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Proc-Type: 2001,MIC-CLEAR
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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 |
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) |
Title of Each Class |
Name of Each Exchange on Which Registered |
|||||
Common
Stock |
NASDAQ Global Market |
Title of Each Class |
Number of Shares Outstanding at September 1, 2007 |
|||||
Common Stock,
$0.01 Par Value |
29,240,175 |
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 Registrants Common Equity and Related Stockholder Matters |
20 | ||||||||||
Item
6. |
Selected Financial Data |
20 | ||||||||||
Item
7. |
Managements 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 |
|
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
Companys 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 Companys stock option grant practices did not comply
consistently with the Companys 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 Companys 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 Companys 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. |
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 |
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 |
|
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
Underwriters 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 operators central location or to each individual location for a quick, consistent and cost-efficient update. |
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) |
|
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. |
|
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.). |
|
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. |
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, Managements 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, Managements 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 |
|
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
Companys 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 Companys stock option grant practices did not comply
consistently with the Companys 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 Companys 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 Companys 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. |
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 |
|
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 |
|
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. |
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 |
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 |
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 |
|
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 Companys stock option grant practices did not comply
consistently with the Companys 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 Companys 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 Companys 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 Committees
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 |
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. |
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 Companys 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 |
|||||||||
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 |
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 TurboChefs directors; |
|
each of TurboChefs named executive officers;
and |
|
all of TurboChefs 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 Companys 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 Companys 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 Companys Guide for Business Conduct (or ethics code, a copy of which is available on the Companys 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 Nasdaqs 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.
Nasdaqs 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 issuers 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 directors 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
IIValuation 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 Registrants 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 Registrants 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 Registrants 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 Registrants Registration Statement on Form
SB-2, Registration No. 33-75008) |
||||||||
3.2 |
|
Amendment to Certificate of IncorporationCertificate of Designation of Series A Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1 to the Registrants 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 IncorporationCertificate of Designation of Series B Convertible Preferred Stock (incorporated by reference
to Exhibit 3.3 to the Registrants 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 IncorporationCertificate of Designation of Series C Convertible Preferred Stock (incorporated by reference
to Exhibit 3.1 to the Registrants 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 IncorporationCertificate of Designation of Series D Convertible Preferred Stock (incorporated by reference
to Exhibit 3(i) to the Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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
Registrants Common Stock |
||||||||
10.1 |
|
1994 Stock Option Plan, as amended (incorporated by reference to Exhibit 10.14.2 to the Registrants 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, Doctors Associates, Inc. and Independent
Purchasing Cooperative, Inc. (incorporated by reference to Exhibit 10.19 to the Registrants 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 Registrants 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
Registrants 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
Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants
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 Registrants
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 Registrants 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 Registrants 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 Registrants 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 Registrants 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 Registrants 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. |
|
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, Managements 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. | |
|
| |
|
By: /s/ James K. Price | |
|
| |
|
James K. Price |
|
|
President and Chief Executive Officer |
|
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 |
|
Title |
|
Date |
|
|
|
|
|
/s/ Richard E. Perlman |
|
|
|
|
Richard E. Perlman |
|
Chairman of the Board and Director |
|
September 20, 2007 |
|
|
|
|
|
/s/ James K. Price |
|
|
|
|
James K. Price |
|
Chief Executive Officer, President and Director (Principal Executive Officer) |
|
September 20, 2007 |
/s/ James A. Cochran |
|
|
|
|
James A. Cochran |
|
Senior Vice President, Assistant Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) |
|
September 20, 2007 |
/s/ William A. Shutzer |
|
|
|
|
William A. Shutzer |
|
Director |
|
September 20, 2007 |
|
|
|
|
|
/s/ Raymond H. Welsh |
|
|
|
|
Raymond H. Welsh |
|
Director |
|
September 20, 2007 |
|
|
|
|
|
/s/ J. Thomas Presby |
|
|
|
|
J. Thomas Presby |
|
Director |
|
September 20, 2007 |
|
|
|
|
|
/s/ James W. DeYoung |
|
|
|
|
James W. DeYoung |
|
Director |
|
September 20, 2007 |
|
|
|
|
|
/s/ Anthony Jolliffe |
|
|
|
|
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 |
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 |
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 |
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 | ) | ||||||||||||||||||||
|
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 | |||||||||
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 activitylandlord funded leasehold improvements |
$ | | $ | 1,832 | $ | | |||||||||
Noncash
investing and financing activity liability recorded in connection with intangible assets |
5,792 | 3,600 | | ||||||||||||
Noncash
investing activityissuance of common stock in exchange for intangible assets |
1,873 | 993 | | ||||||||||||
Noncash
financing activityconversion of preferred stock to common stock |
| | 12,605 | ||||||||||||
Noncash
financing activityissuance of preferred membership units exchangeable for TurboChef common stock in connection with Enersyst acquisition |
| | 6,351 | ||||||||||||
Noncash
financing activityissuance 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 | |
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 |
|
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 sharebasic: |
||||||||||
As reported |
$ | (1.25 | ) | $ | 0.52 | |||||
Pro forma |
(1.71 | ) | 0.22 | |||||||
Net (loss) income applicable to common stockholders per sharediluted: |
||||||||||
As reported |
$ | (1.25 | ) | $ | 0.25 | |||||
Pro forma |
(1.71 | ) | 0.11 |
|
2005 |
|
2004 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Expected life (in years) |
23 | 23 | ||||||||
Volatility |
63 | % | 65168% | |||||||
Risk free interest rateoptions |
4.074.61% | 3.864.74% | ||||||||
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 managements 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 |
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 |
57.5 |
$ | 3,044 | $ | 2,945 | ||||||||||
Furniture and
fixtures |
5 |
1,369 | 1,465 | ||||||||||||
Equipment |
37 |
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 |
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 |
$ | | $ | |
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, Managements 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 |
TURBOCHEF TECHNOLOGIES, INC.
SECOND AMENDMENT TO
2003 STOCK INCENTIVE PLAN
Background
TurboChef Technologies, Inc. (the Company) adopted its 2003 Stock Incentive Plan (the Plan) on October 29, 2003. Under Section 4.1 of the Plan, the total number of shares of Common Stock of the Company available for grant of Awards under the Plan was six million (6,000,000) shares. Effective April 1, 2004, the Company amended the Plan to increase the number of shares available for Award grants to ten million (10,000,000) shares. The amended Plan was approved by stockholders of the Company on July 19, 2004. Effective December 27, 2004, the Company effected a 1-for-3 reverse split of its outstanding shares, and the number of shares available for Award grants under the Plan adjusted pursuant to Section 4.4 of the Plan to 3,333,333 shares. Under Section 13.1 of the Plan the Committee, defined in the Plan as the Compensation Committee of the Companys Board of Directors, is authorized at any time to amend the Plan. The Companys Board of Directors deemed it advisable that the number of shares available for grant of Awards be increased by an additional 2,000,000 shares, to a total of 5,333,333 shares, and by consent on June 6, 2005, the Board, including the members of the Compensation Committee, approved the amendment and recommended it for approval by the stockholders. On July 19, 2005, the amendment was approved by the Companys stockholders.
Amendment
The Plan, as amended, is further amended, effective July 19, 2005, by deleting the first sentence of Section 4.1 thereof and substituting in lieu thereof the following sentence:
Subject to adjustment as provided in Section 4.4, effective July 19, 2005 the total number of Shares available for grant of Awards under the Plan shall be five million three hundred thirty three thousand three hundred thirty three (5,333,333) Shares, subject to Awards granted prior to the effective date, all of which may be granted as Incentive Stock Options.
By authority of the Board of Directors
/s/ Dennis J. Stockwell
Dennis J. Stockwell
Secretary
TURBOCHEF TECHNOLOGIES, INC.
THIRD AMENDMENT TO
2003 STOCK INCENTIVE PLAN
Background
TurboChef Technologies, Inc. (the Company) adopted its 2003 Stock Incentive Plan (the Plan) on October 29, 2003 and it was approved (as then currently amended) by stockholders of the Company on July 19, 2004. Under Section 13.1 of the Plan the Committee, defined in the Plan as the Compensation Committee of the Companys Board of Directors, is authorized at any time to amend the Plan. In light of the accounting impact that results from the application of SFAS 123R to modifications of Awards, such as could be deemed to occur if Awards are electively adjusted in connection with restructuring events, the Committee deemed it in the best interest of the Company to amend the Plan to provide that equitable adjustments under the Plans antidilution provision are mandated for restructuring events, and by consent effective on September 11, 2006, the Compensation Committee, approved the amendment.
Amendment
The Plan, as amended, is further amended, effective September 11, 2006, by deleting Section 4.4 thereof and substituting in lieu thereof the following new Section 4.4:
4.4 Adjustment of Shares. In the event of a corporate transaction involving the Company (including, without limitation, any stock split, recapitalization, reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368), merger, consolidation, separation, including a spin-off, other distribution of stock or property of the Company, or any partial or complete liquidation of the Company), the Committee shall make equitable adjustments to prevent dilution or enlargement of rights, including but not limited to adjustment in the number and class of Shares which may be delivered under the Plan, in the number and class of and/or price of Shares subject to outstanding Awards granted under the Plan, and any other adjustments as the Committee determines to be equitable; provided, however, that the number of Shares subject to any Award shall always be a whole number and the Committee shall make such adjustments as are necessary to insure Awards of whole Shares. Any such adjustment in the Shares or other stock or securities subject to outstanding Incentive Stock
Options (including any adjustments in the purchase price) shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to the extent otherwise permitted by Sections 422 and 424 of the Code.
By authority of the Compensation Committee of the Board of Directors
/s/ Dennis J. Stockwell
Dennis J. Stockwell
Secretary
TURBOCHEF TECHNOLOGIES, INC.
2003 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNITS AGREEMENT
TurboChef Technologies, Inc., a Delaware corporation (the Company), hereby grants to the person named below (Recipient) a number of restricted stock units shown below representing rights to be issued one share of Common Stock of the Company for each restricted stock unit (RSU Shares) for no additional consideration, subject to all of the terms and conditions of the agreement set forth on the reverse side and the TurboChef Technologies, Inc. 2003 Stock Incentive Plan (the Plan).
Recipient: |
IN WITNESS WHEREOF, this restricted stock units agreement has been |
executed on behalf of the Company by a duly authorized officer
[Employee recipient]
|
James K. Price, President and CEO |
___________________________________________________________________________________________________________________
Total Number of Restricted |
Grant Date: |
Stock Units (RSU Shares): |
[####] |
Vesting & Payout Schedule:
|
No. Units |
Date |
1. Grant of Restricted Stock Units.
1.1 |
Restricted Stock Units. The Restricted Stock Units (RSU) described on the front of this Agreement certificate are subject to the following terms and conditions. |
1.2 Construction. This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are incorporated herein by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.
1.3 |
Condition. If this Agreement is not executed by the Recipient, it may be canceled by the Committee. |
1.4 Term. This Agreement shall continue until the Recipients right to be issued RSU Shares has vested to the fullest extent allowed hereunder or until the Payout Date, whichever is later.
2. Vesting. The RSU award shall vest, and, subject to Sections 3.3 and 7.1 or adjustment under Section 9, the Recipient shall have the right to receive one share of Common Stock of the Company for each RSU held (or equivalents, as provided herein, RSU Shares) on or after the dates set forth on the front of this Agreement certificate, subject to earlier vesting of the RSU award as provided in Sections 3.3 and 7, and as the Company may agree in writing, and subject to earlier termination of the RSU award as provided in Sections 1.3 and 6 or in the Plan. The right to receive the RSU Shares as they become vested shall be cumulative and shall continue during the Term unless sooner terminated as provided herein. Further vesting of the RSU award shall cease upon termination of the Recipients employment with the Company or any subsidiary for any reason, other than death or Disability as next provided. In the event the Recipient dies or is terminated by reason of Disability (as determined by the Committee) while an employee of the Company or any subsidiary, the RSU award will immediately vest in its entirety and the Payout Date shall change to the date of death or such termination.
3. |
Manner of Payout. |
3.1 Delivery of RSU Shares. Once vested, the RSU will be paid out by the Company through the issuance of RSU Shares to the Recipient as soon as reasonably possible after, and effective as of, the later of the vesting date and the Payout Date. The Payout Date shall be the date, if any is indicated on the front of this Agreement certificate (adjusted as provided under Sections 3.3 and 7), on which the vested RSU Shares shall be issued. Certificate(s) for the RSU Shares shall be issued in the name of the Recipient, free and clear of all liens, security interests, pledges or other claims or charges or restrictions (other than securities law restrictions), and delivered to the last address of the Recipient known by the Company or as otherwise directed in writing by the Recipient. The Companys obligation to deliver RSU Shares is conditioned upon Recipient providing such information as may be reasonably required or appropriate in connection with such delivery, such as a registration address and tax identification number.
3.2 Stockholder Rights. The Recipient shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to any RSU Shares until issued to the Recipient, except as provided in this Agreement. After RSU Shares have vested, the Recipient shall have the right to equivalent consideration for any dividend declared by the Company on its Common Stock on or after the vesting date, whether such dividend is in the form of cash, securities or other property. After the RSU award but before the vesting date the Recipient shall have no rights to any dividend declared by the Company on its Common Stock, except as provided in Section 9. The Recipient shall have no voting rights with respect to the RSU Shares until issued. Equivalent consideration for any dividends deemed payable on RSU Shares hereunder shall be payable on the Payout Date, and if on the Payout Date the Company may not reasonably issue or deliver dividends in the form payable on the record date therefor, then the Company may deliver cash or other property of a reasonably equivalent value.
3.3 Merger; Acquisition. If the Company is acquired by merger or otherwise, then the vesting of rights to be issued RSU Shares under this Agreement and the Payout Date shall be accelerated to occur immediately prior to the closing of such transaction and the Recipient shall be permitted to participate in the merger consideration or proceeds of acquisition to the same degree as if the RSU Shares had been issued and outstanding at the time of any record date with respect to such merger or acquisition, provided, however, that nothing herein shall give Recipient any voting rights with respect to the RSU Shares until issued.
4. |
Nontransferability. The RSU award and this Agreement shall not be transferable by the Recipient other than by will or by the laws of descent and distribution. |
5. Securities Law Restrictions. The issuance of RSU Shares may be reasonably delayed by the Company until, in the opinion of counsel for the Company, the issuance of the RSU Shares is exempt from registration under the Securities Act of 1933, as amended, or any other applicable federal or state securities law, rule or regulation, or the RSU Shares have been duly registered under such laws. Unless the RSU Shares have been registered for sale under all applicable laws, the Recipient shall represent, warrant and agree, as a condition to the issuance of the RSU Shares, that if the issuance of the RSU Shares is deemed a purchase of such securities under applicable law, then the RSU Shares are being purchased for investment only and without a view to any sale or distribution of such RSU Shares and that such RSU Shares shall not be transferred or disposed of in any manner without registration under such laws, unless it is the opinion of counsel satisfactory to the Company that such a disposition is exempt from such registration. The Recipient acknowledges that an appropriate legend giving notice of the foregoing restrictions shall, at the option of the Company, appear conspicuously on all certificates evidencing the RSU Shares or other securities issued upon the payout of the RSU award.
6. Limitation or Cancellation of Award. If the Recipient engages in any Detrimental Activity, the Committee may, notwithstanding any other provision in this Agreement to the contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any further vesting of the RSU award and this Agreement as of the first date the Recipient engages in the Detrimental Activity, unless sooner terminated by operation of another term of this Agreement, the Plan or any other agreement.
7. |
Effect of Change in Control; Liquidation/Dissolution. |
7.1 Vesting and Payout. Upon the consummation of a Change in Control, all outstanding unvested RSU awards shall become immediately and fully vested and the RSU Shares shall be issued effective as of the date of such consummation of a Change in Control. In such case, the Payout Date shall change to the effective date as of which the RSU Shares are to be issued under this Section 7.1. If, in connection with a Change of Control all or substantially all outstanding shares of Common Stock are exchanged for consideration consisting of cash, other securities or a combination thereof, then Recipient may receive such consideration in lieu of RSU Shares.
7.2 Liquidation/Dissolution. Upon the effective date of the liquidation or dissolution of the Company without a successor, the RSU award shall vest in its entirety, the Payout Date shall change to such effective date and the Company shall issue the RSU Shares to the Recipient.
8. No Additional Rights Created. Nothing in the Plan or this Agreement shall confer on the Recipient any right to continue as an employee by the Company, or by any parent or subsidiary, or limit in any way the rights of the Company to terminate the Recipients employment at any time.
9. Adjustments. In the event of a change in capitalization, the Committee may make appropriate adjustments to the number and class of shares or other stock or securities subject to the RSU award. The Committees adjustment shall be made in accordance with the provisions of Section 4.4 of the Plan and shall be effective and final, binding and conclusive for all purposes of the Plan and this Agreement.
10. Withholding of Taxes. The Company shall have the right to deduct from any distribution of cash to the Recipient an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld (the Withholding Taxes) with respect to the RSU award. The Recipient shall pay the Withholding Taxes (if any) to the Company in cash prior to the issuance of any RSU Shares. In satisfaction of the Withholding Taxes, the Recipient may make a written election, which may be accepted or rejected in the discretion of the Committee, to have withheld a portion of the RSU Shares issuable to him or her upon payout of the RSU award, having an aggregate Fair Market Value equal to the minimum required Withholding Taxes, provided that, if the Recipient may be subject to liability under Section 16(b) of the Exchange Act, the election must comply with the requirements applicable to share transactions by such Recipient.
11. Modification of Agreement. Except as provided in Sections 3.3, 7 and 9, this Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, only by a written instrument executed by the parties hereto.
12. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
13. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.
14. Successors in Interest. This Agreement shall inure to the benefit of and be binding upon each successor corporation to the Company. This Agreement shall inure to the benefit of the Recipients legal representatives. All obligations imposed upon the Recipient and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Recipients heirs, executors, administrators and successors.
15. Resolution of Disputes. Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Recipient and the Company for all purposes.
By signing below, Recipient hereby accepts the RSU award subject to all its terms and provisions and agrees to be bound by the terms and provisions of the Plan. Recipient hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee responsible for administration of the Plan, upon any questions arising under the Plan. Recipient authorizes the Company to withhold, in accordance with applicable law, from any compensation payable to him or her, any taxes required to be withheld by federal, state or local law as a result of the grant, existence or payout of the RSU award.
RECIPIENT
Signature:
TURBOCHEF TECHNOLOGIES, INC.
2003 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNITS AGREEMENT
TurboChef Technologies, Inc., a Delaware corporation (the Company), hereby grants to the person named below (Recipient) a number of restricted stock units shown below representing rights to be issued one share of Common Stock of the Company for each restricted stock unit (RSU Shares) for no additional consideration, subject to all of the terms and conditions of the agreement set forth on the reverse side and the TurboChef Technologies, Inc. 2003 Stock Incentive Plan (the Plan).
Recipient: |
IN WITNESS WHEREOF, this restricted stock units agreement has been |
executed on behalf of the Company by a duly authorized officer
[Director recipient]
|
James K. Price, President and CEO |
___________________________________________________________________________________________________________________
Total Number of Restricted |
Grant Date: |
Stock Units (RSU Shares): |
[#####] |
Vesting and Payout Schedule:
No. Units |
Date |
|
|
|
|
|
|
1. |
Grant of Restricted Stock Units. |
1.1 |
Restricted Stock Units. The Restricted Stock Units (RSU) described on the front of this Agreement certificate are subject to the following terms and conditions. |
1.2 Construction. This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are incorporated herein by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan.
1.3 |
Condition. If this Agreement is not executed by the Recipient, it may be canceled by the Committee. |
1.4 Term. This Agreement shall continue until the Recipients right to be issued RSU Shares has vested to the fullest extent allowed hereunder or until the Payout Date, whichever is later.
2. Vesting. The RSU award shall vest, and, subject to Sections 3.3 and 7.1 or adjustment under Section 9, the Recipient shall have the right to receive one share of Common Stock of the Company for each RSU held (or equivalents, as provided herein, RSU Shares) on or after the dates set forth on the front of this Agreement certificate, subject to earlier vesting of the RSU award as provided in Sections 3.3 and 7, and as the Company may agree in writing, and subject to earlier termination of the RSU award as provided in Sections 1.3 and 6 or in the Plan. The right to receive the RSU Shares as they become vested shall be cumulative and shall continue during the Term unless sooner terminated as provided herein. Further vesting of the RSU award shall cease upon termination of the Recipient as a director and/or employee of the Company or any subsidiary for any reason, other than death or Disability as next provided. In the event the Recipient dies or is terminated by reason of Disability (as determined by the Committee) while a director and/or employee of the Company or any subsidiary, the RSU award will immediately vest in its entirety and the Payout Date shall change to the date of death or such termination.
3. |
Manner of Payout. |
3.1 Delivery of RSU Shares. Once vested, the RSU will be paid out by the Company through the issuance of RSU Shares to the Recipient as soon as reasonably possible after, and effective as of, the later of the vesting date and the Payout Date. The Payout Date shall be the date, if any is indicated on the front of this Agreement certificate (adjusted as provided under Sections 3.3 and 7), on which the vested RSU Shares shall be issued. Certificate(s) for the RSU Shares shall be issued in the name of the Recipient, free and clear of all liens, security interests, pledges or other claims or charges or restrictions (other than securities law restrictions), and delivered to the last address of the Recipient known by the Company or as otherwise directed in writing by the Recipient. The Companys obligation to deliver RSU Shares is conditioned upon Recipient providing such information as may be reasonably required or appropriate in connection with such delivery, such as a registration address and tax identification number.
3.2 Stockholder Rights. The Recipient shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to any RSU Shares until issued to the Recipient, except as provided in this Agreement. After RSU Shares have vested, the Recipient shall have the right to equivalent consideration for any dividend declared by the Company on its Common Stock on or after the vesting date, whether such dividend is in the form of cash, securities or other property. After the RSU award but before the vesting date the Recipient shall have no rights to any dividend declared by the Company on its Common Stock, except as provided in Section 9. The Recipient shall have no voting rights with respect to the RSU Shares until issued. Equivalent consideration for any dividends deemed payable on RSU Shares hereunder shall be payable on the Payout Date, and if on the Payout Date the Company may not reasonably issue or deliver dividends in the form payable on the record date therefor, then the Company may deliver cash or other property of a reasonably equivalent value.
3.3 Merger; Acquisition. If the Company is acquired by merger or otherwise, then the vesting of rights to be issued RSU Shares under this Agreement and the Payout Date shall be accelerated to occur immediately prior to the closing of such transaction and the Recipient shall be permitted to participate in the merger consideration or proceeds of acquisition to the same degree as if the RSU Shares had been issued and outstanding at the time of any record date with respect to such merger or acquisition, provided, however, that nothing herein shall give Recipient any voting rights with respect to the RSU Shares until issued.
4. |
Nontransferability. The RSU award and this Agreement shall not be transferable by the Recipient other than by will or by the laws of descent and distribution. |
5. Securities Law Restrictions. The issuance of RSU Shares may be reasonably delayed by the Company until, in the opinion of counsel for the Company, the issuance of the RSU Shares is exempt from registration under the Securities Act of 1933, as amended, or any other applicable federal or state securities law, rule or regulation, or the RSU Shares have been duly registered under such laws. Unless the RSU Shares have been registered for sale under all applicable laws, the Recipient shall represent, warrant and agree, as a condition to the issuance of the RSU Shares, that if the issuance of the RSU Shares is deemed a purchase of such securities under applicable law, then the RSU Shares are being purchased for investment only and without a view to any sale or distribution of such RSU Shares and that such RSU Shares shall not be transferred or disposed of in any manner without registration under such laws, unless it is the opinion of counsel satisfactory to the Company that such a disposition is exempt from such registration. The Recipient acknowledges that an appropriate legend giving notice of the foregoing restrictions shall, at the option of the Company, appear conspicuously on all certificates evidencing the RSU Shares or other securities issued upon the payout of the RSU award.
6. Limitation or Cancellation of Award. If the Recipient engages in any Detrimental Activity, the Committee may, notwithstanding any other provision in this Agreement to the contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any further vesting of the RSU award and this Agreement as of the first date the Recipient engages in the Detrimental Activity, unless sooner terminated by operation of another term of this Agreement, the Plan or any other agreement.
7. |
Effect of Change in Control; Liquidation/Dissolution. |
7.1 Vesting and Payout. Upon the consummation of a Change in Control, all outstanding unvested RSU awards shall become immediately and fully vested and the RSU Shares shall be issued effective as of the date of such consummation of a Change in Control. In such case, the Payout Date shall change to the effective date as of which the RSU Shares are to be issued under this Section 7.1. If, in connection with a Change of Control all or substantially all outstanding shares of Common Stock are exchanged for consideration consisting of cash, other securities or a combination thereof, then Recipient may receive such consideration in lieu of RSU Shares.
7.2 Liquidation/Dissolution. Upon the effective date of the liquidation or dissolution of the Company without a successor, the RSU award shall vest in its entirety, the Payout Date shall change to such effective date and the Company shall issue the RSU Shares to the Recipient.
8. No Additional Rights Created. Nothing in the Plan or this Agreement shall confer on you any right to continue as a member of the Board of Directors or otherwise be engaged for services by the Company, or by any parent or subsidiary, or limit in any way the rights of the Board of Directors or the stockholders of the Company.
9. Adjustments. In the event of a change in capitalization, the Committee may make appropriate adjustments to the number and class of shares or other stock or securities subject to the RSU award. The Committees adjustment shall be made in accordance with the provisions of Section 4.4 of the Plan and shall be effective and final, binding and conclusive for all purposes of the Plan and this Agreement.
10. Withholding of Taxes. The Company shall have the right to deduct from any distribution of cash to the Recipient an amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld (the Withholding Taxes) with respect to the RSU award. The Recipient shall pay the Withholding Taxes (if any) to the Company in cash prior to the issuance of any RSU Shares. In satisfaction of the Withholding Taxes, the Recipient may make a written election, which may be accepted or rejected in the discretion of the Committee, to have withheld a portion of the RSU Shares issuable to him or her upon payout of the RSU award, having an aggregate Fair Market Value equal to the minimum required Withholding Taxes, provided that, if the Recipient may be subject to liability under Section 16(b) of the Exchange Act, the election must comply with the requirements applicable to share transactions by such Recipient.
11. Modification of Agreement. Except as provided in Sections 3.3, 7 and 9, this Agreement may be modified, amended, suspended or terminated, and any terms or conditions may be waived, only by a written instrument executed by the parties hereto.
12. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms.
13. Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof.
14. Successors in Interest. This Agreement shall inure to the benefit of and be binding upon each successor corporation to the Company. This Agreement shall inure to the benefit of the Recipients legal representatives. All obligations imposed upon the Recipient and all rights granted to the Company under this Agreement shall be final, binding and conclusive upon the Recipients heirs, executors, administrators and successors.
15. Resolution of Disputes. Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Committee. Any determination made hereunder shall be final, binding and conclusive on the Recipient and the Company for all purposes.
By signing below, Recipient hereby accepts the RSU award subject to all its terms and provisions and agrees to be bound by the terms and provisions of the Plan. Recipient hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee responsible for administration of the Plan, upon any questions arising under the Plan. Recipient authorizes the Company to withhold, in accordance with applicable law, from any compensation payable to him or her, any taxes required to be withheld by federal, state or local law as a result of the grant, existence or payout of the RSU award.
RECIPIENT
Signature:
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements of TurboChef Technologies, Inc. listed below of our reports dated September 20, 2007, with respect to the consolidated financial statements and schedule of TurboChef Technologies, Inc. and the effectiveness of internal control over financial reporting of TurboChef Technologies, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2006:
(1) |
Registration Statement (Form S-3 No. 333-82518) of TurboChef Technologies, Inc., |
(2) |
Registration Statement (Form S-3 No. 333-117806) of TurboChef Technologies, Inc., |
(3) |
Registration Statement (Form S-3 No. 333-121818) of TurboChef Technologies, Inc., |
(4) |
Registration Statement (Form S-8 No. 333-76662) pertaining to the 1994 Stock Option Plan, |
(5) |
Registration Statement (Form S-8 No. 333-81571) pertaining to the 1994 Stock Option Plan, |
(6) |
Registration Statement (Form S-8 No. 333-116225) pertaining to TurboChef Technologies, Inc. 2003 Stock Incentive Plan, and |
(7) |
Registration Statement (Form S-8 No. 333-128442) pertaining to TurboChef Technologies, Inc. 2003 Stock Incentive Plan |
/s/ Ernst & Young LLP
Atlanta, Georgia
September 20, 2007
Exhibit 31.1
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James K. Price, certify that:
1. |
I have reviewed this annual report on Form 10-K of TurboChef Technologies, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and we have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information and the material weakness that existed in prior years and at December 31, 2006 related to our stock option granting practices have been resolved by the filing of our Form 10-K for the year ended December 31, 2006; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
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By: |
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/s/ James K. Price |
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James K. Price President and Chief Executive Officer (Principal Executive Officer) |
Date: September 21, 2007
Exhibit 31.2
Certifications
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, James A. Cochran, certify that:
1. |
I have reviewed this annual report on Form 10-K of TurboChef Technologies, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a 15(f) and 15d-15(f)) for the registrant and we have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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c) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information and the material weakness that existed in prior years and at December 31, 2006 related to our stock option granting practices have been resolved by the filing of our Form 10-K for the year ended December 31, 2006; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
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By: |
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/s/ James A. Cochran |
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James A. Cochran Chief Financial Officer (Principal Financial Officer) |
Date: September 21, 2007
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of TurboChef Technologies, Inc. (the Company) on Form 10-K for the period ending December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, James K. Price, Chief Executive Officer of the Company, and James A. Cochran, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to our knowledge, that:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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/s/ James K. Price |
James K. Price Chief Executive Officer |
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/s/ James A. Cochran |
James A. Cochran Chief Financial Officer |
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September 21, 2007 |