $0.07 $0.11 $0.10 $0.28 Diluted weighted average common and potential common shares outstanding 18,535,865 19,080,522 18,680,680 $18,207,541 Q1 2005 Guidance The table below reconciles Q1 2005 Pro-forma EPS guidance to GAAP EPS (unaudited): ------------------- Guidance for Quarter ending March 31, 2005 ------------------- Estimated Pro-forma EPS guidance ($0.02) to $0.02 ------------------- Estimated: Income taxes difference $0.04 Transaction expenses related to the acquisitions ($0.10) to ($0.15) of Vitel and Aprisma Amortization of intangibles and acquisition- ($0.02) to ($0.06) related compensation charges ------------------- Estimated GAAP Loss Per Share ($0.10) to ($0.15) =================== CONTACT: Concord Communications Ray Ruddy, 508-303-4350 Investor Relations rruddy@concord.com or Eric Snow, 508-486-4508 Public Relations esnow@concord.com -----END PRIVACY-ENHANCED MESSAGE-----