Document_And_Entity_Informatio
Document And Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Jul. 31, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'DOT HILL SYSTEMS CORP | ' |
Entity Central Index Key | '0001042783 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q2 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 60,377,412 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
ASSETS | ' | ' |
Cash and cash equivalents | $42,196,000 | $40,406,000 |
Accounts receivable, net | 32,814,000 | 42,907,000 |
Inventories | 7,532,000 | 6,539,000 |
Prepaid expenses and other assets | 4,823,000 | 7,265,000 |
Total current assets | 87,365,000 | 97,117,000 |
Property and equipment, net | 7,577,000 | 7,565,000 |
Other assets | 602,000 | 702,000 |
Total assets | 95,544,000 | 105,384,000 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable | 24,092,000 | 33,255,000 |
Accrued compensation | 3,441,000 | 4,922,000 |
Accrued expenses | 7,509,000 | 8,935,000 |
Deferred revenue | 5,045,000 | 4,211,000 |
Credit facility borrowings | 0 | 2,000,000 |
Total current liabilities | 40,087,000 | 53,323,000 |
Other long-term liabilities | 4,276,000 | 4,414,000 |
Total liabilities | 44,363,000 | 57,737,000 |
Commitments and Contingencies (Note 8) | ' | ' |
Stockholders' Equity: | ' | ' |
Preferred stock, $.001 par value, 10,000 shares authorized, no shares issued or outstanding at December 31, 2013 and June 30, 2014 | 0 | 0 |
Common stock, $.001 par value, 100,000 shares authorized, 59,138 and 60,322 shares issued and outstanding at December 31, 2013 and June 30, 2014, respectively | 60,000 | 59,000 |
Additional paid-in capital | 334,155,000 | 330,103,000 |
Accumulated other comprehensive loss | -3,283,000 | -3,254,000 |
Accumulated deficit | -279,751,000 | -279,261,000 |
Total stockholders' equity | 51,181,000 | 47,647,000 |
Total liabilities and stockholders' equity | $95,544,000 | $105,384,000 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 60,322,000 | 59,138,000 |
Common stock, shares outstanding | 60,322,000 | 59,138,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Comprehensive Loss (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
NET REVENUE | $48,222 | $50,683 | $96,429 | $95,163 |
COST OF GOODS SOLD | 32,199 | 33,676 | 65,141 | 63,716 |
GROSS PROFIT | 16,023 | 17,007 | 31,288 | 31,447 |
OPERATING EXPENSES: | ' | ' | ' | ' |
Research and development | 9,340 | 8,908 | 18,816 | 17,621 |
Sales and marketing | 3,843 | 3,187 | 7,137 | 6,295 |
General and administrative | 2,851 | 2,767 | 5,749 | 5,904 |
Total operating expenses | 16,034 | 14,862 | 31,702 | 29,820 |
OPERATING INCOME (LOSS) | -11 | 2,145 | -414 | 1,627 |
OTHER INCOME (EXPENSE): | ' | ' | ' | ' |
Interest income (expense), net | -4 | -8 | -22 | -15 |
Other Income, net | 11 | 1 | 21 | 0 |
Total other income (expense), net | 7 | -7 | -1 | -15 |
INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS | -4 | 2,138 | -415 | 1,612 |
INCOME TAX EXPENSE | 74 | 49 | 75 | 83 |
INCOME (LOSS) FROM CONTINUING OPERATIONS | -78 | 2,089 | -490 | 1,529 |
LOSS FROM DISCONTINUED OPERATIONS | ' | ' | 0 | -433 |
NET INCOME (LOSS) | -78 | 2,077 | -490 | 1,096 |
NET INCOME (LOSS) PER SHARE: | ' | ' | ' | ' |
Basic and diluted earnings (loss) per share from continuing operations | $0 | $0.04 | ($0.01) | $0.03 |
Loss per share from discontinued operations | $0 | $0 | $0 | ($0.01) |
Basic and diluted (in usd per share) | $0 | $0.04 | ($0.01) | $0.02 |
WEIGHTED AVERAGE SHARES USED TO CALCULATE NET INCOME (LOSS) PER SHARE: | ' | ' | ' | ' |
Weighted Average Number of Shares Outstanding, Basic | 60,159 | 58,384 | 59,920 | 58,194 |
Weighted Average Number of Shares Outstanding, Diluted | 60,159 | 58,797 | 59,920 | 58,616 |
COMPREHENSIVE LOSS: | ' | ' | ' | ' |
NET INCOME (LOSS) | -78 | 2,077 | -490 | 1,096 |
Foreign currency translation adjustment | -29 | 60 | 1 | 204 |
Comprehensive loss | ($77) | $2,137 | ($519) | $1,300 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Cash Flows (USD $) | 6 Months Ended | |
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 |
Cash Flows From Operating Activities: | ' | ' |
NET INCOME (LOSS) | ($490) | $1,096 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,891 | 1,463 |
Stock-based compensation expense | 1,632 | 1,357 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 9,861 | -4,053 |
Inventories | -1,035 | 839 |
Prepaid expenses and other assets | 2,544 | -240 |
Accounts payable | -9,122 | 2,123 |
Accrued compensation and other expenses | -3,213 | -836 |
Deferred revenue | 831 | 1,098 |
Other long-term liabilities | -143 | 160 |
Net cash provided by operating activities | 2,763 | 3,002 |
Cash Flows From Investing Activities: | ' | ' |
Purchases of property and equipment | -1,432 | -2,327 |
Net cash used in investing activities | -1,432 | -2,327 |
Cash Flows From Financing Activities: | ' | ' |
Payments on bank borrowings | -2,000 | -5,600 |
Proceeds from bank borrowings | 0 | 4,900 |
Shares withheld for tax purposes | -80 | -215 |
Proceeds from sale of stock to employees | 2,500 | 428 |
Net cash provided by (used in) financing activities | 420 | -487 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 39 | -101 |
Net Increase in Cash and Cash Equivalents | 1,790 | 87 |
Cash and Cash Equivalents, beginning of period | 40,406 | 40,315 |
Cash and Cash Equivalents, end of period | 42,196 | 40,402 |
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | ' | ' |
Property and equipment acquired but not yet paid | 832 | 308 |
Supplemental Cash Flow Data: | ' | ' |
Cash paid for income taxes | $260 | $84 |
Summary_Of_Significant_Account
Summary Of Significant Accounting Policies | 6 Months Ended | |||||||||||
Jun. 30, 2014 | ||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||
Summary Of Significant Accounting Policies | ' | |||||||||||
Summary of Significant Accounting Policies | ||||||||||||
Basis of Presentation | ||||||||||||
The financial statements of Dot Hill Systems Corp. (referred to herein as Dot Hill, we, our or us) contained herein are unaudited and in the opinion of management contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Securities and Exchange Commission, or SEC, Form 10-Q and Article 10 of SEC Regulation S-X. They do not include all of the information and disclosures required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for future quarters or the year ending December 31, 2014. | ||||||||||||
Use of Accounting Estimates | ||||||||||||
The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition, inventory valuation, recurring and specific issue warranty obligations (see Note 5), the valuation and recognition of stock-based compensation expense, and the valuation of long-lived assets. In addition, we have other accounting policies that involve estimates such as the determination of useful lives of long-lived assets, accruals for restructuring, and income taxes, including the valuation allowance for deferred tax assets. Actual results may differ from these estimates and such differences could be material. | ||||||||||||
Revenue Recognition | ||||||||||||
We derive our revenue from sales of our hardware products, software and services. | ||||||||||||
Hardware | ||||||||||||
Hardware product revenue consists of revenue from sales of our AssuredSAN storage systems that are integrated with our OEM customers' industry standard hardware and which become essential to the integrated system product. We recognize hardware product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, additional revenue reserves may be required. | ||||||||||||
We exclude from revenues taxes collected from customers on behalf of governmental authorities. | ||||||||||||
Software | ||||||||||||
In accordance with the specific guidance for recognizing software revenue, where applicable, we recognize revenue from perpetual software licenses at the inception of the license term assuming all revenue recognition criteria have been met. We use the relative fair value method to allocate revenue to software licenses at the inception of the license term when vendor-specific objective evidence, or VSOE, of fair value for all elements related to our products is available. We have established VSOE for the fair value of our software licenses and support services as measured by the prices paid by our customers when the licenses and services are sold separately on a standalone basis. | ||||||||||||
Specific long term software contracts may contain multiple deliverables including software licenses, services, training and post-contract support (PCS) for which we have not established VSOE of fair value of any of the elements. Under specific guidance for recognizing software revenue, we defer all revenue related to each deliverable until the only undelivered element is PCS. We then begin recognizing revenue ratably over the PCS period. | ||||||||||||
We defer all the direct and incremental costs related to the deliverables in these contracts until delivery of all the elements except PCS. The deferred costs are then recognized ratably over the contractual PCS support periods as a component of Costs of Goods Sold. | ||||||||||||
Service | ||||||||||||
Our service revenue primarily includes out-of-warranty repairs and product maintenance contracts. Out-of warranty repairs primarily consist of product repair services performed by our contract manufacturers for those customers that allowed their original product warranty to expire without purchasing one of our higher level support service plans. Revenue from these out-of-warranty repairs, and the associated cost of sales, is recognized in the period these services are provided. Service revenue also consists of product maintenance contracts purchased by our customers as an extension of our standard warranty. Revenue from our product maintenance contracts is deferred and recognized ratably over the contract term, generally 12 to 36 months. Net revenue derived from services was less than 10% of total revenue for all periods presented. | ||||||||||||
Revenue Recognition for Arrangements with Multiple Deliverables | ||||||||||||
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered elements that relate to the hardware product’s essential software, and undelivered non-software services (all non-software related elements), we allocate the transaction price to all deliverables based on their relative selling prices. In such circumstances, we use a hierarchy to determine the selling price to be used for allocating the transaction price to deliverables: (i) VSOE of fair value, (ii) third-party evidence of selling price, or TPE, and (iii) best estimate of the selling price, or ESP. VSOE of fair value generally exists only when we sell the deliverable separately and represents the actual price charged by us for that deliverable. ESPs reflect our best estimates of what the selling prices of each of the deliverables would be if they were sold regularly on a standalone basis. | ||||||||||||
Revenue Recognition for Sales to Channel Partners | ||||||||||||
On sales to channel partners, we evaluate whether fees are considered fixed or determinable by considering a number of factors, including our ability to estimate returns, payment terms and our relationship and past history with the particular channel partner. If fees are not considered fixed or determinable at the time of sale to a channel partner, revenue recognition is deferred until there is persuasive evidence indicating the product has sold through to an end-user. Persuasive evidence of sell-through may include reports from channel partners documenting sell-through activity or data indicating an order has shipped to an end-user. | ||||||||||||
Deferred Revenue | ||||||||||||
We defer revenue on upfront nonrefundable payments from our customers and recognize it ratably over the term of the agreement, unless the payment is in exchange for products delivered that represent the culmination of a separate earnings process. When we provide consideration to a customer, we recognize the value of that consideration as a reduction in net revenue. We may be required to maintain inventory with certain of our largest OEM customers, which we refer to as "hubbing" arrangements. Pursuant to these arrangements we deliver products to a customer or a designated third-party warehouse based upon the customer’s projected needs, but do not recognize product revenue unless and until the customer has removed our product from the warehouse to incorporate into its end products. | ||||||||||||
Concentration of Customers and Suppliers | ||||||||||||
A majority of our net revenue is derived from a limited number of customers. We currently have two customers that account for approximately 10% or more of our total net revenue: Hewlett Packard, or HP, and Tektronix, Inc., or Tektronix. Our agreements with our customers do not contain any minimum purchase commitments, do not obligate them to purchase their storage solutions exclusively from us and may be terminated at any time upon notice. | ||||||||||||
Net revenue consists of all product and services revenue. Net revenue by major customer is as follows (as a percentage of total net revenue): | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||
HP | 52 | % | 50 | % | 57 | % | 50 | % | ||||
Tektronix | 21 | % | 4 | % | 16 | % | 10 | % | ||||
Other customers less than 10% | 27 | % | 46 | % | 27 | % | 40 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||
If our relationship with HP or Tektronix were disrupted or declined significantly, we would lose a substantial portion of our anticipated net revenue and our business could be materially harmed. We cannot guarantee that our relationship with HP, Tektronix or our other customers will expand or not otherwise be disrupted. | ||||||||||||
We expect that the sale of our products and services to a limited number of customers will continue to account for a high percentage of net revenue for the foreseeable future. Our Product Purchase Agreement with HP, as amended, terminates on October 30, 2016. HP also holds warrants to purchase 1,602,489 shares of our common stock at an exercise price of $2.40 per share, expiring on October 30, 2016. | ||||||||||||
We currently rely on a limited number of contract manufacturing partners to produce substantially all of our products. As a result, should any of our current manufacturing partners, such as Foxconn Technology Group, or parts suppliers not produce and deliver inventory for us to sell on a timely basis, operating results may be adversely impacted. | ||||||||||||
Cash and Cash Equivalents | ||||||||||||
We classify investments as cash equivalents if they are readily convertible to cash and have original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist primarily of money market mutual funds issued or managed in the United States. As of December 31, 2013 and June 30, 2014, the carrying value of cash and cash equivalents approximates fair value due to the short period of time to maturity. | ||||||||||||
As of June 30, 2014, $3.6 million of the $42.2 million of cash and cash equivalents was held by our foreign subsidiaries. We currently intend to repatriate approximately $2.0 million of our cash and cash equivalents when we close down our Netherlands subsidiary during 2014. We obtained a favorable ruling from the Netherlands and will not be charged foreign taxes on the repatriation and we expect that our net operating loss carryforwards and foreign tax credits will be available to offset any tax liability should one arise. We anticipate that future foreign earnings will be deemed to be permanently reinvested, although we could elect to repatriate funds held in one or more foreign jurisdictions. If applicable, withholding taxes could reduce the net amount repatriated, and we could be required to accrue and remit applicable U.S. income taxes to the extent a tax liability results after the utilization of net operating loss carryforwards and available tax credits. | ||||||||||||
Allowance for Doubtful Accounts | ||||||||||||
We establish an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. We determine the allowance for doubtful accounts based on the aging of our accounts receivable balances and an analysis of our historical experience of bad debt write-offs. | ||||||||||||
Balance sheet details are as follows, (in thousands): | ||||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | |||||||||||
Balance, beginning of the year | $ | 240 | $ | 23 | ||||||||
Additions to allowance | 3 | 2 | ||||||||||
Write-offs | (213 | ) | — | |||||||||
Recoveries | (8 | ) | — | |||||||||
Balance, quarter ended | $ | 22 | $ | 25 | ||||||||
Long-lived Asset Impairment | ||||||||||||
We periodically review the recoverability of the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An impairment in the carrying value of an asset group is recognized whenever anticipated future undiscounted cash flows from an asset group are estimated to be less than its carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. There were no impairment charges for the periods ended June 30, 2013 or 2014. | ||||||||||||
Recent Accounting Pronouncements | ||||||||||||
From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective will not have a material impact on our results of operations and financial position. | ||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). This update creates modifications to various revenue accounting standards for specialized transactions and industries. ASU 2014-09 is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards with previously differing treatment between United States practice and those of much of the rest of the world, as well as, to enhance disclosures related to disaggregated revenue information. The updated guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The updated guidance is effective for public entities for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. Early adoption is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. The Company is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on the Company's unaudited condensed consolidated financial statements. | ||||||||||||
In June 2014, the FASB issued Accounting Standards Update 2014-12, Compensation - Stock Compensation (Topic 718) ("ASU 2014-12"). This update requires performance targets that affect vesting and that could be achieved after the requisite service period be treated as a performance target. The updated guidance is effective for public entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities have the choice to apply ASU 2014-12 either prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company will prospectively adopt the standard in our annual period beginning January 1, 2015. The adoption is not expected to have a material impact on the Company's unaudited condensed consolidated financial statements. |
Earnings_Per_Share
Earnings Per Share | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Earnings Per Share | ' | |||||||||||||||
Earnings Per Share | ||||||||||||||||
Basic earnings per share, including continuing and discontinued operations, is calculated by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share, including continuing and discontinued operations, is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period and including the dilutive effect of common stock that would be issued assuming conversion or exercise of outstanding warrants, stock options, share based compensation awards and other dilutive securities. No such items were included in the computation of diluted loss per share in the three and six months ended June 30, 2014 because we incurred net losses in the periods and the effect of inclusion would have been anti-dilutive. | ||||||||||||||||
The following is a reconciliation of weighted-average shares outstanding used in the calculation of basic and diluted earnings from continuing operations per share for the three and six months ended June 30, 2013 and 2014 (in thousands, except per share data): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Income (loss) from continuing operations | $ | 2,089 | $ | (78 | ) | $ | 1,529 | $ | (490 | ) | ||||||
Basic weighted-average common shares outstanding | 58,384 | 60,159 | 58,194 | 59,920 | ||||||||||||
Assumed exercise of dilutive stock options, warrants and restricted stock | 413 | — | 422 | — | ||||||||||||
Diluted weighted-average common shares outstanding | 58,797 | 60,159 | 58,616 | 59,920 | ||||||||||||
Income (loss) per share from continuing operations: | ||||||||||||||||
Basic income (loss) per share | $ | 0.04 | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
Diluted income (loss) per share | $ | 0.04 | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||
Outstanding equity awards not included in the calculation of diluted net loss per share because their effect was anti-dilutive were as follows: | ||||||||||||||||
Three Months Ended | ||||||||||||||||
June 30, | ||||||||||||||||
2013 | 2014 | |||||||||||||||
Number of | Range of | Number of | Range of | |||||||||||||
Potential | Exercise Prices | Potential | Exercise Prices | |||||||||||||
Shares | Shares | |||||||||||||||
Stock options | 7,299,887 | $1.26 - $16.36 | 10,573,585 | $0.47 - $7.84 | ||||||||||||
Unvested stock awards | 5,550 | $ | — | 34,845 | $ | — | ||||||||||
Warrants | 1,602,489 | $ | 2.4 | 1,602,489 | $ | 2.4 | ||||||||||
Six Months Ended | ||||||||||||||||
June 30, | ||||||||||||||||
2013 | 2014 | |||||||||||||||
Number of | Range of | Number of | Range of | |||||||||||||
Potential | Exercise Prices | Potential | Exercise Prices | |||||||||||||
Shares | Shares | |||||||||||||||
Stock options | 8,725,951 | $1.06 - $16.36 | 10,573,585 | $0.47 - $7.84 | ||||||||||||
Unvested stock awards | 11,753 | $ | — | 34,845 | — | |||||||||||
Warrants | 1,602,489 | $ | 2.4 | 1,602,489 | 2.4 | |||||||||||
Shares issued | ||||||||||||||||
Common stock activity during the period is as follows (in thousands). | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Shares issued: | ||||||||||||||||
Options exercised | 27 | 273 | 31 | 905 | ||||||||||||
Restricted stock awards granted | 30 | 30 | 30 | 30 | ||||||||||||
Shares purchased under stock plan | — | 68 | 458 | 266 | ||||||||||||
Share decreases: | ||||||||||||||||
Shares repurchased for tax purposes | (61 | ) | (2 | ) | (147 | ) | (17 | ) | ||||||||
Restricted stock awards canceled | — | — | (23 | ) | — | |||||||||||
Discontinued_Operations
Discontinued Operations | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||||||||||
Discontinued Operations | ' | |||||||||||||||
Discontinued Operations | ||||||||||||||||
During 2011, our primary AssuredUVS customer informed us that the AssuredUVS software would no longer be a component of its business strategy, which would result in a significant decline in revenues for the Company. In February 2012, our Board of Directors approved a plan to exit our AssuredUVS business and close down our Israel Technology Development Center. During the second quarter of 2012, we explored the potential sale of the AssuredUVS business, but were unsuccessful in locating a buyer and ended efforts to sell the business or its component assets as of June 30, 2012. Accordingly, we recognized an impairment of $0.2 million of property, plant and equipment and $1.6 million for the remaining value of acquired software as a component of cost of goods sold during the three months ended June 30, 2012. The AssuredUVS business is now recorded in discontinued operations since we ceased all significant ongoing operational activities as of September 30, 2012. | ||||||||||||||||
The following is a summary of the components of loss from discontinued operations for the three and six months ended June 30, 2013 and 2014 (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net revenue | $ | 2 | $ | — | $ | 22 | $ | — | ||||||||
Cost of goods sold | 11 | — | 142 | — | ||||||||||||
Gross loss | (9 | ) | — | (120 | ) | — | ||||||||||
Operating expenses: | ||||||||||||||||
Research and development | — | — | — | — | ||||||||||||
Sales and marketing | — | — | — | — | ||||||||||||
General and administrative | 3 | — | 323 | — | ||||||||||||
Restructuring charge | — | — | (10 | ) | — | |||||||||||
Total operating expenses | 3 | — | 313 | — | ||||||||||||
Operating loss | (12 | ) | — | (433 | ) | — | ||||||||||
Other expense, net | — | — | — | — | ||||||||||||
Loss from discontinued operations | $ | (12 | ) | $ | — | $ | (433 | ) | $ | — | ||||||
The activity in 2013 was limited to the continued support of certain maintenance contracts entered into prior to shutting down the Israel Technology Development Center, as well as expenses related to the resolution of a dispute with the former primary AssuredUVS customer. |
Inventories
Inventories | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventories | ' | |||||||
Inventories | ||||||||
The components of inventories consist of the following (in thousands): | ||||||||
December 31, | June 30, | |||||||
2013 | 2014 | |||||||
Purchased parts and materials | $ | 2,911 | $ | 2,027 | ||||
Finished goods | 3,628 | 5,505 | ||||||
Total inventory | $ | 6,539 | $ | 7,532 | ||||
Inventories are comprised of finished goods and purchased parts and assemblies, which include costs to purchase assembled units and overhead, and are valued at the lower of cost (first-in, first-out method) or market value. The valuation of inventory requires us to estimate excess or obsolete inventory. The determination of excess or obsolete inventory requires us to estimate the future demand for our products. Our customers may require us to purchase and stock material amounts of inventory to ensure availability to meet forecasts, which increases our risk of excess quantities. Because our markets are volatile and are subject to technological risks, price changes and inventory reduction programs by our customers, and because we are required to make last-time buys of certain components on occasion, there is a risk that we will forecast incorrectly and produce excess inventories of particular products or have commitments to purchase excess inventory components from our suppliers. As a result, actual demand will differ from forecasts, and such a difference has in the past and may in the future have a material adverse effect on our gross margin and our results of operations. Any write downs to inventory due to the existence of excess quantities, physical obsolescence, changes in pricing, damage, or other causes result in a new cost basis for the inventory. When we sell or dispose of reserved inventory, the new cost basis is charged to cost of sales. |
Product_Warranties
Product Warranties | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Product Warranties Disclosures [Abstract] | ' | |||||||||||||||
Product Warranties | ' | |||||||||||||||
Product Warranties | ||||||||||||||||
Our standard warranty provides that if our systems do not function to published specifications, we will repair or replace the defective component, system, or firmware without charge generally for a period of three years. We generally extend to our customers the warranties provided to us by our suppliers, and accordingly, the majority of our warranty obligations to customers are intended to be covered by corresponding supplier warranties. For warranty costs not covered by our suppliers, we provide for estimated warranty costs in the period the revenue is recognized. Estimated liabilities for product warranties are included in accrued expenses. | ||||||||||||||||
Our warranty accrual and cost activity is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Balance, beginning of period | $ | 2,743 | $ | 3,244 | $ | 4,455 | $ | 2,965 | ||||||||
Charges to operations | 372 | 412 | 490 | 826 | ||||||||||||
Deductions for payments made | (145 | ) | (175 | ) | (1,166 | ) | (350 | ) | ||||||||
Changes in estimates | (287 | ) | (118 | ) | (1,096 | ) | (78 | ) | ||||||||
Balance, end of period | $ | 2,683 | $ | 3,363 | $ | 2,683 | $ | 3,363 | ||||||||
During the first quarter of 2013, we were able to negotiate more favorable rates with a third-party service provider. Accordingly, we adjusted our warranty accrual by $0.8 million to reflect this change in estimate. In addition, the decrease in deductions for payments made during the six months ended June 30, 2013 as compared to the six months ended June 30, 2014 relates to price concessions and rebates based on sales volumes issued in 2013 to a material customer related to a quality issue associated with certain power supply devices. |
Credit_Facilities
Credit Facilities | 6 Months Ended |
Jun. 30, 2014 | |
Line of Credit Facility [Abstract] | ' |
Credit Facilities | ' |
Credit Facilities | |
We maintain a credit facility with Silicon Valley Bank for cash advances and letters of credit of up to an aggregate of $30 million based upon an advance rate dependent on certain concentration limits within eligible accounts receivable. These limits exclude certain eligible customer receivables if an individual customer account balance exceeds 25, 50 or 85 percent of the total eligible accounts receivable, depending on the customer, as defined by our Loan and Security Agreement with Silicon Valley Bank. Borrowings under the credit facility bear interest at the Silicon Valley Bank's prime rate, which was 4.0% as of June 30, 2014 and are secured by substantially all of our accounts receivable, deposit and securities accounts. The agreement provides for a negative pledge on our inventory and intellectual property, subject to certain exceptions, and contains usual and customary covenants for an arrangement of its type, including an obligation that we maintain at all times a net worth, as defined in the agreement. As of June 30, 2014, the Company had significant coverage in regard to this covenant. The agreement also includes provisions to increase the financing facility by $20 million subject to our meeting certain requirements, including $40 million in borrowing base for the immediately preceding 90 days, and Silicon Valley Bank locating a lender willing to finance the additional facility. In addition, if our cash and cash equivalents net of the total amount outstanding under the credit facility fall below $20 million (measured on a rolling three-month basis), the interest rate will increase to the bank's prime rate plus 1% and additional restrictions will apply. The maturity date of the credit facility is July 21, 2015. | |
As of June 30, 2014, the Company had no outstanding borrowings under the Silicon Valley Bank line of credit. There was $30.0 million available for borrowing under the agreement as of June 30, 2014. We are currently in compliance with all covenant requirements. |
Fair_Value_Measurements
Fair Value Measurements | 6 Months Ended | |||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
Fair Value Measurements | ' | |||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||
The short-term nature of our financial instruments expose the Company to limited credit risk and have no stated maturities or have short-term maturities and carry interest rates that approximate market interest rates. There were no transfers between Level I, II or III inputs for any of our assets measured at fair value during the reporting period. | ||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | ||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | December 31, | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
2013 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash and cash equivalents | $ | 40,406 | $ | 40,406 | $ | — | $ | — | $ | — | ||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | June 30, | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
2014 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash and cash equivalents | $ | 42,196 | $ | 42,196 | $ | — | $ | — | $ | — | ||||||||||
Fair Value of Financial Instruments | ||||||||||||||||||||
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and credit facility borrowings. The carrying values on our balance sheet of our cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values due to the short maturities. The following disclosures relate to financial instruments for which the ending balances at December 31, 2013 and June 30, 2014 are not carried at fair value in their entirety on the Unaudited Condensed Consolidated Balance Sheet. This table presents the carrying value and fair value, by fair value hierarchy, of our financial instruments, excluding cash and cash equivalents, accounts receivable and accounts payable at December 31, 2013 (in thousands): | ||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | December 31, 2013 | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
Credit facility borrowings | $ | 2,000 | $ | — | $ | 2,000 | $ | — | $ | — | ||||||||||
The Company had no outstanding borrowings on the credit facility as of June 30, 2014. | ||||||||||||||||||||
The fair value of the Company's debt was estimated using a market approach based on the amount at the measurement date that the Company would receive to enter into the identical liability, since quoted prices for the Company's debt instrument are not available. |
Commitments_And_Contingencies
Commitments And Contingencies | 6 Months Ended |
Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments And Contingencies | ' |
Commitments and Contingencies | |
We are currently involved in a legal proceeding that in our opinion lacks merit, but has a possibility of resulting in an unfavorable outcome. However, we are unable to determine a range of possible outcomes at this point. In addition, we are involved in certain claims from time to time arising in the ordinary course of business involving our products, suppliers, and/or customers. Although adverse decisions or settlements of such claims may occur, we believe that the final disposition of such matters will not have a material adverse effect on our financial position or results of operations. | |
Cumulative Translation Adjustment | |
If we liquidate any of our foreign subsidiaries, our cumulative translation adjustment recorded in Other Comprehensive Income would be required to be reclassified into earnings. The Company currently anticipates liquidation of its Netherlands operating unit during 2014. The Netherlands operating unit currently has no active operations. Cumulative translation losses of approximately $2.7 million related to the Netherlands operating unit would be reclassified from other comprehensive loss to operating loss. |
Segment_Information
Segment Information | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Information | ' | |||||||||||||||
Segment Information | ||||||||||||||||
Prior to the first quarter of 2014, our Chief Operating Decision Maker, or CODM, who is our President and Chief Executive Officer, managed our business as one reportable operating segment that included the design, manufacture and marketing of a range of software and hardware storage systems for the entry and midrange storage markets. Beginning in the first quarter of 2014, due to the growth and significance of our Vertical Markets, our CODM is managing our business in three reportable operating segments. Hence, we changed our reporting segments accordingly. Therefore, beginning with the first quarter of 2014, we have reported in the following three segments: Server OEM, Vertical Markets, and Corporate. | ||||||||||||||||
The Server OEM segment consists primarily of large Original Equipment Manufacturers who purchase products from us to sell along with their server products. Our products are typically sold in server led sales into their end-user customers' corporate information technology infrastructure. Major Server OEM customers include HP, Lenovo, Stratus, Dell, and AMD. | ||||||||||||||||
The Vertical Markets segment consists of strategically selected Vertical Markets, that have a propensity for high data growth. Some of our target Vertical Markets include Media & Entertainment, Telecommunications Infrastructure, Oil and Gas, Big Data Analytics and Digital Imaging, among others. These customers typically embed their products into their customer solutions which quite often generate revenue for their end-user customers. We sell to these customers through both Vertical Markets OEM partners or embedded solutions integrators, as well as through channel partners. Major Vertical Markets customers include Teradata, CGG, Motorola, Tektronix, Samsung, Concurrent, Autodesk, and Nokia Siemens. | ||||||||||||||||
The Corporate segment consists primarily of costs that support both the Server OEM and Vertical Markets segments. | ||||||||||||||||
Segment information for all periods presented has been reclassified to conform to fiscal 2014 presentation. | ||||||||||||||||
Net revenues by segment are as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net revenue: | ||||||||||||||||
Server OEM | $ | 29,400 | $ | 27,463 | $ | 59,783 | $ | 53,317 | ||||||||
Vertical Markets | 21,283 | 20,759 | 35,380 | 43,112 | ||||||||||||
Corporate | — | — | — | — | ||||||||||||
Consolidated net revenue | $ | 50,683 | $ | 48,222 | $ | 95,163 | $ | 96,429 | ||||||||
Operating income (loss) by segment and a reconciliation to consolidated income (loss) before income taxes and discontinued operations is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Operating income (loss): | ||||||||||||||||
Server OEM | $ | 7,270 | $ | 6,242 | $ | 15,118 | $ | 11,364 | ||||||||
Vertical Markets | 7,168 | 6,762 | 11,245 | 14,169 | ||||||||||||
Corporate | (12,293 | ) | (13,015 | ) | (24,736 | ) | (25,947 | ) | ||||||||
Consolidated operating income (loss) | 2,145 | (11 | ) | 1,627 | (414 | ) | ||||||||||
Consolidated total other income (expense), net | (7 | ) | 7 | (15 | ) | (1 | ) | |||||||||
Consolidated income (loss) before income taxes and discontinued operations | $ | 2,138 | $ | (4 | ) | $ | 1,612 | $ | (415 | ) | ||||||
The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and therefore asset, depreciation and amortization, or capital expenditure by segment information is not provided to our CODM. |
Summary_Of_Significant_Account1
Summary Of Significant Accounting Policies (Policies) | 6 Months Ended | |||||||||||
Jun. 30, 2014 | ||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||
Basis of Presentation | ' | |||||||||||
Basis of Presentation | ||||||||||||
The financial statements of Dot Hill Systems Corp. (referred to herein as Dot Hill, we, our or us) contained herein are unaudited and in the opinion of management contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for the periods presented. The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions to Securities and Exchange Commission, or SEC, Form 10-Q and Article 10 of SEC Regulation S-X. They do not include all of the information and disclosures required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for future quarters or the year ending December 31, 2014. | ||||||||||||
Use of Accounting Estimates | ' | |||||||||||
Use of Accounting Estimates | ||||||||||||
The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of net revenue and expenses in the reporting periods. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition, inventory valuation, recurring and specific issue warranty obligations (see Note 5), the valuation and recognition of stock-based compensation expense, and the valuation of long-lived assets. In addition, we have other accounting policies that involve estimates such as the determination of useful lives of long-lived assets, accruals for restructuring, and income taxes, including the valuation allowance for deferred tax assets. Actual results may differ from these estimates and such differences could be material. | ||||||||||||
Revenue Recognition | ' | |||||||||||
Revenue Recognition | ||||||||||||
We derive our revenue from sales of our hardware products, software and services. | ||||||||||||
Hardware | ||||||||||||
Hardware product revenue consists of revenue from sales of our AssuredSAN storage systems that are integrated with our OEM customers' industry standard hardware and which become essential to the integrated system product. We recognize hardware product revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue is recognized for hardware product sales upon transfer of title and risk of loss to the customer. We record reductions to revenue for estimated product returns and pricing adjustments in the same period that the related revenue is recorded. These estimates are based on historical sales returns, analysis of credit memo data and other factors known at the time. If actual future returns and pricing adjustments differ from past experience and our estimates, additional revenue reserves may be required. | ||||||||||||
We exclude from revenues taxes collected from customers on behalf of governmental authorities. | ||||||||||||
Software | ||||||||||||
In accordance with the specific guidance for recognizing software revenue, where applicable, we recognize revenue from perpetual software licenses at the inception of the license term assuming all revenue recognition criteria have been met. We use the relative fair value method to allocate revenue to software licenses at the inception of the license term when vendor-specific objective evidence, or VSOE, of fair value for all elements related to our products is available. We have established VSOE for the fair value of our software licenses and support services as measured by the prices paid by our customers when the licenses and services are sold separately on a standalone basis. | ||||||||||||
Specific long term software contracts may contain multiple deliverables including software licenses, services, training and post-contract support (PCS) for which we have not established VSOE of fair value of any of the elements. Under specific guidance for recognizing software revenue, we defer all revenue related to each deliverable until the only undelivered element is PCS. We then begin recognizing revenue ratably over the PCS period. | ||||||||||||
We defer all the direct and incremental costs related to the deliverables in these contracts until delivery of all the elements except PCS. The deferred costs are then recognized ratably over the contractual PCS support periods as a component of Costs of Goods Sold. | ||||||||||||
Service | ||||||||||||
Our service revenue primarily includes out-of-warranty repairs and product maintenance contracts. Out-of warranty repairs primarily consist of product repair services performed by our contract manufacturers for those customers that allowed their original product warranty to expire without purchasing one of our higher level support service plans. Revenue from these out-of-warranty repairs, and the associated cost of sales, is recognized in the period these services are provided. Service revenue also consists of product maintenance contracts purchased by our customers as an extension of our standard warranty. Revenue from our product maintenance contracts is deferred and recognized ratably over the contract term, generally 12 to 36 months. Net revenue derived from services was less than 10% of total revenue for all periods presented. | ||||||||||||
Revenue Recognition for Arrangements with Multiple Deliverables | ||||||||||||
For multi-element arrangements that include hardware products containing software essential to the hardware product’s functionality, undelivered elements that relate to the hardware product’s essential software, and undelivered non-software services (all non-software related elements), we allocate the transaction price to all deliverables based on their relative selling prices. In such circumstances, we use a hierarchy to determine the selling price to be used for allocating the transaction price to deliverables: (i) VSOE of fair value, (ii) third-party evidence of selling price, or TPE, and (iii) best estimate of the selling price, or ESP. VSOE of fair value generally exists only when we sell the deliverable separately and represents the actual price charged by us for that deliverable. ESPs reflect our best estimates of what the selling prices of each of the deliverables would be if they were sold regularly on a standalone basis. | ||||||||||||
Revenue Recognition for Sales to Channel Partners | ||||||||||||
On sales to channel partners, we evaluate whether fees are considered fixed or determinable by considering a number of factors, including our ability to estimate returns, payment terms and our relationship and past history with the particular channel partner. If fees are not considered fixed or determinable at the time of sale to a channel partner, revenue recognition is deferred until there is persuasive evidence indicating the product has sold through to an end-user. Persuasive evidence of sell-through may include reports from channel partners documenting sell-through activity or data indicating an order has shipped to an end-user. | ||||||||||||
Deferred Revenue | ||||||||||||
We defer revenue on upfront nonrefundable payments from our customers and recognize it ratably over the term of the agreement, unless the payment is in exchange for products delivered that represent the culmination of a separate earnings process. When we provide consideration to a customer, we recognize the value of that consideration as a reduction in net revenue. We may be required to maintain inventory with certain of our largest OEM customers, which we refer to as "hubbing" arrangements. Pursuant to these arrangements we deliver products to a customer or a designated third-party warehouse based upon the customer’s projected needs, but do not recognize product revenue unless and until the customer has removed our product from the warehouse to incorporate into its end products. | ||||||||||||
Concentration of Customers and Suppliers | ' | |||||||||||
Concentration of Customers and Suppliers | ||||||||||||
A majority of our net revenue is derived from a limited number of customers. We currently have two customers that account for approximately 10% or more of our total net revenue: Hewlett Packard, or HP, and Tektronix, Inc., or Tektronix. Our agreements with our customers do not contain any minimum purchase commitments, do not obligate them to purchase their storage solutions exclusively from us and may be terminated at any time upon notice. | ||||||||||||
Net revenue consists of all product and services revenue. Net revenue by major customer is as follows (as a percentage of total net revenue): | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||
HP | 52 | % | 50 | % | 57 | % | 50 | % | ||||
Tektronix | 21 | % | 4 | % | 16 | % | 10 | % | ||||
Other customers less than 10% | 27 | % | 46 | % | 27 | % | 40 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||
If our relationship with HP or Tektronix were disrupted or declined significantly, we would lose a substantial portion of our anticipated net revenue and our business could be materially harmed. We cannot guarantee that our relationship with HP, Tektronix or our other customers will expand or not otherwise be disrupted. | ||||||||||||
We expect that the sale of our products and services to a limited number of customers will continue to account for a high percentage of net revenue for the foreseeable future. Our Product Purchase Agreement with HP, as amended, terminates on October 30, 2016. HP also holds warrants to purchase 1,602,489 shares of our common stock at an exercise price of $2.40 per share, expiring on October 30, 2016. | ||||||||||||
We currently rely on a limited number of contract manufacturing partners to produce substantially all of our products. As a result, should any of our current manufacturing partners, such as Foxconn Technology Group, or parts suppliers not produce and deliver inventory for us to sell on a timely basis, operating results may be adversely impacted. | ||||||||||||
Cash and Cash Equivalents | ' | |||||||||||
Cash and Cash Equivalents | ||||||||||||
We classify investments as cash equivalents if they are readily convertible to cash and have original maturities of three months or less at the time of acquisition. Cash and cash equivalents consist primarily of money market mutual funds issued or managed in the United States. As of December 31, 2013 and June 30, 2014, the carrying value of cash and cash equivalents approximates fair value due to the short period of time to maturity. | ||||||||||||
As of June 30, 2014, $3.6 million of the $42.2 million of cash and cash equivalents was held by our foreign subsidiaries. We currently intend to repatriate approximately $2.0 million of our cash and cash equivalents when we close down our Netherlands subsidiary during 2014. We obtained a favorable ruling from the Netherlands and will not be charged foreign taxes on the repatriation and we expect that our net operating loss carryforwards and foreign tax credits will be available to offset any tax liability should one arise. We anticipate that future foreign earnings will be deemed to be permanently reinvested, although we could elect to repatriate funds held in one or more foreign jurisdictions. If applicable, withholding taxes could reduce the net amount repatriated, and we could be required to accrue and remit applicable U.S. income taxes to the extent a tax liability results after the utilization of net operating loss carryforwards and available tax credits. | ||||||||||||
Allowance for Doubtful Accounts | ' | |||||||||||
Allowance for Doubtful Accounts | ||||||||||||
We establish an allowance for doubtful accounts for accounts receivable amounts that may not be collectible. We determine the allowance for doubtful accounts based on the aging of our accounts receivable balances and an analysis of our historical experience of bad debt write-offs. | ||||||||||||
Balance sheet details are as follows, (in thousands): | ||||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | |||||||||||
Balance, beginning of the year | $ | 240 | $ | 23 | ||||||||
Additions to allowance | 3 | 2 | ||||||||||
Write-offs | (213 | ) | — | |||||||||
Recoveries | (8 | ) | — | |||||||||
Balance, quarter ended | $ | 22 | $ | 25 | ||||||||
Long-lived Asset Impairment | ' | |||||||||||
Long-lived Asset Impairment | ||||||||||||
We periodically review the recoverability of the carrying value of long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. An impairment in the carrying value of an asset group is recognized whenever anticipated future undiscounted cash flows from an asset group are estimated to be less than its carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. There were no impairment charges for the periods ended June 30, 2013 or 2014. | ||||||||||||
Recent Accounting Pronouncements | ' | |||||||||||
Recent Accounting Pronouncements | ||||||||||||
From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective will not have a material impact on our results of operations and financial position. | ||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). This update creates modifications to various revenue accounting standards for specialized transactions and industries. ASU 2014-09 is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards with previously differing treatment between United States practice and those of much of the rest of the world, as well as, to enhance disclosures related to disaggregated revenue information. The updated guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The updated guidance is effective for public entities for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. Early adoption is not permitted and entities have the choice to apply ASU 2014-09 either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying ASU 2014-09 at the date of initial application and not adjusting comparative information. The Company is currently evaluating the requirements of ASU 2014-09 and has not yet determined its impact on the Company's unaudited condensed consolidated financial statements. | ||||||||||||
In June 2014, the FASB issued Accounting Standards Update 2014-12, Compensation - Stock Compensation (Topic 718) ("ASU 2014-12"). This update requires performance targets that affect vesting and that could be achieved after the requisite service period be treated as a performance target. The updated guidance is effective for public entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities have the choice to apply ASU 2014-12 either prospectively to all awards granted or modified after the effective date or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company will prospectively adopt the standard in our annual period beginning January 1, 2015. The adoption is not expected to have a material impact on the Company's unaudited condensed consolidated financial statements. |
Summary_Of_Significant_Account2
Summary Of Significant Accounting Policies (Tables) | 6 Months Ended | |||||||||||
Jun. 30, 2014 | ||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||
Net revenue by major customer | ' | |||||||||||
Net revenue by major customer is as follows (as a percentage of total net revenue): | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||
HP | 52 | % | 50 | % | 57 | % | 50 | % | ||||
Tektronix | 21 | % | 4 | % | 16 | % | 10 | % | ||||
Other customers less than 10% | 27 | % | 46 | % | 27 | % | 40 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||
Allowance for doubtful accounts | ' | |||||||||||
Balance sheet details are as follows, (in thousands): | ||||||||||||
June 30, | June 30, | |||||||||||
2013 | 2014 | |||||||||||
Balance, beginning of the year | $ | 240 | $ | 23 | ||||||||
Additions to allowance | 3 | 2 | ||||||||||
Write-offs | (213 | ) | — | |||||||||
Recoveries | (8 | ) | — | |||||||||
Balance, quarter ended | $ | 22 | $ | 25 | ||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 6 Months Ended | |||||||||||||||||||||||||||
Jun. 30, 2014 | Jun. 30, 2013 | |||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ' | ' | ||||||||||||||||||||||||||
Schedule of Weighted Average Number of Shares | ' | ' | ||||||||||||||||||||||||||
The following is a reconciliation of weighted-average shares outstanding used in the calculation of basic and diluted earnings from continuing operations per share for the three and six months ended June 30, 2013 and 2014 (in thousands, except per share data): | ||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||||||||||||||
Income (loss) from continuing operations | $ | 2,089 | $ | (78 | ) | $ | 1,529 | $ | (490 | ) | ||||||||||||||||||
Basic weighted-average common shares outstanding | 58,384 | 60,159 | 58,194 | 59,920 | ||||||||||||||||||||||||
Assumed exercise of dilutive stock options, warrants and restricted stock | 413 | — | 422 | — | ||||||||||||||||||||||||
Diluted weighted-average common shares outstanding | 58,797 | 60,159 | 58,616 | 59,920 | ||||||||||||||||||||||||
Income (loss) per share from continuing operations: | ||||||||||||||||||||||||||||
Basic income (loss) per share | $ | 0.04 | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||||||||||||||
Diluted income (loss) per share | $ | 0.04 | $ | (0.00 | ) | $ | 0.03 | $ | (0.01 | ) | ||||||||||||||||||
Outstanding equity awards not included in calculation of diluted net loss per share | ' | ' | ||||||||||||||||||||||||||
Outstanding equity awards not included in the calculation of diluted net loss per share because their effect was anti-dilutive were as follows: | ||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Number of | Range of | Number of | Range of | |||||||||||||||||||||||||
Potential | Exercise Prices | Potential | Exercise Prices | |||||||||||||||||||||||||
Shares | Shares | |||||||||||||||||||||||||||
Stock options | 7,299,887 | $1.26 - $16.36 | 10,573,585 | $0.47 - $7.84 | ||||||||||||||||||||||||
Unvested stock awards | 5,550 | $ | — | 34,845 | $ | — | ||||||||||||||||||||||
Warrants | 1,602,489 | $ | 2.4 | 1,602,489 | $ | 2.4 | ||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Number of | Range of | Number of | Range of | |||||||||||||||||||||||||
Potential | Exercise Prices | Potential | Exercise Prices | |||||||||||||||||||||||||
Shares | Shares | |||||||||||||||||||||||||||
Stock options | 8,725,951 | $1.06 - $16.36 | 10,573,585 | $0.47 - $7.84 | ||||||||||||||||||||||||
Unvested stock awards | 11,753 | $ | — | 34,845 | — | |||||||||||||||||||||||
Warrants | 1,602,489 | $ | 2.4 | 1,602,489 | 2.4 | |||||||||||||||||||||||
Common stock activity during the period | ' | ' | ||||||||||||||||||||||||||
Common stock activity during the period is as follows (in thousands). | ||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||||||||||||||
Shares issued: | ||||||||||||||||||||||||||||
Options exercised | 27 | 273 | 31 | 905 | ||||||||||||||||||||||||
Restricted stock awards granted | 30 | 30 | 30 | 30 | ||||||||||||||||||||||||
Shares purchased under stock plan | — | 68 | 458 | 266 | ||||||||||||||||||||||||
Share decreases: | ||||||||||||||||||||||||||||
Shares repurchased for tax purposes | (61 | ) | (2 | ) | (147 | ) | (17 | ) | ||||||||||||||||||||
Restricted stock awards canceled | — | — | (23 | ) | — | |||||||||||||||||||||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | |||||||||||||||
Summary of the components of loss from discontinued operations | ' | |||||||||||||||
The following is a summary of the components of loss from discontinued operations for the three and six months ended June 30, 2013 and 2014 (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net revenue | $ | 2 | $ | — | $ | 22 | $ | — | ||||||||
Cost of goods sold | 11 | — | 142 | — | ||||||||||||
Gross loss | (9 | ) | — | (120 | ) | — | ||||||||||
Operating expenses: | ||||||||||||||||
Research and development | — | — | — | — | ||||||||||||
Sales and marketing | — | — | — | — | ||||||||||||
General and administrative | 3 | — | 323 | — | ||||||||||||
Restructuring charge | — | — | (10 | ) | — | |||||||||||
Total operating expenses | 3 | — | 313 | — | ||||||||||||
Operating loss | (12 | ) | — | (433 | ) | — | ||||||||||
Other expense, net | — | — | — | — | ||||||||||||
Loss from discontinued operations | $ | (12 | ) | $ | — | $ | (433 | ) | $ | — | ||||||
Inventories_Tables
Inventories (Tables) | 6 Months Ended | |||||||
Jun. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Components of inventory | ' | |||||||
The components of inventories consist of the following (in thousands): | ||||||||
December 31, | June 30, | |||||||
2013 | 2014 | |||||||
Purchased parts and materials | $ | 2,911 | $ | 2,027 | ||||
Finished goods | 3,628 | 5,505 | ||||||
Total inventory | $ | 6,539 | $ | 7,532 | ||||
Product_Warranties_Tables
Product Warranties (Tables) | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Product Warranties Disclosures [Abstract] | ' | |||||||||||||||
Warranty Accrual and Cost Activity | ' | |||||||||||||||
Our warranty accrual and cost activity is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Balance, beginning of period | $ | 2,743 | $ | 3,244 | $ | 4,455 | $ | 2,965 | ||||||||
Charges to operations | 372 | 412 | 490 | 826 | ||||||||||||
Deductions for payments made | (145 | ) | (175 | ) | (1,166 | ) | (350 | ) | ||||||||
Changes in estimates | (287 | ) | (118 | ) | (1,096 | ) | (78 | ) | ||||||||
Balance, end of period | $ | 2,683 | $ | 3,363 | $ | 2,683 | $ | 3,363 | ||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 6 Months Ended | |||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | ' | |||||||||||||||||||
This table presents the carrying value and fair value, by fair value hierarchy, of our financial instruments, excluding cash and cash equivalents, accounts receivable and accounts payable at December 31, 2013 (in thousands): | ||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | December 31, 2013 | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
Credit facility borrowings | $ | 2,000 | $ | — | $ | 2,000 | $ | — | $ | — | ||||||||||
The Company had no outstanding borrowings on the credit facility as of June 30, 2014. | ||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | ||||||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | December 31, | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
2013 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash and cash equivalents | $ | 40,406 | $ | 40,406 | $ | — | $ | — | $ | — | ||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Description | June 30, | Quoted Prices for Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total (Losses) | |||||||||||||||
2014 | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash and cash equivalents | $ | 42,196 | $ | 42,196 | $ | — | $ | — | $ | — | ||||||||||
Segment_Information_Tables
Segment Information (Tables) | 6 Months Ended | |||||||||||||||
Jun. 30, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Reporting Information by Segment | ' | |||||||||||||||
Net revenues by segment are as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Net revenue: | ||||||||||||||||
Server OEM | $ | 29,400 | $ | 27,463 | $ | 59,783 | $ | 53,317 | ||||||||
Vertical Markets | 21,283 | 20,759 | 35,380 | 43,112 | ||||||||||||
Corporate | — | — | — | — | ||||||||||||
Consolidated net revenue | $ | 50,683 | $ | 48,222 | $ | 95,163 | $ | 96,429 | ||||||||
Operating income (loss) by segment and a reconciliation to consolidated income (loss) before income taxes and discontinued operations is as follows (in thousands): | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2014 | 2013 | 2014 | |||||||||||||
Operating income (loss): | ||||||||||||||||
Server OEM | $ | 7,270 | $ | 6,242 | $ | 15,118 | $ | 11,364 | ||||||||
Vertical Markets | 7,168 | 6,762 | 11,245 | 14,169 | ||||||||||||
Corporate | (12,293 | ) | (13,015 | ) | (24,736 | ) | (25,947 | ) | ||||||||
Consolidated operating income (loss) | 2,145 | (11 | ) | 1,627 | (414 | ) | ||||||||||
Consolidated total other income (expense), net | (7 | ) | 7 | (15 | ) | (1 | ) | |||||||||
Consolidated income (loss) before income taxes and discontinued operations | $ | 2,138 | $ | (4 | ) | $ | 1,612 | $ | (415 | ) | ||||||
Summary_Of_Significant_Account3
Summary Of Significant Accounting Policies (Concentration of Customers and Suppliers) (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
customer | customer | |||
Major customers | ' | ' | ' | ' |
Number of major customers | 2 | ' | 2 | ' |
Concentration risk, percentage of total net revenues | 100.00% | 100.00% | 100.00% | 100.00% |
HP | Common Stock [Member] | ' | ' | ' | ' |
Major customers | ' | ' | ' | ' |
Warrants to purchase shares of our common stock | 1,602,489 | ' | 1,602,489 | ' |
Warrants, exercise price | 2.4 | ' | 2.4 | ' |
Revenue [Member] | Customer Concentration Risk [Member] | HP | ' | ' | ' | ' |
Major customers | ' | ' | ' | ' |
Concentration risk, percentage of total net revenues | 50.00% | 52.00% | 50.00% | 57.00% |
Revenue [Member] | Customer Concentration Risk [Member] | Tektronix | ' | ' | ' | ' |
Major customers | ' | ' | ' | ' |
Concentration risk, percentage of total net revenues | 4.00% | 21.00% | 10.00% | 16.00% |
Revenue [Member] | Customer Concentration Risk [Member] | Other customers less than 10% | ' | ' | ' | ' |
Major customers | ' | ' | ' | ' |
Concentration risk, percentage of total net revenues | 46.00% | 27.00% | 40.00% | 27.00% |
Summary_Of_Significant_Account4
Summary Of Significant Accounting Policies (Allowance for Doubtful Accounts) (Details) (USD $) | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2013 |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ' | ' | ' |
Balance, beginning of the year | $23 | $240 | $22 |
Additions to allowance | -2 | -3 | ' |
Write-offs | 0 | -213 | ' |
Recoveries | 0 | 8 | ' |
Balance, quarter ended | $25 | ' | $22 |
Summary_Of_Significant_Account5
Summary Of Significant Accounting Policies (Revenue Recognition) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' | ' |
Net out-of-period impact | $16,023 | $17,007 | $31,288 | $31,447 |
NET REVENUE | 48,222 | 50,683 | 96,429 | 95,163 |
Cost of goods sold | $32,199 | $33,676 | $65,141 | $63,716 |
Minimum [Member] | ' | ' | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' | ' |
Product maintenance contract term | ' | ' | '12 months | ' |
Maximum [Member] | ' | ' | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' | ' |
Product maintenance contract term | ' | ' | '36 months | ' |
Net Revenue Derived From Services [Member] | ' | ' | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' | ' | ' |
Maximum percentage of total revenue | ' | ' | 10.00% | 10.00% |
Summary_Of_Significant_Account6
Summary Of Significant Accounting Policies Cash and cash equivalents (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 |
Cash and cash equivalents | $42,196,000 | $40,406,000 | $40,402,000 | $40,315,000 |
Earnings expected to be repatriated during fiscal year | 2,000,000 | ' | ' | ' |
Foreign Subsidiaries [Member] | ' | ' | ' | ' |
Cash and cash equivalents | $3,600,000 | ' | ' | ' |
Earnings_Per_Share_Calculation
Earnings Per Share (Calculation of basic and diluted EPS) (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Income (Loss) from Continuing Operations Attributable to Parent | ($78) | $2,089 | ($490) | $1,529 |
Weighted Average Number of Shares Outstanding, Diluted | 60,159 | 58,797 | 59,920 | 58,616 |
Weighted Average Number of Shares Outstanding, Basic | 60,159 | 58,384 | 59,920 | 58,194 |
Incremental Common Shares Attributable to Share-based Payment Arrangements | 0 | 413 | 0 | 422 |
Earnings Per Share, Basic | $0 | $0.04 | ($0.01) | $0.03 |
Earnings Per Share, Diluted | $0 | $0.04 | ($0.01) | $0.03 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Outstanding equity awards not included in the calculation of diluted net loss per share: | ' | ' | ' | ' |
Shares issued: Options exercised | 273,000 | 27,000 | 905,000 | 31,000 |
Share decreases: Shares repurchased for tax purposes | -2,000 | -61,000 | -17,000 | -147,000 |
Stock options | ' | ' | ' | ' |
Outstanding equity awards not included in the calculation of diluted net loss per share: | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 10,573,585 | 7,299,887 | 10,573,585 | 8,725,951 |
Range of exercise prices, lower limit | 0.47 | 1.26 | 0.47 | 1.06 |
Range of exercise prices, upper limit | 7.84 | 16.36 | 7.84 | 16.36 |
Unvested restricted stock awards | ' | ' | ' | ' |
Outstanding equity awards not included in the calculation of diluted net loss per share: | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 34,845 | 5,550 | 34,845 | 11,753 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 30,000 | 30,000 | 0 | 30,000 |
Share decreases: Restricted stock awards canceled | 0 | 0 | 0 | -23,000 |
Warrant | ' | ' | ' | ' |
Outstanding equity awards not included in the calculation of diluted net loss per share: | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,602,489 | 1,602,489 | 1,602,489 | 1,602,489 |
Warrants, exercise price | 2.4 | 2.4 | 2.4 | 2.4 |
2000ESPP | ' | ' | ' | ' |
Outstanding equity awards not included in the calculation of diluted net loss per share: | ' | ' | ' | ' |
Shares issued: Shares purchased under stock plan | 68,000 | 0 | 266,000 | 458,000 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
AssuredUVS [Member] | AssuredUVS [Member] | AssuredUVS [Member] | AssuredUVS [Member] | ||||||
Discontinued Operations [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Tangible Asset Impairment Charges | ' | $200,000 | ' | ' | ' | ' | ' | ' | ' |
Impairment of Intangible Assets (Excluding Goodwill) | ' | 1,600,000 | ' | ' | ' | ' | ' | ' | ' |
Loss from discontinued operations | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | 0 | 2,000 | 0 | 22,000 |
Cost of goods sold | ' | ' | ' | ' | ' | 0 | 11,000 | 0 | 142,000 |
Gross profit | ' | ' | ' | ' | ' | 0 | -9,000 | 0 | -120,000 |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Research and development | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 |
Sales and marketing | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 |
General and administrative | ' | ' | ' | ' | ' | 0 | 3,000 | 0 | 323,000 |
Restructuring charge | ' | ' | ' | ' | ' | 0 | 0 | 0 | -10,000 |
Total operating expenses | ' | ' | ' | ' | ' | 0 | 3,000 | 0 | 313,000 |
Operating loss | ' | ' | ' | ' | ' | 0 | -12,000 | 0 | -433,000 |
Other income (expense), net | ' | ' | ' | ' | ' | 0 | 0 | 0 | 0 |
Loss from discontinued operations | $0 | ' | ($12,000) | $0 | ($433,000) | $0 | ($12,000) | $0 | ($433,000) |
Inventories_Details
Inventories (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Purchased parts and materials | $2,027 | $2,911 |
Finished goods | 5,505 | 3,628 |
Total inventory | $7,532 | $6,539 |
Product_Warranties_Details
Product Warranties (Details) (USD $) | 3 Months Ended | 6 Months Ended | |||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Product Warranties Disclosures [Abstract] | ' | ' | ' | ' | ' |
Maximum product warranty term | ' | ' | ' | '3 years | ' |
Movement in Standard Product Warranty Accrual [Roll Forward] | ' | ' | ' | ' | ' |
Balance, beginning of period | $3,244 | $2,743 | $4,455 | $2,965 | $4,455 |
Charges to operations | 412 | 372 | ' | 826 | 490 |
Deductions for costs incurred | -175 | -145 | ' | -350 | -1,166 |
Changes in estimates | -118 | -287 | -800 | -78 | -1,096 |
Balance, end of period | $3,363 | $2,683 | $2,743 | $3,363 | $2,683 |
Credit_Facilities_Details
Credit Facilities (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Credit Facility [Line Items] | ' | ' |
Line of Credit Facility, Collateral | ' and are secured by substantially all of our accounts receivable, deposit and securities accounts. The agreement provides for a negative pledge on our inventory and intellectual property, subject to certain exceptions | ' |
Letters of credit outstanding | $0 | $2,000,000 |
Covenant Compliance | '. We are currently in compliance with all covenant requirements. | ' |
Silicon Valley Bank | ' | ' |
Credit Facility [Line Items] | ' | ' |
Letters of credit outstanding | 0 | ' |
Remaining borrowing capacity | 30,000,000 | ' |
Credit facility | Silicon Valley Bank | ' | ' |
Credit Facility [Line Items] | ' | ' |
Debt Instrument, Interest Rate, Effective Percentage | 4.00% | ' |
Borrowing capacity | 30,000,000 | ' |
Line of Credit Facility, Covenant Terms, Borrowing Base, Possible Increase | 20,000,000 | ' |
Period for borrowing base requirement | '90 days | ' |
Cash and cash equivalents, net of amount outstanding under credit agreement | 20,000,000 | ' |
Variable rate basis | 'prime | ' |
Interest rate over prime | 1.00% | ' |
Letters of credit | Silicon Valley Bank | ' | ' |
Credit Facility [Line Items] | ' | ' |
Letters of credit outstanding | 0 | ' |
Threshold One [Member] | ' | ' |
Credit Facility [Line Items] | ' | ' |
Customer accounts receivable concentration limit | 25.00% | ' |
Threshold Two [Member] | ' | ' |
Credit Facility [Line Items] | ' | ' |
Customer accounts receivable concentration limit | 50.00% | ' |
Threshold Three [Member] | ' | ' |
Credit Facility [Line Items] | ' | ' |
Customer accounts receivable concentration limit | 85.00% | ' |
Required Borrowing Base Immediately Preceeding 90 Days [Member] | Credit facility | Silicon Valley Bank | ' | ' |
Credit Facility [Line Items] | ' | ' |
Borrowing base requirement | $40,000,000 | ' |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 |
Reported Value | Fair Value | Fair Value | Fair Value | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | |||
Level 1 | Level 2 | Level 3 | Reported Value | Reported Value | Fair Value | Fair Value | Fair Value | Fair Value | Fair Value | Fair Value | ||||||
Level 1 | Level 1 | Level 2 | Level 2 | Level 3 | Level 3 | |||||||||||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | ' | ' | ' | ' | ' | ' | ' | ' | $42,196,000 | $40,406,000 | $42,196,000 | $40,406,000 | $0 | $0 | $0 | $0 |
Assets, Fair Value Adjustment | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facility borrowings | ' | ' | 2,000,000 | 0 | 2,000,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Letters of credit outstanding | $0 | $2,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Commitments_And_Contingencies_
Commitments And Contingencies (Details) (Forecast, USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Forecast | ' |
Loss Contingencies [Line Items] | ' |
Cumulative foreign currency translation adjustments to be reclassified | $2.70 |
Segment_Information_Details
Segment Information (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2013 | Jun. 30, 2014 | |
segment | segment | |
Segment Reporting [Abstract] | ' | ' |
Number of reportable segments | 1 | 3 |
Segment_Information_Schedule_o
Segment Information Schedule of Net Revenues by Segment (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net Revenue | $48,222 | $50,683 | $96,429 | $95,163 |
Server OEMs [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net Revenue | 27,463 | 29,400 | 53,317 | 59,783 |
Vertical Markets [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net Revenue | 20,759 | 21,283 | 43,112 | 35,380 |
Corporate Segment [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Net Revenue | $0 | $0 | $0 | $0 |
Segment_Information_Schedule_o1
Segment Information Schedule of Operating Income (Loss) by Segment (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
In Thousands, unless otherwise specified | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Consolidated operating income (loss) | ($11) | $2,145 | ($414) | $1,627 |
Consolidated total other income (expense), net | 7 | -7 | -1 | -15 |
INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS | -4 | 2,138 | -415 | 1,612 |
Server OEMs [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Consolidated operating income (loss) | 6,242 | 7,270 | 11,364 | 15,118 |
Vertical Markets [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Consolidated operating income (loss) | 6,762 | 7,168 | 14,169 | 11,245 |
Corporate Segment [Member] | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Consolidated operating income (loss) | ($13,015) | ($12,293) | ($25,947) | ($24,736) |