Attached files
file | filename |
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EX-32.1 - EXHIBIT 32.1 - CCUR Holdings, Inc. | ex32_1.htm |
EX-31.1 - EXHIBIT 31.1 - CCUR Holdings, Inc. | ex31_1.htm |
EX-32.2 - EXHIBIT 32.2 - CCUR Holdings, Inc. | ex32_2.htm |
EX-31.2 - EXHIBIT 31.2 - CCUR Holdings, Inc. | ex31_2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_________
FORM
10-Q
(Mark One)
|
|||
T
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Quarterly
Report Pursuant to Section 13 or 15(d) of
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the
Securities Exchange Act of 1934
For the
Quarterly Period Ended December 31, 2009
or
£
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Transition
Report Pursuant to Section 13 or 15(d) of
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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
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04-2735766
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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4375
River Green Parkway, Suite 100, Duluth, GA 30096
(Address
of principal executive offices) (Zip Code)
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 T No £
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes £ No £
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“large accelerated filer”, “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated
filer £
|
Accelerated
filer £
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Non-accelerated
filer £ (Do not
check if a smaller reporting company)
|
Smaller
reporting company T
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes £ No T
Number of
shares of the Registrant's Common Stock, par value $0.01 per share, outstanding
as of January 27, 2010 was 8,341,000.
Concurrent Computer Corporation
Form
10-Q
For the Three and Six Months Ended
December 31, 2009
Table
of Contents
Page
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Part I – Financial
Information
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Item
1.
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2
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2
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3
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4
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5
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Item
2.
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14
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Item
3.
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23
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Item
4.
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23
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Part II – Other
Information
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Item
1.
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24
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Item
1A.
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24
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Item
4.
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24
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Item
5.
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24
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Item
6.
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24
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EX-31.1
SECTION 302 CERTIFICATION OF CEO
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EX-31.2
SECTION 302 CERTIFICATION OF CFO
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EX-32.1
SECTION 906 CERTIFICATION OF CEO
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EX-32.2
SECTION 906 CERTIFICATION OF
CFO
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Part
I
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Financial
Information
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Item
1.
|
Condensed
Consolidated Financial Statements
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Concurrent Computer Corporation
Condensed
Consolidated Balance Sheets
(Dollars
in Thousands)
December 31,
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June 30,
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|||||||
2009
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2009
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|||||||
(Unaudited)
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||||||||
ASSETS
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||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
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$ | 31,002 | $ | 29,110 | ||||
Accounts
receivable, less allowance for doubtful accounts of $84 at December 31,
2009 and $97 at June 30, 2009
|
10,168 | 14,546 | ||||||
Inventories
- net
|
4,132 | 3,060 | ||||||
Prepaid
expenses and other current assets
|
1,768 | 1,444 | ||||||
Total
current assets
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47,070 | 48,160 | ||||||
Property,
plant and equipment - net
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4,589 | 3,860 | ||||||
Intangible
- purchased technology, net
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2,740 | 3,166 | ||||||
Intangible
- customer relationships, net
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1,171 | 1,257 | ||||||
Other
long-term assets - net
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663 | 692 | ||||||
Total
assets
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$ | 56,233 | $ | 57,135 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 7,055 | $ | 10,582 | ||||
Deferred
revenue
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7,971 | 7,870 | ||||||
Revolving
bank line of credit
|
949 | - | ||||||
Total
current liabilities
|
15,975 | 18,452 | ||||||
Long-term
liabilities:
|
||||||||
Deferred
revenue
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3,926 | 1,041 | ||||||
Revolving
bank line of credit
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- | 949 | ||||||
Pension
liability
|
1,980 | 1,868 | ||||||
Other
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1,411 | 1,297 | ||||||
Total
liabilities
|
23,292 | 23,607 | ||||||
Commitments
and contingencies (Note 12)
|
||||||||
Stockholders'
equity:
|
||||||||
Shares
of common stock, par value $.01; 100,000,000 authorized;8,379,027 and
8,321,916 issued and outstanding at December 31, 2009 and June 30, 2009,
respectively
|
84 | 83 | ||||||
Capital
in excess of par value
|
205,454 | 205,222 | ||||||
Accumulated
deficit
|
(173,185 | ) | (172,259 | ) | ||||
Treasury
stock, at cost; 37,788 at December 31, 2009and June 30,
2009
|
(255 | ) | (255 | ) | ||||
Accumulated
other comprehensive income
|
843 | 737 | ||||||
Total
stockholders' equity
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32,941 | 33,528 | ||||||
Total
liabilities and stockholders' equity
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$ | 56,233 | $ | 57,135 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
Concurrent Computer Corporation
Condensed
Consolidated Statements of Operations (Unaudited)
(In
Thousands, Except Per Share Amounts)
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December 31,
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December 31,
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|||||||||||||||
2009
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2008
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2009
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2008
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|||||||||||||
Revenues:
|
||||||||||||||||
Product
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$ | 8,664 | $ | 11,066 | $ | 15,346 | $ | 23,115 | ||||||||
Service
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6,338 | 7,054 | 12,406 | 13,340 | ||||||||||||
Total
revenues
|
15,002 | 18,120 | 27,752 | 36,455 | ||||||||||||
Cost
of sales:
|
||||||||||||||||
Product
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3,503 | 5,106 | 6,393 | 10,741 | ||||||||||||
Service
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2,201 | 2,394 | 4,322 | 4,812 | ||||||||||||
Total
cost of sales
|
5,704 | 7,500 | 10,715 | 15,553 | ||||||||||||
Gross
margin
|
9,298 | 10,620 | 17,037 | 20,902 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Sales
and marketing
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3,946 | 4,238 | 7,751 | 7,806 | ||||||||||||
Research
and development
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3,096 | 3,307 | 6,196 | 7,146 | ||||||||||||
General
and administrative
|
2,084 | 2,180 | 4,001 | 4,503 | ||||||||||||
Total
operating expenses
|
9,126 | 9,725 | 17,948 | 19,455 | ||||||||||||
Operating
income (loss)
|
172 | 895 | (911 | ) | 1,447 | |||||||||||
Interest
income
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4 | 46 | 30 | 156 | ||||||||||||
Interest
expense
|
(28 | ) | (34 | ) | (56 | ) | (64 | ) | ||||||||
Other
(expense) income
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(43 | ) | 91 | 57 | (198 | ) | ||||||||||
Income
(loss) before income taxes
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105 | 998 | (880 | ) | 1,341 | |||||||||||
Provision
for income taxes
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16 | 468 | 46 | 718 | ||||||||||||
Net
income (loss)
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$ | 89 | $ | 530 | $ | (926 | ) | $ | 623 | |||||||
Net
income (loss) per share
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||||||||||||||||
Basic
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$ | 0.01 | $ | 0.06 | $ | (0.11 | ) | $ | 0.08 | |||||||
Diluted
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$ | 0.01 | $ | 0.06 | $ | (0.11 | ) | $ | 0.07 | |||||||
Weighted
average shares outstanding - basic
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8,325 | 8,274 | 8,305 | 8,283 | ||||||||||||
Weighted
average shares outstanding - diluted
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8,419 | 8,302 | 8,305 | 8,316 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
Concurrent Computer Corporation
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in Thousands)
Six
Months Ended
|
||||||||
December 31,
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||||||||
2009
|
2008
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|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
(loss) income
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$ | (926 | ) | $ | 623 | |||
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
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1,535 | 1,564 | ||||||
Share-based
compensation
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233 | 247 | ||||||
Other
non-cash expenses
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17 | 284 | ||||||
Changes
in operating assets and liabilities:
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||||||||
Accounts
receivable
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4,378 | 2,359 | ||||||
Inventories
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(1,117 | ) | 1,799 | |||||
Prepaid
expenses and other current assets
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(316 | ) | (324 | ) | ||||
Other
long-term assets
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34 | 29 | ||||||
Accounts
payable and accrued expenses
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(3,527 | ) | (4,094 | ) | ||||
Deferred
revenue
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2,986 | (809 | ) | |||||
Other
long-term liabilities
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158 | 119 | ||||||
Total
adjustments to net (loss) income
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4,381 | 1,174 | ||||||
Net
cash provided by operating activities
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3,455 | 1,797 | ||||||
INVESTING
ACTIVITIES
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||||||||
Capital
expenditures
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(1,713 | ) | (1,016 | ) | ||||
Net
cash used in investing activities
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(1,713 | ) | (1,016 | ) | ||||
FINANCING
ACTIVITIES
|
||||||||
Purchase
of treasury stock
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- | (255 | ) | |||||
Net
cash used in financing activities
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- | (255 | ) | |||||
Effect
of exchange rates on cash and cash equivalents
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150 | (217 | ) | |||||
Increase
in cash and cash equivalents
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1,892 | 309 | ||||||
Cash
and cash equivalents at beginning of period
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29,110 | 27,359 | ||||||
Cash
and cash equivalents at end of period
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$ | 31,002 | $ | 27,668 | ||||
Cash
paid during the period for:
|
||||||||
Interest
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$ | 31 | $ | 31 | ||||
Income
taxes (net of refunds)
|
$ | 439 | $ | 408 |
The
accompanying notes are an integral part of the condensed consolidated financial
statements
Concurrent Computer Corporation
Notes
to Condensed Consolidated Financial Statements
1.
|
Overview
of Business and Basis of
Presentation
|
Concurrent
is a provider of computing technologies and software applications and related
services for the video solutions market and the high-performance, real-time
market. Our business is comprised of two segments for financial
reporting purposes: products and services. We provide products and
services for each of these markets.
Our video
solutions products consist of hardware and/or software as well as integration
services, sold primarily to broadband companies that provide interactive,
digital services for the delivery of video. Our real-time products
consist of real-time operating systems and software development tools combined,
in most cases, with off-the-shelf hardware and services sold to a wide variety
of companies seeking high-performance, real-time computer
solutions.
We
provide sales and support from offices and subsidiaries throughout North
America, Europe, and Asia.
Our
condensed consolidated interim financial statements are unaudited and reflect
all adjustments (consisting of only normal recurring adjustments) necessary for
a fair statement of our 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 our Annual Report on Form 10-K for
the year ended June 30, 2009. There have been no changes to our
Significant Accounting Policies as disclosed in Note 2 of the consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended June 30, 2009. The results reported in these condensed
consolidated 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.
Income
Taxes
As of
June 30, 2009, we had U.S. federal tax net operating loss carryforwards of
approximately $145.5 million for income tax purposes, of which $10.3 million
expire in fiscal year 2010, and the remainder expire at various dates through
2028.
Recently
Issued Accounting Pronouncements
Adopted
In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05,
“Measuring Liabilities at Fair Value.” This ASU clarifies the application of
certain valuation techniques in circumstances in which a quoted price in an
active market for the identical liability is not available and clarifies that
when estimating the fair value of a liability, the fair value is not adjusted to
reflect the impact of contractual restrictions that prevent its transfer. We
adopted these provisions on October 1, 2009 and the adoption did not have an
impact on our financial position or results of operations.
Accounting
Standards Codification (“ASC”) No. 810, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” requires the
recognition of a noncontrolling interest (minority interest) as equity in the
consolidated financial statements and separate from the parent’s
equity. The amount of net income attributable to the noncontrolling
interest will be included in consolidated net income. It also amends
certain consolidation procedures for consistency with the requirements of ASC
805, “Business Combinations.” The provisions also include expanded
disclosure requirements regarding the interests of the parent and its
noncontrolling interest. We adopted these provisions on July 1, 2009
and the adoption did not have an impact on our financial position or results of
operations.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
In May
2009, the FASB issued Accounting Standards Codification (“ASC”) No. 855, which
provides guidance on management’s assessment of subsequent
events. Historically, management had relied on U.S. auditing
literature for guidance on assessing and disclosing subsequent
events. ASC 855 represents the inclusion of guidance on subsequent
events in the accounting literature and is directed specifically to management,
since management is responsible for preparing an entity’s financial
statements. The new standard clarifies that management must evaluate,
as of each reporting period, events or transactions that occur after the balance
sheet date, “through the date that the financial statements are issued or are
available to be issued.” Management must perform its assessment for
both interim and annual financial reporting periods. We adopted ASC
855 as of June 30, 2009, and adoption of this ASC did not have a material impact
on our financial statements. We have assessed the need for disclosure
of subsequent events through February 3, 2010 and determined that no subsequent
events merit disclosure for our interim period ending December 31,
2009.
Not
yet adopted
In
September 2009, the Financial Accounting Standards Board (the “FASB”) issued
Accounting Standards Update (“ASU”) No. 2009-13, “Multiple Deliverable Revenue
Arrangements – A consensus of the FASB Emerging Issues Task
Force.” The guidance provides principles and application guidance on
whether multiple deliverables exist, determining the unit of accounting for each
deliverable, and the consideration allocated to the separate units of
accounting. Additionally, this guidance requires an entity to
allocate revenue in an arrangement using estimated selling prices of
deliverables if a vendor does not have vendor-specific objective evidence or
third-party evidence of selling price, eliminates the use of the residual
method, and requires an entity to allocate revenue using the relative selling
price method. However, guidance on determining when the criteria for
revenue recognition are met and how an entity should recognize revenue for a
given unit of accounting are contained in other accounting
literature. The guidance is effective for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010. Earlier application is permitted as of the beginning of an
entity’s fiscal year, and would be applied retrospectively as of the beginning
of the fiscal year, if applied subsequent to the first quarter of a fiscal
year. We are currently evaluating the impact of adoption of this
accounting standard on our consolidated financial statements.
In
September 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements
That Include Software Elements – A consensus of the FASB Emerging Issues Task
Force” which amends ASC 985-605, “Software: Revenue Recognition” to exclude from
its scope certain tangible products containing both software and non-software
components that function together to deliver the product’s essential
functionality. This guidance focuses on determining which
arrangements are within the scope of the software revenue guidance in Topic 985
(previously included in AICPA Statement of Position 97-2, Software Revenue
Recognition) and which are not. This guidance also removes tangible products
from the scope of the software revenue guidance and provides guidance on
determining whether software deliverables in an arrangement that includes a
tangible product are within the scope of the software revenue guidance. This
guidance is effective for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010 and shall be
applied on a prospective basis. Earlier application is permitted as
of the beginning of an entity’s fiscal year, and would be applied
retrospectively as of the beginning of the fiscal year, if applied subsequent to
the first quarter of a fiscal year. We
are currently evaluating the impact of
adoption of this accounting standard on our consolidated financial
statements.
In
December 2008, the FASB issued ASC 715-20-65-2, “Compensation – Retirement
Benefits: Defined Benefit Plans.” This section provides
guidance on the objectives an employer should consider when providing detailed
disclosures about assets of a defined benefit pension plan or other
postretirement plan. These disclosure objectives include investment
policies and strategies, categories of plan assets, significant concentrations
of risk and the inputs and valuation techniques used to measure the fair value
of plan assets. These provisions are effective for our fiscal year
ending June 30, 2010. We are currently evaluating the effects that
these provisions may have on our financial statements.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
In
December 2009, the FASB issued ASU No. 2009-17, “Consolidations (Topic 810):
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities.” ASU 2009-17 amends the evaluation criteria to
identify the primary beneficiary of a variable interest entity provided by FASB
Interpretation 46(R), “Consolidation of Variable Interest Entities-An
Interpretation of ARB No. 51.” Additionally, the provisions require
ongoing assessment of whether an enterprise is the primary beneficiary of the
variable interest entity. We will adopt these provisions on July 1,
2010. We do not expect that these provisions will have a material
impact on our financial statements.
2.
|
Basic
and Diluted Net Income (Loss) per
Share
|
Basic net
income (loss) per share is computed 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 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. Diluted earnings per common share assumes
exercise of outstanding stock options and vesting of restricted stock when the
effects of such assumptions are dilutive. Common share equivalents of
1,036,000 and 1,028,000 for the three months ended December 31, 2009 and 2008,
respectively, were excluded from the calculation as their effect was
antidilutive. Common share equivalents of 972,000 and 1,034,000 for
the six months ended December 31, 2009 and 2008, 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 (dollars and share
data in thousands, except per-share amounts):
Three Months Ended
December 31,
|
Six Months Ended
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Basic
and diluted earnings per share (EPS) calculation:
|
||||||||||||||||
Net
(loss) income
|
$ | 89 | $ | 530 | $ | (926 | ) | $ | 623 | |||||||
Basic
weighted average number of shares outstanding
|
8,325 | 8,274 | 8,305 | 8,283 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Restricted
stock
|
94 | 28 | - | 33 | ||||||||||||
Diluted
weighted average number of shares outstanding
|
8,419 | 8,302 | 8,305 | 8,316 | ||||||||||||
Basic
EPS
|
$ | 0.01 | $ | 0.06 | $ | (0.11 | ) | $ | 0.08 | |||||||
Diluted
EPS
|
$ | 0.01 | $ | 0.06 | $ | (0.11 | ) | $ | 0.07 |
3.
|
Share-Based
Compensation
|
At
December 31, 2009, we had share-based employee compensation plans which are
described in Note 11 of the consolidated financial statements included in our
Annual Report on Form 10-K for the year ended June 30, 2009. Option
awards are granted with an exercise price equal to the market price of our stock
at the date of grant. We recognize stock compensation expense over
the requisite service period of the individual grantees, which generally equals
the vesting period. During the six months ended December 31, 2009, we
issued 291,000 shares of restricted stock to employees and non-employee
advisors, of which approximately 120,000 shares will be released over three to
four year vesting periods, and the remaining 171,000 will be released only when
and if certain performance or market criteria are achieved over
time. Performance criteria for the performance based restricted
shares include achieving certain financial results, and market criteria include
our stock reaching certain share prices. As of December 31, 2009, we
had approximately 557,000 stock options and approximately 495,000 restricted
shares outstanding.
During
the three months ended December 31, 2009 and 2008, we recorded $223,000 and
$165,000, respectively, of share-based compensation related to issuances of
stock options and restricted stock to employees, non-employee advisors, and
directors. During the six months ended December 31, 2009 and 2008, we
recorded $233,000 and $247,000, respectively, of share-based compensation
related to issuances of stock options and restricted stock to employees,
non-employee advisors, and directors.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
4.
|
Inventories
|
Inventories
are stated at the lower of cost or market, with cost being determined by using
the first-in, first-out method. We establish excess and obsolete
inventory reserves based upon historical and anticipated usage. The
components of inventories are as follows (in thousands):
December 31,
|
June 30,
|
|||||||
2009
|
2009
|
|||||||
Raw
materials, net
|
$ | 2,553 | $ | 2,239 | ||||
Work-in-process
|
574 | 289 | ||||||
Finished
goods
|
1,005 | 532 | ||||||
$ | 4,132 | $ | 3,060 |
At
December 31, 2009 and June 30, 2009, some portion of our inventory was in excess
of the current requirements based upon the planned level of sales for future
years. Accordingly, we have reduced our gross raw materials inventory
by $1,239,000 at December 31, 2009 and $1,242,000 at June 30, 2009, to the
estimated net realizable value.
5.
|
Fair
Value Measurements
|
As of
July 1, 2009, we have fully adopted all provisions of the Financial Accounting
Standards Board’s (“FASB’s”) ASC that defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair value
measurements. This guidance defines fair value as the price that
would be received upon sale of an asset or paid upon transfer of a liability in
an orderly transaction between market participants at the measurement date and
in the principal or most advantageous market for that asset or
liability. The fair value, in this context, should be calculated
based on assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition,
the fair value of liabilities should include consideration of non-performance
risk including our own credit risk.
The FASB
ASC requires certain disclosures around fair value and establishes a fair value
hierarchy for valuation inputs. The hierarchy prioritizes the inputs
into three levels based on the extent to which inputs used in measuring fair
value are observable in the market. Each fair value measurement is
reported in one of the three levels which are determined by the lowest level
input that is significant to the fair value measurement in its
entirety. These levels are:
|
● Level
1
|
Quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
|
|
● Level
2
|
Inputs
other than quoted prices included within Level 1 that are either directly
or indirectly observable;
|
|
● Level
3
|
Assets
or liabilities for which fair value is based on valuation models with
significant unobservable pricing inputs and which result in the use of
management estimates.
|
Our debt
is relatively short-term in nature and is based on variable interest rates,
therefore the carrying value of the debt approximates fair value, which would be
based on Level 2 inputs. The remaining recorded
value of our assets and liabilities approximate fair value, as applicable under
generally accepted accounting principles.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
Assets
and Liabilities Measured at Fair Value on a Recurring Basis
The table
below presents information as of December 31, 2009, about our financial assets
and financial liabilities that are measured at fair value on a recurring basis
and indicates the fair value hierarchy of the valuation techniques utilized to
determine such fair value (in thousands):
Assets/(liabilities):
|
||||||||||||
Level 1
|
Level 2
|
Level 3
|
||||||||||
Cash
& cash equivalents
|
$ | 31,002 | $ | - | $ | - | ||||||
Revolving
line of credit
|
- | (949 | ) | - |
6.
|
Other
Intangible Assets
|
Intangible
assets consist of the following (in thousands):
December 31,
|
June 30,
|
|||||||
2009
|
2009
|
|||||||
Cost
of amortizable intangibles:
|
||||||||
Purchased
technology
|
$ | 7,700 | $ | 7,700 | ||||
Customer
relationships
|
1,900 | 1,900 | ||||||
Total
cost of intangibles
|
9,600 | 9,600 | ||||||
Less
accumulated amortization:
|
||||||||
Purchased
technology
|
(4,960 | ) | (4,534 | ) | ||||
Customer
relationships
|
(729 | ) | (643 | ) | ||||
Total
accumulated amortization
|
(5,689 | ) | (5,177 | ) | ||||
Total
intangible assets, net
|
$ | 3,911 | $ | 4,423 |
Amortization
expense was $512,000 and $544,000 for the six months ended December 31, 2009 and
2008, respectively.
7.
|
Accounts
Payable and Accrued Expenses
|
The
components of accounts payable and accrued expenses are as follows (in
thousands):
December 31,
|
June 30,
|
|||||||
2009
|
2009
|
|||||||
Accounts
payable, trade
|
$ | 2,892 | $ | 4,175 | ||||
Accrued
payroll, vacation, severance and other employee expenses
|
2,941 | 4,682 | ||||||
Other
accrued expenses
|
1,222 | 1,725 | ||||||
$ | 7,055 | $ | 10,582 |
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
8.
|
Comprehensive
Income (Loss)
|
Our total
comprehensive income (loss) is as follows (in thousands):
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
income (loss)
|
$ | 89 | $ | 530 | $ | (926 | ) | $ | 623 | |||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Foreign
currency translation adjustment
|
(60 | ) | 178 | 104 | 249 | |||||||||||
Adjustment
in pensions
|
1 | 10 | 2 | 21 | ||||||||||||
Total
comprehensive income (loss)
|
$ | 30 | $ | 718 | $ | (820 | ) | $ | 893 |
9.
|
Concentration
of Credit Risk, Segment, and Geographic
Information
|
We
operate in two segments, products and services, as disclosed within our
condensed consolidated Statements of Operations. We do not identify
assets on a segment basis. We attribute revenues to individual
countries and geographic areas based upon location of our selling operating
subsidiaries. A summary of our revenues by geographic area follows
(dollars in thousands):
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
United
States
|
$ | 11,330 | $ | 13,643 | $ | 21,414 | $ | 28,871 | ||||||||
Japan
|
1,937 | 3,128 | 2,807 | 5,117 | ||||||||||||
Other
Asia Pacific countries
|
90 | 313 | 1,014 | 535 | ||||||||||||
Asia
Pacific
|
2,027 | 3,441 | 3,821 | 5,652 | ||||||||||||
Europe
|
1,645 | 1,036 | 2,517 | 1,932 | ||||||||||||
Total
revenue
|
$ | 15,002 | $ | 18,120 | $ | 27,752 | $ | 36,455 |
In
addition, the following summarizes revenues by significant customer where such
revenue accounted for 10%, or more, of total revenues for any one of the
indicated periods:
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Customer
A
|
19 | % | 19 | % | 16 | % | 23 | % | ||||||||
Customer
B
|
13 | % | 16 | % | 12 | % | 18 | % | ||||||||
Customer
C
|
<10 | % | 12 | % | <10 | % | 10 | % |
We assess
credit risk through ongoing credit evaluations of customers’ financial condition
and collateral is generally not required. At December 31, 2009, one
customer accounted for $1,402,000 or 14% of trade receivables, a second customer
accounted for $1,360,000 or 13% of trade receivables and a third customer
accounted for $1,021,000 or 10% of trade receivables. At June 30,
2009, one customer accounted for $2,019,000 or 14% of trade receivables, a
second customer accounted for $1,599,000 or 11% of trade receivables and a third
customer accounted for $1,536,000 or 10% of trade receivables. No
other customers accounted for 10% or more of trade receivables as of December
31, 2009 or June 30, 2009.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
We
sometimes purchase product components from a single supplier in order to obtain
the required technology and the most favorable price and delivery
terms. For the three months ended December 31, 2009, purchases from
three suppliers were equal to, or in excess of 10% of our total
purchases. These three suppliers accounted for 15%, 11% and 10% of
our purchases during the three months ended December 31, 2009. For
the three months ended December 31, 2008, purchases from two suppliers were
equal to, or in excess of 10% of our total purchases. These two
suppliers accounted for 28% and 18% of our purchases during the three months
ended December 31, 2008. For the six months ended December 31, 2009,
purchases from two suppliers were equal to, or in excess of 10% of our total
purchases. These two suppliers accounted for 20% and 13% of our
purchases during the six months ended December 31, 2009. Also, for
the six months ended December 31, 2008, purchases from three suppliers were in
excess of 10% of our total purchases. These three suppliers accounted
for 25%, 17% and 11% of our purchases during the six months ended December 31,
2008.
10.
|
Term
Loan and Revolving Credit Facility
|
We have a
Credit Agreement with Silicon Valley Bank (the “Credit Agreement”)
that provides for a $10,000,000 revolving credit line (the “Revolver”) with
a borrowing base dependent upon our outstanding North American accounts
receivable and a maturity date of December 31, 2010. The
interest amount is based upon the amount advanced and the rate varies based upon
our accounts receivable and the amount of cash in excess of debt. The
Credit Agreement establishes a minimum interest rate so that interest on
outstanding principle is calculated as prime plus 0.50% whereby, for purposes of
the Credit Agreement, “prime” is the greater of (a) Silicon Valley Bank’s most
recently announced “prime” rate, or (b) 4.00%. The interest rate on
the Revolver was 4.50% as of December 31, 2009. The outstanding principal amount
plus all accrued but unpaid interest is payable in full at the expiration of the
credit facility on December 31, 2010. Based on the borrowing formula
and our financial position as of December 31, 2009, approximately $6,660,000 was
available to us under the Revolver. As of December 31, 2009, $949,000
was drawn under the Revolver, resulting in approximately $5,711,000 of remaining
available funds under the Revolver.
In
addition, the Credit Agreement contains certain financial covenants, including a
required adjusted quick ratio (the ratio of cash and accounts receivable to
current liabilities (less the current portion of deferred revenue)) of at least
1.25 to 1.00 and a minimum tangible net worth, as defined, of at least
$10,629,000, as of December 31, 2009. The Credit Agreement also contains
customary restrictive covenants concerning our operations. As of
December 31, 2009, we were in compliance with these covenants as our adjusted
quick ratio was 5.14 to 1.00 and our tangible net worth was
$28,568,000.
11.
|
Retirement
Plans
|
The
following table provides a detail of the components of net periodic benefit cost
of our German Subsidiary’s defined benefit pension plan for the three and six
months ended December 31, 2009 and 2008 (in thousands):
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Service
cost
|
$ | 4 | $ | 5 | $ | 9 | $ | 9 | ||||||||
Interest
cost
|
71 | 69 | 139 | 128 | ||||||||||||
Expected
return on plan assets
|
(29 | ) | (36 | ) | (58 | ) | (68 | ) | ||||||||
Amortization
of net gain
|
- | - | (1 | ) | - | |||||||||||
Amortization
of transition amount
|
1 | 10 | 3 | 21 | ||||||||||||
Net
periodic benefit cost
|
$ | 47 | $ | 48 | $ | 92 | $ | 90 |
We
contributed $14,000 and $28,000 to our German subsidiary’s defined benefit plan
during the three and six months ended December 31, 2009, respectively, and
expect to make similar contributions during the remaining quarters of fiscal
2010. We contributed $16,000 and $29,000 to our German subsidiary’s
defined benefit plan during the three and six months ended December 31, 2008,
respectively.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
We
maintain a retirement savings plan, available to U.S. employees, which qualifies
as a defined contribution plan under Section 401(k) of the Internal Revenue
Code. In September 2009, we suspended the matching of our employee’s
retirement savings plan contribution as a temporary measure to reduce
costs. Prior to this suspension, we matched 50% of up to 5% of an
employee’s salary invested in our 401K program. During the three
months ended December 31, 2009 and 2008, we contributed $0 and $97,000 to this
plan, respectively. During the six months ended December 31, 2009 and
2008, we contributed $68,000 and $247,000 to this plan,
respectively.
We also
maintain a defined contribution plan (“Stakeholder Plan”) for our U.K. based
employees. Previously, we had agreements with certain of our U.K.
based employees to make supplementary contributions to the Stakeholder Plan,
contingent upon their continued employment with Concurrent. This
supplementary contribution program ended in May 2009. For our U.K.
based employees who contribute 4% or more of their salary to the Stakeholder
Plan, we match 100% of employee contributions, up to 7% of their
salary. During the three months ended December 31, 2009 and 2008, we
contributed $36,000 and $92,000 to the Stakeholder Plan,
respectively. During the six months ended December 31, 2009 and 2008,
we contributed $74,000 and $200,000 to the Stakeholder Plan,
respectively.
12.
|
Commitments
and Contingencies
|
We, from
time to time, are involved in litigation incidental to the conduct of our
business. We believe that such pending litigation will not have a
material adverse effect on our results of operations or financial
condition.
We enter
into agreements in the ordinary course of business with customers that often
require us to defend and/or indemnify the customer against intellectual property
infringement claims brought by a third party with respect to our
products. For example, we were notified that certain of our customers
have been sued by the following companies, in the noted jurisdictions, regarding
the listed patents:
Asserting Party
|
Jurisdiction
|
Patents at Issue
|
||
Acacia
Media Technologies, Corp.
|
U.S.
District Court
|
U.S.
Patent Nos. 5,132,992; 5,253,275;
|
||
Northern
District of California
|
5,550,863,
6,002,720 and 6,144,702
|
|||
U.S.A
Video Inc.
|
U.S.
District Court
|
U.S.
Patent No. 5,130,792
|
||
Eastern
District of Texas
|
||||
Vtran
Media Technologies, LLC
|
U.S.
District Court
|
U.S.
Patent Nos. 4,890,320 and
|
||
Eastern
District of Texas
|
4,995,078
|
We
continue to review our potential obligations under our indemnification
agreements with these customers and the indemnity obligations to these customers
from other vendors that also provided systems and services to these
customers. From time to time, we also indemnify customers and
business partners for damages, losses and liabilities they may suffer or incur
relating to personal injury, personal property damage, product liability, and
environmental claims relating to the use of our products and services or
resulting from our acts or omissions, our employees, authorized agents or
subcontractors. To date, we have not encountered material costs as a
result of such obligations and have not accrued any material liabilities related
to such indemnifications in the financial statements under ASC
460-10-25. The maximum potential amount of future payments that we
could be required to make is unlimited.
Concurrent
Computer Corporation
Notes
to the Condensed Consolidated Financial Statements (Continued)
Pursuant
to the terms of the employment agreements with our executive officers,
employment may be terminated by either the respective executive officer or us at
any time. In the event the executive officer voluntarily resigns
(except as described below) or is terminated for cause, compensation under the
employment agreement will end. In the event an agreement is
terminated by us without cause or in certain circumstances constructively by us,
the terminated employee will receive severance compensation for a period from 6
to 12 months, depending on the officer, in an annualized amount equal to the
respective employee's base salary then in effect. Additionally, if
terminated, our CEO and CFO may be entitled to bonuses during the severance
period. At December 31, 2009, the maximum contingent liability under
these agreements is $2,027,000. Our employment agreements with
certain of our officers contain certain offset provisions, as defined in their
respective agreements.
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 regarding Forward-Looking Statements,” elsewhere herein and in other
filings made with the Securities and Exchange Commission (the
“SEC”).
Overview
We are a
provider of computing technologies and software applications and related
services for the video solutions market and the high-performance, real-time
market. Our business is comprised of two segments for financial
reporting purposes: products and services. We provide products and
services for each of these markets.
Our video
solutions products consist of hardware and/or software as well as integration
services, sold primarily to broadband companies that provide interactive,
digital services for the delivery of video. Our real-time products
consist of real-time operating systems and software development tools combined,
in most cases, with off-the-shelf hardware and services sold to a wide variety
of companies seeking high-performance, real-time computer
solutions. We provide sales and support from offices and subsidiaries
throughout North America, Europe, and Asia.
We are
implementing our strategy to sell our video solutions, including our media data
and advertising solutions, to the internet and mobile device
markets. We believe this strategy may have a positive impact on our
business; however, we cannot assure the success or timing of this
initiative. We expect to continue to review and realign our cost
structure as needed, balanced with investing in the business.
Our sales
model for media data and advertising solutions products is converting from a
one-time perpetual license sale, for which maintenance was sold separately, to
two types of commercial models: 1) a term license with maintenance and managed
services, or 2) software as a service. We expect that revenue from
these sales generally will be recognized over the term of the
contract.
Application
of Critical Accounting Estimates
The SEC
defines “critical accounting estimates” as those that require application of
management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain and may change in subsequent periods. For a complete
description of our critical accounting policies, please refer to the
“Application of Critical Accounting Policies” in our most recent Annual Report
on Form 10-K for the year ended June 30, 2009 filed with the SEC on August 28,
2009.
As
described in footnote 1 of the financial statements, in September, 2009 the FASB
issued accounting guidance pertaining to revenue arrangements with multiple
deliverables, and accounting guidance on all tangible products containing both
software and non-software components that function together to deliver the
product’s essential functionality. Once adopted, these accounting
standards may result in changes to our critical accounting estimates pertaining
to revenue recognition.
Results
of Operations
The three months ended December 31,
2009 compared to the three months ended December 31, 2008
Three
Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
(Dollars
in Thousands)
|
2009
|
2008
|
$ Change
|
% Change
|
||||||||||||
Product
revenues
|
$ | 8,664 | $ | 11,066 | $ | (2,402 | ) | (21.7 | %) | |||||||
Service
revenues
|
6,338 | 7,054 | (716 | ) | (10.2 | %) | ||||||||||
Total
revenues
|
15,002 | 18,120 | (3,118 | ) | (17.2 | %) | ||||||||||
Product
cost of sales
|
3,503 | 5,106 | (1,603 | ) | (31.4 | %) | ||||||||||
Service
cost of sales
|
2,201 | 2,394 | (193 | ) | (8.1 | %) | ||||||||||
Total
cost of sales
|
5,704 | 7,500 | (1,796 | ) | (23.9 | %) | ||||||||||
Product
gross margin
|
5,161 | 5,960 | (799 | ) | (13.4 | %) | ||||||||||
Service
gross margin
|
4,137 | 4,660 | (523 | ) | (11.2 | %) | ||||||||||
Total
gross margin
|
9,298 | 10,620 | (1,322 | ) | (12.4 | %) | ||||||||||
Operating
expenses:
|
||||||||||||||||
Sales
and marketing
|
3,946 | 4,238 | (292 | ) | (6.9 | %) | ||||||||||
Research
and development
|
3,096 | 3,307 | (211 | ) | (6.4 | %) | ||||||||||
General
and administrative
|
2,084 | 2,180 | (96 | ) | (4.4 | %) | ||||||||||
Total
operating expenses
|
9,126 | 9,725 | (599 | ) | (6.2 | %) | ||||||||||
Operating
income
|
172 | 895 | (723 | ) | (80.8 | %) | ||||||||||
Interest
(expense) income - net
|
(24 | ) | 12 | (36 | ) | NM | (1) | |||||||||
Other
(expense) income - net
|
(43 | ) | 91 | (134 | ) | NM | (1) | |||||||||
Income
before income taxes
|
105 | 998 | (893 | ) | (89.5 | %) | ||||||||||
Provision
for income taxes
|
16 | 468 | (452 | ) | (96.6 | %) | ||||||||||
Net
income
|
$ | 89 | $ | 530 | $ | (441 | ) | (83.2 | %) |
|
(1)
|
NM
denotes percentage is not
meaningful
|
Product
Revenue. Total product revenue for the three months ended
December 31, 2009 was $8.7 million, a decrease of approximately $2.4 million, or
21.7%, from approximately $11.1 million for the three months ended December 31,
2008. The decrease in product revenue resulted from a $2.9 million,
or 39.0%, decrease in video product sales during the three months ended December
31, 2009, compared to the same period in the prior year. Video
product sales decreased by $1.7 million in the United States due to reductions
in purchases from our two largest customers. Video product sales
decreased by $1.1 million in Japan due to revenue in the prior year period from
completion of a customized software product to a Japanese cable distributor that
did not recur in the current year period. We believe that the
decreasing volume of video product sales is primarily due to the impact of the
economic downturn and the pace at which our broadband customers implement,
upgrade or replace video technology. Fluctuation in video revenue is
often due to the fact that we have a small number of customers making periodic
large purchases that account for a significant percentage of
revenue.
Partially
offsetting the decline in video product revenue, revenue from our real-time
products increased by $0.5 million, or 12.6%, during the three months ended
December 31, 2009, compared to the same period in the prior
year. This increase was primarily due to a $0.6 million increase in
European sales during the three months ended December 31, 2009, compared to the
same period in the prior year. During the three months ended December
31, 2009, some of our European customers who delayed purchases of real-time
systems in our prior fiscal year, during the global economic downturn, increased
their volume of real-time system purchases. While real-time product
revenues increased during the current three month period, compared to the same
period in the prior year, the impact of the ongoing economic downturn on our
customers or other factors may impact our real-time product sales in future
periods.
Service
Revenue. Total service revenue for the three months ended
December 31, 2009 was $6.3 million, a decrease of $0.7 million, or 10.2%, from
$7.1 million for the three months ended December 31, 2008. The
decrease in service revenue was due to the $0.6 million, or 12.9%, decrease in
service revenue related to video products. Video service revenue
decreased due to lower installation revenue in the three months ended December
31, 2009, compared to the same period in the prior year. Lower
installation service revenue was attributable to lower product sales, from which
installation service revenue is often derived, and from the timing of
installation services.
Service
revenues related to real-time products decreased by $0.1 million, or 4.9%,
during the three months ended December 31, 2009, compared to the same period in
the prior year. We have experienced a steady decline in real-time
service revenues over the past few years, as our legacy products have been
removed from service and, to a lesser extent, from customers purchasing our new
products that produce less service revenue. We expect real-time
service revenues to ultimately decline further, as legacy systems continue to be
removed from service, partially offset by newer system service and price
increases to maintain support of legacy systems.
Product Gross
Margin. Product gross margin was $5.2 million for the three
months ended December 31, 2009, a decrease of $0.8 million, or 13.4%, from $6.0
million for the three months ended December 31, 2008. Product margins
decreased in terms of dollars due to lower product revenue during the three
months ended December 31, 2009, compared to the same period of the prior
year. Product gross margin as a percentage of product revenue
increased to 59.6% in the three months ended December 31, 2009 from 53.9% in the
three months ended December 31, 2008. Product gross margins, as a
percentage of product revenue, increased primarily because higher margin video
software sales accounted for a greater portion of total product revenue during
the three months ended December 31, 2009, compared to the same period in the
prior year.
Service Gross
Margin. The gross margin on service revenue decreased to 65.3%
of service revenue in the three months ended December 31, 2009 from 66.1% of
service revenue in the three months ended December 31, 2008. The
decrease in service margins as a percentage of service revenue was primarily due
to the decrease in service revenues relative to the somewhat fixed nature of
service support costs during the three months ended December 31, 2009, compared
to the same period in the prior year.
Sales and
Marketing. Sales and marketing expenses decreased
approximately $0.3 million, or 6.9% to $3.9 million in the three months ended
December 31, 2009 from $4.2 million in the three months ended December 31,
2008. Sales and marketing expense decreased primarily because of
prior year severance charges of $0.4 million as a result of prior year changes
to our sales group. Offsetting the decrease in costs, we incurred
$0.1 million of additional costs to support channel partner sales. We
anticipate that our sales and marketing expenses may increase in the upcoming
fiscal year as we implement our strategy to sell our video solutions to the
internet and mobile device markets, as well as increase our effort to sell
through new channels.
Research and
Development. Research and development expenses decreased
approximately $0.2 million, or 6.4%, to approximately $3.1 million in the three
months ended December 31, 2009 from $3.3 million in the three months ended
December 31, 2008. Lower research and development expenses were
primarily attributable to a $0.3 million reduction of research and development
related salaries, benefits and other employee related costs, resulting from an
office shutdown during the holidays and headcount reductions in the latter half
of the prior fiscal year, as part of our efforts to reduce
expenses. We anticipate that our research and development expenses
may increase this fiscal year as we implement our strategy to develop video
solutions for the internet and mobile device markets.
General and
Administrative. General and administrative expenses decreased
approximately $0.1 million, or 4.4%, to approximately $2.1 million in the three
months ended December 31, 2009 from $2.2 million in the three months ended
December 31, 2008. General and administrative expenses decreased
primarily because we incurred $0.2 million less in incentive compensation
resulting primarily from lower revenue and operating results during the three
months ended December 31, 2009, as compared to the same period in the prior
year. Partially offsetting the decrease in costs, share-based
compensation expense increased by $0.1 million as a result of additional
restricted shares granted to executives in the past twelve
months.
Other (Expense) Income -
net. During the three months ended December 31, 2009, we
incurred approximately $0.1 million of realized currency translation
losses. These losses resulted from the decreasing value of the
Japanese yen during the three months ended December 31, 2009 and the resulting
impact on foreign currency transactions by our subsidiary for which the Japanese
yen is the functional currency. During the three months ended
December 31, 2008, we incurred approximately $0.1 million of realized currency
translation gains. These gains resulted from foreign currency
transactions by our subsidiary for which the Japanese yen is the functional
currency and the strengthening of the yen value during the three months ended
December 31, 2008.
Provision for Income
Taxes. We recorded income tax expense for our domestic and
foreign subsidiaries of less than $0.1 million in the three months ended
December 31, 2009, compared to income tax expense of $0.5 million for our
domestic and foreign subsidiaries in the three months ended December 31,
2008. We have significant net operating loss carryforwards available
to offset taxable income in the United States and in many of the foreign
locations in which we operate. However, during the three months ended
December 31, 2008 our Japan subsidiary, which has no remaining net operating
loss carryforwards to offset taxable income, generated taxable
income. During the three months ended December 31, 2009, our
subsidiary in Japan did not generate taxable income, resulting in a lower total
tax provision during the three months ended December 31, 2009, compared to the
same period in the prior year.
Net Income. The
net income for the three months ended December 31, 2009 was $0.1 million or
$0.01 per basic and diluted share, compared to net income for the three months
ended December 31, 2008 of $0.5 million, or $0.06 per basic and diluted
share.
The six months ended December 31,
2009 compared to the six months ended December 31, 2008
Six
Months Ended
|
||||||||||||||||
December 31,
|
||||||||||||||||
(Dollars
in Thousands)
|
2009
|
2008
|
$ Change
|
% Change
|
||||||||||||
Product
revenues
|
$ | 15,346 | $ | 23,115 | $ | (7,769 | ) | (33.6 | %) | |||||||
Service
revenues
|
12,406 | 13,340 | (934 | ) | (7.0 | %) | ||||||||||
Total
revenues
|
27,752 | 36,455 | (8,703 | ) | (23.9 | %) | ||||||||||
Product
cost of sales
|
6,393 | 10,741 | (4,348 | ) | (40.5 | %) | ||||||||||
Service
cost of sales
|
4,322 | 4,812 | (490 | ) | (10.2 | %) | ||||||||||
Total
cost of sales
|
10,715 | 15,553 | (4,838 | ) | (31.1 | %) | ||||||||||
Product
gross margin
|
8,953 | 12,374 | (3,421 | ) | (27.6 | %) | ||||||||||
Service
gross margin
|
8,084 | 8,528 | (444 | ) | (5.2 | %) | ||||||||||
Total
gross margin
|
17,037 | 20,902 | (3,865 | ) | (18.5 | %) | ||||||||||
Operating
expenses:
|
||||||||||||||||
Sales
and marketing
|
7,751 | 7,806 | (55 | ) | (0.7 | %) | ||||||||||
Research
and development
|
6,196 | 7,146 | (950 | ) | (13.3 | %) | ||||||||||
General
and administrative
|
4,001 | 4,503 | (502 | ) | (11.1 | %) | ||||||||||
Total
operating expenses
|
17,948 | 19,455 | (1,507 | ) | (7.7 | %) | ||||||||||
Operating
(loss) income
|
(911 | ) | 1,447 | (2,358 | ) | NM | (1) | |||||||||
Interest
(expense) income - net
|
(26 | ) | 92 | (118 | ) | NM | (1) | |||||||||
Other
income (expense) - net
|
57 | (198 | ) | 255 | NM | (1) | ||||||||||
(Loss)
income before income taxes
|
(880 | ) | 1,341 | (2,221 | ) | NM | (1) | |||||||||
Provision
for income taxes
|
46 | 718 | (672 | ) | (93.6 | %) | ||||||||||
Net
(loss) income
|
$ | (926 | ) | $ | 623 | $ | (1,549 | ) | NM | (1) |
|
(1)
|
NM
denotes percentage is not
meaningful
|
Product
Revenue. Total product revenue for the six months ended
December 31, 2009 was $15.3 million, a decrease of approximately $7.8 million,
or 33.6%, from approximately $23.1 million for the six months ended December 31,
2008. The decrease in product revenue resulted from a $9.4 million,
or 59.4%, decrease in video product sales during the six months ended December
31, 2009, compared to the same period in the prior year. Video
product sales decreased by $7.8 million in the United States due to significant
reductions in purchases from our two largest customers. Video product
sales decreased by $2.1 million in Japan due to revenue in the prior year period
from completion of customized software products to a Japanese cable distributor
during the six months ended December 31, 2008, that did not recur in the current
year period. We believe that the decreasing volume of video product
sales is primarily due to the impact of the economic downturn and the pace at
which our broadband customers implement, upgrade or replace video
technology. Fluctuation in video revenue is often due to the fact
that we have a small number of customers making periodic large purchases that
account for a significant percentage of revenue.
Partially
offsetting the decline in video product revenue, revenue from our real-time
products increased by $1.6 million, or 21.5%, during the six months ended
December 31, 2009, compared to the same period in the prior year, primarily due
to increasing real-time product sales in the United States during the current
period. Real-time product sales increased by $1.4 million in the
United States primarily due to the sale of legacy, Aegis system spares during
the six months ended December 31, 2009, compared to the same period in the prior
year. While real-time product revenues increased during the current
six month period, compared to the same period in the prior year, the impact of
the ongoing economic downturn on our customers or other factors may impact our
real-time product sales in future periods.
Service
Revenue. Total service revenue for the six months ended
December 31, 2009 was $12.4 million, a decrease of $0.9 million, or 7.0%, from
$13.3 million for the six months ended December 31, 2008. The
decrease in service revenue was due to the $0.9 million, or 10.6%, decrease in
service revenue related to video products. Video service revenue
decreased due to lower installation revenue in the six months ended December 31,
2009, compared to the same period in the prior year. Lower
installation service revenue was attributable to lower product sales, from which
installation service revenue is often derived, and from the timing of
installation services.
Service
revenues related to real-time product sales remained relatively flat during the
six months ended December 31, 2009, compared to the same period in the prior
year. However, we have experienced a steady decline in real-time
service revenues over the past few years, as our legacy products have been
removed from service and, to a lesser extent, from customers purchasing our new
products that produce less service revenue. We expect real-time
service revenues to ultimately decline further, as legacy systems continue to be
removed from service, partially offset by newer system service and price
increases to maintain support of legacy systems.
Product Gross
Margin. Product gross margin was approximately $9.0 million
for the six months ended December 31, 2009, a decrease of approximately $3.4
million, or 27.6%, from approximately $12.4 million for the six months ended
December 31, 2008. Product margins decreased in terms of dollars due
to lower product revenue during the six months ended December 31, 2009, compared
to the same period of the prior year. Product gross margin as a
percentage of product revenue increased to 58.3% in the six months ended
December 31, 2009 from 53.5% in the six months ended December 31,
2008. Product gross margins, as a percentage of product revenue,
increased primarily because higher margin real-time legacy system sales and
video software sales accounted for a greater portion of total product revenue
during the six months ended December 31, 2009, compared to the same period in
the prior year.
Service Gross
Margin. The gross margin on service revenue increased to 65.2%
of service revenue in the six months ended December 31, 2009 from 63.9% of
service revenue in the six months ended December 31, 2008. The
increase in service margins as a percentage of service revenue was primarily due
to the $0.5 million reduction in service costs during the six months ended
December 31, 2009, compared to the same period in the prior
year. Decreasing service costs resulted from decreasing headcount and
severance costs, as we have focused on managing costs of the infrastructure that
is necessary to fulfill service and support provided for our
products.
Sales and
Marketing. Sales and marketing expenses remained approximately
flat at $7.8 million during the six months ended December 31, 2009, compared to
the six months ended December 31, 2008. However, during the six
months ended, we incurred $0.3 million less in severance charges as a result of
prior year changes to our sales group. We also incurred $0.1 million
less in incentive compensation during the six months ended December 31, 2009, as
compared to the same period in the prior year. Offsetting these
decreases in costs, we incurred $0.3 million of additional costs to support
channel partner sales. We anticipate that our sales and marketing
expenses may increase in the upcoming fiscal year as we implement our strategy
to sell our video solutions to the internet and mobile device markets, as well
as increase our effort to sell through new channels.
Research and
Development. Research and development expenses decreased
approximately $0.9 million, or 13.3%, to $6.2 million in the six months ended
December 31, 2009 from $7.1 million in the six months ended December 31,
2008. Lower research and development expenses were primarily
attributable to a $1.0 million reduction of research and development related
salaries, benefits and other employee related costs, resulting from an office
shutdown during the holidays and headcount reductions in the latter half of the
prior fiscal year, as part of our efforts to reduce expenses. We
anticipate that our research and development expenses may increase in the latter
half of this fiscal year as we implement our strategy to develop video solutions
for the internet and mobile device markets.
General and
Administrative. General and administrative expenses decreased
approximately $0.5 million, or 11.1%, to $4.0 million in the six months ended
December 31, 2009 from $4.5 million in the six months ended December 31,
2008. General and administrative expenses decreased primarily because
we incurred $0.2 million less in incentive compensation resulting primarily from
lower revenue and operating results during the six months ended December 31,
2009, as compared to the same period in the prior year. We also
incurred $0.2 million less in consulting fees, primarily attributable to prior
year strategic planning costs. Additionally, we were able to reduce
our accounting costs by $0.1 million during the six months ended December 31,
2009, compared to the same period in the prior year.
Other Income (Expense) -
net. During the six months ended December 31, 2009, we
incurred approximately $0.1 million of realized currency translation
gains. These gains resulted from the increasing value of the Japanese
yen and euro during the six months ended December 31, 2009 and the resulting
impact on foreign currency transactions by our subsidiaries for which the
Japanese yen and euro are the functional currency. During the six
months ended December 31, 2008, we incurred approximately $0.2 million of
realized currency translation losses. These losses resulted primarily
from foreign currency transactions by our subsidiaries for which the euro is the
functional currency and the decline in the euro value during the six months
ended December 31, 2008.
Provision for Income
Taxes. We recorded income tax expense for our domestic and
foreign subsidiaries of less than $0.1 million in the six months ended December
31, 2009, compared to tax expense $0.7 million for our domestic and foreign
subsidiaries in the six months ended December 31, 2008. We have
significant net operating loss carryforwards available to offset taxable income
in the United States and in many of the foreign locations in which we
operate. However, during the six months ended December 31, 2008 our
Japan subsidiary, which has no remaining net operating loss carryforwards to
offset taxable income, generated taxable income. During the six months ended
December 31, 2009, our subsidiary in Japan did not generate taxable income,
resulting in a lower total tax provision during the six months ended December
31, 2009, compared to the same period in the prior year.
Net (Loss)
Income. The net loss for the six months ended December 31,
2009 was ($0.9) million or a loss of ($0.11) per basic and diluted share,
compared to net income for the six months ended December 31, 2008 of $0.6
million, or $0.08 per basic share and $0.07 per diluted share.
Liquidity
and Capital Resources
Our
liquidity is dependent on many factors, including sales volume, operating
results and the efficiency of asset use and turnover. Our future
liquidity will be affected by, among other things:
|
·
|
the
impact of the global economic recession on our business and our
customers;
|
|
·
|
the
rate of growth or decline, if any, of video solutions market expansions
and the pace that broadband companies implement, upgrade or replace video
technology;
|
|
·
|
the
rate of growth or decline, if any, of deployment of our real-time
operating systems and tools;
|
|
·
|
the
actual versus anticipated decline in revenue from maintenance and product
sales of real-time proprietary
systems;
|
|
·
|
our
ability to manage expenses consistent with the rate of growth or decline
in our markets;
|
|
·
|
the
success of our strategy to sell our solutions to the internet and mobile
video markets;
|
|
·
|
ongoing
cost control actions and expenses, including capital
expenditures;
|
|
·
|
the
margins on our product sales;
|
|
·
|
our
ability to leverage the potential of our media data management
to serve advanced advertising and other related data
initiatives;
|
|
·
|
our
ability to raise additional capital, if
necessary;
|
|
·
|
our
ability to obtain additional or replacement bank financing, if
necessary;
|
|
·
|
our
ability to meet the covenants contained in our Credit
Agreement;
|
|
·
|
timing
of product shipments, which typically occur during the last month of the
quarter;
|
|
·
|
our
reliance on a small customer base (two of our video customers accounted
for 41% of our revenue for the six months ended December 31,
2008, and three customers accounted for 37% of our revenue in the six
months ended December 31, 2009);
|
|
·
|
the
percentage of sales derived from outside the United States where there are
generally longer accounts receivable collection cycles;
and
|
|
·
|
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 maintained levels of
capital.
|
Uses
and Sources of Cash
We
generated $3.5 million of cash from operating activities during the six months
ended December 31, 2009 compared to $1.8 million of cash during the six months
ended December 31, 2008. Operating cash inflow during the six months
ended December 31, 2009 was primarily attributable to collection of prior year
receivables and prepayments from two of our video customers for multi-year
maintenance and service contracts. As a result, the long term portion
of deferred revenue increased by over $2.8 million. Prior period
operating cash inflow was primarily attributable to the timing of accounts
receivable collection and the payment of prior year payables and accruals during
the period.
We
invested $1.7 million in property, plant and equipment during the six months
ended December 31, 2009 compared to $1.0 million during the six months ended
December 31, 2008. Capital additions during the six months ended
December 31, 2009 were primarily related to development and testing equipment
required to implement our strategy to develop and sell solutions to the internet
and mobile device markets. Capital additions during the six months
ended December 31, 2008 related primarily to demonstration systems and product
development and testing equipment related to our traditional
markets. We expect capital additions to continue at a similar or
slightly lower level during the remainder of this fiscal year.
We have a
Credit Agreement with Silicon Valley Bank (the “Credit Agreement”)
that provides for a $10,000,000 revolving credit line (the “Revolver”) with
a borrowing base dependent upon our outstanding North American accounts
receivable and a maturity date of December 31, 2010. The
interest amount is based upon the amount advanced and the rate varies based upon
our accounts receivable and the amount of cash in excess of debt. The
Credit Agreement establishes a minimum interest rate so that interest on
outstanding principle is calculated as prime plus 0.50% whereby, for purposes of
the Credit Agreement, “prime” is the greater of (a) Silicon Valley Bank’s most
recently announced “prime” rate, or (b) 4.00%. The interest rate on
the Revolver was 4.5% as of December 31, 2009. The outstanding principal amount
plus all accrued but unpaid interest is payable in full at the expiration of the
credit facility on December 31, 2010. Based on the borrowing formula
and our financial position as of December 31, 2009, approximately $6,660,000 was
available to us under the Revolver. As of December 31, 2009, $949,000
was drawn under the Revolver, resulting in approximately $5,711,000 of remaining
available funds under the Revolver.
In
addition, the Credit Agreement contains certain financial covenants, including a
required adjusted quick ratio (the ratio of cash and accounts receivable to
current liabilities (less the current portion of deferred revenue)) of at least
1.25 to 1.00 and a minimum tangible net worth of at least $10,629,000, as of
December 31, 2009. The Credit Agreement also contains customary restrictive
covenants concerning our operations. As of December 31, 2009, we were
in compliance with these covenants as our adjusted quick ratio was 5.14 to 1.00
and our tangible net worth was $28,568,000.
At
December 31, 2009, we had working capital (current assets less current
liabilities) of $31.1 million, including cash and cash equivalents of
approximately $31.0 million, and had no material commitments for capital
expenditures, compared to working capital of $29.7 million at June 30, 2009,
including cash and cash equivalents of approximately $29.1
million. Based upon our existing cash balances, historical cash
usage, available credit facility, and anticipated operating cash flow in the
current fiscal year, we believe that existing cash balances will be sufficient
to meet our anticipated working capital and capital expenditure requirements for
the next twelve months.
Off-Balance
Sheet Arrangements
We enter
into agreements in the ordinary course of business with customers, resellers,
distributors, integrators and suppliers that often require us to defend and/or
indemnify the other party against intellectual property infringement claims
brought by a third party with respect to our products. We evaluate
estimated losses for such indemnifications under ASC 460-20 and ASC
460-10-25. We consider factors such as the degree of probability of
an unfavorable outcome and the ability to make a reasonable estimate of the
amount of loss. To date, we have not encountered material costs as a result of
such obligations and have not accrued any material liabilities related to such
indemnifications in our financial statements.
Contractual
Obligations and Commercial Commitments
Our
contractual obligations and commercial commitments are disclosed in our Annual
Report on Form 10-K for the year ended June 30, 2009. There have been no
material changes to our contractual obligations and commercial commitments
during the six months ended December 31, 2009.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
statements made or incorporated by reference in this quarterly report 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. Examples of our forward-looking statements in this report
include, but are not limited to, the impact of our new video strategy on our
business, anticipated reduced product revenue due to the economic downturn,
maintaining similar service margins, our expected cash position, the impact of
interest rate changes and fluctuation in currency exchange rates, our
sufficiency of cash, the impact of litigation, and our trend of declining
real-time service revenue. These statements are based on beliefs and
assumptions of our management, which are based on currently available
information. 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: delays
or cancellations of customer orders; changes in product demand; economic
conditions; our ability to satisfy the financial covenants in the credit
agreement; 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 change; delays in testing and
introductions of new products; rapid technology changes; system
errors or failures; reliance on a limited number of suppliers and failure of
components provided by those suppliers; uncertainties associated with
international business activities, including foreign regulations, trade
controls, taxes, and currency fluctuations; the impact of competition
on the pricing of video products; failure to effectively service the installed
base; the entry of new well-capitalized competitors into our markets; the
success of new video solutions and real-time products; the success of our
relationships with technology and channel partners; capital spending patterns by
a limited customer base; the current negative macro-economic environment;
privacy concerns over data collection; and the availability of debt or equity
financing to support our liquidity needs.
Other
important risk factors are discussed in our Annual Report on Form 10-K for the
fiscal year ended June 30, 2009.
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 and bank loans. Short-term cash
investments are primarily in U.S. treasuries. These short-term
investments carry a degree of interest rate risk. Bank loans include
the variable rate Revolver. We believe that the impact of a 2%
increase or decrease in interest rates would not be material to our investment
income and interest expense from bank loans.
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, and
Japan. We do not hedge against fluctuations in exchange rates and
believe that a 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 SEC 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 Securities Exchange Act of 1934, as amended (the “Exchange
Act”), are recorded, processed, summarized and reported, within the time periods
specified in the SEC’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.
Item
1A.
|
Risk
Factors
|
Risk
factors are discussed in Part II, Item 1A. of our Annual Report on Form 10-K for
the fiscal year ended June 30, 2009.
Item
4.
|
Submission
of Matters to a Vote of Security
Holders
|
Concurrent’s
Annual Meeting of Stockholders was held on October 21, 2009. The
results of the voting were as follows:
|
-
|
The
following persons were elected as directors to serve until the next annual
meeting of stockholders: Charles Blackmon (6,298,858 votes for, 916,343
votes withheld), Larry L. Enterline (6,308,291 votes for, 906,910 votes
withheld), C. Shelton James (6,300,954 for, 914,247 votes withheld), Dan
Mondor (6,524,340 votes for, 690,861votes withheld), Steve G. Nussrallah
(6,290,532 votes for, 924,669 votes withheld) and Krish Panu (6,308,680
votes for, 906,521 votes withheld).
|
|
-
|
The
selection of Deloitte & Touche LLP as Concurrent’s independent
registered public accountants for the fiscal year ending June 30, 2010 was
ratified (7,040,015 votes for, 107,049 votes against, 68,135 votes
abstained).
|
|
-
|
The
approval of amendments to the Concurrent Corporation 2001 Stock Option
Plan to increase the number of shares authorized by 500,000 from 1,100,000
to 1,600,000, to require that no more than 5% of the shares authorized
will be granted with performance restrictions that can all lapse within
one year, and to require stockholder approval for any repricing of
previously granted stock options (2,986,345 votes for, 1,018,153 votes
against, 17,981 votes abstained).
|
Item 5.
|
Other
Information
|
Item
6.
|
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)).
|
3.2
|
Amended
and Restated Bylaws of the Registrant (incorporated by reference to the
Registrant’s Quarterly Report on Form 10-Q for the period 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
|
Certificate
of Amendment of the Restated Certificate of Incorporation of the
Registrant (incorporated by reference to the Registrant’s Proxy on Form
DEFR14A filed on June 2, 2008).
|
3.5
|
Amended
Certificate of Designations of Series A Participating Cumulative Preferred
Stock (incorporated by reference to the Form 8-A/A, dated August 9,
2002).
|
3.6
|
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 period 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 on 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).
|
4.4
|
Form
of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K dated May 15, 2007 and incorporated herein by
reference).
|
4.5
|
Form
of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K dated May 15, 2007 and incorporated herein by
reference).
|
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.
|
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: February
3, 2010
|
CONCURRENT
COMPUTER CORPORATION
|
||
By:
|
/s/
Emory O. Berry
|
||
Emory
O. Berry
|
|||
Chief
Financial Officer and Executive Vice President of
Operations
|
|||
(Principal
Financial and Accounting Officer)
|
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 period 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
|
Certificate
of Amendment of the Restated Certificate of Incorporation of the
Registrant (incorporated by reference to the Registrant’s Proxy on Form
DEFR14A filed on June 2, 2008).
|
3.5
|
Amended
Certificate of Designations of Series A Participating Cumulative Preferred
Stock (incorporated by reference to the Form 8-A/A, dated August 9,
2002).
|
3.6
|
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 period 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 on 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).
|
4.4
|
Form
of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K dated May 15, 2007 and incorporated herein by
reference).
|
4.5
|
Form
of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
Form 8-K dated May 15, 2007 and incorporated herein by
reference).
|
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.
|
27