Restatement

12 Months Ended

Dec. 31, 2012

Restatement [Abstract]

Restatement

2.    Restatement

The Company is restating its previously issued consolidated balance sheet for the year ended December 31, 2011 to correct an error for the improper application of Accounting Standards Codification No. 840, “Accounting for Leases” for the Company’s new headquarters and laboratory space.

On June 24, 2011, the Company entered into the lease with ARE-John Hopkins Court LLC (“landlord” or “lessor”). At the time the lease documents were signed, the building was only partially completed and had to undergo a period of construction that included structural improvements before the Company could occupy the space. As set forth in ASC 840-40-55, “The Effect of Lessee Involvement in Asset Construction, (previously EITF 97-10),” the form of a lessee’s involvement during the construction period raises questions about whether the lessee is, solely for accounting purposes, acting as an agent for the owner/lessor or is, in substance, the owner of the asset during the construction period. For accounting purposes, a lessee is considered the owner of a construction project during the construction period if the lessee has substantially all of the construction period risks. If, at any time during the construction period, the present value of amounts that could be due to the landlord is 90% or more of the total qualifying project costs incurred to date or violates any one or more of six “special” provisions, then the lessee would be deemed to have substantially all of the construction period risk and be deemed the accounting owner.

The Company initially determined that it should not have been deemed the owner for accounting purposes of the building and that the lease should be accounted for as an operating lease. During the 2012 audit, the Company concluded that based on the terms of the lease agreement, the Company had substantially all of the construction period risks and should be deemed the accounting owner of the asset during the construction period. Furthermore, upon completion of construction of the building in June 2012, the Company did not meet the sale-leaseback criteria for de-recognition of the building assets and liabilities; therefore, the lease should have been accounted for as a financing obligation commencing at the inception of the lease in June 2011.

Under ASC 840, the Company is required to record an asset representing the total cost of the buildings and improvements, paid by the lessor (the legal owner of the building), with a corresponding lease financing obligation. The assets will be depreciated over the term of the lease, and rental payments will be treated as principal and interest payments on the lease financing obligation. The lease financing obligation balance at the end of the lease term will approximate the net book value of the building to be relinquished to the lessor. The corrections impact the classification of cash flows from operations and financing activities, but have no impact on net increase or decrease in cash and cash equivalents reported in the Company’s consolidated statement of cash flows. The Company assessed the impact of the revisions on its annual consolidated financial statements for the year ended December 31, 2011 and determined that the impact to the consolidated financial statements was material and should be restated under generally accepted accounting principles (“GAAP”). In connection with the restatement, the Company also corrected certain immaterial amounts related to warrants issued in 2011, see Note 10, and other immaterial error corrections. The Company has also adjusted its consolidated statements of cash flows for the year ended December 31, 2011 to correct amounts previously reflected as cash paid for equipment purchases related to its new facility for the year ended December 31, 2011, but for which the cash had not been paid as of December 31, 2011. The adjustment had no impact on the reported cash and cash equivalents as of December 31, 2012 and 2011. The revised consolidated financial information as of December 31, 2011 included in this Annual Report on Form 10-K has been labeled as “As Restated.”

The following tables presents the impact of the revisions on the Company’s previously issued financial statements for the year ended December 31, 2011 (in thousands):

	December 31, 2011
	Previously Reported			Adjustments (1)			As Restated
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	28,759		$	0		$	28,759
Restricted cash		5,000			0			5,000
Accounts receivable, net		11,371			0			11,371
Inventories, net		6,323			0			6,323
Other current assets		2,396			103			2,499
Total current assets		53,849			103			53,952
Property and equipment, net		7,806			7,805			15,611
Restricted cash		3,200			0			3,200
Other long term assets		482			27			509
Total assets	$	65,337		$	7,935		$	73,272
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,543		$	0		$	8,543
Accrued expenses		6,519			108			6,627
Deferred revenue		4,137			0			4,137
Convertible debt, at carrying value		34,851			0			34,851
Other current liabilities		436			256			692
Total current liabilities		54,486			364			54,850
Lease financing obligation, net of current portion		0			7,135			7,135
Other long term liabilities		906			254			1,160
Total liabilities		55,392			7,753			63,145
Stockholders’ equity:
Common stock		12			0			12
Additional paid-in capital		610,781			(209	)		610,572
Accumulated deficit		(600,848	)		391			(600,457	)
Total stockholders’ equity		9,945			182			10,127
Total liabilities and stockholders’ equity	$	65,337		$	7,935		$	73,272

(1) Adjustments include impact of revisions to lease accounting as well as corrections for immaterial adjustments, including certain amounts related to warrants issued in 2011, that were not reflected in the previously reported numbers. Additionally, certain reclassifications have been made to the consolidated balance sheet to conform to the current presentation as of December 31, 2012.

	Consolidated Statements of Comprehensive Income For The Year Ended December 31, 2011
	Previously Reported			Adjustments(1)			As Restated
	(amounts in thousands, except per share data)
Revenue:
Product	$	55,995		$	0		$	55,995
Collaborative and license		5,272			0			5,272
Total revenue		61,267			0			61,267
Operating expenses:
Cost of product and contract manufacturing revenue		34,481			0			34,481
Research and development		10,986			52			11,038
Selling, general and administrative		19,365			(374	)		18,991
Restructuring charges		2,943			0			2,943
Total operating expenses		67,775			(322	)		67,453
Income (loss) from operations		(6,508	)		322			(6,186	)
Other income and expenses:
Other income, net		56			0			56
Interest expense		(3,062	)		(26	)		(3,088	)
Gain on debt extinguishment upon repurchase of convertible notes		15,349			0			15,349
Loss on net change in fair value of derivative assets and liabilities		(964	)		95			(869	)
Total other income, net		11,379			69			11,448
Net income from continuing operations before income taxes		4,871			391			5,262
Income tax benefit		368			0			368
Net income from continuing operations		5,239			391			5,630
Net loss from discontinued operations		(112	)		0			(112	)
Net income attributed to Verenium Corporation	$	5,127		$	391		$	5,518
Net income per share, basic:
Continuing operations	$	0.42		$	0.03		$	0.45
Discontinued operations	$	(0.01	)	$	0.00		$	(0.01	)
Attributed to Verenium Corporation	$	0.41		$	0.03		$	0.44
Net income per share, diluted:
Continuing operations	$	0.42		$	0.03		$	0.45
Discontinued operations	$	(0.01	)	$	0.00		$	(0.01	)
Attributed to Verenium Corporation	$	0.41		$	0.03		$	0.44
Shares used in calculating net income per share, basic		12,608			0			12,608
Shares used in calculating net income per share, diluted		12,608			0			12,608
Comprehensive income	$	5,127		$	391		$	5,518

(1) Adjustments include impact of revisions to lease accounting as well as corrections for immaterial adjustments that were not reflected in the previously reported numbers.

	Consolidated Statement of Cash Flows For the Year Ended December 31, 2011
	Previously Reported			Adjustments(1)			As Restated
	(in thousands)
Operating Activities:
Net income	$	5,127		$	391		$	5,518
Net loss from discontinued operations		112			0			112
Net income from continuing operations		5,239			391			5,630
Adjustments to reconcile net income from continuing operations to net cash used in operating activities of continuing operations:
Depreciation and amortization		1,348			0			1,348
Share-based compensation		1,347			0			1,347
Loss on extinguishment of debt		(15,349	)		0			(15,349	)
Amortization of debt net premium/discount from convertible notes		(140	)		0			(140	)
Loss on net change in fair value of derivative assets and liabilities		964			(95	)		869
Non-cash restructuring charges		532			0			532
Non-cash income tax benefit		(368	)		0			(368	)
Change in operating assets and liabilities:
Accounts receivable		(4,663	)		0			(4,663	)
Inventories		(1,007	)		0			(1,007	)
Other assets		785			380			1,165
Accounts payable and accrued liabilities		(1,464	)		(1,465	)		(2,929	)
Deferred revenue		3,175			0			3,175
Net cash used in operating activities of continuing operations		(9,601	)		(789	)		(10,390	)
Investing activities:
Purchases of property and equipment, net		(6,540	)		1,144			(5,396	)
Restricted cash		(3,200	)		0			(3,200	)
Net cash used in investing activities of continuing operations		(9,740	)		1,144			(8,596	)
Financing activities:
Principal payments on debt obligations		(38,645	)		0			(38,645	)
Proceeds from sale of common stock and warrants		2			0			2
Proceeds from issuance of debt, net of issuance costs		0			(355	)		(355	)
Net cash used in financing activities of continuing operations		(38,643	)		(355	)		(38,998	)
Cash used in discontinued operations:
Net cash used in operating activities of discontinued operations		(1,186	)		0			(1,186	)
Net cash used in discontinued operations		(1,186	)		0			(1,186	)
Net decrease in cash and cash equivalents		(59,170	)		0			(59,170	)
Cash and cash equivalents at beginning of year		87,929			0			87,929
Cash and cash equivalents at end of year	$	28,759		$	0		$	28,759
Supplemental disclosure of cash flow information:
Interest paid	$	3,386		$	0		$	3,386
Supplemental disclosure of non-cash activities:
Property acquired under lease financing obligations	$	0		$	7,391		$	7,391

(1) Adjustments include impact of revisions to lease accounting as well as corrections for immaterial adjustments that were not reflected in the previously reported numbers. The adjustments also correct amounts previously reflected as cash paid for equipment purchases related to its new facility, but for which the cash had not been paid as of the balance sheet date.