Restatement and Revision of Unaudited Condensed Consolidated Financial Statements (Tables)

3 Months Ended

Mar. 31, 2013

Restatement and Revision of Unaudited Condensed Consolidated Financial Statements

The effects of the restatement and revisions on the condensed consolidated balance sheet as of March 31, 2013 are summarized in the following table:

	March 31, 2013 (In thousands, except per share data)
	Previously Reported			Corrections			Penalty Payment Derivative			Revision for Measurement Period Adjustments			Restated and Revised
ASSETS
Current assets:
Cash and cash equivalents	$	51,404		$	—		$	—		$	—		$	51,404
Short-term investments		48,356			—			—			—			48,356
Restricted cash		2,108			—			—			—			2,108
Accounts receivable, net of allowance for doubtful accounts		63,267			—			—			—			63,267
Inventories		68,818			(212	)		—			(6,747	)		61,859
Prepaid expenses and other current assets		8,053			74			—			2,353			10,480
Total current assets		242,006			(138	)		—			(4,394	)		237,474
Long-term investments		331			—			—			—			331
Property, plant and equipment, net		65,079			2,156			—			2,766			70,001
Goodwill		2,188			(2,188	)		—			—			—
Other intangible assets, net		17,176			(72	)		—			1,662			18,766
Other long-term assets		4,206			(2,064	)		—			(781	)		1,361
Total assets	$	330,986		$	(2,306	)	$	—		$	(747	)	$	327,933
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	40,963		$	(146	)	$	—		$	—		$	40,817
Notes payable		10,431			—			—			—			10,431
Current portion of long-term debt		10,710			(1,750	)		—			—			8,960
Accrued and other current liabilities		23,520			1,225			—			129			24,874
Total current liabilities		85,624			(671	)		—			129			85,082
Long-term debt, net of current portion		40,420			1,750			—			—			42,170
Deferred income tax liabilities		655			—			—			—			655
Other noncurrent liabilities		10,506			(2,400	)		138			(97	)		8,147
Total liabilities		137,205			(1,321	)		138			32			136,054
Redeemable common stock		5,000			—			(5,000	)		—			—
Stockholders’ equity:
Preferred stock, $0.0025 par value
Common stock, $0.0025 par value		76			—			—			—			76
Additional paid-in capital		435,282			—			4,862			—			440,144
Accumulated other comprehensive income		11,970			12			—			—			11,982
Accumulated deficit		(258,547	)		(997	)		—			(779	)		(260,323	)
Total stockholders’ equity		188,781			(985	)		4,862			(779	)		191,879
Total liabilities, redeemable common stock and stockholders’ equity	$	330,986		$	(2,306	)	$	—		$	(747	)	$	327,933

The effects of the restatement and revision on the condensed consolidated statement of operations for the three months ended March 31, 2013 are summarized in the following table:

	Three Months Ended March 31, 2013 (In thousands, except share and per share information)
	Previously Reported			Corrections				Revision for Measurement Period Adjustments		Restated and Revised
Revenue	$	56,063		$	—		$	—		$	56,063
Cost of goods sold		44,333			(27	)		—			44,306
Gross profit		11,730			27			—			11,757
Operating expenses:
Research and development		9,707			—			—			9,707
Sales and marketing		3,586			—			—			3,586
General and administrative		8,545			1,024			—			9,569
Amortization of purchased intangible assets		321			—			—			321
Restructuring charges		325			—			—			325
Total operating expenses		22,484			1,024			—			23,508
Loss from operations		(10,754	)		(997	)		—			(11,751	)
Interest income		131			—			—			131
Interest expense		(163	)		—			—			(163	)
Other expense, net		(274	)		—			—			(274	)
Total interest and other expense, net		(306	)		—			—			(306	)
Loss before income taxes		(11,060	)		(997	)		—			(12,057	)
Income tax (expense) benefit		596			—			(779	)		(183	)
Net loss	$	(10,464	)	$	(997	)	$	(779	)	$	(12,240	)
Basic and diluted net loss per share:
Net loss	$	(0.34	)							$	(0.40	)
Weighted average shares used to compute basic and diluted net loss per share		30,574,032									30,574,032

The effects of the restatement and revision on the condensed consolidated statement of comprehensive loss for the three months ended March 31, 2013 are summarized in the following table:

	Three Months Ended March 31, 2013 (In thousands)
	Previously Reported			Corrections			Revision for Measurement Period Adjustments			Restated and Revised
Net loss	$	(10,464	)	$	(997	)	$	(779	)	$	(12,240	)
Foreign currency translation adjustments		160			12			—			172
Unrealized loss on investments, net of tax of $0		(19	)		—			—			(19	)
Comprehensive loss	$	(10,323	)	$	(985	)	$	(779	)	$	(12,087	)

The effects of the restatement and revision on the condensed consolidated statement of cash flows for the three months ended March 31, 2013 are summarized in the following table:

	Three Months Ended March 31, 2013 (In thousands)
	Previously Reported¹			Corrections			Revision for Measurement Period Adjustment			Restated and Revised
Cash flows from operating activities
Net loss	$	(10,464	)	$	(997	)	$	(779)		$	(12,240	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		4,590			(438	)		—			4,152
Asset impairment charges		34			—			—			34
Stock-based compensation expense		1,202			—			—			1,202
Deferred taxes		(781	)		—			781			—
Amortization of premiums and discounts on investments		—			—			—			—
Loss on disposal of property and equipment		111			—			—			111
Gain on sale of discontinued operations		—			—			—			—
Allowance for doubtful accounts		22			—			—			22
Write-down of inventories		30			—			—			30
Others		—			—			—			—
Change in assets and liabilities, net of effects of acquisitions:
Accounts receivable		7,155			—			—			7,155
Inventories		(4,682	)		—			—			(4,682	)
Prepaid expenses and other assets		(1,256	)		281			(2	)		(977	)
Accounts payable		4,014			(1,888	)		—			2,126
Acquisition-related transaction costs		3,190			758			—			3,948
Accrued and other liabilities		(1,462	)		1,742			—			280
Net cash provided by (used in) operating activities		1,703			(542	)		—			1,161
Cash flows from investing activities
Purchase of property, plant and equipment		(5,134	)		—			—			(5,134	)
Purchase of marketable securities		(29,030	)		—			—			(29,030	)
Proceeds from sale of marketable securities		23,747			—			—			23,747
Proceeds from maturity of securities		20,900			—			—			20,900
Decrease in restricted cash		524			—			—			524
Acquisition of OCU, net of notes payable		(14,629	)		542			—			(14,087	)
Net cash provided by (used in) investing activities		(3,622	)		542			—			(3,080	)
Cash flows from financing activities
Proceeds from exercise of stock options		79			—			—			79
Proceeds from bank loans		40,000			(13,557	)		—			26,443
Repayment of bank loans		(22,167	)		13,557			—			(8,610	)
Proceeds from issuance of notes payable		4,881			—			—			4,881
Repayment of notes payable		(6,482	)		—			—			(6,482	)
Net cash provided by (used in) financing activities		16,311			—			—			16,311
Effect of exchange rates on cash and cash equivalents		72			—			—			72
Net increase in cash and cash equivalents		14,464			—			—			14,464
Cash and cash equivalents at the beginning of the period		36,940			—			—			36,940
Cash and cash equivalents at the end of the period	$	51,404		$	—		$	—		$	51,404

The Company’s condensed consolidated statement of cash flows for the three months ended March 31, 2013 was previously restated for amounts related to purchases of property and equipment that were inadvertently overstated resulting in the overstatement of cash used in investing activities by $1.1 million and the overstatement of net cash provided by operating activities by the same amount.

Effect of Reclassification on the Company's Balance Sheet

As further described in Note 11, the Company may be required to pay a $5.0 million penalty if it does not achieve certain performance obligations agreed to in connection with the sale of its common stock in a private placement transaction on April 27, 2012. The penalty payment was originally classified outside of equity as redeemable common stock at December 31, 2012 and March 31, 2013 since, while the Company intends to meet its performance obligations, it determined the ability to satisfy some of the obligations may be outside of the Company’s control. The Company has since determined that the $5.0 million penalty payment is an embedded derivative instrument, with the underlying being the performance or nonperformance of meeting its performance obligations by the deadline, and has thus classified $4.9 million of the $5.0 million to additional paid-in capital and the remaining $0.1 million, representing the estimated fair value of the penalty payment derivative, to other noncurrent liabilities at March 31, 2013 and December 31, 2012. The effect on the Company’s balance sheet at December 31, 2012 for this matter was as follows:

	December 31, 2012
(in thousands)	Previously Reported		As Revised
Other noncurrent liabilities	$	1,724	$	1,862
Redeemable common stock		5,000		—
Additional paid-in capital		433,996		438,858

- Definition

Tabular disclosure of prior period adjustments to previously issued financial statements including (1) the effect of the correction on each financial statement line item and any per-share amounts affected for each prior period presented (2) the cumulative effect of the change on retained earnings or other appropriate components of equity or net assets in the statement of financial position, as of the beginning of the earliest period presented, and (3) the effect of the prior period adjustments (both gross and net of applicable income tax) on the net income of each prior period presented in the entity's annual report for the year in which the adjustments are made.

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