General and Administrative. General and administrative expenses increased
approximately $0.8 million, or 11.6%, to $8.2 million in fiscal year 2013 from
$7.4 million in fiscal year 2012. We incurred an additional $0.9 million of
incentive compensation expense in fiscal year 2013, compared to prior fiscal
year, due to higher revenue and profitability in the current year. Additionally,
we incurred an additional $0.3 million in severance from a reduction in force.
Partially offsetting the increase in incentive compensation and severance, we
incurred $0.4 million less in salaries, wages and benefits due to a year over
year decrease in general and administrative personnel.
Gain on Sale of Intellectual Property, Net. In the fourth quarter of our fiscal
2013, we entered into an agreement to sell certain non-strategic patents and
patent applications (collectively known as "intellectual property") that
Concurrent originally acquired in the purchase of Everstream, Inc.
("Everstream"). We have not and do not expect to use the technology associated
with this intellectual property as part of our ongoing or planned operations.
This intellectual property was originally valued at $0 upon our acquisition of
Everstream, as there was no identifiable use for these patents at the time of
purchase. On June 28, 2013 we closed on this agreement with the purchaser and
the purchaser transferred $2.8 million of cash to us as payment in full for this
intellectual property. As part of the execution of this agreement, we incurred
approximately $0.4 million of transaction costs that we have netted against the
$2.8 million of gross proceeds, as these expenses were incurred as a result of
the sale, and would not have been incurred otherwise.
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Other expense, net. In fiscal year 2013, we incurred $0.3 million of realized
currency translation losses. In fiscal year 2012, we incurred approximately
$0.1 million of realized currency translation losses. These losses resulted
from the impact of the decrease of the Japanese yen in fiscal year 2013 and both
the Japanese yen and euro in fiscal year 2012, relative to the U.S. dollar, on
short-term intercompany accounts which are settled in U.S. dollars in the normal
course of business by our subsidiaries for which the euro and Japanese yen are
the functional currency.
Provision for Income Taxes. We recorded a $0.4 million income tax provision in
fiscal year 2013, compared to $0.7 million in fiscal year 2012. We have net
operating loss carryforwards available to offset taxable income in the United
States and in many of the foreign locations in which we operate, but do not have
net operating loss carryforwards available to offset taxable income in Japan.
Our tax provision recorded in fiscal year 2013 was attributable to alternative
minimum tax and state taxes recorded in the United States and income tax
provision recorded by our subsidiary in Japan as a result of its pretax income
recorded during the year. Our tax provision recorded during the prior fiscal
year was primarily attributable to the income tax provision recorded by our
subsidiary in Japan as a result of its pretax income recorded during the prior
year. We have established a full valuation allowance for deferred tax assets
attributable to our net operating loss carryforwards, as we have determined that
it is more likely than not that such deferred tax assets will not be realized.
We will continue to evaluate all positive and negative evidence each reporting
period and in the future we may conclude, based upon all available evidence,
that some or all of our valuation allowances against our deferred tax assets
should be released.