NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CYBEROPTICS CORPORATION
NOTE 1 – BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
We are a leading global developer and manufacturer of high precision sensing technology solutions. Our sensors are used in general purpose metrology and 3D scanning, surface mount technology (SMT) and semiconductor markets to significantly improve yields and productivity.
Principles of Consolidation
The consolidated financial statements include the accounts of CyberOptics Corporation and its wholly-owned subsidiaries. In these notes to the consolidated financial statements, these companies are collectively referred to as “CyberOptics,” “we,” “us,” or “our.” All significant inter-company accounts and transactions have been eliminated in consolidation.
Segment Reporting
We operate in a single reportable segment that includes the design, development and manufacture of high-precision sensing technology solutions.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of
90 days
or less to be cash equivalents. Cash and cash equivalents consist of funds maintained in demand deposit accounts, money market accounts, corporate debt instruments and U.S. government backed obligations. Cash and cash equivalent balances, at times, may exceed federally insured limits.
Marketable Securities
All marketable securities are classified as available-for-sale and consist of U.S. government and agency backed obligations, certificates of deposit, corporate debt instruments, asset backed securities or equity securities. Marketable securities are classified as short-term or long-term in the consolidated balance sheet based on their maturity date and expectations regarding sales.
Available-for-sale securities are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders’ equity until realized. These fair values are primarily determined using quoted market prices. The carrying amounts of securities, for purposes of computing unrealized gains and losses, are determined by specific identification. The cost of securities sold is also determined by specific identification.
We monitor the carrying value of our investments compared to their fair value to determine whether an other-than-temporary impairment has occurred. If a decline in fair value is determined to be other-than-temporary, an impairment charge related to that specific investment is recorded in current operations.
Cash and marketable securities held by foreign subsidiaries totaled
$614,000
at
December 31, 2016
and
$701,000
at
December 31, 2015
.
Inventories
Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out (FIFO) method. Appropriate consideration is given to deterioration, obsolescence, and other factors in evaluating net realizable value. Demonstration inventories are stated at cost less accumulated amortization, generally based on a
36
month useful life.
Accumulated amortization for demonstration inventories totaled
$1.1 million
at
December 31, 2016
and
$1.3 million
at
December 31, 2015
.
Accounts Receivable and Allowance for Doubtful Accounts
We extend unsecured credit to our customers in the normal course of business. Allowances for doubtful accounts are maintained for estimated losses resulting from the inability of our customers to make required payments. In making the determination of the appropriate allowance for doubtful accounts, we consider specific accounts, historical write-offs, changes in customer relationships and credit worthiness and concentrations of credit risk. Specific accounts receivable are written-off once a determination is made that the account is uncollectible.
Equipment and Leasehold Improvements
Equipment and leasehold improvements are stated at cost. Significant additions or improvements extending asset lives are capitalized, while repairs and maintenance are charged to expense as incurred. In-progress costs are capitalized with depreciation beginning when assets are placed in service. Depreciation is recorded using the straight-line method over the estimated useful lives of the equipment, ranging from
one
to
seven years
. Leasehold improvements are amortized using the straight-line method over the shorter of the asset useful life or the underlying lease term, ranging from
one
to
eight
years. Gains or losses on dispositions are included in current operations.
Business Combinations
We recognize separately from goodwill the fair value of the assets acquired and the liabilities assumed at the acquisition date. Goodwill is measured as the excess of consideration transferred over the acquisition date fair value of the assets acquired and liabilities assumed. Assets acquired include tangible and intangible assets. We determine the value and useful lives of equipment, leasehold improvements and purchased intangible assets with the assistance of an independent third-party valuation firm using certain estimates and assumptions.
While we use estimates and assumptions that we believe are reasonable as a part of the purchase price allocation process to accurately value the assets acquired and the liabilities assumed at the acquisition date, the estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to
one
year from the acquisition date, we may record adjustments to the fair value of the assets acquired and the liabilities assumed based on new information about facts and circumstances that existed as of the acquisition date. Any such adjustments would be recorded as an offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair values, whichever comes first, any subsequent adjustments would be recorded in our consolidated statements of operations.
Goodwill
Goodwill represents the excess of purchase price over the fair value of net assets acquired in a business combination. We evaluate the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that indicate goodwill might be impaired. We have determined that we have
one
reporting unit. When we determine that our goodwill might be impaired, we test for impairment by comparing our fair value, as determined based on our future estimated discounted cash flows, to our net book value.
Patents
Patents consist of legal and patent registration costs for protection of our proprietary technology. We amortize patent costs on a straight-line basis, based upon their estimated life.
Long Lived Assets
Intangible assets subject to amortization and other long lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss would be recognized when future undiscounted cash flows expected to result from use of the asset and eventual disposition are less than the carrying amount.
Revenue Recognition
Revenue from all customers, including distributors, is recognized when all significant contractual obligations have been satisfied, pricing is fixed and determinable and collection of the resulting receivable is reasonably assured. Generally, product revenues are recognized upon shipment under Ex-works terms, and include shipping and handling costs. Revenue from services is recognized as work is performed. Taxes collected from customers and remitted to governmental authorities are excluded from revenue on the net basis of accounting. Estimated returns and warranty costs are recorded at the time of sale. Sales of some surface mount technology (SMT) system products may require customer acceptance due to performance or other acceptance criteria included in the terms of sale. For these SMT product sales, revenue is recognized at the time of customer acceptance. Our multiple deliverable arrangements typically include the sale of an SMT inspection system or 3D scanning solution, related installation and training, and in some cases, an extended warranty. Revenue from installation and training are recognized as the services are provided. Revenue from extended warranties is recognized ratably over the warranty period.
When a sale involves multiple elements, revenue is allocated to each respective element at inception of an arrangement using the relative selling price method. Selling price is determined based on a selling price hierarchy, consisting of vendor specific objective evidence (VSOE), third party evidence or estimated selling price. Management’s best estimate of the selling price of an SMT machine and 3D scanning solution is based on the cost of the product and a reasonable margin based on geographic location and competitive market conditions. We use VSOE to establish fair value for extended warranty, installation and training services. If VSOE is not available to establish fair value for extended warranty, installation and training services, we estimate a selling price based on the cost-build-up for the particular service and a reasonable gross margin. Costs related to products delivered are recognized in the period revenue is recognized. Cost of revenues consists primarily of direct labor, manufacturing overhead, materials and components and excludes amortization of intangible assets.
Foreign Currency Translation
Financial position and results of operations of our international subsidiaries are measured using local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect at each fiscal year-end. Statements of operations accounts are translated at the average rates of exchange prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a cumulative translation adjustment in stockholders’ equity.
Foreign Currency Transactions
Foreign currency transaction gains and losses are included in interest income and other in the statement of operations. We recognized a foreign currency transaction gain of
$207,000
in
2016
and
$103,000
in
2015
.
Research and Development
Research and development (R&D) costs, including software development, are expensed when incurred. Software development costs are required to be expensed until the point that technological feasibility and proven marketability of the product are established; costs otherwise capitalizable after such point also are expensed because they are insignificant. All other R&D costs are expensed as incurred. R&D expenses consist primarily of salaries, project materials, contract labor and other costs associated with ongoing product development and enhancement efforts.
Derivatives and Hedging
We may enter into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies associated with our subsidiary in Singapore. These transactions are designated as cash flow hedges and are recorded in the accompanying consolidated balance sheet at fair value. The effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Cash flows from derivative instruments are classified in the consolidated statement of cash flows in the same category as the cash flows from the items subject to designated hedge relationships.
Advertising Costs
We expense all advertising costs as incurred. Advertising expense incurred was
$356,000
in
2016
and
$410,000
in
2015
.
Warranty Costs
We provide for the estimated cost of product warranties which cover products for periods ranging from
one
to
three years
at the time revenue is recognized.
Income Taxes
We evaluate uncertain tax positions using the “more likely than not” threshold (i.e., a likelihood of occurrence greater than fifty percent). The recognition threshold is met when an entity concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are classified as a gross unrecognized tax benefit until the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
Only the portion of the unrecognized tax benefit that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g., resolution due to the expiration of the statute of limitations) or are not expected to be paid within one year are not classified as current. It is our policy to record estimated interest and penalties as income tax expense and tax credits as a reduction in income tax expense.
Deferred income taxes are recorded to reflect the tax consequences in future years of differences between the financial reporting and tax bases of assets and liabilities. Income tax expense is the sum of the tax currently payable and the change in the deferred tax assets and liabilities during the period, excluding changes in deferred tax assets recorded to equity and goodwill. Valuation allowances are established when, in the opinion of management, there is uncertainty that some portion or all of the deferred tax assets will not be realized. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on all positive and negative evidence.
Net Income (Loss) Per Share
Basic net income (loss) per basic share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Net income per diluted share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of common shares to be issued upon exercise of stock options, vesting of restricted stock units and from purchases of shares under our employee stock purchase plan, as calculated using the treasury stock method. All common equivalent shares are excluded from the calculation of net loss per diluted share due to their anti-dilutive effect.
Fair Value of Financial Instruments
The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other liabilities approximate their related fair values due to the short-term maturities of these instruments.
Stock-Based Compensation
All equity-based payments to employees, including grants of employee stock options, are required to be recognized as an expense in our consolidated statements of operations based on the grant date fair value of the award. We utilize the straight-line method of expense recognition over the award’s service period for our graded vesting options. The fair value of stock options has been determined using the Black-Scholes model. The compensation expense recognized for all equity based awards is net of estimated forfeitures, which is based on historical data. We have classified equity based compensation within our consolidated statement of operations in the same manner as our cash based employee compensation costs. We elected to use the alternative transition guidance known as the “short-cut method” to determine our pool of windfall tax benefits at January 1, 2006.
See Note 6 to the consolidated financial statements for additional information on stock-based compensation.
Related Party Transactions
One of our board members serves as the Chief Executive Officer of Key Tronic Corporation. Our sales to Key Tronic Corporation totaled
$556,000
in 2016 and
$82,000
in 2015.
Recent Accounting Developments
In January 2017, the FASB issued guidance on simplifying the test for goodwill impairment (ASU No. 2017-04,
Simplifying the Test for Goodwill Impairment)
. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. The new guidance eliminates the requirement to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The new guidance is to be applied prospectively to impairment tests beginning January 1, 2020, with early adoption permitted. We would apply this guidance to applicable impairment tests after the adoption date.
In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on the recognition of revenue from contracts with customers (Accounting Standards Update (ASU) No. 2014-09,
Revenue from Contracts with Customers)
. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The FASB has delayed the effective date of the standard by one year to January 1, 2018, with early adoption permitted as of the original effective date of January 1, 2017. We have performed a review of the requirements of the new guidance and have identified which of our revenue streams will be within the scope of ASU 2014-09. We are continuing to evaluate the impact of the new guidance on our consolidated financial statements, and anticipate we will expand our consolidated financial statement disclosures in order to comply with the new ASU. We presently anticipate that we will adopt the new standard retrospectively to each prior reporting period presented.
In March 2016, the FASB issued guidance on simplifying the accounting for stock compensation (ASU No. 2016-09,
Improvements to Employee Share-Based Payment Accounting
). The guidance impacts the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the consolidated statement of cash flows. For U.S. public companies, the updated guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We presently have excess tax benefits from stock option exercises that are not recognized because current taxes payable have not been reduced. Under the new guidance, an entity recognizes excess tax benefits regardless of whether or not they reduce taxes payable in the current period. The new guidance also requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the statement of operations. Stock compensation expense is currently based on the number of awards that are expected to vest in the future. Under the new guidance, we intend to account for stock option forfeitures when they occur. Changes related to the recognition of excess tax benefits and stock option forfeitures should be applied using a modified retrospective approach by recording a cumulative effect adjustment to equity at the beginning of the adoption period. On January 1, 2017, we recorded a $256,000 credit to equity for the cumulative effect adjustment resulting from our adoption of this new guidance.
In February 2016, the FASB issued new lease accounting guidance (ASU No. 2016-02,
Leases).
Under the new guidance, at the commencement date, lessees will be required to recognize a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and
a
right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new guidance is not applicable for leases with a term of 12 months or less. Lessor accounting is largely unchanged. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted upon issuance.
Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. We are currently evaluating the impact of the new guidance on our consolidated financial statements.
In July 2015, the FASB issued guidance on simplifying the measurement of inventory (ASU No. 2015-11,
Simplifying the Measurement of Inventory).
The guidance requires an entity to measure inventory at the lower of cost or net realizable value, which consists of estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. The new guidance eliminates unnecessary complexity that exists under current "lower of cost or market" guidance. For public entities, the updated guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The guidance is to be applied prospectively as of the beginning of an interim or annual reporting period. Our adoption of this standard did not have a material impact on our consolidated financial statements.
In November 2015, the FASB issued guidance on simplifying the balance sheet classification of deferred taxes (ASU No. 2015-17,
Balance Sheet Classification of Deferred Taxes
). To simplify the presentation of deferred income taxes, the new guidance requires that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. Under prior guidance, an entity was required to separate deferred income tax liabilities and assets into current and non-current amounts. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected. For public entities, the guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted. The guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We adopted the new guidance on a prospective basis for our year ending December 31, 2015. Financial statements for prior periods were not retrospectively adjusted. The new guidance was adopted to simplify the balance sheet presentation of deferred taxes, and had no other impact on our consolidated financial statements.
NOTE 2 – MARKETABLE SECURITIES
Our investments in marketable securities are classified as available-for-sale and consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
(In thousands)
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
Short-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
5,005
|
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
5,008
|
|
Corporate debt securities and certificates of deposit
|
|
1,476
|
|
|
1
|
|
|
(1
|
)
|
|
1,476
|
|
Asset backed securities
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
Marketable securities – short-term
|
|
$
|
6,490
|
|
|
$
|
5
|
|
|
$
|
(2
|
)
|
|
$
|
6,493
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
4,815
|
|
|
$
|
1
|
|
|
$
|
(12
|
)
|
|
$
|
4,804
|
|
Corporate debt securities and certificates of deposit
|
|
2,161
|
|
|
—
|
|
|
(17
|
)
|
|
2,144
|
|
Asset backed securities
|
|
1,732
|
|
|
—
|
|
|
(5
|
)
|
|
1,727
|
|
Equity security
|
|
42
|
|
|
11
|
|
|
—
|
|
|
53
|
|
Marketable securities – long-term
|
|
$
|
8,750
|
|
|
$
|
12
|
|
|
$
|
(34
|
)
|
|
$
|
8,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
(In thousands)
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
Short-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
3,806
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
3,804
|
|
Corporate debt securities and certificates of deposit
|
|
1,440
|
|
|
—
|
|
|
(1
|
)
|
|
1,439
|
|
Asset backed securities
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Marketable securities – short-term
|
|
$
|
5,252
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
5,249
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
6,681
|
|
|
$
|
1
|
|
|
$
|
(18
|
)
|
|
$
|
6,664
|
|
Corporate debt securities and certificates of deposit
|
|
675
|
|
|
—
|
|
|
(1
|
)
|
|
674
|
|
Asset backed securities
|
|
694
|
|
|
—
|
|
|
(1
|
)
|
|
693
|
|
Equity security
|
|
42
|
|
|
11
|
|
|
—
|
|
|
53
|
|
Marketable securities – long-term
|
|
$
|
8,092
|
|
|
$
|
12
|
|
|
$
|
(20
|
)
|
|
$
|
8,084
|
|
Our investments in marketable debt securities all have maturities of less than
5 years
. At
December 31, 2016
, marketable debt securities valued at
$6.4 million
were in an unrealized gain position totaling
$6,000
and marketable debt securities valued at
$8.8 million
were in an unrealized loss position totaling
$36,000
(all had been in an unrealized loss position for less than
12 months
). At
December 31, 2015
, marketable debt securities valued at
$2.3 million
were in an unrealized gain position totaling
$1,000
and marketable debt securities valued at
$11.0 million
were in an unrealized loss position totaling
$23,000
(all had been in an unrealized loss position for less than
12 months
).
We hold an investment in
one
equity security. At both
December 31, 2016
and
December 31, 2015
, our equity security had a fair value of
$53,000
, and was in an
$11,000
unrealized gain position.
Net pre-tax unrealized losses for marketable securities of
$19,000
at
December 31, 2016
and net pre-tax unrealized losses for marketable securities of
$11,000
at
December 31, 2015
were recorded as a component of accumulated other comprehensive loss in stockholders’ equity. We received proceeds from the sale of marketable securities of
$1.5 million
in
2016
and
$1.5 million
in
2015
.
No
gain or loss was recognized from the sale of marketable securities in
2016
or
2015
.
Investments in marketable securities classified as cash equivalents of
$5.2 million
at
December 31, 2016
and
$791,000
at
December 31, 2015
consist of the following:
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
(In thousands)
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Recorded
Basis
|
Corporate debt securities and certificates of deposit
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,195
|
|
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
(In thousands)
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Recorded
Basis
|
Corporate debt securities and certificates of deposit
|
|
$
|
791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
791
|
|
|
|
$
|
791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
791
|
|
NOTE 3 – DERIVATIVES
We may enter into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on cash flows denominated in foreign currencies associated with our subsidiary in Singapore. These transactions are designated as cash flow hedges and are recorded in the accompanying consolidated balance sheet at fair value. The effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. Hedge ineffectiveness and the amounts excluded from effectiveness testing recognized in earnings on cash flow hedges were not material for the years ended
December 31, 2016
and
December 31, 2015
.
The maximum length of time over which we hedge our exposure to the variability in future cash flows is
12
months. At
December 31, 2016
, there were no open foreign exchange forward contracts. At December 31, 2015, all of our open foreign exchange forward contracts had maturities of
one
year or less. The dollar equivalent gross notional amount of our foreign exchange forward contracts designated as cash flow hedges was approximately
$1.8 million
at
December 31, 2015
.
Reclassifications of amounts from accumulated other comprehensive loss into earnings include accumulated gains (losses) at the time earnings are impacted by the forecasted transaction. The location in the consolidated statements of operations and consolidated statements of comprehensive loss and amounts of gains and losses related to derivative instruments designated as cash flow hedges are as follows:
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|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
(In thousands)
|
|
Pretax Gain Recognized
in Other Comprehensive
Income (Loss) on Effective
Portion of Derivative
|
|
Pretax Loss Recognized
in Earnings on Effective
Portion of Derivative as a
Result of Reclassification
from Accumulated Other
Comprehensive Loss
|
Cost of revenues
|
|
$
|
32
|
|
|
$
|
(27
|
)
|
Research and development
|
|
14
|
|
|
(6
|
)
|
Selling, general and administrative
|
|
7
|
|
|
(3
|
)
|
Total
|
|
$
|
53
|
|
|
$
|
(36
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
(In thousands)
|
|
Pretax Loss Recognized
in Other Comprehensive Income
(Loss) on Effective
Portion of Derivative
|
|
Pretax Loss Recognized
in Earnings on Effective
Portion of Derivative as a
Result of Reclassification
from Accumulated Other
Comprehensive Loss
|
Cost of revenues
|
|
$
|
(185
|
)
|
|
$
|
(352
|
)
|
Research and development
|
|
(71
|
)
|
|
(118
|
)
|
Selling, general and administrative
|
|
(42
|
)
|
|
(93
|
)
|
Total
|
|
$
|
(298
|
)
|
|
$
|
(563
|
)
|
At December 31, 2016, there were
no
amounts recorded in accumulated other comprehensive loss for cash flow hedging instruments. The
$147,000
after tax net unrealized loss recorded in accumulated other comprehensive loss at
December 31, 2015
for cash flow hedging instruments was reclassified to earnings during 2016. The fair value of our open foreign exchange forward contracts representing losses in the amount of
$78,000
as of
December 31, 2015
have been recorded in accrued expenses.
Additional information with respect to the impact of derivative instruments on other comprehensive loss is included in Note 4. Additional information with respect to the fair value of derivative instruments is included in Note 5.
Our foreign exchange forward contracts contain credit risk to the extent that our bank counter-parties may be unable to meet the terms of the agreements. We minimize such risk by limiting our counter-parties to major financial institutions. We do not expect material losses as a result of defaults by other parties.
NOTE 4 – COMPREHENSIVE INCOME (LOSS)
Reclassification adjustments are made to avoid double counting for items included in comprehensive income (loss) that are also recorded as part of net income (loss). Reclassifications to earnings related to cash flow hedging instruments are discussed in Note 3.
Reclassifications and taxes related to items of other comprehensive loss are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax Amount
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax Amount
|
Foreign currency translation adjustments
|
|
$
|
(383
|
)
|
|
$
|
—
|
|
|
$
|
(383
|
)
|
|
$
|
(625
|
)
|
|
$
|
—
|
|
|
$
|
(625
|
)
|
Net changes related to available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses)
|
|
(8
|
)
|
|
7
|
|
|
(1
|
)
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
Reclassification adjustment for losses included in interest income and other
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total net changes related to available-for-sale securities
|
|
(8
|
)
|
|
13
|
|
|
5
|
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
Net changes related to foreign exchange forward contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains (losses)
|
|
53
|
|
|
—
|
|
|
53
|
|
|
(298
|
)
|
|
—
|
|
|
(298
|
)
|
Reclassification adjustment for losses included in net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
27
|
|
|
41
|
|
|
68
|
|
|
352
|
|
|
—
|
|
|
352
|
|
Research and development expenses
|
|
6
|
|
|
10
|
|
|
16
|
|
|
118
|
|
|
—
|
|
|
118
|
|
Selling, general and administrative expenses
|
|
3
|
|
|
7
|
|
|
10
|
|
|
93
|
|
|
—
|
|
|
93
|
|
Total net changes related to foreign exchange forward contracts
|
|
89
|
|
|
58
|
|
|
147
|
|
|
265
|
|
|
—
|
|
|
265
|
|
Other comprehensive loss
|
|
$
|
(302
|
)
|
|
$
|
71
|
|
|
$
|
(231
|
)
|
|
$
|
(438
|
)
|
|
$
|
—
|
|
|
$
|
(438
|
)
|
At
December 31, 2016
and
December 31, 2015
components of accumulated other comprehensive loss is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
Foreign
Currency
Translation
Adjustments
|
|
Available-
for-Sale
Securities
|
|
Foreign
Exchange
Forward
Contracts
|
|
Accumulated
Other
Comprehensive
Loss
|
Balances at December 31, 2014
|
|
$
|
(920
|
)
|
|
$
|
61
|
|
|
$
|
(412
|
)
|
|
$
|
(1,271
|
)
|
Other comprehensive loss before reclassifications
|
|
(625
|
)
|
|
(78
|
)
|
|
(298
|
)
|
|
(1,001
|
)
|
Reclassifications from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
563
|
|
|
563
|
|
Net current period other comprehensive income (loss)
|
|
(625
|
)
|
|
(78
|
)
|
|
265
|
|
|
(438
|
)
|
Balances at December 31, 2015
|
|
$
|
(1,545
|
)
|
|
$
|
(17
|
)
|
|
$
|
(147
|
)
|
|
$
|
(1,709
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(383
|
)
|
|
(1
|
)
|
|
53
|
|
|
(331
|
)
|
Reclassifications from accumulated other comprehensive loss
|
|
—
|
|
|
6
|
|
|
94
|
|
|
100
|
|
Net current period other comprehensive income (loss)
|
|
(383
|
)
|
|
5
|
|
|
147
|
|
|
(231
|
)
|
Balances at December 31, 2016
|
|
$
|
(1,928
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
(1,940
|
)
|
NOTE 5 – FAIR VALUE MEASUREMENTS
We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our marketable securities and open foreign exchange forward contracts as of
December 31, 2016
and
December 31, 2015
according to the three-level fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at
December 31, 2016 Using
|
(In thousands)
|
|
Balance
December 31,
2016
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
9,812
|
|
|
$
|
—
|
|
|
$
|
9,812
|
|
|
$
|
—
|
|
Corporate debt securities and certificates of deposit
|
|
3,620
|
|
|
—
|
|
|
3,620
|
|
|
—
|
|
Asset backed securities
|
|
1,736
|
|
|
—
|
|
|
1,736
|
|
|
—
|
|
Equity security
|
|
53
|
|
|
53
|
|
|
—
|
|
|
—
|
|
Total marketable securities
|
|
$
|
15,221
|
|
|
$
|
53
|
|
|
$
|
15,168
|
|
|
$
|
—
|
|
Derivative instruments-liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at
December 31, 2015 Using
|
(In thousands)
|
|
Balance
December 31,
2015
|
|
Quoted Prices
in Active Markets for Identical
Assets
(Level 1)
|
|
Significant
Other Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency obligations
|
|
$
|
10,468
|
|
|
$
|
—
|
|
|
$
|
10,468
|
|
|
$
|
—
|
|
Corporate debt securities and certificates of deposit
|
|
2,113
|
|
|
—
|
|
|
2,113
|
|
|
—
|
|
Asset backed securities
|
|
699
|
|
|
—
|
|
|
699
|
|
|
—
|
|
Equity security
|
|
53
|
|
|
53
|
|
|
—
|
|
|
—
|
|
Total marketable securities
|
|
$
|
13,333
|
|
|
$
|
53
|
|
|
$
|
13,280
|
|
|
$
|
—
|
|
Derivative instruments-liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
—
|
|
During the years ended
December 31, 2016
and
2015
there were no transfers within the three level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed which merit a transfer between the disclosed levels of the valuation hierarchy.
The fair value for our U.S. government and agency obligations, corporate debt securities and certificates of deposit and asset backed securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The fair value for our equity security is based on a quoted market price obtained from an active market.
The fair value for our open foreign exchange forward contracts is based on foreign currency spot and forward rates obtained from reputable financial institutions, with resulting valuations periodically validated by obtaining foreign currency spot rate and forward quotes from other industry standard sources or third party or counterparty quotes. The fair value of our foreign exchange forward contracts representing losses in the amount of
$78,000
as of
December 31, 2015
has been recorded in accrued expenses.
The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other liabilities approximate their related fair values due to the short-term maturities of these instruments. Non-financial assets such as equipment and leasehold improvements, goodwill and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired. We had no re-measurements of non-financial assets to fair value in
2016
or
2015
.
NOTE 6 – STOCK-BASED COMPENSATION
We have
four
stock-based compensation plans that are administered by the Compensation Committee of the Board of Directors. We have an Employee Stock Incentive Plan for officers, other employees, consultants and independent contractors under which we have granted options and restricted stock units to officers and other employees, an Employee Stock Purchase Plan under which shares of our common stock may be acquired by employees at discounted prices, and a Non-Employee Director Stock Plan that provides for automatic grants of stock options and shares of our common stock to non-employee directors. We also have another stock incentive plan for non-employee directors, but no further awards are made under this plan. New shares of our common stock are issued upon stock option exercises, vesting of restricted stock units, issuances of shares to board members and issuances of shares under our the Employee Stock Purchase Plan.
Employee Stock Incentive Plan
As of
December 31, 2016
, there are
995,913
shares of common stock reserved in the aggregate for issuance pursuant to outstanding or future awards under our Employee Stock Incentive Plan. Although our Compensation Committee has authority to issue options, restricted stock, restricted stock units, share grants and other share based benefits under our Employee Stock Incentive Plan, to date only issued restricted stock units and stock options have been granted under the plan. Options have been granted at an option price per share equal to the market value of our common stock on the date of grant, vest over a
four
-year period and expire
seven
years after the date of grant. Restricted stock units vest over a
four
-year period and entitle the holders to
one
share of our common stock for each restricted stock unit.
As of
December 31, 2016
, there were
427,739
shares of common stock available for future awards under our Employee Stock Incentive Plan, including an additional
350,000
shares authorized in May 2016. Reserved shares underlying outstanding awards, including options and restricted shares, that are forfeited are available under the Employee Stock Incentive Plan for future grant.
Non-Employee Director Stock Plan
At our annual meeting on May 20, 2016, our shareholders, upon recommendation of the Board of Directors, approved a new Non-Employee Director Stock Plan. A total of
100,000
shares of common stock were authorized for issuance pursuant to the plan. Under the terms of the new plan, each non-employee director will automatically be granted, on the date of each annual meeting at which such director is elected to serve on the board (beginning with our May 2016 annual meeting),
2,000
shares of our common stock and a stock option to acquire
4,000
shares of our common stock. Shares granted under the plan are not subject to vesting restrictions. Each stock option granted under this plan will be fully exercisable, have an exercise price equal to the closing price of our common stock on the date of grant and have a term of
10 years
.
Pursuant to the plan, on the date of our 2016 annual meeting, we issued a total of
8,000
shares of our common stock and stock options to acquire
16,000
shares of our common stock to our non-employee directors. The shares had a total fair market value on the date of grant equal to
$136,000
(grant date fair value of
$16.97
per share) and the options had a total fair market value on the date of grant using the Black-Scholes model equal to
$139,000
(grant date fair value of
$8.71
per option to acquire one share of our common stock). As of
December 31, 2016
, there were
76,000
shares of common stock available for future awards under the Non-Employee Director Stock Plan.
Stock Option Activity
The following is a summary of stock option activity for the year ended
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Weighted Average Exercise
Price Per Share
|
Outstanding, December 31, 2015
|
|
570,500
|
|
|
$
|
8.00
|
|
Granted
|
|
58,000
|
|
|
22.34
|
|
Exercised
|
|
(80,875
|
)
|
|
8.87
|
|
Expired
|
|
—
|
|
|
—
|
|
Forfeited
|
|
—
|
|
|
—
|
|
Outstanding, December 31, 2016
|
|
547,625
|
|
|
$
|
9.39
|
|
Exercisable, December 31, 2016
|
|
248,313
|
|
|
$
|
8.53
|
|
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds the option's exercise price. For options outstanding at
December 31, 2016
, the weighted average remaining contractual term of all outstanding options was
4.83
years and their aggregate intrinsic value was
$9.2 million
. At
December 31, 2016
, the weighted average remaining contractual term of options that were exercisable was
4.29
years and their aggregate intrinsic value was
$4.4 million
. The aggregate intrinsic value of stock options exercised was
$720,000
in
2016
and
$182,000
in
2015
. We received proceeds from stock option exercises of
$465,000
in
2016
and
$458,000
in
2015
. No tax benefit was realized from the exercise of these stock options and no amounts were credited to additional paid-in capital. The aggregate fair value of shares that vested in
2016
was
$495,000
and the aggregate fair value of shares that vested in
2015
was
$264,000
.
The fair value of stock options granted to our employees and non-employee directors was estimated on the date of grant using the Black-Scholes model. The Black-Scholes valuation model incorporates ranges of assumptions that are disclosed in the table below. The risk-free interest rate is based on the United States Treasury yield curve at the time of grant with a remaining term equal to the expected life of the awards. We used historical experience to estimate the expected term, representing the length of time in years, that the options are expected to be outstanding. Expected volatility was computed based on historical fluctuations in the daily price of our common stock.
For stock options granted in the two year period ended
December 31, 2016
, we utilized the fair value of our common stock on the date of grant and employed the following key assumptions in computing fair value using the Black-Scholes option-pricing model:
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Risk-free interest rates
|
|
1.24% - 1.89%
|
|
1.56%
|
Expected life in years
|
|
5.09 - 7.50
|
|
5.01 - 5.11
|
Expected volatility
|
|
42.22% - 46.67%
|
|
40.82%
|
Dividend yield
|
|
0.00%
|
|
0.00%
|
Weighted average fair value on grant date
|
|
$9.88
|
|
$2.73
|
Restricted Stock Units
Restricted stock units are granted under our Employee Stock Incentive Plan. There were
10,700
restricted stock units granted in
2016
and their weighted average grant date fair value was
$26.40
each. There were
18,250
restricted stock units granted in
2015
and their weighted average grant date fair value was
$7.18
each. The aggregate fair value of outstanding restricted stock units based on the closing share price of our common stock as of
December 31, 2016
was
$1.2 million
. No tax benefit was realized from the vesting of restricted stock units and no amounts were credited to additional paid-in capital. The aggregate fair value of restricted stock units that vested, based on the closing share price of our common stock on the vesting date, was
$394,000
for the year ended
December 31, 2016
and
$129,000
for the year ended
December 31, 2015
.
A summary of activity in non-vested restricted stock units for the year ended
December 31, 2016
is as follows:
|
|
|
|
|
|
|
|
|
Non-vested restricted stock units
|
|
Shares
|
|
Weighted Average Grant Date
Fair Value
|
Non-vested at December 31, 2015
|
|
54,315
|
|
|
$
|
7.43
|
|
Granted
|
|
10,700
|
|
|
26.40
|
|
Vested
|
|
(19,466
|
)
|
|
7.32
|
|
Forfeited
|
|
—
|
|
|
—
|
|
Non-vested at December 31, 2016
|
|
45,549
|
|
|
$
|
11.93
|
|
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan available to eligible U.S. employees. Under terms of the plan, eligible employees may designate from
1%
to
10%
of their compensation to be withheld through payroll deductions, up to a maximum of
$6,500
in each plan year, for the purchase of common stock at
85%
of the lower of the market price on the first or last day of the offering period. There were
36,481
shares issued under this plan in the year ended
December 31, 2016
and
35,845
shares issued in the year ended
December 31, 2015
. As of
December 31, 2016
,
59,276
shares remain available for future issuance under this plan.
Stock Grant Plan for Non-Employee Directors
Previously, we had a stock grant plan for non-employee directors that provided for automatic grants of
1,000
shares of our common stock to each of our non-employee directors upon their re-election to the Board of Directors. This plan was terminated and our non-employee directors did not receive any share grants under this plan on the date of our 2016 annual meeting at which our shareholders approved the new Non-Employee Director Stock Plan. Share issuances under the stock grant plan for non-employee directors were
4,000
shares in the year ended
December 31, 2015
. The shares issued in
2015
had a fair market value on the date of grant equal to
$41,000
(weighted average grant date fair value of
$10.36
).
Stock Based Compensation Information
Pre-tax stock-based compensation expense for
2016
included
$648,000
for stock options and restricted stock units,
$79,000
for our employee stock purchase plan, and
$136,000
for
8,000
shares issued to board members for compensation purposes. Pre-tax stock-based compensation expense for
2015
included
$398,000
for stock options and restricted stock units,
$72,000
for our employee stock purchase plan, and
$41,000
for
4,000
shares issued to board members for compensation purposes.
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
Pre-tax stock-based compensation expense
|
|
$
|
863
|
|
|
$
|
511
|
|
Income tax benefits related to stock-based compensation
|
|
$
|
428
|
|
|
$
|
—
|
|
We use historical data to estimate pre-vesting forfeitures. At December 31, 2016, the total unrecognized compensation cost related to non-vested stock-based compensation arrangements was
$1.6 million
and the related weighted average period over which such cost is expected to be recognized is
1.98
years.
NOTE 7 – NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Net income per diluted share is computed by dividing net income by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares consist of common shares to be issued upon exercise of stock options, vesting of restricted stock units and the purchase of shares under our employee stock purchase plan, as calculated using the treasury stock method. All common equivalent shares were excluded from the calculation of net loss per diluted share in 2015 due to their anti-dilutive effect. As a result, no common equivalent shares were included in the calculation of net loss per diluted share for the year ended
December 31, 2015
. The components of net income (loss) per basic and diluted share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands except per share amounts)
|
|
Net Income
|
|
Weighted Average Shares Outstanding
|
|
Per Share Amount
|
Year Ended 12/31/2016:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
11,562
|
|
|
6,832
|
|
|
$
|
1.69
|
|
Dilutive effect of common equivalent shares
|
|
—
|
|
|
217
|
|
|
(0.05
|
)
|
Dilutive
|
|
$
|
11,562
|
|
|
7,049
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands except per share amounts)
|
|
Net Loss
|
|
Weighted Average Shares Outstanding
|
|
Per Share Amount
|
Year Ended 12/31/2015:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2,089
|
)
|
|
6,706
|
|
|
$
|
(0.31
|
)
|
Dilutive effect of common equivalent shares
|
|
—
|
|
|
—
|
|
|
—
|
|
Dilutive
|
|
$
|
(2,089
|
)
|
|
6,706
|
|
|
$
|
(0.31
|
)
|
The calculation of diluted net loss per common share excludes
108,000
potentially dilutive shares for the year ended
December 31, 2016
and
587,000
potentially dilutive shares for the year ended
December 31, 2015
, because their effect would be anti-dilutive.
NOTE 8 – OTHER FINANCIAL STATEMENT DATA
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Raw materials and purchased parts
|
|
$
|
6,475
|
|
|
$
|
6,787
|
|
Work in process
|
|
826
|
|
|
508
|
|
Finished goods
|
|
4,230
|
|
|
5,970
|
|
Total inventories
|
|
$
|
11,531
|
|
|
$
|
13,265
|
|
Equipment and leasehold improvements consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Equipment
|
|
$
|
13,624
|
|
|
$
|
12,500
|
|
Leasehold improvements
|
|
1,628
|
|
|
1,588
|
|
|
|
15,252
|
|
|
14,088
|
|
Accumulated depreciation and amortization
|
|
(12,814
|
)
|
|
(11,720
|
)
|
|
|
$
|
2,438
|
|
|
$
|
2,368
|
|
Total depreciation and amortization expense related to equipment and leasehold improvements was
$1.3 million
for the year ended
December 31, 2016
and
$1.2 million
for the year ended
December 31, 2015
.
Intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
(In thousands)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
Patents
|
|
$
|
2,567
|
|
|
$
|
(2,351
|
)
|
|
$
|
216
|
|
|
$
|
2,513
|
|
|
$
|
(2,253
|
)
|
|
$
|
260
|
|
Software
|
|
206
|
|
(82
|
)
|
|
124
|
|
206
|
|
|
(53
|
)
|
|
153
|
|
Marketing assets and customer relationships
|
|
101
|
|
(33
|
)
|
|
68
|
|
101
|
|
|
(21
|
)
|
|
80
|
|
Non-compete agreements
|
|
101
|
|
(71
|
)
|
|
30
|
|
101
|
|
|
(45
|
)
|
|
56
|
|
|
|
$
|
2,975
|
|
|
$
|
(2,537
|
)
|
|
$
|
438
|
|
|
$
|
2,921
|
|
|
$
|
(2,372
|
)
|
|
$
|
549
|
|
Amortization expense for the years ended
December 31, 2016
and
2015
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Weighted Avg. Remaining Life-Years at December 31, 2016
|
(In thousands)
|
|
2016
|
|
2015
|
|
Patents
|
|
$
|
98
|
|
|
$
|
110
|
|
|
2.5
|
Software
|
|
29
|
|
|
29
|
|
|
4.2
|
Marketing assets and customer relationships
|
|
12
|
|
|
12
|
|
|
5.8
|
Non-compete agreements
|
|
26
|
|
|
25
|
|
|
1.2
|
|
|
$
|
165
|
|
|
$
|
176
|
|
|
|
Amortization of patents has been classified as research and development expense in the accompanying consolidated statement of operations. Estimated aggregate amortization expense based on current intangible assets for the next five years is expected to be as follows:
$157,000
in 2017,
$107,000
in 2018,
$73,000
in 2019,
$62,000
in 2020 and
$20,000
in 2021.
Accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Wages and benefits
|
|
$
|
2,673
|
|
|
$
|
1,014
|
|
Warranty liability
|
|
717
|
|
|
584
|
|
Other
|
|
366
|
|
|
361
|
|
|
|
$
|
3,756
|
|
|
$
|
1,959
|
|
Other liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Deferred rent
|
|
$
|
111
|
|
|
$
|
204
|
|
Warranty liability
|
|
73
|
|
|
61
|
|
Deferred warranty revenue
|
|
66
|
|
|
3
|
|
|
|
$
|
250
|
|
|
$
|
268
|
|
Warranty costs:
We provide for the estimated cost of product warranties, which cover products for periods ranging from
one
to
three years
, at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of component suppliers, warranty obligations are affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required and could be material. Our warranty liability is included as a component of accrued expenses. At the end of each reporting period we revise our estimated warranty liability based on these factors.
A reconciliation of the changes in our estimated warranty liability is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Balance at beginning of period
|
|
$
|
645
|
|
|
$
|
839
|
|
Accrual for warranties
|
|
688
|
|
|
441
|
|
Warranty revision
|
|
(53
|
)
|
|
(19
|
)
|
Settlements made during the period
|
|
(490
|
)
|
|
(616
|
)
|
Balance at end of period
|
|
790
|
|
|
645
|
|
Current portion of estimated warranty liability
|
|
(717
|
)
|
|
(584
|
)
|
Long-term estimated warranty liability
|
|
$
|
73
|
|
|
$
|
61
|
|
Deferred warranty revenue:
The current portion of our deferred warranty revenue is included as a component of advance customer payments. A reconciliation of the changes in our deferred warranty revenue is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Balance at beginning of period
|
|
$
|
199
|
|
|
$
|
475
|
|
Revenue deferrals
|
|
581
|
|
|
353
|
|
Amortization of deferred revenue
|
|
(434
|
)
|
|
(629
|
)
|
Total deferred warranty revenue
|
|
346
|
|
|
199
|
|
Current portion of deferred warranty revenue
|
|
(280
|
)
|
|
(196
|
)
|
Long-term deferred warranty revenue
|
|
$
|
66
|
|
|
$
|
3
|
|
NOTE 9 – GOODWILL
We assess our goodwill for impairment in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
In the fourth quarter of 2016, we performed a qualitative assessment to determine if there was any indication that our goodwill might be impaired. After assessing the totality of events and circumstances, if we determine that it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of the company is greater than its recorded value (i.e. net book value), no further testing is required. If we determine that is more likely than not that the fair value of the company is less than its recorded value, then we are required to perform the first step of the two-step goodwill impairment test. After considering all available evidence, including our significant improved financial performance, improved financial outlook and significant increase in market capitalization, we concluded that it is more likely than not that the fair value of the company exceeds its recorded value. As a result, no further testing was deemed necessary, and we have determined that our goodwill at December 31, 2016 in the amount of
$1.4 million
was not impaired.
In 2015, when evaluating whether goodwill was impaired, we compared our fair value to our net book value or carrying value (Step 1 of the impairment test). In calculating fair value, we used the income approach. The income approach is a valuation technique under which we estimate future cash flows using financial forecasts. Future estimated cash flows are discounted to their present value to calculate fair value. When considering fair value, we also gave consideration to the control premium in excess of our current market capitalization that might be obtained from a third party acquirer. In the situation where net book value or carrying value exceeds fair value, the amount of impairment loss must be measured. The measurement of impairment (Step 2 of the impairment test) is calculated by determining the implied fair value of goodwill, which equals the excess of any remaining fair value over the fair values assigned to other assets and liabilities. Goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair value.
In determining fair value under the income approach, our expected cash flows are affected by various assumptions. Fair value on a discounted cash flow basis uses our business plan and projections as the basis for expected future cash flow forecasts, with an estimation of residual growth rates thereafter. For our
2015
goodwill impairment tests, we utilized a
15%
discount rate and our terminal value was based on a multiple equal to
6
times our projected future earnings before interest, taxes, depreciation and amortization. We believe the significant assumptions used in our
2015
goodwill impairment test, including a
15%
discount rate, are reflective of the assumptions currently used in the marketplace to evaluate fair value. Our 2015 analysis indicated that our goodwill was not impaired.
NOTE 10 – INCOME TAXES
Income (loss) before income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Sources of income (loss) before income taxes:
|
|
|
|
|
|
|
United States
|
|
$
|
5,135
|
|
|
$
|
(2,994
|
)
|
Foreign
|
|
1,256
|
|
|
933
|
|
Total income (loss) before income taxes
|
|
$
|
6,391
|
|
|
$
|
(2,061
|
)
|
The provision (benefit) for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
76
|
|
|
$
|
(14
|
)
|
State
|
|
10
|
|
|
4
|
|
Foreign
|
|
12
|
|
|
—
|
|
Total current
|
|
$
|
98
|
|
|
$
|
(10
|
)
|
Deferred:
|
|
|
|
|
|
|
Federal
|
|
$
|
(4,799
|
)
|
|
$
|
(4
|
)
|
State
|
|
—
|
|
|
1
|
|
Foreign
|
|
(470
|
)
|
|
41
|
|
Total deferred
|
|
$
|
(5,269
|
)
|
|
$
|
38
|
|
Total provision for income taxes
|
|
$
|
(5,171
|
)
|
|
$
|
28
|
|
A reconciliation of the statutory rate to the effective income tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2016
|
|
2015
|
Federal statutory rate
|
|
34.0
|
%
|
|
34.0
|
%
|
State income taxes, net of federal benefit
|
|
0.1
|
|
|
(0.2
|
)
|
U.S. Subpart F income
|
|
3.2
|
|
|
(1.0
|
)
|
Earnings and dividends of foreign affiliate
|
|
32.2
|
|
|
(28.9
|
)
|
Stock based compensation
|
|
0.5
|
|
|
(1.4
|
)
|
Research and experimentation credit
|
|
(2.2
|
)
|
|
4.6
|
|
Foreign rate difference
|
|
(7.1
|
)
|
|
17.8
|
|
Reserve for income taxes
|
|
—
|
|
|
0.7
|
|
Valuation allowance
|
|
(141.9
|
)
|
|
(26.1
|
)
|
Other, net
|
|
0.3
|
|
|
(0.8
|
)
|
Effective tax rate
|
|
(80.9
|
)%
|
|
(1.3
|
)%
|
Our effective tax rate for
2016
was favorably impacted by
141.9%
due to a substantial reduction in the valuation allowances for our deferred tax assets. Recognition of the deferred tax liability for the undistributed earnings of our subsidiary in Singapore impacted our effective tax rate by
32.2%
in 2016. Receipt of a dividend from our subsidiary in Singapore impacted our income tax rate by a negative
28.9%
in 2015.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
Gross UTB balance at beginning of year
|
|
$
|
1,887
|
|
|
$
|
1,508
|
|
Additions based on tax positions related to the current year
|
|
178
|
|
|
186
|
|
Additions for tax positions of prior years
|
|
—
|
|
|
289
|
|
Reductions for tax positions of prior years
|
|
(96
|
)
|
|
(78
|
)
|
Reductions due to lapse of applicable statute of limitations
|
|
(212
|
)
|
|
(18
|
)
|
Gross UTB balance at end of year
|
|
$
|
1,757
|
|
|
$
|
1,887
|
|
Net UTB balance at end of year
|
|
$
|
131
|
|
|
$
|
126
|
|
The ending net UTB results from adjusting the gross balance for items such as federal, state, and non-U.S. deferred items, interest and penalties, and deductible taxes. The net UTB is a long-term income tax reserve within our consolidated balance sheets. We recognize interest and penalties related to unrecognized tax benefits in tax expense. Accrued interest and penalties on a gross basis were
$1,000
as of both
December 31, 2016
and
December 31, 2015
.
During the year ended
December 31, 2016
we recorded a
$5,000
increase in our liability for uncertain tax positions that was recorded as income tax expense. Estimated gross interest and penalties included in this amount were
$1,000
. During the year ended
December 31, 2015
we recorded a
$14,000
decrease in our liability for uncertain tax positions that was recorded as an income tax benefit. Estimated gross interest and penalties included in this amount were
$5,000
.
We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Our federal income tax returns for years after 2012 are still subject to examination by the Internal Revenue Service. We are no longer subject to state and local income tax examinations by tax authorities for years prior to 2012. The Inland Revenue Authority of Singapore recently completed a review of our 2012 income tax return. The review did not result in payment of any additional tax or change in our taxable income.
Deferred tax assets and liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
(In thousands)
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
Equipment, leaseholds and intangible amortization, net
|
|
$
|
352
|
|
|
$
|
395
|
|
|
$
|
377
|
|
|
$
|
367
|
|
Inventory allowances
|
|
783
|
|
|
21
|
|
|
797
|
|
|
6
|
|
Accrued expenses
|
|
221
|
|
|
—
|
|
|
286
|
|
|
—
|
|
Warranty accrual
|
|
272
|
|
|
—
|
|
|
222
|
|
|
—
|
|
Deferred revenue
|
|
181
|
|
|
—
|
|
|
686
|
|
|
—
|
|
Accounts receivable allowance
|
|
188
|
|
|
—
|
|
|
179
|
|
|
—
|
|
Federal and state tax credits
|
|
3,624
|
|
|
—
|
|
|
3,319
|
|
|
—
|
|
Federal and state net operating loss carry forwards
|
|
2,801
|
|
|
—
|
|
|
4,379
|
|
|
—
|
|
Foreign net operating loss carry forwards
|
|
463
|
|
|
—
|
|
|
394
|
|
|
—
|
|
Stock based compensation
|
|
381
|
|
|
—
|
|
|
331
|
|
|
—
|
|
Unrealized gains and losses
|
|
7
|
|
|
—
|
|
|
—
|
|
|
35
|
|
Earnings of foreign subsidiary
|
|
—
|
|
|
2,520
|
|
|
—
|
|
|
—
|
|
Other, net
|
|
72
|
|
|
—
|
|
|
73
|
|
|
—
|
|
Subtotal
|
|
9,345
|
|
|
2,936
|
|
|
11,043
|
|
|
408
|
|
Valuation allowance
|
|
(1,086
|
)
|
|
—
|
|
|
(10,644
|
)
|
|
—
|
|
Total deferred tax assets and liabilities
|
|
$
|
8,259
|
|
|
$
|
2,936
|
|
|
$
|
399
|
|
|
$
|
408
|
|
We have significant deferred tax assets as a result of temporary differences between taxable income on our tax returns and U.S. GAAP income, research and development tax credit carry forwards and federal, state and foreign net operating loss carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our consolidated financial statements become deductible for income tax purposes, when net operating loss carry forwards are applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards.
Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives.
During the fourth quarter of 2016, we substantially reduced the valuation allowances recorded against our United States and Singapore based deferred tax assets, primarily due to significant improvement in our operating results and financial outlook. In analyzing the need for valuation allowances, we first considered our history of cumulative operating results for income tax purposes over the past
three years
in each of the tax jurisdictions where we operate, our financial performance in recent quarters, statutory carry forward periods and tax planning alternatives. Finally, we considered both our near and long-term financial outlook. After considering all available evidence both positive and negative, we concluded that a substantial reduction in the valuation allowances recorded against our United States and Singapore based deferred tax assets was appropriate. A similar analysis was performed at December 31,
2015
, resulting in
$10.6 million
of valuation allowances for our deferred tax assets, primarily due to our cumulative historical operating losses. The
$9.6 million
reduction in valuation allowances for 2016 caused us to recognize a significant non-cash income tax benefit. The reduction resulted from utilization of available net operating loss carryforwards and our determination that significant valuation allowances were no longer needed due to the improvement in our operating results and financial outlook. At December 31, 2016, the remaining valuation allowance primarily relates to state net operating loss carryforwards and state R&D tax credit carryforwards that we do not expect to use.
At
December 31, 2016
, we have federal R&D tax credit carryforwards of
$3.7 million
that will begin to expire in 2019 and a federal net operating loss carry forward of
$8.1 million
that will begin to expire in 2022, if unused. At December 31, 2016, there are
$278,000
of tax benefits from the exercise of stock options that will be recognized through a cumulative effect adjustment to stockholder's equity on January 1, 2017 from our adoption of ASU No. 2016-09,
Improvements to Employee Share-Based Payment Accounting.
Cash payments for income taxes, net of refunds received, were
$144,000
for the year ended
December 31, 2016
. Cash payments for income taxes, net of refunds received, were
$16,000
for the year ended
December 31, 2015
.
During 2015, our Singapore subsidiary repatriated approximately
$3.6 million
to our U.S. based parent, of which approximately
$1.9 million
had been previously taxed. We were able to accomplish the repatriation without having to pay cash taxes given our available U.S. net operating loss carryforwards. At the time, we viewed the repatriation as a one-time event that did not change our position regarding our intent to permanently reinvest the undistributed earnings of our Singapore subsidiary. We may have our Singapore subsidiary pay another dividend in the near future due to the growing intercompany receivable balance and because we do not intend to leave cash balances invested with our international subsidiaries. As a result, we have concluded that it is no longer our intent to permanently reinvest the undistributed earnings of our Singapore subsidiary. Accordingly, a
$2.5 million
deferred tax liability has been recorded at December 31, 2016 for the Singapore subsidiary's undistributed earnings. There is no intent to repatriate funds from any of our other international subsidiaries due to the scope of their operations or because they have accumulated deficits. The amount of any deferred tax liability related to the undistributed earnings of these subsidiaries would be negligible. If we were to change our position on permanent reinvestment of undistributed earnings of these subsidiaries, it is anticipated that any such change would not have a significant impact on our financial position or results of operations.
NOTE 11 – OPERATING LEASES
We lease a
50,724
square foot mixed office and warehouse facility in Golden Valley, Minnesota. The lease has a term of
90 months
and expires on
December 31, 2018
. The lease contains an escalation clause and
two
renewal options of
three years
each. Rental expense, including the effects of lease incentives, is recognized on a straight-line basis over the term of the lease. We are also required to pay insurance, property taxes and other operating expenses related to the leased facility.
We lease a
10,165
square foot mixed office and warehouse facility in Bloomington, Minnesota. The lease expires on April 30, 2018. Rental expense, including the effects of lease incentives, is recognized on a straight-line basis over the term of the lease.
We are also required to pay insurance, property taxes and other operating expenses related to the leased facility. We recently extended the lease for a period of
8
months so that it now expires on December 31, 2018.
We lease a
19,805
square foot mixed office and warehouse facility in Singapore. The current lease contains an escalation clause and expires in
July 2017
. We recently extended the lease for a period of
three
years expiring in July 2020. The new lease contains
one
three
year renewal option. In addition, we lease facilities for the operations of our other subsidiaries under operating leases that expire at various times through
November 2018
.
Total rent expense was
$1.3 million
for the year ended
December 31, 2016
and
$1.2 million
for the year ended
December 31, 2015
. At
December 31, 2016
, the future minimum lease payments required under non-cancelable operating lease agreements are as follows:
|
|
|
|
|
Year ending December 31,
|
(In thousands)
|
2017
|
$
|
1,357
|
|
2018
|
1,342
|
|
2019
|
411
|
|
2020
|
240
|
|
Total
|
$
|
3,350
|
|
NOTE 12 – 401(K) AND OTHER DEFINED CONTRIBUTION PLANS
We have a retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code (the Code), whereby eligible employees may contribute a portion of their earnings, not to exceed annual amounts allowed under the Code. In addition, we may also make contributions at the discretion of the Board of Directors. We provided matching contributions to employees totaling
$261,000
in
2016
and
$300,000
in
2015
.
We also contribute to defined contribution retirement savings plans on behalf of our employees in the United Kingdom. We made contributions to these plans totaling
$30,000
in
2016
and
$33,000
in
2015
.
NOTE 13 – REVENUE CONCENTRATIONS, SIGNIFICANT CUSTOMERS, AND GEOGRAPHIC AREAS
The following summarizes our revenue by product line:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
SMT and High Precision 3D OEM Sensors
|
|
$
|
18,797
|
|
|
$
|
13,022
|
|
Semiconductor Sensors
|
|
10,061
|
|
|
7,677
|
|
SMT Inspection Systems
|
|
28,680
|
|
|
13,578
|
|
3D Scanning Solutions and Services
|
|
8,702
|
|
|
6,853
|
|
Total
|
|
$
|
66,240
|
|
|
$
|
41,130
|
|
The following summarizes certain significant customer information:
|
|
|
|
|
|
|
(In thousands)
|
|
Significant Customer
|
|
Percentage of Revenues
|
Year ended December 31, 2016
|
|
B
|
|
12
|
%
|
|
|
C
|
|
11
|
%
|
Year ended December 31, 2015
|
|
A
|
|
10
|
%
|
|
|
B
|
|
11
|
%
|
Export sales as a percentage of total sales were
81%
for the year ended
December 31, 2016
and
72%
for the year ended
December 31, 2015
. Export sales are attributed to the country where the product is shipped. Substantially all of our export sales are negotiated, invoiced and paid in U.S. dollars.
As of
December 31, 2016
, accounts receivable from significant customer B were
$925,000
and accounts receivable from significant customer C were
$417,000
.
Revenue by geographic area is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
(In thousands)
|
|
2016
|
|
2015
|
United States
|
|
$
|
12,754
|
|
|
$
|
11,452
|
|
Americas
|
|
1,613
|
|
|
1,424
|
|
Netherlands
|
|
8,033
|
|
|
4,533
|
|
Other Europe
|
|
9,183
|
|
|
7,462
|
|
China
|
|
14,626
|
|
|
4,060
|
|
South Korea
|
|
7,634
|
|
|
3,462
|
|
Japan
|
|
4,505
|
|
|
4,802
|
|
Other Asia
|
|
7,873
|
|
|
3,590
|
|
Other
|
|
19
|
|
|
345
|
|
Total revenues
|
|
$
|
66,240
|
|
|
$
|
41,130
|
|
Long-lived assets include equipment and leasehold improvements and intangible and other assets attributable to each geographic area’s operations. Long-lived assets at
December 31, 2016
and
2015
are as follows:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
Long-lived assets:
|
|
|
|
|
|
|
United States
|
|
$
|
2,721
|
|
|
$
|
2,782
|
|
Europe
|
|
7
|
|
|
2
|
|
Asia and other
|
|
148
|
|
|
133
|
|
Total long-lived assets
|
|
$
|
2,876
|
|
|
$
|
2,917
|
|
NOTE 14 – CONTINGENCIES
We are periodically a defendant in miscellaneous claims and disputes in the ordinary course of business. While the outcome of these matters cannot be predicted with certainty, management presently believes the disposition of these matters will not have a material effect on our financial position, results of operations or cash flows.
In the normal course of business to facilitate sales of our products and services, we at times indemnify other parties, including customers, with respect to certain matters. In these instances, we have agreed to hold the other parties harmless against losses arising out of intellectual property infringement or other types of claims. These agreements may limit the time within which an indemnification claim can be made, and almost always limit the amount of the claim. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made, if any, under these agreements have not had a material impact on our operating results, financial position or cash flows.
NOTE 15 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
Revenues
|
|
$
|
19,114
|
|
|
$
|
18,631
|
|
|
$
|
15,040
|
|
|
$
|
13,455
|
|
Gross margin
|
|
7,944
|
|
|
8,145
|
|
|
6,641
|
|
|
6,325
|
|
Income from operations
|
|
2,391
|
|
|
1,987
|
|
|
1,137
|
|
|
638
|
|
Net income
|
|
2,263
|
|
|
2,041
|
|
|
1,172
|
|
|
6,086
|
|
Net income per share - Basic (1)
|
|
0.33
|
|
|
0.30
|
|
|
0.17
|
|
|
0.88
|
|
Net income per share - Diluted (1)
|
|
0.33
|
|
|
0.29
|
|
|
0.16
|
|
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
Revenues
|
|
$
|
9,545
|
|
|
$
|
10,254
|
|
|
$
|
9,937
|
|
|
$
|
11,394
|
|
Gross margin
|
|
4,561
|
|
|
4,569
|
|
|
4,239
|
|
|
4,772
|
|
Income (loss) from operations
|
|
(826
|
)
|
|
(655
|
)
|
|
(721
|
)
|
|
39
|
|
Net loss
|
|
(781
|
)
|
|
(761
|
)
|
|
(514
|
)
|
|
(33
|
)
|
Net loss per share - Basic (1)
|
|
(0.12
|
)
|
|
(0.11
|
)
|
|
(0.08
|
)
|
|
0.00
|
|
Net loss per share - Diluted (1)
|
|
(0.12
|
)
|
|
(0.11
|
)
|
|
(0.08
|
)
|
|
0.00
|
|
|
|
(1)
|
The summation of quarterly per share amounts may not equal the calculation for the full year, as each quarterly
|
calculation is performed discretely.