|
|
|
|
|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
|
Delaware
|
22-3509099
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
Common Stock, $0.001 Par Value
|
The Nasdaq Stock Market LLC
|
(Title of class)
|
(Name of each exchange on which registered)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
x
|
|
|
Page
|
PART I
|
||
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
PART III
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
PART IV
|
|
|
Item 15.
|
||
•
|
the “core” network, which interconnects service providers with each other; and
|
•
|
the “access” network, which connects end-users to a service provider’s closest facility.
|
•
|
Expanding Our Infrastructure to Meet Service Provider Needs
. Network service providers require extensive support and integration with manufacturers to deliver reliable, innovative and cost-effective services. By combining advanced, computer-aided design, test and manufacturing systems with experienced, customer-focused management and technical staff, we believe that we have established the critical mass required to fully support global service provider requirements. We continue to expand our infrastructure through ongoing development and strategic relationships, continuously improving quality, reducing costs and accelerating delivery of advanced solutions.
|
•
|
Continuing the Development and Enhancement of Our SLMS Products
. Our SLMS architecture is the cornerstone of our product development strategy. The design criteria for SLMS products include carrier-class reliability, multi-protocol and multi-service support, and ease of provisioning. We intend to continue to introduce SLMS products that offer the configurations and feature sets that our customers require. In addition, we have introduced products that adhere to the standards, protocols and interfaces dictated by international standards bodies and service providers. In 2009, we introduced our MXK product, a new flagship SLMS product that provides a converged multi-services access platform. In 2012, we launched our new FiberLAN OLS, a cost-effective, efficient and environmentally friendly alternative to existing copper-based Ethernet LAN infrastructure. To facilitate the rapid development of our existing and new SLMS architecture and products, we have established engineering teams responsible for each critical aspect of the architecture and products. We intend to continue to leverage our expertise in voice, data and video technologies to enhance our SLMS architecture, supporting new services, protocols and technologies as they emerge. To further this objective, we intend to continue investing in research and development efforts to extend the SLMS architecture and introduce new SLMS products.
|
•
|
Delivering Full Customer Solutions
. In addition to delivering hardware and software product solutions, we provide customers with pre-sales and post-sales support, education and professional services to enable our
|
Category
|
Product
|
Function
|
Broadband Aggregation and Service
|
MXK
|
Multi-Service Terabit Access Concentrator
|
|
MALC
|
Multi-Access Line Concentrator
|
|
MXP/MX
|
Scalable 1U SLMS VDSL2/Active Ethernet
|
|
MALC-OLT
|
FTTx Optical Line Terminal
|
|
4000 /8000 /12000
|
DSLAMs
|
Customer Premise Equipment (CPE)
|
EtherXtend
|
Ethernet Over Copper
|
|
15xx, 67xx, 65xx
|
Wireline/Wireless DSL Modems
|
|
16xx, 17xx, 6xxx
|
Wireline/Wireless DSL Modems
|
|
zNID
|
Optical Network Terminals
|
Network and Subscriber Management
|
ZMS
|
Zhone Management System
|
Passive Optical LAN
|
MXK
|
Multi-Service Terabit Access Concentrator
|
|
zNID
|
Optical Network Terminals
|
•
|
Services-Centric Architecture.
SLMS has been designed from inception for the delivery of multiple classes of subscriber services (such as voice, data or video distribution), rather than being based on a particular protocol or media. Our SLMS products are built to interoperate in networks supporting packet, cell and circuit technologies. This independence between services and the underlying transportation is designed to position our products to be able to adapt to future transportation technologies within established architectures and to allow our customers to focus on service delivery.
|
•
|
Common Code Base.
Our SLMS products share a common base of software code, which is designed to accelerate development, improve software quality, enable rapid deployment, and minimize training and operations costs, in conjunction with network management software.
|
•
|
Network Management and Operations.
Our ZMS product provides management capabilities that enable rapid, cost-effective, and secure control of the network; standards-based interfaces for seamless integration with supporting systems; hierarchical service and subscriber profiles to allow rapid service definition and provisioning, and to enable wholesaling of services; automated and intelligent CPE provisioning to provide the best end-user experience and accelerate service turn-up; load-balancing for scalability; and full security features to ensure reliability and controlled access to systems and data.
|
•
|
Test Methodologies.
Our SLMS architecture provides for interoperability with a variety of products that reside in networks in which we will deploy our products. To ensure interoperability, we have built a testing facility to conduct extensive multi-vendor trials and to ensure full performance under valid network conditions. Testing has included participation with partners’ certification and accreditation programs for a wide range of interoperable products, including soft switches, SAN equipment and management software. The successful completion of these processes is required by our largest customers to ensure interoperability with their existing software and systems.
|
•
|
Acquired Technologies.
Since our inception, we have completed twelve acquisitions pursuant to which we acquired products, technology and additional technical expertise.
|
•
|
U.S. Sales.
Our U.S. Sales organization establishes and maintains direct relationships with domestic customers, which include communication service providers, cable operators, independent operating companies, or IOCs, as well as competitive carriers, developers and utilities. In addition, this organization is responsible for managing our distribution and original equipment manufacturer, or OEM, partnerships.
|
•
|
International Sales.
Our International Sales organization targets foreign based service providers and is staffed with individuals with specific experience dealing with service providers in their designated international territories.
|
•
|
product performance;
|
•
|
interoperability with existing products;
|
•
|
scalability and upgradeability;
|
•
|
conformance to standards;
|
•
|
breadth of services;
|
•
|
reliability;
|
•
|
ease of installation and use;
|
•
|
geographic footprints for products;
|
•
|
ability to provide customer financing;
|
•
|
price;
|
•
|
technical support and customer service; and
|
•
|
brand recognition.
|
Name
|
Age
|
Position
|
Morteza Ejabat
|
63
|
Chief Executive Officer, President and Chairman of the Board of Directors
|
Kirk Misaka
|
55
|
Chief Financial Officer, Corporate Treasurer and Secretary
|
•
|
commercial acceptance of our SLMS and other products and services;
|
•
|
fluctuations in demand for network access products;
|
•
|
the timing and size of orders from customers;
|
•
|
the ability of our customers to finance their purchase of our products as well as their own operations;
|
•
|
new product introductions, enhancements or announcements by our competitors;
|
•
|
our ability to develop, introduce and ship new products and product enhancements that meet customer requirements in a timely manner;
|
•
|
changes in our pricing policies or the pricing policies of our competitors;
|
•
|
the ability of our company and our contract manufacturers to attain and maintain production volumes and quality levels for our products;
|
•
|
our ability to obtain sufficient supplies of sole or limited source components;
|
•
|
increases in the prices of the components we purchase, or quality problems associated with these components;
|
•
|
unanticipated changes in regulatory requirements which may require us to redesign portions of our products;
|
•
|
changes in accounting rules, such as recording expenses for employee stock option grants;
|
•
|
integrating and operating any acquired businesses;
|
•
|
our ability to achieve targeted cost reductions;
|
•
|
how well we execute on our strategy and operating plans; and
|
•
|
general economic conditions as well as those specific to the communications, internet and related industries.
|
•
|
limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes;
|
•
|
limiting our flexibility to plan for, or react to, changes in our business or market conditions;
|
•
|
requiring us to use a significant portion of any future cash flow from operations to repay or service the debt, thereby reducing the amount of cash available for other purposes;
|
•
|
making us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; and
|
•
|
making us more vulnerable to the impact of adverse economic and industry conditions and increases in interest rates.
|
•
|
the market for our products develops more slowly than anticipated;
|
•
|
we fail to establish market share or generate revenue at anticipated levels;
|
•
|
our capital expenditure forecasts change or prove inaccurate; or
|
•
|
we fail to respond to unforeseen challenges or take advantage of unanticipated opportunities.
|
•
|
increasing our vulnerability to adverse economic conditions in our industry or the economy in general;
|
•
|
requiring substantial amounts of cash to be used for debt servicing, rather than other purposes, including operations;
|
•
|
limiting our ability to plan for, or react to, changes in our business and industry; and
|
•
|
influencing investor and customer perceptions about our financial stability and limiting our ability to obtain financing or acquire customers.
|
•
|
trade protection measures and other regulatory requirements which may affect our ability to import or export our products into or from various countries;
|
•
|
political considerations that affect service provider and government spending patterns;
|
•
|
differing technology standards or customer requirements;
|
•
|
developing and customizing our products for foreign countries;
|
•
|
fluctuations in currency exchange rates;
|
•
|
longer accounts receivable collection cycles and financial instability of customers;
|
•
|
difficulties and excessive costs for staffing and managing foreign operations;
|
•
|
potentially adverse tax consequences; and
|
•
|
changes in a country’s or region’s political and economic conditions.
|
•
|
product performance;
|
•
|
interoperability with existing products;
|
•
|
scalability and upgradeability;
|
•
|
conformance to standards;
|
•
|
breadth of services;
|
•
|
reliability;
|
•
|
ease of installation and use;
|
•
|
geographic footprints for products;
|
•
|
ability to provide customer financing;
|
•
|
price;
|
•
|
technical support and customer service; and
|
•
|
brand recognition.
|
•
|
issue stock that would dilute our current stockholders’ percentage ownership;
|
•
|
consume a substantial portion of our cash resources;
|
•
|
incur substantial debt;
|
•
|
assume liabilities;
|
•
|
increase our ongoing operating expenses and level of fixed costs;
|
•
|
record goodwill and non-amortizable intangible assets that will be subject to impairment testing and potential periodic impairment charges;
|
•
|
incur amortization expenses related to certain intangible assets;
|
•
|
incur large and immediate write-offs; and
|
•
|
become subject to litigation.
|
•
|
difficulties in integrating the operations, technologies, products and personnel of the acquired companies;
|
•
|
unanticipated costs;
|
•
|
diversion of management’s time and attention away from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions;
|
•
|
difficulties in entering markets in which we have no or limited prior experience;
|
•
|
insufficient revenues to offset increased expenses associated with acquisitions and where competitors in such markets have stronger market positions; and
|
•
|
potential loss of key employees, customers, distributors, vendors and other business partners of the companies we acquire following and continuing after announcement of acquisition plans.
|
2013:
|
|
|
|
||||
|
High
|
|
Low
|
||||
Fourth Quarter ended December 31, 2013
|
$
|
6.62
|
|
|
$
|
2.75
|
|
Third Quarter ended September 30, 2013
|
3.89
|
|
|
0.80
|
|
||
Second Quarter ended June 30, 2013
|
1.15
|
|
|
0.72
|
|
||
First Quarter ended March 31, 2013
|
1.24
|
|
|
0.43
|
|
2012:
|
|
|
|
||||
|
High
|
|
Low
|
||||
Fourth Quarter ended December 31, 2012
|
$
|
0.63
|
|
|
$
|
0.40
|
|
Third Quarter ended September 30, 2012
|
0.80
|
|
|
0.50
|
|
||
Second Quarter ended June 30, 2012
|
1.17
|
|
|
0.65
|
|
||
First Quarter ended March 31, 2012
|
1.52
|
|
|
0.85
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Statement of Comprehensive Income (Loss) Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenue
|
$
|
122,248
|
|
|
$
|
115,385
|
|
|
$
|
124,502
|
|
|
$
|
129,036
|
|
|
$
|
126,501
|
|
Cost of revenue (1)
|
76,116
|
|
|
79,101
|
|
|
80,541
|
|
|
79,864
|
|
|
81,106
|
|
|||||
Gross profit
|
46,132
|
|
|
36,284
|
|
|
43,961
|
|
|
49,172
|
|
|
45,395
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and product development (1)
|
15,326
|
|
|
18,542
|
|
|
21,380
|
|
|
21,188
|
|
|
22,113
|
|
|||||
Sales and marketing (1)
|
20,159
|
|
|
19,304
|
|
|
22,297
|
|
|
23,982
|
|
|
22,042
|
|
|||||
General and administrative (1)
|
6,199
|
|
|
7,157
|
|
|
7,784
|
|
|
9,855
|
|
|
9,933
|
|
|||||
Gain on sale of fixed assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,959
|
)
|
|
—
|
|
|||||
Impairment of fixed assets
|
—
|
|
|
61
|
|
|
4,236
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
41,684
|
|
|
45,064
|
|
|
55,697
|
|
|
53,066
|
|
|
54,088
|
|
|||||
Operating income (loss)
|
4,448
|
|
|
(8,780
|
)
|
|
(11,736
|
)
|
|
(3,894
|
)
|
|
(8,693
|
)
|
|||||
Interest expense, net
|
(85
|
)
|
|
(102
|
)
|
|
(41
|
)
|
|
(989
|
)
|
|
(1,284
|
)
|
|||||
Other income (expense), net
|
(7
|
)
|
|
(9
|
)
|
|
111
|
|
|
1
|
|
|
121
|
|
|||||
Income (loss) before income taxes
|
4,356
|
|
|
(8,891
|
)
|
|
(11,666
|
)
|
|
(4,882
|
)
|
|
(9,856
|
)
|
|||||
Income tax provision (benefit)
|
42
|
|
|
124
|
|
|
60
|
|
|
(101
|
)
|
|
171
|
|
|||||
Net income (loss)
|
$
|
4,314
|
|
|
$
|
(9,015
|
)
|
|
$
|
(11,726
|
)
|
|
$
|
(4,781
|
)
|
|
$
|
(10,027
|
)
|
Other comprehensive income (loss)
|
(151
|
)
|
|
(21
|
)
|
|
(40
|
)
|
|
(16
|
)
|
|
43
|
|
|||||
Comprehensive income (loss)
|
$
|
4,163
|
|
|
$
|
(9,036
|
)
|
|
$
|
(11,766
|
)
|
|
$
|
(4,797
|
)
|
|
$
|
(9,984
|
)
|
Basic net income (loss) per share (2)
|
$
|
0.14
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.33
|
)
|
Diluted net income (loss) per share (2)
|
$
|
0.13
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.33
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares used in per-share calculation (2)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
31,429
|
|
|
31,010
|
|
|
30,671
|
|
|
30,393
|
|
|
30,200
|
|
|||||
Diluted
|
33,021
|
|
|
31,010
|
|
|
30,671
|
|
|
30,393
|
|
|
30,200
|
|
|||||
(1) Amounts include stock-based compensation cost as follows:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
$
|
—
|
|
|
$
|
63
|
|
|
$
|
61
|
|
|
$
|
94
|
|
|
$
|
104
|
|
Research and product development
|
2
|
|
|
297
|
|
|
244
|
|
|
362
|
|
|
414
|
|
|||||
Sales and marketing
|
2
|
|
|
250
|
|
|
350
|
|
|
421
|
|
|
484
|
|
|||||
General and administrative
|
420
|
|
|
704
|
|
|
1,015
|
|
|
1,388
|
|
|
1,258
|
|
|||||
(2) All share and per share amounts reflect the one-for-five reverse stock split effected on March 11, 2010.
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and short-term investments
|
$
|
15,686
|
|
|
$
|
11,119
|
|
|
$
|
18,190
|
|
|
$
|
21,174
|
|
|
$
|
21,766
|
|
Working capital
|
39,291
|
|
|
34,868
|
|
|
43,027
|
|
|
49,402
|
|
|
53,843
|
|
|||||
Total assets
|
71,817
|
|
|
61,724
|
|
|
80,732
|
|
|
90,111
|
|
|
110,259
|
|
|||||
Long-term debt, including current portion
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,696
|
|
|||||
Stockholders’ equity
|
$
|
37,559
|
|
|
$
|
31,940
|
|
|
$
|
39,527
|
|
|
$
|
49,415
|
|
|
$
|
51,673
|
|
•
|
Increasing revenue while continuing to carefully control costs;
|
•
|
Continued investments in strategic research and product development activities that will provide the maximum potential return on investment; and
|
•
|
Minimizing consumption of our cash and cash equivalents.
|
|
Year ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Net revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
62
|
%
|
|
69
|
%
|
|
65
|
%
|
Gross profit
|
38
|
%
|
|
31
|
%
|
|
35
|
%
|
Operating expenses:
|
|
|
|
|
|
|||
Research and product development
|
13
|
%
|
|
16
|
%
|
|
17
|
%
|
Sales and marketing
|
16
|
%
|
|
17
|
%
|
|
18
|
%
|
General and administrative
|
5
|
%
|
|
6
|
%
|
|
6
|
%
|
Impairment of fixed assets
|
0
|
%
|
|
0
|
%
|
|
3
|
%
|
Total operating expenses
|
34
|
%
|
|
39
|
%
|
|
44
|
%
|
Operating income (loss)
|
4
|
%
|
|
(8
|
)%
|
|
(9
|
)%
|
Interest expense, net
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Other income (expense), net
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Income (loss) before income taxes
|
4
|
%
|
|
(8
|
)%
|
|
(9
|
)%
|
Income tax provision
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Net income (loss)
|
4
|
%
|
|
(8
|
)%
|
|
(9
|
)%
|
Other comprehensive income (loss)
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Comprehensive income (loss)
|
4
|
%
|
|
(8
|
)%
|
|
(9
|
)%
|
|
2013
|
|
2012
|
|
Increase
|
|
%
change
|
|||||||
Products
|
$
|
114.0
|
|
|
$
|
110.3
|
|
|
$
|
3.7
|
|
|
3
|
%
|
Services
|
8.2
|
|
|
5.1
|
|
|
$
|
3.1
|
|
|
61
|
%
|
||
|
$
|
122.2
|
|
|
$
|
115.4
|
|
|
$
|
6.8
|
|
|
6
|
%
|
|
2013
|
|
2012
|
|
Increase
(Decrease)
|
|
%
change
|
|||||||
Revenue by geography:
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
38.2
|
|
|
$
|
47.1
|
|
|
$
|
(8.9
|
)
|
|
(19
|
)%
|
Canada
|
3.4
|
|
|
3.8
|
|
|
(0.4
|
)
|
|
(11
|
)%
|
|||
Total North America
|
41.6
|
|
|
50.9
|
|
|
(9.3
|
)
|
|
(18
|
)%
|
|||
Latin America
|
27.2
|
|
|
27.9
|
|
|
(0.7
|
)
|
|
(3
|
)%
|
|||
Europe, Middle East, Africa
|
49.6
|
|
|
34.2
|
|
|
15.4
|
|
|
45
|
%
|
|||
Asia Pacific
|
3.8
|
|
|
2.4
|
|
|
1.4
|
|
|
58
|
%
|
|||
Total International
|
80.6
|
|
|
64.5
|
|
|
16.1
|
|
|
25
|
%
|
|||
Total
|
$
|
122.2
|
|
|
$
|
115.4
|
|
|
$
|
6.8
|
|
|
6
|
%
|
|
2012
|
|
2011
|
|
Increase
(Decrease)
|
|
%
change
|
|||||||
Products
|
$
|
110.3
|
|
|
$
|
119.4
|
|
|
$
|
(9.1
|
)
|
|
(8
|
)%
|
Services
|
5.1
|
|
|
5.1
|
|
|
—
|
|
|
—
|
%
|
|||
|
$
|
115.4
|
|
|
$
|
124.5
|
|
|
$
|
(9.1
|
)
|
|
(7
|
)%
|
|
2012
|
|
2011
|
|
Increase
(Decrease)
|
|
%
change
|
|||||||
Revenue by geography:
|
|
|
|
|
|
|
|
|||||||
United States
|
$
|
47.1
|
|
|
$
|
48.6
|
|
|
$
|
(1.5
|
)
|
|
(3
|
)%
|
Canada
|
3.8
|
|
|
4.2
|
|
|
(0.4
|
)
|
|
(10
|
)%
|
|||
Total North America
|
50.9
|
|
|
52.8
|
|
|
(1.9
|
)
|
|
(4
|
)%
|
|||
Latin America
|
27.9
|
|
|
32.1
|
|
|
(4.2
|
)
|
|
(13
|
)%
|
|||
Europe, Middle East, Africa
|
34.2
|
|
|
38.5
|
|
|
(4.3
|
)
|
|
(11
|
)%
|
|||
Asia Pacific
|
2.4
|
|
|
1.1
|
|
|
1.3
|
|
|
118
|
%
|
|||
Total International
|
64.5
|
|
|
71.7
|
|
|
(7.2
|
)
|
|
(10
|
)%
|
|||
Total
|
$
|
115.4
|
|
|
$
|
124.5
|
|
|
$
|
(9.1
|
)
|
|
(7
|
)%
|
•
|
Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual requirements;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
|
•
|
non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; and
|
•
|
other companies in our industry may calculate Adjusted EBITDA and similar measures differently than we do, limiting its usefulness as a comparative measure.
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
4,314
|
|
|
$
|
(9,015
|
)
|
|
$
|
(11,726
|
)
|
Add:
|
|
|
|
|
|
||||||
Interest expense
|
85
|
|
|
102
|
|
|
44
|
|
|||
Income tax provision
|
42
|
|
|
124
|
|
|
60
|
|
|||
Depreciation and amortization
|
367
|
|
|
316
|
|
|
1,810
|
|
|||
Non-cash equity-based compensation expense
|
424
|
|
|
1,314
|
|
|
1,670
|
|
|||
Non-cash material non-recurring transaction (1)
|
—
|
|
|
—
|
|
|
4,236
|
|
|||
Adjusted EBITDA
|
$
|
5,232
|
|
|
$
|
(7,159
|
)
|
|
$
|
(3,906
|
)
|
(1)
|
The 2011 non-cash material non-recurring transaction represents the impairment of fixed assets recorded in the fourth quarter of 2011.
|
|
Total
|
|
Payments due by period
|
||||||||||||||||||||
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018 and
thereafter
|
|||||||||||||||
Operating leases
|
$
|
3,435
|
|
|
$
|
1,649
|
|
|
$
|
1,310
|
|
|
$
|
429
|
|
|
$
|
34
|
|
|
$
|
13
|
|
Purchase commitments
|
4,563
|
|
|
4,563
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Line of credit
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total future contractual commitments
|
$
|
17,998
|
|
|
$
|
16,212
|
|
|
$
|
1,310
|
|
|
$
|
429
|
|
|
$
|
34
|
|
|
$
|
13
|
|
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
15,686
|
|
|
$
|
11,119
|
|
Accounts receivable, net of allowances for sales returns and doubtful accounts of $1,452 in 2013 and $2,878 in 2012
|
33,328
|
|
|
25,820
|
|
||
Inventories
|
19,562
|
|
|
21,404
|
|
||
Prepaid expenses and other current assets
|
2,269
|
|
|
2,590
|
|
||
Total current assets
|
70,845
|
|
|
60,933
|
|
||
Property and equipment, net
|
718
|
|
|
583
|
|
||
Other assets
|
254
|
|
|
208
|
|
||
Total assets
|
$
|
71,817
|
|
|
$
|
61,724
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
12,689
|
|
|
$
|
7,229
|
|
Line of credit
|
10,000
|
|
|
10,000
|
|
||
Accrued and other liabilities
|
8,865
|
|
|
8,836
|
|
||
Total current liabilities
|
31,554
|
|
|
26,065
|
|
||
Other long-term liabilities
|
2,704
|
|
|
3,719
|
|
||
Total liabilities
|
34,258
|
|
|
29,784
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.001 par value. Authorized 180,000 shares; issued and outstanding 32,249 and 31,116 shares as of December 31, 2013 and 2012, respectively
|
32
|
|
|
31
|
|
||
Additional paid-in capital
|
1,074,294
|
|
|
1,072,839
|
|
||
Other comprehensive income
|
65
|
|
|
216
|
|
||
Accumulated deficit
|
(1,036,832
|
)
|
|
(1,041,146
|
)
|
||
Total stockholders’ equity
|
37,559
|
|
|
31,940
|
|
||
Total liabilities and stockholders’ equity
|
$
|
71,817
|
|
|
$
|
61,724
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net revenue
|
$
|
122,248
|
|
|
$
|
115,385
|
|
|
$
|
124,502
|
|
Cost of revenue (1)
|
76,116
|
|
|
79,101
|
|
|
80,541
|
|
|||
Gross profit
|
46,132
|
|
|
36,284
|
|
|
43,961
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and product development (1)
|
15,326
|
|
|
18,542
|
|
|
21,380
|
|
|||
Sales and marketing (1)
|
20,159
|
|
|
19,304
|
|
|
22,297
|
|
|||
General and administrative (1)
|
6,199
|
|
|
7,157
|
|
|
7,784
|
|
|||
Impairment of fixed assets
|
—
|
|
|
61
|
|
|
4,236
|
|
|||
Total operating expenses
|
41,684
|
|
|
45,064
|
|
|
55,697
|
|
|||
Operating income (loss)
|
4,448
|
|
|
(8,780
|
)
|
|
(11,736
|
)
|
|||
Interest expense, net
|
(85
|
)
|
|
(102
|
)
|
|
(41
|
)
|
|||
Other income (expense), net
|
(7
|
)
|
|
(9
|
)
|
|
111
|
|
|||
Income (loss) before income taxes
|
4,356
|
|
|
(8,891
|
)
|
|
(11,666
|
)
|
|||
Income tax provision
|
42
|
|
|
124
|
|
|
60
|
|
|||
Net income (loss)
|
$
|
4,314
|
|
|
$
|
(9,015
|
)
|
|
$
|
(11,726
|
)
|
Other comprehensive loss—foreign currency translation adjustments
|
(151
|
)
|
|
(21
|
)
|
|
(40
|
)
|
|||
Comprehensive income (loss)
|
$
|
4,163
|
|
|
$
|
(9,036
|
)
|
|
$
|
(11,766
|
)
|
|
|
|
|
|
|
||||||
Earnings per common share
|
|
|
|
|
|
||||||
Basic
|
$
|
0.14
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
Diluted
|
$
|
0.13
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding used to compute earnings per common share
|
|
|
|
|
|
||||||
Basic
|
31,429
|
|
|
31,010
|
|
|
30,671
|
|
|||
Diluted
|
33,021
|
|
|
31,010
|
|
|
30,671
|
|
|
Common stock
|
|
Additional
paid-in
capital
|
|
Other
comprehensive
income
|
|
Accumulated
deficit
|
|
Total
stockholders’
equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balances as of December 31, 2010
|
30,555
|
|
|
$
|
30
|
|
|
$
|
1,069,513
|
|
|
$
|
277
|
|
|
$
|
(1,020,405
|
)
|
|
$
|
49,415
|
|
Exercise of stock options for cash
|
109
|
|
|
—
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|||||
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
1,609
|
|
|
—
|
|
|
—
|
|
|
1,609
|
|
|||||
Issuance of common stock for executive services
|
131
|
|
|
1
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|||||
Issuance of common stock for director services
|
25
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,726
|
)
|
|
(11,726
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
|||||
Balances as of December 31, 2011
|
30,820
|
|
|
31
|
|
|
1,071,390
|
|
|
237
|
|
|
(1,032,131
|
)
|
|
39,527
|
|
|||||
Exercise of stock options for cash
|
95
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|||||
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
1,214
|
|
|
—
|
|
|
—
|
|
|
1,214
|
|
|||||
Issuance of common stock for executive services
|
117
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|||||
Issuance of common stock for director services
|
84
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,015
|
)
|
|
(9,015
|
)
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(21
|
)
|
|||||
Balances as of December 31, 2012
|
31,116
|
|
|
31
|
|
|
1,072,839
|
|
|
216
|
|
|
(1,041,146
|
)
|
|
31,940
|
|
|||||
Exercise of stock options for cash
|
930
|
|
|
1
|
|
|
1,031
|
|
|
|
|
|
|
1,032
|
|
|||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Employee stock-based compensation
|
—
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
—
|
|
|
213
|
|
|||||
Issuance of common stock for executive services
|
138
|
|
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
132
|
|
|||||
Issuance of common stock for director services
|
65
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,314
|
|
|
4,314
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
—
|
|
|
(151
|
)
|
|||||
Balances as of December 31, 2013
|
32,249
|
|
|
$
|
32
|
|
|
$
|
1,074,294
|
|
|
$
|
65
|
|
|
$
|
(1,036,832
|
)
|
|
$
|
37,559
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
4,314
|
|
|
$
|
(9,015
|
)
|
|
$
|
(11,726
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
367
|
|
|
316
|
|
|
1,810
|
|
|||
Stock-based compensation
|
424
|
|
|
1,314
|
|
|
1,670
|
|
|||
Loss on disposal of fixed assets
|
—
|
|
|
7
|
|
|
—
|
|
|||
Impairment of fixed assets
|
—
|
|
|
61
|
|
|
4,236
|
|
|||
Provision for sales returns and doubtful accounts
|
(1,426
|
)
|
|
2,594
|
|
|
1,939
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(6,082
|
)
|
|
3,184
|
|
|
(3,790
|
)
|
|||
Inventories
|
1,842
|
|
|
5,989
|
|
|
3,655
|
|
|||
Prepaid expenses and other current assets
|
321
|
|
|
82
|
|
|
(158
|
)
|
|||
Other assets
|
(46
|
)
|
|
5
|
|
|
83
|
|
|||
Accounts payable
|
5,460
|
|
|
(4,568
|
)
|
|
(67
|
)
|
|||
Accrued and other liabilities
|
(986
|
)
|
|
(1,853
|
)
|
|
(4,424
|
)
|
|||
Net cash provided by (used in) operating activities
|
4,188
|
|
|
(1,884
|
)
|
|
(6,772
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(502
|
)
|
|
(359
|
)
|
|
(1,380
|
)
|
|||
Changes in restricted cash
|
—
|
|
|
58
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(502
|
)
|
|
(301
|
)
|
|
(1,380
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from exercise of stock options and purchases under the ESPP plan
|
1,032
|
|
|
135
|
|
|
208
|
|
|||
Net advances (repayment) under credit facilities
|
—
|
|
|
(5,000
|
)
|
|
5,000
|
|
|||
Net cash provided by (used in) financing activities
|
1,032
|
|
|
(4,865
|
)
|
|
5,208
|
|
|||
Effect of exchange rate changes on cash
|
(151
|
)
|
|
(21
|
)
|
|
(40
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
4,567
|
|
|
(7,071
|
)
|
|
(2,984
|
)
|
|||
Cash and cash equivalents at beginning of year
|
11,119
|
|
|
18,190
|
|
|
21,174
|
|
|||
Cash and cash equivalents at end of year
|
$
|
15,686
|
|
|
$
|
11,119
|
|
|
$
|
18,190
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during period for:
|
|
|
|
|
|
||||||
Taxes
|
$
|
42
|
|
|
$
|
124
|
|
|
$
|
65
|
|
Interest
|
85
|
|
|
102
|
|
|
44
|
|
•
|
increasing its vulnerability to adverse economic conditions in its industry or the economy in general;
|
•
|
requiring substantial amounts of cash to be used for debt servicing, rather than other purposes, including operations;
|
•
|
limiting its ability to plan for, or react to, changes in its business and industry; and
|
•
|
influencing investor and customer perceptions about its financial stability and limiting its ability to obtain financing or acquire customers.
|
•
|
Potential deferment of purchases and orders by customers;
|
•
|
Customers’ inability to obtain financing to make purchases from the Company and/or maintain their business;
|
•
|
Negative impact from increased financial pressures on third-party dealers, distributors and retailers;
|
•
|
Intense competition in the communication equipment market;
|
•
|
Commercial acceptance of the Company’s Single Line Multi-Service ("SLMS") products; and
|
•
|
Negative impact from increased financial pressures on key suppliers.
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at beginning of year
|
$
|
2,878
|
|
|
$
|
2,024
|
|
|
$
|
2,433
|
|
Charged to revenue
|
776
|
|
|
2,190
|
|
|
2,039
|
|
|||
Charged to (reversal of) expense
|
(180
|
)
|
|
404
|
|
|
(100
|
)
|
|||
Utilization
|
(2,022
|
)
|
|
(1,740
|
)
|
|
(2,348
|
)
|
|||
Balance at end of year
|
$
|
1,452
|
|
|
$
|
2,878
|
|
|
$
|
2,024
|
|
Level 1 –
|
Inputs are quoted prices in active markets for identical assets or liabilities.
|
Level 2 –
|
Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
|
Level 3 –
|
Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.
|
|
2013
|
|
2012
|
||||
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
11,722
|
|
|
$
|
13,226
|
|
Work in process
|
1,724
|
|
|
2,051
|
|
||
Finished goods
|
6,116
|
|
|
6,127
|
|
||
|
$
|
19,562
|
|
|
$
|
21,404
|
|
Property and equipment, net:
|
|
|
|
||||
Machinery and equipment
|
9,610
|
|
|
9,178
|
|
||
Computers and acquired software
|
3,830
|
|
|
3,758
|
|
||
Furniture and fixtures
|
247
|
|
|
248
|
|
||
Leasehold improvements
|
2,066
|
|
|
2,067
|
|
||
|
15,753
|
|
|
15,251
|
|
||
Less accumulated depreciation and amortization (1)
|
(15,035
|
)
|
|
(14,668
|
)
|
||
|
$
|
718
|
|
|
$
|
583
|
|
(1)
|
The accumulated depreciation and amortization balance includes the
$4.2 million
impairment charge recorded in 2011 and
$0.1 million
impairment charge recorded in 2012 to decrease the net book value of the Company’s fixed assets to their fair value as discussed above in Note 3.
|
|
|
||
Balance at December 31, 2011
|
$
|
1,546
|
|
Charged to cost of revenue
|
1,036
|
|
|
Claims and settlements
|
(1,083
|
)
|
|
Balance at December 31, 2012
|
$
|
1,499
|
|
Charged to cost of revenue
|
696
|
|
|
Claims and settlements
|
(930
|
)
|
|
Balance at December 31, 2013
|
$
|
1,265
|
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Compensation expense relating to employee stock options
|
$
|
424
|
|
|
$
|
1,283
|
|
|
$
|
1,535
|
|
Compensation expense relating to non-employees
|
—
|
|
|
—
|
|
|
61
|
|
|||
Compensation expense relating to Employee Stock Purchase Plan
|
—
|
|
|
31
|
|
|
74
|
|
|||
Stock-based compensation expense
|
$
|
424
|
|
|
$
|
1,314
|
|
|
$
|
1,670
|
|
|
Year ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Expected term
|
4.7 years
|
|
|
4.7 years
|
|
|
4.7 years
|
|
Expected volatility
|
94
|
%
|
|
96
|
%
|
|
94
|
%
|
Risk free interest rate
|
1.42
|
%
|
|
0.74
|
%
|
|
1.19
|
%
|
|
Options
Outstanding
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding as of December 31, 2012
|
5,323
|
|
|
$
|
2.07
|
|
|
3.64
|
|
—
|
|
|
Granted
|
235
|
|
|
$
|
1.17
|
|
|
|
|
|
||
Canceled/Forfeited
|
(350
|
)
|
|
$
|
12.84
|
|
|
|
|
|
||
Exercised
|
(930
|
)
|
|
$
|
1.11
|
|
|
|
|
|
||
Outstanding as of December 31, 2013
|
4,278
|
|
|
$
|
1.36
|
|
|
3.02
|
|
$
|
17,828
|
|
Vested and expected to vest at December 31, 2013
|
4,196
|
|
|
$
|
1.36
|
|
|
2.97
|
|
$
|
17,432
|
|
Vested and exercisable at December 31, 2013
|
3,833
|
|
|
$
|
1.36
|
|
|
2.72
|
|
$
|
15,691
|
|
|
|
Year ended December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Shares purchased
|
|
117
|
|
|
131
|
|
||
Weighted average purchase price
|
|
$
|
0.73
|
|
|
$
|
1.00
|
|
Cash received
|
|
$
|
86
|
|
|
$
|
131
|
|
Aggregate intrinsic value
|
|
$
|
40
|
|
|
$
|
108
|
|
|
|
Year ended December 31,
|
||||||
|
|
2012
|
|
2011
|
||||
Expected term
|
|
3 months
|
|
|
3 months
|
|
||
Volatility
|
|
77
|
%
|
|
71
|
%
|
||
Risk free interest rate
|
|
0.01
|
%
|
|
0.03
|
%
|
||
Weighted average fair value per share
|
|
$
|
0.33
|
|
|
$
|
0.52
|
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
4,314
|
|
|
$
|
(9,015
|
)
|
|
$
|
(11,726
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
31,429
|
|
|
31,010
|
|
|
30,671
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options and share awards
|
1,592
|
|
|
—
|
|
|
—
|
|
|||
Diluted
|
33,021
|
|
|
31,010
|
|
|
30,671
|
|
|||
Net income (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.14
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
Diluted
|
$
|
0.13
|
|
|
$
|
(0.29
|
)
|
|
$
|
(0.38
|
)
|
|
2013
|
|
Weighted average
exercise price
|
|||
Warrants
|
3
|
|
|
$
|
32.45
|
|
Outstanding stock options and unvested restricted shares
|
40
|
|
|
$
|
16.46
|
|
|
43
|
|
|
|
|
2012
|
|
Weighted average
exercise price
|
|||
Warrants
|
7
|
|
|
$
|
116.55
|
|
Outstanding stock options and unvested restricted shares
|
5,376
|
|
|
$
|
2.05
|
|
|
5,383
|
|
|
|
|
2011
|
|
Weighted average
exercise price
|
|||
Warrants
|
7
|
|
|
$
|
116.55
|
|
Outstanding stock options and unvested restricted shares
|
5,759
|
|
|
$
|
2.38
|
|
|
5,766
|
|
|
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Expected tax benefit at statutory rate (35%)
|
$
|
1,510
|
|
|
$
|
(3,155
|
)
|
|
$
|
(4,083
|
)
|
State taxes, net of Federal effect
|
13
|
|
|
17
|
|
|
9
|
|
|||
Foreign rate differential
|
(5,465
|
)
|
|
(2,416
|
)
|
|
(3,532
|
)
|
|||
Valuation allowance
|
3,962
|
|
|
5,362
|
|
|
7,065
|
|
|||
Stock-based compensation
|
136
|
|
|
402
|
|
|
518
|
|
|||
Other
|
(114
|
)
|
|
(86
|
)
|
|
83
|
|
|||
|
$
|
42
|
|
|
$
|
124
|
|
|
$
|
60
|
|
|
2013
|
|
2012
|
||||
Deferred assets:
|
|
|
|
||||
Net operating loss, capital loss, and tax credit carryforwards
|
$
|
552,010
|
|
|
$
|
526,575
|
|
Fixed assets and intangible assets
|
14,260
|
|
|
20,802
|
|
||
Inventory and other reserves
|
4,088
|
|
|
4,995
|
|
||
Other
|
131
|
|
|
128
|
|
||
Gross deferred tax assets
|
570,489
|
|
|
552,500
|
|
||
Less valuation allowance
|
(570,489
|
)
|
|
(552,500
|
)
|
||
Total net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
|
Operating leases
|
||
Year ending December 31:
|
|
||
2014
|
$
|
1,649
|
|
2015
|
1,310
|
|
|
2016
|
429
|
|
|
2017
|
34
|
|
|
2018 and thereafter
|
13
|
|
|
Total minimum lease payments
|
$
|
3,435
|
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenue by Geography:
|
|
|
|
|
|
||||||
United States
|
$
|
38,208
|
|
|
$
|
47,131
|
|
|
$
|
48,626
|
|
Canada
|
3,398
|
|
|
3,763
|
|
|
4,190
|
|
|||
Total North America
|
41,606
|
|
|
50,894
|
|
|
52,816
|
|
|||
Latin America
|
27,253
|
|
|
27,890
|
|
|
32,082
|
|
|||
Europe, Middle East, Africa
|
49,592
|
|
|
34,215
|
|
|
38,529
|
|
|||
Asia Pacific
|
3,797
|
|
|
2,386
|
|
|
1,075
|
|
|||
Total International
|
80,642
|
|
|
64,491
|
|
|
71,686
|
|
|||
|
$
|
122,248
|
|
|
$
|
115,385
|
|
|
$
|
124,502
|
|
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenue by products and services:
|
|
|
|
|
|
||||||
Products
|
$
|
113,979
|
|
|
$
|
110,267
|
|
|
$
|
119,443
|
|
Services
|
8,269
|
|
|
5,118
|
|
|
5,059
|
|
|||
|
$
|
122,248
|
|
|
$
|
115,385
|
|
|
$
|
124,502
|
|
|
Year ended December 31, 2013
|
||||||||||||||
|
Q1 (1)
|
|
Q2
|
|
Q3
|
|
Q4
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net revenue
|
$
|
28,379
|
|
|
$
|
30,048
|
|
|
$
|
31,515
|
|
|
$
|
32,306
|
|
Gross profit
|
10,504
|
|
|
11,612
|
|
|
11,907
|
|
|
12,109
|
|
||||
Operating income
|
333
|
|
|
1,094
|
|
|
1,627
|
|
|
1,394
|
|
||||
Net income
|
230
|
|
|
1,056
|
|
|
1,596
|
|
|
1,432
|
|
||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
Diluted
|
0.01
|
|
|
0.03
|
|
|
0.05
|
|
|
0.04
|
|
||||
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
31,118
|
|
|
31,222
|
|
|
31,480
|
|
|
31,896
|
|
||||
Diluted
|
31,758
|
|
|
32,696
|
|
|
33,344
|
|
|
34,287
|
|
|
Year ended December 31, 2012
|
||||||||||||||
|
Q1 (2)
|
|
Q2
|
|
Q3
|
|
Q4
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net revenue
|
$
|
27,062
|
|
|
$
|
30,835
|
|
|
$
|
29,198
|
|
|
$
|
28,290
|
|
Gross profit
|
8,380
|
|
|
9,272
|
|
|
8,232
|
|
|
10,400
|
|
||||
Operating income (loss)
|
(3,354
|
)
|
|
(2,092
|
)
|
|
(4,139
|
)
|
|
805
|
|
||||
Net income (loss)
|
(3,414
|
)
|
|
(2,102
|
)
|
|
(4,198
|
)
|
|
699
|
|
||||
Net income (loss) per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.11
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
0.02
|
|
Diluted
|
(0.11
|
)
|
|
(0.07
|
)
|
|
(0.14
|
)
|
|
0.02
|
|
||||
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
30,857
|
|
|
30,985
|
|
|
31,086
|
|
|
31,114
|
|
||||
Diluted
|
30,857
|
|
|
30,985
|
|
|
31,086
|
|
|
31,114
|
|
(1)
|
Includes a
$0.6 million
credit as a result of a vendor refund received in 2013 which related to overpayments made in 2012.
|
(2)
|
Includes a
$0.3 million
credit as a result of vendor liabilities identified on the consolidated balance sheet where the applicable statute of limitations had expired and thus the Company was no longer legally liable for these amounts.
|
1.
|
Financial Statements
|
2.
|
Exhibits
|
|
|
ZHONE TECHNOLOGIES, INC.
|
||
|
|
|
||
Date: March 5, 2014
|
|
By:
|
|
/
S
/ M
ORTEZA
E
JABAT
|
|
|
|
|
Morteza Ejabat
|
|
|
|
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/S/ MORTEZA EJABAT
|
|
Chairman of the Board of Directors,
|
|
March 5, 2014
|
Morteza Ejabat
|
|
President, and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
||
/S/ KIRK MISAKA
|
|
Chief Financial Officer,
|
|
March 5, 2014
|
Kirk Misaka
|
|
Treasurer and Secretary
(Principal Financial and Accounting
Officer)
|
|
|
|
|
|
||
/
S
/ M
ICHAEL
C
ONNORS
|
|
Director
|
|
March 5, 2014
|
Michael Connors
|
|
|
|
|
|
|
|
||
/
S
/ R
OBERT
D
AHL
|
|
Director
|
|
March 5, 2014
|
Robert Dahl
|
|
|
|
|
|
|
|
||
/
S
/ N
ANCY
P
IERCE
|
|
Director
|
|
March 5, 2014
|
Nancy Pierce
|
|
|
|
|
|
|
|
||
/
S
/ C. R
ICHARD
K
RAMLICH
|
|
Director
|
|
March 5, 2014
|
C. Richard Kramlich
|
|
|
|
|
|
|
|
||
/
S
/ J
AMES
T
IMMINS
|
|
Director
|
|
March 5, 2014
|
James Timmins
|
|
|
|
|
|
|
|
||
/
S
/ L
AWRENCE
B
RISCOE
|
|
Director
|
|
March 5, 2014
|
Lawrence Briscoe
|
|
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File
Number
|
|
Exhibit
|
|
Filing Date
|
|
||||
3.1
|
Restated Certificate of Incorporation dated February 16, 2005
|
|
10-K
|
|
000-32743
|
|
3.10
|
|
March 16, 2005
|
|
|
3.2
|
Certificate of Amendment of Restated Certificate of Incorporation dated March 11, 2010
|
|
10-K
|
|
000-32743
|
|
3.20
|
|
March 16, 2010
|
|
|
3.3
|
Amended and Restated Bylaws
|
|
10-K
|
|
000-32743
|
|
3.30
|
|
March 16, 2005
|
|
|
4.1
|
Form of Second Restated Rights Agreement dated November 13, 2003
|
|
10-Q
|
|
000-32743
|
|
4.10
|
|
May 14, 2004
|
|
|
10.1#
|
Zhone Technologies, Inc. 1999 Stock Option Plan
|
|
10
|
|
000-50263
|
|
10.20
|
|
April 30, 2003
|
|
|
10.2#
|
Zhone Technologies, Inc. Amended and Restated 2001 Stock Incentive Plan
|
|
8-K
|
|
000-32743
|
|
10.10
|
|
May 17, 2007
|
|
|
10.3#
|
Form of Stock Option Agreement for the Zhone Technologies, Inc. Amended and Restated 2001 Stock Incentive Plan
|
|
8-K
|
|
000-32743
|
|
10.10
|
|
September 1, 2006
|
|
|
10.4#
|
Zhone Technologies, Inc. Amended and Restated Special 2001 Stock Incentive Plan
|
|
10-Q
|
|
000-32743
|
|
10.28
|
|
August 15, 2002
|
|
|
10.5#
|
Form of Restricted Stock Award Agreement for the Zhone Technologies, Inc. Amended and Restated 2001 Stock Incentive Plan
|
|
8-K
|
|
000-32743
|
|
10.20
|
|
May 17, 2007
|
|
|
10.6#
|
Zhone Technologies, Inc. 2002 Employee Stock Purchase Plan
|
|
8-K
|
|
000-32743
|
|
10.10
|
|
May 17, 2006
|
|
|
10.7#
|
Incentive Awards Program Summary
|
|
8-K
|
|
000-32743
|
|
10.20
|
|
March 15, 2006
|
|
|
10.8#
|
Form of Indemnity Agreement between Zhone Technologies, Inc. and its directors and officers
|
|
10-Q
|
|
000-32743
|
|
10.20
|
|
May 14, 2004
|
|
|
10.9#
|
Form of Change of Control Severance Agreement
|
|
10-Q
|
|
000-32743
|
|
10.10
|
|
August 9, 2012
|
|
|
10.10
|
Letter Agreement dated November 13, 2003 between Zhone Technologies, Inc. and New Enterprise Associates VIII, Limited Partnership
|
|
Schedule 13D
|
|
005-61973
|
|
5.00
|
|
November 24, 2003
|
|
|
10.11#
|
Second Amended and Restated Employment Agreement dated as of November 13, 2012 by and between Zhone Technologies, Inc. and Morteza Ejabat
|
|
10-Q
|
|
000-32743
|
|
10.10
|
|
November 14, 2012
|
|
|
10.12#
|
Zhone Technologies, Inc. Incentive Bonus Plan
|
|
10-Q
|
|
000-32743
|
|
10.10
|
|
November 8, 2013
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File
Number
|
|
Exhibit
|
|
Filing Date
|
|
||||
10.13
|
Credit and Security Agreement, dated as of March 13, 2012, by and among Zhone Technologies, Inc., ZTI Merger Subsidiary III, Inc., Premisys Communications, Inc., Zhone Technologies International, Inc., Paradyne Networks, Inc., Paradyne Corporation and Wells Fargo Bank, National Association
|
|
10-K
|
|
000-32743
|
|
10.16
|
|
March 15, 2012
|
|
|
10.13.1
|
First Amendment to Credit and Security Agreements, dated as of March 12, 2013, by and among Zhone Technologies, Inc., ZTI Merger Subsidiary III, Inc., Premisys Communications, Inc., Zhone Technologies International, Inc., Paradyne Networks, Inc., Paradyne Corporation and Wells Fargo Bank, National Association
|
|
10-K
|
|
000-32743
|
|
10.12.1
|
|
March 15, 2013
|
|
|
10.13.2
|
Second Amendment to Credit and Security Agreements, dated as of September 30, 2013, by and among Zhone Technologies, Inc., ZTI Merger Subsidiary III, Inc., Premisys Communications, Inc., Zhone Technologies International, Inc., Paradyne Networks, Inc., Paradyne Corporation and Wells Fargo Bank, National Association
|
|
8-K
|
|
000-32743
|
|
10.20
|
|
October 1, 2013
|
|
|
10.13.3
|
Third Amendment to Credit and Security Agreements, dated as of March 5, 2014, by and among Zhone Technologies, Inc., ZTI Merger Subsidiary III, Inc., Premisys Communications, Inc., Zhone Technologies International, Inc., Paradyne Networks, Inc., Paradyne Corporation and Wells Fargo Bank, National Association
|
|
|
|
|
|
|
|
|
|
X
|
10.14
|
Credit and Security Agreement (Ex-Im Subfacility), dated as of March 13, 2012, by and among Zhone Technologies, Inc., ZTI Merger Subsidiary III, Inc., Premisys Communications, Inc., Zhone Technologies International, Inc., Paradyne Networks, Inc., Paradyne Corporation and Wells Fargo Bank, National Association
|
|
10-K
|
|
000-32743
|
|
10.17
|
|
March 15, 2012
|
|
|
10.15
|
Real Estate Purchase Agreement between Zhone Technologies, Inc. and LBA Realty, LLC
|
|
8-K
|
|
000-32743
|
|
10.1
|
|
September 22, 2010
|
|
|
Exhibit
Number
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File
Number
|
|
Exhibit
|
|
Filing Date
|
|
||||
10.16
|
Multi-Tenant Commercial/Industrial Lease Agreement between Zhone Technologies, Inc. and LBA Realty, LLC
|
|
8-K
|
|
000-32743
|
|
10.2
|
|
September 22, 2010
|
|
|
10.17
|
Discount Payoff Agreement between Zhone Technologies, Inc. and LBA Realty, LLC
|
|
8-K
|
|
000-32743
|
|
10.3
|
|
September 22, 2010
|
|
|
21.2
|
List of Subsidiaries
|
|
10-K
|
|
000-32743
|
|
10.22
|
|
March 15, 2011
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
24.1
|
Power of Attorney (see signature page)
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
#
|
Management contract or compensatory plan or arrangement in which one or more executive officers or directors participates.
|
1.
|
Amendments to Credit Agreements
. The Credit Agreements are amended as follows:
|
Minimum Liquidity
|
Applicable Period/Test Date
|
$3,000,000
|
At all times
|
Applicable Amount
|
Applicable Period
|
$<1,500,000>
|
Three-month period ending March 31, 2014
|
$<1,000,000>
|
Six-month period ending June 30, 2014
|
$500,000
|
Nine-month period ending September 30, 2014
|
$2,500,000
|
Twelve-month period ending December 31, 2014
|
3.
|
Accommodation Fee
. [Intentionally Omitted].
|
ZHONE TECHNOLOGIES, INC.
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
ZTI MERGER SUBSIDIARY III, INC.
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
PREMISYS COMMUNICATIONS, INC.
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
ZHONE TECHNOLOGIES INTERNATIONAL, INC.
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
PARADYNE NETWORKS, INC.
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
PARADYNE CORPORATION
|
|
|
By:
|
/s/ KIRK MISAKA
|
|
Name:
|
Kirk Misaka
|
|
Title:
|
Chief Financial Officer
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
|
|
|
By:
|
/s/ HARRY L. JOE
|
|
Name:
|
Harry L. Joe
|
|
Title:
|
Authorized Signatory
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of Zhone Technologies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ MORTEZA EJABAT
|
|
Morteza Ejabat
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Zhone Technologies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ KIRK MISAKA
|
|
Kirk Misaka
|
|
Chief Financial Officer
|
1.
|
The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ MORTEZA EJABAT
|
|
/s/ KIRK MISAKA
|
Morteza Ejabat
|
|
Kirk Misaka
|
Chief Executive Officer
|
|
Chief Financial Officer
|