SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - --------------
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1995
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 May 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 Nine Months Ended
March 31, March 31,
1995 1994* 1995 1994*
Net Sales:
Computer systems $13,597 $24,616 $57,872 $73,658
Service and other 16,747 19,443 51,766 60,449
Total 30,344 44,059 109,638 134,107
Cost of sales:
Computer systems 8,523 14,946 30,420 40,195
Service and other 10,437 11,582 31,771 37,746
Total 18,960 26,528 62,191 77,941
Gross margin 11,384 17,531 47,447 56,166
Operating expenses:
Research and development 4,707 5,585 15,455 18,360
Selling, general and
administrative 8,665 10,318 28,949 37,597
Provision for
restructuring 2,700 - 2,700 12,000
Sales and use tax
credit - - (1,000) (1,440)
Total operating expenses 16,072 15,903 46,104 66,517
Operating income (loss) (4,688) 1,628 1,343 (10,351)
Interest expense (737) (686) (2,109) (2,827)
Interest income 101 132 412 437
Other non-recurring charge(1,000) - (1,000) -
Other income (expense)-net 339 (195) 483 (287)
Income (loss) before
provision for income taxes,
extraordinary loss and
cumulative effect of change
in accounting principles (5,985) 879 (871) (13,028)
Provision for income taxes (1,000) 300 1,400 900
Income (loss) before
extraordinary loss and
cumulative effect of
change in accounting
principles (4,985) 579 (2,271) (13,928)
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) ($4,985) $579 ($2,271) ($42,121)
Income (loss) per share
Income (loss) before
extraordinary loss and
cumulative effect of
change in accounting
principles ($0.17) $0.02 ($0.08) ($0.51)
Extraordinary loss on
early extinguishment of
debt - - - (0.84)
Cumulative effect of
change in accounting
principles for income
taxes and postretirement
benefits - - - (0.18)
Net income (loss) ($0.17) $0.02 ($0.08) ($1.53)
* 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)
March 31, June 30,
1995, 1994
ASSETS
Current assets:, ,
Cash and cash equivalents $9,773 $9,374
Accounts receivable - net 23,665 34,519
Inventories 17,381 17,829
Prepaid expenses and other current assets 4,630 5,334
Total current assets 55,449 67,056
Property plant and equipment - net 40,362 42,742
Other long-term assets 9,758 13,372
Total assets $105,569 $123,170
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $7,399 $5,749
Current portion of long-term debt 15,438 11,000
Accounts payable and accrued expenses 34,341 44,687
Deferred revenue 6,500 6,236
Total current liabilities 63,678 67,672
Long-term debt 1,160 13,240
Other long-term liabilities 6,198 7,210
Stockholders' equity:
Common stock 301 296
Capital in excess of par value 72,754 71,547
Accumulated deficit after eliminating
accumulated deficit of $81,826 at
December 31, 1991, date of quasi-
reorganization (37,293) (35,022)
Treasury stock (58) (58)
Cumulative translation adjustment (1,171) (1,715)
Total stockholders' equity 34,533 35,048
Total liabilities and stockholders' equity $105,569 $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)
Nine Months Ended
March 31,
1995 1994
Cash flows provided by (used by) operating activities:
Net loss ($2,271) ($42,121)
Adjustments to reconcile net loss
to net cash provided by (used by) operating activities:
Depreciation, amortization and other 9,564 9,038
Non-cash taxes 100 -
Non-cash interest and amortization of financing costs 330 931
Extraordinary loss on early extinguishment of debt - 23,193
Cumulative effect of change in accounting principles - 5,000
Provision for restructuring 2,700 12,000
Other non-recurring charge 1,000 -
Sales and use tax credit (1,000) (1,440)
Decrease (increase) in current assets:
Accounts receivable 12,196 4,472
Inventories (813) 2,944
Prepaid expenses and other current assets 762 906
Decrease in current liabilities
other than debt obligations (10,961) (13,578)
Decrease (increase) in other long-term assets 939 (1,446)
(Decrease) increase in other long-term liabilit (1,307) 717
Total adjustments to net loss 13,510 42,737
Net cash provided by operating activities 11,239 616
Cash flows used by investing activities:
Cash flow provided by (used by) financing activities:
Net proceeds of notes payable 742 2,544
Repayment of long-term debt (7,873) (74,412)
Issuance of long-term debt - 708
Net proceeds from sale and issuance of common stock 150 55,001
Net cash used by financing activities (6,981) (16,159)
Effect of exchange rate changes on cash
and cash equivalents (167) 93
Increase (decrease) in cash and cash equivalents $399 ($20,923)
Cash paid during the period for:
Interest $1,752 $2,162
Income taxes (net of refunds) $610 $400
* 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 March 31, 1995, the outstanding balance of the Company's senior bank debt
(the "Debt") was approximately $15.4 million, excluding up to $3.0 million in
standby letters of credit in connection with overseas lines of credit. Prior
to the amendment during the quarter ended March 31, 1995, the Debt carried
monthly amortization payments of $687,500 through June 1995. The Debt also
carries 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
March 31, 1995 to modify certain financial covenants and the principal
amortization payments schedule. One financial covenant was also waived for
the quarter ended March 31, 1995. The $687,500 monthly amortization payments
for February, March and April 1995 were rescheduled to July, August, and
September 1995, months during which no payment was previously required.
Additional covenant modifications or waivers and monthly amortization payment
deferrals may be required depending on actual financial results through the
maturity date and if such modifications, waivers or deferrals are necessary,
there can be no assurance that they will be obtained or granted.
Note 3: Provision for Restructuring
In January 1995, the Company's senior management approved a plan to
restructure its operations. The restructuring plan provided for a reduction
of approximately 150 worldwide employees and the downsizing or closing of
office locations. In connection with the restructuring, the Company recorded
a $2.7 million provision for restructuring during the quarter ended March 31,
1995. Such provision is net of a $0.5 million release of an excess
restructuring reserve previously recorded during the three months ended
September 30, 1993. During the quarter ended March 31, 1995, the actual cash
payments related to this restructuring was approximately $1.5 million.
Note 4: 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 5: Other Non-recurring Charge
During the three months ended March 31, 1995, the Company recorded a $1.0
million, or $.03 per share, other non-recurring charge in order to adjust the
carrying value of its Tinton Falls, New Jersey facility to its net realizable
value based on current market conditions.
The Company is pursuing the sale of this facility. 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.
Note 6: Income (Loss) Per Share
Income (loss) per share for the three and nine months ended March 31, 1995 and
1994, respectively, is based on the weighted average number of shares of
common stock outstanding. Income per share on a primary and fully diluted
basis for the three and nine months ended March 31, 1995 and 1994 are
equivalent. The number of shares used in computing earnings per share were as
follows:
(Shares in thousands) Three Months Ended Nine Months Ended
March 31 March 31
1995 1994 1995 1994
Primary 30,126 29,585 29,994 27,544
Fully Diluted 30,126 29,585 29,994 27,544
Supplemental net loss per share for the nine months ended March 31, 1994,
which is calculated assuming the Company's comprehensive refinancing
(completed on July 21, 1993) took place on July 1, 1993, was as follows:
Nine Months Ended
March 31, 1994
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) ($0.47)
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 ($1.43)
Note 7: Inventories
(Dollars in thousands) March 31, 1995, June 30,1994
Raw materials $10,262 $ 9,270
Work-in-process 1,904 2,872
Finished goods 5,215 5,687
$17,381 $17,829
Note 8: Accumulated Depreciation
Accumulated depreciation at March 31, 1995 and June 30, 1994 was $36,812,000
and $26,644,000, respectively.
Note 9: 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 and intends to
vigorously defend against any claim. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The Company had indicated at the beginning of the quarter that the
quarter ended March 31, 1995, would be difficult. The operating loss reflects
lower revenues and only the partial benefit of the cost reduction initiatives
implemented during the quarter. Sales cycles in many of the Company's markets
tend to be protracted thus delaying certain orders and revenues. The Company
is continuing to realign its cost structure based on anticipated revenues.
Intensified sales and marketing programs have identified significant new
prospective business that should lead to sustained revenue growth.
During the quarter ended March 31, 1995, revenues from computer systems
sales in international markets exceeded those in North America. International
sales and business opportunities for the Company's industry leading, standards
based, POSIX compliant MAXION multiprocessor system appear to be gaining
momentum. The decline in North America business is due to the anticipated
decline in sales of proprietary systems, reduced shipments under the U.S.
Department of Commerce's Next Generation Weather Radar (NEXRAD) program and
less than anticipated open systems business. 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 may not be realized for more than six months.
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 Nine Months Ended
March 31 March 31
1995 1994 1995 1994
Net sales:
Computer systems 44.8 55.9% 52.8% 54.9%
Service and other 55.2 44.1 47.2 45.1
Total net sales 100.0 100.0 100.0 100.0
Cost of sales (% of respective
sales category):
Computer systems 62.7 60.7 52.6 54.6
Service and other 62.3 59.6 61.4 62.4
Total cost of sales 62.5 60.2 56.7 58.1
Gross margin 37.5 39.8 43.3 41.9
Operating expenses:
Research and development 15.5 12.7 14.1 13.7
Selling, general and
administrative 28.5 23.4 26.4 28.3
Provision for restructuring 8.9 - 2.5 9.0
Sales and use tax credit - - (0.9) (1.1)
Total operating expenses 52.9 36.1 42.1 49.6
Operating income (loss) (15.4) 3.7 1.2 (7.7)
Interest expense (2.4) (1.6) (1.9) (2.1)
Interest income 0.3 0.3 0.4 0.3
Other non-recurring charge (3.3) - (0.9) -
Other income (expense) - net 1.1 (0.4) 0.4 (0.2)
Income (loss) before provision for income taxes
extraordinary loss and cumulative effect of
change in accounting principles (19.7) 2.0 (0.8) (9.7)
Provision for income taxes (3.3) 0.7 1.3 0.7
Income (loss) before extraordinary loss and
cumulative effect of change in accounting
principles (a) (16.4)% 1.3% (2.1)% (10.4)%
(a) The percentage for the nine months ended March 31, 1994 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 March 31, 1995 in Comparison to Three Months Ended March
31, 1994
Net Sales
Net sales for the three months ended March 31, 1995 were $30.3 million,
a decrease of $13.7 million from the prior year period. This decrease was due
to a decrease of $11.0 million, or 44.8%, in computer systems sales and a
decrease of $2.7 million, or 13.9%, in service and other revenues. The
decrease in computer system sales was primarily due to the anticipated decline
in sales of proprietary systems, reduced shipments under the U.S. Department
of Commerce's Next Generation Weather Radar (NEXRAD) program and reduced sales
of open systems (other than 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 $0.8 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 $11.4 million and 37.5%, respectively, for the three months ended March
31, 1995 compared to $17.5 million and 39.8%, respectively, for the prior year
period. The decrease in gross margin dollars and percentage was primarily due
to the aforementioned decline in net sales partially offset by cost savings
resulting from the operational restructurings implemented during fiscal year
1994 and the three months ended March 31, 1995.
Operating Income (Loss)
Operating loss for the current year period was $4.7 million compared to
operating income of $1.6 million for the prior year period. The $6.3 million
decrease in operating income was due to the aforementioned $6.1 million
decrease in gross margin and a $2.7 million provision for restructuring
recorded in the current period partially offset by a $2.5 million reduction in
operating expenses.
The $2.5 million decrease in operating expenses was primarily due to a
$1.6 million decrease in selling, general and administrative expenses and a
$0.9 million decrease in net research and development expenses. The $0.9
million decrease in net research and development expenses reflects a $1.4
million decrease in gross research and development expenses partially offset
by a $0.5 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 restructurings implemented during
fiscal year 1994 and the three months ended March 31, 1995.
Income (Loss) Before Extraordinary Loss and Cumulative Effect of Change in
Accounting Principles
Loss before extraordinary loss and cumulative effect of change in
accounting principles was $5.0 million in the current year period compared to
income of $0.6 million for the prior year period. The $5.6 million change
results from the $6.3 million decrease in operating income partially offset by
a $0.7 million net decrease in non-operating expenses. The decrease in non-
operating expenses was primarily due to an $1.3 million decrease in the
provision for income taxes and a $0.4 million increase in income related to
minority interest partially offset by a $1.0 million other non-recurring
charge incurred in the current year period. The decrease in the provision for
income taxes relates primarily to domestic operations. Such decrease
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. The $1.0 million other
non-recurring charge incurred in the current year was necessary in order to
adjust the carrying value of the Company's Tinton Falls, New Jersey facility
to its net realizable value based on current market conditions.
Nine Months Ended March 31, 1995 in Comparison to Nine Months Ended March 31,
1994
Net Sales
Net sales for the nine months ended March 31, 1995 were $109.6 million,
a decrease of $24.5 million from the prior year period. This decrease was due
to a decrease of $15.8 million, or 21.4%, in computer systems sales and a
decrease of $8.7 million, or 14.4%, in service and other revenues. The
decrease in computer system sales was primarily due to the anticipated decline
in sales of proprietary systems and reduced sales of open systems (other than
the Company's new MAXION open systems) partially offset by 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 $2.4 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 $47.4 million and 43.3%, respectively, for the nine months ended March 31,
1995 compared to $56.2 million and 41.9%, respectively, for the prior year
period. The decrease in gross margin dollars was primarily due to the
aforementioned decline in net sales partially offset by a favorable mix of
higher margin products and cost savings resulting from the operational
restructurings implemented during fiscal year 1994 and the three months ended
March 31, 1995. 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 restructurings implemented during fiscal year
1994 and the three months ended March 31, 1995 partially offset by the decline
in net sales.
Operating Income (Loss)
Operating income for the current year period was $1.3 million compared
to an operating loss of $10.4 million for the prior year period. The $11.7
million increase in operating income was due to a $11.5 million reduction in
operating expenses and a net reduction of $9.3 million in the provision for
restructuring (a $2.7 million provision for restructuring in the current year
period offset by a $12.0 million provision for restructuring in the prior year
period) partially offset by the $8.7 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 $11.5 million decrease in operating expenses was primarily due to a
$8.6 million decrease in selling, general and administrative expenses and a
$2.9 million decrease in net research and development expenses. The $2.9
million decrease in net research and development expenses reflects a $4.2
million decrease in gross research and development expenses partially offset
by a $1.3 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 restructurings implemented during
fiscal year 1994 and the three months ended March 31, 1995.
Income (Loss) Before Extraordinary Loss and Cumulative Effect of Change in
Accounting Principles
Loss before extraordinary loss and cumulative effect of change in
accounting principles was $2.3 million in the current year period compared to
loss of $13.9 million for the prior year period. The $11.6 million change
results from the $11.7 million increase in operating income partially offset
by a $0.1 million net increase in non-operating expenses. The increase in
non-operating expenses was primarily due to a $1.0 million other non-recurring
charge incurred in the current year period and a $0.5 million increase in the
provision for income taxes partially offset by a $0.7 million decrease in
interest expense resulting from the reduction of the Company's indebtedness, a
$0.4 million increase in income related to minority interest and a $0.3
million decrease in foreign exchange losses The $1.0 million other non-
recurring charge incurred in the current year was necessary in order to adjust
the carrying value of the Company's Tinton Falls, New Jersey facility to its
net realizable value based on current market conditions. The increase in the
provision for income taxes relates primarily to international operations.
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 sales level from within the United States where such related accounts
receivable are included in the borrowing base of the Company's existing bank
debt; 4) the number of countries in which the Company operates resulting in
the requirement to maintain minimum cash levels in each country; and 5)
restrictions in some countries where the Company operates which limit its
ability to repatriate cash.
As of March 31, 1995, the Company had a current ratio of .87 to 1, an
inventory turnover ratio of 4.1 times and negative net working capital of $8.2
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
March 31, 1995, cash and cash equivalents amounted to $9.8 million and
accounts receivable amounted to $23.7 million.
At March 31, 1995, the outstanding balance of the Company's senior bank
debt (the "Debt") was approximately $15.4 million, excluding up to $3.0
million in standby letters of credit in connection with overseas lines of
credit. Prior to the amendment during the quarter ended March 31, 1995, the
Debt carried monthly amortization payments of $687,500 through June 1995. The
Debt also carries 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 March 31, 1995 to modify certain financial covenants and the principal
amortization payments schedule. One financial covenant was also waived for
the quarter ended March 31, 1995. The $687,500 monthly amortization payments
for February, March and April 1995 were rescheduled to July, August, and
September 1995, months during which no payment was previously required.
Additional covenant modifications or waivers and monthly amortization payment
deferrals may be required depending on actual financial results through the
maturity date and if such modifications, waivers or deferrals are necessary,
there can be no assurance that they will be obtained or granted.
Amortization payments during the quarters ended September 30, 1994 and
December 31, 1994 included the regular $687,500 monthly amortization payments
and additional amortization payments of $1.375 million on the last day of each
quarter. The additional amortization payments resulted from the bank approved
deferral of the four regular monthly amortization payments from November 1993
through February 1994.
A final maturity payment of $12 million is due on October 1, 1995. The
Company does not expect to be in a position to make this payment in full
through internally generated funds and is pursuing two alternatives: (1) the
sale of its Tinton Falls, New Jersey facility and the sale/leaseback of its
Oceanport, New Jersey facility and (2) the refinancing of this debt through
current or other lenders. However, there can be no assurance that this will
be completed as contemplated. In the event the Company is unable to repay the
final maturity payment in full, the banks would have the right to treat the
loan as in default and to exercise certain rights.
In connection with the restructuring of its operations, the Company
recorded a provision for restructuring of $2.7 million during the quarter
ended March 31, 1995. The restructuring plan provided for a reduction of
approximately 150 worldwide employees and the downsizing or closing of office
locations. The Company estimates that the cost savings related to the
restructuring of its operations will be approximately $2.2 million per quarter
when fully realized. Such savings began during the third quarter of fiscal
year 1995 and will be fully realized during the fourth quarter of fiscal year
1995. Total cash savings are expected to begin during the quarter ending June
30, 1995 and will not be substantially realized until the quarter thereafter
primarily due to employee termination costs. The Company believes that it
will be able to fund the cash outlays through cash flow from operations under
the restructured operations and by managing the timing of certain cash
payments.
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.
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 March 31, 1995.
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
March 31, 1995 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: May 15, 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 Nine Months Ended
March 31 March 31
1995 1994 1995 1994
Income (loss) before extraordinary
loss and cumulative effect of
change in accounting principles ($4,985) $579 ($2,271) ($13,928)
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) ($4,985) $579 ($2,271) ($42,121)
Weighted average number of
common shares 30,126 29,585 29,994 27,544
Increase in weighted average
number of common shares upon
assumed exercise of stock options - - - -
Total 30,126 29,585 29,994 27,544
Income (loss) per share:
Income (loss) before
extraordinary loss and
cumulative effect of change
in accounting principles ($0.17) $0.02 ($0.08) ($0.51)
Extraordinary loss on
early extinguishment - - - (0.84)
of debt
Cumulative effect of change
in accounting principles
for income taxes and
postretirement benefits - - - (0.18)
Net income (loss) ($0.17) $0.02 ($0.08) ($1.53)
{PAGE|19}
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