Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

(11) Stockholders’ Equity

Preferred Stock

Securities Purchase Agreement

On November 15, 2007, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership (collectively, the “Purchasers”).

Pursuant to the Purchase Agreement, the Company sold the Purchasers an aggregate of 5,500 shares of its newly-created Series B convertible preferred stock, par value $0.01 per share (“Series B Preferred Stock”), that are immediately convertible into an aggregate of 3,856,942 shares of its Common Stock at a conversion price of $14.26 per share, and warrants (the “Warrants”) to purchase an aggregate of 1,157,083 shares of Common Stock for $15.69 per share. The consideration paid for the Series B Preferred Stock and the Warrants was $55 million. As of December 31, 2013, no Series B Preferred Stock has been converted and the warrants have expired without any shares having been purchased. The Series B Preferred Stock has not been registered and the Company has not registered the shares of Common Stock issuable upon the conversion of the Series B Preferred Stock.

Investor Rights Agreement

On November 15, 2007, the Company also entered into an Investor Rights Agreement with the Purchasers (the “Investor Rights Agreement”) pursuant to which, among other things, the Company agreed to grant the Purchasers certain registration rights including the right to require the Company to file a registration statement within 30 days to register the Common Stock issuable upon conversion of the Series B Preferred Stock and upon exercise of the Warrants and to use its reasonable best efforts to cause the registration to be declared effective within 90 days after the date the registration is filed. To date, no such request has been made.

Certificate of Designation

Pursuant to a Certificate of Designation for the Series B Preferred Stock (the “Certificate of Designation”) filed by the Company with the Secretary of State of the State of Delaware on November 15, 2007: (i) the Series B Preferred Stock has a purchase price per share equal to $10,000 (the “Original Issue Price”); (ii) in the event of any Liquidation Event (as defined in the Certificate of Designation), the holders of shares of Series B Preferred Stock are entitled to receive, prior to any distribution to the holders of the Common Stock, an amount per share equal to the Original Issue Price, plus any declared and unpaid dividends; (iii) the holders of the Series B Preferred Stock have the right to vote on any matter submitted to a vote of the stockholders of the Company and are entitled to vote that number of votes equal to the aggregate number of shares of Common Stock issuable upon the conversion of such holders’ shares of Series B Preferred Stock; (iv) for so long as 40% of the shares of Series B Preferred Stock remain outstanding, the holders of a majority of such shares will have the right to elect one person to the Company’s board of directors; (v) the Series B Preferred Stock automatically converts into an aggregate of 3,856,942 shares of Common Stock in the event that the Common Stock trades on a trading market at or above a closing price equal to $28.52 per share for 90 consecutive trading days and any demand registration previously requested by the holders of the Series B Preferred Stock has become effective; and (vi) so long as 30% of the shares of the currently-outstanding Series B Preferred Stock remain outstanding, the affirmative vote of the holders of a majority of such shares will be necessary to take any of the following actions: (a) authorize, create or issue any class or classes of our capital stock ranking senior to, or on a parity with (as to dividends or upon a liquidation event) the Series B Preferred Stock or any securities exercisable or exchangeable for, or convertible into, any now or hereafter authorized capital stock ranking senior to, or on a parity with (as to dividends or upon a liquidation event) the Series B Preferred Stock (including, without limitation, the issuance of any shares of Series B Preferred Stock (other than shares of Series B Preferred Stock issued as a stock dividend or in a stock split)); (b) any increase or decrease in the authorized number of shares of Series B Preferred Stock; (c) any amendment, waiver, alteration or repeal of our certificate of incorporation or bylaws in a way that adversely affects the rights, preferences or privileges of the Series B Preferred Stock; (d) the payment of any dividends (other than dividends paid in the capital stock of the Company or any of its subsidiaries) in excess of $0.10 per share per annum on the Common Stock unless after the payment of such dividends we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) in an amount equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; and (e) the purchase or redemption of: (1) any Common Stock (except for the purchase or redemption from employees, directors and consultants pursuant to agreements providing us with repurchase rights upon termination of their service with us) unless after such purchase or redemption we have unrestricted cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the liquidation preference; or (2) any class or series of now or hereafter of our authorized stock that ranks junior to (upon a liquidation event) the Series B Preferred Stock.

Treasury Stock

In December 2000, the Company’s Board of Directors authorized the repurchase of up to $10 million of the Company’s Common Stock, from time to time, in private purchases or in the open market. In February 2004, the Company’s Board of Directors approved the resumption of the stock repurchase program (the “Program”) under new price and volume parameters, leaving unchanged the maximum amount available for repurchase under the Program. However, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, is necessary for the Company to repurchase its Common Stock (except as described above). During the years ended December 31, 2013 and 2012, the Company did not purchase any shares of Common Stock under the Program. Since inception of the Program, the Company has purchased a total of 5,453,416 shares of Common Stock at an aggregate cost of approximately $7.3 million.

In addition, pursuant to the terms of the Company’s 2007 Plan, and certain procedures adopted by the Compensation Committee of the Board of Directors, in connection with the exercise of stock options by certain of the Company’s employees, and the issuance of shares of Common Stock in settlement of vested restricted stock units, the Company may withhold shares in lieu of payment of the exercise price and/or the minimum amount of applicable withholding taxes then due. Through December 31, 2013, the Company had withheld an aggregate of 1,348,883 shares which have been recorded as treasury stock. In addition, the Company received an aggregate of 208,270 shares as partial settlement of the working capital and debt adjustment from the acquisition of Corsis Technology Group II LLC and 3,338 shares as partial settlement of the working capital adjustment from the acquisition of Kikucall, Inc. These shares have been recorded as treasury stock.

Dividends

There were no dividends paid during the year ended December 31, 2013. The Company has reinstated the payment of a $0.025 quarterly per share dividend beginning with the first quarter of 2014. In the third quarter of 2012, the Company’s Board of Directors suspended the payment of a quarterly dividend. During both the first and second quarters of 2012, and for each of the four quarters in the year ended December 31, 2011, the Company paid a quarterly cash dividend of $0.025 per share on its Common Stock and its Series B Preferred Stock on a converted common share basis. For the years ended December 31, 2012 and 2011, these dividend payments totaled approximately $1.8 million and $3.8 million, respectively.

Stock Options

Under the terms of the 1998 Stock Incentive Plan (the “1998 Plan”), 8,900,000 shares of Common Stock of the Company were reserved for awards of incentive stock options, nonqualified stock options, restricted stock, deferred stock, restricted stock units, or any combination thereof. Under the terms of the 2007 Plan, 7,750,000 shares of Common Stock of the Company were reserved for awards of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units or other stock-based awards. The 2007 Plan also authorized cash performance awards. Additionally, under the terms of the 2007 Plan, unused shares authorized for award under the 1998 Plan are available for issuance under the 2007 Plan. No further awards will be made under the 1998 Plan. Awards may be granted to such directors, employees and consultants of the Company as the Compensation Committee of the Board of Directors shall select in its discretion or delegate to management to select. Only employees of the Company are eligible to receive grants of incentive stock options. Awards generally vest over a three- to five-year period and stock options generally have terms of five years. As of December 31, 2013, there remained approximately 2.2 million shares available for future awards under the 2007 Plan. Stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011 was approximately $2.1 million (inclusive of $393 thousand included in restructuring and other charges), $2.4 million (inclusive of $222 thousand included in restructuring and other charges) and $3.4 million, respectively.

A stock option represents the right, once the option has vested and become exercisable, to purchase a share of the Company’s Common Stock at a particular exercise price set at the time of the grant. A restricted stock unit (“RSU”) represents the right to receive one share of the Company’s Common Stock (or, if provided in the award, the fair market value of a share in cash) on the applicable vesting date for such RSU. Until the stock certificate for a share of Common Stock represented by an RSU is delivered, the holder of an RSU does not have any of the rights of a stockholder with respect to the Common Stock. However, the grant of an RSU includes the grant of dividend equivalents with respect to such RSU. The Company records cash dividends for RSUs to be paid in the future at an amount equal to the rate paid on a share of Common Stock for each then-outstanding RSU granted. The accumulated dividend equivalents related to outstanding grants vest on the applicable vesting date for the RSU with respect to which such dividend equivalents were credited, and are paid in cash at the time a stock certificate evidencing the shares represented by such vested RSU is delivered.

A summary of the activity of the 1998 and 2007 Plans and awards issued outside of the Plan pertaining to stock option grants is as follows:

	Shares Underlying Awards			Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted Average Remaining Contractual Life (In Years)
Awards outstanding, December 31, 2012		3,251,849		$	2.22
Options granted		1,645,534		$	2.02
Options exercised		(42,578	)	$	1.75
Options cancelled		(117,029	)	$	2.43
Options expired		(302,240	)	$	6.01
Awards outstanding, December 31, 2013		4,435,536		$	1.89	$	1,806		4.70
Awards vested and expected to vest at December 31, 2013		4,011,951		$	1.88	$	1,654		4.68
Awards exercisable at December 31, 2013		1,202,084		$	1.90	$	557		4.36

A summary of the activity of the 1998 and 2007 Plans pertaining to grants of restricted stock units is as follows:

	Shares Underlying Awards		Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Weighted Average Remaining Contractual Life (In Years)
Awards outstanding, December 31, 2012	913,027		$	—
Restricted stock units granted	1,338,018		$	—
Restricted stock units settled by delivery of Common Stock upon vesting	(751,371	)	$	—
Restricted stock units cancelled	(21,227	)	$	—
Awards outstanding, December 31, 2013	1,478,447		$	—	$	3,341		3.74
Awards vested and expected to vest at December 31, 2013	1,406,822		$	—	$	3,179		3.06

A summary of the status of the Company’s unvested share-based payment awards as of December 31, 2013 and changes in the year then ended is as follows:

Unvested Awards	Awards			Weighted Average Grant Date Fair Value
Shares underlying awards unvested at December 31, 2012	3,834,606		$	1.05
Shares underlying options granted	1,645,534		$	0.63
Shares underlying restricted stock units granted	1,338,018		$	2.06
Shares underlying options vested	(1,216,632	)	$	0.51
Shares underlying restricted stock units issued	(751,371	)	$	2.90
Shares underlying unvested options cancelled	(117,029	)	$	0.79
Shares underlying unvested restricted stock units cancelled	(21,227	)	$	3.25
Shares underlying awards unvested at December 31, 2013	4,711,899		$	1.03

For the years ended December 31, 2013, 2012 and 2011, approximately 1.6 million, 2.8 million and 730 thousand stock options, respectively, were granted to employees of the Company, and 43 thousand options were exercised during the year ended December 31, 2013 yielding $74 thousand of cash proceeds to the Company. There were no stock options exercised during the years ended December 31, 2012 or 2011. For the years ended December 31, 2013, 2012 and 2011, approximately 1.3 million, 249 thousand and 1.4 million restricted stock units, respectively, were granted to employees of the Company, and 751 thousand, 1.3 million and 681 thousand shares, respectively, were issued under restricted stock unit grants. The weighted-average grant date fair value per share of employee stock options granted during the years ended December 31, 2013, 2012 and 2011 was $0.63, $0.48 and $0.89, respectively, and the weighted-average grant date fair value per share of employee restricted stock units granted was $2.06, $1.77 and $2.82, respectively. For the years ended December 31, 2013, 2012 and 2011, the total fair value of share-based awards vested was approximately $2.1 million, $2.7 million and $1.9 million, respectively. For the year ended December 31, 2013, the total intrinsic value of options exercised was approximately $16 thousand. There were no options exercised during the years ended December 31, 2012 or 2011. For the years ended December 31, 2013, 2012 and 2011, the total intrinsic value of restricted stock units that vested was approximately $1.4 million, $2.5 million and $1.6 million, respectively. As of December 31, 2013, there was approximately $4.1 million of unrecognized stock-based compensation expense remaining to be recognized over a weighted-average period of 3.4 years.