Pixelworks (PXLW) 10-Q 31 Jul 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 30, 2015
Entity Information [Line Items]
Entity Registrant Name	Pixelworks, Inc.
Entity Central Index Key	1,040,161
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		23,627,145

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 14,432	$ 17,926
Accounts receivable, net	4,733	4,648
Inventories	2,875	2,898
Prepaid expenses and other current assets	1,239	888
Total current assets	23,279	26,360
Property and equipment, net	7,030	6,402
Other assets, net	926	1,382
Total assets	31,235	34,144
Current liabilities:
Accounts payable	4,004	3,154
Accrued liabilities and current portion of long-term liabilities	9,185	8,539
Current portion of income taxes payable	187	197
Short-term line of credit	3,000	3,000
Total current liabilities	16,376	14,890
Long-term liabilities, net of current portion	919	1,476
Income taxes payable, net of current portion	2,079	2,094
Total liabilities	$ 19,374	$ 18,460
Commitments and contingencies (Note 9)
Shareholders’ equity:
Preferred stock	$ 0	$ 0
Common stock	371,590	369,253
Accumulated other comprehensive income	11	11
Accumulated deficit	(359,740)	(353,580)
Total shareholders’ equity	11,861	15,684
Total liabilities and shareholders’ equity	$ 31,235	$ 34,144

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Revenue, net		$ 15,078	$ 15,166	$ 29,470	$ 28,707
Cost of revenue (1)	[1]	7,844	7,505	15,269	13,051
Gross profit		7,234	7,661	14,201	15,656
Operating expenses:
Research and development (2)	[2]	6,105	5,887	12,423	12,272
Selling, general and administrative (3)	[3]	3,584	3,709	7,471	7,758
Total operating expenses		9,689	9,596	19,894	20,030
Loss from operations		(2,455)	(1,935)	(5,693)	(4,374)
Interest expense and other, net		(105)	(130)	(212)	(252)
Loss before income taxes		(2,560)	(2,065)	(5,905)	(4,626)
Provision for income taxes		236	317	255	263
Net loss		$ (2,796)	$ (2,382)	$ (6,160)	$ (4,889)
Net loss per share - basic and diluted (in usd per share)		$ (0.12)	$ (0.11)	$ (0.26)	$ (0.22)
Weighted average shares outstanding - basic and diluted (in shares)		23,539	22,667	23,434	22,437
[1]	Includes: Stock-based compensation 42 41 95 130 Additional amortization of non-cancelable prepaid royalty — 35 — 91
[2]	Includes: Stock-based compensation 429 413 918 1,239
[3]	Includes: Stock-based compensation 422 487 958 1,275

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Cost of revenue
Stock-based compensation	$ 42	$ 41	$ 95	$ 130
Additional amortization of non-cancelable prepaid royalty	0	35	0	91
Research and development
Stock-based compensation	429	413	918	1,239
Selling, general and administrative
Stock-based compensation	$ 422	$ 487	$ 958	$ 1,275

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net loss	$ (6,160)	$ (4,889)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,139	2,285
Stock-based compensation	1,971	2,644
Reversal of uncertain tax positions	(209)	(270)
Deferred income tax expense	0	160
Other	52	44
Changes in operating assets and liabilities:
Accounts receivable, net	(85)	637
Inventories	23	(1,356)
Prepaid expenses and other current and long-term assets, net	(144)	1,770
Accounts payable	(813)	1,066
Accrued current and long-term liabilities	1,192	6
Income taxes payable	184	245
Net cash provided by (used in) operating activities	(1,850)	2,342
Cash flows from investing activities:
Purchases of property and equipment	(533)	(2,196)
Purchases of licensed technology	(55)	0
Net cash used in investing activities	(588)	(2,196)
Cash flows from financing activities:
Payments on asset financings	(1,422)	(1,037)
Proceeds from issuances of common stock	366	991
Net cash used in financing activities	(1,056)	(46)
Net increase (decrease) in cash and cash equivalents	(3,494)	100
Cash and cash equivalents, beginning of period	17,926	20,805
Cash and cash equivalents, end of period	$ 14,432	$ 20,905

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	BASIS OF PRESENTATION Nature of Business Pixelworks designs, develops and markets video and pixel processing semiconductors, intellectual property cores, software and custom ASIC solutions for high-end digital video applications. Our products allow manufacturers and developers of digital display and projection devices to manufacture screens of all sizes that display the highest video quality with minimum power consumption. Our core video display processing technology intelligently processes video signals from a variety of sources and optimizes the image for the viewer. The continued advancement of display technology and rapid growth of video consumption on digital delivery systems and mobile applications has increased the demand for video display processing technology in recent years. Our products are used in a range of devices from large flat panel displays to small low power mobile applications. Our products are designed to reduce overall system power requirements and reduce costs for our customers by minimizing bandwidth. Our primary target markets include digital projection systems, digital televisions, Ultrabook TM devices, tablets, and smartphones. As of June 30, 2015, we had an intellectual property portfolio of 132 patents related to the visual display of digital image data. Pixelworks was founded in 1997 and is incorporated under the laws of the state of Oregon. Condensed Consolidated Financial Statements The financial information included herein for the three and six month periods ended June 30, 2015 and 2014 is prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and is unaudited. Such information reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the Company's condensed consolidated financial statements for these interim periods. The financial information as of December 31, 2014 is derived from our audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2014, included in Item 8 of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2015, and should be read in conjunction with such consolidated financial statements. The results of operations for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results expected for future periods or for the entire fiscal year ending December 31, 2015. Comprehensive Income (Loss) The Company reports comprehensive income (loss) and its components following guidance set forth by the Financial Accounting Standards Board (the “FASB”), Accounting Standards Codification section 220-10, Comprehensive Income, which establishes standards for the reporting and display of comprehensive income or loss and its components in the financial statements. During the three and six month periods ended June 30, 2015 and 2014, aside from our net loss, there were no other items of comprehensive income or loss and therefore the Company has not included a statement of comprehensive income (loss) in our interim condensed consolidated financial statements. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 allows for either full retrospective or modified retrospective adoption and will become effective for the Company on January 1, 2018. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial position, results of operations and cash flows. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Our significant estimates and judgments include those related to revenue recognition, product returns, warranty obligations, bad debts, inventories, property and equipment, impairment of long-lived assets, valuation of share-based payments, income taxes, litigation and other contingencies. The actual results experienced could differ materially from our estimates.

Balance Sheet Components

Balance Sheet Components	6 Months Ended
	Jun. 30, 2015
Balance Sheet Related Disclosures [Abstract]
Balance Sheet Components	BALANCE SHEET COMPONENTS Accounts Receivable, Net Accounts receivable are recorded at invoiced amount and do not bear interest when recorded or accrue interest when past due. Accounts receivable are stated net of an allowance for doubtful accounts, which is maintained for estimated losses that may result from the inability of our customers to make required payments. Accounts receivable consists of the following: June 30, December 31, Accounts receivable, gross $ 4,964 $ 4,949 Less: allowance for doubtful accounts (231 ) (301 ) Accounts receivable, net $ 4,733 $ 4,648 The following is the change in our allowance for doubtful accounts: Six Months Ended June 30, 2015 2014 Balance at beginning of period $ 301 $ 315 Reductions credited (4 ) (5 ) Accounts written-off, net of recoveries (66 ) — Balance at end of period $ 231 $ 310 Inventories Inventories consist of finished goods and work-in-process, and are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market (net realizable value). Inventories consist of the following: June 30, December 31, Finished goods $ 2,098 $ 1,697 Work-in-process 777 1,201 Inventories $ 2,875 $ 2,898 Property and Equipment, Net Property and equipment consists of the following: June 30, December 31, Gross carrying amount $ 29,853 $ 27,573 Less: accumulated depreciation and amortization (22,823 ) (21,171 ) Property and equipment, net $ 7,030 $ 6,402 Accrued Liabilities and Current Portion of Long-Term Liabilities Accrued liabilities and current portion of long-term liabilities consist of the following: June 30, December 31, Accrued payroll and related liabilities $ 2,891 $ 2,385 Accrued commissions and royalties 2,194 2,055 Accrued interest payable 1,537 1,383 Current portion of accrued liabilities for asset financings 967 1,744 Deferred revenue 153 30 Reserve for warranty returns 32 105 Other 1,411 837 Accrued liabilities and current portion of long-term liabilities $ 9,185 $ 8,539 The following is the change in our reserve for warranty returns: Six Months Ended June 30, 2015 2014 Reserve for warranty returns: Balance at beginning of period $ 105 $ 329 Benefit (65 ) (53 ) Charge-offs (8 ) (22 ) Balance at end of period $ 32 $ 254 Short-Term Line of Credit On December 21, 2010, we entered into a Loan and Security Agreement (the "Revolving Loan Agreement") with Silicon Valley Bank (the "Bank"). On December 14, 2012, we and the Bank entered into Amendment No. 1 to the Revolving Loan Agreement (the "Amendment No. 1"). The Revolving Loan Agreement, as amended, provides a secured working capital-based revolving line of credit (the "Revolving Line") in an aggregate amount of up to the lesser of (i) $10,000 , or (ii) $1,000 plus 80% of eligible domestic accounts receivable and certain foreign accounts receivable. On December 4, 2013, we and the Bank entered into Amendment No. 2 (the "Amendment No. 2") to the Revolving Loan Agreement which changes the maturity date of the Revolving Line to January 1, 2016. The maturity date was previously December 14, 2014, as provided by Amendment No. 1. In addition, the Revolving Loan Agreement, as amended, provides for non-formula advances of up to $10,000 which may be made solely during the last five business days of any fiscal month or quarter and which must be repaid by the Company on or before the fifth business day after the applicable fiscal month or quarter end. Due to their repayment terms, non-formula advances do not provide the Company with usable liquidity. The Revolving Loan Agreement, as amended, contains customary affirmative and negative covenants as well as customary events of default. The occurrence of an event of default could result in the acceleration of the Company's obligations under the Revolving Loan Agreement, as amended, and an increase to the applicable interest rate, and would permit the Bank to exercise remedies with respect to its security interest. As of June 30, 2015, we were in compliance with all of the terms of the Revolving Loan Agreement, as amended. Short-term borrowings outstanding under the Revolving Line consisted of non-formula advances of $3,000 as of June 30, 2015 and as of December 31, 2014, both advances were repaid within required terms. The weighted-average interest rate on short-term borrowings outstanding as of June 30, 2015 and December 31, 2014 was 3.5% .

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value Measurements	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. Three levels of inputs may be used to measure fair value: Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities. Level 2: Valuations based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Valuations based on unobservable inputs in which there is little or no market data available, which require the reporting entity to develop its own assumptions. The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014: Level 1 Level 2 Level 3 Total As of June 30, 2015: Money market funds $ 12,989 $ — $ — $ 12,989 As of December 31, 2014: Money market funds $ 17,480 $ — $ — $ 17,480 We primarily use the market approach to determine the fair value of our financial assets. The fair value of our current assets and liabilities, including accounts receivable and accounts payable approximates the carrying value due to the short-term nature of these balances. We have currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with U.S. GAAP.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Incomes Taxes	INCOME TAXES The provision for income taxes during the 2015 and 2014 periods is primarily comprised of current and deferred tax expense in profitable cost-plus foreign jurisdictions, accruals for tax contingencies in foreign jurisdictions and benefits for the reversal of previously recorded foreign tax contingencies due to the expiration of the applicable statutes of limitation. We recorded a benefit for the reversal of previously recorded foreign tax contingencies of $209 and $270 during the first half of 2015 and 2014, respectively. As we do not believe that it is more likely than not that we will realize a benefit from our U.S. net deferred tax assets, including our U.S. net operating losses, we continue to provide a full valuation allowance against essentially all of those assets, therefore, we do not incur significant U.S. income tax expense or benefit. We have not recorded a valuation allowance against our other foreign net deferred tax assets as we believe that it is more likely than not that we will realize a benefit from those assets. As of June 30, 2015 and December 31, 2014, the amount of our uncertain tax positions was a liability of $1,630 and $1,712 , respectively. A number of years may elapse before an uncertain tax position is resolved by settlement or statute of limitation. Settlement of any particular position could require the use of cash. If the uncertain tax positions we have accrued for are sustained by the taxing authorities in our favor, the reduction of the liability will reduce our effective tax rate. We reasonably expect reductions in the liability for unrecognized tax benefits and interest and penalties of approximately $293 within the next twelve months due to the expiration of statutes of limitation in foreign jurisdictions. We recognize interest and penalties related to uncertain tax positions in income tax expense in our consolidated statements of operations.

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Earnings Per Share	EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net loss per share: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net loss $ (2,796 ) $ (2,382 ) $ (6,160 ) $ (4,889 ) Weighted average shares outstanding - basic and diluted 23,539 22,667 23,434 22,437 Net loss per share - basic and diluted $ (0.12 ) $ (0.11 ) $ (0.26 ) $ (0.22 ) The following weighted average shares were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Employee equity incentive plans 4,197 4,223 4,200 4,425 Potentially dilutive common shares from employee equity incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the employee stock purchase plan.

Supplemental Disclosure of Cash

Supplemental Disclosure of Cash Flow Information	6 Months Ended
	Jun. 30, 2015
Supplemental Cash Flow Information [Abstract]
Supplemental Disclosure of Cash Flow Information	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Supplemental disclosure of cash flow information is as follows: Six Months Ended June 30, 2015 2014 Cash paid during the period for: Income taxes $ 226 $ 81 Interest 74 73 Non-cash investing and financing activities: Acquisitions of property and equipment and other assets under extended payment terms $ 143 $ 2,825

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Segment Information	SEGMENT INFORMATION We have identified a single operating segment: the design and development of integrated circuits for use in electronic display devices. The majority of our assets are located in the United States. Geographic Information Revenue by geographic region, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Japan $ 12,725 $ 8,647 $ 24,540 $ 14,073 Taiwan 1,601 3,239 3,080 4,953 Korea 265 775 586 2,371 Europe 156 507 339 1,021 China 139 1,413 419 2,379 United States 36 145 69 3,191 Other 156 440 437 719 $ 15,078 $ 15,166 $ 29,470 $ 28,707 Significant Customers The percentage of revenue attributable to our distributors, top five end customers, and individual distributors or end customers that represented 10% or more of revenue in at least one of the periods presented, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Distributors: All distributors 44 % 80 % 45 % 69 % Distributor A 26 % 39 % 27 % 34 % Distributor B 7 % 16 % 6 % 11 % End customers: 1 Top five end customers 83 % 61 % 82 % 50 % End customer A 51 % 10 % 49 % 6 % End customer B 11 % 7 % 7 % 6 % End customer C 8 % 10 % 9 % 11 % End customer D 7 % 20 % 10 % 15 % End customer E 5 % 14 % 3 % 10 % 1 End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors. The following accounts represented 10% or more of total accounts receivable in at least one of the periods presented: June 30, December 31, Account X 59 % 37 % Account Y 11 % 15 % Account Z 1 % 16 %

Risks and Uncertainties

Risks and Uncertainties	6 Months Ended
	Jun. 30, 2015
Risks and Uncertainties [Abstract]
Risks and Uncertainties	RISKS AND UNCERTAINTIES Concentration of Suppliers We do not own or operate a semiconductor fabrication facility and do not have the resources to manufacture our products internally. We rely on a limited number of foundries and assembly and test vendors to produce all of our wafers and for completion of finished products. We do not have any long-term agreements with any of these suppliers. In light of these dependencies, it is reasonably possible that failure to perform by one of these suppliers could have a severe impact on our results of operations. Additionally, the concentration of these vendors within Taiwan, the People’s Republic of China and Singapore increases our risk of supply disruption due to natural disasters, economic instability, political unrest or other regional disturbances. Risk of Technological Change The markets in which we compete, or seek to compete, are subject to rapid technological change, frequent new product introductions, changing customer requirements for new products and features, and evolving industry standards. The introduction of new technologies and the emergence of new industry standards could render our products less desirable or obsolete, which could harm our business. Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist of cash equivalents and accounts receivable. We limit our exposure to credit risk associated with cash equivalent balances by holding our funds in high quality, highly liquid money market accounts. We limit our exposure to credit risk associated with accounts receivable by carefully evaluating creditworthiness before offering terms to customers.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIES Indemnifications Certain of our agreements include indemnification provisions for claims from third-parties relating to our intellectual property. It is not possible for us to predict the maximum potential amount of future payments or indemnification costs under these or similar agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. We have not made any payments under these agreements in the past, and as of June 30, 2015, we have not incurred any material liabilities arising from these indemnification obligations. In the future, however, such obligations could materially impact our results of operations. Legal Proceedings We are subject to legal matters that arise from time to time in the ordinary course of our business. Although we currently believe that resolving such matters, individually or in the aggregate, will not have a material adverse effect on our financial position, our results of operations, or our cash flows, these matters are subject to inherent uncertainties and our view of these matters may change in the future.

Basis of Presentation (Policies

Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. ASU 2014-09 allows for either full retrospective or modified retrospective adoption and will become effective for the Company on January 1, 2018. The Company is evaluating the alternative transition methods and the potential effects of the adoption of this update on its financial position, results of operations and cash flows.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Our significant estimates and judgments include those related to revenue recognition, product returns, warranty obligations, bad debts, inventories, property and equipment, impairment of long-lived assets, valuation of share-based payments, income taxes, litigation and other contingencies. The actual results experienced could differ materially from our estimates.
Receivables, Policy	Accounts receivable are recorded at invoiced amount and do not bear interest when recorded or accrue interest when past due. Accounts receivable are stated net of an allowance for doubtful accounts, which is maintained for estimated losses that may result from the inability of our customers to make required payments.
Inventory, Policy	Inventories consist of finished goods and work-in-process, and are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or market (net realizable value).

Balance Sheet Components (Table

Balance Sheet Components (Tables)	6 Months Ended
	Jun. 30, 2015
Balance Sheet Related Disclosures [Abstract]
Accounts Receivable, Net	Accounts receivable consists of the following: June 30, December 31, Accounts receivable, gross $ 4,964 $ 4,949 Less: allowance for doubtful accounts (231 ) (301 ) Accounts receivable, net $ 4,733 $ 4,648
Allowance for Doubtful Accounts	The following is the change in our allowance for doubtful accounts: Six Months Ended June 30, 2015 2014 Balance at beginning of period $ 301 $ 315 Reductions credited (4 ) (5 ) Accounts written-off, net of recoveries (66 ) — Balance at end of period $ 231 $ 310
Inventories	Inventories consist of the following: June 30, December 31, Finished goods $ 2,098 $ 1,697 Work-in-process 777 1,201 Inventories $ 2,875 $ 2,898
Property and Equipment, Net	Property and equipment consists of the following: June 30, December 31, Gross carrying amount $ 29,853 $ 27,573 Less: accumulated depreciation and amortization (22,823 ) (21,171 ) Property and equipment, net $ 7,030 $ 6,402
Accrued Liabilities and Current Portion of Long-Term Liabilities	Accrued liabilities and current portion of long-term liabilities consist of the following: June 30, December 31, Accrued payroll and related liabilities $ 2,891 $ 2,385 Accrued commissions and royalties 2,194 2,055 Accrued interest payable 1,537 1,383 Current portion of accrued liabilities for asset financings 967 1,744 Deferred revenue 153 30 Reserve for warranty returns 32 105 Other 1,411 837 Accrued liabilities and current portion of long-term liabilities $ 9,185 $ 8,539
Reserve for Warranty Returns	The following is the change in our reserve for warranty returns: Six Months Ended June 30, 2015 2014 Reserve for warranty returns: Balance at beginning of period $ 105 $ 329 Benefit (65 ) (53 ) Charge-offs (8 ) (22 ) Balance at end of period $ 32 $ 254

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Assets Measured on Recurring Basis	The following table presents information about our assets measured at fair value on a recurring basis in the condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014: Level 1 Level 2 Level 3 Total As of June 30, 2015: Money market funds $ 12,989 $ — $ — $ 12,989 As of December 31, 2014: Money market funds $ 17,480 $ — $ — $ 17,480

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Earnings Per Share [Abstract]
Earnings Per Share	The following table sets forth the computation of basic and diluted net loss per share: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Net loss $ (2,796 ) $ (2,382 ) $ (6,160 ) $ (4,889 ) Weighted average shares outstanding - basic and diluted 23,539 22,667 23,434 22,437 Net loss per share - basic and diluted $ (0.12 ) $ (0.11 ) $ (0.26 ) $ (0.22 )
Antidilutive Securities Excluded from Computation of Earnings Per Share	The following weighted average shares were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Employee equity incentive plans 4,197 4,223 4,200 4,425

Supplemental Disclosure of Ca19

Supplemental Disclosure of Cash Flow Information (Tables)	6 Months Ended
	Jun. 30, 2015
Supplemental Cash Flow Information [Abstract]
Supplemental Cash Flow Information	Supplemental disclosure of cash flow information is as follows: Six Months Ended June 30, 2015 2014 Cash paid during the period for: Income taxes $ 226 $ 81 Interest 74 73 Non-cash investing and financing activities: Acquisitions of property and equipment and other assets under extended payment terms $ 143 $ 2,825

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Schedule of Revenue by Geographic Region	Revenue by geographic region, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Japan $ 12,725 $ 8,647 $ 24,540 $ 14,073 Taiwan 1,601 3,239 3,080 4,953 Korea 265 775 586 2,371 Europe 156 507 339 1,021 China 139 1,413 419 2,379 United States 36 145 69 3,191 Other 156 440 437 719 $ 15,078 $ 15,166 $ 29,470 $ 28,707
Schedule of Revenue from Significant Customers	The percentage of revenue attributable to our distributors, top five end customers, and individual distributors or end customers that represented 10% or more of revenue in at least one of the periods presented, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Distributors: All distributors 44 % 80 % 45 % 69 % Distributor A 26 % 39 % 27 % 34 % Distributor B 7 % 16 % 6 % 11 % End customers: 1 Top five end customers 83 % 61 % 82 % 50 % End customer A 51 % 10 % 49 % 6 % End customer B 11 % 7 % 7 % 6 % End customer C 8 % 10 % 9 % 11 % End customer D 7 % 20 % 10 % 15 % End customer E 5 % 14 % 3 % 10 % 1 End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.
Schedule of Accounts Receivable Percentage from Significant Customers	The following accounts represented 10% or more of total accounts receivable in at least one of the periods presented: June 30, December 31, Account X 59 % 37 % Account Y 11 % 15 % Account Z 1 % 16 %

Basis of Presentation (Details)

Basis of Presentation (Details)	Jun. 30, 2015patent
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of patents held	132

Balance Sheet Components (Accou

Balance Sheet Components (Accounts Receivable) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Accounts Receivable, Net [Abstract]
Accounts receivable, gross	$ 4,964	$ 4,949
Less: allowance for doubtful accounts	(231)	(301)	$ (310)	$ (315)
Accounts receivable, net	$ 4,733	$ 4,648

Balance Sheet Components (Allow

Balance Sheet Components (Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	$ 301	$ 315
Reductions credited	(4)	(5)
Accounts written-off, net of recoveries	(66)	0
Balance at end of period	$ 231	$ 310

Balance Sheet Components (Inven

Balance Sheet Components (Inventories) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Balance Sheet Related Disclosures [Abstract]
Finished goods	$ 2,098	$ 1,697
Work-in-process	777	1,201
Inventories	$ 2,875	$ 2,898

Balance Sheet Components (Prope

Balance Sheet Components (Property Plant and Equipment) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Balance Sheet Related Disclosures [Abstract]
Gross carrying amount	$ 29,853	$ 27,573
Less: accumulated depreciation and amortization	(22,823)	(21,171)
Property and equipment, net	$ 7,030	$ 6,402

Balance Sheet Components (Accru

Balance Sheet Components (Accrued Liabilities and Current Portion of Long-Term Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Balance Sheet Related Disclosures [Abstract]
Accrued payroll and related liabilities	$ 2,891	$ 2,385
Accrued commissions and royalties	2,194	2,055
Accrued interest payable	1,537	1,383
Current portion of accrued liabilities for asset financings	967	1,744
Deferred revenue	153	30
Reserve for warranty returns	32	105	$ 254	$ 329
Other	1,411	837
Accrued liabilities and current portion of long-term liabilities	$ 9,185	$ 8,539

Balance Sheet Components (Reser

Balance Sheet Components (Reserve for Warranty Returns) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 105	$ 329
Benefit	(65)	(53)
Charge-offs	(8)	(22)
Balance at end of period	$ 32	$ 254

Balance Sheet Components (Short

Balance Sheet Components (Short-Term Line of Credit) (Narrative) (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014	Dec. 04, 2013	Dec. 14, 2012
Balance Sheet Related Disclosures [Abstract]
Maximum borrowing capacity				$ 10,000,000
Line of credit facility, component of calculation for maximum borrowing amount under formula advances				$ 1,000,000
Line of credit facility maximum borrowing capacity limited by eligible AR				80.00%
Line of credit facility, maximum borrowing capacity under non-formula advances			$ 10,000,000
Line of credit facility, amount outstanding	$ 3,000,000	$ 3,000,000
Short-term debt, weighted average interest rate	3.50%	3.50%

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Estimate of Fair Value Measurement - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market funds	$ 12,989	$ 17,480
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market funds	12,989	17,480
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market funds	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market funds	$ 0	$ 0

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Reversal of uncertain tax positions	$ 209	$ 270
Liability for uncertain tax positions	1,630		$ 1,712
Estimated decrease in total gross unrecognized tax benefits as a result of resolutions of global tax examinations and expiration of applicable statutes of limitations, including interest and penalties	$ 293

Earnings Per Share (Earnings Pe

Earnings Per Share (Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Net loss	$ (2,796)	$ (2,382)	$ (6,160)	$ (4,889)
Weighted average shares outstanding - basic and diluted (in shares)	23,539	22,667	23,434	22,437
Net loss per share - basic and diluted (in usd per share)	$ (0.12)	$ (0.11)	$ (0.26)	$ (0.22)

Earnings Per Share (Antidilutiv

Earnings Per Share (Antidilutive Effect on Weighted Average Shares) (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Employee equity incentive plans (in shares)	4,197	4,223	4,200	4,425

Supplemental Disclosure of Ca33

Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash paid during the period for:
Income taxes	$ 226	$ 81
Interest	74	73
Non-cash investing and financing activities:
Acquisitions of property and equipment and other assets under extended payment terms	$ 143	$ 2,825

Segment Information (Geographic

Segment Information (Geographic Information) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue, net	$ 15,078	$ 15,166	$ 29,470	$ 28,707
Japan
Revenue, net	12,725	8,647	24,540	14,073
Taiwan
Revenue, net	1,601	3,239	3,080	4,953
Korea
Revenue, net	265	775	586	2,371
Europe
Revenue, net	156	507	339	1,021
China
Revenue, net	139	1,413	419	2,379
United States
Revenue, net	36	145	69	3,191
Other
Revenue, net	$ 156	$ 440	$ 437	$ 719

Segment Information (Major Cust

Segment Information (Major Customers) (Narrative) (Details) - 6 months ended Jun. 30, 2015	Total
Segment Reporting Information
Number of customers included in five largest customer concentration disclosure	5
Revenue, net | Minimum
Segment Reporting Information
Concentration risk benchmark percentage	10.00%
Accounts Receivable | Minimum
Segment Reporting Information
Concentration risk benchmark percentage	10.00%

Segment Information (Revenue by

Segment Information (Revenue by Major Customer) (Details) - Revenue, net		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
All distributors
Revenue, Major Customer
Percentage of revenue		44.00%	80.00%	45.00%	69.00%
Distributor A
Revenue, Major Customer
Percentage of revenue		26.00%	39.00%	27.00%	34.00%
Distributor B
Revenue, Major Customer
Percentage of revenue		7.00%	16.00%	6.00%	11.00%
Top five end customers
Revenue, Major Customer
Percentage of revenue	[1]	83.00%	61.00%	82.00%	50.00%
End customer A
Revenue, Major Customer
Percentage of revenue	[1]	51.00%	10.00%	49.00%	6.00%
End customer B
Revenue, Major Customer
Percentage of revenue	[1]	11.00%	7.00%	7.00%	6.00%
End customer C
Revenue, Major Customer
Percentage of revenue	[1]	8.00%	10.00%	9.00%	11.00%
End customer D
Revenue, Major Customer
Percentage of revenue	[1]	7.00%	20.00%	10.00%	15.00%
End customer E
Revenue, Major Customer
Percentage of revenue	[1]	5.00%	14.00%	3.00%	10.00%
[1]	End customers include customers who purchase directly from us, as well as customers who purchase our products indirectly through distributors.

Segment Information (Accounts R

Segment Information (Accounts Receivable by Major Customer) (Details) - Accounts Receivable	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Account X
Segment Reporting Information
Percentage of accounts receivable	59.00%	37.00%
Account Y
Segment Reporting Information
Percentage of accounts receivable	11.00%	15.00%
Account Z
Segment Reporting Information
Percentage of accounts receivable	1.00%	16.00%