Annual report pursuant to Section 13 and 15(d)

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

v2.4.0.8
REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS
 12 Months Ended
Mar. 31, 2014
REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS [Abstract]  
REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

NOTE 2: REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

During the first quarter of fiscal 2014, we identified an error related to certain allowances recorded for estimated future price adjustments on products and services sold to our customers. The error had accumulated over a significant number of years, resulting in a $1.5 million cumulative overstatement of revenue and accounts receivable at April 1, 2013. Revenue for fiscal 2013 and 2012 was $0.1 million overstated and $0.1 million understated, respectively, as a result of this error. In addition, in fiscal 2013 we identified a $0.7 million under accrual of sales commission expense for the fourth quarter of fiscal 2013 that was not previously recorded in fiscal 2013. Sales and marketing expense in fiscal 2013 was understated by $0.7 million as a result of this error. The cumulative effect of recording these items in fiscal 2014 would have been a $2.2 million increase in net loss for the year.

In addition, we had previously identified the following items:

  • A $0.5 million understatement of royalty revenue in fiscal 2011 that was corrected as an out-of-period adjustment in fiscal 2012; and
  • A $0.9 million understatement of payroll tax expense on commissions that was corrected as an out-of-period adjustment to sales and marketing expense in fiscal 2013. Of the cumulative adjustment, $0.3 million related to fiscal 2012 and $0.6 million related to periods prior to fiscal 2012.

In the first quarter of fiscal 2014, we evaluated these errors in accordance with the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin No. 99 and determined that the cumulative impact of errors was not material to our results of operations, financial position or cash flows in our previously issued financial statements and; therefore, amendments of previously filed reports are not required. However, if the entire correction of the errors had been recorded during the first quarter of fiscal 2014, the impact would have been significant to the Consolidated Statement of Operations for the quarter ended June 30, 2013. As a result, we revised our prior period financial statements to reflect the correction of these errors.

In the third quarter of fiscal 2014, we identified three balance sheet misclassifications between current and long-term balances related to certain prepaid expenses, restructuring accruals and straight-line rent balances. As of March 31, 2013, current assets were overstated by $0.4 million and current liabilities were overstated by $7.4 million for these items. We determined these balance sheet reclassifications were not material and did not change our conclusion to revise our prior period financial statements made in the first quarter of fiscal 2014. We reflected these reclassifications in our Consolidated Balance Sheet as of March 31, 2013 as a further revision of our prior period financial statements in accordance with the SEC's Staff Accounting Bulletin No. 108 ("SAB No. 108").

In the fourth quarter of fiscal 2014, we identified an error related to straight-line rent expense that had accumulated since fiscal 2006, resulting in a $2.1 million cumulative overstatement of rent expense and total other accrued liabilities and other long-term liabilities at April 1, 2013. General and administrative expense was overstated by $0.2 million for both fiscal 2013 and 2012 as a result of this error. We also identified an additional error related to certain allowances recorded for estimated future price adjustments with a cumulative $0.7 million overstatement of revenue and accounts receivable related to periods prior to fiscal 2012.

We have determined that it is appropriate to further revise our prior period financial statements as a result of the errors identified in the third and fourth quarters of fiscal 2014, in accordance with SAB No. 108. The revisions to correct these items in the applicable prior periods are reflected in the financial information herein and will be reflected in future filings containing such financial information. The revisions had no net impact on our net income (loss) per diluted share for any prior period.

We believe the foregoing revisions are not material to any prior period's Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Loss or Consolidated Statements of Stockholders' Deficit and have no impact on the Consolidated Statement of Cash Flows. The impact of these revisions to our Consolidated Balance Sheet at March 31, 2013; our Consolidated Statements of Operations for the years ended March 31, 2013 and 2012; and our Condensed Consolidated Statements of Operations for the first three quarters of fiscal 2014 and each quarter of fiscal 2013 is summarized as follows (in thousands, except per share amounts):

Consolidated Balance Sheets

          As of March 31, 2013
      As Reported       As Revised
      Accounts receivable   $       99,093     $       96,835  
  Other current assets     12,192       11,831  
  Total current assets     271,727       269,108  
  Other long-term assets     9,531       9,892  
  Total long-term assets     99,413       99,774  
  Total assets     371,140       368,882  
  Accrued restructuring charges, current     4,756       3,021  
  Accrued compensation     30,311       30,964  
  Other accrued liabilities     20,188       14,569  
  Total current liabilities     201,517       194,816  
  Accrued restructuring charges, long-term     -       1,735  
  Other long-term liabilities     7,812       11,301  
  Total long-term liabilities     251,205       256,429  
  Accumulated deficit     (517,816 )     (518,597 )
  Stockholders' deficit     (81,582 )     (82,363 )
  Total liabilities and stockholders' deficit     371,140       368,882  

Consolidated Statements of Operations - Annual

      Fiscal Year Ended March 31,
      2013   2012
              As Reported       As Revised       As Reported       As Revised
  Product revenue   $       399,043     $       398,910     $       451,340     $       451,469  
  Royalty revenue     44,492       44,492       56,666       56,154  
  Total revenue     587,572       587,439       652,370       651,987  
  Cost of service revenue     79,647       79,604       88,459       88,466  
  Total cost of revenue     346,921       346,878       378,535       378,542  
  Gross margin     240,651       240,561       273,835       273,445  
  Sales and marketing expenses     137,041       136,873       130,938       131,239  
  General and administrative expenses     62,179       62,017       62,910       62,666  
  Total operating expenses     283,351       283,021       270,143       270,200  
  Income (loss) from operations     (42,700 )     (42,460 )     5,192       4,745  
  Loss before income taxes     (51,258 )     (51,018 )     (7,922 )     (8,369 )
  Net loss     (52,419 )     (52,179 )     (8,809 )     (9,256 )
  Diluted net loss per share     (0.22 )     (0.22 )     (0.04 )     (0.04 )

Consolidated Statements of Operations - Quarterly - Fiscal 2014 - Unaudited

      Fiscal 2014
          1st Quarter   2nd Quarter
          As Reported       As Revised       As Reported       As Revised
  Product revenue   $       85,969     $       85,849     $       84,707     $       84,756  
  Total revenue     147,969       147,849       131,430       131,479  
  Gross margin     69,955       69,835       56,343       56,392  
  General and administrative expenses     14,697       14,689       14,813       14,795  
  Total operating expenses     64,108       64,100       61,375       61,357  
  Income (loss) from operations     5,847       5,735       (5,032 )     (4,965 )
  Income (loss) before income taxes     3,783       3,671       (7,426 )     (7,359 )
  Net income (loss)     3,393       3,281       (7,960 )     (7,893 )
  Diluted net income (loss) per share     0.01       0.01       (0.03 )     (0.03 )
   
      3rd Quarter                
      As Reported   As Revised                
  Product revenue   $       98,348     $       98,287                  
  Total revenue     145,930       145,869                  
  Gross margin     61,434       61,373                  
  General and administrative expenses     14,279       14,261                  
  Total operating expenses     61,471       61,453                  
  Loss from operations     (37 )     (80 )                
  Loss before income taxes     (2,107 )     (2,150 )                
  Net loss     (2,415 )     (2,458 )                
  Diluted net loss per share     (0.01 )     (0.01 )                

Consolidated Statements of Operations - Quarterly - Fiscal 2013 - Unaudited

      Fiscal 2013
      1st Quarter   2nd Quarter
          As Reported       As Revised       As Reported       As Revised
      Product revenue   $       93,811     $       93,778     $       100,067     $       100,034  
  Total revenue     140,879       140,846       147,340       147,307  
  Cost of service revenue     20,334       20,304       20,232       20,232  
  Total cost of revenue     85,084       85,054       88,116       88,116  
  Gross margin     55,795       55,792       59,224       59,191  
  Sales and marketing expenses     35,278       34,444       34,441       34,441  
  General and administrative expenses     16,780       16,739       15,279       15,238  
  Total operating expenses     70,607       69,732       69,195       69,154  
  Loss from operations     (14,812 )     (13,940 )     (9,971 )     (9,963 )
  Loss before income taxes     (16,999 )     (16,127 )     (11,898 )     (11,890 )
  Net loss     (17,498 )     (16,626 )     (12,268 )     (12,260 )
  Diluted net loss per share     (0.07 )     (0.07 )     (0.05 )     (0.05 )

      3rd Quarter   4th Quarter
      As Reported       As Revised       As Reported       As Revised
      Product revenue       $       112,517     $       112,483     $       92,648     $       92,615  
  Total revenue     159,395       159,361       139,958       139,925  
  Cost of service revenue     19,360       19,360       19,721       19,708  
  Total cost of revenue     91,367       91,367       82,354       82,341  
  Gross margin     68,028       67,994       57,604       57,584  
  Sales and marketing expenses     33,588       33,588       33,734       34,400  
  General and administrative expenses     14,851       14,810       15,269       15,230  
  Total operating expenses     73,656       73,615       69,893       70,520  
  Loss from operations     (5,628 )     (5,621 )     (12,289 )     (12,936 )
  Loss before income taxes     (7,798 )     (7,791 )     (14,563 )     (15,210 )
  Net loss     (8,146 )     (8,139 )     (14,507 )     (15,154 )
  Diluted net loss per share     (0.04 )     (0.04 )     (0.06 )     (0.06 )

These revisions impacted our Condensed Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Comprehensive Loss and Consolidated Statements of Stockholders' Deficit for each period by an amount equal to the impact to net income (loss) for the applicable period.