SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant toSection 13 or 15(d) of
--- the Securities Exchange Act of 1934
For the Quarter Ended March 29, 1997
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.)
2101 West Cypress Creek Road, Ft. Lauderdale, FL 33309
Telephone: (954) 974-1700
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 8, 1997 were 46,541,573.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 29, MARCH 31, MARCH 29, MARCH 31,
1997 1996 1997 1996
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Sales:
Computer systems $16,440 $13,831 $42,196 $ 35,696
Service and other 12,215 12,342 40,841 41,412
-------- -------- -------- ---------
Total 28,655 26,173 83,037 77,108
Cost of sales:
Computer systems 8,529 7,766 22,199 20,129
Service and other 6,593 7,517 21,742 24,297
Transition 171 0 973 0
-------- -------- -------- ---------
Total 15,293 15,283 44,914 44,426
-------- -------- -------- ---------
Gross Margin 13,362 10,890 38,123 32,682
Operating expenses:
Research and development 3,439 2,809 10,238 9,863
Selling, general and administrative 6,432 6,666 19,279 21,937
Transition/restructuring 71 0 2,177 1,300
-------- -------- -------- ---------
Total operating expenses 9,942 9,475 31,694 33,100
-------- -------- -------- ---------
Operating income (loss) 3,420 1,415 6,429 (418)
Interest expense (549) (531) (1,740) (1,851)
Interest income 71 12 152 193
Other non-recurring charge 0 0 0 (1,700)
Other income (expense) - net (261) 37 (2,557) (480)
-------- -------- -------- ---------
Income (loss) before provision for income taxes 2,681 933 2,284 (4,256)
Provision for income taxes 401 400 1,371 1,400
-------- -------- -------- ---------
Net income (loss) $ 2,280 $ 533 $ 913 ($5,656)
======== ======== ======== =========
Net income (loss) per share $ 0.05 $ 0.02 $ 0.02 ($0.19)
======== ======== ======== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
MARCH 29, JUNE 30,
1997 1996
----------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,709 $ 3,562
Trading securities 2,730 10,077
Accounts receivable - net 30,428 27,948
Inventories 10,475 11,683
Prepaid expenses and other current assets 2,124 2,384
----------- ----------
Total current assets 48,466 55,654
Property, plant and equipment - net 15,325 16,453
Facilities held for disposal 4,700 4,700
Other long-term assets 1,468 3,407
----------- ----------
Total assets $ 69,959 $ 80,214
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 4,870 5,013
Current portion of long-term debt 1,669 1,241
Revolving credit facilities 5,238 5,014
Accounts payable and accrued expenses 28,931 40,638
Deferred revenue 4,816 4,573
----------- ----------
Total current liabilities 45,524 56,479
Long-term debt 5,016 6,603
Other long-term liabilities 1,631 4,454
Class B 9% cumulative convertible, redeemable, exchangeable
preferred stock, mandatory redemption value of $6,263,000; $.01
par value per share, 1,000,000 authorized; 640,804.6 issued and
outstanding at March 29, 1997 3,828 5,610
Stockholders' equity:
Common stock 460 412
Capital in excess of par value 90,321 84,252
Accumulated deficit after eliminating
accumulated deficit of $81,826 at December 31,
1991, date of quasi-reorganization (75,827) (76,740)
Treasury stock (58) (58)
Cumulative translation adjustment (936) (798)
----------- ----------
Total stockholders' equity 13,960 7,068
----------- ----------
Total liabilities and stockholders' equity $ 69,959 $ 80,214
=========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
MARCH 29, MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows provided by (used by) operating activities:
Net profit (loss) $ 913 ($5,656)
Adjustments to reconcile net profit (loss)
to net cash provided by (used by) operating activities:
Unrealized loss on CyberGuard stock 2,622 0
Realized gain on CyberGuard stock (755) 0
Depreciation, amortization and other 4,102 9,041
Other non-cash expenses 2,537 1,996
Increase (decrease) to restructuring reserve (8,587) 1,300
Other non-recurring charges 0 1,700
Decrease (increase) in current assets:
Accounts receivable (2,480) (307)
Inventories 883 (486)
Prepaid expenses and other current assets 260 (664)
Decrease in current liabilities other than debt obligations
and restructuring reserve (1,467) (6,806)
Decrease in other long-term assets 1,898 980
Decrease in other long-term liabilities (2,823) (98)
-----------
Total adjustments to net profit (loss) (3,810) 6,656
----------- -----------
Net cash provided by (used by) operating activities (2,897) 1,000
----------- -----------
Cash flows provided by (used by) investing activities:
Net additions to property, plant and equipment (2,566) (2,023)
Net proceeds from sale of trading securities 4,590 0
Net proceeds from sale of facility 0 2,300
----------- -----------
Net cash provided by investing activities 2,024 277
----------- -----------
Cash flows provided by (used by) financing activities:
Net proceeds (payments) of notes payable (143) 427
Net proceeds (payments) of revolving credit facility 224 (1,918)
Repayment of long-term debt (1,159) (3,075)
Net proceeds from sale and issuance of common stock 1,236 110
----------- -----------
Net cash provided by (used by) financing activities 158 (4,456)
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents (138) 529
----------- -----------
Decrease in cash and cash equivalents ($853) ($2,650)
=========== ===========
Cash paid during the period for:
Interest $ 1,948 $ 1,259
=========== ===========
Income taxes (net of refunds) $ 1,079 $ 1,541
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
CONCURRENT COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity 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.
While the Company believes that the disclosures presented are adequate to
make the information not misleading, it is suggested that these consolidated
financial statements be read in conjunction with the audited consolidated
financial statements and the notes included in the Annual Report on Form 10-K
as filed with the Securities and Exchange Commission.
The results of interim periods are not necessarily indicative of the
results to be expected for the full fiscal year.
2. CHANGES IN ACCOUNTING POLICY
Post-retirement Benefits Other Than Pensions
On July 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Post-retirement Benefits Other Than Pensions" (FAS No. 106). This standard
requires companies to accrue post-retirement benefits throughout the
employees' active service periods until they attain full eligibility for those
benefits. The transition obligation (the accumulated post-retirement benefit
obligation at the date of adoption) may be recognized either immediately or by
amortization over the longer of the average remaining service period of active
employees or 20 years.
In connection with the adoption of this standard in fiscal year 1994, the
Company recorded a non-cash charge of $3.0 million representing the immediate
recognition of the accumulated post-retirement benefit obligation at the date
of the adoption.
As a result of the Acquisition as defined in Management's Discussion and
Analysis, the Company terminated the retirement benefits of current employees
and former employees who are not yet retired. In the current quarter, a
curtailment gain of $0.3 million, representing the remaining balance of the
reserve, was recognized. The total year-to-date curtailment gain is $2.5
million. The Company believes there will be no material expenses in
connection with this Plan.
Stock-Based Compensation
On July 1, 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (FAS No. 123). This standard established a fair value method
for accounting for stock-based compensation plans based upon the fair value of
stock options and similar instruments, but does not require the adoption of
this preferred method. The adoption of this standard will not impact results
of operations, financial position or cash flows.
<PAGE>
INCOME (LOSS) PER SHARE
Income (loss) per share for the three and nine months ended March 29,
1997 is based on the weighted average number of shares of common stock
outstanding. The number of shares used in computing primary and fully diluted
earnings per share are as follows:
<TABLE>
<CAPTION>
(SHARES AND DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 29, 1997 MARCH 29, 1997
-------------- --------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average outstanding shares: 45,439 45,439 43,930 43,930
Primary options outstanding 589 589
Fully diluted options outstanding 723 723
-------- --------
Equivalent Shares 46,028 46,162 44,519 44,653
======== ======== ======== ========
Earnings $ 2,280 $ 2,280 $ 913 $ 913
Earnings per share $ 0.05 $ 0.05 $ 0.02 $ 0.02
======== ======== ======== ========
</TABLE>
For the quarter and nine months ended March 31, 1996 equivalent shares were
31,272,000 and 30,482,000 respectively, resulting in earnings (loss) per share
of $.02 and ($.19) respectively.
3. TRADING SECURITIES
As of June 30, 1996, the Company held 683,178 shares of CyberGuard stock
with a market value of $14.75 per share. During the quarter ended September
27, 1996 the Company sold 91,500 shares at $10.645 per share, resulting in a
realized loss of $376 thousand. In addition, the value of the stock at the
end of the quarter ended September 27, 1996 was $8.50 per share, resulting in
an unrealized loss of $3.7 million.
During the quarter ended December 28, 1997, the Company sold 261,500
shares at an average price of $12.748 per share, resulting in a realized gain
of $1.1 million. The market price at December 28, 1996 was $11.625, which
resulted in an unrealized gain of $1.0 million for the quarter. The Company
also sold a call option on an additional 300,000 shares on which revenue was
deferred.
During the quarter ended March 29, 1997, the Company sold 22,500 shares at
$12.514 per share, resulting in a realized gain of $20,000. As of March 29,
the Company held 307,678 shares, including the 300,000 shares subject to the
call option. The market value of these shares was $2,730,642 or $8.875 per
share at March 29, 1997. The unrealized loss was netted against the proceeds
of the call option, leaving a balance of $279 thousand deferred revenue.
4. INVENTORIES
Inventories are valued at the lower of cost or market, with cost being
determined by using the first-in, first-out ("FIFO") method. The components
of inventories are as follows:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
MARCH 29, JUNE 30,
1997 1996
---------- ---------
<S> <C> <C>
Raw Materials $ 8,380 $ 8,789
Work-in-process 316 352
Finished Goods 1,779 2,542
---------- ---------
$ 10,475 $ 11,683
========== =========
</TABLE>
5. ACCUMULATED DEPRECIATION
Accumulated depreciation for property, plant and equipment at March 29,
1997 and June 30, 1996 was $39,691,000 and $44,213,000 respectively. The
change reflects the disposal of fully depreciated assets.
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
MARCH 29, JUNE 30,
1997 1996
---------- ---------
<S> <C> <C>
Accounts payable, trade $ 9,492 $ 9,453
Accrued payroll, vacation and other
employee expenses 7,283 7,934
Restructuring reserve 4,388 12,975
Other accrued expenses 7,768 10,276
---------- ---------
TOTAL ACCOUNTS PAYABLE AND ACCRUALS $ 28,931 $ 40,638
========== =========
</TABLE>
7. SALE/LEASEBACK
On September 27, 1996, the Company entered into a Purchase and Sale
Agreement providing for the sale/leaseback of its Oceanport, New Jersey
facility. The transaction is contingent upon the buyer's ability to lease
approximately 100,000 square feet of the 280,000 square foot building. The
transaction was expected to close during the December, 1996 or January, 1997
timeframe. The contract has been extended in exchange for non-refundable
monetary consideration. It is expected that this transaction will close by
May 15, 1997. The $5.0 million sales price will be reduced by estimated
selling costs of approximately $0.3 million. In accordance with the terms of
the agreement under the New Term Loan, which is defined in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
Company is required to prepay the New Term Loan in an amount equal to 75% of
the net proceeds of the sale of the facility. Accordingly, the net proceeds
will be applied to the remaining outstanding balance of the New Term Loan
(approximately $3.5 million). The remainder of the net proceeds will be
available for working capital purposes. However, there can be no assurance
that the transaction will be completed as contemplated.
8. PROVISION FOR RESTRUCTURING
The Company recorded a restructuring provision of $24.5 million during
the year ended June 30, 1996. This charge included the estimated costs
related to the rationalization of facilities, workforce reductions, asset
writedowns and other costs. The balance of the restructuring reserve at June
30, 1996 was $13.0 million. During the quarter and nine months ended March
29, 1997, cash payments related to the 1996 restructuring amounted to
approximately $1.6 million and $7.6 million respectively and other non-cash
charges represented $1.0 million for the quarter and nine months, of which
approximately $6.4 million related to employee termination costs.
On May 5, 1992, the Company entered into an agreement with the Industrial
Development Authority (IDA) in Ireland to maintain a presence in Ireland
through April 30, 1998. In connection with the Acquisition, the Company has
decided to close its Ireland operations. As a result, the Company may be
required to pay approximately $575,000 (360,000 Irish pounds) to the IDA which
is provided for in the restructuring provision. The Company is currently in
negotiations with the IDA.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
On June 27, 1996, the Company acquired the Real-Time Division of Harris
Computer Systems Corporation ("HCSC"), along with 683,178 shares of newly
issued shares of HCSC, which was renamed CyberGuard Corporation, in exchange
for 10,000,000 shares of Concurrent common stock, 1,000,000 shares of
convertible exchangeable preferred stock of Concurrent with a 9% cumulative
annual dividend payable quarterly in arrears and a mandatory redemption value
of $6,263,000 and the assumption of certain liabilities related to the HCSC
Real-Time Division ("Acquisition"). The aggregate purchase price of the
Acquisition was approximately $18.7 million. The Acquisition has been
accounted for as a purchase effective June 30, 1996.
RESULTS OF OPERATIONS
THE QUARTER ENDED MARCH 29, 1997 COMPARED WITH THE QUARTER ENDED MARCH 31,
1996.
Net Sales. Net sales increased to $28.7 million for the quarter ended
March 29, 1997 from $26.2 million in the comparable period a year ago. The
strengthening of the US dollar against foreign currencies negatively impacted
revenue by approximately $0.9 million for the quarter compared with the
quarter ending December 28, 1996. The Company considers its computer systems
and service business to be one class of products.
Net product sales were $16.4 million for the quarter ended March 29, 1997 as
compared with $13.8 million for the quarter ended March 31, 1996. Sales of
proprietary systems continue to decline, while sales of open systems products
are increasing. Maintenance sales remained virtually unchanged at $12.2
million in the current quarter compared with $12.3 million in the third
quarter of 1996.
Gross Margin. Gross margin as a percentage of sales increased to 46.6%
in the current quarter from 41.6% for the quarter ended March 31, 1996. The
increase reflects the Company's higher product sales this quarter and its
continued cost improvement efforts.
Operating Income. Operating income increased $2.0 million to a profit of
$3.4 million compared with a profit of $1.4 million in the quarter ended March
31, 1996. Expenses increased $0.5 million in the current quarter compared
with the quarter ended March 31, 1996, which primarily represents $0.3 million
lower selling, general and administrative due to the gain recognized from the
discontinuation of the Post Retirement Benefit Plan, $0.6 million higher
research and development costs, and $0.1 million of transition costs incurred
during the quarter.
Net Income. Net income increased from a gain of $0.5 million in the
quarter ended March 31, 1996 to a profit of $2.3 million in the current
quarter. The increase of $1.8 million was due to improvement of net product
sales discussed above. Currency translation negatively impacted net income
for the quarter by approximately $0.1 million.
NINE MONTHS ENDED MARCH 29, 1997 COMPARED WITH THE NINE MONTHS ENDED MARCH 31,
1996.
Net Sales. Net sales increased to $83.0 million for the nine months
ended March 29, 1997 from $77.1 million in the comparable period a year ago.
The Company considers its computer systems and service business to be one
class of products.
Net product sales were $42.2 million for the nine months ended March 29, 1997
as compared with $35.7 million for the nine months ended March 31, 1996.
Sales of proprietary systems continue to decline, while open systems products
are increasing. Maintenance sales were $40.8 million for the nine months
ended March 31, 1997 representing a slight decline from $41.4 million for the
comparable nine months of 1996. This decline is consistent with the decline
experienced in the industry over the past years as customers move from
proprietary to open systems which require less maintenance.
Gross Margin. Gross margin increased $5.4 million during the current
nine-month period to $38.1 million (45.9% as a percentage of sales) compared
with $32.7 million (42.4%) for the nine months ended March 31, 1996. The
increase reflects the Company's higher product sales this quarter and its
continued cost improvement efforts.
Operating Income. Operating income increased $6.8 million to a profit of
$6.4 million compared with a loss of $0.4 million in the nine months ended
March 31, 1996, primarily due to better margins as discussed above. Expenses
decreased $1.4 million in the current nine months compared with the nine
months ended March 31, 1996, which is primarily due to the recognition of a
$2.5 million gain on discontinued post-retirement benefits for current and
former employees as a result of the Acquisition. This gain was partially
offset by $0.9 million higher transition and restructuring costs.
Net Income. Net income increased by $6.6 million from a loss of $5.7
million in the nine months ended March 31, 1996 to a gain of $0.9 million in
the current nine months. The gain is virtually all due to operations,
discussed above. Interest and other non-recurring charges were similar in
both periods. One time charges, namely the loss on the sale of CyberGuard
stock, negatively impacted earnings by $2.6 million in the current nine
months.
LIQUIDITY AND CAPITAL RESOURCES
The Acquisition and related business integration and consolidation is
expected to improve the Company's liquidity through improved operating
performance, additional borrowing availability, and the planned disposition of
its Oceanport, New Jersey facility. The Company'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 the Company
depends 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 combination of the real-time
businesses of the Company and HCSC; and (iv) ongoing cost control actions.
Liquidity will also be affected by: (i) timing of shipments which
predominately occur during the last month of the quarter; (ii) the percentage
of sales derived from outside the United States where there are generally
longer accounts receivable collection cycles and which receivables are not
included in the Company's borrowing base under its revolving credit facility;
(iii) the sales level in the United States where related accounts receivable
are included in the borrowing base of the Company's revolving credit facility;
(iv) the number of countries in which the Company 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. The Company believes that it will be able to fund the
acquisition costs, as well as fiscal year 1997 operations, through its
operating results, existing financing facilities and the planned disposition
of its Oceanport, New Jersey facility. There is no assurance that the
Company's plans will be achieved.
On June 28, 1996, the Company entered into a new agreement providing for
a $19.9 million credit facility which matures August 1, 1999. The facility
includes a $ 7.2 million term loan (the "New Term Loan") and a $12.7 million
revolving credit facility (the "New Revolver"). The New Revolver represents a
$4.7 million increase to the maximum revolver amount, subject to certain
restrictions. In addition, the Company can borrow up to $3.0 million in
standby letters of credit (the "LOC's") in connection with overseas lines of
credit. The LOC's mature July 31, 1997 at which time the Company must extend
the expiration date of the LOC's to August 1, 1999, or obtain alternative
financing or guaranties in lieu thereof.
At March 29, 1997, the outstanding balances under the New Term Loan and
the New Revolver were $6.4 million and $5.2 million, respectively. The entire
outstanding balance of the New Revolver has been classified as a current
liability at March 29, 1997. Both the New Term Loan and the New Revolver bear
interest at the prime rate plus 2.0%. The New Term Loan is payable in 28
monthly installments of approximately $139,000 each, commencing October 1,
1996 and ending January 1, 1999, with the final balance of approximately $3.3
million payable August 1, 1999. The New Revolver may be repaid and
reborrowed, subject to certain collateral requirements, at any time during the
term ending August 1, 1999. The Company has pledged substantially all of its
domestic assets as collateral for the New Term Loan and the New Revolver. The
Company may repay the New Term Loan at any time without penalty. In the event
of a sale or sale/leaseback of its Oceanport facility, the Company is required
to make a prepayment of the New Term Loan up to an amount equal to 75% of the
net sale proceeds. Certain early termination fees apply if the Company
terminates the facility in its entirety prior to August 1, 1999.
The Company's joint venture agreement regarding its Japanese subsidiary
has been renewed through June, 1997. In the event such agreement is not
further extended, the Company could be required to satisfy the then
outstanding amount of demand notes which are guaranteed by the Company
($2,477,174 at March 29, 1997). There can be no assurance that the agreement
will be extended and, in the event the agreement is not extended, the Company
may be required to extend its guarantees, or repay the demand notes and seek
alternative financing. The Company expects to extend the joint venture
agreement.
The Company had cash and cash equivalents on hand of $2.7 million
representing a decrease from $3.6 million as of June 30, 1996. In addition,
the Company holds 307,678 shares of CyberGuard stock, which were valued at
approximately $2.7 million ($8.875 per share) on March 29, 1997. Accounts
payable and accrued expenses decreased by $11.7 million due primarily to the
reduction of the restructure reserve. Other long-term liabilities decreased
by $2.8 million due primarily to the reduction in the post-retirement benefit
obligation resulting from the plan termination.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
This Form 10-Q contains forward-looking statements that are subject to
risks and uncertainties. Statements indicating that the Company "expects,"
"estimates" or "believes" are forward-looking as are all other statements
concerning future financial results, product offerings or other events that
have not yet occurred. There are several important factors that could cause
actual results or events to differ materially from those anticipated by the
forward-looking statements contained herein. Such factors include, but are
not limited to: the growth rates of the Company's market segments; the
positioning of the Company's products in those segments; the Company's ability
to effectively manage its business, and the growth of its business, in a
rapidly changing environment; the timing of new product introductions;
inventory risks due to changes in market conditions; the competitive
environment in the computer industry; the Company's ability to establish
successful strategic relationships; and general economic conditions.
<PAGE>
<TABLE>
<CAPTION>
SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 29, MARCH 31, MARCH 29, MARCH 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales:
Computer systems 57.4% 52.8% 50.8% 46.3%
Service and other 42.6% 47.2% 49.2% 53.7%
---------- ---------- ---------- ----------
Total 100.0% 100.0% 100.0% 100.0%
Cost of sales (% of respective sales category):
Computer systems 51.9% 56.1% 52.6% 56.4%
Service and other 54.0% 60.9% 53.2% 58.7%
Transition N/A 0.0% N/A 0.0%
Total 53.3% 58.4% 54.1% 57.6%
---------- ---------- ---------- ----------
Gross Margin 46.6% 41.6% 45.9% 42.4%
---------- ---------- ---------- ----------
Operating expenses:
Research and development 12.0% 10.7% 12.3% 12.8%
Selling, general and administrative 22.4% 25.5% 23.2% 28.4%
Transition/restructuring 0.2% 0.0% 2.6% 1.7%
---------- ---------- ---------- ----------
Total operating expenses 34.7% 36.2% 38.2% 42.9%
---------- ---------- ---------- ----------
Operating income (loss) 11.9% 5.4% 7.7% (0.5%)
Interest expense (1.9%) (2.0%) (2.1%) (2.4%)
Interest income 0.2% 0.0% 0.2% 0.3%
Other non-recurring charge 0.0% 0.0% 0.0% (2.2%)
Other income (expense) - net (0.9%) 0.1% (3.1%) (0.6%)
---------- ---------- ---------- ----------
Income (loss) before provision for income taxes 9.4% 3.6% 2.8% (5.5%)
Provision for income taxes 1.4% 1.5% 1.7% 1.8%
---------- ---------- ---------- ----------
Net income (loss) 8.0% 2.0% 1.1% (7.3%)
========== ========== ========== ==========
</TABLE>
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits:
(10) Amendment No. Fourteen to the Loan and Security Agreement dated as
of January 15, 1997 between the Company and Foothill Capital Corporation
(11) Amendment No. Fifteen to the Loan and Security Agreement dated as of
April 4, 1997 between the Company and Foothill Capital Corporation
(12) Statement on computation of per share earnings
(27) Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report for the quarter ended March
29, 1997 to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 9, 1997 CONCURRENT COMPUTER CORPORATION
By: /s/ E. Courtney Siegel
-----------------------------
E. COURTNEY SIEGEL
President and Chief Executive Officer
By: /s/ Daniel S. Dunleavy
-----------------------------
DANIEL S. DUNLEAVY
Vice President, Chief Financial Officer and Chief
Administrative Officer
(Principal Financial and Accounting Officer)
<PAGE>
CONCURRENT COMPUTER CORPORATION
EXHIBIT 10
AMENDMENT NO. FOURTEEN TO THE
LOAN AND SECURITY AGREEMENT
CONCURRENT COMPUTER CORPORATION
This Amendment No. Fourteen To The Loan And Security Agreement (this
"Amendment") is entered into as of this 15th day of January, 1997, by and
between CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Borrower"),
with its chief executive office located at 2101 W. Cypress Creek Road, Fort
Lauderdale, Florida 33309 and FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), with a place of business located at 11111 Santa
Monica Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of
the following facts:
FACTS
-----
FACT ONE: Foothill and Borrower have previously entered into that
----------
certain Loan And Security Agreement, dated as of June 29, 1995 (as amended and
supplemented, the "Agreement").
FACT TWO: Foothill and Borrower desires to further amend the
----------
Agreement as provided herein. Terms defined in the Agreement which are used
herein shall have the same meanings as set forth in the Agreement, unless
otherwise specified.
NOW, THEREFORE, Foothill and Borrower hereby modify and amend the
Agreement as follows:
1. Subsection (g) of the Definition "Eligible Accounts" under Section
-----------------
1.1 of the Agreement, is hereby amended in its entirety to read as follows:
"(g) Accounts with respect to an Account Debtor whose total obligations owing
to Borrower exceed ten percent (10%) of all Eligible Accounts, to the extent
of the obligations owing by such Account Debtor in excess of such percentage,
and with respect to Lockheed Martin Marietta Corp. whose total obligations
owing to Borrower exceed thirty-five percent (35%); provided, however that
-------- -------
accounts owed by the Illinois Department of Public Aid, Loral, Airinc, Boeing
Co., Grumman Aircraft, Hughes Aircraft, Hughes Training Inc., ABB Combustion
Engineering, and other accounts that may be approved from time to time by
Foothill may be eligible up to a maximum, per Account Debtor, of fifteen
percent (15%) of all Eligible Accounts, so long as they are otherwise eligible
hereunder;".
2. Foothill shall charge Borrower's loan account a fee in the amount of
Five Hundred Dollars ($500.00). Said fee shall be fully-earned,
non-refundable, and due and payable on the date Borrower's loan account is
charged.
3. In the event of a conflict between the terms and provisions of
this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the
Agreement, as supplemented, amended and modified, shall remain in full force
and effect.
IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of
the day and year first written above.
FOOTHILL CAPITAL CORPORATION CONCURRENT COMPUTER CORPORATION
By /S/ Lisa M. Gonzales By /S/ Robert Fitzpatrick
Lisa M. Gonzales Robert Fitzpatrick
Its Assistant Vice President Its Vice President & Treasurer
------------------------ --------------------------
CONCURRENT COMPUTER CORPORATION
EXHIBIT 11
AMENDMENT NO. FIFTEEN TO THE
LOAN AND SECURITY AGREEMENT
CONCURRENT COMPUTER CORPORATION
This Amendment No. Fifteen To The Loan And Security Agreement (this
"Amendment") is entered into as of this 4th day of April, 1997, by and between
CONCURRENT COMPUTER CORPORATION, a Delaware corporation ("Borrower"), with its
chief executive office located at 2101 W. Cypress Creek Road, Fort Lauderdale,
Florida 33309 and FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), with a place of business located at 11111 Santa Monica
Boulevard, Suite 1500, Los Angeles, California 90025-3333, in light of the
following facts:
FACTS
-----
FACT ONE: Foothill and Borrower have previously entered into that
----------
certain Loan And Security Agreement, dated as of June 29, 1995 (as amended and
supplemented, the "Agreement").
FACT TWO: Foothill and Borrower desires to further amend the
----------
Agreement as provided herein. Terms defined in the Agreement which are used
herein shall have the same meanings as set forth in the Agreement, unless
otherwise specified.
NOW, THEREFORE, Foothill and Borrower hereby modify and amend the
Agreement as follows:
1. Subsection (g) of the Definition "Eligible Accounts" under Section
-----------------
1.1 of the Agreement, is hereby amended in its entirety to read as follows:
"(g) Accounts with respect to an Account Debtor whose total obligations owing
to Borrower exceed ten percent (10%) of all Eligible Accounts, to the extent
of the obligations owing by such Account Debtor in excess of such percentage,
and with respect to Lockheed Martin Marietta Corp. whose total obligations
owing to Borrower exceed thirty-five percent (35%), and with respect to Harris
Corporation, whose total obligations to Borrower exceed thirty percent (30%)
from March 24, 1997 through June 30, 1997 and shall revert to ten percent
(10%); provided, however that accounts owed by the Illinois Department of
-------- -------
Public Aid, Loral, Airinc, Boeing Co., Grumman Aircraft, Hughes Aircraft,
Hughes Training Inc., ABB Combustion Engineering, and other accounts that may
be approved from time to time by Foothill may be eligible up to a maximum, per
Account Debtor, of fifteen percent (15%) of all Eligible Accounts, so long as
they are otherwise eligible hereunder;".
2. Foothill shall charge Borrower's loan account a fee in the amount of
One Thousand Two Hundred Fifty Dollars ($1,250.00). Said fee shall be
fully-earned, non-refundable, and due and payable on the date Borrower's loan
account is charged.
3. In the event of a conflict between the terms and provisions of
this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the
Agreement, as supplemented, amended and modified, shall remain in full force
and effect.
IN WITNESS WHEREOF, Borrower and Foothill have executed this Amendment as of
the day and year first written above.
FOOTHILL CAPITAL CORPORATION CONCURRENT COMPUTER
CORPORATION
By By
Lisa M. Gonzales Robert Fitzpatrick
Its Assistant Vice President Its Vice President & Treasurer
------------------------ --------------------------
<PAGE>
CONCURRENT COMPUTER CORPORATION
EXHIBIT 12
<TABLE>
<CAPTION>
PRIMARY AND FULLY DILUTED EARNINGS PER SHARE COMPUTATION
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 29, MARCH 31, MARCH 29, MARCH 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income (loss) $ 2,280 $ 533 $ 913 ($5,656)
Weighted average number of common shares 45,439 30,568 43,930 30,482
Increase in weighted average number of
common shares upon assumed conversion
of preferred stock -- -- -- --
Increase in weighted average number of
common shares upon assumed conversion
of stock options 723 704 723 --
Total 46,162 31,272 44,653 30,482
Net income (loss) per share
Primary $ 0.05 $ 0.02 $ 0.02 ($0.19)
========== ========== ========== ==========
Fully Diluted $ 0.05 $ 0.02 $ 0.02 ($0.19)
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated balance sheet at March 29, 1997 and Consolidated
Statement of Operations for the nine months ended March 29, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUN-30-1996
<PERIOD-END> MAR-29-1997
<CASH> 2709
<SECURITIES> 2730
<RECEIVABLES> 32253
<ALLOWANCES> 1825
<INVENTORY> 10475
<CURRENT-ASSETS> 48466
<PP&E> 55016
<DEPRECIATION> 39691
<TOTAL-ASSETS> 69959
<CURRENT-LIABILITIES> 45524
<BONDS> 5016
<COMMON> 460
3828
0
<OTHER-SE> 13500
<TOTAL-LIABILITY-AND-EQUITY> 69959
<SALES> 42196
<TOTAL-REVENUES> 83037
<CGS> 22199
<TOTAL-COSTS> 44914
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 17
<INTEREST-EXPENSE> 1740
<INCOME-PRETAX> 2284
<INCOME-TAX> 1371
<INCOME-CONTINUING> 913
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 913
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
