SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
15(d) of the Securities Exchange Act of 1934
(Mark One) [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
to
Commission File Number 000-23478
Delaware | 48-1100390 | |||||
(State or other jurisdiction of incorporation or organization) | (IRS employer identification number) | |||||
Six Concourse Parkway, Suite 1900, Atlanta, Georgia | 30328 | |||||
(Address of principal executive offices) | (Zip Code) |
(678) 987-1700
Title of Each Class | Name of Each Exchange on Which Registered | |||||
Common Stock | NASDAQ Global Market |
Common Stock, $0.01 Par Value
(Title of Class)
Title of Each Class | Number of Shares Outstanding at September 1, 2007 | |||||
Common Stock, $0.01 Par Value | 29,240,175 |
TABLE OF CONTENTS
Form 10-K Item | Page | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Explanatory Note | i | |||||||||||
Part I. | ||||||||||||
Forward-looking Statements | 1 | |||||||||||
Item 1. | Business | 1 | ||||||||||
Item 1A. | Risk Factors | 13 | ||||||||||
Item 1B | Unresolved Staff Comments | 19 | ||||||||||
Item 2. | Properties | 19 | ||||||||||
Item 3. | Legal Proceedings | 19 | ||||||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 20 | ||||||||||
Part II. | ||||||||||||
Item 5. | Market for Registrant’s Common Equity and Related Stockholder Matters | 20 | ||||||||||
Item 6. | Selected Financial Data | 20 | ||||||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||||||||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 45 | ||||||||||
Item 8. | Financial Statements and Supplementary Data | 46 | ||||||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 46 | ||||||||||
Item 9A. | Controls and Procedures | 46 | ||||||||||
Item 9B. | Other Information | 48 | ||||||||||
Part III. | ||||||||||||
Item 10. | Directors and Executive Officers of the Registrant | 48 | ||||||||||
Item 11. | Executive Compensation | 51 | ||||||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management | 58 | ||||||||||
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 61 | ||||||||||
Item 14. | Principal Accountant Fees and Services | 61 | ||||||||||
Part IV. | ||||||||||||
Item 15. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K | 62 | ||||||||||
Signatures |
experts conducting the review. Where we had incomplete documentation, we considered all available relevant information to determine the first date on which all stock option terms were fixed. As described later in this Explanatory Note, where evidence necessary for a determination of the appropriate measurement date under APB 25 was wholly lacking, we estimated compensation charges or a range of possible compensation charges through certain statistical analyses. We believe that the approaches we used to determine or, in some cases estimate, appropriate measurement dates for historic stock option grants were the most appropriate under the circumstances.
• | The Investigative Team found that the Company did not have an established and consistent policy or practice for granting stock options. For example, (i) new employees generally received stock options on or around their start dates or batched with other stock option grants; (ii) grant dates for new employees were often inconsistent with start dates reflected in offer letters, payroll and personnel records and regulatory filings; (iii) certain grants reflected transactions with inconsistent documentation or documentation approved subsequent to the grant date; (iv) in most cases, there was insufficient documentary evidence of Board of Directors or Compensation Committee approval of the specific grant terms on or before the grant dates; (v) management granted some options to employees prior to the delegation of authority from the Compensation Committee being formalized and documented in May 2004 (the Compensation Committee subsequently approved all such grants); and (vi) certain new employees received stock option grants prior to the Board of Directors’ formal adoption of the Company’s applicable stock option plan. |
• | The Investigative Team found that a statistical analysis of average forward returns on grant dates versus non-grant dates did not suggest a stock option backdating practice by current management. |
• | The Investigative Team found that the Board of Directors delegated authority to senior management to grant up to 2.0 million stock options in connection with the change of control transaction in October 2003, and evidence suggested a decision by management to grant options to each director and employee at the fair market value on the date of the change of control, but the Company failed to finalize the determination of fair market value and exercise price until shortly after the grant date, and the allocation of options to certain employees was not finalized on or before the grant date. The actual |
stock option plan pursuant to which the stock options were granted was not formally approved by the Board until on or about December 8, 2003. Although evidence suggested certain directors were informally designated as Board members prior to grant dates for certain of their stock options, these grants were made prior to formal appointment to the Board (or acceptance of the appointment). Stock options were also granted to certain directors for service on Board committees prior to their formal appointment to the committee or, in one instance, prior to the creation of the committee itself. Formal approval of stock option grants associated with Board committee service was not obtained until January 2004. |
• | The Investigative Team found that of senior management, only one executive officer, three non-executive officers and no directors exercised stock options granted during the Post-Change of Control Period. |
• | The Investigative Team found that with respect to one grant to an administrative employee, the number of stock options was increased subsequent to the grant date. |
• | The Investigative Team found that with respect to one grant to an executive officer and two grants to employees, stock options were granted prior to their formal employment dates. |
• | The Investigative Team found that with respect to one grant to an executive officer and five grants to employees, evidence suggested that grant dates and exercise prices were modified subsequent to the recorded grant dates, but it was unclear whether the modifications were intended to capture a lower exercise price. |
• | The Investigative Team found that with respect to one annual grant to two executive officers and certain employees, there was insufficient evidence that the allocation of stock options was complete on or before the grant date. |
• | The Investigative Team found that certain consultants received stock option grants prior to the date of formal Board approval, but it was unclear when the terms of the grants were finalized. |
• | There is evidence that certain former members of management and of the Board of Directors at the time determined grant dates and exercise prices in hindsight for certain stock option grants by (i) apparently selecting grant dates in hindsight to obtain more favorable exercise prices within a particular range of dates; and (ii) apparently re-pricing certain grants in hindsight based, in some cases, on the lowest closing market price within a particular range of dates to attain lower exercise prices. |
• | There is evidence that certain employees and one director were granted stock options prior to their start dates or election to the Board. |
• | Stock option terms were modified subsequent to certain grant dates. |
• | The Company’s stock option grant practices did not comply consistently with the Company’s applicable stock option plan. |
• | Board actions by written consents of all directors in lieu of a meeting (“unanimous written consents” or “UWCs”) were prepared, approved and executed significantly after the date indicated on the documents. |
• | Documentation for many grant events is incomplete or missing from the Company’s records. |
• | The documentary evidence suggests that certain members of management and the former Board, serving at various tenures, were involved or may have been aware of the retrospective selection of certain grant dates and/or modifications to stock option amounts subsequent to the recorded grant date. It is unclear whether these individuals were aware of the accounting implications or accounting treatment of the stock option grants at issue. In addition, based on the foregoing, the Audit Committee found that the review suggested that the one current director of the Company who at various times was on the Company’s Board during the Pre-Change of Control Period may have been aware of the retrospective selection of grant dates and modifications of grant terms with respect to grants he received during that period, but the Committee does not believe he understood the accounting consequences of those actions. The Audit Committee therefore concluded that the evidence did not establish that the director engaged in intentional misconduct. |
• | The Company understated its reported compensation expense for the Pre-Change of Control Period because of the improper measurement dates selected for certain options, and the Company granted “in the money” options without disclosing or accounting for them as such. |
date documents in the Company’s records show formal corporate action making the grant was taken. This appears to have been done, in the case of reporting persons, to make the grant date coincide with a specific event, such as the due date of applicable regulatory filings (i.e., Form 3 or Form 4), the appointment or re-election of a director or the purported date options were granted to non-officers. In many of these cases, we have determined that the correct measurement date is the date on which the Board took the action to approve the grant. However, we often had to make reasonable judgments based on the best available information about when the Board took such action. The review also identified instances in which awards to officers were made effective upon a future event, such as the commencement of employment and instances where the record suggests new employees were granted stock options prior to their start dates. In these cases, we determined that the date of the future event is the correct measurement date for such grants. The review also identified instances where stock option terms (amount, expiration, etc.) were modified subsequent to grant dates, where documents indicate grant dates were selected in hindsight (partly based on the timing of required Form 4 filings) to obtain more favorable exercise prices, and where evidence suggests that members of the Board and senior management re-priced grants subsequent to the award to obtain a lower exercise price. The selection of dates and prices in these instances appears to have been made in hindsight based on the lowest closing stock price within a particular range of dates. In all instances where documents were available to indicate a different measurement date than the one apparently used, the grants were re-measured. In connection with the application of these measurement principles for option grants to officers and directors of the first category, and after accounting for forfeitures, the Company has adjusted the measurement of compensation cost for options covering 2.3 million shares of common stock resulting in an incremental stock-based compensation expense of $7.4 million on a pre-tax basis over the respective awards’ vesting terms. Re-measurement of options of the first category covering 1.0 million shares granted to non-officers resulted in additional stock-based compensation expense of $2.4 million on a pre-tax basis over the awards’ vesting terms after accounting for forfeitures.
Fiscal Year | Expense | Cumulative Increase to Accumulated Deficit | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ 67 | |||||||
1995 | 83 | 150 | ||||||||
1996 | 589 | 739 | ||||||||
1997 | 1,561 | 2,300 | ||||||||
1998 | 2,237 | 4,537 | ||||||||
1999 | 1,657 | 6,194 | ||||||||
2000 | 1,299 | 7,493 | ||||||||
2001 | 1,267 | 8,760 | ||||||||
2002 | 693 | 9,453 | ||||||||
2003 | 1,224 | 10,677 | ||||||||
Subtotal | 10,677 | 10,677 | ||||||||
2004 | 3,365 | 14,042 | ||||||||
2005 | 6,915 | 20,957 | ||||||||
Total | $ | 20,957 | $20,957 |
Board of Director or Compensation Committee meeting dates). For grants that had insufficient evidence to identify either an earliest possible measurement date or the latest possible measurement date (or for Category 2 grants, both dates) we based the range of possible measurement dates on a computation of the minimum and maximum number of days between the grant date and the re-measurement date for those grants in Category 1 (ones with good or some information) by classification of grantee (consultant, director, executive, other). While we believe the evidence and methodology used to determine the revised measurement dates to be the most appropriate, we also believe that illustrating differences in stock-based compensation expense using these alternative date ranges provides some insight into the extent to which hypothetical stock-based compensation expense would have fluctuated if the available evidence had caused us to chose other dates.
Year | Pre-Tax Compensation Expense Based on Selected Revised Measurement Dates | Hypothetical Compensation Expense Based on Lowest Closing Price Within Range of Potential Alternative Measurement Dates | Hypothetical Compensation Expense Based on Highest Closing Price Within Range of Potential Alternative Measurement Dates | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 83 | $ | 83 | $ | 83 | ||||||||
1995 | 330 | 302 | 3,088 | |||||||||||
1996 | 2,949 | 91 | 3,814 | |||||||||||
1997 | 2,323 | 2,055 | 2,661 | |||||||||||
1998 | 2,453 | 1,106 | 4,571 | |||||||||||
1999 | 243 | 243 | 400 | |||||||||||
2000 | 353 | — | 1,131 | |||||||||||
2001 | 883 | 77 | 1,814 | |||||||||||
2002 | 360 | — | 966 | |||||||||||
2003 | — | — | — | |||||||||||
Total | $ | 9,977 | $ | 3,957 | $ | 18,528 |
Year | Pre-Tax Compensation Expense Based on Selected Revised Measurement Dates | Hypothetical Compensation Expense Based on Lowest Closing Price Within Range of Potential Alternative Measurement Dates | Hypothetical Compensation Expense Based on Highest Closing Price Within Range of Potential Alternative Measurement Dates | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ | 67 | $ | 67 | ||||||||
1995 | 83 | 80 | 1,753 | |||||||||||
1996 | 589 | 110 | 1,336 | |||||||||||
1997 | 1,561 | 341 | 2,453 | |||||||||||
1998 | 2,237 | 833 | 2,934 | |||||||||||
1999 | 1,657 | 838 | 2,535 | |||||||||||
2000 | 1,299 | 788 | 2,350 | |||||||||||
2001 | 1,267 | 593 | 2,439 | |||||||||||
2002 | 693 | 242 | 1,304 | |||||||||||
2003 | 524 | 65 | 1,357 | |||||||||||
Total | $ | 9,977 | $ | 3,957 | $ | 18,528 |
speed forced air convection and microwave energy or high-speed forced air convection alone. In our C-3 and Tornado models, a smooth-flowing field of heated air is circulated within the oven at speeds of up to 60 miles per hour to wrap the surface of food in a fast-moving shroud of hot air, while the food simultaneously is cooked with precisely controlled bursts of microwave energy. This system creates a unique set of temperature- and moisture-control conditions within the food that preserves and enhances flavor. Our High h Batch oven uses our air impingement cooking system—specially-placed nozzles that force high-velocity jets of heated air from above and below the food product to produce faster and more consistent cooking than conventional methods, but without microwave. We are applying a combination of these same technologies to our residential oven product and to our newest commercial oven, the i5, to be available early 2008. All of our commercially available ovens and the residential oven design include our patented system of scrubbing the circulating air using a catalytic converter. Heated air is circulated through the internal catalytic converter, instead of being vented outside the unit, as with a conventional oven, resulting in a ventless system. Our ovens employ this technology to cook food at high speeds with food quality we believe to be comparable, and in many instances superior, to both conventional methods and other speed cook methods.
• | The TurboChef C3. The C3 model uses a patented combination of high-speed forced air convection heating and microwave energy to cook up to 10 times faster than conventional methods. The C3 bakes, browns, broils and roasts with food quality that we believe to be comparable or superior to that of traditional cooking. The primary benefit of the C3 is its versatile capability to cook a wide spectrum of food, from dense proteins like filet mignon to delicate soufflés. Because it is certified by Underwriter’s Laboratory (UL®) to be operated in a ventless environment, the C3 does not require a hood, ventilation or a fire suppression system. Its preprogrammed, digital touchpad makes operation and training simple for any operator or chef. |
• | The TurboChef Tornado. Our Tornado oven has many of the same operational benefits as our C3, but is specifically designed to cook, toast and brown sandwiches, pizzas, breakfast items, appetizers and similar food products. The Tornado combines our patented ventless speed cook technology with a conventional wire baking rack or stone and independently-controlled infrared browning element to cook up to 12 times faster than conventional methods with food quality that we believe to be comparable or superior to that of traditional cooking. Like the C3, the Tornado is UL certified to be operated in a ventless environment. We believe the adoption of the Tornado as their exclusive speed |
cook oven by several large and widely known restaurant and coffee shop brands validates the oven and its underlying technologies. |
• | The TurboChef High h Batch. In the High h Batch oven, we applied breakthrough impingement technology in a batch oven as an efficient alternative to currently-marketed commercial small conveyor ovens. The High h Batch oven also includes our patented ventless technology and bakes, browns and toasts with speeds up to twice that of tabletop conveyors and five times the speed of conventional equipment. This model utilizes heated air only with no microwave, and it is particularly suited for fresh dough pizzas, pasta entrees and appetizers, and raw dough and batter-based baked goods, and it can accommodate a full 1/2 sheet pan. |
• | Speed. Our C3 and Tornado ovens cook up to 10 and 12 times faster, respectively, than conventional ovens, and each are capable of cooking diverse items together or consecutively with no lag time. This capability results in significantly increased food throughput for users of our ovens. Our High h Batch oven, applying an advanced version of the heated air impingement technology commonly found in conveyor ovens, but in a batch configuration in our oven, can double the speed of tabletop conveyor cooking, and it can cook up to 5 times as fast as a conventional oven. |
• | Quality and Versatility. We believe that our ovens produce food that is comparable, and in many cases superior, in quality to conventional and other speed cook methods. Additionally, our ovens are able to bake, brown, broil or roast, allowing them to be used in a broad spectrum of venues, including fine dining establishments, quick-service restaurants, hotels, movie theaters, concessions, convenience stores, coffee shops and bakeries. |
• | Ventless Cooking. During the cooking process, air in our speed cook ovens is circulated through an air-scrubbing catalytic converter that breaks down fume and grease by-products of food, enabling the ovens to operate without venting these by-products into the air. This ventless system eliminates the need for commercial kitchen hood systems, allows our ovens to be installed in almost any location, and significantly reduces flavor transfer and odor transfer between different products cooked together or consecutively in the oven. |
• | Ease of Use. Our layered logic operating system allows for step-by-step, intuitive operation of our ovens via a digital touchpad, allowing users to easily specify one of up to as many as 128 pre-preprogrammed cooking profiles, depending on the oven model. These memorized settings allow operators of varying culinary skill levels to easily cook a variety of menu items in a consistent, high quality manner. In addition, our operating system allows users to program their own custom cook settings. Our ChefComm technology offers users the ability to upload and download menus to/from their ovens through the use of readily available memory devices, such as smart cards and USB drives, and our proprietary software application. This coupled with Smart Menu, our menu management system, enables foodservice chains to easily make changes to their menus for promotions and/or new product offerings and have their new menus burned to low cost memory media and mailed to the operator’s central location or to each individual location for a quick, consistent and cost-efficient update. |
allow these foodservice chains to enhance or expand their existing menus, and will permit those with limited or cold food offerings to offer new heated or toasted food items. We believe that the enhanced or new food offerings facilitated by our ovens can help these chains increase same store sales by producing new sources of revenue.
Hotels and Resorts | Hilton Hotels Corporation Starwood Hotels & Resorts Worldwide, Inc. | |||||
Foodservice and Concessions | Compass Group HMS Host Corporation | |||||
Grocery and Convenience Stores | Whole Foods 7-Eleven | |||||
Movie Theaters | Loews Cineplex Entertainment Corporation | |||||
Theme Parks | The Walt Disney Company | |||||
Stadiums | Lambeau Field (Green Bay, Wisconsin) Petco Park (San Diego, California) |
issued patents and pending patent applications in over 25 countries (including the United States, Japan and various countries of the European Union). Our currently issued United States patents will expire at various dates between 2007 and 2020.
• | multi-functional, multi-tasking equipment that fits in a small footprint, is easy to clean, and is fully mobile; |
• | energy efficient with minimal heat and fume emission; |
• | programmable via integrated memory storage devices or connected remotely by a modem; |
• | easy to train new employees to use, given high industry turnover rates and increasing number of non-English speaking employees; |
• | improved quality of equipment service; and |
• | accelerated cooking using specialized heat concentration technology. |
were previously cooked in a conventional microwave oven at the expense of the food’s optimal flavor. Our speed cook ovens offer these other operations a cooking platform that provides an additional revenue source while requiring little, if any, additional investment in kitchen infrastructure, staff or training.
• | consumer desire for speed and convenience in food preparation at home; |
• | increased demand for higher-end kitchen equipment driven by increases in the size of the average American home, new home construction and remodeling trends; |
• | emergence of premium kitchen equipment as a status symbol; and |
• | increasing consumer comfort with using technology in virtually every part of their daily lives. |
• | Amana Commercial (AGA Foodservice); |
• | Duke Manufacturing Company; |
• | Fujimak Corporation; |
• | Groen, Inc. (Dover Corporation); |
• | MerryChef and Lincoln Foodservice Products (Enodis, LLP); |
• | The Middleby Corporation; and |
• | Vulcan-Hart Corporation (Illinois Tool Works, Inc.). |
not reported, the financial impact of past stock option grants, there could be further delays in filing subsequent SEC reports that might result in delisting of our common stock from the NASDAQ Stock Market. If our common stock is delisted from NASDAQ, our stock price could lose value and there may be little or no trading market for our common shares.
• | create and develop demand for and market acceptance of our technologies in the residential oven market; |
• | market, promote and distribute our speed cook ovens and establish public awareness of our brand in the residential oven market; |
• | compete with the numerous, well-established manufacturers and suppliers of conventional and speed cook ovens already in the residential oven market; and |
• | establish and maintain sufficient internal research and development, marketing, sales, production and customer service infrastructures to support these efforts. |
• | our lengthy, unpredictable sales cycle for commercial ovens; |
• | the gain or loss of significant customers; |
• | unexpected delays in new product introductions; |
• | level of market acceptance of new or enhanced versions of our products; |
• | unexpected changes in the levels of our operating expenses including increased research and development and sales and marketing expenses associated with new product introductions; |
• | competitive product offerings and pricing actions; and |
• | general economic conditions. |
• | variations in quarterly operating results; |
• | potential initiation and subsequent changes in financial estimates by securities analysts; |
• | changes in general conditions in the economy or the financial markets; |
• | changes in accounting standards, policies or interpretations; |
• | other developments affecting us, our industry, clients or competitors; and; |
• | the operating and stock price performance of companies that investors deem comparable to us. |
by our then-existing insurance. Additionally, a material product liability or other claim could be brought against us that damages the reputation of our technologies or products in the market. Any of these types of claims could have a material adverse effect upon our business, operating results and financial condition.
Price Range of Common Stock | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Period | | High | | Low | |||||||
Year Ended December 31, 2005 | |||||||||||
First Quarter | $ | 22.98 | $ | 13.55 | |||||||
Second Quarter | 20.01 | 9.85 | |||||||||
Third Quarter | 19.60 | 14.45 | |||||||||
Fourth Quarter | 15.80 | 12.00 | |||||||||
Year Ended December 31, 2006 | |||||||||||
First Quarter | $ | 15.37 | $ | 10.24 | |||||||
Second Quarter | 13.35 | 10.50 | |||||||||
Third Quarter | 13.90 | 7.84 | |||||||||
Fourth Quarter | 17.10 | 12.33 | |||||||||
| Year Ended December 31, | | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | | 2005 (As restated) (1) | | 2004 (As restated) (1)(b) | | 2003 (As restated) (2) | | 2002 (As restated) (2) | ||||||||||||||
Revenues | $ | 48,669 | $ | 52,249 | $ | 70,894 | $ | 3,690 | $ | 5,655 | |||||||||||||
Costs and expenses: | |||||||||||||||||||||||
Cost of product sales | 31,929 | 43,532 | 44,047 | 1,946 | 3,474 | ||||||||||||||||||
Research and development expenses | 4,357 | 4,307 | 1,202 | 897 | 413 | ||||||||||||||||||
Purchased research and development (a) | 7,665 | 6,285 | — | — | — | ||||||||||||||||||
Selling, general and administrative expenses | 28,986 | 34,398 | 19,191 | 7,747 | 9,174 | ||||||||||||||||||
Compensation and severance expenses related to termination of former officers and directors | — | — | — | 7,585 | — | ||||||||||||||||||
Total costs and expenses | 72,937 | 88,522 | 64,440 | 18,175 | 13,061 | ||||||||||||||||||
Operating (loss) income | (24,268 | ) | (36,273 | ) | 6,454 | (14,485 | ) | (7,406 | ) | ||||||||||||||
Interest expense and other (c) | (436 | ) | (332 | ) | (8 | ) | (1,105 | ) | (226 | ) | |||||||||||||
Interest income | 1,300 | 1,536 | 169 | 17 | 255 | ||||||||||||||||||
Total other income (expense) | 864 | 1,204 | 161 | (1,088 | ) | 29 | |||||||||||||||||
(Loss) income before taxes | (23,404 | ) | (35,069 | ) | 6,615 | (15,573 | ) | (7,377 | ) | ||||||||||||||
Provision for income taxes | — | 301 | — | — | |||||||||||||||||||
Net (loss) income | (23,404 | ) | (35,069 | ) | 6,314 | (15,573 | ) | (7,377 | ) | ||||||||||||||
Preferred stock dividends | — | — | — | (195 | ) | (270 | ) | ||||||||||||||||
Beneficial conversion feature of preferred stock (d) | — | — | — | (12,605 | ) | — | |||||||||||||||||
Net (loss) income applicable to common stockholders | $ | (23,404 | ) | $ | (35,069 | ) | $ | 6,314 | $ | (28,373 | ) | $ | (7,647 | ) | |||||||||
Net (loss) income per share applicable to common stockholders: | |||||||||||||||||||||||
Basic | $ | (0.81 | ) | $ | (1.25 | ) | $ | 0.52 | $ | (4.17 | ) | $ | (1.21 | ) | |||||||||
Diluted | (0.81 | ) | (1.25 | ) | 0.25 | (4.17 | ) | (1.21 | ) | ||||||||||||||
Weighted Average Number of Shares Outstanding: | |||||||||||||||||||||||
Basic | 28,834,821 | 28,034,103 | 12,256,686 | 6,797,575 | 6,301,236 | ||||||||||||||||||
Diluted | 28,834,821 | 28,034,103 | 25,626,215 | 6,797,575 | 6,301,236 | ||||||||||||||||||
(a) | During the year ended December 31, 2005, we purchased the patents and technology assets of Global Appliance Technologies, Inc. (Global). The agreement provided for payment of additional consideration contingent on filing a specific number of patent applications within 18 months of the closing date of the transaction. At the time of closing, approximately $6.3 million of the purchase price was allocated to purchased research and development. In 2006, the contingencies were resolved and an additional $7.7 million of the additional consideration payable was allocated to purchased research and development. |
(b) | During the year ended December 31, 2004, we completed the acquisition of Enersyst Development Center, L.L.C. in a transaction accounted for as a purchase. The results of operations of Enersyst have been included in our consolidated results of operations since the May 21, 2004 purchase date. |
(c) | Amount for 2003 primarily represents $1.1 million of debt extinguishment costs incurred in 2003. |
(d) | During 2003, we incurred a one-time, non-cash charge of $12.6 million to record a deemed dividend in recognition of the beneficial conversion feature intrinsic in the terms of our Series D Convertible Preferred Stock. The Series D Convertible Preferred Stock was considered redeemable until July 19, 2004 when shareholders approved an amendment to increase the number of authorized shares of our common stock to 100,000,000 and a sufficient number of shares of common stock were subsequently reserved to permit the conversion of all outstanding shares of our Series D Convertible Preferred Stock into shares of common stock. As of October 28, 2004, all shares of Series D Convertible Preferred Stock had been converted to shares of common stock. |
(1) | See the “Explanatory Note” immediately preceding Part 1, Item 1, Part 1, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of Notes to Consolidated Financial Statements in this Form 10-K. |
(2) | Selected Financial Data for the years ended December 31, 2003 and 2002 has been restated to reflect adjustments related to stock-based compensation expense as further described in the “Explanatory Note” immediately preceding Part 1, Item 1. As a result of these adjustments, net earnings were decreased by $1.2 million and $693,000 for the years ended December 31, 2003 and 2002, respectively. |
| As of December 31, | | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | | 2005 (As restated) (1) (a) | | 2004 (As restated) (2) | | 2003 (As restated) (2) | | 2002 (As restated) (2) | ||||||||||||||
Cash and cash equivalents | $ | 19,675 | $ | 40,098 | $ | 12,942 | $ | 8,890 | $ | 629 | |||||||||||||
Working capital (deficit) | 25,677 | 43,745 | 17,399 | (5,685 | ) | (1,567 | ) | ||||||||||||||||
Total assets | 71,775 | 86,067 | 50,756 | 11,420 | 5,387 | ||||||||||||||||||
Total liabilities, including mezzanine equity | 26,070 | 21,295 | 16,977 | 18,155 | 6,646 | ||||||||||||||||||
Accumulated deficit | (124,792 | ) | (101,388 | ) | (66,319 | ) | (72,633 | ) | (56,865 | ) | |||||||||||||
Total stockholders’ equity (deficit) | 45,705 | 64,772 | 33,779 | (6,735 | ) | (1,259 | ) |
(a) | During the year ended December 31, 2005, we purchased the patents and technology assets of Global Appliance Technologies, Inc. (Global). The agreement provided for payment of additional consideration contingent on delivery of a specific number of patent applications within 18 months of the closing date of the transaction. At the time of closing, approximately $6.3 million of the purchase price was allocated to purchased research and development. In 2006, the contingencies were resolved and an additional $7.7 million of the additional consideration payable was allocated to purchased research and development. |
(1) | See the “Explanatory Note” immediately preceding Part 1, Item 1, Part 1, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of Notes to Consolidated Financial Statements in this Form 10-K. |
(2) | Selected Financial Data for the years ended December 31, 2004, 2003 and 2002 has been restated to reflect adjustments related to stock-based compensation expense as further described in the “Explanatory Note” immediately preceding Part 1, Item 1. As a result of these adjustments, previously reported net earnings were decreased and accumulated deficit increased by $3.4 million, $1.2 million and $693,000 for the years ended December 31, 2004, 2003 and 2002, respectively. |
Year Ended December 31, 2005 | Year Ended December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | ||||||||||||||||
Revenues | $ | 52,249 | $ | — | $ | 52,249 | $ | 70,894 | $ | — | $ | 70,894 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||
Cost of product sales | 43,532 | — | 43,532 | 44,047 | — | 44,047 | |||||||||||||||||||||
Research and development expenses | 4,307 | — | 4,307 | 1,202 | — | 1,202 | |||||||||||||||||||||
Purchased research and development | 6,285 | — | 6,285 | — | — | — | |||||||||||||||||||||
Selling, general and administrative expenses | 27,483 | 6,915 | 34,398 | 15,826 | 3,365 | 19,191 | |||||||||||||||||||||
Total costs and expenses | 81,607 | 6,915 | 88,522 | 61,075 | 3,365 | 64,440 | |||||||||||||||||||||
Operating (loss) income | (29,358 | ) | (6,915 | ) | (36,273 | ) | 9,819 | (3,365 | ) | 6,454 | |||||||||||||||||
Interest expense and other | (332 | ) | — | (332 | ) | (8 | ) | — | (8 | ) | |||||||||||||||||
Interest income | 1,536 | — | 1,536 | 169 | — | 169 | |||||||||||||||||||||
Total other income | 1,204 | — | 1,204 | 161 | — | 161 | |||||||||||||||||||||
(Loss) income before taxes | (28,154 | ) | (6,915 | ) | (35,069 | ) | 9,980 | (3,365 | ) | 6,615 | |||||||||||||||||
Provision for income taxes | — | — | — | (301 | ) | — | (301 | ) |
Year Ended December 31, 2005 | Year Ended December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | ||||||||||||||||
Net (loss) income | (28,154 | ) | (6,915 | ) | (35,069 | ) | 9,679 | (3,365 | ) | 6,314 | |||||||||||||||||
Net (loss) income applicable to common stockholders | $ | (28,154 | ) | $ | (6,915 | ) | $ | (35,069 | ) | $ | 9,679 | $ | (3,365 | ) | $ | 6,314 | |||||||||||
Net (loss) income per share applicable to common stockholders: | |||||||||||||||||||||||||||
Basic | $ | (1.00 | ) | $ | (0.25 | ) | $ | (1.25 | ) | $ | 0.79 | $ | (0.27 | ) | $ | 0.52 | |||||||||||
Diluted | (1.00 | ) | (0.25 | ) | (1.25 | ) | 0.37 | (0.12 | ) | 0.25 | |||||||||||||||||
Shares used in computing net (loss) income per share: | |||||||||||||||||||||||||||
Basic | 28,034 | — | 28,034 | 12,257 | — | 12,257 | |||||||||||||||||||||
Diluted | 28,034 | — | 28,034 | 26,142 | (516 | ) | 25,626 | ||||||||||||||||||||
Year Ended December 31, 2003 | Year Ended December 31, 2002 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | ||||||||||||||||
Revenues | $ | 3,690 | $ | — | $ | 3,690 | $ | 5,655 | $ | — | $ | 5,655 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||
Cost of product sales | 1,946 | — | 1,946 | 3,474 | — | 3,474 | |||||||||||||||||||||
Research and development expenses | 897 | — | 897 | 413 | — | 413 | |||||||||||||||||||||
Purchased research and development | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative expenses | 6,523 | 1,224 | 7,747 | 8,481 | 693 | 9,174 | |||||||||||||||||||||
Compensation and severance expenses related to termination of former officers and directors | 7,585 | — | 7,585 | — | — | — | |||||||||||||||||||||
Total costs and expenses | 16,951 | 1,224 | 18,175 | 12,368 | 693 | 13,061 | |||||||||||||||||||||
Operating loss | (13,261 | ) | (1,224 | ) | (14,485 | ) | (6,713 | ) | (693 | ) | (7,406 | ) | |||||||||||||||
Interest expense and other | (1,105 | ) | — | (1,105 | ) | (226 | ) | — | (226 | ) | |||||||||||||||||
Interest income | 17 | — | 17 | 255 | — | 255 | |||||||||||||||||||||
Total other income (expense) | (1,088 | ) | — | (1,088 | ) | 29 | — | 29 | |||||||||||||||||||
Loss before taxes | (14,349 | ) | (1,224 | ) | (15,573 | ) | (6,684 | ) | (693 | ) | (7,377 | ) | |||||||||||||||
Provision for income taxes | — | — | — | — | — | — | |||||||||||||||||||||
Net loss | �� | (14,349 | ) | (1,224 | ) | (15,573 | ) | (6,684 | ) | (693 | ) | (7,377 | ) | ||||||||||||||
Preferred stock dividends | (195 | ) | — | (195 | ) | (270 | ) | — | (270 | ) | |||||||||||||||||
Beneficial conversion feature of preferred stock | (12,605 | ) | — | (12,605 | ) | — | — | — | |||||||||||||||||||
Net loss applicable to common stockholders | $ | (27,149 | ) | $ | (1,224 | ) | $ | (28,373 | ) | $ | (6,954 | ) | $ | (693 | ) | $ | (7,647 | ) | |||||||||
Net loss per share applicable to common stockholders: | |||||||||||||||||||||||||||
Basic | $ | (3.99 | ) | $ | (0.18 | ) | $ | (4.17 | ) | $ | (1.10 | ) | $ | (0.11 | ) | $ | (1.21 | ) | |||||||||
Diluted | (3.99 | ) | (0.18 | ) | (4.17 | ) | (1.10 | ) | (0.11 | ) | (1.21 | ) | |||||||||||||||
Shares used in computing net loss per share: | |||||||||||||||||||||||||||
Basic | 6,798 | — | 6,798 | 6,301 | — | 6,301 | |||||||||||||||||||||
Diluted | 6,798 | — | 6,798 | 6,301 | — | 6,301 | |||||||||||||||||||||
December 31, 2005 | December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | ||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 40,098 | $ | — | $ | 40,098 | $ | 12,942 | $ | — | $ | 12,942 | |||||||||||||||
Restricted cash | — | — | — | 3,196 | — | 3,196 | |||||||||||||||||||||
Accounts receivable, net of allowance | 7,314 | — | 7,314 | 9,542 | — | 9,542 | |||||||||||||||||||||
Other receivables | 2,003 | — | 2,003 | 43 | — | 43 | |||||||||||||||||||||
Inventory, net | 10,994 | — | 10,994 | 8,155 | — | 8,155 | |||||||||||||||||||||
Prepaid expenses | 724 | — | 724 | 426 | — | 426 | |||||||||||||||||||||
Total current assets | 61,133 | — | 61,133 | 34,304 | — | 34,304 | |||||||||||||||||||||
Property and equipment, net | 6,482 | — | 6,482 | 2,678 | — | 2,678 | |||||||||||||||||||||
Developed technology, net of accumulated amortization | 6,770 | — | 6,770 | 7,577 | — | 7,577 | |||||||||||||||||||||
Goodwill | 5,934 | — | 5,934 | 5,808 | — | 5,808 | |||||||||||||||||||||
Covenants not-to-compete, net of accumulated amortization | 5,434 | — | 5,434 | — | — | — | |||||||||||||||||||||
Other assets | 314 | — | 314 | 389 | — | 389 | |||||||||||||||||||||
Total assets | $ | 86,067 | $ | — | $ | 86,067 | $ | 50,756 | $ | — | $ | 50,756 | |||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable | $ | 6,166 | $ | — | $ | 6,166 | $ | 8,401 | $ | — | $ | 8,401 | |||||||||||||||
Other payables | 1,445 | — | 1,445 | 1,445 | — | 1,445 | |||||||||||||||||||||
Accrued expenses | 3,484 | — | 3,484 | 3,135 | — | 3,135 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | 1,286 | — | 1,286 | — | — | — | |||||||||||||||||||||
Deferred revenue | 2,278 | — | 2,278 | 1,338 | — | 1,338 | |||||||||||||||||||||
Accrued warranty | 2,482 | — | 2,482 | 2,586 | — | 2,586 | |||||||||||||||||||||
Deferred rent | 247 | — | 247 | — | — | — | |||||||||||||||||||||
Total current liabilities | 17,388 | — | 17,388 | 16,905 | — | 16,905 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | 2,363 | — | 2,363 | — | — | — | |||||||||||||||||||||
Deferred rent, non-current | 1,463 | — | 1,463 | — | — | — | |||||||||||||||||||||
Other liabilities | 81 | — | 81 | 72 | — | 72 | |||||||||||||||||||||
Total liabilities | 21,295 | — | 21,295 | 16,977 | — | 16,977 | |||||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||||||
Stockholders’ equity | |||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 967 | — | 967 | 6,351 | — | 6,351 | |||||||||||||||||||||
Common stock | 286 | — | 286 | 243 | — | 243 | |||||||||||||||||||||
Additional paid-in capital | 143,950 | 20,957 | 164,907 | 79,508 | 14,042 | 93,550 | |||||||||||||||||||||
Accumulated deficit | (80,431 | ) | (20,957 | ) | (101,388 | ) | (52,277 | ) | (14,042 | ) | (66,319 | ) | |||||||||||||||
Notes receivable for stock issuances | — | — | — | (46 | ) | — | (46 | ) | |||||||||||||||||||
Total stockholders’ equity | 64,772 | — | 64,772 | 33,779 | — | 33,779 |
December 31, 2005 | December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 86,067 | $ | — | $ | 86,067 | $ | 50,756 | $ | — | $ | 50,756 |
December 31, 2003 | December 31, 2002 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As previously reported | | Adjustments | | As restated | | As previously reported | | Adjustments | | As restated | |||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 8,890 | $ | — | $ | 8,890 | $ | 629 | $ | — | $ | 629 | ||||||||||||||||||
Accounts receivable, net of allowance | 515 | — | 515 | 1,682 | — | 1,682 | ||||||||||||||||||||||||
Other receivables | 5 | — | 5 | 735 | — | 735 | ||||||||||||||||||||||||
Inventory, net | 1,514 | — | 1,514 | 1,954 | — | 1,954 | ||||||||||||||||||||||||
Prepaid expenses | 311 | — | 311 | 79 | — | 79 | ||||||||||||||||||||||||
Total current assets | 11,235 | — | 11,235 | 5,079 | — | 5,079 | ||||||||||||||||||||||||
Property and equipment, net | 101 | — | 101 | 170 | — | 170 | ||||||||||||||||||||||||
Other assets | 84 | — | 84 | 138 | — | 138 | ||||||||||||||||||||||||
Total assets | $ | 11,420 | $ | — | $ | 11,420 | $ | 5,387 | $ | — | $ | 5,387 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Accounts payable | $ | 424 | $ | — | $ | 424 | $ | 1,113 | $ | — | $ | 1,113 | ||||||||||||||||||
Other payables | 1,445 | — | 1,445 | 1,445 | — | 1,445 | ||||||||||||||||||||||||
Accrued expenses | 1,007 | — | 1,007 | 870 | — | 870 | ||||||||||||||||||||||||
Notes payable | 380 | — | 380 | 1,359 | — | 1,359 | ||||||||||||||||||||||||
Deferred revenue | 1,366 | — | 1,366 | 813 | — | 813 | ||||||||||||||||||||||||
Accrued warranty and upgrade costs | 928 | — | 928 | 1,046 | — | 1,046 | ||||||||||||||||||||||||
Total current liabilities | 5,550 | — | 5,550 | 6,646 | — | 6,646 | ||||||||||||||||||||||||
Other liabilities | — | — | — | — | — | — | ||||||||||||||||||||||||
Total liabilities | 5,550 | — | 5,550 | 6,646 | — | 6,646 | ||||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||
Convertible, redeemable preferred stock | 12,605 | — | 12,605 | — | — | |||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||||
Preferred stock | — | — | — | 2,430 | — | 2,430 | ||||||||||||||||||||||||
Common stock | 85 | — | 85 | 191 | — | 191 | ||||||||||||||||||||||||
Additional paid-in capital | 55,630 | 10,677 | 66,307 | 46,513 | 9,453 | 55,966 | ||||||||||||||||||||||||
Accumulated deficit | (61,956 | ) | (10,677 | ) | (72,633 | ) | (47,412 | ) | (9,453 | ) | (56,865 | ) | ||||||||||||||||||
Notes receivable for stock issuances | (43 | ) | — | (43 | ) | (2,530 | ) | — | (2,530 | ) | ||||||||||||||||||||
Treasury stock | (451 | ) | — | (451 | ) | (451 | ) | — | (451 | ) | ||||||||||||||||||||
Total stockholders’ equity (deficit) | (6,735 | ) | — | (6,735 | ) | (1,259 | ) | — | (1,259 | ) | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 11,420 | $ | — | $ | 11,420 | $ | 5,387 | $ | — | $ | 5,387 |
experts conducting the review. Where we had incomplete documentation, we considered all available relevant information to determine the first date on which all stock option terms were fixed. As described later in this Explanatory Note, where evidence necessary for a determination of the appropriate measurement date under APB 25 was wholly lacking, we estimated compensation charges or a range of possible compensation charges through certain statistical analyses. We believe that the approaches we used to determine or, in some cases estimate, appropriate measurement dates for historic stock option grants were the most appropriate under the circumstances.
• | The Investigative Team found that the Company did not have an established and consistent policy or practice for granting stock options. For example, (i) new employees generally received stock options on or around their start dates or batched with other stock option grants; (ii) grant dates for new employees were often inconsistent with start dates reflected in offer letters, payroll and personnel records and regulatory filings; (iii) certain grants reflected transactions with inconsistent documentation or documentation approved subsequent to the grant date; (iv) in most cases, there was insufficient documentary evidence of Board of Directors or Compensation Committee approval of the specific grant terms on or before the grant dates; (v) management granted some options to employees prior to the delegation of authority from the Compensation Committee being formalized and documented in May 2004 (the Compensation Committee subsequently approved all such grants); and (vi) certain new employees received stock option grants prior to the Board of Directors’ formal adoption of the Company’s applicable stock option plan. |
• | The Investigative Team found that a statistical analysis of average forward returns on grant dates versus non-grant dates did not suggest a stock option backdating practice by current management. |
• | The Investigative Team found that the Board of Directors delegated authority to senior management to grant up to 2.0 million stock options in connection with the change of control transaction in October 2003, and evidence suggested a decision by management to grant options to each director and employee at the fair market value on the date of the change of control, but the Company failed to finalize the determination of fair market value and exercise price until shortly after the grant date, and the allocation of options to certain employees was not finalized on or before the grant date. The actual |
stock option plan pursuant to which the stock options were granted was not formally approved by the Board until on or about December 8, 2003. Although evidence suggested certain directors were informally designated as Board members prior to grant dates for certain of their stock options, these grants were made prior to formal appointment to the Board (or acceptance of the appointment). Stock options were also granted to certain directors for service on Board committees prior to their formal appointment to the committee or, in one instance, prior to the creation of the committee itself. Formal approval of stock option grants associated with Board committee service was not obtained until January 2004. |
• | The Investigative Team found that of senior management, only one executive officer, three other non-executive officers and no directors exercised stock options granted during the Post-Change of Control Period. |
• | The Investigative Team found that with respect to one grant to an administrative employee, the number of stock options was increased subsequent to the grant date. |
• | The Investigative Team found that with respect to one grant to an executive officer and two grants to employees, stock options were granted prior to their formal employment dates. |
• | The Investigative Team found that with respect to one grant to an executive officer and five grants to employees, evidence suggested that grant dates and exercise prices were modified subsequent to the recorded grant dates, but it was unclear whether the modifications were intended to capture a lower exercise price. |
• | The Investigative Team found that with respect to one annual grant to two executive officers and certain employees, there was insufficient evidence that the allocation of stock options was complete on or before the grant date. |
• | The Investigative Team found that certain consultants received stock option grants prior to the date of formal Board approval, but it was unclear when the terms of the grants were finalized. |
• | There is evidence that certain former members of management and of the Board of Directors at the time determined grant dates and exercise prices in hindsight for certain stock option grants by (i) apparently selecting grant dates in hindsight to obtain more favorable exercise prices within a particular range of dates; and (ii) apparently re-pricing certain grants in hindsight based, in some cases, on the lowest closing market price within a particular range of dates to attain lower exercise prices. |
• | There is evidence that certain employees and one director were granted stock options prior to their start dates or election to the Board. |
• | Stock option terms were modified subsequent to certain grant dates. |
• | The Company’s stock option grant practices did not comply consistently with the Company’s applicable stock option plan. |
• | Board actions by written consents of all directors in lieu of a meeting (“unanimous written consents” or “UWCs”) were prepared, approved and executed significantly after the date indicated on the documents. |
• | Documentation for many grant events is incomplete or missing from the Company’s records. |
• | The documentary evidence suggests that certain members of management and the former Board, serving at various tenures, were involved or may have been aware of the retrospective selection of certain grant dates and/or modifications to stock option amounts subsequent to the recorded grant date. It is unclear whether these individuals were aware of the accounting implications or accounting treatment of the stock option grants at issue. In addition, based on the foregoing, the Audit Committee found that the review suggested that the one current director of the Company who at various times was on the Company’s Board during the Pre-Change of Control Period may have been aware of the retrospective selection of grant dates and modifications of grant terms with respect to grants he received during that period, but the Committee does not believe he understood the accounting consequences of those actions. The Audit Committee therefore concluded that the evidence did not establish that the director engaged in intentional misconduct. |
• | The Company understated its reported compensation expense for the Pre-Change of Control Period because of the improper measurement dates selected for certain options, and the Company granted “in the money” options without disclosing or accounting for them as such. |
date documents in the Company’s records show formal corporate action making the grant was taken. This appears to have been done, in the case of reporting persons, to make the grant date coincide with a specific event, such as the due date of applicable regulatory filings (i.e., Form 3 or Form 4), the appointment or re-election of a director or the purported date options were granted to non-officers. In many of these cases, we have determined that the correct measurement date is the date on which the Board took the action to approve the grant. However, we often had to make reasonable judgments based on the best available information about when the Board took such action. The review also identified instances in which awards to officers were made effective upon a future event, such as the commencement of employment and instances where the record suggests new employees were granted stock options prior to their start dates. In these cases, we determined that the date of the future event is the correct measurement date for such grants. The review also identified instances where stock option terms (amount, expiration, etc.) were modified subsequent to grant dates, where documents indicate grant dates were selected in hindsight (partly based on the timing of required Form 4 filings) to obtain more favorable exercise prices, and where evidence suggests that members of the Board and senior management re-priced grants subsequent to the award to obtain a lower exercise price. The selection of dates and prices in these instances appears to have been made in hindsight based on the lowest closing stock price within a particular range of dates. In all instances where documents were available to indicate a different measurement date than the one apparently used, the grants were re-measured. In connection with the application of these measurement principles for option grants to officers and directors of the first category, and after accounting for forfeitures, the Company has adjusted the measurement of compensation cost for options covering 2.3 million shares of common stock resulting in an incremental stock-based compensation expense of $7.4 million on a pre-tax basis over the respective awards’ vesting terms. Re-measurement of options of the first category covering 1.0 million shares granted to non-officers resulted in additional stock-based compensation expense of $2.4 million on a pre-tax basis over the awards’ vesting terms after accounting for forfeitures.
Fiscal Year | Expense | Cumulative Increase to Accumulated Deficit | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ 67 | |||||||
1995 | 83 | 150 | ||||||||
1996 | 589 | 739 | ||||||||
1997 | 1,561 | 2,300 | ||||||||
1998 | 2,237 | 4,537 | ||||||||
1999 | 1,657 | 6,194 | ||||||||
2000 | 1,299 | 7,493 | ||||||||
2001 | 1,267 | 8,760 | ||||||||
2002 | 693 | 9,453 | ||||||||
2003 | 1,224 | 10,677 | ||||||||
Subtotal | 10,677 | 10,677 | ||||||||
2004 | 3,365 | 14,042 | ||||||||
2005 | 6,915 | 20,957 | ||||||||
Total | $ | 20,957 | $20,957 |
Board of Director or Compensation Committee meeting dates). For grants that had insufficient evidence to identify either an earliest possible measurement date or the latest possible measurement date (or for Category 2 grants, both dates) we based the range of possible measurement dates on a computation of the minimum and maximum number of days between the grant date and the re-measurement date for those grants in Category 1 (ones with good or some information) by classification of grantee (consultant, director, executive, other). While we believe the evidence and methodology used to determine the revised measurement dates to be the most appropriate, we also believe that illustrating differences in stock-based compensation expense using these alternative date ranges provides some insight into the extent to which hypothetical stock-based compensation expense would have fluctuated if the available evidence had caused us to chose other dates.
Year | | Pre-Tax Compensation Expense Based on Selected Revised Measurement Dates | | Hypothetical Compensation Expense Based on Lowest Closing Price Within Range of Potential Alternative Measurement Dates | | Hypothetical Compensation Expense Based on Highest Closing Price Within Range of Potential Alternative Measurement Dates | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 83 | $ | 83 | $ | 83 | ||||||||
1995 | 330 | 302 | 3,088 | |||||||||||
1996 | 2,949 | 91 | 3,814 | |||||||||||
1997 | 2,323 | 2,055 | 2,661 | |||||||||||
1998 | 2,453 | 1,106 | 4,571 | |||||||||||
1999 | 243 | 243 | 400 | |||||||||||
2000 | 353 | — | 1,131 | |||||||||||
2001 | 883 | 77 | 1,814 | |||||||||||
2002 | 360 | — | 966 | |||||||||||
2003 | — | — | — | |||||||||||
Total | $ | 9,977 | $ | 3,957 | $ | 18,528 |
Year | | Pre-Tax Compensation Expense Based on Selected Revised Measurement Dates | | Hypothetical Compensation Expense Based on Lowest Closing Price Within Range of Potential Alternative Measurement Dates | | Hypothetical Compensation Expense Based on Highest Closing Price Within Range of Potential Alternative Measurement Dates | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ | 67 | $ | 67 | ||||||||
1995 | 83 | 80 | 1,753 | |||||||||||
1996 | 589 | 110 | 1,336 | |||||||||||
1997 | 1,561 | 341 | 2,453 | |||||||||||
1998 | 2,237 | 833 | 2,934 | |||||||||||
1999 | 1,657 | 838 | 2,535 | |||||||||||
2000 | 1,299 | 788 | 2,350 | |||||||||||
2001 | 1,267 | 593 | 2,439 | |||||||||||
2002 | 693 | 242 | 1,304 | |||||||||||
2003 | 524 | 65 | 1,357 | |||||||||||
Total | $ | 9,977 | $ | 3,957 | $ | 18,528 |
revenues and income in the quarters ended September 30, 2004, December 31, 2004 and, to a lesser extent, March 31, 2005. In 2005, we substantially completed the initial rollout with delivery of ovens to international Subway locations. However, the Subway relationship has and should continue to be a meaningful contributor to future revenues. Demand for equipment will continue from this major customer as new Subway restaurants are opened and existing restaurants seek additional ovens. In 2005 and continuing in 2006, we focused our sales efforts on expanding our customer base, with the notable expansion plans of one major contract customer, the addition of several smaller new customers and progress with a number of other customer prospects. During 2007, we will continue to focus on generating revenues from other foodservice establishments, expanding our commercial products line, increasing the profitability of commercial products, introducing our residential oven products and developing enabling strategies.
| 2006 | | 2005 | | 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | (As restated) | | (As restated) | ||||||||||
Revenues | 100 | % | 100 | % | 100 | % | ||||||||
Cost of product sales | 66 | 83 | 62 | |||||||||||
Research and development expenses | 9 | 8 | 2 | |||||||||||
Purchased research and development | 16 | 12 | — | |||||||||||
Selling, general and administrative expenses | 59 | 65 | 27 | |||||||||||
Restructuring charges | — | 1 | ||||||||||||
Total costs and expenses | 150 | 169 | 91 | |||||||||||
Operating (loss) income | (50 | ) | (69 | ) | 9 | |||||||||
Interest income | 3 | 3 | — | |||||||||||
Interest expense and other | (1 | ) | (1 | ) | — | |||||||||
Total other income | 2 | 2 | — | |||||||||||
(Loss) income before taxes | (48 | ) | (67 | ) | 9 | |||||||||
Provision for income taxes | — | — | — | |||||||||||
Net (loss) income | (48 | ) % | (67 | ) % | 9 | % |
• | During 2004, we commenced the rollout of our Tornado oven to Subway franchisees. We completed the rollout in the first quarter of 2005. Subway sales accounted for 35%, 58% and 91% of our total revenues during 2006, 2005 and 2004, respectively. We expect Subway to be a meaningful contributor to future revenues. |
• | During 2006, our non-Subway revenue increased $9.8 million, or 44%, over 2005. One other major customer accounted for 19% of our 2006 revenue. No other single customer accounted for more than 10% of our total 2006 revenues. We expect our non-Subway revenue to continue to increase in 2007. As our customer base continues to grow, we expect our customer concentration levels to decline. |
• | During 2006, we experienced a decrease in our cost of product sales as a percentage of revenue (and an improvement in our gross margin percentage) as compared to 2005. The improvement is primarily due to price increases implemented in 2006 and a reduction in warranty related charges related to having addressed a longevity and reliability issue in 2005, offset somewhat by increases in component pricing. In 2005, we recorded a warranty charge of $9.6 million related to our Tornado ovens sold to Subway. In 2006 and 2005, we experienced increases of 3% and 5%, respectively, in our Tornado oven bill of materials due to increases in component pricing, primarily the result of increased stainless steel pricing. Additionally, we experienced increased freight and handling costs. In 2007, we expect gross profit percentages to improve as we anticipate no recurrence of product performance issues causing material warranty related charges, as we believe a favorable sales mix will result from continued expansion of our |
customer base and as we expect to address component part price increases by a continuous “value-engineering” of our bills of material for all products. |
• | During 2006, we increased our research and development expenditures primarily as the result of our residential oven initiative. In 2007, we expect our research and development expenditures to approximate the 2006 levels as we develop additional residential and commercial products. |
• | During 2006, we recorded a $7.7 million in-process research and development charge in connection with resolution of certain contingencies associated with the 2005 acquisition of technology assets from Global. We had previously recorded a $6.3 million in-process research and development charge in 2005 at the time the acquisition was made. |
• | During 2006, we increased our selling, general and administrative expenses, excluding restructuring costs, depreciation and amortization and stock-based compensation, by $1.1 million over 2005 primarily due to costs related to our residential segment. We expect an increase in 2007, primarily due to increased marketing costs related to the residential product launch. |
• | increase our commercial revenue across our customer base; |
• | reduce our product warranty charges; |
• | manage costs related to the commercial business segment; |
• | successfully launch our residential product line; |
• | manage costs related to the residential product launch; |
• | manage costs related to the residential product launch. |
stock-based awards at fair value on the grant date and recognition of compensation expense over the requisite service period for awards expected to vest. The fair value of stock option grants is determined using the Black-Scholes valuation model, which is consistent with the valuation techniques previously utilized for options in footnote disclosures required under SFAS No. 123,Accounting for Stock Based Compensation, (“SFAS No. 123”) as amended by SFAS No. 148,Accounting for Stock-Based Compensation — Transition and Disclosure (“SFAS No. 148”). The fair value of restricted stock awards is determined based on the number of shares granted and the quoted price of our common stock on the grant date. Such fair values will be recognized as compensation expense over the requisite service period, net of estimated forfeitures, using the straight-line method under SFAS No. 123R.
combined effect of the foregoing factors resulted in a similar cost of product sales as a percentage of product sales for 2006 and 2005 and an increase in cost of product sales as a percentage of related product sales for 2005 as compared to 2004.
Increase (Decrease) in Research and Development Expenses | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2006 to 2005 | 2005 to 2004 | ||||||||||
Payroll and related expenses | $ | 612 | $ | 518 | |||||||
General and administrative expenses | 45 | 30 | |||||||||
Design, prototype and other related expenses | (608 | ) | 2,557 | ||||||||
Total increase | $ | 49 | $ | 3,105 |
professional fees, offset by increased sales activity driven by non-Subway related business and the residential oven initiative. Payroll and related expenses increased by $2.2 million, of which one-half is attributable to the Commercial segment and the remainder is equally attributable to the Residential segment and to the Corporate resource. Depreciation and amortization expense increased $1.1 million related to leasehold improvements and furniture, fixtures and equipment in the new facilities and increased amortization related to the acquisition of technology assets. Rent and occupancy costs increased $544,000 attributable to the Commercial segment operations center in Dallas, Texas, which opened in June 2005. Selling, marketing and related expenses increased $1.1 million, primarily due to increased marketing and advertising expenses in the Residential segment related to the anticipated launch of our new residential oven, offset by a reduction in marketing and advertising expenses in our Commercial segment.
Increase (Decrease) in General and Administrative Expenses | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2006 to 2005 | 2005 to 2004 | ||||||||||
(As restated) | (As restated) | ||||||||||
Non-cash stock compensation | $ | (6,824 | ) | $ | 3,637 | ||||||
Legal and professional fees | (2,912 | ) | 2,669 | ||||||||
Payroll and related expenses | 2,194 | 1,374 | |||||||||
Depreciation and amortization | 1,058 | 1,744 | |||||||||
Selling, marketing and related expenses | 1,056 | 3,159 | |||||||||
Rent and occupancy costs | 544 | 1,478 | |||||||||
Travel and related expenses | 100 | 553 | |||||||||
Other | 34 | (28 | ) | ||||||||
Total (decrease) increase | $ | (4,750 | ) | $ | 14,586 |
quarter of 2005 of $621,000 including $125,000 of non-cash charges, principally related to impairment of fixed assets. In the first quarter of 2006, the Company negotiated to terminate the lease of the closed facility and recorded a reduction in the restructuring reserve of $41,000. The lease termination payment was made in April 2006 and concludes the restructuring plan initiated in the fourth quarter of 2005.
working capital of $1.7 million. The change in working capital items included cash used for increases in inventories, prepaid expenses and other receivables (primarily the amount due from one of our contract assemblers for our consigned inventory lost in a fire at one of its plants) and to reduce trade accounts payable; offset by cash provided by reductions in restricted cash and trade accounts receivable.
Payments Due By Period | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total | 2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | ||||||||||||||||||||||||
Installment Payments for Covenants Not-to-Compete | $ | 2,665 | $ | 1,335 | $ | 1,330 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Installment Payments for Contingent Consideration Due Under Asset Purchase Agreement* | 5,333 | 2,668 | 2,665 | — | — | — | ||||||||||||||||||||||||
Operating Leases | 5,119 | 1,194 | 1,130 | 956 | 613 | 613 | 613 | |||||||||||||||||||||||
Total | $ | 13,117 | $ | 5,197 | $ | 5,125 | $ | 956 | $ | 613 | $ | 613 | $ | 613 |
* | 62% of this obligation is to be settled by issuance of common stock |
has full knowledge of all relevant information. Subsequent recognition, de-recognition, and measurement is based on management’s best judgment given the facts, circumstances and information available at the reporting date. FIN 48 is effective for fiscal years beginning after December 15, 2006. Adoption of this statement will not have a material effect on our financial position or results of operations.
Additionally, we may continue to expand our operations globally, which may increase our exposure to foreign exchange fluctuations.
• | There is evidence that certain former members of management and of the Board of Directors at the time determined grant dates and exercise prices in hindsight for certain stock option grants by (i) apparently selecting grant dates in hindsight to |
obtain more favorable exercise prices within a particular range of dates; and (ii) apparently re-pricing certain grants in hindsight based, in some cases, on the lowest closing market price within a particular range of dates to attain lower exercise prices. |
• | There is evidence that certain employees and one director were granted stock options prior to their start dates or election to the Board. |
• | Stock option terms were modified subsequent to certain grant dates. |
• | The Company’s stock option grant practices did not comply consistently with the Company’s applicable stock option plan. |
• | Board actions by written consents of all directors in lieu of a meeting (“unanimous written consents” or “UWCs”) were prepared, approved and executed significantly after the date indicated on the documents. |
• | Documentation for many grant events is incomplete or missing from the Company’s records. |
• | The documentary evidence suggests that certain members of management and the former Board, serving at various tenures, were involved or may have been aware of the retrospective selection of certain grant dates and/or modifications to stock option amounts subsequent to the recorded grant date. It is unclear whether these individuals were aware of the accounting implications or accounting treatment of the stock option grants at issue. In addition, based on the foregoing, the Audit Committee found that the review suggested that the one current director of the Company who at various times was on the Company’s Board during the Pre-Change of Control Period may have been aware of the retrospective selection of grant dates and modifications of grant terms with respect to grants he received during that period, but the Committee does not believe he understood the accounting consequences of those actions. The Audit Committee therefore concluded that the evidence did not establish that the director engaged in intentional misconduct. |
• | The Company understated its reported compensation expense for the Pre-Change of Control Period because of the improper measurement dates selected for certain options, and the Company granted “in the money” options without disclosing or accounting for them as such. |
• | The adoption of a policy requiring that all equity awards to executive officers and other employees be granted and priced according to a pre-determined, fixed schedule each year; |
• | Revisions and clarifications of the parameters of the Compensation Committee’s delegation of authority to our Chairman and Chief Executive Officer to make equity awards; |
• | Establishment of improved processes and procedures for the documentation of corporate actions approving the grant of stock options, including the use of unanimous written consents; and |
• | Improvements to our processes and procedures with respect to the timing of recording and processing equity awards. |
Name | | Age | | Position | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard E. Perlman | 61 | Chairman of the Board of Directors | ||||||||
James K. Price | 49 | President, Chief Executive Officer and Director | ||||||||
James A. Cochran | 60 | Senior Vice President and Chief Financial Officer | ||||||||
Paul P. Lehr | 60 | Vice President and Chief Operating Officer | ||||||||
Joseph T. McGrain | 60 | Vice President and President, Residential Oven Division | ||||||||
Stephen J. Beshara | 46 | Vice President and Chief Branding Officer | ||||||||
William A. Shutzer | 60 | Director |
Name | | Age | | Position | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Raymond H. Welsh | 75 | Director | ||||||||
J. Thomas Presby | 67 | Director | ||||||||
Sir Anthony Jolliffe | 69 | Director | ||||||||
James W. DeYoung | 64 | Director |
LLC’s Investment Banking Group. From September 1978 until February 1994, Mr. Shutzer was a managing director of Lehman Brothers and its predecessors. From March 2001 to October 2003 he was a director of PracticeWorks, Inc. Mr. Shutzer is currently a director of Tiffany & Co., CSK Auto, Inc., and Jupitermedia Corp. Mr. Shutzer received a B.A. from Harvard University and an M.B.A. from Harvard Business School.
copies of all Section 16(a) forms they file.
and the Company as a whole. Targets for the commercial business include EBITDA and revenue numbers for the year. Targets for the residential business and the residential marketing function are based on EBITDA.
Name and Principal Position | | Year | | Salary | | Bonus | | All Other Compensation | | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Richard E. Perlman | 2006 | $ | 393,608 | $ | 75,000 | $ | 35,862(1 | ) | $ | 504,470 | ||||||||||||
Chairman | ||||||||||||||||||||||
James K. Price | 2006 | $ | 393,608 | $ | 75,000 | $ | 23,130(2 | ) | $ | 491,738 | ||||||||||||
Chief Executive Officer | ||||||||||||||||||||||
James A. Cochran | 2006 | $ | 262,046 | $ | 25,000 | $ | 17,739(3 | ) | $ | 304,785 | ||||||||||||
Chief Financial Officer | ||||||||||||||||||||||
Paul P. Lehr | 2006 | $ | 200,000 | $ | 50,000 | $ | 19,682(4 | ) | $ | 269,682 | ||||||||||||
Chief Operating Officer | ||||||||||||||||||||||
Joseph t. McGrain | 2006 | $ | 200,000 | $ | 25,000 | — | $ | 225,000 | ||||||||||||||
President, Residential Oven Division |
(1) | Includes $16,130 paid in 2006 for contractual salary increases earned but not paid in 2004 and 2005 and amounts for automobile allowance, life and disability insurance premiums and credit card fees. |
(2) | Includes $16,130 paid in 2006 for contractual salary increases earned but not paid in 2004 and 2005. |
(3) | Includes $10,739 paid in 2006 for contractual salary increases earned but not paid in 2004 and 2005. |
(4) | Includes amounts for living expenses, life and disability insurance premiums and credit card fees. |
the first day of the month following the anniversary of the contracts, October 29, directly proportional to the percent change in the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, comparing the CPI for October for the current year against the CPI for October 2003. The Company failed to increase these salaries as required on November 1, 2004 and 2005. In 2006, the Company corrected the base salaries, as required, and paid these executives the amounts they should have received in salary from the previous adjustment periods, without interest. The “catch-up” payments are recorded in the table above under “All Other Compensation.” Messrs. Perlman and Price under their employment agreements had the right to be paid bonuses for 2004 in the amount of 2% of pre-tax profit that year. Both executives waived part of their contractual bonuses, accepting a bonus of 1.725% of pre-tax profit. Bonuses paid to Messrs. Perlman and Price for 2006 were discretionary bonuses awarded by the Compensation Committee.
Option Awards | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Number of Securities Underlying Unexercised Exercisable Options(1) | | Option Exercise Price | | Option Expiration Date | ||||||||
Richard E. Perlman, Chairman | 416,633 | $ | 5.25 | October 29, 2013 | ||||||||||
James K. Price, Chief Executive Officer | 416,666 | $ | 5.25 | October 29, 2013 | ||||||||||
James A. Cochran, Chief Financial Officer | 133,333 | $ | 5.25 | October 29, 2013 | ||||||||||
15,000 (2 | ) | 10.35 | May 3, 2015 | |||||||||||
Paul P. Lehr, Chief Operating Officer | 4,666 (3 | ) | $ | 10.20 | May 25, 2014 | |||||||||
40,000 (2 | ) | 10.35 | May 3, 2015 | |||||||||||
Joseph T. McGrain, President, Residential Oven Division | 133,333 (2 | ) | $ | 10.35 | May 3, 2015 |
(1) | The Company accelerated the vesting of all outstanding stock options on December 31, 2005, so all options listed are fully vested. While the executive officer may exercise the options at any time, each has agreed not to sell the underlying shares until the date the shares would have vested but for the Company’s acceleration of vesting at the end of 2005. The shares underlying options that are still subject to the purchase-and-hold provision of the stock option modification agreements are indicated by footnote. |
(2) | Shares are released from the purchase-and-hold provision described in footnote (1) in equal amounts every three months over a three-year period beginning May 3, 2005. |
(3) | All shares were released from the purchase-and-hold provision described in footnote (1) on or before May 25, 2007. |
Option Awards | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Number of Shares Acquired on Exercise | | Value Realized on Exercise | |||||||
Richard E. Perlman, Chairman | –0– | –0– | |||||||||
James K. Price, Chief Executive Officer | –0– | –0– | |||||||||
James A. Cochran, Chief Financial Officer | –0– | –0– | |||||||||
Paul P. Lehr, Chief Operating Officer | 20,000 | $107,000 | |||||||||
10,000 | 66,900 | ||||||||||
10,000 | 40,200 | ||||||||||
9,778 | 83,895 | ||||||||||
12,000 | 52,320 | ||||||||||
Joseph T. McGrain, President, Residential Oven Division | –0– | –0– | |||||||||
become fully vested. In addition, the executive may, during the six-month period following the change of control, resign and receive payment within five days of the lump-sum severance amounts described above. The employment agreements also provide for an additional, tax gross-up payment to be made by the Company to the executive in the event that, upon termination without cause or for “good reason” or in connection with a change in control, any payments made to the executive are subject to an excise tax under Section 4999 of the Internal Revenue Code. Finally, the employment agreements prohibit the executive from engaging in certain activities which compete with the Company, seeks to recruit its employees or disclose any of its trade secrets or otherwise confidential information.
Name | | Type of Severance Benefit | | Amount Payable | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard E. Perlman | Base Salary | $ | 1,194,438 | |||||||
Bonus | 75,000 | |||||||||
Benefits | 24,681 | |||||||||
IRC Sec. 4999 Gross Up | 446,015 | |||||||||
Total value: | $ | 1,740,134 | ||||||||
James K. Price | Base Salary | $ | 1,194,438 | |||||||
Bonus | 75,000 | |||||||||
Benefits | 33,426 | |||||||||
IRC Sec. 4999 Gross Up | 469,026 | |||||||||
Total value: | $ | 1,771,890 | ||||||||
James A. Cochran | Base Salary | $ | 795,201 | |||||||
Bonus | 25,000 | |||||||||
Benefits | 14,265 | |||||||||
IRC Sec. 4999 Gross Up | 310,914 | |||||||||
Total value: | $ | 1,145,380 | ||||||||
Paul P. Lehr | Base Salary | $ | 100,000 | |||||||
IRC Sec. 4999 Gross Up | 0 | |||||||||
Total value: | $ | 100,000 | ||||||||
Joseph T. McGrain | Base Salary | $ | 100,000 | |||||||
IRC Sec. 4999 Gross Up | 0 | |||||||||
Total value: | $ | 100,000 |
Raymond H. Welsh
James W. DeYoung
Name | | Fees Paid in Cash | | Restricted Stock Units Awards(1) | | Other Compensation | | Total | | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
J. Thomas Presby(3) | $6,250 | $7,484 | $13,734 | ||||||||||||||||
William A. Shutzer(4) | $6,250 | $7,484 | $13,734 | ||||||||||||||||
Raymond H. Welsh(5) | $6,250 | $5,345 | $11,595 | ||||||||||||||||
James W. DeYoung(6) | $6,250 | $5,345 | $39,938 | $51,533 | |||||||||||||||
Sir Anthony Jolliffe(7) | $6,250 | $5,345 | $39,938 | $51,533 |
(1) | The grant date fair value under SFAS 123R of the RSUs awarded was $12.83 per share on October 29, 2006. |
(2) | Compensation was in the form of 4,580 restricted stock units each, awarded on May 2, 2006 for consulting services, vesting monthly over one year, with a delayed payout until May 2, 2009. The grant date fair value under SFAS 123R was $13.08 per share. |
(3) | At year end, Mr. Presby held stock options on 68,332 shares, all of which were vested, and RSUs for 7,000 shares, none of which were vested. |
(4) | At year end, Mr. Shutzer held stock options on 68,332 shares, all of which were vested, and RSUs for 7,000 shares, none of which were vested. |
(5) | At year end, Mr. Welsh held stock options on 53,332 shares, all of which were vested, and RSUs for 5,000 shares, none of which were vested. |
(6) | At year end, Mr. DeYoung held stock options on 61,665 shares, all of which were vested, and RSUs for 9,580 shares, 2,671 of which were vested but not payable until May 2, 2009. |
(7) | At year end, Sir Anthony Jolliffe held stock options on 89,998 shares, all of which were vested, and RSUs for 9,580 shares, 2,671 of which were vested but not payable until May 2, 2009. |
Title of Class | | Name and Address of Beneficial Owner of Class | | Amount of Beneficial Ownership | | Percent of Class(1) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common | OvenWorks, LLLP 655 Madison Avenue Suite 1500 New York, NY 10021 | 3,601,575 | (2) | 12.32 | % | |||||||||
Common | Jeffrey B. Bogatin 888 Park Avenue New York, NY 10021 | 1,479,164 | (3) | 5.06 | % | |||||||||
Common | Steven Shapiro 360 Madison Avenue 21st Floor New York, NY 10017 | 1,460,100 | (4) | 5.04 | % | |||||||||
Common | Ergates Capital Management, LLC 1525-B The Greens Way Jacksonville Beach, FL 32250 | 2,840,937 | (5) | 9.72 | % |
Title of Class | | Name and Address of Beneficial Owner of Class | | Amount of Beneficial Ownership | | Percent of Class(1) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common | FMR Corp. 82 Devonshire Street Boston, MA 02109 | 4,292,573 | (6) | 14.68 | % | |||||||||
Common | Jack Silver SIAR Capital LLC 660 Madison Avenue New York, NY 10021 | 1,533,328 | (7) | 5.24 | % |
(1) | Based upon 29,240,175 shares outstanding on September 1, 2007. |
(2) | Shares of common stock held by OvenWorks were issued upon the conversion of shares of Series D Convertible Preferred Stock that were issued in connection with a private placement to OvenWorks. Oven Management, Inc. is the sole general partner of OvenWorks, LLLP. Richard Perlman, our Chairman, is the sole shareholder, sole director and President of Oven Management, Inc. and also a limited partner of OvenWorks. |
(3) | Based upon ownership reported in an amended Schedule 13D filed on December 21, 2006. |
(4) | Based upon ownership reported in a Schedule 13G filed on March 16, 2007. The Schedule 13G was filed by Steven Shapiro as well as the following related entities filing as a group: Bluenose Capital Fund (QP), L.P., Bluenose Master Fund, Ltd., Intrepid Capital Advisors, LLC and Intrepid Fund Management, LLC. |
(5) | Based upon ownership reported in an amended Schedule 13G filed on February 13, 2007. The amended Schedule 13G was filed by Ergates Capital Management, LLC as well as Jason S. Atkins and Ergon Capital, LP, which disclaims a “group” for these reporting purposes. |
(6) | Based upon ownership reported in a Schedule 13G filed on January 10, 2007. The Schedule 13G was filed by FMR Corp. as well as Edward C. Johnson 3d, Chairman of FMR Corp. |
(7) | Based upon ownership reported in a Schedule 13G filed on July 30, 2007. |
• | each of TurboChef’s directors; |
• | each of TurboChef’s named executive officers; and |
• | all of TurboChef’s directors and executive officers as a group. |
Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership (1) | | Percent of Class | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Richard E. Perlman | 5,204,935 | (2) | 17.6 | % | ||||||
James K. Price | 2,197,202 | (3) | 7.4 | % | ||||||
J. Thomas Presby | 192,072 | (4) | * | |||||||
William A. Shutzer | 1,889,563 | (5) | 6.4 | % | ||||||
Raymond H. Welsh | 301,983 | (6) | 1.0 | % | ||||||
Sir Anthony Jolliffe | 147,369 | (7) | * | |||||||
James W. DeYoung | 364,339 | (8) | 1.2 | % | ||||||
James A. Cochran | 310,287 | (9) | 1.1 | % | ||||||
Paul P. Lehr | 44,666 | (10) | * | |||||||
Joseph T. McGrain | 133,333 | (11) | * | |||||||
Stephen J. Beshara | 86,666 | (12) | * | |||||||
All current directors and executive officers as a group (10 persons) | 9,385,089 | (2)(13) | 30.4 | % |
* | Less than 1% |
(1) | Unless otherwise indicated, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Percentages herein assume a base of 29,240,175 shares of common stock outstanding as of September 1, 2007. |
(2) | Includes 416,633 shares of common stock issuable upon exercise of options and 3,601,575 shares of common stock (or 12.32%) currently owned by OvenWorks, LLLP, which is controlled by Mr. Perlman. Current directors and executive officers (or their affiliates) would have beneficial ownership of an aggregate of 2,081,130 shares of the Company’s common stock if OvenWorks distributed such shares to its partners. |
(3) | Includes 416,666 shares of common stock issuable upon exercise of options and 593,809 shares of common stock currently owned by OvenWorks, LLLP. |
(4) | Includes 68,333 shares of common stock issuable upon exercise of options, 3,500 shares of common stock issuable upon vesting of restricted stock units and 40,099 shares of common stock currently owned by OvenWorks, LLLP. |
(5) | Includes 68,333 shares of common stock issuable upon exercise of options, 3,500 shares of common stock issuable upon vesting of restricted stock units and 606,213 shares of common stock currently owned by OvenWorks, LLLP. |
(6) | Includes 53,333 shares of common stock issuable upon exercise of options, 2,500 shares of common stock issuable upon vesting of restricted stock units and 69,441 shares of common stock currently owned by OvenWorks, LLLP. |
(7) | Includes 89,999 shares of common stock issuable upon exercise of options, 2,500 shares of common stock issuable upon vesting of restricted stock units and 18,299 shares of common stock currently owned by OvenWorks, LLLP. |
(8) | Includes 61,666 shares of common stock issuable upon exercise of options, 2,500 shares of common stock issuable upon vesting of restricted stock units and 69,441 shares of common stock currently owned by OvenWorks, LLLP. |
(9) | Includes 148,333 shares of common stock issuable upon exercise of options and 90,019 shares of common stock currently owned by OvenWorks, LLLP. |
(10) | Shares issuable upon exercise of options. |
(11) | Shares issuable upon exercise of options. |
(12) | Shares issuable upon exercise of options. |
(13) | Includes 1,587,956 shares issuable upon exercise of options and 3,601,575 shares of common stock currently owned by OvenWorks, LLLP. |
Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 3,221,162 | $ | 8.54 | 1,690,496 | ||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||
Total | 3,221,162 | $ | 8.54 | 1,690,496 |
Transactions with Related Persons
Since the beginning of the Company’s last fiscal year, there has been no transaction or currently proposed transaction involving in excess of $120,000 with the Company in which any director or executive officer of the Company or immediate family member or five percent shareholder has a direct or indirect material interest. Any such transaction would be subject to review by the Board of Directors under the Company’s Guide for Business Conduct (or ethics code, a copy of which is available on the Company’s website), and the Company expects a director or executive officer contemplating such a transaction also would, if applicable, seek approval by a majority of disinterested directors under Section 144 of the Delaware General Corporation Law.
Independence of Members of the Board of Directors
Nasdaq Marketplace Rules require that a majority of the members of our Board of Directors be independent. Our Board of Directors has determined that all of the members of the Board who are not executive officers of the Company are independent, as that term is defined under Nasdaq’s Marketplace Rule 4200(a)(15). Therefore, Messrs. Presby, Shutzer, DeYoung, and Welsh and Sir Anthony Jolliffe, who comprise more than a majority of the seven-member Board, are independent under such rule. The independence standards of these rules also include independence requirements for committees of the Board of Directors. Our compensation, nominating and audit committees include members only from among our independent directors.
Nasdaq’s Marketplace Rule 4200(a)(15) defines an “independent director” as “a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” The Rule goes on to exclude certain persons, including a director who was employed by the Company during the last three years, accepted compensation from the Company in excess of $100,000 in any twelve consecutive month period within the last three years or who had various relationships with family members who had business relationships or various interlocking relationships with the Company. In addition to a review of any related party transactions, as would be disclosed above, the Board looks at information it has available to it about each individual director, such as responses to questionnaires, as well as its general knowledge of a director’s relationships with the Company, management personnel and other directors, and it assesses this information against the categories of excluded individuals under Nasdaq Marketplace Rule 4200(a)(15) to help it reach its determination of whether a director is independent. In reaching its determination that the directors identified above are independent, the Board considered the ownership interest of the directors in OvenWorks LLLP and the consulting arrangement between the Company and one of the directors.
Description | Page | |||||
---|---|---|---|---|---|---|
Reports of Independent Registered Public Accounting Firm | F-2 | |||||
Consolidated Balance Sheets as of December 31, 2006 and 2005 | F-6 | |||||
Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004 | F-7 | |||||
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2006, 2005 and 2004 | F-8 | |||||
Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004 | F-10 | |||||
Notes to Consolidated Financial Statements | F-11 |
Description | Page | |||||
---|---|---|---|---|---|---|
Schedule II—Valuation and Qualifying Accounts | S-1 |
Exhibit No. | Description | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
2.1 | — | Stock Purchase Agreement dated as of October 28, 2003 by and between the Registrant and OvenWorks, LLLP (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 10, 2003) | ||||||||
2.2 | — | Contribution Agreement, dated May 21, 2004 by and among the Registrant, Enersyst Development Center LLC and its members (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on May 28, 2004) | ||||||||
2.3 | — | Asset Purchase Agreement, dated September 12, 2005, among TurboChef Technologies, Inc., Global Appliance Technologies, Inc. and stockholders of Global Appliance Technologies (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 13, 2005) | ||||||||
3.1 | — | Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1.2 to the Registrant’s Registration Statement on Form SB-2, Registration No. 33-75008) | ||||||||
3.2 | — | Amendment to Certificate of Incorporation—Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, filed with the Commission on November 14, 2000) | ||||||||
3.3 | — | Amendment to Certificate of Incorporation—Certificate of Designation of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Commission on April 16, 2001) |
Exhibit No. | Description | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
3.4 | — | Amendment to Certificate of Incorporation—Certificate of Designation of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the Commission on May 15, 2002) | ||||||||
3.5 | — | Amendment to Certificate of Incorporation—Certificate of Designation of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3(i) to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 10, 2003) | ||||||||
3.6 | — | Certificate of Amendment to the Restated Certificate of Incorporation of TurboChef Technologies, Inc., as amended (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on July 20, 2004) | ||||||||
3.7 | — | Certificate of Amendment to the Restated Certificate of Incorporation of TurboChef Technologies, Inc., as amended (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2004) | ||||||||
3.8 | — | Restated By-Laws (incorporated by reference to Exhibit 3.2.2 to the Registrant’s Registration Statement on Form SB-2, Registration No. 33-75008) | ||||||||
4.1 | — | Specimen Common Stock certificate (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form SB-2, Registration No. 33-75008) | ||||||||
4.2 | — | Specimen Common Stock certificate (incorporated by reference to Exhibit 4.11 to the Registrant’s Registration Statement on Form S-3, Registration No. 333-121818) | ||||||||
4.3 | — | See Exhibits 3.1 through 3.8 for provisions of the Certificate of Incorporation and Bylaws of the Registrant defining the rights of holders of the Registrant’s Common Stock | ||||||||
10.1 | — | 1994 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.14.2 to the Registrant’s Registration Statement on Form SB-2, Registration No. 33-75008) | ||||||||
10.2* | — | Equipment Supplier Approval Agreement dated as of March 5, 2004 by and among the Registrant, Doctor’s Associates, Inc. and Independent Purchasing Cooperative, Inc. (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.3 | — | TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.4 | — | Form of Incentive Stock Option Agreement under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.5 | — | Form of Non-Qualified Stock Option Agreement under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.6 | — | Form of Non-Qualified Stock Option Agreement for Consultants under the 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.7 | — | Employment Agreement, dated as of February 9, 2004, by and between the Registrant and Richard E. Perlman (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) |
Exhibit No. | Description | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
10.8 | — | Employment Agreement, dated as of February 9, 2004, by and between the Registrant and James K. Price (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.9 | — | Employment Agreement, dated as of February 9, 2004, by and between the Registrant and James A. Cochran (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Commission on March 30, 2004) | ||||||||
10.10 | — | Preferred Unit Exchange Agreement, dated May 21, 2004, by and among the Registrant and the members of Enersyst (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on May 28, 2004) | ||||||||
10.11 | — | Amended and Restated Operating Agreement of Enersyst, dated May 21, 2004 (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, filed with the Commission on May 28, 2004) | ||||||||
10.12 | — | Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed with the Commission on May 12, 2004, as amended on November 22, 2004) | ||||||||
10.13 | — | Employment Agreement, dated as of September 14, 2004, by and between the Registrant and Paul P. Lehr (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 1, 2004) | ||||||||
10.14 | — | Credit Agreement dated as of February 28, 2005 among TurboChef Technologies, Inc., its subsidiaries and Bank of America, N.A. (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 3, 2005) | ||||||||
10.15 | — | Employment Agreement, effective as of April 25, 2005, by and between TurboChef Technologies, Inc. and Joseph T. McGrain (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on May 5, 2005) | ||||||||
10.16 | — | Restrictive Covenant Agreement, dated September 12, 2005, between TurboChef Technologies, Inc. and David H. McFadden (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 13, 2005) | ||||||||
10.17 | — | Restrictive Covenant Agreement, dated September 12, 2005, between TurboChef Technologies, Inc. and David A. Bolton (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 13, 2005) | ||||||||
10.18 | — | Second Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan | ||||||||
10.19 | — | Third Amendment to TurboChef Technologies, Inc. 2003 Stock Incentive Plan | ||||||||
10.20 | — | Form of Restricted Stock Unit award agreement for employees under the 2003 Stock Incentive Plan | ||||||||
10.21 | — | Form of Restricted Stock Unit award agreement for directors under the 2003 Stock Incentive Plan | ||||||||
23.1 | — | Consent of Independent Registered Public Accounting Firm | ||||||||
24.1 | — | Power of Attorney (see signature page) | ||||||||
31.1 | — | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
31.2 | — | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||||
32.1 | — | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Portions of these documents have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment of the omitted portions. |
TURBOCHEF TECHNOLOGIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
| Balance at Beginning of Year | | Charged to Costs and Expenses | | Charged to Other Accounts | | Deductions | | Balance at End of Year | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | |||||||||||||||||||||||
Allowance for Doubtful Accounts | |||||||||||||||||||||||
Year ended December 31, 2006 | $ | 177 | $ | 147 | $ | — | $ | (162 | ) | $ | 162 | ||||||||||||
Year ended December 31, 2005 | 197 | 98 | (48 | ) | (70 | ) | 177 | ||||||||||||||||
Year ended December 31, 2004 | 219 | 46 | 58 | (126 | ) | 197 | |||||||||||||||||
Deferred Income Tax Asset Valuation Allowance | |||||||||||||||||||||||
Year ended December 31, 2006 | 32,985 | 7,882 | — | — | 40,867 | ||||||||||||||||||
Year ended December 31, 2005 (As restated) (1) | 19,645 | 12,344 | 996 | — | 32,985 | ||||||||||||||||||
Year ended December 31, 2004 (As restated) (1) | 23,323 | — | — | (3,678 | ) | 19,645 |
(1) | See the “Explanatory Note” immediately preceding Part 1, Item 1, Part 1, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 3 of Notes to Consolidated Financial Statements in this Form 10-K |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on form 10-K for the year ended December 31, 2006 to be signed on its behalf by the undersigned, thereunto duly authorized on this 21st day of September, 2007.
| TURBOCHEF TECHNOLOGIES, INC. | |
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| By: /s/ James K. Price | |
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| James K. Price |
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| President and Chief Executive Officer |
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James K. Price and Richard E. Perlman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature |
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| Date |
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/s/ Richard E. Perlman |
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Richard E. Perlman |
| Chairman of the Board and Director |
| September 20, 2007 |
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/s/ James K. Price |
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James K. Price |
| Chief Executive Officer, President and Director (Principal Executive Officer) |
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September 20, 2007 |
/s/ James A. Cochran |
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James A. Cochran |
| Senior Vice President, Assistant Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) |
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September 20, 2007 |
/s/ William A. Shutzer |
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William A. Shutzer |
| Director |
| September 20, 2007 |
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/s/ Raymond H. Welsh |
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Raymond H. Welsh |
| Director |
| September 20, 2007 |
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/s/ J. Thomas Presby |
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J. Thomas Presby |
| Director |
| September 20, 2007 |
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/s/ James W. DeYoung |
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James W. DeYoung |
| Director |
| September 20, 2007 |
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/s/ Anthony Jolliffe |
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Sir Anthony Jolliffe |
| Director |
| September 20, 2007 |
Reports of Independent Registered Public Accounting Firm | F-2 | |||||
Consolidated Financial Statements: | ||||||
Balance Sheets as of December 31, 2006 and 2005 | F-4 | |||||
Statements of Operations for the years ended December 31, 2006, 2005 and 2004 | F-5 | |||||
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2006, 2005 and 2004 | F-6 | |||||
Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004 | F-8 | |||||
Notes to Financial Statements | F-9 |
TurboChef Technologies, Inc.
September 20, 2007
TurboChef Technologies, Inc.
September 20, 2007
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2006 | 2005 | ||||||||||
(As restated) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 19,675 | $ | 40,098 | |||||||
Accounts receivable, net of allowance of $162 and $177 | 11,001 | 7,314 | |||||||||
Other receivables | 2,771 | 2,003 | |||||||||
Inventory, net | 11,311 | 10,994 | |||||||||
Prepaid expenses | 2,128 | 724 | |||||||||
Total current assets | 46,886 | 61,133 | |||||||||
Property and equipment, net | 7,944 | 6,482 | |||||||||
Developed technology, net of accumulated amortization of $2,107 and $1,300 | 5,963 | 6,770 | |||||||||
Goodwill | 5,934 | 5,934 | |||||||||
Covenants not-to-compete, net of accumulated amortization of $726 and $166 | 4,874 | 5,434 | |||||||||
Other assets | 174 | 314 | |||||||||
Total assets | $ | 71,775 | $ | 86,067 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 9,200 | $ | 6,166 | |||||||
Other payables | — | 1,445 | |||||||||
Accrued expenses | 3,103 | 3,484 | |||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | 3,793 | 1,286 | |||||||||
Deferred revenue | 2,977 | 2,278 | |||||||||
Accrued warranty | 1,889 | 2,482 | |||||||||
Deferred rent | 247 | 247 | |||||||||
Total current liabilities | 21,209 | 17,388 | |||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | 3,550 | 2,363 | |||||||||
Deferred rent, non-current | 1,218 | 1,463 | |||||||||
Other liabilities | 93 | 81 | |||||||||
Total liabilities | 26,070 | 21,295 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $1 par value, authorized 5,000,000 shares, 0 shares issued | — | — | |||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 384 | 967 | |||||||||
Common stock, $.01 par value, authorized 100,000,000 shares; issued 29,197,145 and 28,624,247 shares at December 31, 2006 and 2005, respectively | 292 | 286 | |||||||||
Additional paid-in capital | 169,821 | 164,907 | |||||||||
Accumulated deficit | (124,792 | ) | (101,388 | ) | |||||||
Total stockholders’ equity | 45,705 | 64,772 | |||||||||
Total liabilities and stockholders’ equity | $ | 71,775 | $ | 86,067 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006 | 2005 | 2004 | |||||||||||||
(As restated) | (As restated) | ||||||||||||||
Revenues: | |||||||||||||||
Product sales | $ | 47,403 | $ | 50,239 | $ | 69,707 | |||||||||
Royalties and services | 1,266 | 2,010 | 1,187 | ||||||||||||
Total revenues | 48,669 | 52,249 | 70,894 | ||||||||||||
Costs and expenses: | |||||||||||||||
Cost of product sales | 31,929 | 43,532 | 44,047 | ||||||||||||
Research and development | 4,357 | 4,307 | 1,202 | ||||||||||||
Purchased research and development | 7,665 | 6,285 | — | ||||||||||||
Selling, general and administrative | 29,027 | 33,777 | 19,191 | ||||||||||||
Restructuring charges | (41 | ) | 621 | — | |||||||||||
Total costs and expenses | 72,937 | 88,522 | 64,440 | ||||||||||||
Operating (loss) income | (24,268 | ) | (36,273 | ) | 6,454 | ||||||||||
Other income (expense): | |||||||||||||||
Interest income | 1,300 | 1,536 | 169 | ||||||||||||
Interest expense and other | (436 | ) | (332 | ) | (8 | ) | |||||||||
864 | 1,204 | 161 | |||||||||||||
(Loss) income before income taxes | (23,404 | ) | (35,069 | ) | 6,615 | ||||||||||
Provision for income taxes | — | — | 301 | ||||||||||||
Net (loss) income | $ | (23,404 | ) | $ | (35,069 | ) | $ | 6,314 | |||||||
Per share data: | |||||||||||||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.81 | ) | $ | (1.25 | ) | $ | 0.52 | |||||||
Diluted | (0.81 | ) | (1.25 | ) | 0.25 | ||||||||||
Weighted average number of common shares outstanding | |||||||||||||||
Basic | 28,834,821 | 28,034,103 | 12,256,686 | ||||||||||||
Diluted | 28,834,821 | 28,034,103 | 25,626,215 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | | Amount | | Preferred Membership Units | | Shares | | Amount | | Additional Paid-in Capital | | Accumulated Deficit | ||||||||||||||||||
Balance, January 1, 2004 — As previously reported | — | — | — | 8,491,339 | $ | 85 | $ | 55,630 | $ | (61,956 | ) | ||||||||||||||||||||
Adjustments to opening stockholders’ equity | 10,677 | (10,677 | ) | ||||||||||||||||||||||||||||
Balance, January 1, 2004 — As restated | — | — | — | 8,491,339 | $ | 85 | $ | 66,307 | $ | (72,633 | ) | ||||||||||||||||||||
Net income — As restated | — | — | 6,314 | ||||||||||||||||||||||||||||
Issuance of preferred membership units | — | — | 6,351 | — | — | — | — | ||||||||||||||||||||||||
Conversion of Series D preferred stock | — | — | — | 14,217,666 | 142 | 12,463 | — | ||||||||||||||||||||||||
Compensation expense, primarily related to stock options granted for services — As restated | — | — | — | — | — | 3,478 | — | ||||||||||||||||||||||||
Exercise of options and warrants for common stock | — | — | — | 464,032 | 5 | 1,757 | — | ||||||||||||||||||||||||
Issuance of common stock in private placement, net of issuance costs | — | — | — | 1,151,209 | 11 | 9,996 | — | ||||||||||||||||||||||||
Cancellation of treasury shares and other | — | — | — | (11,088 | ) | — | (451 | ) | — | ||||||||||||||||||||||
Interest on notes receivable for stock issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance, December 31, 2004 — As restated | — | — | 6,351 | 24,313,158 | 243 | 93,550 | (66,319 | ) | |||||||||||||||||||||||
Net loss — As restated | — | — | — | — | — | — | (35,069 | ) | |||||||||||||||||||||||
Issuance of common stock in public offering, net of issuance costs | — | — | — | 2,925,000 | 29 | 54,810 | — | ||||||||||||||||||||||||
Issuance of common stock in exchange for Enersyst preferred membership units | — | — | (5,384 | ) | 518,032 | 5 | 5,379 | — | |||||||||||||||||||||||
Exercise of options and warrants for common stock | — | — | — | 807,278 | 8 | 3,064 | — | ||||||||||||||||||||||||
Issuance of common stock for acquisition of intangible assets | — | — | — | 60,838 | 1 | 992 | — | ||||||||||||||||||||||||
Proceeds from notes receivable for stock issuances | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Compensation expense, primarily related to stock options granted for services — As restated | — | — | — | — | — | 7,115 | — | ||||||||||||||||||||||||
Other | — | — | — | (59 | ) | — | (3 | ) | — | ||||||||||||||||||||||
Balance, December 31, 2005 — As restated | — | — | 967 | 28,624,247 | 286 | 164,907 | (101,388 | ) | |||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (23,404 | ) | |||||||||||||||||||||||
Issuance of common stock in exchange for Enersyst preferred membership units | — | — | (583 | ) | 56,093 | 1 | 582 | — | |||||||||||||||||||||||
Exercise of options and warrants for common stock | — | — | — | 342,106 | 3 | 2,171 | — | ||||||||||||||||||||||||
Issuance of common stock for acquisition of intangible assets | — | — | — | 169,365 | 2 | 1,871 | — | ||||||||||||||||||||||||
Compensation expense, primarily related to restricted stock granted for services | — | — | — | 5,334 | — | 290 | — | ||||||||||||||||||||||||
Balance, December 31, 2006 | — | — | 384 | 29,197,145 | $ | 292 | $ | 169,821 | $ | (124,792 | ) | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
| Notes Receivable For Stock Issuances | | Treasury Stock | | Total Stockholders’ Equity | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, January 1, 2004 — As previously reported | $ | (43 | ) | $ | (451 | ) | $ | (6,735 | ) | ||||||
Adjustments to opening stockholders’ equity | — | — | — | ||||||||||||
Balance, January 1, 2004 — As restated | (43 | ) | $ | (451 | ) | $ | (6,735 | ) | |||||||
Net income — As restated | — | — | 6,314 | ||||||||||||
Issuance of preferred membership units | — | — | 6,351 | ||||||||||||
Conversion of Series D preferred stock | — | — | 12,605 | ||||||||||||
Compensation expense, primarily related to stock options granted for services — As restated | — | — | 3,478 | ||||||||||||
Exercise of options and warrants for common stock | — | — | 1,762 | ||||||||||||
Issuance of common stock in private placement, net of issuance costs | — | — | 10,007 | ||||||||||||
Cancellation of treasury shares and other | — | 451 | — | ||||||||||||
Interest on notes receivable for stock issuances | (3 | ) | — | (3 | ) | ||||||||||
Balance, December 31, 2004 | (46 | ) | — | 33,779 | |||||||||||
Net loss — As restated | — | — | (35,069 | ) | |||||||||||
Issuance of common stock in public offering, net of issuance costs | — | — | 54,839 | ||||||||||||
Issuance of common stock in exchange for Enersyst preferred membership units | — | — | — | ||||||||||||
Exercise of options and warrants for common stock | — | — | 3,072 | ||||||||||||
Issuance of common stock for acquisition of intangible assets | — | — | 993 | ||||||||||||
Proceeds from notes receivable for stock issuances | 46 | — | 46 | ||||||||||||
Compensation expense, primarily related to stock options granted for services — As restated | — | — | 7,115 | ||||||||||||
Other | — | — | (3 | ) | |||||||||||
Balance, December 31, 2005 | — | — | 64,772 | ||||||||||||
Net loss | — | — | (23,404 | ) | |||||||||||
Issuance of common stock in exchange for Enersyst preferred membership units | — | — | — | ||||||||||||
Exercise of options and warrants for common stock | — | — | 2,174 | ||||||||||||
Issuance of common stock for acquisition of intangible assets | — | — | 1,873 | ||||||||||||
Compensation expense, primarily related to restricted stock granted for services | — | — | 290 | ||||||||||||
Balance, December 31, 2006 | $ | — | $ | — | $ | 45,705 | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Years Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006 | 2005 | 2004 | |||||||||||||
| | (As restated) | | (As restated) | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net (loss) income | $ | (23,404 | ) | $ | (35,069 | ) | 6,314 | ||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||||||||||||||
Purchased research and development | 7,665 | 6,285 | — | ||||||||||||
Depreciation and amortization | 3,854 | 2,796 | 1,052 | ||||||||||||
Non-cash interest | 391 | 203 | 5 | ||||||||||||
Non-cash equity compensation expense | 290 | 7,115 | 3,478 | ||||||||||||
Amortization of deferred rent | (244 | ) | (122 | ) | — | ||||||||||
Non-cash restructuring costs | — | 125 | — | ||||||||||||
Provision for doubtful accounts | 147 | 98 | 46 | ||||||||||||
Foreign exchange loss (gain) | 8 | 76 | (44 | ) | |||||||||||
Changes in operating assets and liabilities, net of effects of acquisition: | |||||||||||||||
Restricted cash | — | 3,196 | (3,196 | ) | |||||||||||
Accounts receivable | (3,834 | ) | 2,196 | (8,603 | ) | ||||||||||
Inventories | (1,102 | ) | (3,619 | ) | (6,822 | ) | |||||||||
Prepaid expenses and other assets | (2,140 | ) | (2,342 | ) | (136 | ) | |||||||||
Accounts payable | 1,581 | (2,311 | ) | 7,731 | |||||||||||
Accrued expenses and warranty | (1,023 | ) | 245 | 3,791 | |||||||||||
Deferred revenue | 699 | 940 | (27 | ) | |||||||||||
Net cash (used in) provided by operating activities | (17,112 | ) | (20,188 | ) | 3,589 | ||||||||||
Cash flows from investing activities: | |||||||||||||||
Acquisition of business, net of cash acquired | — | (192 | ) | (7,683 | ) | ||||||||||
Acquisition of intangible assets | (2,349 | ) | (7,292 | ) | — | ||||||||||
Purchase of property and equipment, net | (3,111 | ) | (3,098 | ) | (2,913 | ) | |||||||||
Other | — | 128 | (330 | ) | |||||||||||
Net cash used in investing activities | (5,460 | ) | (10,454 | ) | (10,926 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from the sale of common stock, net | — | 54,839 | 10,007 | ||||||||||||
Proceeds from the exercise of stock options and warrants | 2,174 | 3,072 | 1,762 | ||||||||||||
Payment of note payable | — | — | (380 | ) | |||||||||||
Payment of deferred loan costs | (25 | ) | (156 | ) | — | ||||||||||
Other | — | 43 | — | ||||||||||||
Net cash provided by financing activities | 2,149 | 57,798 | 11,389 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | (20,423 | ) | 27,156 | 4,052 | |||||||||||
Cash and cash equivalents at beginning of year | 40,098 | 12,942 | 8,890 | ||||||||||||
Cash and cash equivalents at end of year | $ | 19,675 | $ | 40,098 | $ | 12,942 | |||||||||
Supplemental disclosures of noncash activities: | |||||||||||||||
Noncash investing activity—landlord funded leasehold improvements | $ | — | $ | 1,832 | $ | — | |||||||||
Noncash investing and financing activity — liability recorded in connection with intangible assets | 5,792 | 3,600 | — | ||||||||||||
Noncash investing activity—issuance of common stock in exchange for intangible assets | 1,873 | 993 | — | ||||||||||||
Noncash financing activity—conversion of preferred stock to common stock | — | — | 12,605 | ||||||||||||
Noncash financing activity—issuance of preferred membership units exchangeable for TurboChef common stock in connection with Enersyst acquisition | — | — | 6,351 | ||||||||||||
Noncash financing activity—issuance of common stock in exchange for preferred membership units | 583 | 5,384 | — | ||||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||
Cash paid for income taxes | — | 236 | — | ||||||||||||
Cash paid for interest | 38 | 50 | — |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. | NATURE OF OPERATIONS AND GENERAL |
NOTE 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2006 | 2005 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Finished goods — ovens | $ | 4,154 | $ | 3,891 | ||||||
Demonstration inventory, net | 224 | 468 | ||||||||
Parts inventory, net | 6,933 | 6,635 | ||||||||
$ | 11,311 | $ | 10,994 |
deferred rent credit is included in other liabilities (current and long term) in the accompanying balance sheets and will be amortized as a reduction of rent expense over the term of the applicable lease.
| 2006 | | 2005 | | 2004 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | As restated | | As restated | ||||||||||
Numerator for basic and diluted earnings per share available to common stockholders: | ||||||||||||||
Net (loss) income applicable to common stockholders | $ | (23,404 | ) | $ | (35,069 | ) | $ | 6,314 | ||||||
Denominator: | ||||||||||||||
Denominator for basic (loss) income per share available to common Stockholders | ||||||||||||||
Weighted average common shares outstanding | 28,835 | 28,034 | 12,257 | |||||||||||
Effect of potentially dilutive securities | ||||||||||||||
Convertible preferred stock | — | — | 11,417 | |||||||||||
Preferred membership interests exchangeable for common stock | — | — | 375 | |||||||||||
Dilutive stock options and warrants | — | — | 1,577 | |||||||||||
Shares applicable to diluted (loss) income per share applicable to common stockholders | 28,835 | 28,034 | 25,626 |
| 2005 | | 2004 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| As restated | | As restated | |||||||
Net (loss) income applicable to common stockholders, as reported | $ | (35,069 | ) | $ | 6,314 | |||||
Add: Employee stock-based compensation expense | (6,936 | ) | (3,372 | ) | ||||||
Deduct: Employee stock-based compensation expense, net of forfeitures | (19,882 | ) | (6,975 | ) | ||||||
Pro forma net (loss) income applicable to common stockholders | $ | (48,015 | ) | $ | 2,711 | |||||
Net (loss) income applicable to common stockholders per share—basic: | ||||||||||
As reported | $ | (1.25 | ) | $ | 0.52 | |||||
Pro forma | (1.71 | ) | 0.22 | |||||||
Net (loss) income applicable to common stockholders per share—diluted: | ||||||||||
As reported | $ | (1.25 | ) | $ | 0.25 | |||||
Pro forma | (1.71 | ) | 0.11 |
| 2005 | | 2004 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Expected life (in years) | 2–3 | 2–3 | ||||||||
Volatility | 63 | % | 65–168% | |||||||
Risk free interest rate—options | 4.07–4.61% | 3.86–4.74% | ||||||||
Dividend yield | 0.0 | % | 0.0 | % | ||||||
Weighted average fair value of option grants — Black-Scholes model | $ | 6.54 | $ | 8.08 |
threshold. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Subsequent recognition, de-recognition, and measurement is based on management’s best judgment given the facts, circumstances and information available at the reporting date. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of this statement to have a material effect on the financial position or results of operations.
NOTE 3. | RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS |
date documents in the Company’s records show formal corporate action making the grant was taken. This appears to have been done, in the case of reporting persons, to make the grant date coincide with a specific event, such as the due date of applicable regulatory filings (i.e., Form 3 or Form 4), the appointment or re-election of a director or the purported date options were granted to non-officers. In many of these cases, we have determined that the correct measurement date is the date on which the Board took the action to approve the grant. However, we often had to make reasonable judgments based on the best available information about when the Board took such action. The review also identified instances in which awards to officers were made effective upon a future event, such as the commencement of employment and instances where the record suggests new employees were granted stock options prior to their start dates. In these cases, we determined that the date of the future event is the correct measurement date for such grants. The review also identified instances where stock option terms (amount, expiration, etc.) were modified subsequent to grant dates, where documents indicate grant dates were selected in hindsight (partly based on the timing of required Form 4 filings) to obtain more favorable exercise prices, and where evidence suggests that members of the Board and senior management re-priced grants subsequent to the award to obtain a lower exercise price. The selection of dates and prices in these instances appears to have been made in hindsight based on the lowest closing stock price within a particular range of dates. In all instances where documents were available to indicate a different measurement date than the one apparently used, the grants were re-measured. In connection with the application of these measurement principles for option grants to officers and directors of the first category, and after accounting for forfeitures, the Company has adjusted the measurement of compensation cost for options covering 2.3 million shares of common stock resulting in an incremental stock-based compensation expense of $7.4 million on a pre-tax basis over the respective awards’ vesting terms. Re-measurement of options of the first category covering 1.0 million shares granted to non-officers resulted in additional stock-based compensation expense of $2.4 million on a pre-tax basis over the awards’ vesting terms after accounting for forfeitures.
the Company changed its equity compensation programs to include acceleration of all unvested options as of December 31, 2005 and to cease awarding any more stock options. Consequently, 100% of the expense being recorded is in years prior to fiscal 2006. The additional stock-based compensation expense increased selling, general and administrative expenses in the affected periods. The adjustments did not affect TurboChef’s previously reported revenue, cash and cash equivalents or net working capital balances in any of the restated periods. The aggregate stock-based compensation charge of approximately $21.0 million recorded by the Company resulted in no deferred income tax benefits as the Company maintained a full valuation allowance against its deferred tax assets for the Review Period.
Fiscal Year | Expense | Cumulative Increase to Accumulated Deficit | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ 67 | |||||||
1995 | 83 | 150 | ||||||||
1996 | 589 | 739 | ||||||||
1997 | 1,561 | 2,300 | ||||||||
1998 | 2,237 | 4,537 | ||||||||
1999 | 1,657 | 6,194 | ||||||||
2000 | 1,299 | 7,493 | ||||||||
2001 | 1,267 | 8,760 | ||||||||
2002 | 693 | 9,453 | ||||||||
2003 | 1,224 | 10,677 | ||||||||
Subtotal | 10,677 | 10,677 | ||||||||
2004 | 3,365 | 14,042 | ||||||||
2005 | 6,915 | 20,957 | ||||||||
Total | $ | 20,957 | $20,957 |
Year ended December 31, 2005 | Year ended December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Product sales | $ | 50,239 | $ | — | $ | 50,239 | $ | 69,707 | $ | — | $ | 69,707 | |||||||||||||||
Royalties and services | 2,010 | — | 2,010 | 1,187 | — | 1,187 | |||||||||||||||||||||
Total revenues | 52,249 | — | 52,249 | 70,894 | — | 70,894 | |||||||||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||
Cost of product sales | 43,532 | — | 43,532 | 44,047 | — | 44,047 | |||||||||||||||||||||
Research and development expenses | 4,307 | — | 4,307 | 1,202 | — | 1,202 | |||||||||||||||||||||
Purchased research and development | 6,285 | — | 6,285 | — | — | — | |||||||||||||||||||||
Selling, general and administrative | 26,862 | 6,915 | 33,777 | 15,826 | 3,365 | 19,191 | |||||||||||||||||||||
Restructuring costs | 621 | — | 621 | — | — | — | |||||||||||||||||||||
Total Costs and Expenses | 81,607 | 6,915 | 88,522 | 61,075 | 3,365 | 64,440 |
Year ended December 31, 2005 | Year ended December 31, 2004 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Operating (loss) income | (29,358 | ) | (6,915 | ) | (36,273 | ) ) | 9,819 | (3,365 | ) | 6,454 | |||||||||||||||||
Other income (expense) | |||||||||||||||||||||||||||
Interest income | 1,536 | — | 1,536 | 169 | — | 169 | |||||||||||||||||||||
Interest expense and other | (332 | ) | — | (332 | ) | (8 | ) | — | (8 | ) | |||||||||||||||||
1,204 | — | 1,204 | 161 | — | 161 | ||||||||||||||||||||||
Loss (income) before income taxes | (28,154 | ) | (6,915 | ) | (35,069 | ) )) | 9,980 | (3,365 | ) | 6,615 | |||||||||||||||||
Provision for income taxes | — | — | — | (301 | ) | — | (301 | ) | |||||||||||||||||||
Net (loss) income | $ | (28,154 | ) | $ | (6,915 | ) | $ | (35,069 | ) | $ | 9,679 | $ | (3,365 | ) | $ | 6,314 | |||||||||||
Per share data: | |||||||||||||||||||||||||||
Net income per share: | |||||||||||||||||||||||||||
Basic | $ | (1.00 | ) | $ | (0.25 | ) | $ | (1.25 | ) | $ | 0.79 | $ | (0.27 | ) | $ | 0.52 | |||||||||||
Diluted | �� | (1.00 | ) | (0.25 | ) | (1.25 | ) | 0.37 | (0.12 | ) | 0.25 | ||||||||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||||||||||
Basic | 28,034,103 | — | 28,034,103 | 12,256,686 | — | 12,256,686 | |||||||||||||||||||||
Diluted | 28,034,103 | — | 28,034,103 | 26,142,101 | (515,886 | ) | 25,626,215 |
December 31, 2005 | | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | | Adjustments | | As restated | |||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 40,098 | $ | — | $ | 40,098 | |||||||||
Accounts receivable, net of allowance of $177 | 7,314 | — | 7,314 | ||||||||||||
Other receivables | 2,003 | — | 2,003 | ||||||||||||
Inventory, net | 10,994 | — | 10,994 | ||||||||||||
Prepaid expenses | 724 | — | 724 | ||||||||||||
Total current assets | 61,133 | — | 61,133 | ||||||||||||
Property and equipment, net | 6,482 | — | 6,482 | ||||||||||||
Developed technology, net of accumulated amortization of $1,300 | 6,770 | — | 6,770 | ||||||||||||
Goodwill | 5,934 | — | 5,934 | ||||||||||||
Covenants not-to-compete, net of accumulated amortization of $166 | 5,434 | — | 5,434 | ||||||||||||
Other assets | 314 | — | 314 | ||||||||||||
Total assets | $ | 86,067 | $ | — | $ | 86,067 | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 6,166 | $ | — | $ | 6,166 | |||||||||
Other payables | 1,445 | — | 1,445 | ||||||||||||
Accrued expenses | 3,484 | — | 3,484 |
December 31, 2005 | | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | | Adjustments | | As restated | ||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | 1,286 | — | 1,286 | |||||||||||||||
Deferred revenue | 2,278 | — | 2,278 | |||||||||||||||
Accrued warranty | 2,482 | — | 2,482 | |||||||||||||||
Deferred rent | 247 | — | 247 | |||||||||||||||
Total current liabilities | 17,388 | — | 17,388 | |||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | 2,363 | — | 2,363 | |||||||||||||||
Deferred rent, non-current | 1,463 | — | 1,463 | |||||||||||||||
Other liabilities | 81 | — | 81 | |||||||||||||||
Total liabilities | 21,295 | — | 21,295 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Preferred stock | — | — | — | |||||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 967 | — | 967 | |||||||||||||||
Common stock | 286 | — | 286 | |||||||||||||||
Additional paid-in capital | 143,950 | 20,957 | (A) | 164,907 | ||||||||||||||
Accumulated deficit | (80,431 | ) | (20,957 | )(A) | (101,388 | ) | ||||||||||||
Total stockholders’ equity | 64,772 | — | 64,772 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 86,067 | $ | — | $ | 86,067 |
(A) | Impact of a $21.0 million increase in additional paid-in capital with a corresponding increase in accumulated deficit related to stock-based compensation expense adjustments. |
Fiscal Year | Additional Paid-In Capital | Accumulated Deficit | Net Impact to Stockholders’ Equity | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1994 | $ | 67 | $ | (67 | ) | $ | — | |||||||||||
1995 | 83 | (83 | ) | — | ||||||||||||||
1996 | 589 | (589 | ) | — | ||||||||||||||
1997 | 1,561 | (1,561 | ) | — | ||||||||||||||
1998 | 2,237 | (2,237 | ) | — | ||||||||||||||
1999 | 1,657 | (1,657 | ) | — | ||||||||||||||
2000 | 1,299 | (1,299 | ) | — | ||||||||||||||
2001 | 1,267 | (1,267 | ) | — | ||||||||||||||
2002 | 693 | (693 | ) | — | ||||||||||||||
2003 | 1,224 | (1,224 | ) | — | ||||||||||||||
Subtotal | 10,677 | (10,677 | ) | — | ||||||||||||||
2004 | 3,365 | (3,365 | ) | — | ||||||||||||||
2005 | 6,915 | (6,915 | ) | — | ||||||||||||||
Total | $ | 20,957 | $ | (20,957 | ) | $ | — |
Year ended December 31, 2005 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||
Net loss | $ | (28,154 | ) | $ | (6,915 | ) | $ | (35,069 | ) | |||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||
Purchased research and development | 6,285 | — | 6,285 | |||||||||||||||
Depreciation and amortization | 2,796 | — | 2,796 | |||||||||||||||
Non-cash interest | 203 | — | 203 | |||||||||||||||
Non-cash compensation expense | 200 | 6,915 | 7,115 | |||||||||||||||
Amortization of deferred rent | (122 | ) | — | (122 | ) | |||||||||||||
Non-cash restructuring costs | 125 | — | 125 | |||||||||||||||
Provision for doubtful accounts | 98 | — | 98 | |||||||||||||||
Foreign exchange loss (gain) | 76 | — | 76 | |||||||||||||||
Changes in operation assets and liabilities, net of effects of acquisition: | — | |||||||||||||||||
Restricted cash | 3,196 | — | 3,196 | |||||||||||||||
Accounts receivable | 2,196 | — | 2,196 | |||||||||||||||
Inventories | (3,619 | ) | — | (3,619 | ) | |||||||||||||
Prepaid expenses and other assets | (2,342 | ) | — | (2,342 | ) | |||||||||||||
Accounts payable | (2,311 | ) | — | (2,311 | ) | |||||||||||||
Accrued expenses and warranty | 245 | — | 245 | |||||||||||||||
Deferred revenue | 940 | — | 940 | |||||||||||||||
Net cash used in operating activities | (20,188 | ) | — | (20,188 | ) | |||||||||||||
Cash flows from investing activities | ||||||||||||||||||
Acquisition of business, net of cash acquired | (192 | ) | — | (192 | ) | |||||||||||||
Acquisition of intangible assets | (7,292 | ) | — | (7,292 | ) | |||||||||||||
Purchase of property and equipment, net | (3,098 | ) | — | (3,098 | ) | |||||||||||||
Other | 128 | — | 128 | |||||||||||||||
Net cash used in investing activities | (10,454 | ) | — | (10,454 | ) | |||||||||||||
Cash flows from financing activities | ||||||||||||||||||
Proceeds from the sale of common stock, net | 54,839 | — | 54,839 | |||||||||||||||
Proceeds from the exercise of stock options and warrants | 3,072 | — | 3,072 | |||||||||||||||
Payment of note payable | — | — | — | |||||||||||||||
Payment of deferred loan costs | (156 | ) | — | (156 | ) | |||||||||||||
Other | 43 | — | 43 | |||||||||||||||
Net cash provided by financing activities | 57,798 | — | 57,798 | |||||||||||||||
Net increase in cash and cash equivalents | 27,156 | — | 27,156 | |||||||||||||||
Cash and cash equivalents at beginning of year | 12,942 | — | 12,942 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 40,098 | $ | — | $ | 40,098 |
Year ended December 31, 2004 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | |||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 9,679 | $ | (3,365 | ) | $ | 6,314 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Purchased research and development | — | — | — | ||||||||||||
Depreciation and amortization | 1,052 | — | 1,052 | ||||||||||||
Non-cash interest | 5 | — | 5 | ||||||||||||
Non-cash compensation expense | 113 | 3,365 | 3,478 |
Year ended December 31, 2004 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | ||||||||||||||||
Amortization of deferred rent | — | — | — | |||||||||||||||
Non-cash restructuring costs | — | — | — | |||||||||||||||
Provision for doubtful accounts | 46 | — | 46 | |||||||||||||||
Foreign exchange loss (gain) | (44 | ) | — | (44 | ) | |||||||||||||
Changes in operation assets and liabilities, net of effects of acquisition: | — | |||||||||||||||||
Restricted cash | (3,196 | ) | — | (3,196 | ) | |||||||||||||
Accounts receivable | (8,603 | ) | — | (8,603 | ) | |||||||||||||
Inventories | (6,822 | ) | — | (6,822 | ) | |||||||||||||
Prepaid expenses and other assets | (136 | ) | — | (136 | ) | |||||||||||||
Accounts payable | 7,731 | — | 7,731 | |||||||||||||||
Accrued expenses and warranty | 3,791 | — | 3,791 | |||||||||||||||
Deferred revenue | (27 | ) | — | (27 | ) | |||||||||||||
Net cash provided by operating activities | 3,589 | — | 3,589 | |||||||||||||||
Cash flows from investing activities | ||||||||||||||||||
Acquisition of business, net of cash acquired | (7,683 | ) | — | (7,683 | ) | |||||||||||||
Acquisition of intangible assets | — | — | — | |||||||||||||||
Purchase of property and equipment, net | (2,913 | ) | — | (2,913 | ) | |||||||||||||
Other | (330 | ) | — | (330 | ) | |||||||||||||
Net cash used in investing activities | (10,926 | ) | — | (10,926 | ) | |||||||||||||
Cash flows from financing activities | ||||||||||||||||||
Proceeds from the sale of common stock, net | 10,007 | — | 10,007 | |||||||||||||||
Proceeds from the exercise of stock options and warrants | 1,762 | — | 1,762 | |||||||||||||||
Payment of note payable | (380 | ) | — | (380 | ) | |||||||||||||
Payment of deferred loan costs | — | — | — | |||||||||||||||
Other | — | — | — | |||||||||||||||
Net cash provided by financing activities | 11,389 | — | 11,389 | |||||||||||||||
Net increase in cash and cash equivalents | 4,052 | — | 4,052 | |||||||||||||||
Cash and cash equivalents at beginning of year | 8,890 | — | 8,890 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 12,942 | $ | — | $ | 12,942 |
Year ended December 31, 2005 | Year Ended December 31, 2004 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | |||||||||||||||||||||||||
Net (loss) income applicable to common stockholders, as reported | $ | (28,154 | ) | $ | (6,915 | ) | $ | (35,069 | ) | $ | 9,679 | $ | (3,365 | ) | $ | 6,314 | ||||||||||||||
Add: Employee stock-based compensation expense | (100 | ) | (6,836 | ) | (6,936 | ) | — | (3,372 | ) | (3,372 | ) | |||||||||||||||||||
Deduct: Employee stock-based compensation expense, net of forfeitures | (13,837 | ) | (6,045 | ) | (19,882 | ) | (3,909 | ) | (3,066 | ) | (6,975 | ) | ||||||||||||||||||
Pro forma net (loss) income applicable to common stockholders | $ | (41,891 | ) | $ | (6,124 | ) | $ | (48,015 | ) | $ | 5,770 | $ | (3,059 | ) | $ | 2,711 | ||||||||||||||
Net (loss) income applicable to common stockholders per share — basic: | ||||||||||||||||||||||||||||||
As reported | $ | (1.00 | ) | $ | (0.25 | ) | $ | (1.25 | ) | $ | 0.79 | (0.27 | ) | $ | 0.52 |
Year ended December 31, 2005 | Year Ended December 31, 2004 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | |||||||||||||||||||||||||
Pro forma | (1.49 | ) | (0.22 | ) | (1.71 | ) | $ | 0.47 | (0.25 | ) | 0.22 | |||||||||||||||||||
Net (loss) income applicable to common stockholders per share — diluted: | ||||||||||||||||||||||||||||||
As reported | $ | (1.00 | ) | $ | (0.25 | ) | $ | (1.25 | ) | $ | 0.37 | $ | (0.12 | ) | $ | 0.25 | ||||||||||||||
Pro forma | (1.49 | ) | (0.22 | ) | (1.71 | ) | 0.22 | (0.11 | ) | 0.11 |
NOTE 4. | ACQUISITION OF INTANGIBLE ASSETS |
2006 | | 2005 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Estimated Useful Lives (years) | (In thousands) | ||||||||||||||
Leasehold improvements | 5–7.5 | $ | 3,044 | $ | 2,945 | ||||||||||
Furniture and fixtures | 5 | 1,369 | 1,465 | ||||||||||||
Equipment | 3–7 | 6,471 | 3,533 | ||||||||||||
10,884 | 7,943 | ||||||||||||||
Less accumulated depreciation | (2,940 | ) | (1,461 | ) | |||||||||||
$ | 7,944 | $ | 6,482 |
2006 | 2005 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Accrued compensation and benefits | $ | 1,378 | $ | 837 | ||||||
Professional and accounting fees | 432 | 1,333 | ||||||||
Sales and marketing | 549 | 791 | ||||||||
Accrued restructuring | — | 100 | ||||||||
Accrued taxes and other | 744 | 423 | ||||||||
Total accrued expenses | $ | 3,103 | $ | 3,484 |
this issue aggregated $9.6 million or $0.34 per share for 2005.
2006 | 2005 | 2004 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at beginning of year | $ | 2,482 | $ | 2,586 | $ | 928 | ||||||||
Provision for warranties | 3,301 | 3,997 | 3,296 | |||||||||||
Warranty expenditures | (3,894 | ) | (13,682 | ) | (1,189 | ) | ||||||||
Other adjustments to provision for warranties | — | 9,581 | (405 | ) | ||||||||||
Currency fluctuations | — | — | (44 | ) | ||||||||||
Balance at end of year | $ | 1,889 | $ | 2,482 | $ | 2,586 |
NOTE 10. | RESTRUCTURING CHARGES |
Lease Termination And Other Related Charges | |||||||
---|---|---|---|---|---|---|---|
Balance as of December 31, 2005 | $ | 100 | |||||
Payments | (59 | ) | |||||
Adjustments | (41 | ) | |||||
Balance as of December 31, 2006 | $ | — |
NOTE 11. | INCOME TAXES |
2006 | 2005 As restated | 2004 As restated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current: | ||||||||||||||
Federal | $ | — | $ | — | $ | 205 | ||||||||
State | — | — | 96 | |||||||||||
Total provision for income taxes | $ | — | $ | — | $ | 301 |
2006 | 2005 As restated | 2004 As restated | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected income tax (benefit) provision | $ | (7,957 | ) | $ | (11,923 | ) | $ | 2,249 | ||||||
State income tax (benefit), net of federal benefit | (489 | ) | (740 | ) | 44 | |||||||||
Other | (207 | ) | (89 | ) | 23 | |||||||||
Changes in deferred income tax asset valuation allowance | 8,653 | 12,752 | (2,015 | ) | ||||||||||
Provision for income taxes | $ | — | $ | — | $ | 301 |
2006 | 2005 As restated | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred income tax assets: | ||||||||||
Warranty reserves | $ | 682 | $ | 896 | ||||||
Allowance for doubtful accounts | 55 | 60 | ||||||||
Basis difference of other current assets | 470 | 800 | ||||||||
Total current deferred income tax assets | 1,207 | 1,756 | ||||||||
Net operating loss carryforwards | 29,229 | 22,547 | ||||||||
Basis difference of intangible assets | 6,279 | 4,172 | ||||||||
Basis difference of stock- based compensation | 3,366 | 4,110 | ||||||||
Research and development credit carryforwards | 832 | 579 | ||||||||
Federal alternative minimum tax credit carryforwards | 121 | 121 | ||||||||
Basis difference of other long-term assets | 57 | 115 | ||||||||
Total non-current deferred income tax assets | 39,884 | 31,644 | ||||||||
Total gross deferred income tax assets | 41,091 | 33,400 | ||||||||
Deferred income tax liabilities: | ||||||||||
Basis difference of other long-term assets | (224 | ) | (415 | ) | ||||||
Total gross deferred income tax liabilities | (224 | ) | (415 | ) | ||||||
Net deferred income tax asset | 40,867 | 32,985 | ||||||||
Less deferred income tax asset valuation allowance | (40,867 | ) | (32,985 | ) | ||||||
Net deferred income tax assets | $ | — | $ | — |
100% of the net deferred income tax assets at December 31, 2006 and 2005, respectively.
NOTE 12. | CREDIT FACILITY |
NOTE 13. | STOCKHOLDERS’ EQUITY |
| Number of Shares | | Weighted Average Exercise Price | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Options outstanding at January 1, 2004 | 2,894,973 | $ | 5.91 | |||||||
Options granted | 673,333 | 10.62 | ||||||||
Options exercised | (274,363 | ) | 4.01 | |||||||
Options expired or canceled | (172,317 | ) | 8.01 | |||||||
Options outstanding at December 31, 2004 | 3,121,626 | 6.97 | ||||||||
Options granted | 966,578 | 12.81 | ||||||||
Options exercised | (482,058 | ) | 4.38 | |||||||
Options expired or canceled | (82,219 | ) | 12.51 | |||||||
Options outstanding at December 31, 2005 | 3,523,927 | 8.79 | ||||||||
Options granted | — | — | ||||||||
Options exercised | (342,106 | ) | 6.35 | |||||||
Options expired or canceled | (99,935 | ) | 19.66 | |||||||
Options outstanding at December 31, 2006 | 3,081,886 | 8.71 | ||||||||
Options exercisable at December 31, 2004 | 1,246,848 | $ | 6.53 | |||||||
Options exercisable at December 31, 2005 | 3,523,927 | 8.79 | ||||||||
Options exercisable at December 31, 2006 | 3,081,886 | 8.71 |
Options Outstanding and Exercisable | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of Exercise Prices | | Outstanding as of December 31, 2006 | | Weighted Average Remaining Contractual Life | | Weighted Average Exercise Price | ||||||||||
$2.58–$5.25 | 1,425,160 | 6.75 | $ | 5.17 | ||||||||||||
$5.26–$10.35 | 1,038,582 | 7.70 | 9.94 | |||||||||||||
$10.36–$28.50 | 618,144 | 8.27 | 14.83 | |||||||||||||
3,081,886 | 7.38 | 8.71 |
| Number of RSUs | | Weighted Average Grant-Date Fair Value | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2006 | — | $ | — | |||||||
RSUs granted | 83,160 | 12.84 | ||||||||
RSUs vested | (5,334 | ) | 13.08 | |||||||
RSUs forfeited | — | — | ||||||||
Balance at December 31, 2006 | 77,826 | 12.82 |
NOTE 14. | COMMITMENTS AND CONTINGENCIES |
Year | ||||||
---|---|---|---|---|---|---|
2007 | $ | 1,194 | ||||
2008 | 1,130 | |||||
2009 | 956 | |||||
2010 | 613 | |||||
2011 | 613 | |||||
Thereafter | 613 | |||||
$ | 5,119 |
NOTE 15. | LITIGATION |
NOTE 16. | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) |
2006 | | First | | Second | | Third | | Fourth | | Fiscal Year | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total revenues | $ | 9,536 | $ | 10,494 | $ | 13,401 | $ | 15,238 | $ | 48,669 | ||||||||||||||||
Gross profit | 2,899 | 3,224 | 5,052 | 5,565 | 16,740 | |||||||||||||||||||||
Net loss | (4,932 | ) | (4,987 | ) | (10,668 | ) | (2,817 | ) | (23,404 | ) | ||||||||||||||||
Basic and diluted loss per share | $ | (0.17 | ) | $ | (0.17 | ) | $ | (0.37 | ) | $ | (0.10 | ) | $ | (0.81 | ) | |||||||||||
Number of shares used in the computation of basic and diluted loss per share | 28,665,275 | 28,765,080 | 28,835,787 | 29,060,089 | 28,834,821 |
2005 | | First | | Second | | Third | | Fourth | | Fiscal Year | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total revenues | $ | 20,403 | $ | 10,750 | $ | 11,814 | $ | 9,282 | $ | 52,249 | ||||||||||||
Gross profit | 7,912 | 1,220 | (2,705 | ) | 2,290 | 8,717 | ||||||||||||||||
Net income (loss) (as restated) | 683 | (6,868 | ) | (17,648 | ) | (11,236 | ) | (35,069 | ) | |||||||||||||
Basic income (loss) per share (as restated) | $ | 0.03 | $ | (0.24 | ) | $ | (0.62 | ) | $ | (0.39 | ) | $ | (1.25 | ) | ||||||||
Number of shares used in the computation of basic income (loss) per share | 26,589,785 | 28,193,611 | 28,525,088 | 28,598,014 | 28,034,103 | |||||||||||||||||
Diluted income (loss) per share (as restated) | $ | 0.02 | $ | $(0.24 | ) | $ | (0.62 | ) | $ | (0.39 | ) | $ | (1.25 | ) | ||||||||
Number of shares used in the computation of diluted income (loss) per share | 28,699,711 | 28,193,611 | 28,525,088 | 28,598,014 | 28,034,103 |
Quarter Ended March 31, 2005 | Quarter Ended June 30, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Revenues | $ | 20,403 | $ | — | $ | 20,403 | $ | 10,750 | $ | — | $ | 10,750 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||
Cost of product sales | 12,491 | — | 12,491 | 9,530 | — | 9,530 | |||||||||||||||||||||
Research and development expenses | 1,049 | — | 1,049 | 1,123 | — | 1,123 | |||||||||||||||||||||
Purchased research and development | — | — | — | — | — | — | |||||||||||||||||||||
Selling, general and administrative expenses | 5,584 | 838 | 6,422 | 6,265 | 1,002 | 7,267 | |||||||||||||||||||||
Total costs and expenses | 19,124 | 838 | 19,962 | 16,918 | 1,002 | 17,920 | |||||||||||||||||||||
Quarter Ended March 31, 2005 | Quarter Ended June 30, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Operating (loss) income | 1,279 | (838 | ) | 441 | (6,168 | ) | (1,002 | ) | (7,170 | ) | |||||||||||||||||
Interest expense and other | (21 | ) | — | (21 | ) | (104 | ) | — | (104 | ) | |||||||||||||||||
Interest income | 263 | — | 263 | 406 | — | 406 | |||||||||||||||||||||
Total other income | 242 | — | 242 | 302 | — | 302 | |||||||||||||||||||||
(Loss) income before taxes | 1,521 | (838 | ) | 683 | (5,866 | ) | (1,002 | ) | (6,868 | ) | |||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | |||||||||||||||||||||
Net (loss) income | 1,521 | (838 | ) | 683 | (5,866 | ) | (1,002 | ) | (6,868 | ) | |||||||||||||||||
Net (loss) income applicable to common stockholders | $ | 1,521 | $ | (838 | ) | $ | 683 | $ | (5,866 | ) | $ | (1,002 | ) | $ | (6,868 | ) | |||||||||||
Net (loss) income per share applicable to common stockholders: | |||||||||||||||||||||||||||
Basic | $ | 0.06 | $ | (0.03 | ) | $ | 0.03 | $ | (0.21 | ) | $ | (0.03 | ) | $ | (0.24 | ) | |||||||||||
Diluted | 0.05 | (0.03 | ) | 0.02 | (0.21 | ) | (0.03 | ) | (0.24 | ) | |||||||||||||||||
Shares used in computing net (loss) income per share: | |||||||||||||||||||||||||||
Basic | 26,590 | — | 26,590 | 28,194 | — | 28,194 | |||||||||||||||||||||
Diluted | 28,989 | (289 | ) | 28,700 | 28,194 | — | 28,194 |
Quarter Ended September 30, 2005 | Quarter Ended December 31, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Revenues | $ | 11,814 | $ | — | $ | 11,814 | $ | 9,282 | $ | — | $ | 9,282 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||
Cost of product sales | 14,519 | — | 14,519 | 6,992 | — | 6,992 | |||||||||||||||||||||
Research and development expenses | 953 | — | 953 | 1,182 | — | 1,182 | |||||||||||||||||||||
Purchased research and development | 6,285 | — | 6,285 | — | — | — | |||||||||||||||||||||
Selling, general and administrative expenses | 7,187 | 933 | 8,120 | 8,447 | 4,142 | 12,589 | |||||||||||||||||||||
Total costs and expenses | 28,944 | 933 | 29,877 | 16,621 | 4,142 | 20,763 | |||||||||||||||||||||
Operating (loss) income | (17,130 | ) | (933 | ) | (18,063 | ) | (7,339 | ) | (4,142 | ) | (11,481 | ) | |||||||||||||||
Interest expense and other | (69 | ) | — | (69 | ) | (138 | ) | — | (138 | ) | |||||||||||||||||
Interest income | 484 | — | 484 | 383 | — | 383 | |||||||||||||||||||||
Total other income | 415 | — | 415 | 245 | — | 245 | �� | ||||||||||||||||||||
(Loss) income before taxes | (16,715 | ) | (933 | ) | (17,648 | ) | (7,094 | ) | (4,142 | ) | (11,236 | ) | |||||||||||||||
Provision for income taxes | — | — | — | — | — | — | |||||||||||||||||||||
Net (loss) income | (16,715 | ) | (933 | ) | (17,648 | ) | (7,094 | ) | (4,142 | ) | (11,236 | ) | |||||||||||||||
Net (loss) income applicable to common stockholders | $ | (16,715 | ) | $ | (933 | ) | $ | (17,648 | ) | $ | (7,094 | ) | $ | (4,142 | ) | $ | (11,236 | ) | |||||||||
Net (loss) income per share applicable to common stockholders: | |||||||||||||||||||||||||||
Basic | $ | (0.59 | ) | $ | (0.03 | ) | $ | (0.62 | ) | $ | (0.25 | ) | $ | (0.14 | ) | $ | (0.39 | ) | |||||||||
Diluted | (0.59 | ) | (0.03 | ) | (0.62 | ) | (0.25 | ) | (0.14 | ) | (0.39 | ) | |||||||||||||||
Shares used in computing net (loss) income per share: | |||||||||||||||||||||||||||
Basic | 28,525 | — | 28,525 | 28,598 | — | 28,598 | |||||||||||||||||||||
Diluted | 28,525 | — | 28,525 | 28,598 | — | 28,598 |
March 31, 2006 | June 30, 2006 | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 33,227 | $ | — | $ | 33,227 | $ | 28,307 | $ | — | $ | 28,307 | ||||||||||||||||||
Accounts receivable, net of allowance | 6,186 | — | 6,186 | 6,079 | — | 6,079 | ||||||||||||||||||||||||
Other receivables | 1,972 | — | 1,972 | 1,945 | — | 1,945 | ||||||||||||||||||||||||
Inventory, net | 10,536 | — | 10,536 | 9,568 | — | 9,568 | ||||||||||||||||||||||||
Prepaid expenses | 830 | — | 830 | 742 | — | 742 | ||||||||||||||||||||||||
Total current assets | 52,571 | — | 52,571 | 46,641 | — | 46,641 | ||||||||||||||||||||||||
Property and equipment, net | 7,088 | — | 7,088 | 8,222 | — | 8,222 | ||||||||||||||||||||||||
Developed technology, net of accumulated amortization | 6,568 | — | 6,568 | 6,366 | — | 6,366 | ||||||||||||||||||||||||
Goodwill | 5,934 | — | 5,934 | 5,934 | — | 5,934 | ||||||||||||||||||||||||
Covenants not-to-compete, net of accumulated amortization | 5,294 | — | 5,294 | 5,154 | — | 5,154 | ||||||||||||||||||||||||
Other assets | 276 | — | 276 | 250 | — | 250 | ||||||||||||||||||||||||
Total assets | $ | 77,731 | $ | — | $ | 77,731 | $ | 72,567 | $ | — | $ | 72,567 | ||||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Accounts payable | $ | 4,420 | $ | — | $ | 4,420 | $ | 4,007 | $ | — | $ | 4,007 | ||||||||||||||||||
Other payables | 1,445 | — | 1,445 | 1,445 | — | 1,445 | ||||||||||||||||||||||||
Accrued expenses | 2,550 | — | 2,550 | 3,374 | — | 3,374 | ||||||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | 1,302 | — | 1,302 | 1,318 | — | 1,318 | ||||||||||||||||||||||||
Deferred revenue | 1,834 | — | 1,834 | 1,331 | — | 1,331 | ||||||||||||||||||||||||
Accrued warranty | 1,815 | — | 1,815 | 1,386 | — | 1,386 | ||||||||||||||||||||||||
Deferred rent | 247 | — | 247 | 247 | — | 247 | ||||||||||||||||||||||||
Total current liabilities | 13,613 | — | 13,613 | 13,108 | — | 13,108 | ||||||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | 2,395 | — | 2,395 | 2,428 | — | 2,428 | ||||||||||||||||||||||||
Deferred rent, non-current | 1,402 | — | 1,402 | 1,340 | — | 1,340 | ||||||||||||||||||||||||
Other liabilities | 85 | — | 85 | 89 | — | 89 | ||||||||||||||||||||||||
Total liabilities | 17,495 | — | 17,495 | 16,965 | — | 16,965 | ||||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | ||||||||||||||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 510 | — | 510 | 425 | — | 425 | ||||||||||||||||||||||||
Common stock | 287 | — | 287 | 288 | — | 288 | ||||||||||||||||||||||||
Additional paid-in capital | 144,802 | 20,957 | 165,759 | 145,239 | 20,957 | 166,196 | ||||||||||||||||||||||||
Accumulated deficit | (85,363 | ) | (20,957 | ) | (106,320 | ) | (90,350 | ) | (20,957 | ) | (111,307 | ) | ||||||||||||||||||
Total stockholders’ equity | 60,236 | — | 60,236 | 55,602 | — | 55,602 | ||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 77,731 | $ | — | $ | 77,731 | $ | 72,567 | $ | — | $ | 72,567 |
September 30, 2006 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | |||||||||||||
Assets | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 25,902 | $ | — | $ | 25,902 | |||||||||
Accounts receivable, net of allowance | 8,345 | — | 8,345 | ||||||||||||
Other receivables | 1,924 | — | 1,924 | ||||||||||||
Inventory, net | 10,249 | — | 10,249 | ||||||||||||
Prepaid expenses | 670 | — | 670 | ||||||||||||
Total current assets | 47,090 | — | 47,090 | ||||||||||||
Property and equipment, net | 8,224 | — | 8,224 | ||||||||||||
Developed technology, net of accumulated amortization | 6,165 | — | 6,165 | ||||||||||||
Goodwill | 5,934 | — | 5,934 | ||||||||||||
Covenants not-to-compete, net of accumulated amortization | 5,014 | — | 5,014 | ||||||||||||
Other assets | 199 | — | 199 | ||||||||||||
Total assets | $ | 72,626 | $ | — | $ | 72,626 | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 6,720 | $ | — | $ | 6,720 | |||||||||
Other payables | 900 | — | 900 | ||||||||||||
Accrued expenses | 3,294 | — | 3,294 | ||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | 6,057 | — | 6,057 | ||||||||||||
Deferred revenue | 2,073 | — | 2,073 | ||||||||||||
Accrued warranty | 1,521 | — | 1,521 | ||||||||||||
Deferred rent | 247 | — | 247 | ||||||||||||
Total current liabilities | 20,812 | — | 20,812 | ||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | 3,503 | — | 3,503 | ||||||||||||
Deferred rent, non-current | 1,279 | — | 1,279 | ||||||||||||
Other liabilities | 91 | — | 91 | ||||||||||||
Total liabilities | 25,685 | — | 25,685 | ||||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders’ equity | |||||||||||||||
Preferred stock | — | — | — | ||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 413 | — | 413 | ||||||||||||
Common stock | 290 | — | 290 | ||||||||||||
Additional paid-in capital | 147,256 | 20,957 | 168,213 | ||||||||||||
Accumulated deficit | (101,018 | ) | (20,957 | ) | (121,975 | ) | |||||||||
Total stockholders’ equity | 46,941 | — | 46,941 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 72,626 | $ | — | $ | 72,626 |
March 31, 2005 | June 30, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 65,863 | $ | — | $ | 65,863 | $ | 61,903 | $ | — | $ | 61,903 | |||||||||||||||
Restricted cash | 2,811 | — | 2,811 | 684 | — | 684 | |||||||||||||||||||||
Accounts receivable, net of allowance | 8,409 | — | 8,409 | 7,025 | — | 7,025 | |||||||||||||||||||||
Other receivables | 1,601 | — | 1,601 | 1,955 | — | 1,955 | |||||||||||||||||||||
Inventory, net | 9,186 | — | 9,186 | 10,711 | — | 10,711 | |||||||||||||||||||||
Prepaid expenses | 653 | — | 653 | 605 | — | 605 | |||||||||||||||||||||
Total current assets | 88,523 | — | 88,523 | 82,833 | — | 82,883 | |||||||||||||||||||||
Property and equipment, net | 3,605 | — | 3,605 | 6,212 | — | 6,212 | |||||||||||||||||||||
Developed technology, net of accumulated amortization | 7,375 | — | 7,375 | 7,173 | — | 7,173 | |||||||||||||||||||||
Goodwill | 5,912 | — | 5,912 | 5,934 | — | 5,934 | |||||||||||||||||||||
Covenants not-to-compete, net of accumulated amortization | — | — | — | — | — | — | |||||||||||||||||||||
Other assets | 405 | — | 405 | 445 | — | 445 | |||||||||||||||||||||
Total assets | $ | 105,820 | $ | — | $ | 105,820 | $ | 102,647 | $ | — | $ | 102,647 | |||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable | $ | 7,255 | $ | — | $ | 7,255 | $ | 6,306 | $ | — | $ | 6,306 | |||||||||||||||
Other payables | 1,445 | — | 1,445 | 1,445 | — | 1,445 | |||||||||||||||||||||
Accrued expenses | 2,777 | — | 2,777 | 2,150 | — | 2,150 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | — | — | — | — | — | — | |||||||||||||||||||||
Deferred revenue | 369 | — | 369 | 299 | — | 299 | |||||||||||||||||||||
Accrued warranty | 2,818 | — | 2,818 | 3,345 | — | 3,345 | |||||||||||||||||||||
Deferred rent | — | — | — | 247 | — | 247 | |||||||||||||||||||||
Total current liabilities | 14,664 | — | 14,664 | 13,792 | — | 13,792 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | — | — | — | — | — | — | |||||||||||||||||||||
Deferred rent, non-current | — | — | — | — | — | — | |||||||||||||||||||||
Other liabilities | 73 | — | 73 | 1,657 | — | 1,657 | |||||||||||||||||||||
Total liabilities | 14,737 | — | 14,737 | 15,449 | — | 15,449 | |||||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||||||
Stockholders’ equity | |||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 972 | — | 972 | 967 | — | 967 | |||||||||||||||||||||
Common stock | 281 | — | 281 | 285 | — | 285 | |||||||||||||||||||||
Additional paid-in capital | 140,586 | 14,880 | 155,466 | 142,568 | 15,882 | 158,450 | |||||||||||||||||||||
Accumulated deficit | (50,756 | ) | (14,880 | ) | (65,636 | ) | (56,622 | ) | (15,882 | ) | (72,504 | ) | |||||||||||||||
Total stockholders’ equity | 91,083 | — | 91,083 | 87,198 | — | 87,198 | |||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 105,820 | $ | — | $ | 105,820 | $ | 102,647 | $ | — | $ | 102,647 |
September 30, 2005 | December 31, 2005 | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported | Adjustments | As restated | As previously reported | Adjustments | As restated | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 46,656 | $ | — | $ | 46,656 | $ | 40,098 | $ | — | $ | 40,098 | |||||||||||||||
Restricted cash | — | — | — | — | — | — | |||||||||||||||||||||
Accounts receivable, net of allowance | 8,578 | — | 8,578 | 7,314 | — | 7,314 | |||||||||||||||||||||
Other receivables | 2,052 | — | 2,052 | 2,003 | — | 2,003 | |||||||||||||||||||||
Inventory, net | 11,732 | — | 11,732 | 10,994 | — | 10,994 | |||||||||||||||||||||
Prepaid expenses | 501 | — | 501 | 724 | — | 724 | |||||||||||||||||||||
Total current assets | 69,519 | — | 69,519 | 61,133 | — | 61,133 | |||||||||||||||||||||
Property and equipment, net | 6,476 | — | 6,476 | 6,482 | — | 6,482 | |||||||||||||||||||||
Developed technology, net of accumulated amortization | 6,972 | — | 6,972 | 6,770 | — | 6,770 | |||||||||||||||||||||
Goodwill | 5,934 | — | 5,934 | 5,934 | — | 5,934 | |||||||||||||||||||||
Covenants not-to-compete, net of accumulated amortization | 1,991 | — | 1,991 | 5,434 | — | 5,434 | |||||||||||||||||||||
Other assets | 318 | — | 318 | 314 | — | 314 | |||||||||||||||||||||
Total assets | $ | 91,210 | $ | — | $ | 91,210 | $ | 86,067 | $ | — | $ | 86,067 | |||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable | $ | 5,853 | $ | — | $ | 5,853 | $ | 6,166 | $ | — | $ | 6,166 | |||||||||||||||
Other payables | 1,445 | — | 1,445 | 1,445 | — | 1,445 | |||||||||||||||||||||
Accrued expenses | 3,548 | — | 3,548 | 3,484 | — | 3,484 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired | — | — | — | 1,286 | — | 1,286 | |||||||||||||||||||||
Deferred revenue | 1,668 | — | 1,668 | 2,278 | — | 2,278 | |||||||||||||||||||||
Accrued warranty | 5,302 | — | 5,302 | 2,482 | — | 2,482 | |||||||||||||||||||||
Deferred rent | 247 | — | 247 | 247 | — | 247 | |||||||||||||||||||||
Total current liabilities | 18,063 | — | 18,063 | 17,388 | — | 17,388 | |||||||||||||||||||||
Future installments due on covenants not-to-compete and additional consideration for assets acquired, non-current | — | — | — | 2,363 | — | 2,363 | |||||||||||||||||||||
Deferred rent, non-current | 1,524 | — | 1,524 | 1,463 | — | 1,463 | |||||||||||||||||||||
Other liabilities | 77 | — | 77 | 81 | — | 81 | |||||||||||||||||||||
Total liabilities | 19,664 | — | 19,664 | 21,295 | — | 21,295 | |||||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||||||
Stockholders’ equity | |||||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||||||
Preferred membership units exchangeable for shares of TurboChef common stock | 967 | — | 967 | 967 | — | 967 | |||||||||||||||||||||
Common stock | 286 | — | 286 | 286 | — | 286 | |||||||||||||||||||||
Additional paid-in capital | 143,630 | 16,815 | 160,445 | 143,950 | 20,957 | 164,907 | |||||||||||||||||||||
Accumulated deficit | (73,337 | ) | (16,815 | ) | (90,152 | ) | (80,431 | ) | (20,957 | ) | (101,388 | ) | |||||||||||||||
Total stockholders’ equity | 71,546 | — | 71,546 | 64,772 | — | 64,772 | |||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 91,210 | $ | — | $ | 91,210 | $ | 86,067 | $ | — | $ | 86,067 |
NOTE 17. | SEGMENT INFORMATION AND REVENUE BY GEOGRAPHIC AREA |
SEGMENT | | 2006 | | 2005 (As restated) | | 2004 (As restated) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Commercial: | ||||||||||||||
Revenues | $ | 48,669 | $ | 52,249 | $ | 70,894 | ||||||||
Depreciation and amortization | 2,806 | 2,035 | 1,036 | |||||||||||
Net (loss) income | (488 | ) | (9,433 | )(1) | 16,500(1 | ) | ||||||||
Residential: | ||||||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||||
Depreciation and amortization | 240 | — | — | |||||||||||
Net loss | (7,030 | ) | (5,142 | )(1) | (80 | ) | ||||||||
Corporate: | ||||||||||||||
Revenues | $ | — | $ | — | $ | — | ||||||||
Depreciation and amortization | 808 | 761 | 16 | |||||||||||
Net loss | (15,886 | ) | (20,494 | )(1) | (10,106 | )(1) | ||||||||
Totals: | ||||||||||||||
Revenues | $ | 48,669 | $ | 52,249 | $ | 70,894 | ||||||||
Depreciation and amortization | 3,854 | 2,796 | 1,052 | |||||||||||
Net loss | (23,404 | ) | (35,069 | )(1) | 6,314 | (1) |
(1) | See the “Explanatory Note” immediately preceding Part 1, Item 1, Part 1, Item 6, “Selected Financial Data”, Part 1, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of the Notes to Consolidated Financial Statements in this Form 10-K. |
REGION | 2006 | 2005 | 2004 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
North America | $ | 40,166 | $ | 41,031 | $ | 69,182 | ||||||||
Europe and Asia/Pacific | 8,503 | 11,218 | 1,712 | |||||||||||
Totals | $ | 48,669 | $ | 52,249 | $ | 70,894 |
NOTE 18. | SUBSEQUENT EVENTS |