Company Operations and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Accounting Policies [Abstract] | ' |
Consolidation | ' |
Consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents—The Company considers cash equivalents to be highly liquid investments with a maturity at the date of purchase of three months or less. |
Accounts Receivable | ' |
Accounts Receivable—The Company sells its products directly to hospitals and reference laboratories in the U.S. as well as to distributors in the U.S., Europe and Japan. The Company periodically assesses the financial strength of these customers and establishes reserves for anticipated losses when necessary, which historically have not been material. The Company’s reserves primarily consist of amounts related to cash discounts and contract rebates. The balance of accounts receivable is net of reserves of $5.8 million and $5.0 million at December 31, 2013 and 2012, respectively. |
Concentration of Credit Risk | ' |
Concentration of Credit Risk—Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. |
The Company invests its cash equivalents primarily in money market funds. Cash equivalents are maintained with high quality institutions. |
The Company’s trade accounts receivable are primarily derived from sales to medical distributors, hospitals and reference laboratories in the U.S. (see Note 7). The Company performs credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. Credit quality is monitored by evaluation of collection history. The Company believes that the concentration of credit risk in its trade receivables is moderated by its credit evaluation process, relatively short collection terms, the high level of credit worthiness of its customers, and letters of credit issued on the Company’s behalf. Potential credit losses are limited to the gross value of accounts receivable. |
Inventories | ' |
Inventories—Inventories are stated at the lower of cost (first-in, first-out method) or market. The Company reviews the components of its inventory on a quarterly basis for excess, obsolete and impaired inventory and makes appropriate dispositions as obsolete stock is identified. Inventories consisted of the following, net of reserves of $0.6 million at December 31, 2013 and 2012 (in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | |
Raw materials | | $ | 11,938 | | | $ | 5,582 | | | | | | | | | | | | | | | | | | | | | |
Work-in-process (materials, labor and overhead) | | | 9,831 | | | | 4,686 | | | | | | | | | | | | | | | | | | | | | |
Finished goods (materials, labor and overhead) | | | 5,870 | | | | 5,228 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total inventories | | $ | 27,639 | | | $ | 15,496 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Property, Plant and Equipment | ' |
Property, Plant and Equipment—Property, plant and equipment is recorded at cost and depreciated over the estimated useful lives of the assets (three to 15 years) using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. The total expense for depreciation of fixed assets and amortization of leasehold improvements was $7.9 million, $7.3 million and $6.0 million for the years ended December 31, 2013, 2012 and 2011, respectively. Maintenance and minor repairs are charged to operations as incurred. |
Property, plant and equipment consisted of the following (in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | |
Equipment, furniture and fixtures | | $ | 69,103 | | | $ | 53,626 | | | | | | | | | | | | | | | | | | | | | |
Building and improvements | | | 25,964 | | | | 26,507 | | | | | | | | | | | | | | | | | | | | | |
Instruments available for lease | | | 7,223 | | | | 3,872 | | | | | | | | | | | | | | | | | | | | | |
Land | | | 1,080 | | | | 1,080 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 103,370 | | | | 85,085 | | | | | | | | | | | | | | | | | | | | | |
Less: accumulated depreciation and amortization | | | (55,313 | ) | | | (50,929 | ) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total property, plant and equipment, net | | $ | 48,057 | | | $ | 34,156 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible Assets | ' |
Intangible Assets—Intangible assets are recorded at cost and amortized on a straight-line basis over their estimated useful lives, except for software development costs and indefinite-lived intangibles such as goodwill and in-process research and development. Software development costs associated with software to be sold, leased or otherwise marketed are expensed as incurred until technological feasibility has been established. After technological feasibility is established, software development costs are capitalized. The capitalized cost is amortized on a straight-line basis over the estimated product life or on the ratio of current revenues to total projected product revenues, whichever is greater. The Company capitalized $0.9 million of software costs in 2013 and expects to amortize these costs over a weighted average useful life of five years. Amortization expense related to the capitalized software costs was $0.3 million and $0.4 million for the years ended December 31, 2013 and 2012, respectively. Intangible assets consisted of the following (dollar amounts in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Weighted- | | | December 31, 2013 | | | December 31, 2012 | |
| | Average | | | | | | | | | | | | | | | | | | | |
| | Useful Life | | | Gross | | | Accumulated | | | | | | Gross | | | Accumulated | | | | |
Description | | (years) | | | Assets | | | Amortization | | | Net | | | Assets | | | Amortization | | | Net | |
Goodwill | | | Indefinite | | | $ | 84,212 | | | $ | (3,449 | ) | | $ | 80,763 | | | $ | 74,462 | | | $ | (3,449 | ) | | $ | 71,013 | |
Purchased technology | | | 8.4 | | | | 51,870 | | | | (22,287 | ) | | | 29,583 | | | | 46,570 | | | | (16,208 | ) | | | 30,362 | |
Customer relationships | | | 7.5 | | | | 7,250 | | | | (2,954 | ) | | | 4,296 | | | | 6,322 | | | | (2,007 | ) | | | 4,315 | |
In-process research and development | | | Indefinite | | | | 2,260 | | | | — | | | | 2,260 | | | | 1,570 | | | | — | | | | 1,570 | |
License agreements | | | 5.9 | | | | 34,330 | | | | (21,374 | ) | | | 12,956 | | | | 32,778 | | | | (12,786 | ) | | | 19,992 | |
Patent and trademark costs | | | 12.3 | | | | 10,530 | | | | (861 | ) | | | 9,669 | | | | 1,390 | | | | (265 | ) | | | 1,125 | |
Favorable lease | | | — | | | | — | | | | — | | | | — | | | | 1,700 | | | | (1,594 | ) | | | 106 | |
Software development costs | | | 5 | | | | 4,191 | | | | (693 | ) | | | 3,498 | | | | 3,262 | | | | (391 | ) | | | 2,871 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total goodwill and intangible assets | | | | | | $ | 194,643 | | | $ | (51,618 | ) | | $ | 143,025 | | | $ | 168,054 | | | $ | (36,700 | ) | | $ | 131,354 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The previously reported gross assets and accumulated amortization at December 31, 2012 have been restated in order to remove fully amortized assets and to conform the asset groupings with those presented at December 31, 2013. |
The Company acquired distribution rights for $0.8 million in conjunction with the March 2013 Agreement with Life Technologies Corporation (see “Collaborative Arrangement” in Note 1). The distribution rights will be amortized on a straight-line basis over the contractual term of six years. The Company acquired intangible assets in conjunction with the BioHelix Corporation (“BioHelix”) acquisition in May 2013 and the Andiatec GmbH & Co. KG (“Andiatec”) asset acquisition in August 2013, as more fully described in Note 10. |
Amortization expense was $16.6 million, $15.4 million and $11.3 million for the years ended December 31, 2013, 2012 and 2011, respectively. Included in the $16.6 million of amortization expense for 2013 is $8.0 million of amortization for licensed technology recorded in cost of sales. This amount is related to the purchase of a license pursuant to the Alere Amendment as discussed in Note 6. Amortization expense associated with this intangible asset will be recorded in cost of sales and is expected to be $8.0 million and $0.7 million for fiscal periods 2014 and 2015, respectively. |
The expected future annual amortization expense of the Company’s intangible assets is as follows (in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amortization | | | | | | | | | | | | | | | | | | | | | | | | | |
For the years ending December 31, | | Expense | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | | $ | 17,705 | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | | | 10,324 | | | | | | | | | | | | | | | | | | | | | | | | | |
2016 | | | 9,485 | | | | | | | | | | | | | | | | | | | | | | | | | |
2017 | | | 9,183 | | | | | | | | | | | | | | | | | | | | | | | | | |
2018 | | | 3,613 | | | | | | | | | | | | | | | | | | | | | | | | | |
Thereafter | | | 9,692 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 60,002 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Company completed its annual evaluation for impairment of goodwill and in-process research and development as of December 31, 2013 and determined that no impairment of goodwill and indefinite lived intangible assets existed. The Company recorded a $0.5 million impairment charge of in-process research and development related to a discontinued research and development project for the year ended December 31, 2011. To value this asset, the Company considered a discounted future cash flow model. The Company determined that this asset had no future cash flows associated with it and was fully impaired. The Company classified this impairment loss as research and development expense on the Consolidated Statements of Income. A significant decline in the Company’s projected revenue or earnings growth or cash flows, a significant decline in the Company’s stock price or the stock price of comparable companies, loss of legal ownership or title to an asset, and any significant change in the Company’s strategic business objectives and utilization of assets are among many factors that could result in an impairment charge that could have a material negative impact on the Company’s operating results. |
Impairment of Long-Lived Assets | ' |
Impairment of Long-Lived Assets—The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the total book value of an asset may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and the eventual disposition are less than its carrying amount. An impairment loss is equal to the excess of the book value of an asset over its determined fair value. The Company recorded no impairment charges for the years ended December 31, 2013 and 2012. For the year ended December 31, 2011, the Company recorded $1.0 million of impairment charges on a fixed asset group related to a discontinued product. To value this asset group, the Company considered a discounted future cash flow model. The Company determined that this asset group had no future cash flows associated with it and was fully impaired. The Company classified this impairment loss as research and development expense on the Consolidated Statements of Income. |
Other current liabilities | ' |
Other current liabilities—Other current liabilities consisted of the following (in thousands): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | | | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | |
Customer incentives | | $ | 3,068 | | | $ | 2,693 | | | | | | | | | | | | | | | | | | | | | |
Unearned grant revenue | | | 2,029 | | | | 2,156 | | | | | | | | | | | | | | | | | | | | | |
Income tax payable | | | 20 | | | | 955 | | | | | | | | | | | | | | | | | | | | | |
Customer prepayments | | | 68 | | | | 450 | | | | | | | | | | | | | | | | | | | | | |
Accrued liability for technology licenses | | | 180 | | | | 707 | | | | | | | | | | | | | | | | | | | | | |
Other | | | 2,275 | | | | 1,280 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other current liabilities | | $ | 7,640 | | | $ | 8,241 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue Recognition | ' |
Revenue Recognition—The Company records revenues primarily from product sales. These revenues are recorded net of rebates and other discounts which are estimated at the time of sale, and are largely driven by various customer program offerings, including special pricing agreements, promotions and other volume-based incentives. Revenue from product sales are recorded upon passage of title and risk of loss to the customer. Change in title to the product and recognition of revenue occurs upon delivery to the customer when sales terms are free on board (“FOB”) destination and at the time of shipment when the sales terms are FOB shipping point and there is no right of return. A portion of our product sales include revenues for diagnostic kits, which are utilized on leased instrument systems that remain our property and are capitalized on the balance sheet under property and equipment. |
The Company earns income from grants for research and commercialization activities. On November 6, 2012, the Company was awarded a milestone-based grant totaling up to $8.3 million from the Bill and Melinda Gates Foundation to develop, manufacture and validate a quantitative, low-cost, nucleic acid assay for HIV drug treatment monitoring on the integrated Savanna™ MDx platform initially for use in developing countries. Upon execution of the grant agreement, the Company received $2.6 million to fund subsequent research and development activities. The Company received $2.5 million in 2013 and expects to receive milestone payments of $3.2 million in 2014. The Company will recognize grant revenue on the lessor of the amount recognized on a straight-line basis or the amount that is non-refundable through the end of the agreement, which is December 31, 2015. For the years ended December 31, 2013 and 2012, the Company recognized $2.6 million and $0.4 million, respectively, as grant revenue. The Company included $1.0 million and $2.2 million of restricted cash as a component of prepaid expense and other current assets and as a component of other current liabilities as of December 31, 2013 and 2012, respectively. |
Royalty income from the grant of license rights is recognized during the period in which the revenue is earned and the amount is determinable from the licensee. The Company also earns income from the licensing of technology. |
Research and Development Costs | ' |
Research and Development Costs—Research and development costs are charged to operations as incurred. In conjunction with certain third party service agreements, the Company is required to make periodic payments based on achievement of certain milestones. The costs related to these research and development services are also charged to operations as incurred. |
Collaborative Arrangement | ' |
Collaborative Arrangement— In July 2012, the Company entered into a collaborative arrangement with Life Technologies Corporation for the development of molecular assays. ASC Topic 808, Collaborative Arrangements (“ASC Topic 808”), defines a collaborative arrangement as an arrangement where the parties are active participants and have exposure to significant risks. The Company is accounting for the joint development and commercialization activities with the third-party as a joint risk sharing collaboration in accordance with ASC Topic 808. Payments from the third party, which totaled $1.4 million in 2013 and $3.0 million in 2012, are recorded as a reduction to research and development expense in the accompanying consolidated financial statements due to the nature of the activities. In connection with the executed project plan, the third party is expected to reimburse the Company an additional $0.4 million in 2014. The reimbursement represents 50% of project development costs based upon mutually agreed upon project plans for each molecular assay. In connection with the collaboration agreement, the Company also entered into a manufacturing and supply agreement with the same third party. As part of that agreement, and upon commercialization, the Company will manufacture and sell assays to the third party at cost plus 20%. Additionally, the Company will receive 40% of the gross margin for sales from the third party to the end customer. In March 2013, the Company entered into a six year instrument supply agreement (the “March 2013 Agreement”) with Life Technologies Corporation pursuant to the March 2013 Agreement the Company paid $0.8 million for distribution rights to sell Life Technologies Corporation’s QuantStudio™ DX diagnostic laboratory instrument for use in the infectious disease field, along with the assays developed under the collaborative agreement. |
Product Shipment Costs | ' |
Product Shipment Costs—Product shipment costs are included in sales and marketing expense in the accompanying Consolidated Statements of Income. Shipping and handling costs were $2.2 million, $1.6 million and $1.6 million for the years ended December 31, 2013, 2012 and 2011, respectively. |
Advertising Costs | ' |
Advertising Costs—Advertising costs are expensed as incurred. Advertising costs were $0.7 million, $0.2 million and $0.7 million for the years ended December 31, 2013, 2012 and 2011, respectively. |
Deferred Rent | ' |
Deferred Rent—Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement is recorded as deferred rent. |
Income Taxes | ' |
Income Taxes—Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company’s policy is to recognize the interest expense and penalties related to income tax matters as a component of income tax expense. |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments— The Company uses the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures, that requires the valuation of assets and liabilities subject to fair value measurements using a three tiered approach and fair value measurement be classified and disclosed by the Company in one of the following three categories: |
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; |
Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; |
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). |
The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable, and accrued liabilities approximate their fair values due to their short-term nature. The outstanding balance owed under the line of credit approximates its fair value due to the instrument’s variable interest rate feature. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company establishes reserves for estimated uncollectible accounts and believes its reserves are adequate. |
Product Warranty | ' |
Product Warranty—The Company generally sells products with a limited product warranty and certain limited indemnifications. Due to product testing, the short time between product shipment and the detection and correction of product failures and a low historical rate of payments on indemnification claims, the historical activity and the related expense were not significant for the fiscal years presented. |
Stock-Based Compensation | ' |
Stock-Based Compensation—Compensation expense related to stock options granted is recognized ratably over the service vesting period for the entire option award. The total number of stock options expected to vest is adjusted by estimated forfeiture rates. The Company determined the estimated fair value of each stock option on the date of grant using the Black-Scholes option valuation model. Compensation expense for restricted stock (“stock awards”) is measured at the grant date and recognized ratably over the vesting period. The fair value of stock awards is determined based on the closing market price of the Company’s common stock on the grant date. |
Computation of Earnings Per Share | ' |
Computation of Earnings Per Share—Diluted net income per share is reported based on the more dilutive of the treasury stock or the two-class method. Under the two-class method, net income is allocated to common stock and participating securities. The Company’s unvested restricted stock awards and certain unvested restricted stock units meet the definition of participating securities. Basic net income per share under the two-class method is computed by dividing net income adjusted for earnings allocated to unvested stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share under the two-class method is computed by dividing net income adjusted for earnings allocated to unvested stockholders for the period by the weighted average number of common and common equivalent shares outstanding during the period. The Company excludes stock options from the calculation of diluted net income per share when the combined exercise price, unrecognized stock-based compensation and assumed tax benefits upon exercise are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. Stock options totaling 0.5 million, 1.1 million and 1.8 million for the years ended December 31, 2013, 2012 and 2011, respectively were not included in the computation of diluted earnings per share as their effect was anti-dilutive. Due to the fact that the holders of participating securities are not contractually required to share in the Company’s losses, in applying the two-class method to compute basic net loss per common share, no allocation to participating securities was made for periods in which the Company incurred a net loss. |
The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2013, 2012 and 2011 (in thousands, except per share amounts): |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2011 | | | | | | | | | | | | | | | | | |
Basic net income per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 7,390 | | | $ | 4,993 | | | $ | 7,633 | | | | | | | | | | | | | | | | | |
Less: income allocated to participating securities | | | (17 | ) | | | (28 | ) | | | (68 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income allocated to common stockholders | | $ | 7,373 | | | $ | 4,965 | | | $ | 7,565 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding — basic | | | 33,836 | | | | 33,068 | | | | 32,903 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income per share — basic | | $ | 0.22 | | | $ | 0.15 | | | $ | 0.23 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted net income per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 7,390 | | | $ | 4,993 | | | $ | 7,633 | | | | | | | | | | | | | | | | | |
Less: income allocated to participating securities | | | (16 | ) | | | (27 | ) | | | (67 | ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income allocated to common stockholders | | $ | 7,374 | | | $ | 4,966 | | | $ | 7,566 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding — basic | | | 33,836 | | | | 33,068 | | | | 32,903 | | | | | | | | | | | | | | | | | |
Dilutive securities | | | 1,111 | | | | 634 | | | | 417 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding — diluted | | | 34,947 | | | | 33,702 | | | | 33,320 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income per share — diluted | | $ | 0.21 | | | $ | 0.15 | | | $ | 0.23 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Comprehensive Income | ' |
Comprehensive Income—Comprehensive income includes unrealized gains and losses excluded from the Company’s Consolidated Statements of Income. |
Facility Restructuring | ' |
Facility Restructuring— The Company announced a plan to move its manufacturing operations in Santa Clara, California to Athens, Ohio. Termination benefits for those employees who chose not to relocate are accounted for in accordance with ASC Topic 712, Compensation – Nonretirement Postemployment Benefits (“ASC 712”), and are recorded when it is probable that employees will be entitled to benefits and the amounts can be reasonably estimated. Estimates of termination benefits are based on the frequency of past termination benefits and the similarity of benefits under the current plan and prior plans. Facility related costs are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”), and are recorded when the liability is incurred. The Company recorded a charge of $1.8 million during the year ended December 31, 2013, which included employee termination benefits and impairment charges related to the facility lease. As of December 31, 2013 $0.8 million is included in other current liabilities in the accompanying Consolidated Balance Sheet. The facility restructuring is expected to be completed during 2014, therefore, no portion of the future estimated expenses are included in other non-current liabilities as of December 31, 2013. |
Use of Estimates | ' |
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Accounting Periods | ' |
Accounting Periods—Each of the Company’s fiscal quarters end on the Sunday closest to the end of the calendar quarter. The Company’s fiscal year end is December 29, 2013. For ease of reference, the calendar quarter end dates are used herein. |
Reclassifications | ' |
Reclassifications –The Company reclassified $0.7 million from other current liabilities to other non-current liabilities on the December 31, 2012 Consolidated Balance Sheet in order to classify interest and penalties associated with uncertain tax positions in a manner consistent with the related liability. |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements—In July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, (“ASU 2012-02”), to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The provisions of this ASU were effective for fiscal years beginning after September 15, 2012, and the adoption did not have an impact on our consolidated financial statements. |
|
In July 2013, the FASB issued ASU No 2013-11, Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists, to clarify that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax benefit is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be netted with the deferred tax asset. These amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company early adopted this new guidance for the year ended December 31, 2013, which did not have a material impact on the consolidated financial statements. |
Accounting for Sales of Real Estate | ' |
During 1999, the Company completed a sale and leaseback transaction of its San Diego facility. The facility was sold for $15.0 million, of which $3.8 million was capital contributed by the Company. The sale was an all cash transaction, netting the Company approximately $7.0 million. The Company is a 25% limited partner in the partnership that acquired the facility. The transaction was deemed a financing transaction under the guidance in ASC Topic 840-40, Accounting for Sales of Real Estate. The assets sold remain on the books of the Company and will continue to be depreciated over the estimated useful life. In December 2009, the Company amended the terms of its lease agreement which had no significant impact on the Company’s financial statements. The amended terms include a new ten-year lease term through December 2019, with options to extend the lease for up to three additional five-year periods. The Company is amortizing the lease obligation over the new lease term. The amount of the monthly rental payments remain the same under the amendment. In addition, the Company has the option to purchase the general partner’s interest in the partnership in January 2015 for a fixed price. The Company has determined that the partnership is a variable interest entity (VIE). The Company is not, however, the primary beneficiary of the VIE as it does not absorb the majority of the partnership’s expected losses or receive a majority of the partnership’s residual returns. The Company made lease payments to the partnership of approximately $1.1 million for each of the three years ended December 31, 2013, 2012 and 2011. |
Fair Value Measurements and Disclosures | ' |
In conjunction with Financial Accounting Standards Board Accounting Standard Update No. 2009-05, Fair Value Measurements and Disclosures (Topic 820), the Company assigned $28.8 million to the licensed technology and $0.7 million as a one-time charge to cost of sales to settle royalty claims. |