Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 12-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'PHOTOMEDEX INC | ' |
Entity Central Index Key | '0000711665 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 18,908,245 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $29,724 | $45,388 |
Short term bank deposit | 18,348 | 14,113 |
Accounts receivable, net of allowance for doubtful accounts of $10,751 and $10,734, respectively | 22,077 | 27,218 |
Inventories, net | 27,008 | 27,547 |
Deferred tax asset | 12,955 | 13,041 |
Prepaid expenses and other current assets | 12,833 | 12,597 |
Total current assets | 122,945 | 139,904 |
Property and equipment, net | 11,458 | 10,489 |
Patents and licensed technologies, net | 10,389 | 10,832 |
Other intangible assets | 9,421 | 9,701 |
Goodwill | 25,067 | 24,930 |
Deferred tax asset | 23,290 | 24,039 |
Funds in respect of employee rights upon retirement and other assets | 1,078 | 1,034 |
Total assets | 203,648 | 220,929 |
Current liabilities: | ' | ' |
Current portion of notes payable | 628 | 838 |
Short-term debt | 5,000 | 10,000 |
Accounts payable | 8,964 | 14,785 |
Accrued compensation and related expenses | 2,592 | 3,230 |
Other accrued liabilities | 15,662 | 22,032 |
Deferred revenues | 5,696 | 5,961 |
Total current liabilities | 38,542 | 56,846 |
Long-term liabilities: | ' | ' |
Long-term note payable, net of current maturities | 68 | 82 |
Deferred revenues | 2,307 | 2,758 |
Other liabilities | 253 | 61 |
Liability for employee rights upon retirement | 863 | 821 |
Total liabilities | 42,033 | 60,568 |
Commitment and Contingencies (Note 11) | ' | ' |
Stockholders' equity: | ' | ' |
Preferred Stock, $.01 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2014 and December 31, 2013 | 0 | 0 |
Common stock, $.01 par value, 50,000,000 shares authorized; 18,903,425 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 189 | 189 |
Additional paid-in capital | 106,216 | 104,954 |
Retained earnings | 53,334 | 53,679 |
Accumulated other comprehensive income | 1,876 | 1,539 |
Total stockholders' equity | 161,615 | 160,361 |
Total liabilities and stockholders' equity | $203,648 | $220,929 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets: | ' | ' |
Accounts receivable, allowance for doubtful accounts | $10,751 | $10,734 |
Stockholders' Equity | ' | ' |
Preferred Stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred Stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, issued (in shares) | 0 | 0 |
Preferred Stock, outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $0.01 | $0.01 |
Common Stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common Stock, issued (in shares) | 18,903,245 | 18,903,245 |
Common Stock, outstanding (in shares) | 18,903,245 | 18,903,245 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) [Abstract] | ' | ' |
Revenues | $50,075 | $57,216 |
Cost of revenues | 10,345 | 11,866 |
Gross profit | 39,730 | 45,350 |
Operating expenses: | ' | ' |
Engineering and product development | 795 | 773 |
Selling and marketing | 31,625 | 29,326 |
General and administrative | 7,587 | 5,659 |
Total operating expenses | 40,007 | 35,758 |
Income (loss) from operations | -277 | 9,592 |
Other income (loss): | ' | ' |
Interest and other financing income (expense), net | -147 | 131 |
Net income (loss) before taxes | -424 | 9,723 |
Income tax expense (benefit) | 79 | -2,511 |
Net income | -345 | 7,212 |
Net income per share: | ' | ' |
Basic (in dollars per share) | ($0.02) | $0.35 |
Diluted (in dollars per share) | ($0.02) | $0.34 |
Shares used in computing net income per share: | ' | ' |
Basic (in shares) | 18,719,419 | 20,678,023 |
Diluted (in shares) | 18,719,419 | 21,147,583 |
Other comprehensive income (loss): | ' | ' |
Foreign currency translation adjustments | 337 | -1,813 |
Comprehensive income | ($8) | $5,399 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (loss) [Member] | Total |
In Thousands, except Share data, unless otherwise specified | |||||
BALANCE at Dec. 31, 2013 | $189 | $104,954 | $53,679 | $1,539 | $160,361 |
BALANCE (in shares) at Dec. 31, 2013 | 18,903,245 | ' | ' | ' | 18,903,245 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Stock-based compensation related to stock options and restricted stock | 0 | 1,192 | 0 | 0 | 1,192 |
Stock options issued to consultants for services | 0 | 70 | 0 | 0 | 70 |
Other comprehensive income | 0 | 0 | 0 | 337 | 337 |
Net income | 0 | 0 | -345 | 0 | -345 |
BALANCE at Mar. 31, 2014 | $189 | $106,216 | $53,334 | $1,876 | $161,615 |
BALANCE (in shares) at Mar. 31, 2014 | 18,903,245 | ' | ' | ' | 18,903,245 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash Flows From Operating Activities: | ' | ' |
Net income | ($345) | $7,212 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,636 | 1,443 |
Provision for doubtful accounts | 813 | 1,046 |
Deferred income taxes | 857 | 523 |
Stock-based compensation | 1,262 | 1,290 |
Gain on disposal of assets | -10 | 0 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | 4,367 | -6,403 |
Inventories | 571 | 794 |
Prepaid expenses and other assets | -280 | 4,013 |
Accounts payable | -5,837 | -2,707 |
Accrued compensation and related expenses | -641 | 30 |
Other accrued liabilities | -6,383 | -5,372 |
Other liabilities | 42 | 58 |
Deferred revenues | -538 | 1,137 |
Net cash provided by operating activities | -4,486 | 3,064 |
Cash Flows From Investing Activities: | ' | ' |
Purchases of property and equipment | -85 | -211 |
Investment in short-term bank deposits | -4,235 | 0 |
Lasers placed in service | -1,717 | -1,220 |
Proceeds on sale of assets | 20 | 0 |
Increase in funds - employees retirement rights | -42 | -58 |
Net cash used in investing activities | -6,059 | -1,489 |
Cash Flows From Financing Activities: | ' | ' |
Payments on notes payable | -224 | -203 |
Repayments of long term debt | -5,000 | -10 |
Proceeds from option exercises | 0 | 13 |
Net cash used in financing activities | -5,224 | -200 |
Effect of exchange rate changes on cash | 105 | -214 |
Net (decrease) increase in cash and cash equivalents | -15,664 | 1,161 |
Cash and cash equivalents, beginning of period | 45,388 | 44,348 |
Cash and cash equivalents, end of period | 29,724 | 45,509 |
Supplemental information: | ' | ' |
Cash paid for income taxes | 405 | 3,941 |
Cash paid for interest | $47 | $7 |
The_Company
The Company | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
The Company [Abstract] | ' | ||||||||
The Company | ' | ||||||||
Note 1 | |||||||||
The Company: | |||||||||
Background | |||||||||
PhotoMedex, Inc. (and its subsidiaries) (the “Company”) is a Global Skin Health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers. The Company provides proprietary products and services that address skin diseases and conditions including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage. | |||||||||
On December 13, 2011, the Company closed the reverse merger with Radiancy, Inc. Immediately following the reverse merger, the pre-reverse merger shareholders of PhotoMedex, Inc. (“Pre-merged PhotoMedex”) collectively owned approximately 20% of the Company’s outstanding common stock, and the former Radiancy, Inc. stockholders owned approximately 80% of the Company’s outstanding common stock. | |||||||||
The merger was accounted for as a reverse acquisition with Radiancy treated for accounting purposes as the acquirer. As such, the financial statements of Radiancy, Inc. were treated as the historical financial statements of the Company, with the results of Pre-merged PhotoMedex, Inc. being included from December 14, 2011 and thereafter. | |||||||||
As a result of the acquisition, the Company implemented a revised business plan focused on three key components – skilled direct sales force to target Physician and Professional Segments expertise in global consumer marketing; and a full product life cycle model representing the ability to develop and commercialize innovative products from concept through regulatory, physician acceptance, and ultimately marketed directly to the consumer as dictated by normal product-life-cycle evolution. The Company reorganized its business into three operating segments to better align its organization based upon the Company’s management structure, products and services offered, markets served and types of customers. | |||||||||
On July 1, 2013, PhotoMedex’ wholly-owned subsidiary, Radiancy, Inc., completed the acquisition of 100% of the shares of LK Technology Importaçăo E Exportaçăo LTDA (“LK”), a privately-held distributor in Brazil based in Sao Paulo, and has begun to market and sell its no!no!® products in Brazil in the third quarter through its acquisition of LK. (See Note 2, Acquisition). | |||||||||
On March 3, 2014, PhotoMedex’ wholly-owned subsidiary, Radiancy, Inc., formed a wholly-owned subsidiary in Hong Kong, Radiancy (HK) Limited, through which the Company plans to directly market certain products and services to patients and consumers in selected markets in that country. | |||||||||
On March 5, 2014, PhotoMedex formed a wholly-owned subsidiary in India, PhotoMedex India Private Limited, through which the Company plans to directly market certain products and services to patients and consumers in selected markets in that country. | |||||||||
On May 12, 2014, PhotoMedex completed the acquisition of 100% of the shares of LCA-Vision Inc. (“LCA”), a publicly–traded Delaware corporation. LCA is a provider of fixed-site laser vision corrections services at its Lasik Plus® vision centers. Through this acquisition, the Company intends to add an additional operating segment to its organization. The Company plans to begin to directly market certain of its existing products from these centers. The results of operations of LCA will be included from May 12, 2014 and thereafter into the PhotoMedex consolidated financial statements. (See Note 14, Subsequent Events). | |||||||||
Basis of Presentation: | |||||||||
The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“fiscal 2013”). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. | |||||||||
The results for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other interim period or for any future period. | |||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of the Company and the wholly- and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Revenue Recognition | |||||||||
The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for estimated chargebacks, rebates, expected returns and cash discounts. | |||||||||
The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will insist upon FOB destination. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are (i) when title to the goods transfers and (ii) when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured. | |||||||||
For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit. | |||||||||
With respect to sales arrangements under which the buyer has a right to return the related product, revenue is recognized only if all the following conditions are met: the price is fixed or determinable at the date of sale; the buyer has paid, or is obligated to pay and the obligation is not contingent on resale of the product; the buyer's obligation would not be changed in the event of theft or physical destruction or damage of the product; the buyer has economic substance; the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and the amount of future returns can be reasonably estimated. | |||||||||
The Company provides a provision for product returns based on the experience with historical sales returns, in accordance with ASC Topic 605-15 with respect to sales of product when a right of return exists. Reported revenues are shown net of the returns provision. Such allowance for sales returns is included in Other Accrued Liabilities. (See Note 8). | |||||||||
Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service. | |||||||||
The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) sells its lasers through a distributor or directly to a physician or (ii) places its lasers in a physician’s office (at no charge to the physician) and generally charges the physician a fee for an agreed upon number of treatments. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period. | |||||||||
When the Company places a laser in a physician’s office, it generally recognizes service revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are performed, this obligation has been satisfied. | |||||||||
The Company defers substantially all revenue from sales of treatment codes ordered by and performed to its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period. | |||||||||
Functional Currency | |||||||||
The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the US dollar ("$" or "dollars"), except for the operations of Photo Therapeutics, Ltd. which are conducted in the Great Britain Pounds (GBP) and LK Technologies which are conducted in Brazilian Real (BRL). Substantially all of the Group's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Thus, the functional (and reporting currency) of the Company and its subsidiaries (other than Photo Therapeutics, Ltd. and LK Technologies) is the dollar. | |||||||||
Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income, the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses. | |||||||||
Assets and liabilities of foreign subsidiaries, whose functional currency is their local currency, are translated from their respective functional currency to U.S. dollars at the balance sheet date exchange rates. Income and expense items are translated at the average rates of exchange prevailing during the year. Translation adjustments are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments as the earnings of the subsidiaries are considered to be permanently reinvested. | |||||||||
Fair Value Measurements | |||||||||
The Company measures and discloses fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows: | |||||||||
• | Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. | ||||||||
• | Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. | ||||||||
• | Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors | ||||||||
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. | |||||||||
The fair value of cash and cash equivalents and short term bank deposits are based on its demand value, which is equal to its carrying value. The estimated fair values of notes payable which are based on borrowing rates that are available to the Company for loans with similar terms, collateral and maturity approximate the carrying values. Additionally, the carrying value of all other monetary assets and liabilities is estimated to be equal to their fair value due to the short-term nature of these instruments. | |||||||||
Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Group would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2. The fair value of contingent consideration in connection with the acquisition of LK (see Note 2) is based on management estimate of the entity prices of remaining inventories of LK at acquisition date (level 3 measurement). | |||||||||
In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets including goodwill. As such, we have determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. | |||||||||
Derivatives | |||||||||
The group applies the provisions of Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For derivative financial instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. | |||||||||
From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted expenses of the Israeli subsidiary (Radiancy) denominated in Israeli local currency (NIS) which is different than its functional currency. | |||||||||
Such derivatives were not designated as hedging instruments, and accordingly they were recognized in the balance sheet at their fair value, with changes in the fair value carried to the Statement of Comprehensive Income and included in financing income (expenses), net. | |||||||||
At March 31, 2014, the balance of such derivative instruments amounted to approximately $175 in assets and approximately $90 were recognized as financing income in the Statement of Comprehensive Income during the quarter ended that date. | |||||||||
The nominal amounts of foreign currency derivatives as of March 31, 2014 consist of forward transactions for the exchange of $4,250 into NIS as of March 31, 2014. | |||||||||
Accrued Warranty Costs | |||||||||
The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2014 and 2013 is summarized as follows: | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
(unaudited) | (unaudited) | ||||||||
Accrual at beginning of year | $ | 1,151 | $ | 1,440 | |||||
Additions charged to warranty expense | 256 | 337 | |||||||
Expiring warranties | (69 | ) | (152 | ) | |||||
Claims satisfied | (247 | ) | (314 | ) | |||||
Total | 1,091 | 1,311 | |||||||
Less: current portion | (1,021 | ) | (1,190 | ) | |||||
Accrued extended warranty | $ | 70 | $ | 121 | |||||
For extended warranty on the consumer products, see Revenue Recognition above. | |||||||||
Earnings Per Share | |||||||||
Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding: | |||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Weighted-average number of common and common equivalent shares outstanding: | |||||||||
Basic number of common shares outstanding | 18,719,419 | 20,678,023 | |||||||
Dilutive effect of stock options and warrants | - | 469,560 | |||||||
Diluted number of common and common stock equivalent shares outstanding | 18,719,419 | 21,147,583 | |||||||
Diluted earnings per share for the three months ended March 31, 2014, exclude the impact of common stock options and warrants, totaling 2,444,016 shares, as the effect of their inclusion would be anti-dilutive. Diluted earnings per share for the three months ended March 31, 2013, excluded the impact of common stock options and warrants, totaling 1,081,226 shares, as the effect of their inclusion would be anti-dilutive. | |||||||||
Adoption of New Accounting Standards | |||||||||
Effective January 1, 2013, the Company adopted Accounting Standard Update 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) ("ASU 2013-11"). | |||||||||
The amendments in ASU 2013-11 state 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, except as follows: To the extent 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 to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, 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 presented net of deferred tax assets. | |||||||||
ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. For public companies the amendments in this ASU became effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments were applied prospectively to all unrecognized tax benefits that existed at the effective date. | |||||||||
The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition. | |||||||||
Effective January 1, 2013, the Company adopted Accounting Standards Update 2013-5, Foreign Currency Matters (Topic 830) Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-5"). | |||||||||
ASU 2013-5 clarifies that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. ASU 2013-5 also clarifies that if the business combination achieved in stages relates to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment. | |||||||||
For public companies, the amendments in this Update became effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. In accordance with the transition requirements, the amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. | |||||||||
The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition. |
Acquisition
Acquisition | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Acquisition [Abstract] | ' | ||||
Acquisition | ' | ||||
Note 2 | |||||
Acquisition: | |||||
On July 1, 2013, PhotoMedex’ wholly-owned subsidiary, Radiancy, Inc., completed the acquisition of 100% of the shares of LK Technology Importaçăo E Exportaçăo LTDA (“LK”), a privately-held distributor in Brazil. | |||||
LK brings to PhotoMedex all required licenses, authorizations and permits to immediately begin its consumer business operating locally. LK was founded in 2003 and is based in Sao Paulo. LK has been operating for several years selling Radiancy’s professional line of products in Brazil. The local manager of LK remains in his position. | |||||
The total consideration was $181, consisting of $100 consideration and $81 (a contingent consideration component) liability for an estimated amount to be due for the profit to be earned on the remaining inventory at acquisition date. Such contingent amount is expected to be paid during the year 2014. | |||||
The fair value of the assets acquired and liabilities assumed were based on management estimates. Based on the initial purchase price allocation, the following table summarizes the fair value amounts of the assets acquired and liabilities assumed at the date of the acquisition: | |||||
Cash and cash equivalents | $ | 125 | |||
Accounts receivable | 1 | ||||
Inventories | 20 | ||||
Prepaid expenses and other current assets | 2 | ||||
Total assets acquired at fair value | 148 | ||||
Accounts payable | (75 | ) | |||
Accrued compensation and related expenses | (2 | ) | |||
Other accrued liabilities | (11 | ) | |||
Total liabilities assumed | (88 | ) | |||
Net assets acquired | $ | 60 | |||
The purchase price exceeded the fair value of the net assets acquired by $121, which was recorded as goodwill. | |||||
The consolidated results of operations do not include any revenues or expenses related to the LK business on or prior to July 1, 2013, the consummation date of the acquisition. The amounts of revenue and earnings of LK since the acquisition date through December 31, 2013 included in the consolidated statement of comprehensive income were immaterial. Assuming the acquisition of LK had occurred on January 1, 2013, the impact on the Company’s results for the quarter ended March 31, 2013 would have been immaterial. However this determination does not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2013, nor to be indicative of future results of operations. |
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventories [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Note 3 | |||||||||
Inventories: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
(unaudited) | |||||||||
Raw materials and work in progress | $ | 11,326 | $ | 12,631 | |||||
Finished goods | 15,682 | 14,916 | |||||||
Total inventories | $ | 27,008 | $ | 27,547 | |||||
Work-in-process is immaterial, given the Company’s typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials. |
Property_and_Equipment
Property and Equipment | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Note 4 | |||||||||
Property and Equipment: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Lasers-in-service | $ | 14,277 | $ | 12,599 | |||||
Equipment, computer hardware and software | 4,715 | 4,730 | |||||||
Furniture and fixtures | 759 | 705 | |||||||
Leasehold improvements | 488 | 534 | |||||||
20,239 | 18,568 | ||||||||
Accumulated depreciation and amortization | (8,781 | ) | (8,079 | ) | |||||
Property and equipment, net | $ | 11,458 | $ | 10,489 | |||||
Depreciation and related amortization expense was $824 and $634 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Patents_and_Licensed_Technolog
Patents and Licensed Technologies, net | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Patents and Licensed Technologies, net [Abstract] | ' | ||||||||
Patents and Licensed Technologies, net | ' | ||||||||
Note 5 | |||||||||
Patents and Licensed Technologies, net: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Gross Amount beginning of period | $ | 15,648 | $ | 15,411 | |||||
Additions | 56 | 171 | |||||||
Translation differences | 29 | 66 | |||||||
Gross Amount end of period | 15,733 | 15,648 | |||||||
Accumulated amortization | (5,344 | ) | (4,816 | ) | |||||
Patents and licensed technologies, net | $ | 10,389 | $ | 10,832 | |||||
Related amortization expense was $512 and $509 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Estimated amortization expense for amortizable patents and licensed technologies assets for the next five years is as follows: | |||||||||
Last nine months of 2014 | $ | 1,542 | |||||||
2015 | 2,049 | ||||||||
2016 | 2,047 | ||||||||
2017 | 909 | ||||||||
2018 | 899 | ||||||||
Thereafter | 2,943 | ||||||||
Total | $ | 10,389 | |||||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||||||||||
Note 6 | |||||||||||||||||||||||||
Goodwill and Other Intangible Assets: | |||||||||||||||||||||||||
As part of the purchase price allocation for the reverse acquisition, the Company recorded goodwill in the amount of $24,005 and definite-lived intangibles in the amount of $12,000. Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. The purchase price intrinsically recognizes the benefits of the broadened depth of the management team and the addition of a sizeable direct sales force creating greater access to the physician community with branded products and technologies. Furthermore, the purchase price paid by Radiancy, Inc., a private company includes, among other things, other benefits such as the intrinsic value of being a Nasdaq-listed issuer post-merger and now having access to capital markets and stockholder liquidity. | |||||||||||||||||||||||||
Balance at January 1, 2014 | $ | 24,930 | |||||||||||||||||||||||
Translation differences | 137 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 25,067 | |||||||||||||||||||||||
The Company has no impairment loss as of March 31, 2014. | |||||||||||||||||||||||||
Set forth below is a detailed listing of other definite-lived intangible assets: | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Trademarks | Customer Relationships | Total | Trademarks | Customer Relationships | Total | ||||||||||||||||||||
Gross Amount beginning of period | $ | 5,772 | $ | 6,417 | $ | 12,189 | $ | 5,744 | $ | 6,372 | $ | 12,116 | |||||||||||||
Translation differences | 12 | 20 | 32 | 28 | 45 | 73 | |||||||||||||||||||
Gross Amount end of period | 5,784 | 6,437 | 12,221 | 5,772 | 6,417 | 12,189 | |||||||||||||||||||
Accumulated amortization | (1,326 | ) | (1,474 | ) | (2,800 | ) | (1,178 | ) | (1,310 | ) | (2,488 | ) | |||||||||||||
Net Book Value | $ | 4,458 | $ | 4,963 | $ | 9,421 | $ | 4,594 | $ | 5,107 | $ | 9,701 | |||||||||||||
Related amortization expense was $300 and $300 for the periods ended March 31, 2014 and 2013, respectively. Customer Relationships embody the value to the Company of relationships that Pre-merged PhotoMedex had formed with its customers. Trademarks include the tradenames and various trademarks associated with Pre-merged PhotoMedex products (e.g. “XTRAC”, “Neova” “Omnilux” and “Lumiere”). | |||||||||||||||||||||||||
Estimated amortization expense for the above amortizable intangible assets for the next five years is as follows: | |||||||||||||||||||||||||
Last nine months of 2014 | $ | 900 | |||||||||||||||||||||||
2015 | 1,200 | ||||||||||||||||||||||||
2016 | 1,200 | ||||||||||||||||||||||||
2017 | 1,200 | ||||||||||||||||||||||||
2018 | 1,200 | ||||||||||||||||||||||||
Thereafter | 3,721 | ||||||||||||||||||||||||
Total | $ | 9,421 | |||||||||||||||||||||||
Accrued_Compensation_and_relat
Accrued Compensation and related expenses | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accrued Compensation and related expenses [Abstract] | ' | ||||||||
Accrued Compensation and related expenses | ' | ||||||||
Note 7 | |||||||||
Accrued Compensation and related expenses: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Accrued payroll and related taxes | $ | 830 | $ | 707 | |||||
Accrued vacation | 339 | 290 | |||||||
Accrued commissions and bonus | 1,423 | 2,233 | |||||||
Total accrued compensation and related expense | $ | 2,592 | $ | 3,230 | |||||
Other_Accrued_Liabilities
Other Accrued Liabilities | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Other Accrued Liabilities [Abstract] | ' | ||||||||
Other Accrued Liabilities | ' | ||||||||
Note 8 | |||||||||
Other Accrued Liabilities: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Accrued warranty, current, see Note 1 | $ | 1,021 | $ | 1,094 | |||||
Accrued taxes, net | 1,371 | 1,023 | |||||||
Accrued sales returns (1) | 9,773 | 16,046 | |||||||
Other accrued liabilities | 3,497 | 3,869 | |||||||
Total other accrued liabilities | $ | 15,662 | $ | 22,032 | |||||
(1) | The activity in the sales returns liability account was as follows: | ||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
(unaudited) | (unaudited) | ||||||||
Balance at beginning of year | $ | 16,046 | $ | 11,781 | |||||
Additions that reduce net sales | 9,899 | 10,008 | |||||||
Deductions from reserves | (16,172 | ) | (10,241 | ) | |||||
Balance at end of period | $ | 9,773 | $ | 11,548 | |||||
Shortterm_Debt
Short-term Debt | 3 Months Ended |
Mar. 31, 2014 | |
Short-term Debt: [Abstract] | ' |
Short-term Debt | ' |
Note 9 | |
Short-term Debt: | |
Term-Note Credit Facility | |
In December 2013, the Company, through its subsidiary, Radiancy, Inc., entered into a term-note facility with JP Morgan Chase (“Chase”). The facility has maximum principal amount of $15 million and is for a term of one year. As of March 31, 2014 and December 31, 2013, the Company had total borrowings of $5 million and $10 million, respectively, under this facility. The stated interest rate for any draw under the credit facility was set as the greater of (i) prime rate, (ii) federal funds effective rate plus .5% or (iii) LIBOR plus 2.5%. Each draw has a repayment period of one year with principal due at maturity, although any draw may be paid early with penalty. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes [Abstract] | ' |
Income Taxes | ' |
Note 10 | |
Income Taxes: | |
The Company's effective tax rate is dependent upon the geographic distribution of its earnings or losses (mainly between US and Israel). | |
The difference between the Company's effective tax rates for the three month period ended March 31, 2014 and the U.S. Federal statutory rate (34%) resulted primarily from Pre-merged PhotoMedex current operations which have generated losses, which reduced the overall corporate tax expense and which will have effect on current tax expense when the Company elected to file a U.S. consolidated income tax return. In addition, the Israeli and UK subsidiaries’ earnings are taxed at rates lower than the federal statutory rate (Israel 16% preferred income tax rate, 26.5% standard corporation tax rate and in the UK 20%). | |
The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and can be ambiguous; the Company is, therefore, obliged to make many subjective assumptions and judgments regarding the application of such laws and regulations to its facts and circumstances. In addition, interpretations of and guidance surrounding income tax laws and regulations are subject to changes over time. Any changes in the Company's subjective assumptions and judgments could materially affect amounts recognized in its consolidated balance sheets and statements of income. | |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Contingencies [Abstract] | ' |
Contingencies | ' |
Note 11 | |
Contingencies: | |
During the year ended December 31, 2013, Radiancy, Inc., a wholly-owned subsidiary of PhotoMedex, commenced legal action against Viatek Consumer Products Group, Inc., over Viatek’s Pearl and Samba hair removal products which Radiancy believes infringe the intellectual property covering its no!no! hair removal devices. The first suit, which was filed in the United States Federal Court, Southern District of New York, includes claims against Viatek for patent infringement, trademark and trade dress infringement, and false and misleading advertising. A second suit against Viatek was filed in Canada, where the Pearl is offered on that country’s The Shopping Channel, alleging trademark and trade dress infringement, and false and misleading advertising. Viatek’s response contains a variety of counterclaims and affirmative defenses against both Radiancy and its parent company PhotoMedex, including, among other counts, claims regarding the invalidity of Radiancy’s patents and antitrust allegations regarding Radiancy’s conduct. | |
On March 28, 2014, the Court granted the Company’s motion and dismissed PhotoMedex from the lawsuit. The Court also dismissed certain counterclaims and affirmative defenses asserted by Viatek, including Viatek’s counterclaims against Radiancy for antitrust, unfair competition, and tortious interference with business relationships and Viatek’s affirmative defenses of unclean hands and inequitable conduct before the U.S. Patent and Trademark Office in procuring its patent. Radiancy had also moved for sanctions against Viatek for failure to provide meaningful and timely responses to Radiancy’s discovery requests; on April 1, 2014, the Court granted Radiancy’s motion for sanctions against Viatek, which has appealed both the sanctions ruling and the dismissal of Viatek’s counterclaims and defenses from the case, as well as PhotoMedex dismissal as a plaintiff. As of May 12, 2014, the case remains in the discovery phase of the litigation. Radiancy, and PhotoMedex, had moved to dismiss PhotoMedex from the case, and to dismiss the counterclaims and affirmative defenses asserted by Viatek. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated as the case is still in the early stages of discovery to determine the validity of any claim or claims made by Viatek. Therefore, the Company has not recorded any reserve or contingent liability related to this particular legal matter. However, in the future, as the case progresses, the Company may be required to record a contingent liability or reserve for this matter. | |
On December 20, 2013, PhotoMedex, Inc. was served with a putative class action lawsuit filed in the United States District Court for the Eastern District of Pennsylvania against the Company and its two top executives, Dolev Rafaeli, Chief Executive Officer, and Dennis M. McGrath, President and Chief Financial Officer. The suit, filed by Mr. Guy Ratz, a former employee of Radiancy (Israel) Ltd., a wholly-owned subsidiary of the Company, alleges various violations of the Federal securities laws between November 7, 2012 and November 14, 2013, including that the Company and its officers made false and misleading statements or failed to disclose material facts concerning the Company’s business. Two other shareholders filed suit through other firms; the Asbestos Workers Local 14 Pension Fund was appointed the lead plaintiff in this case. An amended complaint was filed by the plaintiffs on April 15, 2014. The complaint seeks certification of the putative class as well as an unspecified amount of monetary damages, pre-and post-judgment interest and attorneys’ fees, expert witness fees and other costs. The Company and its officers intend to vigorously defend themselves against this lawsuit. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated as the cases have only been initiated and no discovery has been conducted to determine the validity of any claim or claims made by plaintiffs. Therefore, the Company has not recorded any reserve or contingent liability related to these particular legal matters. However, in the future, as the cases progress, the Company may be required to record a contingent liability or reserve for these matters. | |
Six putative class-action lawsuits were filed in connection with PhotoMedex’s proposed acquisition of LCA-Vision, Inc. Two of those suits were filed in the Court of Chancery of the State of Delaware and four were filed in the Court of Common Pleas of Hamilton County, Ohio. All cases assert claims against LCA-Vision, Inc., and a mix of other defendants, including LCA’s chief executive officer and directors, PhotoMedex, and Gatorade Acquisition Corp., a wholly owned subsidiary of PhotoMedex. The complaints generally allege that the proposed acquisition undervalued LCA and deprived LCA’s shareholders of the opportunity to participate in LCA’s long-term financial prospects, that the “go shop” and “deal-protection” provisions of the Merger Agreement were designed to prevent LCA from soliciting or receiving competing offers, that LCA’s Board breached its fiduciary duties and failed to maximize that company’s stockholder value, and that LCA, PhotoMedex, and Gatorade aided and abetted the LCA defendants’ alleged breaches of duty. The complaints seek injunctive relief, unspecified damages, and other relief. The Ohio plaintiffs agreed to consolidate their suits and take the lead on this matter, although the Ohio Court did not formally consolidate the suits until April 24, 2014. The Delaware suits were consolidated on March 25, 2014; on or around that same date, the parties reached an agreement by which LCA and the other defendants agreed to produce certain discovery to the plaintiffs on an expedited basis. On April 30, 2014, the Ohio plaintiffs (with the Delaware plaintiffs’ concurrence) agreed to withdraw their motion for a preliminary injunction and not seek to enjoin the stockholder vote or the consummation of the merger in return for LCA’s agreement to make certain supplemental disclosures related to the merger. Those supplemental disclosures were filed by LCA under a Form 8-K on April 30, 2014. This agreement did not affect the terms of the Merger Agreement or the amount of consideration LCA stockholders will be entitled to receive in the merger. Defendants intend to continue to vigorously defend themselves in the lawsuits if the parties cannot enter into a formal stipulation of settlement. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated, as the cases have only been recently initiated and little discovery has been conducted to determine the validity of any claim or claims made by plaintiffs. Therefore, the Company has not recorded any reserve or contingent liability related to these particular legal matters. However, in the future, as the cases progress, the Company may be required to record a contingent liability or reserve for these matters if the cases cannot be resolved. | |
On April 25, 2014, a putative class action lawsuit was filed in the United States District Court for the District of Columbia against the Company’s subsidiary, Radiancy, Inc. and Dolev Rafaeli, Radiancy’s President. The suit was filed by Jan Mouzon and twelve other customers residing in ten different states who purchased Radiancy’s no!no! Hair products. It alleges various violations of state business and consumer protection codes including false and misleading advertising, unfair trade practices, and breach of express and implied warranties. The complaint seeks certification of the putative class, or, alternatively, certification as subclasses of plaintiffs residing in those specific states. The complaint also seeks an unspecified amount of monetary damages, pre-and post-judgment interest and attorneys’ fees, expert witness fees and other costs. Dr. Rafaeli was served with the Complaint on May 5, 2014; to date, Radiancy, has not been served. Radiancy and its officers intend to vigorously defend themselves against this lawsuit. At this time, the amount of any loss, or range of loss, cannot be reasonably estimated as the case has only been initiated and no discovery has been conducted to determine the validity of any claim or claims made by plaintiffs. Therefore, the Company has not recorded any reserve or contingent liability related to these particular legal matters. However, in the future, as the cases progress, the Company may be required to record a contingent liability or reserve for these matters. | |
From time to time in the ordinary course of our business, we and certain of our subsidiaries are involved in certain other legal actions and claims, including product liability, consumer, commercial, tax and governmental matters, and claims regarding false advertising and product efficacy which were already raised and reviewed in the Tria litigation. We believe, based on discussions with legal counsel, that these other litigations and claims will likely be resolved without a material effect on our consolidated financial position, results of operations or liquidity. However, litigation is inherently unpredictable, and excessive verdicts can result from litigation. Although we believe we have substantial defenses in these matters, we may, in the future, incur judgments or enter into settlements of claims that could have a material adverse effect on our results of operations in a particular period. | |
Employee_Stock_Benefit_Plans
Employee Stock Benefit Plans | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Employee Stock Benefit Plans [Abstract] | ' | ||||||||
Employee Stock Benefit Plans | ' | ||||||||
Note 12 | |||||||||
Employee Stock Benefit Plans: | |||||||||
Post-Reverse Merger | |||||||||
Following the closing of the reverse acquisition, the previous Non-Employee Director Stock Option Plan of PhotoMedex (the acquired entity) was adopted by the group. This plan has authorized 120,000 shares; of which 7,000 shares had been issued or were reserved for issuance as awards of shares of common stock, and 14,578 shares were reserved for outstanding stock options. | |||||||||
In addition, following the closing of the reverse acquisition, the previous 2005 Equity Compensation Plan (“2005 Equity Plan”) of Pre-merged PhotoMedex (the acquired entity) was also adopted for use by the group. The 2005 Equity Plan has authorized 3,000,000 shares, of which 753,095 shares had been issued or were reserved for issuance as awards of shares of common stock, and 1,187,101 shares were reserved for outstanding options. | |||||||||
Stock option activity under all of the Company’s share-based compensation plans for the three months ended March 31, 2014 was as follows: | |||||||||
Number of Options | Weighted Average Exercise Price | ||||||||
Outstanding, January 1, 2014 | 1,132,678 | $ | 16.51 | ||||||
Granted | 71,500 | 14.8 | |||||||
Exercised | - | - | |||||||
Cancelled | (2,499 | ) | 102.48 | ||||||
Outstanding, March 31, 2014 | 1,201,679 | $ | 16.23 | ||||||
Options exercisable at March 31, 2014 | 517,179 | $ | 16.45 | ||||||
At March 31, 2014, there was $8,057 of total unrecognized compensation cost related to non-vested option grants and stock awards that is expected to be recognized over a weighted-average period of 2.6 years. The intrinsic value of options outstanding and exercisable at March 31, 2014 was not significant. | |||||||||
The Company calculates expected volatility for a share-based grants based on historic daily stock price observations of its common stock. For estimating the expected term of share-based grants made in the three months ended March 31, 2014, the Company has adopted the simplified method. The Company has used historical data to estimate expected employee behaviors related to option exercises and forfeitures and included these expected forfeitures as a part of the estimate of expense as of the grant date. | |||||||||
The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted-average assumptions: | |||||||||
Three Months Ended | |||||||||
31-Mar-14 | |||||||||
Risk-free interest rate | 2.11% | ||||||||
Volatility | 81.16% | ||||||||
Expected dividend yield | 0% | ||||||||
Expected life | 5.5 years | ||||||||
Estimated forfeiture rate | 0% | ||||||||
With respect to grants of options, the risk-free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant or award. | |||||||||
On February 27, 2014, the Company granted an aggregate of 71,500 options to purchase common stock to a number of employees and consultants with a strike price of $14.80, which was higher than the quoted market value of our stock at the date of grants. The options vest over five years and expire ten years from the date of grant. The aggregate fair value of the options granted was $718. | |||||||||
Total stock based compensation expense was $1,262 and $1,290 for the three months ended March 31, 2014 and 2013, including amounts relating to consultants. | |||||||||
Business_Segments_and_Geograph
Business Segments and Geographic Data | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Business Segments and Geographic Data [Abstract] | ' | ||||||||||||||||
Business Segments and Geographic Data | ' | ||||||||||||||||
Note 13 | |||||||||||||||||
Business Segments and Geographic Data: | |||||||||||||||||
The Company organized its business into three operating segments to better align its organization based upon the Company’s management structure, products and services offered, markets served and types of customers, as follows: The Consumer segment derives its revenues from the design, development, manufacturing and selling of long-term hair reduction and acne consumer products. The Physician Recurring segment derives its revenues from the XTRAC procedures performed by dermatologists, the sales of skincare products, the sales of surgical disposables and accessories to hospitals and surgery centers and on the repair, maintenance and replacement parts on our various products. The Professional segment generates revenues from the sale of equipment, such as lasers, medical and esthetic light and heat-based products and LED products. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance. | |||||||||||||||||
Unallocated operating expenses include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses. Unallocated assets include cash and cash equivalents, prepaid expenses and deposits. | |||||||||||||||||
The following tables reflect results of operations from our business segments for the periods indicated below: | |||||||||||||||||
Three Months Ended March 31, 2014 (unaudited) | |||||||||||||||||
CONSUMER | PHYSICIAN RECURRING | PROFESSIONAL | TOTAL | ||||||||||||||
Revenues | $ | 40,870 | $ | 7,219 | $ | 1,986 | $ | 50,075 | |||||||||
Costs of revenues | 6,250 | 2,830 | 1,265 | 10,345 | |||||||||||||
Gross profit | 34,620 | 4,389 | 721 | 39,730 | |||||||||||||
Gross profit % | 84.7 | % | 60.8 | % | 36.3 | % | 79.3 | % | |||||||||
Allocated operating expenses: | |||||||||||||||||
Engineering and product development | 287 | 310 | 198 | 795 | |||||||||||||
Selling and marketing expenses | 27,157 | 4,011 | 457 | 31,625 | |||||||||||||
Unallocated operating expenses | - | - | - | 7,587 | |||||||||||||
27,444 | 4,321 | 655 | 40,007 | ||||||||||||||
Income (loss) from operations | 7,176 | 68 | 66 | (277 | ) | ||||||||||||
Interest and other financing income (expense), net | - | - | - | 147 | |||||||||||||
Net income (loss) before taxes | $ | 7,176 | $ | 68 | $ | 66 | $ | ( 424 | ) | ||||||||
Three Months Ended March 31, 2013 (unaudited) | |||||||||||||||||
CONSUMER | PHYSICIAN RECURRING | PROFESSIONAL | TOTAL | ||||||||||||||
Revenues | $ | 49,060 | $ | 5,955 | $ | 2,201 | $ | 57,216 | |||||||||
Costs of revenues | 7,517 | 2,931 | 1,418 | 11,866 | |||||||||||||
Gross profit | 41,543 | 3,024 | 783 | 45,350 | |||||||||||||
Gross profit % | 84.7 | % | 50.8 | % | 35.6 | % | 79.3 | % | |||||||||
Allocated operating expenses: | |||||||||||||||||
Engineering and product development | 218 | 324 | 231 | 773 | |||||||||||||
Selling and marketing expenses | 25,631 | 3,174 | 521 | 29,326 | |||||||||||||
Unallocated operating expenses | - | - | - | 5,659 | |||||||||||||
25,849 | 3,498 | 752 | 35,758 | ||||||||||||||
Income (loss) from operations | 15,694 | (474 | ) | 31 | 9,592 | ||||||||||||
Interest and other financing income, net | - | - | - | 131 | |||||||||||||
Net income (loss) before taxes | $ | 15,694 | $ | ( 474 | ) | $ | 31 | $ | 9,723 | ||||||||
For the three months ended March 31, 2014 and 2013, net revenues by geographic area were as follows: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unadudited) | (unadudited) | ||||||||||||||||
North America 1 | $ | 39,972 | $ | 44,899 | |||||||||||||
Asia Pacific 2 | 2,377 | 5,762 | |||||||||||||||
Europe (including Israel) | 7,408 | 5,633 | |||||||||||||||
South America | 318 | 922 | |||||||||||||||
$ | 50,075 | $ | 57,216 | ||||||||||||||
1 United States | $ | 34,766 | $ | 38,007 | |||||||||||||
1 Canada | $ | 5,206 | $ | 6,892 | |||||||||||||
2 Japan | $ | 698 | $ | 4,262 | |||||||||||||
As of March 31, 2014 and December 31, 2013, long-lived assets by geographic area were as follows: | |||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||
(unaudited) | |||||||||||||||||
North America | $ | 10,157 | $ | 9,119 | |||||||||||||
Europe (including Israel) | 1,297 | 1,370 | |||||||||||||||
South America | 4 | - | |||||||||||||||
$ | 11,458 | $ | 10,489 | ||||||||||||||
The Company discusses segmental details in its Management Discussion and Analysis found elsewhere in this Quarterly Report on Form 10-Q. | |||||||||||||||||
Significant_Customer_Concentra
Significant Customer Concentration | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Significant Customer Concentration [Abstract] | ' | ||||||||
Significant Customer Concentration | ' | ||||||||
Note 14 | |||||||||
Significant Customer Concentration: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Customer A | 0 | % | 10 | % | |||||
No other customer was more than 10% of total company revenues for the three months ended March 31, 2014 and 2013. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
Note 15 | |
Subsequent Events: | |
On May 7, 2014, the LCA shareholders approved the proposed acquisition by PhotoMedex, Inc. with 11,943,611 proxies in favor of the acquisition, or 61.7% of the total outstanding shares of LCA. On May 8, 2014, the PhotoMedex board of directors voted unanimously in favor of consummating the acquisition effective May 12, 2014. | |
LCA is a publicly–traded Delaware corporation. LCA is a provider of fixed-site laser vision corrections services at its Lasik Plus® vision centers. The vision centers provide the staff, facilities, equipment and support services for performing laser vision correction that employs advanced laser technologies to help correct nearsightedness, farsightedness and astigmatism. The vision centers are supported by independent ophthalmologists and credentialed optometrists, as well as other healthcare professionals. Substantially all of LCA’s revenues is derived from the delivery of laser vision correction procedures performed in the vision centers. | |
On February 13, 2014, the Company, LCA-Vision Inc. (NasdaqGS: LCAV), and Gatorade Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), had entered into an Agreement and Plan of Merger (the “Merger Agreement”) under which the Company agreed to acquire the entire holdings of LCA. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions therein, Merger Sub will be merged with and into LCA (the “Merger”), with LCA surviving as a wholly-owned subsidiary of the Company. | |
At the effective time of the merger, each outstanding share of LCA common stock (other than dissenting shares, treasury shares, any shares owned by the Company and its subsidiaries, and shares owned by a subsidiary of LCA) will be cancelled, and the shareholders will receive $5.37 in cash, without interest. Immediately prior to the effective time of the Merger, each outstanding option to acquire common stock granted under any LCA equity incentive plan, whether vested or exercisable, that is outstanding will be cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (i) the excess, if any, of $5.37 over the per share exercise price of the option multiplied by (ii) the total number of shares of common stock subject to the option. Also immediately prior to the effective time of the Merger, each outstanding share of restricted stock unit award or other right to receive common stock granted under any LCA equity incentive plan, whether vested or exercisable, will be cancelled and converted into the right to receive $5.37 per share in cash, without interest. The $5.37 per ownership interest price approximates a purchase price of $106.4 million for all LCA stock and equity instruments described above. | |
The Company is funding this transaction through the $85 million senior secured credit facilities as well as through existing cash balances. | |
On May 12, 2014, the Company entered into an $85 million senior secured credit facilities (“the Facilities”) with JP Morgan Chase (“Chase”) which includes a $10 million revolving credit facility and a $75 million four-year term loan. The facilities are secured by a first priority security interest in and lien on all assets of the Company. All current and future subsidiaries are guarantors on the facilities. There are financial covenants, a maximum leverage covenant and a minimum fixed charge covenant, which the Company must maintain. These covenants will be determined quarterly based on a rolling twelve months of financial data. | |
The facilities will be utilized to refinance the existing term debt with Chase, fund the acquisition of LCA and for working capital and other general corporate purposes. |
The_Company_Policies
The Company (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
The Company [Abstract] | ' | ||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation: | |||||||||
The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“fiscal 2013”). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company’s financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. | |||||||||
The results for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other interim period or for any future period. | |||||||||
Principles of Consolidation | ' | ||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of the Company and the wholly- and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition | |||||||||
The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for estimated chargebacks, rebates, expected returns and cash discounts. | |||||||||
The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will insist upon FOB destination. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are (i) when title to the goods transfers and (ii) when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured. | |||||||||
For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit. | |||||||||
With respect to sales arrangements under which the buyer has a right to return the related product, revenue is recognized only if all the following conditions are met: the price is fixed or determinable at the date of sale; the buyer has paid, or is obligated to pay and the obligation is not contingent on resale of the product; the buyer's obligation would not be changed in the event of theft or physical destruction or damage of the product; the buyer has economic substance; the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer; and the amount of future returns can be reasonably estimated. | |||||||||
The Company provides a provision for product returns based on the experience with historical sales returns, in accordance with ASC Topic 605-15 with respect to sales of product when a right of return exists. Reported revenues are shown net of the returns provision. Such allowance for sales returns is included in Other Accrued Liabilities. (See Note 8). | |||||||||
Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service. | |||||||||
The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) sells its lasers through a distributor or directly to a physician or (ii) places its lasers in a physician’s office (at no charge to the physician) and generally charges the physician a fee for an agreed upon number of treatments. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period. | |||||||||
When the Company places a laser in a physician’s office, it generally recognizes service revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are performed, this obligation has been satisfied. | |||||||||
The Company defers substantially all revenue from sales of treatment codes ordered by and performed to its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period. | |||||||||
Functional Currency | ' | ||||||||
Functional Currency | |||||||||
The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the US dollar ("$" or "dollars"), except for the operations of Photo Therapeutics, Ltd. which are conducted in the Great Britain Pounds (GBP) and LK Technologies which are conducted in Brazilian Real (BRL). Substantially all of the Group's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Thus, the functional (and reporting currency) of the Company and its subsidiaries (other than Photo Therapeutics, Ltd. and LK Technologies) is the dollar. | |||||||||
Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income, the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses. | |||||||||
Assets and liabilities of foreign subsidiaries, whose functional currency is their local currency, are translated from their respective functional currency to U.S. dollars at the balance sheet date exchange rates. Income and expense items are translated at the average rates of exchange prevailing during the year. Translation adjustments are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income. Deferred taxes are not provided on translation adjustments as the earnings of the subsidiaries are considered to be permanently reinvested. | |||||||||
Fair Value Measurements | ' | ||||||||
Fair Value Measurements | |||||||||
The Company measures and discloses fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows: | |||||||||
• | Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. | ||||||||
• | Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. | ||||||||
• | Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors | ||||||||
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. | |||||||||
The fair value of cash and cash equivalents and short term bank deposits are based on its demand value, which is equal to its carrying value. The estimated fair values of notes payable which are based on borrowing rates that are available to the Company for loans with similar terms, collateral and maturity approximate the carrying values. Additionally, the carrying value of all other monetary assets and liabilities is estimated to be equal to their fair value due to the short-term nature of these instruments. | |||||||||
Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Group would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2. The fair value of contingent consideration in connection with the acquisition of LK (see Note 2) is based on management estimate of the entity prices of remaining inventories of LK at acquisition date (level 3 measurement). | |||||||||
In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets including goodwill. As such, we have determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. | |||||||||
Derivatives | ' | ||||||||
Derivatives | |||||||||
The group applies the provisions of Accounting Standards Codification ("ASC") Topic 815, Derivatives and Hedging. In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For derivative financial instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. | |||||||||
From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted expenses of the Israeli subsidiary (Radiancy) denominated in Israeli local currency (NIS) which is different than its functional currency. | |||||||||
Such derivatives were not designated as hedging instruments, and accordingly they were recognized in the balance sheet at their fair value, with changes in the fair value carried to the Statement of Comprehensive Income and included in financing income (expenses), net. | |||||||||
At March 31, 2014, the balance of such derivative instruments amounted to approximately $175 in assets and approximately $90 were recognized as financing income in the Statement of Comprehensive Income during the quarter ended that date. | |||||||||
The nominal amounts of foreign currency derivatives as of March 31, 2014 consist of forward transactions for the exchange of $4,250 into NIS as of March 31, 2014. | |||||||||
Accrued Warranty Costs | ' | ||||||||
Accrued Warranty Costs | |||||||||
The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2014 and 2013 is summarized as follows: | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
(unaudited) | (unaudited) | ||||||||
Accrual at beginning of year | $ | 1,151 | $ | 1,440 | |||||
Additions charged to warranty expense | 256 | 337 | |||||||
Expiring warranties | (69 | ) | (152 | ) | |||||
Claims satisfied | (247 | ) | (314 | ) | |||||
Total | 1,091 | 1,311 | |||||||
Less: current portion | (1,021 | ) | (1,190 | ) | |||||
Accrued extended warranty | $ | 70 | $ | 121 | |||||
For extended warranty on the consumer products, see Revenue Recognition above. | |||||||||
Earnings Per Share | ' | ||||||||
Earnings Per Share | |||||||||
Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding: | |||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Weighted-average number of common and common equivalent shares outstanding: | |||||||||
Basic number of common shares outstanding | 18,719,419 | 20,678,023 | |||||||
Dilutive effect of stock options and warrants | - | 469,560 | |||||||
Diluted number of common and common stock equivalent shares outstanding | 18,719,419 | 21,147,583 | |||||||
Diluted earnings per share for the three months ended March 31, 2014, exclude the impact of common stock options and warrants, totaling 2,444,016 shares, as the effect of their inclusion would be anti-dilutive. Diluted earnings per share for the three months ended March 31, 2013, excluded the impact of common stock options and warrants, totaling 1,081,226 shares, as the effect of their inclusion would be anti-dilutive. | |||||||||
Adoption of New Accounting Standards | ' | ||||||||
Adoption of New Accounting Standards | |||||||||
Effective January 1, 2013, the Company adopted Accounting Standard Update 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) ("ASU 2013-11"). | |||||||||
The amendments in ASU 2013-11 state 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, except as follows: To the extent 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 to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, 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 presented net of deferred tax assets. | |||||||||
ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. For public companies the amendments in this ASU became effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments were applied prospectively to all unrecognized tax benefits that existed at the effective date. | |||||||||
The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition. | |||||||||
Effective January 1, 2013, the Company adopted Accounting Standards Update 2013-5, Foreign Currency Matters (Topic 830) Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-5"). | |||||||||
ASU 2013-5 clarifies that, when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in-substance real estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Subtopic 830-30 to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. ASU 2013-5 also clarifies that if the business combination achieved in stages relates to a previously held equity method investment (step-acquisition) that is a foreign entity, the amount of accumulated other comprehensive income that is reclassified and included in the calculation of gain or loss shall include any foreign currency translation adjustment related to that previously held investment. | |||||||||
For public companies, the amendments in this Update became effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. In accordance with the transition requirements, the amendments should be applied prospectively to derecognition events occurring after the effective date. Prior periods should not be adjusted. | |||||||||
The adoption of the standard did not have a material impact on the Company's consolidated results of operations and financial condition. |
The_Company_Tables
The Company (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
The Company [Abstract] | ' | ||||||||
Activity in the Warranty Accrual | ' | ||||||||
The Company offers a standard warranty on product sales generally for a one to two-year period. In the case of domestic sales of XTRAC lasers, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities on the balance sheet. The activity in the warranty accrual during the three months ended March 31, 2014 and 2013 is summarized as follows: | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
(unaudited) | (unaudited) | ||||||||
Accrual at beginning of year | $ | 1,151 | $ | 1,440 | |||||
Additions charged to warranty expense | 256 | 337 | |||||||
Expiring warranties | (69 | ) | (152 | ) | |||||
Claims satisfied | (247 | ) | (314 | ) | |||||
Total | 1,091 | 1,311 | |||||||
Less: current portion | (1,021 | ) | (1,190 | ) | |||||
Accrued extended warranty | $ | 70 | $ | 121 | |||||
Calculation of Basic and Diluted Earnings per Common Share | ' | ||||||||
Basic and diluted earnings per common share were calculated using the following weighted-average shares outstanding: | |||||||||
For the Three Months Ended | |||||||||
March 31, | |||||||||
2014 | 2013 | ||||||||
Weighted-average number of common and common equivalent shares outstanding: | |||||||||
Basic number of common shares outstanding | 18,719,419 | 20,678,023 | |||||||
Dilutive effect of stock options and warrants | - | 469,560 | |||||||
Diluted number of common and common stock equivalent shares outstanding | 18,719,419 | 21,147,583 | |||||||
Acquisition_Tables
Acquisition (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Acquisition [Abstract] | ' | ||||
Purchase Price Allocation | ' | ||||
The fair value of the assets acquired and liabilities assumed were based on management estimates. Based on the initial purchase price allocation, the following table summarizes the fair value amounts of the assets acquired and liabilities assumed at the date of the acquisition: | |||||
Cash and cash equivalents | $ | 125 | |||
Accounts receivable | 1 | ||||
Inventories | 20 | ||||
Prepaid expenses and other current assets | 2 | ||||
Total assets acquired at fair value | 148 | ||||
Accounts payable | (75 | ) | |||
Accrued compensation and related expenses | (2 | ) | |||
Other accrued liabilities | (11 | ) | |||
Total liabilities assumed | (88 | ) | |||
Net assets acquired | $ | 60 |
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Inventories [Abstract] | ' | ||||||||
Inventories | ' | ||||||||
Inventories: | |||||||||
March 31, 2014 | December 31, 2013 | ||||||||
(unaudited) | |||||||||
Raw materials and work in progress | $ | 11,326 | $ | 12,631 | |||||
Finished goods | 15,682 | 14,916 | |||||||
Total inventories | $ | 27,008 | $ | 27,547 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Property and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property and Equipment: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Lasers-in-service | $ | 14,277 | $ | 12,599 | |||||
Equipment, computer hardware and software | 4,715 | 4,730 | |||||||
Furniture and fixtures | 759 | 705 | |||||||
Leasehold improvements | 488 | 534 | |||||||
20,239 | 18,568 | ||||||||
Accumulated depreciation and amortization | (8,781 | ) | (8,079 | ) | |||||
Property and equipment, net | $ | 11,458 | $ | 10,489 |
Patents_and_Licensed_Technolog1
Patents and Licensed Technologies, net (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Patents and Licensed Technologies, net [Abstract] | ' | ||||||||
Patents and Licensed Technologies | ' | ||||||||
Patents and Licensed Technologies, net: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Gross Amount beginning of period | $ | 15,648 | $ | 15,411 | |||||
Additions | 56 | 171 | |||||||
Translation differences | 29 | 66 | |||||||
Gross Amount end of period | 15,733 | 15,648 | |||||||
Accumulated amortization | (5,344 | ) | (4,816 | ) | |||||
Patents and licensed technologies, net | $ | 10,389 | $ | 10,832 | |||||
Amortization Expense for Amortizable Patents and Licensed Technologies | ' | ||||||||
Estimated amortization expense for amortizable patents and licensed technologies assets for the next five years is as follows: | |||||||||
Last nine months of 2014 | $ | 1,542 | |||||||
2015 | 2,049 | ||||||||
2016 | 2,047 | ||||||||
2017 | 909 | ||||||||
2018 | 899 | ||||||||
Thereafter | 2,943 | ||||||||
Total | $ | 10,389 | |||||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | ' | ||||||||||||||||||||||||
Goodwill Acquired | ' | ||||||||||||||||||||||||
As part of the purchase price allocation for the reverse acquisition, the Company recorded goodwill in the amount of $24,005 and definite-lived intangibles in the amount of $12,000. Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. The purchase price intrinsically recognizes the benefits of the broadened depth of the management team and the addition of a sizeable direct sales force creating greater access to the physician community with branded products and technologies. Furthermore, the purchase price paid by Radiancy, Inc., a private company includes, among other things, other benefits such as the intrinsic value of being a Nasdaq-listed issuer post-merger and now having access to capital markets and stockholder liquidity. | |||||||||||||||||||||||||
Balance at January 1, 2014 | $ | 24,930 | |||||||||||||||||||||||
Translation differences | 137 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 25,067 | |||||||||||||||||||||||
Other Definite-lived Intangible Assets | ' | ||||||||||||||||||||||||
Set forth below is a detailed listing of other definite-lived intangible assets: | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
Trademarks | Customer Relationships | Total | Trademarks | Customer Relationships | Total | ||||||||||||||||||||
Gross Amount beginning of period | $ | 5,772 | $ | 6,417 | $ | 12,189 | $ | 5,744 | $ | 6,372 | $ | 12,116 | |||||||||||||
Translation differences | 12 | 20 | 32 | 28 | 45 | 73 | |||||||||||||||||||
Gross Amount end of period | 5,784 | 6,437 | 12,221 | 5,772 | 6,417 | 12,189 | |||||||||||||||||||
Accumulated amortization | (1,326 | ) | (1,474 | ) | (2,800 | ) | (1,178 | ) | (1,310 | ) | (2,488 | ) | |||||||||||||
Net Book Value | $ | 4,458 | $ | 4,963 | $ | 9,421 | $ | 4,594 | $ | 5,107 | $ | 9,701 | |||||||||||||
Estimated Amortization Expense for Amortizable Intangible Assets | ' | ||||||||||||||||||||||||
Estimated amortization expense for the above amortizable intangible assets for the next five years is as follows: | |||||||||||||||||||||||||
Last nine months of 2014 | $ | 900 | |||||||||||||||||||||||
2015 | 1,200 | ||||||||||||||||||||||||
2016 | 1,200 | ||||||||||||||||||||||||
2017 | 1,200 | ||||||||||||||||||||||||
2018 | 1,200 | ||||||||||||||||||||||||
Thereafter | 3,721 | ||||||||||||||||||||||||
Total | $ | 9,421 | |||||||||||||||||||||||
Accrued_Compensation_and_relat1
Accrued Compensation and related expenses (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Accrued Compensation and related expenses [Abstract] | ' | ||||||||
Accrued Compensation and Related Expenses | ' | ||||||||
Accrued Compensation and related expenses: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Accrued payroll and related taxes | $ | 830 | $ | 707 | |||||
Accrued vacation | 339 | 290 | |||||||
Accrued commissions and bonus | 1,423 | 2,233 | |||||||
Total accrued compensation and related expense | $ | 2,592 | $ | 3,230 |
Other_Accrued_Liabilities_Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Other Accrued Liabilities [Abstract] | ' | ||||||||
Other Accrued Liabilities | ' | ||||||||
Other Accrued Liabilities: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
(unaudited) | |||||||||
Accrued warranty, current, see Note 1 | $ | 1,021 | $ | 1,094 | |||||
Accrued taxes, net | 1,371 | 1,023 | |||||||
Accrued sales returns (1) | 9,773 | 16,046 | |||||||
Other accrued liabilities | 3,497 | 3,869 | |||||||
Total other accrued liabilities | $ | 15,662 | $ | 22,032 | |||||
(1) | The activity in the sales returns liability account was as follows: | ||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
(unaudited) | (unaudited) | ||||||||
Balance at beginning of year | $ | 16,046 | $ | 11,781 | |||||
Additions that reduce net sales | 9,899 | 10,008 | |||||||
Deductions from reserves | (16,172 | ) | (10,241 | ) | |||||
Balance at end of period | $ | 9,773 | $ | 11,548 | |||||
Employee_Stock_Benefit_Plans_T
Employee Stock Benefit Plans (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Employee Stock Benefit Plans [Abstract] | ' | ||||||||
Stock Option Activity | ' | ||||||||
Stock option activity under all of the Company’s share-based compensation plans for the three months ended March 31, 2014 was as follows: | |||||||||
Number of Options | Weighted Average Exercise Price | ||||||||
Outstanding, January 1, 2014 | 1,132,678 | $ | 16.51 | ||||||
Granted | 71,500 | 14.8 | |||||||
Exercised | - | - | |||||||
Cancelled | (2,499 | ) | 102.48 | ||||||
Outstanding, March 31, 2014 | 1,201,679 | $ | 16.23 | ||||||
Options exercisable at March 31, 2014 | 517,179 | $ | 16.45 | ||||||
Weighted Average Assumptions Used to Estimate Fair Value of Stock Options | ' | ||||||||
The Company uses the Black-Scholes option-pricing model to estimate fair value of grants of stock options with the following weighted-average assumptions: | |||||||||
Three Months Ended | |||||||||
31-Mar-14 | |||||||||
Risk-free interest rate | 2.11% | ||||||||
Volatility | 81.16% | ||||||||
Expected dividend yield | 0% | ||||||||
Expected life | 5.5 years | ||||||||
Estimated forfeiture rate | 0% | ||||||||
Business_Segments_and_Geograph1
Business Segments and Geographic Data (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Business Segments and Geographic Data [Abstract] | ' | ||||||||||||||||
Results of Operations from Business Segments | ' | ||||||||||||||||
The following tables reflect results of operations from our business segments for the periods indicated below: | |||||||||||||||||
Three Months Ended March 31, 2014 (unaudited) | |||||||||||||||||
CONSUMER | PHYSICIAN RECURRING | PROFESSIONAL | TOTAL | ||||||||||||||
Revenues | $ | 40,870 | $ | 7,219 | $ | 1,986 | $ | 50,075 | |||||||||
Costs of revenues | 6,250 | 2,830 | 1,265 | 10,345 | |||||||||||||
Gross profit | 34,620 | 4,389 | 721 | 39,730 | |||||||||||||
Gross profit % | 84.7 | % | 60.8 | % | 36.3 | % | 79.3 | % | |||||||||
Allocated operating expenses: | |||||||||||||||||
Engineering and product development | 287 | 310 | 198 | 795 | |||||||||||||
Selling and marketing expenses | 27,157 | 4,011 | 457 | 31,625 | |||||||||||||
Unallocated operating expenses | - | - | - | 7,587 | |||||||||||||
27,444 | 4,321 | 655 | 40,007 | ||||||||||||||
Income (loss) from operations | 7,176 | 68 | 66 | (277 | ) | ||||||||||||
Interest and other financing income (expense), net | - | - | - | 147 | |||||||||||||
Net income (loss) before taxes | $ | 7,176 | $ | 68 | $ | 66 | $ | ( 424 | ) | ||||||||
Three Months Ended March 31, 2013 (unaudited) | |||||||||||||||||
CONSUMER | PHYSICIAN RECURRING | PROFESSIONAL | TOTAL | ||||||||||||||
Revenues | $ | 49,060 | $ | 5,955 | $ | 2,201 | $ | 57,216 | |||||||||
Costs of revenues | 7,517 | 2,931 | 1,418 | 11,866 | |||||||||||||
Gross profit | 41,543 | 3,024 | 783 | 45,350 | |||||||||||||
Gross profit % | 84.7 | % | 50.8 | % | 35.6 | % | 79.3 | % | |||||||||
Allocated operating expenses: | |||||||||||||||||
Engineering and product development | 218 | 324 | 231 | 773 | |||||||||||||
Selling and marketing expenses | 25,631 | 3,174 | 521 | 29,326 | |||||||||||||
Unallocated operating expenses | - | - | - | 5,659 | |||||||||||||
25,849 | 3,498 | 752 | 35,758 | ||||||||||||||
Income (loss) from operations | 15,694 | (474 | ) | 31 | 9,592 | ||||||||||||
Interest and other financing income, net | - | - | - | 131 | |||||||||||||
Net income (loss) before taxes | $ | 15,694 | $ | ( 474 | ) | $ | 31 | $ | 9,723 | ||||||||
Net Revenues and Long-Lived Assets by Geographical Area | ' | ||||||||||||||||
For the three months ended March 31, 2014 and 2013, net revenues by geographic area were as follows: | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(unadudited) | (unadudited) | ||||||||||||||||
North America 1 | $ | 39,972 | $ | 44,899 | |||||||||||||
Asia Pacific 2 | 2,377 | 5,762 | |||||||||||||||
Europe (including Israel) | 7,408 | 5,633 | |||||||||||||||
South America | 318 | 922 | |||||||||||||||
$ | 50,075 | $ | 57,216 | ||||||||||||||
1 United States | $ | 34,766 | $ | 38,007 | |||||||||||||
1 Canada | $ | 5,206 | $ | 6,892 | |||||||||||||
2 Japan | $ | 698 | $ | 4,262 | |||||||||||||
As of March 31, 2014 and December 31, 2013, long-lived assets by geographic area were as follows: | |||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||
(unaudited) | |||||||||||||||||
North America | $ | 10,157 | $ | 9,119 | |||||||||||||
Europe (including Israel) | 1,297 | 1,370 | |||||||||||||||
South America | 4 | - | |||||||||||||||
$ | 11,458 | $ | 10,489 | ||||||||||||||
Significant_Customer_Concentra1
Significant Customer Concentration (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Significant Customer Concentration [Abstract] | ' | ||||||||
Significant Customer Concentration | ' | ||||||||
Significant Customer Concentration: | |||||||||
Three Months Ended March 31, | |||||||||
2014 | 2013 | ||||||||
Customer A | 0 | % | 10 | % | |||||
The_Company_Details
The Company (Details) (USD $) | 3 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Business Acquisition [Line Items] | ' | ' | ' |
Effective date of merger | 13-Dec-11 | ' | ' |
Number of operating units | 3 | ' | ' |
Revenue Recognition [Abstract] | ' | ' | ' |
Number of distribution channels | 2 | ' | ' |
Period of sales deferred | '14 days | ' | ' |
Derivatives [Abstract] | ' | ' | ' |
Balance of derivative instruments | $175 | ' | ' |
Amount recognized as financing income | 90 | ' | ' |
Notional amounts of foreign currency derivatives | 4,250 | ' | ' |
Activity in warranty accrual [Roll Forward] | ' | ' | ' |
Accrual at beginning of year | 1,151 | 1,440 | ' |
Additions charged to warranty expense | 256 | 337 | ' |
Expiring warranties | -69 | -152 | ' |
Claims satisfied | -247 | -314 | ' |
Total | 1,091 | 1,311 | ' |
Less: current portion | -1,021 | -1,190 | -1,094 |
Accrued long-term warranty | $70 | $121 | ' |
Weighted-average number of common and common equivalent shares outstanding [Abstract] | ' | ' | ' |
Basic number of common shares outstanding (in shares) | 18,719,419 | 20,678,023 | ' |
Dilutive effect of stock options and warrants (in shares) | 0 | 469,560 | ' |
Diluted number of common and common stock equivalent shares outstanding (in shares) | 18,719,419 | 21,147,583 | ' |
Common stock options and warrants excluded from computation of diluted earnings per share (in shares) | 2,444,016 | 1,081,226 | ' |
PhotoMedex, Inc. [Member] | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' |
Percentage of ownership on reverse merger (in hundredths) | 20.00% | ' | ' |
Radiancy, Inc. [Member] | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' |
Percentage of ownership on reverse merger (in hundredths) | 80.00% | ' | ' |
Acquisition_Details
Acquisition (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Acquisition [Abstract] | ' |
Effective date of merger | 13-Dec-11 |
Percentage of shares acquired by wholly-owned subsidiary (in hundredths) | 100.00% |
Total consideration | $181 |
Contigent consideration component | 81 |
Amount of consideration | 100 |
Goodwill recognized under reverse acquisition | 121 |
Fair value of the assets acquired and liabilities assumed [Abstract] | ' |
Cash and cash equivalents | 125 |
Accounts receivable | 1 |
Inventories | 20 |
Prepaid expenses and other current assets | 2 |
Total assets acquired at fair value | 148 |
Accounts payable | -75 |
Accrued compensation and related expenses | -2 |
Other accrued liabilities | -11 |
Total liabilities assumed | -88 |
Net assets acquired | $60 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of inventories [Abstract] | ' | ' |
Raw materials and work-in-process | $11,326 | $12,631 |
Finished goods | 15,682 | 14,916 |
Total inventories | $27,008 | $27,547 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Schedule property and equipment [Abstract] | ' | ' | ' |
Property and equipment, gross | $20,239 | ' | $18,568 |
Accumulated depreciation and amortization | -8,781 | ' | -8,079 |
Total property and equipment, net | 11,458 | ' | 10,489 |
Depreciation and related amortization expense | 824 | 634 | ' |
Lasers-in-Service [Member] | ' | ' | ' |
Schedule property and equipment [Abstract] | ' | ' | ' |
Property and equipment, gross | 14,277 | ' | 12,599 |
Equipment, Computer Hardware and Software [Member] | ' | ' | ' |
Schedule property and equipment [Abstract] | ' | ' | ' |
Property and equipment, gross | 4,715 | ' | 4,730 |
Furniture and Fixtures [Member] | ' | ' | ' |
Schedule property and equipment [Abstract] | ' | ' | ' |
Property and equipment, gross | 759 | ' | 705 |
Leasehold Improvements [Member] | ' | ' | ' |
Schedule property and equipment [Abstract] | ' | ' | ' |
Property and equipment, gross | $488 | ' | $534 |
Patents_and_Licensed_Technolog2
Patents and Licensed Technologies, net (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
In Thousands, unless otherwise specified | Patents and Licensed Technologies [Member] | Patents and Licensed Technologies [Member] | ||
Patents and Licensed Technologies [Abstract] | ' | ' | ' | ' |
Gross Amount beginning of period | ' | ' | $15,648 | $15,411 |
Additions | ' | ' | 56 | 171 |
Translation differences | ' | ' | 29 | 66 |
Gross Amount end of period | ' | ' | 15,733 | 15,648 |
Accumulated amortization | ' | ' | -5,344 | -4,816 |
Patents and licensed technologies, net | 10,389 | 10,832 | 10,389 | 10,832 |
Amortization expense | ' | ' | 512 | 509 |
Estimated amortization expense for amortizable patents and licensed technologies assets [Abstract] | ' | ' | ' | ' |
Last nine months of 2014 | ' | ' | 1,542 | ' |
2015 | ' | ' | 2,049 | ' |
2016 | ' | ' | 2,047 | ' |
2017 | ' | ' | 909 | ' |
2018 | ' | ' | 899 | ' |
Thereafter | ' | ' | 2,943 | ' |
Patents and licensed technologies, net | $10,389 | $10,832 | $10,389 | $10,832 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Goodwill [Roll Forward] | ' | ' | ' |
Goodwill, beginning balance, as restated | $24,930 | ' | ' |
Translation differences | 137 | ' | ' |
Goodwill, ending balance | 25,067 | ' | 24,930 |
Accumulated impairment loss | 0 | ' | ' |
Definite-lived intangibles | 9,421 | ' | 9,701 |
Schedule of definite-lived intangible assets [Abstract] | ' | ' | ' |
Gross Amount beginning of period | 12,189 | 12,116 | 12,116 |
Translation differences | 32 | ' | 73 |
Gross Amount end of period | 12,221 | ' | 12,189 |
Accumulated amortization | -2,800 | ' | -2,488 |
Net Book Value | 9,421 | ' | 9,701 |
Amortization expense | 300 | 300 | ' |
Estimated amortization expense for amortizable intangible assets [Abstract] | ' | ' | ' |
Last nine months of 2014 | 900 | ' | ' |
2015 | 1,200 | ' | ' |
2016 | 1,200 | ' | ' |
2017 | 1,200 | ' | ' |
2018 | 1,200 | ' | ' |
Thereafter | 3,721 | ' | ' |
Net Book Value | 9,421 | ' | 9,701 |
Trademarks [Member] | ' | ' | ' |
Schedule of definite-lived intangible assets [Abstract] | ' | ' | ' |
Gross Amount beginning of period | 5,772 | 5,744 | 5,744 |
Translation differences | 12 | ' | 28 |
Gross Amount end of period | 5,784 | ' | 5,772 |
Accumulated amortization | -1,326 | ' | -1,178 |
Net Book Value | 4,458 | ' | 4,594 |
Estimated amortization expense for amortizable intangible assets [Abstract] | ' | ' | ' |
Net Book Value | 4,458 | ' | 4,594 |
Customer Relationships [Member] | ' | ' | ' |
Schedule of definite-lived intangible assets [Abstract] | ' | ' | ' |
Gross Amount beginning of period | 6,417 | 6,372 | 6,372 |
Translation differences | 20 | ' | 45 |
Gross Amount end of period | 6,437 | ' | 6,417 |
Accumulated amortization | -1,474 | ' | -1,310 |
Net Book Value | 4,963 | ' | 5,107 |
Estimated amortization expense for amortizable intangible assets [Abstract] | ' | ' | ' |
Net Book Value | 4,963 | ' | 5,107 |
Radiancy, Inc. [Member] | ' | ' | ' |
Goodwill [Roll Forward] | ' | ' | ' |
Goodwill, ending balance | 24,005 | ' | ' |
Definite-lived intangibles | $12,000 | ' | ' |
Accrued_Compensation_and_relat2
Accrued Compensation and related expenses (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued Compensation and related expenses [Abstract] | ' | ' |
Accrued payroll and related taxes | $830 | $707 |
Accrued vacation | 339 | 290 |
Accrued commissions and bonus | 1,423 | 2,233 |
Total accrued compensation and related expense | $2,592 | $3,230 |
Other_Accrued_Liabilities_Deta
Other Accrued Liabilities (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Other Accrued Liabilities [Abstract] | ' | ' | ' |
Accrued warranty, current, see Note 1 | $1,021 | $1,190 | $1,094 |
Accrued taxes, net | 1,371 | ' | 1,023 |
Accrued sales return (1) | 9,773 | 11,548 | ' |
Other accrued liabilities | 3,497 | ' | 3,869 |
Total other accrued liabilities | 15,662 | ' | 22,032 |
Balance at beginning of year | 16,046 | 11,781 | ' |
Additions that reduce net sales | 9,899 | 10,008 | ' |
Deductions from reserves | -16,172 | -10,241 | ' |
Balance at end of period | $9,773 | $11,548 | ' |
Other_Accrued_Liabilities_Sale
Other Accrued Liabilities, Sales returns liability Rollforward (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Sales returns liability roll forward [Abstract] | ' | ' |
Balance at beginning of year | $16,046 | $11,781 |
Additions that reduce net sales | 9,899 | 10,008 |
Deductions from reserves | -16,172 | -10,241 |
Balance at end of period | $9,773 | $11,548 |
Shortterm_Debt_Details
Short-term Debt (Details) (USD $) | 3 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ' | ' |
Maximum borrowing capacity | ' | $15 |
Period for term note facility (in years) | ' | '1 year |
Total borrowings | $5 | $10 |
Description of variable rate basis | 'LIBOR plus 2.5% | ' |
LIBOR [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Effective interest rate (in hundredths) | ' | 0.50% |
Federal [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Effective interest rate (in hundredths) | ' | 2.50% |
Income_Taxes_Details
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Effective income tax rate reconciliation [Line Items] | ' |
Statutory income tax rate (in hundredths) | 34.00% |
Standard corporate income tax rate (in hundredths) | 20.00% |
Israeli subsidiaries [Member] | Prospective [Member] | ' |
Effective income tax rate reconciliation [Line Items] | ' |
Preferred income tax rate ( in hundredths) | 16.00% |
Standard corporate income tax rate (in hundredths) | 26.50% |
Employee_Stock_Benefit_Plans_D
Employee Stock Benefit Plans (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Feb. 28, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Unrecognized compensation cost related to non-vested option grants and stock awards | ' | $8,057 | ' |
Weighted-average period over which unrecognized compensation is expected to be recognized | ' | '2 years 7 months 6 days | ' |
Weighted average assumptions to estimate fair value of grants of stock options [Abstract] | ' | ' | ' |
Aggregate fair value of options granted | 718 | ' | ' |
Total stock based compensation expense | ' | $1,262 | $1,290 |
Stock Options [Member] | ' | ' | ' |
Number of Options [Roll Forward] | ' | ' | ' |
Outstanding (in shares) | ' | 1,132,678 | ' |
Granted (in shares) | ' | 71,500 | ' |
Exercised (in shares) | ' | 0 | ' |
Cancelled (in shares) | ' | -2,499 | ' |
Outstanding (in shares) | ' | 1,201,679 | ' |
Options exercisable (in shares) | ' | 517,179 | ' |
Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Outstanding (in dollars per share) | ' | $16.51 | ' |
Granted (in dollars per share) | ' | $14.80 | ' |
Exercised (in dollars per share) | ' | $0 | ' |
Cancelled (in dollars per share) | ' | $102.48 | ' |
Outstanding (in dollars per share) | ' | $16.23 | ' |
Options exercisable (in dollars per share) | ' | $16.45 | ' |
Weighted average assumptions to estimate fair value of grants of stock options [Abstract] | ' | ' | ' |
Risk-free interest rate (in hundredths) | ' | 2.11% | ' |
Volatility (in hundredths) | ' | 81.16% | ' |
Expected dividend yield (in hundredths) | ' | 0.00% | ' |
Expected life | ' | '5 years 6 months | ' |
Estimated forfeiture rate (in hundredths) | ' | 0.00% | ' |
Options granted to purchase common stock (in shares) | ' | 71,500 | ' |
Strike price of options granted (in dollars per share) | ' | $14.80 | ' |
Stock Options [Member] | Employees And Consultants [Member] | ' | ' | ' |
Number of Options [Roll Forward] | ' | ' | ' |
Granted (in shares) | 71,500 | ' | ' |
Weighted Average Exercise Price [Roll Forward] | ' | ' | ' |
Granted (in dollars per share) | $14.80 | ' | ' |
Weighted average assumptions to estimate fair value of grants of stock options [Abstract] | ' | ' | ' |
Options granted to purchase common stock (in shares) | 71,500 | ' | ' |
Strike price of options granted (in dollars per share) | $14.80 | ' | ' |
Vesting period of options granted | '5 years | ' | ' |
Expiration period of options granted | '10 years | ' | ' |
Non-Employee Director Stock Option Plan [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock authorized in stock option plan (in shares) | ' | 120,000 | ' |
Non-Employee Director Stock Option Plan [Member] | Common Stock [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock issued or reserved for issuance (in shares) | ' | 7,000 | ' |
Non-Employee Director Stock Option Plan [Member] | Stock Options [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock issued or reserved for issuance (in shares) | ' | 14,578 | ' |
2005 Equity Plan [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock authorized in stock option plan (in shares) | ' | 3,000,000 | ' |
2005 Equity Plan [Member] | Common Stock [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock issued or reserved for issuance (in shares) | ' | 753,095 | ' |
2005 Equity Plan [Member] | Stock Options [Member] | ' | ' | ' |
Employee Stock Benefit Plan [Abstract] | ' | ' | ' |
Common stock issued or reserved for issuance (in shares) | ' | 1,187,101 | ' |
Business_Segments_and_Geograph2
Business Segments and Geographic Data (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Business Segments and Geographic Data [Abstract] | ' | ' |
Number of operating units | 3 | ' |
Results of operations from business segments [Abstract] | ' | ' |
Revenues | 50,075 | $57,216 |
Cost of revenues | 10,345 | 11,866 |
Gross profit | 39,730 | 45,350 |
Gross profit % (in hundredths) | 79.30% | 79.30% |
Allocated operating expenses [Abstract] | ' | ' |
Engineering and product development | 795 | 773 |
Selling and marketing expenses | 31,625 | 29,326 |
Unallocated operating expenses | 7,587 | 5,659 |
Total operating expenses | 40,007 | 35,758 |
Income (loss) from operations | -277 | 9,592 |
Interest and other financing income, net | -147 | 131 |
Net income (loss) before taxes | -424 | 9,723 |
CONSUMER [Member] | ' | ' |
Results of operations from business segments [Abstract] | ' | ' |
Revenues | 40,870 | 49,060 |
Cost of revenues | 6,250 | 7,517 |
Gross profit | 34,620 | 41,543 |
Gross profit % (in hundredths) | 84.70% | 84.70% |
Allocated operating expenses [Abstract] | ' | ' |
Engineering and product development | 287 | 218 |
Selling and marketing expenses | 27,157 | 25,631 |
Unallocated operating expenses | 0 | 0 |
Total operating expenses | 27,444 | 25,849 |
Income (loss) from operations | 7,176 | 15,694 |
Interest and other financing income, net | 0 | 0 |
Net income (loss) before taxes | 7,176 | 15,694 |
PHYSICIAN RECURRING [Member] | ' | ' |
Results of operations from business segments [Abstract] | ' | ' |
Revenues | 7,219 | 5,955 |
Cost of revenues | 2,830 | 2,931 |
Gross profit | 4,389 | 3,024 |
Gross profit % (in hundredths) | 60.80% | 50.80% |
Allocated operating expenses [Abstract] | ' | ' |
Engineering and product development | 310 | 324 |
Selling and marketing expenses | 4,011 | 3,174 |
Unallocated operating expenses | 0 | 0 |
Total operating expenses | 4,321 | 3,498 |
Income (loss) from operations | 68 | -474 |
Interest and other financing income, net | 0 | 0 |
Net income (loss) before taxes | 68 | -474 |
PROFESSIONAL [Member] | ' | ' |
Results of operations from business segments [Abstract] | ' | ' |
Revenues | 1,986 | 2,201 |
Cost of revenues | 1,265 | 1,418 |
Gross profit | 721 | 783 |
Gross profit % (in hundredths) | 36.30% | 35.60% |
Allocated operating expenses [Abstract] | ' | ' |
Engineering and product development | 198 | 231 |
Selling and marketing expenses | 457 | 521 |
Unallocated operating expenses | 0 | 0 |
Total operating expenses | 655 | 752 |
Income (loss) from operations | 66 | 31 |
Interest and other financing income, net | 0 | 0 |
Net income (loss) before taxes | 66 | $31 |
Business_Segment_and_Geographi
Business Segment and Geographic Data, Revenue by Geographical Data (Details) (USD $) | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | $50,075 | $57,216 | ' | ||
Long-lived assets by geographic area [Abstract] | ' | ' | ' | ||
Long-lived assets | 11,458 | ' | 10,489 | ||
North America [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 39,972 | [1] | 44,899 | [1] | ' |
Long-lived assets by geographic area [Abstract] | ' | ' | ' | ||
Long-lived assets | 10,157 | ' | 9,119 | ||
Asia Pacific [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 2,377 | [2] | 5,762 | [2] | ' |
Europe (Including Israel) [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 7,408 | 5,633 | ' | ||
Long-lived assets by geographic area [Abstract] | ' | ' | ' | ||
Long-lived assets | 1,297 | ' | 1,370 | ||
South America [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 318 | 922 | ' | ||
Long-lived assets by geographic area [Abstract] | ' | ' | ' | ||
Long-lived assets | 4 | ' | 0 | ||
United States [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 34,766 | 38,007 | ' | ||
Japan [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | 698 | 4,262 | ' | ||
Canada [Member] | ' | ' | ' | ||
Net revenues by geographic area [Abstract] | ' | ' | ' | ||
Revenues | $5,206 | $6,892 | ' | ||
[1] | United States $ 34,766 $ 38,007 Canada $5,206 $6,892 | ||||
[2] | Japan $ 698 $4,262 |
Significant_Customer_Concentra2
Significant Customer Concentration (Details) (Customer A [Member]) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Customer A [Member] | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' |
Percentage of revenue generated by single major customer (in hundredths) | 0.00% | 10.00% |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | Mar. 31, 2014 | 7-May-14 | 12-May-14 | Feb. 13, 2014 | 12-May-14 | 12-May-14 | Feb. 13, 2014 |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||
Vote | Revolving Credit Facility [Member] | Term Loan [Member] | LCA Vision Inc [Member] | ||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Proxies in favor of acquisition | ' | 11,943,611 | ' | ' | ' | ' | ' |
Percentage of total outstanding shares (in hundredths) | 100.00% | 61.70% | ' | ' | ' | ' | ' |
Cash price per share (in dollars per share) | ' | ' | ' | ' | ' | ' | $5.37 |
Price per share as ownership (in dollars per share) | ' | ' | ' | ' | ' | ' | $5.37 |
Approximate purchase price for all stock and equity instrument | $100,000 | ' | ' | ' | ' | ' | $106,400,000 |
Debt amount to fund the transaction | ' | ' | $85,000,000 | $85,000,000 | $10,000,000 | $75,000,000 | ' |
Debt instrument term (in years) | ' | ' | ' | ' | ' | '4 years | ' |