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, 1996
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, 1996 were 30,590,239.
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,
1996 1995 1996 1995
Net sales:
Computer systems $13,831 $13,597 35,696 $57,872
Service and other 12,342 16,747 41,412 51,766
Total 26,173 30,344 77,108 109,638
Cost of sales:
Computer systems 7,766 8,523 20,129 30,420
Service and other 7,517 10,437 24,297 31,771
Total 15,283 18,960 44,426 62,191
Gross margin 10,890 11,384 32,682 47,447
Operating expenses:
Research and development 2,809 4,707 9,863 15,455
Selling, general and
administrative 6,666 8,665 21,937 28,949
Provision for restructuring - 2,700 1,300 2,700
Sales and use tax credit - - - (1,000)
Total operating expenses 9,475 16,072 33,100 46,104
Operating income (loss) 1,415 (4,688) (418) 1,343
Interest expense (531) (737) (1,851) (2,109)
Interest income 12 101 193 412
Other non-recurring charge - (1,000) (1,700) (1,000)
Other income (expense) - net 37 339 (480) 483
Income (loss) before
provision for income taxes 933 (5,985) (4,256) (871)
Provision for income taxes 400 (1,000) 1,400 1,400
Net income (loss) $533 $(4,985) ($5,656) ($2,271)
Net income (loss) per share $0.02 ($0.17) ($0.19) ($0.08)
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,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $3,078 $5,728
Accounts receivable - net 24,887 25,456
Inventories 12,662 14,510
Prepaid expenses and other current assets 4,477 4,303
Total current assets 45,104 49,997
Property plant and equipment - net 32,048 38,567
Other long-term assets 3,354 9,795
Total assets $80,506 $98,359
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $5,655 $6,716
Current portion of long-term debt 824 1,529
Revolving credit facility 3,843 5,761
Accounts payable and accrued expenses 22,933 29,285
Deferred revenue 4,610 4,841
Total current liabilities 37,865 48,132
Long-term debt 7,129 9,536
Other long-term liabilities 5,229 5,521
Stockholders' equity:
Common stock 306 302
Capital in excess of par value 73,737 73,112
Accumulated deficit after eliminating
accumulated deficit of $81,826 at
December 31, 1991, date of
quasi-reorganization (42,684) (37,028)
Treasury stock (58) (58)
Cumulative translation adjustment (1,018) (1,158)
Total stockholders' equity 30,283 35,170
Total liabilities and stockholders' equity $80,506 $98,359
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,
1996 1995
Cash flows (used by) provided by operating
activities:
Net loss ($5,656) ($2,271)
Adjustments to reconcile net loss
to net cash (used by) provided
by operating activities:
Depreciation, amortization and other 9,041 9,564
Provision for inventory reserves 1,896 -
Non-cash taxes - 100
Non-cash interest and amortization of
financing costs 100 330
Provision for restructuring 1,300 2,700
Other non-recurring charge 1,700 1,000
Sales and use tax credit - (1,000)
Decrease (increase) in current assets:
Accounts receivable (307) 12,196
Inventories (486) (813)
Prepaid expenses and other current assets (664) 762
Decrease in current liabilities, other than
debt obligations (6,806) (10,961)
Decrease in other long-term assets 980 939
Decrease in other long-term liabilities (98) (1,307)
Total adjustments to net loss 6,656 13,510
Net cash provided by operating activities 1,000 11,239
Cash flows provided by (used by) investing activities:
Additions to property, plant and equipment (2,023) (3,692)
Proceeds from sale of facility 2,300 -
Net cash provided by (used by) investing
activities 277 (3,692)
Cash flow (used by) provided by financing activities:
Net proceeds of notes payable 427 742
Net payments of revolving credit facility (1,918) -
Repayment of long-term debt (3,075) (7,873)
Net proceeds from sale and issuance of
common stock 110 150
Net cash used by financing activities (4,456) (6,981)
Effect of exchange rate changes on cash
and cash equivalents 529 (167)
Decrease in cash and cash equivalents ($2,650) $399
Cash paid during the period for:
Interest $1,259 $1,752
Income taxes (net of refunds) $1,541 $610
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: Income (Loss) Per Share
Income (loss) per share for the three and nine months ended March
31, 1996 and 1995, respectively, is based on the weighted average
number of shares of common stock outstanding and for the three
months ended March 31, 1996 includes common stock equivalents
(dilutive stock options). 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,
1996 1995 1996 1995
---- ---- ---- ----
Primary 30,750 30,126 30,482 29,994
Fully Diluted 31,272 30,126 30,482 29,994
Note 3: Inventories
(Dollars in thousands) March 31, June 30,
1996 1995
Raw materials $ 6,097 $ 7,111
Work-in-process 183 753
Finished goods 6,382 6,646
$12,662 $14,510
Note 4: Accumulated Depreciation
Accumulated depreciation at March 31, 1996 and June 30, 1995 was
$43,471,000 and $37,573,000, respectively.
Note 5: Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of:
(Dollars in thousands)
March 31, June 30,
1996 1995
Accounts payable -trade $8,269 $11,023
Accrued payroll, vacation and
other employee expenses 6,203 8,510
Restructuring costs 1,600 2,568
Other accrued expenses 6,861 7,184
$22,933 $29,285
Note 6: Provision for Restructuring
In October 1995, the Company's management approved a plan to
restructure its operations. In connection with the restructuring,
the Company recorded a $1.3 million provision for restructuring
during the quarter ended December 31, 1995. The restructuring plan
provided for a reduction of approximately 55 employees worldwide
and the downsizing or closing of certain office locations which
represents approximately 85% and 15% of the provision,
respectively. During the nine months ended March 31,1996, the
actual cash payments related to this restructuring amounted to
approximately $1.2 million and were primarily related to employee
termination and office closing costs.
Note 7: Other Non-recurring Charge
On March 20, 1996, the Company completed the sale of its Tinton
Falls, New Jersey facility. The net proceeds from this transaction
were approximately $2.3 million. During the quarter ending
September 30, 1995, the Company recorded a non-recurring charge of
$1.7 million to adjust the book value of this facility to its
estimated fair value of $2.3 million. At completion of this
transaction, the Company made a mandatory term loan prepayment of
$1.7 million, of which 50% was applied to the next six scheduled
monthly principal payments and 50% was applied to the final
maturity payment.
Note 8: Proposed Acquisition of Harris Computer Systems
Corporation's Real-Time Business
On March 26, 1996, the Company and Harris Computer Systems
Corporation ("HCSC") jointly signed a purchase and sale agreement
for the previously announced transaction in which HCSC agreed to
sell its real-time business to the Company. The agreement is a
modification of the proposed transaction structure previously
announced on November 6, 1995. The modified transaction will
result in a combination of the real-time businesses of both
companies. Under the modified transaction structure, HCSC will
sell its real-time computing business (retaining its trusted
systems computing business) and 683,178 shares of HCSC common stock
(after giving effect to a three for one stock split) to Concurrent,
in exchange for 10 million shares of Concurrent common stock and
approximately $10 million liquidation preference of Concurrent
convertible, exchangeable preferred stock (the "Preferred Stock"),
subject to adjustments in certain circumstances, with a 9% coupon,
convertible into Concurrent common stock at a rate of $2.50 per
share subject to mandatory redemption in ten years unless
previously converted. Upon completion of the modified transaction,
Concurrent and HCSC shareholders will own approximately 77% and
23%, respectively, of Concurrent, and HCSC shareholders and
Concurrent will own approximately 91% and 9%, respectively, of
HCSC. HCSC shareholders could increase their ownership interest in
Concurrent to approximately 29% upon full conversion of the
Preferred Stock. The modified transaction is subject to a number
of conditions including approval of the shareholders of both
companies. The completion of the transaction is anticipated by
June 30, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
On March 26, 1996 the Company and Harris Computer Systems
Corporation ("HCSC") jointly signed the purchase and sale agreement
for the previously announced transaction (the "Transaction") in
which HCSC agreed to sell its real-time business to the Company.
The agreement is a modification of the proposed transaction
structure previously announced November 6, 1995. The Transaction
will result in the combination of the real-time businesses of both
companies. Under the Transaction, HCSC will sell its real-time
computing business (retaining its trusted systems computing
business) and 683,178 shares of HCSC common stock to Concurrent, in
exchange for 10 million shares of Concurrent common stock and
approximately $10 million liquidation preference of Concurrent
convertible, exchangeable preferred stock (the "Preferred Stock"),
subject to adjustments in certain circumstances, with a 9% coupon,
convertible into Concurrent common stock at a rate of $2.50 per
share subject to mandatory redemption in ten years unless
previously converted. Upon completion of the Transaction,
Concurrent and HCSC shareholders will own approximately 77% and 23%
respectively, of Concurrent, and HCSC shareholders and Concurrent
will own approximately 91% and 9%, respectively, of HCSC. HCSC
shareholder ownership interest in Concurrent would increase to
approximately 29% upon full conversion of the Preferred Stock. The
Transaction is subject to a number of conditions including the
approval of the shareholders of both companies. The Transaction is
expected to be completed by June 30, 1996, although there can be no
assurances.
The Transaction is expected to generate significant cost
savings as early as the first fiscal year after completion of the
Transaction. Such savings will be primarily obtained through
headcount reductions and facilities cost reductions. These savings
are expected to be obtained through a variety of actions including,
among others: the integration of corporate management and
administrative functions; the consolidation of production and
research and development facilities; and, the consolidation of
sales/service offices. Accordingly, the Company expects to take a
material charge in the period in which the Transaction is
consummated to record the related business integration costs,
including: severance payments; outplacement expenses; office and
plant closing costs; the write-down of equipment and other surplus
assets and office and equipment relocation expenses.
Net sales for the quarter ended March 31, 1996 increased by
$1.7 million over the prior quarter. The $1.7 million increase in
net sales was largely due to an increase in international open
systems shipments. This continues a trend experienced in the last
five quarters whereby the Company's international revenues have
exceeded those of North America. As a result of the distractions
and uncertainties associated with the Transaction, net sales for the
quarter ended June 30, 1996 are expected to be the lowest quarterly
revenues for the fiscal year 1996.
The uncertainties and distractions associated with the
development and implementation of the Company's integration plan may
have a material adverse effect on the Company's financial
performance and financial condition in the quarter ending June 30,
1996 and beyond. The Company's objective is to minimize such
potential negative impact and to manage its costs based on
anticipated revenue levels.
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 Nine Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
Net sales:
Computer systems 52.8% 44.8% 46.3% 52.8%
Service and other 47.2 55.2 53.7 47.2
Total net sales 100.0 100.0 100.0 100.0
Cost of sales (% of respective
sales category):
Computer systems 56.1 62.7 56.4 52.6
Service and other 60.9 62.3 58.7 61.4
Total cost of sales 58.4 62.5 57.6 56.7
Gross margin 41.6 37.5 42.4 43.3
Operating expenses:
Research and development 10.7 15.5 12.8 14.1
Selling, general and
administrative 25.5 28.5 28.4 26.4
Provision for restructuring - 8.9 1.7 2.5
Sales and use tax credit - - - (0.9)
Total operating expenses 36.2 52.9 42.9 42.1
Operating income (loss) 5.4 (15.4) (.5) 1.2
Interest expense (2.0) (2.4) (2.4) (1.9)
Interest income - 0.3 0.2 0.4
Other non-recurring charge - (3.3) (2.2) (0.9)
Other income (expense) - net 0.1 1.1 (.6) 0.4
Income (loss) before provision for
income taxes 3.5 (19.7) (5.5) (0.8)
Provision for income taxes 1.5 (3.3) 1.8 1.3
Net income (loss) 2.0% (16.4)% (7.3)% (2.1)%
Results of Operations
Three Months Ended March 31, 1996 in Comparison to Three Months
Ended March 31, 1995
Net Sales
Net sales for the three months ended March 31, 1996 were $26.2
million, a decrease of $4.2 million from the prior year period.
This decrease was due to a decrease of $4.4 million, or 26.3%, in
service and other revenues partially offset by an increase of $0.2
million, or 1.7%, in computer systems sales. 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, the decommissioning of older
proprietary equipment by some customers, the decision by certain
customers to self maintain equipment and approximately $0.2 million
related to the impact of unfavorable exchange rates. Further
declines for the same reasons but at a reduced rate, may continue
in future periods. To mitigate this trend, the Company has
launched a multi-vendor service support program and is more
aggressively targeting its installed base.
Gross Margin
Gross margin, as measured in dollars and as a percentage of
net sales, was $10.9 million and 41.6%, respectively, for the three
months ended March 31, 1996 compared to $11.4 million and 37.5%,
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 cost savings resulting from the
Company's operational restructurings. The increase in gross margin
percentage was primarily due to cost savings resulting from the
Company's operational restructurings.
Operating Income (Loss)
Operating income for the three months ended March 31, 1996 was
$1.4 million compared to operating loss of $4.7 million for the
prior year period. The $6.1 million change was due to a $3.9
million reduction in operating expenses, a $2.7 million provision
for restructuring recorded in the previous period partially offset
by a $0.5 million decrease in gross margin.
The $3.9 million decrease in operating expenses was primarily
due to a $2.0 million decrease in selling, general and
administrative expenses and a $1.9 million decrease in research and
development expenses. The decrease in expenses is primarily due to
cost savings resulting from the Company's operational
restructurings.
Net Income (Loss)
Net income for the three months ended March 31, 1996 was $0.5
million compared to net loss of $5.0 million for the prior year
period. The $5.5 million change results from the $6.1 million
increase in operating income partially offset by a $0.6 million
increase in non-operating expenses. The increase in non-operating
expenses was primarily due to a $1.4 million increase in the
provision for income taxes and a $0.3 million decrease in other
income, partially offset by a $1.0 million non-recurring charge
adjusting the carrying value of the Company's Tinton Falls, New
Jersey facility to its then estimated fair value which was recorded
in the prior year period. The increase in the provision for income
taxes is primarily due to a reduction to the prior period provision
related to domestic operating losses.
Nine Months Ended March 31, 1996 in Comparison to Nine Months Ended
March 31, 1995
Net Sales
Net sales for the nine months ended March 31, 1996 were $77.1
million, a decrease of $32.5 million from the prior year period.
This decrease was due to a decrease of $22.2 million, or 38.3%, in
computer systems sales and a decrease of $10.3 million, or 20.0%,
in service and other revenues. The decrease in computer system
sales was primarily due to reduced shipments under the U.S.
Department of Commerce's Next Generation Weather Radar (NEXRAD)
program and reduced sales of open systems and refurbished products.
The decline in sales of open systems is primarily attributable to a
decline in North America business. 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, the decommissioning of equipment by some of
our proprietary customers and the decision by certain customers to
self maintain equipment, partially offset by approximately $0.4
million related to the impact of favorable exchange rates. Further
declines for the same reasons but at a reduced rate, may continue
in future periods. To mitigate this trend, the Company has
launched a multi-vendor service support program and is more
aggressively targeting its installed base.
Gross Margin
Gross margin, as measured in dollars and as a percentage of
net sales, was $32.7 million and 42.4%, respectively, for the nine
months ended March 31, 1996 compared to $47.4 million and 43.3%,
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 Company's operational restructurings.
Operating Income (Loss)
Operating loss for the nine months ended March 31, 1996 was
$0.4 million compared to operating income of $1.3 million for the
prior year period. The $1.7 million change was due to the
aforementioned $14.7 million decrease in gross margin, partially
offset by a $11.6 million reduction in operating expenses and a net
reduction of $1.4 million in the provision for restructuring (a
$1.3 million provision for restructuring in the current year period
offset by a $2.7 million provision for restructuring in the prior
year.)
The $11.6 million decrease in operating expenses was primarily
due to a $7.0 million decrease in selling, general and
administrative expenses and a $5.6 million decrease in research and
development expenses offset by a $1.0 million decrease in the sales
and use tax credit. The decrease in expenses is primarily due to
cost savings resulting from the Company's operational
restructurings.
Net Income (Loss)
Net loss for the nine months ended March 31, 1996 was $5.7
million compared to net loss of $2.3 million for the prior year
period. The $3.4 million change primarily results from the $1.7
million decrease in operating income and a $1.6 million net increase
in non-operating expenses. The increase in non-operating expenses
was primarily due to a $0.7 million increase in non-recurring
charges compared to the prior period, a $0.7 million increase in
foreign exchange losses, and a $0.2 million increase in other
expenses. The non-recurring charge of $1.7 million incurred during
the current year period compared to the $1.0 million incurred in the
prior year period related to the adjustment of the carrying value of
the Company's Tinton Falls, New Jersey facility to its estimated
fair value. The facility was sold during the period ended March 31,
1996.
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 use and turnover. The future liquidity of the
Company's business will depend to a significant extent on: 1) the
actual versus anticipated decline in sales of proprietary systems
and service maintenance revenue; 2) revenue growth from open
systems; 3) both the related costs and the length of time to realize
the anticipated benefits from the integration of the real-time
businesses of the Company and HCSC; and 4) ongoing cost control
actions.
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 are generally longer
accounts receivable collection patterns and which receivables are
not included in the borrowing base of the Company's revolving credit
facility; 3) the sales level in the United States where related
accounts receivable are included in the borrowing base of the
Company's revolving credit facility; and 4) the number of countries
in which the Company operates resulting in the requirement to
maintain minimum cash levels in each country and, in certain cases,
requirements which restrict cash, such as cash supporting building
rental deposits.
Although the purchase of the HCSC real-time computing business
and integration and consolidation of the two businesses is expected
to improve Concurrent's liquidity by permitting additional borrowing
availability, there can be no assurance that cash flow from the
combined real-time operations will be sufficient to fund the costs
of the Transaction including the business integration costs. The
Company anticipates substantial costs to close the acquisition of
HCSC's real-time computing business and to combine the two
companies. The Company believes that it will be able to fund the
cost of the Transaction, subsequent integration and ongoing
operations through operating results, ongoing cost control actions,
the sale of certain facilities, if required, and the existing
revolving credit facility. The Transaction is expected to provide
the Company with potential additional borrowing capacity under its
revolving credit facility based on a higher borrowing base resulting
from the combination of the real-time businesses of the two
companies. The Company will also hold 683,178 shares of HCSC after
the closing of the Transaction. The Company may sell or pledge all
or part of this interest, subject to certain restrictions. As of
March 31, 1996, this stock interest had a fair market value of
approximately $11.1 million. In addition, upon the closing of the
Transaction all of the Company's issued and outstanding stock
options to purchase approximately 2.8 million shares of common stock
will become fully vested and exercisable. The exercise of all the
"in-the-money" options at the time of this filing would result in
approximately $2.9 million in proceeds to the Company.
The Company has announced that the corporate headquarters for
the combined company will be in the southern Florida area. There
will be significant costs in integrating the corporate management
and administration functions of the companies and relocating key
personnel. In addition, the Company is reviewing its options
regarding the consolidation of the production and research and
development facilities. If the decision is made to consolidate some
or all of these functions in Florida there will be significant costs
associated with personnel reductions, rehirings, and retraining of
employees. The Company will also incur costs to eliminate
duplicative sales/service offices throughout the world.
The Company expects to take a material pre-tax charge and to
adjust negative goodwill, as appropriate, in the quarter in which
the Transaction is consummated to cover the Transaction and business
integration costs. At the time of this filing, the estimated
aggregate charge for these items is in the range of $28 to $31
million. Approximately $18 million of these costs are expected to
be paid out in cash over the next two years (primarily fiscal year
1997), $9 to $11 million of the total charge is expected to be non-
cash fixed asset carrying cost adjustments and approximately $2
million will be obligations settled using the Company's common
stock. Such preliminary estimates indicate that approximately $8
million of the future cash payments are expected to be incremental
to the current cash flow run-rate of the two real-time businesses on
a stand alone basis combined. Such costs include Transaction
expenses (such as investment banker, legal and accounting fees),
employee, facility and equipment relocation costs and employee
outplacement costs. The $10 million of remaining cash payments are
expected to be a continuation of current funding requirements and,
after their full satisfaction, will positively impact the Company's
liquidity. For example, cash expenditures for employee severance
costs are expected to be paid out over time without increasing
payroll costs; payroll costs are expected to decline as severance
payments cease. There can be no assurances as to the actual amount
of these charges or adjustments, and such charges or adjustments
could be higher than current estimates. In addition, there may be
adjustments in future periods relating to the cost of integrating
the real-time businesses of Concurrent and HCSC. However, the
amount of such future adjustments cannot currently be determined.
As of March 31, 1996, the Company had a current ratio of 1.19
to 1, an inventory turnover ratio of 4.8 times and net working
capital of $7.2 million. At March 31, 1996, cash and cash
equivalents amounted to $3.1 million and accounts receivable
amounted to $24.9 million. The Company purposefully manages its
cash and cash equivalents at minimum levels and borrows under its
Revolver (as described below) as needed.
The Company's current bank arrangement provides for a $18.0
million credit facility. The facility includes a $10.0 million term
loan (the "Term Loan") and a $8.0 million revolving credit facility
(the "Revolver"). At March 31, 1996, the outstanding balances under
the Term Loan and the Revolver were $7.2 and $3.8 million,
respectively. At March 31, 1996, the additional borrowing
availability under the Revolver was $0.6 million. The outstanding
balance of the Revolver is classified as a current liability. Both
the Term Loan and the Revolver bear interest at the prime rate plus
2.0%. The Term Loan is payable in 36 equal monthly installments of
$139,000 each, commencing August 1, 1995, with a final payment of
approximately $5.0 million payable August 1, 1998; subject to
certain mandatory prepayments in the event of a sale or
sale/leaseback of its Oceanport and Tinton Falls New Jersey
facilities. The Revolver may be repaid and reborrowed, subject to
certain collateral requirements, at any time during the term ending
August 1, 1998. The Company has pledged substantially all of its
domestic assets as collateral for the Term Loan and the Revolver.
The Company may repay the Term Loan at any time without penalty.
Certain early termination fees apply if the Company terminates the
facility in its entirety prior to August 1, 1998.
On March 20, 1996, the Company completed the sale of its Tinton
Falls, New Jersey facility. The net proceeds from this transaction
were approximately $2.3 million. During the quarter ending
September 30, 1995, the Company recorded a non-recurring charge of
$1.7 million to adjust the book value of this facility to its
estimated fair value of $2.3 million. At completion of this
transaction, the Company made a mandatory term loan prepayment of
$1.7 million, of which 50% was applied to the next six scheduled
monthly principal payments through September 1996 and 50% was
applied to the final maturity payment.
The Loan and Security Agreement covering the credit facility
requires lender consent to the acquisition of HCSC's real-time
computing business. The Company is in discussions with the lender
to obtain such consent and to modify the lending arrangement,
specifically to increase the amount available under the Revolver and
to modify various covenants to become effective upon the closing of
the Transaction. In the event that the Transaction does not close
and the Company experiences a loss prior to the effectiveness of
such modifications, the Company may not be able to satisfy a certain
financial covenant requirement in which case it will seek a waiver.
There can be no assurance that the Company will be granted such a
waiver, if necessary, or that the Company will be able to modify the
lending arrangement as contemplated under the proposed Transaction.
The Company anticipates that the capital resources available
upon completion of the Transaction will be adequate to satisfy its
capital requirements through June 1997, assuming quarterly net
sales of the combined real-time businesses amount to approximately
$30 million. The Company's future capital requirements, however,
will depend on many factors, including its ability to successfully
market and sell its commercial products, the cost and timing of the
integration of the real-time businesses of the two companies to
realize potential synergies and cost savings, and the cost of
developing, marketing and selling competitive products. To the
extent that the funds generated by operations are insufficient to
satisfy the Company's capital requirements, the Company may seek
additional equity or debt financing or obtain additional credit
facilities. Any equity or debt financing, if available at all, may
be on terms which are not favorable to the Company and, in the case
of equity or convertible debt offerings, could result in dilution
to the Company's then existing shareholders. The Company is also
considering various additional financing alternatives, including a
possible sale, or sale and partial leaseback, of its Oceanport, New
Jersey facility to improve its financial flexibility. If adequate
funds are not available, the Company may be required to curtail
certain activities, including product development, marketing and
sales activities.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11.1 Computation of Primary Earnings Per Share
11.2 Computation of Fully Dilutive Earnings Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the fiscal
quarter ended March 31, 1996.
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, 1996 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
(Principal Financial Officer)
Dated: May 15, 1996
Exhibit Index
Exhibit No. Description
11.1 Computation of primary earnings per share
11.2 Computation of fully dilutive earnings per share
27 Financial data schedule
Concurrent Computer Corporation
Exhibit 11.1
Primary Earnings Per Share Computation
(Dollars and shares in thousands, except per share amounts)
Three Months Nine Months
Ended March 31, Ended March
31,
1996 1995 1996 1995
Net income (loss) $533 ($4,985) ($5,656) ($2,271)
Weighted average number of
common shares 30,568 30,126 30,482 29,994
shares
Increase in weighted average number
of common shares upon assumed
exercise of stock options 182 - - -
_____ _____ _____ _____
Total 30,750 30,126 30,482 29,994
Net income (loss) per share $0.02 ($0.17) ($0.19) ($0.08)
Concurrent Computer Corporation
Exhibit 11.2
Fully Dilutive Earnings Per Share Computation
(Dollars and shares in thousands, except per share amounts)
Three Months Nine Months
Ended March 31, Ended March 31,
1996 1995 1996 1995
Net income (loss) $533 ($4,985) ($5,656) ($2,271)
Weighted average number of
common shares 30,568 30,126 30,482 29,994
shares
Increase in weighted average number
of common shares upon assumed exercise
of stock options 704 - - -
_____ _____ _____ _____
Total 31,272 30,126 30,482 29,994
Net income (loss) per share $0.02 ($0.17) ($0.19) ($0.08)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Concurrent Computer Corporation
Exhibit 27
Financial Data Schedule
(Dollars in thousands, except per share amounts)
This schedule contains summary financial information
extracted from the Company's Consolidated Balance Sheet at March
31, 1996 and Consolidated Statement Of Operations for the nine
months ended March 31, 1996, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 3078
<SECURITIES> 0
<RECEIVABLES> 26075
<ALLOWANCES> 1188
<INVENTORY> 12662
<CURRENT-ASSETS> 45104
<PP&E> 75519
<DEPRECIATION> 43471
<TOTAL-ASSETS> 80506
<CURRENT-LIABILITIES> 37865
<BONDS> 7129
<COMMON> 306
0
0
<OTHER-SE> 29977
<TOTAL-LIABILITY-AND-EQUITY> 80506
<SALES> 35696
<TOTAL-REVENUES> 77108
<CGS> 20129
<TOTAL-COSTS> 32682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (230)
<INTEREST-EXPENSE> 1851
<INCOME-PRETAX> (4256)
<INCOME-TAX> 1400
<INCOME-CONTINUING> (5656)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5656)
<EPS-PRIMARY> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
