UNITED STATES
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 Quarterly Period Ended September 30, 2004
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
(Exact name of registrant as specified in its charter)
Delaware 04-2735766
(State of Incorporation) (I.R.S. Employer Identification No.)
4375 River Green Parkway, Suite 100, Duluth, GA 30096
(Address of principal executive offices)
Telephone: (678) 258-4000
(Registrant's telephone number, including area code)
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
--- ---
Indicate by a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
--- ---
Number of shares of the Registrant's Common Stock, par value $0.01 per share,
outstanding as of October 29, 2004 was 62,917,829.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
----------- -----------
Revenues:
Product
ISD systems $ 5,533 $ 4,394
VOD systems 6,054 9,147
----------- -----------
Total product revenues 11,587 13,541
Service
ISD systems 3,274 4,146
VOD systems 2,469 1,215
----------- -----------
Total service revenues 5,743 5,361
----------- -----------
Total revenues 17,330 18,902
Cost of sales:
Product
ISD systems 2,457 1,356
VOD systems 4,210 3,657
----------- -----------
Total product cost of sales 6,667 5,013
Service
ISD systems 2,003 2,184
VOD systems 1,521 755
----------- -----------
Total service cost of sales 3,524 2,939
----------- -----------
Total cost of sales 10,191 7,952
----------- -----------
Gross margin 7,139 10,950
Operating expenses:
Sales and marketing 4,477 4,080
Research and development 5,180 4,668
General and administrative 2,506 2,169
----------- -----------
Total operating expenses 12,163 10,917
----------- -----------
Operating income (loss) (5,024) 33
Recovery of minority investment - 1,060
Interest income - net 92 60
Other expense - net (35) (134)
----------- -----------
Income (loss) before income taxes (4,967) 1,019
Provision for income taxes 54 407
----------- -----------
Net income (loss) $ (5,021) $ 612
=========== ===========
Net income (loss) per share
Basic $ (0.08) $ 0.01
=========== ===========
Diluted $ (0.08) $ 0.01
=========== ===========
Weighted average shares outstanding - basic 62,852 62,369
=========== ===========
Weighted average shares outstanding - diluted 62,852 63,006
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
1
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
SEPTEMBER 30, JUNE 30,
2004 2004
--------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 18,779 $ 27,928
Accounts receivable, less allowance for doubtful
accounts of $200 at September 30, 2004 and June 30, 2004 11,421 10,192
Inventories - net 7,378 9,617
Deferred tax asset - net 539 517
Prepaid expenses and other current assets 1,913 861
--------------- ---------------
Total current assets 40,030 49,115
Property, plant and equipment - net 10,851 11,569
Purchased developed computer software - net 966 1,013
Goodwill 10,744 10,744
Investment in minority owned company 553 553
Other long-term assets - net 1,450 1,548
--------------- ---------------
Total assets $ 64,594 $ 74,542
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 11,004 $ 12,069
Deferred revenue 6,607 10,668
--------------- ---------------
Total current liabilities 17,611 22,737
Long-term liabilities:
Deferred revenue 3,986 4,117
Deferred tax liability 291 278
Pension liability 1,442 1,372
Other 301 312
--------------- ---------------
Total liabilities 23,631 28,816
Stockholders' equity:
Common stock 629 628
Capital in excess of par value 174,375 174,338
Accumulated deficit (133,747) (128,712)
Treasury stock - (42)
Unearned compensation (335) (351)
Accumulated other comprehensive income (loss) 41 (135)
--------------- ---------------
Total stockholders' equity 40,963 45,726
--------------- ---------------
Total liabilities and stockholders' equity $ 64,594 $ 74,542
=============== ===============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
2
CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
------------------------
OPERATING ACTIVITIES
Net income (loss) $ (5,021) $ 612
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Reduction in accrual of non-cash warrants - (970)
Depreciation and amortization 1,421 1,257
Provision for (reversal of) inventory reserves (10) 461
Reversal of provision for bad debts - (311)
Non-cash income tax provision - 336
Recovery of minority investment - (1,060)
Other non cash expenses 7 128
Changes in operating assets and liabilities:
Accounts receivable (1,229) (2,653)
Inventories 2,249 230
Prepaid expenses and other current assets (1,052) (718)
Other long-term assets 97 144
Accounts payable and accrued expenses (1,065) (3,497)
Deferred revenue (4,192) 473
Pension liability 70 225
Other long-term liabilities 13 (55)
----------- -----------
Total adjustments to net income (loss) (3,691) (6,010)
----------- -----------
Net cash used in operating activities (8,712) (5,398)
INVESTING ACTIVITIES
Net additions to property, plant and equipment (650) (1,198)
Repayment of note receivable from minority owned company - 1,060
----------- -----------
Net cash used in investing activities (650) (138)
FINANCING ACTIVITIES
Net repayment of capital lease obligation (24) (22)
Proceeds from sale of treasury stock 28 -
Proceeds from sale and issuance of common stock 38 8
----------- -----------
Net cash provided by (used in) financing activities 42 (14)
Effect of exchange rates on cash and cash equivalents 171 34
----------- -----------
Decrease in cash and cash equivalents (9,149) (5,516)
Cash and cash equivalents at beginning of period 27,928 30,697
----------- -----------
Cash and cash equivalents at end of period $ 18,779 $ 25,181
=========== ===========
Cash paid during the period for:
Interest $ 2 $ 3
=========== ===========
Income taxes (net of refunds) $ 134 $ 78
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
CONCURRENT COMPUTER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. OVERVIEW OF BUSINESS AND BASIS OF PRESENTATION
Concurrent Computer Corporation ("Concurrent") is a leading supplier of
high-performance computer systems, software, and services and operates in two
divisions, the Video-On-Demand ("VOD") division, located in Duluth, Georgia, and
the Integrated Solutions Division ("ISD"), located in Pompano Beach, Florida.
Concurrent's VOD division provides VOD systems consisting of hardware and
software as well as integration services, primarily to residential cable
companies that have upgraded their networks to support interactive, digital
services.
Concurrent's Integrated Solutions Division provides high-performance,
real-time computer systems to commercial and government customers for use in
applications such as simulation and data acquisition.
Concurrent provides sales and support from offices and subsidiaries
throughout North America, Europe, Asia, and Australia.
The condensed, consolidated interim financial statements of Concurrent are
unaudited and reflect all adjustments (consisting of only normal recurring
adjustments) necessary for a fair statement of Concurrent's financial position,
results of operations and cash flows at the dates and for the periods indicated.
These financial statements should be read in conjunction with the Annual Report
on Form 10-K for the year ended June 30, 2004. There have been no significant
changes to Concurrent's Accounting Policies as disclosed in the Annual Report on
Form 10-K for the year ended June 30, 2004. Certain reclassifications have been
made to prior year amounts to conform to the current year presentation. The
results reported in these condensed, consolidated quarterly financial statements
should not be regarded as necessarily indicative of results that may be expected
for the entire year.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Concentration of Credit Risk
Concurrent assesses credit risk through ongoing credit evaluations of
customers' financial condition and collateral is generally not required. As of
both September 30, 2004 and June 30, 2004, there were two customers that each
accounted for more than 10% of trade receivables. At September 30, 2004, one
customer accounted for $2,532,000 or 22% of trade receivables and the other
accounted for $1,467,000 or 13% of trade receivables. At June 30, 2004, one
customer accounted for $2,715,000 or 26% of trade receivables and the other
accounted for $1,089,000 or 10% of trade receivables.
Recently Issued Accounting Pronouncements
In March 2004, the Emerging Issues Task Force (EITF) ratified its consensus
related to the application guidance within EITF Issue No. 03-1, "The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments."
EITF Issue No. 03-1 applies to investments in debt and equity securities within
the scope of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," and equity securities that are not subject to the scope of
SFAS No. 115 and not accounted for under the equity method under Accounting
Principles Board Opinion 18, "The Equity Method of Accounting for Investments in
Common Stock" and related interpretations. EITF Issue No. 03-1 requires that a
three-step model be applied in determining when an investment is considered
impaired, whether that impairment is other than temporary and the measurement of
an impairment loss. The recognition and measurement guidance within EITF Issue
No. 03-1 has been applied by
4
Concurrent to other-than-temporary impairment evaluations beginning July 1,
2004. The adoption of EITF Issue No. 03-1 is not expected to have a material
impact on Concurrent's financial position or results of operations.
2. BASIC AND DILUTED NET INCOME PER SHARE
Basic net income (loss) per share is computed in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," by
dividing net income (loss) by the weighted average number of common shares
outstanding during each period. Diluted net income (loss) per share is computed
by dividing net income (loss) by the weighted average number of shares including
dilutive common share equivalents. Under the treasury stock method, incremental
shares representing the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued are included
in the computation. Common share equivalents of 5,851,000 and 5,635,000 for the
three month periods ended September 30, 2004 and 2003, respectively, were
excluded from the calculation as their effect was antidilutive. The following
table presents a reconciliation of the numerators and denominators of basic and
diluted net income (loss) per share for the periods indicated:
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
2004 2003
----------- ----------
Basic and diluted earnings per share (EPS) calculation:
Net income (loss) $ (5,021) $ 612
=========== ==========
Basic weighted average number of shares outstanding 62,852 62,369
Effect of dilutive securities:
Employee stock options - 637
----------- ----------
Diluted weighted average number of shares outstanding 62,852 63,006
=========== ==========
Basic EPS $ (0.08) $ 0.01
=========== ==========
Diluted EPS $ (0.08) $ 0.01
=========== ==========
3. STOCK-BASED COMPENSATION
At September 30, 2004, Concurrent had stock-based employee compensation
plans which are described in Note 14 in our annual report on Form 10-K for the
year ended June 30, 2004. Concurrent accounts for these plans under the
recognition and measurement principles of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
For the three months ended September 30, 2004 and 2003, Concurrent recognized
$16,000 and $32,000, respectively, of stock compensation expense for the
issuance of restricted stock awards. There is no other expense for stock
options issued in the reported net income (loss) for the quarters ended
September 30, 2004 and 2003.
5
In accordance with SFAS No. 148, "Accounting for Stock Based Compensation -
Transition and Disclosure - An Amendment of FASB Statement No. 123," the
following table illustrates the effect on net income (loss) and earnings (loss)
per share if Concurrent had applied the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based employee
compensation:
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
----------- -----------
Net income (loss) as reported $ (5,021) $ 612
Deduct: Total stock-based employee compensation
expense determined under the fair value method, net
of related taxes (1,047) (1,057)
----------- -----------
Pro forma net loss $ (6,068) $ (445)
=========== ===========
Net income (loss) per share:
Basic- as reported $ (0.08) $ 0.01
=========== ===========
Basic-pro forma $ (0.10) $ (0.01)
=========== ===========
Diluted-as reported $ (0.08) $ 0.01
=========== ===========
Diluted-pro forma $ (0.10) $ (0.01)
=========== ===========
The weighted-average assumptions used for the three months ended September
30, 2004, and 2003 were: expected dividend yield of 0.0% for both periods;
risk-free interest rate of 3.6% and 2.9%, respectively; expected life of 6 years
for both periods; and an expected volatility of 104.7% and 110.0%, respectively.
4. REVENUE RECOGNITION AND RELATED MATTERS
VOD and ISD system revenues are recognized based on the guidance in
American Institute of Certified Public Accountants Statement of Position ("SOP")
97-2, "Software Revenue Recognition" ("SOP 97-2") and related amendments, SOP
98-4, "Deferral of the Effective Date of a Provision of SOP 97-2, Software
Revenue Recognition" and SOP 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions". Concurrent recognizes
revenue from VOD and ISD systems when persuasive evidence of an arrangement
exists, the system has been shipped, the fee is fixed or determinable and
collectibility of the fee is probable. Under multiple element arrangements,
Concurrent allocates revenue to the various elements based on vendor-specific
objective evidence ("VSOE") of fair value. Concurrent's VSOE of fair value is
determined based on the price charged when the same element is sold separately.
If evidence of fair value does not exist for all elements in a multiple element
arrangement, Concurrent recognizes revenue using the residual method. Under the
residual method, the fair value of the undelivered elements is deferred and the
remaining portion of the arrangement is recognized as revenue.
6
5. INVENTORIES
Inventories are stated at the lower of cost or market, with cost being
determined by using the first-in, first-out method. Concurrent establishes
excess and obsolete inventory reserves based upon historical and anticipated
usage. The components of inventories are as follows (dollars in thousands):
SEPTEMBER 30, JUNE 30,
2004 2004
-------------- --------------
Raw materials, net $ 5,113 $ 7,361
Work-in-process 1,313 1,229
Finished goods 952 1,027
-------------- --------------
$ 7,378 $ 9,617
============== ==============
At September 30, 2004 and June 30, 2004, some portion of Concurrent's
inventory was in excess of the current requirements based upon the planned level
of sales for future years. Accordingly, Concurrent had inventory valuation
allowances for raw materials of $2.3 million and $3.0 million to reduce the
value of the inventory to its estimated net realizable value at September 30,
2004 and June 30, 2004, respectively.
6. INVESTMENTS IN AND RECEIVABLE FROM MINORITY OWNED COMPANIES
In March 2002, Concurrent purchased a 14.4% equity ownership interest in
Thirdspace Living Limited ("Thirdspace"). Concurrent invested cash of $4
million and the equivalent of $3 million in its common stock in exchange for
1,220,601 series C shares of Thirdspace. In addition to the equity investment,
Concurrent also loaned Thirdspace $6 million in exchange for two $3 million long
term notes receivable. In fiscal year 2003, Concurrent recorded a $13.0 million
net impairment charge due to an other than temporary decline in the market value
of the investment in Thirdspace. In May 2003, Thirdspace sold the majority of
its assets to Alcatel Telecom Ltd. As a result of the sale of these certain
assets, Concurrent received proceeds that were recorded as a reduction to the
impairment loss in the line item "Recovery of minority investment."
In the first quarter of fiscal 2004, Concurrent received $1.1 million in
proceeds as a result of the sale of certain assets of Thirdspace. During the
remainder of fiscal 2004, Concurrent received an additional $2.0 million in
proceeds as a result of the sale of the majority of Thirdspace's remaining
assets. Thirdspace's only significant remaining asset after the sale is a right
to 40% of amounts recovered by nCube Corporation ("nCube"), if any, from the
lawsuit brought by nCube against SeaChange International, Inc., alleging patent
infringement. The likelihood of collecting this asset, and the amount and timing
of such collection, is uncertain. Pursuant to the sale of the assets of
Thirdspace to Alcatel, Concurrent believes that it has the right to the first
approximately $3.0 million of such recovery, if any. Beyond any such recovery,
Concurrent does not anticipate further cash proceeds related to the liquidation
of Thirdspace's remaining assets.
In April 2002, Concurrent invested cash of $500,000 in Everstream Holdings,
Inc. ("Everstream") in exchange for 480,770 shares of Series C Preferred stock,
giving Concurrent a 4.9% ownership interest. Everstream is a privately held
company specializing in broadband advertising systems, operations and data
warehousing software and related integration services. Concurrent is accounting
for its investment in the Series C Preferred stock of Everstream using the cost
method because Concurrent does not believe it exercises significant influence on
Everstream. This investment is reviewed annually for impairment, and as of June
30, 2004, there has been no evidence of permanent impairment of the Everstream
investment. Furthermore, Concurrent is not aware of any events or circumstances
subsequent to June 30, 2004 that would require more frequent testing of
impairment of Concurrent's investment in Everstream.
7
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The components of accounts payable and accrued expenses are as follows (in
thousands):
SEPTEMBER 30, JUNE 30,
2004 2004
-------------- --------------
Accounts payable, trade $ 2,753 $ 3,487
Accrued payroll, vacation, severance
and other employee expenses 5,122 5,420
Warranty accrual 777 1,122
Other accrued expenses 2,352 2,040
-------------- --------------
$ 11,004 $ 12,069
============== ==============
Concurrent's estimate of warranty obligations is based on historical
experience and expectation of future conditions. The changes in the warranty
accrual during the period ended September 30, 2004 were as follows (in
thousands):
Balance at June 30, 2004 $1,122
Charged to costs and expenses 41
Deductions (386)
-------
Balance at September 30, 2004 $ 777
=======
8. COMPREHENSIVE INCOME
Concurrent's total comprehensive income (loss) is as follows (in
thousands):
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
----------- ----------
Net income (loss) $ (5,021) $ 612
Other comprehensive income:
Foreign currency translation gain 176 85
----------- ----------
Total comprehensive income (loss) $ (4,845) $ 697
=========== ==========
9. SEGMENT INFORMATION
Concurrent operates its business in two divisions: ISD and VOD, in
accordance with SFAS 131, "Disclosure about Segments of an Enterprise and
Related Information". Concurrent's Integrated Solutions Division is a leading
provider of high-performance, real-time computer systems, solutions and software
for commercial and government markets focusing on strategic market areas that
include hardware-in-the-loop and man-in-the-loop simulation, data acquisition,
industrial systems, and software and embedded applications. Concurrent's VOD
division is a leading supplier of digital video server systems primarily to the
broadband cable television market. Shared expenses are primarily allocated
based on either revenues or headcount. Corporate costs include costs related to
the offices of the Chief Executive Officer, Chief Financial Officer, General
Counsel, Investor Relations, Human Resources, Accounting and other
administrative costs including annual audit and tax fees, board of director fees
and similar costs.
8
The following summarizes the operating income (loss) by segment for the
three month periods ended September 30, 2004 and September 30, 2003,
respectively (dollars in thousands):
THREE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED)
-----------------------------------------------------------
INTEGRATED
SOLUTIONS VOD CORPORATE TOTAL
------------- -------------- -------------- ------------
Revenues:
Product $ 5,533 $ 6,054 $ - $ 11,587
Service 3,274 2,469 - 5,743
------------- -------------- -------------- ------------
Total 8,807 8,523 - 17,330
Cost of sales:
Product 2,457 4,210 - 6,667
Service 2,003 1,521 - 3,524
------------- -------------- -------------- ------------
Total 4,460 5,731 - 10,191
------------- -------------- -------------- ------------
Gross margin 4,347 2,792 - 7,139
Operating expenses:
Sales and marketing 1,935 2,429 113 4,477
Research and development 1,575 3,605 - 5,180
General and administrative 364 399 1,743 2,506
------------- -------------- -------------- ------------
Total operating expenses 3,874 6,433 1,856 12,163
------------- -------------- -------------- ------------
Operating income (loss) $ 473 $ (3,641) $ (1,856) $ (5,024)
============= ============== ============== ============
THREE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)
----------------------------------------------------------
INTEGRATED
SOLUTIONS VOD CORPORATE TOTAL
------------- ------------- -------------- ------------
Revenues:
Product $ 4,394 $ 9,147 $ - $ 13,541
Service 4,146 1,215 - 5,361
------------- ------------- -------------- ------------
Total 8,540 10,362 - 18,902
Cost of sales:
Product 1,356 3,657 - 5,013
Service 2,184 755 - 2,939
------------- ------------- -------------- ------------
Total 3,540 4,412 - 7,952
------------- ------------- -------------- ------------
Gross margin 5,000 5,950 - 10,950
Operating expenses
Sales and marketing 1,807 2,156 117 4,080
Research and development 1,482 3,186 - 4,668
General and administrative 419 173 1,577 2,169
------------- ------------- -------------- ------------
Total operating expenses 3,708 5,515 1,694 10,917
------------- ------------- -------------- ------------
Operating income (loss) $ 1,292 $ 435 $ (1,694) $ 33
============= ============= ============== ============
9
10. ISSUANCE AND ACCRUAL OF NON-CASH WARRANTS
Comcast Cable Communications Inc. Warrants
On March 29, 2001, Concurrent entered into a definitive purchase agreement
with Comcast Cable, providing for the purchase of VOD equipment. As part of
that agreement Concurrent agreed to issue warrants to purchase shares of its
common stock based upon the volume of purchases of Concurrent's products.
Through March 31, 2004, the expiration date of the agreement, Comcast
earned a total of 268,543 warrants, which have all been issued and expire at
various dates through June 4, 2008. These warrants are exercisable over a four
year term and have exercise prices between $2.62 and $15.02. All of these
warrants are outstanding as of September 30, 2004.
Concurrent recognized the value of the warrants over the term of the
agreement as Comcast purchased additional VOD servers from Concurrent and made
the service available to its customers. As this agreement expired during fiscal
2004, Concurrent did not recognize any increase in, or reduction to, revenue
during the three months ended September 30, 2004. For the three months ended
September 30, 2003, Concurrent recognized $351,000 as a reduction in revenue for
the warrants that were earned during that quarter.
For the three months ended September 30, 2003, the value of the warrants
was determined using the Black-Scholes valuation model. The weighted-average
assumptions used for the three months ended September 30, 2003 were: expected
dividend yield of 0%; risk-free interest rate of 2.4%; expected life of 4 years;
and an expected volatility of 112%.
The exercise prices of the warrants are subject to adjustment for stock
splits, combinations, stock dividends, mergers, and other similar
recapitalization events. The exercise prices are also subject to adjustment for
issuance of additional equity securities at a purchase price less than the then
current fair market value of Concurrent's Common Stock. The exercise prices of
the warrants issued to Comcast equaled the average closing price of Concurrent's
Common Stock for the 30 trading days prior to the applicable warrant issuance
date and will be exercisable over a four-year term. As the agreement with
Comcast expired on March 31, 2004, Concurrent is no longer obligated to issue
any additional warrants to Comcast. The warrants issued to Comcast did not
exceed 1% of Concurrent's outstanding shares of Common Stock.
Scientific Atlanta, Inc. Warrants
In accordance with a five year definitive agreement with Scientific
Atlanta, Inc. ("SAI") executed in August of 1998, Concurrent agreed to issue
warrants to SAI upon achievement of pre-determined revenue targets. Concurrent
accrued for this cost as a part of cost of sales at the time of recognition of
applicable revenue. Concurrent issued warrants to purchase 261,164 of its
common stock to SAI upon reaching the first $30 million threshold on April 1,
2002, exercisable at $7.106 per share over a four-year term, all of which are
still outstanding as of September 30, 2004.
The five year definitive agreement with SAI expired on August 17, 2003, and
at that time Concurrent had not reached the second $30 million threshold of
revenue using the SAI platform. As a result, Concurrent was not obligated to
issue a warrant under the agreement regarding the second $30 million threshold,
and accordingly, reversed $1.3 million of expense in the three months ended
September 30, 2003, which had been previously accrued in anticipation of
reaching the next $30 million threshold. This reversal was recorded in VOD
product cost of sales.
10
11. RETIREMENT PLANS
The following table provides a detail of the components of net periodic
benefit cost for the three months ended September 30, 2004 and 2003 (in
thousands):
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
----------- -----------
Service cost $ 6 $ 87
Interest cost 49 276
Expected return on plan assets (21) (190)
Amortization of unrecognized net transition obligation 8 (17)
Amortization of unrecognized prior service
benefit - 6
Recognized actuarial loss 1 94
----------- -----------
Net periodic benefit cost $ 43 $ 256
=========== ===========
Concurrent contributed $16,000 to its defined benefit plan during the three
months ended September 30, 2004 and expects to make similar contributions during
the remaining quarters of fiscal 2005.
Concurrent maintains a retirement savings plan available to U.S. employees
that qualifies as a defined contribution plan under Section 401(k) of the
Internal Revenue Code. During the three months ended September 30, 2004 and
2003, Concurrent contributed $271,000 and $242,000 to this plan, respectively.
Concurrent also maintains a defined contribution plan ("the stakeholder
plan") for its U.K. based employees. Concurrent also has agreements with
certain of its U.K. based employees to make supplementary contributions to the
plan over the next five years, contingent upon their continued employment with
Concurrent. During the three months ended September 30, 2004 and 2003,
Concurrent contributed $133,000 and $4,000 to this plan, respectively.
12. COMMITMENTS AND CONTINGENCIES
Concurrent, from time to time, is involved in litigation incidental to the
conduct of its business. Concurrent believes that such pending litigation will
not have a material adverse effect on Concurrent's results of operations or
financial condition.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto which appear
elsewhere herein. Except for the historical financial information, many of the
matters discussed in this Item 2 may be considered "forward-looking" statements
that reflect our plans, estimates and beliefs. Actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed in the "Cautionary Note to Forward-Looking Statements,"
elsewhere herein and in other filings made with the Securities and Exchange
Commission.
OVERVIEW
During the quarter ended September 30, 2004, we used approximately $9.1
million in cash and cash equivalents and ended the quarter with $18.8 million in
cash and cash equivalents. The increased net cash usage during the quarter is
the result of the increased net loss and the recognition of revenue during the
quarter on shipments for which the cash was received in the prior quarter. In an
attempt to reduce the cash used and reduce our breakeven point, we undertook
actions during the quarter to reduce operating expenses that included the
termination of approximately 12% of our workforce and reducing our capital
expenditures to primarily those with impact on near term revenues. We are also
in discussions with a bank regarding a new credit facility. See further
discussions in the "Liquidity and Capital Resources" section of this document.
Other trends in the business are detailed in our latest Form 10-K filed
September 7, 2004. There were no changes during the recent quarter in our
critical accounting policies.
12
SELECTED OPERATING DATA AS A PERCENTAGE OF TOTAL REVENUE
The following table sets forth selected operating data as a percentage of
total revenue, unless otherwise indicated, for certain items in our consolidated
statements of operations for the periods indicated.
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
----------------------
(Unaudited)
Revenues:
Product (% of total sales):
ISD systems 31.9% 23.2%
VOD systems 35.0 48.4
---------- ----------
Total product revenues 66.9 71.6
Service:
ISD systems 18.9 21.9
VOD systems 14.2 6.4
---------- ----------
Total service revenues 33.1 28.4
---------- ----------
Total revenues 100.0 100.0
Cost of sales (% of respective sales category):
Product:
ISD systems 44.4 30.9
VOD systems 69.5 40.0
---------- ----------
Total product cost of sales 57.5 37.0
Service:
ISD systems 61.2 52.7
VOD systems 61.6 62.1
---------- ----------
Total service cost of sales 61.4 54.8
---------- ----------
Total cost of sales 58.8 42.1
---------- ----------
Gross margin 41.2 57.9
Operating expenses:
Sales and marketing 25.8 21.6
Research and development 29.9 24.7
General and administrative 14.5 11.4
---------- ----------
Total operating expenses 70.2 57.7
---------- ----------
Operating income (loss) (29.0) 0.2
Recovery of minority investment - 5.6
Interest income - net 0.5 0.3
Other expense - net (0.2) (0.7)
---------- ----------
Income (loss) before income taxes (28.7) 5.4
Provision for income taxes 0.3 2.2
---------- ----------
Net income (loss) (29.0)% 3.2%
========== ==========
13
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2003
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------
$ %
(DOLLARS IN THOUSANDS) 2004 2003 CHANGE CHANGE
----------- ----------- -------- ---------
Product revenues $ 11,587 $ 13,541 $(1,954) (14.4)%
Service revenues 5,743 5,361 382 7.1 %
----------- ----------- -------- ---------
Total revenues 17,330 18,902 (1,572) (8.3)%
Product cost of sales 6,667 5,013 1,654 33.0 %
Service cost of sales 3,524 2,939 585 19.9 %
----------- ----------- -------- ---------
Total cost of sales 10,191 7,952 2,239 28.2 %
----------- ----------- -------- ---------
Product gross margin 4,920 8,528 (3,608) (42.3)%
Service gross margin 2,219 2,422 (203) (8.4)%
----------- ----------- -------- ---------
Total gross margin 7,139 10,950 (3,811) (34.8)%
Operating expenses:
Sales and marketing 4,477 4,080 397 9.7 %
Research and development 5,180 4,668 512 11.0 %
General and administrative 2,506 2,169 337 15.5 %
----------- ----------- -------- ---------
Total operating expenses 12,163 10,917 1,246 11.4 %
----------- ----------- -------- ---------
Operating income (loss) (5,024) 33 (5,057) NM
Recovery of minority investment - 1,060 (1,060) (100.0)%
Interest income - net 92 60 32 53.3 %
Other expense - net (35) (134) 99 (73.9)%
----------- ----------- -------- ---------
Income (loss) before income taxes (4,967) 1,019 (5,986) NM
Provision for income taxes 54 407 (353) (86.7)%
----------- ----------- -------- ---------
Net income (loss) $ (5,021) $ 612 $(5,633) NM
=========== =========== ======== =========
(1) NM denotes percentage is not meaningful
Product Sales. Total product sales for the three months ended September 30,
2004 were $11.6 million, a decrease of $1.9 million, or 14.4%, from $13.5
million for the three months ended September 30, 2003. The decrease in product
sales resulted from the $3.0 million, or 33.8%, decrease in VOD product sales to
$6.1 million in the first quarter of fiscal 2005 from $9.1 million in the first
quarter of fiscal 2004. The decrease in VOD product sales was due to the sale of
our VOD solutions to five new markets in the first quarter of fiscal 2004,
compared to zero new market deployments in the first quarter of fiscal 2005.
These reductions in domestic VOD product revenue were partially offset by
increases in international sales volume during the first quarter of fiscal 2005
which resulted in a $0.6 million increase in VOD product revenue in Europe and
Asia compared to the first quarter of the prior year. Fluctuation in VOD revenue
is often due to the fact that we have a small base of large customers making
periodic large purchases that account for a significant percentage of revenue.
Although we have lost market share with certain customers over the past year, we
believe that we will be able to maintain or increase our share of the North
American cable market and also capture a meaningful share of the video-over-DSL
market in both the United States and internationally in part through our
partnership with Alcatel. We also anticipate that the erosion of the price per
stream that has occurred over the past 5 years will not be as significant going
forward.
Partially offsetting the decrease in VOD product sales, ISD product sales
increased $1.1 million, or 25.9%, to $5.5 million in the first quarter of fiscal
2005 from $4.4 million in the first quarter of fiscal 2004. The increase in ISD
product sales is primarily due to an increase in international revenue,
particularly from strong sales in Europe and Asia. Over the past year, our
Integrated Solutions Division has integrated software
14
applications from strategic partnerships that we believe will enable it to
expand beyond its traditional customer base. Based on this initiative, we
expect to maintain market share in our traditional ISD markets and expect to
capture market share in new markets needing ISD solutions.
Service Revenue. Service revenue increased $0.3 million, or 7.1%, to $5.7
million for the three months ended September 30, 2004 from $5.4 million for the
three months ended September 30, 2003. VOD service revenue increased $1.3
million, or 103.2%, to $2.5 million in the first quarter of fiscal 2005 from
$1.2 million in the first quarter of fiscal 2004, as the VOD division continues
to recognize maintenance, installation, and training revenue on our expanding
base of VOD market deployments. As the warranty and maintenance agreements that
typically accompany the initial sale and installation of our VOD systems expire,
we expect to sell new, long-term service and support agreements. Because of
these anticipated new agreements, our expanding deployment base and increasing
software component of our total VOD solution, we expect sales of these VOD
services to continue to increase.
The increase in VOD service revenue was partially offset by a $0.9 million,
or 21.0%, decrease in ISD service revenue to $3.3 million in the first quarter
of fiscal 2005 from $4.2 million in the first quarter of fiscal 2004. ISD
service revenue continued to decline primarily due to the cancellation of
maintenance contracts as legacy machines were removed from service and, to a
lesser extent, from customers purchasing our new products that produce
significantly less service revenue. We expect this trend of declining ISD
service revenue to continue into the foreseeable future.
Product Gross Margin. Product gross margin was $4.9 million for the three
months ended September 30, 2004, a decrease of $3.6 million, or 42.3%, from $8.5
million for the three months ended September 30, 2003. Product gross margin as a
percentage of product sales decreased to 42.5% in the first quarter of fiscal
2005 from 63.0% in the first quarter of fiscal 2004 primarily because the VOD
division's product gross margin decreased to 30.5% from 60.0% of VOD product
revenue for the same respective periods. The decrease in VOD product gross
margin is due to changes in product mix and an incentive discount provided to
one of our North America cable customers who upgraded its older VOD systems to
our fourth generation architecture. In addition, prior year margins were
favorably affected by approximately 14% due to the Scientific Atlanta, Inc.
warrant expense reversal of $1.3 million.
The gross margin on sales of ISD product decreased to 55.6% of ISD product
revenue in the first quarter of fiscal 2005 from 69.1% of ISD product revenue in
the first quarter of fiscal 2004 due to a less favorable product mix, as
compared to the same period of the prior fiscal year.
Service Gross Margin. The gross margin on service sales decreased $0.2
million, or 8.4%, to $2.2 million, or 38.6% of service revenue in the three
months ended September 30, 2004 from $2.4 million, or 45.2% of service revenue
in the three months ended September 30, 2003. The decrease in overall service
margins is due to the decrease in ISD service margins to 38.8% of ISD service
revenues in the first quarter of fiscal 2005 from 47.3% of service revenues
during the first quarter of fiscal 2004. Declining ISD margins are primarily due
to declining service revenues from contractual maintenance obligations and due
to an increase in severance expense during the quarter. Severance expense of
$0.2 million recorded in the first quarter of fiscal 2005 results from a
reduction in service personnel as ISD has scaled down the infrastructure that is
necessary to fulfill these declining contractual obligations. The decline in
contractual obligations results from the cancellation of maintenance contracts
as legacy machines are removed from service and replaced with machines that are
simpler to maintain. We will continue to scale down its service infrastructure
in response to this trend of declining ISD contractual service obligations.
The decrease in ISD service margins was partially offset by an increase in
VOD service margins. VOD service margins increased to 38.4% of VOD service
revenues during the three months ended September 30, 2004 from 37.9% in the
first quarter of the prior fiscal year as the VOD division continues to build
its VOD deployment base. Although our VOD service revenue continues to
increase, our VOD customer service and support costs have also increased 101%
over the prior year as required to provide the necessary services.
Sales and Marketing. Sales and marketing expenses increased as a
percentage of sales to 25.8% in the three months ended September 30, 2004 from
21.6% in the three months ended September 30, 2003. These expenses increased
$0.4 million, or 9.7%, to $4.5 million during the three months ended September
30, 2004 from $4.1 million in the same period of the prior year, primarily due
to $0.2 million of domestic and international severance expense related to a
reduction in force initiative during the first quarter of 2005 in the VOD
division.
15
Additionally, ISD incurred an additional $0.1 million of expense due to
commissions on increased international sales in Europe and Asia, and also due to
the reduction in force initiative during the first quarter of 2005.
Research and Development. Research and development expenses increased as a
percentage of sales to 29.9% in the three months ended September 30, 2004 from
24.7% in the three months ended September 30, 2003. These expenses increased
$0.5 million, or 11.0%, to $5.2 million in first quarter of fiscal 2005 from
$4.7 million in the first quarter of fiscal 2004. The increase in research and
development expense is due to a $0.4 million increase in VOD salaries and
related costs resulting from new software development staff over the past year.
The VOD division added development staff and subcontractors to meet the
increasing software development requirements for customers' business management
functionality, resource management and client system monitoring as a result of
increases in both our customer base and deployment base. In addition to the
increase in personnel costs, the VOD division incurred an additional $0.1
million in fixed asset depreciation expense related to purchases of product
development and testing equipment, compared to the same period of the prior
year. We expect that VOD software development costs will begin to stabilize and
flatten over the next few years, as we reduce our number of software platforms
and as we stabilize our software in the field. ISD's research and development
expenses increased $0.1 million primarily due to domestic severance expense
related to the reduction in force initiative during the first quarter of 2005.
General and Administrative. General and administrative expenses increased
as a percentage of sales to 14.5% in the three months ended September 30, 2004
from 11.4% in the three months ended September 30, 2003. These expenses
increased $0.3 million, or 15.5%, to $2.5 million in the three months ended
September 30, 2004 from $2.2 million in same period of the prior year. This
increase in general and administrative expense is due to a prior year $0.3
million bad debt reversal that did not recur in the current quarter.
Recovery of Minority Investment. During the first quarter of fiscal
year 2004 we received $1.1 million in cash from continued monetization of the
Thirdspace assets and settlement of its liabilities. No similar recovery was
obtained in the first quarter of fiscal 2005.
Provision for Income Taxes. We recorded income tax expense for our
domestic and foreign subsidiaries of $54,000 in the first quarter of fiscal year
2005, which is related primarily to foreign withholding taxes and income earned
in foreign locations, which cannot be offset by net operating loss
carryforwards. For the first quarter of fiscal 2004, we recorded income tax
expense for our domestic and foreign subsidiaries of $407,000. This expense was
primarily attributable to U.S. federal income tax that was offset by net
operating losses originating prior to our quasi-reorganization in November 1991.
For accounting purposes, the benefit from the utilization of the pre
quasi-reorganization net operating losses must be recognized directly in equity
rather than through the income statement.
Net Income (Loss). The net loss for the three months ended September 30,
2004 was $5.0 million or $0.08 per basic and diluted share compared to net
income for the three months ended September 30, 2003 of $0.6 million or $0.01
per basic and diluted share.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity is dependent on many factors, including sales volume,
operating profit and the efficiency of asset use and turnover. Our future
liquidity will be affected by, among other things:
- revenue growth from new VOD market deployments and the pace at which
domestic and international cable companies and telephone companies
implement VOD technology;
- revenue growth from expansions of previously deployed VOD systems;
- the actual versus anticipated decline in revenue from maintenance of
ISD proprietary systems;
- revenues from ISD systems;
- ongoing cost control actions and expenses, including for example,
research and development and capital expenditures;
- the margins on our VOD and ISD businesses;
- our ability to raise additional capital, if necessary;
- our ability to obtain bank financing, if necessary;
- timing of product shipments which occur primarily during the last
month of the quarter;
16
- the percentage of sales derived from outside the United States where
there are generally longer accounts receivable collection cycles;
- the number of countries in which we 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; and
- the success of the fourth generation VOD platform and our ISD Linux
products.
We used $8.7 million of cash from operating activities during the three
months ended September 30, 2004 compared to using $5.4 million of cash during
the same period of the prior year. The decrease in cash from operations was
primarily due to changes in working capital and operating losses during the
current quarter.
We invested $0.7 million in property, plant and equipment during the three
months ended September 30, 2004 compared to $1.2 million during the three months
ended September 30, 2003. Capital additions during each of these periods
related primarily to product development and testing equipment, demonstration
equipment and equipment loans to our customers for our VOD division. We expect
a similar mix of capital additions during the remainder of this fiscal year.
In the prior fiscal year, we received $1.1 million from the continued
liquidation of Thirdspace during the three months ended September 30, 2003.
As part of our cost reduction initiative implemented during the first
quarter of fiscal 2005, we anticipate reducing our breakeven point. If revenues
do not reach these breakeven levels or our cost reduction efforts are not as
successful as planned, then we will continue to use cash. Our working capital
has declined from $43.5 million at June 30, 2002 to $22.4 million at September
30, 2004. We expect that our working capital will continue to decrease during
the second quarter of fiscal year 2005. If our VOD revenue does not increase and
stabilize in future periods, we will continue to use cash in operating
activities, which will cause working capital to further decline. If this
situation continues, we may need to raise additional funds through a public
offering of stock or debt, or through a credit facility with a bank. We cannot
be certain that we will be able to obtain additional financing on favorable
terms, if at all.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Our only significant contractual obligations and commitments relate to
certain operating leases for sales, service and manufacturing facilities in the
United States, Europe and Asia. There have been no material changes to our
contractual obligations during the quarter ended September 30, 2004.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this release may
constitute "forward-looking statements" within the meaning of the federal
securities laws. When used or incorporated by reference in this release, the
words "believes," "expects," "estimates," "anticipates," and similar
expressions, are intended to identify forward-looking statements. Statements
regarding future events and developments, our future performance, market share,
and new market growth, as well as our expectations, beliefs, plans, estimates,
or projections relating to the future, are forward-looking statements within the
meaning of these laws. All forward-looking statements are subject to certain
risks and uncertainties that could cause actual events to differ materially from
those projected. The risks and uncertainties which could affect our financial
condition or results of operations include, without limitation: our ability to
keep our customers satisfied; availability of video-on-demand content; delays or
cancellations of customer orders; 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 our ability and the ability of other
companies to enforce their intellectual property rights; the pricing and
availability of equipment, materials and inventories; the concentration of our
customers; failure to effectively manage growth; delays in testing and
introductions of new products; rapid technology changes; system errors or
failures; reliance on a limited number of suppliers; uncertainties associated
with international business activities, including foreign regulations, trade
controls, taxes, and currency fluctuations; the highly competitive environment
in which we operate and predatory pricing pressures; failure to effectively
service the installed base; the entry of new well-capitalized competitors into
our markets; the success of new products in both the VOD and ISD divisions; the
availability of Linux software in
17
light of issues raised by SCO group; capital spending patterns by a limited
customer base; and customer obligations that could impact revenue recognition.
Other important risk factors are discussed in our Annual Report on Form
10-K for the fiscal year ended June 30, 2004.
Our forward-looking statements are based on current expectations and speak
only as of the date of such statements. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of future
events, new information or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates and foreign
currency exchange rates. We are exposed to the impact of interest rate changes
on our short-term cash investments, which are backed by U.S. government
obligations, and other investments in respect of institutions with the highest
credit ratings, all of which have maturities of three months or less. These
short-term investments carry a degree of interest rate risk. We believe that
the impact of a 10% increase or decline in interest rates would not be material
to our investment income.
We conduct business in the United States and around the world. Our most
significant foreign currency transaction exposure relates to the United Kingdom,
those Western European countries that use the Euro as a common currency,
Australia, and Japan. We do not hedge against fluctuations in exchange rates
and believe that a hypothetical 10% upward or downward fluctuation in foreign
currency exchange rates relative to the United States dollar would not have a
material impact on future earnings, fair values, or cash flows.
ITEM 4. CONTROLS AND PROCEDURES
As required by Securities and Exchange Commission rules, we have evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. This evaluation
was carried out under the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer. Based on this evaluation, these officers have concluded that the
design and operation of our disclosure controls and procedures are effective.
There were no significant changes to our internal control over financial
reporting during the period covered by this report that materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.
Disclosure controls and procedures are our controls and other procedures
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act are recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act are accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation relating to claims
arising out of our ordinary course of business. We are not presently involved
in any material litigation, but are involved in various other legal proceedings.
We believe that any liability that may arise as a result of these proceedings
will not have a material adverse effect on our financial condition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 - Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's
Registration Statement on Form S-2 (No. 33-62440)).
18
3.2 - Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant's
Quarterly report on Form 10-Q for the quarter ended March 31, 2003).
3.3 - Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2002).
3.4 - Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock
(incorporated by reference to the Form 8-A/A, dated August 9, 2002).
3.5 - Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred
Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).
4.1 - Form of Common Stock Certificate (incorporated by reference to the Registrant's Quarterly report on
Form 10-Q for the quarter ended March 31, 2003).
4.2 - Form of Rights Certificate (incorporated by reference to the Registrant's Current Report on Form 8-
K/A filed August 12, 2002).
4.3 - Amended and Restated Rights Agreement dated as of August 7, 2002 between the Registrant and
American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to the
Registrant's Current Report on Form 8-K/A filed on August 12, 2002).
11.1* - Statement Regarding Computation of Per Share Earnings.
31.1**- Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**- Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**- Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**- Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
* Data required by Statement of Financial Accounting Standards No. 128,
"Earnings per Share," is provided in the Notes to the condensed
consolidated financial statements in this report.
** Filed herewith.
(b) Reports on Form 8-K.
The following reports on Form 8-K were furnished during the period covered
by this report:
- Current Report on Form 8-K furnished on July 1, 2004, announcing the
fourth quarter 2004 earnings release date and providing updated
earnings guidance.
- Current Report on Form 8-K furnished on August 12, 2004, relating to
results of operations and financial condition as of and for the
quarter and year ended June 30, 2004.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 5, 2004 CONCURRENT COMPUTER CORPORATION
By: /s/ Steven R. Norton
----------------------
Steven R. Norton
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
20
EXHIBIT INDEX
-------------
3.1 - Restated Certificate of Incorporation of the Registrant (incorporated by reference to the Registrant's
Registration Statement on Form S-2 (No. 33-62440)).
3.2 - Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant's
Quarterly report on Form 10-Q for the quarter ended March 31, 2003).
3.3 - Certificate of Correction to Restated Certificate of Incorporation of the Registrant (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 2002).
3.4 - Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock
(incorporated by reference to the Form 8-A/A, dated August 9, 2002).
3.5 - Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred
Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002).
4.1 - Form of Common Stock Certificate (incorporated by reference to the Registrant's Quarterly report on
Form 10-Q for the quarter ended March 31, 2003).
4.2 - Form of Rights Certificate (incorporated by reference to the Registrant's Current Report on Form 8-
K/A filed August 12, 2002).
4.3 - Amended and Restated Rights Agreement dated as of August 7, 2002 between the Registrant and
American Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to the
Registrant's Current Report on Form 8-K/A filed on August 12, 2002).
11.1* - Statement Regarding Computation of Per Share Earnings.
31.1**- Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**- Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**- Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**- Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
* Data required by Statement of Financial Accounting Standards No. 128,
"Earnings per Share," is provided in the Notes to the condensed
consolidated financial statements in this report.
** Filed herewith.
21