SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
---
Securities Exchange Act of 1934
For the Quarter Ended March 31, 1999
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 12, 1999 was 48,265,848.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales:
Computer systems . . . . . . . . . . . . . $ 8,566 $ 9,544 $24,362 $28,169
Service and other. . . . . . . . . . . . . 9,110 10,850 29,369 33,846
-------- -------- -------- --------
Total. . . . . . . . . . . . . . . . . . 17,676 20,394 53,731 62,015
Cost of sales:
Computer systems . . . . . . . . . . . . . 3,403 5,123 10,661 13,916
Service and other. . . . . . . . . . . . . 5,016 5,670 15,230 17,852
-------- -------- -------- --------
Total. . . . . . . . . . . . . . . . . . 8,419 10,793 25,891 31,768
-------- -------- -------- --------
Gross margin . . . . . . . . . . . . . . . . 9,257 9,601 27,840 30,247
Operating expenses:
Research and development . . . . . . . . . 2,371 2,739 7,620 8,253
Selling, general and administrative. . . . 6,324 5,845 18,907 17,739
Restructuring. . . . . . . . . . . . . . . - - - (607)
-------- -------- -------- --------
Total operating expenses . . . . . . . . . . 8,695 8,584 26,527 25,385
-------- -------- -------- --------
Operating income . . . . . . . . . . . . . . 562 1,017 1,313 4,862
Interest expense . . . . . . . . . . . . . . (45) (159) (194) (609)
Interest income. . . . . . . . . . . . . . . 34 51 127 109
Other non-recurring gain (loss). . . . . . . - - (88) 420
Other income (expense) - net . . . . . . . . (205) 120 (237) (122)
-------- -------- -------- --------
Income before provision for income taxes . . 346 1,029 921 4,660
Provision for income taxes . . . . . . . . . 52 24 138 932
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . $ 294 $ 1,005 $ 783 $ 3,728
Preferred stock dividends and accretion of
mandatory redeemable preferred shares. . . - - - (18)
-------- -------- -------- --------
Net income available to common shareholders. $ 294 $ 1,005 $ 783 $ 3,710
======== ======== ======== ========
Basic and diluted net income per share . . . $ 0.01 $ 0.02 $ 0.02 $ 0.08
======== ======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30,
1999 1998
------------ ----------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 5,607 $ 5,733
Accounts and notes receivable - net. . . . . . . . . . . . . 16,203 18,996
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . 5,832 6,263
Prepaid expenses and other current assets. . . . . . . . . . 1,599 1,487
------------ ----------
Total current assets . . . . . . . . . . . . . . . . . . . 29,241 32,479
Property, plant and equipment - net. . . . . . . . . . . . . . 12,503 12,419
Other long-term assets . . . . . . . . . . . . . . . . . . . . 1,104 1,337
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 42,848 $ 46,235
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . $ - $ 365
Revolving credit facility. . . . . . . . . . . . . . . . . . - 1,123
Accounts payable and accrued expenses. . . . . . . . . . . . 9,512 13,321
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 3,598 4,018
------------ ----------
Total current liabilities. . . . . . . . . . . . . . . . . 13,110 18,827
Other long-term liabilities. . . . . . . . . . . . . . . . . . 1,968 1,898
------------ ----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 15,078 20,725
------------ ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . 481 476
Capital in excess of par value . . . . . . . . . . . . . . . 98,100 97,136
Accumulated deficit after eliminating accumulated deficit of
$81,826 at December 31, 1991, date of quasi-reorganization (70,408) (71,191)
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . (58) (58)
Cumulative translation adjustment. . . . . . . . . . . . . . (345) (853)
------------ ----------
Total stockholders' equity . . . . . . . . . . . . . . . . 27,770 25,510
------------ ----------
Total liabilities and stockholders' equity . . . . . . . . . . $ 42,848 $ 46,235
============ ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
MARCH 31,
1999 1998
----------- ---------
<S> <C> <C>
Cash flows provided by operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . $ 783 $ 3,728
Adjustments to reconcile net income
to net cash provided by operating activities:
Realized gain on trading securities . . . . . . . . - (420)
Gain on sale of facility. . . . . . . . . . . . . . - (706)
Loss on dissolution of subsidiary . . . . . . . . . 429 -
Depreciation, amortization and other. . . . . . . . 3,701 4,317
Other non-cash expenses . . . . . . . . . . . . . . 19 1,027
Decrease (increase) in assets:
Accounts and notes receivable . . . . . . . . . . 2,782 4,189
Inventories . . . . . . . . . . . . . . . . . . . 423 1,703
Prepaid expenses and other current assets . . . . (753) (775)
Other long-term assets. . . . . . . . . . . . . . 192 83
Increase (decrease) in liabilities:
Accounts payable, accrued expenses and
other current liabilities . . . . . . . . . (4,229) (9,197)
Other long-term liabilities . . . . . . . . . . . 70 297
----------- ---------
Total adjustments to net income . . . . . . . . . . . 2,634 518
----------- ---------
Net cash provided by operating activities . . . . . . . 3,417 4,246
----------- ---------
Cash flows (used in) provided by investing activities:
Net additions to property, plant and equipment. . . . (2,957) (1,977)
Proceeds from sale of facility. . . . . . . . . . . . - 5,406
Proceeds from sale of trading securities. . . . . . . - 2,668
----------- ---------
Net cash (used in) provided by investing activities . . (2,957) 6,097
----------- ---------
Cash flows used in financing activities:
Payments of notes payable . . . . . . . . . . . . . . (425) (462)
Proceeds of revolving credit facility . . . . . . . . 39,995 48,965
Payments of revolving credit facility . . . . . . . . (41,118) (52,083)
Repayment of long-term debt . . . . . . . . . . . . . - (6,161)
Proceeds from sale and issuance of common stock . . . 969 679
----------- ---------
Net cash used in financing activities . . . . . . . . . (579) (9,062)
----------- ---------
Effect of exchange rates on cash and cash equivalents . (7) (428)
----------- ---------
(Decrease) increase in cash and cash equivalents. . . . $ (126) $ 853
=========== =========
Cash paid during the period for:
Interest. . . . . . . . . . . . . . . . . . . . . . $ 190 $ 594
=========== =========
Income taxes (net of refunds) . . . . . . . . . . . $ 875 $ 891
=========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
<PAGE>
CONCURRENT COMPUTER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Concurrent
Computer Corporation ("Concurrent" or the "Company") 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 condensed
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. EARNINGS PER SHARE
In the quarter ended March 31, 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS No. 128"),
which supersedes APB Opinion No. 15, "Earnings Per Share", and specifies the
computation, presentation, and disclosure requirements for earnings per share
("EPS") for entities with publicly held common stock or potential common stock.
FAS No. 128 replaces primary and fully diluted EPS with basic and diluted EPS,
respectively. It also requires dual presentation of basic EPS and diluted EPS
on the face of the income statement and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation.
Basic EPS is computed by dividing income after deduction of preferred stock
dividends by the weighted average number of common shares outstanding during
each year. Diluted EPS is computed by dividing income after deduction of
preferred stock dividends by the weighted average number of shares giving effect
to all dilutive potential shares that were outstanding during the period, as
calculated under the treasury stock method.
The number of shares used in computing basic and diluted EPS for the three
months ended March 31, 1999 was 48,043,000 and 50,981,000, respectively. The
number of shares used in computing basic and fully diluted EPS for the three
months ended March 31, 1998 was 47,260,000 and 49,058,000, respectively. The
number of shares used in computing basic and fully diluted EPS for the nine
months ended March 31, 1999 was 47,855,000 and 49,186,000, respectively. The
number of shares used in computing basic and fully diluted EPS for the nine
months ended March 31, 1998 was 46,816,000 and 48,641,000, respectively.
<PAGE>
3. 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:
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1999 1998
---------- ---------
<S> <C> <C>
Raw materials . $ 4,610 $ 4,780
Work-in-process 804 959
Finished goods. 418 524
---------- ---------
$ 5,832 $ 6,263
========== =========
</TABLE>
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The components of accounts payable and accrued expenses are as follows:
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1999 1998
---------- ---------
<S> <C> <C>
Accounts payable, trade . . . $ 3,169 $ 4,946
Accrued payroll, vacation and
other employee expenses . . 3,519 4,695
Restructuring reserve . . . . 213 661
Other accrued expenses. . . . 2,611 3,019
---------- ---------
$ 9,512 $ 13,321
========== =========
</TABLE>
5. PROVISION FOR RESTRUCTURING
As of June 30, 1998, the Company's restructuring reserve consisted of
$177,000 of accrued severance payments and $484,000 of estimated payments to be
made to the Industrial Development Authority of Ireland (the "IDA") during
fiscal year 1999. On May 5, 1992, the Company entered into an agreement with
the IDA to maintain a presence in Ireland through April 30, 1998. The Company
closed its Ireland operations in December 1996. As a result of the closing, the
Company is required to repay grants to the IDA of approximately $500,000.
During the first quarter of fiscal year 1999, the severance payments were made
and taken against the restructuring reserve, leaving $484,000 as of September
30, 1998. During the second and third quarters of fiscal year 1999, IDA
payments of $135,000 and $136,000, respectively, were made leaving $213,000 of
restructuring reserve as of March 31, 1999.
<PAGE>
6. COMPREHENSIVE INCOME
Effective July 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" ("FAS No. 130"). FAS No. 130 requires the reporting of
comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net income. The Company's total comprehensive
is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
------ ------- ------ -------
<S> <C> <C> <C> <C>
Net income. . . . . . . . . . . . . . . . . . $ 294 $1,005 $ 783 $3,728
Other comprehensive income (loss):
Foreign currency translation gains (losses) (559) (26) 508 (145)
------ ------- ------ -------
Total comprehensive income. . . . . . . . . . $(265) $ 979 $1,291 $3,583
====== ======= ====== =======
</TABLE>
7. YEAR 2000
The Company converted its computer systems and believes such systems
are Year 2000 compliant. The Year 2000 problem is the result of computer
programs being written using two digits rather than four to define the
applicable year. The Company has expensed all costs associated with these
systems changes.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THE QUARTER ENDED MARCH 31, 1999 COMPARED WITH THE QUARTER ENDED MARCH 31, 1998.
Net Sales. Net sales decreased to $17.7 million for the quarter ended March
31, 1999 from $20.4 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 $8.6 million for the quarter ended March 31, 1999 as
compared with $9.5 million for the quarter ended March 31, 1998. Sales of
proprietary systems continue to decline, and the selling price of open systems
is significantly lower than the selling price of proprietary products.
Maintenance sales decreased from $10.9 million in the quarter ended March 31,
1998 to $9.1 million in the quarter ended March 31, 1999, continuing the decline
experienced over the past years as customers move from proprietary systems to
open systems which require less maintenance.
Gross Margin. Gross margin decreased approximately $0.3 million during the
current quarter to $9.3 million (52% as a percentage of sales) compared to $9.6
million (47%) for the three months ended March 31, 1998. The overall decrease
in gross margin reflects the Company's lower sales this quarter. The improved
margin percentage resulted from a more favorable product mix, changes in pricing
structure, the move toward open systems which have a higher margins than
proprietary systems, and the Company's ongoing cost reduction efforts.
Operating Income. Operating income decreased $0.4 million to $0.6 million
in the current quarter compared with an income of $1.0 million in the quarter
ended March 31, 1998 due to the decrease in gross margin discussed above and a
$0.1 million increase in operating expenses. The increase in operating expenses
is largely due to the increase in marketing expenses primarily relating to
Interactive Video on Demand ("IVOD") products.
Net Income. Net income decreased from $1.0 million in the quarter ended
March 31, 1998 to $0.3 million in the current quarter. The decrease of $0.7
million is primarily due to the $0.4 million decrease in operating income, and a
$0.3 million decrease in other income (expense) - net due to miscellaneous
adjustments.
<PAGE>
THE NINE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE NINE MONTHS ENDED MARCH
31, 1998.
Net Sales. Net sales decreased to $53.7 million for the nine months ended
March 31, 1999 from $62.0 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 $24.4 million for the nine months ended March 31, 1999 as
compared with $28.2 million for the nine months ended March 31, 1998. Sales of
proprietary systems continue to decline, and the selling price of open systems
is significantly lower than that of proprietary products. Furthermore, in the
first quarter of fiscal year 1999, international sales decreased due to the
economic crisis in Asia.
Maintenance sales decreased from $33.8 million in the nine months ended March
31, 1998 to $29.4 million for the comparable nine months of 1999, continuing the
decline experienced over the past years as customers move from proprietary to
open systems which require less maintenance.
Gross Margin. Gross margin decreased $2.4 million during the current
nine-month period to $27.8 million compared to $30.2 million for the nine months
ended March 31, 1998. The decrease reflects the Company's lower sales this
quarter. The gross margin as a percentage of sales increased from 49% in the
nine months ended March 31, 1998 to 52% in the current nine months. The improved
margin percentage resulted from a more favorable product mix, changes in pricing
structure, the move toward open systems which have a higher margins than
proprietary systems, and the Company's ongoing cost reduction efforts.
Operating Income. Operating income decreased $3.5 million to a profit of
$1.3 million in the current nine-month period compared with an income of $4.8
million in the nine months ended March 31, 1998 due to the $2.4 million decrease
in gross margin discussed above and a $1.1 million increase in operating
expenses. The increase in operating expenses is largely due to a $0.6 million
gain on the sale of the Company's Oceanport, New Jersey building recorded as an
offset to restructuring expense in the prior nine month period, increased legal
expenses in the current period relating to subsequently resolved lawsuits, and
an increase in marketing expenses in the current nine months primarily relating
to IVOD products. This increase was partially offset by a slight decrease in
research and development costs resulting from cost reduction efforts.
Net Income. Net income decreased from a profit of $3.7 million in the nine
months ended March 31, 1998 to an income of $0.8 million in the current nine
months. This decrease of $2.9 million is primarily due to the $3.5 million
decrease in operating income discussed above, a $0.5 decrease in other
non-recurring gain (loss) and a $0.1 million decrease in other income (expense)
- - net. The decrease in other non-recurring gain (loss) is primarily due to a
$0.1 million loss in the current nine months consisting of a $0.4 million loss
due to the dissolution of the Company's French Branch and a $0.3 exchange gain
resulting from the settlement of a subsidiary's short term loan to the Company,
as compared to a $0.4 million gain in the nine months ended March 31, 1998 due
to a gain on the sale of trading securities. The decrease in other income
(expense) - net is primarily due to miscellaneous adjustments. These decreases
to net income were partially offset by a $0.8 million decrease in the tax
provision resulting from an income shift towards subsidiaries with net operating
losses sufficient to offset the gains and a $0.4 million decrease in interest
expense resulting from decreased borrowings.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
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; and (iii)
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; and (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 ongoing operations through its operating results and existing financing
facilities.
On March 1, 1998, the Company entered into a new agreement providing for an
$8 million revolving credit facility through August 1, 2000. At March 31, 1999,
the outstanding balance under the revolving credit facility was $0. The
revolving credit facility bears interest at the prime rate plus .75% (8.5% at
March 31, 1999). The revolving credit facility may be repaid and reborrowed,
subject to certain collateral requirements, at any time prior to its maturity.
The Company has pledged substantially all of its domestic assets as collateral
for the revolving credit facility. Certain early termination fees apply if the
Company terminates the facility in its entirety prior to June 30, 1999.
The Company had debt to outside financial institutions of $0 at March 31,
1999 as compared to $1.5 million at June 30, 1998.
The Company and Nippon Steel Corporation ("NSC") terminated the joint
venture in Concurrent Nippon Corporation ("CNC") in the quarter ended June 30,
1998, and the Company acquired 100% of the stock in CNC. In connection with
this transaction, NSC paid the Company $1.2 million and the Company paid off
debt owed to certain Japanese banks on behalf of CNC.
The Company had cash and cash equivalents on hand of $5.6 million at March
31, 1999 representing a slight increase from $5.7 million as of June 30, 1998
primarily due to timing differences.
YEAR 2000
The Company has been aggressively addressing Year 2000 issues related to
the processing of date-sensitive data. A cross-functional team was assembled,
and a determination was made as to which systems were Year 2000 non-compliant.
The Company believes that all of the Company's critical financial,
manufacturing, R&D and other systems are fully compliant.
Concurrent has reviewed customer and supplier relationships, and has a Year
2000 software product available which many of its customers have implemented.
While the Company is taking all reasonable efforts, including direct mailings
and internet web site offerings, to make information on the Year 2000 readiness
of its products available to its customers, this information may not reach all
customers, particularly third-party customers. Although the Company believes it
has addressed Year 2000 readiness issues related to its products, there may be
disruptions and/or product failures that are unforeseen.
The Company is requesting assurances from its major suppliers that
they are addressing these issues and that products procured by the Company will
function properly in the Year 2000. It is expected that certain critical
suppliers may be unwilling or unable to provide such assurances. As a result,
it is difficult for the Company to assess the impact on its business of such
entities' failure to be Year 2000 compliant.
The additional costs to be incurred in achieving Year 2000 compliance are
not expected to be material.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
Certain matters discussed in this Form 10-Q may be "forward-looking statements"
as defined in the Private Securities Litigation Reform Act of 1995. Concurrent
Computer Corporation cautions investors that any forward-looking statements made
herein are not guarantees of future performance and that a variety of factors
could cause its actual results and experience to differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. The risks and uncertainties which could affect Concurrent Computer
Corporation's performance or results include, without limitation, changes in
product demand; economic conditions; various inventory risks due to changes in
market conditions; uncertainties relating to the development and ownership of
intellectual property; uncertainties relating to the ability of Concurrent
Computer Corporation and other companies to enforce their intellectual property
rights; the pricing and availability of equipment, materials and inventories;
technological developments; delays in testing of new products; rapid technology
changes; the highly competitive environment in which Concurrent Computer
Corporation operates; the entry of new well-capitalized competitors into
Concurrent Computer Corporation's markets, and other risks and uncertainties.
<PAGE>
SELECTED OPERATING DATA AS A PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales:
Computer systems. . . . . . . . . . . . 48.5% 46.8% 45.3% 45.4%
Service and other . . . . . . . . . . . 51.5% 53.2% 54.7% 54.6%
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Cost of sales:
Computer systems. . . . . . . . . . . . 39.7% 53.7% 43.8% 49.4%
Service and other . . . . . . . . . . . 55.1% 52.3% 51.9% 52.7%
Total . . . . . . . . . . . . . . . . 47.6% 52.9% 48.2% 51.2%
------ ------ ------ ------
Gross margin. . . . . . . . . . . . . . . 52.4% 47.1% 51.8% 48.8%
Operating expenses:
Research and development. . . . . . . . 13.4% 13.4% 14.2% 13.3%
Selling, general and administrative . . 35.8% 28.7% 35.2% 28.6%
Restructuring . . . . . . . . . . . . . 0.0% 0.0% 0.0% (1.0%)
------ ------ ------ ------
Total operating expenses. . . . . . . . . 49.2% 42.1% 49.4% 40.9%
------ ------ ------ ------
Operating income. . . . . . . . . . . . . 3.2% 5.0% 2.4% 7.8%
Interest expense. . . . . . . . . . . . . (0.3%) (0.8%) (0.4%) (1.0%)
Interest income . . . . . . . . . . . . . 0.2% 0.3% 0.2% 0.2%
Other non-recurring gain (loss) . . . . . 0.0% 0.0% (0.2%) 0.7%
Other income (expense) - net. . . . . . . (1.2%) 0.6% (0.4%) (0.2%)
------ ------ ------ ------
Income before provision for income taxes. 2.0% 5.0% 1.7% 7.5%
Provision for income taxes. . . . . . . . 0.3% 0.1% 0.3% 1.5%
------ ------ ------ ------
Net income. . . . . . . . . . . . . . . . 1.7% 4.9% 1.5% 6.0%
====== ====== ====== ======
</TABLE>
<PAGE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
(a) Exhibits:
* 10.1(a) Employment Agreement dated as of November 17, 1998 between the
Company and Steve G. Nussrallah.
* 10.1(b) Amendment to Employment Agreement dated as of January 1, 1999
between the Company and E. Courtney Siegel.
(11) Statement on computation of per share earnings.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
None.
_________________________________________________________
* Management contract or compensatory plan or arrangement.
<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 31,
1999 to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 14, 1999 CONCURRENT COMPUTER CORPORATION
By: /s/ Daniel S. Dunleavy
---------------------------
DANIEL S. DUNLEAVY
President, Real-Time Division and Acting Chief
Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
CONCURRENT COMPUTER CORPORATION
EXHIBIT 10.1(A)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 17th day of November, 1998 by and between CONCURRENT COMPUTER CORPORATION, a
Delaware corporation ("Company"), and STEVE G. NUSSRALLAH ("Employee").
WHEREAS, the Company, through its Board of Directors, desires to retain the
services of Employee, and Employee desires to be retained by the Company, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee, and Employee hereby
----------
accepts employment, as President, Video-On-Demand Division of the Company upon
the terms of and subject to this Agreement.
2. TERM. The term ("Term") of this Agreement shall commence and this
----
Agreement shall become effective on November 17, 1998, and shall continue until
otherwise terminated by either party at any time in accordance with the terms
hereof.
3. DUTIES. During his employment hereunder from the date hereof through
------
December 31, 1998, Employee shall perform such duties as shall be assigned to
Employee by the President and Chief Executive Officer of the Company on a
part-time basis. Commencing January 1, 1999 through December 31, 1999, Employee
shall serve as the President, Video-On-Demand Division of the Company. Employee
shall have general and active charge of the business and affairs of the
Video-On-Demand (VOD) Division and, in such capacity, shall have responsibility
for the day-to-day operations of the VOD Division, subject to the authority and
control of the President and Chief Executive Officer of the Company. Commencing
January 1, 2000, provided that the Company shall have disposed of its real-time
computer business, Employee shall serve as the President and Chief Executive
Officer of the Company, and the Company shall take such actions as necessary to
cause his nomination as a member of the Board of Directors of the Company. In
such capacity, Employee shall have general and active charge of the business and
affairs of the Company, and responsibility for the day-to-day operations of the
Company, subject to the authority and control of the Board of Directors of the
Company. Throughout the term of employment hereunder, the Employee shall devote
his full time and undivided attention during normal business hours to the
business and affairs of the Company, as appropriate to his duties and
responsibilities hereunder, except for reasonable vacations and illness or other
disability, but nothing in this Agreement shall preclude the Employee from
devoting reasonable periods required for serving as a director or member of any
advisory committee of not more than two (at any time) "for profit" organizations
involving no conflict of interest with the interests of the Company (subject to
approval by the Board of Directors, which approval shall not be unreasonably
withheld), or from engaging in charitable and community activities, or from
managing his personal investments, provided such activities do not materially
interfere with the performance of his duties and responsibilities under this
Agreement.
4. COMPENSATION.
------------
a. Salary: Employee shall be paid an initial salary of $250,000 per
year, payable in equal installments not less than monthly. Commencing January 1,
2000, Employee shall be paid a salary of $280,000 per year payable in equal
installments not less than monthly. The Employee's salary shall be reviewed at
least annually.
b. Stock Option/Bonus: In addition to salary, Employee shall be
entitled to participate in the Company's Stock Option Plan (the "Stock Option
Plan") and Employee shall be initially granted, subject to the approval of the
Company's shareholders of an amendment to the Stock Option Plan providing for,
among other things, an increase in the share authorization thereunder, an option
to purchase 1,000,000 shares of common stock of the Company (such number to be
subject to adjustment as provided in section 5, paragraph 3, of the Stock Option
Plan). The per share exercise price of the option shall be the fair market value
of the Company's common stock as of the date of grant ($2.75), and the option
shall vest in three equal annual installments over a three-year period. The
Employee shall be additionally granted a long-term option to purchase up to
250,000 shares of common stock of the Company, at an exercise price equal to the
fair market value of a share of common stock as of the date of grant ($2.75),
and the option shall vest in its entirety on November 17, 2001. Further,
Employee shall be provided with an annual bonus opportunity with an initial
target bonus for Employee of $150,000, representing 60% of Employee's annual
salary as set forth in Paragraph 4.a., above (hereafter the "Executive Bonus
Plan"), the actual amount to be paid depending upon the degree of achievement of
various objectives. Commencing January 1, 2000, Employee shall be provided with
an annual bonus opportunity of 65% of Employee's annual salary as set forth in
Paragraph 4.a above, the actual amount to be paid depending upon the degree of
achievement of various objectives. The objectives for each year and other terms
and conditions of the bonus opportunity shall be established by the Board of
Directors or a committee thereof and shall be reasonably consistent with the
business plan of the Company for such year, or portion thereof, established in
advance. The target bonus opportunity may be increased to no more than an
additional 100% for superior performance as defined and determined under the
Executive Bonus Plan.
c. Insurance: During his employment hereunder, Employee shall be
entitled to participate in such health, life, disability and other insurance
programs, if any, that the Company may offer to other key executive employees of
the Company from time to time.
d. Other Benefits: During his employment hereunder, Employee shall be
entitled to such other benefits, if any, that the Company may offer to other key
executive employees of the Company from time to time. Certain other benefits are
described on Schedule A hereto. In addition, the Company and Employee shall
enter into an Indemnification Agreement in the form the Company may enter into
with other key executive employees of the Company from time to time.
e. Vacation: Employee shall be entitled to four weeks vacation leave
(in addition to holidays) in each calendar year during the Term, or such
additional amount as may be set forth in the vacation policy that the Company
shall establish from time to time.
f. Expense Reimbursement: Employee shall, upon submission of
appropriate supporting documentation, be entitled to reimbursement of reasonable
out-of-pocket expenses incurred in the performance of his duties hereunder in
accordance with policies established by the Company. Such expenses shall
include, without limitation, reasonable entertainment expenses, gasoline and
toll expenses and cellular phone use charges, if such charges are directly
related to the business of the Company.
5. GROUNDS FOR TERMINATION. The Company may terminate this Agreement
-------------------------
for Cause. As used herein, "Cause" shall mean any of the following: (a) the
Employee has committed a willful serious act against the Company intended to
enrich himself at the expense of the Company, such as embezzlement, or has been
convicted of a felony involving moral turpitude; or (b) Employee has (i)
willfully and grossly neglected his duties hereunder, or (ii) intentionally
failed to observe specific directives or policies of the President and Chief
Executive Officer or the Board of Directors, which directives or policies were
consistent with his positions, duties and responsibilities hereunder, and which
failure had, or continuing failure will have, a material adverse effect on the
Company. Prior to any such termination, Employee shall be given written notice
by the Board of Directors that the Company intends to terminate his employment
for Cause under this Section 5, which written notice shall specify the
particular acts or omissions on the basis of which the Company intends to so
terminate Employee's employment, and Employee (with his counsel, if he so
chooses) shall be given the opportunity, within 15 days of his receipt of such
notice, to have a meeting with the Board of Directors to discuss such acts or
omissions and be given reasonable time to remedy the situation. In the event of
such termination, the Employee shall be promptly furnished written specification
of the basis therefor in reasonable detail.
6. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at any
-------------------------
time with Good Reason. "Good Reason" shall exist if:
a. the Company demotes or otherwise elects or appoints the
Employee to lesser offices than set forth in Section 3, or fails to elect or
appoint him to such;
b. the Company causes a material change in the nature or scope of
the authorities, powers, functions, duties or responsibilities attached to the
Employee's positions as described in Section 3;
c. the Company causes Employee to relocate more than 50 miles from
Atlanta, Georgia;
d. the Company decreases the Employee's compensation below the levels
provided for by the terms of Section 4 (taking into account increases made from
time to time in accordance with Section 4);
e. the Company materially reduces the Employee's benefits under any
employee benefit plan, program or arrangement of the Company (other than a
change that affects all employees similarly situated) from the level in effect
upon the Employee's commencement or participation;
f. the Company commits any other material breach of the provisions of
this Agreement (except those set forth in Paragraph 4.a) and employee provides
at least 15 days' prior written notice to at least two members of the Company's
Board of Directors of the existence of such breach and his intention to
terminate this Agreement (no such termination shall be effective if such breach
is cured during such period);
g. the Company fails to comply with the provisions of Paragraph 4.a.
for an uninterrupted 10 day period; or
h. in the event the Company fails to dispose of its real-time computer
business by January 1, 2000, the Company fails to complete a public offering in
respect of the Video-On-Demand Division by June 2000.
7. PAYMENT AND OTHER PROVISIONS UPON TERMINATION FOR CAUSE OR
------------------------------------------------------------------
EMPLOYEE CONVENIENCE.
- ---------------------
a. In the event Employee's employment with the Company (including its
subsidiaries) is terminated by the Company for Cause as provided in
Paragraph 5 then, on or before Employee's last day of employment with the
Company, the provisions of this Paragraph 7.a shall apply. These same
provisions shall apply if the Employee terminates his employment other than
in accordance with the provisions of Paragraph 6 hereof.
i. Compensation: The Company shall pay in a lump sum to
employee such amount of compensation due Employee for services rendered to the
Company, as well as compensation for unused vacation time, as has accrued but
remains unpaid. Any and all other rights to compensation of any kind granted to
Employee under this Agreement shall terminate as of the date of termination,
except as may be otherwise required by statute.
ii. Noncompetition/Nonsolicitation Period: The provisions of
Paragraphs 13 and 14 shall continue to apply with respect to Employee for a
period of one year following the date of termination.
b. In the event Employee's employment with the Company (including its
subsidiaries) is terminated by the Company for any reason other than for Cause
as provided in Paragraph 5 and other than as a consequence of Employee's death,
disability, or normal retirement under the Company's retirement plans and
practices, then the following provisions apply. These same provisions shall
apply if Employee terminates his employment in accordance with the provisions of
Paragraph 6 hereof.
i. Salary and Bonus Payments: On or before Employee's last day of
employment with the Company, the Company shall promptly pay in a lump sum to
Employee as compensation for services rendered to the Company a cash amount
equal to twice the amount of Employee's annual base salary and twice the target
bonus under the Executive Bonus Plan as in effect immediately prior to his date
of termination. At the election of the Company, the cash amount referred to in
this subparagraph 7.b.i may be paid to Employee in periodic installments in
accordance with the normal salary payment procedures of the Company.
ii. Vesting of Options and Rights: Notwithstanding the vesting
period provided for in the Stock Option Plan and related stock option agreements
between the Company and Employee for stock options ("options") and stock
appreciation rights ("rights") granted Employee by the Company, at least
one-third of the options and stock appreciation rights shall be exercisable upon
termination of employment. In addition, Employee shall have the right to
exercise such options and rights for the shorter of (a) one year following his
termination of employment or (b) with respect to each option, the remainder of
the period of exercisability under the terms of the appropriate documents that
grant such options.
iii. Benefit Plan Coverage: The Company shall maintain in full
force and effect for Employee and his dependents for two years after the date of
termination, all life, health, accident, and disability benefit plans and other
similar employee benefit plans, programs and arrangements in which Employee or
his dependents were entitled to participate immediately prior to the date of
termination, in such amounts as were in effect immediately prior to the date of
termination, provided that such continued participation is possible under the
general terms and provisions of such benefit plans, programs and arrangements.
In the event that participation in any benefit plan, program or arrangement
described above is barred, or any such benefit plan, program or arrangement is
discontinued or the benefits thereunder materially reduced, the Company shall
arrange to provide Employee and his dependents for two years after the date of
termination with benefits substantially similar to those that they were entitled
to receive under such benefit plans, programs and arrangements immediately prior
to the date of termination. If immediately prior to the date of termination the
Company provided Employee with any club memberships, Employee shall be entitled
to continue such memberships at his sole expense. Notwithstanding any time
period for continued benefits stated in this subparagraph 7.b.iii, all benefits
in this subparagraph 7.b.iii will terminate on the date that Employee becomes an
employee of another employer and eligible to participate in the employee benefit
plans of such other employer. To the extent that Employee was required to
contribute amounts for the benefits described in this subparagraph 7.b.iii prior
to his termination, he shall continue to contribute such amounts for such time
as these benefits continue in effect after termination.
iv. Savings and Other Plans: Except as otherwise more
specifically provided herein or under the terms of the respective plans relating
to termination of employment, Employee's active participation in any applicable
savings, retirement, profit sharing or supplemental employment retirement plans
or any deferred compensation or similar plan of the Company or any of its
subsidiaries shall continue only through the last day of his employment. All
other provisions, including any distribution and/or vested rights under such
plans, shall be governed by the terms of those respective plans.
v. Noncompetition/Nonsolicitation Period: The provisions of
Paragraph 13 and 14 shall continue, beyond the time periods set forth in such
paragraphs, to apply with respect to employee for the shorter of (x) twenty-four
(24) months following the date of termination or (y) until such time as the
Company has failed to comply with the provisions of subparagraph 7.b.i for an
uninterrupted 10-day period and such failure is not cured within 15 days after
written notice of such failure is delivered to at least two non-employee
directors of the Company, provided, that in such circumstances, Employee shall
remain entitled to exercise his rights under this Agreement.
c. The provisions of this Paragraph 7 shall apply if Employee's
employment is terminated prior to a Change of Control or more than three years
after the occurrence of a Change of Control (as defined in Paragraph 8.c). From
the occurrence of any Change of Control until the third anniversary of such
Change of Control, the provisions of Paragraph 8 shall apply in place of this
Paragraph 7; provided, however, that in the event Employee terminates his
employment with the Company after a Change in Control other than in accordance
with the provisions of Paragraph 6 hereof, then the provisions of Paragraph 8
hereof shall not apply and the provisions of Paragraph 7.a. shall apply.
Termination upon death, disability and retirement are covered by Paragraphs 9,
10 and 11, respectively.
8. PAYMENT AND OTHER PROVISIONS FOR TERMINATION OTHER THAN FOR CAUSE.
--------------------------------------------------------------------
a. Salary, Performance Award and Bonus Payments: In the event
Employee's employment with the Company is terminated (other than as a
consequence of his death or disability, or of his normal retirement under the
Company's retirement plans and practices) either (i) by the Company for any
reason other than for Cause in accordance with Paragraph 5, or (ii) by Employee
in accordance with the provisions of Paragraph 6 hereof, then Employee shall be
entitled to receive from the Company, the following:
i. Base Salary: In the event of any such termination within the
first year of employment hereunder, Employee's annual base salary as in effect
at the date of termination, multiplied by two,
<PAGE>
shall be paid on the date of termination; and in the event of any such
termination thereafter, Employee's annual base salary as in effect at the date
of termination, multiplied by three, shall be paid on the date of termination;
ii. Target bonus: In the event of any such termination within the
first year of employment hereunder, the amount of the Employee's target bonus
under the Executive Bonus Plan for the fiscal year in which the date of
termination occurs, multiplied by two, shall be paid on the date of termination;
and in the event of termination thereafter, the amount of Employee's target
bonus under the Executive Bonus Plan for the fiscal year in which the date of
termination occurs, multiplied by three, shall be paid on the date of
termination; and
iii. Other Benefits: All benefits under Paragraphs 7.b.ii,
7.b.iii and 7.b.iv shall be extended to Employee as described in such
paragraphs, except that notwithstanding the vesting period provided for in the
Stock Option Plan and any related stock option agreements between the Company
and Employee for stock options ("options") and stock appreciation rights
("rights") granted employee by the Company, all options and rights shall be
fully vested and exercisable upon termination of employment and the period of
exercise of options and rights described in the last sentence of Paragraph
7.b.ii shall be the shorter of (a) three years following his termination of
employment or (b) with respect to each option, the remainder of the period of
exercisability under the terms of the appropriate documents that grant such
options.
b. Noncompetition/Nonsolicitation Period: In the event of a
termination under the circumstances described in Paragraph 8.a, the provision of
Paragraphs 13 and 14 shall be without force and effect and shall not apply to
Employee.
c. For purposes of this Agreement, the term "Change of Control" shall
mean:
i. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Rule 13d-3 promulgated under
the Exchange Act or any successor provision)(any of the foregoing described in
this Paragraph 8.c.i. hereafter a "Person") of 33% or more of either (a) the
then outstanding shares of Capital Stock of the Company (the "Outstanding
Capital Stock") or (b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Voting Securities"), provided, however, that any acquisition by
------------------
(x) the Company or any of it subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its subsidiaries
or (y) any Person that is eligible, pursuant to Rule 13d-1(b) under the Exchange
Act, to file a statement on Schedule 13D with respect to its beneficial
ownership of Voting Securities, whether or not such Person shall have filed a
statement on Schedule 13G, unless such Person shall have filed a statement on
Schedule 13D with respect to beneficial ownership of 33% or more of the Voting
Securities or (z) any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Capital Stock and Voting Securities
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the Outstanding
Capital Stock and Voting Securities, as the case may be, shall not constitute a
Change of Control; or
ii. Individuals who, as of November 17, 1998, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to November 17, 1998 whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company (as such terms are used in Rule 14a-11 of Regulation
14A, or any successor section, promulgated under the Exchange Act); or
iii. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in each
case, with respect to which all or substantially all holders of the Outstanding
Capital Stock and Voting Securities immediately prior to such Business
Combination do not, following such Business Combination, beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from the Business Combination; or
iv. (a) a complete liquidation or dissolution of the Company or
(b) a sale or other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, following such sale
or disposition, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Capital Stock and Voting Securities immediately prior to such sale
or disposition in substantially the same proportion as their ownership of the
Outstanding Capital Stock and Voting Securities, as the case may be, immediately
prior to such sale or disposition.
d. For purposes of this Agreement, the term "Change of Control" shall
not mean a sale or other disposition of all or substantially all of the assets
of the Real-Time Division of the Company within the first year of the Term of
this Agreement.
9. TERMINATION BY REASON OF DEATH. If Employee shall die while
-----------------------------------
employed by the Company both prior to termination of employment and during the
effective term of this Agreement, all Employee's rights under this Agreement
shall terminate with the payment of such amounts of annual base salary as have
accrued but remain unpaid and prorated amount of targeted bonus under the
Executive Bonus Plan through the month in which his death occurs, plus six
additional months of the fixed salary and targeted bonus. All benefits under
Paragraphs 7.b.ii and 7.b.iv shall be extended to Employee's estate as described
in such paragraphs. In addition, Employee's eligible dependents shall receive
continued benefit plan coverage under Paragraph 7.b.iii for six months from the
date of Employee's death.
10. TERMINATION BY DISABILITY. Employee's employment hereunder may be
---------------------------
terminated by the Company for disability. In such event, all Employee's rights
under this Agreement shall terminate with the payment of such amounts of annual
base salary as have accrued but remain unpaid as of the thirtieth (30th) day
after such notice is given except that all benefits under Paragraphs 7.b.ii,
------
7.b.iii and 7.b.iv shall be extended to Employee as described in such
paragraphs, provided, however, that with respect to Paragraph 7.b.iii, the
-------------------
period for continued benefit plan coverage shall be limited to six months from
the date of termination. In addition, the noncompetition and nonsolicitation
provisions of Paragraphs 13 and 14 shall continue to apply for a period of six
months from the date of termination for disability. For purposes of this
Agreement, "disability" is defined to mean that, as a result of Employee's
incapacity due to physical or mental illness:
a. Employee shall have been absent from his duties as an officer of
the Company on a substantially full-time basis for six (6) consecutive months;
and
b. Within thirty (30) days after the Company notifies Employee in
writing that it intends to replace him, Employee shall not have returned to the
performance of his duties as an officer for the Company on a full-time basis.
Such notice may be given by the Company at any time after Employee has been
absent for a total of four consecutive months.
11. RETIREMENT. Employee shall be entitle to participate in the
----------
Company's Retirement Savings Plan and any other retirement plan hereafter made
available to senior executive officers of the Company in accordance with the
provisions thereof as in effect from time to time.
12. INDEMNIFICATION. If litigation shall be brought to enforce or
---------------
interpret any provision contained herein, the non-prevailing party shall
indemnify the prevailing party for reasonable attorneys' fees (including those
for negotiations, trial and appeals) and disbursements incurred by the
prevailing party in such litigation, and hereby agrees to pay prejudgment
interest on any money judgment obtained by the prevailing party calculated at
the generally prevailing Nations Bank of Florida, N.A. (or any successor
thereto) base rate of interest charge to its commercial customers in effect from
time to time from the date that payments(s) to him should have been made under
this Agreement.
13. NONCOMPETITION.
--------------
a. At all times during Employee's employment hereunder, and for such
additional periods as may otherwise be set forth in this Agreement in reference
to this Paragraph 13, Employee shall not, directly or indirectly, engage in any
business, enterprise or employment, whether as owner, operator, shareholder,
director, partner, creditor, consultant, agent or any capacity whatsoever that
manufactures products designed to compete directly with products of the Company
or markets such products anywhere in the world where the Company (i) is engaged
in business or (ii) has evidenced an intention of engaging in business. Employee
acknowledges that he has read the foregoing and agrees that the nature of the
geographical restrictions are reasonable given the international nature of the
Company's business. In the event that these geographical or temporal
restrictions are judicially determined to be unreasonable, the parties agree
that the restrictions shall be judicially reformed to the maximum restrictions
which are reasonable.
b. Notwithstanding the provisions of the preceding Subparagraph, the
Employee may accept employment with a company that would be deemed to be a
competitor of the Company as described in the previous subparagraph
("Competitor"), so long as (i) the Competitor has had annual revenues of at
least $1 billion in each of the prior two fiscal years, (ii) the Competitor's
revenues for products and maintenance in direct competition with the Company do
not exceed 50% of its total revenues, and (iii) the Employee's responsibilities
are solely for divisions or subsidiaries of the Competitor that do not compete
with the Company.
14. NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times during the
-------------------------------------------
Employee's employment hereunder, and for such additional periods as may
otherwise be set forth in this Agreement, in reference to this Paragraph 14, the
Employee shall not, directly or indirectly, for himself or for any other
person, firm, corporation, partnership, association or other entity (a) attempt
to employ, employ or enter into any contractual arrangement with any employee or
former employee of the Company, its affiliates, subsidiaries or predecessors in
interest, unless such employee or former employee has not been employed by the
Company, its affiliates, subsidiaries or predecessors in interest, during the
six months prior to the Employee's attempt to employ him, or (b) call on or
solicit any of the actual or targeted prospective customers of the Company or
its affiliates, subsidiaries or predecessors in interest with respect to any
matters related to or competitive with the business of the Company.
15. CONFIDENTIALITY.
---------------
a. Nondisclosure: The Employee acknowledges and agrees that the
Confidential Information (as defined below) is a valuable, special and unique
asset of the Company's business. Accordingly, except in connection with the
performance of his duties hereunder, the Employee shall not at any time during
or subsequent to the term of his employment hereunder disclose, directly or
indirectly, to any person, firm, corporation, partnership, association or other
entity any proprietary or confidential information relating to the Company or
any information concerning the Company's financial condition or prospects, the
Company's customers, the design, development, manufacture, marketing or sale of
the Company's products or the Company's methods of operating its business
(collectively, "Confidential Information"). Confidential Information shall not
include information which, at the time of disclosure, is known or available to
the general public by publications or otherwise through no act or failure to act
on the part of Employee.
b. Return of Confidential Information: Upon termination of Employee's
employment, for whatever reason and whether voluntary or involuntary, or at any
time at the request of the Company, Employee shall promptly return all
Confidential Information in the possession or under the control of Employee to
the Company and shall not retain any copies or other reproductions or extracts
thereof. Employee shall at any time at the request of the Company destroy or
have destroyed all memoranda, notes, reports, and documents, whether in "hard
copy" form or as stored on magnetic or other media, and all copies and other
reproductions and extracts thereof, prepared by Employee and shall provide the
Company with a certificate that the foregoing materials have in fact been
returned or destroyed.
c. Books and Records: All books, records and accounts whether prepared
by Employee or otherwise coming into Employee's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of Employee's employment hereunder or upon the
Company's request at any time.
16. INJUNCTION/SPECIFIC PERFORMANCE/SETOFF. Employee acknowledges that
---------------------------------------
a breach of any of the provisions of Paragraphs 13, 14, or 15 hereof would in
immediate and irreparable injury to the Company which cannot be adequately or
result reasonably compensated at law. Therefore, Employee agrees that the
Company shall be entitled, if any such breach shall occur or be threatened or
attempted, to a decree of specific performance and to a temporary and permanent
injunction, without the posting of a bond, enjoining and restraining such breach
by Employee or his agents, either directly or indirectly, and that such right to
injunction shall be cumulative to whatever other remedies for actual damages to
which the Company is entitled. Employee further agrees that the Company may set
off against or recoup from any amounts due under this Agreement to the extent of
any losses incurred by the Company as a result of any breach by Employee of the
provisions of Paragraphs 13, 14 or 15 hereof.
17. SEVERABILITY. Any provision in this Agreement that is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, by ineffective
only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or enenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
18. SUCCESSORS: This Agreement shall be binding upon Employee and inure
----------
to the benefit of the Company and any permitted successor of the Company.
Neither this Agreement nor any rights arising hereunder may be assigned or
pledged by Employee or anyone claiming through Employee; or by the Company,
except to any corporation which is the successor in interest to the Company by
reason of a merger, consolidation or sale of substantially all of the assets of
the Company.
The foregoing sentence shall not be deemed to have any effect upon the
rights of Employee upon a Change of Control.
19. CONTROLLING LAW: This Agreement shall in all respects be governed
----------------
by, and construed in accordance with, the laws of the State of Georgia.
20. NOTICES: Any notice required or permitted to be given hereunder
-------
shall be written and sent by registered or certified mail, telecommunicated or
hand delivered at the address set forth herein or to any other address of which
notice is given:
TO THE COMPANY: CONCURRENT COMPUTER CORPORATION
2101 WEST CYPRESS CREEK ROAD
FT. LAUDERDALE, FLORIDA 33309
TO THE EMPLOYEE: STEVE G. NUSSRALLAH
605 Buttercup Trace
-------------------
ALPHARETTA, GEORIGA 30022
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
-----------------
between the parties hereto on the subject matter hereof and may not be modified
without the written agreement of both parties hereto.
22. WAIVER. A waiver by any party of any of the terms and conditions
------
hereof shall not be construed as a general waiver by such party.
23. COUNTERPARTS. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original and both of which together shall
constitute a single agreement.
24. INTERPRETATION. In the event of a conflict between the provisions
--------------
of this Agreement and any other
agreement or document defining rights and duties of Employee or the Company upon
Employee's termination, the rights and duties set forth in this Agreement shall
control.
25. CERTAIN LIMITATIONS ON REMEDIES. Paragraph 7.b provides that
----------------------------------
certain payments and other benefits shall be received by Employee upon the
termination of Employee by the Company other than for Cause and states that
these same provisions shall apply if Employee terminates his employment in
accordance with the provisions of paragraph 6 hereof. It is the intention of
this Agreement that if the Company terminates Employee other than for Cause (and
other than as a consequence of Employee's death, disability or normal
retirement) or if Employee terminates his employment in accordance with the
provisions of paragraph 6 hereof, then the payments and other benefits set forth
in Paragraph 7.b shall constitute the sole and exclusive remedies of Employee.
This Paragraph 25 shall have no effect upon the provisions of Paragraph 8 of
this Agreement.
IN WITNESS WHEREOF, this Employment Agreement has been executed by the
parties as of the date first above written.
CONCURRENT COMPUTER CORPORATION EMPLOYEE
- ------------------------------- --------
/s/ E. Courtney Siegel /s/ Steve G. Nussrallah
- ------------------------- ------------------------
E. Courtney Siegel Steve G. Nussrallah
Chairman, President and Chief Executive Officer
<PAGE>
SCHEDULE A
OTHER BENEFITS
1. Use of golf club membership maintained by the Company at a private
country club to be designated by Employee.
2. Commencing January 1,2000, first class tickets on airlines when
travelling on Company business.
<PAGE>
CONCURRENT COMPUTER CORPORATION
Exhibit 10.1(b)
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT (the "Amendment") to that certain Employment Agreement dated
as of March 25, 1996 (the "Agreement") is made and entered into as of the 1st
day of January, 1999, by and between Concurrent Computer Corporation (the
"Company") and E. Courtney Siegel (the "Employee").
WHEREAS, in an effort to provide for a smooth succession of the President
and Chief Executive Officer of the Company, the Company, through its Board of
Directors, plans to offer employment in said positions to Steve G. Nussrallah to
be effective January 1, 2000, provided that the Company disposes of its
--------
real-time business;
WHEREAS, the Company, through its Board of Directors, and the Employee,
desire to amend the terms and conditions set forth in the Agreement to define
Employee's position and responsibilities and compensation in respect thereof for
services to be rendered following the disposition of the real-time business and
the election of Mr. Nussrallah to the positions of President and Chief Executive
Officer (the "Succession");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. AMENDMENTS
----------
a. Paragraph 1 of the Agreement is amended by adding the following
sentence as the ultimate sentence thereof:
Effective upon the Succession, but no earlier than January 1, 2000,
Employee shall cease to serve as President and Chief Executive Officer, but
shall continue as an employee of the Company and shall serve as Chairman of
the Board of the Company.
b. Paragraph 3 of the Agreement is amended to read in its entirety as
follows:
3. DUTIES.
------
a. During his employment hereunder (unless and until Subparagraph b.
hereof becomes applicable), Employee shall serve as the Chairman of the Board,
President and Chief Executive Officer of the Company and the Company will take
such actions as necessary to cause his nomination as a member of the Board of
Directors of the Company. Employee shall have general and active charge of the
business and affairs of the Company and, in such capacity, shall have
responsibility for the day-to-day operations of the Company, subject to the
authority and control of the Board of Directors of the Company. Employee shall
report directly to the authority and control of the Board of Directors of the
Company. Throughout the term of employment under this subparagraph, the Employee
shall devote his full time and undivided attention during normal business hours
to the business and affairs of the Company, as appropriate to his duties and
responsibilities hereunder, except for reasonable vacations and illness or other
disability, but nothing in this Agreement shall preclude the Employee from
devoting reasonable periods required for serving as a director or member of any
advisory committee of not more than two (at any time) "for profit" organizations
involving no conflict of interest with the interests of the Company (subject to
approval by the Board of Directors, which approval shall not be unreasonably
withheld), or from engaging in charitable and community activities, or from
managing his personal investments, provided such activities do not materially
interfere with the performance of his duties and responsibilities under this
Agreement.
b. Effective upon the Succession, but no earlier than January 1, 2000,
Employee shall serve as Chairman of the Board. Employee shall have the
responsibility for review of the operations of the Company working directly with
the President and Chief Executive Officer. His responsibilities shall include:
review of the Company's business plans on at least a monthly basis; management
of the investment portfolio of the Company; active involvement with the
Company's large shareholders and analysts; active involvement with all merger
and acquisition activity; active involvement with large customers; and such
other duties as shall be requested by the Board of Directors of the Company.
Employee shall report directly to the Board of Directors of the Company.
Throughout the term of employment under this subparagraph, the Employee shall
devote his full time and undivided attention during normal business hours for
three or four days per week to the business and affairs of the Company, as
appropriate to his duties and responsibilities hereunder, except for reasonable
vacations and illness or other disability, but nothing in this Agreement shall
preclude the Employee from devoting reasonable periods required for serving as a
director or member of any advisory committee of not more than four (at any time)
"for profit" organizations involving no conflict of interest with the interests
of the Company (subject to approval by the Board of Directors, which approval
shall not be unreasonably withheld), or from engaging in charitable and
community activities, or from managing his personal investments, provided such
activities do not materially interfere with the performance of his duties and
responsibilities under this Agreement.
c. Subparagraph 4.a. of the Agreement is amended to read in its
entirety as follows:
4. COMPENSATION.
-------------
a. Salary: During his employment as President and Chief Executive
Officer of the Company, Employee shall be paid an initial salary of $300,000 per
year, payable in equal installments not less than monthly. Effective upon the
Succession, but no earlier than January 1, 2000, Employee shall be paid a salary
of $200,000 per year, payable in equal installments not less than monthly. The
Employee's salary shall be reviewed at least annually by the Board of Directors
or any Committee of the Board delegated the authority to review executive
compensation.
2. MISCELLANEOUS
-------------
a. This Amendment shall be construed in accordance with the laws of
the State of Florida.
b. Except as amended hereby, the terms and conditions of the Agreement
shall remain in effect.
IN WITNESS WHEREOF, the Company and the Employee have caused this Amendment
to be executed as of the date first above written.
CONCURRENT COMPUTER CORPORATION EMPLOYEE
By: /s/ Michael A. Brunner By: /s/ E. Courtney Siegel
------------------------- -------------------------
Michael A. Brunner
Director
Chairman, Compensation Committee
<PAGE>
<TABLE>
<CAPTION>
CONCURRENT COMPUTER CORPORATION
EXHIBIT 11
BASIC AND DILUTED EARNINGS PER SHARE COMPUTATION
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1999
----------------- -----------------
BASIC DILUTED BASIC DILUTED
------- -------- ------- --------
<S> <C> <C> <C> <C>
Average outstanding shares:. . 48,043 48,043 47,855 47,855
Dilutive options outstanding . - 2,938 - 1,331
------- -------- ------- --------
Equivalent Shares. . . . . . . 48,043 50,981 47,855 49,186
======= ======== ======= ========
Net income available to common
stockholders . . . . . . . . $ 294 $ 294 $ 783 $ 783
======= ======== ======= ========
Earnings per share . . . . . . $ 0.01 $ 0.01 $ 0.02 $ .02
======= ======== ======= ========
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet at March 31, 1999 and Consolidated
Statement of Operations for the nine months ended March 31, 1999, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 5607
<SECURITIES> 0
<RECEIVABLES> 16631
<ALLOWANCES> 428
<INVENTORY> 5832
<CURRENT-ASSETS> 29241
<PP&E> 35352
<DEPRECIATION> 22849
<TOTAL-ASSETS> 42848
<CURRENT-LIABILITIES> 13110
<BONDS> 0
<COMMON> 481
0
0
<OTHER-SE> 27289
<TOTAL-LIABILITY-AND-EQUITY> 42848
<SALES> 24362
<TOTAL-REVENUES> 53731
<CGS> 10661
<TOTAL-COSTS> 25891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 11
<INTEREST-EXPENSE> 194
<INCOME-PRETAX> 921
<INCOME-TAX> 138
<INCOME-CONTINUING> 783
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 783
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
