Delaware | 94-3180138 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ý | |||
Non-accelerated filer | ¨(Do not check if a smaller reporting company) | Smaller Reporting Company | ¨ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
June 30, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,334 | $ | 25,013 | ||||
Short-term investments | 35,932 | 39,918 | ||||||
Accounts and other receivables (net of allowances for doubtful accounts of $15) | 1,671 | 1,213 | ||||||
Prepaid expenses and other current assets | 2,940 | 2,790 | ||||||
Total current assets | 60,877 | 68,934 | ||||||
Property and equipment, net | 4,241 | 4,589 | ||||||
Deferred income tax assets | 30,754 | 24,633 | ||||||
Prepaid income taxes | 4,997 | 6,995 | ||||||
Intangibles and other assets, net | 289 | 264 | ||||||
Total assets | $ | 101,158 | $ | 105,415 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,590 | $ | 650 | ||||
Accrued compensation | 3,265 | 4,840 | ||||||
Other current liabilities | 3,503 | 2,999 | ||||||
Deferred revenue | 5,689 | 6,696 | ||||||
Total current liabilities | 15,047 | 15,185 | ||||||
Long-term deferred revenue | 1,416 | 2,516 | ||||||
Other long-term liabilities | 882 | 1,099 | ||||||
Total liabilities | 17,345 | 18,800 | ||||||
Contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Common stock and additional paid-in capital — $0.001 par value; 100,000,000 shares authorized; 35,379,275 and 34,845,310 shares issued, respectively; 28,863,381 and 28,329,416 shares outstanding, respectively | 217,509 | 212,115 | ||||||
Accumulated other comprehensive income | 141 | 86 | ||||||
Accumulated deficit | (88,199 | ) | (79,948 | ) | ||||
Treasury stock at cost: 6,515,894 shares | (45,638 | ) | (45,638 | ) | ||||
Total stockholders’ equity | 83,813 | 86,615 | ||||||
Total liabilities and stockholders’ equity | $ | 101,158 | $ | 105,415 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Royalty and license | $ | 7,615 | $ | 15,939 | $ | 21,063 | $ | 31,951 | ||||||||
Development, services, and other | 249 | 284 | 424 | 559 | ||||||||||||
Total revenues | 7,864 | 16,223 | 21,487 | 32,510 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues (exclusive of amortization of intangibles shown separately below) | 59 | 115 | 82 | 230 | ||||||||||||
Sales and marketing | 3,397 | 3,670 | 7,200 | 7,880 | ||||||||||||
Research and development | 2,966 | 3,499 | 7,278 | 7,226 | ||||||||||||
General and administrative | 11,001 | 6,719 | 21,091 | 15,012 | ||||||||||||
Amortization of intangibles | 2 | 3 | 5 | 15 | ||||||||||||
Total costs and expenses | 17,425 | 14,006 | 35,656 | 30,363 | ||||||||||||
Operating income (loss) | (9,561 | ) | 2,217 | (14,169 | ) | 2,147 | ||||||||||
Interest and other income (expense) | 33 | 46 | 245 | 21 | ||||||||||||
Income (loss) from continuing operations before benefit (provision) for income taxes | (9,528 | ) | 2,263 | (13,924 | ) | 2,168 | ||||||||||
Benefit (provision) for income taxes | 3,323 | (668 | ) | 5,024 | (632 | ) | ||||||||||
Income (loss) from continuing operations | (6,205 | ) | 1,595 | (8,900 | ) | 1,536 | ||||||||||
Income from discontinued operations | 649 | — | 649 | — | ||||||||||||
Net income (loss) | $ | (5,556 | ) | $ | 1,595 | $ | (8,251 | ) | $ | 1,536 | ||||||
Basic net income (loss) per share: | ||||||||||||||||
Continuing operations | (0.22 | ) | 0.06 | (0.31 | ) | 0.05 | ||||||||||
Discontinued operations | 0.02 | 0.00 | 0.02 | 0.00 | ||||||||||||
Total | $ | (0.20 | ) | $ | 0.06 | $ | (0.29 | ) | $ | 0.05 | ||||||
Shares used in calculating basic net income (loss) per share | 28,834 | 28,070 | 28,663 | 27,944 | ||||||||||||
Diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | (0.22 | ) | 0.06 | (0.31 | ) | 0.05 | ||||||||||
Discontinued operations | 0.02 | 0.00 | 0.02 | 0.00 | ||||||||||||
Total | $ | (0.20 | ) | $ | 0.06 | $ | (0.29 | ) | $ | 0.05 | ||||||
Shares used in calculating diluted net income (loss) per share | 28,834 | 28,906 | 28,663 | 28,779 | ||||||||||||
Other comprehensive income | ||||||||||||||||
Change in unrealized gains on short-term investments | 23 | 3 | 55 | 4 | ||||||||||||
Total other comprehensive income | 23 | 3 | 55 | 4 | ||||||||||||
Total comprehensive income (loss) | $ | (5,533 | ) | $ | 1,598 | $ | (8,196 | ) | $ | 1,540 |
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
Cash flows provided by (used in) operating activities: | ||||||||
Net income (loss) | $ | (8,251 | ) | $ | 1,536 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization of property and equipment | 448 | 549 | ||||||
Amortization of intangibles | 5 | 15 | ||||||
Stock-based compensation | 3,589 | 2,969 | ||||||
Allowance for doubtful accounts | 2 | 3 | ||||||
Loss on sale disposal of equipment | — | 10 | ||||||
Income from discontinued operations | (649 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts and other receivables | (460 | ) | 1,918 | |||||
Deferred income taxes | (6,472 | ) | 4,766 | |||||
Prepaid income taxes | 1,998 | (3,718 | ) | |||||
Prepaid expenses and other current assets | (150 | ) | (1,289 | ) | ||||
Other operating assets | (103 | ) | (22 | ) | ||||
Accounts payable | 1,935 | 573 | ||||||
Accrued compensation and other current liabilities | (1,056 | ) | 1,277 | |||||
Deferred revenue | (2,107 | ) | 7,895 | |||||
Other long-term liabilities | (217 | ) | 192 | |||||
Net cash provided by (used in) operating activities | (11,488 | ) | 16,674 | |||||
Cash flows provided by investing activities: | ||||||||
Purchases of short-term investments | (19,886 | ) | (4,994 | ) | ||||
Proceeds from maturities of short-term investments | 24,000 | 29,000 | ||||||
Purchases of property and equipment | (110 | ) | (3,289 | ) | ||||
Proceeds from discontinued operations | 1,000 | — | ||||||
Net cash provided by investing activities | 5,004 | 20,717 | ||||||
Cash flows provided by financing activities: | ||||||||
Issuance of common stock under employee stock purchase plan | 128 | 190 | ||||||
Exercise of stock options | 1,677 | 675 | ||||||
Net cash provided by financing activities | 1,805 | 865 | ||||||
Net increase (decrease) in cash and cash equivalents | (4,679 | ) | 38,256 | |||||
Cash and cash equivalents: | ||||||||
Beginning of period | 25,013 | 14,380 | ||||||
End of period | $ | 20,334 | $ | 52,636 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for taxes | $ | (473 | ) | $ | 90 | |||
Supplemental disclosure of noncash operating, investing, and financing activities | ||||||||
Amounts accrued for property and equipment | $ | 8 | $ | 1,052 | ||||
Release of Restricted Stock Units and Awards under company stock plan | $ | 1,945 | $ | 2,647 |
• | Persuasive evidence of an arrangement exists. For a license arrangement, the Company requires a written contract, signed by both the customer and the Company. |
• | Delivery has occurred. The Company delivers software to customers physically and also delivers software electronically. For electronic deliveries, delivery occurs when the Company provides the customer access codes or “keys” that allow the customer to take immediate possession of the software. |
• | The fee is fixed or determinable. The Company’s arrangement fee is based on the use of standard payment terms, which are those that are generally offered to the majority of customers. For transactions involving extended payment terms, the Company deems these fees not to be fixed or determinable for revenue recognition purposes and revenue is deferred until the fees become due and payable. |
• | Collectibility is probable. To recognize revenue, the Company must judge collectibility of fees, which is done on a customer-by-customer basis pursuant to the Company’s credit review policy. The Company typically sells to customers with whom there is a history of successful collection. For new customers, the Company evaluates the customer’s financial condition and ability to pay. If it is determined that collectibility is not probable based upon the credit review process or the customer’s payment history, revenue is recognized when payment is received. |
June 30, 2016 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
(In thousands) | ||||||||||||||||
Assets: | ||||||||||||||||
U.S. Treasury securities | $ | — | $ | 35,932 | $ | — | $ | 35,932 | ||||||||
Money market accounts | 6,007 | — | — | 6,007 | ||||||||||||
Total assets at fair value | $ | 6,007 | $ | 35,932 | $ | — | $ | 41,939 |
December 31, 2015 | ||||||||||||||||
Fair value measurements using | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
(In thousands) | ||||||||||||||||
Assets: | ||||||||||||||||
U.S. Treasury securities | $ | — | $ | 39,918 | $ | 39,918 | ||||||||||
Money market accounts | 14,032 | — | — | 14,032 | ||||||||||||
Total assets at fair value | $ | 14,032 | $ | 39,918 | $ | — | $ | 53,950 |
June 30, 2016 | ||||||||||||||||
Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
U.S. Treasury securities | $ | 35,892 | $ | 40 | $ | — | $ | 35,932 | ||||||||
Total | $ | 35,892 | $ | 40 | $ | — | $ | 35,932 |
December 31, 2015 | ||||||||||||||||
Amortized Cost | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Fair Value | |||||||||||||
(In thousands) | ||||||||||||||||
U.S. Treasury securities | $ | 39,933 | $ | — | $ | (15 | ) | $ | 39,918 | |||||||
Total | $ | 39,933 | $ | — | $ | (15 | ) | $ | 39,918 |
June 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Trade accounts receivable | $ | 1,196 | $ | 935 | ||||
Receivables from vendors and other | 475 | 278 | ||||||
Accounts and other receivables | $ | 1,671 | $ | 1,213 |
June 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Computer equipment and purchased software | $ | 3,620 | $ | 3,564 | ||||
Machinery and equipment | 943 | 923 | ||||||
Furniture and fixtures | 1,375 | 1,361 | ||||||
Leasehold improvements | 3,838 | 3,838 | ||||||
Total | 9,776 | 9,686 | ||||||
Less accumulated depreciation | (5,535 | ) | (5,097 | ) | ||||
Property and equipment, net | $ | 4,241 | $ | 4,589 |
June 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Purchased patents and other purchased intangible assets | $ | 4,605 | $ | 4,605 | ||||
Less: Accumulated amortization of purchased patents and other purchased intangibles | (4,604 | ) | (4,599 | ) | ||||
Purchased patents and other purchased intangible assets, net | 1 | 6 | ||||||
Other assets | 288 | 258 | ||||||
Intangibles and other assets, net | $ | 289 | $ | 264 |
June 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Accrued legal | $ | 2,268 | $ | 1,458 | ||||
Accrued services | 330 | 849 | ||||||
Income taxes payable | 305 | 129 | ||||||
Other current liabilities | 600 | 563 | ||||||
Total other current liabilities | $ | 3,503 | $ | 2,999 |
June 30, 2016 | December 31, 2015 | |||||||
(In thousands) | ||||||||
Deferred revenue for Sony Computer Entertainment | $ | — | $ | 1,263 | ||||
Other deferred revenue | 1,416 | 1,253 | ||||||
Long-term deferred revenue | $ | 1,416 | $ | 2,516 |
June 30, 2016 | ||
Common stock shares available for grant | 653,077 | |
Standard and market condition stock options outstanding | 3,521,481 | |
Restricted stock awards outstanding | 77,540 | |
RSU's outstanding | 510,234 |
Six Months Ended June 30, 2016 | |||
Shares purchased under ESPP | 17,711 | ||
Average price of shares purchased under ESPP | $ | 7.21 | |
Intrinsic value of shares purchased under ESPP | $ | 23,000 |
Six Months Ended June 30, 2016 | ||||
Beginning outstanding balance | 3,596,533 | |||
Granted | 444,769 | |||
Exercised | (280,676 | ) | ||
Forfeited | (219,457 | ) | ||
Expired | (244,688 | ) | ||
Ending outstanding balance | 3,296,481 | |||
Aggregate intrinsic value of options exercised | $ | 700,000 | ||
Weighted average fair value of options granted | 3.72 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in millions) | ||||||||||
June 30, 2016 | |||||||||||||
Options outstanding | 3,296,481 | $ | 8.51 | 4.18 | $ | 2.5 | |||||||
Options vested and expected to vest using estimated forfeiture rates | 3,104,511 | 8.46 | 4.08 | 2.5 | |||||||||
Options exercisable | 2,097,193 | 8.08 | 3.42 | 2.4 |
Six Months Ended June 30, 2016 | ||||
Beginning outstanding balance | 200,000 | |||
Granted | 75,000 | |||
Exercised | — | |||
Canceled | (50,000 | ) | ||
Ending outstanding balance | 225,000 | |||
Aggregate intrinsic value of options exercised | $ | — | ||
Weighted average fair value of options granted | 3.68 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in millions) | ||||||||||
June 30, 2016 | |||||||||||||
Options outstanding | 225,000 | $ | 8.39 | 6.00 | $ | — | |||||||
Options vested and expected to vest using estimated forfeiture rates | 202,048 | 8.38 | 5.99 | — | |||||||||
Options exercisable | 46,875 | 8.09 | 5.67 | — |
Six Months Ended June 30, 2016 | ||||
Beginning outstanding balance | 487,117 | |||
Awarded | 295,880 | |||
Released | (214,222 | ) | ||
Forfeited | (58,541 | ) | ||
Ending outstanding balance | 510,234 | |||
Weighted average grant date fair value of RSUs granted | $ | 8.85 | ||
Total fair value of RSUs released | 1,806,000 |
Number of Shares | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (in millions) | |||||||
June 30, 2016 | |||||||||
RSUs outstanding | 510,234 | 1.37 | $ | 3.7 | |||||
RSUs vested and expected to vest using estimated forfeiture rates | 385,983 | 1.25 | 2.8 |
Six Months Ended June 30, 2016 | ||||
Beginning outstanding balance | 21,356 | |||
Awarded | 77,540 | |||
Released | (21,356 | ) | ||
Forfeited | — | |||
Ending outstanding balance | 77,540 | |||
Weighted average grant date fair value of restricted stock awarded | $ | 6.52 | ||
Total fair value of restricted stock awards released | 139,000 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Standard Stock Options | |||||||||||||||
Expected life (in years) | 4.5 | 4.6 | 4.5 | 4.7 | |||||||||||
Volatility | 55 | % | 55 | % | 55 | % | 56 | % | |||||||
Interest rate | 1.1 | % | 1.4 | % | 1.2 | % | 1.4 | % | |||||||
Dividend yield | N/A | N/A | N/A | N/A |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2016 | 2015 | 2016 | 2015 | |||||||
Market Condition Based Stock Options | ||||||||||
Expected life (in years) | N/A | N/A | 7.0 | 7.0 | ||||||
Volatility | N/A | N/A | 59 | % | 65 | % | ||||
Interest rate | N/A | N/A | 1.6 | % | 1.9 | % | ||||
Dividend yield | N/A | N/A | N/A | N/A |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2016 | 2015 | 2016 | 2015 | |||||||
Employee Stock Purchase Plan | ||||||||||
Expected life (in years) | N/A | N/A | 0.5 | 0.5 | ||||||
Volatility | N/A | N/A | 53 | % | 45 | % | ||||
Interest rate | N/A | N/A | 0.5 | % | 0.1 | % | ||||
Dividend yield | N/A | N/A | N/A | N/A |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(In thousands) | ||||||||||||||||
Statement of Operations Classifications | ||||||||||||||||
Sales and marketing | $ | 332 | $ | 288 | $ | 560 | $ | 552 | ||||||||
Research and development | 258 | 264 | 784 | 760 | ||||||||||||
General and administrative | 665 | 677 | 2,245 | 1,657 | ||||||||||||
Total | $ | 1,255 | $ | 1,229 | $ | 3,589 | $ | 2,969 |
Six Months Ended June 30, 2016 | ||||||||||||
Unrealized Gains and Losses on Available-for Sale Securities | Foreign Currency Items | Total | ||||||||||
(In thousands) | ||||||||||||
Beginning balance | $ | (15 | ) | $ | 101 | $ | 86 | |||||
Other comprehensive income before reclassifications | 55 | — | 55 | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | |||||||||
Net current period other comprehensive income | 55 | — | 55 | |||||||||
Ending Balance | $ | 40 | $ | 101 | $ | 141 |
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(In thousands) | ||||||||||||||||
Income (loss) from continuing operations before benefit (provision) for income taxes | $ | (9,528 | ) | $ | 2,263 | $ | (13,924 | ) | $ | 2,168 | ||||||
Benefit (provision) for income taxes | 3,323 | (668 | ) | 5,024 | (632 | ) | ||||||||||
Effective tax rate | 34.9 | % | 29.5 | % | 36.1 | % | 29.2 | % |
Three months ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Numerator: | ||||||||||||||||
Income (loss) from continuing operations | $ | (6,205 | ) | $ | 1,595 | $ | (8,900 | ) | $ | 1,536 | ||||||
Income from discontinued operations, net of tax | 649 | — | 649 | — | ||||||||||||
Net income (loss) used in computing basic net income (loss) per share | $ | (5,556 | ) | $ | 1,595 | $ | (8,251 | ) | $ | 1,536 | ||||||
Denominator: | ||||||||||||||||
Shares used in computation of basic and diluted net income (loss) per share (weighted average common shares outstanding) | 28,834 | 28,070 | 28,663 | 27,944 | ||||||||||||
Dilutive potential common shares: | ||||||||||||||||
Stock options, ESPP, restricted Stock and RSUs | — | 836 | — | 835 | ||||||||||||
Shares used in computation of diluted net income (loss) per share | 28,834 | 28,906 | 28,663 | 28,779 | ||||||||||||
Basic net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.22 | ) | $ | 0.06 | $ | (0.31 | ) | $ | 0.05 | ||||||
Discontinued operations | 0.02 | 0.00 | 0.02 | 0.00 | ||||||||||||
Total | $ | (0.20 | ) | $ | 0.06 | $ | (0.29 | ) | $ | 0.05 | ||||||
Diluted net income (loss) per share: | ||||||||||||||||
Continuing operations | $ | (0.22 | ) | $ | 0.06 | $ | (0.31 | ) | $ | 0.05 | ||||||
Discontinued operations | 0.02 | 0.00 | 0.02 | 0.00 | ||||||||||||
Total | $ | (0.20 | ) | $ | 0.06 | $ | (0.29 | ) | $ | 0.05 |
June 30, | |||
2016 | |||
Outstanding stock options | 3,521,481 | ||
Unvested restricted stock awards | 77,540 | ||
Unvested RSUs | 510,234 | ||
ESPP | 27,670 |
June 30, | Change | % Change | |||||||||||||
REVENUES | 2016 | 2015 | |||||||||||||
(In thousands) | |||||||||||||||
Three months ended: | |||||||||||||||
Royalty and license | $ | 7,615 | $ | 15,939 | $ | (8,324 | ) | (52 | )% | ||||||
Development, services, and other | 249 | 284 | (35 | ) | (12 | )% | |||||||||
Total Revenues | $ | 7,864 | $ | 16,223 | $ | (8,359 | ) | (52 | )% | ||||||
Six months ended: | |||||||||||||||
Royalty and license | $ | 21,063 | $ | 31,951 | $ | (10,888 | ) | (34 | )% | ||||||
Development, services, and other | 424 | 559 | (135 | ) | (24 | )% | |||||||||
Total Revenues | $ | 21,487 | $ | 32,510 | $ | (11,023 | ) | (34 | )% |
June 30, | Change | % Change | |||||||||||||
OPERATING EXPENSES | 2016 | 2015 | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Three months ended: | |||||||||||||||
Sales and marketing | $ | 3,397 | $ | 3,670 | $ | (273 | ) | (7 | )% | ||||||
% of total revenue | 43 | % | 23 | % | 20 | % | |||||||||
Research and development | $ | 2,966 | $ | 3,499 | $ | (533 | ) | (15 | )% | ||||||
% of total revenue | 38 | % | 22 | % | 16 | % | |||||||||
General and administrative | $ | 11,001 | $ | 6,719 | $ | 4,282 | 64 | % | |||||||
% of total revenue | 140 | % | 41 | % | 99 | % | |||||||||
Amortization of intangibles | $ | 2 | $ | 3 | $ | (1 | ) | (33 | )% | ||||||
% of total revenue | — | % | — | % | — | % | |||||||||
Six months ended: | |||||||||||||||
Sales and marketing | $ | 7,200 | $ | 7,880 | $ | (680 | ) | (9 | )% | ||||||
% of total revenue | 34 | % | 24 | % | 10 | % | |||||||||
Research and development | $ | 7,278 | $ | 7,226 | $ | 52 | 1 | % | |||||||
% of total revenue | 34 | % | 22 | % | 12 | % | |||||||||
General and administrative | $ | 21,091 | $ | 15,012 | $ | 6,079 | 40 | % | |||||||
% of total revenue | 98 | % | 46 | % | 52 | % | |||||||||
Amortization of intangibles | $ | 5 | $ | 15 | $ | (10 | ) | (67 | )% | ||||||
% of total revenue | — | % | — | % | — | % |
June 30, | Change | % Change | |||||||||||||
BENEFIT FOR TAXES | 2016 | 2015 | |||||||||||||
(Dollars in thousands) | |||||||||||||||
Three months ended: | |||||||||||||||
Benefit (provision) for income taxes | $ | 3,323 | $ | (668 | ) | $ | 3,991 | (597 | )% | ||||||
Income (loss) from continuing operations before benefit (provision) for income taxes | (9,528 | ) | 2,263 | ||||||||||||
Effective tax rate | 34.9 | % | 29.5 | % | |||||||||||
Six months ended: | |||||||||||||||
Benefit (provision) for income taxes | 5,024 | (632 | ) | $ | 5,656 | (895 | )% | ||||||||
Income (loss) from continuing operations before benefit (provision) for income taxes | (13,924 | ) | 2,168 | ||||||||||||
Effective tax rate | 36.1 | % | 29.2 | % |
• | the competition we may face from third parties and/or the internal design teams of existing and potential licensees; |
• | difficulties in persuading third parties to work with us, to rely on us for critical technology, and to disclose to us proprietary product development and other strategies; |
• | difficulties in persuading existing licensees who compensate us for including our software in certain of their touch-enabled products to also license and compensate us for our patents that cover other touch-enabled products of theirs that do not include our software; |
• | challenges in demonstrating the compelling value of our technologies and challenges associated with customers’ ability to easily implement our technologies; |
• | difficulties in obtaining new licensees for yet-to-be commercialized technology because their suppliers may not be ready to meet stringent price, quality and parts availability requirements; |
• | difficulties in entering into or renewing gaming licenses if video console makers choose not to license third parties to make peripherals for their new consoles, if video console makers no longer require peripherals to play video games, if video console makers no longer utilize technology in the peripherals that are covered by our patents or if the overall market for video consoles deteriorates substantially; |
• | reluctance of content developers or distributors, mobile device manufacturers, and service providers to sign license agreements without a critical mass of other such inter-dependent supporters of the mobile device industry also having a license, or without enough similar devices in the market that incorporate our technologies; |
• | inability of current or prospective licensees to ship certain devices if they are involved in IP infringement claims by third parties that ultimately prevent them from shipping products or that impose substantial royalties on their products; and |
• | difficulties in persuading other licensees to take a license or renew a license for our intellectual property without the expenditure of significant resources. |
• | our pending patent applications may not result in the issuance of patents; |
• | our patents may not be broad enough to protect our proprietary rights; and |
• | effective patent protection may not be available in every country, particularly in Asia, where we or our licensees do business; and |
• | our pending litigation against Apple and AT&T Mobility may be unsuccessful or may result in one or more of the patents asserted becoming limited in scope, declared unenforceable or invalidated. |
• | laws and contractual restrictions may not be sufficient to prevent misappropriation of our technologies or deter others from developing similar technologies; and |
• | policing unauthorized use of our patented technologies, trademarks, and other proprietary rights would be difficult, expensive, and time-consuming, within and particularly outside of the United States. |
• | compliance with multiple, conflicting and changing governmental laws and regulations; |
• | laws and business practices favoring local competitors; |
• | foreign exchange and currency risks; |
• | import and export restrictions, duties, tariffs, quotas and other barriers; |
• | difficulties staffing and managing foreign operations; |
• | difficulties and expense in establishing and enforcing IP rights; |
• | business risks, including fluctuations in demand for our technologies and products and the cost and effort to conduct international operations and travel abroad to promote international distribution and overall global economic conditions; |
• | multiple conflicting tax laws and regulations; |
• | political and economic instability; and |
• | the possibility of an outbreak of hostilities or unrest in markets where major customers are located, including Korea. |
• | engage in research and develop our technologies; |
• | increase our sales and marketing efforts; |
• | attempt to expand the market for touch-enabled technologies and products; |
• | protect and enforce our IP; |
• | expand our international presence in connection with the recently implemented reorganization of our corporate organization; |
• | incur costs related to litigation; and |
• | acquire IP or other assets from third-parties. |
• | the establishment or loss of licensing relationships; |
• | the timing and recognition of payments under fixed and/or up-front license agreements, as well as other multi-element arrangements; |
• | seasonality in the demand for our technologies or products or our licensees’ products; |
• | the timing of our expenses, including costs related to litigation, stock-based awards, acquisitions of technologies, or businesses; |
• | developments in and costs of pursuing or settling any pending litigation; |
• | the timing of introductions and market acceptance of new technologies and products and product enhancements by us, our licensees, our competitors, or their competitors; |
• | the timing of work performed under development agreements; and |
• | errors in our licensees’ royalty reports, and corrections and true-ups to royalty payments and royalty rates from prior periods. |
• | our board of directors is classified into three classes of directors with staggered three-year terms; |
• | only our chairperson of the board of directors, a majority of our board of directors or 10% or greater stockholders are authorized to call a special meeting of stockholders; |
• | our stockholders can only take action at a meeting of stockholders and not by written consent; |
• | vacancies on our board of directors can be filled only by our board of directors and not by our stockholders; |
• | our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval; and |
• | advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. |
• | unanticipated costs associated with the acquisitions; |
• | use of substantial portions of our available cash to consummate the acquisitions; |
• | diversion of management’s attention from other business concerns; |
• | difficulties in assimilation of acquired personnel or operations; |
• | failure to realize the anticipated benefits of acquired IP or other assets; |
• | charges associated with amortization of acquired assets or potential charges for write-down of assets or goodwill associated with unsuccessful acquisitions; |
• | potential IP infringement or other claims related to acquired businesses, assets, product lines, or technologies; and |
• | potential costs associated with failed acquisition efforts. |
IMMERSION CORPORATION | ||
By | /s/ Victor Viegas | |
Victor Viegas | ||
President, Chief Executive Officer, Interim Chief Financial Officer and Principal Accounting Officer |
Number | Description | |
31.1 | Certification of Victor Viegas, Chief Executive Officer and interim Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of Victor Viegas, Chief Executive Officer and interim Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Report Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document |
* | This certification is deemed not filed for purposes of section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act. |
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 |
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/ Victor Viegas | |
Victor Viegas | |
Chief Executive Officer and Interim Chief Financial Officer |
/s/ Victor Viegas | |
Victor Viegas | |
Chief Executive Officer and Interim Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2016 |
Jul. 29, 2016 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | IMMR | |
Entity Registrant Name | IMMERSION CORP | |
Entity Central Index Key | 0001058811 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 28,907,745 |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 15 | $ 15 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, shares issued (in shares) | 35,379,275 | 34,845,310 |
Common Stock, shares outstanding (in shares) | 28,863,381 | 28,329,416 |
Treasury Stock, shares (in shares) | 6,515,894 | 6,515,894 |
SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Description of Business Immersion Corporation (the “Company”) was incorporated in 1993 in California and reincorporated in Delaware in 1999. The Company focuses on the creation, design, development, and licensing of innovative haptic technologies that allow people to use their sense of touch more fully as they engage with cutting-edge products and experience the digital world around them. The Company has adopted a “hybrid” business model, under which it provides advanced tactile software, related tools, and technical assistance to certain customers; and offers licenses to the Company's patented intellectual property (“IP”) to other customers. Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of Immersion Corporation and its wholly-owned subsidiaries: Immersion Canada Corporation; Immersion International, LLC; Immersion Medical, Inc.; Immersion Japan K.K.; Immersion Ltd.; Immersion Software Ireland Ltd.; Haptify, Inc.; Immersion (Shanghai) Science & Technology Company, Ltd.; and Immersion Technology International Ltd. All intercompany accounts, transactions, and balances have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows, in conformity with GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2015. In the opinion of management, all adjustments consisting of only normal and recurring items necessary for the fair presentation of the financial position and results of operations for the interim periods presented have been included. The results of operations for the three months and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year. Segment Information The Company develops, licenses, and supports a wide range of software and IP that more fully engage users’ sense of touch when operating digital devices. The Company focuses on the following target application areas: mobility and consumer electronics, automotive, gaming, commercial and industrial, and medical. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM allocates resources to and assesses the performance of the Company using information about its financial results as one operating and reporting segment. Revenue Recognition The Company recognizes revenues in accordance with applicable accounting standards, including ASC 605-10-S99, “Revenue Recognition” (“ASC 605-10-S99”); ASC 605-25, “Multiple Element Arrangements” (“ASC 605-25”); and ASC 985-605, “Software-Revenue Recognition” (“ASC 985-605”). The Company derives its revenues from two principal sources: royalty and license fees, and development contract and service fees. As described below, management judgments, assumptions, and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue for any period based on the judgments and estimates made by management. Specifically, in connection with each transaction, the Company must evaluate whether: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectibility is probable. The Company applies these criteria as discussed below.
Royalty and license revenue — The Company licenses its patents and software to customers in a variety of industries such as mobility, gaming, automotive, and medical devices. Certain of these are variable fee arrangements where the royalties earned by the Company are based on unit or sales volumes of the respective licensees. The Company also enters into fixed license fee arrangements. The terms of the royalty agreements generally require licensees to give notification of royalties due to the Company within 30 – 45 days of the end of the quarter during which their related sales occur. As the Company is unable to reliably estimate the licensees’ sales in any given quarter to determine the royalties due to it, the Company recognizes royalty revenues based on royalties reported by licensees and when all revenue recognition criteria are met. Certain royalties are based upon customer shipments or revenues and could be subject to change and may result in out of period adjustments. The Company recognizes fixed license fee revenue for licenses when earned under the terms of the agreements, which is generally recognized on a straight-line basis over the expected term of the license. Development, services, and other revenue — Development, services, and other revenue are composed of engineering services (engineering services and/or development contracts), and in limited cases, post contract customer support (“PCS”). Engineering services revenues are recognized under the proportional performance accounting method based on physical completion of the work to be performed or completed performance method. A provision for losses on contracts is made, if necessary, in the period in which the loss becomes probable and can be reasonably estimated. Revisions in estimates are reflected in the period in which the conditions become known. To date, such losses have not been significant. Revenue from PCS is typically recognized over the period of the ongoing obligation, which is generally consistent with the contractual term. Multiple element arrangements — The Company enters into multiple element arrangements in which customers purchase time-based non-exclusive licenses that cannot be resold to others, which include a combination of software and/or IP licenses, engineering services, and in limited cases PCS. For arrangements that are software based and include software and engineering services, the services are generally not essential to the functionality of the software, and customers may purchase engineering services to facilitate the adoption of the Company’s technology, but they may also decide to use their own resources or appoint other engineering service organizations to perform these services. For arrangements that are in substance subscription arrangements, the entire arrangement fee is recognized ratably over the contract term, subject to any limitations related to extended payment terms. For arrangements involving upfront fees for services and royalties earned by the Company based on unit or sales volumes of the respective licensees, and the services are performed ratably over the arrangement or are front-end loaded, the upfront fees are recognized ratably over the contract term and royalties based on unit or sales volume are recognized when they become fixed and determinable. As the Company is unable to reliably estimate the licensees’ sales in any given quarter to determine the royalties due to it, the Company recognizes per unit or sales volume driven royalty revenues based on royalties reported by licensees and when all revenue recognition criteria are met. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers: Topic 606” (“ASU 2014-09”) which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers: Deferral of the Effective Date”, which deferred the effective date of ASU 2014-09 for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. In April 2016, the FASB issued ASU 2016-10 "Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing" ("ASU 2016-10"), which further provides additional updates to revenue recognition guidance relating to performance obligations and accounting for licensing revenue. In May 2016, the FASB issued ASU 2016-12 "Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients" ("ASU 2016-12") which further provides updates to revenue recognition guidance relating to scope and practical expedients for revenue recognition. Accordingly, ASU 2014-09, ASU 2016-10, and ASU 2016-12 are effective for the Company and are expected to be adopted in the first quarter of fiscal 2018. These standards permit companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption through a cumulative adjustment. The Company is in the process of determining the method of adoption and evaluating the impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases: Topic 842” (“ASU 2016-02”), which supersedes the existing guidance for lease accounting in Topic 840, Leases. The FASB issued the ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments of this ASU are effective for periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the impact of this standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 “Compensation - Stock Compensation: Topic 718” (“ASU 2016-09”) which simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification in the statement of cash flows. The standard is effective for periods beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of evaluating the impact of this standard on its consolidated financial statements. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Cash Equivalents and Short-term Investments The financial instruments of the Company measured at fair value on a recurring basis are cash equivalents and short-term investments. The Company’s fixed income available-for-sale securities consist of high quality, investment grade securities. The Company values these securities based on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1) or inputs other than quoted prices that are observable either directly or indirectly (Level 2) in determining fair value. The types of instruments valued based on quoted market prices in active markets include money market securities. Such instruments are generally classified within Level 1 of the fair value hierarchy. The types of instruments valued based on quoted prices in markets that are less active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy and include U.S. treasury securities. The types of instruments valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy. The Company had no Level 3 instruments as of June 30, 2016 and December 31, 2015. Financial instruments measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 are classified based on the valuation technique in the table below:
The above table excludes $14.3 million of cash held in banks.
The above table excludes $11.0 million of cash held in banks. U.S. Treasury securities are classified as short-term investments, and money market accounts are classified as cash equivalents on the Company’s condensed consolidated balance sheets. Short-term Investments
The contractual maturities of the Company’s available-for-sale securities on June 30, 2016 and December 31, 2015 were all due within one year. There were no transfers of instruments between Level 1 and 2 during the three months and six months ended June 30, 2016 and the year ended December 31, 2015. |
ACCOUNTS AND OTHER RECEIVABLES |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS AND OTHER RECEIVABLES | ACCOUNTS AND OTHER RECEIVABLES
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PROPERTY AND EQUIPMENT |
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PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT
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INTANGIBLES AND OTHER ASSETS |
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Intangibles And Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLES AND OTHER ASSETS | INTANGIBLES AND OTHER ASSETS
The Company amortizes its intangible assets related to purchased patents, over their estimated useful lives, generally 10 years from the purchase date. The Company recorded $2,000 and $5,000 in amortization of purchased patents in the three months and six months ended June 30, 2016, respectively. The Company recorded $3,000 and $15,000 in amortization of purchased patents in the three months and six months ended June 30, 2015, respectively. The remaining $1,000 in net book value of purchased patents as of June 30, 2016 will be amortized during the remainder of 2016. |
OTHER CURRENT LIABILITIES |
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OTHER CURRENT LIABILITIES | OTHER CURRENT LIABILITIES
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LONG-TERM DEFERRED REVENUE |
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LONG-TERM DEFERRED REVENUE | LONG-TERM DEFERRED REVENUE Long-term deferred revenue consisted of the following:
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STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock Options and Awards The Company’s equity incentive program is a long-term retention program that is intended to attract, retain, and provide incentives for talented employees, consultants, officers, and directors and to align stockholder and employee interests. The Company may grant time based options, market condition based options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares, performance units, and other stock-based or cash-based awards to employees, officers, directors, and consultants. Under this program, stock options may be granted at prices not less than the fair market value on the date of grant for stock options. These options generally vest over four years and expire from seven to ten years from the date of grant. In addition to time based vesting, market condition based options are subject to a market condition: the closing price of the Company stock must exceed a certain level for a number of trading days within a specified timeframe or the options will be cancelled before the expiration of the options. Restricted stock generally vests over one year. RSUs generally vest over three years. Awards granted other than an option or stock appreciation right reduce the common stock shares available for grant under the program by 1.75 shares for each share issued.
Employee Stock Purchase Plan The Company has an Employee Stock Purchase Plan (“ESPP”). Under the ESPP, eligible employees may purchase common stock through payroll deductions at a purchase price of 85% of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or the purchase date. Participants may not purchase more than 2,000 shares in a six-month offering period or purchase stock having a value greater than $25,000 in any calendar year as measured at the beginning of the offering period. A total of 1,000,000 shares of common stock have been reserved for issuance under the ESPP. As of June 30, 2016, 621,269 shares had been purchased since the inception of the ESPP in 1999. Under ASC 718-10, the ESPP is considered a compensatory plan and the Company is required to recognize compensation cost related to the fair value of the award purchased under the ESPP. Shares purchased under the ESPP for the six months ended June 30, 2016 are listed below. Shares purchased under the ESPP for the six months ended June 30, 2015 are 23,713. The intrinsic value listed below is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.
Summary of Standard Stock Options The following table sets forth the summary of activity with respect to standard stock options granted under the Company’s stock option plans for the six months ended June 30, 2016:
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the exercise price of the Company’s common stock for the options that were in-the-money. Information regarding these standard stock options outstanding at June 30, 2016 is summarized below:
Summary of Market Condition Based Stock Options The following table sets forth activity with respect to market condition based stock options granted under the Company’s stock option plans for the six months ended June 30, 2016:
Information regarding these market condition based stock options outstanding at June 30, 2016 is summarized below:
Summary of Restricted Stock Units RSU activity for the six months ended June 30, 2016 was as follows:
Information regarding RSUs outstanding at June 30, 2016 is summarized below:
Summary of Restricted Stock Awards Restricted stock award activity for the six months ended June 30, 2016 was as follows:
Stock Plan Assumptions The assumptions used to value option grants under the Company’s stock plans were as follows:
Compensation Costs Total stock-based compensation recognized in the condensed consolidated statements of operations and comprehensive loss is as follows:
As of June 30, 2016, there was $8.3 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock options, restricted stock awards and RSUs granted to the Company’s employees and directors. This cost will be recognized over an estimated weighted-average period of approximately 2.62 years for standard options, 2.76 years for market condition based options, 2.11 years for RSUs, and 0.93 years for restricted stock awards. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. |
STOCKHOLDERS' EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Accumulated Other Comprehensive Income The changes in accumulated other comprehensive income are included in the table below.
Stock Repurchase Program On November 1, 2007, the Company announced its Board of Directors (the "Board")’ authorized the repurchase of up to $50.0 million of the Company’s common stock (“Stock Repurchase Program”). In addition, on October 22, 2014, the Board authorized another $30.0 million under the share repurchase program. The Company may repurchase its common stock for cash in the open market in accordance with applicable securities laws. The timing of and amount of any stock repurchase will depend on share price, corporate and regulatory requirements, economic and market conditions, and other factors. The stock repurchase authorization has no expiration date, does not require the Company to repurchase a specific number of shares, and may be modified, suspended, or discontinued at any time. There were no stock repurchases during the three months and six months ended June 30, 2016 and 2015. As of June 30, 2016, the Stock Repurchase Program remains available with approximately $34.4 million that may yet be purchased under the program. |
DISCONTINUED OPERATIONS |
6 Months Ended |
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Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS During the year ended December 31, 2009, the Company sold its 3D product line including inventory, fixed assets, and intangibles and recorded gains on the sale of discontinued operations of $187,000 at the time of the sales. Total initially negotiated consideration for the sales was $2.7 million which comprised of $320,000 in cash paid in the year ended December 31, 2009 and notes receivable of $2.4 million which were payable through the year ended December 31, 2013. Given the inherent uncertainty relative to the credit worthiness of the buyers, the Company concluded that they would recognize income from the notes receivable as proceeds received. The operations of the 3D product line were classified as discontinued operations in the period of the initial sales transactions. During the three and six months ended June 30, 2016, a final settlement payment of $1.0 million was received relative to these sales resulting in $649,000 discontinued operations, net of tax of $351,000. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income tax provisions consisted of the following:
The benefit (provision) for income tax for the three months ended June 30, 2016 and 2015 resulted primarily from the Company’s federal and foreign tax recognized at statutory rates, adjusted for the tax impact of nondeductible permanent items including stock-based compensation and foreign withholding taxes. The benefit for income tax for the three months and six months ended June 30, 2016 also includes non-cash tax expense on intercompany profit that resulted from the sale of certain IP rights to one of the Company's foreign subsidiaries as part of the Company's reorganization of its international operations during the second half of 2015. Discrete items recognized for the six months ended June 30, 2016 include a tax refund related to the settlement with a taxing authority and the release of certain reserves and related accrued interest. On July 27, 2015, a U.S. Tax Court opinion (Altera Corporation et. al v. Commissioner) concerning the treatment of stock-based compensation expense in an intercompany cost sharing arrangement was issued. In its opinion, the U.S. Tax Court accepted Altera's position of excluding stock-based compensation from its intercompany cost sharing arrangement. On February 19, 2016, the IRS appealed the ruling to the U.S. Court of Appeals for the Ninth Circuit. Although the IRS has appealed the decision, based on the findings of the U.S. Tax Court, the Company has concluded that it is more likely than not that the decision will be upheld and accordingly has excluded stock-based compensation from intercompany charges during the period. The Company will continue to monitor ongoing developments and potential impacts to its condensed consolidated financial statements. As of June 30, 2016, the Company had unrecognized tax benefits under ASC 740 “Income Taxes” of approximately $6.2 million and there was no applicable interest. The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate, if recognized, was $2.9 million. The Company released reserves totaling $310,000 including interest and recorded a tax benefit due to the receipt of a tax refund related to the settlement with a taxing authority as noted above. The Company’s policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months. Net deferred income taxes were $30.8 million as of June 30, 2016, consisting primarily of federal net operating loss carryforwards and timing differences between book and tax. Because the Company had net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state, and foreign taxing authorities may examine the Company’s tax returns for all years from 1998 through the current period. The Company maintains a valuation allowance of $8.2 million against certain of its deferred tax assets, including federal, state, and certain foreign deferred tax assets. The Company has determined there is not sufficient evidence to support the release of the valuation allowance against these federal, state and foreign deferred tax assets. |
NET LOSS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET LOSS PER SHARE | NET LOSS PER SHARE Basic and diluted net loss per share is computed using the weighted average number of common shares outstanding for the period, excluding unvested restricted stock and RSUs. The following is a reconciliation of the numerators and denominators used in computing basic and diluted net loss per share for both continuing and dscontinued operations:
The Company includes the underlying market condition stock options in the calculation of diluted earnings per share if the performance condition has been satisfied as of the end of the reporting period and excludes such options if the performance condition has not been met. For the three months and six months ended June 30, 2015, options to purchase approximately 1.3 million and 2.1 million shares of common stock, respectively, with exercise prices greater than the average fair market value of the Company’s stock of $11.28 and $10.08 per share, respectively, were not included in the calculation because the effect would have been anti-dilutive. As of June 30, 2016, the Company had securities outstanding that could potentially dilute basic earnings per share in the future, but these were excluded from the computation of diluted net loss per share for three months and six months ended June 30, 2016, since their effect would have been anti-dilutive. These outstanding securities consisted of the following:
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CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES From time to time, the Company receives claims from third parties asserting that the Company’s technologies, or those of its licensees, infringe on the other parties’ IP rights. Management believes that these claims are without merit. Additionally, periodically, the Company is involved in routine legal matters and contractual disputes incidental to its normal operations. In management’s opinion, the resolution of such matters will not have a material adverse effect on the Company’s condensed consolidated financial condition, results of operations, or liquidity. In the normal course of business, the Company provides indemnification of varying scope to customers against claims of IP infringement made by third parties arising from the use of the Company’s IP, technology, or products. Historically, costs related to these guarantees have not been significant, and the Company is unable to estimate the maximum potential impact of these guarantees on its future results of operations. |
SUBSEQUENT EVENT |
6 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT On July 12, 2016, the Company, together with Immersion Software Ireland Limited, an Irish company and a wholly owned subsidiary of the Company, entered into an Amendment No. 4 (the “Amendment”) to Amended and Restated License Agreement (the “Agreement”) with Samsung Electronics Co., Ltd., a South Korean Corporation (“Samsung”). Pursuant to the Agreement, the parties agreed to amend Section 13.4(c) relating to the Product Life Cycle Wind-Down Rights (as defined in the Agreement) to permit Samsung to exercise the Product Life Cycle Wind-Down Rights for $19.0 million. The parties also agreed to terminate the arbitration proceedings relating to the Product Life Cycle Wind-Down Rights and to mutual releases regarding a variety of other matters. The Company also agreed not to bring any judicial, administrative or other action against Samsung relating to the Amendment or patent infringement for a period of time. The Company received a payment under this Agreement for $19.0 million in July 2016 and plans to recognize it as license revenue during the three months ended September 30, 2016. |
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Jun. 30, 2016 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Description of Business | Immersion Corporation (the “Company”) was incorporated in 1993 in California and reincorporated in Delaware in 1999. The Company focuses on the creation, design, development, and licensing of innovative haptic technologies that allow people to use their sense of touch more fully as they engage with cutting-edge products and experience the digital world around them. The Company has adopted a “hybrid” business model, under which it provides advanced tactile software, related tools, and technical assistance to certain customers; and offers licenses to the Company's patented intellectual property (“IP”) to other customers. |
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Principles of Consolidation and Basis of Presentation | The condensed consolidated financial statements include the accounts of Immersion Corporation and its wholly-owned subsidiaries: Immersion Canada Corporation; Immersion International, LLC; Immersion Medical, Inc.; Immersion Japan K.K.; Immersion Ltd.; Immersion Software Ireland Ltd.; Haptify, Inc.; Immersion (Shanghai) Science & Technology Company, Ltd.; and Immersion Technology International Ltd. All intercompany accounts, transactions, and balances have been eliminated in consolidation. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows, in conformity with GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2015. In the opinion of management, all adjustments consisting of only normal and recurring items necessary for the fair presentation of the financial position and results of operations for the interim periods presented have been included. The results of operations for the three months and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year. |
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Segment Information | The Company develops, licenses, and supports a wide range of software and IP that more fully engage users’ sense of touch when operating digital devices. The Company focuses on the following target application areas: mobility and consumer electronics, automotive, gaming, commercial and industrial, and medical. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM allocates resources to and assesses the performance of the Company using information about its financial results as one operating and reporting segment. |
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Revenue Recognition | The Company recognizes revenues in accordance with applicable accounting standards, including ASC 605-10-S99, “Revenue Recognition” (“ASC 605-10-S99”); ASC 605-25, “Multiple Element Arrangements” (“ASC 605-25”); and ASC 985-605, “Software-Revenue Recognition” (“ASC 985-605”). The Company derives its revenues from two principal sources: royalty and license fees, and development contract and service fees. As described below, management judgments, assumptions, and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of revenue for any period based on the judgments and estimates made by management. Specifically, in connection with each transaction, the Company must evaluate whether: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) collectibility is probable. The Company applies these criteria as discussed below.
Royalty and license revenue — The Company licenses its patents and software to customers in a variety of industries such as mobility, gaming, automotive, and medical devices. Certain of these are variable fee arrangements where the royalties earned by the Company are based on unit or sales volumes of the respective licensees. The Company also enters into fixed license fee arrangements. The terms of the royalty agreements generally require licensees to give notification of royalties due to the Company within 30 – 45 days of the end of the quarter during which their related sales occur. As the Company is unable to reliably estimate the licensees’ sales in any given quarter to determine the royalties due to it, the Company recognizes royalty revenues based on royalties reported by licensees and when all revenue recognition criteria are met. Certain royalties are based upon customer shipments or revenues and could be subject to change and may result in out of period adjustments. The Company recognizes fixed license fee revenue for licenses when earned under the terms of the agreements, which is generally recognized on a straight-line basis over the expected term of the license. Development, services, and other revenue — Development, services, and other revenue are composed of engineering services (engineering services and/or development contracts), and in limited cases, post contract customer support (“PCS”). Engineering services revenues are recognized under the proportional performance accounting method based on physical completion of the work to be performed or completed performance method. A provision for losses on contracts is made, if necessary, in the period in which the loss becomes probable and can be reasonably estimated. Revisions in estimates are reflected in the period in which the conditions become known. To date, such losses have not been significant. Revenue from PCS is typically recognized over the period of the ongoing obligation, which is generally consistent with the contractual term. Multiple element arrangements — The Company enters into multiple element arrangements in which customers purchase time-based non-exclusive licenses that cannot be resold to others, which include a combination of software and/or IP licenses, engineering services, and in limited cases PCS. For arrangements that are software based and include software and engineering services, the services are generally not essential to the functionality of the software, and customers may purchase engineering services to facilitate the adoption of the Company’s technology, but they may also decide to use their own resources or appoint other engineering service organizations to perform these services. For arrangements that are in substance subscription arrangements, the entire arrangement fee is recognized ratably over the contract term, subject to any limitations related to extended payment terms. For arrangements involving upfront fees for services and royalties earned by the Company based on unit or sales volumes of the respective licensees, and the services are performed ratably over the arrangement or are front-end loaded, the upfront fees are recognized ratably over the contract term and royalties based on unit or sales volume are recognized when they become fixed and determinable. As the Company is unable to reliably estimate the licensees’ sales in any given quarter to determine the royalties due to it, the Company recognizes per unit or sales volume driven royalty revenues based on royalties reported by licensees and when all revenue recognition criteria are met. |
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Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers: Topic 606” (“ASU 2014-09”) which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers: Deferral of the Effective Date”, which deferred the effective date of ASU 2014-09 for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. In April 2016, the FASB issued ASU 2016-10 "Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing" ("ASU 2016-10"), which further provides additional updates to revenue recognition guidance relating to performance obligations and accounting for licensing revenue. In May 2016, the FASB issued ASU 2016-12 "Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical Expedients" ("ASU 2016-12") which further provides updates to revenue recognition guidance relating to scope and practical expedients for revenue recognition. Accordingly, ASU 2014-09, ASU 2016-10, and ASU 2016-12 are effective for the Company and are expected to be adopted in the first quarter of fiscal 2018. These standards permit companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption through a cumulative adjustment. The Company is in the process of determining the method of adoption and evaluating the impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases: Topic 842” (“ASU 2016-02”), which supersedes the existing guidance for lease accounting in Topic 840, Leases. The FASB issued the ASU to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments of this ASU are effective for periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the impact of this standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09 “Compensation - Stock Compensation: Topic 718” (“ASU 2016-09”) which simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification in the statement of cash flows. The standard is effective for periods beginning after December 15, 2016, with early adoption permitted. The Company is currently in the process of evaluating the impact of this standard on its consolidated financial statements. |
FAIR VALUE MEASUREMENTS (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial instruments measured at fair value on recurring basis | Financial instruments measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 are classified based on the valuation technique in the table below:
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Schedule of short-term investments | Short-term Investments
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ACCOUNTS AND OTHER RECEIVABLES (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts and other receivables |
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PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment |
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INTANGIBLES AND OTHER ASSETS (Tables) |
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Intangibles And Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangibles and other assets |
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OTHER CURRENT LIABILITIES (Tables) |
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Other Liabilities, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of other current liabilities | OTHER CURRENT LIABILITIES
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LONG-TERM DEFERRED REVENUE (Tables) |
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Deferred Revenue Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term deferred revenue | Long-term deferred revenue consisted of the following:
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STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock options and awards |
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Schedule of employee stock purchase plan | The intrinsic value listed below is calculated as the difference between the market value on the date of purchase and the purchase price of the shares.
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Schedule of standard and market-based stock options activity | The following table sets forth the summary of activity with respect to standard stock options granted under the Company’s stock option plans for the six months ended June 30, 2016:
The following table sets forth activity with respect to market condition based stock options granted under the Company’s stock option plans for the six months ended June 30, 2016:
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Schedule of information regarding standard and market condition based stock options outstanding | Information regarding these market condition based stock options outstanding at June 30, 2016 is summarized below:
Information regarding these standard stock options outstanding at June 30, 2016 is summarized below:
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Schedule of restricted stock units activity | RSU activity for the six months ended June 30, 2016 was as follows:
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Schedule of information regarding restricted stock units outstanding | Information regarding RSUs outstanding at June 30, 2016 is summarized below:
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Schedule of restricted stock awards activity | Restricted stock award activity for the six months ended June 30, 2016 was as follows:
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Schedule of stock options, market condition based stock options and employee stock purchase plan, valuation assumptions | The assumptions used to value option grants under the Company’s stock plans were as follows:
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Schedule of stock-based compensation | Total stock-based compensation recognized in the condensed consolidated statements of operations and comprehensive loss is as follows:
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STOCKHOLDERS' EQUITY (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in accumulated other comprehensive income | The changes in accumulated other comprehensive income are included in the table below.
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INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax provisions | Income tax provisions consisted of the following:
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NET LOSS PER SHARE (Tables) |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation used in Computing Basic and Diluted Net Income (Loss) per Share | The following is a reconciliation of the numerators and denominators used in computing basic and diluted net loss per share for both continuing and dscontinued operations:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | These outstanding securities consisted of the following:
|
SIGNIFICANT ACCOUNTING POLICIES - ADDITIONAL INFORMATION (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2016
Segment
| |
Accounting Policies [Abstract] | |
Number of reporting segments | 1 |
Number of operating segments | 1 |
Period of royalties notification, minimum | 30 days |
Period of royalties notification, maximum | 45 days |
FAIR VALUE MEASUREMENTS - SCHEDULE OF SHORT-TERM INVESTMENTS (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term investments, amortized cost | $ 35,892 | $ 39,933 |
Short-term investments, gross unrealized holding gains | 40 | 0 |
Short-term investments, gross unrealized holding losses | 0 | (15) |
Short-term investments, fair value | 35,932 | 39,918 |
U.S. Treasury securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Short-term investments, amortized cost | 35,892 | 39,933 |
Short-term investments, gross unrealized holding gains | 40 | 0 |
Short-term investments, gross unrealized holding losses | 0 | (15) |
Short-term investments, fair value | $ 35,932 | $ 39,918 |
FAIR VALUE MEASUREMENTS - ADDITIONAL INFORMATION (Detail) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Fair Value Disclosures [Abstract] | ||
Cash held in banks | $ 14,300,000 | $ 11,000,000 |
Period for contractual maturities of the Company's available-for-sale securities | 1 year | 1 year |
Fair value assets, Level 1 to Level 2 | $ 0 | $ 0 |
Fair value assets, Level 2 to Level 1 | 0 | 0 |
Fair value liabilities, Level 1 to Level 2 | 0 | 0 |
Fair value liabilities, Level 2 to Level 1 | $ 0 | $ 0 |
ACCOUNTS AND OTHER RECEIVABLES - SCHEDULE OF ACCOUNTS AND OTHER RECEIVABLES (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Trade accounts receivable | $ 1,196 | $ 935 |
Receivables from vendors and other | 475 | 278 |
Accounts and other receivables | $ 1,671 | $ 1,213 |
PROPERTY AND EQUIPMENT - SCHEDULE OF PROPERTY AND EQUIPMENT (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property and equipment, total | $ 9,776 | $ 9,686 |
Less accumulated depreciation | (5,535) | (5,097) |
Property and equipment, net | 4,241 | 4,589 |
Computer equipment and purchased software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, total | 3,620 | 3,564 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, total | 943 | 923 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, total | 1,375 | 1,361 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, total | $ 3,838 | $ 3,838 |
INTANGIBLES AND OTHER ASSETS - SCHEDULE OF INTANGIBLES AND OTHER ASSETS (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Other assets | $ 288 | $ 288 | $ 258 | ||
Intangibles and other assets, net | 289 | $ 289 | 264 | ||
Intangible asset - useful life | 10 years | ||||
Amortization of intangibles | 2 | $ 3 | $ 5 | $ 15 | |
Net book value of purchased patents | 1 | 1 | |||
Purchased patents and other purchased intangibles | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Purchased patents and other purchased intangible assets | 4,605 | 4,605 | 4,605 | ||
Less: Accumulated amortization of purchased patents and other purchased intangibles | (4,604) | (4,604) | (4,599) | ||
Purchased patents and other purchased intangible assets, net | $ 1 | $ 1 | $ 6 |
OTHER CURRENT LIABILITIES (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Other Liabilities, Current [Abstract] | ||
Accrued legal | $ 2,268 | $ 1,458 |
Accrued services | 330 | 849 |
Income taxes payable | 305 | 129 |
Other current liabilities | 600 | 563 |
Total other current liabilities | $ 3,503 | $ 2,999 |
LONG-TERM DEFERRED REVENUE - SCHEDULE OF LONG-TERM DEFERRED REVENUE (Detail) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred Revenue Disclosure [Abstract] | ||
Deferred revenue for Sony Computer Entertainment | $ 0 | $ 1,263 |
Other deferred revenue | 1,416 | 1,253 |
Long-term deferred revenue | $ 1,416 | $ 2,516 |
STOCK-BASED COMPENSATION - SCHEDULE OF STOCK OPTIONS AND AWARDS (Detail) - shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock shares available for grant | 653,077 | |
Outstanding stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Standard and market condition stock options outstanding (in shares) | 3,521,481 | |
Unvested restricted stock awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 77,540 | 21,356 |
Unvested RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock outstanding (in shares) | 510,234 | 487,117 |
STOCK-BASED COMPENSATION - SCHEDULE OF EMPLOYEE STOCK PURCHASE PLAN (Detail) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares purchased under ESPP (in shares) | 17,711 | 23,713 |
Average price of shares purchased under ESPP (in dollars per share) | $ 7.21 | |
Intrinsic value of shares purchased under ESPP | $ 23 |
STOCK-BASED COMPENSATION - SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY (Detail) - Unvested RSUs - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Restricted stock outstanding (in shares) | 510,234 | 487,117 |
Awarded (in shares) | 295,880 | |
Released (in shares) | (214,222) | |
Forfeited (in shares) | (58,541) | |
Ending outstanding balance (in shares) | 510,234 | |
Weighted average grant date fair value of RSUs granted (in dollars per share) | $ 8.85 | |
Total fair value of RSUs released (in dollars) | $ 1,806 |
STOCK-BASED COMPENSATION - SCHEDULE OF INFORMATION REGARDING RESTRICTED STOCK UNITS OUTSTANDING (Detail) - Unvested RSUs - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RSUs outstanding, number (in shares) | 510,234 | 487,117 |
RSUs vested and expected to vest using estimated forfeiture rates, number (in shares) | 385,983 | |
RSUs outstanding, Weighted Average Remaining Contractual Life (years) | 1 year 4 months 13 days | |
RSUs vested and expected to vest using estimated forfeiture rates, Weighted Average Remaining Contractual Life (years) | 1 year 3 months | |
RSUs outstanding, aggregate intrinsic value (in dollars) | $ 3.7 | |
RSUs vested and expected to vest using estimated forfeiture rates, aggregate intrinsic value (in dollars) | $ 2.8 |
STOCK-BASED COMPENSATION - SCHEDULE OF RESTRICTED STOCK AWARDS ACTIVITY (Detail) - Unvested restricted stock awards $ / shares in Units, $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Restricted stock outstanding (in shares) | 21,356 |
Awarded (in shares) | 77,540 |
Released (in shares) | (21,356) |
Forfeited (in shares) | 0 |
Ending outstanding balance (in shares) | 77,540 |
Weighted average grant date fair value of restricted stock awarded (in dollars per share) | $ / shares | $ 6.52 |
Total fair value of restricted stock awards released (in dollars) | $ | $ 139 |
STOCK-BASED COMPENSATION - SCHEDULE OF STOCK OPTIONS, MARKET CONDITION BASED STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN VALUATION ASSUMPTIONS (Detail) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 6 months | 6 months | ||
Volatility | 53.00% | 45.00% | ||
Interest rate | 0.50% | 0.10% | ||
Standard Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 4 years 6 months | 4 years 7 months 6 days | 4 years 6 months | 4 years 8 months 12 days |
Volatility | 55.00% | 55.00% | 55.00% | 56.00% |
Interest rate | 1.10% | 1.40% | 1.20% | 1.40% |
Market Condition Based Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected life (in years) | 7 years | 7 years | ||
Volatility | 59.00% | 65.00% | ||
Interest rate | 1.60% | 1.90% |
STOCK-BASED COMPENSATION - SCHEDULE OF STOCK-BASED COMPENSATION (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation, total | $ 1,255 | $ 1,229 | $ 3,589 | $ 2,969 |
Sales and marketing | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation, total | 332 | 288 | 560 | 552 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation, total | 258 | 264 | 784 | 760 |
General and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Share-based compensation, total | $ 665 | $ 677 | $ 2,245 | $ 1,657 |
STOCKHOLDERS' EQUITY - ADDITIONAL INFORMATION (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Oct. 22, 2014 |
Nov. 01, 2007 |
|
Equity [Abstract] | ||||||
Stock repurchase program, additional authorized amount | $ 30,000,000 | $ 50,000,000 | ||||
Repurchased shares | 0 | 0 | 0 | 0 | ||
Stock repurchase program, remaining available repurchase amount | $ 34,400,000 | $ 34,400,000 |
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2009 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Discontinued Operations and Disposal Groups [Abstract] | |||||
Income from discontinued operations | $ 187 | ||||
Disposal group, including discontinued operation, consideration | 2,700 | ||||
Disposal group, including discontinued operation, cash and cash equivalents | 320 | ||||
Disposal group, including discontinued operation, accounts, notes and loans receivable, net | $ 2,400 | ||||
Proceeds from discontinued operations | $ 1,000 | $ 0 | |||
Income from discontinued operations | $ 649 | $ 0 | 649 | $ 0 | |
Discontinued operation, tax effect of discontinued operation | $ 351 |
INCOME TAXES - SCHEDULE OF INCOME TAX PROVISIONS (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income (loss) from continuing operations before benefit (provision) for income taxes | $ (9,528) | $ 2,263 | $ (13,924) | $ 2,168 |
Benefit (provision) for income taxes | $ 3,323 | $ (668) | $ 5,024 | $ (632) |
Effective tax rate (in percent) | 34.90% | 29.50% | 36.10% | 29.20% |
INCOME TAXES - ADDITIONAL INFORMATION (Detail) |
3 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 6,200,000 |
Unrecognized tax benefits, interest | 0 |
Unrecognized tax benefits that would affect the Company's effective tax rate | 2,900,000 |
Unrecognized tax benefits released | 310,000 |
Net deferred income taxes | 30,800,000 |
Valuation allowance of deferred tax assets | $ 8,200,000 |
SUBSEQUENT EVENT SUBSEQUENT EVENT (Details) - Product Life Cycle Wind-Down Rights - Subsequent event - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Jul. 31, 2016 |
Jul. 12, 2016 |
|
Subsequent Event [Line Items] | ||
Indefinite-lived license agreements | $ 19.0 | |
Deferred revenue, Current | $ 19.0 |
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