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RESTATEMENT | 6 Months Ended
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Sep. 30, 2018
Restatement [Abstract] |
RESTATEMENT | NOTE 2: RESTATEMENT Restatement of Previously Issued Financial Statements In February 2018, the Audit Committee (“Audit Committee”) of our Board of Directors (the “Board”), and subsequently a special committee of the Board (the “Special Committee”) consisting of two members of the Audit Committee, began conducting an internal investigation, with the assistance of independent accounting and legal advisors, into matters related to the Company’s accounting practices and internal control over financial reporting related to revenue recognition for transactions occurring between January 1, 2016 and March 31, 2018. Upon the recommendation of the Audit Committee and as a result of the investigation by the Special Committee and after consultation with the Company’s management, on September 14, 2018, the Company’s Board of Directors concluded that the Company’s previously issued consolidated financial statements and other financial data for the fiscal years ended March 31, 2017, 2016 and 2015 contained in the Company’s Annual Reports on Form 10-K for the fiscal year ended March 31, 2017, and the Company’s condensed consolidated financial statements for each of the quarterly and year-to-date periods ended June 30, 2015, September 30, 2015, December 31, 2015, June 30, 2016, September 30, 2016, December 31, 2016, June 30, 2017 and September 30, 2017 (collectively, the “Non-Reliance Periods”) should not be relied upon and required restatement (the “Restatement”). The Board also determined that the Company’s disclosures related to these financial statements and related communications issued by or on behalf of the Company with respect to the Non-Reliance Periods, including management’s assessment of internal control over financial reporting and disclosure controls and procedures, should not be relied upon. This Note discloses the nature of the Restatement adjustments and shows the impact of the restatement on revenues, expenses, income, assets, liabilities, equity, and cash flows from operating activities, investing activities and financing activities, and the cumulative effects of these adjustments on the consolidated balance sheets, statements of operations and comprehensive loss, statement of stockholders’ deficit and statements of cash flows for the six months ended September 30, 2017. Restatement Background On January 11, 2018, the Company received a subpoena from the Securities and Exchange Commission (“SEC”) seeking documents pertaining to the Company’s accounting practices and internal controls related to revenue recognition for transactions commencing April 1, 2016. The Company subsequently decided to postpone the release of Quantum’s results for the third quarter of fiscal 2018 and the Audit Committee began an independent investigation into the Company’s accounting practices and internal controls over financial reporting related to revenue recognition for transactions occurring between January 1, 2016 and March 31, 2018, with the assistance of independent accounting and legal advisors. Subsequently, the Special Committee, undertook to continue the investigation. In September 2018, the Special Committee substantially completed and finalized its principal findings with respect to its investigation. The principal findings included a determination that the Company engaged in certain business and sales practices that may have undermined its historical accounting treatment for transactions with several key distributors and at least one end customer. The Special Committee found that the identified transactions potentially affected by such practices commenced at least in the fourth quarter of fiscal 2015 and continued at least through the fourth quarter of fiscal 2018 (the “Investigation Related Revenue Misstatements”). The Special Committee also found that these business and sales practices may have resulted in the Company recognizing revenue for certain transactions prior to satisfying the criteria for revenue recognition required under generally accepted accounting principles in the United States of America (“U.S. GAAP”). In response to the findings of the Special Committee, the Company conducted a thorough review of its financial records for the fiscal years ended March 31, 2015, 2016 and 2017, and for each of the quarterly and year to date periods ended June 30, 2017 and September 30, 2017 to determine whether further adjustments were necessary. The Company concluded that there were material misstatements in the consolidated financial statements for the fiscal years ended March 31, 2015, 2016 and 2017 as well as the unaudited interim consolidated financial statements for the quarterly periods ended June 30, 2016, December 31, 2016, June 30, 2017 and September 30, 2017. The Special Committee investigation is now complete, although our outside legal counsel, together with the assistance of the independent legal counsel to the Special Committee and independent accounting advisors, continue to provide support as requested in connection with the SEC investigation discussed in more detail in Item 3—Legal Proceedings contained in the Annual Report for fiscal 2019 on Form 10-K. Description of Restatement Matters and Restatement Adjustments The categories of restatement adjustments and their impact on previously reported consolidated financial statements are described below.
| (a) | Investigation Related Revenue – As disclosed in Note 2: Restatement , the Company prematurely recognized product revenue sold to certain distributors, resellers and end-user customers. The associated product cost of revenue for each product revenue sales order was also recognized in the incorrect period. Additionally, for all transactions where product revenue was recognized prematurely, a reclassification is recorded at sell-in to reflect the movement of inventory at Quantum’s warehouse to inventory at its distributor’s warehouse. For the transactions where revenue was recognized prematurely, the Company restated the consolidated financial statements to reflect the revenue in the period in which the criteria for revenue recognition under U.S. GAAP have been satisfied. For revenue transactions where the criteria for revenue recognition under U.S. GAAP have not yet been satisfied, we deferred revenue recognition until all criteria are satisfied.
| (b) | Service Revenue Amortization Convention – The Company inappropriately recognized service revenue on a monthly convention at the beginning of the initial month of service regardless of the service period start date resulting in an acceleration of revenue recognition. Additionally, certain annual service contracts were inappropriately recognized over a 13-month period resulting in a deceleration of revenue recognition.
| (c) | Cash Consideration Paid to Customers – The Company inappropriately recorded cash consideration paid to customers as expenses rather than as a reduction of revenue as such payments did not meet the identifiable benefit criteria within the Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“Topic 605”) guidance. We have reclassified these expenses from sales and marketing expense to product revenue.
| (d) | Accrued Warranty – The Company reviewed its warranty accrual methodology and determined that previous estimates did not appropriately reflect the Company’s historical experience. The Company changed its method in calculating the warranty accrual and applied the adjustments retroactively.
| (e) | Commissions Accrual – Relating to misstatement (a), when the Company prematurely recognized revenue, the associated commission expense was also prematurely recognized. The Company restated commission expense to match the timing of associated revenue recognition.
| (f) | Short Term Disability Plan – The Company inappropriately accounted for its employee funded disability plan and did not reflect employee contributions within restricted cash and did not recognize the obligation to fund disability claims as incurred.
| (g) | Third Party Maintenance Contracts – The Company changed its method to appropriately account for capitalized third party maintenance contracts.
| (h) | Debt Issuance Costs – The Company reclassified capitalized debt issuance costs on its revolver loan from long-term debt to a current asset.
| (i) | Restructuring – The Company did not properly calculate expenses related to its restructuring activities, including failure to apply appropriate discount rates and omitting certain facilities in calculating the restructuring liabilities.
| (j) | Performance Based Stock Units – The Company previously accrued stock-based compensation expense on performance-based stock units (“PSUs”) assuming the shares would be earned. The Company determined the likelihood of meeting the requirement conditions at the time was remote and therefore should not have recognized stock-based compensation expense for the related PSUs.
| (k) | Debt – The Company incorrectly accounted for multiple amendments to the term loan and revolving credit agreements resulting in errors in the treatment of debt extinguishment and issuance costs.
| (l) | General Presentation – Certain activities in the statement of cash flows and consolidated balance sheets have been reclassified to conform with current fiscal year’s presentation.
| (m) | Australian Deferred Tax Assets and Valuation Allowance – The Company failed to record deferred tax assets for certain book-tax differences at an Australian affiliate and to further establish a valuation allowance against certain of the tax assets.
| (n) | Deferred Tax Liability Related to Unrealized Swiss Currency Gains – The Company misclassified and under accrued Swiss income tax on unrealized currency gains attributable to a dollar-denominated intercompany note receivable.
| (o) | Reserves for Uncertain Tax Positions on Transfer Pricing – The Company did not accrue a reserve for foreign taxes payable due to uncertain tax positions relating to its transfer pricing for services and interest income on intercompany notes and payables.
| (p) | Valuation Allowance for State Credit Carryforward – The Company failed to analyze all evidence, both positive and negative, when considering the future realization of its Texas state credit carryforward and inappropriately established a 100 % valuation allowance against the related deferred tax asset. The Company reevaluated the evidence and partially removed this valuation allowance.
| (q) | Tax Accounting – The Company recalculated its income tax expense on an annual and quarterly basis to account for certain errors in the previous calculations of its federal income tax receivable, federal long-term income tax payable, and state income tax payable. Restatements impacting book income and various asset and liability accounts had no net effect on deferred taxes or tax expense due to the Company’s position of losses and a full valuation allowance.
| (r) | Other Adjustments – There are other restatement matters otherwise not described in items (a) through (s) of this Note. The related adjustments are individually insignificant in the fiscal year ended March 31, 2017 but in aggregate are material to the consolidated financial statements. These misstatements include:
| • |  | Unrecognized gain (loss) of cumulative translation adjustments upon the liquidation of certain foreign entities
| • |  | Unrecognized asset retirement obligations
| • |  | Incorrect accounting for a cost method investment
| • |  | Accruals recorded in the incorrect accounting period
Consolidated financial statement adjustments tables The following tables present the restatement adjustments to previously issued consolidated financial statements, including the previously reported consolidated balance sheet as of September 30, 2017, and the consolidated statement of operations and comprehensive loss, stockholders’ deficit and statement of cash flows for the six months ended September 30, 2017. The correction of misstatements affecting fiscal years prior to the six months ended September 30, 2017 are reflected as a cumulative adjustment to the April 1, 2017 stockholders’ deficit on the consolidated balance sheet and consolidated statement of stockholders’ deficit.
QUANTUM CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands)
|  | September 30, 2017 |
|  | As Reported |  |  | Restatement Adjustments |  |  | Restatement Reference |  |  | As Restated |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 9,504 |  |  | $ | 4,479 |  |  |  | k |  |  | $ | 13,983 |
Accounts receivable, |  |  | 105,771 |  |  |  | (6,545 | ) |  |  | a |  |  |  | 99,226 |
Manufacturing inventories |  |  | 29,119 |  |  |  | 5,593 |  |  |  | a |  |  |  | 34,712 |
Service part inventories |  |  | 19,915 |  |  |  | — |  |  |  |  |  |  |  | 19,915 |
Other current assets |  |  | 8,795 |  |  |  | 786 |  |  |  | g, q |  |  |  | 9,581 |
Restricted cash |  |  | 1,969 |  |  |  | 1,094 |  |  |  | f |  |  |  | 3,063 |
Total current assets |  |  | 175,073 |  |  |  | 5,407 |  |  |  |  |  |  |  | 180,480 |
Property and equipment, less accumulated depreciation |  |  | 10,745 |  |  |  | (325 | ) |  |  | r |  |  |  | 10,420 |
Restricted cash, long-term |  |  | 20,000 |  |  |  | — |  |  |  |  |  |  |  | 20,000 |
Other long-term assets |  |  | 5,332 |  |  |  | 1,418 |  |  |  | h, m, p, r |  |  |  | 6,750 |
Total assets |  | $ | 211,150 |  |  | $ | 6,500 |  |  |  |  |  |  | $ | 217,650 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 48,488 |  |  |  | — |  |  |  |  |  |  | $ | 48,488 |
Accrued warranty |  |  | 2,950 |  |  |  | (2,950 | ) |  |  | l |  |  |  | — |
Deferred revenue, current |  |  | 77,090 |  |  |  | 11,415 |  |  |  | a, b |  |  |  | 88,505 |
Accrued restructuring charges, current |  |  | 1,743 |  |  |  | 627 |  |  |  | i |  |  |  | 2,370 |
Convertible subordinated debt, current |  |  | 57,034 |  |  |  | — |  |  |  |  |  |  |  | 57,034 |
Accrued compensation |  |  | 23,180 |  |  |  | (925 | ) |  |  | e, f |  |  |  | 22,255 |
Other accrued liabilities |  |  | 12,927 |  |  |  | 3,634 |  |  |  | a, d, l, n, q, r |  |  |  | 16,561 |
Total current liabilities |  |  | 223,412 |  |  |  | 11,801 |  |  |  |  |  |  |  | 235,213 |
Deferred revenue, long-term |  |  | 35,906 |  |  |  | 868 |  |  |  | b |  |  |  | 36,774 |
Accrued restructuring charges, long-term |  |  | 423 |  |  |  | 3,192 |  |  |  | i |  |  |  | 3,615 |
Long-term debt, net of current portion |  |  | 70,631 |  |  |  | 5,860 |  |  |  | h, m |  |  |  | 76,491 |
Other long-term liabilities |  |  | 5,112 |  |  |  | 5,924 |  |  |  | n, p, q |  |  |  | 11,036 |
Total liabilities |  |  | 335,484 |  |  |  | 27,645 |  |  |  |  |  |  |  | 363,129 |
Commitment and contingencies (Note 12) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Stockholders’ deficit |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |
Common stock |  |  | 347 |  |  |  | — |  |  |  |  |  |  |  | 347 |
Additional paid-in capital |  |  | 476,409 |  |  |  | (316 | ) |  |  | j |  |  |  | 476,093 |
Accumulated deficit |  |  | (604,832 | ) |  |  | (16,197 | ) |  |  | a, b, d, e, m, o, p, q, r |  |  |  | (621,029 | )
Accumulated other comprehensive income (loss) |  |  | 3,742 |  |  |  | (4,632 | ) |  |  | n, r |  |  |  | (890 | )
Total stockholders’ deficit |  |  | (124,334 | ) |  |  | (21,145 | ) |  |  |  |  |  |  | (145,479 | )
Total liabilities and stockholders’ deficit |  | $ | 211,150 |  |  | $ | 6,500 |  |  |  |  |  |  | $ | 217,650 |
QUANTUM CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
|  | Six Months Ended September 30, 2017 |
|  | As Reported |  |  | Restatement Adjustments |  |  | Restatement References |  |  | As Restated |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product revenue |  | $ | 135,224 |  |  | $ | 1,855 |  |  |  | a, c |  |  | $ | 137,079 |
Service revenue |  |  | 69,410 |  |  |  | 617 |  |  |  | b |  |  |  | 70,027 |
Royalty revenue |  |  | 19,275 |  |  |  | — |  |  |  |  |  |  |  | 19,275 |
Total revenue |  |  | 223,909 |  |  |  | 2,472 |  |  |  |  |  |  |  | 226,381 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product cost of revenue |  |  | 99,510 |  |  |  | 2,772 |  |  |  | a |  |  |  | 102,282 |
Service cost of revenue |  |  | 29,807 |  |  |  | 135 |  |  |  | d |  |  |  | 29,942 |
Total cost of revenue |  |  | 129,317 |  |  |  | 2,907 |  |  |  |  |  |  |  | 132,224 |
Gross profit |  |  | 94,592 |  |  |  | (435 | ) |  |  |  |  |  |  | 94,157 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 20,795 |  |  |  | — |  |  |  |  |  |  |  | 20,795 |
Sales and marketing |  |  | 54,003 |  |  |  | (1,101 | ) |  |  | c, e |  |  |  | 52,902 |
General and administrative |  |  | 24,667 |  |  |  | (737 | ) |  |  | j, r |  |  |  | 23,930 |
Restructuring charges |  |  | 2,366 |  |  |  | (665 | ) |  |  | i |  |  |  | 1,701 |
Total operating expenses |  |  | 101,831 |  |  |  | (2,503 | ) |  |  |  |  |  |  | 99,328 |
Loss from operations |  |  | (7,239 | ) |  |  | 2,068 |  |  |  |  |  |  |  | (5,171 | )
Other expenses and losses, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  | 5,175 |  |  |  | 42 |  |  |  | r |  |  |  | 5,217 |
Loss on debt extinguishment |  |  | 39 |  |  |  | — |  |  |  |  |  |  |  | 39 |
Other income, net |  |  | (175 | ) |  |  | — |  |  |  |  |  |  |  | (175 | )
Loss before income taxes |  |  | (12,278 | ) |  |  | 2,026 |  |  |  |  |  |  |  | (10,252 | )
Income tax benefit |  |  | (741 | ) |  |  | (293 | ) |  |  | m, o, p, q |  |  |  | (1,034 | )
Net loss |  | $ | (11,537 | ) |  | $ | 2,319 |  |  |  |  |  |  | $ | (9,218 | )
Net loss per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.34 | ) |  |  |  |  |  |  |  |  |  | $ | (0.27 | )
Diluted |  | $ | (0.34 | ) |  |  |  |  |  |  |  |  |  | $ | (0.27 | )
Weighted average common shares outstanding - basic |  |  | 34,337 |  |  |  |  |  |  |  |  |  |  |  | 34,338 |
Weighted average common shares outstanding - diluted |  |  | 34,337 |  |  |  |  |  |  |  |  |  |  |  | 34,338 |
|  | Three Months Ended September 30, 2017 |
|  | As Reported |  |  | Restatement Adjustments |  |  | Restatement References |  |  | As Restated |
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product revenue |  | $ | 63,606 |  |  | $ | 3,990 |  |  |  | a, c |  |  | $ | 67,596 |
Service revenue |  |  | 34,165 |  |  |  | 745 |  |  |  | b |  |  |  | 34,910 |
Royalty revenue |  |  | 9,280 |  |  |  | — |  |  |  |  |  |  |  | 9,280 |
Total revenue |  |  | 107,051 |  |  |  | 4,735 |  |  |  |  |  |  |  | 111,786 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product cost of revenue |  |  | 48,561 |  |  |  | 3,041 |  |  |  | a |  |  |  | 51,602 |
Service cost of revenue |  |  | 14,717 |  |  |  | 148 |  |  |  | d |  |  |  | 14,865 |
Total cost of revenue |  |  | 63,278 |  |  |  | 3,189 |  |  |  |  |  |  |  | 66,467 |
Gross profit |  |  | 43,773 |  |  |  | 1,546 |  |  |  |  |  |  |  | 45,319 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and development |  |  | 10,190 |  |  |  | — |  |  |  |  |  |  |  | 10,190 |
Sales and marketing |  |  | 26,179 |  |  |  | (355 | ) |  |  | c, e |  |  |  | 25,824 |
General and administrative |  |  | 12,158 |  |  |  | (652 | ) |  |  | j, r |  |  |  | 11,506 |
Restructuring charges |  |  | 31 |  |  |  | 39 |  |  |  | i |  |  |  | 70 |
Total operating expenses |  |  | 48,558 |  |  |  | (968 | ) |  |  |  |  |  |  | 47,590 |
Loss from operations |  |  | (4,785 | ) |  |  | 2,514 |  |  |  |  |  |  |  | (2,271 | )
Other expenses and losses, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  |  | 2,617 |  |  |  | 21 |  |  |  | r |  |  |  | 2,638 |
Loss on debt extinguishment |  |  | 39 |  |  |  | — |  |  |  |  |  |  |  | 39 |
Other income, net |  |  | (77 | ) |  |  | — |  |  |  |  |  |  |  | (77 | )
Loss before income taxes |  |  | (7,364 | ) |  |  | 2,493 |  |  |  |  |  |  |  | (4,871 | )
Income tax expense |  |  | 499 |  |  |  | (271 | ) |  |  | m, o, p, q |  |  |  | 228 |
Net loss |  | $ | (7,863 | ) |  | $ | 2,764 |  |  |  |  |  |  | $ | (5,099 | )
Net loss per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.23 | ) |  |  |  |  |  |  |  |  |  | $ | (0.15 | )
Diluted |  | $ | (0.23 | ) |  |  |  |  |  |  |  |  |  | $ | (0.15 | )
Weighted average common shares outstanding - basic |  |  | 34,561 |  |  |  |  |  |  |  |  |  |  |  | 34,580 |
Weighted average common shares outstanding - diluted |  |  | 34,561 |  |  |  |  |  |  |  |  |  |  |  | 34,580 |
QUANTUM CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
|  | For the Six Months Ended September 30, 2017 |
|  | As Reported |  |  | Restatement Adjustments |  |  | Restatement Reference |  |  | As Restated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (11,537 | ) |  | $ | 2,319 |  |  |  | a, b, e, f, g, h, i, l, n, p, q |  |  | $ | (9,218 | )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 2,525 |  |  |  | 85 |  |  |  | l, r |  |  |  | 2,610 |
Amortization of debt issuance costs |  |  | 855 |  |  |  | — |  |  |  |  |  |  |  | 855 |
Product and service parts lower of cost or market adjustment |  |  | 2,319 |  |  |  | 1,844 |  |  |  | l |  |  |  | 4,163 |
Tax benefit from settlement |  |  | (1,656 | ) |  |  | 1,656 |  |  |  | l |  |  |  | — |
Share-based compensation expense |  |  | 3,330 |  |  |  | (317 | ) |  |  | l |  |  |  | 3,013 |
Non-cash interest expense |  |  | 621 |  |  |  | (621 | ) |  |  | l |  |  |  | — |
Non-cash loss on debt extinguishment |  |  | 9 |  |  |  | 30 |  |  |  | l |  |  |  | 39 |
Pension expense |  |  | — |  |  |  | 733 |  |  |  | l |  |  |  | 733 |
Bad debt expense |  |  | — |  |  |  | 292 |  |  |  | l |  |  |  | 292 |
Deferred income taxes, net |  |  | 144 |  |  |  | (463 | ) |  |  | l, m, o, p |  |  |  | (319 | )
Loss on disposal of property and equipment |  |  | — |  |  |  | 2 |  |  |  | l |  |  |  | 2 |
Unrealized foreign exchange (gain)/loss |  |  | — |  |  |  | 1,019 |  |  |  | l |  |  |  | 1,019 |
Loss on investments |  |  | — |  |  |  | 72 |  |  |  | l |  |  |  | 72 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable |  |  | 10,284 |  |  |  | (7,219 | ) |  |  | a, l |  |  |  | 3,065 |
Manufacturing inventories |  |  | (1,752 | ) |  |  | 553 |  |  |  | a, l |  |  |  | (1,199 | )
Service parts inventories |  |  | (2,737 | ) |  |  | 353 |  |  |  | l |  |  |  | (2,384 | )
Accounts payable |  |  | 6,537 |  |  |  | 838 |  |  |  | g, l |  |  |  | 7,375 |
Accrued warranty |  |  | (313 | ) |  |  | 313 |  |  |  | l |  |  |  | — |
Accrued restructuring charges |  |  | 817 |  |  |  | (1,114 | ) |  |  | e, f, g |  |  |  | (297 | )
Accrued compensation |  |  | (1,236 | ) |  |  | (1,031 | ) |  |  | i, l |  |  |  | (2,267 | )
Deferred revenue |  |  | (9,329 | ) |  |  | 3,382 |  |  |  | a, b, l |  |  |  | (5,947 | )
Other assets and liabilities |  |  | 815 |  |  |  | (3,728 | ) |  |  | a, d, g, h, l, m, n, p, q |  |  |  | (2,913 | )
Net cash used in operating activities |  |  | (304 | ) |  |  | (1,002 | ) |  |  |  |  |  |  | (1,306 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases of property and equipment |  |  | (1,156 | ) |  |  | 5 |  |  |  | l |  |  |  | (1,151 | )
Proceeds from sale of assets |  |  | — |  |  |  | 275 |  |  |  | l |  |  |  | 275 |
Cash distributions from investments |  |  | 278 |  |  |  | — |  |  |  |  |  |  |  | 278 |
Net cash used in investing activities |  |  | (878 | ) |  |  | 280 |  |  |  |  |  |  |  | (598 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Borrowings of long-term debt and subordinated convertible debt, net of debt issuance costs |  |  | 164,650 |  |  |  | 620 |  |  |  | k |  |  |  | 165,270 |
Repayments on long-term debt |  |  | (160,245 | ) |  |  | 4,479 |  |  |  | k |  |  |  | (155,766 | )
Repayment of convertible subordinated debt |  |  | (6,000 | ) |  |  | (30 | ) |  |  | l |  |  |  | (6,030 | )
Payment of tax withholding due upon vesting of restricted stock |  |  | (1,775 | ) |  |  | (2 | ) |  |  | l |  |  |  | (1,777 | )
Proceeds from issuance of common stock, net |  |  | 1,010 |  |  |  | 2 |  |  |  | l |  |  |  | 1,012 |
Net cash provided by (used in) financing activities |  |  | (2,360 | ) |  |  | 5,069 |  |  |  |  |  |  |  | 2,709 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  |  | 82 |  |  |  | 247 |  |  |  | l |  |  |  | 329 |
Net decrease in cash, cash equivalents and restricted cash |  |  | (3,454 | ) |  |  | 4,588 |  |  |  |  |  |  |  | 1,134 |
Cash, cash equivalents and restricted cash at the beginning of period |  |  | 36,658 |  |  |  | (746 | ) |  |  |  |  |  |  | 35,912 |
Cash, cash equivalents and restricted cash at the end of period |  | $ | 33,204 |  |  | $ | 3,842 |  |  |  |  |  |  | $ | 37,046 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchases of property and equipment included in accounts payable |  | $ | 335 |  |  | $ | (48 | ) |  |  | l |  |  | $ | 287 |
Transfer of inventory to property and equipment |  | $ | — |  |  | $ | 919 |  |  |  | l |  |  | $ | 919 |
Cash Paid For: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest |  | $ | — |  |  | $ | 4,515 |  |  |  | l |  |  | $ | 4,515 |
Taxes, net of refunds |  | $ | — |  |  | $ | 914 |  |  |  | l |  |  | $ | 914 |

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