Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Dec. 31, 2014 | Jan. 29, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | ITERIS, INC. | |
Entity Central Index Key | 350868 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -28 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 32,553,876 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q3 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $21,076 | $20,414 |
Trade accounts receivable, net of allowance for doubtful accounts of $314 and $532 at December 31, 2014 and March 31, 2014, respectively | 11,008 | 12,349 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 5,153 | 5,813 |
Inventories | 2,773 | 2,546 |
Deferred income taxes | 1,429 | 1,429 |
Prepaid expenses and other current assets | 1,610 | 1,275 |
Total current assets | 43,049 | 43,826 |
Property and equipment, net | 2,013 | 1,546 |
Deferred income taxes | 6,596 | 6,112 |
Intangible assets, net | 1,120 | 1,584 |
Goodwill | 17,318 | 17,318 |
Other assets | 213 | 221 |
Total assets | 70,309 | 70,607 |
Current liabilities: | ||
Trade accounts payable | 5,379 | 5,913 |
Accrued payroll and related expenses | 3,787 | 3,971 |
Accrued liabilities | 1,105 | 1,643 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 2,065 | 1,391 |
Total current liabilities | 12,336 | 12,918 |
Deferred rent | 929 | |
Unrecognized tax benefits | 177 | 199 |
Total liabilities | 13,442 | 13,117 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $1.00 par value: Authorized shares - 2,000 Issued and outstanding shares - none | ||
Common stock, $0.10 par value: Authorized shares - 70,000 at December 31, 2014 and March 31, 2014, Issued and outstanding shares - 32,554 at December 31, 2014 and 32,788 at March 31, 2014 | 3,256 | 3,280 |
Additional paid-in capital | 135,691 | 135,986 |
Accumulated deficit | -82,080 | -81,776 |
Total stockholders' equity | 56,867 | 57,490 |
Total liabilities and stockholders' equity | $70,309 | $70,607 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, except Per Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ||
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $314 | $532 |
Preferred stock, par value (in dollars per share) | $1 | $1 |
Preferred stock, Authorized shares | 2,000 | 2,000 |
Preferred stock, Issued shares | 0 | 0 |
Common stock, par value (in dollars per share) | $0.10 | $0.10 |
Common stock, Authorized shares | 70,000 | 70,000 |
Common stock, Issued shares | 32,554 | 32,788 |
Common stock, outstanding shares | 32,554 | 32,788 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Statements of Operations | ||||
Total revenues | $17,540 | $16,548 | $54,206 | $50,605 |
Cost of revenues | 10,678 | 10,356 | 33,238 | 30,775 |
Gross profit | 6,862 | 6,192 | 20,968 | 19,830 |
Operating expenses: | ||||
Selling, general and administrative | 5,734 | 4,632 | 17,642 | 14,528 |
Research and development | 1,618 | 1,085 | 3,984 | 2,818 |
Amortization of intangible assets | 102 | 161 | 341 | 483 |
Change in fair value of contingent consideration | 1 | 5 | 9 | 21 |
Total operating expenses | 7,455 | 5,883 | 21,976 | 17,850 |
Operating (loss) income | -593 | 309 | -1,008 | 1,980 |
Non-operating (expense) income: | ||||
Other (expense) income, net | -8 | -3 | -11 | 6 |
Interest income, net | 6 | 8 | 2 | |
(Loss) income from continuing operations before income taxes | -595 | 314 | -1,017 | 1,986 |
Benefit (provision) for income taxes | 441 | -86 | 562 | -667 |
(Loss) income from continuing operations | -154 | 228 | -455 | 1,319 |
Gain on sale of discontinued operation, net of tax | 56 | 10 | 151 | 40 |
Net (loss) income | ($98) | $238 | ($304) | $1,359 |
(Loss) income per share from continuing operations - basic and diluted | $0 | $0.01 | ($0.01) | $0.04 |
Gain per share from sale of discontinued operation - basic and diluted (in dollars per share) | $0 | $0 | $0 | $0 |
Net (loss) income per share - basic and diluted | $0 | $0.01 | ($0.01) | $0.04 |
Shares used in basic per share calculations (in shares) | 32,568 | 32,734 | 32,603 | 32,628 |
Shares used in diluted per share calculations (in shares) | 32,568 | 32,897 | 32,603 | 32,826 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Cash flows from operating activities | ||
Net (loss) income | ($304) | $1,359 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Deferred income taxes | -484 | 699 |
Depreciation of property and equipment | 380 | 585 |
Stock-based compensation | 274 | 253 |
Amortization of intangible assets | 464 | 536 |
Change in fair value of contingent consideration | 9 | 21 |
Gain on sale of discontinued operation, net of tax | -151 | -40 |
Loss on disposal of property and equipment | 11 | |
Changes in operating assets and liabilities, net of effects of discontinued operation: | ||
Accounts receivable | 1,341 | 303 |
Net costs and estimated earnings in excess of billings | 1,334 | 353 |
Inventories | -227 | -203 |
Prepaid expenses and other assets | -277 | -522 |
Accounts payable and accrued expenses | -20 | -993 |
Net cash provided by operating activities | 2,350 | 2,351 |
Cash flows from investing activities | ||
Purchases of property and equipment | -858 | -356 |
Capitalized software | -301 | |
Net proceeds from sale of business segment | 99 | |
Net cash (used in) investing activities | -759 | -657 |
Cash flows from financing activities | ||
Deferred payment for prior business combination | -336 | -659 |
Repurchases of common stock | -606 | -339 |
Proceeds from stock option exercises | 33 | 185 |
Issuance of common stock pursuant to restricted stock units | -20 | -31 |
Net cash used in financing activities | -929 | -844 |
Increase in cash and cash equivalents | 662 | 850 |
Cash and cash equivalents at beginning of period | 20,414 | 19,137 |
Cash and cash equivalents at end of period | $21,076 | $19,987 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2014 | |
Description of Business and Summary of Significant Accounting Policies | |
Description of Business and Summary of Significant Accounting Policies | 1.Description of Business and Summary of Significant Accounting Policies |
Description of Business | |
Iteris, Inc. (referred to collectively with our subsidiaries in these consolidated financial statements as “Iteris,” the “Company,” “we,” “our” and “us”) is a leading provider of intelligent information solutions for the traffic management market. We are focused on the development and application of advanced technologies and software-based information systems that reduce traffic congestion, provide measurement, management and predictive traffic and weather analytics and improve the safety of surface transportation systems infrastructure. We also believe our products, services and solutions, in conjunction with sound traffic management, minimize the environmental impact of traffic congestion. By combining our unique intellectual property, products, decades of experience in traffic management, weather forecasting solutions and information technologies, we offer a broad range of Intelligent Transportation Systems (“ITS”) solutions to customers throughout the U.S. and internationally. We are also making significant investments to leverage our existing technologies and further expand our software-based information systems to offer solutions to the precision agriculture technology markets. Iteris was incorporated in Delaware in 1987. | |
Basis of Presentation | |
Our unaudited consolidated financial statements include the accounts of Iteris, Inc. and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. | |
The results of continuing operations for all periods presented in the unaudited consolidated financial statements exclude the financial impact of a discontinued operation. See Note 3, “Sale of Vehicle Sensors”, for further discussion related to the discontinued operation presentation. | |
Reclassification | |
Certain prior year amounts in the unaudited consolidated statement of cash flows have been reclassified from cash and cash equivalents at the end of the period into prepaid expenses and other current assets for consistency with the current period presentation. The amount reclassified in the unaudited consolidated statement of cash flows for the nine months ended December 31, 2013 was approximately $524,000. | |
Use of Estimates | |
The preparation of consolidated financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in the preparation of the consolidated financial statements include the allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, inventory and warranty reserves, costs to complete long-term contracts, indirect cost rates used in cost-plus contracts, contract reserves, the valuation of purchased intangible assets and goodwill, the valuation of equity instruments and estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate the stock-based compensation. | |
Revenue Recognition | |
Product revenues and related costs of sales are recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery under the terms of the arrangement has occurred, (iii) the price to the customer is fixed or determinable, and (iv) collection of the receivable is reasonably assured. These criteria are typically met at the time of product shipment, but in certain circumstances, may not be met until receipt or acceptance by the customer. Accordingly, at the date revenue is recognized, the significant obligations or uncertainties concerning the sale have been resolved. | |
Transportation Systems and iPerform revenues are derived primarily from long-term contracts with governmental agencies. When appropriate, revenues are recognized using the percentage of completion method of accounting, whereby revenue is recognized as contract performance progresses and is determined based on the relationship of costs incurred to total estimated costs. Any anticipated losses on contracts are charged to earnings when identified. Changes in job performance and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenues and are recognized in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. Certain of our revenues are recognized as services are performed and amounts are earned, which is measured by time incurred or other contractual milestones or output measures. Revenues accounted for in this manner generally relate to certain fixed fee professional services, cost-plus fixed fee or time-and-materials contracts. Revenues for ongoing operations and maintenance services contracts are generally accounted for ratably as the services are performed throughout the term of the contract. Payments received in advance of services performed are deferred and recognized when the related services are performed. | |
We recognize revenue from the sale of deliverables that are part of a multiple-element arrangement in accordance with applicable accounting guidance that establishes a relative selling price hierarchy permitting the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor specific objective evidence (“VSOE”) nor third-party evidence (“TPE”) of fair value is available for that deliverable. In the absence of VSOE or TPE of the standalone selling price for one or more delivered or undelivered elements in a multiple-element arrangement, we are required to estimate the selling prices of those elements. Overall arrangement consideration is allocated to each element (both delivered and undelivered items) that has stand-alone value based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on our estimated selling prices. | |
We account for multiple-element arrangements that consist only of software and software-related services in accordance with applicable accounting guidance for software and software-related transactions. For such transactions, revenue on arrangements that include multiple elements is allocated to each element based on the relative fair value of each element, and fair value is determined by VSOE. If we cannot objectively determine the fair value of any undelivered element included in such multiple-element arrangements and the only undelivered element is post-contract customer support or maintenance, and VSOE of the fair value of such support or maintenance does not exist, revenue from the entire arrangement is recognized ratably over the support period. When the fair value of a delivered element has not been established but VSOE of fair value exists for the undelivered elements, we use the residual method to recognize revenue if the fair value of all undelivered elements is determinable. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. | |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | |
Costs and estimated earnings in excess of billings on uncompleted contracts in the accompanying consolidated balance sheets represent unbilled amounts earned and reimbursable under services sales arrangements. At any given period-end, a large portion of the balance in this account represents the accumulation of labor, materials and other costs that have not been billed due to timing, whereby the accumulation of each month’s costs and earnings are not administratively billed until the subsequent month. Also included in this account are amounts that will become billable according to contract terms, which usually require the consideration of the passage of time, achievement of milestones or completion of the project. Such unbilled amounts are expected to be billed and collected within the next twelve months. | |
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts | |
Billings in excess of costs and estimated earnings on uncompleted contracts in the accompanying consolidated balance sheets is comprised of cash collected from customers and billings to customers on contracts in advance of work performed, advance payments negotiated as a contract condition, estimated losses on uncompleted contracts, project-related legal liabilities and other project-related reserves. The unearned amounts are expected to be earned within the next twelve months. | |
We record provisions for estimated losses on uncompleted contracts in the period in which such losses become known. The cumulative effects of revisions to contract revenues and estimated completion costs are recorded in the accounting period in which the amounts become evident and can be reasonably estimated. These revisions can include such items as the effects of change orders and claims, warranty claims, liquidated damages or other contractual penalties and adjustments for contract closeout settlements. | |
Concentration of Credit Risk | |
Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. | |
Cash and cash equivalents consist primarily of demand deposits and money market funds maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with high credit quality financial institutions, and therefore are believed to have minimal credit risk. | |
Our accounts receivable are primarily derived from billings with customers located throughout North America, as well as in the Middle East, Europe, South America and Asia. We generally do not require collateral or other security from our customers. We maintain an allowance for doubtful accounts for potential credit losses, which losses have historically been within management’s expectations. | |
Fair Values of Financial Instruments | |
The fair value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate carrying value because of the short period of time to maturity. | |
Cash and Cash Equivalents | |
Cash and cash equivalents consist of cash and short-term investments with initial maturities of ninety days or less. | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets were $1.6 million as of December 31, 2014 and $1.3 million as of March 31, 2014 and included approximately $520,000 of cash designated as collateral on performance bonds, as required under certain of our Transportation Systems contracts in the Middle East. The performance bonds require us to maintain 100% cash value of the bonds as collateral in a bank that is local to the purchasing agency. The performance bond collateral is required throughout the delivery of our services and maintained in the local bank until the contract is closed by the purchasing agency. We expect these requirements, and the related cash collateral restrictions, to remain in place through calendar year 2015. | |
Allowance for Doubtful Accounts | |
The collectability of our accounts receivable is evaluated through review of outstanding invoices and ongoing credit evaluations of our customers’ financial condition. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized accounts receivable to the amount we reasonably believe will be collected. We also maintain an allowance based on our historical collections experience. When we determine that collection is not likely, we write off accounts receivable against the allowance for doubtful accounts. | |
Inventories | |
Inventories consist of finished goods, work-in-process and raw materials and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. | |
Property and Equipment | |
Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter. | |
Goodwill and Long-Lived Assets | |
We evaluate goodwill on an annual basis in our fourth fiscal quarter or more frequently if we believe indicators of impairment exist. We have determined that our reporting units for purposes of testing for goodwill impairment are identical to our reportable segments for financial reporting purposes. In the fiscal year ended March 31, 2012 (“Fiscal 2012”), we adopted the provisions issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify goodwill impairment testing. This guidance permits us 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 amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step goodwill impairment test. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their carrying values. We determine the fair values of our reporting units using the income valuation approach, as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. We monitor the indicators for goodwill impairment testing between annual tests. Certain adverse business conditions impacting one or more reporting units could cause us to test goodwill for impairment on an interim basis. Based on our interim assessment, there were no indicators of impairment to our goodwill as of December 31, 2014. | |
We test long-lived assets and purchased intangible assets (other than goodwill) for impairment if we believe indicators of impairment exist. We determine whether the carrying value of an asset or asset group is recoverable, based on comparisons to undiscounted expected future cash flows the asset are expected to generate. If an asset is not recoverable, we record an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value. We primarily use the income valuation approach to determine the fair value of our long lived assets and purchased intangible assets. | |
Income Taxes | |
We utilize the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more-likely-than-not that some or all of the deferred tax assets will not be realized, which increases our income tax expense in the period such determination is made. | |
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. | |
Stock-Based Compensation | |
We record stock-based compensation in the unaudited consolidated statements of operations as an expense, based on the estimated grant date fair value of our stock-based awards, whereby such fair values are amortized over the requisite service period. Our stock-based awards are currently comprised of common stock options and restricted stock units. The fair value of our common stock option awards is estimated on the grant date using the Black-Scholes-Merton option-pricing formula. While utilizing this model meets established requirements, the estimated fair values generated by it may not be indicative of the actual fair values of our common stock option awards as it does not consider certain factors important to those awards to employees, such as continued employment and periodic vesting requirements, as well as limited transferability. The fair value of our restricted stock units is based on the closing market price of our common stock on the grant date. If there are any modifications or cancellations of the underlying unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. | |
Research and Development Expenditures | |
Research and development expenditures are charged to expense in the period incurred. | |
Shipping and Handling Costs | |
Shipping and handling costs are included as cost of revenues in the period during which the products ship. | |
Sales Taxes | |
Sales taxes are presented on a net basis (excluded from revenues) in the unaudited consolidated statements of operations. | |
Warranty | |
We generally provide a one to three year warranty from the original invoice date on all products, materials and workmanship. Products sold to various original equipment manufacturer customers sometimes carry longer warranties. Defective products will be either repaired or replaced, usually at our option, upon meeting certain criteria. We accrue a provision for the estimated costs that may be incurred for product warranties relating to a product as a component of cost of revenues at the time revenue for that product is recognized. The accrued warranty reserve is included within accrued liabilities in the accompanying unaudited consolidated balance sheets. | |
Repair and Maintenance Costs | |
We incur repair and maintenance costs in the normal course of business. Should the repair or maintenance result in a permanent improvement to one of our leased facilities, the cost is capitalized as a leasehold improvement and amortized over its useful life or the remainder of the lease period, whichever is shorter. Non-permanent repair and maintenance costs are charged to expense as incurred. | |
Recent Accounting Pronouncements | |
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgment and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of our fiscal year ending March 31, 2018, using one of two retrospective application methods. The Company has not determined the potential effects on its consolidated financial statements of the adoption of ASU 2014-09. | |
In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (“ASU 2014-12”) to resolve diversity in accounting treatment for share based awards in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The standard is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 and may be applied prospectively or retrospectively. The Company does not anticipate a significant impact on its consolidated financial statements upon adoption of ASU 2014-12. | |
In August 2015, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (“ASU 2014-15”), which requires a business entity to evaluate whether there is substantial doubt about the ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. The standard is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company does not anticipate a significant impact on its consolidated financial statements upon adoption of ASU 2014-15. | |
Supplemental_Financial_Informa
Supplemental Financial Information | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Supplemental Financial Information | ||||||||||||||
Supplemental Financial Information | 2.Supplemental Financial Information | |||||||||||||
Inventories | ||||||||||||||
The following table presents details of our inventories: | ||||||||||||||
December 31, | March 31, | |||||||||||||
2014 | 2014 | |||||||||||||
(In thousands) | ||||||||||||||
Materials and supplies | $ | 1,597 | $ | 1,320 | ||||||||||
Work in process | 191 | 175 | ||||||||||||
Finished goods | 985 | 1,051 | ||||||||||||
$ | 2,773 | $ | 2,546 | |||||||||||
Property and Equipment | ||||||||||||||
Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter. | ||||||||||||||
Intangible Assets | ||||||||||||||
The following table presents details of our intangible assets: | ||||||||||||||
December 31, 2014 | March 31, 2014 | |||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||
Amount | Amount | |||||||||||||
(In thousands) | ||||||||||||||
Technology | $ | 1,856 | $ | (1,529 | ) | $ | 1,856 | $ | (1,422 | ) | ||||
Customer contracts / relationships | 750 | (465 | ) | 750 | (371 | ) | ||||||||
Trade names and non-compete agreements | 1,110 | (892 | ) | 1,110 | (754 | ) | ||||||||
Capitalized software development costs | 498 | (208 | ) | 498 | (83 | ) | ||||||||
Total | $ | 4,214 | $ | (3,094 | ) | $ | 4,214 | $ | (2,630 | ) | ||||
As of December 31, 2014, future estimated amortization expense is as follows: | ||||||||||||||
Fiscal Year Ending March 31: | ||||||||||||||
(In thousands) | ||||||||||||||
Remainder of 2015 | $ | 133 | ||||||||||||
2016 | 526 | |||||||||||||
2017 | 365 | |||||||||||||
2018 | 88 | |||||||||||||
2019 | 8 | |||||||||||||
Thereafter | — | |||||||||||||
$ | 1,120 | |||||||||||||
Warranty Reserve Activity | ||||||||||||||
The following table presents activity related to the warranty reserve: | ||||||||||||||
Nine Months Ended | ||||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||
Balance at beginning of period | $ | 184 | $ | 169 | ||||||||||
Addition charged to cost of revenues | 98 | 132 | ||||||||||||
Warranty claims | (102 | ) | (118 | ) | ||||||||||
Balance at end of period | $ | 180 | $ | 183 | ||||||||||
Comprehensive Income (Loss) | ||||||||||||||
Comprehensive income (loss) is equal to net income (loss) for all periods presented in the accompanying unaudited consolidated statements of operations. | ||||||||||||||
Earnings Per Share | ||||||||||||||
The following table sets forth the computation of basic and diluted net (loss) income per share from continuing operations: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Denominator: | ||||||||||||||
Weighted average common shares used in basic per share computation | 32,568 | 32,734 | 32,603 | 32,628 | ||||||||||
Dilutive stock options | — | 118 | — | 125 | ||||||||||
Dilutive restricted stock units | — | 45 | — | 71 | ||||||||||
Dilutive warrants | — | — | — | 2 | ||||||||||
Weighted average common shares used in diluted per share computation | 32,568 | 32,897 | 32,603 | 32,826 | ||||||||||
The following instruments were excluded for purposes of calculating weighted average common share equivalents in the computation of diluted net income (loss) from continuing operations per share as their effect would have been anti-dilutive: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Stock options | 2,391 | 765 | 2,177 | 898 | ||||||||||
Restricted stock units | 201 | — | 197 | — | ||||||||||
Sale_of_Vehicle_Sensors
Sale of Vehicle Sensors | 9 Months Ended |
Dec. 31, 2014 | |
Sale of Vehicle Sensors | |
Sale of Vehicle Sensors | 3.Sale of Vehicle Sensors |
On July 29, 2011, we completed the sale of substantially all of our assets used in connection with our prior Vehicle Sensors segment to Bendix Commercial Vehicle Systems LLC (“Bendix”), a member of Knorr-Bremse Group, pursuant to an Asset Purchase Agreement (the “Agreement”) signed on July 25, 2011 (the “Asset Sale”). | |
Pursuant to the terms of the Agreement, upon the closing of the Asset Sale, Bendix paid us $14 million in cash, subject to a $2 million holdback and adjustments based upon the working capital of the Vehicle Sensors segment at closing, and Bendix assumed certain specified obligations and liabilities of the Vehicle Sensors segment. In October 2012, we received approximately $1.7 million in connection with the release of the holdback provision. Furthermore, we are entitled to additional consideration in the form of the following performance and royalty-related earn-outs: Bendix is obligated to pay us an amount in cash equal to (i) 85% of revenue associated with royalties received under our license and distribution agreements with Audiovox Electronics Corporation and Valeo Schalter and Sensoren GmbH through December 31, 2017 and (ii) 30% of the amount, if any, by which the amount of revenue generated from the sale of our lane departure warning systems exceeds Bendix’s projection for such revenue for the two years following the closing, each subject to certain reductions and limitations set forth in the Agreement. As of December 31, 2014, we received approximately $1.1 million in connection with royalty-related earn-out provisions for a total of $14.8 million in cash from the Asset Sale, and we had approximately $165,000 in royalty-related receivables included in the prepaid expenses and other current assets in the accompanying unaudited consolidated balance sheet. | |
In accordance with applicable accounting guidance, we determined that the Vehicle Sensors segment, which constituted one of our operating segments, qualified as a discontinued operation. For the three months ended December 31, 2014 and 2013, we recorded a gain on sales of discontinued operations of approximately $56,000 and $10,000, respectively, net of tax. For the nine months ended December 31, 2014 and 2013, we recorded a gain on sale of discontinued operation of approximately $151,000 and $40,000, respectively, net of tax, related to the earn-out provisions of the Agreement. | |
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Fair Value Measurements | |||||
Fair Value Measurements | 4.Fair Value Measurements | ||||
We measure fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities or prices quoted in inactive markets; and Level 3, defined as unobservable inputs that are significant to the fair value of the asset or liability, and for which little or no market data exists, therefore requiring management to utilize its own assumptions to provide its best estimate of what market participants would use in valuing the asset or liability. | |||||
The liability for the estimated fair value of the contingent consideration in connection with our acquisitions of Meridian Environmental Technology, Inc. (“MET”) and Berkeley Transportation Systems, Inc. (“BTS”) was initially determined using Level 3 inputs based on a probability calculation whereby we assigned estimated probabilities to achieving the earn-out targets and then discounted the total contingent consideration to net present value. The MET and BTS earn-out targets were completed during the fiscal year ended March 31, 2013 (“Fiscal 2013”) and the remaining liability at March 31, 2014 related to BTS deferred acquisition payments discounted to net present value using Level 1 inputs. The following table reconciles this liability measured at fair value on a recurring basis for the nine months ended December 31, 2014 (in thousands): | |||||
Balance at March 31, 2014 | $ | 327 | |||
Payments made or accrued to reduce BTS liability | (336 | ) | |||
Change in fair value included in net income | 9 | ||||
Balance at December 31, 2014 | $ | — | |||
The final BTS deferred acquisition payment of approximately $336,000 was paid in full during the third quarter of the fiscal year ending March 31, 2015 (“Fiscal 2015”), resulting in no remaining contingent consideration liabilities as of December 31, 2014. As of March 31, 2014, approximately $327,000 was included within accrued liabilities in the accompanying consolidated balance sheet. The change in the estimated fair value of the liability for the three and nine months ended December 31, 2014 and 2013 is included as part of operating expenses in the accompanying unaudited consolidated statements of operations. | |||||
Other than the above, we did not have any material financial assets or liabilities measured at fair value on a recurring basis using Level 3 inputs as of December 31, 2014 or March 31, 2014. | |||||
Our non-financial assets, such as goodwill, intangible assets and property and equipment, are measured at fair value on a non-recurring basis, generally when there is a transaction involving those assets such as a purchase transaction, a business combination or an adjustment for impairment. No non-financial assets were measured at fair value during the three and nine months ended December 31, 2014 and 2013. | |||||
Credit_Facility
Credit Facility | 9 Months Ended |
Dec. 31, 2014 | |
Credit Facility | |
Credit Facility | 5.Credit Facility |
In October 2008, we entered into a $19.5 million credit facility with California Bank & Trust (“CB&T”). This credit facility provided for a two-year revolving line of credit with borrowings of up to $12.0 million and a $7.5 million 48-month term note. In September 2010, we entered into a modification agreement with CB&T to extend the expiration date of our revolving line of credit to October 1, 2012. We repaid in full all principal and accrued interest under the term note in September 2012. The term note did not contain any early termination fees or prepayment penalties. | |
In September 2012, we entered into a second modification agreement with CB&T to extend the expiration date of our revolving line of credit to October 1, 2014. In September 2014, we entered into a modification agreement with CB&T to extend the expiration date of our revolving line of credit to December 1, 2014. In November 2014, we entered into another modification agreement with CB&T to extend the expiration date of our revolving line of credit to March 1, 2015. We are currently negotiating the terms of our line of credit to extend our line of credit beyond March 1, 2015. Interest on borrowed amounts under the revolving line of credit is payable monthly at a rate equal to the current stated prime rate (3.25% at December 31, 2014) up to the current stated prime rate plus 0.25%, depending on aggregate deposit balances maintained at CB&T in relation to the total loan commitment under the credit facility. We are obligated to pay an unused line fee of 0.25% per annum applied to the average unused portion of the revolving line of credit during the preceding month. The revolving line of credit does not contain any early termination fees and is secured by substantially all of our assets. | |
As of December 31, 2014 and March 31, 2014, no amounts were outstanding under the credit facility with CB&T. Availability under this line of credit may be reduced or otherwise limited as a result of our obligations to comply with certain financial and other covenants. As of December 31, 2014, we were not in compliance with all such financial covenants and we obtained a waiver of compliance on those certain covenants from CB&T. Our waiver of compliance is effective through March 1, 2015. | |
Income_Taxes
Income Taxes | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Income Taxes | ||||||||||||||
Income Taxes | 6.Income Taxes | |||||||||||||
The following table sets forth our benefit (provision) for income taxes, along with the corresponding effective tax rates: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands, except percentages) | ||||||||||||||
Benefit (provision) for income taxes | $ | 441 | $ | (86 | ) | $ | 562 | $ | (667 | ) | ||||
Effective tax rate | (74.1 | )% | 27.4 | % | (55.3 | )% | 33.6 | % | ||||||
Our effective tax rates in the three and nine months ended December 31, 2014 were favorably impacted by the benefit of research tax credits that became available to the Company upon extension of the federal R&D credit provisions to December 31, 2014, which was enacted during the third quarter of Fiscal 2015. We recognized a tax benefit of $134,000 during the three and nine months ended December 31, 2014, as a result of the extension of the federal R&D credit provisions, which was partially offset by unfavorable impacts from permanent non-deductible tax items, including share-based payments, and other permanent differences. | ||||||||||||||
Our effective tax rates in the three and nine months ended December 31, 2013 were favorably impacted by the benefit of certain state tax credits, and the true-up of certain federal and state tax credits claimed for the prior fiscal year, offset by unfavorable impacts by permanent non-deductible tax items, including share-based payments, unrecognized tax benefits and other permanent differences. | ||||||||||||||
On an interim basis, we estimate what our anticipated annual effective tax rate will be, while also separately considering applicable discrete and other non-recurring items, and record a quarterly income tax provision in accordance with the anticipated annual rate. As the fiscal year progresses, we refine our estimates based on actual events and financial results during the year. This process can result in significant changes to our expected effective tax rate. When this occurs, we adjust our income tax provision during the quarter in which our estimates are refined so that the year-to-date provision reflects the expected annual effective tax rate. These changes, along with adjustments to our deferred taxes, among others, may create fluctuations in our overall effective tax rate from quarter to quarter. As of December 31, 2014 and March 31, 2014, we recorded a valuation allowance against certain of our state net operating losses in the amount of $373,000. | ||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 7.Commitments and Contingencies |
Litigation and Other Contingencies | |
On October 24, 2014, Wavetronix LLC, an Idaho limited liability company, filed a lawsuit against us in the United States District Court for the Western District of Texas alleging infringement of United States Patent No. 7,991,542. The lawsuit relates to our Vantage Vector product, which is a vehicle detection sensor for use in traffic control applications. Wavetronix seeks unspecified compensatory and treble damages, attorney fees and a permanent injunction. Wavetronix was also seeking a preliminary injunction, the motion for which was denied by the court on January 21, 2015. At this time, we cannot predict the outcome of this matter or the resulting financial impact to us, if any. However, we dispute the allegations of wrongdoing and intend to vigorously defend ourselves in this matter. | |
In addition to the matter described above, as a provider of traffic engineering services, products and solutions, we may be, from time to time, involved in other litigation relating to claims arising out of our operations in the normal course of business. We cannot accurately predict the outcome of any such litigation including whether the adverse outcome of which, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial position or cash flows. | |
Related Party Transaction | |
We previously subleased office space to Maxxess Systems, Inc. (“Maxxess”), one of our former subsidiaries that we sold in September 2003. Maxxess is currently owned by an investor group that includes one current Iteris director, who is the Chief Executive Officer of Maxxess, and a former Iteris director. The sublease terminated in September 2007, at which time Maxxess owed us an aggregate of $274,000 related to this sublease and certain ancillary corporate services that we provided to Maxxess. In August 2009, Maxxess executed a promissory note payable to Iteris in the original principal amount of $274,000. The promissory note accrued interest at a rate of 6% per annum, compounded annually, with accrued interest to be paid annually on the first business day of each calendar year; and allowed payments under the note to be made in bona fide services rendered by Maxxess to Iteris, to the extent such services and amounts were pre-approved in writing by us. All amounts outstanding under the note was to become due and payable on the earliest of (i) August 10, 2014, (ii) a change of control in Maxxess, or (iii) a financing by Maxxess resulting in gross proceeds of at least $10 million. | |
On July 23, 2013, the promissory note from Maxxess was amended and restated. The amended and restated note bears interest at a rate of 6% per annum, compounded annually, with accrued interest to be paid quarterly on the first business day of each calendar quarter. Payments under the amended and restated note may only be paid in cash and all amounts outstanding will become due and payable on the earliest of (i) August 10, 2016, (ii) a change of control in Maxxess, or (iii) a financing by Maxxess resulting in gross proceeds of at least $10 million. As of December 31, 2014, approximately $259,000 of the original principal balance was outstanding and payable to Iteris. We have previously fully reserved for amounts owed to us by Maxxess and all outstanding principal remains fully reserved. | |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
Stock-Based Compensation | 8.Stock-Based Compensation | |||||||||||||
We currently administer two separate stock incentive plans. Of these plans, we may only grant future awards from the 2007 Omnibus Incentive Plan (the “2007 Plan”). The 2007 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and other stock-based awards. On October 17, 2014, our stockholders approved an amendment of the 2007 Plan to increase the number of shares of common stock authorized for issuance under the 2007 Plan by an additional 1,500,000 shares. At December 31, 2014, there were approximately 1,276,000 shares of common stock available for grant or issuance under the 2007 Plan. | ||||||||||||||
Stock Options | ||||||||||||||
A summary of activity with respect to our stock options for the nine months ended December 31, 2014 is as follows: | ||||||||||||||
Number of | Weighted- | |||||||||||||
Shares | Average | |||||||||||||
Exercise | ||||||||||||||
Price Per | ||||||||||||||
Share | ||||||||||||||
(In thousands) | ||||||||||||||
Options outstanding at March 31, 2014 | 2,019 | $ | 1.88 | |||||||||||
Granted | 630 | 1.86 | ||||||||||||
Exercised | (23 | ) | 1.4 | |||||||||||
Forfeited | (189 | ) | 2 | |||||||||||
Expired | (60 | ) | 2.4 | |||||||||||
Options outstanding at December 31, 2014 | 2,377 | $ | 1.85 | |||||||||||
Restricted Stock Units | ||||||||||||||
A summary of activity with respect to our RSUs, which entitle the holder to receive one share of our common stock for each RSU upon vesting, for the nine months ended December 31, 2014 is as follows: | ||||||||||||||
Number of | ||||||||||||||
Shares | ||||||||||||||
(In thousands) | ||||||||||||||
Restricted stock units ouststanding at March 31, 2014 | 195 | |||||||||||||
Restricted stock units granted | 90 | |||||||||||||
Restricted stock units vested | (84 | ) | ||||||||||||
Restricted stock units forfeited | — | |||||||||||||
Restricted stock units ouststanding at December 31, 2014 | 201 | |||||||||||||
Stock-Based Compensation Expense | ||||||||||||||
The following table presents stock-based compensation expense that is included in each functional line item on our unaudited consolidated statements of operations: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Cost of revenues | $ | 5 | $ | 5 | $ | 14 | $ | 26 | ||||||
Selling, general and administrative expense | 64 | 75 | 219 | 212 | ||||||||||
Research and development expense | 20 | 9 | 41 | 15 | ||||||||||
$ | 89 | $ | 89 | $ | 274 | $ | 253 | |||||||
At December 31, 2014, there was approximately $814,000 and $284,000 of unrecognized compensation expense related to unvested stock options and RSUs, respectively. This expense is currently expected to be recognized over a weighted average period of approximately 2.9 years for stock options and approximately 2.9 years for RSUs. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock options, RSUs or other stock-based awards. | ||||||||||||||
Stock_Repurchase_Program
Stock Repurchase Program | 9 Months Ended |
Dec. 31, 2014 | |
Stock Repurchase Program | |
Stock Repurchase Program | 9.Stock Repurchase Program |
In August 2011, our Board of Directors approved a stock repurchase program pursuant to which we were authorized to acquire up to $3 million of our outstanding common stock from time to time through August 2012. We repurchased approximately 964,000 shares under this original program for a total purchase price of $1.3 million. On August 9, 2012, our Board of Directors approved a new stock repurchase program pursuant to which we may acquire up to $3 million of our outstanding common stock for an unspecified length of time. Under the new program, we may repurchase shares from time to time in open-market and privately negotiated transactions and block trades, and may also repurchase shares pursuant to a 10b5-1 trading plan during our closed trading windows. There is no guarantee as to the exact number of shares that will be repurchased. We may modify or terminate the repurchase program at any time without prior notice. On November 6, 2014, our Board of Directors approved a $3.0 million increase to the Company’s existing stock repurchase program, pursuant to which the Company may continue to acquire shares of its outstanding common stock from time to time for an unspecified length of time. For the three and nine months ended December 31, 2014, we repurchased approximately 7,000 and 330,000 shares of our common stock, respectively. For the three months ended December 31, 2013, we did not repurchase any shares of our common stock. For the nine months ended December 31, 2013, we repurchased approximately 196,000 shares of our common stock. As of December 31, 2014, $3,141,000 remained available for the repurchase of our common stock under our current program. | |
From inception of the original program in August 2011 through December 31, 2014, we repurchased approximately 2,623,000 shares of our common stock for an aggregate of approximately $4.2 million at an average purchase price per share of $1.57. All repurchased shares have been retired and resumed their status as authorized and unissued shares of our common stock as of December 31, 2014. | |
Business_Segment_Information
Business Segment Information | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Business Segment Information | ||||||||||||||
Business Segment Information | 10.Business Segment Information | |||||||||||||
We operate in three reportable segments: Roadway Sensors, Transportation Systems and iPerform. | ||||||||||||||
The Roadway Sensors segment provides hardware and software products to multiple segments of the ITS market. These various vehicle detection and information systems are used for traffic intersection control, incident detection and roadway traffic data collection applications. These include, among other products, our Vantage, VantageNext, VersiCam, Vantage Vector, SmartCycle, SmartSpan, Velocity, P10, P100 and Abacus products. | ||||||||||||||
The Transportation Systems segment includes transportation engineering and consulting services, and the development of transportation management and traveler information systems for the ITS industry. During Fiscal 2012 and Fiscal 2013, this segment included the operations of MET, which specializes in 511 advanced traveler information systems and offers predictive weather and ClearPath Weather management tools that allow users to create solutions to meet roadway maintenance decision needs. As of April 1, 2013, the predictive weather and ClearPath Weather services were reassigned to the iPerform segment to better align our predictive weather and traffic capabilities, resources and initiatives. | ||||||||||||||
The iPerform segment includes our performance measurement and information management solution iPeMS, a specialized transportation performance measurement and traffic analytics solution, as well as Clearpath Weather, our road-maintenance application, and ClearAg, our precision agriculture solution. iPeMS provides big data and software analytics solutions that help determine current and future traffic patterns, permitting the effective performance analysis and management of traffic infrastructure resources. This information can then be analyzed by traffic professionals to measure how a transportation network is performing and to identify potential areas of improvement. Our ClearAg platform provides access to a comprehensive database of weather, soil and agronomic information essential to making informed agricultural decisions. | ||||||||||||||
The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies (Note 1). Certain corporate expenses, including interest and amortization of intangible assets, are not allocated to the segments. The reportable segments are each managed separately because they manufacture and distribute distinct products or provide services with different processes. All reported segment revenues are derived from external customers. | ||||||||||||||
The following table sets forth selected unaudited consolidated financial information for our reportable segments for the three and nine months ended December 31, 2014 and 2013: | ||||||||||||||
Roadway | Transportation | iPerform | Total | |||||||||||
Sensors | Systems | |||||||||||||
(In thousands) | ||||||||||||||
Three Months Ended December 31, 2014 | ||||||||||||||
Total revenues | $ | 8,112 | $ | 7,796 | $ | 1,632 | $ | 17,540 | ||||||
Segment operating income (loss) | 1,053 | 1,381 | (1,455 | ) | 979 | |||||||||
Three Months Ended December 31, 2013 | ||||||||||||||
Total revenues | $ | 7,348 | $ | 7,505 | $ | 1,695 | $ | 16,548 | ||||||
Segment operating income (loss) | 1,336 | 692 | (414 | ) | 1,614 | |||||||||
Nine Months Ended December 31, 2014 | ||||||||||||||
Total revenues | $ | 27,328 | $ | 22,745 | $ | 4,133 | $ | 54,206 | ||||||
Segment operating income (loss) | 4,972 | 3,202 | (3,344 | ) | 4,830 | |||||||||
Nine Months Ended December 31, 2013 | ||||||||||||||
Total revenues | $ | 23,654 | $ | 22,661 | $ | 4,290 | $ | 50,605 | ||||||
Segment operating income (loss) | 4,506 | 2,721 | (923 | ) | 6,304 | |||||||||
The following table reconciles total segment income to unaudited consolidated income from continuing operations before income taxes: | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Segment operating income: | ||||||||||||||
Total income from reportable segments | $ | 979 | $ | 1,614 | $ | 4,830 | $ | 6,304 | ||||||
Unallocated amounts: | ||||||||||||||
Corporate and other expenses | (1,469 | ) | (1,139 | ) | (5,488 | ) | (3,820 | ) | ||||||
Amortization of intangible assets | (102 | ) | (161 | ) | (341 | ) | (483 | ) | ||||||
Change in fair value of contingent consideration | (1 | ) | (5 | ) | (9 | ) | (21 | ) | ||||||
Other expense, net | (8 | ) | (3 | ) | (11 | ) | 6 | |||||||
Interest income (expense), net | 6 | 8 | 2 | — | ||||||||||
(Loss) income from continuing operations before income taxes | $ | (595 | ) | $ | 314 | $ | (1,017 | ) | $ | 1,986 | ||||
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2014 | |
Description of Business and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation |
Our unaudited consolidated financial statements include the accounts of Iteris, Inc. and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. | |
The results of continuing operations for all periods presented in the unaudited consolidated financial statements exclude the financial impact of a discontinued operation. See Note 3, “Sale of Vehicle Sensors”, for further discussion related to the discontinued operation presentation. | |
Reclassification | Reclassification |
Certain prior year amounts in the unaudited consolidated statement of cash flows have been reclassified from cash and cash equivalents at the end of the period into prepaid expenses and other current assets for consistency with the current period presentation. The amount reclassified in the unaudited consolidated statement of cash flows for the nine months ended December 31, 2013 was approximately $524,000. | |
Use of Estimates | Use of Estimates |
The preparation of consolidated financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in the preparation of the consolidated financial statements include the allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, inventory and warranty reserves, costs to complete long-term contracts, indirect cost rates used in cost-plus contracts, contract reserves, the valuation of purchased intangible assets and goodwill, the valuation of equity instruments and estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate the stock-based compensation. | |
Revenue Recognition | Revenue Recognition |
Product revenues and related costs of sales are recognized when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery under the terms of the arrangement has occurred, (iii) the price to the customer is fixed or determinable, and (iv) collection of the receivable is reasonably assured. These criteria are typically met at the time of product shipment, but in certain circumstances, may not be met until receipt or acceptance by the customer. Accordingly, at the date revenue is recognized, the significant obligations or uncertainties concerning the sale have been resolved. | |
Transportation Systems and iPerform revenues are derived primarily from long-term contracts with governmental agencies. When appropriate, revenues are recognized using the percentage of completion method of accounting, whereby revenue is recognized as contract performance progresses and is determined based on the relationship of costs incurred to total estimated costs. Any anticipated losses on contracts are charged to earnings when identified. Changes in job performance and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenues and are recognized in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. Certain of our revenues are recognized as services are performed and amounts are earned, which is measured by time incurred or other contractual milestones or output measures. Revenues accounted for in this manner generally relate to certain fixed fee professional services, cost-plus fixed fee or time-and-materials contracts. Revenues for ongoing operations and maintenance services contracts are generally accounted for ratably as the services are performed throughout the term of the contract. Payments received in advance of services performed are deferred and recognized when the related services are performed. | |
We recognize revenue from the sale of deliverables that are part of a multiple-element arrangement in accordance with applicable accounting guidance that establishes a relative selling price hierarchy permitting the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor specific objective evidence (“VSOE”) nor third-party evidence (“TPE”) of fair value is available for that deliverable. In the absence of VSOE or TPE of the standalone selling price for one or more delivered or undelivered elements in a multiple-element arrangement, we are required to estimate the selling prices of those elements. Overall arrangement consideration is allocated to each element (both delivered and undelivered items) that has stand-alone value based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or TPE or are based on our estimated selling prices. | |
We account for multiple-element arrangements that consist only of software and software-related services in accordance with applicable accounting guidance for software and software-related transactions. For such transactions, revenue on arrangements that include multiple elements is allocated to each element based on the relative fair value of each element, and fair value is determined by VSOE. If we cannot objectively determine the fair value of any undelivered element included in such multiple-element arrangements and the only undelivered element is post-contract customer support or maintenance, and VSOE of the fair value of such support or maintenance does not exist, revenue from the entire arrangement is recognized ratably over the support period. When the fair value of a delivered element has not been established but VSOE of fair value exists for the undelivered elements, we use the residual method to recognize revenue if the fair value of all undelivered elements is determinable. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. | |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts |
Costs and estimated earnings in excess of billings on uncompleted contracts in the accompanying consolidated balance sheets represent unbilled amounts earned and reimbursable under services sales arrangements. At any given period-end, a large portion of the balance in this account represents the accumulation of labor, materials and other costs that have not been billed due to timing, whereby the accumulation of each month’s costs and earnings are not administratively billed until the subsequent month. Also included in this account are amounts that will become billable according to contract terms, which usually require the consideration of the passage of time, achievement of milestones or completion of the project. Such unbilled amounts are expected to be billed and collected within the next twelve months. | |
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts | Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts |
Billings in excess of costs and estimated earnings on uncompleted contracts in the accompanying consolidated balance sheets is comprised of cash collected from customers and billings to customers on contracts in advance of work performed, advance payments negotiated as a contract condition, estimated losses on uncompleted contracts, project-related legal liabilities and other project-related reserves. The unearned amounts are expected to be earned within the next twelve months. | |
We record provisions for estimated losses on uncompleted contracts in the period in which such losses become known. The cumulative effects of revisions to contract revenues and estimated completion costs are recorded in the accounting period in which the amounts become evident and can be reasonably estimated. These revisions can include such items as the effects of change orders and claims, warranty claims, liquidated damages or other contractual penalties and adjustments for contract closeout settlements. | |
Concentration of Credit Risk | Concentration of Credit Risk |
Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. | |
Cash and cash equivalents consist primarily of demand deposits and money market funds maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with high credit quality financial institutions, and therefore are believed to have minimal credit risk. | |
Our accounts receivable are primarily derived from billings with customers located throughout North America, as well as in the Middle East, Europe, South America and Asia. We generally do not require collateral or other security from our customers. We maintain an allowance for doubtful accounts for potential credit losses, which losses have historically been within management’s expectations. | |
Fair Values of Financial Instruments | Fair Values of Financial Instruments |
The fair value of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate carrying value because of the short period of time to maturity. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash and cash equivalents consist of cash and short-term investments with initial maturities of ninety days or less. | |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets |
Prepaid expenses and other current assets were $1.6 million as of December 31, 2014 and $1.3 million as of March 31, 2014 and included approximately $520,000 of cash designated as collateral on performance bonds, as required under certain of our Transportation Systems contracts in the Middle East. The performance bonds require us to maintain 100% cash value of the bonds as collateral in a bank that is local to the purchasing agency. The performance bond collateral is required throughout the delivery of our services and maintained in the local bank until the contract is closed by the purchasing agency. We expect these requirements, and the related cash collateral restrictions, to remain in place through calendar year 2015. | |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts |
The collectability of our accounts receivable is evaluated through review of outstanding invoices and ongoing credit evaluations of our customers’ financial condition. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized accounts receivable to the amount we reasonably believe will be collected. We also maintain an allowance based on our historical collections experience. When we determine that collection is not likely, we write off accounts receivable against the allowance for doubtful accounts. | |
Inventories | Inventories |
Inventories consist of finished goods, work-in-process and raw materials and are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. | |
Property and Equipment | Property and Equipment |
Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter. | |
Goodwill and Long-Lived Assets | Goodwill and Long-Lived Assets |
We evaluate goodwill on an annual basis in our fourth fiscal quarter or more frequently if we believe indicators of impairment exist. We have determined that our reporting units for purposes of testing for goodwill impairment are identical to our reportable segments for financial reporting purposes. In the fiscal year ended March 31, 2012 (“Fiscal 2012”), we adopted the provisions issued by the Financial Accounting Standards Board (“FASB”) that were intended to simplify goodwill impairment testing. This guidance permits us 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 amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step goodwill impairment test. The first step of the impairment test involves comparing the fair values of the applicable reporting units with their carrying values. We determine the fair values of our reporting units using the income valuation approach, as well as other generally accepted valuation methodologies. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, we perform the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit’s goodwill with the carrying value of that goodwill. The amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. We monitor the indicators for goodwill impairment testing between annual tests. Certain adverse business conditions impacting one or more reporting units could cause us to test goodwill for impairment on an interim basis. Based on our interim assessment, there were no indicators of impairment to our goodwill as of December 31, 2014. | |
We test long-lived assets and purchased intangible assets (other than goodwill) for impairment if we believe indicators of impairment exist. We determine whether the carrying value of an asset or asset group is recoverable, based on comparisons to undiscounted expected future cash flows the asset are expected to generate. If an asset is not recoverable, we record an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value. We primarily use the income valuation approach to determine the fair value of our long lived assets and purchased intangible assets. | |
Income Taxes | Income Taxes |
We utilize the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more-likely-than-not that some or all of the deferred tax assets will not be realized, which increases our income tax expense in the period such determination is made. | |
Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met. | |
Stock-Based Compensation | Stock-Based Compensation |
We record stock-based compensation in the unaudited consolidated statements of operations as an expense, based on the estimated grant date fair value of our stock-based awards, whereby such fair values are amortized over the requisite service period. Our stock-based awards are currently comprised of common stock options and restricted stock units. The fair value of our common stock option awards is estimated on the grant date using the Black-Scholes-Merton option-pricing formula. While utilizing this model meets established requirements, the estimated fair values generated by it may not be indicative of the actual fair values of our common stock option awards as it does not consider certain factors important to those awards to employees, such as continued employment and periodic vesting requirements, as well as limited transferability. The fair value of our restricted stock units is based on the closing market price of our common stock on the grant date. If there are any modifications or cancellations of the underlying unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. | |
Research and Development Expenditures | Research and Development Expenditures |
Research and development expenditures are charged to expense in the period incurred. | |
Shipping and Handling Costs | Shipping and Handling Costs |
Shipping and handling costs are included as cost of revenues in the period during which the products ship. | |
Sales Taxes | Sales Taxes |
Sales taxes are presented on a net basis (excluded from revenues) in the unaudited consolidated statements of operations. | |
Warranty | Warranty |
We generally provide a one to three year warranty from the original invoice date on all products, materials and workmanship. Products sold to various original equipment manufacturer customers sometimes carry longer warranties. Defective products will be either repaired or replaced, usually at our option, upon meeting certain criteria. We accrue a provision for the estimated costs that may be incurred for product warranties relating to a product as a component of cost of revenues at the time revenue for that product is recognized. The accrued warranty reserve is included within accrued liabilities in the accompanying unaudited consolidated balance sheets. | |
Repair and Maintenance Costs | Repair and Maintenance Costs |
We incur repair and maintenance costs in the normal course of business. Should the repair or maintenance result in a permanent improvement to one of our leased facilities, the cost is capitalized as a leasehold improvement and amortized over its useful life or the remainder of the lease period, whichever is shorter. Non-permanent repair and maintenance costs are charged to expense as incurred. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgment and assets recognized from costs incurred to obtain or fulfill a contract. The effective date will be the first quarter of our fiscal year ending March 31, 2018, using one of two retrospective application methods. The Company has not determined the potential effects on its consolidated financial statements of the adoption of ASU 2014-09. | |
In June 2014, the FASB issued ASU No. 2014-12, Compensation - Stock Compensation (“ASU 2014-12”) to resolve diversity in accounting treatment for share based awards in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The standard is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 and may be applied prospectively or retrospectively. The Company does not anticipate a significant impact on its consolidated financial statements upon adoption of ASU 2014-12. | |
In August 2015, the FASB issued ASU No. 2014-15, Presentation of Financial Statements — Going Concern (“ASU 2014-15”), which requires a business entity to evaluate whether there is substantial doubt about the ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. The standard is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016. The Company does not anticipate a significant impact on its consolidated financial statements upon adoption of ASU 2014-15. | |
Supplemental_Financial_Informa1
Supplemental Financial Information (Tables) | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Supplemental Financial Information | ||||||||||||||
Schedule of inventories | December 31, | March 31, | ||||||||||||
2014 | 2014 | |||||||||||||
(In thousands) | ||||||||||||||
Materials and supplies | $ | 1,597 | $ | 1,320 | ||||||||||
Work in process | 191 | 175 | ||||||||||||
Finished goods | 985 | 1,051 | ||||||||||||
$ | 2,773 | $ | 2,546 | |||||||||||
Schedule of intangible assets | December 31, 2014 | March 31, 2014 | ||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||
Amount | Amount | |||||||||||||
(In thousands) | ||||||||||||||
Technology | $ | 1,856 | $ | (1,529 | ) | $ | 1,856 | $ | (1,422 | ) | ||||
Customer contracts / relationships | 750 | (465 | ) | 750 | (371 | ) | ||||||||
Trade names and non-compete agreements | 1,110 | (892 | ) | 1,110 | (754 | ) | ||||||||
Capitalized software development costs | 498 | (208 | ) | 498 | (83 | ) | ||||||||
Total | $ | 4,214 | $ | (3,094 | ) | $ | 4,214 | $ | (2,630 | ) | ||||
Schedule of future estimated amortization expense | Fiscal Year Ending March 31: | |||||||||||||
(In thousands) | ||||||||||||||
Remainder of 2015 | $ | 133 | ||||||||||||
2016 | 526 | |||||||||||||
2017 | 365 | |||||||||||||
2018 | 88 | |||||||||||||
2019 | 8 | |||||||||||||
Thereafter | — | |||||||||||||
$ | 1,120 | |||||||||||||
Schedule of warranty reserve activity | Nine Months Ended | |||||||||||||
December 31, | ||||||||||||||
2014 | 2013 | |||||||||||||
(In thousands) | ||||||||||||||
Balance at beginning of period | $ | 184 | $ | 169 | ||||||||||
Addition charged to cost of revenues | 98 | 132 | ||||||||||||
Warranty claims | (102 | ) | (118 | ) | ||||||||||
Balance at end of period | $ | 180 | $ | 183 | ||||||||||
Schedule of computation of basic and diluted income (loss) per share from continuing operations | Three Months Ended | Nine Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Denominator: | ||||||||||||||
Weighted average common shares used in basic per share computation | 32,568 | 32,734 | 32,603 | 32,628 | ||||||||||
Dilutive stock options | — | 118 | — | 125 | ||||||||||
Dilutive restricted stock units | — | 45 | — | 71 | ||||||||||
Dilutive warrants | — | — | — | 2 | ||||||||||
Weighted average common shares used in diluted per share computation | 32,568 | 32,897 | 32,603 | 32,826 | ||||||||||
Schedule of instruments excluded in the computation of diluted income from continuing operations per share | Three Months Ended | Nine Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Stock options | 2,391 | 765 | 2,177 | 898 | ||||||||||
Restricted stock units | 201 | — | 197 | — | ||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Fair Value Measurements | |||||
Schedule of reconciliation of liability measured at fair value on a recurring basis | The following table reconciles this liability measured at fair value on a recurring basis for the nine months ended December 31, 2014 (in thousands): | ||||
Balance at March 31, 2014 | $ | 327 | |||
Payments made or accrued to reduce BTS liability | (336 | ) | |||
Change in fair value included in net income | 9 | ||||
Balance at December 31, 2014 | $ | — | |||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Income Taxes | ||||||||||||||
Schedule of provision for income taxes and effective tax rates | Three Months Ended | Nine Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands, except percentages) | ||||||||||||||
Benefit (provision) for income taxes | $ | 441 | $ | (86 | ) | $ | 562 | $ | (667 | ) | ||||
Effective tax rate | (74.1 | )% | 27.4 | % | (55.3 | )% | 33.6 | % | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Stock-Based Compensation | ||||||||||||||
Summary of activity with respect to stock options | Number of | Weighted- | ||||||||||||
Shares | Average | |||||||||||||
Exercise | ||||||||||||||
Price Per | ||||||||||||||
Share | ||||||||||||||
(In thousands) | ||||||||||||||
Options outstanding at March 31, 2014 | 2,019 | $ | 1.88 | |||||||||||
Granted | 630 | 1.86 | ||||||||||||
Exercised | (23 | ) | 1.4 | |||||||||||
Forfeited | (189 | ) | 2 | |||||||||||
Expired | (60 | ) | 2.4 | |||||||||||
Options outstanding at December 31, 2014 | 2,377 | $ | 1.85 | |||||||||||
Summary of activity with respect to RSUs | Number of | |||||||||||||
Shares | ||||||||||||||
(In thousands) | ||||||||||||||
Restricted stock units ouststanding at March 31, 2014 | 195 | |||||||||||||
Restricted stock units granted | 90 | |||||||||||||
Restricted stock units vested | (84 | ) | ||||||||||||
Restricted stock units forfeited | — | |||||||||||||
Restricted stock units ouststanding at December 31, 2014 | 201 | |||||||||||||
Schedule of stock-based compensation expense | Three Months Ended | Nine Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Cost of revenues | $ | 5 | $ | 5 | $ | 14 | $ | 26 | ||||||
Selling, general and administrative expense | 64 | 75 | 219 | 212 | ||||||||||
Research and development expense | 20 | 9 | 41 | 15 | ||||||||||
$ | 89 | $ | 89 | $ | 274 | $ | 253 | |||||||
Business_Segment_Information_T
Business Segment Information (Tables) | 9 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Business Segment Information | ||||||||||||||
Schedule of selected unaudited consolidated financial information for reportable segments | Roadway | Transportation | iPerform | Total | ||||||||||
Sensors | Systems | |||||||||||||
(In thousands) | ||||||||||||||
Three Months Ended December 31, 2014 | ||||||||||||||
Total revenues | $ | 8,112 | $ | 7,796 | $ | 1,632 | $ | 17,540 | ||||||
Segment operating income (loss) | 1,053 | 1,381 | (1,455 | ) | 979 | |||||||||
Three Months Ended December 31, 2013 | ||||||||||||||
Total revenues | $ | 7,348 | $ | 7,505 | $ | 1,695 | $ | 16,548 | ||||||
Segment operating income (loss) | 1,336 | 692 | (414 | ) | 1,614 | |||||||||
Nine Months Ended December 31, 2014 | ||||||||||||||
Total revenues | $ | 27,328 | $ | 22,745 | $ | 4,133 | $ | 54,206 | ||||||
Segment operating income (loss) | 4,972 | 3,202 | (3,344 | ) | 4,830 | |||||||||
Nine Months Ended December 31, 2013 | ||||||||||||||
Total revenues | $ | 23,654 | $ | 22,661 | $ | 4,290 | $ | 50,605 | ||||||
Segment operating income (loss) | 4,506 | 2,721 | (923 | ) | 6,304 | |||||||||
Schedule of reconciliation of total segment income to unaudited consolidated income from continuing operations before income taxes | Three Months Ended | Nine Months Ended | ||||||||||||
December 31, | December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
(In thousands) | ||||||||||||||
Segment operating income: | ||||||||||||||
Total income from reportable segments | $ | 979 | $ | 1,614 | $ | 4,830 | $ | 6,304 | ||||||
Unallocated amounts: | ||||||||||||||
Corporate and other expenses | (1,469 | ) | (1,139 | ) | (5,488 | ) | (3,820 | ) | ||||||
Amortization of intangible assets | (102 | ) | (161 | ) | (341 | ) | (483 | ) | ||||||
Change in fair value of contingent consideration | (1 | ) | (5 | ) | (9 | ) | (21 | ) | ||||||
Other expense, net | (8 | ) | (3 | ) | (11 | ) | 6 | |||||||
Interest income (expense), net | 6 | 8 | 2 | — | ||||||||||
(Loss) income from continuing operations before income taxes | $ | (595 | ) | $ | 314 | $ | (1,017 | ) | $ | 1,986 | ||||
Description_of_Business_and_Su2
Description of Business and Summary of Significant Accounting Policies (Details) (USD $) | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Prepaid Expense and Other Assets, Current [Abstract] | |||
Prepaid expenses and other current assets | $1,600,000 | $1,300,000 | |
Prior Period Reclassification Adjustment | 524,000 | ||
Cash and Cash Equivalents | |||
Cash designated as collateral on performance bonds | $520,000 | ||
Percentage of cash value of the bonds as collateral | 100.00% | ||
Minimum | |||
Warranty | |||
Warranty period | 1 year | ||
Minimum | Property and equipment | |||
Property and Equipment | |||
Useful life | 3 years | ||
Maximum | |||
Costs in Excess of Billings on Uncompleted Contracts | |||
Expected period for unbilled amounts to be billed and collected | 12 years | ||
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts | |||
Expected period for unearned amounts to be earned | 12 months | ||
Warranty | |||
Warranty period | 3 years | ||
Maximum | Property and equipment | |||
Property and Equipment | |||
Useful life | 8 years |
Supplemental_Financial_Informa2
Supplemental Financial Information (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2014 |
Inventories | ||
Materials and supplies | 1,597 | $1,320 |
Work in process | 191 | 175 |
Finished goods | 985 | 1,051 |
Total inventories | 2,773 | $2,546 |
Minimum | Property and equipment | ||
Property and Equipment | ||
Useful life | 3 years | |
Maximum | Property and equipment | ||
Property and Equipment | ||
Useful life | 8 years |
Supplemental_Financial_Informa3
Supplemental Financial Information (Details 2) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Intangible Assets | ||
Gross Carrying Amount | $4,214 | $4,214 |
Accumulated Amortization | -3,094 | -2,630 |
Future estimated amortization expense | ||
Remainder of 2015 | 133 | |
2016 | 526 | |
2017 | 365 | |
2018 | 88 | |
2019 | 8 | |
Total | 1,120 | 1,584 |
Technology | ||
Intangible Assets | ||
Gross Carrying Amount | 1,856 | 1,856 |
Accumulated Amortization | -1,529 | -1,422 |
Customer contracts / relationships | ||
Intangible Assets | ||
Gross Carrying Amount | 750 | 750 |
Accumulated Amortization | -465 | -371 |
Trade names and non-compete agreements | ||
Intangible Assets | ||
Gross Carrying Amount | 1,110 | 1,110 |
Accumulated Amortization | -892 | -754 |
Capitalized software development costs | ||
Intangible Assets | ||
Gross Carrying Amount | 498 | 498 |
Accumulated Amortization | ($208) | ($83) |
Supplemental_Financial_Informa4
Supplemental Financial Information (Details 3) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Activity related to warranty reserve | ||
Balance at beginning of period | $184 | $169 |
Addition charged to cost of revenues | 98 | 132 |
Warranty claims | -102 | -118 |
Balance at end of period | $180 | $183 |
Supplementary_Financial_Inform
Supplementary Financial Information (Details 4) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Denominator: | ||||
Weighted average common shares used in basic per share computation | 32,568 | 32,734 | 32,603 | 32,628 |
Dilutive warrants (in shares) | 2 | |||
Weighted average common shares used in diluted per share computation | 32,568 | 32,897 | 32,603 | 32,826 |
Stock options | ||||
Denominator: | ||||
Dilutive (in shares) | 118 | 125 | ||
Restricted Stock Units (RSUs) | ||||
Denominator: | ||||
Dilutive (in shares) | 45 | 71 |
Supplementary_Financial_Inform1
Supplementary Financial Information (Details 5) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Stock options | ||||
Shares excluded in the computation of income from continuing operations per share | ||||
Shares excluded in the computation of income from continuing operations per share | 2,391 | 765 | 2,177 | 898 |
Restricted Stock Units (RSUs) | ||||
Shares excluded in the computation of income from continuing operations per share | ||||
Shares excluded in the computation of income from continuing operations per share | 201 | 197 |
Sale_of_Vehicle_Sensors_Detail
Sale of Vehicle Sensors (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2012 | Jul. 29, 2011 | Jul. 25, 2011 | Jul. 29, 2010 | |
segment | ||||||||
Sale of Vehicle Sensors | ||||||||
Number of discontinued operations business segments | 1 | |||||||
Cash proceeds from sale of assets | $99,000 | |||||||
Sale of Vehicle Sensors, additional disclosures | ||||||||
Gain on sale of discontinued operation, net of tax | 56,000 | 10,000 | 151,000 | 40,000 | ||||
Vehicle Sensors segment | ||||||||
Sale of Vehicle Sensors | ||||||||
Aggregate proceeds received on sale | 14,000,000 | |||||||
Holdback amount | 2,000,000 | |||||||
Additional cash consideration, percentage of revenue associated with royalties | 85.00% | |||||||
Additional cash consideration, percentage on excess of revenue over projected revenue | 30.00% | |||||||
Amount of earn-outs in connection with royalty | 1,100,000 | |||||||
Cash received pursuant to resolution of the holdback provision | 1,700,000 | |||||||
Cash proceeds from sale of assets | 14,800,000 | |||||||
Royalty Receivables | 165,000 | |||||||
Sale of Vehicle Sensors, additional disclosures | ||||||||
Gain on sale of discontinued operation, net of tax | $56,000 | $10,000 | $151,000 | $40,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Reconciliation of liability measured at fair value | |||||
Balance at the beginning of the period | $327,000 | ||||
Payments made or accrued to reduce BTS liability | 9,000 | ||||
Fair value disclosure of liabilities | |||||
Deferred acquisition payment | 336,000 | ||||
Current portions of contingent consideration included within accrued liabilities | 0 | 0 | 327,000 | ||
Non-financial assets measured at fair value | |||||
Non-financial assets measured at fair value | $0 | $0 | $0 | $0 |
Credit_Facility_Details
Credit Facility (Details) (USD $) | 9 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Oct. 31, 2008 | Mar. 31, 2014 |
Credit facility | |||
Revolving Line of Credit | |||
Maximum borrowing capacity | $19.50 | ||
Amount outstanding | 0 | 0 | |
Revolving Line of Credit | |||
Revolving Line of Credit | |||
Maximum borrowing capacity | 12 | ||
Term of debt instrument | 2 years | ||
Prime rate at the end of the period (as a percent) | 3.25% | ||
Unused line fee (as a percent) | 0.25% | ||
Revolving Line of Credit | Maximum | |||
Revolving Line of Credit | |||
Monthly interest rate basis | prime rate | ||
Basis points added to reference rate (as a percent) | 0.25% | ||
Bank Term Note | |||
Revolving Line of Credit | |||
Term of debt instrument | 48 months | ||
Principal amount | $7.50 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Income Taxes | |||||
Benefit (provision) for income taxes | $441,000 | ($86,000) | $562,000 | ($667,000) | |
Effective tax rate (as a percent) | -74.10% | 27.40% | -55.30% | 33.60% | |
Valuation allowance on deferred tax assets | 373,000 | ||||
Reconciliation of income tax provision (benefit) to taxes computed at U.S. federal statutory rates | |||||
Tax benefit of research credits | ($134,000) | ($134,000) |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 0 Months Ended | 9 Months Ended | ||
Jul. 23, 2013 | Aug. 31, 2009 | Dec. 31, 2014 | Aug. 31, 2009 | |
subsidiary | ||||
director | ||||
Related Party Transaction | ||||
Promissory note payable issued to reporting entity for amounts previously owed under a sublease agreement | 259,000 | |||
Maxxess | ||||
Related Party Transaction | ||||
Number of former subsidiaries | 1 | |||
Number of current directors included in investor group | 1 | |||
Number of former directors included in investor group | 1 | |||
Promissory note payable issued to reporting entity for amounts previously owed under a sublease agreement | 274,000 | 274,000 | ||
Interest on promissory note (as a percent) | 6.00% | 6.00% | 6.00% | |
Maxxess | Minimum | ||||
Related Party Transaction | ||||
Gross proceeds from financing by related party | 10,000,000 | 10,000,000 |
Stock_Based_Compensation_Detai
Stock Based Compensation (Details) (USD $) | 9 Months Ended | 0 Months Ended |
Dec. 31, 2014 | Oct. 17, 2014 | |
plan | ||
Stock-Based Compensation | ||
Number of stock incentive plans | 2 | |
Weighted Average Exercise Price Per Share | ||
Number of shares of common stock receivable upon vesting of each RSU | 1 | |
Stock options | ||
Number of Shares | ||
Options outstanding at the beginning of the period (in shares) | 2,019,000 | |
Granted (in shares) | 630,000 | |
Exercised (in shares) | -23,000 | |
Forfeited (in shares) | -189,000 | |
Expired (in shares) | -60,000 | |
Options outstanding at the end of the period (in shares) | 2,377,000 | |
Weighted Average Exercise Price Per Share | ||
Options outstanding at the beginning of the period (in dollars per share) | 1.88 | |
Granted (in dollars per share) | 1.86 | |
Exercised (in dollars per share) | 1.4 | |
Forfeited (in dollars per share) | 2 | |
Expired (in dollars per share) | 2.4 | |
Options outstanding at the end of the period (in dollars per share) | 1.85 | |
Restricted Stock Units (RSUs) | ||
Number of Shares | ||
Restricted stock units outstanding at the beginning of the period (in shares) | 195,000 | |
Restricted stock units granted (in shares) | 90,000 | |
Restricted stock units vested (in shares) | -84,000 | |
Restricted stock units outstanding at the end of the period (in shares) | 201,000 | |
2007 Plan | ||
Employee Benefit Plans | ||
Shares of common stock available for grant | 1,276,000 | |
Increase in number of shares of common stock authorized and reserved for issuance under the plan | 1,500,000 |
Stock_Based_Compensation_Detai1
Stock Based Compensation (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock-Based Compensation | ||||
Stock-based compensation expense | $89,000 | $89,000 | $274,000 | $253,000 |
Stock options | ||||
Stock-Based Compensation | ||||
Unrecognized compensation expense related to unvested stock options | 814,000 | 814,000 | ||
Weighted average period over which compensation expense is expected to be recognized | 2 years 10 months 24 days | |||
Restricted Stock Units (RSUs) | ||||
Stock-Based Compensation | ||||
Unrecognized compensation expense related to unvested RSUs | 284,000 | 284,000 | ||
Weighted average period over which compensation expense is expected to be recognized | 2 years 10 months 24 days | |||
Cost of revenues | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | 5,000 | 5,000 | 14,000 | 26,000 |
Selling, general and administrative | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | 64,000 | 75,000 | 219,000 | 212,000 |
Research and development | ||||
Stock-Based Compensation | ||||
Stock-based compensation expense | $20,000 | $9,000 | $41,000 | $15,000 |
Stock_Repurchase_Program_Detai
Stock Repurchase Program (Details) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | 41 Months Ended | 0 Months Ended | ||
Nov. 06, 2014 | Aug. 09, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Aug. 31, 2011 | |
Stock Repurchase Program | |||||||
Value of common stock approved under stock repurchase program | $3,000,000 | ||||||
Increase in the authorized amount for repurchase of common stock | 3,000,000 | ||||||
Number of shares of common stock repurchased | 7,000 | 330,000 | 196,000 | 2,623,000 | |||
Value of common stock repurchased | 4,200,000 | ||||||
Average price per share of common stock repurchased (in dollars per share) | $1.57 | ||||||
Value of common stock available for repurchase under current program | 3,141,000 | ||||||
August 2011 Program | |||||||
Stock Repurchase Program | |||||||
Number of shares of common stock repurchased | 964,000 | ||||||
Value of common stock repurchased | 1,300,000 | ||||||
August 2011 Program | Maximum | |||||||
Stock Repurchase Program | |||||||
Value of common stock approved under stock repurchase program | $3,000,000 |
Business_Segment_Information_D
Business Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Segments | ||||
Total revenues | $17,540 | $16,548 | $54,206 | $50,605 |
Depreciation | 380 | 585 | ||
Segment operating income (loss) | -593 | 309 | -1,008 | 1,980 |
Operating segments | ||||
Business Segments | ||||
Total revenues | 17,540 | 16,548 | 54,206 | 50,605 |
Segment operating income (loss) | 979 | 1,614 | 4,830 | 6,304 |
Operating segments | Roadway Sensors | ||||
Business Segments | ||||
Total revenues | 8,112 | 7,348 | 27,328 | 23,654 |
Segment operating income (loss) | 1,053 | 1,336 | 4,972 | 4,506 |
Operating segments | Transportation Systems | ||||
Business Segments | ||||
Total revenues | 7,796 | 7,505 | 22,745 | 22,661 |
Segment operating income (loss) | 1,381 | 692 | 3,202 | 2,721 |
Operating segments | iPerform | ||||
Business Segments | ||||
Total revenues | 1,632 | 1,695 | 4,133 | 4,290 |
Segment operating income (loss) | ($1,455) | ($414) | ($3,344) | ($923) |
Business_Segment_Information_D1
Business Segment Information (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Segments | ||||
Total operating income from reporting segment | ($593) | $309 | ($1,008) | $1,980 |
Amortization of intangible assets | -102 | -161 | -341 | -483 |
Change in fair value of contingent consideration | -1 | -5 | -9 | -21 |
Other (expense) income, net | -8 | -3 | -11 | 6 |
Interest income (expense), net | 6 | 8 | 2 | |
(Loss) income from continuing operations before income taxes | -595 | 314 | -1,017 | 1,986 |
Operating segments | ||||
Business Segments | ||||
Total operating income from reporting segment | 979 | 1,614 | 4,830 | 6,304 |
Unallocated amounts | ||||
Business Segments | ||||
Corporate and other expenses | -1,469 | -1,139 | -5,488 | -3,820 |
Amortization of intangible assets | -102 | -161 | -341 | -483 |
Change in fair value of contingent consideration | -1 | -5 | -9 | -21 |
Other (expense) income, net | -8 | -3 | -11 | 6 |
Interest income (expense), net | 6 | 8 | 2 | |
(Loss) income from continuing operations before income taxes | ($595) | $314 | ($1,017) | $1,986 |