MAXWELL TECHNOLOGIES INC, 10-Q/A filed on 8/14/2013
Amended Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2012
Oct. 19, 2012
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
MAXWELL TECHNOLOGIES INC 
 
Entity Central Index Key
0000319815 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2012 
 
Amendment Flag
true 
 
Amendment Description
Restatement 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
mxwl 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
29,182,923 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2011
Dec. 31, 2010
Current assets :
 
 
 
 
Cash and cash equivalents
$ 20,073 
$ 29,289 
$ 30,988 
$ 39,829 
Trade and other accounts receivable, net of allowance for doubtful accounts of $341 and $450 at September 30, 2012 and December 31, 2011, respectively
38,816 
27,973 
 
 
Inventories
43,802 
33,234 
 
 
Prepaid expenses and other current assets
2,975 
3,152 
 
 
Total current assets
105,666 
93,648 
 
 
Property and equipment, net
35,806 
28,541 
 
 
Intangible assets, net
758 
1,111 
 
 
Goodwill
24,826 
24,887 
 
 
Pension asset
6,945 
6,359 
 
 
Other non-current assets
38 
200 
 
 
Total assets
174,039 
154,746 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
31,989 
36,100 
 
 
Accrued warranty
244 
258 
 
 
Accrued employee compensation
5,025 
6,343 
 
 
Deferred revenue
5,149 
1,042 
 
 
Short-term borrowings and current portion of long-term debt
9,844 
5,431 
 
 
Deferred tax liability
499 
499 
 
 
Total current liabilities
52,750 
49,673 
 
 
Deferred tax liability, long-term
962 
933 
 
 
Long-term debt, excluding current portion
25 
68 
 
 
Other long-term liabilities
699 
3,028 
 
 
Total liabilities
54,436 
53,702 
 
 
Commitments and contingencies (Note 10)
   
   
 
 
Stockholders' equity:
 
 
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 29,183 and 28,174 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively
2,915 
2,815 
 
 
Additional paid-in capital
267,069 
252,907 
 
 
Accumulated deficit
(161,000)
(165,308)
 
 
Accumulated other comprehensive income
10,619 
10,630 
 
 
Total stockholders' equity
119,603 
101,044 
 
 
Total liabilities and stockholders' equity
$ 174,039 
$ 154,746 
 
 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Statement of Financial Position [Abstract]
 
 
Trade and other accounts receivable, allowance
$ 341 
$ 450 
Common stock, par value
$ 0.10 
$ 0.10 
Common stock, shares authorized
40,000,000 
40,000,000 
Common stock, shares issued
29,183,000 
28,174,000 
Common stock, shares outstanding
29,183,000 
28,174,000 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Income Statement [Abstract]
 
 
 
 
Revenue
$ 42,713 
$ 42,030 
$ 114,755 
$ 109,800 
Cost of revenue
24,571 
25,200 
66,932 
67,740 
Gross profit
18,142 
16,830 
47,823 
42,060 
Operating expenses:
 
 
 
 
Selling, general and administrative
7,342 
9,605 
25,539 
26,759 
Research and development
5,084 
5,707 
15,948 
16,976 
Total operating expenses
12,426 
15,312 
41,487 
43,735 
Income (loss) from operations
5,716 
1,518 
6,336 
(1,675)
Interest expense, net
(56)
(27)
(138)
(88)
Amortization of debt discount and prepaid debt costs
(16)
0 
(42)
(55)
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net
 
 
0 
1,086 
Income from operations before income taxes
5,644 
1,491 
6,156 
(732)
Income tax provision
416 
922 
1,849 
1,221 
Net income (loss)
$ 5,228 
$ 569 
$ 4,307 
$ (1,953)
Net income (loss) per share:
 
 
 
 
Basic
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Diluted
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Weighted average common shares outstanding:
 
 
 
 
Basic
28,736 
27,733 
28,511 
27,564 
Diluted
28,748 
28,161 
28,695 
27,564 
Condensed Consolidated Statements of Comprehensive Income Loss (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ 5,228 
$ 569 
$ 4,307 
$ (1,953)
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustment
718 
(4,399)
(176)
1,661 
Defined benefit pension plan, net of tax:
 
 
 
 
Amortization of deferred loss, net of tax provision of $8 and tax benefit of $117 for the three months ended September 30, 2012 and 2011, respectively; net of tax provision of $24 and tax benefit of $117 for the nine months ended September 30, 2012 and 2011, respectively
45 
(34)
138 
117 
Amortization of prior service cost, net of tax provision of $1 and tax benefit of $18 for the three months ended September 30, 2012 and 2011, respectively; net of tax provision of $5 and tax benefit of $18 for the nine months ended September 30, 2012 and 2011, respectively
10 
(6)
27 
17 
Other comprehensive income (loss), net of tax
773 
(4,439)
(11)
1,795 
Comprehensive income (loss)
$ 6,001 
$ (3,870)
$ 4,296 
$ (158)
Condensed Consolidated Statements of Comprehensive Income Loss (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Statement of Other Comprehensive Income [Abstract]
 
 
 
 
Tax provision (benefit) for amortization of deferred loss
$ 8 
$ 117 
$ 24 
$ 117 
Tax provision (benefit) for amortization of prior service cost
$ 1 
$ 18 
$ 5 
$ 18 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
OPERATING ACTIVITIES:
 
 
Net income (loss)
$ 4,307 
$ (1,953)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Depreciation
5,104 
4,335 
Amortization of intangible assets
351 
422 
Amortization of debt discount and prepaid debt costs
42 
55 
Gain on embedded derivatives
0 
(1,086)
Pension cost
135 
186 
Stock-based compensation expense
2,561 
2,440 
Provision for (recovery of) losses on accounts receivable
(110)
299 
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
(10,782)
(2,594)
Inventories
(10,570)
(10,317)
Prepaid expenses and other assets
339 
709 
Accounts payable and accrued liabilities and deferred revenue
29 
5,312 
Accrued employee compensation
723 
954 
Deferred tax liability, long term
(1,396)
0 
Other long-term liabilities
(2,326)
(5,583)
Net cash used in operating activities
(11,593)
(6,821)
INVESTING ACTIVITIES:
 
 
Purchase of property and equipment
(13,121)
(10,994)
Restricted cash
0 
8,000 
Net cash used in investing activities
(13,121)
(10,994)
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
(6,890)
(10,254)
Proceeds from long-term and short-term borrowings
11,230 
10,047 
Proceeds from sale of common stock, net of offering costs
10,283 
0 
Repurchase of shares
(319)
(154)
Proceeds from issuance of common stock under equity compensation plans
1,737 
2,561 
Net cash provided by financing activities
16,041 
10,200 
Increase (decrease) in cash and cash equivalents from operations
(8,673)
(7,615)
Effect of exchange rate changes on cash and cash equivalents
(543)
(1,226)
Decrease in cash and cash equivalents
(9,216)
(8,841)
Cash and cash equivalents, beginning of period
29,289 
39,829 
Cash and cash equivalents, end of period
$ 20,073 
$ 30,988 
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
Description of Business
Maxwell Technologies, Inc. is a Delaware corporation originally incorporated in 1965 under the name Maxwell Laboratories, Inc. In 1983, the Company completed an initial public offering, and in 1996, changed its name to Maxwell Technologies, Inc. The Company is headquartered in San Diego, California, and has two manufacturing locations, in San Diego, California and Rossens, Switzerland. The Company is also in the process of opening a manufacturing facility in Peoria, Arizona. In addition, the Company has two contract manufacturers located in China. Maxwell operates as one operating segment called High Reliability, which is comprised of three product lines:
•
Ultracapacitors: The Company’s primary focus, ultracapacitors, are energy storage devices that possess a unique combination of high power density, extremely long operational life and the ability to charge and discharge very rapidly. The Company’s ultracapacitor cells and multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including transportation, automotive, information technology, renewable energy and consumer and industrial electronics.
•
High-Voltage Capacitors: The Company’s CONDIS® high-voltage capacitors are extremely robust devices that are designed and manufactured to perform reliably for decades. These products include grading and coupling capacitors and capacitive voltage dividers that are used to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy.
•
Radiation-Hardened Microelectronic Products: The Company’s radiation-hardened microelectronic products include high-performance, high-density power modules, memory modules and single board computers that incorporate our proprietary RADPAK® packaging and shielding technology and novel architectures that enable them to withstand environmental radiation effects and perform reliably in space.
The Company’s products are designed to perform reliably for the life of the products and systems into which they are integrated. The Company achieves high reliability through the application of proprietary technologies and rigorously controlled design, development, manufacturing and test processes.
Financial Statement Presentation
The accompanying condensed consolidated financial statements include the accounts of Maxwell Technologies, Inc. and its subsidiaries. All significant intercompany transactions and account balances have been eliminated in consolidation. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q/A all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q/A contain all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary to present fairly the financial position, results of operations, and cash flows of Maxwell Technologies, Inc. for all periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire year. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Unless required as a result of the restatement, as discussed in Note 2, Restatement of Previously Issued Financial Statements, the Company has not otherwise updated or amended the information in this amended quarterly report on Form 10-Q.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. These estimates include, but are not limited to, assessing the collectability of accounts receivable, applied and unapplied production costs, production capacities, the usage and recoverability of inventories and long-lived assets, including deferred income taxes, the incurrence of warranty obligations, impairment of goodwill and other intangible assets, estimation of the cost to complete certain projects, accruals for estimated losses from legal matters, and estimation of the value of stock-based compensation awards, including the probability that the performance criteria of restricted stock awards will be met.
Warranty Obligation
The Company provides warranties on all product sales. The majority of the Company’s warranties are for one to two years in the normal course of business. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure.
Net Income (Loss) per Share
In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
 
 
(Restated)
 
(Restated)
 
(Restated)
 
(Restated)
Numerator
 
 
 
 
 
 
 
 
Net income (loss)
 
$
5,228

 
$
569

 
$
4,307

 
$
(1,953
)
Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
28,736

 
27,733

 
28,511

 
27,564

Effect of potentially dilutive securities:
 
 
 
 
 
 
 
 
Options to purchase common stock
 
8

 
410

 
153

 
—

Restricted stock awards
 
3

 
8

 
11

 
—

Restricted stock unit awards
 
—

 
10

 
3

 
—

Employee stock purchase plan
 
1

 
—

 
17

 
—

Weighted-average common shares outstanding, assuming dilution
 
28,748

 
28,161

 
28,695

 
27,564

Net income (loss) per share
 
 
 
 
 
 
 
 
Basic
 
$
0.18

 
$
0.02

 
$
0.15

 
$
(0.07
)
Diluted
 
$
0.18

 
$
0.02

 
$
0.15

 
$
(0.07
)

The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net income per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Outstanding options to purchase common stock
 
920

 
344

 
549

 
1,248

Restricted stock awards
 
337

 
141

 
338

 
183

Restricted stock unit awards
 
20

 
22

 
17

 
22

Employee stock purchase plan awards
 
—

 
—

 
—

 
12


Change in Additional Paid in Capital
For the nine months ended September 30, 2012, additional paid in capital increased $14.2 million. This increase includes $10.2 million related to proceeds from shares of common stock sold pursuant to the Company’s shelf registration statement, net of offering costs, and $4.3 million associated with the Company’s stock-based compensation plans, offset by $318,000 for the repurchase of shares that were withheld by the Company to satisfy employee tax liabilities upon the vesting of restricted stock awards.
Pending Accounting Pronouncements
In December 2011, the FASB issued Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities, which requires companies to disclose information about financial instruments that have been offset and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. In January 2013, the FASB issued Accounting Standards Update No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (1) offset in the financial statements or (2) subject to an enforceable master netting arrangement or similar agreement. Companies will be required to provide both net (offset amounts) and gross information in the notes to the financial statements for relevant assets and liabilities that are offset. These standard updates will be effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Company does not expect the adoption of these standard updates to impact its financial position or results of operations, as they only require additional disclosure in the Company’s financial statements.
In July 2012, the FASB issued Accounting Standards Update No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. The new guidance is intended to reduce the complexity and costs of the annual impairment test for indefinite-lived intangible assets by allowing companies to make a qualitative evaluation about the likelihood of impairment to determine whether it should perform a quantitative impairment test. This new guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company anticipates early adoption of this standard in the fourth quarter of 2012. The Company does not expect the adoption of the standard update to have a significant impact on its financial position or results of operations.
Restatement of Previously Issued Fiancial Statements
Restatement of Previously issued Financial Statements
Restatement of Previously Issued Financial Statements
Background on the Restatement
Audit Committee's Investigation
In January 2013, following receipt of information concerning potential revenue recognition issues, the Audit Committee of the Board of Directors engaged independent legal counsel and forensic accountants to conduct an investigation concerning the potential issues and to work with management to determine the potential impact on accounting for revenue. In February 2013, as a result of the findings of the Audit Committee's investigation to date, the Company determined that certain of its employees had engaged in conduct which resulted in revenue being recorded in periods prior to the criteria for revenue recognition under U.S. generally accepted accounting principles being satisfied.
The investigation revealed arrangements with three of the Company's distributors regarding extended payment terms, which allowed these distributors to pay the Company after they received payment from their customer, and with one of the Company's distributors regarding return rights and profit margin protection, for sales to such distributors with respect to certain transactions. In addition, arrangements were revealed with one non-distributor customer to honor transfer of title at a date later than the customer's purchase orders indicated. Based on the results of its investigation, the Audit Committee determined that these arrangements had not been communicated to the Company's finance and accounting department, or to the Company's CEO, and therefore, had not been considered when revenue was originally recorded. Based on the terms of the agreements with these customers as they were known to the Company's finance and accounting department, it had been the Company's policy to record revenue related to shipments as title passed at either shipment from the Company's facilities or receipt at the customer's facility, assuming all other revenue recognition criteria had been achieved. In addition to the arrangements noted above, the investigation uncovered an error on an individual transaction where a customer was given extended payment terms, which allowed them to pay the Company after they received payment from their customer, but those terms were not considered when revenue was originally recognized.
As a result of the arrangements discovered during the investigation, the Company does not believe that a fixed or determinable sales price existed at the time of shipment, nor was collection reasonably assured, at least with respect to certain transactions. In addition, revenue related to certain shipments to the one non-distributor customer was recorded before the actual transfer of title and the satisfaction of the Company's obligation to deliver the products. Therefore, revenue from these sales should not have been recognized at the time of shipment.
Based on the arrangements with customers revealed in the investigation that were not considered when revenue was originally recognized, the Company determined the following:
•
Beginning in the period in which the investigation revealed arrangements regarding extended payment terms for certain sales to three distributors, the Company determined it is appropriate to defer revenue recognition on all sales to these distributors from the period of shipment to the period in which payment is received. For these distributors, revenue recognition in the period in which payment is received was determined to be appropriate beginning in the fourth quarter of 2011.
•
Beginning in the period in which the investigation revealed return rights and profit margin protection for one distributor, the Company determined it appropriate to defer revenue recognition on all sales to this distributor until the distributor confirms with the Company that they are not entitled to any further returns or credits. For this distributor, the deferral of revenue on this basis was determined to be appropriate beginning in the fourth quarter of 2011. At such time as the distributor confirms with the Company that they are not entitled to any further returns or credits, which is currently anticipated to occur in the second half of the fiscal year 2013, previous sales for which revenue has been deferred, net of any credits or returns that may be made by the distributor, will be recognized as revenue.
•
For the arrangements with the non-distributor customer to honor transfer of title at a date later than the customer's purchase order indicated, the Company determined it appropriate to defer revenue recognition to the period in which the Company agreed to honor transfer of title.
•
For the individual transaction where a customer was given extended payment terms which were not considered when revenue was originally recognized in the first quarter of 2011, revenue recognition in the period in which payment was received, which was in the second quarter of 2011, was determined to be appropriate.
Management's Subsequent Internal Review
Once the audit committee investigation was complete, management of the Company conducted a review beginning with the first quarter of 2009 through the first quarter of 2013 to ensure that all sales arrangements had been detected and accounted for appropriately. During this review, the Company noted that there were a number of quarter end revenue cut-off errors wherein revenue was recorded prior to the transfer of title to the customer and the satisfaction of the Company's obligation to deliver the products. The Company has corrected these errors occurring in the first quarter of 2011 through the third quarter of 2012 by moving the revenue recognition for these items to the period in which delivery actually occurred.
Results of the Audit Committee's Investigation and Management's Internal Review
Based on the findings of the investigation, as previously reported in the Company's current report on Form 8-K dated March 7, 2013, the Audit Committee, in consultation with management and the Board of Directors, concluded that the Company's previously issued financial statements contained in its annual report on Form 10-K for the year ended December 31, 2011, and the quarterly reports on Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, September 30, 2011, March 31, 2012, June 30, 2012 and September 30, 2012, should no longer be relied upon. Accordingly, the consolidated financial statements for the first three quarters of the fiscal year ended December 31, 2012, for the fiscal year ended December 31, 2011, and for each of the interim periods within the fiscal year ended December 31, 2011, have been restated in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012. See Note 15, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, for the effects of the restatement adjustments on our 2012 and 2011 unaudited quarterly financial information.
As a result of the Audit Committee's investigation, certain employees were terminated and the Company's Sr. Vice President of Sales and Marketing resigned as reported in the Company's current report on Form 8-K dated March 7, 2013.
In connection with the errors identified during the investigation resulting in the restatement of previously reported financial statements, the Company identified control deficiencies in its internal control over financial reporting that constitute material weaknesses. For a discussion of our disclosure controls and procedures and the material weaknesses identified, see Part I, Item 4, Controls and Procedures, of this Quarterly Report on Form 10-Q/A.
The Company's previously filed annual report on Form 10-K for the fiscal year ended December 31, 2011, and its quarterly reports on Form 10-Q for the periods affected by the restatements, have not been amended, other than this amended quarterly report on Form 10-Q for the quarter ended September 30, 2012. Accordingly, investors should no longer rely upon the Company's previously released financial statements for any quarterly or annual periods after and including March 31, 2011, and any earnings releases or other communications relating to these periods. See Note 2, Restatement of Previously Issued Financial Statements and Financial Information, and Note 15, Unaudited Quarterly Financial Information, of the Notes to the Consolidated Financial Statements, in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, for the impact of these adjustments for the full fiscal year ended December 31, 2011, and the first three quarters of the fiscal year ended December 31, 2012 and each of the quarterly periods in the fiscal year ended December 31, 2011, respectively.
Restatement Adjustments
Restatement Adjustments Related to Sales Arrangements
Several adjustments were made to the Company's previously filed consolidated financial statements as a result of the restatement in order to reflect revenue recognition in the appropriate periods as discussed above. Accordingly, for the subject sales transactions, revenue and accounts receivable balances were reduced by an equivalent amount in the period that the sale was originally recorded as revenue, and revenue was increased in the subsequent period in which the criteria for revenue recognition were met. Further, for the subject sales transactions, cost of revenue was reduced, and inventory was increased, in the period that the sale was originally recorded as revenue, and cost of revenue was increased, and inventory was reduced, in the period the sale was ultimately recorded as revenue. However, for sales to one distributor in which revenue is being deferred until the Company determines that the distributor is not entitled to any further returns or credits, as discussed above, the increase to revenue, and the related reduction to inventory and increase to cost of revenue, will be recorded in a future period when this determination is made.
The adjustments also reflect the impacts of adjusting the Company's returns reserves for certain stock rotation rights of the distributors, and adjusting the Company's reserves for allowances for doubtful accounts, as well as commissions expense, although these changes were not material.
In addition to the adjustments to revenue, accounts receivable, inventory and cost of revenue, inventory reserve balances and cost of revenue were adjusted in relation to the adjustments to inventory discussed above, in order to reflect inventory ultimately recorded on our balance sheets at its lower of cost or market value.
Other Restatement Adjustments
Since the Company's determination to restate its previously issued financial statements constituted an event of default under the terms of its credit facility, the bank had the right to require immediate payment of the outstanding borrowings. As a result restatement adjustments were recorded to reclassify the amounts outstanding under the credit facility from long-term debt to current liabilities as of each respective balance sheet date. In addition, an insignificant amount of debt issuance costs were reclassified from a long-term asset to a short-term asset, consistent with the classification of the related debt. In June 2013, the Company entered into a forbearance agreement with the bank wherein the bank agreed to forbear from further exercise of its rights and remedies to call our outstanding debt under the credit facility in connection with the events of default for a period terminating on the earlier of September 30, 2013 or the occurrence of any additional events of default.
Further, a restatement adjustment was made to reclassify a legal settlement with a customer from selling, general and administrative expense to contra-revenue in the second quarter of 2011 in the amount of for $2.6 million. Certain other immaterial adjustments were made in connection with the restatement.
The restatement adjustments did not impact the Company's previously reported tax provision or benefit in any of the affected periods, other than a $54,000 decrease in the income tax provision for the quarter ended September 30, 2012, as all of the restatement adjustments were related to our U.S. operations, for which the Company has significant net operating loss carryforwards and has not recorded an income tax expense or benefit in any period to date. However, the restatement adjustments did impact the composition of the Company's deferred tax assets and liabilities as of December 31, 2011 as presented in Note 10, Income Taxes, of the Notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

The unaudited restated condensed consolidated balance sheet as of September 30, 2012 is presented below (in thousands, except per share data):
 
 
September 30, 2012
 
 
As previously reported
 
Restatement Adjustments
 
Debt Classification Adjustments
 
Restated
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
20,073

 
$
—

 
$
—

 
$
20,073

Trade and other accounts receivable, net of allowance for doubtful accounts of $341 at September 30, 2012
 
52,988

 
(14,172
)
 
—

 
38,816

Inventories
 
31,930

 
11,872

 
—

 
43,802

Prepaid expenses and other current assets
 
2,829

 
105

 
41

 
2,975

Total current assets
 
107,820

 
(2,195
)
 
41

 
105,666

Property and equipment, net
 
35,806

 
—

 
—

 
35,806

Intangible assets, net
 
758

 
—

 
—

 
758

Goodwill
 
24,826

 
—

 
—

 
24,826

Pension asset
 
6,945

 
—

 
—

 
6,945

Other non-current assets
 
79

 
—

 
(41
)
 
38

Total assets
 
$
176,234

 
$
(2,195
)
 
$
—

 
$
174,039

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
32,789

 
$
(800
)
 
$
—

 
$
31,989

Accrued warranty
 
244

 
—

 
—

 
244

Accrued employee compensation
 
5,025

 
—

 
—

 
5,025

Deferred revenue
 
—

 
5,149

 
—

 
5,149

Short-term borrowings and current portion of long-term debt
 
6,909

 
—

 
2,935

 
9,844

Deferred tax liability
 
499

 
—

 
—

 
499

Total current liabilities
 
45,466

 
4,349

 
2,935

 
52,750

Deferred tax liability, long-term
 
962

 
—

 
—

 
962

Long-term debt, excluding current portion
 
2,960

 
—

 
(2,935
)
 
25

Other long-term liabilities
 
699

 
—

 
—

 
699

Total liabilities
 
50,087

 
4,349

 
—

 
54,436

Commitments and contingencies (Note 11)
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 29,183 shares issued and outstanding at September 30, 2012
 
2,915

 
—

 
—

 
2,915

Additional paid-in capital
 
267,069

 
—

 
—

 
267,069

Accumulated deficit
 
(154,456
)
 
(6,544
)
 
—

 
(161,000
)
Accumulated other comprehensive income
 
10,619

 
—

 
—

 
10,619

Total stockholders’ equity
 
126,147

 
(6,544
)
 
—

 
119,603

Total liabilities and stockholders’ equity
 
$
176,234

 
$
(2,195
)
 
$
—

 
$
174,039

The restated condensed consolidated balance sheet as of December 31, 2011 is presented below (in thousands, except per share data)
 
 
December 31, 2011
 
 
As previously reported
 
Restatement Adjustments
 
Debt Classification Adjustments
 
Restated
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
29,289

 
$
—

 
$
—

 
$
29,289

Trade and other accounts receivable, net of allowance for doubtful accounts of $450 at December 31, 2011
 
36,131

 
(8,158
)
 
—

 
27,973

Inventories
 
27,232

 
6,002

 
—

 
33,234

Prepaid expenses and other current assets
 
3,125

 
(34
)
 
61

 
3,152

Total current assets
 
95,777

 
(2,190
)
 
61

 
93,648

Property and equipment, net
 
28,541

 
—

 
—

 
28,541

Intangible assets, net
 
1,111

 
—

 
—

 
1,111

Goodwill
 
24,887

 
—

 
—

 
24,887

Pension asset
 
6,359

 
—

 
—

 
6,359

Other non-current assets
 
261

 
—

 
(61
)
 
200

Total assets
 
$
156,936

 
$
(2,190
)
 
$
—

 
$
154,746

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
36,103

 
$
(3
)
 
$
—

 
$
36,100

Accrued warranty
 
258

 
—

 
—

 
258

Accrued employee compensation
 
6,243

 
100

 
—

 
6,343

Deferred revenue
 
1,042

 
—

 
—

 
1,042

Short-term borrowings and current portion of long-term debt
 
5,431

 
—

 
—

 
5,431

Deferred tax liability
 
499

 
—

 
—

 
499

Total current liabilities
 
49,576

 
97

 
—

 
49,673

Deferred tax liability, long-term
 
933

 
—

 
—

 
933

Long-term debt, excluding current portion
 
68

 
—

 
—

 
68

Other long-term liabilities
 
3,028

 
—

 
—

 
3,028

Total liabilities
 
53,605

 
97

 
—

 
53,702

Commitments and contingencies (Note 11)
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 28,174 shares issued and outstanding at December 31, 2011
 
2,815

 
—

 
—

 
2,815

Additional paid-in capital
 
252,907

 
—

 
—

 
252,907

Accumulated deficit
 
(163,021
)
 
(2,287
)
 
—

 
(165,308
)
Accumulated other comprehensive income
 
10,630

 
—

 
—

 
10,630

Total stockholders’ equity
 
103,331

 
(2,287
)
 
—

 
101,044

Total liabilities and stockholders’ equity
 
$
156,936

 
$
(2,190
)
 
$
—

 
$
154,746

The unaudited restated condensed quarterly consolidated statements of operations for the three months ended September 30, 2012 and 2011, respectively are presented below (in thousands, except per share data):
 
 
Three months ended September 30, 2012
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
43,907

 
$
(1,194
)
 
$
42,713

Cost of revenue
 
25,534

 
(963
)
 
24,571

Gross profit
 
18,373

 
(231
)
 
18,142

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
7,344

 
(2
)
 
7,342

Research and development
 
5,084

 
—

 
5,084

Total operating expenses
 
12,428

 
(2
)
 
12,426

Income from operations
 
5,945

 
(229
)
 
5,716

Interest expense, net
 
(56
)
 
—

 
(56
)
Amortization of debt discount and prepaid debt costs
 
(16
)
 
—

 
(16
)
Income from operations before income taxes
 
5,873

 
(229
)
 
5,644

Income tax provision
 
470

 
(54
)
 
416

Net income
 
$
5,403

 
$
(175
)
 
$
5,228

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.19

 
$
(0.01
)
 
$
0.18

Diluted
 
$
0.19

 
$
(0.01
)
 
$
0.18

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
28,736

 
 
 
28,736

Diluted
 
28,748

 
 
 
28,748


 
 
Three months ended September 30, 2011
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
41,096

 
$
934

 
$
42,030

Cost of revenue
 
24,547

 
653

 
25,200

Gross profit
 
16,549

 
281

 
16,830

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
9,595

 
10

 
9,605

Research and development
 
5,707

 
—

 
5,707

Total operating expenses
 
15,302

 
10

 
15,312

Income from operations
 
1,247

 
271

 
1,518

Interest expense, net
 
(27
)
 
—

 
(27
)
Income from operations before income taxes
 
1,220

 
271

 
1,491

Income tax provision
 
922

 
—

 
922

Net income
 
$
298

 
$
271

 
$
569

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.01

 
$
0.01

 
$
0.02

Diluted
 
$
0.01

 
$
0.01

 
$
0.02

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
27,733

 
 
 
27,733

Diluted
 
28,161

 
 
 
28,161

The unaudited restated condensed consolidated statements of operations for the nine months ended September 30, 2012 and 2011, respectively are presented below (in thousands, except per share data):
 
 
Nine months ended September 30, 2012
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
123,993

 
$
(9,238
)
 
$
114,755

Cost of revenue
 
72,503

 
(5,571
)
 
66,932

Gross profit
 
51,490

 
(3,667
)
 
47,823

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
24,868

 
671

 
25,539

Research and development
 
15,974

 
(26
)
 
15,948

Total operating expenses
 
40,842

 
645

 
41,487

Income from operations
 
10,648

 
(4,312
)
 
6,336

Interest expense, net
 
(138
)
 
—

 
(138
)
Amortization of debt discount and prepaid debt costs
 
(42
)
 
—

 
(42
)
Income from operations before income taxes
 
10,468

 
(4,312
)
 
6,156

Income tax provision
 
1,903

 
(54
)
 
1,849

Net income
 
$
8,565

 
$
(4,258
)
 
$
4,307

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.30

 
$
(0.15
)
 
$
0.15

Diluted
 
$
0.30

 
$
(0.15
)
 
$
0.15

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
28,511

 
 
 
28,511

Diluted
 
28,695

 
 
 
28,695

 
 
Nine months ended September 30, 2011
 
 
As previously reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
114,818

 
$
(5,018
)
 
$
109,800

Cost of revenue
 
68,909

 
(1,169
)
 
67,740

Gross profit
 
45,909

 
(3,849
)
 
42,060

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
29,378

 
(2,619
)
 
26,759

Research and development
 
16,976

 
—

 
16,976

Total operating expenses
 
46,354

 
(2,619
)
 
43,735

Loss from operations
 
(445
)
 
(1,230
)
 
(1,675
)
Interest expense, net
 
(88
)
 
—

 
(88
)
Amortization of debt discount and prepaid debt costs
 
(55
)
 
—

 
(55
)
Gain on embedded derivatives
 
1,086

 
—

 
1,086

Income (loss) from operations before income taxes
 
498

 
(1,230
)
 
(732
)
Income tax provision
 
1,221

 
—

 
1,221

Net loss
 
$
(723
)
 
$
(1,230
)
 
$
(1,953
)
Net loss per share:
 
 
 
 
 
 
Basic
 
$
(0.03
)
 
$
(0.04
)
 
$
(0.07
)
Diluted
 
$
(0.03
)
 
$
(0.04
)
 
$
(0.07
)
Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
27,564

 
 
 
27,564

Diluted
 
27,564

 
 
 
27,564

The unaudited restated condensed consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011, respectively are presented below (in thousands):
 
 
Nine Months Ended September 30, 2012
 
 
As Previously Reported
 
Revenue Restatement Adjustments
 
Restated
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income
 
$
8,565

 
$
(4,258
)
 
$
4,307

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
 
 
Depreciation
 
5,104

 
—

 
5,104

Amortization of intangible assets
 
351

 
—

 
351

Amortization of debt discount and prepaid debt costs
 
42

 
—

 
42

Pension cost
 
135

 
—

 
135

Stock-based compensation expense
 
2,561

 
—

 
2,561

Recovery of losses on accounts receivable
 
(237
)
 
127

 
(110
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
Trade and other accounts receivable
 
(16,673
)
 
5,891

 
(10,782
)
Inventories
 
(4,700
)
 
(5,870
)
 
(10,570
)
Prepaid expenses and other assets
 
478

 
(139
)
 
339

Accounts payable and accrued liabilities and deferred revenue
 
(3,626
)
 
3,655

 
29

Accrued employee compensation
 
(1,296
)
 
2,019

 
723

Deferred tax liability, long term
 
29

 
(1,425
)
 
(1,396
)
Other long-term liabilities
 
(2,326
)
 
—

 
(2,326
)
Net cash used in operating activities
 
(11,593
)
 
—

 
(11,593
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Purchases of property and equipment
 
(13,121
)
 
—

 
(13,121
)
Net cash used in investing activities
 
(13,121
)
 
—

 
(13,121
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
Principal payments on long-term debt and short-term borrowings
 
(6,890
)
 
—

 
(6,890
)
Proceeds from long-term and short-term borrowings
 
11,230

 
—

 
11,230

Proceeds from sale of common stock, net of offering costs
 
10,283

 
—

 
10,283

Repurchase of shares
 
(319
)
 
—

 
(319
)
Proceeds from issuance of common stock under equity compensation plans
 
1,737

 
—

 
1,737

Net cash provided by financing activities
 
16,041

 
—

 
16,041

Decrease in cash and cash equivalents from operations
 
(8,673
)
 
—

 
(8,673
)
Effect of exchange rate changes on cash and cash equivalents
 
(543
)
 
—

 
(543
)
Decrease in cash and cash equivalents
 
(9,216
)
 
—

 
(9,216
)
Cash and cash equivalents, beginning of period
 
29,289

 
—

 
29,289

Cash and cash equivalents, end of period
 
$
20,073

 
$
—

 
$
20,073


 
 
Nine Months Ended September 30, 2011
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net loss
 
$
(723
)
 
$
(1,230
)
 
$
(1,953
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
Depreciation
 
4,335

 
—

 
4,335

Amortization of intangible assets
 
422

 
—

 
422

Amortization of debt discount and prepaid debt costs
 
55

 
—

 
55

Gain on embedded derivatives
 
(1,086
)
 
—

 
(1,086
)
Pension cost
 
186

 
—

 
186

Stock-based compensation expense
 
2,440

 
—

 
2,440

Provision for losses on accounts receivable
 
304

 
(5
)
 
299

Changes in operating assets and liabilities:
 
 
 
 
 
 
Trade and other accounts receivable
 
(4,430
)
 
1,836

 
(2,594
)
Inventories
 
(8,621
)
 
(1,696
)
 
(10,317
)
Prepaid expenses and other assets
 
722

 
(13
)
 
709

Accounts payable and accrued liabilities and deferred revenue
 
4,204

 
1,108

 
5,312

Accrued employee compensation
 
954

 

 
954

Other long-term liabilities
 
(5,583
)
 
—

 
(5,583
)
Net cash used in operating activities
 
(6,821
)
 
—

 
(6,821
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Purchases of property and equipment
 
(10,994
)
 
—

 
(10,994
)
Net cash used in investing activities
 
(10,994
)
 
—

 
(10,994
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
Principal payments on long-term debt and short-term borrowings
 
(10,254
)
 
—

 
(10,254
)
Proceeds from long-term and short-term borrowings
 
10,047

 
—

 
10,047

Repurchase of shares
 
(154
)
 
—

 
(154
)
Proceeds from issuance of common stock under equity compensation plans
 
2,561

 
—

 
2,561

Release of restricted cash
 
8,000

 
—

 
8,000

Net cash provided by financing activities
 
10,200

 
—

 
10,200

Decrease in cash and cash equivalents from operations
 
(7,615
)
 
—

 
(7,615
)
Effect of exchange rate changes on cash and cash equivalents
 
(1,226
)
 
—

 
(1,226
)
Decrease in cash and cash equivalents
 
(8,841
)
 
—

 
(8,841
)
Cash and cash equivalents, beginning of period
 
39,829

 
—

 
39,829

Cash and cash equivalents, end of period
 
$
30,988

 
$
—

 
$
30,988

Balance Sheet Details
Balance Sheet Details
Balance Sheet Details (in thousands)
Inventories 
 
 
September 30, 2012
 
December 31, 2011
 
 
(Restated)
 
(Restated)
Raw material and purchased parts
 
$
13,553

 
$
9,661

Work-in-process
 
2,508

 
3,942

Finished goods
 
16,331

 
14,133

Consigned finished goods
 
11,410

 
5,498

Total inventories
 
$
43,802

 
$
33,234


Intangible Assets
Intangible assets consisted of the following:
 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Foreign
Currency
Adjustment
 
Net
Carrying
Value
As of September 30, 2012
 
 
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(1,852
)
 
$
—

 
$
624

Developed core technology
 
1,100

 
(1,100
)
 
—

 
—

Patent license agreement
 
741

 
(571
)
 
(36
)
 
134

Total intangible assets at September 30, 2012
 
$
4,317

 
$
(3,523
)
 
$
(36
)
 
$
758

 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Foreign
Currency
Adjustment
 
Net
Carrying
Value
As of December 31, 2011
 
 
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(1,699
)
 
$
—

 
$
777

Developed core technology
 
1,100

 
(1,050
)
 
29

 
79

Patent license agreement
 
741

 
(468
)
 
(18
)
 
255

Total intangible assets at December 31, 2011
 
$
4,317

 
$
(3,217
)
 
$
11

 
$
1,111


Goodwill
The change in the carrying amount of goodwill from December 31, 2011 to September 30, 2012 is as follows:
Balance at December 31, 2011
 
$
24,887

Foreign currency translation adjustments
 
(61
)
Balance at September 30, 2012
 
$
24,826


Accrued Warranty
 
 
Nine Months Ended
 
 
September 30,
 
 
2012
 
2011
Beginning balance
 
$
258

 
$
449

Product warranties issued
 
278

 
242

Settlement of warranties
 
(154
)
 
(160
)
Change related to preexisting warranties
 
(138
)
 
(283
)
Foreign currency translation adjustments
 
—

 
13

Ending balance
 
$
244

 
$
261


Accumulated Other Comprehensive Income
 
 
Foreign
Currency
Translation
Adjustment
 
Defined Benefit
Pension Plan
 
Accumulated
Other
Comprehensive
Income
Balance as of December 31, 2011
 
$
14,580

 
$
(3,950
)
 
$
10,630

Current period change
 
(176
)
 
165

 
(11
)
Balance as of September 30, 2012
 
$
14,404

 
$
(3,785
)
 
$
10,619

Convertible Debentures Convertible Debentures
Convertible Debentures [Text Block]
Convertible Debentures
On December 20, 2005, the Company issued $25 million in aggregate principal amount of senior subordinated convertible debentures (the “Debentures”) due and payable in quarterly installments of $2.8 million which commenced December 2008. However, the holder, at its election, could defer each quarterly payment one time, for a 24 month period. As the holder had elected to defer some quarterly installments, the outstanding principal of the Debentures at December 31, 2010 was $8.3 million. In February 2011, the holder of the Debentures converted the remaining $8.3 million principal balance into 514,086 shares of the Company’s common stock at a conversion price of $16.21 per share. On the conversion date, the common stock had a fair value of $9.3 million, which was based on the closing market price. This conversion resulted in a gain of $1.0 million, which is included in “gain on embedded derivatives” in the consolidated statement of operations for the nine months ended September 30, 2011. As long as the Debentures were outstanding, the Company was required to maintain a minimum cash balance of $8.0 million. The cash restriction was released in February 2011 when the outstanding principal amount of the convertible debentures was converted to shares of the Company’s common stock.
Interest paid with cash and principal converted into shares of common stock are as follows (in thousands):
 
 
Nine months ended September 30, 2011
 
 
Value
 
Shares
Conversion of principal into shares of common stock
 
$
8,333

 
$
514

Interest paid with cash
 
17

 
—

Total debenture payments
 
$
8,350

 
$
514


Until the conversion of the remaining principal balance in February 2011, the principal balance was convertible by the holder at any time into common shares. In addition, after eighteen months from the issue date, the Company could have required that a specified amount of the principal of the Debentures be converted if certain conditions were satisfied for a period of 20 consecutive trading days. The Company accounted for the conversion options in the Debentures as derivative liabilities in accordance with the Derivatives and Hedging Topic of the FASB ASC. The discount at the issuance date of $9.2 million related to the fair value of the conversion options and embedded warrants issued in connection with the Debentures, and debt issuance costs, were amortized using the effective interest method over the term of the Debentures. For the nine months ended September 30, 2011, $6,000 of the discount and prepaid fees were amortized. Upon conversion of the remaining principal balance of the Debentures into shares of the Company’s common stock in February 2011, the remaining unamortized discount was written off and is included in “amortization of debt discount and prepaid debt costs” in the consolidated statement of operations.
For the nine months ended September 30, 2011, the change in fair value on revaluation of the conversion rights was the difference between the fair value on the conversion date in February 2011 and the fair value at the beginning of the period using the value calculated by the Black-Scholes pricing model. The effect of the fair market value adjustment for nine months ended September 30, 2011 was a $78,000 gain, which is recorded as “gain on embedded derivatives” in the consolidated statement of operations.
As long as the Debentures were outstanding, the Company was required to maintain a minimum cash balance of $8.0 million. The cash restriction was released in February 2011 when the outstanding principal amount of the convertible debentures was converted to shares of the Company’s common stock.
Credit Facility
Credit Facility
Credit Facility
In December 2011, the Company obtained a secured credit facility in the form of a revolving line of credit up to a maximum of $15.0 million (the “Revolving Line of Credit”) and an equipment term loan (the “Equipment Term Loan”) (together, the “Credit Facility”). In general, amounts borrowed under the Credit Facility are secured by a lien on all of the Company’s assets other than its intellectual property. In addition, under the credit agreement, the Company is required to pledge 65.0% of its equity interests in its Swiss subsidiary. The Company has also agreed not to encumber any of its intellectual property. The agreement contains certain restrictive covenants that limit the Company’s ability to, amongst other things; (i) incur additional indebtedness or guarantees; (ii) create liens or other encumbrances on its property; (iii) enter into a merger or similar transaction; (iv) invest in another entity; (v) declare or pay dividends; and (vi) invest in fixed assets in excess of a defined dollar amount. Repayment of amounts owed pursuant to the Credit Facility may be accelerated in the event that the Company is in violation of the representations, warranties and covenants made in the credit agreement, including certain financial covenants. The financial covenants that the Company must meet during the term of the credit agreement include quarterly minimum liquidity ratios, minimum quick ratios and EBITDA targets and an annual net income target. Borrowings under the Credit Facility bear interest, payable monthly, at either (i) the bank's prime rate or (ii) LIBOR plus 2.25%, at the Company's option subject to certain limitations. Further, the Company incurs an unused commitment fee, payable quarterly, equal to 0.25% per annum of the average daily unused amount of the Revolving Line of Credit.
As a result of the restatement of prior period financial statements, as such financial information was previously submitted to the bank has since proven to be materially incorrect, the Company was in default with respect to the terms of the credit agreement beginning in the fourth quarter of 2011. In addition, as a result of the restatement of prior period financial statements, the Company was not in compliance with the financial covenant pertaining to the annual minimum net income target for the fiscal year ended December 31, 2011. Although, the Company did meet the financial covenants of the credit agreement in all other periods since the Credit Facility was entered into, including as of December 31, 2012, these violations represent events of default under the terms of the Credit Facility. As a result of this noncompliance, the bank's obligation to extend any further credit has ceased and terminated.
In June 2013, the Company entered into a forbearance agreement with the bank (“the Forbearance Agreement”). Pursuant to the terms of the Forbearance Agreement, the bank agreed to forbear from further exercise of its rights and remedies under the credit agreement to call the Company's outstanding debt obligation in connection with the events of default for a period terminating on the earlier of September 30, 2013 or the occurrence of any additional events of default. In connection with the execution of the Forbearance Agreement, in June 2013, the Company posted a cash deposit of $1.8 million with the bank and granted the bank a security interest therein, which will remain restricted until the bank may determine to waive the existing events of defaults discussed above, or the loan is satisfied.
As borrowings outstanding under the Credit Facility were immediately callable by the bank for each of the quarterly and annual periods since and including the fourth quarter of 2011, borrowings outstanding under the Credit Facility have been classified as a current obligation in the each of the accompanying condensed consolidated balance sheets.
As of September 30, 2012, $4.5 million was outstanding under the Equipment Term Loan and the applicable interest rate was LIBOR plus 2.25% (2.5% as of September 30, 2012). If the bank does not exercise its right to accelerate repayment, under the original terms of the Credit Facility, principal and interest under the Equipment Term Loan are payable in 36 equal monthly installments such that the Equipment Term Loan is fully repaid by the maturity date of April 30, 2015, but may be prepaid in whole or in part at any time. As of September 30, 2012, no amounts were outstanding under the Revolving Line of Credit. Since September 30, 2012, the Company has not made any additional borrowings on the Equipment Term Loan or the Revolving Line of Credit, and as a result of the events of default discussed above, the Company is currently not eligible to borrow any additional amounts under the Credit Facility.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
The Company records certain financial instruments at fair value in accordance with the Fair Value Measurements and Disclosures Topic of the FASB ASC. As of September 30, 2012, the financial instruments to which this topic applied were foreign currency forward contracts. As of September 30, 2012, the fair value of these foreign currency forward contracts was an asset of $348,000 which is recorded in “trade and other accounts receivable, net” in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC.
The carrying value of short-term and long-term borrowings approximates fair value because of the relative short maturity of these instruments and the interest rates the Company could currently obtain.
Foreign Currency Derivative Instruments
Foreign Currency Derivative Instruments
Foreign Currency Derivative Instruments
Maxwell uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables, denominated in a foreign currency. The change in fair value of these instruments represents a natural hedge as gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates. These contracts generally expire in one month. These contracts are considered economic hedges and are not designated as hedges under the Derivatives and Hedging Topic of the FASB ASC, therefore, the change in the fair value of the instrument is recognized currently in the consolidated statement of operations.
The net gains and losses on foreign currency forward contracts included in cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
1

 
$
(45
)
 
$
1

 
$
(282
)
Selling, general and administrative
 
174

 
(1,273
)
 
(308
)
 
742

Total gain (loss)
 
$
175

 
$
(1,318
)
 
$
(307
)
 
$
460


The net gains and losses on foreign currency forward contracts were partially offset by net gains and losses on the underlying monetary assets and liabilities. Foreign currency gains and losses on those underlying monetary assets and liabilities included in cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
(1
)
 
$
(74
)
 
$
13

 
$
149

Selling, general and administrative
 
(357
)
 
1,271

 
(100
)
 
(918
)
Total gain (loss)
 
$
(358
)
 
$
1,197

 
$
(87
)
 
$
(769
)

As of September 30, 2012, the total notional amount of foreign currency forward contracts not designated as hedges was $23.0 million. The fair value of these derivatives was a $348,000 asset as of September 30, 2012. For additional information, refer to Note 6 - Fair Value Measurements.
Stock Plans
Stock Plans
Stock Plans
The Company has two active stock-based compensation plans as of September 30, 2012: the 2004 Employee Stock Purchase Plan and the 2005 Omnibus Equity Incentive Plan under which incentive stock options, non-qualified stock options, restricted stock awards and restricted stock units can be granted to employees and non-employee directors.
Stock Options
Compensation expense recognized from employee stock options for the three months ended September 30, 2012 and 2011 was $156,000 and $322,000, respectively, and $867,000 and $1.1 million for the nine months ended September 30, 2012 and 2011, respectively. Beginning in 2011, the Company ceased granting stock options and began granting restricted stock awards to employees as part of its annual equity incentive award program. The Company may determine to grant stock options in the future under the Incentive Plan.
Restricted Stock Awards
The Company did not grant any restricted stock awards during the three months ended September 30, 2012. During the three months ended September 30, 2011, the Company issued 1,200 shares, upon granting of restricted stock awards, which had an average grant date fair value per share of $15.60. During the nine months ended September 30, 2012 and 2011, the Company issued 251,066 and 217,116 shares, respectively, upon granting of restricted stock awards, which had an average grant date fair value per share of $20.81 and $18.92, respectively. The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three and nine months ended September 30, 2012 and 2011 (in thousands): 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Service-based restricted stock
 
$
369

 
$
170

 
$
1,216

 
$
635

Performance-based restricted stock
 
(198
)
 
91

 
(37
)
 
241

Total compensation expense recognized for restricted stock awards
 
$
171

 
$
261

 
$
1,179

 
$
876


Restricted Stock Units
Beginning in 2011, non-employee directors receive an annual restricted stock unit award as part of their annual retainer compensation, which vests one year from the date of grant. During the three months ended September 30, 2012 and 2011, no restricted stock units were granted. During the nine months ended September 30, 2012 and 2011, non-employee directors were granted a total of 20,342 and 22,036 restricted stock units, respectively, with an average grant date fair value per share of $20.65 and $19.06, respectively.
Total compensation expense recognized for service-based restricted stock unit awards was $106,000 and $106,000 during the three months ended September 30, 2012 and 2011, respectively, and $316,000 and $268,000 for the nine months ended September 30, 2012 and 2011, respectively.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (“ESPP”) permits substantially all employees to purchase common stock through payroll deductions, at 85% of the lower of the trading price of the stock at the beginning or at the end of each six month offering period commencing on January 1 and July 1. The number of shares purchased is based on participants’ contributions made during the offering period. In 2013, the Company suspended its ESPP Plan because the registration statement on Form S-8 became ineffective as a result of the restatement of the Company's previously issued financial statements (as discussed in Note 2, Restatement of Previously Issued Financial Statements).
Compensation expense recognized for the ESPP for the three months ended September 30, 2012 and 2011 was $72,000 and $46,000, respectively, and $199,000 and $159,000 for the nine months ended September 30, 2012 and 2011, respectively. The fair value of the ESPP shares was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Expected dividends
 
$
—

 
$
—

 
$
—

 
$
—

Exercise price
 
$
5.58

 
$
16.19

 
$
8.93

 
$
18.01

Expected volatility
 
83
%
 
33
%
 
75
%
 
43
%
Average risk-free interest rate
 
0.16
%
 
0.10
%
 
0.12
%
 
0.16
%
Expected life/term (in years)
 
0.5

 
0.5

 
0.5

 
0.5

Fair value per share
 
$
2.78

 
$
3.94

 
$
3.79

 
$
5.00


Stock-based Compensation Expense
Compensation cost for restricted stock, restricted stock units, employee stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
163

 
$
89

 
$
543

 
$
292

Selling, general and administrative
 
213

 
531

 
1,586

 
1,773

Research and development
 
129

 
115

 
432

 
375

Total stock-based compensation expense
 
$
505

 
$
735

 
$
2,561

 
$
2,440

Stock Offering
Stock Offering
Stock Offering
In April 2011, the Company filed a shelf registration statement on Form S-3 with the SEC to, from time to time, sell up to an aggregate of $125 million of its common stock, warrants or debt securities. On August 19, 2011, the registration statement was declared effective by the SEC. In February 2012, the Company entered into an At-the-Market Equity Offering Sales Agreement (“Sales Agreement”) with Citadel Securities LLC (“Citadel”) pursuant to which the Company could sell, at its option, up to an aggregate of $30.0 million in shares of common stock through Citadel, as sales agent. The Company will pay Citadel a commission equal to 2% of the gross proceeds from the sale of shares of the Company’s common stock under the Sales Agreement. During the three months ended March 31, 2012, 572,510 shares of the Company's common stock were sold under this agreement for net proceeds to the Company of $10.3 million. No shares were sold subsequent to the quarter ended March 31, 2012.
Beginning in March 2013, as a result of the restatement of the Company's previously issued financial statements (as discussed in Note 2, Restatement of Previously Issued Financial Statements), the Company is no longer in compliance with the ongoing eligibility requirements of this shelf registration statement on Form S-3, and the shelf registration statement is therefore no longer effective.
Defined Benefit Plan
Defined Benefit Plan
Defined Benefit Plan
Maxwell SA, a subsidiary of the Company, has a retirement plan that is classified as a defined benefit pension plan. The employee pension benefit is based on compensation, length of service and credited investment earnings. The plan guarantees both a minimum rate of return as well as minimum annuity purchase rates. The Company’s funding policy with respect to the pension plan is to contribute the amount required by Swiss law, using the required percentage applied to the employee’s compensation. In addition, participating employees are required to contribute to the pension plan. This plan has a measurement date of December 31.
Components of net periodic pension cost are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Service cost
 
$
164

 
$
213

 
$
502

 
$
601

Interest cost
 
159

 
193

 
487

 
543

Expected return on plan assets
 
(342
)
 
(435
)
 
(1,048
)
 
(1,227
)
Prior service cost amortization
 
11

 
12

 
32

 
35

Deferred loss amortization
 
53

 
83

 
162

 
234

Net periodic pension cost
 
$
45

 
$
66

 
$
135

 
$
186


Employer contributions of $173,000 and $207,000 were paid during the three months ended September 30, 2012 and 2011, respectively. Employer contributions of $544,000 and $592,000 were paid during the nine months ended September 30, 2012 and 2011, respectively. Additional employer contributions of approximately $137,000 are expected to be paid during the remainder of fiscal 2012.
Legal Proceedings
Legal Proceedings
Legal Proceedings
Although the Company expects to incur significant legal costs in connection with the below legal proceedings, the Company is unable to estimate the amount of such legal costs and therefore, such costs will be expensed in the period the legal services are performed.
FCPA Matter
As a result of being a publicly traded company in the U.S., the Company is subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits companies from making improper payments to foreign officials for the purpose of obtaining or retaining business. Beginning in 2009, the Company conducted an internal review into payments made to its former independent sales agent in China with respect to sales of the Company's high voltage capacitor products produced by its Swiss subsidiary. In January 2011, the Company reached settlements with the SEC and the U.S. Department of Justice (“DOJ”) with respect to charges asserted by the SEC and DOJ relating to the anti-bribery, books and records, internal controls, and disclosure provisions of the FCPA and other securities laws violations. The Company settled civil charges with the SEC, agreeing to an injunction against further violations of the FCPA. Under the terms of the settlement with the SEC, the Company agreed to pay a total of approximately $6.4 million in profit disgorgement and prejudgment interest, in two installments, with $3.2 million paid in each of the first quarters of 2011 and 2012. Under the terms of the settlement with the DOJ, the Company agreed to pay a total of $8.0 million in penalties in three installments, with $3.5 million paid in the first quarter of 2011, $2.3 million paid in the first quarter of 2012 and $2.3 million payable in the first quarter of 2013. As part of the settlement, the Company entered into a three-year deferred prosecution agreement (“DPA”) with the DOJ. If the Company remain in compliance with the terms of the DPA, at the conclusion of the term, the charges against the Company asserted by the DOJ will be dismissed with prejudice. Further, under the terms of the agreements, the Company will periodically report to the SEC and DOJ on its internal compliance program concerning anti-bribery. As of September 30, 2012, the Company has accrued a liability of $2.3 million for this matter, which is included in “accounts payable and accrued liabilities” on the accompanying consolidated balance sheet.
Customer Bankruptcy Matter
In January 2011, the Company attended a bankruptcy proceeding for a previous customer in order to bid on certain intellectual property and physical assets that were being auctioned. During this proceeding, an offer for sale was presented for any and all potential claims held by the previous customer against the Company. These potential claims related primarily to payments made to the Company prior to the previous customer filing bankruptcy, as well as a potential intellectual property dispute between the Company and the previous customer. At the January 2011 bankruptcy proceeding, the Company bid $250,000 to purchase the right to any and all claims against the Company stemming from rights held by the previous customer. However, following the auction, the previous customer essentially declined this offer for settlement. Since this time, in the interest of a more expedient resolution to this matter, the Company recently increased its settlement offer to $750,000. However, this settlement offer was rejected by the previous customer. The Company believes that it has strong legal defenses against any and all potential claims related to this matter, and does not believe a settlement amount in excess of $750,000 is likely. The Company’s current estimate of the range of loss on this matter is $750,000 to $1,100,000, with the low end of this range based on the Company’s recent settlement offer, and the high end of the range based on the amount the Company expects that the previous customer would immediately accept without further negotiation. The Company has accrued a total of $750,000 as the estimated loss on this matter, which is included in “accounts payable and accrued liabilities” in the consolidated balance sheet as of September 30, 2012.
The following legal matters developed subsequent to the quarter ended September 30, 2012.
Securities Matter
In early 2013, we voluntarily provided information to the United States Attorney's Office for the Southern District of California and the U.S. Securities and Exchange Commission related to our announcement that we intend to file restated financial statements for fiscal years 2011 and 2012. We are cooperating with these investigations. At this preliminary stage, we cannot predict the ultimate outcome of this action, nor can we estimate the range of potential loss, and we therefore have not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on our financial condition and results of operation.
Securities Class Action Matter
From March 13, 2013 through April 19, 2013, four purported shareholder class actions were filed in the United States District Court for the Southern District of California against us and three of our current and former officers. These actions are entitled Foster v. Maxwell Technologies, Inc., et al., Case No. 13-cv-0580 (S.D. Cal. filed March 13, 2013), Weinstein v. Maxwell Technologies, Inc., et al., No. 13-cv-0686 (S.D. Cal. filed March 21, 2013), Abanades v. Maxwell Technologies, Inc., et al., No. 13-cv-0867 (S.D. Cal. filed April 11, 2013), and Mebarak v. Maxwell Technologies, Inc., et al., No. 13-cv-0942 (S.D. Cal. filed April 19, 2013). The complaints allege that the defendants made false and misleading statements regarding our financial performance and business prospects and overstated our reported revenue. The complaints purport to assert claims for violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 on behalf of all persons who purchased our common stock between April 28, 2011 and March 7, 2013, inclusive. The complaints seek unspecified monetary damages and attorneys' fees and costs. On May 13, 2013, four prospective lead plaintiffs filed motions to consolidate the four actions and to be appointed lead plaintiff. On June 11, 2013, the Court vacated the hearing on those motions and indicated that it would issue a written order in the near future. At this preliminary stage, we cannot determine whether there is a reasonable possibility that a loss has been incurred nor can we estimate the range of potential loss. Accordingly, we have not accrued an amount for any potential loss associated with this action, but an adverse result could have a material adverse impact on our financial condition and results of operation.
State Shareholder Derivative Matter
On April 11, 2013 and April 18, 2013, two shareholder derivative actions were filed in California Superior Court for the County of San Diego, entitled Warsh v. Schramm, et al., Case No. 37-2013-00043884 (San Diego Sup. Ct. filed April 11, 2013) and Neville v. Cortes, et al., Case No. 37-2013-00044911-CU-BT-CTL (San Diego Sup. Ct. filed April 18, 2013). The complaints name as defendants certain of our current and former officers and directors as well as our former auditor McGladrey LLP. We are named as a nominal defendant. The complaints allege that the individual defendants made or caused us to make false and/or misleading statements regarding our financial condition, and failed to disclose material adverse facts about our business, operations and prospects. The complaints assert causes of action for breaches of fiduciary duty for disseminating false and misleading information, failing to maintain internal controls, and failing to properly oversee and manage the company, as well as for unjust enrichment, abuse of control, gross mismanagement, professional negligence and accounting malpractice, and aiding and abetting breaches of fiduciary duty. The lawsuits seek unspecified damages, an order directing us to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution and disgorgement of profits, benefits and other compensation, attorneys' and experts' fees, and costs and expenses. On May 7, 2013, the Court consolidated the two actions. We filed a motion to stay the consolidated action on July 2, 2013. Because this action is derivative in nature, it does not seek monetary damages from us. However, we may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendants and to incur other financial obligations. At this preliminary stage, we cannot predict the ultimate outcome of this action, nor can we estimate the range of potential loss, and we therefore have not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on our financial condition and results of operation.
Federal Shareholder Derivative Matter
On April 23, 2013 and May 7, 2013, two shareholder derivative actions were filed in the United States District Court for the Southern District of California, entitled Kienzle v. Schramm, et al., Case No. 13-cv-0966 (S.D. Cal. filed April 23, 2013) and Agrawal v. Cortes, et al., Case No. 13-cv-1084 (S.D. Cal. filed May 7, 2013). The complaints name as defendants certain of our current and former officers and directors and name us as a nominal defendant. The complaints allege that the individual defendants caused or allowed us to issue false and misleading statements about our financial condition, operations, management, and internal controls and falsely represented that we maintained adequate controls. The complaints assert causes of action for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. The lawsuits seek unspecified damages, an order directing us to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution and disgorgement of profits, benefits, and other compensation, attorneys' and experts' fees, and costs and expenses. On June 10, 2013, the parties filed a joint motion to consolidate the two actions. The Court has not yet ruled on that motion. Because this action is derivative in nature, it does not seek monetary damages from us. However, we may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendants and to incur other financial obligations. At this preliminary stage, we cannot predict the ultimate outcome of this action, nor can we estimate the range of potential loss, and we therefore have not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on our financial condition and results of operation.
Shareholder Demand Letter Matter
On April 9, 2013, Stephen Neville, a purported shareholder of the Company, sent a demand letter to us to inspect our books and records pursuant to California Corporations Code Section 1601. The demand sought inspection of documents related to our March 7, 2013 announcement that we would be restating our previously-issued financial statements for 2011 and 2012, board minutes and committee materials, and other documents related to our board or management discussions regarding revenue recognition from January 1, 2011 to the present. We responded by letter dated April 19, 2013, explaining why we believed that the demand did not appear to be proper. Following receipt of a second letter from Mr. Neville dated April 23, 2013, we explained by letter dated April 29, 2013 why we continue to believe that the inspection demand appears improper. We have not received a further response from Mr. Neville regarding the inspection demand. At this preliminary stage, we cannot predict the ultimate outcome of this action, nor can we estimate the range of potential loss, and we therefore have not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on our financial condition and results of operation.
Description of Business and Basis of Presentation (Policies)
Financial Statement Presentation 
Financial Statement Presentation
The accompanying condensed consolidated financial statements include the accounts of Maxwell Technologies, Inc. and its subsidiaries. All significant intercompany transactions and account balances have been eliminated in consolidation. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q/A all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q/A contain all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary to present fairly the financial position, results of operations, and cash flows of Maxwell Technologies, Inc. for all periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire year. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Use of Estimates 
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. These estimates include, but are not limited to, assessing the collectability of accounts receivable, applied and unapplied production costs, production capacities, the usage and recoverability of inventories and long-lived assets, including deferred income taxes, the incurrence of warranty obligations, impairment of goodwill and other intangible assets, estimation of the cost to complete certain projects, accruals for estimated losses from legal matters, and estimation of the value of stock-based compensation awards, including the probability that the performance criteria of restricted stock awards will be met.
Warranty Obligation 
Warranty Obligation
The Company provides warranties on all product sales. The majority of the Company’s warranties are for one to two years in the normal course of business. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure.
Net Income (Loss) per Share 
Net Income (Loss) per Share
In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive.
Derivatives and Hedging 
Maxwell uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables, denominated in a foreign currency. The change in fair value of these instruments represents a natural hedge as gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates. These contracts generally expire in one month. These contracts are considered economic hedges and are not designated as hedges under the Derivatives and Hedging Topic of the FASB ASC, therefore, the change in the fair value of the instrument is recognized currently in the consolidated statement of operations.
Fair Value Measurements and Disclosures 
The Company records certain financial instruments at fair value in accordance with the Fair Value Measurements and Disclosures Topic of the FASB ASC. As of September 30, 2012, the financial instruments to which this topic applied were foreign currency forward contracts. As of September 30, 2012, the fair value of these foreign currency forward contracts was an asset of $348,000 which is recorded in “trade and other accounts receivable, net” in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC.
Description of Business and Basis of Presentation (Tables)
Schedule of computation of basic and diluted net income (loss) per share 
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
 
 
(Restated)
 
(Restated)
 
(Restated)
 
(Restated)
Numerator
 
 
 
 
 
 
 
 
Net income (loss)
 
$
5,228

 
$
569

 
$
4,307

 
$
(1,953
)
Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
28,736

 
27,733

 
28,511

 
27,564

Effect of potentially dilutive securities:
 
 
 
 
 
 
 
 
Options to purchase common stock
 
8

 
410

 
153

 
—

Restricted stock awards
 
3

 
8

 
11

 
—

Restricted stock unit awards
 
—

 
10

 
3

 
—

Employee stock purchase plan
 
1

 
—

 
17

 
—

Weighted-average common shares outstanding, assuming dilution
 
28,748

 
28,161

 
28,695

 
27,564

Net income (loss) per share
 
 
 
 
 
 
 
 
Basic
 
$
0.18

 
$
0.02

 
$
0.15

 
$
(0.07
)
Diluted
 
$
0.18

 
$
0.02

 
$
0.15

 
$
(0.07
)
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive 
The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net income per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Outstanding options to purchase common stock
 
920

 
344

 
549

 
1,248

Restricted stock awards
 
337

 
141

 
338

 
183

Restricted stock unit awards
 
20

 
22

 
17

 
22

Employee stock purchase plan awards
 
—

 
—

 
—

 
12

Restatement of Previously Issued Fiancial Statements (Tables)
Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]
The unaudited restated condensed consolidated balance sheet as of September 30, 2012 is presented below (in thousands, except per share data):
 
 
September 30, 2012
 
 
As previously reported
 
Restatement Adjustments
 
Debt Classification Adjustments
 
Restated
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
20,073

 
$
—

 
$
—

 
$
20,073

Trade and other accounts receivable, net of allowance for doubtful accounts of $341 at September 30, 2012
 
52,988

 
(14,172
)
 
—

 
38,816

Inventories
 
31,930

 
11,872

 
—

 
43,802

Prepaid expenses and other current assets
 
2,829

 
105

 
41

 
2,975

Total current assets
 
107,820

 
(2,195
)
 
41

 
105,666

Property and equipment, net
 
35,806

 
—

 
—

 
35,806

Intangible assets, net
 
758

 
—

 
—

 
758

Goodwill
 
24,826

 
—

 
—

 
24,826

Pension asset
 
6,945

 
—

 
—

 
6,945

Other non-current assets
 
79

 
—

 
(41
)
 
38

Total assets
 
$
176,234

 
$
(2,195
)
 
$
—

 
$
174,039

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
32,789

 
$
(800
)
 
$
—

 
$
31,989

Accrued warranty
 
244

 
—

 
—

 
244

Accrued employee compensation
 
5,025

 
—

 
—

 
5,025

Deferred revenue
 
—

 
5,149

 
—

 
5,149

Short-term borrowings and current portion of long-term debt
 
6,909

 
—

 
2,935

 
9,844

Deferred tax liability
 
499

 
—

 
—

 
499

Total current liabilities
 
45,466

 
4,349

 
2,935

 
52,750

Deferred tax liability, long-term
 
962

 
—

 
—

 
962

Long-term debt, excluding current portion
 
2,960

 
—

 
(2,935
)
 
25

Other long-term liabilities
 
699

 
—

 
—

 
699

Total liabilities
 
50,087

 
4,349

 
—

 
54,436

Commitments and contingencies (Note 11)
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 29,183 shares issued and outstanding at September 30, 2012
 
2,915

 
—

 
—

 
2,915

Additional paid-in capital
 
267,069

 
—

 
—

 
267,069

Accumulated deficit
 
(154,456
)
 
(6,544
)
 
—

 
(161,000
)
Accumulated other comprehensive income
 
10,619

 
—

 
—

 
10,619

Total stockholders’ equity
 
126,147

 
(6,544
)
 
—

 
119,603

Total liabilities and stockholders’ equity
 
$
176,234

 
$
(2,195
)
 
$
—

 
$
174,039

The restated condensed consolidated balance sheet as of December 31, 2011 is presented below (in thousands, except per share data)
 
 
December 31, 2011
 
 
As previously reported
 
Restatement Adjustments
 
Debt Classification Adjustments
 
Restated
ASSETS
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
29,289

 
$
—

 
$
—

 
$
29,289

Trade and other accounts receivable, net of allowance for doubtful accounts of $450 at December 31, 2011
 
36,131

 
(8,158
)
 
—

 
27,973

Inventories
 
27,232

 
6,002

 
—

 
33,234

Prepaid expenses and other current assets
 
3,125

 
(34
)
 
61

 
3,152

Total current assets
 
95,777

 
(2,190
)
 
61

 
93,648

Property and equipment, net
 
28,541

 
—

 
—

 
28,541

Intangible assets, net
 
1,111

 
—

 
—

 
1,111

Goodwill
 
24,887

 
—

 
—

 
24,887

Pension asset
 
6,359

 
—

 
—

 
6,359

Other non-current assets
 
261

 
—

 
(61
)
 
200

Total assets
 
$
156,936

 
$
(2,190
)
 
$
—

 
$
154,746

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
36,103

 
$
(3
)
 
$
—

 
$
36,100

Accrued warranty
 
258

 
—

 
—

 
258

Accrued employee compensation
 
6,243

 
100

 
—

 
6,343

Deferred revenue
 
1,042

 
—

 
—

 
1,042

Short-term borrowings and current portion of long-term debt
 
5,431

 
—

 
—

 
5,431

Deferred tax liability
 
499

 
—

 
—

 
499

Total current liabilities
 
49,576

 
97

 
—

 
49,673

Deferred tax liability, long-term
 
933

 
—

 
—

 
933

Long-term debt, excluding current portion
 
68

 
—

 
—

 
68

Other long-term liabilities
 
3,028

 
—

 
—

 
3,028

Total liabilities
 
53,605

 
97

 
—

 
53,702

Commitments and contingencies (Note 11)
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 28,174 shares issued and outstanding at December 31, 2011
 
2,815

 
—

 
—

 
2,815

Additional paid-in capital
 
252,907

 
—

 
—

 
252,907

Accumulated deficit
 
(163,021
)
 
(2,287
)
 
—

 
(165,308
)
Accumulated other comprehensive income
 
10,630

 
—

 
—

 
10,630

Total stockholders’ equity
 
103,331

 
(2,287
)
 
—

 
101,044

Total liabilities and stockholders’ equity
 
$
156,936

 
$
(2,190
)
 
$
—

 
$
154,746

The unaudited restated condensed quarterly consolidated statements of operations for the three months ended September 30, 2012 and 2011, respectively are presented below (in thousands, except per share data):
 
 
Three months ended September 30, 2012
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
43,907

 
$
(1,194
)
 
$
42,713

Cost of revenue
 
25,534

 
(963
)
 
24,571

Gross profit
 
18,373

 
(231
)
 
18,142

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
7,344

 
(2
)
 
7,342

Research and development
 
5,084

 
—

 
5,084

Total operating expenses
 
12,428

 
(2
)
 
12,426

Income from operations
 
5,945

 
(229
)
 
5,716

Interest expense, net
 
(56
)
 
—

 
(56
)
Amortization of debt discount and prepaid debt costs
 
(16
)
 
—

 
(16
)
Income from operations before income taxes
 
5,873

 
(229
)
 
5,644

Income tax provision
 
470

 
(54
)
 
416

Net income
 
$
5,403

 
$
(175
)
 
$
5,228

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.19

 
$
(0.01
)
 
$
0.18

Diluted
 
$
0.19

 
$
(0.01
)
 
$
0.18

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
28,736

 
 
 
28,736

Diluted
 
28,748

 
 
 
28,748


 
 
Three months ended September 30, 2011
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
41,096

 
$
934

 
$
42,030

Cost of revenue
 
24,547

 
653

 
25,200

Gross profit
 
16,549

 
281

 
16,830

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
9,595

 
10

 
9,605

Research and development
 
5,707

 
—

 
5,707

Total operating expenses
 
15,302

 
10

 
15,312

Income from operations
 
1,247

 
271

 
1,518

Interest expense, net
 
(27
)
 
—

 
(27
)
Income from operations before income taxes
 
1,220

 
271

 
1,491

Income tax provision
 
922

 
—

 
922

Net income
 
$
298

 
$
271

 
$
569

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.01

 
$
0.01

 
$
0.02

Diluted
 
$
0.01

 
$
0.01

 
$
0.02

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
27,733

 
 
 
27,733

Diluted
 
28,161

 
 
 
28,161

The unaudited restated condensed consolidated statements of operations for the nine months ended September 30, 2012 and 2011, respectively are presented below (in thousands, except per share data):
 
 
Nine months ended September 30, 2012
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
123,993

 
$
(9,238
)
 
$
114,755

Cost of revenue
 
72,503

 
(5,571
)
 
66,932

Gross profit
 
51,490

 
(3,667
)
 
47,823

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
24,868

 
671

 
25,539

Research and development
 
15,974

 
(26
)
 
15,948

Total operating expenses
 
40,842

 
645

 
41,487

Income from operations
 
10,648

 
(4,312
)
 
6,336

Interest expense, net
 
(138
)
 
—

 
(138
)
Amortization of debt discount and prepaid debt costs
 
(42
)
 
—

 
(42
)
Income from operations before income taxes
 
10,468

 
(4,312
)
 
6,156

Income tax provision
 
1,903

 
(54
)
 
1,849

Net income
 
$
8,565

 
$
(4,258
)
 
$
4,307

Net income per share:
 
 
 
 
 
 
Basic
 
$
0.30

 
$
(0.15
)
 
$
0.15

Diluted
 
$
0.30

 
$
(0.15
)
 
$
0.15

Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
28,511

 
 
 
28,511

Diluted
 
28,695

 
 
 
28,695

 
 
Nine months ended September 30, 2011
 
 
As previously reported
 
Restatement Adjustments
 
Restated
Revenue
 
$
114,818

 
$
(5,018
)
 
$
109,800

Cost of revenue
 
68,909

 
(1,169
)
 
67,740

Gross profit
 
45,909

 
(3,849
)
 
42,060

Operating expenses:
 
 
 
 
 
 
Selling, general and administrative
 
29,378

 
(2,619
)
 
26,759

Research and development
 
16,976

 
—

 
16,976

Total operating expenses
 
46,354

 
(2,619
)
 
43,735

Loss from operations
 
(445
)
 
(1,230
)
 
(1,675
)
Interest expense, net
 
(88
)
 
—

 
(88
)
Amortization of debt discount and prepaid debt costs
 
(55
)
 
—

 
(55
)
Gain on embedded derivatives
 
1,086

 
—

 
1,086

Income (loss) from operations before income taxes
 
498

 
(1,230
)
 
(732
)
Income tax provision
 
1,221

 
—

 
1,221

Net loss
 
$
(723
)
 
$
(1,230
)
 
$
(1,953
)
Net loss per share:
 
 
 
 
 
 
Basic
 
$
(0.03
)
 
$
(0.04
)
 
$
(0.07
)
Diluted
 
$
(0.03
)
 
$
(0.04
)
 
$
(0.07
)
Weighted average common shares outstanding:
 
 
 
 
 
 
Basic
 
27,564

 
 
 
27,564

Diluted
 
27,564

 
 
 
27,564

The unaudited restated condensed consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011, respectively are presented below (in thousands):
 
 
Nine Months Ended September 30, 2012
 
 
As Previously Reported
 
Revenue Restatement Adjustments
 
Restated
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income
 
$
8,565

 
$
(4,258
)
 
$
4,307

Adjustments to reconcile net income to net cash used in operating activities:
 
 
 
 
 
 
Depreciation
 
5,104

 
—

 
5,104

Amortization of intangible assets
 
351

 
—

 
351

Amortization of debt discount and prepaid debt costs
 
42

 
—

 
42

Pension cost
 
135

 
—

 
135

Stock-based compensation expense
 
2,561

 
—

 
2,561

Recovery of losses on accounts receivable
 
(237
)
 
127

 
(110
)
Changes in operating assets and liabilities:
 
 
 
 
 
 
Trade and other accounts receivable
 
(16,673
)
 
5,891

 
(10,782
)
Inventories
 
(4,700
)
 
(5,870
)
 
(10,570
)
Prepaid expenses and other assets
 
478

 
(139
)
 
339

Accounts payable and accrued liabilities and deferred revenue
 
(3,626
)
 
3,655

 
29

Accrued employee compensation
 
(1,296
)
 
2,019

 
723

Deferred tax liability, long term
 
29

 
(1,425
)
 
(1,396
)
Other long-term liabilities
 
(2,326
)
 
—

 
(2,326
)
Net cash used in operating activities
 
(11,593
)
 
—

 
(11,593
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Purchases of property and equipment
 
(13,121
)
 
—

 
(13,121
)
Net cash used in investing activities
 
(13,121
)
 
—

 
(13,121
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
Principal payments on long-term debt and short-term borrowings
 
(6,890
)
 
—

 
(6,890
)
Proceeds from long-term and short-term borrowings
 
11,230

 
—

 
11,230

Proceeds from sale of common stock, net of offering costs
 
10,283

 
—

 
10,283

Repurchase of shares
 
(319
)
 
—

 
(319
)
Proceeds from issuance of common stock under equity compensation plans
 
1,737

 
—

 
1,737

Net cash provided by financing activities
 
16,041

 
—

 
16,041

Decrease in cash and cash equivalents from operations
 
(8,673
)
 
—

 
(8,673
)
Effect of exchange rate changes on cash and cash equivalents
 
(543
)
 
—

 
(543
)
Decrease in cash and cash equivalents
 
(9,216
)
 
—

 
(9,216
)
Cash and cash equivalents, beginning of period
 
29,289

 
—

 
29,289

Cash and cash equivalents, end of period
 
$
20,073

 
$
—

 
$
20,073


 
 
Nine Months Ended September 30, 2011
 
 
As Previously Reported
 
Restatement Adjustments
 
Restated
OPERATING ACTIVITIES:
 
 
 
 
 
 
Net loss
 
$
(723
)
 
$
(1,230
)
 
$
(1,953
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
Depreciation
 
4,335

 
—

 
4,335

Amortization of intangible assets
 
422

 
—

 
422

Amortization of debt discount and prepaid debt costs
 
55

 
—

 
55

Gain on embedded derivatives
 
(1,086
)
 
—

 
(1,086
)
Pension cost
 
186

 
—

 
186

Stock-based compensation expense
 
2,440

 
—

 
2,440

Provision for losses on accounts receivable
 
304

 
(5
)
 
299

Changes in operating assets and liabilities:
 
 
 
 
 
 
Trade and other accounts receivable
 
(4,430
)
 
1,836

 
(2,594
)
Inventories
 
(8,621
)
 
(1,696
)
 
(10,317
)
Prepaid expenses and other assets
 
722

 
(13
)
 
709

Accounts payable and accrued liabilities and deferred revenue
 
4,204

 
1,108

 
5,312

Accrued employee compensation
 
954

 

 
954

Other long-term liabilities
 
(5,583
)
 
—

 
(5,583
)
Net cash used in operating activities
 
(6,821
)
 
—

 
(6,821
)
INVESTING ACTIVITIES:
 
 
 
 
 
 
Purchases of property and equipment
 
(10,994
)
 
—

 
(10,994
)
Net cash used in investing activities
 
(10,994
)
 
—

 
(10,994
)
FINANCING ACTIVITIES:
 
 
 
 
 
 
Principal payments on long-term debt and short-term borrowings
 
(10,254
)
 
—

 
(10,254
)
Proceeds from long-term and short-term borrowings
 
10,047

 
—

 
10,047

Repurchase of shares
 
(154
)
 
—

 
(154
)
Proceeds from issuance of common stock under equity compensation plans
 
2,561

 
—

 
2,561

Release of restricted cash
 
8,000

 
—

 
8,000

Net cash provided by financing activities
 
10,200

 
—

 
10,200

Decrease in cash and cash equivalents from operations
 
(7,615
)
 
—

 
(7,615
)
Effect of exchange rate changes on cash and cash equivalents
 
(1,226
)
 
—

 
(1,226
)
Decrease in cash and cash equivalents
 
(8,841
)
 
—

 
(8,841
)
Cash and cash equivalents, beginning of period
 
39,829

 
—

 
39,829

Cash and cash equivalents, end of period
 
$
30,988

 
$
—

 
$
30,988

Balance Sheet Details (Tables)
Schedule of inventories 
 
 
September 30, 2012
 
December 31, 2011
 
 
(Restated)
 
(Restated)
Raw material and purchased parts
 
$
13,553

 
$
9,661

Work-in-process
 
2,508

 
3,942

Finished goods
 
16,331

 
14,133

Consigned finished goods
 
11,410

 
5,498

Total inventories
 
$
43,802

 
$
33,234

Schedule of intangible assets 
Intangible assets consisted of the following:
 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Foreign
Currency
Adjustment
 
Net
Carrying
Value
As of September 30, 2012
 
 
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(1,852
)
 
$
—

 
$
624

Developed core technology
 
1,100

 
(1,100
)
 
—

 
—

Patent license agreement
 
741

 
(571
)
 
(36
)
 
134

Total intangible assets at September 30, 2012
 
$
4,317

 
$
(3,523
)
 
$
(36
)
 
$
758

 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Foreign
Currency
Adjustment
 
Net
Carrying
Value
As of December 31, 2011
 
 
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(1,699
)
 
$
—

 
$
777

Developed core technology
 
1,100

 
(1,050
)
 
29

 
79

Patent license agreement
 
741

 
(468
)
 
(18
)
 
255

Total intangible assets at December 31, 2011
 
$
4,317

 
$
(3,217
)
 
$
11

 
$
1,111

Schedule of change in the carrying amount of goodwill 
The change in the carrying amount of goodwill from December 31, 2011 to September 30, 2012 is as follows:
Balance at December 31, 2011
 
$
24,887

Foreign currency translation adjustments
 
(61
)
Balance at September 30, 2012
 
$
24,826

Schedule of accrued warranty 
 
 
Nine Months Ended
 
 
September 30,
 
 
2012
 
2011
Beginning balance
 
$
258

 
$
449

Product warranties issued
 
278

 
242

Settlement of warranties
 
(154
)
 
(160
)
Change related to preexisting warranties
 
(138
)
 
(283
)
Foreign currency translation adjustments
 
—

 
13

Ending balance
 
$
244

 
$
261

Schedule of accumulated other comprehensive income 
 
 
Foreign
Currency
Translation
Adjustment
 
Defined Benefit
Pension Plan
 
Accumulated
Other
Comprehensive
Income
Balance as of December 31, 2011
 
$
14,580

 
$
(3,950
)
 
$
10,630

Current period change
 
(176
)
 
165

 
(11
)
Balance as of September 30, 2012
 
$
14,404

 
$
(3,785
)
 
$
10,619

Convertible Debentures Convertible Debentures (Tables)
Schedule Of Debenture Interest Paid With Cash And Principal Converted Into Shares Of Common Stock [Table Text Block]
Interest paid with cash and principal converted into shares of common stock are as follows (in thousands):
 
 
Nine months ended September 30, 2011
 
 
Value
 
Shares
Conversion of principal into shares of common stock
 
$
8,333

 
$
514

Interest paid with cash
 
17

 
—

Total debenture payments
 
$
8,350

 
$
514

Foreign Currency Derivative Instruments (Tables)
Schedule of gains (losses) on foreign currency forward contracts 
The net gains and losses on foreign currency forward contracts included in cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
1

 
$
(45
)
 
$
1

 
$
(282
)
Selling, general and administrative
 
174

 
(1,273
)
 
(308
)
 
742

Total gain (loss)
 
$
175

 
$
(1,318
)
 
$
(307
)
 
$
460

Schedule of foreign currency gains and losses on underlying assets and liabilities 
Foreign currency gains and losses on those underlying monetary assets and liabilities included in cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
(1
)
 
$
(74
)
 
$
13

 
$
149

Selling, general and administrative
 
(357
)
 
1,271

 
(100
)
 
(918
)
Total gain (loss)
 
$
(358
)
 
$
1,197

 
$
(87
)
 
$
(769
)
Offsetting Liabilities 
Stock Plans (Tables)
Schedule of stock-based compensation expense 
Compensation cost for restricted stock, restricted stock units, employee stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Cost of revenue
 
$
163

 
$
89

 
$
543

 
$
292

Selling, general and administrative
 
213

 
531

 
1,586

 
1,773

Research and development
 
129

 
115

 
432

 
375

Total stock-based compensation expense
 
$
505

 
$
735

 
$
2,561

 
$
2,440

Schedule of employee stock purchase plan weighted-average assumptions 
The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three and nine months ended September 30, 2012 and 2011 (in thousands): 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Service-based restricted stock
 
$
369

 
$
170

 
$
1,216

 
$
635

Performance-based restricted stock
 
(198
)
 
91

 
(37
)
 
241

Total compensation expense recognized for restricted stock awards
 
$
171

 
$
261

 
$
1,179

 
$
876

Schedule of stock-based compensation expense 
The Company may determine to grant stock options in the future under the Incentive Plan.
Schedule of stock-based compensation expense 
The fair value of the ESPP shares was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Expected dividends
 
$
—

 
$
—

 
$
—

 
$
—

Exercise price
 
$
5.58

 
$
16.19

 
$
8.93

 
$
18.01

Expected volatility
 
83
%
 
33
%
 
75
%
 
43
%
Average risk-free interest rate
 
0.16
%
 
0.10
%
 
0.12
%
 
0.16
%
Expected life/term (in years)
 
0.5

 
0.5

 
0.5

 
0.5

Fair value per share
 
$
2.78

 
$
3.94

 
$
3.79

 
$
5.00

Defined Benefit Plan (Tables)
Schedule of components of net periodic pension income
Components of net periodic pension cost are as follows (in thousands):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2012
 
2011
 
2012
 
2011
Service cost
 
$
164

 
$
213

 
$
502

 
$
601

Interest cost
 
159

 
193

 
487

 
543

Expected return on plan assets
 
(342
)
 
(435
)
 
(1,048
)
 
(1,227
)
Prior service cost amortization
 
11

 
12

 
32

 
35

Deferred loss amortization
 
53

 
83

 
162

 
234

Net periodic pension cost
 
$
45

 
$
66

 
$
135

 
$
186

Description of Business and Basis of Presentation (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Schedule of computation of basic and diluted net income (loss) per share
 
 
 
 
Net income
$ 5,228 
$ 569 
$ 4,307 
$ (1,953)
Effect of assumed conversion of convertible debentures
 
 
 
 
Weighted Average Number of Shares Outstanding, Basic
28,736 
27,733 
28,511 
27,564 
Weighted Average Number of Shares Outstanding, Diluted
28,748 
28,161 
28,695 
27,564 
Net income per share
 
 
 
 
Basic
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Diluted
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Stock Options
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
8 
410 
153 
0 
Restricted Stock [Member]
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
3 
8 
11 
0 
Restricted Stock Unit
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
0 
10 
3 
0 
Employee Stock Purchase Plan
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
1 
0 
17 
0 
Description of Business and Basis of Presentation (Details 1)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Outstanding options to purchase common stock
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
920 
344 
549 
1,248 
Restricted Stock Awards
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
337 
141 
338 
183 
Restricted stock unit awards
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
20 
22 
17 
22 
Employee Stock Purchase Plan
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
0 
0 
0 
12 
Description of Business and Basis of Presentation (Details Textual) (USD $)
9 Months Ended
Sep. 30, 2012
Segment
manufacturing_location
Description of Business and Basis of Presentation (Textual) [Abstract]
 
Manufacturing locations
2 
Operating segments
1 
Warranty period, minimum, in years
1 year 
Warranty period, maximum, in years
2 years 
Additional paid in capital increase
$ 14,200,000 
Amount associated with stock-based compensation plans
4,300,000 
Repurchase of shares
$ (318,000)
Restatement of Previously Issued Financial Statements (Quarterly Consolidated Statement of Operations) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Revenue
$ 42,713 
$ 42,030 
$ 114,755 
$ 109,800 
Cost of revenue
24,571 
25,200 
66,932 
67,740 
Gross Profit
18,142 
16,830 
47,823 
42,060 
Operating expenses:
 
 
 
 
Selling, general and administrative
7,342 
9,605 
25,539 
26,759 
Research and development
5,084 
5,707 
15,948 
16,976 
Total operating expenses
12,426 
15,312 
41,487 
43,735 
Income (loss) from operations
5,716 
1,518 
6,336 
(1,675)
Interest expense, net
(56)
(27)
(138)
(88)
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net
 
 
0 
1,086 
Income (loss) from operations before income taxes
5,644 
1,491 
6,156 
(732)
Income Tax Expense (Benefit)
416 
922 
1,849 
1,221 
Net income (loss)
5,228 
569 
4,307 
(1,953)
Earnings Per Share, Basic
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Earnings Per Share, Diluted
$ 0.18 
$ 0.02 
$ 0.15 
$ (0.07)
Weighted Average Number of Shares Outstanding, Basic
28,736 
27,733 
28,511 
27,564 
Weighted Average Number of Shares Outstanding, Diluted
28,748 
28,161 
28,695 
27,564 
Scenario, Previously Reported [Member]
 
 
 
 
Revenue
43,907 
41,096 
123,993 
114,818 
Cost of revenue
25,534 
24,547 
72,503 
68,909 
Gross Profit
18,373 
16,549 
51,490 
45,909 
Operating expenses:
 
 
 
 
Selling, general and administrative
7,344 
9,595 
24,868 
29,378 
Research and development
5,084 
5,707 
15,974 
16,976 
Total operating expenses
12,428 
15,302 
40,842 
46,354 
Income (loss) from operations
5,945 
1,247 
10,648 
(445)
Interest expense, net
(56)
(27)
(138)
(88)
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net
 
 
 
1,086 
Income (loss) from operations before income taxes
5,873 
1,220 
10,468 
498 
Income Tax Expense (Benefit)
470 
922 
1,903 
1,221 
Net income (loss)
5,403 
298 
8,565 
(723)
Earnings Per Share, Basic
$ 0.19 
$ 0.01 
$ 0.30 
$ (0.03)
Earnings Per Share, Diluted
$ 0.19 
$ 0.01 
$ 0.30 
$ (0.03)
Weighted Average Number of Shares Outstanding, Basic
28,736 
27,733 
28,511 
27,564 
Weighted Average Number of Shares Outstanding, Diluted
28,748 
28,161 
28,695 
27,564 
Restatement Adjustment [Member]
 
 
 
 
Revenue
(1,194)
934 
(9,238)
(5,018)
Cost of revenue
(963)
653 
(5,571)
(1,169)
Gross Profit
(231)
281 
(3,667)
(3,849)
Operating expenses:
 
 
 
 
Selling, general and administrative
(2)
10 
671 
(2,619)
Research and development
0 
0 
(26)
0 
Total operating expenses
(2)
10 
645 
(2,619)
Income (loss) from operations
(229)
271 
(4,312)
(1,230)
Interest expense, net
0 
0 
0 
0 
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net
 
 
 
0 
Income (loss) from operations before income taxes
(229)
271 
(4,312)
(1,230)
Income Tax Expense (Benefit)
(54)
0 
(54)
0 
Net income (loss)
$ (175)
$ 271 
$ (4,258)
$ (1,230)
Earnings Per Share, Basic
$ (0.01)
$ 0.01 
$ (0.15)
$ (0.04)
Earnings Per Share, Diluted
$ (0.01)
$ 0.01 
$ (0.15)
$ (0.04)
Restatement of Previously Issued Fiancial Statements (Quarterly Consolidated Statement of Cash Flows) (Details) (USD $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Net income (loss)
$ 4,307,000 
$ (1,953,000)
OPERATING ACTIVITIES:
 
 
Depreciation
5,104,000 
4,335,000 
Amortization of intangible assets
351,000 
422,000 
Amortization of debt discount and prepaid debt costs
(42,000)
(55,000)
Gain on embedded derivatives
0 
(1,086,000)
Pension cost
135,000 
186,000 
Stock-based compensation expense
2,561,000 
2,440,000 
Recovery of losses on accounts receivable
(110,000)
299,000 
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
(10,782,000)
(2,594,000)
Inventories
(10,570,000)
(10,317,000)
Prepaid expenses and other assets
339,000 
709,000 
Accounts payable and accrued liabilities and deferred revenue
29,000 
5,312,000 
Accrued employee compensation
723,000 
954,000 
Deferred tax liability, long term
(1,396,000)
0 
Other long-term liabilities
(2,326,000)
(5,583,000)
Net cash used in operating activities
(11,593,000)
(6,821,000)
INVESTING ACTIVITIES:
 
 
Purchases of property and equipment
(13,121,000)
(10,994,000)
Net cash used in investing activities
(13,121,000)
(10,994,000)
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
(6,890,000)
(10,254,000)
Proceeds from long-term and short-term borrowings
11,230,000 
10,047,000 
Proceeds from sale of common stock, net of offering costs
10,283,000 
0 
Repurchase of shares
(319,000)
(154,000)
Proceeds from issuance of common stock under equity compensation plans
1,737,000 
2,561,000 
Net cash provided by financing activities
16,041,000 
10,200,000 
Decrease in cash and cash equivalents from operations
(8,673,000)
(7,615,000)
Effect of exchange rate changes on cash and cash equivalents
(543,000)
(1,226,000)
Decrease in cash and cash equivalents
(9,216,000)
(8,841,000)
Cash and cash equivalents, beginning of period
29,289,000 
39,829,000 
Increase (Decrease) in Restricted Cash
0 
8,000,000 
Scenario, Previously Reported [Member]
 
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Net income (loss)
8,565,000 
(723,000)
OPERATING ACTIVITIES:
 
 
Depreciation
5,104,000 
4,335,000 
Amortization of intangible assets
351,000 
422,000 
Amortization of debt discount and prepaid debt costs
(42,000)
(55,000)
Gain on embedded derivatives
 
(1,086,000)
Pension cost
135,000 
186,000 
Stock-based compensation expense
2,561,000 
2,440,000 
Recovery of losses on accounts receivable
(237,000)
304,000 
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
(16,673,000)
(4,430,000)
Inventories
(4,700,000)
(8,621,000)
Prepaid expenses and other assets
478,000 
722,000 
Accounts payable and accrued liabilities and deferred revenue
(3,626,000)
4,204,000 
Accrued employee compensation
(1,296,000)
954,000 
Deferred tax liability, long term
29,000 
 
Other long-term liabilities
(2,326,000)
(5,583,000)
Net cash used in operating activities
(11,593,000)
(6,821,000)
INVESTING ACTIVITIES:
 
 
Purchases of property and equipment
(13,121,000)
(10,994,000)
Net cash used in investing activities
(13,121,000)
(10,994,000)
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
(6,890,000)
(10,254,000)
Proceeds from long-term and short-term borrowings
11,230,000 
10,047,000 
Proceeds from sale of common stock, net of offering costs
10,283,000 
 
Repurchase of shares
(319,000)
(154,000)
Proceeds from issuance of common stock under equity compensation plans
1,737,000 
2,561,000 
Net cash provided by financing activities
16,041,000 
10,200,000 
Decrease in cash and cash equivalents from operations
(8,673,000)
(7,615,000)
Effect of exchange rate changes on cash and cash equivalents
(543,000)
(1,226,000)
Decrease in cash and cash equivalents
(9,216,000)
(8,841,000)
Cash and cash equivalents, beginning of period
29,289,000 
39,829,000 
Increase (Decrease) in Restricted Cash
 
8,000,000 
Restatement Adjustment [Member]
 
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Net income (loss)
(4,258,000)
(1,230,000)
OPERATING ACTIVITIES:
 
 
Depreciation
0 
0 
Amortization of intangible assets
0 
0 
Amortization of debt discount and prepaid debt costs
0 
0 
Gain on embedded derivatives
 
0 
Pension cost
0 
0 
Stock-based compensation expense
0 
0 
Recovery of losses on accounts receivable
127,000 
(5,000)
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
5,891,000 
1,836,000 
Inventories
(5,870,000)
(1,696,000)
Prepaid expenses and other assets
(139,000)
(13,000)
Accounts payable and accrued liabilities and deferred revenue
3,655,000 
1,108,000 
Accrued employee compensation
2,019,000 
   
Deferred tax liability, long term
(1,425,000)
 
Other long-term liabilities
0 
0 
Net cash used in operating activities
0 
0 
INVESTING ACTIVITIES:
 
 
Purchases of property and equipment
0 
0 
Net cash used in investing activities
0 
0 
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
0 
0 
Proceeds from long-term and short-term borrowings
0 
0 
Proceeds from sale of common stock, net of offering costs
0 
 
Repurchase of shares
0 
0 
Proceeds from issuance of common stock under equity compensation plans
0 
0 
Net cash provided by financing activities
0 
0 
Decrease in cash and cash equivalents from operations
0 
0 
Effect of exchange rate changes on cash and cash equivalents
0 
0 
Decrease in cash and cash equivalents
0 
0 
Cash and cash equivalents, beginning of period
0 
 
Increase (Decrease) in Restricted Cash
 
$ 0 
Restatement of Previously Issued Fiancial Statements (Details Textual) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended 3 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Other Restatement Adjustments [Member]
Jun. 30, 2011
Other Restatement Adjustments [Member]
Reclassification to contra-revenue
$ 42,713 
$ 42,030 
$ 114,755 
$ 109,800 
 
$ (2,600)
Decrease in income tax provision
$ 416 
$ 922 
$ 1,849 
$ 1,221 
$ (54)
 
Restatement of Previously Issued Fiancial Statements Restatement of Previously Issued Financial Statements (Quarterly Consolidated Balance Sheet) (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Sep. 30, 2011
Dec. 31, 2010
Liabilities and Equity
$ 174,039 
$ 154,746 
 
 
Stockholders' Equity Attributable to Parent
119,603 
101,044 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
10,619 
10,630 
 
 
Retained Earnings (Accumulated Deficit)
(161,000)
(165,308)
 
 
Additional Paid in Capital
267,069 
252,907 
 
 
Common Stock, Value, Issued
2,915 
2,815 
 
 
Commitments and Contingencies
   
   
 
 
Liabilities
54,436 
53,702 
 
 
Other Liabilities, Noncurrent
699 
3,028 
 
 
Long-term Debt, Excluding Current Maturities
25 
68 
 
 
Deferred Tax Liabilities, Net, Noncurrent
962 
933 
 
 
Liabilities, Current
52,750 
49,673 
 
 
Deferred Tax Liabilities, Net, Current
499 
499 
 
 
Debt, Current
9,844 
5,431 
 
 
Deferred revenue
5,149 
1,042 
 
 
Employee-related Liabilities, Current
5,025 
6,343 
 
 
Accrued warranty
244 
258 
 
 
Accounts Payable and Accrued Liabilities, Current
31,989 
36,100 
 
 
Assets
174,039 
154,746 
 
 
Other Assets, Noncurrent
38 
200 
 
 
Defined Benefit Plan, Funded Status of Plan
6,945 
6,359 
 
 
Goodwill
24,826 
24,887 
 
 
Intangible Assets, Net (Excluding Goodwill)
758 
1,111 
 
 
Property, Plant and Equipment, Net
35,806 
28,541 
 
 
Assets, Current
105,666 
93,648 
 
 
Prepaid Expense and Other Assets, Current
2,975 
3,152 
 
 
Inventory, Net
43,802 
33,234 
 
 
Accounts Receivable, Net, Current
38,816 
27,973 
 
 
Cash and cash equivalents, end of period
20,073 
29,289 
30,988 
39,829 
Debt Classification Adjustments [Member]
 
 
 
 
Liabilities and Equity
0 
0 
 
 
Stockholders' Equity Attributable to Parent
0 
0 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
0 
0 
 
 
Retained Earnings (Accumulated Deficit)
0 
0 
 
 
Additional Paid in Capital
0 
0 
 
 
Common Stock, Value, Issued
0 
0 
 
 
Liabilities
0 
0 
 
 
Other Liabilities, Noncurrent
0 
0 
 
 
Long-term Debt, Excluding Current Maturities
(2,935)
0 
 
 
Deferred Tax Liabilities, Net, Noncurrent
0 
0 
 
 
Liabilities, Current
2,935 
0 
 
 
Deferred Tax Liabilities, Net, Current
0 
0 
 
 
Debt, Current
2,935 
0 
 
 
Deferred revenue
0 
0 
 
 
Employee-related Liabilities, Current
0 
0 
 
 
Accrued warranty
0 
0 
 
 
Accounts Payable and Accrued Liabilities, Current
0 
0 
 
 
Assets
0 
0 
 
 
Other Assets, Noncurrent
(41)
(61)
 
 
Defined Benefit Plan, Funded Status of Plan
0 
0 
 
 
Goodwill
0 
0 
 
 
Intangible Assets, Net (Excluding Goodwill)
0 
0 
 
 
Property, Plant and Equipment, Net
0 
0 
 
 
Assets, Current
41 
61 
 
 
Prepaid Expense and Other Assets, Current
41 
61 
 
 
Inventory, Net
0 
0 
 
 
Accounts Receivable, Net, Current
0 
0 
 
 
Cash and cash equivalents, end of period
0 
0 
 
 
Restatement Adjustment [Member]
 
 
 
 
Liabilities and Equity
(2,195)
(2,190)
 
 
Stockholders' Equity Attributable to Parent
(6,544)
(2,287)
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
0 
0 
 
 
Retained Earnings (Accumulated Deficit)
(6,544)
(2,287)
 
 
Additional Paid in Capital
0 
0 
 
 
Common Stock, Value, Issued
0 
0 
 
 
Liabilities
4,349 
97 
 
 
Other Liabilities, Noncurrent
0 
0 
 
 
Long-term Debt, Excluding Current Maturities
0 
0 
 
 
Deferred Tax Liabilities, Net, Noncurrent
0 
0 
 
 
Liabilities, Current
4,349 
97 
 
 
Deferred Tax Liabilities, Net, Current
0 
0 
 
 
Debt, Current
0 
0 
 
 
Deferred revenue
5,149 
0 
 
 
Employee-related Liabilities, Current
0 
100 
 
 
Accrued warranty
0 
0 
 
 
Accounts Payable and Accrued Liabilities, Current
(800)
(3)
 
 
Assets
(2,195)
(2,190)
 
 
Other Assets, Noncurrent
0 
0 
 
 
Defined Benefit Plan, Funded Status of Plan
0 
0 
 
 
Goodwill
0 
0 
 
 
Intangible Assets, Net (Excluding Goodwill)
0 
0 
 
 
Property, Plant and Equipment, Net
0 
0 
 
 
Assets, Current
(2,195)
(2,190)
 
 
Prepaid Expense and Other Assets, Current
105 
(34)
 
 
Inventory, Net
11,872 
6,002 
 
 
Accounts Receivable, Net, Current
(14,172)
(8,158)
 
 
Cash and cash equivalents, end of period
0 
0 
0 
 
Scenario, Previously Reported [Member]
 
 
 
 
Liabilities and Equity
176,234 
156,936 
 
 
Stockholders' Equity Attributable to Parent
126,147 
103,331 
 
 
Accumulated Other Comprehensive Income (Loss), Net of Tax
10,619 
10,630 
 
 
Retained Earnings (Accumulated Deficit)
(154,456)
(163,021)
 
 
Additional Paid in Capital
267,069 
252,907 
 
 
Common Stock, Value, Issued
2,915 
2,815 
 
 
Liabilities
50,087 
53,605 
 
 
Other Liabilities, Noncurrent
699 
3,028 
 
 
Long-term Debt, Excluding Current Maturities
2,960 
68 
 
 
Deferred Tax Liabilities, Net, Noncurrent
962 
933 
 
 
Liabilities, Current
45,466 
49,576 
 
 
Deferred Tax Liabilities, Net, Current
499 
499 
 
 
Debt, Current
6,909 
5,431 
 
 
Deferred revenue
0 
1,042 
 
 
Employee-related Liabilities, Current
5,025 
6,243 
 
 
Accrued warranty
244 
258 
 
 
Accounts Payable and Accrued Liabilities, Current
32,789 
36,103 
 
 
Assets
176,234 
156,936 
 
 
Other Assets, Noncurrent
79 
261 
 
 
Defined Benefit Plan, Funded Status of Plan
6,945 
6,359 
 
 
Goodwill
24,826 
24,887 
 
 
Intangible Assets, Net (Excluding Goodwill)
758 
1,111 
 
 
Property, Plant and Equipment, Net
35,806 
28,541 
 
 
Assets, Current
107,820 
95,777 
 
 
Prepaid Expense and Other Assets, Current
2,829 
3,125 
 
 
Inventory, Net
31,930 
27,232 
 
 
Accounts Receivable, Net, Current
52,988 
36,131 
 
 
Cash and cash equivalents, end of period
$ 20,073 
$ 29,289 
$ 30,988 
$ 39,829 
Balance Sheet Details (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Schedule of inventories
 
 
Raw material and purchased parts
$ 13,553 
$ 9,661 
Work-in-process
2,508 
3,942 
Finished goods
16,331 
14,133 
Inventory, Finished Goods, Consigned
11,410 
5,498 
Total inventories
$ 43,802 
$ 33,234 
Balance Sheet Details (Details 1) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Dec. 31, 2011
Schedule of intangible assets
 
 
Gross Carrying Value
$ 4,317 
$ 4,317 
Accumulated Amortization
(3,523)
(3,217)
Foreign Currency Adjustment
(36)
11 
Net Carrying Value
758 
1,111 
Patents
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
2,476 
2,476 
Accumulated Amortization
(1,852)
(1,699)
Foreign Currency Adjustment
0 
0 
Net Carrying Value
624 
777 
Developed core technology
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
1,100 
1,100 
Accumulated Amortization
(1,100)
(1,050)
Foreign Currency Adjustment
0 
29 
Net Carrying Value
0 
79 
Patent license agreement
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
741 
741 
Accumulated Amortization
(571)
(468)
Foreign Currency Adjustment
(36)
(18)
Net Carrying Value
$ 134 
$ 255 
Balance Sheet Details (Details 2) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Schedule of change in the carrying amount of goodwill
 
Balance at December 31, 2011
$ 24,887 
Foreign currency translation adjustments
(61)
Balance at September 30, 2012
$ 24,826 
Balance Sheet Details (Details 3) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Schedule of accrued warranty
 
 
Beginning balance
$ 258 
$ 449 
Product warranties issued
278 
242 
Settlement of warranties
(154)
(160)
Change related to preexisting warranties
(138)
(283)
Foreign currency translation adjustments
0 
13 
Ending balance
$ 244 
$ 261 
Balance Sheet Details (Details 4) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
 
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Portion Attributable to Parent
 
 
$ (176)
 
 
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, before Tax, Portion Attributable to Parent
 
 
165 
 
 
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax
14,404 
 
14,404 
 
14,580 
Schedule of accumulated other comprehensive income
 
 
 
 
 
Balance as of December 31, 2011
 
 
10,630 
 
 
Current period change
773 
(4,439)
(11)
1,795 
 
Balance as of September 30, 2012
10,619 
 
10,619 
 
 
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax
$ (3,785)
 
$ (3,785)
 
$ (3,950)
Convertible Debentures Convertible Debentures (Details) (USD $)
0 Months Ended 1 Months Ended 9 Months Ended 12 Months Ended
Dec. 20, 2005
Feb. 28, 2011
Sep. 30, 2011
Dec. 31, 2011
Convertible Debentures [Abstract]
 
 
 
 
Debt Instrument Original Discount and Issuance Costs
 
$ 9,200,000 
 
 
Amortization of Financing Costs and Discounts
 
 
6,000 
 
Embedded Derivative Gain on Embedded Derivative Fair Value Measurement
 
 
 
78,000 
Stock Issued During Period, Value, Conversion of Convertible Securities
 
9,300,000 
 
 
Debt Instrument, Face Amount
25,000,000 
 
 
 
Debt Instrument, Periodic Payment
2,800,000 
 
 
 
Debt Conversion, Converted Instrument, Amount
 
8,300,000 
 
8,000 
Debt Conversion, Converted Instrument, Shares Issued
 
514,086 
 
1,000 
Debt Instrument, Convertible, Conversion Price
 
$ 16.21 
 
 
Debt Conversion, Converted Instrument, Interest Paid
 
 
 
0 
Repayments of Convertible Debt
 
 
 
8,000 
Embedded Derivative Gain on Embedded Derivative Conversion
 
1,000,000 
 
 
Restricted Cash and Cash Equivalents
 
$ 8,000,000 
 
 
Credit Facility (Details Textual) (USD $)
9 Months Ended 12 Months Ended 9 Months Ended 13 Months Ended
Sep. 30, 2012
Dec. 31, 2011
Dec. 31, 2011
Revolving Credit Facility [Member]
Sep. 30, 2012
Revolving Credit Facility [Member]
Sep. 30, 2012
Secured Debt [Member]
Dec. 31, 2011
London Interbank Offered Rate (LIBOR) [Member]
Revolving Credit Facility [Member]
Apr. 30, 2012
Equipment Term Loan [Member]
Secured Debt [Member]
Sep. 30, 2012
Equipment Term Loan [Member]
Secured Debt [Member]
Sep. 30, 2012
Equipment Term Loan [Member]
London Interbank Offered Rate (LIBOR) [Member]
Secured Debt [Member]
Dec. 31, 2011
Equipment Term Loan [Member]
London Interbank Offered Rate (LIBOR) [Member]
Secured Debt [Member]
Sep. 30, 2012
Collateral for Borrowing [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
 
 
$ 15,000,000 
 
 
 
 
 
 
 
 
Line of Credit Facility, Required Pledge of Equity Interests in Subsidiary, Percent
 
65.00% 
 
 
 
 
 
 
 
 
 
Amounts outstanding under the Revolving Line of Credit
 
 
 
0 
 
 
 
 
 
 
 
Borrowings under credit facility, interest payable description
at either (i) the bank’s prime rate or (ii) LIBOR plus 2.25% 
 
 
 
applicable interest rate was LIBOR plus 2.25% (2.5% as of September 30, 2012) 
 
 
 
 
 
 
Borrowings under credit facility, interest related to Libor rate
 
 
 
 
 
2.25% 
 
 
 
2.25% 
 
Equipment term loan number of payments
 
 
 
 
 
 
36 months 
 
 
 
 
Equipment term loan, interest rate
 
 
 
 
 
 
 
 
2.50% 
 
 
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage
 
 
0.25% 
 
 
 
 
 
 
 
 
Restricted cash
 
 
 
 
 
 
 
 
 
 
1,800,000 
Long-term Debt
 
 
 
 
 
 
 
$ 4,500,000 
 
 
 
Fair Value Measurements (Details Textual) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2012
Fair Value Measurements (Textual) [Abstract]
 
Fair value of derivatives
$ 348 
Foreign Currency Derivative Instruments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
$ 175 
$ (1,318)
$ (307)
$ 460 
Cost of revenue
 
 
 
 
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
1 
(45)
1 
(282)
Selling, general and administrative
 
 
 
 
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
$ 174 
$ (1,273)
$ (308)
$ 742 
Foreign Currency Derivative Instruments (Details 1) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Schedule of foreign currency gains and losses on underlying assets and liabilities
 
 
 
 
Net gains (loss) on foreign currency forward contracts were partially offset on assets and liabilities
$ (358)
$ 1,197 
$ (87)
$ (769)
Cost of Sales
 
 
 
 
Schedule of foreign currency gains and losses on underlying assets and liabilities
 
 
 
 
Net gains (loss) on foreign currency forward contracts were partially offset on assets and liabilities
(1)
(74)
13 
149 
Selling, General and Administrative Expenses
 
 
 
 
Schedule of foreign currency gains and losses on underlying assets and liabilities
 
 
 
 
Net gains (loss) on foreign currency forward contracts were partially offset on assets and liabilities
$ (357)
$ 1,271 
$ (100)
$ (918)
Foreign Currency Derivative Instruments (Details Textual) (USD $)
Sep. 30, 2012
Foreign Currency Derivative Instruments (Textual) [Abstract]
 
Notional amount of foreign currency forward contracts not designated as hedges
$ 23,000,000 
Foreign Currency Derivative Instruments Not Designated as Hedging Instruments, Asset at Fair Value
$ 348,000 
Stock Plans (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
 
 
$ 2,561,000 
$ 2,440,000 
Allocated Share-based Compensation Expense
505,000 
735,000 
2,561,000 
2,440,000 
Restricted Stock Awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
171,000 
261,000 
1,179,000 
876,000 
Service-based restricted stock [Member] |
Restricted Stock Awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
369,000 
170,000 
1,216,000 
635,000 
Performance-based restricted stock [Member] |
Restricted Stock Awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
(198,000)
91,000 
(37,000)
241,000 
Cost of revenue
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
163,000 
89,000 
543,000 
292,000 
Selling, General and Administrative Expenses
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
213,000 
531,000 
1,586,000 
1,773,000 
Research and development [Member]
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
$ 129,000 
$ 115,000 
$ 432,000 
$ 375,000 
Stock Plans (Details 1) (Employee Stock Purchase Plan, USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Employee Stock Purchase Plan
 
 
 
 
Schedule of stock options and employee stock purchase plan weighted-average assumptions
 
 
 
 
Expected dividends
0.00% 
0.00% 
0.00% 
0.00% 
Exercise price
$ 5.58 
$ 16.19 
$ 8.93 
$ 18.01 
Expected volatility
83.00% 
33.00% 
75.00% 
43.00% 
Average risk-free interest rate
0.16% 
0.10% 
0.12% 
0.16% 
Expected life/term (in years)
6 months 
6 months 
6 months 
6 months 
Fair value per share
$ 2.78 
$ 3.94 
$ 3.79 
$ 5.00 
Stock Plans (Details Textual) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation plans
2 
 
2 
 
Stock-based compensation expense
 
 
$ 2,561,000 
$ 2,440,000 
Restricted stock unit, granted
 
1,200 
 
 
Outstanding options to purchase common stock
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
156,000 
322,000 
867,000 
1,100,000 
Restricted Stock Awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Restricted stock granted
0 
1,200 
251,066 
217,116 
Restricted stock, average grant date fair value per share
 
$ 0 
$ 20.81 
$ 18.92 
Restricted stock unit awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
106,000 
106,000 
316,000 
268,000 
Restricted stock unit, granted
0 
 
20,342 
22,036 
Restricted stock, average grant date fair value per share
 
 
$ 20.65 
$ 19.06 
Restricted stock unit vesting period (in years)
 
 
1 year 
 
Employee Stock Purchase Plan
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
$ 72,000 
$ 46,000 
$ 199,000 
$ 159,000 
Discount rate from market value on offering date
 
 
85.00% 
 
Stock Offering (Details Textual) (USD $)
1 Months Ended 3 Months Ended 9 Months Ended
Apr. 30, 2011
Feb. 28, 2011
Mar. 31, 2012
Sep. 30, 2012
Stock Offering (Textual) [Abstract]
 
 
 
 
Sale of common stock shares
$ 125,000,000 
 
 
 
stock offering common stock warrants
 
30,000,000 
 
 
Commission on sale of common stock
 
 
 
2.00% 
Number of shares sold under sales agreement
 
 
572,510 
 
Net proceeds on sale of common stock
 
 
$ 10,300,000 
 
Defined Benefit Plan (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Schedule of components of net periodic pension income
 
 
 
 
Service cost
$ 164 
$ 213 
$ 502 
$ 601 
Interest cost
159 
193 
487 
543 
Expected return on plan assets
(342)
(435)
(1,048)
(1,227)
Prior service cost amortization
11 
12 
32 
35 
Deferred loss amortization
53 
83 
162 
234 
Net periodic pension income
$ 45 
$ 66 
$ 135 
$ 186 
Defined Benefit Plan (Details Textual) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Defined Benefit Plan (Textual) [Abstract]
 
 
 
 
Employer contributions
$ 173 
$ 207 
$ 544 
$ 592 
Additional employer contributions, expected to be paid during the remainder of fiscal year
$ 137 
 
$ 137 
 
Legal Proceedings (Details Textual) (USD $)
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Sep. 30, 2012
Jan. 31, 2011
Customer Bankruptcy [Member]
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
Bankruptcy proceedings settlement offer
$ 750,000 
 
 
$ 250,000 
Loss Contingency, Range of Possible Loss, Minimum
750,000 
 
 
 
Loss Contingency, Range of Possible Loss, Maximum
1,100,000 
 
 
 
Accrued estimated loss on settlement offer
 
 
750,000 
 
SEC Penalties Settlement [Member]
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
Legal agree upon settle amount
 
 
 
6,400,000 
Payments for legal settlements
 
3,200,000 
 
 
Doj Penalties Settlement [Member]
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
Legal agree upon settle amount
 
 
 
8,000,000 
Payments for legal settlements
2,300,000 
3,500,000 
 
 
Accrued estimated loss on settlement offer
 
 
$ 2,300,000