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 March 31, 2003
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the Transition Period from ____ to ____
CONCURRENT COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2735766
(State of Incorporation) (I.R.S. Employer Identification No.)
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4375 River Green Parkway, Duluth, GA 30096
(Address of principal executive offices)
Telephone: (678) 258-4000
(Registrant's telephone number, including area code)
Number of shares of the Registrant's Common Stock, par value $0.01 per share, outstanding as of May 02, 2003 was 62,083,981.
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 NINE MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
--------- -------- --------- --------
Revenues:
Product:
Real-time systems $ 5,027 $ 5,647 $ 14,998 $15,845
Video-on-demand systems 7,631 14,319 28,959 29,783
--------- -------- --------- --------
Total product revenues 12,658 19,966 43,957 45,628
Service:
Real-time systems 4,169 4,805 13,332 15,252
Video-on-demand systems 821 257 2,634 731
--------- -------- --------- --------
Total service revenues 4,990 5,062 15,966 15,983
--------- -------- --------- --------
Total revenues 17,648 25,028 59,923 61,611
Cost of sales:
Product:
Real-time systems 1,926 2,054 5,990 6,682
Video-on-demand systems 4,308 6,822 14,485 15,589
--------- -------- --------- --------
Total product cost of sales 6,234 8,876 20,475 22,271
Service:
Real-time systems 2,725 2,838 7,835 8,651
Video-on-demand systems 754 553 2,216 1,388
--------- -------- --------- --------
Total service cost of sales 3,479 3,391 10,051 10,039
--------- -------- --------- --------
Total cost of sales 9,713 12,267 30,526 32,310
--------- -------- --------- --------
Gross margin 7,935 12,761 29,397 29,301
Operating expenses:
Sales and marketing 4,287 4,198 13,449 12,526
Research and development 4,991 3,861 14,015 10,977
General and administrative 2,381 2,341 6,976 6,439
--------- -------- --------- --------
Total operating expenses 11,659 10,400 34,440 29,942
--------- -------- --------- --------
Operating income (loss) (3,724) 2,361 (5,043) (641)
Impairment loss on minority investment (10,479) - (13,422) -
Interest income - net 109 154 407 561
Other expense - net (94) (61) (94) (120)
--------- -------- --------- --------
Income (loss) before income taxes (14,188) 2,454 (18,152) (200)
Provision for income taxes 72 150 153 450
--------- -------- --------- --------
Net income (loss) $(14,260) $ 2,304 $(18,305) $ (650)
========= ======== ========= ========
Net income (loss) per share
Basic $ (0.23) $ 0.04 $ (0.30) $ (0.01)
========= ======== ========= ========
Diluted $ (0.23) $ 0.04 $ (0.30) $ (0.01)
========= ======== ========= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
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CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30,
2003 2002
----------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 30,227 $ 30,519
Accounts receivable - net 14,962 23,894
Inventories 6,750 6,822
Deferred tax asset 870 870
Prepaid expenses and other current assets 1,542 1,009
----------- ----------
Total current assets 54,351 63,114
Property, plant and equipment - net 11,900 10,696
Purchased developed computer software - net 1,251 1,393
Goodwill 10,744 10,744
Investment in minority owned company 553 7,814
Note receivable from minority owned companies - 3,000
Deferred tax asset 1,087 1,087
Other long-term assets - net 1,338 840
----------- ----------
Total assets $ 81,224 $ 98,688
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 10,593 $ 15,514
Deferred revenue 7,377 4,055
----------- ----------
Total current liabilities 17,970 19,569
Long-term liabilities:
Deferred revenue 2,243 1,677
Deferred tax liability 1,778 1,634
Other 7,219 6,584
----------- ----------
Total liabilities 29,210 29,464
Stockholders' equity:
Common stock 620 618
Capital in excess of par value 173,751 172,929
Accumulated deficit (116,682) (98,377)
Treasury stock (58) (58)
Accumulated other comprehensive loss (5,617) (5,888)
----------- ----------
Total stockholders' equity 52,014 69,224
----------- ----------
Total liabilities and stockholders' equity $ 81,224 $ 98,688
=========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
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CONCURRENT COMPUTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED
MARCH 31,
2003 2002
--------- ---------
OPERATING ACTIVITIES
Net loss $(18,305) $ (650)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Accrual of non-cash warrants 295 1,751
Depreciation and amortization 3,535 3,713
Impairment loss on minority investment and related note 13,422 -
Other non cash expenses 126 837
Changes in operating assets and liabilities:
Accounts receivable 8,924 (8,628)
Inventories (30) (1,598)
Prepaid expenses and other current assets (533) (164)
Other long-term assets (692) (11)
Accounts payable and accrued expenses (4,921) 646
Short-term deferred revenue 3,322 265
Long-term liabilities 1,408 (435)
--------- ---------
Total adjustments to net loss 24,856 (3,624)
--------- ---------
Net cash provided by (used in) operating activities 6,551 (4,274)
INVESTING ACTIVITIES
Net additions to property, plant and equipment (4,471) (3,260)
Investment in minority owned company - (4,000)
Note receivable from minority owned company (3,000) (3,000)
Other (29) -
--------- ---------
Net cash used in investing activities (7,500) (10,260)
FINANCING ACTIVITIES
Net repayment of capital lease obligation (63) (58)
Proceeds from sale and issuance of common stock 546 27,486
--------- ---------
Net cash provided by financing activities 483 27,428
Effect of exchange rates on cash and cash equivalents 174 54
Increase (decrease) in cash and cash equivalents (292) 12,948
Cash and cash equivalents at beginning of period 30,519 9,460
--------- ---------
Cash and cash equivalents at end of period $ 30,227 $ 22,408
========= =========
Cash paid during the period for:
Interest $ 13 $ 52
========= =========
Income taxes (net of refunds) $ 290 $ 353
========= =========
Non-cash investing/financing activities:
Common stock issued for investment in minority owned company $ - $ 3,000
========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
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CONCURRENT COMPUTER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed, consolidated interim financial statements of Concurrent Computer Corporation ("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, 2002. 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, 2002. Certain reclassifications have been made to prior year amounts to conform with 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.
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 (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 5,996,000 and 3,756,000 for the three month periods ended March 31, 2003 and 2002, respectively, were excluded from the calculation as their effect was antidilutive. Common share equivalents of 6,107,000 and 7,248,000 for the nine month periods ended March 31, 2003 and 2002, 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:
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 2003 MARCH 31, 2003
BASIC DILUTED BASIC DILUTED
--------- --------- --------- ---------
Average outstanding shares 61,975 61,975 61,899 61,899
Dilutive effect of options and warrants - - - -
--------- --------- --------- ---------
Equivalent shares 61,975 61,975 61,899 61,899
========= ========= ========= =========
Net loss $(14,260) $(14,260) $(18,305) $(18,305)
========= ========= ========= =========
Loss per share $ (0.23) $ (0.23) $ (0.30) $ (0.30)
========= ========= ========= =========
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2002
BASIC DILUTED BASIC DILUTED
--------- --------- --------- ---------
Average outstanding shares 61,560 61,560 60,712 60,712
Dilutive effect of options and warrants - 3,207 - -
--------- --------- --------- ---------
Equivalent shares 61,560 64,767 60,712 60,712
========= ========= ========= =========
Net income (loss) $ 2,304 $ 2,304 $ (650) $ (650)
========= ========= ========= =========
Income (loss) per share $ 0.04 $ 0.04 $ (0.01) $ (0.01)
========= ========= ========= =========
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3. STOCK-BASED COMPENSATION
At March 31, 2003, Concurrent had stock-based employee compensation plans, which are described in Note 17 in our annual report on Form 10-K for the year ended June 30, 2002. The company 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. No stock-based employee compensation is reflected in net income (loss), as all options granted under those plans had an exercise price equal to the market value of the underlying stock on the grant date. In accordance with SFAS Statement 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 the company had applied the fair value recognition provisions of SFAS Statement No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation:
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
--------- -------- --------- --------
Net income (loss) as reported $(14,260) $ 2,304 $(18,305) $ (650)
Deduct: Total stock-based employee compensation
expense determined under the fair value method,
net of related taxes (1,480) (2,024) (5,017) (6,483)
--------- -------- --------- --------
Pro forma net income (loss) $(15,740) $ 280 $(23,322) $(7,133)
========= ======== ========= ========
Earnings (loss) per share:
Basic-as reported $ (0.23) $ 0.04 $ (0.30) $ (0.01)
========= ======== ========= ========
Basic-pro forma $ (0.25) $ 0.00 $ (0.38) $ (0.12)
========= ======== ========= ========
Diluted-as reported $ (0.23) $ 0.04 $ (0.30) $ (0.01)
========= ======== ========= ========
Diluted-pro forma $ (0.25) $ 0.00 $ (0.38) $ (0.12)
========= ======== ========= ========
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4. REVENUE RECOGNITION AND RELATED MATTERS
Video-on-demand ("VOD") and real-time system revenues are recognized based on the guidance in American Institute of Certified Public Accountants Statement of Position ("SOP") 97-2, "Software Revenue Recognition". Concurrent recognizes revenue from video-on-demand and real-time 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.
In certain limited instances, Concurrent's customers require significant customization of both the software and hardware products and, therefore, the revenues are recognized as long term contracts in conformity with Accounting Research Bulletin ("ARB") No. 45, "Long Term Construction Type Contracts", SOP 81-1, "Accounting for Performance of Construction-Type and Certain Production-Type Contracts" and SOP 97-2, "Software Revenue Recognition". For long-term contracts, revenue is recognized using the percentage-of-completion method of accounting based on costs incurred on the project compared to the total costs expected to be incurred through completion.
Concurrent recognizes revenue from customer service plans ratably over the term of each plan, typically one year for real-time customers, and between one and three years for VOD customers.
Custom engineering and integration services performed by the Real-Time division are typically completed within 90 days from receipt of an order. Revenues from these services are recognized upon completion and delivery of such services to the customer.
5. INVENTORIES
Inventories are valued at the lower of cost or market, with cost being determined by using the first-in, first-out ("FIFO") method. The components of inventories are as follows:
(DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30,
2003 2002
---------- ---------
Raw materials, net $ 3,919 $ 5,030
Work-in-process 1,124 1,633
Finished goods 1,707 159
---------- ---------
$ 6,750 $ 6,822
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6. INVESTMENTS IN AND RECEIVABLE FROM MINORITY OWNED COMPANIES
In March 2002, Concurrent invested in Thirdspace Living Limited ("Thirdspace"). Thirdspace is a closely held United Kingdom global software services corporation that offers interactive and on-demand television solutions for DSL (digital subscriber line) and other broadband networks. Concurrent invested cash of $4 million and issued 291,461 shares of its common stock (valued at $10.29 per share) in exchange for 1,220,601 series C shares of Thirdspace, giving Concurrent a 14.4% ownership interest in all shares outstanding as of the investment date. As part of this transaction, Concurrent capitalized approximately $300,000 in various transaction costs and as a result, the total equity investment in Thirdspace was $7.3 million. The resale of the 291,461 shares was registered under a resale registration statement filed with the Securities and Exchange Commission and declared effective on June 20, 2002. As of December 31, 2002, all of these shares had been sold by Thirdspace. In exchange for its investment, Concurrent also received a warrant for 400,000 series C shares of Thirdspace. The warrant became exercisable on December 19, 2002. If the fair market value of the warrant on the date of exercise is less than $5.73 per share, then the exercise price will be the then current fair market value. If the fair market value of the warrant on the date of exercise is equal to or greater than $5.73 per share, then the exercise price will be the greater of $5.73 or 85% of the then current fair market value.
In addition to the equity investment, Concurrent also loaned Thirdspace $6 million in exchange for two $3 million long-term convertible notes receivable, bearing interest at 8% annually, with interest payments first due December 31, 2002, and semi-annually, thereafter. The notes are convertible into Series C shares of Thirdspace, at the option of Concurrent, beginning six months after issuance (March 19, 2002 and September 3, 2002, respectively) and may be converted at any time prior to 48 months after the issuance of the notes. The notes are convertible based on the then fair market value of the common stock. The first and second notes became convertible on September 19, 2002 and March 3, 2003, respectively. Concurrent has a security interest in all of the assets of Thirdspace, which is subject to a prior lien on Thirdspace's intellectual property securing an obligation of approximately $3.8 million at March 31, 2003. Other than the prior lien on Thirdspace's intellectual property, Concurrent's security interest ranks ratably with those of other secured creditors. As of March 31, 2003, Thirdspace had an aggregate of $1.6 million of additional debt that ranks ratably with Concurrent's indebtedness. Thirdspace has not yet made any interest payments. As of March 31, 2003, Concurrent has no further funding requirements or commitments related to this transaction with Thirdspace.
The investment and notes receivable are reviewed for impairment on a quarterly basis in accordance with Accounting Principles Board Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock" and SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities", respectively. In light of that review, Concurrent has determined that the future success of Thirdspace and the growth in the number of customers utilizing their interactive and on-demand television technology is dependent upon, among
other things, their ability to obtain additional funding for operations, the state of the economy, and the financial condition and willingness to deploy video applications by the telecommunications industry. Although the fair market value of the Thirdspace Series C common stock and the Thirdspace warrant is not readily determinable, Concurrent has evaluated Thirdspace's financial condition and actual performance relative to expected performance, the market conditions of the telecommunications sector, and the state of the economy and has estimated the impact on the valuation of Thirdspace. Based on this analysis, Concurrent believes that there has been an other-than-temporary decline in the market value of its minority equity investment in Thirdspace and as a result recorded a $2.9 million impairment charge against the investment in Thirdspace for the quarter ended December 31, 2002. In the quarter ended March 31, 2003, Concurrent performed an additional valuation assessment and as a result recorded an additional impairment charge of $4.4 million for the remaining equity investment in Thirdspace. A total of $7.3 million has been charged for the impairment of the equity investment in Thirdspace for the nine months ended March 31, 2003. Concurrent also believes that the Thirdspace warrants no longer have any value.
During the three months ended March 31, 2003, Concurrent's management evaluated the likelihood of collecting the notes receivable and related accrued interest based on the factors above regarding Thirdspace's financial condition, and has determined that the probability of collecting the notes receivable and accrued interest is highly unlikely. As a result, Concurrent wrote off the $6 million notes and accrued interest of $149,000. Although Concurrent has a security interest in all of the assets of Thirdspace, Concurrent believes in the event of liquidation of Thirdspace that the prior lien securing $3.8 million of indebtedness at March 31, 2003, would not leave sufficient assets to allow Concurrent to recover any amount owed to it from Thirdspace. Also in the event of a sale of Thirdspace, Concurrent believes that substantial concessions on the part of Concurrent would be necessary as a prerequisite to closing a transaction, including a substantial reduction in the amount of the note, reduction in interest rate, extension of due date and elimination of the security interest in the assets of Thirdspace. Therefore, the ultimate collectibility of the notes receivable in any scenario is unlikely.
Concurrent is accounting for its investment in the common stock and warrants of Thirdspace using the cost method, as Concurrent does not believe it exercises significant influence on Thirdspace. The convertible notes are recorded at fair value, in accordance with SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities", with changes in fair value recorded as a component of other comprehensive income. Any impairment losses that are other than temporary are charged through the Consolidated Statement of Operations.
In the ordinary course of business, Concurrent sells equipment to Thirdspace. During the three month and nine month periods ended March 31, 2003, Concurrent sold $60,000 and $136,000 of equipment, respectively, to Thirdspace.
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, software, infrastructure and related integration services. Concurrent is accounting for its investment in the Series C Preferred stock of Everstream using the cost method, as Concurrent does not believe it exercises significant influence on Everstream. The investment is reviewed for impairment on a quarterly basis.
In the ordinary course of business, Concurrent purchases consulting services from Everstream. During the three month and nine month periods ended March 31, 2003, Concurrent purchased $225,000 and $863,000 of contract software development services, respectively, from Everstream.
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The components of accounts payable and accrued expenses are as follows:
(DOLLARS IN THOUSANDS)
MARCH 31, JUNE 30,
2003 2002
---------- ---------
Accounts payable, trade $ 2,603 $ 5,351
Accrued payroll, vacation and
other employee expenses 4,283 5,872
Warranty accrual 2,133 2,272
Other accrued expenses 1,574 2,019
---------- ---------
$ 10,593 $ 15,514
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8. COMPREHENSIVE INCOME
Concurrent's total comprehensive income (loss) is as follows:
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
--------- ------ --------- ------
Net income (loss) $(14,260) $2,304 $(18,305) $(650)
Other comprehensive income:
Foreign currency translation income 327 166 271 259
--------- ------ --------- ------
Total comprehensive income (loss) $(13,933) $2,470 $(18,034) $(391)
========= ====== ========= ======
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9. SEGMENT INFORMATION
Concurrent operates its business in two divisions: Real-Time and Xstreme. Its Real-Time 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 Xstreme division is a leading supplier of digital video server systems primarily to the broadband cable industry, and to a lesser extent, the telecom industry [Video over IP], and to education, hospitality and other related markets. 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, and other administrative costs including annual audit and tax fees, legal fees, Board of Director fees and similar costs.
The following summarizes the operating income (loss) by segment for the three month periods ended March 31, 2003 and March 31, 2002, respectively:
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
-------------------------------------------
REAL-TIME VOD CORPORATE TOTAL
---------- -------- ----------- --------
Revenues:
Product $ 5,027 $ 7,631 $ - $12,658
Service 4,169 821 - 4,990
---------- -------- ----------- --------
Total 9,196 8,452 - 17,648
Cost of sales:
Product 1,926 4,308 - 6,234
Service 2,725 754 - 3,479
---------- -------- ----------- --------
Total 4,651 5,062 - 9,713
---------- -------- ----------- --------
Gross margin 4,545 3,390 - 7,935
Operating expenses
Sales and marketing 1,811 2,315 161 4,287
Research and development 1,371 3,620 - 4,991
General and administrative 441 494 1,446 2,381
---------- -------- ----------- --------
Total operating expenses 3,623 6,429 1,607 11,659
---------- -------- ----------- --------
Operating income (loss) $ 922 $(3,039) $ (1,607) $(3,724)
========== ======== =========== ========
THREE MONTHS ENDED MARCH 31, 2002 (UNAUDITED)
-------------------------------------------
REAL-TIME VOD CORPORATE TOTAL
---------- -------- ----------- --------
Revenues:
Product $ 5,647 $14,319 $ - $19,966
Service 4,805 257 - 5,062
---------- -------- ----------- --------
Total 10,452 14,576 - 25,028
Cost of sales:
Product 2,054 6,822 - 8,876
Service 2,838 553 - 3,391
---------- -------- ----------- --------
Total 4,892 7,375 - 12,267
---------- -------- ----------- --------
Gross margin 5,560 7,201 - 12,761
Operating expenses
Sales and marketing 1,696 2,350 152 4,198
Research and development 1,409 2,452 - 3,861
General and administrative 627 450 1,264 2,341
---------- -------- ----------- --------
Total operating expenses 3,732 5,252 1,416 10,400
---------- -------- ----------- --------
Operating income (loss) $ 1,828 $ 1,949 $ (1,416) $ 2,361
========== ======== =========== ========
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The following summarizes the operating income (loss) by segment for the nine month periods ended March 31, 2003 and March 31, 2002, respectively:
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
-------------------------------------------
REAL-TIME VOD CORPORATE TOTAL
---------- -------- ----------- --------
Revenues:
Product $ 14,998 $28,959 $ - $43,957
Service 13,332 2,634 - 15,966
---------- -------- ----------- --------
Total 28,330 31,593 - 59,923
Cost of sales:
Product 5,990 14,485 - 20,475
Service 7,835 2,216 - 10,051
---------- -------- ----------- --------
Total 13,825 16,701 - 30,526
---------- -------- ----------- --------
Gross margin 14,505 14,892 - 29,397
Operating expenses
Sales and marketing 5,579 7,401 469 13,449
Research and development 4,048 9,967 - 14,015
General and administrative 1,276 1,559 4,141 6,976
---------- -------- ----------- --------
Total operating expenses 10,903 18,927 4,610 34,440
---------- -------- ----------- --------
Operating income (loss) $ 3,602 $(4,035) $ (4,610) $(5,043)
========== ======== =========== ========
NINE MONTHS ENDED MARCH 31, 2002 (UNAUDITED)
-------------------------------------------
REAL-TIME VOD CORPORATE TOTAL
---------- -------- ----------- --------
Revenues:
Product $ 15,845 $29,783 $ - $45,628
Service 15,252 731 - 15,983
---------- -------- ----------- --------
Total 31,097 30,514 - 61,611
Cost of sales:
Product 6,682 15,589 - 22,271
Service 8,651 1,388 - 10,039
---------- -------- ----------- --------
Total 15,333 16,977 - 32,310
---------- -------- ----------- --------
Gross margin 15,764 13,537 - 29,301
Operating expenses
Sales and marketing 5,059 7,026 441 12,526
Research and development 3,913 7,064 - 10,977
General and administrative 1,379 1,322 3,738 6,439
---------- -------- ----------- --------
Total operating expenses 10,351 15,412 4,179 29,942
---------- -------- ----------- --------
Operating income (loss) $ 5,413 $(1,875) $ (4,179) $ (641)
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10. ISSUANCE AND ACCRUAL OF NON-CASH WARRANTS
On March 29, 2001, Concurrent entered into a three-year definitive purchase agreement with Comcast Cable, providing for the purchase of VOD equipment. As part of that agreement, Concurrent agreed to issue three different types of warrants.
Concurrent issued a warrant to purchase 50,000 shares of its Common Stock on March 29, 2001, exercisable at $5.196 per share over a four-year term. This warrant is referred to as the "Initial Warrant."
Concurrent is also generally obligated to issue new warrants to purchase shares of its Common Stock to Comcast at the end of each quarter through March 31, 2004, based upon specified performance goals which are measured by the number of Comcast basic cable subscribers that have the ability to utilize the VOD service. The incremental number of subscribers that have access to VOD at each quarter end as compared to the prior quarter end multiplied by a specified percentage is the number of additional warrants that were earned during the quarter. These warrants are referred to as the "Performance Warrants". Concurrent issued to Comcast a performance warrant for 4,431 shares on October 9, 2001, exercisable at $6.251 per share over a four-year term, a performance warrant for 52,511 shares on January 15, 2002, exercisable at $15.019 per share over a four year term, and a performance warrant for 1,502 shares on August 10, 2002, exercisable at $5.707 per share over a four year term.
The resale of the shares issuable upon exercise of the warrants to purchase 50,000 shares and 4,431 shares were registered under a registration statement filed with the Securities and Exchange Commission and declared effective on November 20, 2001.
Concurrent will also issue additional warrants to purchase shares of its Common Stock, if at the end of any quarter the then total number of Comcast basic cable subscribers with the ability to utilize the VOD system exceeds specified threshold levels. These warrants are referred to as the "Cliff Warrants".
Concurrent is recognizing the value of the Performance Warrants and the
Cliff Warrants over the term of the agreement as Comcast purchases additional
VOD servers from Concurrent and makes the service available to its customers.
The value of the warrants is determined using the Black-Scholes valuation model.
The weighted-average assumptions used for the quarter ended March 31, 2003 were:
expected dividend yield of 0%; risk-free interest rate of 2.36%; expected life
of 4 years; and an expected volatility of 119.53%. Concurrent will adjust the
value of the earned but unissued warrants on a quarterly basis using the
Black-Scholes valuation model until the warrants are actually issued. The value
of the new warrants earned and any adjustments in value for warrants previously
earned will be determined using the Black-Scholes valuation model and recognized
as part of revenue on a quarterly basis.
The exercise price of the warrants is subject to adjustment for stock splits, combinations, stock dividends, mergers, and other similar recapitalization events. The exercise price is 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. Based on the information that is currently available, Concurrent does not expect the warrants to be issued to Comcast to exceed 1% of its outstanding shares of Common Stock over the term of the agreement. The exercise price of the warrants to be issued to Comcast will equal 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.
For the three month and nine month periods ended March 31, 2003, Concurrent recognized $21,000 and $19,000, respectively, as a decrease in revenue for the Performance Warrants and Cliff Warrants that have been earned but unissued. The three month decrease in revenue results from the increase in basic subscribers during the three months ended March 31, 2003. This quarterly decrease in revenue was partially offset over the nine month period ended March 31, 2003 by an increase in revenue in previous quarters due to a decrease in the value of the unissued warrants using the Black-Scholes valuation model. For the three month period ended March 31, 2002, Concurrent recognized $242,000 as an increase to revenue for the Performance Warrants and Cliff Warrants that were earned. For the nine month period ended March 31, 2002, Concurrent recognized $450,000 as a decrease in revenue for the Performance Warrants and Cliff Warrants that were earned.
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. The value of these warrants cannot exceed 5% of applicable revenue and the number of shares of Concurrent common stock related to the warrant are determined using the Black-Scholes valuation model and cannot exceed 888,888 shares for every $30 million of revenue from the sale of VOD servers using the SAI platform. The Black-Scholes value of these warrants cannot impact gross margin by more than $1.5 million per $30 million of applicable revenue. Concurrent accrues for this cost as a part of cost of sales at the time of recognition of applicable revenue. For each of the three month periods ended March 31, 2003 and 2002, Concurrent accrued $82,000 and $576,000, respectively, as a part of VOD systems cost of sales for SAI performance warrants that have been earned but unissued. For each of the nine month periods ended March 31, 2003 and 2002, Concurrent accrued $275,000 and $1,301,000, respectively, as a part of VOD systems cost of sales for SAI performance warrants that have been earned but unissued. As a result of the cumulative revenue from sales of VOD servers using the SAI platform reaching the first $30 million revenue target, Concurrent issued to SAI a warrant for 261,164 shares on April 1, 2002, exercisable at $7.106 per share over a four year term.
11. RECENT ACCOUNTING PRONOUNCEMENTS
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for Concurrent's fiscal 2003 annual financial statements and the interim disclosure provisions are effective for Concurrent's quarter ended March 31, 2003, which are included in Note 3. The company plans to continue accounting for its stock option plans in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
12. 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Revenue Recognition
Video-on-demand and real-time system revenues are recognized based on the guidance in American Institute of Certified Public Accountants Statement of Position 97-2, "Software Revenue Recognition". Concurrent recognizes revenue from video-on-demand and real-time systems when: (1) persuasive evidence of an arrangement exists; (2) the system has been shipped; (3) the fee is fixed or determinable; and (4) 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. Determination of criteria (3) and (4) are based on management's judgements regarding the fixed nature of the fee charged for products and services delivered and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.
In certain limited instances, Concurrent's customers require significant customization of both software and hardware products and, therefore, revenues are recognized as long term contracts using the percentage-of-completion method, which relies on estimates of total expected contract revenue and costs. Concurrent follows this method since reasonably dependable estimates of the revenue and costs applicable to various stages of a contract can be made. Recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are charged to income in the period in which the facts that give rise to the revision become known.
Valuation and Accrual of Non-Cash Warrants
Concurrent entered into a three-year definitive purchase agreement with Comcast Cable in March of 2001, providing for the sale of VOD equipment. As part of that agreement, Concurrent agreed to issue three types of warrants (See Note 10 to the condensed consolidated financial statements).
Concurrent recognized the value of the Initial Warrant as a reduction of revenue in the quarter ended March 31, 2001. Concurrent recognizes the value of Performance Warrants and Cliff Warrants as an adjustment to revenue over the term of the agreement as Comcast purchases additional VOD servers from Concurrent and makes the service available to its customers.
The value of the warrants is determined using the Black-Scholes valuation
model. The weighted assumptions used for the quarter ended March 31, 2003 were:
expected dividend yield - 0%; risk free interest rate - 2.36%; expected life -
4 years; and expected volatility - 119.53%. Concurrent will adjust the value of
the earned but unissued warrants on a quarterly basis using the valuation
option-pricing model until the warrants are actually issued. The value of the
new warrants earned, but unissued, and any adjustments in value for warrants
previously earned, but unissued, will be determined using the Black-Scholes
valuation model and recognized as part of revenue on a quarterly basis. To the
extent the above assumptions change on a periodic basis, or the number of
subscribers capable of receiving VOD increases or decreases, revenue and gross
margins may be positively or negatively impacted.
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. The value of these warrants cannot exceed 5% of applicable revenue and the number of shares related to the warrant are determined using the Black-Scholes valuation model and cannot exceed 888,888 shares for every $30 million of revenue from the sale of VOD servers using the SAI platform. The Black-Scholes value of these warrants cannot impact gross margin by more than $1.5 million per $30 million of applicable revenue. Concurrent accrues for this cost as a part of cost of sales at the time of recognition of applicable revenue.
Warranty Accrual/Maintenance Revenue Deferral
Concurrent either accrues the estimated costs to be incurred in performing warranty services at the time of revenue recognition and shipment of the servers, or defers revenue associated with the maintenance services to be provided during the warranty period based upon the value for which Concurrent would sell such services separately, depending upon the specific terms of the customer agreement. Concurrent's estimate of costs to service its warranty obligations is based on historical experience and expectation of future conditions. To the extent Concurrent experiences increased warranty claim activity or increased costs associated with servicing those claims, its warranty accrual will increase resulting in decreased gross margin.
Inventory Valuation Reserves
Concurrent provides for inventory obsolescence based upon assumptions about future demand, market conditions and anticipated timing of the release of next generation products. If actual market conditions or future demand are less favorable than those projected by management, or if next generation products are released earlier than anticipated, additional inventory write-downs may be required.
Impairment of Goodwill
At March 31, 2003, Concurrent had $10.7 million of goodwill. In assessing the recoverability of Concurrent's goodwill, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. If the estimates or their related assumptions change in the future, Concurrent may be required to record impairment charges for these assets not previously recorded. In connection with the adoption of SFAS 142, Concurrent was required to perform an impairment assessment within six months of its July 1, 2001 adoption. As of September 30, 2001, Concurrent completed this transitional impairment test and deemed that no impairment loss was necessary. In accordance with SFAS 142, Concurrent performed an annual impairment test as of July 1, 2002, reaffirming that no impairment loss is necessary. Any subsequent impairment losses, if any, will be reflected in operating income in the Consolidated Statement of Operations.
Valuation of Deferred Tax Assets
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. At March 31, 2003 and June 30, 2002, substantially all of the deferred tax assets have been fully reserved due to the operating losses for the past several years and the inability to assess as more likely than not the likelihood of generating sufficient future taxable income to realize such benefits.
Investment In and Receivable from Minority Owned Company
Concurrent has a 14.4% equity ownership interest in Thirdspace resulting from a $7.3 million equity investment made in March 2002. Additionally, Concurrent has two long-term notes receivable due from Thirdspace that total $6 million. For the quarter ending December 31, 2002, Concurrent evaluated its $7.3 million equity investment in Thirdspace and determined a $2.9 million impairment charge of its investment was necessary. In the quarter ended March 31, 2003, Concurrent again evaluated its remaining equity investment of $4.4 million along with the notes receivable and accrued interest due from Thirdspace of $6.1 million and determined that an additional impairment charge of $4.4 million for the equity investment was necessary and also determined that a charge of $6.1 million would be necessary to write-off completely the notes receivable and related accrued interest. The assessment to impair the equity investment is based upon Thirdspace's financial condition and actual performance relative to expected performance, the status of its capital raising initiatives, the market conditions of the telecommunications sector, the state of the economy, and the reduced market value of Thirdspace. The notes receivable and accrued interest were entirely written off in the third quarter ended March 31, 2003, due to the
uncertainty of collectibility based on the conditions listed above. Although Concurrent continues to have a 14.4% equity ownership interest in the Company and $6 million in notes receivable, the value of each of these investments has been reduced to zero on the March 31, 2003 balance sheet. Concurrent also believes that the Thirdspace warrants no longer have any value.
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 Concurrent's consolidated statements of operations for the periods indicated.
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2003 2002 2003 2002
--------- --------- --------- ---------
(Unaudited) (Unaudited)
Net sales:
Product sales (% of total sales):
Real-time systems 28.5% 22.6% 25.0% 25.7%
Video-on-demand systems 43.2 57.2 48.3 48.3
--------- --------- --------- ---------
Total product sales 71.7 79.8 73.4 74.1
Service:
Real-time systems 23.6 19.2 22.2 24.8
Video-on-demand systems 4.7 1.0 4.4 1.2
--------- --------- --------- ---------
Total service sales 28.3 20.2 26.6 25.9
--------- --------- --------- ---------
Total 100.0 100.0 100.0 100.0
Cost of sales (% of respective sales category):
Product:
Real-time systems 38.3 36.4 39.9 42.2
Video-on-demand systems 56.5 47.6 50.0 52.3
--------- --------- --------- ---------
Total product cost of sales 49.2 44.5 46.6 48.8
Service:
Real-time systems 65.4 59.1 58.8 56.7
Video-on-demand systems 91.8 215.2 84.1 189.9
--------- --------- --------- ---------
Total service cost of sales 69.7 67.0 63.0 62.8
--------- --------- --------- ---------
Total cost of sales 55.0 49.0 50.9 52.4
--------- --------- --------- ---------
Gross margin 45.0 51.0 49.1 47.6
Operating expenses:
Sales and marketing 24.3 16.8 22.4 20.3
Research and development 28.3 15.4 23.4 17.8
General and administrative 13.5 9.4 11.6 10.5
--------- --------- --------- ---------
Total operating expenses 66.1 41.6 57.5 48.6
--------- --------- --------- ---------
Operating income (loss) (21.1) 9.4 (8.4) (1.0)
Impairment loss on minority investment (59.4) - (22.4) -
Interest income - net 0.6 0.6 0.7 0.9
Other expense - net (0.5) (0.2) (0.2) (0.2)
--------- --------- --------- ---------
Income (loss) before income taxes (80.4) 9.8 (30.3) (0.3)
Provision for income taxes 0.4 0.6 0.3 0.7
--------- --------- --------- ---------
Net income (loss) (80.8)% 9.2% (30.5)% (1.1)%
========= ========= ========= =========
|
RESULTS OF OPERATIONS
THE QUARTER ENDED MARCH 31, 2003 COMPARED TO THE QUARTER ENDED MARCH 31, 2002
Product Sales. Total product sales were $12.7 million for the three months ended March 31, 2003, a decrease of $7.3 million or 36.6% from $20.0 million for the three months ended March 31, 2002. This decrease resulted primarily from VOD product sales decreasing by $6.7 million, or 46.7% to $7.6 million in the three month period ended March 31, 2003 from $14.3 million for the three months ended March 31, 2002. The decrease in VOD product sales is due primarily to increased scrutiny by the cable operators of their capital expenditures and the timing of revenue recognition for one cable operator where certain software deliverables have yet to be completed. During the three months ended March 31, 2003, VOD product purchases from each of two North American multiple system cable operators ("MSO") accounted for more than 10% of VOD system revenue and 92.2% of VOD system revenue in the aggregate.
Sales of Real-Time products decreased $0.6 million, or 11.0% to $5.0 million during the three month period ended March 31, 2003 from $5.6 million for the three month period ended March 31, 2002. This decrease in real-time product revenue is due to a decrease of $0.2 million in real-time product sales in the North America markets and a decrease of $0.4 million in real-time product sales internationally, primarily in the U.K. and Japan, due to unfavorable economic conditions in those countries. Sales to a single customer accounted for 50.6% of real-time product sales during the three months ended March 31, 2003, compared to 60.0% of real-time product sales during the three months ended March 31, 2002.
Service Sales. Service sales decreased $0.1 million, or 1.4% to $5.0 million for the three months ended March 31, 2003, from $5.1 million for the three months ended March 31, 2002. VOD service revenue increased $0.5 million, or 219.5% to $0.8 million in the three month period ended March 31, 2003 from $0.3 million for the same period in fiscal 2002, as the Xstreme division continued to recognize deferred maintenance revenue and expand its VOD customer base requiring additional installation, training, technical support, and software and hardware maintenance services. This increase was offset by a $0.6 million, or 13.2% decrease in real-time service revenue to $4.2 million in the three month period ended March 31, 2003 from $4.8 million for the three months ended March 31, 2002. Real-time service revenue continued to decline primarily due to the cancellation of maintenance contracts as machines were removed from service and from customers purchasing Concurrent's new products which are less expensive to maintain.
Product Gross Margin. The product gross margin decreased $4.7 million, or 42.1% to $6.4 million for the three months ended March 31, 2003 from $11.1 million for the three months ended March 31, 2002. The gross margin as a percentage of sales decreased to 50.8% in the three month period ended March 31, 2003 from 55.5% in the three month period ended March 31, 2002, due to a decrease in both VOD and real-time product margins in the current year quarter. VOD product gross margins decreased to 43.5% in the three month period ended March 31, 2003 from 52.4% in the three month period ended March 31, 2002, due to certain fixed costs being spread over lower product sales volume, product mix changes, and competitive downward pricing pressures. Real-time product gross margins decreased slightly to 61.7% for the three months ended March 31, 2003 from 63.6% for the three months ended March 31, 2002, primarily due to strong margins on software product sales in the prior year period.
Service Gross Margin. The gross margin on service sales decreased to 30.3% for the three months ended March 31, 2003 from 33.0% for the same period in fiscal 2002. This decrease results from a decrease in real-time service margins to 34.6% during the three months ended March 31, 2003, compared to 40.9% during the same period in the prior year. This decrease in margins was primarily due to an increase in severance expense during the quarter resulting from a reduction in service personnel as the Real-Time division has scaled down the infrastructure that is necessary to fulfill declining contractual obligations. The decline in contractual obligations results from the cancellation of maintenance contracts as machines were removed from service and from customers purchasing Concurrent's new products which are less expensive to maintain. This decrease was offset by an increase of $0.5 million in VOD service revenue, bringing VOD service margins to 8.2% during the three months ended March 31,
2003 compared to a negative margin of 115.2% of VOD service revenue during the same period in the prior year. VOD service margins increased as the Xstreme division continued to recognize deferred maintenance revenue and expand its customer base requiring additional installation, training, technical support, and software and hardware maintenance services, at a faster rate than growth of the costs to support such services. Real-time service revenue made up 83.5% of total service revenue, and as a result, a large increase in VOD service margins minimally impacts overall service margins.
Sales and Marketing. Sales and marketing expenses increased as a percentage of sales to 24.3% for the three months ended March 31, 2003 from 16.8% for the three months ended March 31, 2002. These expenses increased $0.1 million, or 2.1% to $4.3 million during the three month period ended March 31, 2003 from $4.2 million in the three month period ended March 31, 2002. The Real-Time division's sales and marketing expenses increased $0.1 million compared to the same period in the prior year due primarily to the addition of a new sales person. The Xstreme division's sales and marketing expenses remained the same as compared to last year.
Research and Development. Research and development expenses increased as a percentage of sales to 28.3% for the three month period ended March 31, 2003 from 15.4% for the three month period ended March 31, 2002. These expenses increased $1.1 million, or 29.3% to $5.0 million during the three month period ended March 31, 2003 from $3.9 million during the same period ended March 31, 2002. Since the three months ended March 31, 2002, the Xstreme division added new development staff and utilized outside consultants to focus on new application software development and customer specific integration activities. The addition of the development staff and use of outside consultants resulted in an increase in VOD research and development expense of $0.5 million and $0.2 million, respectively, when compared to the three months ended March 31, 2002. In addition, Concurrent incurred $0.1 million of additional product certification costs and $0.1 million in additional depreciation expense due to purchases of new testing and quality assurance equipment since the three months ended March 31, 2002. Additionally, there was an increase of $0.1 million of rent expense while temporarily occupying two development facilities as a result of moving our U.K. office to a new facility, and a $0.1 million increase in development expenses in the U.K. due to appreciation of the Great Britain Pound against the U.S. Dollar when compared to the same period in the prior year.
General and Administrative. General and administrative expenses increased as a percentage of sales to 13.5% for the three months ended March 31, 2003 from 9.4% for the three months ended March 31, 2002. These expenses increased $0.1 million to $2.4 million during the three month period ended March 31, 2003 compared to $2.3 million in same period in the prior year. This increase was due to a $0.1 million increase in corporate insurance costs and a $.02 million increase as Concurrent increased its accounting personnel, partially offset by a $0.1 million decrease in bad debt expense, as compared to the three months ended March 31, 2002.
Impairment Loss on Minority Investment and Related Note Receivable. Concurrent recorded a $10.5 million impairment charge, which included the write-off of the equity investment of $4.4 million and notes receivable and accrued interest of $6.1 million due from Thirdspace, during the quarter ended March 31, 2003, due to an other-than-temporary decline in the estimated market value of the equity investment in Thirdspace and the uncertainty of collectibility of the notes receivable from Thirdspace. The impairment of the equity investment and write off of the related notes receivable and accrued interest is based upon Thirdspace's financial condition and actual performance relative to expected performance, the status of Thirdspace's capital raising initiatives, the market conditions of the telecommunications sector, the state of the economy and the reduced market value of Thirdspace.
Income Taxes. Concurrent recorded income tax expense for its domestic and foreign subsidiaries of $72,000 and $150,000 during the three month periods ended March 31, 2003 and 2002, respectively. This expense is based on a pre-tax loss of $14.2 million and pre-tax income of $2.5 million in the three month periods ended March 31, 2003 and 2002, respectively. This expense is primarily
attributable to foreign withholding taxes and income earned in foreign locations, which cannot be offset by net operating loss carryforwards.
Net Income (Loss). Concurrent recorded a net loss of $14.3 million or $0.23 per basic and diluted share for the three months ended March 31, 2003, compared to net income of $2.3 million or $.04 per basic and diluted share for the three months ended March 31, 2002.
THE NINE MONTHS ENDED MARCH 31, 2003 COMPARED TO THE NINE MONTHS ENDED MARCH 31,
2002
Product Sales. Total product sales were $44.0 million for the nine months ended March 31, 2003, a decrease of $1.6 million or 3.7% from $45.6 million for the nine months ended March 31, 2002. This decrease resulted, in part, from VOD product sales decreasing slightly by $0.8 million, or 2.8% to $29.0 million in the nine month period ended March 31, 2003 from $29.8 million for the nine months ended March 31, 2002. The decrease in VOD product sales for the nine months ended March 31, 2003, is due primarily to increased scrutiny by the cable operators of their capital expenditures and the timing of revenue recognition for one cable operator where certain software deliverables have yet to be completed. During the nine months ended March 31, 2003, VOD product purchases from each of four North American MSO's accounted for more than 10% of VOD system revenue and 89.6% of VOD system revenue in the aggregate.
Sales of real-time products decreased $0.8 million, or 5.3% to $15.0 million in the nine month period ended March 31, 2003 from $15.8 million for the nine month period ended March 31, 2002. The decrease in real-time product sales is due to a nonrecurring sale to an Australian customer in the nine months ended March 31, 2002, unfavorable economic factors and a longer than expected sales cycle internationally and domestically, partially offset in the domestic market by sales to one specific customer, as compared to the nine months ended March 31, 2002. Sales to a single customer accounted for approximately 51.4% of real-time product sales during the nine months ended March 31, 2003.
Service Sales. Service sales remained at $16.0 million for the nine months ended March 31, 2003 compared to the nine months ended March 31, 2002. VOD service revenue increased $1.9 million, or 260.3%, as the Xstreme division continued to recognize deferred maintenance revenue and expand its VOD customer base requiring additional installation, training, technical support, and hardware and software maintenance services. This increase was offset by a decrease of $1.9 million in real-time service revenue due primarily to the cancellation of maintenance contracts as machines were removed from service and from customers purchasing Concurrent's new products which are less expensive to maintain.
Product Gross Margin. The product gross margin increased slightly to $23.5 million for the nine months ended March 31, 2003 from $23.4 million for the nine months ended March 31, 2002. The gross margin as a percentage of sales increased to 53.4% in the nine month period ended March 31, 2003 from 51.2% in the nine month period ended March 31, 2002, due to increases in both VOD and real-time product margins in the current fiscal year. VOD product gross margins increased to 50.0% in the nine month period ended March 31, 2003 from 47.7% in the nine month period ended March 31, 2002, due to improved efficiencies in the new MediaHawk model 3000 server, partially offset by a less favorable product mix and certain fixed costs being spread over lower product sales volume in the second and third quarters of fiscal 2003. Real-time product gross margins increased to 60.1% for the nine months ended March 31, 2003 from 57.8% for the nine months ended March 31, 2002, primarily due to strong margins on software sales and a favorable product mix on hardware during the nine months ended March 31, 2003, compared to the same period in the prior year.
Service Gross Margin. The gross margin as a percent of services sales remained relatively constant on a consolidated basis, at 37.0% for the nine months ended March 31, 2003 compared to 37.2% for the same period in 2002. This decrease results from a decline in real-time service margins to 41.2% during the nine months ended March 31, 2003 compared to 43.3% during the same period in the prior year. This decrease in margins was due to an increase in severance expense during the nine months ended March 31, 2003 from a reduction in personnel as the Real-Time division has scaled down the infrastructure that is necessary to fulfill declining contractual obligations. The decline in contractual obligations resulted from the cancellation of maintenance contracts as machines
were removed from service and from customers purchasing Concurrent's new products which are less expensive to maintain. This decrease in real-time service margins is partially offset by a $1.9 million increase in VOD service revenue, bringing VOD service margins to 15.9% during the nine months ended March 31, 2003 compared to a negative margin of 89.9% during the same period in the prior year. VOD service margins increased as the Xstreme division continued to recognize deferred maintenance revenue and expand its customer base requiring additional installation, training, technical support, and software and maintenance services, at a faster rate than the growth of the costs to support such services. Real-time service revenue made up 83.5% of total service revenues in the nine months ended March 31, 2003, and as a result, the increase in VOD margins over the same period in the prior year has only a minor impact on overall service margins.
Sales and Marketing. Sales and marketing expenses increased as a percentage of sales to 22.4% for the nine months ended March 31, 2003 from 20.3% for the nine months ended March 31, 2002. These expenses increased $0.9 million, or 7.4% to $13.4 million during the nine month period ended March 31, 2003 from $12.5 million in the nine month period ended March 31, 2002. The Real-Time division's sales and marketing expenses increased $0.4 million due primarily to an increase in salaries and benefits from additional personnel, including the addition of a new sales person at Concurrent Federal Systems Inc., a wholly owned subsidiary of Concurrent Computer Corporation, focusing primarily on government programs. The Xstreme division's sales and marketing expenses increased $0.5 million in the nine months ended March 31, 2003 compared to the same period in the prior year due to a $0.2 million increase in severance costs for international personnel reductions and a $0.3 million increase in salary and wage benefits related to an increase in domestic sales personnel.
Research and Development. Research and development expenses increased as a percentage of sales to 23.4% for the nine month period ended March 31, 2003 from 17.8% for the nine month period ended March 31, 2002. These expenses increased from $11.0 million to $14.0 million, or 27.7%, during the nine month period ended March 31, 2003 as compared to the nine month period ended March 31, 2002. Of the $3.0 million increase in research and development expenses, $2.9 million was attributed to VOD research and development. The increase in VOD research and development expense resulted primarily from the addition of new development staff and utilization of outside consultants to focus on new application software development and customer specific integration activities. The addition of the development staff and use of outside consultants resulted in an increase in research and development expense of $1.3 million and $0.8 million, respectively, when compared to the nine months ended March 31, 2002. In addition, there was an increase in product certification costs of $0.1 million, an additional $0.2 million of depreciation expense from purchases of new testing and quality assurance equipment, an increase of $0.1 million in rent expense while temporarily occupying two development facilities as a result of moving our U.K. office to a new facility, and a $0.1 million increase in development expenses in the U.K. due to the appreciation of the Great Britain Pound against the U.S. Dollar when compared to the same period in the prior year.
General and Administrative. General and administrative expenses increased as a percentage of sales to 11.6% for the nine months ended March 31, 2003 from 10.5% during the same period in the prior year. These expenses increased $0.6 million, or 8.3% to $7.0 million, during the nine month period ended March 31, 2003 from $6.4 million during the nine month period ended March 31, 2002, primarily due to a $0.4 million increase in corporate insurance costs and a $0.1 million increase in accounting fees. In addition, in the prior fiscal year, Concurrent hired a new Xstreme division president and added personnel to its legal and investor relations department, resulting in a $0.6 million increase in general and administrative salaries and benefits in the nine months ended March 31, 2003. The increase in these cost were partially offset by a decrease of $0.1 million in one time legal costs and a $0.3 million decrease in bad debt expense.
Impairment Loss on Minority Investment and Related Note Receivable. Concurrent recorded a $10.5 million and a $2.9 million impairment charge during the quarters ended March 31, 2003 and December 31, 2002, respectively, totaling $13.4 million for the nine months ended March 31, 2003. The impairment charge recorded in the quarter ended March 31, 2003 included the write off of the notes receivable and related accrued interest totaling $6.1 million owed to Concurrent by Thirdspace and an other-than-temporary decline in the estimated market value
of the remaining minority equity investment in Thirdspace of $4.4 million. The impairment of the investment and write off of the related notes receivable and accrued interest is based upon Thirdspace's financial condition and actual performance relative to expected performance, the status of Thirdspace's capital raising initiatives, the market conditions of the telecommunications sector, the uncertainty of the collectibility of the notes receivable, the state of the economy and the reduced market value of Thirdspace.
Income Taxes. Concurrent recorded income tax expense for its domestic and foreign subsidiaries of $153,000 during the nine month period ended March 31, 2003, compared to $450,000 during the nine month period ended March 31, 2002. This expense is primarily attributable to foreign withholding taxes and income earned in foreign locations, which cannot be offset by net operating loss carryforwards.
Net Loss. Concurrent recorded a net loss of $18.3 million or $0.30 per basic and diluted share for the nine months ended March 31, 2003, compared to a net loss of $650,000 or $0.01 per basic and diluted share for the nine months ended March 31, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Concurrent's liquidity is dependent on many factors, including sales volume, operating profit and the efficiency of asset use and turnover. Concurrent's future liquidity will be affected by, among other things:
- The potential decline in Real-Time systems and service revenue;
- Revenue from VOD systems and the pace at which MSOs implement VOD
technology;
- Ongoing cost control actions and expenses, including for example,
research and development and capital expenditures;
- The margins on the VOD and real-time businesses;
- The ability to raise additional capital, if necessary;
- Timing of product shipments which occur primarily during the last
month of the quarter;
- 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 Concurrent operates, 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 potential change in the fair market value of Concurrent's
remaining minority equity investment.
Concurrent provided cash of $6.6 million from operating activities during the nine months ended March 31, 2003 compared to using cash of $4.3 million during the nine months ended March 31, 2002, primarily due to improved collections of accounts receivables and improved inventory control. Concurrent's previously available $5 million revolving credit facility with Wachovia Bank expired on December 31, 2002. Concurrent has elected not to renew or extend this credit facility beyond its December 31, 2002 expiration date.
Concurrent invested $4.5 million in property, plant and equipment during the nine months ended March 31, 2003 compared to $3.3 million during the nine months ended March 31, 2002. Current year capital expenditures relate primarily to leasehold improvements, product development, and the acquisition of testing and quality assurance, and demonstration equipment for Concurrent's Xstreme division. Concurrent completed its obligation of providing an additional $3 million loan to Thirdspace in September of 2002. This note has a four-year term and bears interest at 8% per annum. However, due to the uncertainty surrounding the collectibility of the notes receivable from Thirdspace, the notes are valued at zero on the March 31, 2003 balance sheet.
Concurrent received $24.0 million in net proceeds from a private placement of 5.4 million shares of common stock on July 19, 2001, such shares having
subsequently been registered with the Securities and Exchange Commission in a filing on Form S-3. In addition, Concurrent received $546,000 and $3.5 million from the issuance of common stock to employees and directors who exercised stock options during the nine month periods ended March 31, 2003 and 2002, respectively.
At March 31, 2003, Concurrent had working capital of $36.4 million and had no material commitments for capital expenditures. Management of Concurrent believes that the existing cash balances and funds generated by operations will be sufficient to meet the anticipated working capital and capital expenditure requirements for the next 12 months.
Included in deferred revenue are billings for maintenance contracts and billings for products that are pending completion of the revenue recognition process. Maintenance revenue, whether bundled with the product or priced separately, is recognized ratably over the maintenance period. At March 31, 2003, deferred revenue includes billings to certain customers who agreed to make progress payments for systems that had not yet been completed and revenue had not yet been recognized. Deferred revenues have increased $3.9 million from $5.7 million at June 30, 2002 to $9.6 million at March 31, 2003, due to billings to a North America cable operator in advance of revenue recognition and the growing base of cable customers with maintenance programs where the revenue is recognized ratably over the maintenance period.
Concurrent maintains pension plans for certain employees and former employees in the United Kingdom and Germany. The projected benefit obligation for the benefit plans at June 30, 2002 and June 30, 2001 as determined in accordance with FAS No. 87, "Employers Accounting for Pensions", was $17.0 million and $15.4 million, respectively, and the value of the plans assets was $12.0 million and $12.4 million, respectively. As a result, the plans were underfunded by $5.0 million at June 30, 2002 and by $2.9 million at June 30, 2001. Since June 30, 2002, the value of the plan assets has continued to decline to $10.8 million at March 31, 2003. Due to the decline in the fair market value of the plans' assets, it is likely that the amount of Concurrent's contributions to the plans will increase from the $320,000 of contributions made in fiscal 2002. In addition, management expects the pension cost to be recognized in the financial statements will increase from the $465,000 recognized in fiscal 2002 to approximately $800,000 in fiscal 2003, of which approximately $600,000 was recognized in the nine months ended March 31, 2003. The expense to be recognized in future periods could increase further, depending upon the amount of the change in the fair market value of the plan assets and the change in the projected benefit obligation.
As a result of the overall decline in market interest rates, Concurrent may decide it is necessary to use a lower discount rate in the calculation of its projected benefit obligation. The use of a lower discount rate combined with the decrease in the market value of plan assets is likely to cause the amount of the underfunded status to increase. Though management has not yet determined the exact amount of such underfunding, after completion of the actuarial valuations in the fourth quarter of fiscal 2003, Concurrent could be required to record an additional reduction to stockholders' equity. Concurrent recorded reductions to stockholders' equity in fiscal 2002 and 2001 amounting to $1.6 million and $2.8 million, respectively. However, management does not currently believe the underfunded status of the pension plans will materially affect Concurrent's financial position. Moreover, given the impact that the discount rate and stock market performance have on the projected benefit obligation and market value of plan assets, future changes in either one of these may reduce our pension plan underfunding.
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Concurrent's only significant contractual obligations and commitments relate to certain operating leases for sales, service and manufacturing facilities in the United States, Europe and Asia.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this report on Form 10-Q may constitute "forward-looking statements" within the meaning of the federal securities laws. When used or incorporated by reference in this prospectus, the words "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Statements regarding
future events and developments and our future performance, 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 Concurrent's financial condition or results of operations include, without limitation:
- 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;
- instability and financial instability in the cable industry;
- the pricing and availability of equipment, materials and inventories;
- the limited operating history of our video-on-demand segment;
- the concentration of our customers;
- failure to effectively manage growth;
- delays in testing and introductions of new products;
- rapid technology changes;
- demand shifts from high-priced, proprietary real-time systems to
low-priced, open server systems;
- 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;
- failure to effectively service the installed base;
- the entry of new well-capitalized competitors into our markets; and
- the valuation of equity investments and collectibility of notes
receivable, including but not limited to our equity and debt
investment in Thirdspace.
Other important risk factors are discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2002.
Our forward-looking statements are based on current expectations and speak only as of the date of such statements. Concurrent undertakes 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 DISCLOSURE ABOUT MARKET RISK
Concurrent is exposed to market risk from changes in interest rates and foreign currency exchange rates. Concurrent is exposed to the impact of interest rate changes on its 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. Concurrent believes that the impact of a 10% increase or decline in interest rates would not be material to the financial statements.
Concurrent conducts business in the United States and around the world. The most significant foreign currency transaction exposures relate to the United Kingdom, those Western European countries that use the Euro as a common currency, Australia, and Japan. Concurrent does not hedge against fluctuations in exchange rates and believes 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 SEC rules, Concurrent has evaluated the effectiveness of the design and operation of its disclosure controls and procedures within 90 days of the filing date of this quarterly 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 Concurrent's disclosure controls and procedures are effective. There were no significant changes to Concurrent's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.
Disclosure controls and procedures are Concurrent's controls and other procedures that are designed to ensure that information required to be disclosed by Concurrent in the reports that we file or submit under the Exchange Act is 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 Concurrent in the reports that Concurrent files under the Exchange Act is accumulated and communicated to our management, including Concurrent's 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, Concurrent may be involved in litigation relating to claims arising out of its ordinary course of business. Concurrent is not presently involved in any material litigation, but has the following matters pending:
Concurrent is involved in various other legal proceedings. Management of Concurrent believes that any liability to Concurrent which may arise as a result of these proceedings, including the proceedings specifically discussed above, will not have a material adverse effect on Concurrent's 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)).
3.2 - Amended and Restated Bylaws of the Registrant.
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.
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.
99.1 - 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.
99.2 - 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.
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the period covered by this report:
- Current Report on Form 8-K filed on January 24, 2003 relating to
financial results for the quarter ended December 31, 2002.
- Current Report on Form 8-K filed on January 31, 2003 regarding the
retirement of Board Member Morton Handel.
- Current Report on Form 8-K filed on March 21, 2003 relating to the
equity investment in Thirdspace.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report for the quarter ended March 31, 2003, to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 15, 2003 CONCURRENT COMPUTER CORPORATION
By: /s/ Steven R. Norton
----------------------
Steven R. Norton
Executive Vice President, Chief Financial Officer
and Secretary
(Principal Financial and Accounting Officer,
Authorized Officer)
|
I, Jack A. Bryant, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Concurrent Computer Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Jack A. Bryant
-------------------------------------------
Name: Jack A. Bryant
Title: President and Chief Executive Officer
|
I, Steven R. Norton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Concurrent Computer Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Steven R. Norton
-------------------------------------
Name: Steven R. Norton
Title: Executive Vice President, Chief Financial
Officer and Secretary
|
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.
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.
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.
99.1 - 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.
99.2 - 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.
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
CONCURRENT COMPUTER CORPORATION
(NOVEMBER 1996)
****
These by-laws, the powers of the corporation and of its directors and stockholders, and all matters concerning the conduct and regulation of the business of the corporation shall be subject to such provisions in regard thereto as are set forth in the certificate of incorporation filed pursuant to the General Corporation Law of the State of Delaware, which is hereby made a part of these by-laws.
The term "certificate of incorporation" in these by-laws unless the context requires otherwise, includes not only the original certificate of incorporation filed to create the corporation but also all other certificates, agreements of merger or consolidation, plans of reorganization, or other instruments, howsoever designated, filed pursuant to the General Corporation Law of the State of Delaware which have the effect of amending or supplementing in some respect the corporation's original certificate of incorporation.
An annual meeting of stockholders shall be held for the election of directors and for the transaction of any other business for the transaction of which the meeting shall have been properly convened on such day not a legal holiday in the months of September, October, or November in each year, or upon such other day as the board of directors may at any time otherwise determine, at such place, within or without the State of Delaware, and at such time as such day, place and time shall be fixed by the board of directors and specified in the notice of the meeting. Any other proper business may be transacted at the annual meeting. If the annual meeting for election of directors shall not be held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient.
Special meetings of the stockholders may be held either within or without the State of Delaware, at such time and place and for such purposes as shall be specified in a call for such meeting made by the board of directors or by a writing filed with the secretary signed by the president or by a majority of the directors.
Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, which notice shall be given not less than ten nor more than fifty days before the date of the meeting, except where longer notice is required by law, to each stockholder entitled to vote at such meeting, by leaving such notice with him or by mailing it, postage prepaid, directed to him at his address as it appears upon the records of the corporation. In case of the death, absence, incapacity or refusal of the secretary, such notice may be given by a person designated either by the secretary or by the person or persons calling the meeting or by the board of directors. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
At an annual or special meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Provided at all times that stockholders may only give notice to the secretary of matters to be brought before a meeting that are suitable and appropriate for consideration by stockholders of a public company. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at any meeting except in accordance with the procedures set forth in this paragraph. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
Only persons who are nominated in accordance with the procedures set
forth in this paragraph shall be eligible for election as directors at a
meeting of stockholders. Nominations of persons for election to the board of
directors of the corporation may be made at a meeting of stockholders by or at
the direction of the board of directors or by any stockholder of the
corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this paragraph. Such
nominations, other than those made by or at the direction of the board of
directors, shall be made pursuant to timely notice in writing to the secretary
of the corporation. To be timely, a stockholder's notice shall be delivered
to or mailed and received at the principal executive offices of the
corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number
of shares of the corporation which are beneficially owned by such person and
(iv) any other information relating to such person that is required to be
disclosed in solicitations or proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including without limitation such
persons' written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); and (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such stockholder. At the request
of the board of directors any person nominated by the board of directors for
election as a director shall furnish to the secretary of the corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth in this paragraph. The chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made
in accordance with the procedures prescribed by the By-Laws, and if he should
so determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
At any meeting of the stockholders, a majority (based on voting rights of all shares) of all shares issued and outstanding and entitled to vote upon a question to be considered at the meeting shall constitute a quorum for the consideration of such question when represented at such meeting by the holders thereof in person or by their duly constituted and authorized attorney, but a less interest may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting a majority of the stock so represented thereat and entitled to vote shall, except where a larger vote is required by law, by the certificate of incorporation or by these by-laws, decide any question brought before such meeting.
The secretary or other officer having charge of the stock ledger shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall have been specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Said list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders required by this Article or the books of the corporation, or the stockholders entitled to vote in person or by proxy at any meeting of stockholders.
Except as otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy but (except as otherwise expressly permitted by law) no proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period or so long as it is coupled with an interest sufficient in law to support an irrevocable power.
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty or less than ten days before the date of such meeting, nor more than sixty days prior to any other action.
If no record date is fixed:
(1) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(2) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed.
(3) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the board of directors may fix a new record date for the adjourned meeting.
Except as otherwise provided by law or by the certificate of incorporation, the business and affairs of the corporation shall be managed by the board of directors.
The number of directors shall be such number, not fewer than three nor more than twelve, as may be determined from time to time by resolution of the board of directors. Directors shall be elected by the stockholders at the annual meeting. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. No director need be a stockholder.
The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee who may replace any absent or disqualified member at any meeting of the committee and may define the number and qualifications which shall constitute a quorum of such committee. Except as otherwise limited by law, any such committee, to the extent provided in the resolution appointing such committee, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member.
Regular meetings of the board of directors may be held without call or formal notice at such places either within or without the State of Delaware and at such times as the board may by vote from time to time determine.
Special meetings of the board of directors may be held at any place either within or without the State of Delaware at any time when called by the chairman of the board, secretary or two or more directors, reasonable notice of the time and place thereof being given to each director.
Unless otherwise restricted by the certificate of incorporation or by other provisions of these by-laws, (a) any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting of all members of the board or of such committee, as the case may be, consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the board or committee, and (b) members of the board of directors or of any committee designated by the board may participate in a meeting thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at such meeting.
Except as otherwise expressly provided in the certificate of incorporation or in these by-laws, a majority of the total number of directors at the time in office shall constitute a quorum for the transaction of business, but a less number may adjourn any meeting from time to time. Except as otherwise so expressly provided, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, provided, that the affirmative vote in good faith of a majority of the disinterested directors, even though the disinterested directors shall be fewer than a quorum, shall be sufficient to authorize a contract or transaction in which one or more directors have an interest if the material facts as to such interest and the relation of the interested directors to the contract or transaction have been disclosed or are known to the directors.
Whenever notice is required to be given under any provision of law or the certificate of corporation or by-laws, a written waiver thereof, signed by the person entitled to notice whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or the by-laws.
The corporation shall have a president, secretary and treasurer, who shall be chosen by the directors, each of whom shall hold his office until his successor has been chosen and qualified or until his earlier resignation or removal. The corporation may have such other officers and agents as are desired, including without limitation a chairman of the board of directors and an executive vice president, each of whom shall be chosen by the board of directors and shall hold his office for such term and have such authority and duties as shall be determined by the board of directors. The board of directors may secure the fidelity of any or all of such officers or agents by bond or otherwise. Any number of offices may be held by the same person. Each officer shall, subject to these by-laws, have in addition to the duties and powers herein set forth, such duties and powers as the board of directors shall from time to time designate. In all cases where the duties of any officer, agent or employee are not specifically prescribed by the by-laws, or by the board of directors, such officer, agent or employee shall obey the orders and instructions of the president. Any officer may resign at any time upon written notice to the corporation.
Except as otherwise voted by the board, the chairman of the board shall preside at all meetings of the stockholders and of the board of directors at which he is present.
The president and chief executive officer shall, subject to the direction and under the supervision of the board of directors, have general and active control of the corporation's affairs and business, and general supervision over its officers, agents and employees. In the absence of and when so designated by the chairman of the board, the president and chief executive officer shall perform the duties and responsibilities of the chairman of the board on a temporary basis in accordance with and as specifically prescribed by the by-laws or as specifically prescribed by the board of directors. The president and chief executive officer shall have custody of the treasurer's bond, if any.
The secretary shall record all the proceedings of the meetings of the stockholders and directors in a book, which shall be the property of the corporation, to be kept for that purpose. The secretary shall perform such other duties as shall be assigned to him by the board of directors. In the absence of the secretary from any such meeting, a temporary secretary shall be chosen, who shall record the proceedings of such meetings in the aforesaid book.
The treasurer shall, subject to the direction and under the supervision of the board of directors, have the care and custody of the funds and valuable papers of the corporation, except his own bond, and he shall, except as the board of directors shall generally or in particular cases authorize the endorsement thereof in some other manner, have power to endorse for deposit or collection all notes, checks, drafts and other obligations for the payment of money to the corporation or its order. He shall keep, or cause to be kept, accurate books of account, which shall be the property of the corporation.
The stockholders may, at any meeting called for the purpose, by vote of a majority of the capital stock issued and outstanding and entitled to vote thereon, remove any director from office.
The board of directors may, at any meeting called for the purpose, by vote of a majority of their entire number remove from office any officer or agent of the corporation or any member of any committee appointed by the board of directors or by any committee of the board of directors or by any officer or agent of the corporation.
Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office (though less than a quorum) or by a sole remaining director, and each of the incumbents so chosen shall hold office for the unexpired term in respect of which the vacancy occurred and until his successor shall have been duly elected and qualified or for such shorter period as shall be specified in the filling of such vacancy or, if such vacancy shall have occurred in the office of director, until such a successor shall have been chosen by the stockholders.
Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors (if one shall be incumbent) or the president or a vice-president and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary, certifying the number of shares owned by him in the corporation. If such certificate is countersigned (1) by a transfer agent other than the corporation or its employee, or (2) by a registrar other than the corporation or its employee, any other signatures on the certificate may be facsimile. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of issue.
If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificates which the corporation shall issue to represent such class or series of stock or there shall be set forth on the face or back of the certificates which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish, without charge to each stockholder who so requests, the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any restriction imposed upon the transfer of shares or registration of transfer of shares shall be noted conspicuously on the certificate representing the shares subject to such restriction.
The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the directors may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in its place and upon such other terms or without any such bond which the board of directors shall prescribe.
The corporate seal shall, subject to alteration by the board of directors, consist of a flat-faced circular die with the word "Delaware" together with the name of the corporation and the year of its organization cut or engraved thereon. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
Except as otherwise provided in these by-laws or as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, checks, drafts and other obligations made, accepted or endorsed by the corporation, shall be signed by the president or by the treasurer.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving, at the request of the corporation, another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments and fines actually imposed or
reasonably incurred by him in connection with such action, suit or proceeding
unless in any proceeding he shall be finally adjudged not to have acted in
good faith in the reasonable belief that his action was in the best interests
of the corporation; provided, however, that such indemnification shall not
cover liabilities in connection with any matter which shall be disposed of
through a compromise payment by such person, pursuant to a consent decree or
otherwise, unless such compromise shall be approved as in the best interest of
the corporation, after notice that it involves such indemnification, (a) by
the board of directors by a majority vote of a quorum consisting of directors
who were not parties to such action, event or proceeding, or (b) if such a
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(c) by the stockholders. Such indemnification may include payment by the
corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under these
provisions. The rights of indemnification hereby provided shall not be
exclusive of or affect other rights to which any director, officer, employee,
agent or stockholder may be entitled. As used in this paragraph, the terms
"director", "officer", "employee", "agent" or "stockholder" include their
respective heirs, executors and administrators, and an "interested" director
or officer is one against whom as such the proceeding in question or another
proceeding on the same or similar grounds is then pending. Any
indemnification to which a person is entitled under this paragraph shall be
provided although the person to be indemnified is no longer such a director,
officer, employee, agent or stockholder. Notwithstanding the foregoing, no
indemnification shall be provided hereunder to the extent then prohibited by
applicable law.
Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the last day of June of each year.
Except as otherwise provided by law or by the certificate of incorporation, these by-laws, as from time to time altered or amended, may be made, altered or amended at any annual or special meeting of the stockholders called for the purpose, of which the notice shall specify the subject matter of the proposed alteration or amendment or new by-law or the article or articles to be affected thereby. If the certificate of incorporation so provides, these by-laws may also be made, altered or amended by a majority of the whole number of directors. Such action may be taken at any meeting of the board of directors, of which notice shall have been given as for a meeting of stockholders.
073255
EXHIBIT 4.1
SHARES
NUMBER CONCURRENT SEE REVERSE FOR
CCU14563 COMPUTER CORPORATION CERTAIN DEFINITIONS
Concurrent Computer Corporation
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS IS TO CERTIFY THAT CUSIP 206710 20 4
IS THE OWNER OF
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.01, OF
Dated:
05-10-02 05-10-02
CONCURRENT COMPUTER CORPORATION
CORPORATE SEAL
1981 DELAWARE
/s/ Jack Bryant /s/ Steven R. Norton
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
ABM SECOL ABM SECOL
COUNTER SIGNED AND REGISTERED
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, N.Y.)
|
TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE
THE CORPORATION WILL FURNISH TO THE HOLDER UPON REQUEST WITHOUT CHARGE THE DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OF RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to
Minors survivorship and not as tenants Act.
in common. (State)
Additional abbreviations may also be used though not in the above list.
For value received, ________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated ___________________________
SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVING AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIPS IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Concurrent Computer Corporation (the "Company") and The First National Bank of Boston, dated as of July 31, 1992 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may expire, or may be evidenced by separate certificates and no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement without charge promptly after receipt of a written request therefore. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was, or becomes an Acquiring Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Persons by any subsequent holder, may be null and void.
EXHIBIT 99.1
CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Concurrent Computer Corporation (the "Corporation") for the quarter ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the President and Chief Executive Officer of the Corporation certifies that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Corporation.
/s/ Jack A. Bryant ----------------------------------------- Jack A. Bryant President and Chief Executive Officer May 15, 2003 |
A signed original of this written statement required by Section 906 has been provided to Concurrent Computer Corporation and will be retained by Concurrent Computer Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 99.2
CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Concurrent Computer Corporation (the "Corporation") for the quarter ended March 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Executive Vice President, Chief Financial Officer and Secretary of the Corporation certifies that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Corporation.
/s/ Steven R. Norton ----------------------------------------- Steven R. Norton Executive Vice President, Chief Financial Officer and Secretary May 15, 2003 |
A signed original of this written statement required by Section 906 has been provided to Concurrent Computer Corporation and will be retained by Concurrent Computer Corporation and furnished to the Securities and Exchange Commission or its staff upon request.