Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 01, 2016 | Oct. 24, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | IRIDEX CORP | |
Entity Central Index Key | 1,006,045 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 1, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Trading Symbol | IRIX | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,148,110 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 9,577 | $ 9,995 | |
Accounts receivable, net of allowance for doubtful accounts of $174 as of October 1, 2016 and $140 as of January 2, 2016 | 7,926 | 9,282 | |
Inventories | 12,678 | 11,106 | |
Prepaid expenses and other current assets | 1,225 | 386 | |
Total current assets | 31,406 | 30,769 | |
Property and equipment, net | 1,447 | 1,104 | |
Intangible assets, net | 256 | 268 | |
Goodwill | 533 | 533 | |
Deferred income taxes | 8,985 | 8,985 | |
Other long-term assets | 87 | 164 | |
Total assets | 42,714 | 41,823 | |
Current liabilities: | |||
Accounts payable | 2,472 | 2,223 | |
Accrued compensation | 1,574 | 1,572 | |
Accrued expenses | 1,622 | 1,722 | |
Accrued warranty | 570 | 603 | |
Deferred revenue | 1,305 | 1,311 | |
Total current liabilities | 7,543 | 7,431 | |
Long-term liabilities: | |||
Other long-term liabilities | 619 | 704 | |
Total liabilities | 8,162 | 8,135 | |
Stockholders’ equity: | |||
Common stock, $0.01 par value: Authorized: 30,000,000 shares; Issued and outstanding 10,146,235 and 10,009,408 shares as of October 1, 2016 and January 2, 2016, respectively | 112 | 111 | |
Additional paid-in capital | 39,747 | 37,986 | |
Accumulated deficit | (5,307) | (4,409) | |
Total stockholders’ equity | 34,552 | 33,688 | |
Total liabilities and stockholders’ equity | $ 42,714 | $ 41,823 | |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 174 | $ 140 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 10,146,235 | 10,009,408 |
Common stock, shares outstanding | 10,146,235 | 10,009,408 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Income Statement [Abstract] | ||||
Total revenues | $ 9,789 | $ 9,815 | $ 33,628 | $ 29,644 |
Cost of revenues | 5,544 | 4,974 | 18,352 | 15,176 |
Gross profit | 4,245 | 4,841 | 15,276 | 14,468 |
Operating expenses: | ||||
Research and development | 1,256 | 1,237 | 4,007 | 4,000 |
Sales and marketing | 2,378 | 2,234 | 7,212 | 6,463 |
General and administrative | 1,858 | 1,227 | 5,546 | 4,206 |
Total operating expenses | 5,492 | 4,698 | 16,765 | 14,669 |
(Loss) income from operations | (1,247) | 143 | (1,489) | (201) |
Other (expense) income, net | (51) | 164 | (83) | 134 |
(Loss) income from operations before benefit from income taxes | (1,298) | 307 | (1,572) | (67) |
Benefit from income taxes | (627) | (135) | (674) | (103) |
Net (loss) income | $ (671) | $ 442 | $ (898) | $ 36 |
Net (loss) income per share: | ||||
Basic | $ (0.07) | $ 0.04 | $ (0.09) | $ 0 |
Diluted | $ (0.07) | $ 0.04 | $ (0.09) | $ 0 |
Weighted average shares used in computing net (loss) income per common share: | ||||
Basic | 10,129 | 9,972 | 10,083 | 9,956 |
Diluted | 10,129 | 10,094 | 10,083 | 10,142 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (671) | $ 442 | $ (898) | $ 36 |
Comprehensive (loss) income | $ (671) | $ 442 | $ (898) | $ 36 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | ||
Operating activities: | |||
Net (loss) income | $ (898) | $ 36 | |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 461 | 389 | |
Change in fair value of earn-out liability | 86 | (129) | |
Stock-based compensation | 1,270 | 725 | |
Provision for doubtful accounts | 66 | 36 | |
Deferred income taxes | 2 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,290 | 565 | |
Inventories | (1,572) | (2,065) | |
Prepaid expenses and other current assets | (839) | (156) | |
Other long-term assets | 77 | 37 | |
Accounts payable | 249 | 801 | |
Accrued compensation | 2 | (552) | |
Accrued expenses | 16 | (180) | |
Accrued warranty | (33) | 59 | |
Deferred revenue | (6) | 32 | |
Other long-term liabilities | 26 | 46 | |
Net cash provided by (used in) operating activities | 195 | (354) | |
Investing activities: | |||
Acquisition of property and equipment | (792) | (731) | |
Payment on earn-out liability | (313) | (328) | |
Net cash used in investing activities | (1,105) | (1,059) | |
Financing activities: | |||
Proceeds from stock option exercises | 650 | 747 | |
Repurchase of common stock | (59) | (1,543) | |
Repurchase of vested stock options | (275) | ||
Taxes paid related to net share settlements of equity awards | (99) | (606) | |
Net cash provided by (used in) financing activities | 492 | (1,677) | |
Net decrease in cash and cash equivalents | (418) | (3,090) | |
Cash and cash equivalents, beginning of period | 9,995 | [1] | 13,303 |
Cash and cash equivalents, end of period | 9,577 | 10,213 | |
Cash paid during the period for: | |||
Income taxes | $ 37 | $ 33 | |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Oct. 01, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of IRIDEX Corporation (“IRIDEX”, the “Company”, “we”, “our”, or “us”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto, together with management’s discussion and analysis of the Company’s financial condition and results of operations, contained in our Annual Report on Form 10-K for the fiscal year ended January 2, 2016, which was filed with the Securities and Exchange Commission (“SEC”) on March 31, 2016. The results of operations for the three and nine months ended October 1, 2016 and October 3, 2015 are not necessarily indicative of the results for the fiscal year ending December 31, 2016 or any future interim period. The three and nine month periods ended October 1, 2016 and October 3, 2015, each had 13 weeks. For purposes of reporting the financial results, the Company’s fiscal years end on the Saturday closest to the end of December. Periodically, the Company includes a 53rd week to a year in order to end that year on the Saturday closest to the end of December. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The Company’s significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended January 2, 2016, which was filed with the SEC on March 31, 2016. Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates. The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results. Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables and service and support activities. Revenue from product sales is recognized upon receipt of a purchase order and product shipment provided that no significant obligations remain and collectibility is reasonably assured. Shipments are generally made with Free-On-Board (“FOB”) shipping point terms, whereby title passes upon shipment from our dock. Any shipments with FOB receiving point terms are recorded as revenue when the shipment arrives at the receiving point. Cost is recognized as product sales revenue is recognized. The Company’s sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition, Multiple-Element Arrangements” In international regions, we utilize distributors to market and sell our products. We recognize revenue upon shipment for sales to these independent, third-party distributors as we have no continuing obligations subsequent to shipment. Generally our distributors are responsible for all marketing, sales, installation, training and warranty labor coverage for our products. Our standard terms and conditions do not provide price protection or stock retention rights to any of our distributors. Royalty revenues are typically based on licensees’ net sales of products that utilize our technology and are recognized as earned in accordance with the contract terms when royalties from licensees can be reliably measured and collectibility is reasonably assured, such as upon the earlier of the receipt of a royalty statement from the licensee or upon payment by the licensee. Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and nine month periods ended October 1, 2016 and October 3, 2015, no single customer accounted for 10% of total revenues. As of October 1, 2016, no customer accounted for approximately 10% of our accounts receivable and as of January 2, 2016, no customer accounted for more than 10% of our accounts receivable. Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations. Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented. Deferred Revenue. Revenue related to extended service contracts is deferred and recognized on a straight line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211 Warranty. The Company generally provides a one to two year warranty on its products, which is accrued for upon shipment of products. Actual warranty costs incurred have not materially differed from those accrued. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the statement of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528 Recently Issued and Adopted Accounting Standards. In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers “Revenue from Contracts with Customers, Deferral of the Effective Date” In June 2014, the FASB issued ASU 2014-12, “ Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” In February 2016, the FASB issued ASU 2016-02, "Leases," In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers (Topic 606) In May 2016, the FASB issued ASU No. 2016-12 which amended the revenue recognition guidance regarding collectibility, noncash consideration, presentation of sales tax and transition. This ASU is effective during the same period as ASU 2014-09. We are currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". |
Inventories
Inventories | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories The components of the Company’s inventories as of October 1, 2016 and January 2, 2016 are as follows: (in thousands) October 1, 2016 January 2, 2016 Raw materials $ 5,499 $ 4,578 Work in process 2,715 1,791 Finished goods 4,464 4,737 Total inventories $ 12,678 $ 11,106 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Oct. 01, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill. The carrying value of goodwill was $0.5 million as of October 1, 2016 and January 2, 2016. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value may not be recoverable. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step quantitative goodwill impairment test. If, after assessing the totality of circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the two-step impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying value. However, an entity also has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to assess impairment, its common stock price is an important component of the fair value calculation. If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit and can lead to potential impairment in future periods. The Company performed its annual impairment test during the second quarter of fiscal 2016 and determined that its goodwill was not impaired. As of October 1, 2016, the Company had not identified any factors that indicated there was an impairment of its goodwill and determined that no additional impairment analysis was then required. Intangible Assets. The following table summarizes the components of gross and net intangible asset balances: October 1, 2016 January 2, 2016 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents $ 720 $ 600 $ 120 Varies $ 720 $ 600 $ 120 Customer relations 240 104 136 8.50 Years 240 92 148 Total $ 960 $ 704 $ 256 $ 960 $ 692 $ 268 For the nine months ended October 1, 2016 and October 3, 2015, amortization expense totaled $12 thousand for each period. The amortization of customer relations was charged to sales and marketing expense and the amortization of patents was charged to cost of revenues. Future estimated amortization expense (in thousands): 2016 (three months) $ 4 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 256 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. • Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. • Level 3: Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value. The carrying amounts of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of October 1, 2016 and January 2, 2016, approximate fair value because of the short maturity of these instruments. As of October 1, 2016 and January 2, 2016, financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows: October 1, 2016 January 2, 2016 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,577 — — $ 9,577 $ 9,212 — — $ 9,212 Liabilities: Earn-out liability $ — — $ 778 $ 778 $ — — $ 1,005 $ 1,005 The Company’s Level 1 financial assets are money market funds whose fair values are based on quoted market prices. The Company does not have any Level 2 financial assets or liabilities. The fair value of the earn-out liability arising from the acquisitions of RetinaLabs, Inc. and Ocunetics, Inc. is classified within Level 3 of the fair value hierarchy since it is based on significant unobservable inputs. The significant unobservable inputs include projected royalties and discount rates to present value the payments. A significant increase (decrease) in the projected royalty payments in isolation could result in a significantly higher (lower) fair value measurement and a significant increase (decrease) in the discount rate in isolation could result in a significantly lower (higher) fair value measurement. The fair value of the earn-out liability is calculated on a quarterly basis by the Company based on a collaborative effort of the Company’s operations, finance and accounting groups as additional information becomes available. Any change in the fair value adjustment is recorded in the statement of operations of that period. The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of October 1, 2016. As of October 1, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 778 Discounted cash flow Projected royalties (in thousands) $2,096 ($134 - $2,284) Discount rate 11.83% (10.37% - 27.00%) A reconciliation of the changes in the Company’s earn-out liability (Level 3 liability) for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance as of beginning of the period $ 1,005 $ 1,423 Payments against earn-out (313 ) (328 ) Change in fair value of earn-out liability 86 (129 ) Balance as of the end of the period $ 778 $ 966 The earn-out liability is included in accrued expenses and other long-term liabilities in the condensed consolidated balance sheets. Any change in the fair value adjustment is recorded to other expense in the condensed consolidated statements of operations. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Oct. 01, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Based Compensation | 6. Stock Based Compensation The Company accounts for stock-based compensation granted to employees and directors, including employees stock option awards, restricted stock and restricted stock units in accordance with ASC 718 , “Compensation – Stock Compensation” The Company values options using the Black-Scholes option pricing model. Restricted stock and time-based restricted stock units are valued at the grant date fair value of the underlying common shares. Performance-based restricted stock units with market conditions are valued using the Monte Carlo simulation model. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock. The Monte Carlo simulation model incorporates assumptions for the holding period, risk-free interest rate, stock price volatility and dividend yield. 2008 Equity Incentive Plan. For the nine months ended October 1, 2016, the only active stock-based compensation plan was the 2008 Equity Incentive Plan (the “Incentive Plan”). The terms of awards granted during the nine months ended October 1, 2016 were consistent with those described in the consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 2, 2016. Summary of Stock Options The following table summarizes information regarding activity under the Incentive Plan during the nine months ended October 1, 2016: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of January 2, 2016 551,492 $ 6.92 Granted 79,777 $ 13.30 Exercised (117,576 ) $ 5.53 Canceled or forfeited (51,307 ) $ 8.56 Outstanding as of October 1, 2016 462,386 $ 8.19 $ 2,980 The weighted average grant date fair value of the options granted under the Incentive Plan as calculated using the Black-Scholes option-pricing model was $6.37 and $2.77 per share for the three months ended October 1, 2016 and October 3, 2015, respectively. The weighted average grant date fair value of the options granted under the Incentive Plan as calculated using the Black-Scholes option-pricing model was $5.23 and $4.23 per share for the nine months ended October 1, 2016 and October 3, 2015, respectively. The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Average risk free interest rate 1.03 % 1.30 % 1.10 % 1.27 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 46 % 47 % 46 % 50 % Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility is based on analysis of the Company’s stock price history over a period commensurate with the expected term of the options, trading volume of the Company’s stock, look-back volatilities and Company specific events that affected volatility in a prior period. The expected term of employee stock options represents the weighted average period the stock options are expected to remain outstanding and is based on the history of exercises and cancellations on all past option grants made by the Company, the contractual term, the vesting period and the expected remaining term of the outstanding options. The risk-free interest rate is based on the U.S. Treasury interest rates whose term is consistent with the expected life of the stock options. No dividend yield is included as the Company has not issued any dividends and does not anticipate issuing any dividends in the future. The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended October 1, 2016 and October 3, 2015: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Cost of revenues $ 3 $ 49 $ 84 $ 172 Research and development 39 21 90 153 Sales and marketing 38 42 119 146 General and administrative 390 51 977 254 $ 470 $ 163 $ 1,270 $ 725 Stock-based compensation expense capitalized to inventory was immaterial for the nine months ended October 1, 2016 and October 3, 2015. Occasionally, the Company will grant stock-based instruments to non-employees. During the nine months ended October 1, 2016 and October 3, 2015, the amount of stock-based compensation related to non-employee options was not material. Information regarding stock options outstanding, vested and expected to vest and exercisable as of October 1, 2016 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 462,386 $ 8.19 4.54 $ 2,980 Options vested and expected to vest 428,659 $ 7.98 4.44 $ 2,844 Options exercisable 225,703 $ 6.35 3.52 $ 1,837 The aggregate intrinsic value in the table above represents the pre-tax intrinsic value, based on the Company’s closing price as of September 30, 2016, that would have been received by option holders had all option holders exercised their stock options as of that date. This amount changes based on the fair market value of the Company’s stock. The total intrinsic value of options exercised for the three months ended October 1, 2016 and October 3, 2015 was approximately $187 thousand and $144 thousand, respectively. As of October 1, 2016, there was $3.5 million of total unrecognized compensation cost, net of expected forfeitures, related to non-vested stock-based compensation arrangements under the Incentive Plan. The cost is expected to be recognized over a weighted average period of 2.47 years. Summary of Restricted Stock Units and Awards Information regarding the restricted stock units (“RSUs”) activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 147,589 Restricted stock units granted 285,005 Restricted stock units released (30,789 ) Restricted stock units cancelled (66,000 ) Outstanding as of October 1, 2016 335,805 During the nine months ended October 1, 2016, the Company awarded 285,005 restricted stock units at a weighted-average grant date fair value of $11.89 per share. Of this amount, 256,138 stock units represent performance based shares that are subject to service, performance and market vesting conditions with a weighted-average grant date fair value of $11.40 per share. RSUs granted with market conditions are valued using the Monte Carlo simulation model and compensation expense is recognized ratably during the service period even if the market condition is not satisfied. To the extent that the market condition is not met, the RSUs will not vest and will be cancelled. RSUs granted with performance conditions are valued at the grant date fair value of the underlying common shares. The Company makes a determination regarding the probability of the performance criteria being achieved and compensation expense is recognized ratably over the vesting period, if it is expected that the performance criteria will be met. During the nine months ended October 1, 2016, the Company accelerated the vesting of 6,400 of restricted stock units and 10,000 performance-based restricted stock units in connection with an early termination. In connection with the acceleration, the Company recorded a $220,000 charge to general and administrative expenses. Information regarding the restricted stock awards activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 2,513 Restricted stock awards granted 1,289 Restricted stock awards released (2,513 ) Outstanding as of October 1, 2016 1,289 During the nine months ended October 1, 2016, the Company awarded 1,289 unvested restricted stock awards at an average grant date fair value of $15.51 per share. Stock Repurchase Program. In February 2013, the Board of Directors approved a one year $3.0 million stock repurchase program that replaced the prior two year $4.0 million stock repurchase program. In February 2014, the Board of Directors approved the extension of the plan for an additional year. In July 2014, the Board of Directors approved an extension of the plan for an additional year and authorized an additional $3.0 million of stock repurchases. In August 2015, the Board of Directors approved a further extension of the plan for another year and authorized an additional $2.0 million of stock repurchases. During the nine months ended October 1, 2016, the Company repurchased 6,544 shares at an average price of $9.00 per share. As of October 1, 2016, we have repurchased 843,785 shares for approximately $6.7 million under this current program. The remaining balance of approximately $1.0 million approved under the plan was not used when the plan lapsed in August 2016. |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes Provision for Income Tax. The Company calculates its interim tax provision in accordance with the provisions of ASC 740-270, Income Taxes; Interim Reporting Deferred Income Taxes. The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes (“ASC 740”) Uncertain Tax Positions. The Company accounts for its uncertain tax positions in accordance with ASC 740. As of January 2, 2016, the Company had $0.9 million of unrecognized tax benefits of which $0.4 million of unrecognized tax benefits would result in a change in the Company’s effective tax rate if recognized in future years. The Company is not aware of any other uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate during the fiscal year. The Company files U.S. federal and state returns. The tax years 2008 to 2015 remain open in several jurisdictions, none of which have individual significance. |
Computation of Basic and Dilute
Computation of Basic and Diluted Net Loss Per Common Share | 9 Months Ended |
Oct. 01, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Loss Per Common Share | 8. Computation of Basic and Diluted Net Loss Per Common Share Basic and diluted net loss per share is based upon the weighted average number of common shares outstanding during the period. Common stock equivalents consist of incremental common shares issuable upon the exercise of stock options, and the release (vesting) of restricted stock units and awards and are calculated under the treasury stock method. Common stock equivalent shares from unexercised stock options, and unvested restricted stock units and awards are excluded from the computation for periods in which we incur a net loss or if the exercise price of such options is greater than the average market price of our common stock for the period as their effect would be anti-dilutive. For the three and nine months ended October 1, 2016, stock options to purchase 462,386 shares of common stock, 335,805 RSUs and 1,289 restricted stock awards were excluded from the computation of diluted weighted average shares outstanding because the effect of such would be anti-dilutive. For the three and nine months ended October 3, 2015, stock options to purchase 234,958 shares of common stock, 147,589 RSUs and 2,513 restricted stock awards were excluded from the computation of diluted weighted average shares outstanding because the effect of such would be anti-dilutive. A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Numerator: Net (loss) income $ (671 ) $ 442 $ (898 ) $ 36 Denominator: Weighted average shares of common stock (basic) 10,129 9,972 10,083 9,956 Effect of dilutive stock options — 117 — 174 Effect of dilutive contingent shares — 5 — 12 Weighted average shares of common stock (diluted) 10,129 10,094 10,083 10,142 Per share data: Basic net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — Diluted net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — |
Business Segments
Business Segments | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
Business Segments | 9. Business Segments The Company operates in one segment, ophthalmology. The Company develops, manufactures and markets medical devices. Our revenues arise from the sale of consoles, delivery devices, consumables, service and support activities. Revenue information shown by geographic region, based on the location at which each sale originates, is as follows: Three Months Ended Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 United States $ 5,871 $ 5,791 $ 18,642 $ 16,763 Europe 2,191 2,083 6,779 5,763 Rest of Americas 476 506 1,858 2,041 Asia/Pacific Rim 1,251 1,435 6,349 5,077 $ 9,789 $ 9,815 $ 33,628 $ 29,644 Revenues are attributed to countries based on location of end customers. No individual country accounted for more than 10% of the Company’s revenues, other than the United States, which accounted for 60.0% and 59.0% of revenues for the three month periods ended October 1, 2016 and October 3, 2015, respectively. For the nine month periods ended October 1, 2016 and October 3, 2015, the United States accounted for 55.4% and 56.5% of sales, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 01, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events On November 2, 2016, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Silicon Valley Bank providing for a $15.0 million secured revolving loan facility (“Revolving Loan Facility”), with availability subject to an accounts receivable borrowing base formula. Borrowings under the Revolving Loan Facility accrue interest at a per annum rate equal to the Wall Street Journal Prime Rate as in effect from time to time, plus 1.5%. The Loan Agreement does not include any financial covenants. The Company may borrow, repay and reborrow funds under the Revolving Loan Facility until November 2, 2019, at which time the Revolving Loan Facility matures and all outstanding amounts must be repaid. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Policies [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates. The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. In addition, any change in these estimates or their related assumptions could have an adverse effect on our operating results. |
Revenue Recognition | Revenue Recognition. Our revenues arise from the sale of laser consoles, delivery devices, consumables and service and support activities. Revenue from product sales is recognized upon receipt of a purchase order and product shipment provided that no significant obligations remain and collectibility is reasonably assured. Shipments are generally made with Free-On-Board (“FOB”) shipping point terms, whereby title passes upon shipment from our dock. Any shipments with FOB receiving point terms are recorded as revenue when the shipment arrives at the receiving point. Cost is recognized as product sales revenue is recognized. The Company’s sales may include post-sales obligations for training or other deliverables. For revenue arrangements such as these, we recognize revenue in accordance with Accounting Standards Codification (“ASC”) 605, “Revenue Recognition, Multiple-Element Arrangements” In international regions, we utilize distributors to market and sell our products. We recognize revenue upon shipment for sales to these independent, third-party distributors as we have no continuing obligations subsequent to shipment. Generally our distributors are responsible for all marketing, sales, installation, training and warranty labor coverage for our products. Our standard terms and conditions do not provide price protection or stock retention rights to any of our distributors. Royalty revenues are typically based on licensees’ net sales of products that utilize our technology and are recognized as earned in accordance with the contract terms when royalties from licensees can be reliably measured and collectibility is reasonably assured, such as upon the earlier of the receipt of a royalty statement from the licensee or upon payment by the licensee. |
Concentration of Credit Risk | Concentration of Credit Risk. Our cash and cash equivalents are deposited in demand and money market accounts. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally these deposits may be redeemed upon demand and therefore, bear minimal risk. We market our products to distributors and end-users throughout the world. Sales to international distributors are generally made on open credit terms and letters of credit. Management performs ongoing credit evaluations of our customers and maintains an allowance for potential credit losses. Historically, we have not experienced any significant losses related to individual customers or a group of customers in any particular geographic area. For the three and nine month periods ended October 1, 2016 and October 3, 2015, no single customer accounted for 10% of total revenues. As of October 1, 2016, no customer accounted for approximately 10% of our accounts receivable and as of January 2, 2016, no customer accounted for more than 10% of our accounts receivable. |
Taxes Collected from Customers and Remitted to Governmental Authorities | Taxes Collected from Customers and Remitted to Governmental Authorities. Taxes collected from customers and remitted to governmental authorities are recognized on a net basis in the accompanying condensed consolidated statements of operations. |
Shipping and Handling Costs | Shipping and Handling Costs. Our shipping and handling costs billed to customers are included in revenues and the associated expense is recorded in cost of revenues for all periods presented. |
Deferred Revenue | Deferred Revenue. Revenue related to extended service contracts is deferred and recognized on a straight line basis over the period of the applicable service contract. Costs associated with these service arrangements are recognized as incurred. A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211 |
Warranty | Warranty. The Company generally provides a one to two year warranty on its products, which is accrued for upon shipment of products. Actual warranty costs incurred have not materially differed from those accrued. The Company’s warranty policy is applicable to products which are considered defective in their performance or fail to meet the product specifications. Warranty costs are reflected in the statement of operations as cost of revenues. A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528 |
Recently Issued and Adopted Accounting Standards | Recently Issued and Adopted Accounting Standards. In May 2014, as part of its ongoing efforts to assist in the convergence of U.S. GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers “Revenue from Contracts with Customers, Deferral of the Effective Date” In June 2014, the FASB issued ASU 2014-12, “ Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force) In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” In February 2016, the FASB issued ASU 2016-02, "Leases," In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." In April 2016, the FASB issued ASU No. 2016-10, “ Revenue from Contracts with Customers (Topic 606) In May 2016, the FASB issued ASU No. 2016-12 which amended the revenue recognition guidance regarding collectibility, noncash consideration, presentation of sales tax and transition. This ASU is effective during the same period as ASU 2014-09. We are currently evaluating the impact of this guidance on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15 " Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments". |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Accounting Policies [Abstract] | |
Reconciliation of Changes in Deferred Revenue | A reconciliation of the changes in the Company’s deferred revenue balance for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 1,311 $ 1,179 Additions to deferral 1,025 1,068 Revenue recognized (1,031 ) (1,036 ) Balance, end of period $ 1,305 $ 1,211 |
Reconciliation of Changes in Warranty Liability | A reconciliation of the changes in the Company’s warranty liability for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance, beginning of period $ 603 $ 469 Accruals for product warranties 318 267 Cost of warranty claims and adjustments (351 ) (208 ) Balance, end of period $ 570 $ 528 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | The components of the Company’s inventories as of October 1, 2016 and January 2, 2016 are as follows: (in thousands) October 1, 2016 January 2, 2016 Raw materials $ 5,499 $ 4,578 Work in process 2,715 1,791 Finished goods 4,464 4,737 Total inventories $ 12,678 $ 11,106 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Components of Gross and Net Intangible Asset | The following table summarizes the components of gross and net intangible asset balances: October 1, 2016 January 2, 2016 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Remaining Amortization Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Patents $ 720 $ 600 $ 120 Varies $ 720 $ 600 $ 120 Customer relations 240 104 136 8.50 Years 240 92 148 Total $ 960 $ 704 $ 256 $ 960 $ 692 $ 268 |
Future Estimated Amortization Expense | Future estimated amortization expense (in thousands): 2016 (three months) $ 4 2017 78 2018 74 2019 16 2020 16 Thereafter 68 Total $ 256 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis | As of October 1, 2016 and January 2, 2016, financial assets and liabilities measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows: October 1, 2016 January 2, 2016 Fair Value Measurements Fair Value Measurements (in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds $ 9,577 — — $ 9,577 $ 9,212 — — $ 9,212 Liabilities: Earn-out liability $ — — $ 778 $ 778 $ — — $ 1,005 $ 1,005 |
Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements | The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of October 1, 2016. As of October 1, 2016 Fair Value (in thousands) Valuation Technique Significant Unobservable Input Weighted Average (range) Earn-out liability $ 778 Discounted cash flow Projected royalties (in thousands) $2,096 ($134 - $2,284) Discount rate 11.83% (10.37% - 27.00%) |
Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance | A reconciliation of the changes in the Company’s earn-out liability (Level 3 liability) for the nine months ended October 1, 2016 and October 3, 2015 is as follows: Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 Balance as of beginning of the period $ 1,005 $ 1,423 Payments against earn-out (313 ) (328 ) Change in fair value of earn-out liability 86 (129 ) Balance as of the end of the period $ 778 $ 966 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Activity under Incentive Plan | The following table summarizes information regarding activity under the Incentive Plan during the nine months ended October 1, 2016: Number of Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (thousands) Outstanding as of January 2, 2016 551,492 $ 6.92 Granted 79,777 $ 13.30 Exercised (117,576 ) $ 5.53 Canceled or forfeited (51,307 ) $ 8.56 Outstanding as of October 1, 2016 462,386 $ 8.19 $ 2,980 |
Weighted Average Assumptions for Fair Value Estimate of Stock-Based Awards (Options) | The Company uses the Black-Scholes option-pricing model to estimate fair value of stock-based awards (options) with the following weighted average assumptions: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Average risk free interest rate 1.03 % 1.30 % 1.10 % 1.27 % Expected life (in years) 4.55 years 4.55 years 4.55 years 4.55 years Dividend yield —% —% —% —% Average volatility 46 % 47 % 46 % 50 % |
Stock-Based Compensation Expense | The following table shows stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended October 1, 2016 and October 3, 2015: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Cost of revenues $ 3 $ 49 $ 84 $ 172 Research and development 39 21 90 153 Sales and marketing 38 42 119 146 General and administrative 390 51 977 254 $ 470 $ 163 $ 1,270 $ 725 |
Summary of Stock Options Outstanding, Vested and Expected to Vest and Exercisable | Information regarding stock options outstanding, vested and expected to vest and exercisable as of October 1, 2016 is summarized below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic (thousands) Options outstanding 462,386 $ 8.19 4.54 $ 2,980 Options vested and expected to vest 428,659 $ 7.98 4.44 $ 2,844 Options exercisable 225,703 $ 6.35 3.52 $ 1,837 |
Restricted Stock Units and Awards | Information regarding the restricted stock units (“RSUs”) activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 147,589 Restricted stock units granted 285,005 Restricted stock units released (30,789 ) Restricted stock units cancelled (66,000 ) Outstanding as of October 1, 2016 335,805 Information regarding the restricted stock awards activity for the nine months ended October 1, 2016 is summarized below: Number of Shares Outstanding as of January 2, 2016 2,513 Restricted stock awards granted 1,289 Restricted stock awards released (2,513 ) Outstanding as of October 1, 2016 1,289 |
Computation of Basic and Dilu23
Computation of Basic and Diluted Net Loss Per Common Share (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share | A reconciliation of the numerator and denominator of basic and diluted net loss per common share is provided as follows: Three Months Ended Nine Months Ended October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 Numerator: Net (loss) income $ (671 ) $ 442 $ (898 ) $ 36 Denominator: Weighted average shares of common stock (basic) 10,129 9,972 10,083 9,956 Effect of dilutive stock options — 117 — 174 Effect of dilutive contingent shares — 5 — 12 Weighted average shares of common stock (diluted) 10,129 10,094 10,083 10,142 Per share data: Basic net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — Diluted net (loss) income per share $ (0.07 ) $ 0.04 $ (0.09 ) $ — |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Oct. 01, 2016 | |
Segment Reporting [Abstract] | |
Revenue Information by Geographic Region | Revenue information shown by geographic region, based on the location at which each sale originates, is as follows: Three Months Ended Nine Months Ended (in thousands) October 1, 2016 October 3, 2015 October 1, 2016 October 3, 2015 United States $ 5,871 $ 5,791 $ 18,642 $ 16,763 Europe 2,191 2,083 6,779 5,763 Rest of Americas 476 506 1,858 2,041 Asia/Pacific Rim 1,251 1,435 6,349 5,077 $ 9,789 $ 9,815 $ 33,628 $ 29,644 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Additional Information (Details) - Customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | Jan. 02, 2016 | |
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Customer accounted percentage of net accounts receivable balance | 10.00% | 10.00% | |||
Minimum | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Products warranty period | 1 year | ||||
Maximum | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Products warranty period | 2 years | ||||
Revenue, Total | Customer Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customer accounted for total revenues and net accounts receivable | 0 | 0 | 0 | 0 | |
Customer accounted percentage of total revenues | 10.00% | 10.00% | 10.00% | 10.00% | |
Accounts Receivable | Credit Concentration Risk | |||||
Disclosure Summary Of Significant Accounting Policies [Line Items] | |||||
Number of customer accounted for total revenues and net accounts receivable | 0 | 0 | 0 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Reconciliation of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | ||
Reconciliation of the changes in the Company's deferred revenue balance | |||
Balance, beginning of period | $ 1,311 | [1] | $ 1,179 |
Additions to deferral | 1,025 | 1,068 | |
Revenue recognized | (1,031) | (1,036) | |
Balance, end of period | $ 1,305 | $ 1,211 | |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Reconciliation of Changes in Warranty Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | ||
Reconciliation of the changes in the Company's warranty liability | |||
Balance, beginning of period | $ 603 | [1] | $ 469 |
Accruals for product warranties | 318 | 267 | |
Cost of warranty claims and adjustments | (351) | (208) | |
Balance, end of period | $ 570 | $ 528 | |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 | |
Inventory Disclosure [Abstract] | |||
Raw materials | $ 5,499 | $ 4,578 | |
Work in process | 2,715 | 1,791 | |
Finished goods | 4,464 | 4,737 | |
Total inventories | $ 12,678 | $ 11,106 | [1] |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Goodwill and Intangible Asset29
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 9 Months Ended | |||
Oct. 01, 2016 | Oct. 03, 2015 | Jan. 02, 2016 | [1] | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||||
Carrying value of goodwill | $ 533,000 | $ 533,000 | ||
Impairment of goodwill | 0 | |||
Amortization expense | $ 12,000 | $ 12,000 | ||
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Goodwill and Intangible Asset30
Goodwill and Intangible Assets - Summary of Components of Gross and Net Intangible Asset (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2016 | Jan. 02, 2016 | ||
Schedule of Intangible Assets | |||
Gross Carrying Amount | $ 960 | $ 960 | |
Accumulated Amortization | 704 | 692 | |
Net Carrying Amount | 256 | 268 | [1] |
Patents | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | 720 | 720 | |
Accumulated Amortization | 600 | 600 | |
Net Carrying Amount | 120 | 120 | |
Customer relations | |||
Schedule of Intangible Assets | |||
Gross Carrying Amount | 240 | 240 | |
Accumulated Amortization | 104 | 92 | |
Net Carrying Amount | $ 136 | $ 148 | |
Remaining Amortization Life | 8 years 6 months | ||
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Goodwill and Intangible Asset31
Goodwill and Intangible Assets - Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 | [1] |
Future estimated amortization expense | |||
2016 (three months) | $ 4 | ||
2,017 | 78 | ||
2,018 | 74 | ||
2,019 | 16 | ||
2,020 | 16 | ||
Thereafter | 68 | ||
Net Carrying Amount | $ 256 | $ 268 | |
[1] | Derived from the audited consolidated financial statements included in the Annual Report on Form 10-K filed with the SEC for the year ended January 2, 2016. |
Fair Value Measurement - Financ
Fair Value Measurement - Financial Assets and Liabilities Measured and Recognized at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Oct. 01, 2016 | Jan. 02, 2016 |
Money Market Funds | ||
Assets: | ||
Assets, Fair Value Measurements | $ 9,577 | $ 9,212 |
Money Market Funds | Level 1 | ||
Assets: | ||
Assets, Fair Value Measurements | 9,577 | 9,212 |
Earn Out Liability | ||
Liabilities: | ||
Liabilities, Fair Value Measurements | 778 | 1,005 |
Earn Out Liability | Level 3 | ||
Liabilities: | ||
Liabilities, Fair Value Measurements | $ 778 | $ 1,005 |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about the Inputs and Valuation Methodologies Used for Fair Value Measurements (Details) - Earn Out Liability - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Jan. 02, 2016 | |
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Liabilities, Fair Value Measurements | $ 778 | $ 1,005 |
Level 3 | ||
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Liabilities, Fair Value Measurements | 778 | $ 1,005 |
Level 3 | Discounted Cash Flow | ||
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Liabilities, Fair Value Measurements | $ 778 | |
Valuation Technique, Earn-out liability | Discounted cash flow | |
Level 3 | Discounted Cash Flow | Weighted Average | ||
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Weighted Average, Projected royalties | $ 2,096 | |
Weighted Average, Discount rate | 11.83% | |
Level 3 | Discounted Cash Flow | Minimum | ||
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Weighted Average, Projected royalties | $ 134 | |
Weighted Average, Discount rate | 10.37% | |
Level 3 | Discounted Cash Flow | Maximum | ||
Quantitative information about the inputs and valuation methodologies used for fair value measurements | ||
Weighted Average, Projected royalties | $ 2,284 | |
Weighted Average, Discount rate | 27.00% |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of the Changes in the Company's Earn-Out - Cash (Level 3 Liabilities) Balance (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Oct. 03, 2015 | |
Reconciliation of the changes in the Company's earn-out - cash (Level 3 liabilities) balance | ||
Balance as of beginning of the period | $ 1,005 | $ 1,423 |
Payments against earn-out | (313) | (328) |
Change in fair value of earn-out liability | 86 | (129) |
Balance as of the end of the period | $ 778 | $ 966 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Activity under Incentive Plan (Details) $ / shares in Units, $ in Thousands | 9 Months Ended |
Oct. 01, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Outstanding, Number of Shares, Beginning Balance | shares | 551,492 |
Number of Shares, Options Granted | shares | 79,777 |
Number of Shares, Options Exercised | shares | (117,576) |
Number of Shares, Options Cancelled or forfeited | shares | (51,307) |
Outstanding, Number of Shares, Ending Balance | shares | 462,386 |
Outstanding, Weighted Average Exercise Price Per Share, Beginning Balance | $ / shares | $ 6.92 |
Weighted Average Exercise Price Per Share, Options Granted | $ / shares | 13.30 |
Weighted Average Exercise Price Per Share, Options Exercised | $ / shares | 5.53 |
Weighted Average Exercise Price Per Share, Options Cancelled or forfeited | $ / shares | 8.56 |
Outstanding, Weighted Average Exercise Price Per Share, Ending Balance | $ / shares | $ 8.19 |
Aggregate Intrinsic Value, Ending Balance | $ | $ 2,980 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | Aug. 31, 2016 | Aug. 31, 2015 | Jul. 31, 2014 | Feb. 28, 2013 | Feb. 28, 2012 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Weighted-average grant date fair value of the options granted | $ 6.37 | $ 2.77 | $ 5.23 | $ 4.23 | |||||
Total intrinsic value of options exercised | $ 187,000 | $ 144,000 | |||||||
Total unrecognized compensation cost related to non-vested share-based compensation arrangements | 3,500,000 | $ 3,500,000 | |||||||
Cost is expected to be recognized over a weighted average period | 2 years 5 months 19 days | ||||||||
Stock repurchase program authorized amount | $ 6,700,000 | $ 6,700,000 | $ 3,000,000 | $ 3,000,000 | $ 4,000,000 | ||||
Repurchase of shares | 843,785 | 843,785 | |||||||
Remaining common stock value authorized to purchase under stock repurchase program lapsed | $ 1,000,000 | ||||||||
Stock repurchase program additional amount authorized | $ 2,000,000 | ||||||||
Stock repurchase, shares | 6,544 | ||||||||
Shares repurchased price, per share | $ 9 | ||||||||
Restricted Stock Units (RSUs) | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Unvested restricted stock awarded | 285,005 | ||||||||
Weighted-average grant date fair value of restricted stock awarded | $ 11.89 | ||||||||
Number of shares, vested | 30,789 | ||||||||
Restricted Stock Units (RSUs) | Accelerated Vesting | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Number of shares, vested | 6,400 | ||||||||
Restricted Stock Units (RSUs) | Performance Award | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Unvested restricted stock awarded | 256,138 | ||||||||
Weighted-average grant date fair value of restricted stock awarded | $ 11.40 | ||||||||
Restricted Stock Units (RSUs) | Performance Award | Accelerated Vesting | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Number of shares, vested | 10,000 | ||||||||
Restricted Stock Units (RSUs) | Performance Award | Accelerated Vesting | General and administrative | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Stock-based compensation expense | $ 220,000 | ||||||||
Restricted Stock Awards | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||||
Unvested restricted stock awarded | 1,289 | ||||||||
Weighted-average grant date fair value of restricted stock awarded | $ 15.51 | ||||||||
Number of shares, vested | 2,513 |
Stock Based Compensation - Weig
Stock Based Compensation - Weighted Average Assumptions for Fair Value Stock-Based Awards (Options) (Details) | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Weighted average assumptions for fair value estimate of stock-based awards (options) | ||||
Average risk free interest rate | 1.03% | 1.30% | 1.10% | 1.27% |
Expected life (in years) | 4 years 6 months 18 days | 4 years 6 months 18 days | 4 years 6 months 18 days | 4 years 6 months 18 days |
Average volatility | 46.00% | 47.00% | 46.00% | 50.00% |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 470 | $ 163 | $ 1,270 | $ 725 |
Cost of revenues | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 3 | 49 | 84 | 172 |
Research and development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 39 | 21 | 90 | 153 |
Sales and marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 38 | 42 | 119 | 146 |
General and administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 390 | $ 51 | $ 977 | $ 254 |
Stock Based Compensation - Su39
Stock Based Compensation - Summary of Stock Options Outstanding, Vested and Expected to Vest and Exercisable (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Oct. 01, 2016 | Jan. 02, 2016 | |
Stock options outstanding, exercisable and expected to vest | ||
Options outstanding, Number of Shares | 462,386 | 551,492 |
Options vested and expected to vest, Number of Shares | 428,659 | |
Options exercisable, Number of Shares | 225,703 | |
Options outstanding, Weighted Average Exercise Price | $ 8.19 | $ 6.92 |
Options vested and expected to vest, Weighted Average Exercise Price | 7.98 | |
Options exercisable, Weighted Average Exercise Price | $ 6.35 | |
Options outstanding, Weighted Average Remaining Contractual Life (Years) | 4 years 6 months 15 days | |
Options vested and expected to vest, Weighted Average Remaining Contractual Life (Years) | 4 years 5 months 9 days | |
Options exercisable, Weighted Average Remaining Contractual Life (Years) | 3 years 6 months 7 days | |
Options outstanding, Aggregate Intrinsic Value | $ 2,980 | |
Options vested and expected to vest, Aggregate Intrinsic Value | 2,844 | |
Options exercisable, Aggregate Intrinsic Value | $ 1,837 |
Stock Based Compensation - Rest
Stock Based Compensation - Restricted Stock Units and Awards (Details) | 9 Months Ended |
Oct. 01, 2016shares | |
Restricted Stock Units (RSUs) | |
Restricted stock units | |
Outstanding, Number of Shares, Beginning Balance | 147,589 |
Number of Shares, Restricted stock granted | 285,005 |
Number of Shares, Restricted stock released | (30,789) |
Number of Shares, Restricted stock cancelled | (66,000) |
Outstanding, Number of Shares, Ending Balance | 335,805 |
Restricted Stock Awards | |
Restricted stock units | |
Outstanding, Number of Shares, Beginning Balance | 2,513 |
Number of Shares, Restricted stock granted | 1,289 |
Number of Shares, Restricted stock released | (2,513) |
Outstanding, Number of Shares, Ending Balance | 1,289 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | Jan. 02, 2016 | |
Income Taxes [Line Items] | |||||
Income tax benefit | $ 627 | $ 135 | $ 674 | $ 103 | |
Release of deferred tax assets valuation allowance | $ 9,200 | ||||
Unrecognized tax benefits | $ 900 | ||||
Unrecognized tax benefits recognition impact on income tax rate | $ 400 | ||||
Earliest Tax Year | |||||
Income Taxes [Line Items] | |||||
Open Tax Year | 2,008 | ||||
Latest Tax Year | |||||
Income Taxes [Line Items] | |||||
Open Tax Year | 2,015 |
Computation of Basic and Dilu42
Computation of Basic and Diluted Net Loss Per Common Share - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Stock option | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were excluded from the computation of diluted weighted average shares outstanding | 462,386 | 234,958 | 462,386 | 234,958 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were excluded from the computation of diluted weighted average shares outstanding | 335,805 | 147,589 | 335,805 | 147,589 |
Restricted Stock Awards | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Shares that were excluded from the computation of diluted weighted average shares outstanding | 1,289 | 2,513 | 1,289 | 2,513 |
Computation of Basic and Dilu43
Computation of Basic and Diluted Net Loss Per Common Share - Reconciliation of Numerator and Denominator of Basic and Diluted Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Numerator: | ||||
Net (loss) income | $ (671) | $ 442 | $ (898) | $ 36 |
Denominator: | ||||
Weighted average shares of common stock (basic) | 10,129 | 9,972 | 10,083 | 9,956 |
Effect of dilutive stock options | 117 | 174 | ||
Effect of dilutive contingent shares | 5 | 12 | ||
Weighted average shares of common stock (diluted) | 10,129 | 10,094 | 10,083 | 10,142 |
Per share data: | ||||
Basic net (loss) income per share | $ (0.07) | $ 0.04 | $ (0.09) | $ 0 |
Diluted net (loss) income per share | $ (0.07) | $ 0.04 | $ (0.09) | $ 0 |
Business Segments - Additional
Business Segments - Additional Information (Details) - Segment | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | 1 | |||
Customer Concentration Risk | Revenue, Total | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of concentration risk | 10.00% | 10.00% | 10.00% | 10.00% |
Other than United States | Customer Concentration Risk | Revenue, Total | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of concentration risk | 60.00% | 59.00% | ||
United States | Customer Concentration Risk | Revenue, Total | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of concentration risk | 55.40% | 56.50% |
Business Segments - Revenue Inf
Business Segments - Revenue Information by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2016 | Oct. 03, 2015 | Oct. 01, 2016 | Oct. 03, 2015 | |
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total revenues | $ 9,789 | $ 9,815 | $ 33,628 | $ 29,644 |
United States | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total revenues | 5,871 | 5,791 | 18,642 | 16,763 |
Europe | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total revenues | 2,191 | 2,083 | 6,779 | 5,763 |
Rest of Americas | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total revenues | 476 | 506 | 1,858 | 2,041 |
Asia/Pacific Rim | ||||
Revenues From External Customers And Long Lived Assets [Line Items] | ||||
Total revenues | $ 1,251 | $ 1,435 | $ 6,349 | $ 5,077 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Subsequent Event - Loan Agreement - Silicon Valley Bank - Revolving Loan Facility | Nov. 02, 2016USD ($) |
Subsequent Event [Line Items] | |
Borrowings available under secured revolving loan facility | $ 15,000,000 |
Loan facility, maturity date | Nov. 2, 2019 |
Wall Street Journal Prime Rate | |
Subsequent Event [Line Items] | |
Debt instrument, basis spread on variable interest rate | 1.50% |