Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 08, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | ROSETTA STONE INC | ||
Entity Central Index Key | 1,351,285 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 159.3 | ||
Entity Common Stock, Shares Outstanding (in shares) | 22,161,289 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 36,195 | $ 47,782 |
Restricted cash | 402 | 80 |
Accounts receivable (net of allowance for doubtful accounts of $1,072 and $1,196, at December 31, 2016 and December 31, 2015, respectively) | 31,788 | 47,327 |
Inventory | 6,767 | 7,333 |
Deferred sales commissions | 14,085 | 13,526 |
Prepaid expenses and other current assets | 3,813 | 3,612 |
Total current assets | 93,050 | 119,660 |
Deferred sales commissions | 4,143 | 5,614 |
Property and equipment, net | 24,795 | 22,532 |
Goodwill | 48,251 | 50,280 |
Intangible assets, net | 22,753 | 28,244 |
Other assets | 1,318 | 2,213 |
Total assets | 194,310 | 228,543 |
Current liabilities: | ||
Accounts payable | 10,684 | 10,778 |
Accrued compensation | 10,777 | 8,201 |
Income tax payable | 785 | 121 |
Obligations under capital lease | 532 | 521 |
Other current liabilities | 22,150 | 35,318 |
Deferred revenue | 113,821 | 106,868 |
Total current liabilities | 158,749 | 161,807 |
Deferred revenue | 27,636 | 35,880 |
Deferred income taxes | 6,173 | 4,998 |
Obligations under capital lease | 2,027 | 2,622 |
Other long-term liabilities | 1,384 | 826 |
Total liabilities | 195,969 | 206,133 |
Commitments and contingencies (Note 16) | ||
Stockholders' (deficit) equity: | ||
Preferred stock, $0.001 par value; 10,000 and 10,000 shares authorized, zero and zero shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 0 | 0 |
Non-designated common stock, $0.00005 par value, 190,000 and 190,000 shares authorized, 23,451 and 23,150 shares issued and 22,451 and 22,150 shares outstanding at December 31, 2016 and December 31, 2015, respectively | 2 | 2 |
Additional paid-in capital | 190,827 | 185,863 |
Treasury stock, at cost; 1,000 and 1,000 shares at December 31, 2016 and December 31, 2015, respectively | (11,435) | (11,435) |
Accumulated loss | (177,344) | (149,794) |
Accumulated other comprehensive loss | (3,709) | (2,226) |
Total stockholders' (deficit) equity | (1,659) | 22,410 |
Total liabilities and stockholders' (deficit) equity | $ 194,310 | $ 228,543 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,072 | $ 1,196 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Non-designated common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 |
Non-designated common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 |
Non-designated common stock, shares issued (in shares) | 23,450,864 | 23,149,634 |
Non-designated common stock, shares outstanding (in shares) | 22,450,864 | 22,149,634 |
Treasury Stock, issued not outstanding (in shares) | 1,000,000 | 1,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | |||
Subscription and service | $ 154,336 | $ 151,701 | $ 125,602 |
Product | 39,753 | 65,969 | 136,251 |
Total revenue | 194,089 | 217,670 | 261,853 |
Cost of revenue: | |||
Cost of subscription and service revenue | 23,676 | 21,629 | 18,862 |
Cost of product revenue | 10,645 | 16,898 | 34,192 |
Total cost of revenue | 34,321 | 38,527 | 53,054 |
Gross profit | 159,768 | 179,143 | 208,799 |
Operating expenses | |||
Sales and marketing | 114,340 | 136,084 | 173,208 |
Research and development | 26,273 | 29,939 | 33,176 |
General and administrative | 40,501 | 50,124 | 57,120 |
Impairment | 3,930 | 6,754 | 20,333 |
Lease abandonment and termination | 1,644 | 55 | 3,812 |
Total operating expenses | 186,688 | 222,956 | 287,649 |
Loss from operations | (26,920) | (43,813) | (78,850) |
Other income and (expense): | |||
Interest income | 46 | 23 | 17 |
Interest expense | (470) | (378) | (233) |
Other income and (expense) | 2,297 | (1,469) | (1,129) |
Total other income and (expense) | 1,873 | (1,824) | (1,345) |
Loss before income taxes | (25,047) | (45,637) | (80,195) |
Income tax expense (benefit) | 2,503 | 1,159 | (6,489) |
Net loss | $ (27,550) | $ (46,796) | $ (73,706) |
Loss per share: | |||
Basic (in dollars per share) | $ (1.25) | $ (2.17) | $ (3.47) |
Diluted (in dollars per share) | $ (1.25) | $ (2.17) | $ (3.47) |
Common shares and equivalents outstanding: | |||
Basic weighted average shares (in shares) | 21,969 | 21,571 | 21,253 |
Diluted weighted average shares (in shares) | 21,969 | 21,571 | 21,253 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (27,550) | $ (46,796) | $ (73,706) |
Other comprehensive loss, net of tax: | |||
Foreign currency translation loss | (1,483) | (1,548) | (1,523) |
Other comprehensive loss | (1,483) | (1,548) | (1,523) |
Comprehensive loss | $ (29,033) | $ (48,344) | $ (75,229) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Non-Designated Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Loss | Accumulated Other Comprehensive Income / (Loss) |
Balance at Dec. 31, 2013 | $ 131,243 | $ 2 | $ 171,123 | $ (11,435) | $ (29,292) | $ 845 |
Balance (in shares) at Dec. 31, 2013 | 20,926 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 669 | 669 | ||||
Stock Issued Upon the Exercise of Stock Options (in shares) | 116 | |||||
Restricted Stock Award Vesting (in shares) | 287 | |||||
Stock-based Compensation Expense | 6,762 | 6,762 | ||||
Net loss | (73,706) | (73,706) | ||||
Other comprehensive loss | (1,523) | (1,523) | ||||
Balance at Dec. 31, 2014 | 63,445 | $ 2 | 178,554 | (11,435) | (102,998) | (678) |
Balance (in shares) at Dec. 31, 2014 | 21,329 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 114 | 114 | ||||
Stock Issued Upon the Exercise of Stock Options (in shares) | 25 | |||||
Restricted Stock Award Vesting (in shares) | 452 | |||||
Stock-based Compensation Expense | 7,195 | 7,195 | ||||
Net loss | (46,796) | (46,796) | ||||
Other comprehensive loss | (1,548) | (1,548) | ||||
Balance at Dec. 31, 2015 | 22,410 | $ 2 | 185,863 | (11,435) | (149,794) | (2,226) |
Balance (in shares) at Dec. 31, 2015 | 21,806 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock Issued Upon the Exercise of Stock Options | 58 | 58 | ||||
Stock Issued Upon the Exercise of Stock Options (in shares) | 13 | |||||
Restricted Stock Award Vesting (in shares) | 255 | |||||
Stock-based Compensation Expense | 4,906 | 4,906 | ||||
Net loss | (27,550) | (27,550) | ||||
Other comprehensive loss | (1,483) | (1,483) | ||||
Balance at Dec. 31, 2016 | $ (1,659) | $ 2 | $ 190,827 | $ (11,435) | $ (177,344) | $ (3,709) |
Balance (in shares) at Dec. 31, 2016 | 22,074 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | $ (27,550,000) | $ (46,796,000) | $ (73,706,000) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | |||
Stock-based compensation expense | 4,906,000 | 7,195,000 | 6,762,000 |
(Gain) loss on foreign currency transactions | (2,449,000) | 1,471,000 | 1,171,000 |
Bad debt expense | 709,000 | 1,657,000 | 2,405,000 |
Depreciation and amortization | 13,322,000 | 13,660,000 | 13,904,000 |
Deferred income tax expense (benefit) | 1,162,000 | 849,000 | (7,667,000) |
Loss (gain) on disposal of equipment | 179,000 | (15,000) | 184,000 |
Amortization of deferred financing costs | 274,000 | 160,000 | 21,000 |
Loss on impairment | 3,930,000 | 6,754,000 | 20,333,000 |
Loss from equity method investments | 45,000 | 23,000 | 0 |
Gain on divestiture of subsidiary | 0 | (660,000) | 0 |
Net change in: | |||
Restricted cash | (378,000) | 43,000 | (13,000) |
Accounts receivable | 14,681,000 | 26,376,000 | (16,478,000) |
Inventory | 538,000 | (1,253,000) | 341,000 |
Deferred sales commissions | 919,000 | (4,121,000) | (7,268,000) |
Prepaid expenses and other current assets | (167,000) | 1,080,000 | 1,844,000 |
Income tax receivable or payable | 719,000 | 568,000 | (147,000) |
Other assets | 668,000 | (684,000) | 446,000 |
Accounts payable | (74,000) | (8,636,000) | 8,394,000 |
Accrued compensation | 2,701,000 | (5,485,000) | (4,494,000) |
Other current liabilities | (13,261,000) | (14,223,000) | 11,318,000 |
Other long-term liabilities | 558,000 | (486,000) | 459,000 |
Deferred revenue | (192,000) | 16,878,000 | 48,864,000 |
Net cash provided by (used in) operating activities | 1,240,000 | (5,645,000) | 6,673,000 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (12,514,000) | (8,856,000) | (9,736,000) |
Proceeds from sale of fixed assets | 38,000 | 1,642,000 | 0 |
Decrease in restricted cash for Vivity acquisition | 0 | 0 | 12,314,000 |
Acquisitions, net of cash acquired | 0 | (1,688,000) | (41,687,000) |
Net cash outflow from divestiture of subsidiary | 0 | (186,000) | 0 |
Other investing activities | 0 | (286,000) | 0 |
Net cash used in investing activities | (12,476,000) | (9,374,000) | (39,109,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from the exercise of stock options | 58,000 | 114,000 | 669,000 |
Payment of deferred financing costs | (183,000) | (130,000) | (381,000) |
Payments under capital lease obligations | (533,000) | (711,000) | (593,000) |
Net cash used in financing activities | (658,000) | (727,000) | (305,000) |
Decrease in cash and cash equivalents | (11,894,000) | (15,746,000) | (32,741,000) |
Effect of exchange rate changes in cash and cash equivalents | 307,000 | (1,129,000) | (1,427,000) |
Net decrease in cash and cash equivalents | (11,587,000) | (16,875,000) | (34,168,000) |
Cash and cash equivalents—beginning of year | 47,782,000 | 64,657,000 | 98,825,000 |
Cash and cash equivalents—end of year | 36,195,000 | 47,782,000 | 64,657,000 |
Cash paid during the periods for: | |||
Interest | 197,000 | 218,000 | 211,000 |
Income taxes, net of refund | 604,000 | 601,000 | 1,722,000 |
Noncash financing and investing activities: | |||
Accrued liability for purchase of property and equipment | 270,000 | 258,000 | 561,000 |
Equipment acquired under capital lease | $ 27,000 | $ 462,000 | $ 0 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Rosetta Stone Inc. and its subsidiaries ("Rosetta Stone," or the "Company") develop, market and support a suite of language-learning and literacy solutions consisting of perpetual software products, web-based software subscriptions, online and professional services, audio practice products and mobile applications. The Company's offerings are sold on a direct basis and through select third party retailers and distributors. The Company provides its solutions to customers through the sale of packaged software and web-based software subscriptions, domestically and in certain international markets. In March 2016, the Company announced the withdrawal of direct sales presence in almost all of its non-U.S. and non-northern European geographies related to the distribution of the Enterprise & Education Language offerings (the "2016 Restructuring Plan"). Where appropriate, the Company seeks to operate through partners in the geographies being exited. The Company has also initiated processes to close the software development operations in France and China. These actions are in addition to the plan announced in early 2015 (the "2015 Restructuring Plan") to accelerate and prioritize its focus on satisfying the needs of the passionate learners in the U.S. and select non-U.S. geographies in the Consumer language business. See Note 2 "Summary of Significant Accounting Policies," Note 13 "Restructuring," Note 17 "Segment Information" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" within Part II for additional information about these strategic undertakings and the associated impact to the Company's financial statements and financial results. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of Rosetta Stone Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The equity method is used to account for investments in entities if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of the investee. The Company determines its level of influence over an equity method investment by considering key factors such as ownership interest, representation on the investee's governance body, participation in policy-making decisions, and technological dependencies. The Company's proportionate share of the net income or loss of any equity method investments is reported in "Other income and (expense)" and included in the net loss on the consolidated statements of operations. The carrying value of any equity method investment is reported in "Other assets" on the consolidated balance sheets. Use of Estimates The preparation of financial statements, in accordance with GAAP requires management to make certain estimates and assumptions. The amounts reported in the consolidated financial statements include significant estimates and assumptions that have been made, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, estimated sales returns and reserves, stock-based compensation, restructuring costs, fair value of intangibles and goodwill, disclosure of contingent assets and liabilities, disclosure of contingent litigation, allowance for valuation of deferred tax assets, and the Company's quarterly going concern assessment. The Company bases its estimates and assumptions on historical experience and on various other judgments that are believed to be reasonable under the circumstances. The Company continuously evaluates its estimates and assumptions. Actual results may differ from these estimates and assumptions. Revenue Recognition The Company's primary sources of revenue are web-based software subscriptions, online services, perpetual product software, and bundles of perpetual product software and online services. The Company also generates revenue from the sale of audio practice products, mobile applications, and professional services. Revenue is recognized when all of the following criteria are met: there is persuasive evidence of an arrangement; the product has been delivered or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. Revenue is recorded net of discounts and net of taxes. The Company identifies the units of accounting contained within sales arrangements in accordance with Accounting Standards Codification ("ASC") subtopic 605-25 Revenue Recognition - Multiple Element Arrangements (“ASC 605-25”). In doing so, the Company evaluates a variety of factors including whether the undelivered element(s) have value to the customer on a stand-alone basis or if the undelivered element(s) could be sold by another vendor on a stand-alone basis. For multiple element arrangements that contain perpetual software products and related online services, the Company allocates the total arrangement consideration to its deliverables based on the existence of vendor-specific objective evidence of fair value, or vendor-specific objective evidence ("VSOE"), in accordance with ASC subtopic 985-605-25 Software: Revenue Recognition-Multiple-Element Arrangements ("ASC 985-605-25"). The Company generates a portion of its Consumer revenue from the CD and digital download formats of the Rosetta Stone language-learning product which are typically multiple-element arrangements that contain two deliverables: perpetual software, delivered at the time of sale, and online service, which is considered an undelivered software-related element. The online service includes access to conversational coaching services. Because the Company only sells the perpetual language-learning software on a stand-alone basis in its homeschool version, the Company does not have a sufficient concentration of stand-alone sales to establish VSOE for the perpetual product. Where VSOE of the undelivered online services can be established, arrangement consideration is allocated using the residual method. The Company determines VSOE by reference to the range of comparable stand-alone renewal sales of the online service. The Company reviews these stand-alone sales on a quarterly basis. VSOE is established if at least 80% of the stand-alone sales are within a range of plus or minus 15% of a midpoint of the range of prices, consistent with generally accepted industry practice. Where VSOE of the undelivered online services cannot be established, revenue is deferred and recognized commensurate with the delivery of the online services. For non-software multiple element arrangements, the Company allocates revenue to all deliverables based on their relative selling prices. The Company's non-software multiple element arrangements primarily occur as sales to its Enterprise & Education Language and Literacy customers, and to a lesser extent its Consumer customers. These arrangements can include web-based subscription services, audio practice products and professional services or any combination thereof. The Company does not have a sufficient concentration of stand-alone sales of the various deliverables noted above to its customers, and therefore cannot establish VSOE for each deliverable. Third party evidence of fair value does not exist for the web-based subscription, audio practice products and professional services due to the lack of interchangeable language-learning products and services within the market. Accordingly, the Company determines the relative selling price of the web-based subscription, audio practice products and professional services deliverables included in its non-software multiple element arrangements using the best estimated selling price. The Company determines the best estimated selling price based on its internally published price list which includes suggested sales prices for each deliverable based on the type of client and volume purchased. This price list is derived from past experience and from the expectation of obtaining a reasonable margin based on what each deliverable costs the Company. In the U.S. and Canada, the Company offers consumers who purchase packaged software and audio practice products directly from the Company a 30 -day, unconditional, full money-back refund. The Company also permits some of our retailers and distributors to return unsold packaged products, subject to certain limitations. In accordance with ASC subtopic 985-605, Software: Revenue Recognition ("ASC 985-605"), the Company estimates and establishes revenue reserves for packaged product returns at the time of sale based on historical return rates, estimated channel inventory levels, the timing of new product introductions and other factors. The Company distributes its products and services both directly to the end customer and indirectly through resellers. Resellers earn commissions generally calculated as a fixed percentage of the gross sale to the end customer. The Company evaluates each of its reseller relationships in accordance with ASC subtopic 605-45, Revenue Recognition - Principal Agent Considerations (“ASC 605-45”) to determine whether the revenue recognized from indirect sales should be the gross amount of the contract with the end customer or reduced for the reseller commission. In making this determination the Company evaluates a variety of factors including whether it is the primary obligor to the end customer. Revenue for web-based subscriptions and online services is recognized ratably over the term of the subscription or service period, assuming all revenue recognition criteria have been met. The CD and digital download formats of Rosetta Stone language-learning products are bundled with an online service where customers are allowed to begin their online services at any point during a registration window, which is typically up to six months from the date of purchase from us or an authorized reseller. The online services that are not activated during this registration window are forfeited and revenue is recognized upon expiry. Revenue from non-refundable upfront fees that are not related to products already delivered or services already performed is deferred and recognized ratably over the term of the related arrangement because the period over which a customer is expected to benefit from the service that is included within our subscription arrangements does not extend beyond the contractual period. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding subscription agreement. Software products are sold to end user customers and resellers. In many cases, revenue from sales to resellers is not contingent upon resale of the software to the end user and is recorded in the same manner as all other product sales. Revenue from sales of packaged software products and audio practice products is recognized as the products are shipped and title passes and risks of loss have been transferred. For many product sales, these criteria are met at the time the product is shipped. For some sales to resellers and certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit. In other cases where packaged software products are sold to resellers on a consignment basis, revenue is recognized for these consignment transactions once the end user sale has occurred, assuming the remaining revenue recognition criteria have been met. In accordance with ASC subtopic 605-50, Revenue Recognition: Customer Payments and Incentives (“ASC 605-50”), cash sales incentives to resellers are accounted for as a reduction of revenue, unless a specific identified benefit is identified and the fair value is reasonably determinable. Price protection for changes in the manufacturer suggested retail value granted to resellers for the inventory that they have on hand at the date the price protection is offered is recorded as a reduction to revenue at the time of sale. The Company offers customers the ability to make payments for packaged software purchases in installments over a period of time, which typically ranges between three and five months. Given that these installment payment plans are for periods less than 12 months , a successful collection history has been established and these fees are fixed and determinable, revenue is recognized at the time of sale, assuming the remaining revenue recognition criteria have been met. In connection with packaged software product sales and web-based software subscriptions, technical support is provided to customers, including customers of resellers, via telephone support at no additional cost for up to six months from the time of purchase. As the fee for technical support is included in the initial licensing fee, the technical support and services are generally provided within one year, the estimated cost of providing such support is deemed insignificant and no unspecified upgrades/enhancements are offered, technical support revenue is recognized together with the software product and web-based software subscription revenue. Costs associated with technical support are accrued at the time of sale. Sales commissions from non-cancellable web-based software subscription contracts are deferred and amortized in proportion to the revenue recognized from the related contract. Divestitures The Company deconsolidates divested subsidiaries when there is a loss of control or when appropriate when evaluated under the variable interest entity model. The Company recognizes a gain or loss at divestiture equal to the difference between the fair value of any consideration received and the carrying amount of the former subsidiary’s assets and liabilities. Any resulting gain or loss is reported in "Other income and (expense)" on the consolidated statement of operations. See Note 5 "Divestitures" for disclosures on the Company's recent divestiture. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and demand deposits with financial institutions. Restricted Cash Restricted cash is generally used to reimburse funds to employees under the Company's flexible benefit plan and deposits received on subleased properties. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to the Company from its normal business activities. The Company provides an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified. Inventories Inventories are stated at the lower of cost, determined on a first-in first-out basis, or market. The Company reviews inventory for excess quantities and obsolescence based on its best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to establish a new cost basis for obsolete and potential obsolete inventory. See Note 3 "Inventory" for disclosures on the Company's inventory balances. Concentrations of Credit Risk Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. The Company reserves for credit losses on its trade accounts receivable. In addition, the Company maintains cash and investment balances in accounts at various banks and brokerage firms. The Company has not experienced any losses on cash and cash equivalent accounts to date. The Company sells its offerings to retailers, resellers, government agencies, and individual consumers and extends credit based on an evaluation of the customer's financial condition, and may require collateral, such as letters of credit, in certain circumstances. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. No customer accounted for more than 10% of the Company's revenue during the years ended December 31, 2016 , 2015 or 2014 . The four largest distributor and reseller receivable balances collectively represented 23% and 30% of accounts receivable as of December 31, 2016 and 2015 , respectively, with one customer that accounted for 13% and 17% of accounts receivable as of December 31, 2016 and 2015 , respectively. The Company maintains trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. Fair Value of Financial Instruments The Company values its assets and liabilities using the methods of fair value as described in ASC topic 820, Fair Value Measurements and Disclosures, ("ASC 820"). ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of the fair value hierarchy are described below: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of equipment are charged to expense as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. See Note 4 "Property Plant and Equipment" for the Company's additional disclosures. Valuation of Long-Lived Assets In accordance with ASC topic 360, Property, Plant and Equipment ("ASC 360"), the Company evaluates the recoverability of its long-lived assets. ASC 360 requires recognition of impairment of long-lived assets in the event that the net book value of such assets exceeds the future undiscounted net cash flows attributable to such assets. Impairment, if any, is recognized in the period of identification to the extent the carrying amount of an asset exceeds the fair value of such asset. Software Developed for Internal Use The Company capitalizes software development costs related to certain of its software platforms developed exclusively to provide its web-based subscription services and other general and administrative use software in accordance with ASC subtopic 350-40: Internal-Use Software . Development costs for internal-use software are expensed as incurred until the project reaches the application development stage. Internal-use software is defined to have the following characteristics: (a) the software is internally developed, or modified solely to meet the Company's internal needs, and (b) during the software's development or modification, no substantive plan exists or is being developed to market the software externally. Internally developed software is amortized over a three -year useful life. Years Ended December 31, 2016 2015 2014 Amounts capitalized as internal-use software $ 11,375 $ 7,132 $ 8,811 Amortization expense of internal-use software $ (6,369 ) $ (4,786 ) $ (3,379 ) Impairment expense of internal-use software $ (1,029 ) $ (1,142 ) $ (163 ) Intangible Assets Intangible assets consist of acquired technology, including developed and core technology, customer related assets, trade name and trademark, and other intangible assets. Those intangible assets with finite lives are recorded at cost and amortized on a straight line basis over their expected lives in accordance with ASC topic 350, Intangibles—Goodwill and Other ("ASC 350"). Annually, as of December 31, and more frequently if a triggering event occurs, the Company reviews its indefinite-lived intangible asset for impairment in accordance with ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative test. If necessary, the quantitative test is performed by comparing the fair value of indefinite lived intangible assets to the carrying value. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. The Rosetta Stone trade name is the Company's only indefinite-lived intangible asset. See Note 7 "Intangible Assets" for a discussion and results associated with the Company's recent intangible asset impairment tests. Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. The Company tests goodwill for impairment annually on June 30 of each year or more frequently if impairment indicators arise. Goodwill is tested for impairment at the reporting unit level using a fair value approach, in accordance with the provisions of ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, a "Step 0" analysis. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value the Company performs "Step 1" of the traditional two-step goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value exceeds the fair value, the Company measures the amount of impairment loss, if any, by comparing the implied fair value of the reporting unit goodwill with its carrying amount, the "Step 2" analysis. See Note 6 "Goodwill" for a discussion and results associated with the Company's recent goodwill impairment tests. For income tax purposes, the goodwill balances with tax basis are amortized over a period of 15 years. Guarantees Indemnifications are provided of varying scope and size to certain Enterprise & Education Language and Literacy customers against claims of intellectual property infringement made by third parties arising from the use of its products. The Company has not incurred any costs or accrued any liabilities as a result of such obligations. Cost of Subscription and Service Revenue and Cost of Product Revenue The cost of subscription and service revenue primarily represents costs associated with supporting the web-based subscription services and online language-learning services, which includes online language conversation coaching, hosting costs and depreciation. Also included are the costs of credit card processing and customer technical support in both cost of product revenue and cost of subscription and service revenue. Cost of product revenue consists of the direct and indirect materials and labor costs to produce and distribute the Company's products. Such costs include packaging materials, computer headsets, freight, inventory receiving, personnel costs associated with product assembly, third-party royalty fees and inventory storage, obsolescence and shrinkage. Research and Development Research and development expenses include employee compensation costs, consulting fees and overhead costs associated with the development of our solutions. The Company develops a portion of its language-learning software products for perpetual sale to external customers. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. The Company has determined that technological feasibility for such software products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established have not been material, and accordingly, the Company has expensed all research and development costs when incurred. Income Taxes The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes ("ASC 740"), which provides for an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Significant judgment is required to determine whether a valuation allowance is necessary and the amount of such valuation allowance, if appropriate. The valuation allowance is reviewed at each reporting period and is maintained until sufficient positive evidence exists to support a reversal. When assessing the realization of the Company's deferred tax assets, the Company considers all available evidence, including: • the nature, frequency, and severity of cumulative financial reporting losses in recent years; • the carryforward periods for the net operating loss, capital loss, and foreign tax credit carryforwards; • predictability of future operating profitability of the character necessary to realize the asset; • prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax assets; and • the effect of reversing taxable temporary differences. The evaluation of the recoverability of the deferred tax assets requires that the Company weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. The establishment of a valuation allowance has no effect on the ability to use the deferred tax assets in the future to reduce cash tax payments. The Company will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly, which could materially affect the Company's financial position and results of operations. See Note 15 "Income Taxes" for additional disclosures. Stock-Based Compensation The Company accounts for its stock-based compensation in accordance ASC topic 718, Compensation—Stock Compensation ("ASC 718"). Under ASC 718, all stock-based awards, including employee stock option grants, are recorded at fair value as of the grant date. For options granted with service and/or performance conditions, the fair value of each grant is estimated on the date of grant using the Black-Scholes option pricing model. For options granted with market-based conditions, the fair value of each grant is estimated on the grant date using the Monte-Carlo simulation model. These methods require the use of estimates, including future stock price volatility, expected term and forfeitures. As the Company does not have sufficient historical option exercise experience that spans the full 10 year contractual term for determining the expected term of options granted, the Company estimates the expected term of options using a combination of historical information and the simplified method for estimating the expected term. The Company uses its own historical stock price data to estimate its forfeiture rate and expected volatility over the most recent period commensurate with the estimated expected term of the awards. For the risk-free interest rate, the Company uses a U.S. Treasury Bond rate consistent with the estimated expected term of the option award. The Company's restricted stock and restricted stock unit grants are accounted for as equity awards. Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. For equity awards granted with market-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. See Note 10 "Stock-Based Compensation" for additional disclosures. Restructuring Costs As part of the 2016 Restructuring Plan and the 2015 Restructuring Plan, the Company announced and initiated actions to reduce headcount and other costs in order to support its strategic shift in business focus. In connection with these plans, the Company incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. These costs are included within Cost of Sales and the Sales and marketing, Research and development, and General and administrative operating expense categories in the Company's consolidated statements of operations. Employee severance and related benefit costs primarily include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive involuntary termination plan previously existed, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in which a detailed plan has been approved by management and communicated to the terminated employees. Severance costs pursuant to ongoing benefit arrangements, including termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Contract termination costs include penalties to cancel certain service and license contracts and costs to terminate operating leases. Contract termination costs are recognized at fair value in the period in which the contract is terminated in accordance with the contract terms. Other related costs generally include external consulting and legal costs associated with the strategic shift in business focus. Such costs are recognized at fair value in the period in which the costs are incurred. See Note 13 "Restructuring" for additional disclosures. Net Loss Per Share Net loss per share is computed under the provisions of ASC topic 260, Earnings Per Share . Basic loss per share is computed using net loss and the weighted average number of shares of common stock outstanding. Diluted loss per share reflect the weighted average number of shares of common stock outstanding plus any potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of shares issuable upon the exercise of stock options, restricted stock awards, restricted stock units and conversion of shares of preferred stock. Common stock equivalent shares are excluded from the diluted computation if their effect is anti-dilutive. When there is a net loss, there is a presumption that there are no dilutive shares as these would be anti-dilutive. The following table sets forth the computation of basic and diluted net loss per common share: Years Ended December 31, 2016 2015 2014 (dollars in thousands, except per share amounts) Numerator: Net loss $ (27,550 ) $ (46,796 ) $ (73,706 ) Denominator: Common shares and equivalents outstanding: Basic weighted average shares 21,969 21,571 21,253 Diluted weighted average shares 21,969 21,571 21,253 Loss per share: Basic $ (1.25 ) $ (2.17 ) $ (3.47 ) Diluted $ (1.25 ) $ (2.17 ) $ (3.47 ) For the years ended December 31, 2016 , 2015 and 2014 , no common stock equivalent shares were included in the calculation of the Company’s diluted net loss per share. The following is a summary of common stock equivalents for the securities outstanding during the respective periods that have been excluded from the earnings per share calculations as their impact was anti-dilutive. Years Ended December 31, 2016 2015 2014 (in thousands) Stock options 16 35 67 Restricted stock units 174 39 103 Restricted stocks 129 82 89 Total common stock equivalent shares 319 156 259 Comprehensive Loss Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss refers to revenues, expenses, gains, and losses that are not included in net loss, but rather are recorded directly in stockholders' (deficit) equity. For the years ended December 31, 2016 , 2015 and 2014 , the Company's comprehensive loss consisted of net loss and foreign currency translation losses. The other comprehensive loss presented in the consolidated financial statements and the notes are presented |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventory consisted of the following (in thousands): As of December 31, 2016 2015 Raw materials $ 4,384 $ 3,375 Finished goods 2,383 3,958 Total inventory $ 6,767 $ 7,333 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): As of December 31, 2016 2015 Land $ 876 $ 893 Buildings and improvements 9,503 9,573 Leasehold improvements 1,645 1,477 Computer equipment 15,866 16,508 Software 43,688 34,478 Furniture and equipment 2,393 3,115 73,971 66,044 Less: accumulated depreciation (49,176 ) (43,512 ) Property and equipment, net $ 24,795 $ 22,532 The Company leases certain computer equipment, software, buildings, and machinery under capital lease agreements. As of December 31, 2016 and 2015 , assets under capital lease included in property and equipment above were $5.4 million and $5.5 million , respectively. As of December 31, 2016 and 2015 , accumulated depreciation and amortization relating to property and equipment under capital lease arrangements totaled $2.1 million and $1.5 million , respectively. The Company recorded total depreciation and amortization expense for its property and equipment for the years ended December 31, 2016 , 2015 and 2014 in the amount of $9.0 million , $8.5 million and $7.6 million , respectively. Depreciation and amortization expense related to property and equipment includes depreciation related to its physical assets and amortization expense related to amounts capitalized in the development of internal-use software. During the years ending December 31, 2016 2015 , and 2014 the Company recorded $1.0 million , $1.1 million , and $0.2 million respectively, in impairment expense related to the abandonment of previously capitalized internal-use software projects. |
DIVESTITURES
DIVESTITURES | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
DIVESTITURES | DIVESTITURES As part of the shift in strategy initiated in early 2015, the Company determined that its ownership of the consumer-oriented Rosetta Stone Korea Ltd. ("RSK") entity no longer agreed with the Company’s overall strategy to focus on the Enterprise & Education business. In September 2015, the Company completed the divestiture of 100% of the Company's capital stock of RSK to the current President of RSK for consideration equal to the assumption of RSK's net liabilities at the date of sale. This divestiture resulted in a pre-tax gain of $0.7 million reported in “ Other income and (expense) ” line of the consolidated statements of operations. This gain was comprised of a gain of $0.2 million equal to the value of the net liabilities transferred and a $0.5 million gain on the transfer of the foreign subsidiary's cumulative translation adjustment on the date of sale. As part of the transaction, the Company has agreed to continue to provide to RSK certain of its online product offerings for resale and distribution and RSK is committed to purchase those products, for an initial term ending December 31, 2025. In addition, the Company has loaned RSK $0.5 million as of October 2, 2015, which will be repaid in five equal installments due every six months beginning December 31, 2016 . The first installment was paid in full according to schedule and no allowance was deemed necessary. As a result of this loan receivable and the level of financial support it represents, the Company concluded that it holds a variable interest in RSK whereby the Company is not the primary beneficiary. The maximum exposure to loss as a result of this involvement in the variable interest entity is limited to the $0.5 million amount of the loan. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL The value of gross goodwill is primarily derived from the acquisition of Rosetta Stone Ltd. (formerly known as Fairfield & Sons, Ltd.) in January 2006, the acquisition of certain assets of SGLC International Co. Ltd ("SGLC") in November 2009, the acquisitions of Livemocha, Inc. ("Livemocha") in April 2013, the acquisition of Lexia Learning Systems, Inc. ("Lexia") in August 2013, and the acquisitions of Vivity Labs, Inc. ("Vivity") and Tell Me More S.A. ("Tell Me More") in January 2014. The Company tests goodwill for impairment annually on June 30 of each year at the reporting unit level using a fair value approach, in accordance with the provisions of ASC topic 350, Intangibles - Goodwill and other ("ASC 350"), or more frequently, if impairment indicators arise. The Company also routinely reviews goodwill at the reporting unit level for potential impairment. The Company's reporting units were Enterprise & Education Language, Enterprise & Education Literacy, Consumer Language, and Consumer Fit Brains. The combined Consumer Language and Consumer Fit Brains reporting units make up the Consumer operating and reportable segment. The following table shows the balance and changes in goodwill for the Company's operating segments and reporting units for the years ended December 31, 2016 and 2015 (in thousands): Enterprise & Education Language Literacy Consumer Consumer Language Consumer Fit Brains Total Balance as of January 1, 2015 Gross Goodwill $ 40,084 $ 9,962 $ 20,170 $ 8,538 $ 78,754 Accumulated Impairment — — (20,170 ) — (20,170 ) Goodwill as of January 1, 2015 $ 40,084 $ 9,962 $ — $ 8,538 $ 58,584 Partial Impairment of Consumer Fit Brains — — — (5,604 ) (5,604 ) Effect of change in foreign currency rate (1,384 ) — — (1,316 ) (2,700 ) Balance as of December 31, 2015 Gross Goodwill $ 38,700 $ 9,962 $ 20,170 $ 7,222 $ 76,054 Accumulated Impairment — — (20,170 ) (5,604 ) (25,774 ) Goodwill as of December 31, 2015 $ 38,700 $ 9,962 $ — $ 1,618 $ 50,280 Remaining Full Impairment of Consumer Fit Brains — — — (1,740 ) (1,740 ) Effect of change in foreign currency rate (411 ) — — 122 (289 ) Balance as of December 31, 2016 Gross Goodwill $ 38,289 $ 9,962 $ 20,170 $ 7,344 $ 75,765 Accumulated Impairment — — (20,170 ) (7,344 ) (27,514 ) Goodwill as of December 31, 2016 $ 38,289 $ 9,962 $ — $ — $ 48,251 2016 Activity Annual Impairment Testing of Goodwill and Consumer Fit Brains Impairment Consistent with elections in prior annual tests, the Company exercised its option to bypass Step 0 for all reporting units with remaining goodwill balances in connection with the annual goodwill impairment analysis performed as of June 30, 2016 . The Enterprise & Education Language and Literacy reporting units both resulted in fair values that substantially exceeded the carrying values, and therefore no goodwill impairment charges were recorded in connection with the annual analysis for these reporting units. The Consumer Fit Brains reporting unit was also evaluated, which resulted in a fair value that was significantly below the carrying value. The decrease in fair value was due to the second quarter 2016 strategy update for the Consumer Fit Brains business. The Consumer Fit Brains reporting unit was no longer considered central to the core strategy for the Company's focus on language and literacy learning. Due to the continued declines in operations since the $5.6 million partial impairment in the fourth quarter of 2015 which is further discussed below, management revised the Consumer Fit Brains financial projections in the second quarter of 2016 assuming reduced media spend and reduced revenue in 2016 and beyond. The change in operating plans and the lack of cushion since the fourth quarter 2015 impairment resulted in an implied fair value of goodwill that was significantly below its carrying value. As a result, the Company recorded a second quarter impairment loss of $1.7 million , which represented a full impairment of the remaining Consumer Fit Brains reporting unit's goodwill. The impairment charge was recorded in the "Impairment" line on the statement of operations. Interim Impairment Review The Company also routinely reviews goodwill at the reporting unit level for potential impairment as part of the Company’s internal control framework. In the fourth quarter of 2016 , the Enterprise & Education Language and Literacy reporting units (the only reporting units with remaining goodwill balances) were evaluated to determine if a triggering event has occurred. As of December 31, 2016 , the Company concluded that there were no indicators of impairment that would cause it to believe that it is more likely than not that the fair value of these reporting units is less than the carrying value. Accordingly, a detailed impairment test has not been performed and no impairment charges were recorded for these reporting units in connection with the interim impairment review. 2015 Activity Consumer Fit Brains Impairment During the fourth quarter of 2015, the Company determined that sufficient indication existed to require performance of an interim goodwill impairment analysis for the Consumer Fit Brains reporting unit. This indicator was due to a decline in the operations of the Consumer Fit Brains reporting unit, with decreases in revenue and bookings within this reporting unit driving lower than expected operating results for the quarter and impacting the forecast going forward. In this interim goodwill impairment test, the Consumer Fit Brains reporting unit failed Step 1. The combination of lower reporting unit fair value calculated in Step 1 and the identification of unrecognized fair value adjustments to the carrying values of other assets and liabilities (primarily developed technology and deferred revenue) in Step 2 of the interim goodwill impairment test, resulted in an implied fair value of goodwill below its carrying value. As a result, the Company recorded an impairment loss of $5.6 million associated with the interim impairment assessment of the Consumer Fit Brains reporting unit as of December 31, 2015. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets consisted of the following items as of the dates indicated (in thousands): Trade name / trademark * Core technology Customer relationships Patents and Other Total Gross Carrying Amount $ 12,442 $ 15,149 $ 26,245 $ 312 $ 54,148 Accumulated Amortization (1,271 ) (7,817 ) (16,603 ) (213 ) (25,904 ) Balance as of December 31, 2015 $ 11,171 $ 7,332 $ 9,642 $ 99 $ 28,244 Gross Carrying Amount 12,431 15,092 26,149 312 53,984 Accumulated Amortization (1,481 ) (9,859 ) (18,485 ) (251 ) (30,076 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2016 $ 10,924 $ 4,232 $ 7,536 $ 61 $ 22,753 * Included within the Trade name/ trademark intangible asset category is the Rosetta Stone trade name with a carrying amount of $10.6 million . This intangible asset is considered to have an indefinite useful life and is therefore not amortized, but rather tested for impairment on at least an annual basis. The Company computes amortization of intangible assets on a straight-line basis over the estimated useful life. Below are the weighted average remaining useful lives of the Company's amortizing intangible assets: Weighted Average Life Trade name / trademark 19 months Core technology 32 months Customer relationships 69 months Patents 27 months Amortization expense consisted of the following (in thousands): Years Ended December 31, 2016 2015 2014 Included in cost of revenue: Cost of subscription and service revenue $ 404 $ 322 $ 209 Cost of product revenue 182 264 377 Total included in cost of revenue 586 586 586 Included in operating expenses: Sales and marketing 2,178 2,804 3,677 Research and development 1,587 1,802 2,000 General and administrative — — — Total included in operating expenses 3,765 4,606 5,677 Total $ 4,351 $ 5,192 $ 6,263 The following table summarizes the estimated future amortization expense related to intangible assets as of December 31, 2016 (in thousands): As of 2017 $ 3,749 2018 3,155 2019 1,532 2020 1,282 2021 940 Thereafter 1,488 Total $ 12,146 2016 Activity Impairment Reviews of Intangible Assets The Company also routinely reviews indefinite-lived intangible assets and long-lived intangible assets for potential impairment as part of the Company’s internal control framework. During the second quarter of 2016, the Company revised the business outlook and financial projections for the Consumer Fit Brains reporting unit, which prompted a long-lived intangible asset impairment analysis of the tradename, developed technology, and customer relationships associated with the Consumer Fit Brains reporting unit ("Consumer Fit Brains Intangible Assets"). The carrying values of the Consumer Fit Brains Intangible Assets exceeded the estimated fair values. As a result, the Company recorded an impairment loss of $1.2 million associated with the impairment of the remaining carrying value of the Consumer Fit Brains Intangible Assets as of June 30, 2016. The impairment charge was recorded in the "Impairment" line on the statement of operations. As an indefinite-lived intangible asset, the Rosetta Stone tradename was evaluated as of December 31, 2016 to determine if indicators of impairment exist. The Company elected to bypass the option to first assess qualitative factors to determine whether it is more likely than not that the Rosetta Stone trade name was impaired and performed the quantitative assessment. In the quantitative assessment, the Company noted that the fair value of the Rosetta Stone trade name exceeded the carrying value. There were no impairment charges related to the Rosetta Stone trade name for the year ended December 31, 2016. Additionally, all other long-lived intangible assets were evaluated at December 31, 2016 to determine if indicators of impairment exist and the Company concluded that there are no additional potential indicators of impairment and no further impairment chargers were recorded during the year ended December 31, 2016 . There were no impairment charges related to intangible assets for the years ended December 31, 2015 and 2014 . |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES The following table summarizes other current liabilities (in thousands): As of 2016 2015 Accrued marketing expenses $ 8,460 $ 20,022 Accrued professional and consulting fees 2,050 1,746 Sales return reserve 1,338 3,728 Sales, withholding, and property taxes payable 3,772 3,879 Other 6,530 5,943 Total Other current liabilities $ 22,150 $ 35,318 |
FINANCING ARRANGEMENTS
FINANCING ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
FINANCING ARRANGEMENTS | FINANCING ARRANGEMENTS Revolving Line of Credit See Note 21 "Subsequent Events" regarding the March 2017 amendment of the Company’s credit facility. The following discussion pertains to the credit facility as in effect as of December 31, 2016. On October 28, 2014 , Rosetta Stone Ltd (“RSL”), a wholly owned subsidiary of parent company Rosetta Stone Inc., executed a Loan and Security Agreement with Silicon Valley Bank (“Bank”) to obtain a $25.0 million revolving credit facility (the “credit facility”). The Company executed the First Amendment to the credit facility with the Bank effective March 31, 2015 , the Second Amendment effective May 1, 2015 , the Third Amendment effective June 29, 2015 , and the Fourth Amendment effective December 29, 2015 . The Company is subject to certain covenants under the Loan and Security Agreement including financial covenants and limitations on indebtedness, encumbrances, investments and distributions and dispositions of assets, certain of which covenants were amended in the First, Second, Third, and Fourth Amendments, which were primarily amended to reflect updates to the Company's financial outlook. The Third Amendment also changed the definition of "change of control" to eliminate the clause referring to a change in a portion of the Board of Directors within a twelve-month period. On March 14, 2016, the Company executed the Fifth Amendment to the credit facility. Under the amended agreement, the Company may borrow up to $25.0 million including a sub-facility, which reduces available borrowings, for letters of credit in the aggregate availability amount of $4.0 million (the "credit facility"). Borrowings by RSL under the credit facility are guaranteed by the Company as the ultimate parent. The credit facility has a term that expires on January 1, 2018, during which time RSL may borrow and re-pay loan amounts and re-borrow the loan amounts subject to customary borrowing conditions. The total obligations under the credit facility cannot exceed the lesser of (i) the total revolving commitment of $25.0 million or (ii) the borrowing base, which is calculated as 80% of eligible accounts receivable. As a result, the borrowing base will fluctuate and the Company expects it will follow the general seasonality of cash and accounts receivable (lower in the first half of the year and higher in the second half of the year). If the borrowing base less any outstanding amounts, plus the cash held at SVB ("Availability") is greater than $25.0 million , then the Company may borrow up to an additional $5.0 million , but in no case can borrowings exceed $25.0 million . Interest on borrowings accrue at the Prime Rate provided that the Company maintains a minimum cash and Availability balance of $17.5 million . If cash and Availability is below $17.5 million , interest will accrue at the Prime Rate plus 1% . Proceeds of loans made under the credit facility may be used as working capital or to fund general business requirements. All obligations under the credit facility, including letters of credit, are secured by a security interest on substantially all of the Company’s assets including intellectual property rights and by a stock pledge by the Company of 100% of its ownership interests in U.S. subsidiaries and 66% of its ownership interests in certain foreign subsidiaries. The credit facility contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to, among other things, incur additional indebtedness, dispose of assets, execute a material change in business, acquire or dispose of an entity, grant liens, make share repurchases, and make distributions, including payment of dividends. The Company is required to maintain compliance with a minimum liquidity amount and minimum financial performance requirements, as defined in the credit facility. As of December 31, 2016 , the Company was in compliance with all covenants. The credit facility contains customary events of default, including among others, non-payment defaults, covenant defaults, bankruptcy and insolvency defaults, and a change of control default, in each case, subject to customary exceptions. The occurrence of a default event could result in the Bank’s acceleration of repayment obligations of any loan amounts then outstanding. As of December 31, 2016 , there were no borrowings outstanding and the Company was eligible to borrow the entire $20.8 million of available credit, less $4.0 million in letters of credit have been issued by the Bank on the Company's behalf, resulting in a net borrowing availability of $16.8 million . A quarterly commitment fee accrues on any unused portion of the credit facility at a nominal annual rate. Capital Leases The Company enters into capital leases under non-committed arrangements for equipment and software. In addition, as a result of the Tell Me More Merger, the Company assumed a capital lease for a building near Versailles, France, where Tell Me More’s headquarters are located. The fair value of the lease liability at the date of acquisition was $4.0 million . During the years ended December 31, 2016 and 2015 , the Company acquired equipment or software through the issuance of capital leases totaling $27,000 and $0.5 million , respectively. This non-cash investing activity has been excluded from the consolidated statement of cash flows. There were no equipment or software acquired through the issuance of capital leases during the year ended December 31, 2014 . As of December 31, 2016 , the future minimum payments under capital leases with initial terms of one year or more are as follows (in thousands): Periods Ending December 31, 2017 $ 635 2018 483 2019 480 2020 476 2021 473 Thereafter 354 Total minimum lease payments $ 2,901 Less amount representing interest 342 Present value of net minimum lease payments $ 2,559 Less current portion 532 Obligations under capital lease, long-term $ 2,027 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION 2006 Stock Incentive Plan On January 4, 2006 , the Company established the Rosetta Stone Inc. 2006 Stock Incentive Plan (the "2006 Plan") under which the Company's Board of Directors, at its discretion, could grant stock options to employees and certain directors of the Company and affiliated entities. The 2006 Plan initially authorized the grant of stock options for up to 1,942,200 shares of common stock. On May 28, 2008 , the Board of Directors authorized the grant of additional stock options for up to 195,000 shares of common stock under the plan, resulting in total stock options available for grant under the 2006 Plan of 2,137,200 as of December 31, 2008 . The stock options granted under the 2006 Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Board or its designated committee at the date of grant, but not more than ten years from such grant date. Stock issued as a result of exercises of stock options will be issued from the Company's authorized available stock. All unissued stock associated with the 2006 Stock Incentive Plan expired in 2016 at the end of the ten year contractual term. 2009 Omnibus Incentive Plan On February 27, 2009 , the Company's Board of Directors approved the 2009 Omnibus Incentive Plan (the "2009 Plan") that provides for the ability of the Company to grant up to 2,437,744 of new stock incentive awards or options including Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Performance based Restricted Stock, Share Awards, Phantom Stock and Cash Incentive Awards. The stock incentive awards and options granted under the 2009 Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Board or its designated committee at the date of grant, but not more than ten years from such grant date. Concurrent with the approval of the 2009 Plan, the 2006 Plan was terminated for purposes of future grants. On May 26, 2011 the Board of Directors authorized and the Company's shareholders' approved the allocation of an additional 1,000,000 shares of common stock to the 2009 Plan. On May 23, 2012 , the Board of Directors authorized and the Company's shareholders approved the allocation of 1,122,930 additional shares of common stock to the 2009 Plan. On May 23, 2013 , the Board of Directors authorized and the Company's shareholders approved the allocation of 2,317,000 additional shares of common stock to the 2009 Plan. On May 20, 2014 , the Board of Directors authorized and the Company's shareholders approved the allocation of 500,000 additional shares of common stock to the 2009 Plan. On June 12, 2015 , the Board of Directors authorized and the Company's shareholders approved the allocation of 1,200,000 additional shares of common stock to the 2009 Plan. At December 31, 2016 there were 1,403,424 shares available for future grant under the 2009 Plan. Valuation Assumptions The determination of fair value of our stock-based awards is affected by assumptions regarding subjective and complex variables. Generally, our assumptions are based on historical information and judgment is required to determine if historical trends may be indicators of future outcomes. In accordance with ASC 718, the fair value of stock-based awards to employees is calculated as of the date of grant. Compensation expense is then recognized over the requisite service period of the award. Stock-based compensation expense recognized is based on the estimated portion of the awards that are expected to vest. Estimated forfeiture rates are applied in the expense calculation. The Company calculates the pool of additional paid-in capital associated with excess tax benefits in accordance with ASC 718. The Company determines the fair values of stock-based awards as follows: • Service-Based Restricted Stock Awards, Restricted Stock Units, and Performance-Based Restricted Stock Awards: Fair value is determined based on the quoted market price of our common stock on the date of grant. • Service-Based Stock Options and Performance-Based Stock Options: Fair value is determined using the Black-Scholes pricing model, which requires the use of estimates, including the risk-free interest rate, expected volatility, expected dividends, and expected term. • Market-Based Restricted Stock Awards and Market-Based Stock Options: The fair value of the market-based awards is determined using a Monte-Carlo simulation model. The Monte Carlo valuation also estimates the number of market-based awards that would be awarded which is reflected in the fair value on the grant date. For the years ended December 31, 2016 , 2015 , and 2014 the fair value of service-based stock options and performance-based stock options granted was calculated using the following assumptions in the Black-Scholes model: Years Ended December 31, 2016 2015 2014 Expected stock price volatility 46%-47% 49%-63% 63%-65% Expected term of options 5.5-6.5 years 6 years 6 years Expected dividend yield — — — Risk-free interest rate 1.24%-1.50% 1.19%-1.75% 1.46%-1.80% For the years ended December 31, 2016 , 2015 , and 2014 the fair value of market-based stock options and market-based restricted stock awards granted was calculated using the following assumptions in the Monte-Carlo simulation model: Years Ended December 31, 2016 2015 2014 Expected stock price volatility 45%-49% none none Expected term of options 1.7 years-7 years none none Expected dividend yield — none none Risk-free interest rate .71%-1.53% none none Stock-Based Compensation Expense Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. For equity awards granted with market-based conditions, stock compensation is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. The following table presents stock-based compensation expense included in the related financial statement line items (in thousands): Years Ended December 31, 2016 2015 2014 Included in cost of revenue: Cost of subscription and service revenue $ (4 ) $ 44 $ 13 Cost of product revenue 52 57 95 Total included in cost of revenue 48 101 108 Included in operating expenses: Sales and marketing 998 1,327 1,975 Research & development 709 841 958 General and administrative 3,151 4,926 3,721 Total included in operating expenses 4,858 7,094 6,654 Total $ 4,906 $ 7,195 $ 6,762 Service-Based Stock Options The following table summarizes the Company's service-based stock option activity from January 1, 2016 to December 31, 2016 : Options Weighted Weighted Aggregate Options Outstanding, January 1, 2016 1,837,165 $ 10.58 7.70 $ 130,262 Options granted 464,194 7.50 Options exercised (12,971 ) 4.42 Options cancelled (494,458 ) 10.65 Options Outstanding, December 31, 2016 1,793,930 9.81 7.58 1,154,498 Vested and expected to vest at December 31, 2016 1,687,078 9.93 7.50 1,032,107 Exercisable at December 31, 2016 1,125,493 $ 10.34 7.02 $ 576,390 As of December 31, 2016 and 2015 , there was approximately $3.1 million and $5.2 million of unrecognized compensation expense related to non-vested service-based stock options that is expected to be recognized over a weighted average period of 2.36 and 1.84 years, respectively. Service-based stock options are granted at the discretion of the Board of Directors or the Compensation Committee (or its authorized member(s)) and expire 10 years from the date of the grant. Service-based stock options generally vest over a four -year period based upon required service conditions and do not have performance or market conditions. The weighted average remaining contractual term and the aggregate intrinsic value for service-based stock options outstanding at December 31, 2016 was 7.58 years and $1.2 million , respectively. The weighted average remaining contractual term and the aggregate intrinsic value for service-based stock options exercisable at December 31, 2015 was 7.70 years and $0.1 million , respectively. As of December 31, 2016 , service-based stock options that were vested and exercisable totaled 1,125,493 shares of common stock with a weighted average exercise price per share of $10.34 . The weighted average grant-date fair value per share of service-based stock options granted was $3.41 and $4.77 for the years ended December 31, 2016 and 2015 , respectively. The aggregate intrinsic value disclosed above represents the total intrinsic value (the difference between the fair market value of the Company's common stock as of December 31, 2016 , and the exercise price, multiplied by the number of in-the-money service-based stock options) that would have been received by the option holders had all option holders exercised their options on December 31, 2016 . This amount is subject to change based on changes to the fair market value of the Company's common stock. Service-Based Restricted Stock Awards The following table summarizes the Company's service-based restricted stock activity for the years ended December 31, 2016 and 2015 , respectively: Nonvested Outstanding Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested Awards, January 1, 2015 482,645 $ 12.59 $ 6,074,136 Awards granted 481,992 9.05 Awards vested (452,341 ) 10.56 Awards canceled (170,717 ) 11.88 Nonvested Awards, December 31, 2015 341,579 10.61 3,624,153 Awards granted 300,650 7.59 Awards vested (196,001 ) 9.54 Awards canceled (71,848 ) 9.65 Nonvested Awards, December 31, 2016 374,380 8.94 3,348,080 During 2016 and 2015 , 300,650 and 481,992 shares of service-based restricted stock were granted, respectively. The aggregate grant date fair value of the service-based restricted stock awards in 2016 and 2015 was $2.3 million and $4.4 million , respectively, which will be recognized as expense on a straight-line basis over the requisite service period of the awards, which is also the vesting period. The Company's service-based restricted stock awards are accounted for as equity awards. The grant date fair value is based on the market price of the Company's common stock at the date of grant. The Company did not grant any restricted stock prior to April 2009. During 2016 , 71,848 shares of restricted stock were forfeited. As of December 31, 2016 , future compensation cost related to the nonvested portion of the service-based restricted stock awards not yet recognized in the statement of operations was $2.6 million and is expected to be recognized over a period of 2.06 years. Service-based restricted stock awards are considered outstanding at the time of grant as the stockholders are entitled to voting rights and to receive any dividends declared subject to the loss of the right to receive accumulated dividends if the award is forfeited prior to vesting. Unvested service-based restricted stock awards are not considered outstanding in the computation of basic earnings per share. Restricted Stock Units The following table summarizes the Company's restricted stock unit activity from January 1, 2016 to December 31, 2016 : Units Outstanding Weighted Aggregate Units Outstanding, January 1, 2016 187,942 $ 11.16 $ 1,257,332 Units granted 67,663 7.70 Units released (58,719 ) 11.51 Units cancelled (8,829 ) 8.50 Units Outstanding, December 31, 2016 188,057 9.93 1,675,588 Vested and expected to vest at December 31, 2016 115,263 7.70 1,026,990 Vested and deferred at December 31, 2016 82,157 $ 12.44 $ 732,019 During 2016 and 2015 , 67,663 and 63,436 restricted stock units were granted, respectively, to members of the Board of Directors as part of their compensation package. Restricted stock units convert to common stock following the separation of service with the Company. The aggregate grant date fair value of the awards in 2016 and 2015 was $0.5 million and $0.5 million , respectively. Beginning June 2015, all restricted stock unit awards vest quarterly over a one year period from the date of grant, with expense recognized straight-line over the vesting period. Prior to June 2015, all restricted stock unit awards were immediately vested with expense recognized in full on the grant date. The Company's restricted stock units are accounted for as equity awards. The grant date fair value is based on the market price of the Company's common stock at the date of grant. The Company did not grant any restricted stock units prior to April 2009. Performance and Market Conditioned Restricted Stock Awards and Stock Options On April 4, 2016, the Company named Mr. John Hass as President, CEO and Chairman of the Board. In conjunction with his appointment, the Compensation Committee approved a stock-based compensation package for Mr. Hass aimed to provide significant reward potential for achieving outstanding Company operating performance results and building shareholder value. The package was comprised of performance-based restricted stock awards (PRSAs), performance-based stock options (PSOs), market-based restricted stock awards (MRSAs), and market-based stock options (MSOs). Awards also vest if a majority change in control of the Company occurs during the performance or vesting period. Performance Conditioned: In addition to the performance condition, the PRSAs and PSOs also have a service condition. Vesting of PRSAs and PSOs are dependent upon whether the Company achieves certain operating performance targets which are based on the Company's defined measures of revenue, bookings, adjusted free cash flow, and adjusted EBITDA, measured against the full-year 2016 operating results. Following the end of the performance measurement period on December 31, 2016, PRSAs and PSOs issued based on the operating performance metrics will vest 50% , 25% , and 25% on April 4, 2017, 2018 and 2019, respectively. The Company records compensation expense ratably for each vesting tranche of the PRSAs and PSOs based on the probability that operating performance conditions will be met and to what extent. Changes in the probability estimates will be accounted for in the period of change using a cumulative catch-up adjustment to retroactively apply the new probability estimates. In any period in which the Company determines that achievement of the performance metrics is not probable, the Company ceases recording compensation expense and all previously recognized compensation expense for the award is reversed. The PRSAs were granted at "target" (at 100% of target). Based upon actual attainment of the operating performance results through December 31, 2016 relative to target, actual issuance of RSAs can fall anywhere between a maximum of 200% and 0% of the target number of PRSAs originally granted. As of December 31, 2016 , future compensation cost related to the nonvested portion of the PRSAs not yet recognized in the consolidated statement of operations was $0.2 million and is expected to be recognized over a weighted average period of 1.69 years. The following table summarizes the Company's PRSA activity from January 1, 2016 to December 31, 2016 : Nonvested Weighted Aggregate Nonvested PRSAs, January 1, 2016 — $ — $ — PRSAs granted 70,423 7.10 500,003 PRSAs vested — — PRSAs canceled — — Performance adjustments (8,360 ) Nonvested PRSAs, December 31, 2016 62,063 $ 7.10 $ 440,647 The PSOs were granted at "maximum" (at 200% of target). Based on actual attainment of the operating performance results through December 31, 2016 relative to maximum, actual issuance of stock options can fall anywhere between 100% and 0% of the maximum number of PSOs originally granted. As of December 31, 2016 , future compensation cost related to the nonvested portion of the PSOs not yet recognized in the consolidated statement of operations was $0.2 million and is expected to be recognized over a weighted average period of 1.69 years. The following table summarizes the Company's PSO activity from January 1, 2016 to December 31, 2016 : PSOs Outstanding Weighted Aggregate PSOs Outstanding, January 1, 2016 — $ — $ — PSOs granted 314,465 3.24 1,000,242 PSOs released — — PSOs cancelled — Performance adjustments (175,898 ) PSOs Outstanding, December 31, 2016 138,567 3.24 440,750 Vested and expected to vest at December 31, 2016 — — — Exercisable at December 31, 2016 — $ — $ — Market Conditioned: In addition to the market condition, the MRSAs and MSOs also have a service condition. Vesting of these MRSAs and MSOs are dependent upon whether the Company achieves predetermined growth rates of total shareholder return for the two -year measurement period beginning on January 4, 2016 and ending on December 29, 2017. Following the end of the market performance measurement period on December 29, 2017, MRSAs and MSOs issued based on total shareholder return will vest annually on a pro-rata basis over three years beginning April 4, 2018. The Company records compensation expense ratably for each vesting tranche of the MRSAs and MSOs based on the Monte Carlo fair value estimated on the grant date, regardless of meeting or not meeting the market conditions. The MRSAs were granted at "target" (at 100% of target). Based upon actual attainment of total shareholder return growth rate results through December 29, 2017 relative to target, actual issuance of RSAs can fall anywhere between a maximum of 200% and 0% of the target number of MRSAs originally granted. As of December 31, 2016 , future compensation cost related to the nonvested portion of the MRSAs not yet recognized in the consolidated statement of operations was $0.3 million and is expected to be recognized over a weighted average period of 2.56 years. The following table summarizes the Company's MRSA activity from January 1, 2016 to December 31, 2016 : Nonvested Weighted Aggregate Nonvested MRSAs, January 1, 2016 — $ — $ — MRSAs granted 70,423 6.17 434,510 MRSAs vested — — MRSAs canceled — — Nonvested MRSAs, December 31, 2016 70,423 $ 6.17 $ 434,510 The MSOs were granted at "maximum" (at 200% of target). Based on actual attainment of total shareholder return growth rate results through December 29, 2017 relative to maximum, actual issuance of stock options can fall anywhere between 100% and 0% of the maximum number of MSOs originally granted. As of December 31, 2016 , future compensation cost related to the nonvested portion of the MSOs not yet recognized in the consolidated statement of operations was $0.2 million and is expected to be recognized over a weighted average period of 2.56 years. The following table summarizes the Company's MSO activity from January 1, 2016 to December 31, 2016 : MSOs Outstanding Weighted Aggregate MSOs Outstanding, January 1, 2016 — $ — $ — MSOs granted 314,465 0.94 294,550 MSOs released — — MSOs cancelled — — MSO Outstanding, December 31, 2016 314,465 — — Vested and expected to vest at December 31, 2016 — — — Exercisable at December 31, 2016 — $ — $ — |
STOCKHOLDERS' (DEFICIT) EQUITY
STOCKHOLDERS' (DEFICIT) EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' (DEFICIT) EQUITY | STOCKHOLDERS' (DEFICIT) EQUITY At December 31, 2016 , the Company's Board of Directors had the authority to issue 200,000,000 shares of stock, of which 190,000,000 were designated as Common Stock, with a par value of $0.00005 per share, and 10,000,000 were designated as Preferred Stock, with a par value of $0.001 per share. At December 31, 2016 and 2015 , the Company had shares of Common Stock issued of 23,450,864 and 23,149,634 , respectively, and shares of Common Stock outstanding of 22,450,864 and 22,149,634 , respectively. On August 22, 2013 , the Company’s Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $25.0 million of its outstanding common stock from time to time in the open market or in privately negotiated transactions depending on market conditions, other corporate considerations, debt facility covenants and other contractual limitations, and applicable legal requirements. For the year ended December 31, 2013 , the Company paid $11.4 million to repurchase 1,000,000 shares at a weighted average price of $11.44 per share as part of this program. No shares were repurchased during the years ended December 31, 2014 , 2015 , or 2016 . Shares repurchased under the program were recorded as treasury stock on the Company’s consolidated balance sheet. The shares repurchased under this program during the year ended December 31, 2013 were not the result of an accelerated share repurchase agreement. Management has not made a decision on whether shares purchased under this program will be retired or reissued. Holders of the Company's common stock are entitled to receive dividends when and if declared by the Board of Directors out of assets or funds legally available for that purpose. Future dividends are dependent on the Company's financial condition and results of operations, the capital requirements of its business, covenants associated with financing arrangements, other contractual restrictions, legal requirements, regulatory constraints, industry practice and other factors deemed relevant by its Board of Directors. The Company has not paid any cash dividends on its common stock and does not intend to do so in the foreseeable future. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLAN The Company maintains a defined contribution 401(k) Plan (the "Plan"). The Company matches employee contributions to the Plan up to 4% of their compensation. The Company recorded Company contribution matching expenses for the Plan totaling $2.0 million , $2.0 million , and $2.2 million for the years ended December 31, 2016 , 2015 and 2014 , respectively. |
RESTRUCTURING AND OTHER EMPLOYE
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE | RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE 2016 Restructuring Actions In the first quarter of 2016, the Company announced and initiated actions to withdraw the direct sales presence in almost all of its non-U.S. and non-northern European geographies related to the distribution of Enterprise & Education Language offerings. The Company has also initiated processes to close its software development operations in France and China. Restructuring charges included in the Company’s consolidated statement of operations related to the 2016 Restructuring Plan include the following: • Employee severance and related benefits costs incurred in connection with headcount reductions involving employees primarily in France, China, Brazil, Canada, Spain, Mexico, U.S. and the U.K.; • Contract termination costs associated with operating lease terminations from office closures; and • Other related costs. The following table summarizes activity with respect to the restructuring charges for the 2016 Restructuring Plan during the year ended December 31, 2016 (in thousands): Balance at January 1, 2016 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2016 Severance costs $ — $ 4,367 $ (3,867 ) $ — $ 500 Contract termination costs — 165 (74 ) (69 ) 22 Other costs — 590 (399 ) (121 ) 70 Total $ — $ 5,122 $ (4,340 ) $ (190 ) $ 592 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash lease closure expense and foreign currency translation adjustments. 2015 Restructuring Actions In the first quarter of 2015, the Company announced and initiated actions to reduce headcount and other costs in order to support its strategic shift in business focus. During 2016, the final payments were made against the 2015 Restructuring Plan accruals and the Company does not expect to incur any additional restructuring costs in connection with the 2015 Plan. Restructuring charges included in the Company’s consolidated statement of operations related to the 2015 Restructuring Plan include the following: • Employee severance and related benefits costs incurred in connection with headcount reductions involving employees primarily in the U.S. and the U.K.; • Contract termination costs; and • Other related costs. The following table summarizes activity with respect to the restructuring charges for the 2015 Restructuring Plan during the years ended December 31, 2015 and December 31, 2016 (in thousands): Balance at January 1, 2015 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2015 Severance costs $ — $ 7,240 $ (5,940 ) $ (1,048 ) $ 252 Contract termination costs — 1,134 (1,134 ) — — Other costs — 417 (417 ) — — Total $ — $ 8,791 $ (7,491 ) $ (1,048 ) $ 252 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash stock compensation expense and foreign currency translation adjustments. Balance at January 1, 2016 Cost Incurred Cash Payments Balance at December 31, 2016 Severance costs $ 252 $ 71 $ (323 ) $ — Contract termination costs — — — — Other costs — — — — Total $ 252 $ 71 $ (323 ) $ — Restructuring Cost The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans for the years ended December 31, 2016 and 2015 , and total costs incurred through December 31, 2016 (in thousands): Years ended Incurred through 2016 2015 December 31, 2016 Severance costs $ 4,438 $ 7,240 $ 11,678 Contract termination costs 165 1,134 1,299 Other costs 590 417 1,007 Total $ 5,193 $ 8,791 $ 13,984 As of December 31, 2016 , the entire restructuring liability of $0.6 million was classified as a current liability within accrued compensation and other current liabilities on the consolidated balance sheets. The following table presents restructuring costs associated with the 2016 and 2015 Restructuring Plans included in the related line items of our Statement of Operations (in thousands): Years ended 2016 2015 Cost of revenue $ 573 $ 113 Sales and marketing 2,324 4,492 Research and development 913 602 General and administrative 1,383 3,584 Total $ 5,193 $ 8,791 These restructuring expenses are not allocated to any reportable segment under our definition of segment contribution as defined in Note 17 "Segment Information." At each reporting date, the Company will evaluate its accrued restructuring costs to ensure the liabilities reported are still appropriate. Any changes to the estimated costs of executing approved restructuring plans will be reflected in the Company’s consolidated statements of operations. 2014 Employee Severance Actions On January 9, 2014, the Company completed its acquisition of Tell Me More, a company organized under the laws of France. At acquisition, the plan was to fully integrate Tell Me More into the operations of the Company. Following the acquisition, the Company undertook financial performance review of the French entity and of the Company as a whole. As a result, the Company identified the need to reduce expenses. In the second quarter of 2014, the Company began to create a plan to address the economic issues of the business through the reduction of expense. The result of this economic planning was to reduce headcount within certain business units of the French entity. Under the requirements of French Labour Law, there is an expectation on the part of both the employer and employee that if an employee is terminated, the employer is required to pay a minimum amount of severance. Accordingly, the Company concluded that the termination benefits for certain employees as the result of the reduction in force in France were payable based upon an ongoing benefit arrangement. A severance liability became probable and estimable when the Company received approval from the French Labour Administration and when the specific employees impacted were determined. These criteria were met in the third quarter of 2014 and the Company recorded an accrual and related expense of $1.0 million . Severance payments totaling $0.5 million related to this reduction in force were paid during the fourth quarter of 2014 and $0.4 million was paid in 2015. During 2014, the Company initiated other actions across its business to reduce headcount in order to align resources to support business needs. The Company recorded $3.2 million in severance costs associated with these actions. As a result, $2.3 million was paid during 2014, $0.8 million was paid during 2015, and the remaining $0.1 million liability was paid in 2016. As of December 31, 2016, the Company does not expect any further activity associated with the 2014 Employee Severance Actions and were considered closed and remaining accruals were reversed. |
LEASE ABANDONMENT AND TERMINATI
LEASE ABANDONMENT AND TERMINATION | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
LEASE ABANDONMENT AND TERMINATION | LEASE ABANDONMENT AND TERMINATION As part of the Company’s effort to reduce general and administrative expenses through a planned space consolidation at its Arlington, Virginia headquarters location, the Company incurred a lease abandonment charge of $3.2 million for the year ended December 31, 2014. Prior to January 31, 2014, the Company occupied the 6th and 7th floors at its Arlington, Virginia headquarters. The Company estimated the liability under the operating lease agreements and accrued lease abandonment costs in accordance with ASC 420, Exit or Disposal Cost Obligations ("ASC 420"), as the Company has no future economic benefit from the abandoned space and the lease does not terminate until December 31, 2018. All leased space related to the 6th floor was abandoned and ceased to be used by the Company on January 31, 2014. In a further effort to reduce general and administrative expenses through a planned space consolidation, effective October 10, 2016, the Company relocated its headquarters location to 1621 North Kent Street, Suite 1200, Arlington, Virginia 22209. The previously leased space at the 7th floor of 1919 North Lynn Street was abandoned and ceased to be used by the Company on October 10, 2016 and resulted in $1.6 million in lease abandonment expense in the fourth quarter of 2016. A summary of the Company’s lease abandonment activity for the years ended December 31, 2016 and 2015 is as follows (in thousands): As of December 31, 2016 2015 Accrued lease abandonment costs, beginning of period $ 1,282 $ 1,679 Costs incurred and charged to expense 1,644 55 Principal reductions (803 ) (452 ) Accrued lease abandonment costs, end of period $ 2,123 $ 1,282 Accrued lease abandonment costs liability: Short-term $ 1,047 $ 455 Long-term 1,076 827 Total $ 2,123 $ 1,282 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2016 and 2015 (in thousands): As of December 31, 2016 2015 Deferred tax assets: Inventory $ 735 $ 564 Net operating and capital loss carryforwards 61,174 48,334 Deferred revenue 10,862 13,908 Accrued liabilities 6,975 9,780 Stock-based compensation 4,440 4,656 Amortization and depreciation 1,056 31 Bad debt reserve 389 398 Foreign and other tax credits 1,881 1,517 Gross deferred tax assets 87,512 79,188 Valuation allowance (78,363 ) (70,464 ) Net deferred tax assets 9,149 8,724 Deferred tax liabilities: Goodwill and indefinite lived intangibles (6,098 ) (4,782 ) Deferred sales commissions (7,060 ) (7,337 ) Prepaid expenses (656 ) (625 ) Foreign currency translation (1,508 ) (973 ) Other — (5 ) Gross deferred tax liabilities (15,322 ) (13,722 ) Net deferred tax liabilities $ (6,173 ) $ (4,998 ) For the year ended December 31, 2016 , the Company recorded income tax expense of $2.5 million . The tax expense was primarily related to current year profits of operations in Germany and the U.K. Additionally, the tax expense relates to the tax impact of the amortization of U.S. indefinite-lived intangible assets and the inability to recognize tax benefits associated with current year losses of operations in all other foreign jurisdictions and in the U.S. due to the valuation allowance recorded against the deferred tax asset balances of these entities. For the year ending December 31, 2015 , the Company recorded income tax expense of $1.2 million primarily related to current year operations in Germany and the UK and the tax impact of the amortization of indefinite lived intangibles, and the inability to recognize tax benefits associated with current year losses of operations in all other foreign jurisdictions and in the U.S. due to the valuation allowance recorded against the deferred tax asset balances of these entities. These tax expenses were partially offset by tax benefits related to current year losses (excluding the Consumer Fit Brains goodwill impairment) in Canada. The goodwill that was impaired is no t deductible for tax. Additionally, tax benefits were recorded related to the reversal of accrued withholding taxes as a result of an intercompany transaction. During the third quarter of 2012, the Company established a full valuation allowance to reduce the deferred tax assets of its operations in Brazil, Japan, and the U.S., resulting in a non-cash charge of $0.4 million , $2.1 million , and $23.1 million , respectively. Additionally, no tax benefits were provided on 2012 losses incurred in foreign jurisdictions where the Company has determined a valuation allowance is required. As of December 31, 2016 , a full valuation allowance was provided for domestic and certain foreign deferred tax assets in those jurisdictions where the Company has determined the deferred tax assets will more likely than not be realized. If future events change the outcome of the Company's projected return to profitability, a valuation allowance may not be required to reduce the deferred tax assets. The Company will continue to assess the need for a valuation allowance. As of December 31, 2016 , the Company had federal, state and foreign tax NOL carryforward amounts and expiration periods as follows (in thousands): Year of Expiration U.S. Federal State Brazil France Japan Other Foreign Total 2017-2021 $ — $ 679 $ — $ — $ — $ — $ 679 2022-2026 — 2,308 — — 11,824 — 14,132 2027-2031 — 11,526 — — — 377 11,903 2032-2036 86,621 76,568 — — — 3 163,192 2037-2041 39,304 33,777 — — — 909 73,990 Indefinite — — 4,309 8,193 — 665 13,167 Totals $ 125,925 $ 124,858 $ 4,309 $ 8,193 $ 11,824 $ 1,954 $ 277,063 As of December 31, 2016 , the Company had federal and state capital loss carryforward amounts and expiration periods as follows (in thousands): Year of Tax Capital Loss Expiration U.S. Federal State 2017-2021 $ 6,837 $ 4,947 2022-2026 — — 2027-2031 — 128 2032-2036 — — 2037-2041 — — Indefinite — — Totals $ 6,837 $ 5,075 As of December 31, 2016 , the Company had federal tax credit carryforward amounts and expiration periods as follows (in thousands): Year of Tax Credit Expiration U.S. Federal 2017-2021 $ — 2022-2026 1,517 2027-2031 121 2032-2036 218 2037-2041 — Indefinite 25 Totals $ 1,881 The components of loss before income taxes and the provision for taxes on income consist of the following (in thousands): Years Ended December 31, 2016 2015 2014 United States $ (24,963 ) $ (41,458 ) $ (60,434 ) Foreign (84 ) (4,179 ) (19,761 ) Loss before income taxes $ (25,047 ) $ (45,637 ) $ (80,195 ) The provision for taxes on income consists of the following (in thousands): Federal $ — $ (157 ) $ 29 State 78 96 23 Foreign 1,250 444 1,258 Total current $ 1,328 $ 383 $ 1,310 Deferred: Federal $ 1,147 $ 1,148 $ (5,425 ) State 169 169 (797 ) Foreign (141 ) (541 ) (1,577 ) Total deferred 1,175 776 (7,799 ) Provision (benefit) for income taxes $ 2,503 $ 1,159 $ (6,489 ) Reconciliation of income tax provision (benefit) computed at the U.S. federal statutory rate to income tax expense (benefit) is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Income tax benefit at statutory federal rate $ (8,766 ) $ (15,973 ) $ (28,068 ) State income tax expense, net of federal income tax effect 219 231 (782 ) Acquired intangibles — — — Nondeductible goodwill impairment 604 1,961 — Other nondeductible expenses 384 88 482 Tax rate differential on foreign operations (474 ) (1,019 ) 276 Increase in valuation allowance 10,404 15,713 21,772 Tax audit settlements — (96 ) — Change in prior year estimates — 225 (69 ) Other tax credits 129 29 (102 ) Other 3 — 2 Income tax expense (benefit) $ 2,503 $ 1,159 $ (6,489 ) The Company accounts for uncertainty in income taxes under ASC topic 740-10-25, Income Taxes: Overall: Recognition, ("ASC 740-10-25"). ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense (benefit). As of December 31, 2016 and 2015 , the Company had no unrecognized tax benefits or interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): Years Ended December 31, 2016 2015 Balance at January 1, $ — $ 446 Increases for tax positions taken during prior years — — Settlements with tax authorities — (446 ) Reductions for tax positions taken during prior years — — Lapse of statute of limitations — — Balance at December 31, $ — $ — The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company's tax years 2010 and forward are subject to examination by the tax authorities. The Company was under audit by the Internal Revenue Service for tax years 2009 to 2012. During 2015, the U.S. audit for tax years 2009 through 2012 concluded and resulted in the Company recording a $0.1 million tax benefit. The previously recorded $0.4 million of unrecognized tax benefits were settled as a result of the concluded IRS audit. The Company does not expect that the amounts of unrecognized tax benefits will change significantly within the next twelve months. The Company had an accumulated consolidated deficit related to its foreign subsidiaries of $21.6 million at December 31, 2016 and aggregate 2016 losses before income tax related to its foreign subsidiaries of approximately $0.1 million . The Company has certain foreign subsidiaries with aggregate undistributed earnings of $12.0 million at December 31, 2016 . The foreign subsidiaries with aggregate undistributed earnings are considered indefinitely reinvested as of December 31, 2016 . As a result of the multitude of scenarios in which the earnings could be repatriated, if desired, and the complexity of associated calculations, it is not practicable to estimate the amount of additional tax that might be payable on the undistributed foreign earnings. The Company made income tax payments of $0.8 million , $1.4 million , and $1.7 million , in 2016 , 2015 and 2014 , respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases copiers, parking spaces, buildings, a warehouse, and office space under operating lease and site license arrangements, some of which contain renewal options. The following table summarizes future minimum operating lease payments as of December 31, 2016 and the years thereafter (in thousands): As of Periods Ending December 31, 2017 $ 4,552 2018 4,363 2019 1,741 2020 1,004 2021 590 Thereafter — Total future minimum operating lease payments $ 12,250 Total expenses under operating leases were $4.0 million , $5.1 million and $5.6 million during the years ended December 31, 2016 , 2015 and 2014 , respectively. The Company accounts for its leases under the provisions of ASC topic 840, Accounting for Leases ("ASC 840"), which require that leases be evaluated and classified as operating leases or capital leases for financial reporting purposes. Certain operating leases contain rent escalation clauses, which are recorded on a straight-line basis over the initial term of the lease with the difference between the rent paid and the straight-line rent recorded as either a deferred rent asset or liability depending on the calculation. Lease incentives received from landlords are recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense. Royalty Agreements The Company has entered into agreements to license software from vendors for incorporation in the Company's offerings. Pursuant to some of these agreements, the Company is required to pay minimum royalties or license fees over the term of the agreement regardless of actual license sales. In addition, such agreements typically specify that, in the event the software is incorporated into specified Company products, royalties will be due at a contractual rate based on actual sales volumes. These agreements are subject to various royalty rates typically calculated based on the level of sales for those products. The Company expenses these amounts to cost of sales or research and development expense, as appropriate. Royalty expense was $0.3 million , $0.2 million , and $31,000 for the years ended December 31 2016 , 2015 and 2014 , respectively. Employment Agreements The Company has agreements with certain of its executives and key employees which provide guaranteed severance payments upon termination of their employment without cause. Litigation From time to time, the Company has been subject to various claims and legal actions in the ordinary course of its business. The Company is not currently involved in any legal proceeding the ultimate outcome of which, in its judgment based on information currently available, would have a material impact on its business, financial condition or results of operations. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION In March 2016, the Company announced its strategy to position the organization for success. The Company has prioritized the growth of literacy sales and is taking actions to align resources to drive this growth. As a result of this shift, the Company reevaluated its segment structure. Prior to the strategy shift, the Company was managed in two operating segments - "Enterprise & Education" and "Consumer". Following the shift, the Company is managed in three operating segments - "Enterprise & Education Language", "Literacy", and "Consumer". The current Literacy segment was previously a component of the "Enterprise & Education" segment and is comprised solely of the Lexia business. The Literacy segment focuses on delivering subscription-based English literacy-learning and assessment solutions to grades K through 12. The Company's current operating segments also represent the Company's reportable segments. The Company will continue to evaluate its management reporting and will update its operating and reportable segments as appropriate. The Company assesses profitability of each segment in terms of segment contribution. Segment contribution is the measure of profitability used by our Chief Operating Decision Maker ("CODM"). The CODM assesses profitability and performance of the Company on its current operating segments. Segment contribution includes segment revenue and expenses incurred directly by the segment, including material costs, service costs, customer care and coaching costs, sales and marketing expenses, and bad debt expense. Segment contribution excludes depreciation, amortization, stock compensation, research and development, restructuring related expenses, and other non-recurring expenses. The Company does not allocate expenses beneficial to all segments, which include certain general and administrative expenses such as legal fees, payroll processing fees, and accounting related expenses. These expenses are included in the unallocated expenses section in the following table. Revenue from transactions between the Company's operating segments is not material. Prior periods have been reclassified to reflect our current segment presentation and definition of segment contribution. With the exception of goodwill, the Company does not identify or allocate its assets by operating segment. Consequently, the Company does not present assets or liabilities by operating segment. Operating results by segment for the years ended December 31, 2016 , 2015 , and 2014 were as follows (in thousands, except percentages): Years Ended December 31, 2016 2015 2014 Revenue: Enterprise & Education Language $ 72,083 $ 76,129 $ 74,788 Literacy 34,123 21,928 9,912 Consumer 87,883 119,613 177,153 Total revenue $ 194,089 $ 217,670 $ 261,853 Segment contribution: Enterprise & Education Language $ 28,304 $ 21,321 $ 16,945 Literacy 5,634 729 (2,984 ) Consumer 21,120 30,047 28,012 Total segment contribution $ 55,058 $ 52,097 $ 41,973 Unallocated expenses, net: Unallocated cost of sales 5,624 3,023 2,775 Unallocated sales and marketing 6,574 9,303 7,632 Unallocated research and development 26,273 29,939 33,176 Unallocated general and administrative 37,933 46,836 53,095 Unallocated impairment 3,930 6,754 20,333 Unallocated lease abandonment and termination 1,644 55 3,812 Unallocated non-operating (income)/expense (1,873 ) 1,824 1,345 Total unallocated expenses, net $ 80,105 $ 97,734 $ 122,168 Loss before income taxes $ (25,047 ) $ (45,637 ) $ (80,195 ) Segment contribution margin: Enterprise & Education Language 39.3 % 28.0 % 22.7 % Literacy 16.5 % 3.3 % (30.1 )% Consumer 24.0 % 25.1 % 15.8 % Geographic Information Revenue by major geographic region is based primarily upon the geographic location of the customers who purchase the Company's products. The geographic locations of distributors and resellers who purchase and resell the Company's products may be different from the geographic locations of end customers. The information below summarizes revenue from customers by geographic area as of December 31, 2016 , 2015 and 2014 , respectively (in thousands): Years Ended December 31, 2016 2015 2014 United States $ 162,815 $ 177,966 $ 212,070 International 31,274 39,704 49,783 Total revenue $ 194,089 $ 217,670 $ 261,853 The information below summarizes long-lived assets by geographic area classified as held and used for the years ended December 31, 2016 and 2015 , respectively (in thousands): As of December 31, 2016 2015 United States $ 21,652 $ 18,704 International 3,143 3,828 Total property and equipment, net $ 24,795 $ 22,532 Revenue by Product and Service The Company earns revenue from the sale of language-learning, literacy and brain fitness products and services. The information below summarizes revenue by type for the years ended December 31, 2016 , 2015 and 2014 , respectively (in thousands): As of December 31, 2016 2015 2014 Language learning $ 155,532 $ 191,568 $ 249,340 Literacy 34,123 21,928 9,912 Brain Fitness 4,434 4,174 2,601 Total revenue $ 194,089 $ 217,670 $ 261,853 |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES As of December 31, 2016 and 2015 , the Company had outstanding receivables from employees in the amount of $22,000 and $18,000 , respectively. |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
VALUATION AND QUALIFYING ACCOUNTS | VALUATION AND QUALIFYING ACCOUNTS The following table includes the Company's valuation and qualifying accounts for the respective periods (in thousands): Years Ended December 31, 2016 2015 2014 Allowance for doubtful accounts: Beginning balance $ 1,196 $ 1,434 $ 1,000 Charged to costs and expenses 709 1,657 2,405 Deductions—accounts written off (833 ) (1,895 ) (1,971 ) Ending balance $ 1,072 $ 1,196 $ 1,434 Promotional rebate and coop advertising reserves: Beginning balance $ 16,910 $ 23,437 $ 13,025 Charged to costs and expenses 18,337 40,563 39,249 Deductions - reserves utilized (29,279 ) (47,090 ) (28,837 ) Ending balance $ 5,968 $ 16,910 $ 23,437 Sales return reserve: Beginning balance $ 3,728 $ 3,570 $ 4,834 Charged against revenue 5,034 11,474 12,011 Deductions—reserves utilized (7,424 ) (11,316 ) (13,275 ) Ending balance $ 1,338 $ 3,728 3,570 Deferred income tax asset valuation allowance: Beginning balance $ 70,464 53,809 33,866 Charged to costs and expenses 7,899 16,655 19,943 Deductions — — — Ending balance $ 78,363 $ 70,464 $ 53,809 |
SUPPLEMENTAL QUARTERLY FINANCIA
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) | SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) Summarized quarterly supplemental consolidated financial information for 2016 and 2015 are as follows (in thousands, except per share amounts): Three Months Ended March 31, June 30, September 30, December 31, 2016 Revenue $ 48,002 $ 45,716 $ 48,693 $ 51,678 Gross profit $ 39,954 $ 37,752 $ 40,322 $ 41,740 Net loss $ (7,507 ) $ (8,978 ) $ (5,452 ) $ (5,613 ) Basic loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in basic per share computation 21,867 21,948 21,993 22,065 Diluted loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in diluted per share computation 21,867 21,948 21,993 22,065 2015 Revenue $ 58,442 $ 51,411 $ 49,802 $ 58,015 Gross profit $ 47,140 $ 42,391 $ 41,136 $ 48,476 Net loss $ (19,884 ) $ (8,175 ) $ (7,301 ) $ (11,436 ) Basic loss per share $ (0.95 ) $ (0.38 ) $ (0.34 ) $ (0.52 ) Shares used in basic per share computation 21,018 21,689 21,771 21,801 Diluted loss per share $ (0.95 ) $ (0.38 ) $ (0.34 ) $ (0.52 ) Shares used in diluted per share computation 21,018 21,689 21,771 21,801 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Extension of Credit Facility On March 10, 2017, the Company entered into the sixth amendment to its credit facility, which primarily extended the term to April 1, 2020. Definitive Agreement with SOURCENEXT On March 13, 2017, the Company entered into a series of agreements (the “Agreement”) with SOURCENEXT Corporation, (“SOURCENEXT”), a leading software distributor and developer in Japan. Under the Agreement, the Company will provide a perpetual, exclusive license of certain brands and trademarks, including the primary Rosetta Stone brand, and product code for exclusive development and sale of language and education-related products in Japan. In conjunction with the Agreement, the Company will receive approximately $9 million and if certain additional brand licensing and technology transfers are successfully completed, SOURCENEXT will pay the Company an additional $4 million , net of adjustments. In addition, the Company is guaranteed to receive minimum payments totaling an additional $6 million over the next ten years. Finally, as part of the Agreement, the Company will have the first right to license and sell any products developed by SOURCENEXT under the Rosetta Stone trademark in territories outside of Japan. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Rosetta Stone Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The equity method is used to account for investments in entities if the investment provides the Company with the ability to exercise significant influence over operating and financial policies of the investee. The Company determines its level of influence over an equity method investment by considering key factors such as ownership interest, representation on the investee's governance body, participation in policy-making decisions, and technological dependencies. The Company's proportionate share of the net income or loss of any equity method investments is reported in "Other income and (expense)" and included in the net loss on the consolidated statements of operations. The carrying value of any equity method investment is reported in "Other assets" on the consolidated balance sheets. |
Use of Estimates | Use of Estimates The preparation of financial statements, in accordance with GAAP requires management to make certain estimates and assumptions. The amounts reported in the consolidated financial statements include significant estimates and assumptions that have been made, including, but not limited to, those related to revenue recognition, allowance for doubtful accounts, estimated sales returns and reserves, stock-based compensation, restructuring costs, fair value of intangibles and goodwill, disclosure of contingent assets and liabilities, disclosure of contingent litigation, allowance for valuation of deferred tax assets, and the Company's quarterly going concern assessment. The Company bases its estimates and assumptions on historical experience and on various other judgments that are believed to be reasonable under the circumstances. The Company continuously evaluates its estimates and assumptions. Actual results may differ from these estimates and assumptions. |
Revenue Recognition | Revenue Recognition The Company's primary sources of revenue are web-based software subscriptions, online services, perpetual product software, and bundles of perpetual product software and online services. The Company also generates revenue from the sale of audio practice products, mobile applications, and professional services. Revenue is recognized when all of the following criteria are met: there is persuasive evidence of an arrangement; the product has been delivered or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured. Revenue is recorded net of discounts and net of taxes. The Company identifies the units of accounting contained within sales arrangements in accordance with Accounting Standards Codification ("ASC") subtopic 605-25 Revenue Recognition - Multiple Element Arrangements (“ASC 605-25”). In doing so, the Company evaluates a variety of factors including whether the undelivered element(s) have value to the customer on a stand-alone basis or if the undelivered element(s) could be sold by another vendor on a stand-alone basis. For multiple element arrangements that contain perpetual software products and related online services, the Company allocates the total arrangement consideration to its deliverables based on the existence of vendor-specific objective evidence of fair value, or vendor-specific objective evidence ("VSOE"), in accordance with ASC subtopic 985-605-25 Software: Revenue Recognition-Multiple-Element Arrangements ("ASC 985-605-25"). The Company generates a portion of its Consumer revenue from the CD and digital download formats of the Rosetta Stone language-learning product which are typically multiple-element arrangements that contain two deliverables: perpetual software, delivered at the time of sale, and online service, which is considered an undelivered software-related element. The online service includes access to conversational coaching services. Because the Company only sells the perpetual language-learning software on a stand-alone basis in its homeschool version, the Company does not have a sufficient concentration of stand-alone sales to establish VSOE for the perpetual product. Where VSOE of the undelivered online services can be established, arrangement consideration is allocated using the residual method. The Company determines VSOE by reference to the range of comparable stand-alone renewal sales of the online service. The Company reviews these stand-alone sales on a quarterly basis. VSOE is established if at least 80% of the stand-alone sales are within a range of plus or minus 15% of a midpoint of the range of prices, consistent with generally accepted industry practice. Where VSOE of the undelivered online services cannot be established, revenue is deferred and recognized commensurate with the delivery of the online services. For non-software multiple element arrangements, the Company allocates revenue to all deliverables based on their relative selling prices. The Company's non-software multiple element arrangements primarily occur as sales to its Enterprise & Education Language and Literacy customers, and to a lesser extent its Consumer customers. These arrangements can include web-based subscription services, audio practice products and professional services or any combination thereof. The Company does not have a sufficient concentration of stand-alone sales of the various deliverables noted above to its customers, and therefore cannot establish VSOE for each deliverable. Third party evidence of fair value does not exist for the web-based subscription, audio practice products and professional services due to the lack of interchangeable language-learning products and services within the market. Accordingly, the Company determines the relative selling price of the web-based subscription, audio practice products and professional services deliverables included in its non-software multiple element arrangements using the best estimated selling price. The Company determines the best estimated selling price based on its internally published price list which includes suggested sales prices for each deliverable based on the type of client and volume purchased. This price list is derived from past experience and from the expectation of obtaining a reasonable margin based on what each deliverable costs the Company. In the U.S. and Canada, the Company offers consumers who purchase packaged software and audio practice products directly from the Company a 30 -day, unconditional, full money-back refund. The Company also permits some of our retailers and distributors to return unsold packaged products, subject to certain limitations. In accordance with ASC subtopic 985-605, Software: Revenue Recognition ("ASC 985-605"), the Company estimates and establishes revenue reserves for packaged product returns at the time of sale based on historical return rates, estimated channel inventory levels, the timing of new product introductions and other factors. The Company distributes its products and services both directly to the end customer and indirectly through resellers. Resellers earn commissions generally calculated as a fixed percentage of the gross sale to the end customer. The Company evaluates each of its reseller relationships in accordance with ASC subtopic 605-45, Revenue Recognition - Principal Agent Considerations (“ASC 605-45”) to determine whether the revenue recognized from indirect sales should be the gross amount of the contract with the end customer or reduced for the reseller commission. In making this determination the Company evaluates a variety of factors including whether it is the primary obligor to the end customer. Revenue for web-based subscriptions and online services is recognized ratably over the term of the subscription or service period, assuming all revenue recognition criteria have been met. The CD and digital download formats of Rosetta Stone language-learning products are bundled with an online service where customers are allowed to begin their online services at any point during a registration window, which is typically up to six months from the date of purchase from us or an authorized reseller. The online services that are not activated during this registration window are forfeited and revenue is recognized upon expiry. Revenue from non-refundable upfront fees that are not related to products already delivered or services already performed is deferred and recognized ratably over the term of the related arrangement because the period over which a customer is expected to benefit from the service that is included within our subscription arrangements does not extend beyond the contractual period. Accounts receivable and deferred revenue are recorded at the time a customer enters into a binding subscription agreement. Software products are sold to end user customers and resellers. In many cases, revenue from sales to resellers is not contingent upon resale of the software to the end user and is recorded in the same manner as all other product sales. Revenue from sales of packaged software products and audio practice products is recognized as the products are shipped and title passes and risks of loss have been transferred. For many product sales, these criteria are met at the time the product is shipped. For some sales to resellers and certain other sales, the Company defers revenue until the customer receives the product because the Company legally retains a portion of the risk of loss on these sales during transit. In other cases where packaged software products are sold to resellers on a consignment basis, revenue is recognized for these consignment transactions once the end user sale has occurred, assuming the remaining revenue recognition criteria have been met. In accordance with ASC subtopic 605-50, Revenue Recognition: Customer Payments and Incentives (“ASC 605-50”), cash sales incentives to resellers are accounted for as a reduction of revenue, unless a specific identified benefit is identified and the fair value is reasonably determinable. Price protection for changes in the manufacturer suggested retail value granted to resellers for the inventory that they have on hand at the date the price protection is offered is recorded as a reduction to revenue at the time of sale. The Company offers customers the ability to make payments for packaged software purchases in installments over a period of time, which typically ranges between three and five months. Given that these installment payment plans are for periods less than 12 months , a successful collection history has been established and these fees are fixed and determinable, revenue is recognized at the time of sale, assuming the remaining revenue recognition criteria have been met. In connection with packaged software product sales and web-based software subscriptions, technical support is provided to customers, including customers of resellers, via telephone support at no additional cost for up to six months from the time of purchase. As the fee for technical support is included in the initial licensing fee, the technical support and services are generally provided within one year, the estimated cost of providing such support is deemed insignificant and no unspecified upgrades/enhancements are offered, technical support revenue is recognized together with the software product and web-based software subscription revenue. Costs associated with technical support are accrued at the time of sale. Sales commissions from non-cancellable web-based software subscription contracts are deferred and amortized in proportion to the revenue recognized from the related contract. |
Divestitures | Divestitures The Company deconsolidates divested subsidiaries when there is a loss of control or when appropriate when evaluated under the variable interest entity model. The Company recognizes a gain or loss at divestiture equal to the difference between the fair value of any consideration received and the carrying amount of the former subsidiary’s assets and liabilities. Any resulting gain or loss is reported in "Other income and (expense)" on the consolidated statement of operations. See Note 5 "Divestitures" for disclosures on the Company's recent divestiture. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less and demand deposits with financial institutions. |
Restricted Cash | Restricted Cash Restricted cash is generally used to reimburse funds to employees under the Company's flexible benefit plan and deposits received on subleased properties. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consist of amounts due to the Company from its normal business activities. The Company provides an allowance for doubtful accounts to reflect the expected non-collection of accounts receivable based on past collection history and specific risks identified. |
Inventories | Inventories Inventories are stated at the lower of cost, determined on a first-in first-out basis, or market. The Company reviews inventory for excess quantities and obsolescence based on its best estimates of future demand, product lifecycle status and product development plans. The Company uses historical information along with these future estimates to establish a new cost basis for obsolete and potential obsolete inventory. See Note 3 "Inventory" for disclosures on the Company's inventory balances. |
Concentrations of Credit Risk | Concentrations of Credit Risk Accounts receivable and cash and cash equivalents subject the Company to its highest potential concentrations of credit risk. The Company reserves for credit losses on its trade accounts receivable. In addition, the Company maintains cash and investment balances in accounts at various banks and brokerage firms. The Company has not experienced any losses on cash and cash equivalent accounts to date. The Company sells its offerings to retailers, resellers, government agencies, and individual consumers and extends credit based on an evaluation of the customer's financial condition, and may require collateral, such as letters of credit, in certain circumstances. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. No customer accounted for more than 10% of the Company's revenue during the years ended December 31, 2016 , 2015 or 2014 . The four largest distributor and reseller receivable balances collectively represented 23% and 30% of accounts receivable as of December 31, 2016 and 2015 , respectively, with one customer that accounted for 13% and 17% of accounts receivable as of December 31, 2016 and 2015 , respectively. The Company maintains trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company values its assets and liabilities using the methods of fair value as described in ASC topic 820, Fair Value Measurements and Disclosures, ("ASC 820"). ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of the fair value hierarchy are described below: Level 1: Quoted prices for identical instruments in active markets. Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Significant inputs to the valuation model are unobservable. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and other accrued expenses approximate fair value due to relatively short periods to maturity. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life Expenses for repairs and maintenance that do not extend the life of equipment are charged to expense as incurred. Expenses for major renewals and betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. See Note 4 "Property Plant and Equipment" for the Company's additional disclosures. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets In accordance with ASC topic 360, Property, Plant and Equipment ("ASC 360"), the Company evaluates the recoverability of its long-lived assets. ASC 360 requires recognition of impairment of long-lived assets in the event that the net book value of such assets exceeds the future undiscounted net cash flows attributable to such assets. Impairment, if any, is recognized in the period of identification to the extent the carrying amount of an asset exceeds the fair value of such asset. |
Software Developed for Internal Use | Software Developed for Internal Use The Company capitalizes software development costs related to certain of its software platforms developed exclusively to provide its web-based subscription services and other general and administrative use software in accordance with ASC subtopic 350-40: Internal-Use Software . Development costs for internal-use software are expensed as incurred until the project reaches the application development stage. Internal-use software is defined to have the following characteristics: (a) the software is internally developed, or modified solely to meet the Company's internal needs, and (b) during the software's development or modification, no substantive plan exists or is being developed to market the software externally. Internally developed software is amortized over a three -year useful life. Years Ended December 31, 2016 2015 2014 Amounts capitalized as internal-use software $ 11,375 $ 7,132 $ 8,811 Amortization expense of internal-use software $ (6,369 ) $ (4,786 ) $ (3,379 ) Impairment expense of internal-use software $ (1,029 ) $ (1,142 ) $ (163 ) |
Intangible Assets | Intangible Assets Intangible assets consist of acquired technology, including developed and core technology, customer related assets, trade name and trademark, and other intangible assets. Those intangible assets with finite lives are recorded at cost and amortized on a straight line basis over their expected lives in accordance with ASC topic 350, Intangibles—Goodwill and Other ("ASC 350"). Annually, as of December 31, and more frequently if a triggering event occurs, the Company reviews its indefinite-lived intangible asset for impairment in accordance with ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative test. If necessary, the quantitative test is performed by comparing the fair value of indefinite lived intangible assets to the carrying value. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. The Rosetta Stone trade name is the Company's only indefinite-lived intangible asset. See Note 7 "Intangible Assets" for a discussion and results associated with the Company's recent intangible asset impairment tests. |
Goodwill | Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. The Company tests goodwill for impairment annually on June 30 of each year or more frequently if impairment indicators arise. Goodwill is tested for impairment at the reporting unit level using a fair value approach, in accordance with the provisions of ASC 350. This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, a "Step 0" analysis. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value the Company performs "Step 1" of the traditional two-step goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying value exceeds the fair value, the Company measures the amount of impairment loss, if any, by comparing the implied fair value of the reporting unit goodwill with its carrying amount, the "Step 2" analysis. See Note 6 "Goodwill" for a discussion and results associated with the Company's recent goodwill impairment tests. For income tax purposes, the goodwill balances with tax basis are amortized over a period of 15 years. |
Guarantees | Guarantees Indemnifications are provided of varying scope and size to certain Enterprise & Education Language and Literacy customers against claims of intellectual property infringement made by third parties arising from the use of its products. The Company has not incurred any costs or accrued any liabilities as a result of such obligations. |
Cost of Product and Subscription and Service Revenue | Cost of Subscription and Service Revenue and Cost of Product Revenue The cost of subscription and service revenue primarily represents costs associated with supporting the web-based subscription services and online language-learning services, which includes online language conversation coaching, hosting costs and depreciation. Also included are the costs of credit card processing and customer technical support in both cost of product revenue and cost of subscription and service revenue. |
Research and Development | Research and Development Research and development expenses include employee compensation costs, consulting fees and overhead costs associated with the development of our solutions. The Company develops a portion of its language-learning software products for perpetual sale to external customers. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. The Company has determined that technological feasibility for such software products is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established have not been material, and accordingly, the Company has expensed all research and development costs when incurred. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC topic 740, Income Taxes ("ASC 740"), which provides for an asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Significant judgment is required to determine whether a valuation allowance is necessary and the amount of such valuation allowance, if appropriate. The valuation allowance is reviewed at each reporting period and is maintained until sufficient positive evidence exists to support a reversal. When assessing the realization of the Company's deferred tax assets, the Company considers all available evidence, including: • the nature, frequency, and severity of cumulative financial reporting losses in recent years; • the carryforward periods for the net operating loss, capital loss, and foreign tax credit carryforwards; • predictability of future operating profitability of the character necessary to realize the asset; • prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the loss of the deferred tax assets; and • the effect of reversing taxable temporary differences. The evaluation of the recoverability of the deferred tax assets requires that the Company weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. The establishment of a valuation allowance has no effect on the ability to use the deferred tax assets in the future to reduce cash tax payments. The Company will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the valuation allowance will be adjusted accordingly, which could materially affect the Company's financial position and results of operations. See Note 15 "Income Taxes" for additional disclosures. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based compensation in accordance ASC topic 718, Compensation—Stock Compensation ("ASC 718"). Under ASC 718, all stock-based awards, including employee stock option grants, are recorded at fair value as of the grant date. For options granted with service and/or performance conditions, the fair value of each grant is estimated on the date of grant using the Black-Scholes option pricing model. For options granted with market-based conditions, the fair value of each grant is estimated on the grant date using the Monte-Carlo simulation model. These methods require the use of estimates, including future stock price volatility, expected term and forfeitures. As the Company does not have sufficient historical option exercise experience that spans the full 10 year contractual term for determining the expected term of options granted, the Company estimates the expected term of options using a combination of historical information and the simplified method for estimating the expected term. The Company uses its own historical stock price data to estimate its forfeiture rate and expected volatility over the most recent period commensurate with the estimated expected term of the awards. For the risk-free interest rate, the Company uses a U.S. Treasury Bond rate consistent with the estimated expected term of the option award. The Company's restricted stock and restricted stock unit grants are accounted for as equity awards. Stock compensation expense associated with service-based equity awards is recognized in the statement of operations on a straight-line basis over the requisite service period, which is the vesting period. For equity awards granted with performance-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche based on the probability that operating performance conditions will be met and to what extent. For equity awards granted with market-based conditions, stock compensation expense is recognized in the statement of operations ratably for each vesting tranche regardless of meeting or not meeting the market conditions. See Note 10 "Stock-Based Compensation" for additional disclosures. |
Restructuring Costs | Restructuring Costs As part of the 2016 Restructuring Plan and the 2015 Restructuring Plan, the Company announced and initiated actions to reduce headcount and other costs in order to support its strategic shift in business focus. In connection with these plans, the Company incurred restructuring related costs, including employee severance and related benefit costs, contract termination costs, and other related costs. These costs are included within Cost of Sales and the Sales and marketing, Research and development, and General and administrative operating expense categories in the Company's consolidated statements of operations. Employee severance and related benefit costs primarily include cash payments, outplacement services, continuing health insurance coverage, and other benefits. Where no substantive involuntary termination plan previously existed, these severance costs are generally considered “one-time” benefits and recognized at fair value in the period in which a detailed plan has been approved by management and communicated to the terminated employees. Severance costs pursuant to ongoing benefit arrangements, including termination benefits provided for in existing employment contracts, are recognized when probable and reasonably estimable. Contract termination costs include penalties to cancel certain service and license contracts and costs to terminate operating leases. Contract termination costs are recognized at fair value in the period in which the contract is terminated in accordance with the contract terms. Other related costs generally include external consulting and legal costs associated with the strategic shift in business focus. Such costs are recognized at fair value in the period in which the costs are incurred. See Note 13 "Restructuring" for additional disclosures. |
Net Loss Per Share | Net Loss Per Share Net loss per share is computed under the provisions of ASC topic 260, Earnings Per Share . Basic loss per share is computed using net loss and the weighted average number of shares of common stock outstanding. Diluted loss per share reflect the weighted average number of shares of common stock outstanding plus any potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of shares issuable upon the exercise of stock options, restricted stock awards, restricted stock units and conversion of shares of preferred stock. Common stock equivalent shares are excluded from the diluted computation if their effect is anti-dilutive. When there is a net loss, there is a presumption that there are no dilutive shares as these would be anti-dilutive. |
Comprehensive (Loss) Income | Comprehensive Loss Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss refers to revenues, expenses, gains, and losses that are not included in net loss, but rather are recorded directly in stockholders' (deficit) equity. For the years ended December 31, 2016 , 2015 and 2014 , the Company's comprehensive loss consisted of net loss and foreign currency translation losses. The other comprehensive loss presented in the consolidated financial statements and the notes are presented net of tax. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currency of the Company's foreign subsidiaries is their local currency. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense items are translated at average rates for the period. Translation adjustments are recorded as a component of other comprehensive loss in stockholders' (deficit) equity. Cash flows of consolidated foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars using average exchange rates for the period. The Company reports the effect of exchange rate changes on cash balances held in foreign currencies as a separate item in the reconciliation of the changes in cash and cash equivalents during the period. |
Advertising Costs | Advertising Costs Costs for advertising are expensed as incurred. |
Going Concern Assessment | Going Concern Assessment The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Management has evaluated whether relevant conditions or events, considered in the aggregate, indicate that there is substantial doubt about the Company's ability to continue as a going concern. Substantial doubt exists when conditions and events, considered in the aggregate, indicate it is probable that the Company will be unable to meet its obligations as they become due within one year after the financial statement issuance date. The assessment is based on the relevant conditions that are known or reasonable knowable as of March 14, 2017 . The assessment of the Company's ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. The inputs that are considered important in the Company's going concern analysis, include, but are not limited to, the Company's 2017 cash flow forecast, 2017 operating budget, and long-term plan that extends beyond 2017. These inputs consider information including, but not limited to, the Company’s financial condition, liquidity sources, obligations due within one year after the financial statement issuance date, funds necessary to maintain operations, and financial conditions, including negative financial trends or other indicators of possible financial difficulty. The Company has considered both quantitative and qualitative factors as part of the assessment that are known or reasonably knowable as of March 14, 2017 , and concluded that conditions and events considered in the aggregate, do not indicate that it is probable that the Company will be unable to meet obligations as they become due through the one year period following the financial statement issuance date. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards During 2016, the Company adopted the following recently issued Accounting Standard Updates ("ASU"): In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) ("ASU 2014-15"). ASU 2014-15 addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company has adopted this guidance and as discussed above. No additional disclosures are required. The following ASUs were recently issued but have not yet been adopted by the Company: In February 2017, the FASB issued ASU No. 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"). ASU 2017-05 clarifies the scope and accounting of a financial asset that meets the definition of an “in-substance nonfinancial asset” and defines the term, “in-substance nonfinancial asset.” ASU 2017-05 also adds guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective at the same time Topic 606, Revenue from Contracts with Customers is effective. ASU 2017-05 may be applied retrospectively for all periods presented or retrospectively with a cumulative-effect adjustment at the date of adoption. The Company is in the process of evaluating the impact of the new guidance on the Company's financial statements and disclosures and the adoption method. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for annual and interim goodwill tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates on or after January 1, 2017. The Company is in the process of evaluating the guidance. Given the prospective adoption application, there is no impact on the Company's historical consolidated financial statements and disclosures. In January 2017, the FASB issued ASU No. 2017-01, Business Combination (Topic 805) Clarifying the Definition of a Business ("ASU 2017-01"). The amendments under ASU 2017-01 clarify the definition of a business and requires that an entity apply certain criteria in order to determine when a set of assets and activities qualifies as a business. ASU 2017-01 is effective for public entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted. The Company is currently evaluating the timing of adoption of this guidance. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash a consensus of the FASB Emerging Issues Task Force ("ASU 2016-18"). Under ASU 2016-18, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption of this guidance. The new guidance only impacts presentation of the Company's consolidated statement of cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the methodology for measuring credit losses of financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is in the process of evaluating the impact of the new guidance on the Company's consolidated financial statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). Under ASU 2016-09, accounting for share-based payment award transactions was simplified related to the accounting for (a) income tax effects; (b) minimum statutory tax withholding requirements; (c) and forfeitures. ASU 2016-09 is effective for public entities in annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted. The Company expects to adopt this new guidance for its 2017 interim and annual reporting periods. Due to the historical cumulative shortfall position, the adoption of ASU 2016-09 will not result in a cumulative-effect adjustment to retained earnings. ASU 2016-09 allows for an entity-wide accounting policy election, which would be applied prospectively, to either account for forfeitures when they occur or continue to estimate the number of awards that are expected to vest. The Company is in the process of evaluating the potential forfeiture policy election and the impact this election may have on the Company's consolidated financial statements and disclosures. Other aspects of adoption ASU 2016-09 are not anticipated to have a material impact to the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). Under ASU 2016-02, entities will be required to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting is largely unchanged. ASU 2016-02 is effective for public entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of the new guidance on the Company's consolidated financial statements and disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. Under the new guidance, entities will be required to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicability exception. The accounting for other financial instruments, such as loans and investments in debt securities is largely unchanged. ASU 2016-01 is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not believe that the adoption of this guidance will have a material impact on the Company's consolidated financial statements and disclosures. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which replaces the current revenue accounting guidance. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date which defers the effective date of the updated guidance on revenue recognition by one year. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarifies and improves the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarifies and improves the operability and understanding of the implementation guidance on identifying performance obligations and licensing. Collectively these ASUs comprise the new revenue standard ("New Revenue Standard"). The core principle of the New Revenue Standard is that an entity should recognize revenue to depict the transfer of 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. To achieve that core principle, an entity should apply a five step model to 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The New Revenue Standard is effective for annual periods beginning after December 15, 2017. The Company expects that it will adopt the New Revenue Standard beginning in the first quarter of 2018. The New Revenue Standard provides the option between two different methods of adoption. The full retrospective method calls for the Company to present each prior reported period shown in the financial statements under the new guidance. The modified retrospective method requires the Company to calculate the cumulative effect of applying the new guidance as of the date of adoption via adjustment to retained earnings. The Company is currently considering adopting the New Revenue Standard using the full retrospective method. The Company's ability to adopt using the full retrospective method is dependent on several factors, including the significance of the impact of the New Revenue Standard to the Company’s financial results, system readiness and ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary. The Company is currently evaluating the impact the New Revenue Standard will have on its accounting policies, processes, and system requirements. Internal resources have been assigned to assist in the evaluation and the Company will continue to make investments in systems to enable timely and accurate reporting under the New Revenue Standard. As part of its initial evaluations, the Company believes the impact of the change in the New Revenue Standard on the Enterprise & Education and Literacy segments will be minimal as the accounting outcome of the vast majority of transactions remains unchanged. Due to the elimination of software specific accounting guidance, the Company anticipates more significant changes to the accounting for the packaged perpetual software product line within the Consumer segment. This change is expected to be greater in the historical periods presented for comparison in the 2018 financial statements due to the Company pursuing its strategy to transition the Consumer segment to a fully SaaS delivery model by the end of 2017. While the Company continues to assess all potential impacts under the New Revenue Standard, including the areas described above, we do not know or cannot reasonably estimate quantitative information related to the impact of the New Revenue Standard on the Company's consolidated financial statements and disclosures at this time. |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives of property, equipment and software | Depreciation on property, building and leasehold improvements, furniture, equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows: Software 3 years Computer equipment 3-5 years Automobiles 5 years Furniture and equipment 5-7 years Building 39 years Building improvements 15 years Leasehold improvements lesser of lease term or economic life Assets under capital leases lesser of lease term or economic life |
Finite-lived Intangible Assets, Capitalization, Amortization, and Impairment | Years Ended December 31, 2016 2015 2014 Amounts capitalized as internal-use software $ 11,375 $ 7,132 $ 8,811 Amortization expense of internal-use software $ (6,369 ) $ (4,786 ) $ (3,379 ) Impairment expense of internal-use software $ (1,029 ) $ (1,142 ) $ (163 ) |
Computation of basic and diluted net income (loss) per common share | The following table sets forth the computation of basic and diluted net loss per common share: Years Ended December 31, 2016 2015 2014 (dollars in thousands, except per share amounts) Numerator: Net loss $ (27,550 ) $ (46,796 ) $ (73,706 ) Denominator: Common shares and equivalents outstanding: Basic weighted average shares 21,969 21,571 21,253 Diluted weighted average shares 21,969 21,571 21,253 Loss per share: Basic $ (1.25 ) $ (2.17 ) $ (3.47 ) Diluted $ (1.25 ) $ (2.17 ) $ (3.47 ) |
Schedule of antidilutive securities excluded from computation of earnings per share | The following is a summary of common stock equivalents for the securities outstanding during the respective periods that have been excluded from the earnings per share calculations as their impact was anti-dilutive. Years Ended December 31, 2016 2015 2014 (in thousands) Stock options 16 35 67 Restricted stock units 174 39 103 Restricted stocks 129 82 89 Total common stock equivalent shares 319 156 259 |
Schedule of accumulated other comprehensive income (loss) | Components of accumulated other comprehensive loss as of December 31, 2016 are as follows (in thousands): Foreign Currency Total Balance at beginning of period $ (2,226 ) $ (2,226 ) Other comprehensive loss before reclassifications (1,483 ) (1,483 ) Amounts reclassified from accumulated other comprehensive loss — — Net current period other comprehensive loss (1,483 ) (1,483 ) Accumulated other comprehensive loss $ (3,709 ) $ (3,709 ) |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consisted of the following (in thousands): As of December 31, 2016 2015 Raw materials $ 4,384 $ 3,375 Finished goods 2,383 3,958 Total inventory $ 6,767 $ 7,333 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): As of December 31, 2016 2015 Land $ 876 $ 893 Buildings and improvements 9,503 9,573 Leasehold improvements 1,645 1,477 Computer equipment 15,866 16,508 Software 43,688 34,478 Furniture and equipment 2,393 3,115 73,971 66,044 Less: accumulated depreciation (49,176 ) (43,512 ) Property and equipment, net $ 24,795 $ 22,532 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of the balance and changes in goodwill, by reporting unit | The following table shows the balance and changes in goodwill for the Company's operating segments and reporting units for the years ended December 31, 2016 and 2015 (in thousands): Enterprise & Education Language Literacy Consumer Consumer Language Consumer Fit Brains Total Balance as of January 1, 2015 Gross Goodwill $ 40,084 $ 9,962 $ 20,170 $ 8,538 $ 78,754 Accumulated Impairment — — (20,170 ) — (20,170 ) Goodwill as of January 1, 2015 $ 40,084 $ 9,962 $ — $ 8,538 $ 58,584 Partial Impairment of Consumer Fit Brains — — — (5,604 ) (5,604 ) Effect of change in foreign currency rate (1,384 ) — — (1,316 ) (2,700 ) Balance as of December 31, 2015 Gross Goodwill $ 38,700 $ 9,962 $ 20,170 $ 7,222 $ 76,054 Accumulated Impairment — — (20,170 ) (5,604 ) (25,774 ) Goodwill as of December 31, 2015 $ 38,700 $ 9,962 $ — $ 1,618 $ 50,280 Remaining Full Impairment of Consumer Fit Brains — — — (1,740 ) (1,740 ) Effect of change in foreign currency rate (411 ) — — 122 (289 ) Balance as of December 31, 2016 Gross Goodwill $ 38,289 $ 9,962 $ 20,170 $ 7,344 $ 75,765 Accumulated Impairment — — (20,170 ) (7,344 ) (27,514 ) Goodwill as of December 31, 2016 $ 38,289 $ 9,962 $ — $ — $ 48,251 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consisted of the following items as of the dates indicated (in thousands): Trade name / trademark * Core technology Customer relationships Patents and Other Total Gross Carrying Amount $ 12,442 $ 15,149 $ 26,245 $ 312 $ 54,148 Accumulated Amortization (1,271 ) (7,817 ) (16,603 ) (213 ) (25,904 ) Balance as of December 31, 2015 $ 11,171 $ 7,332 $ 9,642 $ 99 $ 28,244 Gross Carrying Amount 12,431 15,092 26,149 312 53,984 Accumulated Amortization (1,481 ) (9,859 ) (18,485 ) (251 ) (30,076 ) Accumulated Impairment (26 ) (1,001 ) (128 ) — (1,155 ) Balance as of December 31, 2016 $ 10,924 $ 4,232 $ 7,536 $ 61 $ 22,753 * Included within the Trade name/ trademark intangible asset category is the Rosetta Stone trade name with a carrying amount of $10.6 million . This intangible asset is considered to have an indefinite useful life and is therefore not amortized, but rather tested for impairment on at least an annual basis. |
Schedule of estimated useful lives of acquired intangible assets | Below are the weighted average remaining useful lives of the Company's amortizing intangible assets: Weighted Average Life Trade name / trademark 19 months Core technology 32 months Customer relationships 69 months Patents 27 months |
Schedule of amortization expense | Amortization expense consisted of the following (in thousands): Years Ended December 31, 2016 2015 2014 Included in cost of revenue: Cost of subscription and service revenue $ 404 $ 322 $ 209 Cost of product revenue 182 264 377 Total included in cost of revenue 586 586 586 Included in operating expenses: Sales and marketing 2,178 2,804 3,677 Research and development 1,587 1,802 2,000 General and administrative — — — Total included in operating expenses 3,765 4,606 5,677 Total $ 4,351 $ 5,192 $ 6,263 |
Summary of the estimated future amortization expense related to intangible assets | The following table summarizes the estimated future amortization expense related to intangible assets as of December 31, 2016 (in thousands): As of 2017 $ 3,749 2018 3,155 2019 1,532 2020 1,282 2021 940 Thereafter 1,488 Total $ 12,146 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Summary of other current liabilities | The following table summarizes other current liabilities (in thousands): As of 2016 2015 Accrued marketing expenses $ 8,460 $ 20,022 Accrued professional and consulting fees 2,050 1,746 Sales return reserve 1,338 3,728 Sales, withholding, and property taxes payable 3,772 3,879 Other 6,530 5,943 Total Other current liabilities $ 22,150 $ 35,318 |
FINANCING ARRANGEMENTS (Tables)
FINANCING ARRANGEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | As of December 31, 2016 , the future minimum payments under capital leases with initial terms of one year or more are as follows (in thousands): Periods Ending December 31, 2017 $ 635 2018 483 2019 480 2020 476 2021 473 Thereafter 354 Total minimum lease payments $ 2,901 Less amount representing interest 342 Present value of net minimum lease payments $ 2,559 Less current portion 532 Obligations under capital lease, long-term $ 2,027 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | For the years ended December 31, 2016 , 2015 , and 2014 the fair value of service-based stock options and performance-based stock options granted was calculated using the following assumptions in the Black-Scholes model: Years Ended December 31, 2016 2015 2014 Expected stock price volatility 46%-47% 49%-63% 63%-65% Expected term of options 5.5-6.5 years 6 years 6 years Expected dividend yield — — — Risk-free interest rate 1.24%-1.50% 1.19%-1.75% 1.46%-1.80% For the years ended December 31, 2016 , 2015 , and 2014 the fair value of market-based stock options and market-based restricted stock awards granted was calculated using the following assumptions in the Monte-Carlo simulation model: Years Ended December 31, 2016 2015 2014 Expected stock price volatility 45%-49% none none Expected term of options 1.7 years-7 years none none Expected dividend yield — none none Risk-free interest rate .71%-1.53% none none |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table presents stock-based compensation expense included in the related financial statement line items (in thousands): Years Ended December 31, 2016 2015 2014 Included in cost of revenue: Cost of subscription and service revenue $ (4 ) $ 44 $ 13 Cost of product revenue 52 57 95 Total included in cost of revenue 48 101 108 Included in operating expenses: Sales and marketing 998 1,327 1,975 Research & development 709 841 958 General and administrative 3,151 4,926 3,721 Total included in operating expenses 4,858 7,094 6,654 Total $ 4,906 $ 7,195 $ 6,762 |
Schedule of Stock Option Activity | The following table summarizes the Company's service-based stock option activity from January 1, 2016 to December 31, 2016 : Options Weighted Weighted Aggregate Options Outstanding, January 1, 2016 1,837,165 $ 10.58 7.70 $ 130,262 Options granted 464,194 7.50 Options exercised (12,971 ) 4.42 Options cancelled (494,458 ) 10.65 Options Outstanding, December 31, 2016 1,793,930 9.81 7.58 1,154,498 Vested and expected to vest at December 31, 2016 1,687,078 9.93 7.50 1,032,107 Exercisable at December 31, 2016 1,125,493 $ 10.34 7.02 $ 576,390 The following table summarizes the Company's PSO activity from January 1, 2016 to December 31, 2016 : PSOs Outstanding Weighted Aggregate PSOs Outstanding, January 1, 2016 — $ — $ — PSOs granted 314,465 3.24 1,000,242 PSOs released — — PSOs cancelled — Performance adjustments (175,898 ) PSOs Outstanding, December 31, 2016 138,567 3.24 440,750 Vested and expected to vest at December 31, 2016 — — — Exercisable at December 31, 2016 — $ — $ — The following table summarizes the Company's MSO activity from January 1, 2016 to December 31, 2016 : MSOs Outstanding Weighted Aggregate MSOs Outstanding, January 1, 2016 — $ — $ — MSOs granted 314,465 0.94 294,550 MSOs released — — MSOs cancelled — — MSO Outstanding, December 31, 2016 314,465 — — Vested and expected to vest at December 31, 2016 — — — Exercisable at December 31, 2016 — $ — $ — |
Schedule of Nonvested Share Activity | The following table summarizes the Company's service-based restricted stock activity for the years ended December 31, 2016 and 2015 , respectively: Nonvested Outstanding Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested Awards, January 1, 2015 482,645 $ 12.59 $ 6,074,136 Awards granted 481,992 9.05 Awards vested (452,341 ) 10.56 Awards canceled (170,717 ) 11.88 Nonvested Awards, December 31, 2015 341,579 10.61 3,624,153 Awards granted 300,650 7.59 Awards vested (196,001 ) 9.54 Awards canceled (71,848 ) 9.65 Nonvested Awards, December 31, 2016 374,380 8.94 3,348,080 |
Schedule of Restricted Stock Units Award Activity | The following table summarizes the Company's restricted stock unit activity from January 1, 2016 to December 31, 2016 : Units Outstanding Weighted Aggregate Units Outstanding, January 1, 2016 187,942 $ 11.16 $ 1,257,332 Units granted 67,663 7.70 Units released (58,719 ) 11.51 Units cancelled (8,829 ) 8.50 Units Outstanding, December 31, 2016 188,057 9.93 1,675,588 Vested and expected to vest at December 31, 2016 115,263 7.70 1,026,990 Vested and deferred at December 31, 2016 82,157 $ 12.44 $ 732,019 |
Schedule of Nonvested Restricted Stock Activity | The following table summarizes the Company's PRSA activity from January 1, 2016 to December 31, 2016 : Nonvested Weighted Aggregate Nonvested PRSAs, January 1, 2016 — $ — $ — PRSAs granted 70,423 7.10 500,003 PRSAs vested — — PRSAs canceled — — Performance adjustments (8,360 ) Nonvested PRSAs, December 31, 2016 62,063 $ 7.10 $ 440,647 The following table summarizes the Company's MRSA activity from January 1, 2016 to December 31, 2016 : Nonvested Weighted Aggregate Nonvested MRSAs, January 1, 2016 — $ — $ — MRSAs granted 70,423 6.17 434,510 MRSAs vested — — MRSAs canceled — — Nonvested MRSAs, December 31, 2016 70,423 $ 6.17 $ 434,510 |
RESTRUCTURING AND OTHER EMPLO38
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes activity with respect to the restructuring charges for the 2015 Restructuring Plan during the years ended December 31, 2015 and December 31, 2016 (in thousands): Balance at January 1, 2015 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2015 Severance costs $ — $ 7,240 $ (5,940 ) $ (1,048 ) $ 252 Contract termination costs — 1,134 (1,134 ) — — Other costs — 417 (417 ) — — Total $ — $ 8,791 $ (7,491 ) $ (1,048 ) $ 252 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash stock compensation expense and foreign currency translation adjustments. Balance at January 1, 2016 Cost Incurred Cash Payments Balance at December 31, 2016 Severance costs $ 252 $ 71 $ (323 ) $ — Contract termination costs — — — — Other costs — — — — Total $ 252 $ 71 $ (323 ) $ — The following table summarizes activity with respect to the restructuring charges for the 2016 Restructuring Plan during the year ended December 31, 2016 (in thousands): Balance at January 1, 2016 Cost Incurred Cash Payments Other Adjustments (1) Balance at December 31, 2016 Severance costs $ — $ 4,367 $ (3,867 ) $ — $ 500 Contract termination costs — 165 (74 ) (69 ) 22 Other costs — 590 (399 ) (121 ) 70 Total $ — $ 5,122 $ (4,340 ) $ (190 ) $ 592 (1) Other Adjustments includes non-cash period changes in the liability balance, which may include non-cash lease closure expense and foreign currency translation adjustments. |
Restructuring and Related Costs | The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans for the years ended December 31, 2016 and 2015 , and total costs incurred through December 31, 2016 (in thousands): Years ended Incurred through 2016 2015 December 31, 2016 Severance costs $ 4,438 $ 7,240 $ 11,678 Contract termination costs 165 1,134 1,299 Other costs 590 417 1,007 Total $ 5,193 $ 8,791 $ 13,984 A summary of the Company’s lease abandonment activity for the years ended December 31, 2016 and 2015 is as follows (in thousands): As of December 31, 2016 2015 Accrued lease abandonment costs, beginning of period $ 1,282 $ 1,679 Costs incurred and charged to expense 1,644 55 Principal reductions (803 ) (452 ) Accrued lease abandonment costs, end of period $ 2,123 $ 1,282 Accrued lease abandonment costs liability: Short-term $ 1,047 $ 455 Long-term 1,076 827 Total $ 2,123 $ 1,282 |
Schedule of Restructuring and related Costs by Income Statement Location | The following table presents restructuring costs associated with the 2016 and 2015 Restructuring Plans included in the related line items of our Statement of Operations (in thousands): Years ended 2016 2015 Cost of revenue $ 573 $ 113 Sales and marketing 2,324 4,492 Research and development 913 602 General and administrative 1,383 3,584 Total $ 5,193 $ 8,791 |
LEASE ABANDONMENT AND TERMINA39
LEASE ABANDONMENT AND TERMINATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring and Related Activities [Abstract] | |
Lease abandonment costs | The following table summarizes the major types of costs associated with the 2016 and 2015 Restructuring Plans for the years ended December 31, 2016 and 2015 , and total costs incurred through December 31, 2016 (in thousands): Years ended Incurred through 2016 2015 December 31, 2016 Severance costs $ 4,438 $ 7,240 $ 11,678 Contract termination costs 165 1,134 1,299 Other costs 590 417 1,007 Total $ 5,193 $ 8,791 $ 13,984 A summary of the Company’s lease abandonment activity for the years ended December 31, 2016 and 2015 is as follows (in thousands): As of December 31, 2016 2015 Accrued lease abandonment costs, beginning of period $ 1,282 $ 1,679 Costs incurred and charged to expense 1,644 55 Principal reductions (803 ) (452 ) Accrued lease abandonment costs, end of period $ 2,123 $ 1,282 Accrued lease abandonment costs liability: Short-term $ 1,047 $ 455 Long-term 1,076 827 Total $ 2,123 $ 1,282 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Summary of significant components of deferred tax assets and liabilities | The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2016 and 2015 (in thousands): As of December 31, 2016 2015 Deferred tax assets: Inventory $ 735 $ 564 Net operating and capital loss carryforwards 61,174 48,334 Deferred revenue 10,862 13,908 Accrued liabilities 6,975 9,780 Stock-based compensation 4,440 4,656 Amortization and depreciation 1,056 31 Bad debt reserve 389 398 Foreign and other tax credits 1,881 1,517 Gross deferred tax assets 87,512 79,188 Valuation allowance (78,363 ) (70,464 ) Net deferred tax assets 9,149 8,724 Deferred tax liabilities: Goodwill and indefinite lived intangibles (6,098 ) (4,782 ) Deferred sales commissions (7,060 ) (7,337 ) Prepaid expenses (656 ) (625 ) Foreign currency translation (1,508 ) (973 ) Other — (5 ) Gross deferred tax liabilities (15,322 ) (13,722 ) Net deferred tax liabilities $ (6,173 ) $ (4,998 ) |
Summary of operating loss carryforwards | As of December 31, 2016 , the Company had federal, state and foreign tax NOL carryforward amounts and expiration periods as follows (in thousands): Year of Expiration U.S. Federal State Brazil France Japan Other Foreign Total 2017-2021 $ — $ 679 $ — $ — $ — $ — $ 679 2022-2026 — 2,308 — — 11,824 — 14,132 2027-2031 — 11,526 — — — 377 11,903 2032-2036 86,621 76,568 — — — 3 163,192 2037-2041 39,304 33,777 — — — 909 73,990 Indefinite — — 4,309 8,193 — 665 13,167 Totals $ 125,925 $ 124,858 $ 4,309 $ 8,193 $ 11,824 $ 1,954 $ 277,063 |
Summary of capital loss carryforwards | As of December 31, 2016 , the Company had federal and state capital loss carryforward amounts and expiration periods as follows (in thousands): Year of Tax Capital Loss Expiration U.S. Federal State 2017-2021 $ 6,837 $ 4,947 2022-2026 — — 2027-2031 — 128 2032-2036 — — 2037-2041 — — Indefinite — — Totals $ 6,837 $ 5,075 |
Summary of tax credit carryforwards | As of December 31, 2016 , the Company had federal tax credit carryforward amounts and expiration periods as follows (in thousands): Year of Tax Credit Expiration U.S. Federal 2017-2021 $ — 2022-2026 1,517 2027-2031 121 2032-2036 218 2037-2041 — Indefinite 25 Totals $ 1,881 |
Schedule of components of income (loss) before income taxes | The components of loss before income taxes and the provision for taxes on income consist of the following (in thousands): Years Ended December 31, 2016 2015 2014 United States $ (24,963 ) $ (41,458 ) $ (60,434 ) Foreign (84 ) (4,179 ) (19,761 ) Loss before income taxes $ (25,047 ) $ (45,637 ) $ (80,195 ) The provision for taxes on income consists of the following (in thousands): Federal $ — $ (157 ) $ 29 State 78 96 23 Foreign 1,250 444 1,258 Total current $ 1,328 $ 383 $ 1,310 Deferred: Federal $ 1,147 $ 1,148 $ (5,425 ) State 169 169 (797 ) Foreign (141 ) (541 ) (1,577 ) Total deferred 1,175 776 (7,799 ) Provision (benefit) for income taxes $ 2,503 $ 1,159 $ (6,489 ) |
Schedule of reconciliation of income tax provision (benefit) computed at the U.S. federal statutory rate to income tax expense | Reconciliation of income tax provision (benefit) computed at the U.S. federal statutory rate to income tax expense (benefit) is as follows (in thousands): Years Ended December 31, 2016 2015 2014 Income tax benefit at statutory federal rate $ (8,766 ) $ (15,973 ) $ (28,068 ) State income tax expense, net of federal income tax effect 219 231 (782 ) Acquired intangibles — — — Nondeductible goodwill impairment 604 1,961 — Other nondeductible expenses 384 88 482 Tax rate differential on foreign operations (474 ) (1,019 ) 276 Increase in valuation allowance 10,404 15,713 21,772 Tax audit settlements — (96 ) — Change in prior year estimates — 225 (69 ) Other tax credits 129 29 (102 ) Other 3 — 2 Income tax expense (benefit) $ 2,503 $ 1,159 $ (6,489 ) |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties | A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands): Years Ended December 31, 2016 2015 Balance at January 1, $ — $ 446 Increases for tax positions taken during prior years — — Settlements with tax authorities — (446 ) Reductions for tax positions taken during prior years — — Lapse of statute of limitations — — Balance at December 31, $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of future minimum operating lease payments | The following table summarizes future minimum operating lease payments as of December 31, 2016 and the years thereafter (in thousands): As of Periods Ending December 31, 2017 $ 4,552 2018 4,363 2019 1,741 2020 1,004 2021 590 Thereafter — Total future minimum operating lease payments $ 12,250 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of operating results by segment | Operating results by segment for the years ended December 31, 2016 , 2015 , and 2014 were as follows (in thousands, except percentages): Years Ended December 31, 2016 2015 2014 Revenue: Enterprise & Education Language $ 72,083 $ 76,129 $ 74,788 Literacy 34,123 21,928 9,912 Consumer 87,883 119,613 177,153 Total revenue $ 194,089 $ 217,670 $ 261,853 Segment contribution: Enterprise & Education Language $ 28,304 $ 21,321 $ 16,945 Literacy 5,634 729 (2,984 ) Consumer 21,120 30,047 28,012 Total segment contribution $ 55,058 $ 52,097 $ 41,973 Unallocated expenses, net: Unallocated cost of sales 5,624 3,023 2,775 Unallocated sales and marketing 6,574 9,303 7,632 Unallocated research and development 26,273 29,939 33,176 Unallocated general and administrative 37,933 46,836 53,095 Unallocated impairment 3,930 6,754 20,333 Unallocated lease abandonment and termination 1,644 55 3,812 Unallocated non-operating (income)/expense (1,873 ) 1,824 1,345 Total unallocated expenses, net $ 80,105 $ 97,734 $ 122,168 Loss before income taxes $ (25,047 ) $ (45,637 ) $ (80,195 ) Segment contribution margin: Enterprise & Education Language 39.3 % 28.0 % 22.7 % Literacy 16.5 % 3.3 % (30.1 )% Consumer 24.0 % 25.1 % 15.8 % |
Summary of revenue from customers by geographic area and products | The information below summarizes revenue from customers by geographic area as of December 31, 2016 , 2015 and 2014 , respectively (in thousands): Years Ended December 31, 2016 2015 2014 United States $ 162,815 $ 177,966 $ 212,070 International 31,274 39,704 49,783 Total revenue $ 194,089 $ 217,670 $ 261,853 |
Summary of long-lived assets by geographic area | The information below summarizes long-lived assets by geographic area classified as held and used for the years ended December 31, 2016 and 2015 , respectively (in thousands): As of December 31, 2016 2015 United States $ 21,652 $ 18,704 International 3,143 3,828 Total property and equipment, net $ 24,795 $ 22,532 |
Summary of revenue from customers by type | The Company earns revenue from the sale of language-learning, literacy and brain fitness products and services. The information below summarizes revenue by type for the years ended December 31, 2016 , 2015 and 2014 , respectively (in thousands): As of December 31, 2016 2015 2014 Language learning $ 155,532 $ 191,568 $ 249,340 Literacy 34,123 21,928 9,912 Brain Fitness 4,434 4,174 2,601 Total revenue $ 194,089 $ 217,670 $ 261,853 |
VALUATION AND QUALIFYING ACCO43
VALUATION AND QUALIFYING ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule of valuation and qualifying accounts | The following table includes the Company's valuation and qualifying accounts for the respective periods (in thousands): Years Ended December 31, 2016 2015 2014 Allowance for doubtful accounts: Beginning balance $ 1,196 $ 1,434 $ 1,000 Charged to costs and expenses 709 1,657 2,405 Deductions—accounts written off (833 ) (1,895 ) (1,971 ) Ending balance $ 1,072 $ 1,196 $ 1,434 Promotional rebate and coop advertising reserves: Beginning balance $ 16,910 $ 23,437 $ 13,025 Charged to costs and expenses 18,337 40,563 39,249 Deductions - reserves utilized (29,279 ) (47,090 ) (28,837 ) Ending balance $ 5,968 $ 16,910 $ 23,437 Sales return reserve: Beginning balance $ 3,728 $ 3,570 $ 4,834 Charged against revenue 5,034 11,474 12,011 Deductions—reserves utilized (7,424 ) (11,316 ) (13,275 ) Ending balance $ 1,338 $ 3,728 3,570 Deferred income tax asset valuation allowance: Beginning balance $ 70,464 53,809 33,866 Charged to costs and expenses 7,899 16,655 19,943 Deductions — — — Ending balance $ 78,363 $ 70,464 $ 53,809 |
SUPPLEMENTAL QUARTERLY FINANC44
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of quarterly supplemental consolidated financial information | Summarized quarterly supplemental consolidated financial information for 2016 and 2015 are as follows (in thousands, except per share amounts): Three Months Ended March 31, June 30, September 30, December 31, 2016 Revenue $ 48,002 $ 45,716 $ 48,693 $ 51,678 Gross profit $ 39,954 $ 37,752 $ 40,322 $ 41,740 Net loss $ (7,507 ) $ (8,978 ) $ (5,452 ) $ (5,613 ) Basic loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in basic per share computation 21,867 21,948 21,993 22,065 Diluted loss per share $ (0.34 ) $ (0.41 ) $ (0.25 ) $ (0.25 ) Shares used in diluted per share computation 21,867 21,948 21,993 22,065 2015 Revenue $ 58,442 $ 51,411 $ 49,802 $ 58,015 Gross profit $ 47,140 $ 42,391 $ 41,136 $ 48,476 Net loss $ (19,884 ) $ (8,175 ) $ (7,301 ) $ (11,436 ) Basic loss per share $ (0.95 ) $ (0.38 ) $ (0.34 ) $ (0.52 ) Shares used in basic per share computation 21,018 21,689 21,771 21,801 Diluted loss per share $ (0.95 ) $ (0.38 ) $ (0.34 ) $ (0.52 ) Shares used in diluted per share computation 21,018 21,689 21,771 21,801 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2016deliverable | |
Revenue Recognition | |
Refund, unconditional, full money-back, daily criteria | 30 days |
Expiration period | 10 years |
Rosetta Stone Version 4 TOTALe bundles | |
Revenue Recognition | |
Number of deliverables identified | 2 |
Rosetta Stone Version 4 TOTALe bundles | Maximum | |
Revenue Recognition | |
Period of registration window to begin services from the date of purchase from the entity (up to) | 6 months |
Packaged software | Minimum | |
Revenue Recognition | |
Period offered to customers for payment of purchases in installments | 3 months |
Packaged software | Maximum | |
Revenue Recognition | |
Period offered to customers for payment of purchases in installments | 5 months |
Period of installment payment plans (less than) | 12 months |
Packaged software and online software subscriptions | Maximum | |
Revenue Recognition | |
Period of providing technical support in connection with packaged software product sales and online software subscriptions (up to) | 6 months |
Stock options | 2006 Plan | Maximum | |
Revenue Recognition | |
Expiration period | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - Accounts receivables - Customer concentration - customer | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Concentrations of Credit Risk | ||
Number of customers | 4 | 4 |
Percentage of concentration risk | 23.00% | 30.00% |
Customer Number One | ||
Concentrations of Credit Risk | ||
Number of customers | 1 | 1 |
Percentage of concentration risk | 13.00% | 17.00% |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment | |||
Impairment charges | $ 1,029 | $ 1,142 | $ 163 |
Goodwill | |||
Amortization period of goodwill for tax purposes | 15 years | ||
Software | |||
Property and equipment | |||
Estimated useful lives | 3 years | ||
Computer equipment | Minimum | |||
Property and equipment | |||
Estimated useful lives | 3 years | ||
Computer equipment | Maximum | |||
Property and equipment | |||
Estimated useful lives | 5 years | ||
Automobiles | |||
Property and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Minimum | |||
Property and equipment | |||
Estimated useful lives | 5 years | ||
Furniture and equipment | Maximum | |||
Property and equipment | |||
Estimated useful lives | 7 years | ||
Building | |||
Property and equipment | |||
Estimated useful lives | 39 years | ||
Building improvements | |||
Property and equipment | |||
Estimated useful lives | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Amounts capitalized as internal-use software | $ 11,375 | $ 7,132 | $ 8,811 |
Amortization expense of internal-use software | (6,369) | (4,786) | (3,379) |
Impairment expense of internal-use software | $ (1,029) | $ (1,142) | $ (163) |
Internally Developed Software | |||
Property, Plant and Equipment [Line Items] | |||
Estimated useful lives | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator: | |||||||||||
Net loss | $ (5,613,000) | $ (5,452,000) | $ (8,978,000) | $ (7,507,000) | $ (11,436,000) | $ (7,301,000) | $ (8,175,000) | $ (19,884,000) | $ (27,550,000) | $ (46,796,000) | $ (73,706,000) |
Common shares and equivalents outstanding: | |||||||||||
Basic weighted average shares (in shares) | 22,065,000 | 21,993,000 | 21,948,000 | 21,867,000 | 21,801,000 | 21,771,000 | 21,689,000 | 21,018,000 | 21,969,000 | 21,571,000 | 21,253,000 |
Diluted weighted average shares (in shares) | 22,065,000 | 21,993,000 | 21,948,000 | 21,867,000 | 21,801,000 | 21,771,000 | 21,689,000 | 21,018,000 | 21,969,000 | 21,571,000 | 21,253,000 |
Loss per share: | |||||||||||
Basic (in dollars per share) | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.52) | $ (0.34) | $ (0.38) | $ (0.95) | $ (1.25) | $ (2.17) | $ (3.47) |
Diluted (in dollars per share) | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.52) | $ (0.34) | $ (0.38) | $ (0.95) | $ (1.25) | $ (2.17) | $ (3.47) |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Dilutive securities, common stock, equivalent shares (in shares) | 0 | 0 | 0 | 0 | 0 | ||||||
Antidilutive shares of common stock excluded from the calculation of diluted earnings per share (in shares) | 319,000 | 156,000 | 259,000 | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||||||
Balance | $ 22,410,000 | $ 63,445,000 | $ 22,410,000 | $ 63,445,000 | $ 131,243,000 | ||||||
Other comprehensive loss before reclassifications | (1,483,000) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||||||||||
Net current period other comprehensive loss | (1,483,000) | ||||||||||
Balance | $ (1,659,000) | $ 22,410,000 | (1,659,000) | 22,410,000 | 63,445,000 | ||||||
Other comprehensive income (loss), tax | 0 | 0 | 0 | ||||||||
Advertising Costs | |||||||||||
Advertising expense | 37,000,000 | 46,900,000 | 79,600,000 | ||||||||
Going Concern [Abstract] | |||||||||||
Net loss | 5,613,000 | $ 5,452,000 | $ 8,978,000 | 7,507,000 | 11,436,000 | $ 7,301,000 | $ 8,175,000 | 19,884,000 | 27,550,000 | 46,796,000 | 73,706,000 |
Cash flow from operating activities | 1,240,000 | (5,645,000) | 6,673,000 | ||||||||
AOCI Attributable to Parent | |||||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||||||
Balance | $ (2,226,000) | $ (678,000) | (2,226,000) | (678,000) | 845,000 | ||||||
Balance | $ (3,709,000) | $ (2,226,000) | (3,709,000) | $ (2,226,000) | $ (678,000) | ||||||
Foreign Currency | |||||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |||||||||||
Other comprehensive loss before reclassifications | (1,483,000) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss | 0 | ||||||||||
Net current period other comprehensive loss | $ (1,483,000) | ||||||||||
Stock options | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Antidilutive shares of common stock excluded from the calculation of diluted earnings per share (in shares) | 16,000 | 35,000 | 67,000 | ||||||||
Restricted stock units | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Antidilutive shares of common stock excluded from the calculation of diluted earnings per share (in shares) | 174,000 | 39,000 | 103,000 | ||||||||
Restricted stocks | |||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||||||
Antidilutive shares of common stock excluded from the calculation of diluted earnings per share (in shares) | 129,000 | 82,000 | 89,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,384 | $ 3,375 |
Finished goods | 2,383 | 3,958 |
Total inventory | $ 6,767 | $ 7,333 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment | |||
Property, plant and equipment, gross | $ 73,971 | $ 66,044 | |
Less: accumulated depreciation | (49,176) | (43,512) | |
Property and equipment, net | 24,795 | 22,532 | |
Depreciation and amortization | 13,322 | 13,660 | $ 13,904 |
Impairment charges | 1,029 | 1,142 | 163 |
Land | |||
Property and equipment | |||
Property, plant and equipment, gross | 876 | 893 | |
Buildings and improvements | |||
Property and equipment | |||
Property, plant and equipment, gross | 9,503 | 9,573 | |
Leasehold improvements | |||
Property and equipment | |||
Property, plant and equipment, gross | 1,645 | 1,477 | |
Computer equipment | |||
Property and equipment | |||
Property, plant and equipment, gross | 15,866 | 16,508 | |
Software | |||
Property and equipment | |||
Property, plant and equipment, gross | 43,688 | 34,478 | |
Furniture and equipment | |||
Property and equipment | |||
Property, plant and equipment, gross | 2,393 | 3,115 | |
Computer equipment and software | |||
Property and equipment | |||
Less: accumulated depreciation | (2,100) | (1,500) | |
Assets under capital lease | 5,400 | 5,500 | |
Depreciation and amortization | $ 9,000 | $ 8,500 | $ 7,600 |
DIVESTITURES (Details)
DIVESTITURES (Details) - Rosetta Stone Korea - Discontinued Operations, Held-for-sale or Disposed of by Sale | Dec. 31, 2016 | Sep. 30, 2015USD ($) | Oct. 02, 2015USD ($)installment |
Business Acquisition [Line Items] | |||
Acquisition by management, percent | 100.00% | ||
Disposal group, including discontinued operation, net liabilities | $ 200,000 | ||
Disposal group, including discontinued operation, foreign currency translation gains (losses) | 500,000 | ||
Amount company to loan acquired entity | $ 500,000 | ||
Repayment period, number of installments | installment | 5 | ||
Repayment period, frequency of installment | 6 months | ||
Amount company to loan acquired entity, valuation allowance | $ 0 | ||
Other Nonoperating Income (Expense) | |||
Business Acquisition [Line Items] | |||
Gain (loss) on disposition of business | $ 700,000 |
GOODWILL (Schedule of Goodwill)
GOODWILL (Schedule of Goodwill) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in goodwill | |||
Gross Goodwill, Beginning Balance | $ 76,054,000 | $ 78,754,000 | |
Accumulated Impairment, Beginning Balance | (25,774,000) | (20,170,000) | |
Goodwill, Beginning Balance | 50,280,000 | 58,584,000 | |
Goodwill, Impairment Loss | 0 | ||
Effect of change in foreign currency rate | (289,000) | (2,700,000) | |
Gross Goodwill, Ending Balance | 75,765,000 | 76,054,000 | |
Accumulated Impairment, Ending Balance | (27,514,000) | (25,774,000) | |
Goodwill, Ending Balance | 48,251,000 | 50,280,000 | |
Enterprise & Education Language | |||
Changes in goodwill | |||
Gross Goodwill, Beginning Balance | 38,700,000 | 40,084,000 | |
Goodwill, Beginning Balance | 38,700,000 | 40,084,000 | |
Goodwill, Impairment Loss | 0 | ||
Effect of change in foreign currency rate | (411,000) | (1,384,000) | |
Gross Goodwill, Ending Balance | 38,289,000 | 38,700,000 | |
Goodwill, Ending Balance | 38,289,000 | 38,700,000 | |
Literacy | |||
Changes in goodwill | |||
Gross Goodwill, Beginning Balance | 9,962,000 | 9,962,000 | |
Goodwill, Beginning Balance | 9,962,000 | 9,962,000 | |
Goodwill, Impairment Loss | 0 | ||
Effect of change in foreign currency rate | 0 | 0 | |
Gross Goodwill, Ending Balance | 9,962,000 | 9,962,000 | |
Goodwill, Ending Balance | 9,962,000 | 9,962,000 | |
Consumer Language | |||
Changes in goodwill | |||
Gross Goodwill, Beginning Balance | 20,170,000 | 20,170,000 | |
Accumulated Impairment, Beginning Balance | (20,170,000) | (20,170,000) | |
Goodwill, Beginning Balance | 0 | 0 | |
Effect of change in foreign currency rate | 0 | 0 | |
Gross Goodwill, Ending Balance | 20,170,000 | 20,170,000 | |
Accumulated Impairment, Ending Balance | (20,170,000) | (20,170,000) | |
Goodwill, Ending Balance | 0 | 0 | |
Consumer Fit Brains | |||
Changes in goodwill | |||
Gross Goodwill, Beginning Balance | 7,222,000 | 8,538,000 | |
Accumulated Impairment, Beginning Balance | (5,604,000) | ||
Goodwill, Beginning Balance | 1,618,000 | 8,538,000 | |
Goodwill, Impairment Loss | $ (1,200,000) | (1,740,000) | (5,604,000) |
Effect of change in foreign currency rate | 122,000 | (1,316,000) | |
Gross Goodwill, Ending Balance | 7,344,000 | 7,222,000 | |
Accumulated Impairment, Ending Balance | (7,344,000) | (5,604,000) | |
Goodwill, Ending Balance | $ 0 | $ 1,618,000 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | ||||
Unallocated impairment | $ 0 | |||
Brain Fitness | Consumer Fit Brains | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | $ 1,700,000 | $ 5,600,000 | ||
Enterprise & Education Language | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | 0 | |||
Literacy | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | 0 | |||
Consumer Fit Brains | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | $ 1,200,000 | $ 1,740,000 | $ 5,604,000 | |
Enterprise & Education Language | Language learning | ||||
Goodwill [Line Items] | ||||
Unallocated impairment | $ 5,600,000 |
INTANGIBLE ASSETS (Schedule of
INTANGIBLE ASSETS (Schedule of Intangible Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite and indefinite lived intangible assets | $ 53,984 | $ 54,148 |
Accumulated Amortization | (30,076) | (25,904) |
Accumulated Impairment | (1,155) | |
Intangible Assets, Net (Excluding Goodwill) | 22,753 | 28,244 |
Total | 12,146 | |
Trade name / trademark | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite and indefinite lived intangible assets | 12,431 | 12,442 |
Accumulated Amortization | (1,481) | (1,271) |
Accumulated Impairment | (26) | |
Intangible Assets, Net (Excluding Goodwill) | 10,924 | 11,171 |
Core technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 15,092 | 15,149 |
Accumulated Amortization | (9,859) | (7,817) |
Accumulated Impairment | (1,001) | |
Total | 4,232 | 7,332 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 26,149 | 26,245 |
Accumulated Amortization | (18,485) | (16,603) |
Accumulated Impairment | (128) | |
Total | 7,536 | 9,642 |
Patents and Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount of finite lived intangible assets | 312 | 312 |
Accumulated Amortization | (251) | (213) |
Accumulated Impairment | 0 | |
Total | $ 61 | $ 99 |
INTANGIBLE ASSETS (Useful Lives
INTANGIBLE ASSETS (Useful Lives) (Details) - Weighted Average | 12 Months Ended |
Dec. 31, 2016 | |
Trade name / trademark | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 19 months |
Core technology | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 32 months |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 69 months |
Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Weighted Average Life | 27 months |
INTANGIBLE ASSETS (Amortization
INTANGIBLE ASSETS (Amortization Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 4,351 | $ 5,192 | $ 6,263 |
Cost of subscription and service revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 404 | 322 | 209 |
Cost of product revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 182 | 264 | 377 |
Cost of revenue | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 586 | 586 | 586 |
Sales and marketing | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 2,178 | 2,804 | 3,677 |
Research and development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 1,587 | 1,802 | 2,000 |
General and administrative | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | 0 | 0 | 0 |
Total included in operating expenses | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization of intangible assets | $ 3,765 | $ 4,606 | $ 5,677 |
INTANGIBLE ASSETS (Estimated Fu
INTANGIBLE ASSETS (Estimated Future Amortization Expense) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2,017 | $ 3,749 |
2,018 | 3,155 |
2,019 | 1,532 |
2,020 | 1,282 |
2,021 | 940 |
Thereafter | 1,488 |
Total | $ 12,146 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Unallocated impairment | $ 0 | |||
Impairment of intangible assets (excluding goodwill) | 0 | $ 0 | $ 0 | |
Impairment of long-lived assets to be disposed of | 0 | |||
Consumer Fit Brains | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Unallocated impairment | $ 1,200,000 | 1,740,000 | $ 5,604,000 | |
Trade Names | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment of intangible assets (excluding goodwill) | 0 | |||
Trade Names | Rosetta Stone Ltd | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Indefinite lived intangibles associated with acquisitions | $ 10,600,000 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Other Liabilities Disclosure [Abstract] | ||
Accrued marketing expenses | $ 8,460 | $ 20,022 |
Accrued professional and consulting fees | 2,050 | 1,746 |
Sales return reserve | 1,338 | 3,728 |
Sales, withholding, and property taxes payable | 3,772 | 3,879 |
Other | 6,530 | 5,943 |
Total Other current liabilities | $ 22,150 | $ 35,318 |
FINANCING ARRANGEMENTS (Details
FINANCING ARRANGEMENTS (Details) - USD ($) | Mar. 14, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 28, 2014 | Jan. 09, 2014 |
Borrowing agreement | ||||||
Equipment acquired under capital lease | $ 27,000 | $ 462,000 | $ 0 | |||
Tell Me More SA | ||||||
Borrowing agreement | ||||||
Fair value of the lease liability at the date of acquisition | $ 4,000,000 | |||||
Revolving Credit Facility | Line of Credit | ||||||
Borrowing agreement | ||||||
Borrowing capacity provided under credit facility | $ 25,000,000 | 20,800,000 | $ 25,000,000 | |||
Maximum borrowing capacity, accounts receivable collateral basis, percentage | 80.00% | |||||
Maximum conditional borrowing capacity | $ 5,000,000 | |||||
Minimum cash and availability balance | $ 17,500,000 | |||||
Applicable interest rate added to the reference rate | 1.00% | |||||
Long-term line of credit | 0 | |||||
Net borrowing availability | 16,800,000 | |||||
Revolving Credit Facility | Line of Credit | Parent Company and Guarantor Subsidiaries | UNITED STATES | ||||||
Borrowing agreement | ||||||
Line of credit, ownership stock pledged as collateral, percentage | 100.00% | |||||
Revolving Credit Facility | Line of Credit | Parent Company and Guarantor Subsidiaries | Foreign Countries | ||||||
Borrowing agreement | ||||||
Line of credit, ownership stock pledged as collateral, percentage | 66.00% | |||||
Letter of Credit | Line of Credit | ||||||
Borrowing agreement | ||||||
Borrowing capacity provided under credit facility | $ 4,000,000 | $ 4,000,000 |
FINANCING ARRANGEMENTS (Capital
FINANCING ARRANGEMENTS (Capital Lease) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
2,017 | $ 635 | |
2,018 | 483 | |
2,019 | 480 | |
2,020 | 476 | |
2,021 | 473 | |
Thereafter | 354 | |
Total minimum lease payments | 2,901 | |
Less amount representing interest | 342 | |
Present value of net minimum lease payments | 2,559 | |
Less current portion | 532 | $ 521 |
Obligations under capital lease, long-term | $ 2,027 | $ 2,622 |
STOCK-BASED COMPENSATION (Weigh
STOCK-BASED COMPENSATION (Weighted Average Assumption) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Stock Option, Serviced-Based | |||
Stock-based compensation | |||
Expected stock price volatility Minimum | 46.00% | 49.00% | 63.00% |
Expected stock price volatility Maximum | 47.00% | 63.00% | 65.00% |
Expected term of options | 6 years | 6 years | |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate Minimum | 1.24% | 1.19% | 1.46% |
Risk-free interest rate Maximum | 1.50% | 1.75% | 1.80% |
Employee Stock Option, Performance-Based | |||
Stock-based compensation | |||
Expected stock price volatility Minimum | 46.00% | 49.00% | 63.00% |
Expected stock price volatility Maximum | 47.00% | 63.00% | 65.00% |
Expected term of options | 6 years | 6 years | |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Risk-free interest rate Minimum | 1.24% | 1.19% | 1.46% |
Risk-free interest rate Maximum | 1.50% | 1.75% | 1.80% |
Employee Stock Option, Market-Based | |||
Stock-based compensation | |||
Expected stock price volatility Minimum | 45.00% | ||
Expected stock price volatility Maximum | 49.00% | ||
Expected dividend yield | 0.00% | ||
Risk-free interest rate Minimum | 0.71% | ||
Risk-free interest rate Maximum | 1.53% | ||
Restricted Stock Award, Market-Based | |||
Stock-based compensation | |||
Expected stock price volatility Minimum | 45.00% | ||
Expected stock price volatility Maximum | 49.00% | ||
Expected dividend yield | 0.00% | ||
Risk-free interest rate Minimum | 0.71% | ||
Risk-free interest rate Maximum | 1.53% | ||
Minimum | Employee Stock Option, Serviced-Based | |||
Stock-based compensation | |||
Expected term of options | 5 years 6 months | ||
Minimum | Employee Stock Option, Performance-Based | |||
Stock-based compensation | |||
Expected term of options | 5 years 6 months | ||
Minimum | Employee Stock Option, Market-Based | |||
Stock-based compensation | |||
Expected term of options | 1 year 8 months 22 days | ||
Minimum | Restricted Stock Award, Market-Based | |||
Stock-based compensation | |||
Expected term of options | 1 year 8 months 22 days | ||
Maximum | Employee Stock Option, Serviced-Based | |||
Stock-based compensation | |||
Expected term of options | 6 years 6 months | ||
Maximum | Employee Stock Option, Performance-Based | |||
Stock-based compensation | |||
Expected term of options | 6 years 6 months | ||
Maximum | Employee Stock Option, Market-Based | |||
Stock-based compensation | |||
Expected term of options | 7 years | ||
Maximum | Restricted Stock Award, Market-Based | |||
Stock-based compensation | |||
Expected term of options | 7 years |
STOCK-BASED COMPENSATION (Stock
STOCK-BASED COMPENSATION (Stock-based Compensation Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 4,906 | $ 7,195 | $ 6,762 |
Cost of subscription and service revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | (4) | 44 | 13 |
Cost of product revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 52 | 57 | 95 |
Total included in cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 48 | 101 | 108 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 998 | 1,327 | 1,975 |
Research & development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 709 | 841 | 958 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | 3,151 | 4,926 | 3,721 |
Total included in operating expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based compensation expense | $ 4,858 | $ 7,094 | $ 6,654 |
STOCK-BASED COMPENSATION (Sto65
STOCK-BASED COMPENSATION (Stock Option Activity) (Details) - USD ($) | May 23, 2012 | May 26, 2011 | May 28, 2008 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 12, 2015 | May 20, 2014 | May 23, 2013 | Feb. 27, 2009 | Dec. 31, 2008 | Jan. 04, 2006 |
Stock-based compensation | |||||||||||
Expiration period (not more than) | 10 years | ||||||||||
2009 Plan | |||||||||||
Stock-based compensation | |||||||||||
Number of shares authorized for grant (in shares) | 1,200,000 | 500,000 | 2,317,000 | 2,437,744 | |||||||
Number of additional shares authorized for grant (in shares) | 1,122,930 | 1,000,000 | |||||||||
Shares available for future grant under plan (in shares) | 1,403,424 | ||||||||||
2009 Plan | Maximum | |||||||||||
Stock-based compensation | |||||||||||
Expiration period (not more than) | 10 years | ||||||||||
Employee Stock Option | 2006 Plan | |||||||||||
Stock-based compensation | |||||||||||
Number of shares authorized for grant (in shares) | 2,137,200 | 1,942,200 | |||||||||
Number of additional shares authorized for grant (in shares) | 195,000 | ||||||||||
Employee Stock Option | 2006 Plan | Maximum | |||||||||||
Stock-based compensation | |||||||||||
Expiration period (not more than) | 10 years | ||||||||||
Employee Stock Option, Serviced-Based | |||||||||||
Stock-based compensation | |||||||||||
Vesting period | 4 years | ||||||||||
Options Outstanding | |||||||||||
Options Outstanding at the beginning of the period (in shares) | 1,837,165 | ||||||||||
Options granted (in shares) | 464,194 | ||||||||||
Options exercised (in shares) | (12,971) | ||||||||||
Options cancelled (in shares) | (494,458) | ||||||||||
Options Outstanding at the end of the period (in shares) | 1,793,930 | 1,837,165 | |||||||||
Vested and expected to vest at the end of the period (in shares) | 1,687,078 | ||||||||||
Exercisable at the end of the period (in shares) | 1,125,493 | ||||||||||
Weighted Average Exercise Price | |||||||||||
Options Outstanding beginning of the period (in dollars per share) | $ 10.58 | ||||||||||
Options granted (in dollars per share) | 7.50 | ||||||||||
Options exercised (in dollars per share) | 4.42 | ||||||||||
Options cancelled (in dollars per share) | 10.65 | ||||||||||
Options Outstanding end of the period (in dollars per share) | 9.81 | $ 10.58 | |||||||||
Vested and expected to vest at the end of the period (in dollars per share) | 9.93 | ||||||||||
Exercisable at the end of the period (in dollars per share) | 10.34 | ||||||||||
Weighted Average Grant Date Fair Value | |||||||||||
Options granted (in dollars per share) | $ 3.41 | $ 4.77 | |||||||||
Weighted Average Contractual Life (years) | |||||||||||
Options Outstanding at balance sheet date | 7 years 6 months 29 days | 7 years 8 months 12 days | |||||||||
Vested and expected to vest at the end of the period | 7 years 6 months | ||||||||||
Exercisable at the end of the period | 7 years 7 days | ||||||||||
Aggregate Intrinsic Value | |||||||||||
Options outstanding at balance sheet date | $ 1,154,498 | $ 130,262 | |||||||||
Vested and expected to vest at the end of the period | 1,032,107 | ||||||||||
Exercisable at the end of the period | 576,390 | ||||||||||
Additional information | |||||||||||
Unrecognized stock-based compensation expense related to non-vested stock option awards | $ 3,100,000 | $ 5,200,000 | |||||||||
Period over which future compensation cost expected to be recognized | 2 years 4 months 9 days | 1 year 10 months 2 days | |||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||
Options Outstanding | |||||||||||
Options Outstanding at the beginning of the period (in shares) | 0 | ||||||||||
Options granted (in shares) | 314,465 | ||||||||||
Options exercised (in shares) | 0 | ||||||||||
Options cancelled (in shares) | 0 | ||||||||||
Options performance adjustment (in shares) | (175,898) | ||||||||||
Options Outstanding at the end of the period (in shares) | 138,567 | 0 | |||||||||
Vested and expected to vest at the end of the period (in shares) | 0 | ||||||||||
Exercisable at the end of the period (in shares) | 0 | ||||||||||
Weighted Average Grant Date Fair Value | |||||||||||
Options Outstanding beginning of the period (in dollars per share) | $ 0 | ||||||||||
Options granted (in dollars per share) | 3.24 | ||||||||||
Options exercised (in dollars per share) | 0 | ||||||||||
Options Outstanding end of the period (in dollars per share) | 3.24 | $ 0 | |||||||||
Vested and expected to vest at the end of the period (in dollars per share) | 0 | ||||||||||
Exercisable at the end of the period (in dollars per share) | $ 0 | ||||||||||
Aggregate Intrinsic Value | |||||||||||
Options outstanding at balance sheet date | $ 440,750 | $ 0 | |||||||||
Granted, intrinsic value | 1,000,242 | ||||||||||
Vested and expected to vest at the end of the period | 0 | ||||||||||
Exercisable at the end of the period | $ 0 | ||||||||||
Additional information | |||||||||||
Period over which future compensation cost expected to be recognized | 1 year 8 months 9 days | ||||||||||
Grant target threshold, percentage | 100.00% | ||||||||||
Compensation cost not yet recognized | $ 200,000 | ||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Maximum | |||||||||||
Additional information | |||||||||||
Attainment of target, granted, percentage | 200.00% | ||||||||||
Employee Stock Option, Performance-Based | President, Chief Executive Officer, and Board of Directors Chairman | Minimum | |||||||||||
Additional information | |||||||||||
Grant target threshold, percentage | 0.00% | ||||||||||
Employee Stock Option, Performance-Based | Vest April 4, 2017 | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||
Stock-based compensation | |||||||||||
Award vesting rights, percentage | 50.00% | ||||||||||
Employee Stock Option, Performance-Based | Vest April 4, 2018 | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||
Stock-based compensation | |||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||
Employee Stock Option, Performance-Based | Vest April 4, 2019 | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||
Stock-based compensation | |||||||||||
Award vesting rights, percentage | 25.00% | ||||||||||
Employee Stock Option, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | |||||||||||
Stock-based compensation | |||||||||||
Vesting schedule growth rate, measurement period | 2 years | ||||||||||
Options Outstanding | |||||||||||
Options Outstanding at the beginning of the period (in shares) | 0 | ||||||||||
Options granted (in shares) | 314,465 | ||||||||||
Options exercised (in shares) | 0 | ||||||||||
Options cancelled (in shares) | 0 | ||||||||||
Options Outstanding at the end of the period (in shares) | 314,465 | 0 | |||||||||
Vested and expected to vest at the end of the period (in shares) | 0 | ||||||||||
Exercisable at the end of the period (in shares) | 0 | ||||||||||
Weighted Average Grant Date Fair Value | |||||||||||
Options Outstanding beginning of the period (in dollars per share) | $ 0 | ||||||||||
Options granted (in dollars per share) | 0.94 | ||||||||||
Options exercised (in dollars per share) | 0 | ||||||||||
Options cancelled (in dollars per share) | 0 | ||||||||||
Options Outstanding end of the period (in dollars per share) | 0 | $ 0 | |||||||||
Vested and expected to vest at the end of the period (in dollars per share) | 0 | ||||||||||
Exercisable at the end of the period (in dollars per share) | $ 0 | ||||||||||
Aggregate Intrinsic Value | |||||||||||
Options outstanding at balance sheet date | $ 0 | $ 0 | |||||||||
Granted, intrinsic value | 294,550 | ||||||||||
Vested and expected to vest at the end of the period | 0 | ||||||||||
Exercisable at the end of the period | $ 0 | ||||||||||
Additional information | |||||||||||
Period over which future compensation cost expected to be recognized | 2 years 6 months 21 days | ||||||||||
Grant target threshold, percentage | 100.00% | ||||||||||
Compensation cost not yet recognized | $ 200,000 | ||||||||||
Employee Stock Option, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | Maximum | |||||||||||
Additional information | |||||||||||
Attainment of target, granted, percentage | 200.00% | ||||||||||
Employee Stock Option, Market-Based | President, Chief Executive Officer, and Board of Directors Chairman | Minimum | |||||||||||
Additional information | |||||||||||
Grant target threshold, percentage | 0.00% |
STOCK-BASED COMPENSATION (Restr
STOCK-BASED COMPENSATION (Restricted Stock Activity) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock Award, Service-Based | |||
Nonvested Outstanding | |||
Balance at beginning of the period (in shares) | 341,579 | 482,645 | |
Awards granted (in shares) | 300,650 | 481,992 | |
Awards vested (in shares) | (196,001) | (452,341) | |
Awards cancelled (in shares) | (71,848) | (170,717) | |
Balance at end of the period (in shares) | 374,380 | 341,579 | |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 10.61 | $ 12.59 | |
Awards granted (in dollars per share) | 7.59 | 9.05 | |
Awards vested (in dollars per share) | 9.54 | 10.56 | |
Awards cancelled (in dollars per share) | 9.65 | 11.88 | |
Balance at the end of the period (in dollars per share) | $ 8.94 | $ 10.61 | |
Aggregate Intrinsic Value | |||
Awards outstanding at Balance Sheet date | $ 3,348,080 | $ 3,624,153 | $ 6,074,136 |
Additional information | |||
Period over which future compensation cost expected to be recognized | 2 years 22 days | ||
Compensation cost not yet recognized | $ 2,600,000 | ||
President, Chief Executive Officer, and Board of Directors Chairman | Restricted Stock Award, Market-Based | |||
Nonvested Outstanding | |||
Balance at beginning of the period (in shares) | 0 | ||
Awards granted (in shares) | 70,423 | ||
Awards vested (in shares) | 0 | ||
Awards cancelled (in shares) | 0 | ||
Balance at end of the period (in shares) | 70,423 | 0 | |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 0 | ||
Awards granted (in dollars per share) | 6.17 | ||
Awards vested (in dollars per share) | 0 | ||
Awards cancelled (in dollars per share) | 0 | ||
Balance at the end of the period (in dollars per share) | $ 6.17 | $ 0 | |
Aggregate Intrinsic Value | |||
Awards outstanding at Balance Sheet date | $ 434,510 | $ 0 | |
Granted, aggregate intrinsic value | $ 434,510 | ||
Additional information | |||
Period over which future compensation cost expected to be recognized | 2 years 6 months 21 days | ||
Vesting schedule growth rate, measurement period | 2 years | ||
Vesting period | 3 years | ||
Attainment of target, granted, percentage | 100.00% | ||
Compensation cost not yet recognized | $ 300,000 | ||
President, Chief Executive Officer, and Board of Directors Chairman | Restricted Stock Award, Market-Based | Maximum | |||
Additional information | |||
Grant target threshold, percentage | 200.00% | ||
President, Chief Executive Officer, and Board of Directors Chairman | Restricted Stock Award, Market-Based | Minimum | |||
Additional information | |||
Grant target threshold, percentage | 0.00% |
STOCK-BASED COMPENSATION (Res67
STOCK-BASED COMPENSATION (Restricted Stock Performance Based) (Details) - Restricted Stock, Performance-Based - President, Chief Executive Officer, and Board of Directors Chairman - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Nonvested PRSAs Outstanding | ||
PRSAs granted (in shares) | 70,423 | |
Awards vested (in shares) | 0 | |
Awards cancelled (in shares) | 0 | |
Performance adjustments (in shares) | (8,360) | |
Balance at end of the period (in shares) | 62,063 | 0 |
Weighted Average Grant Date Fair Value | ||
Balance at the beginning of the period (in dollars per share) | $ 0 | |
PRSAs granted (in dollars per share) | 7.10 | |
PRSAs vested (in dollars per share) | 0 | |
PRSAs cancelled (in dollars per share) | 0 | |
Balance at the end of the period (in dollars per share) | $ 7.10 | $ 0 |
Aggregate Intrinsic Value | ||
Balance at the beginning of the period | $ 0 | |
Granted, aggregate intrinsic value | 500,003 | |
Balance at the end of the period | $ 440,647 | $ 0 |
Additional information | ||
Attainment of target, granted, percentage | 100.00% | |
Compensation cost not yet recognized | $ 200,000 | |
Period over which future compensation cost expected to be recognized | 1 year 8 months 9 days | |
Vest April 4, 2017 | ||
Additional information | ||
Award vesting rights, percentage | 50.00% | |
Vest April 4, 2018 | ||
Additional information | ||
Award vesting rights, percentage | 25.00% | |
Vest April 4, 2019 | ||
Additional information | ||
Award vesting rights, percentage | 25.00% | |
Maximum | ||
Additional information | ||
Grant target threshold, percentage | 200.00% | |
Minimum | ||
Additional information | ||
Grant target threshold, percentage | 0.00% |
STOCK-BASED COMPENSATION (Res68
STOCK-BASED COMPENSATION (Restricted Stock Unit Activity) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | |
Restricted Stock, Service-Based | |||
Units Outstanding | |||
Balance at beginning of the period (in shares) | 341,579 | 482,645 | |
Units granted (in shares) | 300,650 | 481,992 | |
Units released (in shares) | (196,001) | (452,341) | |
Units cancelled (in shares) | (71,848) | (170,717) | |
Balance at end of the period (in shares) | 374,380 | 341,579 | |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 10.61 | $ 12.59 | |
Units granted (in dollars per share) | 7.59 | 9.05 | |
Units released (in dollars per share) | 9.54 | 10.56 | |
Units cancelled (in dollars per share) | 9.65 | 11.88 | |
Balance at the end of the period (in dollars per share) | $ 8.94 | $ 10.61 | |
Additional information | |||
Aggregate grant date fair value of awards | $ 2,300,000 | $ 4,400,000 | |
Restricted Stock Units (RSUs) | |||
Units Outstanding | |||
Balance at beginning of the period (in shares) | 187,942 | ||
Units granted (in shares) | 67,663 | 63,436 | |
Units released (in shares) | (58,719) | ||
Units cancelled (in shares) | (8,829) | ||
Balance at end of the period (in shares) | 188,057 | 187,942 | |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 11.16 | ||
Units granted (in dollars per share) | 7.70 | ||
Units released (in dollars per share) | 11.51 | ||
Units cancelled (in dollars per share) | 8.50 | ||
Balance at the end of the period (in dollars per share) | $ 9.93 | $ 11.16 | |
Aggregate Intrinsic Value | |||
Units Outstanding at balance sheet date | $ 1,675,588 | $ 1,257,332 | $ 1,675,588 |
Units Outstanding at balance sheet date | 1,675,588 | 1,257,332 | |
Additional information | |||
Units, vested and expected to vest end of period, units outstanding (in shares) | 115,263 | ||
Units, vested and deferred end of period, units outstanding (in shares) | 82,157 | ||
Weighted Average Grant Date Fair Value, Vested and expected to vest end of period (in dollars per share) | $ 7.70 | ||
Weighted Average Grant Date Fair Value, Vested and deferred end of period (in dollars per share) | $ 12.44 | ||
Aggregate Intrinsic Value, Vested and expected to vest end of period | $ 1,026,990 | ||
Aggregate Intrinsic Value, Vested and deferred end of period | $ 732,019 | ||
Aggregate grant date fair value of awards | $ 500,000 | $ 500,000 | |
Vesting period | 1 year |
STOCKHOLDERS' (DEFICIT) EQUITY
STOCKHOLDERS' (DEFICIT) EQUITY (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Aug. 22, 2013 | |
Stockholders' Equity Note [Abstract] | |||||
Capital units, authorized (in shares) | 200,000,000 | ||||
Common stock | |||||
Common stock, shares authorized (in shares) | 190,000,000 | 190,000,000 | |||
Common stock, par value (in dollars per share) | $ 0.00005 | $ 0.00005 | |||
Common stock, shares issued (in shares) | 23,450,864 | 23,149,634 | |||
Common stock, shares outstanding (in shares) | 22,450,864 | 22,149,634 | |||
Preferred stock | |||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||
Share repurchase program | |||||
Share repurchase program, number of shares authorized to repurchase, value | $ 25,000,000 | ||||
Stock repurchased during the year, value | $ 11,400,000 | ||||
Shares repurchased under the share repurchase program (in shares) | 0 | 0 | 0 | 1,000,000 | |
Stock repurchased during the year, weighted average price (in dollars per share) | $ 11.44 |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE BENEFIT PLAN | |||
Expenses for the plan | $ 2 | $ 2 | $ 2.2 |
Maximum | |||
EMPLOYEE BENEFIT PLAN | |||
Percentage of contributions vested | 4.00% |
RESTRUCTURING AND OTHER EMPLO71
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE (Restructuring Reserve) (Details) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | |
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | $ 5,193 | $ 8,791 | |
Incurred through December 31, 2016 | $ 13,984 | ||
Cost of revenue | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 573 | 113 | |
Sales and marketing | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 2,324 | 4,492 | |
Research and development | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 913 | 602 | |
General and administrative | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 1,383 | 3,584 | |
Severance costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 4,438 | 7,240 | |
Incurred through December 31, 2016 | 11,678 | ||
Contract termination costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 165 | 1,134 | |
Incurred through December 31, 2016 | 1,299 | ||
Other costs | |||
Restructuring Reserve [Roll Forward] | |||
Cost Incurred | 590 | 417 | |
Incurred through December 31, 2016 | 1,007 | ||
Restructuring Plan, 2016 | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Cost Incurred | 5,122 | ||
Cash Payments | (4,340) | ||
Other adjustments | (190) | ||
Ending Balance | 592 | 0 | 592 |
Restructuring Plan, 2016 | Severance costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Cost Incurred | 4,367 | ||
Cash Payments | (3,867) | ||
Other adjustments | 0 | ||
Ending Balance | 500 | 0 | 500 |
Restructuring Plan, 2016 | Contract termination costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Cost Incurred | 165 | ||
Cash Payments | (74) | ||
Other adjustments | (69) | ||
Ending Balance | 22 | 0 | 22 |
Restructuring Plan, 2016 | Other costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | ||
Cost Incurred | 590 | ||
Cash Payments | (399) | ||
Other adjustments | (121) | ||
Ending Balance | 70 | 0 | 70 |
Restructuring Plan, 2015 | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 252 | 0 | 0 |
Cost Incurred | 71 | 8,791 | |
Cash Payments | (323) | (7,491) | |
Other adjustments | (1,048) | ||
Ending Balance | 0 | 252 | 0 |
Restructuring Plan, 2015 | Severance costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 252 | 0 | 0 |
Cost Incurred | 71 | 7,240 | |
Cash Payments | (323) | (5,940) | |
Other adjustments | (1,048) | ||
Ending Balance | 0 | 252 | 0 |
Restructuring Plan, 2015 | Contract termination costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | 0 | 0 |
Cost Incurred | 0 | 1,134 | |
Cash Payments | 0 | (1,134) | |
Other adjustments | 0 | ||
Ending Balance | 0 | 0 | 0 |
Restructuring Plan, 2015 | Other costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | 0 | 0 |
Cost Incurred | 0 | 417 | |
Cash Payments | 0 | (417) | |
Other adjustments | 0 | ||
Ending Balance | $ 0 | $ 0 | $ 0 |
RESTRUCTURING AND OTHER EMPLO72
RESTRUCTURING AND OTHER EMPLOYEE SEVERANCE (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
France Related Restructuring | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Severance costs | $ 1 | ||||
Other Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Severance costs | $ 3.2 | ||||
Severance costs | France Related Restructuring | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Payments for restructuring | $ 0.5 | $ 0.4 | |||
Severance costs | Other Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Payments for restructuring | $ 0.1 | $ 0.8 | $ 2.3 | ||
Accrued Compensation and Other Current Liabilities | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring reserve | $ 0.6 |
LEASE ABANDONMENT AND TERMINA73
LEASE ABANDONMENT AND TERMINATION LEASE ABANDONMENT AND TERMINATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Restructuring Cost and Reserve [Line Items] | ||||
Lease abandonment charge | $ 5,193 | $ 8,791 | ||
Lease abandonment expense | 1,644 | 55 | $ 3,812 | |
Facility Closing | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Lease abandonment charge | $ 1,644 | $ 55 | ||
Facility Closing | VIRGINIA | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Lease abandonment charge | $ 3,200 | |||
Lease abandonment expense | $ 1,600 |
LEASE ABANDONMENT AND TERMINA74
LEASE ABANDONMENT AND TERMINATION (Lease Abandonment Activity) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring Reserve [Roll Forward] | ||
Costs incurred and charged to expense | $ 5,193 | $ 8,791 |
Facility Closing | ||
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 1,282 | 1,679 |
Costs incurred and charged to expense | 1,644 | 55 |
Principal reductions | (803) | (452) |
Ending Balance | 2,123 | 1,282 |
Accrued lease abandonment costs liability: | ||
Short-term | 1,047 | 455 |
Long-term | $ 1,076 | $ 827 |
INCOME TAXES (Schedule of Defer
INCOME TAXES (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Inventory | $ 735 | $ 564 |
Net operating and capital loss carryforwards | 61,174 | 48,334 |
Deferred revenue | 10,862 | 13,908 |
Accrued liabilities | 6,975 | 9,780 |
Stock-based compensation | 4,440 | 4,656 |
Amortization and depreciation | 1,056 | 31 |
Bad debt reserve | 389 | 398 |
Foreign and other tax credits | 1,881 | 1,517 |
Gross deferred tax assets | 87,512 | 79,188 |
Valuation allowance | (78,363) | (70,464) |
Net deferred tax assets | 9,149 | 8,724 |
Deferred tax liabilities: | ||
Goodwill and indefinite lived intangibles | (6,098) | (4,782) |
Deferred sales commissions | (7,060) | (7,337) |
Prepaid expenses | (656) | (625) |
Foreign currency translation | (1,508) | (973) |
Other | 0 | (5) |
Gross deferred tax liabilities | (15,322) | (13,722) |
Net deferred tax liabilities | $ (6,173) | $ (4,998) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2012 | |
Income Tax Examination [Line Items] | ||||
Income tax expense | $ 2,503,000 | $ 1,159,000 | $ (6,489,000) | |
Goodwill, expected tax deductible amount | 0 | |||
Valuation allowance | 78,363,000 | 70,464,000 | ||
Unrecognized tax benefits | 0 | 0 | 446,000 | |
Accrued interest and penalties | 0 | 0 | ||
Effective income tax rate reconciliation, tax benefit amount | 0 | 96,000 | 0 | |
Unrecognized tax benefits, resulting from settlements with taxing authorities | 0 | (446,000) | ||
Accumulated loss | 177,344,000 | 149,794,000 | ||
Losses before income tax, foreign subsidiaries | (84,000) | (4,179,000) | (19,761,000) | |
Undistributed earnings of foreign subsidiaries | 12,000,000 | |||
Income tax payments | 800,000 | $ 1,400,000 | $ 1,700,000 | |
Foreign | ||||
Income Tax Examination [Line Items] | ||||
Accumulated loss | $ 21,600,000 | |||
Brazil | ||||
Income Tax Examination [Line Items] | ||||
Valuation allowance | $ 400,000 | |||
Japan | ||||
Income Tax Examination [Line Items] | ||||
Valuation allowance | 2,100,000 | |||
UNITED STATES | ||||
Income Tax Examination [Line Items] | ||||
Valuation allowance | $ 23,100,000 |
INCOME TAXES (Net Operating Los
INCOME TAXES (Net Operating Losses Carryforward and Tax Credit Carryforward) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | $ 277,063 |
U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 125,925 |
Capital loss carryforward, amount | 6,837 |
Tax credit carryforward, amount | 1,881 |
State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 124,858 |
Capital loss carryforward, amount | 5,075 |
Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 4,309 |
France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 8,193 |
Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 11,824 |
Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 1,954 |
2017-2021 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 679 |
2017-2021 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 6,837 |
Tax credit carryforward, amount | 0 |
2017-2021 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 679 |
Capital loss carryforward, amount | 4,947 |
2017-2021 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2017-2021 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2017-2021 | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2017-2021 | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2022-2026 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 14,132 |
2022-2026 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 1,517 |
2022-2026 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 2,308 |
Capital loss carryforward, amount | 0 |
2022-2026 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2022-2026 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2022-2026 | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 11,824 |
2022-2026 | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2027-2031 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 11,903 |
2027-2031 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 121 |
2027-2031 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 11,526 |
Capital loss carryforward, amount | 128 |
2027-2031 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2027-2031 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2027-2031 | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2027-2031 | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 377 |
2032-2036 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 163,192 |
2032-2036 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 86,621 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 218 |
2032-2036 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 76,568 |
Capital loss carryforward, amount | 0 |
2032-2036 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2032-2036 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2032-2036 | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2032-2036 | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 3 |
2037-2041 | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 73,990 |
2037-2041 | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 39,304 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 0 |
2037-2041 | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 33,777 |
Capital loss carryforward, amount | 0 |
2037-2041 | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2037-2041 | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2037-2041 | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
2037-2041 | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 909 |
Indefinite | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 13,167 |
Indefinite | U.S. Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Tax credit carryforward, amount | 25 |
Indefinite | State | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Capital loss carryforward, amount | 0 |
Indefinite | Brazil | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 4,309 |
Indefinite | France | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 8,193 |
Indefinite | Japan | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | 0 |
Indefinite | Other Foreign | Foreign | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforward, amount | $ 665 |
INCOME TAXES (Loss Before Incom
INCOME TAXES (Loss Before Income Taxes and Provision for Taxes) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components of income (loss) before income tax expense | |||
United States | $ (24,963,000) | $ (41,458,000) | $ (60,434,000) |
Foreign | (84,000) | (4,179,000) | (19,761,000) |
Loss before income taxes | (25,047,000) | (45,637,000) | (80,195,000) |
The provision for taxes on income consists of the following (in thousands): | |||
Federal | 0 | (157,000) | 29,000 |
State | 78,000 | 96,000 | 23,000 |
Foreign | 1,250,000 | 444,000 | 1,258,000 |
Total current | 1,328,000 | 383,000 | 1,310,000 |
Deferred: | |||
Federal | 1,147,000 | 1,148,000 | (5,425,000) |
State | 169,000 | 169,000 | (797,000) |
Foreign | (141,000) | (541,000) | (1,577,000) |
Total deferred | 1,175,000 | 776,000 | (7,799,000) |
Provision (benefit) for income taxes | 2,503,000 | 1,159,000 | (6,489,000) |
Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties | |||
Balance at the beginning of the period | 0 | 446,000 | |
Increases for tax positions taken during prior years | 0 | 0 | |
Settlements with tax authorities | 0 | 446,000 | |
Reductions for tax positions taken during prior years | 0 | 0 | |
Lapse of statute of limitations | 0 | 0 | |
Balance at the end of the period | $ 0 | $ 0 | $ 446,000 |
INCOME TAXES (Reconciliation) (
INCOME TAXES (Reconciliation) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of income tax provision (benefit) computed at the U.S. federal statutory rate to income tax expense | |||
Income tax benefit at statutory federal rate | $ (8,766) | $ (15,973) | $ (28,068) |
State income tax expense, net of federal income tax effect | 219 | 231 | (782) |
Acquired intangibles | 0 | 0 | 0 |
Nondeductible goodwill impairment | 604 | 1,961 | 0 |
Other nondeductible expenses | 384 | 88 | 482 |
Tax rate differential on foreign operations | (474) | (1,019) | 276 |
Increase in valuation allowance | 10,404 | 15,713 | 21,772 |
Tax audit settlements | 0 | (96) | 0 |
Change in prior year estimates | 0 | 225 | (69) |
Other tax credits | 129 | 29 | (102) |
Other | 3 | 0 | 2 |
Provision (benefit) for income taxes | $ 2,503 | $ 1,159 | $ (6,489) |
COMMITMENTS AND CONTINGENCIES80
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Future minimum operating lease payments | |||
2,017 | $ 4,552 | ||
2,018 | 4,363 | ||
2,019 | 1,741 | ||
2,020 | 1,004 | ||
2,021 | 590 | ||
Thereafter | 0 | ||
Total future minimum operating lease payments | 12,250 | ||
Rent and Royalty | |||
Rent expense | 4,000 | $ 5,100 | $ 5,600 |
Royalty expense | $ 300 | $ 200 | $ 31 |
SEGMENT INFORMATION (Operating
SEGMENT INFORMATION (Operating Results by Segment) (Details) | 2 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 29, 2016segment | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenue: | ||||||||||||
Revenue | $ 51,678,000 | $ 48,693,000 | $ 45,716,000 | $ 48,002,000 | $ 58,015,000 | $ 49,802,000 | $ 51,411,000 | $ 58,442,000 | $ 194,089,000 | $ 217,670,000 | $ 261,853,000 | |
Segment contribution: | ||||||||||||
Operating income (loss) | 26,920,000 | 43,813,000 | 78,850,000 | |||||||||
Unallocated expenses, net: | ||||||||||||
Unallocated cost of sales | 34,321,000 | 38,527,000 | 53,054,000 | |||||||||
Unallocated sales and marketing | 114,340,000 | 136,084,000 | 173,208,000 | |||||||||
Unallocated research and development | 26,273,000 | 29,939,000 | 33,176,000 | |||||||||
Unallocated general and administrative | 40,501,000 | 50,124,000 | 57,120,000 | |||||||||
Unallocated impairment | 0 | |||||||||||
Unallocated lease abandonment and termination | 1,644,000 | 55,000 | 3,812,000 | |||||||||
Unallocated non-operating (income)/expense | (1,873,000) | 1,824,000 | 1,345,000 | |||||||||
Loss before income taxes | $ (25,047,000) | $ (45,637,000) | $ (80,195,000) | |||||||||
Segment contribution margin: | ||||||||||||
Number of operating segments | segment | 2 | 3 | ||||||||||
Enterprise & Education Language | ||||||||||||
Segment contribution margin: | ||||||||||||
Segment contribution margin, percent | 39.30% | 28.00% | 22.70% | |||||||||
Literacy | ||||||||||||
Unallocated expenses, net: | ||||||||||||
Unallocated impairment | $ 0 | |||||||||||
Segment contribution margin: | ||||||||||||
Segment contribution margin, percent | 16.50% | 3.30% | (30.10%) | |||||||||
Consumer | ||||||||||||
Segment contribution margin: | ||||||||||||
Segment contribution margin, percent | 24.00% | 25.10% | 15.80% | |||||||||
Operating segments | ||||||||||||
Segment contribution: | ||||||||||||
Operating income (loss) | $ (55,058,000) | $ (52,097,000) | $ (41,973,000) | |||||||||
Operating segments | Enterprise & Education Language | ||||||||||||
Revenue: | ||||||||||||
Revenue | 72,083,000 | 76,129,000 | 74,788,000 | |||||||||
Segment contribution: | ||||||||||||
Operating income (loss) | (28,304,000) | (21,321,000) | (16,945,000) | |||||||||
Operating segments | Literacy | ||||||||||||
Revenue: | ||||||||||||
Revenue | 34,123,000 | 21,928,000 | 9,912,000 | |||||||||
Segment contribution: | ||||||||||||
Operating income (loss) | (5,634,000) | (729,000) | 2,984,000 | |||||||||
Operating segments | Consumer | ||||||||||||
Revenue: | ||||||||||||
Revenue | 87,883,000 | 119,613,000 | 177,153,000 | |||||||||
Segment contribution: | ||||||||||||
Operating income (loss) | (21,120,000) | (30,047,000) | (28,012,000) | |||||||||
Segment Reconciling Items | ||||||||||||
Segment contribution: | ||||||||||||
Operating income (loss) | 80,105,000 | 97,734,000 | 122,168,000 | |||||||||
Unallocated expenses, net: | ||||||||||||
Unallocated cost of sales | 5,624,000 | 3,023,000 | 2,775,000 | |||||||||
Unallocated sales and marketing | 6,574,000 | 9,303,000 | 7,632,000 | |||||||||
Unallocated research and development | 26,273,000 | 29,939,000 | 33,176,000 | |||||||||
Unallocated general and administrative | 37,933,000 | 46,836,000 | 53,095,000 | |||||||||
Unallocated impairment | 3,930,000 | 6,754,000 | 20,333,000 | |||||||||
Unallocated lease abandonment and termination | 1,644,000 | 55,000 | 3,812,000 | |||||||||
Unallocated non-operating (income)/expense | $ (1,873,000) | $ 1,824,000 | $ 1,345,000 |
SEGMENT INFORMATION (Geographic
SEGMENT INFORMATION (Geographic Area and Type) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Geographic Information | |||||||||||
Revenue | $ 51,678 | $ 48,693 | $ 45,716 | $ 48,002 | $ 58,015 | $ 49,802 | $ 51,411 | $ 58,442 | $ 194,089 | $ 217,670 | $ 261,853 |
Long-lived assets | 24,795 | 22,532 | 24,795 | 22,532 | |||||||
Language learning | |||||||||||
Geographic Information | |||||||||||
Revenue | 155,532 | 191,568 | 249,340 | ||||||||
Literacy | |||||||||||
Geographic Information | |||||||||||
Revenue | 34,123 | 21,928 | 9,912 | ||||||||
Brain Fitness | |||||||||||
Geographic Information | |||||||||||
Revenue | 4,434 | 4,174 | 2,601 | ||||||||
United States | |||||||||||
Geographic Information | |||||||||||
Revenue | 162,815 | 177,966 | 212,070 | ||||||||
Long-lived assets | 21,652 | 18,704 | 21,652 | 18,704 | |||||||
International | |||||||||||
Geographic Information | |||||||||||
Revenue | 31,274 | 39,704 | $ 49,783 | ||||||||
Long-lived assets | $ 3,143 | $ 3,828 | $ 3,143 | $ 3,828 |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Related Party Transactions [Abstract] | ||
Outstanding receivables from employees | $ 22 | $ 18 |
VALUATION AND QUALIFYING ACCO84
VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts: | |||
Changes in the valuation and qualifying accounts | |||
Beginning balance | $ 1,196 | $ 1,434 | $ 1,000 |
Charged to costs and expenses | 709 | 1,657 | 2,405 |
Deductions | (833) | (1,895) | (1,971) |
Ending balance | 1,072 | 1,196 | 1,434 |
Promotional rebate and coop advertising reserves: | |||
Changes in the valuation and qualifying accounts | |||
Beginning balance | 16,910 | 23,437 | 13,025 |
Charged to costs and expenses | 18,337 | 40,563 | 39,249 |
Deductions | (29,279) | (47,090) | (28,837) |
Ending balance | 5,968 | 16,910 | 23,437 |
Sales return reserve: | |||
Changes in the valuation and qualifying accounts | |||
Beginning balance | 3,728 | 3,570 | 4,834 |
Deductions | (7,424) | (11,316) | (13,275) |
Charged against revenue | 5,034 | 11,474 | 12,011 |
Ending balance | 1,338 | 3,728 | 3,570 |
Deferred income tax asset valuation allowance: | |||
Changes in the valuation and qualifying accounts | |||
Beginning balance | 70,464 | 53,809 | 33,866 |
Charged to costs and expenses | 7,899 | 16,655 | 19,943 |
Deductions | 0 | 0 | 0 |
Ending balance | $ 78,363 | $ 70,464 | $ 53,809 |
SUPPLEMENTAL QUARTERLY FINANC85
SUPPLEMENTAL QUARTERLY FINANCIAL INFORMATION (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 51,678 | $ 48,693 | $ 45,716 | $ 48,002 | $ 58,015 | $ 49,802 | $ 51,411 | $ 58,442 | $ 194,089 | $ 217,670 | $ 261,853 |
Gross profit | 41,740 | 40,322 | 37,752 | 39,954 | 48,476 | 41,136 | 42,391 | 47,140 | 159,768 | 179,143 | 208,799 |
Net loss | $ (5,613) | $ (5,452) | $ (8,978) | $ (7,507) | $ (11,436) | $ (7,301) | $ (8,175) | $ (19,884) | $ (27,550) | $ (46,796) | $ (73,706) |
Basic income (loss) per share (in dollars per share) | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.52) | $ (0.34) | $ (0.38) | $ (0.95) | $ (1.25) | $ (2.17) | $ (3.47) |
Shares used in basic per share computation (in shares) | 22,065 | 21,993 | 21,948 | 21,867 | 21,801 | 21,771 | 21,689 | 21,018 | 21,969 | 21,571 | 21,253 |
Diluted income (loss) per share (in dollars per share) | $ (0.25) | $ (0.25) | $ (0.41) | $ (0.34) | $ (0.52) | $ (0.34) | $ (0.38) | $ (0.95) | $ (1.25) | $ (2.17) | $ (3.47) |
Shares used in diluted per share computation (in shares) | 22,065 | 21,993 | 21,948 | 21,867 | 21,801 | 21,771 | 21,689 | 21,018 | 21,969 | 21,571 | 21,253 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Sourcenext Corporation Licensing Agreement - Subsequent Event | Mar. 13, 2017USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Estimated proceeds upon signing licensing agreement | $ 9,000,000 |
Estimated proceeds upon completion of additional requirements | 4,000,000 |
Estimated minimum proceeds to be received | $ 6,000,000 |
Estimated minimum proceeds to be received time period | 10 years |