SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - --------------
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended December 31, 1994
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.)
2 Crescent Place, Oceanport, New Jersey 07757
Telephone: (908) 870-4500
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No___
Number of shares of the Registrant's Common Stock, par value $0.01 per
share, outstanding as of February 1, 1995 were 30,208,396.
PART I. Financial Information
Item 1. Financial Statements
Concurrent Computer Corporation
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993* 1994 1993*
Net Sales:
Computer systems $20,402 $21,254 $44,275 $49,042
Service and other 17,384 19,434 35,019 41,006
Total 37,786 40,688 79,294 90,048
Cost of sales:
Computer systems 9,718 12,131 21,897 25,249
Service and other 10,782 12,774 21,334 26,164
Total 20,500 24,905 43,231 51,413
Gross margin 17,286 15,783 36,063 38,635
Operating expenses:
Research and development 5,327 6,551 10,748 12,775
Selling, general and
administrative 10,086 13,371 20,284 27,279
Provision for
restructuring - - - 12,000
Sales and use tax
credit (1,000) (1,440) (1,000) (1,440)
________ _______ _______ _______
Total operating expenses 14,413 18,482 30,032 50,614
Operating income (loss) 2,873 (2,699) 6,031 (11,979)
Interest expense (648) (640) (1,372) (2,141)
Interest income 129 144 311 305
Other income (expense)-net (14) (147) 144 (92)
Income (loss) before provision
for income taxes,extraordinary
loss and cumulative effect
of change in accounting
principles 2,340 (3,342) 5,114 (13,907)
Provision for income taxes 1,300 150 2,400 600
Income (loss) before
extraordinary loss and
cumulative effect of
change in accounting
principles 1,040 (3,492) 2,714 (14,507)
Extraordinary loss on early
extinguishment of debt - - - (23,193)
Cumulative effect of change
in accounting principles
for income taxes and
postretirement benefits - - - (5,000)
Net income (loss) $1,040 ($3,492) $2,714 ($42,700)
Income (loss) per share:
Income (loss) before
extraordinary loss and
cumulative effect of
change in accounting
principles $0.03 ($0.12) $0.09 ($0.55)
Extraordinary loss on
early extinguishment
of debt - - - (0.87)
Cumulative effect of change
in accounting principles
for income taxes and
postretirement benefits - - - (0.19)
Net income (loss) $0.03 ($0.12) $0.09 ($1.61)
* Reclassified to conform to current year presentation.
The accompanying notes are an integral part of the consolidated financial
statements.
Concurrent Computer Corporation
Consolidated Balance Sheets
(Dollars in thousands)
December 31, June 30,
1994 1994
ASSETS
Current assets:
Cash and cash equivalents $8,249 $9,374
Accounts receivable - net 26,759 34,519
Inventories 19,834 17,829
Prepaid expenses and other
current assets 5,099 5,334
Total current assets 59,941 67,056
Property plant and equipment - net 39,510 42,742
Other long-term assets 12,722 13,372
Total assets $112,173 $123,170
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $6,193 $5,749
Current portion of long-term debt 16,125 11,000
Accounts payable and accrued
expenses 35,485 44,687
Deferred revenue 5,337 6,236
Total current liabilities 63,140 67,672
Long-term debt 1,125 13,240
Other long-term liabilities 6,982 7,210
Stockholders' equity:
Common stock 301 296
Capital in excess of par value 74,456 71,547
Accumulated deficit after
eliminating accumulated deficit
of $81,826 at December 31, 1991,
date of quasi-reorganization (32,308) (35,022)
Treasury stock (58) (58)
Cumulative translation adjustment (1,465) (1,715)
_______ _________
Total stockholders' equity 40,926 35,048
Total liabilities and stockholders'
equity $112,173 $123,170
The accompanying notes are an integral part of the consolidated
financial statements.
Concurrent Computer Corporation
Consolidated Statements of Cash Flows
(Dollars in thousands)
Six Months Ended
December 31,
1994 1993 *
Cash flows provided by (used by) operating
activities:
Net income (loss) $2,714 ($42,700)
_______ _________
Adjustments to reconcile net income
(loss) to net cash provided by (used
by) operating activities:
Depreciation, amortization and other 6,502 6,067
Non-cash taxes 1,800 200
Non-cash interest and amortization of
financing costs 230 801
Extraordinary loss on early
extinguishment of debt - 23,193
Cumulative effect of change in
accounting principles - 5,000
Provision for restructuring - 12,000
Sales and use tax credit (1,000) (1,440)
Decrease (increase) in current assets:
Accounts receivable 7,970 4,538
Inventories (1,751) (2,338)
Prepaid expenses and other current
assets 52 (70)
Decrease in current liabilities,
other than debt obligations (8,359) (7,668)
Increase in other long-term assets (88) (1,457)
(Decrease) increase in other long-
term liabilities (310) 461
________ _______
Total adjustments to net income (loss) 5,046 39,287
________ _______
Net cash provided by (used by) operating
activities 7,760 (3,413)
________ _______
Cash flows used by investing activities:
Additions to property, plant and equipment (2,626) (3,497)
Cash flow provided by (used by) financing
activities:
Net proceeds of notes payable 488 1,908
Repayment of long-term debt (7,065) (73,615)
Issuance of long-term debt - 708
Net proceeds from sale and issuance of
common stock 150 55,001
_______ ________
Net cash used by financing activities (6,427) (15,998)
_______ ________
Effect of exchange rate changes on cash
and cash equivalents 168 238
Decrease in cash and cash equivalents ($1,125) ($22,670)
________ _________
Cash paid during the year for:
Interest $1,189 $1,642
_______ _________
Income taxes (net of refunds) $551 $204
_____ _____
* Reclassified to conform to current year presentation.
The accompanying notes are an integral part of the consolidated financial
statements.
Concurrent Computer Corporation
Notes To Consolidated Financial Statements
___________________________
Note 1: Basis of Presentation
The accompanying consolidated financial statements are unaudited and have
been prepared in accordance 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. These results, however, are not necessarily indicative of the
results to be expected for the full fiscal year.
Note 2: Debt Agreement
At December 31, 1994, the outstanding balance of the Company's senior bank
debt (the "debt") was approximately $16.1 million, excluding up to $3.0
million in standby letters of credit in connection with overseas lines of
credit. The debt carries monthly amortization payments of $687,500 through
June 1995 and a final maturity payment of $12 million on October 1, 1995.
The debt bears interest, at the Company's option, at the prime rate plus
1% or the London Interbank Rate plus 3%. The debt is secured by a first
security interest in the Company's domestic assets and a security interest
in two-thirds of the Company's ownership interest in its subsidiaries.
The debt may be prepaid at any time without penalty.
The term loan agreement covering the debt was amended during the quarter
ended September 30, 1994 to modify certain financial covenants. The
amendment also extended the maturity date from June 30, 1995 to
October 1, 1995.
The Company is in discussions with its lenders to amend the term loan
agreement to modify certain financial covenants. The amendments are
expected to be necessary based on anticipated financial results for the
remainder of fiscal year 1995.
Note 3: Change in Accounting Estimate
During the three months ended December 31, 1994, the Company recorded a
sales and use tax credit of $1.0 million, or $.03 per share, related to a
change in estimate of state sales and use tax reserves based on a final
state audit determination.
Note 4: Income (Loss) Per Share
Income (loss) per share for the three and six months ended December 31,
1994 and 1993, respectively, is based on the weighted average number of
shares of common stock outstanding and for the three and six months
ended December 31, 1994 includes common stock equivalents (dilutive
stock options). Income per share on a primary and fully diluted basis
for the three and six months ended December 31, 1994 are equivalent.
The number of shares used in computing earnings per share were as follows:
(Shares in thousands)
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
Primary 30,127 29,585 29,991 26,524
Fully Diluted 30,127 29,585 29,991 26,524
Supplemental net loss per share for the six months ended December 31, 1993,
which is calculated assuming the Company's comprehensive refinancing
(completed on July 21, 1993) took place on July 1, 1993, was as follows:
Six Months Ended
December 31, 1993
Income (loss) before extraordinary loss
and cumulative effect of change in
accounting principles (including a
$12.0 million, or $0.41 per share,
provision for restructuring) ($0.49)
Extraordinary loss on early extinguishment
of debt (0.79)
Cumulative effect of change in accounting
principles for income taxes and
postretirement benefits (0.17)
Net loss ($1.45)
Note 5: Inventories
(Dollars in thousands)
December 31, June 30,
1994 1994
Raw materials $10,883 $9,270
Work-in-process 1,799 2,872
Finished goods 7,152 5,687
________ ________
$19,834 $17,829
Note 6: Accumulated Depreciation
Accumulated depreciation at December 31, 1994 and June 30, 1994 was
$33,274,000 and $26,644,000, respectively.
Note 7: Contingency
The U.S. government has asserted that the Company's prices for shipments
of spare parts prior to 1994 under the U.S. Department of Commerce's Next
Generation Weather Radar (NEXRAD) program were too high. No claim or
action has been filed against the Company. The Company believes that its
pricing practices are in compliance with applicable regulations. The
Company and the government are in discussions to resolve the matter.
Although there can be no assurance, the Company expects that any
resolution of the matter will not have a material adverse affect on the
Company's financial condition or liquidity.
Note 8: Subsequent Event
Commencing during January 1995, the Company began the process of
restructuring its operations. The restructuring plan includes a reduction
in headcount and the closing of certain offices. The plan will result in
the recording of a provision for restructuring during
the three months ending March 31, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
During the first and second quarters of fiscal year 1995, Concurrent
achieved profitability despite declining revenues. The Company's profit
performance reflects the benefits from continued tight cost controls and
focused investment. The decline in revenues results from the continued
shift in market demand from higher unit-priced proprietary systems to
lower unit-priced open systems, such as the MAXION systems. The MAXION
systems continue to be well received by customers who have purchased them.
However, sales of the MAXION systems have not increased as expected and
declined in the quarter ended December 31, 1994. Management believes the
reason sales of the MAXION systems have not reached the initially
anticipated levels is that not enough potential customers are aware of
the MAXION systems, its capabilities and benefits. Therefore, the Company
is in the process of streamlining operations and realigning resources to
focus even more intently on its MAXION system business. The Company is
initiating new efforts to position, market and sell its MAXION systems to
customers who, like existing customers who have purchased them, require
high-performance, high-throughput and real-time capabilities to stay
competitive in their industries. In connection with restructuring efforts,
the Company will record a provision for restructuring during the quarter
ending March 31, 1995. Although revenues for the quarter ending March 31,
1995 are expected to be lower than the quarter ended December 31, 1994
(reflecting, in part, a reduction in shipments of spare parts under the
U.S. Department of Commerce's Next Generation Weather Radar (NEXRAD)
program), management believes that the Company's focused investment and
cost containment efforts will result in future revenue growth and
profitability. However, there can be no assurance that these goals will
be achieved.
The Company is pursuing a number of major program opportunities for its
MAXION systems. Prospects are promising but uncertain. Given the long
(6-18 months) selling cycle for such programs, should the Company be
selected as a supplier, the benefits from such programs are not likely to
be realized in fiscal year 1995.
During the quarter ended December 31, 1994 the Company shipped MAXION
systems to a number of strategic customers, including the 120th MAXION
system to Lockheed Austin for its work on the U.S. Navy's Tactical
Environmental Support System (TESS) program, initial units of the
MAXION/ATR "flyable" MAXION multiprocessor system to Loral Electronic
Systems, and other MAXION systems to such customers as the U.S.
Government, CAE, Fuji Heavy Industries, Ltd., and Boeing. The Company
continues to expand its product offerings through strategic alliances,
such as those with Oracle in data acquisition and Bull Information
Systems in networking, and is pursuing additional distribution and
marketing alliances.
The Company's objective is to increase revenues by providing real-time
computer systems and services to its installed base of proprietary systems
and to its open systems target markets. The achievement of these
objectives requires that the Company continue to enhance its proprietary
hardware and operating system platforms, while investing in the
development of its real-time open system hardware and operating systems
and providing industry standard product enhancements, such as networking,
graphics and data acquisition. The future growth of the Company's
business and its future financial performance will depend, to a
significant extent, upon its ability to continue to develop and
market competitive open systems which meet the real-time computing needs
of its targeted customers.
One of the goals of the Company's strategy is to minimize the effect of
the anticipated decline in sales of the Company's proprietary systems and
traditional maintenance and support services, while increasing sales of its
open systems and associated services. Since the average selling price of
an open system is considerably less than the average selling price of a
proprietary system, the number of total systems sold must increase to
maintain and grow revenues. A shift in sales from proprietary systems,
however, is likely to result in lower gross margins. Currently, gross
margins on open systems are lower than gross margins on proprietary
systems. The Company's operating income would be adversely affected by
such a shift unless total net sales increase, the gross margins on its
open systems improve and/or total operating expenses are further reduced.
Although there can be no assurance that this will be the case, the
Company believes gross margins on its open systems will improve with the
continued implementation of its value-added market strategy. This strategy
involves the continued introduction of new next generation open system
products, which the Company believes will generate higher gross margins than
its older open systems products. It also involves the development and sale
of value-added products and services such as software productivity and
development tools, and packaged services, which sales are expected to have
an aggregate positive impact on total gross margins.
Selected Operating Data as a Percentage of Net Sales
The Company considers its computer systems and service business (including
maintenance, support and training) to be one class of products which
accounted for the percentages of net sales set forth below. The following
table sets forth selected operating data as a percentage of net sales for
certain items in the Company's consolidated statements of operations for
the periods indicated.
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
Net sales:
Computer systems 54.0% 47.7% 55.8% 48.5%
Service and other 46.0 52.3 44.2 51.5
_____ _____ _____ _____
Total net sales 100.0 100.0 100.0 100.0
Cost of sales (% of respective
sales category):
Computer systems 47.6 58.6 49.5 53.9
Service and other 62.0 63.6 60.9 60.1
_____ _____ _____ _____
Total cost of sales 54.3 61.2 54.5 57.1
Gross margin 45.7 38.8 45.5 42.9
Operating expenses:
Research and development 14.1 16.1 13.6 14.2
Selling, general and
administrative 26.7 32.8 25.6 30.3
Provision for restructuring - - - 13.3
Sales and use tax credit (2.7) (3.5) (1.3) (1.6)
______ ______ ______ _____
Total operating expenses 38.1 45.4 37.9 56.2
______ ______ ______ _____
Operating income (loss) 7.6 (6.6) 7.6 (13.3)
Interest expense (1.7) (1.6) (1.7) (2.4)
Interest income 0.3 0.4 0.3 0.4
Other income (expense) - net - (0.4) 0.2 (0.1)
____ ____ _____ ______
Income (loss) before provision
for income taxes, extraordinary
loss and cumulative effect
of change in accounting
principles 6.2 (8.2) 6.4 (15.4)
Provision for income taxes 3.4 0.4 3.0 0.7
____ ____ ____ ______
Income (loss) before
extraordinary loss and cumulative
effect of change in accounting
principles (a) 2.8% (8.6)% 3.4% (16.1)%
_____ ______ ____ _______
(a) The percentage for the six months ended December 31, 1993 excludes a
$23.2 million extraordinary loss on early extinguishment of debt and a
$5.0 million non-cash charge for the cumulative effect of change in
accounting principles.
Results of Operations
Three Months Ended December 31, 1994 in Comparison to Three Months Ended
December 31, 1993
Net Sales
Net sales for the three months ended December 31, 1994 were $37.8
million, a decrease of $2.9 million from the prior year period. This
decrease was due to a decrease of $0.9 million, or 4.0%, in computer
systems sales and a decrease of $2.0 million, or 10.5%, in service and
other revenues. The decrease in computer system sales was primarily due
to the anticipated decline in sales of proprietary systems substantially
offset by shipments of spare parts under the U.S. Department of
Commerce's Next Generation Weather Radar (NEXRAD) program and sales of
the Company's new MAXION open systems. The decrease in service and
other revenues was primarily due to the decline in computer system
sales experienced in prior periods which resulted in fewer maintenance
contracts and a decline in renewal rates on maturing contracts partially
offset by approximately $1.0 million related to the impact of favorable
exchange rates.
Gross Margin
Gross margin, as measured in dollars and as a percentage of net sales,
was $17.3 million and 45.7%, respectively, for the three months ended
December 31, 1994 compared to $15.8 million and 38.8%, respectively, for
the prior year period. The increase in gross margin dollars and percentage
was primarily due to a favorable mix of higher margin products and cost
savings resulting from the operational restructuring implemented during
fiscal year 1994 partially offset by the decline in net sales.
Operating Income (Loss)
Operating income for the current year period was $2.9 million compared to
operating loss of $2.7 million for the prior year period. The $5.6 million
increase in operating income was due to the aforementioned $1.5 million
increase in gross margin and a $4.5 million reduction in operating expenses
partially offset by a $0.4 million reduction in the sales and use tax credit
as compared to a similar credit in the prior year period. The sales and use
tax credit in both periods relates to a change in the estimate of state
sales and use tax reserves.
The $4.5 million decrease in operating expenses was primarily due to a $3.3
million decrease in selling, general and administrative expenses and a $1.2
million decrease in net research and development expenses. The $1.2 million
decrease in net research and development expenses reflects a $1.5 million
decrease in gross research and development expenses partially offset by a
$0.3 million decrease in the amount of software production costs which were
capitalized during the period. The decrease in selling, general and
administrative and gross research and development expenses is primarily due
to cost savings resulting from the operational restructuring implemented
during fiscal year 1994.
Income (Loss) Before Extraordinary Loss and Cumulative Effect of Change in
Accounting Principles
Income before extraordinary loss and cumulative effect of change in
accounting principles was $1.0 million in the current year period compared
to a loss of $3.5 million for the prior year period. The $4.5 million
change results from the $5.6 million increase in operating income partially
offset by a $1.1 million net increase in non-operating expenses. The
increase in non-operating expenses was primarily due to an $1.1 million
increase in the provision for income taxes. The increase in the provision
for income taxes relates primarily to domestic operations. Such increase
represents non-cash taxes which are offset in capital in excess of par
value through the reversal of temporary differences which originated prior
to the Company's quasi-reorganization on December 31, 1991.
Six Months Ended December 31, 1994 in Comparison to Six Months Ended
December 31, 1993
Net Sales
Net sales for the six months ended December 31, 1994 were $79.3 million,
a decrease of $10.8 million from the prior year period. This decrease was
due to a decrease of $4.8 million, or 9.7%, in computer systems sales and
a decrease of $6.0 million, or 14.6%, in service and other revenues. The
decrease in computer system sales was primarily due to the anticipated
decline in sales of proprietary systems substantially offset by shipments
of spare parts under the U.S. Department of Commerce's Next Generation
Weather Radar (NEXRAD) program and sales of the Company's new MAXION open
systems. The decrease in service and other revenues was primarily due to
the decline in computer system sales experienced in prior periods which
resulted in fewer maintenance contracts and a decline in renewal rates on
maturing contracts partially offset by approximately $1.6 million related
to the impact of favorable exchange rates.
Gross Margin
Gross margin, as measured in dollars and as a percentage of net sales,
was $36.1 million and 45.5%, respectively, for the six months ended
December 31, 1994 compared to $38.6 million and 42.9%, respectively,
for the prior year period. The decrease in gross margin dollars was
primarily due to the decline in net sales partially offset by a
favorable mix of higher margin products and cost savings resulting
from the operational restructuring implemented during fiscal year 1994.
The increase in gross margin as a percentage of net sales was primarily
due to a favorable mix of higher margin products and cost savings
resulting from the operational restructuring implemented during fiscal
year 1994 partially offset by the decline in net sales.
Operating Income (Loss)
Operating income for the current year period was $6.0 million compared
to an operating loss of $12.0 million for the prior year period. The
$6.0 million increase in operating income (net of the one-time $12.0
million provision for restructuring incurred in the prior year) was
due to a $9.0 million reduction in operating expenses partially offset
by the $2.6 million decrease in gross margin and a $0.4 million reduction
in the sales and use tax credit as compared to a similar credit in the
prior year period. The sales and use tax credit in both periods relates
to a change in the estimate of state sales and use tax reserves.
The $9.0 million decrease in operating expenses was primarily due to a
$7.0 million decrease in selling, general and administrative expenses and
a $2.0 million decrease in net research and development expenses. The
$2.0 million decrease in net research and development expenses reflects a
$2.8 million decrease in gross research and development expenses partially
offset by a $0.8 million decrease in the amount of software production
costs which were capitalized during the period. The decrease in selling,
general and administrative and gross research and development expenses
is primarily due to cost savings resulting from the operational
restructuring implemented during fiscal year 1994.
Income (Loss) Before Extraordinary Loss and Cumulative Effect of Change in
Accounting Principles
Income before extraordinary loss and cumulative effect of change in
accounting principles was $2.7 million in the current year period compared
to loss of $14.5 million for the prior year period. The $17.2 million
change results from the $18.0 million increase in operating income partially
offset by a $0.8 million net increase in non-operating expenses. The
increase in non-operating expenses was primarily due to an $1.8 million
increase in the provision for income taxes partially offset by a $0.8
million decrease in interest expense resulting from the reduction of the
Company's indebtedness and a $0.03 million decrease in foreign exchange
losses. The increase in the provision for income taxes relates primarily
to domestic operations. Such increase represents non-cash taxes which
are offset in capital in excess of par value through the reversal of
temporary differences which originated prior to the Company's
quasi-reorganization on December 31, 1991.
Financial Resources and Liquidity
The liquidity of the business is dependent on many factors, including
sales volume, operating profit ratio, debt service and the efficiency of
asset utilization and turnover. The future liquidity of the Company's
business will depend to a significant extent on: 1) its ability to
generate significant revenue growth of its MAXION systems; 2) the actual
versus anticipated decline in sales of proprietary systems and traditional
services; 3) its ongoing cost control efforts; and 4) refinancing of its
existing senior bank debt and access to additional equity, if necessary.
The liquidity of the business is also affected by: 1) the timing of
shipments which predominantly occur during the last month of the quarter;
2) the increasing percentage of sales derived from outside of the United
States where there is generally longer accounts receivable collection
patterns; 3) the number of countries in which the Company operates
resulting in the requirement to maintain minimum cash levels in each
country; and 4) restrictions in some countries where the Company operates
which limit its ability to repatriate cash.
As of December 31, 1994, the Company had a current ratio of .95 to 1, an
inventory turnover ratio of 4.3 times and negative net working capital of
$3.2 million. Current liabilities include the final maturity payment on
the Company's senior bank debt of $12.0 million due on October 1, 1995.
The reduction in the inventory turnover ratio (from 5.2 at June 30, 1994)
is due primarily to the timing of shipments and inventory purchases made
in anticipation of orders for certain business opportunities in process.
At December 31, 1994, cash and cash equivalents amounted to $8.2 million
and accounts receivable amounted to $26.8 million.
At December 31, 1994, the outstanding balance of the Company's senior
bank debt (the "debt") was approximately $16.1 million, excluding up to
$3.0 million in standby letters of credit in connection with overseas
lines of credit. The debt carries monthly amortization payments of
$687,500 through June 1995 and a final maturity payment of $12 million on
October 1, 1995. Amortization payments during the quarters ended
September 30, 1994 and December 31, 1994 included the regular $687,500
monthly payments and additional payments of $1.375 million on September
30, 1994 and December 31, 1994, respectively. The September 30, 1994
and December 31, 1994 payments of $1.375 million resulted from the bank
approved deferral of the four regular monthly amortization payments
from November 1993 through February 1994. In consideration of the deferral,
the Company granted stock purchase warrants to the senior banks to
purchase an aggregate of 600,000 shares of Common Stock at an exercise
price of $1.50, the fair market value of a share of Common Stock at the
time of the applicable bank term loan amendment. The warrants expired
unexercised on September 30, 1994. The debt bears interest, at the
Company's option, at the prime rate plus 1% or the London Interbank Rate
plus 3%. The debt is secured by a first security interest in the
Company's domestic assets and a security interest in two-thirds of
the Company's ownership interest in its subsidiaries. The debt may
be prepaid at any time without penalty.
The term loan agreement covering the debt was amended during the
quarter ended September 30, 1994 to modify certain financial covenants.
The amendment also extended the maturity date from June 30, 1995 to
October 1, 1995. The Company is in discussions with its lenders to
modify certain financial covenants based on anticipated financial
results for the remainder of fiscal year 1995. The Company does not
expect to be in a position to repay the final maturity payment of $12.0
million due on October 1, 1995 from internally generated funds and is
pursuing options for refinancing the debt. There can be no assurance
that any of the above will be obtained or achieved.
The Company's Tinton Falls, New Jersey facility continues to be for sale.
In the event of a sale, the Company is required to make a prepayment of
the existing senior bank debt in an amount equal to 75% of the net sale
proceeds. The prepayment would be applied to the payment due on the
October 1, 1995 maturity date.
Commencing during January 1995, the Company began the process of
restructuring its operations. The restructuring plan will include a
reduction in headcount and the closing of certain offices. The plan will
result in the recording of a provision for restructuring during the
three months ending March 31, 1995.
Although management believes that improvements in cash flow will result
from the restructuring of operations and other actions which will enhance
the Company's ability to manage its cash requirements, the short term
prospects for the Company's liquidity are dependent to a significant
degree upon the level and stability of revenue from sales and service of
its computer systems and the Company's ongoing cost control actions.
To provide additional flexibility, the Company is in discussions with
its lenders to reschedule future monthly debt amortization payments.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 Computation of Primary Earnings Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the fiscal quarter ended
December 31, 1994.
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this quarterly report for the quarter ended
December 31, 1994 to be signed on its behalf by the undersigned thereunto
duly authorized.
CONCURRENT COMPUTER CORPORATION
(Registrant)
By:/s/ John T. Stihl
John T. Stihl
Chairman of the Board
President and
Chief Executive Officer
By:/s/ Roger J. Mason
Roger J. Mason
Vice President,
Finance and Treasurer
Chief Financial Officer
Dated: February 14, 1995
Exhibit Index
Exhibit No. Description
11 Computation of primary earnings per share
27 Financial data schedule
Concurrent Computer Corporation
Exhibit 11
Primary Earnings Per Share Computation
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
Income (loss) before
extraordinary loss and
cumulative effect of change
in accounting principles $1,040 ($3,492) $2,714 ($14,507)
Extraordinary loss on early
extinguishment of debt - - - (23,193)
Cumulative effect of change
in accounting principles
for income taxes and
postretirement benefits - - - (5,000)
_____ ______ ______ ________
Net income (loss) $1,040 ($3,492) $2,714 ($42,700)
_______ ________ _______ __________
Weighted average number
of common shares 30,126 29,585 29,928 26,524
Increase in weighted
average number of common
shares upon assumed
exercise of stock options 1 - 63 -
_______ _______ _______ _______
Total 30,127 29,585 29,991 26,524
_______ ______ ______ ______
Income (loss) per share:
Income (loss) before
extraordinary loss and
cumulative effect of
change in accounting
principles $0.03 ($0.12) $0.09 ($0.55)
Extraordinary loss on
early extinguishment - - - (0.87)
of debt
Cumulative effect of
change in accounting
principles for income
taxes and postretirement
benefits - - - (0.19)
_______ _______ ______ _______
Net income (loss) $0.03 ($0.12) $0.09 ($1.61)
<PAGE>
February 14, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Concurrent Computer Corporation
Q2 10-Q Filing
Dear Sirs:
On behalf of Concurrent Computer Corporation (the "Company"), we are
filing by means of the EDGAR system a 10-Q for Fiscal Year 95 Q-2.
Sincerely,
/s/ Kevin J. Dell
Vice President
General Counsel and Secretary
Concurrent Computer Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at December 31, 1994 and Consolidated
Statement of Operations FOR THE SIX MONTHS ENDED DECEMBER 31, 1994, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 8,249
<SECURITIES> 0
<RECEIVABLES> 28,650
<ALLOWANCES> 1,891
<INVENTORY> 19,834
<CURRENT-ASSETS> 59,941
<PP&E> 72,784
<DEPRECIATION> 33,274
<TOTAL-ASSETS> 112,173
<CURRENT-LIABILITIES> 63,140
<BONDS> 1,125
<COMMON> 301
0
0
<OTHER-SE> 40,625
<TOTAL-LIABILITY-AND-EQUITY> 112,173
<SALES> 44,275
<TOTAL-REVENUES> 79,294
<CGS> 21,897
<TOTAL-COSTS> 43,231
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 281
<INTEREST-EXPENSE> 1,372
<INCOME-PRETAX> 5,114
<INCOME-TAX> 2,400
<INCOME-CONTINUING> 2,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,714
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
</TABLE>
