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Subsequent Events
9 Months Ended
Sep. 30, 2013
Subsequent Events

Note 13. Subsequent Event

Settlement with Santur

In January 2014, the Company reached a non-binding verbal understanding for the terms of a settlement agreement (“Settlement”) covering the outstanding claims in connection with its 2011 acquisition of Santur Corporation (“Santur”). The Settlement is subject to the execution of a definitive written agreement between the Company and the other parties.  Under the Settlement, a net amount of $1.9 million will be paid to the Company from the escrow account that was set up under the original merger agreement.  This amount comprises $3.9 million related to certain indemnification claims by the Company (“Indemnification Amount”) which were partially offset by $2.0 million related to additional consideration for the business acquisition that was contingent upon Santur’s gross profit performance during 2012 (“Contingent Consideration Amount”).  Prior to this Settlement, the Company had recorded $1.0 million as its estimated fair value of the Contingent Consideration Amount.  As a result of this Settlement the Company recorded an additional $1.0 million in its operating expenses for the three and nine months ended September 30, 2013 to adjust the fair value of the Contingent Consideration Amount to the full $2.0 million settlement amount, which is included in accrued and other current liabilities on its condensed consolidated balance sheets.  Because it is considered to be a contingent gain, the $3.9 million Indemnification Amount will not be recognized as other income until paid.