As filed with the Securities and Exchange Commission on June 26, 1996
Registration No. 333-5169
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CONCURRENT COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2735766
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Crescent Place
Oceanport, New Jersey 07757
(908) 870-4500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Kevin J. Dell, Esq.
Vice President, General Counsel and Secretary
Concurrent Computer Corporation
Two Crescent Place
Oceanport, New Jersey 07757
(908) 870-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Eric L. Cochran, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Tel: (212) 735-3000
Fax: (212) 735-2001
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of the Registration
Statement and from time to time thereafter.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional securities for an offer-
ing pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
EXPLANATORY NOTE
This Registration Statement on Form S-3, as amended (the
"Registration Statement"), including the Prospectus forming a
part hereof, relates to the sale of common stock (the "Common
Stock") of Concurrent Computer Corporation issued in connection
with the acquisition (the "Acquisition") of certain assets and
stock of CyberGuard Corporation (formerly known as Harris Comput-
er Systems Corporation). Although, it is a condition precedent
to the consummation of the Acquisition that this Registration
Statement be declared effective by the Commission, no shares of
Common Stock will be issued or sold until after the Acquisition
has been consummated. Accordingly, this Prospectus has been
prepared as if the Acquisition has been consummated. No shares
of Common Stock will be sold if the Acquisition is not consummat-
ed.
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such State.
PROSPECTUS (Subject to Completion)
Issued June 26, 1996
14,000,000 SHARES
CONCURRENT COMPUTER CORPORATION
COMMON STOCK
This Prospectus relates to the offering by CyberGuard
Corporation, formerly known as Harris Computer Systems Corpora-
tion (the "Selling Stockholder"), of up to 14,000,000 shares of
the common stock, par value $0.01 per share (the "Common Stock"),
of Concurrent Computer Corporation ("Concurrent") including a
maximum of 4,000,000 shares of Common Stock, subject to adjust-
ment in certain circumstances, that are issuable upon the conver-
sion of convertible exchangeable preferred stock (or the deben-
tures for which such preferred stock is exchangeable pursuant to
its terms). As consideration for the acquisition (the "Acquisi-
tion") by Concurrent of (i) the assets of the real-time computer
business of the Selling Stockholder and (ii) 683,178 shares of
common stock of the Selling Stockholder pursuant to the terms of
a Purchase and Sale Agreement (the "Purchase and Sale Agree-
ment"), dated as of March 26, 1996, as amended and restated on
May 23, 1996, between Concurrent and the Selling Stockholder,
Concurrent issued to the Selling Stockholder the 10,000,000
shares of Common Stock and the convertible exchangeable preferred
stock, which has a liquidation preference of $10,000,000 (sub-
ject to adjustments to reflect, among other things, the amount of
net current assets transferred in the Acquisition). In the
Acquisition, Concurrent also assumed certain liabilities of the
Selling Stockholder relating to its real-time computing busi-
ness. The Common Stock includes a right to purchase fractional
shares of preferred stock of Concurrent, as provided in
Concurrent's Rights Agreement, dated as of July 31, 1992.
The Common Stock is traded in the over-the-counter market
and price quotations therefor are reported on the National
Association of Securities Dealers Automated Quotation System
("NASDAQ") National Market System ("Nasdaq/NMS") under the
symbol "CCUR". The last reported sale price of the Common Stock
on June 25, 1996 was $2 5/16 per share.
THE SECURITIES OFFERED HEREBY REPRESENT A SIGNIFICANT DEGREE
OF RISK. INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN RISKS AND
OTHER CONSIDERATIONS RELATING TO THE COMMON STOCK AND CONCURRENT.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The distribution of the shares of Common Stock by the
Selling Stockholder is not subject to any underwriting agreement.
The Selling Stockholder may sell the shares of Common Stock
covered by the Prospectus through the Nasdaq/ NMS, at prices and
terms then prevailing, through customary brokerage channels, in
privately negotiated transactions or otherwise, either through
broker-dealers acting as agents or brokers for the seller, or
through broker-dealers acting as agents or principals. Such
broker-dealers may receive compensation in the form of underwrit-
ing discounts, concessions, or commissions from the Selling
Stockholder and/or the purchasers of the shares of Common Stock
for whom they may act as agent, which compensation may be in
excess of customary commissions. To the extent required, the
purchase price, the names of any such agent, dealer or underwrit-
er, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospec-
tus Supplement. The aggregate net proceeds to the Selling
Stockholder from the sale of any shares of the Common Stock will
be the price thereof less the aggregate agent's commission or
underwriter's discount, if any. See "Plan of Distribution".
Concurrent will not receive any of the proceeds from the sale of
any shares of Common Stock offered by the Selling Stockholder.
The Selling Stockholder and any dealer, agent or underwriter
that participates with the Selling Stockholder in the distribu-
tion of the Common Stock may be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commission or profit may be deemed to
be underwriting commissions or discounts under the Securities
Act. See "Plan of Distribution".
No person has been authorized in connection with any offer-
ing made hereby to give any information or to make any represen-
tations other than those contained in this Prospectus or any
Prospectus Supplement, and, if given or made, such information or
representations must not be relied upon as having been authorized
by Concurrent, the Selling Stockholder or any underwriter, dealer
or agent. This Prospectus or any Prospectus Supplement does not
constitute an offer to sell or the solicitation of an offer to
buy any securities other than the securities to which it relates
or any offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicita-
tion is unlawful. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sale hereunder or thereunder shall,
under any circumstances, create any implication that the informa-
tion contained herein or therein is correct as of any time
subsequent to the date hereof and thereof.
AVAILABLE INFORMATION
Concurrent is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy state-
ments and other information with the Securities and Exchange
Commission (the "Commission"). Copies of such reports, proxy
statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the Commis-
sion: Seven World Trade Center, 13th Floor, New York, NY 10048
and Citicorp Center, 500 West Madison Street (Suite 1400),
Chicago, Illinois 60661. Copies of such material can be obtained
at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site at http://www.sec.gov. which
contains reports, proxy statements and other information regard-
ing registrants that file electronically with the Commission.
The Common Stock is traded on the Nasdaq/NMS (Symbol: CCUR) In
addition, material filed by Concurrent can be inspected at the
offices of Nasdaq/NMS, Reports Section, 1735 K Street N.W.,
Washington, D.C. 20006.
Concurrent has filed a registration statement (the "Regis-
tration Statement") on Form S-3 with respect to the Common Stock
offered hereby with the Commission under the Securities Act.
This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in
schedules and exhibits to the Registration Statement as permitted
by the rules and regulations of the Commission. For further
information with respect to Concurrent and the Common Stock
offered hereby, reference is made to the Registration Statement
and to the exhibits and schedules thereto. Statements contained
in this Prospectus as to the contents of any agreement, instru-
ment or other document referred to are not necessarily complete.
With respect to each such agreement, instrument or other docu-
ment filed as an exhibit to the Registration Statement, reference
is made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed quali-
fied in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the
Commission by Concurrent pursuant to the Exchange Act (Commission
File No. 0-13150), are incorporated by reference in this Prospec-
tus:
(1) Annual Report on Form 10-K for the fiscal year ended
June 30, 1995 (the "Annual Report");
(2) Quarterly Reports on Form 10-Q for the fiscal quarters
ended September 30, 1995, December 31, 1995 and March
31, 1996;
(3) Current Report on Form 8-K, dated April 19, 1996; and
(4) Joint Proxy Statement for the Special Meeting of Stock-
holders of Concurrent and the Selling Stockholder held
on June 26, 1996 (the "Joint Proxy Statement").
The Annual Report contains a description of Concurrent's
business. For a description of the effect of the Acquisition on
the business of Concurrent, see "Concurrent Computer Corporation
-- Recent Developments".
All documents filed by Concurrent pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Common Stock made hereby shall be deemed to be
incorporated by reference in the Prospectus and to be a part
hereof from the date of filing of such documents. Any statement
contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently
filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates by reference documents relating
to Concurrent which are not presented herein or delivered here-
with. A copy of any documents incorporated by reference (not
including exhibits to such documents other than exhibits specifi-
cally incorporated by reference into such documents) are avail-
able without charge to any person, including any beneficial
owner, to whom this Prospectus is delivered, upon written or oral
request. Requests for such documents should be directed to the
General Counsel of Concurrent Computer Corporation, Two Crescent
Place, Oceanport, New Jersey 07757, telephone number (908) 870-
4500.
FORWARD-LOOKING STATEMENTS
This Prospectus and the Joint Proxy Statement incorporated
by reference herein, contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act. Such statements include, but are not limited
to, integration of the Selling Stockholder and Concurrent real-
time businesses, achieving cost savings from the Acquisition,
projected sales, gross margin and net income figures, the
availability of capital resources, customer reaction to the
Acquisition, plans concerning products and market acceptance.
Forward-looking statements are inherently subject to risks
and uncertainties, many of which can not be predicted with
accuracy and some of which might not even be anticipated. Future
events and actual results, financial and otherwise, could differ
materially from those set forth in or contemplated by the for-
ward-looking statements herein. Important factors that could
contribute to such differences are set forth below under "Risk
Factors" including, but not limited to, "Changes in Market Prices
of Common Stock; Shares Eligible for Future Sale," "Uncertainties
in Successfully Integrating the CyberGuard Real-Time Business and
Achieving Cost Savings," "Impact of Transaction Costs on Finan-
cial Performance; Uncertainty of Acquisition-Related Costs,"
"Potential Shortfall in Liquidity," and "Product Obsolescence;
Significant Research and Development Expenditures."
CONCURRENT COMPUTER CORPORATION
GENERAL
Concurrent is a supplier of high-performance real-time
computer systems. "Real-time" systems acquire, analyze, store,
display and control analog, digital and network data to provide
time critical information as real-world events occur. Concurrent
has over 25 years of experience in real-time systems, including
specific expertise in systems, applications software, productivi-
ty tools and networking. Concurrent's real-time systems offer
networked and distributed computing solutions and may be config-
ured to provide fault tolerance. Concurrent sells its systems
worldwide to end-users as well as to original equipment manufac-
turers, systems integrators, independent software vendors and
value-added resellers who combine Concurrent's products with
other equipment or with additional application software for
resale to end-users. End uses of Concurrent's systems include
product design and testing; flight simulation; air traffic
control and weather forecasting; intelligence data acquisition
and analysis; financial trading; and hospital information manage-
ment. Concurrent designs, manufactures, sells, and supports
real-time proprietary and standards-based open systems. It also
offers traditional maintenance and support services and profes-
sional services, such as performance and capacity analysis and
systems integration.
THE ACQUISITION
On June 27, 1996, Concurrent acquired (the "Acquisition")
the assets of the real-time computer business of the Selling
Stockholder and 683,178 newly issued shares of common stock of
the Selling Stockholder (the "CyberGuard Stock") pursuant to the
Purchase and Sale Agreement dated as of March 26, 1996, as
amended and restated on May 23, 1996 (the "Purchase and Sale
Agreement"). The Selling Stockholder or its predecessors have
been engaged in the real-time computing business since 1974. The
CyberGuard Stock represents approximately 9% of the common stock
of the Selling Stockholder outstanding immediately after the
issuance of the CyberGuard Stock to Concurrent and after giving
effect to the vesting and exercise of certain stock options. As
consideration for the Acquisition, Concurrent issued to the
Selling Stockholder (i) 10,000,000 shares of Common Stock, which
represented approximately 23% of the shares of Common Stock
outstanding immediately after such issuance, after giving effect
to the vesting and exercise of all outstanding options with
respect to the Common Stock, and (ii) 1,000,000 shares of 9.00%
Class B Convertible Preferred Stock (the "Convertible Preferred
Stock") with a $10,000,000 aggregate liquidation preference
(subject to post-closing adjustments to reflect, among other
things, the amount of net current assets transferred to Concur-
rent in the Acquisition) and convertible into a maximum of
4,000,000 shares of Common Stock, subject to anti-dilution
adjustments. In addition, Concurrent also assumed certain
liabilities of the Selling Stockholder relating to its real-time
computing business.
In connection with the Acquisition, Concurrent and the
Selling Stockholder entered into certain ancillary agreements
including a Share Holding Agreement (the "Share Holding Agree-
ment") that contains certain standstill, transfer and registra-
tion provisions relating to the Common Stock and the CyberGuard
Stock, and provisions relating to the composition of the Board of
Directors of Concurrent and the Selling Stockholder. See "Sell-
ing Stockholder".
The Board of Directors of Concurrent believes the Acquisi-
tion offers the following significant strategic and financial
benefits to Concurrent and its stockholders, as well as to its
employees and customers:
* Enhanced Competitive Position. As a result of the
Acquisition, Concurrent expects to be in a better position
to meet the challenges of the increasingly competitive
environment in the real-time computing industry more effec-
tively than either Concurrent or the Selling Stockholder
standing alone. In addition, Concurrent now has access to
its own as well as the Selling Stockholder's technology,
allowing it to combine the best of both technologies in the
next generation of products.
* Larger and More Diverse Market Coverage. As a result of the
Acquisition, Concurrent's service territory, installed base
and product offerings are larger and more diverse than prior
to the Acquisition. In addition, the combination of the
best of the technologies of the two companies is expected to
allow for a reduction in the time between the introduction
of next generation products within Concurrent's product
line, resulting in Concurrent being less dependent on the
success of any individual next generation product.
* Cost Savings. The Acquisition is expected to generate
significant cost savings during the first fiscal year. Such
savings will be primarily obtained through headcount reduc-
tions, as well as facilities cost reductions. These savings
will be obtained through a variety of actions including,
among others, integration of corporate management and admin-
istrative functions, consolidation of production and re-
search and development facilities and consolidation of
sales/service offices.
* Liquidity. The Acquisition has provided Concurrent with
additional borrowing capacity under its revolving credit
facility based on the higher borrowing base resulting from
the combination of the real-time businesses of the two
companies. Concurrent has entered into an amendment to the
loan agreement with its primary lender which, among other
things, extends the term of such agreement until August 1,
1999 and effectively increases the line of credit under the
revolving credit facility by $4.75 million to $12.75 mil-
lion. In addition, the Acquisition has provided Concurrent
with the opportunity to improve its liquidity by either
selling or pledging, subject to certain restrictions, the
shares of CyberGuard Stock owned by it.
For a discussion of certain risks associated with the
Acquisition, see "Risk Factors". For additional information
concerning the Acquisition and the real-time business of the
Selling Stockholder, see the Joint Proxy Statement incorporated
by reference herein.
The Selling Stockholder is engaged in the development and
marketing of commercial network security products designed to
protect data on computer networks from access by unauthorized
users.
ADDITIONAL INFORMATION
Concurrent's principal offices are located at Two Crescent
Place, Oceanport, New Jersey 07757. Its telephone number is
(908) 870-4500. Concurrent's principal offices are being relocat-
ed to 2101 West Cypress Creek Road, Fort Lauderdale, Florida
33309.
Concurrent has also filed with the Commission a registration
statement on Form S-3 for 1,600,000 shares of Common Stock of
which up to 716,770 shares are to be sold by Concurrent to fund
the severance obligations which were incurred in connection with
the Acquisition. The balance will be sold by Concurrent on
behalf of Berenson Minella & Company ("Berenson Minella"),
financial advisor to Concurrent in partial satisfaction of its
financial advisory fee relating to the Acquisition. For addi-
tional information with respect to the severance arrangements and
the arrangements with Berenson Minella, see the Joint Proxy
Statement incorporated by reference herein.
RISK FACTORS
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS AND INCORPORATED BY REFERENCE
HEREIN, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN EVALUATING CONCURRENT BEFORE PURCHASING ANY
SHARES OF COMMON STOCK.
CHANGES IN MARKET PRICES OF COMMON STOCK; SHARES ELIGIBLE FOR
FUTURE SALE
General Market Risk
Pursuant to the Purchase and Sale Agreement, Concurrent
issued 10,000,000 shares of Common Stock to the Selling Stock-
holder, and the Selling Stockholder issued 683,178 shares of
CyberGuard Stock to Concurrent. The market prices of the Common
Stock will vary from such price at the date of this Prospectus.
Such variation will be the result of changes in the business,
operations or prospects of Concurrent, regulatory considerations,
general market, economic and industry conditions, the results of
operations, liquidity and the market's perception of the pros-
pects of Concurrent as well as other factors affecting Concurrent
including the risk factors set forth below. Furthermore, because
Concurrent owns 9% of the CyberGuard Stock, the price of the
Common Stock will also reflect changes in the price of the
CyberGuard Stock and in the business prospects for the Selling
Stockholder. Despite Concurrent's ownership of the CyberGuard
Stock and its right to designate one of the Selling Stockholder's
seven members of its Board of Directors, Concurrent will not be
able to control the Selling Stockholder's strategic direction or
influence the day-to-day management of the Selling Stockholder's
business or the future results of the Selling Stockholder's
operations.
Shares Eligible for Future Sale
No assurance can be given as to the effect, if any, that
future sales of shares of Common Stock, or the availability of
shares of Common Stock for future sales, will have on the market
price of the Common Stock from time to time. Future sales of
shares of Common Stock (including shares issued upon exercise of
stock options), or the possibility that such sales could occur,
could adversely affect the prevailing market price of the Common
Stock. As of the date of this Prospectus, the shares of Common
Stock offered pursuant to this Prospectus when aggregated with
the shares of Common Stock that are issuable upon the exercise of
the options, the shares of Common Stock being offered by Concur-
rent pursuant to a separate prospectus (see "Concurrent Computer
Corporation -- Additional Information") and the shares issuable
upon the exercise of certain outstanding warrants to purchase
361,544 shares of Common Stock at $3 per share equals approxi-
mately 43.2% of the shares of Common Stock outstanding. As of
the date of this Prospectus, there are also 2,556,740 shares of
Common Stock issuable upon exercise of options that are fully
vested, of which 2,366,822 options have an exercise price equal
to or less than $3.00 per share. An additional 6,056,209 shares
of Common Stock or options therefor are available for future
issuance under Concurrent's stock option plan. The shares of
Common Stock offered pursuant to this Prospectus are subject to
the terms of the Share Holding Agreement between Concurrent and
the Selling Stockholder pursuant to which shares of Common Stock
may be sold by the Selling Stockholder subject to certain re-
strictions on transfer (including certain restrictions on the
sales of shares when Concurrent is engaged in or preparing to
engage in a public offering of Common Stock) and on the volume of
sales by the Selling Stockholder of Common Stock.
UNCERTAINTIES IN SUCCESSFULLY INTEGRATING THE CYBERGUARD REAL-
TIME BUSINESS AND ACHIEVING COST SAVINGS
Concurrent has begun cost savings actions relating to the
Acquisition and expects full implementation thereof approximately
six months after the Acquisition. These savings will require
significant reductions in employees, as well as consolidation of
facilities worldwide and other miscellaneous cost savings ac-
tions. Obtaining these savings through the consolidation of
functions, the integration of departments, systems and procedures
and the relocation of staff present significant management
challenges. The consolidation of development and manufacturing
operations are especially challenging. The failure to effective-
ly consolidate development functions may result in delays in
introduction of the next generation of products. Similarly, the
failure to effectively consolidate manufacturing operations could
result in a delay in the shipment of certain customer orders and
could affect the quality of the goods delivered. Such failures
could have a material adverse effect on the future financial
performance, results of operations and financial condition of
Concurrent. There can be no assurance that such potential cost
savings, operating efficiencies and other synergies will be
successfully accomplished or accomplished within the time periods
initially contemplated, particularly since liquidity issues (see
" Potential Shortfall in Liquidity") may constrain Concurrent's
ability to integrate the real-time businesses of Concurrent and
the Selling Stockholder. Moreover, although the primary purpose
of such actions is to realize direct cost savings and other
operating efficiencies, there can be no assurance of the extent
to which such cost savings and efficiencies can be achieved.
IMPACT OF TRANSACTION COSTS ON FINANCIAL PERFORMANCE; UNCERTAINTY
OF ACQUISITION-RELATED COSTS
Concurrent expects to take a pre-tax charge in the range of
$29 to $32 million and to adjust negative goodwill to cover the
transaction costs of the Acquisition and the costs of integrating
the real-time businesses of Concurrent and the Selling Stockhold-
er, including the cost of facility closings and employee termina-
tions to eliminate duplicate facilities and excess capacity and
other non-recurring items. Concurrent expects that such charges
and related cash transaction costs will initially have a material
adverse effect on Concurrent's financial performance and finan-
cial condition within the period in which the charge and costs
are taken. 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 are expected to
be non-cash fixed asset carrying cost adjustments and approxi-
mately $2 to $3 million are obligations which will be settled
using Common Stock. Such costs include Acquisition expenses
(such as investment banker, legal and accounting fees), employee,
facility and equipment relocation costs and employee out-place-
ment costs. The $10 million of remaining cash payments will be a
continuation of current funding requirements and, after their
full satisfaction, are expected to positively impact Concurrent'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 further charges in future periods relating to the
cost of integrating the real-time business of Concurrent and the
Selling Stockholder. However, the amount of such future charges
cannot currently be determined.
DECLINING TREND IN NET SALES
Over the past five years, annual net sales of Concurrent
generally have declined from a high of approximately $255 million
to an annualized rate in the current fiscal year of approximately
$100 million. With the exception of the quarter ended June 30,
1995, where net sales increased $162,000 over the prior quarter,
net sales of Concurrent declined quarter to quarter during the
fiscal year ended June 30, 1995 from $41.5 million in the first
quarter to $30.5 million in the fourth quarter for total net
sales during the period of $140.1 million. The trend continued
in the first two quarters of the fiscal year ended June 30, 1996.
Net sales for the three months ended September 30, 1995 were
$26.5 million, a decrease of $15.0 million from the prior year
period and a decrease of $4 million from the previous quarter.
Net sales for the three months ended December 31, 1995 were $24.5
million, a decrease of $13.3 million from the prior year quarter
and a decrease of $2 million from the previous quarter. 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 but an
increase of $1.7 million from the previous quarter. As a result
of the distractions and uncertainties associated with the Acqui-
sition, net sales for the quarter ended June 30, 1996 are expect-
ed to be the lowest quarterly revenues for the fiscal year ended
June 30, 1996. The decline in net sales was largely the result
of the anticipated decline in sales of proprietary systems,
including reduced shipments under the U.S. Department of
Commerce's Next Generation Weather Radar (NEXRAD) program without
a corresponding increase in the sales of open systems. Declining
sales of computer systems consequently results in fewer mainte-
nance contracts. This, together with a decline in renewal rates
on maturing maintenance contracts as installed systems are
decommissioned and competitive discounting from third party
maintenance providers, has led to a declining trend in service
revenues.
The future growth of Concurrent's business and its future
financial performance will depend on, among other things, its
ability to increase net sales by continuing to develop and market
competitive real-time open systems products and to expand its
revenue base through a combination of internal growth and strate-
gic alliances. There can be no assurance as to the future growth
of Concurrent's business and financial performance or as to the
success of its products and strategic alliances.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
For the nine months ended March 31, 1996 and for the fiscal
years ended June 30, 1995 and 1994, Concurrent experienced losses
(before extraordinary items and the cumulative effect of changes
in accounting principles) of approximately $5.7 million, $2.0
million and $11.6 million, respectively. Concurrent recorded net
income of $3.9 million for the fiscal year ended June 30, 1993.
Pro forma to reflect the Acquisition, Concurrent would have
experienced losses of approximately $7.6 million and $7.4 million
for the nine months ended March 31, 1996 and the fiscal year
ended June 30, 1995, respectively, assuming the Acquisition were
consummated at the beginning of each such period. There can be
no assurance that Concurrent will be able to achieve profitabili-
ty, or if achieved, that such profitability can be maintained.
For the nine months ended March 31, 1996 and for the fiscal
years ended June 30, 1995, 1994 and 1993, Concurrent also experi-
enced a decline in assets. On a pro forma basis as of March 31,
1996, as a result of the Acquisition, Concurrent would have had
assets of approximately $109.5 million, including its CyberGuard
Stock (see "Pro Forma Condensed Consolidated Financial Statements
of Concurrent" in the Joint Proxy Statement incorporated by
reference herein). The pro forma consolidated balance sheet at
March 31, 1996 does not reflect certain restructuring adjustments
which may result from the integration of Concurrent's and the
Selling Stockholder's real-time businesses, such as the write-
down of the carrying value of property, plant and equipment which
may become excess to the needs of Concurrent. Such write-downs
may exceed $10 million. There can be no assurance that
Concurrent's assets will not continue to decline.
POTENTIAL SHORTFALL IN LIQUIDITY
Although the purchase of the Selling Stockholder's real-time
business and the integration and consolidation of development and
manufacturing operations 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 transaction costs related
to the Acquisition including relocation of Concurrent's opera-
tions to Florida, anticipated restructuring costs, and ongoing
working capital requirements. Concurrent's liquidity 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 Concurrent will depend to a significant
extent on (i) the actual versus anticipated decline in sales of
proprietary systems and service maintenance revenue; (ii) revenue
growth from open systems; (iii) both the related costs and the
length of time to realize the anticipated benefits from the
integration of the real-time businesses of Concurrent and the
Selling Stockholder; and (iv) ongoing cost control actions.
Liquidity will also be affected by: (i) the timing of shipments,
which predominantly occur during the last month of the quarter;
(ii) the increasing percentage of sales derived from outside the
United States, where there are generally longer accounts receiv-
able collection cycles and which receivables are not included in
Concurrent's borrowing base under its revolving credit facility;
(iii) the sales level in the United States, where related ac-
counts receivable are included in the borrowing base of
Concurrent's revolving credit facilities; and (iv) the number of
countries in which Concurrent will operate, which may require
maintenance of minimum cash levels in each country and, in
certain cases, may restrict the repatriation of cash, such as
cash held on deposit to secure office leases.
Concurrent may sell or pledge some or all of the CyberGuard
Stock to generate cash. To the extent the Selling Stockholder
consummates a public offering of its stock, Concurrent intends to
sell at least one-half of the shares of CyberGuard Stock owned by
it in connection with such public offering. On May 23, 1996, the
Selling Stockholder filed a registration statement relating to a
public offering of 2,500,000 million shares of its common stock
of which 1,800,000 shares are being offered by the Selling
Stockholder, 341,589 are being offered by Concurrent and the
balance are being offered by other selling stockholders. In
addition, under the terms of the agreements relating to the
Acquisition, Concurrent may sell a portion of its stock even if a
public offering is not consummated. However, Concurrent's
ability to sell or pledge the CyberGuard Stock is subject to a
number of limitations and conditions pursuant to the terms of the
Acquisition. See "Terms of the Transaction - The Share Holding
Agreement" of the Joint Proxy Statement incorporated herein by
reference. These limitations and conditions may affect
Concurrent's flexibility in generating cash through sales of
CyberGuard Stock.
Concurrent anticipates that the capital resources available
will be adequate to satisfy its capital requirements through June
1997, assuming quarterly net sales of the combined real-time
businesses in the range of $30 million. Concurrent's future
capital requirements, however, will depend on many factors,
including its ability to successfully market and sell its commer-
cial products, the cost and timing of the integration of the
real-time businesses of Concurrent and the Selling Stockholder 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 Concurrent's capital requirements, Concurrent 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 Concurrent and, in the
case of equity or convertible debt offerings, could result in
dilution to Concurrent's then existing stockholders. Concurrent
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 flexibil-
ity. If adequate funds are not available, Concurrent may be
required to curtail certain activities, including product devel-
opment, marketing and sales activities.
POTENTIALLY ADVERSE CUSTOMER REACTION
While Concurrent believes that its customers generally favor
the Acquisition due to the broader product line of Concurrent and
the other operational benefits of the Acquisition, there can be
no assurance as to such customer reaction. Adverse reactions by
Concurrent customers could have a material adverse effect on the
financial performance, results of operations and financial
condition of Concurrent.
LAG IN CUSTOMER ORDERS; LONG SALES CYCLE
Although Concurrent pursues significant programs with the
potential for high volume unit sales of its systems, it neither
has nor relies on fixed term or fixed quantity contracts for
future sales. Consequently, Concurrent relies on customer orders
in a given quarter for net sales for the quarter and on internal
forecasts of customer demand to plan operating expenditures. The
internal forecasts generally have proven to be optimistic. The
ability to match expenditures to anticipated sales is further
complicated by the trend of a majority of customers to delay
orders to the last month of a quarter. Further, the manufacture
of systems in anticipation of firm orders introduces the risk of
over-production and investing limited cash resources in potential
excess inventory. As a result, substantial efforts must be
undertaken on a continuous basis to maintain existing levels of
business and to manage expenditures consistent with anticipated
sales.
The sale of real-time products generally involves signifi-
cant education and commitment of capital by prospective custom-
ers, with the attendant delays frequently associated with large
capital expenditures and lengthy procurement procedures. For
these and other reasons, the expected sales cycle associated with
the sale of Concurrent's products is typically long and subject
to a number of significant risks over which Concurrent does not
have significant control. As a result, Concurrent may expend
significant resources pursuing potential sales that will not be
consummated, which in turn result in decreased revenues and cash
flow, potentially resulting in a material adverse effect on the
financial performance, results of operations and financial
condition of Concurrent.
SHIFT IN EMPHASIS AWAY FROM PROPRIETARY SYSTEMS
Many of Concurrent's target markets have undergone or are
undergoing a shift away from "proprietary" to "open" systems.
Sales related to Concurrent's proprietary systems, while declin-
ing, continue to represent more than 50% of its total systems
sales. Concurrent had approximately $25 million in open system
sales and $47 million in proprietary systems sales in its fiscal
year ended June 30, 1995 and $15 million in open systems sales
and $21 million in proprietary systems sales for the nine months
ended March 31, 1996. Although Concurrent's installed base of
proprietary systems is currently its largest market, Concurrent's
growth and its long-term financial performance will depend
largely on its ability to continue to develop and market industry
leading open systems that meet the real-time computing needs of
its targeted customers. Concurrent plans to capitalize on the
trend to open systems by focusing on its target markets as well
as entering into strategic alliances with third parties to bring
to market new solutions and software applications for new and
existing customers. Concurrent does not expect the shift in
emphasis to open systems to result in either significant incre-
mental costs over current cost levels or incremental capital
investment. A shift in emphasis to open systems may, however,
result in lower gross margins on systems sales. Currently, gross
margins on open systems are lower than gross margins on propri-
etary systems. Concurrent'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 reduced.
Servicing Concurrent's large installed base, particularly
its proprietary systems, is an important element in Concurrent's
business strategy and generates significant revenue and cash flow
to Concurrent. The shift in emphasis to open systems may also
have an adverse impact on maintenance revenues. Generally, open
systems require less maintenance and can, in many cases, be
serviced by the customers themselves or by third party providers.
For Concurrent, the shift in emphasis, together with declining
systems sales, resulted in the decline of service revenue from
$87.6 million for the year ended June 30, 1993 to $68.1 million
for the year ended June 30, 1995, respectively. For the nine
months ended March 31, 1996, Concurrent's service revenue was
$41.4 million compared to $51.8 million in the prior year period.
There can be no assurance that the decline in service revenue
will not continue. Should such decline continue, Concurrent's
operating income would be adversely affected by such a decline
unless non-service revenues increase and/or total operating
expenses are reduced.
PRODUCT OBSOLESCENCE; SIGNIFICANT RESEARCH AND DEVELOPMENT
EXPENDITURES
The information technology industry is characterized by
rapid advances in technology and demand for more cost effective
"solutions." The technologies incorporated by Concurrent into
its products and future products are in a continuous state of
development and tend to be surpassed by new developments within
18-24 months of initial commercial use. Continued rapid advances
in technology will further accelerate the technological obsoles-
cence of these products as well as those of Concurrent's competi-
tors, which may affect Concurrent's financial performance,
results of operations and financial condition. Concurrent's
success will depend, to a significant extent, upon the ability to
enhance existing products, to integrate the best technologies of
Concurrent and the Selling Stockholder and to introduce new
products and features in a timely manner to meet changing custom-
er requirements. It will also be dependent on the success of
strategic technological alliances. In order to accomplish these
objectives, Concurrent must maintain certain levels of investment
in research and development and effectively use this investment.
Concurrent must obtain and incorporate new hardware, software,
communications and peripheral technologies that are primarily
developed by others. There can be no assurance that the new
product development activities will be successful, that new
technologies will be available to Concurrent, that it will be
able to deliver commercial products in a timely manner or that
its products will achieve market acceptance. The business of
Concurrent will be adversely affected if it, its strategic
partners, or its suppliers incur delays in developing new prod-
ucts or enhancements, or if such products or enhancements do not
gain market acceptance because of competing technology. In
addition, some new product introductions are intended to replace
existing products. Although reasonable commercial efforts will
be made to monitor and manage new product introductions, there
can be no assurance that a new product introduction will not
result in a material amount of obsolete inventory. Consequently,
there may be a material adverse effect on liquidity of Concurrent
in the event there is significant inventory that Concurrent is
unable to dispose of in a reasonable time frame at an aggregate
value approximately equal to its aggregate book value. There can
be no assurance that new product introductions will be executed
without a material adverse effect on the financial performance,
results of operations or the financial condition of Concurrent.
The costs of developing future products in the real-time comput-
ing and multimedia markets is expected to be significant. While
Concurrent's real-time computing sectors are well developed and
have an extensive operational history, its multimedia sector is
in the relatively early stages of market development and is
likely to require extensive development, sales and marketing
expense before it may be in a position to contribute significant
revenue or cash flow. There can be no assurance as to the cost
of funding future products in either product sector or on the
ability of these product sectors to contribute to the revenues or
cash flows of Concurrent.
NEED TO ESTABLISH ADDITIONAL MARKETING RELATIONSHIPS
A significant business strategy of Concurrent is to enter
into strategic marketing alliances or other similar collaborative
relationships. There can be no assurance that existing or
contemplated collaborative relationships will be commercially
successful, that Concurrent will be able to negotiate additional
collaborative relationships, that such additional collaborations
will be available to Concurrent on acceptable terms or that any
such relationships, if established, will be commercially success-
ful. The potential increased revenues from such relationships
may be reduced by requirements to provide volume price discounts
and other allowances, and potential significant costs incurred in
customizing products. In addition, there can be no assurance
that parties with whom collaborative relationships are estab-
lished will not pursue alternative technologies or develop
alternative products in addition to or in lieu of Concurrent's
products, either on their own or in collaboration with others,
including Concurrent's competitors. Such alternative technolo-
gies or products, if developed, may be in direct competition with
Concurrent's technologies or products and may significantly erode
the benefits of such strategic marketing alliances or collabora-
tive relationships.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS; RISK OF LITIGATION; RELIANCE ON LICENSED TECHNOLOGY
Concurrent relies on patent, trademark, copyright and trade
secret laws, employee and third-party non-disclosure agreements
and other methods to protect its rights. Concurrent holds
patents and may apply for patents which cover certain aspects of
its technology. There can be no assurance that any pending or
future patent applications will be granted or that any current or
future patents will not be challenged, invalidated or circumvent-
ed or that the rights granted thereunder will provide competitive
advantages to Concurrent. There can be no assurance that Concur-
rent s trade secrets or non-disclosure agreements will provide
meaningful protection of its proprietary information. Further-
more, there can be no assurance that others will not independent-
ly develop similar technologies or duplicate any technology
developed by Concurrent or that the technology will not infringe
upon patents or other rights owned by others. Further, Concur-
rent may be subject to risk as it enters into transactions in
countries where intellectual property laws are not well developed
or are poorly enforced. Legal protections of Concurrent's rights
may be ineffective in such countries, and technology developed in
such countries may not be protectable in jurisdictions where
protection is ordinarily available. Concurrent s inability to
maintain a competitive advantage based on proprietary rights
would have a material adverse effect on its financial perfor-
mance, results of operations and financial condition.
As the number of real-time computing products in the indus-
try increases and the functionality of these products further
overlaps, software developers and publishers may increasingly
become subject to infringement claims. There can be no assurance
that third parties will not assert infringement claims against
Concurrent in the future with respect to current or future
products. There has been substantial litigation regarding
patent, copyright, trademark and other intellectual property
rights involving computer companies generally. Concurrent has
been separately notified by IBM and BTG (British Technology
Group), that each believes that certain of Concurrent s technolo-
gy may infringe on certain patents held by their respective
companies. These and any claims or litigation, with or without
merit, could be costly and could result in a diversion of manage-
ment s attention, which could have a material adverse effect on
Concurrent's financial performance, results of operations and
financial condition. Adverse determinations in such claims or
litigation could also have a material adverse effect on
Concurrent's financial performance, results of operations and
financial condition.
From time to time, other companies and individuals assert
exclusive patent, copyright, trademark and other intellectual
property rights to technologies or marks that are important to
the computer industry or Concurrent's business. Concurrent
evaluates each claim relating to its products and, if appropri-
ate, seeks a license to use the protected technology. The
licensing agreements generally do not protect Concurrent from
trade secret, copyright or other violations by Concurrent or its
suppliers in developing or selling these products. There can be
no assurance, however, that Concurrent will be able to obtain
licenses to intellectual property of third parties on commercial-
ly reasonable terms, if at all. In addition, Concurrent could be
at a disadvantage if its competitors obtain licenses for protect-
ed technologies with more favorable terms than does Concurrent.
If Concurrent or its suppliers are unable to license protected
technology used in its products, Concurrent could be prohibited
from marketing those products or may have to market products
without desirable features. Concurrent could also incur substan-
tial costs to redesign its products or to defend any legal action
taken against it. If Concurrent's products should be found to
infringe protected technology, it could be enjoined from further
infringement and required to pay damages to the infringed party.
RELIANCE ON GOVERNMENT BUSINESS
Concurrent derives a significant portion of its revenues
from the supply of systems under government contracts. For its
fiscal year ended June 30, 1995, approximately $39.2 million of
Concurrent's revenues were directly or indirectly related to
agencies of the U.S. Government. This amount represented approx-
imately 28% of Concurrent's worldwide revenues for fiscal year
1995, compared to 31% and 29% for its 1994 and 1993 fiscal years,
respectively. For the nine months ended March 31, 1996, approxi-
mately $14 million (18%) of Concurrent s revenues were directly
or indirectly related to agencies of the U.S. Government.
Concurrent's revenues related to sales to the U.S. Government are
derived from various federal agencies, no one of which accounted
for more than 5% of total revenues (e.g., several agencies
participate under the NEXRAD program). Sales to Unisys Corp., as
prime contractor, under the NEXRAD program contributed approxi-
mately $17.5 million, $23 million and $35 million in revenues for
fiscal years 1995, 1994 and 1993, respectively. The program is
largely completed and no significant revenue is expected for
future periods. Government business is, in general, subject to
special risks, such as delays in funding, termination of con-
tracts or subcontracts for convenience of the government or for
default by the contractor, reduction or modification of contracts
or subcontracts, failure to exercise options, changes in govern-
mental policies and the imposition of budgetary constraints. A
loss of government contract revenues could have a material
adverse effect on the financial performance, results of opera-
tions and financial condition of Concurrent.
DEPENDENCE ON INTERNATIONAL OPERATIONS
The financial results of Concurrent are increasingly depen-
dent on its international operations. Approximately 46% of
total revenues for its fiscal year 1995 were derived from inter-
national operations. For the nine months ended March 31, 1996,
approximately 51% of total revenues were derived from interna-
tional operations. Concurrent expects international operations
to continue to account for a significant percentage of total
revenues. Certain risks are inherent in international opera-
tions, including exposure to currency fluctuations, the imposi-
tion of government controls, export license requirements, re-
strictions on the export of critical technology, political and
economic instability, trade restrictions, changes in tariffs,
taxes and freight rates, generally longer payment cycles, diffi-
culties in staffing and managing international operations and
general economic conditions. From time to time in the past,
financial results of Concurrent have been affected both favorably
and unfavorably by fluctuations in currency exchange rates.
Future unfavorable fluctuations in currency exchange rates may
have an adverse impact on the financial performance, results of
operations and financial condition of Concurrent. Although
international revenues continue to represent an increasing
percentage of total revenues, accounts receivable from such
international revenues are not included in the borrowing base
under Concurrent's revolving credit facility.
COMPETITION
Concurrent operates in highly competitive environments
driven by rapid technological innovation. Many of its competi-
tors have greater financial and operating resources. In addi-
tion, companies with greater resources that currently do not
compete may enter into various of the company's target business-
es. The success of Concurrent will depend in part upon the
ability of its management to demonstrate to potential customers
the performance and reliability of its products and services.
There can be no assurance that management will be successful in
these efforts.
An increase in competition could result in, among other
things, price reductions and loss of sales volume. Such competi-
tion and any resulting reduction in aggregate revenues and/or
gross margins could have a material adverse effect on the future
financial performance, results of operations and financial
condition of Concurrent. There can be no assurance that
Concurrent's competitors will not develop real-time products that
may be more effective than Concurrent's current or future prod-
ucts or that Concurrent's technologies and products will not be
rendered obsolete by such developments.
LIMITED SOURCES OF SUPPLY
In limited cases, Concurrent purchases components from a
single supplier to obtain the required technology and the most
favorable price and delivery terms. Concurrent estimates that a
lead time of up to 16-24 weeks may be necessary to switch to an
alternative supplier of certain custom application specific
integrated circuits ("ASICS") and printed circuit assemblies. A
change in the supplier of these components without the appropri-
ate lead time could result in a material delay in shipments by
Concurrent of certain products and possibly, a material adverse
effect on the financial performance, results of operations and
financial condition of Concurrent.
Concurrent purchases components, including customized
components such as certain computer peripheral equipment incorpo-
rated into NightHawk computers, from a single supplier to obtain
the required technology and the most favorable price and delivery
terms. This single supplier will continue to be relied upon by
Concurrent. In the manufacture of the current generation 6000
series of NightHawk computers, Concurrent depends on the avail-
ability of Power PC chips provided by both IBM and Motorola. In
addition, the manufacturing process requires a high volume of
quality components that are procured from third-party suppliers.
Reliance on suppliers, as well as industry supply condi-
tions, generally involve several risks, including the possibility
of defective parts, a shortage of components, increase in compo-
nent costs, and reduced control over delivery schedules, any or
all of which could adversely affect Concurrent's respective
financial results. Where alternative sources are available,
qualification of the alternative suppliers and establishment of
reliable supplies of components from such sources may result in
delays. Problems with supplier performance or delays in delivery
of components may cause a delay in shipments of various products.
Since revenue is recognized typically upon shipment, any delay in
shipment may also result in a delay in revenue recognition,
possibly outside the fiscal period originally planned, and, as a
result, may adversely affect financial results for that particu-
lar period.
POTENTIAL NEED TO EXPAND INFRASTRUCTURE
If Concurrent experiences rapid growth, of which there can
be no assurance, it will need to continue to improve and expand
its infrastructure. There can be no assurance that Concurrent
will be able to manage expansion of its infrastructure to support
future growth effectively, if required. Concurrent expects to
transition its management information systems to more fully
integrate them on an enterprise wide basis, to reduce redundancy
and to incorporate enhanced functionality. There can be no
assurance that this management information system transition can
be accomplished on a timely basis or without disruptions of
Concurrent's operations, or management information functions,
which could have a material adverse effect on Concurrent's
financial performance, results of operations and financial
condition.
DEPENDENCE ON KEY EMPLOYEES
As a high technology company in a highly competitive indus-
try, the success of Concurrent depends in part on its ability to
attract and retain highly skilled technical, managerial, sales
and marketing employees. Competition for these key employees is
intense. The uncertainty as to which employees will remain as
part of Concurrent and the locations of various functions in
connection with the integration of the Selling Stockholder's
real-time business as well as other factors beyond Concurrent's
control may lead certain employees to choose alternative employ-
ment. Although Concurrent is not dependent on any one employee,
the loss of a number of key employees in significant positions
and the inability to attract and retain qualified replacement
employees in a timely manner could adversely affect the financial
performance, results of operations and financial condition of
Concurrent.
DIVIDEND POLICY
It is currently contemplated that Concurrent will not pay
cash dividends on the Common Stock in the immediately foreseeable
future. Concurrent's dividend policy will be reviewed by its
Board of Directors at such future time as may be appropriate in
light of relevant factors existing at such times.
CERTAIN BARRIERS TO CHANGES OF CONTROL; EFFECTS OF CHANGES OF
CONTROL
Rights associated with Common Stock may have the effect of
discouraging a third party from making an acquisition proposal to
Concurrent, and may thereby inhibit a change in control of the
company in circumstances that could give the holders of Common
Stock the opportunity to realize a premium over the then prevail-
ing market price. Such provisions may also adversely affect the
market price of Common Stock. In addition, loans under certain
credit agreements may be accelerated at the option of the lenders
in the event of a "change in control" of Concurrent (as that term
is defined in the credit agreements governing such loans). The
charter and by-laws of Concurrent and the Delaware General
Corporation Law (the "DGCL") contain certain provisions that may
have the effect of inhibiting a non-negotiated merger or other
business combination.
The Board of Directors of Concurrent has the authority to
issue shares of preferred stock and to determine the designa-
tions, preferences, and rights and the qualifications or restric-
tions of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be
subject to, and may be materially adversely affected by, the
rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions
and other corporate actions, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a
third party from acquiring, as the case may be. With the excep-
tion of the Convertible Preferred Stock issued to the Selling
Stockholder, Concurrent has no present plan to issue shares of
preferred stock.
LIMITATIONS ON THE USE OF CERTAIN TAX LOSS CARRYFORWARDS
Concurrent has substantial tax loss carryforwards available
to offset future taxable income. Under Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"), the use
of Concurrent's tax loss carryforwards could be limited in the
event of an "ownership change" involving more than 50% of
Concurrent's stock, including ownership changes arising by reason
of stock issuances by Concurrent. Although Concurrent has issued
a significant amount of stock in connection with the Acquisition,
the "ownership shift" resulting from such issuance, when coupled
with other ownership shifts involving certain 5% stockholders of
Concurrent since July 21, 1993, is not sufficient to constitute a
50% ownership change within the meaning of Section 382 of the
Code. Accordingly, the Acquisition has not impaired the avail-
ability of these tax loss carryforwards to Concurrent. It is
possible, however, that future ownership shifts involving the
stock of Concurrent could limit its ability to use these tax loss
carryforwards, including changes which occur by reason of addi-
tional stock issuances by Concurrent or acquisitions or disposi-
tions of Common Stock by persons who are or become owners of 5%
or more of Common Stock.
ANTI-TAKEOVER PROVISIONS
Concurrent has adopted and implemented a Rights Agreement
that will expire by its terms on August 14, 2002 pursuant to
which each share of Common Stock has attached to it a right to
purchase a fractional share of preferred stock under certain
circumstances. This agreement is intended to encourage a person
interested in acquiring Concurrent to negotiate with, and to
obtain the approval of, the Board of Directors in connection with
such a transaction. However, this agreement may discourage a
future acquisition of Concurrent, including an acquisition in
which stockholders might otherwise receive a premium for their
shares. As a result, stockholders who might desire to partici-
pate in such a transaction may not have the opportunity to do so.
SELLING STOCKHOLDER
As of the date of this Prospectus, the Selling Stockholder
owned 10,000,000 shares of Common Stock and all of the 1,000,000
outstanding shares of the Convertible Preferred Stock, which has
a liquidation preference of $10,000,000 (subject to adjustments
to reflect, among other things, the amount of net current assets
transferred in the Acquisition) and is convertible into 4,000,000
shares of Common Stock, subject to anti-dilution adjustments. As
of the date of this Prospectus, the Selling Stockholder's total
holdings, assuming conversion, would have equaled 29% of
Concurrent's issued and outstanding Common Stock. The Selling
Stockholder intends to offer from time to time the shares of
Common Stock owned by it pursuant to this Prospectus subject to
the restrictions imposed on its right to sell such shares pursu-
ant to the terms of the Acquisition. See "Terms of the Transac-
tion" in the Joint Proxy Statement which is incorporated by
reference herein.
Pursuant to the terms of the Acquisition, the Selling
Stockholder may designate three persons to serve on the Board of
Directors of Concurrent and Concurrent may designate one person
to serve on the Board of Directors of the Selling Stockholder.
PLAN OF DISTRIBUTION
The Common Stock will be offered and sold by CyberGuard for
its own account. Concurrent will not receive any proceeds from
the sale of the Common Stock pursuant to this Prospectus.
Concurrent has agreed to pay the expenses of registration of the
Common Stock, including legal and accounting fees but excluding
commissions, discounts or other selling fees.
The Selling Stockholder may choose to sell the Common Stock
offered hereby at any time in the future. Concurrent intends to
maintain the effectiveness of its registration of the shares of
Common Stock until June 30, 1999 (as such period may be extended
under certain circumstances, as provided in the Share Holding
Agreement) during which time the Selling Stockholder may choose
to sell the shares of Common Stock by use of one or more of the
distribution methods discussed below.
The distribution of the shares of Common Stock is not
subject to any underwriting agreement. Any or all of the shares
of Common Stock offered hereby may be offered and sold to
purchasers directly by or on behalf of the Selling Stockholder
from time to time in the over-the-counter market, in privately
negotiated transactions, or otherwise at prices prevailing in
such market or as may be negotiated at the time of the sale. The
shares of Common Stock may also be publicly offered through
agents, underwriters or dealers. In such event the Selling
Stockholder may enter into agreements with respect to any such
offering. Such underwriters, dealers or agents may receive
compensation in the form of underwriting discounts, concessions
or commissions from the Selling Stockholder and/or the purchasers
of the shares of the Common Stock. The Selling Stockholder and
any such underwriters, dealers or agents that participate in the
distribution of shares of the Common Stock may be deemed to be
underwriters, and any profit on the sale of the shares of the
Common Stock by them and any discounts, commissions or conces-
sions received by them may be deemed to be underwriting discounts
and commissions under the Securities Act. Any such underwriters,
dealers and agents may also engage in transactions with, and
perform services for, Concurrent. At the time a particular offer
of the shares of Common Stock is made, to the extent required, a
supplement to this Prospectus will be distributed which will set
forth the aggregate number of shares of Common Stock being
offered, and the terms of the offering, the name or names of any
underwriters, dealers or agents, any underwriting discounts
commissions and other items constituting compensation from, and
the resulting net proceeds to, the Selling Stockholder, any
discounts, commissions or concessions allowed or reallowed or
paid to dealers and, if applicable, the purchase price to be paid
by any underwriter for shares of Common Stock purchased from the
Selling Stockholder.
In order to comply with the securities laws of certain
states, sales of shares of the Common Stock to the public in such
states may be made only through broker-dealers who are registered
or licensed in such states. Sales of shares of the Common Stock
must also be made by the Selling Stockholder in compliance with
other applicable state securities laws and regulations.
Under the terms of the Acquisition, Concurrent has agreed to
indemnify the Selling Stockholder and such Selling Stockholder's
officers, directors, agents and employees, against certain
liabilities which may be incurred in connection with the sale of
shares of Common Stock under this Prospectus. The terms of the
Share Holding Agreement also provide for rights of contribution
if such indemnification is not available.
The Selling Stockholder is not restricted as to the price or
prices at which it may sell its Common Stock. Sales of Common
Stock at less than the market prices thereof may depress the
market price of the Common Stock. The Selling Stockholder is a
party to the Share Holding Agreement with Concurrent relating to
the Common Stock offered hereby that contains certain limitations
on the sales of Common Stock held by the Selling Stockholder.
Exceptions to such limitations include, but are not limited to,
sales in an amount of less than 5% of the outstanding securities
of any class of Concurrent (and for these purposes sales in open
market transactions which are not intentionally planned by the
seller to assist any other person in acquiring over 5% of the
outstanding securities of any class of Concurrent shall be
permitted). The Share Holding Agreement provides that the
Selling Stockholder may pledge the Common Stock to a bank or
other lending institution (each, a "Pledgee") to secure
borrowings or other indebtedness as extended from time to time,
provided that as a condition to such pledge, (i) the Pledgee
shall agree in writing not to sell, transfer or otherwise dispose
of the securities pledged to it other than pursuant to an effec-
tive registration statement on Form S-3 with respect to the
disposition of such securities or an applicable exemption from
registration under the Securities Act, (ii) the Pledgee shall
agree in writing that such Pledgee will be bound by the terms of
the Share Holding Agreement relating to any restrictions on such
securities, and (iii) all certificates representing securities
pledged to such Pledgee shall bear an appropriate restrictive
legend substantially as set forth in the Share Holding Agreement.
Notwithstanding the above restrictions, sales of a significant
number of shares of Common Stock at the same time may have a
depressive effect on the market price of the Common Stock.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be
passed on for Concurrent by Skadden, Arps, Slate, Meagher & Flom,
919 Third Avenue, New York, New York 10022.
EXPERTS
Concurrent Computer Corporation's consolidated balance
sheets as of June 30, 1995 and 1994, and the consolidated state-
ment of operations, shareholders' equity (deficiency) and cash
flow for each of the three years in the period ended June 30,
1995, incorporated by reference in this Prospectus have been
incorporated herein in reliance on the report of Coopers &
Lybrand, L.L.P. independent accountants, given on the authority
of that firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance of the securities
being registered hereby are estimated as follows:
SEC Registration fee . . . . . . . . . $13,880
Accounting fees and expenses . . . . . 2,500
Legal fees and expenses . . . . . . . . 20,000
Blue Sky and Legal Investment fees
and expenses . . . . . . . . . . . . 2,000
Transfer Agent's fees and expenses . . 1,500
Printing expenses . . . . . . . . . . . 1,000
Miscellaneous . . . . . . . . . . . . . 1,000
Total . . . . . . . . . . . . . . . . $41,880
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify directors and officers as well
as other employees and individuals against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation - a "deriva-
tive action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of
derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such action, and the statute re-
quires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to
the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote,
agreement or otherwise. Article 23 of the Registrant's By-laws
provides for indemnification of directors, officers, employees
and agents of the Registrant for expenses (including attorneys'
fees), judgments or fines of any threatened, pending or completed
action, suit or proceeding.
Article 11 of the Registrant's Certificate of Incorporation
provides that directors shall not be liable for monetary damages
resulting from a breach of their fiduciary duties, except for
liability for any of the following: (i) any breach of the duty
of loyalty to the Registrant and its stockholders, (ii) acts or
omissions not in good faith or which involve intentional miscon-
duct or a knowing violation of law, (iii) as provided under
Section 174 of the General Corporation Law of the State of
Delaware (which provides that directors are personally liable for
unlawful dividends or unlawful stock repurchase or redemptions),
or (iv) any transaction from which a director personally derived
any improper personal benefit. If the Delaware General Corpora-
tion Law is amended after approval by the stockholders of Article
11 to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a
director of Concurrent shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law,
as so amended from time to time. Any repeal or modification of
Article 11 shall not increase the personal liability of any
director of Concurrent for any act or occurrence taking place
prior to such repeal or modification, or otherwise adversely
affect any right or protection of a director of Concurrent
existing hereunder prior to the time of such repeal or modifica-
tion.
The Registrant maintains director and officer liability
insurance policies providing for the insurance on behalf of any
person who is or was a director or officer of the Registrant and
subsidiary companies against any liability incurred by him in any
such capacity or arising out of his status as such. The
insurers' limit of liability under the policies is $10,000,000 in
the aggregate for all insured losses per year. The policies
contain various reporting requirements and exclusions.
Effective January 31, 1996 Concurrent entered into indemnity
agreements with its directors and executive officers (each, an
"Indemnitee" and collectively, the "Indemnitees"). The indemnity
agreements provide a contractual right to indemnification to the
Indemnities for certain expenses incurred due to actions, suits
or other proceedings brought against them in their capacity as
directors, officers, employees or agents of Concurrent or any of
its subsidiaries.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
2.1 Purchase and Sale Agreement dated March 26, 1996,
as amended and restated on May 23, 1996, between
Concurrent Computer Corporation ("Concurrent") and
Harris Computer Systems Corporation ("Harris").
(a)
4.1 Certificate of Designation, Preferences and Rights
of Class B Convertible Preferred Stock. (b)
4.2 Form of Share Holding Agreement between Concurrent
and Harris. (b)
4.3 Form of Common Stock Certificate. (c)
4.4 Rights Agreement, dated July 31, 1992. (d)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom
(included in Exhibit 5.1).
(a) Previously filed.
(b) Incorporated by reference to the Exhibits to Concurrent's
Current Report on Form 8-K, dated April 19, 1996.
(c) Incorporated by reference to Exhibit Number 4.4 of Item 14
of Concurrent's Annual Report on Form 10-K for the fiscal
year ended June 30, 1992.
(d) Incorporated by reference to Concurrent's Current Report on
Form 8-K dated August 20, 1992.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective amend-
ment to this registration statement.
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent post-effec-
tive amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the infor-
mation set forth in the registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration state-
ment.
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursu-
ant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of
a post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration state-
ment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the regis-
trant pursuant to the foregoing provisions, or otherwise,
the registrant has ben advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, there-
fore, unenforceable. In the event that a claim for indemni-
fication against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the regis-
trant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indem-
nification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereun-
to duly authorized in the City of Oceanport, State of New Jersey,
on June 26, 1996.
CONCURRENT COMPUTER CORPORATION
By: /s/ Kevin J. Dell
Kevin J. Dell
Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed by
the following persons in the capacities indicated on June 26,
1996.
NAME TITLE
/s/ John T. Stihl Chairman of the Board
John T. Stihl President and Chief
Executive Officer
(Principal Execu-
tive Officer)
/s/ Roger J. Mason Vice President,
Roger J. Mason Finance, Treasurer and Chief
Financial Officer
(Principal Finan-
cial and Accounting
Officer)
/s/ Michael A. Brunner Director
Michael A. Brunner
/s/ Kevin N. Clowe Director
Kevin N. Clowe
/s/ C. Forbes Dewey, Jr. Director
C. Forbes Dewey, Jr.
/s/ Morton E. Handel Director
Morton E. Handel
/s/ Richard P. Rifenburgh Director
Richard P. Rifenburgh
/s/ Robert R. Sparacino Director
Robert R. Sparacino
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022-3987
(212) 735-3000
Fax: (212) 735-2000
June 26, 1996
Concurrent Computer Corporation
2 Crescent Place
Oceanport, NJ 07757
Re: Concurrent Computer Corporation
Registration Statement on Form S-3
(File No. 333-5169)
Ladies and Gentlemen:
We have acted as special counsel to Concurrent
Computer Corporation, a Delaware corporation (the "Compa-
ny"), in connection with the public offering by Harris
Computer Systems Corporation, a stockholder of the Compa-
ny (the "Selling Stockholder"), of up to 14,000,000
shares (the "Shares") of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), including
10,000,000 shares of Common Stock (the "Primary Shares")
and up to 4,000,000 shares of Common Stock (the "Converted
Shares") issuable upon the conversion of up to 1,000,000
shares of 9.00% Class B Convertible Preferred Stock, par
value $.01 per share, of Concurrent (the "Preferred Stock")
or the debentures into which the Preferred Shares are
ex-changeable.
This opinion is being furnished in accordance
with the requirements of Item 601(b)(5) of Regulation S-K
under the Securities Act of 1933, as amended (the "Act").
In connection with this opinion, we have exam-
ined originals or copies, certified or otherwise identi-
fied to our satisfaction, of (i) the Registration State-
ment on Form S-3 (File No. 333-5169) as filed with the
Securities and Exchange Commission (the "Commission") on
June 4, 1996 under the Act and Amendment No. 1 thereto
filed with the Commission on June 26, 1996 (such Regis-
tration Statement, as so amended, being hereinafter
referred to as the "Registration Statement"), (ii) the
Purchase and Sale Agreement dated March 26, 1996, as
amended and restated on May 23, 1996, between Concurrent
and the Selling Stockholder, filed as an exhibit to the
Registration Statement (the "Purchase and Sale Agree-
ment"), including the description of the debentures for
which the Preferred Stock may be exchanged (the "Deben-
tures"), (iii) a specimen certificate representing the
Common Stock, (iv) the Certificate of Incorporation of
the Company, as presently in effect, (v) the By-Laws of
the Company, as presently in effect, (vi) certain resolu-
tions of the Board of Directors of the Company relating
to the issuance and sale of the Shares and related mat-
ters and (vii) the form of the proposed Certificate of
Designation for the Preferred Stock (the "Certificate of
Designation"). We have also examined originals or cop-
ies, certified or otherwise identified to our satisfac-
tion, of such records of the Company and such agreements,
certificates of public officials, certificates of offi-
cers or other representatives of the Company and others,
and such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the
opinions set forth herein.
In our examination, we have assumed the legal
capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted
to us as originals, the conformity to original documents
of all documents submitted to us as certified, conformed
or photostatic copies and the authenticity of the origi-
nals of such latter documents. In making our examination
of documents executed or to be executed by parties other
than the Company, we have assumed that such parties had
or will have the power, corporate or other, to enter into
and perform all obligations thereunder and have also
assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such
parties of such documents and the validity and binding
effect thereof. As to any facts material to the opinions
expressed herein which we have not independently estab-
lished or verified, we have relied upon statements and
representations of officers and other representatives of
the Company and others.
Members of our firm are admitted to the bar in
the State of Delaware, and we do not express any opinion
as to the laws of any other jurisdiction.
Based upon and subject to the foregoing, we are
of the opinion that:
The Shares have been duly authorized. When the
consummation of the transactions contemplated by the
Purchase and Sale Agreement has occurred, the Primary
Shares will be validly issued, fully paid and nonassess-
able. When (i) the consummation of the transactions
contemplated by the Purchase and Sale Agreement has
occurred, including the filing of the Certificate of
Designation with the Secretary of State of the State of
Delaware and the issuance of up to 1,000,000 shares of
Preferred Stock to the Selling Stockholder, and (ii) Con-
verted Shares have been issued pursuant to the terms of
either (a) the Preferred Stock in accordance with the
terms of the Certificate of Designation or (b) any deben-
tures that may be issued in exchange for any shares of
Preferred Stock, the Converted Shares will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion
with the Commission as an exhibit to the Registration
Statement. We also consent to the reference to our firm
under the caption "Legal Opinions" in the Registration
Statement. In giving this consent, we do not thereby
admit that we are included in the category of persons
whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM
CONSENT OF INDEPENDENT ACCOUNTANTS
___________
We consent to the incorporation by reference in this registration
statement of Concurrent Computer Corporation on Form S-3 (File
No. 333-5169) of our report dated August 15, 1995, except for
Note 19, as to which the date is September 26, 1995, on our
audits of the consolidated financial statements and financial
statement schedules of Concurrent Computer Corporation. We also
consent to the reference to our Firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
Parsippany, New Jersey
June 26, 1996
