UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
  
 Washington,
D.C. 20549
 --------------
 
 FORM
10-Q
 
 (Mark
One)
 x        
Quarterly Report Pursuant to Section 13 or 15(d) of
 the
Securities Exchange Act of 1934
 
 For the
Quarterly Period Ended September 30, 2008
 
 or
 
 oTransition
Report Pursuant to Section 13 or 15(d) of
 the
Securities Exchange Act of 1934
 
 For the
Transition Period from ____ to  ____
 
 Commission
File No. 0-13150
 _____________
 
 CONCURRENT
COMPUTER CORPORATION
 (Exact
name of registrant as specified in its charter)
 
 Delaware
                
                04-2735766(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer Identification No.)
 
 4375
River Green Parkway, Suite 100, Duluth, GA  30096
 (Address
of principal executive offices) (Zip Code)
 
 Telephone:
(678) 258-4000
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the Registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 Yes x      No   o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer.  See definition of
“large accelerated filer”, “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.  (Check one):
 
 Large
      accelerated filer o
                Accelerated
      Filer x
                Non-Accelerated
      Filer o
                Smaller
      reporting company   o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 
 Yes o  
   No x
  Number of shares of the Registrant's
Common Stock, par value $0.01 per share, outstanding as of October 27, 2008 was
8,275,000.
  
 
  ConcurrentComputer Corporation
 Form
10-Q
 For the Three Months Ended September
30, 2008
  Table of Contents
  PagePart I – Financial
    InformationItem 1.
                          Condensed Consolidated Financial
Statements
                          2Condensed Consolidated Balance Sheets
      (Unaudited)
                          2Condensed Consolidated Statements of Operations
      (Unaudited)
                          3Condensed Consolidated Statements of Cash Flows
      (Unaudited)
                          4Notes to Condensed Consolidated Financial Statements
      (Unaudited)
                          5Item 2.
                          Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                          13Item 3.
                          Quantitative and
      Qualitative Disclosures About Market Risk
                          20Item 4.
                          Controls and
      Procedures
                          20Part II – Other
  InformationItem 1.
                          Legal
      Proceedings
                          20Item
      1A.
                          Risk Factors
                          20Item
      2.
                          Unregistered Sales of Equity Securities and Use of
      Proceeds
                          21Item 6.
                          Exhibits
                          21EX-31.1
      SECTION 302 CERTIFICATION OF CEOEX-31.2
      SECTION 302 CERTIFICATION OF CFOEX-32.1
      SECTION 906 CERTIFICATION OF CEOEX-32.2
      SECTION 906 CERTIFICATION OF
CFO
  1
 Table of Contents
  PartI        
  Financial Information
 Item
1.         Condensed Consolidated Financial
Statements
 
 Concurrent
Computer Corporation
 Condensed
Consolidated Balance Sheets
 (Dollars
in Thousands)
 
 September
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2008(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                    
                    $
                    23,856
                    
                    
                    $
                    27,359Accounts
      receivable, less allowance for doubtful accounts of $89 at September 30,
      2008 and $90 at June 30, 2008
                    
                    
                    17,511
                    
                    
                    
                    14,422Inventories
      - net
                    
                    
                    3,372
                    
                    
                    
                    5,094Prepaid
      expenses and other current assets
                    
                    
                    1,773
                    
                    
                    
                    1,360Total
      current assets
                    
                    
                    46,512
                    
                    
                    
                    48,235Property,
      plant and equipment - net
                    
                    
                    3,973
                    
                    
                    
                    3,867Intangible
      - purchased technology, net
                    
                    
                    3,852
                    
                    
                    
                    4,081Intangible
      - customer relationships and trademark, net
                    
                    
                    2,487
                    
                    
                    
                    2,530Goodwill
                    
                    
                    15,990
                    
                    
                    
                    15,990Other
      long-term assets - net
                    
                    
                    737
                    
                    
                    
                    836Total
      assets
                    
                    $
                    73,551
                    
                    
                    $
                    75,539LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                    
                    $
                    10,332
                    
                    
                    $
                    13,984Revolving
      bank line of credit
                    
                    
                    949
                    
                    
                    
                    -Deferred
      revenue
                    
                    
                    10,419
                    
                    
                    
                    8,570Total
      current liabilities
                    
                    
                    21,700
                    
                    
                    
                    22,554Long-term
      liabilities:Deferred
      revenue
                    
                    
                    1,005
                    
                    
                    
                    962Revolving
      bank line of credit
                    
                    
                    -
                    
                    
                    
                    949Pension
      liability
                    
                    
                    1,700
                    
                    
                    
                    1,878Other
                    
                    
                    1,713
                    
                    
                    
                    1,768Total
      liabilities
                    
                    
                    26,118
                    
                    
                    
                    28,111Commitments
      and contingencies (Note 13)Stockholders'
      equity:Shares
      of common stock, par value $.01; 100,000,000 authorized;8,268,393 and
      8,305,588 issued and outstanding at September 30, 2008 and June 30, 2008,
      respectively
                    
                    
                    83
                    
                    
                    
                    83Capital
      in excess of par value
                    
                    
                    204,656
                    
                    
                    
                    204,574Accumulated
      deficit
                    
                    
                    (157,689
                    )
                    
                    
                    (157,782
                    )Treasury
      stock, at cost; 37,002 shares and 0 at September 30, 2008 and June 30,
      2008, respectively
                    
                    
                    (252
                    )
                    
                    
                    -Accumulated
      other comprehensive income
                    
                    
                    635
                    
                    
                    
                    553Total
      stockholders' equity
                    
                    
                    47,433
                    
                    
                    
                    47,428Total
      liabilities and stockholders' equity
                    
                    $
                    73,551
                    
                    
                    $
                    75,539
 
 The
accompanying notes are an integral part of the condensed consolidated financial
statements.
  2
 Table of Contents
  ConcurrentComputer Corporation
 Condensed
Consolidated Statements of Operations (Unaudited)
 (In
Thousands, Except Per Share Amounts)
 
 
 Three
      Months EndedSeptember 30,2008
                  
                  
                  2007Revenues:Product
                  
                  $
                  12,049
                  
                  
                  $
                  9,768Service
                  
                  
                  6,286
                  
                  
                  
                  6,487Total
      revenues
                  
                  
                  18,335
                  
                  
                  
                  16,255Cost
      of sales:Product
                  
                  
                  5,635
                  
                  
                  
                  5,053Service
                  
                  
                  2,418
                  
                  
                  
                  2,647Total
      cost of sales
                  
                  
                  8,053
                  
                  
                  
                  7,700Gross
      margin
                  
                  
                  10,282
                  
                  
                  
                  8,555Operating
      expenses:Sales
      and marketing
                  
                  
                  3,568
                  
                  
                  
                  3,793Research
      and development
                  
                  
                  3,839
                  
                  
                  
                  4,212General
      and administrative
                  
                  
                  2,323
                  
                  
                  
                  2,347Total
      operating expenses
                  
                  
                  9,730
                  
                  
                  
                  10,352Operating
      income (loss)
                  
                  
                  552
                  
                  
                  
                  (1,797
                  )Gain
      on arbitration settlement, net
                  
                  
                  -
                  
                  
                  
                  1,900Recovery
      of minority investment, net
                  
                  
                  -
                  
                  
                  
                  1,415Interest
      income
                  
                  
                  111
                  
                  
                  
                  225Interest
      expense
                  
                  
                  (29
                  )
                  
                  
                  (36
                  )Other
      income (expense), net
                  
                  
                  (291
                  )
                  
                  
                  91Income
      before income taxes
                  
                  
                  343
                  
                  
                  
                  1,798Provision
      for income taxes
                  
                  
                  250
                  
                  
                  
                  54Net
      income
                  
                  $
                  93
                  
                  
                  $
                  1,744Net
      income per shareBasic
                  
                  $
                  0.01
                  
                  
                  $
                  0.21Diluted
                  
                  $
                  0.01
                  
                  
                  $
                  0.21Weighted
      average shares outstanding - basic
                  
                  
                  8,292
                  
                  
                  
                  8,293Weighted
      average shares outstanding - diluted
                  
                  
                  8,308
                  
                  
                  
                  8,311
 
 
 The
accompanying notes are an integral part of the condensed consolidated financial
statements.
  3
 Table of Contents
  ConcurrentComputer Corporation
 Condensed
Consolidated Statements of Cash Flows (Unaudited)
 (Dollars
in Thousands)
 
 
 Three
      Months EndedSeptember 30,2008
                  
                  
                  2007OPERATING
      ACTIVITIESNet
      income
                  
                  $
                  93
                  
                  
                  $
                  1,744Adjustments
      to reconcile net income to net cash (used in) provided by operating
      activities:Depreciation
      and amortization
                  
                  
                  775
                  
                  
                  
                  1,165Share-based
      compensation
                  
                  
                  82
                  
                  
                  
                  161Recovery
      of minority investment, net
                  
                  
                  -
                  
                  
                  
                  (1,415
                  )Other
      non-cash expenses
                  
                  
                  362
                  
                  
                  
                  (63
                  )Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  (3,089
                  )
                  
                  
                  5,313Inventories
                  
                  
                  1,656
                  
                  
                  
                  142Prepaid
      expenses and other current assets
                  
                  
                  (434
                  )
                  
                  
                  (321
                  )Other
      long-term assets
                  
                  
                  99
                  
                  
                  
                  13Accounts
      payable and accrued expenses
                  
                  
                  (3,652
                  )
                  
                  
                  (3,060
                  )Deferred
      revenue
                  
                  
                  1,892
                  
                  
                  
                  688Other
      long-term liabilities
                  
                  
                  (29
                  )
                  
                  
                  381Total
      adjustments to net income
                  
                  
                  (2,338
                  )
                  
                  
                  3,004Net
      cash (used in) provided by operating activities
                  
                  
                  (2,245
                  )
                  
                  
                  4,748INVESTING
      ACTIVITIESCapital
      expenditures
                  
                  
                  (646
                  )
                  
                  
                  (271
                  )Recovery
      of minority investment, net
                  
                  
                  -
                  
                  
                  
                  1,415Net
      cash (used in) provided by investing activities
                  
                  
                  (646
                  )
                  
                  
                  1,144FINANCING
      ACTIVITIESRepayment
      of note payable to bank
                  
                  
                  -
                  
                  
                  
                  (391
                  )Purchase
      of treasury stock
                  
                  
                  (252
                  )
                  
                  
                  (29
                  )Net
      cash used in financing activities
                  
                  
                  (252
                  )
                  
                  
                  (420
                  )Effect
      of exchange rates on cash and cash equivalents
                  
                  
                  (360
                  )
                  
                  
                  197(Decrease)
      increase in cash and cash equivalents
                  
                  
                  (3,503
                  )
                  
                  
                  5,669Cash
      and cash equivalents at beginning of period
                  
                  
                  27,359
                  
                  
                  
                  20,416Cash
      and cash equivalents at end of period
                  
                  $
                  23,856
                  
                  
                  $
                  26,085Cash
      paid during the period for:Interest
                  
                  $
                  15
                  
                  
                  $
                  16Income
      taxes (net of refunds)
                  
                  $
                  412
                  
                  
                  $
                  52
 
 The
accompanying notes are an integral part of the condensed consolidated financial
statements
  4
 Table of Contents
  ConcurrentComputer Corporation
 Notes
to Condensed Consolidated Financial Statements
 
 
 1.            Overview
of Business and Basis of Presentation
 
 Concurrent
is a provider of computing technologies and software applications, and related
services, for the video-on-demand (VOD) market and the high-performance
real-time market.  Concurrent’s business is comprised of two segments
for financial reporting purposes: products and services.  We provide
products and services for each of these markets.
 
 Concurrent’s
on-demand products consist of hardware and/or software as well as integration
services, sold primarily to broadband companies that provide interactive,
digital services.  Concurrent’s real-time products consist of
real-time operating systems and software development tools combined, in most
cases, with off-the-shelf hardware and services sold to a wide variety of
companies seeking high-performance, real-time computer solutions for use in
various applications requiring low-latency response and determinism such as
simulation, image generation, hardware-in-the-loop testing and data
acquisition.
 
 Concurrent
provides sales and support from offices and subsidiaries throughout North
America, Europe, and Asia.
 
 The
condensed consolidated interim financial statements of Concurrent are unaudited
and reflect all adjustments (consisting of only normal recurring adjustments)
necessary for a fair statement of Concurrent’s financial position, results of
operations and cash flows at the dates and for the periods
indicated.  These financial statements should be read in conjunction
with Concurrent’s Annual Report on Form 10-K for the year ended June 30,
2008.  There have been no changes to Concurrent’s Significant
Accounting Policies as disclosed in Note 2 of the consolidated financial
statements included in Concurrent’s Annual Report on Form 10-K for the year
ended June 30, 2008.  The results reported in these condensed
consolidated financial statements should not be regarded as necessarily
indicative of results that may be expected for the entire year.
 
 Use of Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.
 
 Recently
Issued Accounting Pronouncements
 
 Effective
July 1, 2008, Concurrent adopted Financial Accounting Standards Board (“FASB”)
Statement (“SFAS”) No. 157, Fair Value Measurements
(“SFAS No. 157”), and this adoption did not have a material impact on
Concurrent’s financial statements.  On October 10, 2008, the FASB
issued FASB Staff Position (FSP) FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not
Active.  The FSP clarifies the application of SFAS No. 157 in a
market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the
market for that financial asset is not active.  The FSP is effective
upon issuance, including prior periods for which financial statements have not
been issued.  Revisions resulting from a change in the valuation
technique or its application should be accounted for as a change in accounting
estimate following the guidance in SFAS No. 154, Accounting Changes and Error
Corrections.  However, the disclosure provisions in Statement
154 for a change in accounting estimate are not required for revisions
resulting from a change in valuation technique or its application.
  2.           Basic
and Diluted Net Income per Share
 
 On July
8, 2008, Concurrent’s shareholders approved a one-for-ten reverse stock split
(the “Reverse Stock Split”) and the reverse stock split became effective on July
9, 2008.  Pursuant to the Reverse Stock Split, every ten shares of
Concurrent common stock have been combined into one share of common
stock.  The number of shares subject to outstanding options and
warrants have been reduced in the same ratio as the reduction in the outstanding
shares, and the per share exercise price of those options and warrants have been
increased in direct proportion to the Reverse Stock Split
ratio.   Earnings per share computations, balance sheets, and
footnote presentation of shares and share equivalents for the three months ended
September 30, 2007 have been restated to reflect the Reverse Stock
Split.  The Reverse Stock Split had no impact on the authorized number
of shares.
  5
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 Basic net
income per share is computed in accordance with SFAS No. 128, Earnings Per Share, by
dividing net income by the weighted average number of common shares outstanding
during each period.  Diluted net income per share is computed by
dividing net income by the weighted average number of shares including dilutive
common share equivalents.  Under the treasury stock method,
incremental shares representing the number of additional common shares that
would have been outstanding if the dilutive potential common shares had been
issued are included in the computation.  Diluted earnings per common
share assumes exercise of outstanding stock options and vesting of restricted
stock when the effects of such assumptions are dilutive.  Common share
equivalents of 1,051,000 and 949,000 for the three months ended September 30,
2008 and 2007, 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 per share for
the periods indicated (dollars and share data in thousands, except per-share
amounts):
 
 Three
      Months Ended September 30,2008
                          
                          
                          2007Basic
      and diluted earnings per share (EPS) calculation:Net
      income
                          
                          $
                          93
                          
                          
                          $
                          1,744Basic
      weighted average number of shares outstanding
                          
                          
                          8,292
                          
                          
                          
                          8,293Effect
      of dilutive securities:Restricted
      stock
                          
                          
                          16
                          
                          
                          
                          15Employee
      stock options
                          
                          
                          -
                          
                          
                          
                          3Shares
      issued upon assumed exercise of warrants
                          
                          
                          -
                          
                          
                          
                          -Diluted
      weighted average number of shares outstanding
                          
                          
                          8,308
                          
                          
                          
                          8,311Basic
      EPS
                          
                          $
                          0.01
                          
                          
                          $
                          0.21Diluted
      EPS
                          
                          $
                          0.01
                          
                          
                          $
                          0.21
 
 3.        
    Share-Based Compensation
 
 At
September 30, 2008, Concurrent had share-based employee compensation plans which
are described in Note 12 of the consolidated financial statements included in
Concurrent’s Annual Report on Form 10-K for the year ended June 30,
2008.  Option awards are granted with an exercise price equal to the
market price of Concurrent’s stock at the date of grant.  Concurrent
recognizes stock compensation expense over the requisite service period of the
individual grantees, which generally equals the vesting period.  All of
Concurrent’s stock compensation is accounted for as equity
instruments.  As of September 30, 2008, Concurrent had approximately
738,000 stock options and approximately 55,000 restricted shares
outstanding.
 
 Concurrent
uses the Black-Scholes valuation model to estimate the fair value of each option
award on the date of grant.  During the three months ended September
30, 2008, Concurrent granted 20,000 stock options and 10,000 shares of
restricted stock.  For stock option grants during the three months
ended September 30, 2008, Concurrent used a risk-free rate interest rate of
2.9%, expected volatility of 70.1%, expected term of 6 years and expected
dividend yield of 0%.  Based on historical experience of option
pre-vesting cancellations, Concurrent has assumed an annualized forfeiture rate
of 6.0% for unvested options for the three months ended September 30,
2008.  Under the true-up provisions of SFAS 123R, Concurrent will
record additional expense if the actual forfeiture rate is lower than estimated,
and will record a recovery of prior expense if the actual forfeiture is higher
than estimated.
  6
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 Concurrent
recorded share-based compensation related to issuances of stock options and
restricted stock to employees and directors, as follows (amounts in thousands of
dollars):
 
 Three
      Months EndedSeptember
      30,2008
                    
                    
                    2007Statement
      of Operations:Cost
      of sales
                    
                    $
                    1
                    
                    
                    $
                    (3
                    )Sales
      and marketing
                    
                    
                    12
                    
                    
                    
                    32Research
      and development
                    
                    
                    20
                    
                    
                    
                    14General
      and administrative
                    
                    
                    49
                    
                    
                    
                    118Total
                    
                    
                    82
                    
                    
                    
                    161Tax
      benefit
                    
                    
                    -
                    
                    
                    
                    -Share-based
      compensation expense, net of taxes
                    
                    $
                    82
                    
                    
                    $
                    161Increase
      in basic income (loss) per share
                    
                    $
                    0.01
                    
                    
                    $
                    0.02Increase
      in diluted income (loss) per share
                    
                    $
                    0.01
                    
                    
                    $
                    0.02
 
 4.          
  Inventories
 
 Inventories
are stated at the lower of cost or market, with cost being determined by using
the first-in, first-out method.  Concurrent establishes excess and
obsolete inventory reserves based upon historical and anticipated
usage.  The components of inventories are as follows (in
thousands):
 
 September
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2008Raw
      materials, net
                    
                    $
                    1,865
                    
                    
                    $
                    3,849Work-in-process
                    
                    
                    723
                    
                    
                    
                    609Finished
      goods
                    
                    
                    784
                    
                    
                    
                    636$
                    3,372
                    
                    
                    $
                    5,094
 
 At
September 30, 2008 and June 30, 2008, some portion of Concurrent’s inventory was
in excess of the current requirements based upon the planned level of sales for
future years.  Accordingly, Concurrent has reduced its gross raw
materials inventory by $1,296,000 at September 30, 2008 and $1,234,000 at June
30, 2008, to its estimated net realizable value.
 
 5.             Goodwill
and Other Intangible Assets
 
 Goodwill
was $15,990,000 as of both September 30, 2008 and June 30,
2008.  Concurrent does not measure assets on a segment basis, and
therefore, does not allocate goodwill on a segment basis.  Concurrent
operates in two segments, as defined by SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information.  Our two segments are
products and services, which are also considered Reporting Units for assessment
of goodwill impairment under SFAS No. 142, Goodwill and Other Intangible Assets(“SFAS No. 142”).  Since
Concurrent does not measure assets on a segment basis, it allocates operating
expenses on a pro-rata basis between products and services to test impairment of
goodwill and allocates goodwill between the two reporting units in the same
manner.  In accordance with SFAS No. 142, Concurrent tests goodwill
and trademark for impairment, at least annually.  Concurrent’s annual
goodwill and trademark impairment testing date is July 1.  There has
not been any impairment charge as a result of the most recent assessment as of
July 1, 2008.
  7
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 Other intangible assets consist of the
following (in thousands):
 
 September
      30,
                      
                      
                      June
      30,2008
                      
                      
                      2008Cost
      of amortizable intangibles:Purchased
      technology
                      
                      $
                      7,700
                      
                      
                      $
                      7,700Customer
      relationships
                      
                      
                      1,900
                      
                      
                      
                      1,900Total
      cost of intangibles
                      
                      
                      9,600
                      
                      
                      
                      9,600Less
      accumulated amortization:Purchased
      technology
                      
                      
                      (3,848
                      )
                      
                      
                      (3,619
                      )Customer
      relationships
                      
                      
                      (513
                      )
                      
                      
                      (470
                      )Total
      accumulated amortization
                      
                      
                      (4,361
                      )
                      
                      
                      (4,089
                      )Trademark
                      
                      
                      1,100
                      
                      
                      
                      1,100Total
      intangible assets, net
                      
                      $
                      6,339
                      
                      
                      $
                      6,611
 
 Amortization
expense was $272,000 for each of the three months ended September 30, 2008 and
2007, respectively.
 
 6.      
     Accounts Payable and Accrued Expenses
 
 The
components of accounts payable and accrued expenses are as follows (in
thousands):
 
 September
      30,
                    
                    
                    June
      30,2008
                    
                    
                    2008Accounts
      payable, trade
                    
                    $
                    5,345
                    
                    
                    $
                    7,003Accrued
      payroll, vacation, severance and other employee expenses
                    
                    
                    3,522
                    
                    
                    
                    4,338Income
      taxes payable
                    
                    
                    205
                    
                    
                    
                    390Warranty
      accrual
                    
                    
                    165
                    
                    
                    
                    198Other
      accrued expenses
                    
                    
                    1,095
                    
                    
                    
                    2,055$
                    10,332
                    
                    
                    $
                    13,984
 
 Concurrent’s
estimate of warranty obligations is based on historical experience and
expectation of future conditions.  The changes in the warranty accrual
during the three months ended September 30, 2007 were as follows (in
thousands):
 
 Balance
      at June 30, 2008
                        
                        $
                        198Charged
      to costs and expenses, net
                        
                        
                        35Deductions
      against accrual
                        
                        
                        (68
                        )Balance
      at September 30, 2008
                        
                        $
                        165
  8
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 7.    
       Comprehensive Income
(Loss)
 
 Concurrent’s
total comprehensive income (loss) is as follows (in thousands):
 
 Three
      Months EndedSeptember
      30,2008
                    
                    
                    2007Net
      income
                    
                    $
                    93
                    
                    
                    $
                    1,744Other
      comprehensive income:Foreign
      currency translation gain
                    
                    
                    71
                    
                    
                    
                    133Amortization
      of pension gain and transition amount
                    
                    
                    11
                    
                    
                    
                    (19
                    )Total
      comprehensive income
                    
                    $
                    175
                    
                    
                    $
                    1,858
 
 8.      
     Recovery of Investment in Minority
Investment
 
 In March
2002, Concurrent purchased a 14.4% equity ownership interest in Thirdspace
Living Limited (“Thirdspace”) for $7,000,000 and loaned Thirdspace $6,000,000 in
exchange for two $3,000,000 long-term notes receivable.  In fiscal
year 2003, Concurrent recorded a $13,000,000 net impairment charge due to an
“other-than-temporary” decline in the market value of the investment in
Thirdspace.  In May 2003, Thirdspace sold the majority of its assets
to Alcatel Telecom Ltd.  As a result of the sale of these certain
assets, in fiscal year 2004, Concurrent received $3,100,000 in proceeds that
were recorded in the line item “Recovery of minority investment,” within
Concurrent’s Statement of Operations.
  Thirdspace’s
only significant remaining asset subsequent to the aforementioned transactions
was a right to 40% of amounts recovered by nCube Corporation (“nCube”), now part
of Arris Group, Inc., if any, from the lawsuit brought by nCube against
SeaChange International, Inc., alleging patent infringement.  On
January 9, 2006, the U.S. Court of Appeals for the Federal Circuit affirmed the
lower court’s decision in favor of nCube.  Until the three months
ended September 30, 2007, the likelihood of collecting this asset, and the
amount and timing of such collection was uncertain and, as a result, Concurrent
had not recorded the gain contingency.
  On
September 28, 2007, nCube, Alcatel and Concurrent agreed upon the terms of
distributing this asset.  Net proceeds from the settlement, including
$85,000 of liquidation fees, were $1,415,000.  Consistent with
previous recoveries of the impaired Thirdspace investment, Concurrent recorded
the $1,415,000 as a “Recovery of minority investment, net” within its condensed
consolidated Statements of Operations during the three months ended September
30, 2007.  Concurrent does not anticipate further cash proceeds
related to the liquidation of Thirdspace’s remaining assets.
 
 9.       
    Arbitration Settlement
 
 In August
2007, Concurrent reached an agreement with Vicor, Inc. (“Vicor”), a supplier of
Concurrent’s, to settle the claims in the pending arbitration between the two
parties, in exchange for a full release.  In the arbitration,
Concurrent alleged that in 2002 and 2003 Concurrent experienced high failure
rates in its MediaHawk 2000 and 3000 series on-demand servers as a result of
defective power converters manufactured by Vicor.  Concurrent settled
for approximately $2,350,000, from which approximately $450,000 of attorney fees
was deducted and Concurrent received $1,900,000 in net proceeds in the three
months ended September 30, 2007.  Concurrent recorded the $1,900,000
net proceeds as a “Gain on arbitration settlement, net” within the condensed
consolidated Statements of Operations during the three months ended September
30, 2007.
  9
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 10.          Concentration
of Credit Risk, Segment, and Geographic Information
 
 In
accordance with SFAS 131, “Disclosure about Segments of an Enterprise and
Related Information”, Concurrent operates in two segments, products and
services, as disclosed within its condensed consolidated Statements of
Operations.  Concurrent does not identify assets on a segment
basis.
 
 Concurrent
attributes revenues to individual countries and geographic areas based upon
location of its selling operating subsidiaries.  A summary of
Concurrent’s financial data by geographic area follows (dollars in
thousands):
 
 Three
      Months EndedSeptember
      30,2008
                    
                    
                    2007United
      States
                    
                    $
                    15,228
                    
                    
                    $
                    13,323Japan
                    
                    
                    1,989
                    
                    
                    
                    1,289Other
      Asia Pacific countries
                    
                    
                    222
                    
                    
                    
                    437Asia
      Pacific
                    
                    
                    2,211
                    
                    
                    
                    1,726Europe
                    
                    
                    896
                    
                    
                    
                    1,206Total
      revenue
                    
                    $
                    18,335
                    
                    
                    $
                    16,255
 
 In
addition, the following summarizes revenues by significant customer where such
revenue exceeded 10% of total revenues for any one of the indicated
periods:
 
 Three
      Months EndedSeptember
      30,2008
                    
                    
                    2007Customer
      A
                    
                    
                    27
                    %
                    
                    <10
                    %Customer
      B
                    
                    
                    20
                    %
                    
                    
                    12
                    %Customer
      C
                    
                    <10
                    %
                    
                    
                    22
                    %
 
 
 Concurrent
assesses credit risk through ongoing credit evaluations of customers’ financial
condition and collateral is generally not required.  At September 30,
2008, one customer accounted for $5,499,000 or 31% of trade receivables, and a
second customer accounted for $4,012,000 or 23% of trade
receivables.  At June 30, 2008, one customer accounted for $1,807,000
or 12% and a second customer accounted for $1,398,000 or 10% of trade
receivables.  No other customers accounted for 10% or more of trade
receivables as of September 30, 2008 or June 30, 2008.
 
 Concurrent
sometimes purchases product components from a single supplier in order to obtain
the required technology and the most favorable price and delivery
terms.  For the three months ended September 30, 2008, purchases from
each of three suppliers were equal to, or in excess of 10% of Concurrent’s total
purchases.  These three suppliers accounted for 23%, 17% and 13% of
Concurrent’s purchases during the three months ended September 30,
2008.  Also, for the three months ended September 30, 2007, purchases
from three suppliers were equal to, or in excess of 10% of Concurrent’s total
purchases.  These three suppliers accounted for 27%, 20% and 11% of
Concurrent’s purchases during the three months ended September 30,
2007.
 
 11.          Term
Loan and Revolving Credit Facility
 
 Concurrent is
party to a Credit Agreement with Silicon Valley Bank that provides Concurrent up
to a $10,000,000 revolving credit line (the “Revolver”) with a borrowing base
dependent upon Concurrent’s outstanding North American accounts
receivable.  Concurrent had $949,000 outstanding under the Revolver as
of September 30, 2008 and June 30, 2008, respectively.  Based on the
borrowing formula and Concurrent’s financial position as of September 30, 2008,
$9,960,000 was available to Concurrent under the Revolver, resulting in
approximately $9,011,000 of remaining available funds under the
Revolver.
  10
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 The
Credit Agreement contains certain financial covenants, including a required
adjusted quick ratio (the ratio of cash and accounts receivable to current
liabilities and outstanding bank debt (less the current portion of deferred
revenue)) of at least 1.25 to 1.00 and a minimum tangible net worth of at least
$10,181,000 as of September 30, 2008.  The Credit Agreement also
contains customary restrictive covenants concerning Concurrent's
operations.  As of September 30, 2008, Concurrent’s adjusted quick
ratio was 3.67 to 1.00 and its tangible net worth (defined as total assets (less
goodwill and other intangibles) minus total liabilities) was approximately
$24,686,000.  Concurrent was in compliance with all applicable
covenants as of September 30, 2008.
 
 Interest
on any outstanding amounts under the Revolver is payable monthly at the prime
rate (5.00% at September 30, 2008) plus 0.50% per annum.  The
outstanding principal amount plus all accrued but unpaid interest is payable in
full at the expiration of the Credit Agreement on July 1, 2009.
 
 12.          Retirement
Plans
 
 The
following table provides a detail of the components of net periodic benefit cost
for the three months ended September 30, 2008 and 2007 (in
thousands):
 
 Three
      Months EndedSeptember
      30,2008
                      
                      
                      2007Service
      cost
                      
                      $
                      5
                      
                      
                      $
                      6Interest
      cost
                      
                      
                      68
                      
                      
                      
                      50Expected
      return on plan assets
                      
                      
                      (35
                      )
                      
                      
                      (32
                      )Amortization
      of net (gain) loss
                      
                      
                      -
                      
                      
                      
                      (28
                      )Amortization
      of transition amount
                      
                      
                      10
                      
                      
                      
                      9Net
      periodic benefit cost
                      
                      $
                      48
                      
                      
                      $
                      5
 
 Concurrent
contributed $15,000 to its German subsidiary’s defined benefit plan during the
three months ended September 30, 2008, and expects to make similar contributions
during the remaining quarters of fiscal 2008.  Concurrent contributed
$15,000 to its German subsidiary’s defined benefit plan during the three months
ended September 30, 2007.
 
 Concurrent
maintains a retirement savings plan, available to U.S. employees, which
qualifies as a defined contribution plan under Section 401(k) of the Internal
Revenue Code.  During the three months ended September 30, 2008 and
2007, Concurrent contributed $150,000 and $137,000 to this plan,
respectively.
 
 Concurrent
also maintains a defined contribution plan (“Stakeholder Plan”) for its U.K.
based employees.  Concurrent has agreements with certain of its U.K.
based employees to make supplementary contributions to the Stakeholder Plan over
the next year, contingent upon their continued employment with
Concurrent.  During the three months ended September 30, 2008 and
2007, Concurrent contributed $108,000 and $120,000 to the Stakeholder Plan,
respectively.
 
 13.           Commitments
and Contingencies
 
 Concurrent,
from time to time, is involved in litigation incidental to the conduct of its
business.  Concurrent believes that such pending litigation will not
have a material adverse effect on Concurrent’s results of operations or
financial condition.
 
 Concurrent
enters into agreements in the ordinary course of business with customers that
often require Concurrent to defend and/or indemnify the customer against
intellectual property infringement claims brought by a third party with respect
to Concurrent’s products.  For example, Concurrent was notified that
certain of its customers have been sued by the following companies, in the noted
jurisdictions, regarding the listed patents:
  11
 Table of Contents
  Concurrent
Computer Corporation
 Notes
to the Condensed Consolidated Financial Statements (Continued)
 
 
 Asserting
      Party
                        
                        Jurisdiction
                        
                        Patents
      at IssueAcacia
      Media Technologies, Corp.
                        
                        U.S.
      District Court
                        
                        U.S.
      Patent Nos. 5,132,992; 5,253,275;Northern
      District of California
                        
                        5,550,863,
      6,002,720 and 6,144,702U.S.A
      Video Inc.
                        
                        U.S.
      District Court
                        
                        U.S.
      Patent No. 5,130,792Eastern
      District of TexasVtran
      Media Technologies, LLC
                        
                        U.S.
      District Court
                        
                        U.S.
      Patent Nos. 4,890,320 andEastern
      District of Texas
                        
                        4,995,078
 
 Some of
these customers have requested indemnification under their agreements with
Concurrent.  Concurrent continues to review its potential obligations
under its indemnification agreements with these customers and the indemnity
obligations to these customers from other vendors that also provided systems and
services to these customers.  From time to time, Concurrent also
indemnifies customers and business partners for damages, losses and liabilities
they may suffer or incur relating to personal injury, personal property damage,
product liability, and environmental claims relating to the use of Concurrent’s
products and services or resulting from the acts or omissions of Concurrent, its
employees, authorized agents or subcontractors.  To date, Concurrent
has not encountered material costs as a result of such obligations and has not
accrued any material liabilities related to such indemnifications in the
financial statements under FIN No. 45, “Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others.”  The maximum potential amount of future payments that
Concurrent could be required to make is unlimited.
 
 Pursuant
to the terms of the employment agreements with the executive officers of
Concurrent, employment may be terminated by either Concurrent or the respective
executive officer at any time.  In the event the executive officer
voluntarily resigns (except as described below) or is terminated for cause,
compensation under the employment agreement will end.  In the event an
agreement is terminated by Concurrent without cause or in certain circumstances
constructively by Concurrent, the terminated employee will receive severance
compensation for a period from 6 to 12 months, depending on the officer, in an
annualized amount equal to the respective employee's base salary then in
effect.  Additionally, if terminated, Concurrent’s CEO and CFO would
be entitled to bonuses during the severance period.  At September 30,
2008, the maximum contingent liability under these agreements is
$1,882,000.  Concurrent’s employment agreements with certain of its
officers contain certain offset provisions, as defined in their respective
agreements.
  12
 Table of Contents
  Item2.          Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
 
 The
following Management’s Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto which appear
elsewhere herein.  Except for the historical financial information,
many of the matters discussed in this Item 2 may be considered “forward-looking”
statements that reflect our plans, estimates and beliefs.  Actual
results could differ materially from those discussed in the forward-looking
statements.  Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in the “Cautionary
Note regarding Forward-Looking Statements,” elsewhere herein and in other
filings made with the Securities and Exchange Commission.
 
 Overview
 
 On July
8, 2008, our shareholders approved a one-for-ten reverse stock split (the
“Reverse Stock Split”) and the Reverse Stock Split became effective on July 9,
2008.  Pursuant to the Reverse Stock Split, every ten shares of our
common stock have been combined into one share of common stock.  The
number of shares subject to our outstanding options and warrants have been
reduced in the same ratio as the reduction in the outstanding shares, and the
per share exercise price of those options and warrants have been increased in
direct proportion to the Reverse Stock Split ratio.   Earnings
per share computations, balance sheets, and footnote presentation of shares and
share equivalents for the three months ended September 30, 2008 and prior
periods have been restated to reflect the reverse stock split.  The
Reverse Stock Split will have no impact on the authorized number of
shares.
 
 We are
evaluating the targeted video advertising market over cable networks and the
internet to determine if there are opportunities to sell our current products or
develop new products.  We are focused on utilizing our video and
analytics expertise, existing and newly developed software, and our patent
portfolio to address these markets.  We are in the midst of this
process and believe that it may have a positive impact on our business, however,
we cannot assure the success or timing of this initiative.
 
 We
believe we are executing our business plan and expense reduction initiatives to
achieve sustainable profitability.  We will continue to review
and realign our cost structure as needed, balanced with investing in the
business to increase revenues.
 
 Application
of Critical Accounting Policies
 
 The SEC defines “critical accounting
policies” as those that require application of management’s most difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain and may change in
subsequent periods.  For a complete description of our critical
accounting policies, please refer to the “Application of Critical Accounting
Policies” in our most recent Annual Report on Form 10-K for the year ended June
30, 2008 filed with the SEC on August 27, 2008.
  13
 Table of Contents
  Selected
Operating Data as a Percentage of Total Revenue
 
 The
following table sets forth selected operating data as a percentage of total
revenue, unless otherwise indicated, for certain items in our consolidated
statements of operations for the periods indicated.
 
 Three
      Months EndedSeptember 30,2008
                          
                          
                          2007Revenues:
                          
                          (Unaudited)Product
                          
                          
                          65.7
                          %
                          
                          
                          60.1
                          %Service
                          
                          
                          34.3
                          
                          
                          
                          39.9Total
      revenues
                          
                          
                          100.0
                          
                          
                          
                          100.0Cost
      of sales (% of respective sales category):Product
                          
                          
                          46.8
                          
                          
                          
                          51.7Service
                          
                          
                          38.5
                          
                          
                          
                          40.8Total
      cost of sales
                          
                          
                          43.9
                          
                          
                          
                          47.4Gross
      margin
                          
                          
                          56.1
                          
                          
                          
                          52.6Operating
      expenses:Sales
      and marketing
                          
                          
                          19.5
                          
                          
                          
                          23.3Research
      and development
                          
                          
                          20.9
                          
                          
                          
                          25.9General
      and administrative
                          
                          
                          12.7
                          
                          
                          
                          14.5Total
      operating expenses
                          
                          
                          53.1
                          
                          
                          
                          63.7Operating
      income (loss)
                          
                          
                          3.0
                          
                          
                          
                          (11.1
                          )Gain
      on arbitration settlement, net
                          
                          
                          -
                          
                          
                          
                          11.7Recovery
      of minority investment, net
                          
                          
                          -
                          
                          
                          
                          8.7Interest
      income - net
                          
                          
                          0.5
                          
                          
                          
                          1.2Other
      income (expense) - net
                          
                          
                          (1.6
                          )
                          
                          
                          0.6Income
      before income taxes
                          
                          
                          1.9
                          
                          
                          
                          11.1Provision
      for income taxes
                          
                          
                          1.4
                          
                          
                          
                          0.4Net
      income
                          
                          
                          0.5
                          %
                          
                          
                          10.7
                          %
  14
 Table of Contents
  Results
of Operations
 
 The three months ended September 30,
2008 compared to the three months ended September 30, 2007
 
 Three
      Months EndedSeptember 30,(Dollars
      in Thousands)
                  
                  2008
                  
                  
                  2007
                  
                  
                  $ Change
                  
                  
                  % ChangeProduct
      revenues
                  
                  $
                  12,049
                  
                  
                  $
                  9,768
                  
                  
                  $
                  2,281
                  
                  
                  
                  23.4
                  %Service
      revenues
                  
                  
                  6,286
                  
                  
                  
                  6,487
                  
                  
                  
                  (201
                  )
                  
                  
                  (3.1
                  %)Total
      revenues
                  
                  
                  18,335
                  
                  
                  
                  16,255
                  
                  
                  
                  2,080
                  
                  
                  
                  12.8
                  %Product
      cost of sales
                  
                  
                  5,635
                  
                  
                  
                  5,053
                  
                  
                  
                  582
                  
                  
                  
                  11.5
                  %Service
      cost of sales
                  
                  
                  2,418
                  
                  
                  
                  2,647
                  
                  
                  
                  (229
                  )
                  
                  
                  (8.7
                  %)Total
      cost of sales
                  
                  
                  8,053
                  
                  
                  
                  7,700
                  
                  
                  
                  353
                  
                  
                  
                  4.6
                  %Product
      gross margin
                  
                  
                  6,414
                  
                  
                  
                  4,715
                  
                  
                  
                  1,699
                  
                  
                  
                  36.0
                  %Service
      gross margin
                  
                  
                  3,868
                  
                  
                  
                  3,840
                  
                  
                  
                  28
                  
                  
                  
                  0.7
                  %Total
      gross margin
                  
                  
                  10,282
                  
                  
                  
                  8,555
                  
                  
                  
                  1,727
                  
                  
                  
                  20.2
                  %Operating
      expenses:Sales
      and marketing
                  
                  
                  3,568
                  
                  
                  
                  3,793
                  
                  
                  
                  (225
                  )
                  
                  
                  (5.9
                  %)Research
      and development
                  
                  
                  3,839
                  
                  
                  
                  4,212
                  
                  
                  
                  (373
                  )
                  
                  
                  (8.9
                  %)General
      and administrative
                  
                  
                  2,323
                  
                  
                  
                  2,347
                  
                  
                  
                  (24
                  )
                  
                  
                  (1.0
                  %)Total
      operating expenses
                  
                  
                  9,730
                  
                  
                  
                  10,352
                  
                  
                  
                  (622
                  )
                  
                  
                  (6.0
                  %)Operating
      income (loss)
                  
                  
                  552
                  
                  
                  
                  (1,797
                  )
                  
                  
                  2,349
                  
                  
                  NM
                  (1)Gain
      on arbitration settlement, net
                  
                  
                  -
                  
                  
                  
                  1,900
                  
                  
                  
                  (1,900
                  )
                  
                  NM
                  (1)Recovery
      of minority investment, net
                  
                  
                  -
                  
                  
                  
                  1,415
                  
                  
                  
                  (1,415
                  )
                  
                  NM
                  (1)Interest
      income - net
                  
                  
                  82
                  
                  
                  
                  189
                  
                  
                  
                  (107
                  )
                  
                  
                  (56.6
                  %)Other
      (expense) income - net
                  
                  
                  (291
                  )
                  
                  
                  91
                  
                  
                  
                  (382
                  )
                  
                  NM
                  (1)Income
      before income taxes
                  
                  
                  343
                  
                  
                  
                  1,798
                  
                  
                  
                  (1,455
                  )
                  
                  
                  (80.9
                  %)Provision
      for income taxes
                  
                  
                  250
                  
                  
                  
                  54
                  
                  
                  
                  196
                  
                  
                  
                  363.0
                  %Net
      income
                  
                  $
                  93
                  
                  
                  $
                  1,744
                  
                  
                  $
                  (1,651
                  )
                  
                  
                  (94.7
                  %)
 
 (1) NM
denotes percentage is not meaningful
 
 Product
Sales.  Total product sales for the three months ended
September 30, 2008 were approximately $12.0 million, an increase of
approximately $2.3 million, or 23.4%, from $9.8 million for the three months
ended September 30, 2007.  The increase in product sales resulted from
the $2.1 million, or 32.9%, increase in on-demand product sales to $8.4 million
in the three months ended September 30, 2008, from $6.3 million in the three
months ended September 30, 2007.  The increase in on-demand product
revenue was primarily generated by $1.4 million and $0.7 million increases in
sales in North America and Japan, respectively.  North American
on-demand product sales increased due to existing customers replacing older
systems with our latest generation on-demand system, expanding existing systems,
and two customers deploying video-on-demand to new markets. On-demand product
sales increased in Japan due to completion of a customized software product to a
Japanese cable distributor in the three months ended September 30, 2008, that
was incremental to prior year revenue.  Fluctuation in on-demand
revenue is often due to the fact that we have a small base of large customers
making periodic large purchases that account for a significant percentage of
revenue.
  15
 Table of Contents
  Real-time
product sales increased approximately $0.2 million, or 6.0%, to $3.7 million in
the three months ended September 30, 2008 from $3.5 million in the three months
ended September 30, 2007.  This increase was due to slightly increased
volume of North American system sales during the three months ended September
30, 2008, compared to the same period in the prior year.
 
 Service
Revenue.Total service revenue for the three months ended
September 30, 2008 was $6.3 million, a decrease of $0.2 million, or 3.1%, from
$6.5 million for the three months ended September 30, 2007.  The
decrease in service revenue was due to the $0.4 million, or 14.2%, decrease in
service revenue related to real-time products.  For years we have
experienced a steady decline in real-time service revenues, as our old legacy
products have been removed from service and, to a lesser extent, from customers
purchasing our new products that produce significantly less service
revenue.  We expect real-time service revenues to ultimately decline
further, partially offset by newer system service, as additional legacy systems
are eventually removed from service.
 
 Service
revenue associated with on-demand products increased $0.2 million, or 5.5%,
partially offsetting the decrease in real-time service
revenue.  On-demand service revenue increased due to additional
installations during the quarter, and also because we continue to expand our
base of on-demand market deployments that generate maintenance and support
service revenue.
 
 Product Gross
Margin.  Product gross margin was $6.4 million for the three
months ended September 30, 2008, an increase of approximately $1.7 million, or
36%, from $4.7 million for the three months ended September 30,
2007.  Product gross margin as a percentage of product revenue
increased to 53.2% in the three months ended September 30, 2008 from 48.3% in
the three months ended September 30, 2007.  Product gross margins, as
a percentage of product revenue, increased primarily due to technological
advances in our systems allowing us to utilize less hardware per system, coupled
with a lower fixed component of labor and overhead and our ability to purchase
product components at lower prices during the three months ended September 30,
2008, compared to the same period in the prior year.
 
 Service Gross
Margin.  The gross margin on service revenue increased to 61.5%
of service revenue in the three months ended September 30, 2008 from 59.2% of
service revenue in the three months ended September 30, 2007.  The
increase in service margins as a percentage of service revenue was primarily due
to the $0.2 million reduction in service costs during the three months ended
September 30, 2008, compared to the same period in the prior
year.  Decreasing service costs resulted from decreasing headcount and
facilities costs, as we have focused on managing costs of the infrastructure
that is necessary to fulfill service and support provided for our
products.  We expect to maintain similar or slightly lower service
margins as we continue to manage costs related to our maintenance and support
infrastructure.
 
 Sales and
Marketing.Sales and marketing expenses decreased
approximately $0.2 million, or 5.9% to $3.6 million in the three months ended
September 30, 2008 from $3.8 million in the three months ended September 30,
2007.  Sales and marketing expense decreased primarily because we
incurred $0.2 million less in depreciation expense related to our MediaHawk 4500
on-demand systems that were being used as demonstration systems for
customers.
 
 Research and
Development.Research and development expenses decreased
approximately $0.4 million, or 8.9%, to approximately $3.8 million in the three
months ended September 30, 2008 from $4.2 million in the three months ended
September 30, 2007.  Decreasing research and development expenses were
primarily attributable to a $0.2 million reduction in lease and facilities costs
resulting from consolidating development facilities and moving to smaller office
space during the prior fiscal year.  We also incurred $0.1 million
less in depreciation expense related to development and test equipment in the
three months ended September 30, 2008, compared to the same period in the prior
year, as a result of a downward trend in capital expenditures for development
and test equipment over the past few years.
 
 General and
Administrative.General and administrative expenses remained
flat at approximately $2.3 million during each of the three months ended
September 30, 2008 and 2007.
 
 Gain on Arbitration Settlement,
Net.  In August 2007, we reached an agreement with a supplier
of ours, to settle the claims in the pending arbitration between the two
parties, in exchange for a full release.  In the arbitration, we
alleged that in 2002 and 2003 we experienced high failure rates in our MediaHawk
2000 and 3000 series on-demand servers as a result of defective power converters
manufactured by the supplier.  We settled for approximately $2.4
million, from which approximately $0.5 million of attorney fees were deducted
and we received the net proceeds in the three months ended September 30,
2007.  We do not anticipate any further proceeds from this
settlement.
  16
 Table of Contents
  Recovery of Minority Investment,
Net.  In fiscal year 2003, we recorded a $13.0 million net
impairment charge due to an “other-than-temporary” decline in the market value
of an equity investment in Thirdspace Living Limited
(“Thirdspace”).  At the end of fiscal year 2003, Thirdspace was sold
to Alcatel Telecom Ltd. and placed into liquidation.  The liquidation
of Thirdspace assets resulted in a recovery for us of $3.1 million of our
previously impaired investment, in aggregate, during fiscal year
2004.  Thirdspace’s only significant remaining asset subsequent to the
aforementioned transactions was a right to 40% of amounts recovered by nCube,
now part of Arris Group, Inc., if any, from the lawsuit brought by nCube against
SeaChange International, Inc., alleging patent infringement.  On
January 9, 2006, the U.S. Court of Appeals for the Federal Circuit affirmed the
lower court’s decision in favor of nCube.  On September 28, 2007,
nCube, Alcatel and Concurrent agreed upon the terms of distributing this
Thirdspace asset and we received $1.4 million of net proceeds from the
settlement of Thirdspace’s remaining asset.  Consistent with previous
recoveries of the impaired Thirdspace investment, we recorded the $1.4 million
as a “Recovery of minority investment” within the Statement of Operations during
the three months ended September 30, 2007.  We do not anticipate
further cash proceeds related to the liquidation of Thirdspace.  As
part of the arrangement with nCube and Alcatel, we also eliminated
transferability concerns regarding our license to U.S. patent numbers 5,805,804
and 5,623,595.  The agreement provides that licenses to these patents
may be transferred to an acquirer of Concurrent or Concurrent’s on-demand
business, so long as the acquirer has not been formally identified as an Alcatel
target.
 
 Other (Expense) Income -
net.  During the three months ended September 30, 2008, we
incurred approximately $0.3 million of realized currency translation
losses.  These losses resulted from foreign currency transactions by
our subsidiaries for which the Euro is the functional currency, primarily due to
the decline in the Euro value during the three months ended September 30,
2008.
 
 Provision for Income
Taxes.We recorded income tax expense for our domestic and
foreign subsidiaries of $0.3 million in the three months ended September 30,
2008, compared to tax expense of $0.1 million for our domestic and foreign
subsidiaries in the three months ended September 30, 2007.  The
increase in the consolidated effective tax rate during the three months ended
September 30, 2008, compared to the same period in the prior year was due to
income recorded in the US in the prior year for which net operating loss
carryforwards were available to reduce otherwise taxable
income.  However, during the three months ended September 30, 2008,
consolidated income before taxes was primarily attributable to income earned in
foreign locations that had no remaining net operating loss carryforwards. Income
tax expense for each of the three months ended September 30, 2008 and 2007 was
primarily attributable to income earned in foreign locations that cannot be
offset by net operating loss carryforwards.
 
 Net Income.The
net income for the three months ended September 30, 2008 was $0.1 million or
$0.01 per basic and diluted share compared to a net income for the three months
ended September 30, 2007 of $1.7 million, or $0.21 per basic and diluted
share.
 
 Liquidity
and Capital Resources
 
 Our
liquidity is dependent on many factors, including sales volume, operating profit
and the efficiency of asset use and turnover.  Our future liquidity
will be affected by, among other things:
 
 ·
              the
      rate of growth or decline, if any, of on-demand market expansions and the
      pace at which domestic and international cable companies and telephone
      companies implement on-demand
technology;
  ·
              the
      rate of growth or decline, if any, of deployment of our real-time
      operating systems and tools;
  ·
              the
      actual versus anticipated decline in revenue from maintenance and product
      sales of real-time proprietary
systems;
  ·
              ongoing
      cost control actions and expenses, including capital
      expenditures;
  17
 Table of Contents
  ·
              the
      margins on our product sales;
  ·
              our
      ability to leverage the potential of Everstream, including advanced
      advertising and other to be identified
  initiatives;
  ·
              our
      ability to raise additional capital, if
  necessary;
  ·
              our
      ability to obtain additional or replacement bank financing, if
      necessary;
  ·
              our
      ability to meet the covenants contained in our Credit
      Agreement;
  ·
              timing
      of product shipments, which typically occur during the last month of the
      quarter;
  ·
              the
      percentage of sales derived from outside the United States where there are
      generally longer accounts receivable collection cycles;
  and
  ·
              the
      number of countries in which we operate, which may require maintenance of
      minimum cash levels in each country and, in certain cases, may restrict
      the repatriation of cash, such as cash held on deposit to secure office
      leases.
 
 Uses
and Sources of Cash
 
 We used
$2.2 million of cash from operating activities during the three months ended
September 30, 2008 compared to generating $4.7 million of cash during the three
months ended September 30, 2007.  Operating cash outflow was primarily
attributable to payment of prior year end payables and accruals during the
period and the timing of accounts receivable collection.  Prior period
operating cash inflow was primarily attributable to collection of receivables
and $1.9 million of net cash proceeds received from an arbitration
settlement.  We do not anticipate further cash proceeds related to
this settlement.
 
 During
the three months ended September 30, 2007, we received $1.4 million of net cash
proceeds from the monetization of remaining assets of Thirdspace, an entity that
we purchased a minority interest in during fiscal 2002, and that was
subsequently liquidated.   We do not anticipate further cash
proceeds related to the liquidation of Thirdspace.
 
 We
invested $0.6 million in property, plant and equipment during the three months
ended September 30, 2008 compared to $0.3 million during the three months ended
September 30, 2007.  Capital additions during each of these periods
related primarily to product development and testing equipment.  We
expect capital additions to continue at a similar level during the remainder of
this fiscal year.
 
 We have a
Credit Agreement with Silicon Valley Bank that provides for a $10.0 million
revolving credit line (the “Revolver”) with a borrowing base dependent upon our
outstanding North American accounts receivable.   The interest
amount is based upon the amount advanced and the rate varies based upon our
accounts receivable and the amount of cash in excess of debt.  The
interest rate on the Revolver was 5.50% as of September 30, 2008. The
outstanding principal amount plus all accrued but unpaid interest is payable in
full at the expiration of the credit facility on July 1, 2009.  Based
on the borrowing formula and our financial position as of September 30, 2008,
approximately $9.9 million was available to us under the Revolver.  As
of September 30, 2008, $0.9 million was drawn under the Revolver, resulting in
$9.0 million of remaining available funds under the Revolver.
 
 In
addition, the Credit Agreement contains certain financial covenants, including a
required adjusted quick ratio (the ratio of cash and accounts receivable to
current liabilities (less the current portion of deferred revenue)) of at least
1.25 to 1.00 and a minimum tangible net worth of at least $10.2 million, as of
September 30, 2008. The Credit Agreement also contains customary restrictive
covenants concerning our operations.  As of September 30, 2008, we
were in compliance with these covenants as our adjusted quick ratio was 3.67 to
1.00 and our tangible net worth was $24.7 million.
 
 At
September 30, 2008, we had working capital (current assets, less current
liabilities) of $24.8 million and had no material commitments for capital
expenditures compared to working capital of $25.7 million at June 30,
2008.  Based upon our existing cash balances, historical cash usage,
available credit facility, and generation of operating cash flow in fiscal year
2008, we believe that existing cash balances will be sufficient to meet our
anticipated working capital and capital expenditure requirements for the next
twelve months.
  18
 Table of Contents
  Off-Balance
Sheet Arrangements
 
 We enter
into agreements in the ordinary course of business with customers, resellers,
distributors, integrators and suppliers that often require us to defend and/or
indemnify the other party against intellectual property infringement claims
brought by a third party with respect to our products.  We evaluate
estimated losses for such indemnifications under SFAS No. 5,“Accounting for
Contingencies”, as interpreted by FASB Interpretation No. (“FIN”) 45,
“Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others.” We consider factors such as the
degree of probability of an unfavorable outcome and the ability to make a
reasonable estimate of the amount of loss. To date, we have not encountered
material costs as a result of such obligations and have not accrued any material
liabilities related to such indemnifications in our financial
statements.
 
 Contractual
Obligations and Commercial Commitments
 
 Our contractual obligations and
commercial commitments are disclosed in our Annual Report on Form 10-K for the
year ended June 30, 2008. There have been no material changes to our contractual
obligations and commercial commitments during the three months ended September
30, 2008.
 
 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 Certain
statements made or incorporated by reference in this release may constitute
“forward-looking statements” within the meaning of the federal securities
laws.  When used or incorporated by reference in this release, the
words “believes,” “expects,” “estimates,” “anticipates,” and similar
expressions, are intended to identify forward-looking
statements.  Statements regarding future events and developments, our
future performance, market share, and new market growth, as well as our
expectations, beliefs, plans, estimates, or projections relating to the future,
are forward-looking statements within the meaning of these
laws.  Examples of our forward-looking statements in this report
include, but are not limited to, our pricing trends, our expected cash position,
our expectations of on-demand service revenue flattening or decreasing, our
expectations of market share and growth, the impact of interest rate changes and
fluctuation in currency exchange rates, our sufficiency of cash, the impact of
litigation, and our previous historical trend of declining real-time service
revenue.  These statements are based on beliefs and assumptions of
Concurrent’s management, which are based on currently available
information.  All forward-looking statements are subject to certain
risks and uncertainties that could cause actual events to differ materially from
those projected.  The risks and uncertainties which could affect our
financial condition or results of operations include, without limitation: delays
or cancellations of customer orders; changes in product demand; economic
conditions; our ability to satisfy the financial covenants in the credit
agreement; various inventory risks due to changes in market conditions;
uncertainties relating to the development and ownership of intellectual
property; uncertainties relating to our ability and the ability of other
companies to enforce their intellectual property rights; the pricing and
availability of equipment, materials and inventories; the concentration of our
customers; failure to effectively manage change; delays in testing and
introductions of new products;  rapid technology changes; system
errors or failures; reliance on a limited number of suppliers and failure of
components provided by those suppliers; uncertainties associated with
international business activities, including foreign regulations, trade
controls, taxes, and currency fluctuations; the impact of  competition
on the pricing of VOD products; failure to effectively service the installed
base; the entry of new well-capitalized competitors into our markets; the
success of new on-demand and real-time products; the availability of Linux
software in light of issues raised by SCO Group; the success of our
relationships with Alcatel-Lucent; capital spending patterns by a limited
customer base and in light of the current negative macro-economic environment;
privacy concerns over data collection; and the availability of debt or equity
financing to support our liquidity needs if cash flow does not
improve.
 
 Other important risk factors are
discussed in Part II, Item 1A. of this Form 10-Q and in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2008.
 
 Our
forward-looking statements are based on current expectations and speak only as
of the date of such statements.  We undertake no obligation to
publicly update or revise any forward-looking statement, whether as a result of
future events, new information or otherwise.
  19
 Table of Contents
  Item3.          Quantitative
and Qualitative Disclosures About Market Risk
 
 We are
exposed to market risk from changes in interest rates and foreign currency
exchange rates.  We are exposed to the impact of interest rate changes
on our short-term cash investments and bank loans.  Short-term cash
investments are primarily in U.S. treasuries.  These short-term
investments carry a degree of interest rate risk.  Bank loans include
a variable rate Revolver.  We believe that the impact of a 10%
increase or decrease in interest rates would not be material to our investment
income and interest expense from bank loans.
 
 We
conduct business in the United States and around the world.  Our most
significant foreign currency transaction exposure relates to the United Kingdom,
those Western European countries that use the Euro as a common currency, and
Japan.  We do not hedge against fluctuations in exchange rates and
believe that a 10% upward or downward fluctuation in foreign currency exchange
rates relative to the United States dollar would not have a material impact on
future earnings, fair values, or cash flows.
 
 Item4.          Controls and
Procedures
 
 As
required by Securities and Exchange Commission rules, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report.  This
evaluation was carried out under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer.  Based on this evaluation, these officers have
concluded that the design and operation of our disclosure controls and
procedures are effective.  There were no significant changes to our
internal control over financial reporting during the period covered by this
report that materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting.
 
 Disclosure controls and procedures are
our controls and other procedures designed to ensure that information required
to be disclosed by us in the reports that we file or submit under the Exchange
Act are recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by us in the reports that we file under the Exchange Act are
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure.
 
 Part
II         Other
Information
 
 Item1.         Legal
Proceedings
 
 From time
to time, we may be involved in litigation relating to claims arising out of our
ordinary course of business.  We are not presently involved in any
material litigation.
 
 Item1A.      Risk
Factors
 
 Economic
downturns may impact our customers, and a possible revenue shortfall may harm
our operating results
 
 Recent
indications of significant economic weakness and credit tightening could result
in our customers experiencing financial difficulties and/or electing to
materially constrain spending on system purchases or expansions, which in turn
could result in decreased revenues and earnings for us.  Recent
economic uncertainty may also have a negative impact on our ability to forecast
and manage the amount of components purchased from our suppliers, as well as
make it difficult to forecast operating results, and future investment decisions
that depend on those results.  The foregoing negative impact on our
customers, and on our ability to manage our business, could have a material
adverse effect on our business, financial condition and results of
operations.
 
 Other
important risk factors are discussed in Part II, Item 1A. of our Annual Report
on Form 10-K for the fiscal year ended June 30, 2008.
  20
 Table of Contents
  Item2.         Unregistered Sales
of Equity Securities and Use of Proceeds
 
 On June
23, 2008, our board of directors authorized the repurchase of up to
$2.5 million of our common stock, through a stock repurchase program. Under
the share repurchase program, we may repurchase shares from time to time at the
discretion of a stock repurchase committee in accordance with applicable
securities laws in the open market or in privately negotiated
transactions.  Repurchases will depend upon market conditions and
other factors, and repurchases may be commenced or suspended from time to time
at our discretion, without prior notice.  We do not intend to
repurchase any shares from our management, directors or other
insiders.  During the first quarter of fiscal year 2009, we
repurchased 36,924 shares for $252,000 under the plan described in this
paragraph. The transactions occurred in open market purchases.  The
following table below provides monthly activity for the number of shares we
acquired and the average price paid per share during the three months ended
September 30, 2008:
  Purchased
                    
                    Total number
                      of shares
                      purchased
                    
                    
                    Average
                      price paid
                      per share
                    
                    
                    Total number of
                      shares
                      purchased as
                      part of publicly
                      announced plans
                      or programs
                    
                    
                    Maximum number
                      of shares(or
                      approximate dollar
                      value of shares)
                      that may yet be
                      purchased under
                      the planJuly
      1, 2008 – July 31, 2008
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    2,500,000August
      1, 2008 – August 31, 2008
                    
                    
                    21,000
                    
                    
                    $
                    6.73
                    
                    
                    
                    21,000
                    
                    
                    $
                    2,358,760September
      1, 2008 – September 30, 2008
                    
                    
                    16,002
                    
                    
                    $
                    6.95
                    
                    
                    
                    15,924
                    
                    
                    $
                    2,248,025Total
                    
                    
                    37,002
                    
                    
                    $
                    6.81
                    
                    
                    
                    36,924
 
 Item
6.         Exhibits
 
 3.1
              Restated
      Certificate of Incorporation of the Registrant (incorporated by reference
      to the Registrant's Registration Statement on Form S-2 (No.
      33-62440)).
 
 3.2
              Amended
      and Restated Bylaws of the Registrant (incorporated by reference to the
      Registrant’s Quarterly Report on Form 10-Q for the period ended March 31,
      2003).
 
 3.3
              Certificate
      of Correction to Restated Certificate of Incorporation of the Registrant
      (incorporated by reference to the Registrant’s Annual Report on Form 10-K
      for the fiscal year ended June 30,
2002).
 
 3.4
              Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant (incorporated by reference to the Registrant’s Proxy on Form
      DEFR14A filed on June 2, 2008).
 
 3.5
              Amended
      Certificate of Designations of Series A Participating Cumulative Preferred
      Stock (incorporated by reference to the Form 8-A/A, dated August 9,
      2002).
 
 3.6
              Amendment
      to Amended Certificate of Designations of Series A Participating
      Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A,
      dated August 9, 2002).
 
 4.1
              Form
      of Common Stock Certificate (incorporated by reference to the Registrant’s
      Quarterly Report on Form 10-Q for the period ended March 31,
      2003).
 
 4.2
              Form
      of Rights Certificate (incorporated by reference to the Registrant’s
      Current Report on Form 8-K/A filed on August 12,
  2002).
 
 4.3
              Amended
      and Restated Rights Agreement dated as of August 7, 2002 between the
      Registrant and American Stock Transfer & Trust Company, as Rights
      Agent (incorporated by reference to the Registrant’s Current Report on
      Form 8-K/A filed on August 12,
2002).
  21
 Table of Contents
  4.4
              Form
      of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K dated May 15, 2007 and incorporated herein by
      reference).
 
 4.5
              Form
      of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K dated May 15, 2007 and incorporated herein by
      reference).
 
 10.1
              Employment
      Agreement, dated August 1, 2008, between Concurrent Computer Corporation
      and Emory O. Berry (incorporated by reference to Exhibit 10.01 to the
      Registrant’s Current Report on Form 8-K filed on August 6,
      2008).
 
 11.1*
              Statement
      Regarding Computation of Per Share
Earnings.
 
 31.1**
              Certification
      of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
 
 31.2**
              Certification
      of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
 
 32.1**
              Certification
      of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 32.2**
              Certification
      of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 *
              Data
      required by Statement of Financial Accounting Standards No. 128, “Earnings
      per Share,” is provided in the Notes to the condensed consolidated
      financial statements in this
report.
 
 **  
Filed herewith.
  22
 Table of Contents
  SIGNATURES
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 Date:  November
      3, 2008
                    CONCURRENT
      COMPUTER CORPORATIONBy:/s/ Emory O. BerryEmory
      O. BerryChief
      Financial Officer(Principal
      Financial and Accounting
Officer)
  23
 Table of Contents
  ExhibitIndex
 
 
 3.1
              Restated
      Certificate of Incorporation of the Registrant (incorporated by reference
      to the Registrant's Registration Statement on Form S-2 (No.
      33-62440)).
 
 3.2
              Amended
      and Restated Bylaws of the Registrant (incorporated by reference to the
      Registrant’s Quarterly Report on Form 10-Q for the period ended March 31,
      2003).
 
 3.3
              Certificate
      of Correction to Restated Certificate of Incorporation of the Registrant
      (incorporated by reference to the Registrant’s Annual Report on Form 10-K
      for the fiscal year ended June 30,
2002).
 
 3.4
              Certificate
      of Amendment of the Restated Certificate of Incorporation of the
      Registrant (incorporated by reference to the Registrant’s Proxy on Form
      DEFR14A filed on June 2, 2008).
 
 3.5
              Amended
      Certificate of Designations of Series A Participating Cumulative Preferred
      Stock (incorporated by reference to the Form 8-A/A, dated August 9,
      2002).
 
 3.6
              Amendment
      to Amended Certificate of Designations of Series A Participating
      Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A,
      dated August 9, 2002).
 
 4.1
              Form
      of Common Stock Certificate (incorporated by reference to the Registrant’s
      Quarterly Report on Form 10-Q for the period ended March 31,
      2003).
 
 4.2
              Form
      of Rights Certificate (incorporated by reference to the Registrant’s
      Current Report on Form 8-K/A filed on August 12,
  2002).
 
 4.3
              Amended
      and Restated Rights Agreement dated as of August 7, 2002 between the
      Registrant and American Stock Transfer & Trust Company, as Rights
      Agent (incorporated by reference to the Registrant’s Current Report on
      Form 8-K/A filed on August 12,
2002).
 
 4.4
              Form
      of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K dated May 15, 2007 and incorporated herein by
      reference).
 
 4.5
              Form
      of Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on
      Form 8-K dated May 15, 2007 and incorporated herein by
      reference).
 
 10.1
              Employment
      Agreement, dated August 1, 2008, between Concurrent Computer Corporation
      and Emory O. Berry (incorporated by reference to Exhibit 10.01 to the
      Registrant’s Current Report on Form 8-K filed on August 6,
      2008).
 
 11.1*
              Statement
      Regarding Computation of Per Share
Earnings.
 
 31.1**
              Certification
      of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
 
 31.2**
              Certification
      of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
 
 32.1**
              Certification
      of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 32.2**
              Certification
      of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.
 
 *
              Data
      required by Statement of Financial Accounting Standards No. 128, “Earnings
      per Share,” is provided in the Notes to the condensed consolidated
      financial statements in this
report.
 
 ** Filed
herewith.
   24