Delaware | 81-4465732 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
3025 Orchard Parkway, San Jose, California | 95134 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common stock, par value $0.001 per share | The NASDAQ Global Select Market |
Page | ||
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (33,017 | ) | $ | (11,029 | ) | |
Adjustments to reconcile net loss to net cash from operating activities: | |||||||
Depreciation of property and equipment | 1,775 | 1,834 | |||||
Amortization of intangible assets | 27,166 | 28,554 | |||||
Stock-based compensation expense | 7,408 | 7,081 | |||||
Deferred income tax | (6,743 | ) | (37,950 | ) | |||
Amortization of premium or discount on investments and other | 1,012 | 87 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (7,059 | ) | (7,132 | ) | |||
Unbilled contracts receivable, net | 31,123 | 30,620 | |||||
Other assets | (770 | ) | 6,575 | ||||
Accounts payable | (609 | ) | (3,292 | ) | |||
Accrued legal fees | (787 | ) | 1,499 | ||||
Accrued and other liabilities | (17,543 | ) | 183 | ||||
Deferred revenue | 2,694 | 1,932 | |||||
Net cash from operating activities | 4,650 | 18,962 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (768 | ) | (565 | ) | |||
Purchases of short-term investments | — | (11,493 | ) | ||||
Proceeds from sales of short-term investments | 8,540 | 1,035 | |||||
Proceeds from maturities of short-term investments | 7,800 | 4,650 | |||||
Net cash from investing activities | 15,572 | (6,373 | ) | ||||
Cash flows from financing activities: | |||||||
Dividend paid | (9,886 | ) | (9,843 | ) | |||
Repayment of debt | (100,000 | ) | (1,500 | ) | |||
Proceeds from exercise of stock options | 829 | 4,241 | |||||
Proceeds from employee stock purchase program | 3,402 | 1,155 | |||||
Repurchase of common stock | (17,861 | ) | (3,251 | ) | |||
Net cash from financing activities | (123,516 | ) | (9,198 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | (103,294 | ) | 3,391 | ||||
Cash and cash equivalents at beginning of period | 138,260 | 65,626 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 34,966 | $ | 69,017 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid | $ | 5,650 | $ | 8,100 | |||
Income taxes paid, net of refunds | $ | 3,963 | $ | 3,040 |
March 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 34,966 | $ | 138,260 | |||
Short-term investments | 45,824 | 62,432 | |||||
Accounts receivable, net | 23,107 | 17,010 | |||||
Unbilled contracts receivable | 204,765 | 10,866 | |||||
Other current assets | 17,364 | 16,949 | |||||
Total current assets | 326,026 | 245,517 | |||||
Long-term unbilled contracts receivable | 71,331 | 2,930 | |||||
Property and equipment, net | 33,423 | 34,442 | |||||
Intangible assets, net | 404,623 | 431,789 | |||||
Goodwill | 385,574 | 385,574 | |||||
Other assets | 5,383 | 9,772 | |||||
Total assets | $ | 1,226,360 | $ | 1,110,024 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 3,624 | $ | 4,233 | |||
Accrued legal fees | 6,696 | 7,483 | |||||
Accrued liabilities | 30,785 | 47,969 | |||||
Current portion of long-term debt | — | 34,451 | |||||
Deferred revenue | 4,597 | 2,686 | |||||
Total current liabilities | 45,702 | 96,822 | |||||
Long-term deferred tax liabilities | 72,564 | 15,085 | |||||
Long-term debt, net | 480,330 | 545,211 | |||||
Other long-term liabilities | 17,403 | 17,330 | |||||
Commitments and contingencies (Note 13) | |||||||
Stockholders’ equity: | |||||||
Preferred stock: $0.001 par value; 10,000 shares authorized and no shares issued and outstanding | — | — | |||||
Common stock: $0.001 par value; 150,000 shares authorized; 61,509 and 60,608 shares issued, respectively, and 49,225 and 49,103 shares outstanding, respectively | 61 | 60 | |||||
Additional paid-in capital | 698,297 | 686,660 | |||||
Treasury stock at cost: 12,284 and 11,505 shares of common stock at each period end, respectively | (337,258 | ) | (319,397 | ) | |||
Accumulated other comprehensive loss | (520 | ) | (303 | ) | |||
Retained earnings | 249,781 | 68,556 | |||||
Total stockholders’ equity | 610,361 | 435,576 | |||||
Total liabilities and stockholders’ equity | $ | 1,226,360 | $ | 1,110,024 |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Revenue: | |||||||
Royalty and license fees | $ | 65,532 | $ | 67,255 | |||
Total revenue | 65,532 | 67,255 | |||||
Operating expenses: | |||||||
Cost of revenue | 2,324 | 1,400 | |||||
Research, development and other related costs | 26,515 | 26,012 | |||||
Selling, general and administrative | 34,702 | 41,205 | |||||
Amortization expense | 27,166 | 28,555 | |||||
Litigation expense | 7,316 | 9,978 | |||||
Total operating expenses | 98,023 | 107,150 | |||||
Operating loss | (32,491 | ) | (39,895 | ) | |||
Interest expense | (6,318 | ) | (6,459 | ) | |||
Other income and expense, net | 3,154 | 46 | |||||
Loss before taxes | (35,655 | ) | (46,308 | ) | |||
Benefit from income taxes | (2,638 | ) | (35,279 | ) | |||
Net loss | $ | (33,017 | ) | $ | (11,029 | ) | |
Basic and diluted net loss per share: | |||||||
Basic | $ | (0.67 | ) | $ | (0.22 | ) | |
Diluted | $ | (0.67 | ) | $ | (0.22 | ) | |
Cash dividends declared per share | $ | 0.20 | $ | 0.20 | |||
Weighted average number of shares used in per share calculations-basic | 49,302 | 49,139 | |||||
Weighted average number of shares used in per share calculations-diluted | 49,302 | 49,139 |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Net loss | $ | (33,017 | ) | $ | (11,029 | ) | |
Other comprehensive income (loss): | |||||||
Net unrealized gains (losses) on available-for-sale securities, net of tax | (217 | ) | 38 | ||||
Other comprehensive income (loss) | (217 | ) | 38 | ||||
Comprehensive loss | $ | (33,234 | ) | $ | (10,991 | ) |
BALANCE SHEET | Balance at December 31, 2017 | Adjustments due to Topic 606 | Balance at January 1, 2018 | ||||||||
Assets | |||||||||||
Unbilled contracts receivable | $ | 10,866 | $ | 188,760 | $ | 199,626 | |||||
Other current assets | 16,949 | (2,000 | ) | 14,949 | |||||||
Long-term unbilled contracts receivable | 2,930 | 105,193 | 108,123 | ||||||||
Other assets | 9,772 | (3,656 | ) | 6,116 | |||||||
Liabilities | |||||||||||
Accrued liabilities | 47,969 | 432 | 48,401 | ||||||||
Deferred revenue | 2,686 | (783 | ) | 1,903 | |||||||
Long-term deferred tax liabilities | 15,085 | 64,520 | 79,605 | ||||||||
Equity | |||||||||||
Retained earnings | 68,556 | 224,128 | 292,684 |
Three months ended March 31, 2018 | |||||||||||
STATEMENT OF OPERATIONS | As Reported | Amounts under Topic 605 | Effect of Change Higher/(lower) | ||||||||
Royalty and license fees | $ | 65,532 | $ | 96,160 | $ | (30,628 | ) | ||||
Cost of revenue | 2,324 | 2,099 | 225 | ||||||||
Operating loss | (32,491 | ) | (1,638 | ) | (30,853 | ) | |||||
Other income and expense, net | 3,154 | 1,003 | 2,151 | ||||||||
Loss before taxes | (35,655 | ) | (6,953 | ) | (28,702 | ) | |||||
Provision for (benefit from) income taxes | (2,638 | ) | 2,250 | (4,888 | ) | ||||||
Net loss | (33,017 | ) | (9,203 | ) | (23,814 | ) | |||||
Basic/Diluted net loss per share | $ | (0.67 | ) | $ | (0.19 | ) | $ | (0.48 | ) |
As of March 31, 2018 | |||||||||||
BALANCE SHEET | As Reported | Amounts under Topic 605 | Effect of Change Higher/(lower) | ||||||||
Assets | |||||||||||
Unbilled contracts receivable | $ | 204,765 | $ | 10,340 | $ | 194,425 | |||||
Other current assets | 17,364 | 19,114 | (1,750 | ) | |||||||
Long-term unbilled contracts receivable | 71,331 | 2,488 | 68,843 | ||||||||
Other assets | 5,383 | 7,571 | (2,188 | ) | |||||||
Liabilities | |||||||||||
Accrued liabilities | 30,785 | 30,687 | 98 | ||||||||
Deferred revenue | 4,597 | 5,636 | (1,039 | ) | |||||||
Long-term deferred tax liabilities | 72,564 | 12,610 | 59,954 | ||||||||
Equity | |||||||||||
Retained earnings | 249,781 | 49,464 | 200,317 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
Revenue recognized in the period from: | |||||||
Amounts included in deferred revenue at the beginning of the period | $ | 353 | $ | 236 | |||
Performance obligations satisfied in previous periods (true ups or settlements) | — | — |
As of | |||||||
March 31, 2018 | December 31, 2017 | ||||||
Revenue from contracts with performance obligations expected to be satisfied in: | |||||||
One year or less | $ | 4,442 | $ | 2,440 | |||
More than one year but less than two years | 175 | 149 | |||||
More than two years | 274 | 240 | |||||
Total | $ | 4,891 | $ | 2,829 |
March 31, 2018 | December 31, 2017 | ||||||
Prepaid income taxes | $ | 6,609 | $ | 6,713 | |||
Prepaid expenses | 7,009 | 6,655 | |||||
Other | 3,746 | 3,581 | |||||
$ | 17,364 | $ | 16,949 |
March 31, 2018 | December 31, 2017 | ||||||
Equipment, furniture and other | $ | 26,735 | $ | 26,029 | |||
Building and improvements | 18,222 | 18,222 | |||||
Land | 5,300 | 5,300 | |||||
Leasehold improvements | 6,437 | 6,469 | |||||
56,694 | 56,020 | ||||||
Less: accumulated depreciation and amortization | (23,271 | ) | (21,578 | ) | |||
$ | 33,423 | $ | 34,442 |
March 31, 2018 | December 31, 2017 | ||||||
Employee compensation and benefits | $ | 21,093 | $ | 37,056 | |||
Other | 9,692 | 10,913 | |||||
$ | 30,785 | $ | 47,969 |
March 31, 2018 | December 31, 2017 | ||||||
Unrealized loss on available-for-sale securities, net of tax | $ | (520 | ) | $ | (303 | ) | |
$ | (520 | ) | $ | (303 | ) |
For the three months ended, | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Interest income from significant financing components under Topic 606 | $ | 2,151 | $ | — | |||
Interest income from investments | 250 | 213 | |||||
Other income (losses) | 753 | (167 | ) | ||||
$ | 3,154 | $ | 46 |
March 31, 2018 | |||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Values | ||||||||||||
Available-for-sale securities | |||||||||||||||
Corporate bonds and notes | $ | 37,945 | $ | — | $ | (441 | ) | $ | 37,504 | ||||||
Commercial paper | 2,399 | — | — | 2,399 | |||||||||||
Treasury and agency notes and bills | 6,000 | — | (79 | ) | 5,921 | ||||||||||
Money market funds | 2,124 | — | — | 2,124 | |||||||||||
Total available-for-sale securities | $ | 48,468 | $ | — | $ | (520 | ) | $ | 47,948 | ||||||
Reported in: | |||||||||||||||
Cash and cash equivalents | $ | 2,124 | |||||||||||||
Short-term investments | 45,824 | ||||||||||||||
Total marketable securities | $ | 47,948 |
December 31, 2017 | |||||||||||||||
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Values | ||||||||||||
Available-for-sale securities | |||||||||||||||
Corporate bonds and notes | $ | 45,803 | $ | — | $ | (230 | ) | $ | 45,573 | ||||||
Commercial paper | 2,392 | — | (2 | ) | 2,390 | ||||||||||
Treasury and agency notes and bills | 6,000 | — | (71 | ) | 5,929 | ||||||||||
Certificates of deposit | 8,540 | — | — | 8,540 | |||||||||||
Money market funds | 40,413 | — | — | 40,413 | |||||||||||
Total available-for-sale securities | $ | 103,148 | $ | — | $ | (303 | ) | $ | 102,845 | ||||||
Reported in: | |||||||||||||||
Cash and cash equivalents | $ | 40,413 | |||||||||||||
Short-term investments | 62,432 | ||||||||||||||
Total marketable securities | $ | 102,845 |
March 31, 2018 | Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Corporate bonds and notes | $ | 30,557 | $ | (401 | ) | $ | 6,947 | $ | (40 | ) | $ | 37,504 | $ | (441 | ) | ||||||||
Treasury and agency notes and bills | — | — | 5,921 | (79 | ) | 5,921 | (79 | ) | |||||||||||||||
Total | $ | 30,557 | $ | (401 | ) | $ | 12,868 | $ | (119 | ) | $ | 43,425 | $ | (520 | ) |
December 31, 2017 | Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Corporate bonds and notes | $ | 30,811 | $ | (189 | ) | $ | 14,762 | $ | (41 | ) | $ | 45,573 | $ | (230 | ) | ||||||||
Commercial paper | 2,390 | (2 | ) | — | — | 2,390 | (2 | ) | |||||||||||||||
Treasury and agency notes and bills | — | — | 5,929 | (71 | ) | 5,929 | (71 | ) | |||||||||||||||
Total | $ | 33,201 | $ | (191 | ) | $ | 20,691 | $ | (112 | ) | $ | 53,892 | $ | (303 | ) |
Estimated Fair Value | |||
Due in one year or less | $ | 19,224 | |
Due in one to two years | 19,070 | ||
Due in two to three years | 9,654 | ||
Total | $ | 47,948 |
Level 1 | Quoted prices in active markets for identical assets. | |
Level 2 | Observable market-based inputs or unobservable inputs that are corroborated by market data. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | |||||||||||||||
Marketable securities | |||||||||||||||
Money market funds (1) | $ | 2,124 | $ | 2,124 | $ | — | $ | — | |||||||
Corporate bonds and notes (2) | 37,504 | — | 37,504 | — | |||||||||||
Treasury and agency notes and bills (2) | 5,921 | — | 5,921 | — | |||||||||||
Commercial paper (2) | 2,399 | — | 2,399 | — | |||||||||||
Total Assets | $ | 47,948 | $ | 2,124 | $ | 45,824 | $ | — |
(1) | Reported as cash and cash equivalents. |
(2) | Reported as short-term investments. |
Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets | |||||||||||||||
Marketable securities | |||||||||||||||
Money market funds (1) | $ | 40,413 | $ | 40,413 | $ | — | $ | — | |||||||
Certificates of deposit (2) | 8,540 | — | 8,540 | — | |||||||||||
Corporate bonds and notes (2) | 45,573 | — | 45,573 | — | |||||||||||
Treasury and agency notes and bills (2) | 5,929 | — | 5,929 | — | |||||||||||
Commercial paper (2) | 2,390 | — | 2,390 | — | |||||||||||
Total Assets | $ | 102,845 | $ | 40,413 | $ | 62,432 | $ | — |
(1) | Reported as cash and cash equivalents. |
(2) | Reported as short-term investments. |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||
Average Life (Years) | Gross Assets | Accumulated Amortization | Net | Gross Assets | Accumulated Amortization | Net | |||||||||||||||||||
Acquired patents / core technology | 3-15 | $ | 142,584 | $ | (117,314 | ) | $ | 25,270 | $ | 142,584 | $ | (113,349 | ) | $ | 29,235 | ||||||||||
Existing technology | 5-10 | 204,394 | (70,085 | ) | 134,309 | 204,394 | (61,518 | ) | 142,876 | ||||||||||||||||
Customer contracts and related relationships | 3-9 | 291,769 | (81,658 | ) | 210,111 | 291,769 | (68,267 | ) | 223,502 | ||||||||||||||||
Trademarks/trade name | 4-10 | 40,083 | (7,354 | ) | 32,729 | 40,083 | (6,111 | ) | 33,972 | ||||||||||||||||
Non-competition agreements | 1 | 2,231 | (2,231 | ) | — | 2,231 | (2,231 | ) | — | ||||||||||||||||
Total amortizable intangible assets | 681,061 | (278,642 | ) | 402,419 | 681,061 | (251,476 | ) | 429,585 | |||||||||||||||||
In-process research and development | 2,204 | — | 2,204 | 2,204 | — | 2,204 | |||||||||||||||||||
Total intangible assets | $ | 683,265 | $ | (278,642 | ) | $ | 404,623 | $ | 683,265 | $ | (251,476 | ) | $ | 431,789 |
2018 (remaining 9 months) | $ | 80,775 | |
2019 | 98,855 | ||
2020 | 87,140 | ||
2021 | 79,478 | ||
2022 | 31,173 | ||
Thereafter | 24,998 | ||
$ | 402,419 |
2018 (remaining 9 months) | $ | — | |
2019 | — | ||
2020 | — | ||
2021 | — | ||
2022 | — | ||
Thereafter | 494,000 | ||
Total | $ | 494,000 |
Three Months Ended | |||||
March 31, 2018 | March 31, 2017 | ||||
Denominator: | |||||
Weighted average common shares outstanding | 49,302 | 49,144 | |||
Less: shares of restricted stock subject to repurchase | — | (5 | ) | ||
Total common shares-basic | 49,302 | 49,139 | |||
Effect of dilutive securities: | |||||
Options | — | — | |||
Restricted stock awards and units | — | — | |||
Total common shares-diluted | 49,302 | 49,139 |
Options Outstanding | ||||
Number of Shares Subject to Options | Weighted Average Exercise Price Per Share | |||
Balance at December 31, 2017 | 1,172 | $24.06 | ||
Options granted | — | — | ||
Options exercised | (45 | ) | $18.23 | |
Options canceled / forfeited / expired | (35 | ) | $34.58 | |
Balance at March 31, 2018 | 1,092 | $23.97 | ||
Restricted Stock and Restricted Stock Units | ||||||||||||
Number of Shares Subject to Time- based Vesting | Number of Shares Subject to Performance- based Vesting | Total Number of Shares | Weighted Average Grant Date Fair Value Per Share | |||||||||
Balance at December 31, 2017 | 2,014 | 1,119 | 3,133 | $ | 33.35 | |||||||
Awards and units granted | 683 | — | 683 | $ | 22.37 | |||||||
Awards and units vested / earned | (506 | ) | (171 | ) | (677 | ) | $ | 35.62 | ||||
Awards and units canceled / forfeited | (74 | ) | (227 | ) | (301 | ) | $ | 29.03 | ||||
Balance at March 31, 2018 | 2,117 | 721 | 2,838 | $ | 30.63 |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Research, development and other related costs | $ | 3,094 | $ | 2,870 | |||
Selling, general and administrative | 4,314 | 4,211 | |||||
Total stock-based compensation expense | 7,408 | 7,081 | |||||
Tax effect on stock-based compensation expense | (1,256 | ) | (2,019 | ) | |||
Net effect on net income (loss) | $ | 6,152 | $ | 5,062 |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Employee stock options | $ | 177 | $ | 645 | |||
Restricted stock awards and units | 6,432 | 6,006 | |||||
Employee stock purchase plan | 799 | 430 | |||||
Total stock-based compensation expense | $ | 7,408 | $ | 7,081 |
February 2018 | February 2017 | ||||||
Expected life (years) | 2.0 | 2.0 | |||||
Risk-free interest rate | 2.2 | % | 1.2 | % | |||
Dividend yield | 3.6 | % | 2.0 | % | |||
Expected volatility | 39.4 | % | 28.3 | % |
Three Months Ended, | ||||||||
March 31, 2018 | March 31, 2017 | |||||||
Revenue: | ||||||||
Product licensing segment | $ | 53,216 | $ | 27,701 | ||||
Semiconductor and IP licensing segment | 12,316 | 39,554 | ||||||
Total revenue | 65,532 | 67,255 | ||||||
Operating expenses: | ||||||||
Product licensing segment | 43,891 | 43,182 | ||||||
Semiconductor and IP licensing segment | 19,430 | 22,763 | ||||||
Unallocated operating expenses (1) | 34,702 | 41,205 | ||||||
Total operating expenses | 98,023 | 107,150 | ||||||
Operating income (loss): | ||||||||
Product licensing segment | 9,325 | (15,481 | ) | |||||
Semiconductor and IP licensing segment | (7,114 | ) | 16,791 | |||||
Unallocated operating expenses (1) | (34,702 | ) | (41,205 | ) | ||||
Total operating loss | $ | (32,491 | ) | $ | (39,895 | ) |
Three Months Ended, | |||||||||||||
March 31, 2018 | March 31, 2017 | ||||||||||||
Japan | $ | 19,345 | 30 | % | $ | 13,891 | 21 | % | |||||
Korea | 14,428 | 22 | 6,887 | 10 | |||||||||
China | 14,145 | 21 | 3,055 | 4 | |||||||||
U.S. | 11,628 | 18 | 33,405 | 50 | |||||||||
Taiwan | 531 | 1 | 7,991 | 12 | |||||||||
Other | 5,455 | 8 | 2,026 | 3 | |||||||||
$ | 65,532 | 100 | % | $ | 67,255 | 100 | % |
Three Months Ended | ||||||
March 31, 2018 | March 31, 2017 | |||||
Revenue: | ||||||
Royalty and license fees | 100 | % | 100 | % | ||
Total revenue | 100 | 100 | ||||
Operating expenses: | ||||||
Cost of revenue | 4 | 2 | ||||
Research, development and other related costs | 40 | 39 | ||||
Selling, general and administrative | 53 | 61 | ||||
Amortization expense | 41 | 42 | ||||
Litigation expense | 11 | 15 | ||||
Total operating expenses | 149 | 159 | ||||
Operating loss | (49 | ) | (59 | ) | ||
Interest expense | 10 | 9 | ||||
Other income and expense, net | (5 | ) | — | |||
Loss before taxes | (54 | ) | (68 | ) | ||
Benefit from income taxes | (4 | ) | (52 | ) | ||
Net loss | (50 | )% | (16 | )% |
Three Months Ended | ||||||||||||||
March 31, 2018 | March 31, 2017 | Increase/ (Decrease) | % Change | |||||||||||
Royalty and license fees | $ | 65,532 | $ | 67,255 | $ | (1,723 | ) | (3 | )% |
Three Months Ended, | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Research, development and other related costs | $ | 3,094 | $ | 2,870 | |||
Selling, general and administrative | 4,314 | 4,211 | |||||
Total stock-based compensation expense | $ | 7,408 | $ | 7,081 |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Revenue: | |||||||
Product licensing segment | $ | 53,216 | $ | 27,701 | |||
Semiconductor and IP licensing segment | 12,316 | 39,554 | |||||
Total revenue | 65,532 | 67,255 | |||||
Operating expenses: | |||||||
Product licensing segment | 43,891 | 43,182 | |||||
Semiconductor and IP licensing segment | 19,430 | 22,763 | |||||
Unallocated operating expenses (1) | 34,702 | 41,205 | |||||
Total operating expenses | 98,023 | 107,150 | |||||
Operating income (loss): | |||||||
Product licensing segment | 9,325 | (15,481 | ) | ||||
Semiconductor and IP licensing segment | (7,114 | ) | 16,791 | ||||
Unallocated operating expenses (1) | (34,702 | ) | (41,205 | ) | |||
Total operating loss | $ | (32,491 | ) | $ | (39,895 | ) |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Revenue: | |||||||
Royalty and license fees | $ | 53,216 | $ | 27,701 | |||
Total revenue | 53,216 | 27,701 | |||||
Operating expenses: | |||||||
Cost of revenue | 2,324 | 1,400 | |||||
Research, development and other related costs | 19,520 | 19,047 | |||||
Litigation | (3 | ) | — | ||||
Amortization | 22,050 | 22,735 | |||||
Total operating expenses | 43,891 | 43,182 | |||||
Total operating income (loss) | $ | 9,325 | $ | (15,481 | ) |
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Revenue: | |||||||
Royalty and license fees | $ | 12,316 | $ | 39,554 | |||
Total revenue | 12,316 | 39,554 | |||||
Operating expenses: | |||||||
Research, development and other related costs | 6,995 | 6,965 | |||||
Litigation | 7,319 | 9,979 | |||||
Amortization | 5,116 | 5,819 | |||||
Total operating expenses | 19,430 | 22,763 | |||||
Total operating income (loss) | $ | (7,114 | ) | $ | 16,791 |
As of | |||||||
(in thousands, except for percentages) | March 31, 2018 | December 31, 2017 | |||||
Cash and cash equivalents | $ | 34,966 | $ | 138,260 | |||
Short-term investments | 45,824 | 62,432 | |||||
Total cash, cash equivalents and short-term investments | $ | 80,790 | $ | 200,692 | |||
Percentage of total assets | 7 | % | 18 | % | |||
Three Months Ended | |||||||
March 31, 2018 | March 31, 2017 | ||||||
Net cash from operating activities | $ | 4,650 | $ | 18,962 | |||
Net cash from investing activities | $ | 15,572 | $ | (6,373 | ) | ||
Net cash from financing activities | $ | (123,516 | ) | $ | (9,198 | ) |
• | the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the automotive and surveillance industry; |
• | the willingness and ability of materials and equipment suppliers to produce materials and equipment that support our licensed technology, in a quantity sufficient to enable volume manufacturing; |
• | the ability of our customers to purchase such materials and equipment on a cost-effective and timely basis; |
• | the length of the design cycle and the ability of us and our customers to successfully integrate certain of our imaging technologies into their integrated circuits; |
• | the demand for products incorporating semiconductors that use our licensed technology; |
• | the cyclicality of supply and demand for products using our licensed technology; |
• | the impact of economic downturns; and |
• | the impact of poor financial performance of our customers. |
• | rapid technological change and product obsolescence; |
• | new and improved product introductions; |
• | changing consumer demands; |
• | increasingly competitive product landscape; and |
• | evolving industry standards. |
• | the number of radio stations broadcasting digitally using HD Radio technology; |
• | the willingness of automobile manufacturers to include HD Radio receivers in their vehicles; |
• | the willingness of manufacturers to incorporate HD Radio technology into their products; |
• | the cost and availability of HD Radio enabled products; and |
• | the marketing and pricing strategies that we employ and that are employed by our customers and retailers. |
• | internet streaming, cable-based audio programming and other digital audio broadcast formats; |
• | satellite delivered digital audio radio services that offer numerous programming channels; |
• | other digital radio competitors, such as Digital Radio Mondiale, or DAB; and |
• | growth in use of portable devices for storage and playback of audio content. |
• | changes in trade protection laws, policies and measures, and other regulatory requirements affecting trade and investment; |
• | regulatory requirements and prohibitions that differ between jurisdictions; |
• | laws and business practices favoring local companies; |
• | withholding tax obligations on license royalties that we may not be able to offset fully against our U.S. tax obligations, including the further risk that foreign tax authorities may re-characterize license fees or increase tax rates, which could result in increased tax withholdings and penalties; |
• | security concerns, including crime, political instability, terrorist activity, armed conflict and civil or military unrest; |
• | differing employment practices, labor issues and business and cultural factors; |
• | less effective protection of intellectual property than is afforded to us in the U.S. or other developed countries; and |
• | limited infrastructure and disruptions, such as large-scale outages or interruptions of service from utilities or telecommunications providers. |
• | recruit, hire, and train additional personnel; |
• | implement and improve our operational and financial systems, procedures, and controls; |
• | maintain our cost structure at an appropriate level based on the royalties, billings and cash we forecast and generate; |
• | manage multiple concurrent development projects; and |
• | manage operations in multiple time zones with different cultures and languages. |
• | these acquisitions could fail to produce anticipated benefits or could have other adverse effects that we currently do not foresee. As a result, these acquisitions could result in a reduction of net income per share as compared to the net income per share we would have achieved if these acquisitions had not occurred. We may also be required to recognize impairment charges of acquired assets or goodwill, and if we decide to restructure acquired businesses, we may incur other restructuring charges; |
• | the purchase price for each acquisition is determined based on significant judgment on factors such as projected cash flow, quality and availability of the business, technology or patent. In addition, if other companies have similar interests in the same business, technology or patent, our ability to negotiate these acquisitions at favorable terms may be limited and the purchase price may be artificially inflated; |
• | following completion of these acquisitions, we may uncover additional liabilities, patent validity, infringement or enforcement issues or unforeseen expenses not discovered during our diligence process; |
• | any such additional liabilities, patent validity, infringement or enforcement issues or expenses could result in significant unanticipated costs not originally estimated, such as impairment charges of acquired assets and goodwill, and may harm our financial results; |
• | the integration of technologies, patent assets and personnel, if any, will be a time consuming and expensive process that may disrupt our operations if it is not completed in a timely and efficient manner. If our integration efforts are not successful, our results of operations could be harmed, employee morale could decline, key employees could leave, and customer relations could be damaged. In addition, we may not achieve anticipated synergies or other benefits from any of these acquisitions; |
• | we have incurred substantial direct transaction and integration costs as a result of past acquisitions. In future acquisitions, the total direct transaction costs and the costs of integration may exceed our expectations; |
• | sales by the acquired businesses may be subject to different accounting treatment than our existing businesses, especially related to the recognition of revenue. This may lead to the loss or deferral of revenue under current and emerging accounting standards; |
• | there may be a significant time lag between acquiring patent assets and recognizing royalties from those patent assets. During that time lag, material costs are likely to be incurred in preparing licensing or litigation efforts and amortization of acquired patent assets that would have a negative effect on our results of operations, cash flows and financial position; |
• | we may require external financing that is dilutive or presents risks of debt; and |
• | we are required to estimate and record fair values of contingent assets, liabilities, deferred tax assets and liabilities at the time of an acquisition. Even though these estimates are based on management's best judgment, the actual results may differ. Under the current accounting guidance, differences between actual results and management's estimate could cause our operating results to fluctuate or could adversely affect our results of operations. |
• | the timing of, and compliance with license or service agreements and the terms and conditions for payment to us of license or service fees under these agreements; |
• | fluctuations in our royalties caused by the pricing terms of certain of our license agreements; |
• | the amount of our product and service revenue; |
• | changes in the level of our operating expenses; |
• | delays in our introduction of new technologies or market acceptance of these new technologies through new license agreements; |
• | our ability to protect or enforce our intellectual property rights or the terms of our agreements; |
• | legal proceedings affecting our patents, patent applications or license agreements; |
• | the timing of the introduction by others of competing technologies; |
• | changes in demand for semiconductor chips in the specific end markets in which we concentrate; |
• | changes in demand for camera-enabled devices including cell phones, security systems and personal computers; |
• | the timing of the conclusion of license agreements; |
• | the length of time it takes to establish new licensing arrangements; |
• | meeting the requirements for revenue recognition under generally accepted accounting principles; |
• | changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties; and |
• | cyclical fluctuations in semiconductor markets generally. |
Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of our share repurchase program | Approximate dollar value of shares that may yet be purchased under our share repurchase program (a) | ||||||||
(Shares in thousands) | |||||||||||
2018 | |||||||||||
January | — | $ | — | — | |||||||
February | — | — | — | ||||||||
March | 645 | 23.18 | 645 | ||||||||
Total | 645 | $ | 23.18 | 645 | $127.9 million |
Exhibit Number | Exhibit Title | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
XPERI CORPORATION | ||
By: | /s/ Jon Kirchner | |
Jon Kirchner Chief Executive Officer |
Date: May 3, 2018 | /s/ Jon Kirchner | |
Jon Kirchner | ||
Chief Executive Officer |
Date: | May 3, 2018 | /s/ Robert Andersen | |
Robert Andersen | |||
Executive Vice President and Chief Financial Officer |
/s/ Jon Kirchner |
Jon Kirchner |
Chief Executive Officer |
May 3, 2018 |
/s/ Robert Andersen |
Robert Andersen |
Executive Vice President and Chief Financial Officer |
May 3, 2018 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Apr. 26, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | XPERI CORPORATION | |
Trading Symbol | XPER | |
Entity Central Index Key | 0001690666 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,030,824 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 680 | $ 1,181 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 60,502,000 | 60,608,000 |
Common stock, shares outstanding (in shares) | 49,283,000 | 49,103,000 |
Treasury stock, shares (in shares) | 11,219,000 | 11,505,000 |
Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (33,017) | $ (11,029) |
Other comprehensive income (loss): | ||
Net unrealized gains (losses) on available-for-sale securities, net of tax | (217) | 38 |
Other comprehensive income (loss) | (217) | 38 |
Comprehensive loss | $ (33,234) | $ (10,991) |
The Company And Basis Of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company And Basis Of Presentation | THE COMPANY AND BASIS OF PRESENTATION Xperi Corporation (the “Company”) completed the acquisition of DTS, Inc. ("DTS"), a publicly-traded developer of sound-based technologies, in December 2016. At the time of the acquisition, Tessera Technologies, Inc. and DTS were combined under the newly-formed Tessera Holding Corporation. During the first quarter of 2017, the Company introduced its new corporate name, “Xperi Corporation”, stock ticker, “XPER”, and launched a new corporate logo. Xperi Corporation licenses its innovative products, technologies and inventions to global electronics companies which, in turn, integrate the technologies into their own consumer electronics and semiconductor products. The Company's technologies and inventions are widely adopted and used every day by millions of people. The Company's audio technologies have shipped in billions of devices for the home, mobile and automotive markets. The Company's imaging technologies are embedded in more than 25% of smartphones on the market today. The Company's semiconductor packaging and interconnect technologies have been licensed to more than 100 customers and have shipped in over 100 billion semiconductor chips. The accompanying interim unaudited condensed consolidated financial statements as of March 31, 2018 and 2017, and for the three months then ended, have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) for interim financial information. The amounts as of December 31, 2017 have been derived from the Company’s annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto as of and for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 23, 2018 (the “Form 10-K”). The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the full year ended December 31, 2018 or any future period and the Company makes no representations related thereto. Reclassification Certain reclassifications have been made to prior period balances in order to conform to the current period’s presentation. |
Summary Of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies are detailed in "Note 2 - Summary of Significant Accounting Policies" in its Form 10-K for the year ended December 31, 2017. Significant changes to its accounting policies as a result of adopting Topic 606 are discussed in Note 3 - Revenue. Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory." This ASU requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company adopted this standard as of January 1, 2018 on a prospective basis. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment awarded require an entity to apply modification accounting. The standard is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted the standard as of January 1, 2018 on a prospective basis. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of goods or services is transferred to customers at an amount that reflects the consideration the entity expects to be entitled in exchange for the goods or services. Under the prior standard, licensing companies generally reported revenue from per-unit royalty based arrangements one quarter in arrears. Under the new guidance, the Company estimates per-unit royalty-based revenue prior to receiving customer royalty reports. The Company also expects the standard to have a significant impact on the timing of revenue recognition associated with its fixed fee and minimum guarantee arrangements, as a majority of such revenue which had previously been recognized over the license term is expected to be recognized at the inception of the license term. On January 1, 2018, the Company adopted the new standard using the modified retrospective method, under which the Company recorded a $224 million cumulative net of tax adjustment to the opening balance of retained earnings on January 1, 2018. The adjustment was determined by measuring the impact of the new standard on existing contracts that were not completed as of December 31, 2017. Prior period comparative information has not been restated and continues to be reported under Topic 605 in effect for those periods. The Company expects this new standard to have a material impact on its revenue and its consolidated statement of operations and balance sheet on an ongoing basis, with no impact on the timing of customer billings or on cash flows. See “Note 3 - Revenue" for further discussion. The cumulative effect of the changes made to the Company's condensed consolidated balance sheet for the adoption of Topic 606 was as follows (in thousands):
The most significant impact from adopting Topic 606 was a substantial increase in unbilled contracts receivable, long-term deferred tax liabilities and retained earnings, which was driven primarily by applying the standard on fixed fee and minimum guarantee contracts that were not completed as of December 31, 2017, and secondarily by recording to retained earnings those royalties from customer shipments completed in the fourth quarter of 2017 and reported to the Company in the first quarter of 2018. The adjustments noted above had no impact on the Company's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018. Adoption of the new revenue standard had the following impact on the Company's condensed consolidated financial statements as compared to the comparable results under the previous accounting standards (in thousands, except per share amounts):
Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for the Company in the first quarter of 2019, and early adoption is permitted. The Company will adopt the new standard effective January 1, 2019. While the Company continues to evaluate the effect of adopting this guidance on its consolidated financial statements and related disclosures, it is expected the Company's operating leases, as disclosed in Note 13 - "Commitments and Contingencies," will be subject to the new standard. The Company will recognize right-of-use assets and operating lease liabilities on its consolidated balance sheets upon adoption, which will increase total assets and liabilities, respectively. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for the Company in the first quarter of the year ending December 31, 2020. The Company is in the process of evaluating the impact of the adoption of this new standard on its consolidated financial statements. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE As discussed in Note 2, on January 1, 2018, the Company adopted Topic 606 using the modified retrospective method. Results for reporting periods beginning January 1, 2018 are presented under Topic 606, while prior period amounts are not restated and continue to be reported in accordance with the historic accounting under Topic 605. Revenue Recognition The Company derives its revenue primarily from royalty and license fees for rights to use the Company’s intellectual property and technologies (“IP”). Revenue is recognized upon transfer of control of promised products, services or IP rights to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products, services or licensing of the IP rights. Certain licensees have entered into fixed fee or minimum guarantee arrangements, whereby licensees pay a fixed fee for the right to incorporate the Company's technology in the licensee's products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. In most cases, the customer pays the fixed license fee in specified installments over the license term. For these agreements, the Company recognizes the full fixed fee as revenue at the beginning of the license term, when the licensee has the right to use the IP and begins to benefit from the license. If the contract term of a fixed fee or minimum guarantee arrangement is longer than one year, the Company also considers the scheduled payment arrangements to determine whether a significant financing component exists. In general, if the payment arrangements extend beyond the initial twelve months of the contract, the Company treats a portion of the payments as a significant financing component. When the payments are expected to be received within one year or less, the Company does not adjust the promised amount of consideration for the effects of a financing component. The discount rate used for each arrangement reflects the rate that would be used in a separate financing transaction between the Company and the licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income and expense in the Consolidated Statements of Operations. For certain licensees, royalty revenues are generated based on a licensee's production or shipment of licensed products incorporating the Company’s IP, technologies or software. Licensees with a per-unit arrangement pay a per-unit royalty for each product manufactured or sold, as set forth in its license agreement. Licensees generally report manufacturing or sales information in the quarter subsequent to when the shipment activity takes place. The Company estimates the royalties earned each quarter based on its forecast of manufacturing and sales activity incurred by its licensees in that quarter. Any differences between actual royalties owed by a licensee and the Company’s quarterly estimate are recognized in the following quarter, when the licensee’s royalty report is received. Estimating licensees’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments that could have a material impact on the amount of revenue it reports on a quarterly basis. The Company actively monitors and enforces its IP, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s intellectual property without a license. As a result of these activities, the Company may, from time to time, recognize revenue from payments resulting from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, as part of a settlement of a patent infringement dispute, or legal judgments from a license dispute. These recoveries and settlements may cause revenue to be higher than expected during a particular reporting period and such recoveries may not occur in subsequent periods. The Company recognizes revenue from recoveries when a binding agreement has been executed and the Company concludes collection under that agreement is likely. In some instances, the Company may enter into license agreements that contain multiple performance obligations that include engineering services in addition to a technology or software license. For such arrangements where all components are capable of being distinct and accounted for as separate performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices ordinarily charged to customers, or in some cases by applying a reasonable cost-plus margin. The consideration for engineering services is recognized as the underlying performance obligations are satisfied. Generally, the Company satisfies performance obligations over time and therefore recognizes revenue over time by measuring the progress toward completion of the performance obligation at each reporting period. Revenue is recognized gross of withholding taxes that are remitted directly by the Company's licensees directly to a local tax authority. For additional detail on the Company's revenue disaggregated by geographic location, refer to Note 14 - "Segment and Geographic Information." Contract Balances Unbilled Contracts Receivable Timing of revenue recognition may differ significantly from the timing of invoicing to customers. Accounts receivable, net, include amounts billed and currently due from customers. Unbilled contracts receivable represent unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date (or cumulative adjustments to retained earnings in the initial period of adopting Topic 606) exceeds the amount billed, and right to payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. Deferred Revenue Deferred revenue includes payments made by licensees for which the corresponding performance obligations have not yet been fully satisfied by the Company and typically occurs when performance obligations are satisfied over time. The following table presents additional revenue and contract disclosures (in thousands):
Remaining revenue under contracts with performance obligations represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) under the Company’s engineering services contracts. The Company's remaining revenue under contracts with performance obligations was as follows (in thousands):
Practical Expedients The Company expenses sales commissions when incurred because the amortization period generally would have been one year or less. In addition, sales commissions have historically not been a significant expense and are not contemplated to be significant in the future. Sales commissions are recorded in selling, general and administrative expenses in the consolidated statement of operations. |
Composition Of Certain Financial Statement Captions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition Of Certain Financial Statement Captions | COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS Other current assets consisted of the following (in thousands):
Property and equipment, net consisted of the following (in thousands):
Depreciation and amortization expense for the three months ended March 31, 2018 and 2017 amounted to $1.8 million and $1.8 million, respectively. Accrued liabilities consisted of the following (in thousands):
Accumulated other comprehensive loss consisted of the following (in thousands):
Other income and expense, net, consisted of the following (in thousands):
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Financial Instruments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | FINANCIAL INSTRUMENTS The following is a summary of marketable securities at March 31, 2018 and December 31, 2017 (in thousands):
At March 31, 2018 and December 31, 2017, the Company had $80.8 million and $200.7 million, respectively, in cash, cash equivalents and short-term investments. These balances include $32.8 million and $97.8 million in cash held in operating accounts not included in the tables above at March 31, 2018 and December 31, 2017, respectively. The gross realized gains and losses on sales of marketable securities were not significant during the three months ended March 31, 2018 and 2017. Unrealized losses were $0.5 million and $0.3 million, net of tax, as of March 31, 2018 and December 31, 2017, respectively. These amounts were related to temporary fluctuations in value of the remaining available-for-sale securities and were due primarily to changes in interest rates and market and credit conditions of the underlying securities. Certain investments with a temporary decline in value are not considered to be other-than-temporarily impaired as of March 31, 2018 because the Company has the intent and ability to hold these investments to allow for recovery, does not anticipate having to sell these securities with unrealized losses and continues to receive interest at the maximum contractual rate. For the three months ended March 31, 2018 and 2017, respectively, the Company did not record any impairment charges related to its marketable securities. The following table summarizes the fair value and gross unrealized losses related to individual available-for-sale securities at March 31, 2018 and December 31, 2017, which have been in a continuous unrealized loss position, aggregated by investment category and length of time (in thousands):
The estimated fair value of marketable securities by contractual maturity at March 31, 2018 is shown below (in thousands). Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
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Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | FAIR VALUE The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
When applying fair value principles in the valuation of assets, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs. There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2017 and March 31, 2018. The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of March 31, 2018 (in thousands):
The following footnotes indicate where the noted items were recorded in the Condensed Consolidated Balance Sheet at March 31, 2018:
The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of December 31, 2017 (in thousands):
The following footnotes indicate where the noted items were recorded in the Consolidated Balance Sheet at December 31, 2017:
The Company also has outstanding debt at March 31, 2018 and December 31, 2017 that is considered a level 2 liability and is measured at fair value on a recurring basis. See “Note 8 - Debt” for additional information. At March 31, 2018 and December 31, 2017, the fair value of the Company's debt was not materially different than the outstanding principal amount. |
Goodwill And Identified Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill And Identified Intangible Assets | GOODWILL AND IDENTIFIED INTANGIBLE ASSETS The Company's reporting units include the Product Licensing segment and the Semiconductor and IP Licensing segment. Of the carrying value of goodwill, approximately $377.9 million was allocated to the Product Licensing segment and approximately $7.7 million was allocated to the Semiconductor and IP Licensing segment as of March 31, 2018 and December 31, 2017, respectively. Identified intangible assets consisted of the following (in thousands):
Amortization expense for the three months ended March 31, 2018 and 2017 amounted to $27.2 million and $28.6 million, respectively. As of March 31, 2018, the estimated future amortization expense of total (amortizable) intangible assets was as follows (in thousands):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Debt | DEBT On December 1, 2016, in connection with the consummation of the acquisition of DTS, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, Royal Bank of Canada, as administrative agent and collateral agent, and the lenders party thereto. The Credit Agreement provided for a $600 million seven-year term B loan facility (the “Term B Loan Facility”) which matures on November 30, 2023. Upon the closing of the Credit Agreement, the Company borrowed $600 million under the Term B Loan facility. Net proceeds were used on December 1, 2016, together with cash and cash equivalents, to finance the acquisition of DTS. On January 23, 2018, the Company and the loan parties entered into an amendment to the Credit Agreement (the “Amendment”). In connection with the Amendment, the Company made a voluntary prepayment of $100.0 million of the term loan outstanding under the Credit Agreement using cash on hand. The Amendment provided for, among other things, (i) a replacement of the outstanding initial term loan with the new tranche term B-1 loan (the “Amended Term B Loan”) in a principal amount of $494.0 million, (ii) a reduction of the interest rate margin applicable to such loan to (x) in the case of Eurodollar loans, 2.50% per annum and (y) in the case of base rate loans, 1.50% per annum, (iii) a prepayment premium of 1.00% in connection with any repricing transaction with respect to the Amended Term B Loan within six months of the closing date of the Amendment, and (iv) certain amendments to provide the Company with additional flexibility under the covenant governing restricted payments. The Company’s obligations under the Credit Agreement, as amended by the Amendment, continue to be guaranteed by substantially all of the Company’s subsidiaries, and secured by substantially all of the assets of the Company and its subsidiaries. The Credit Agreement contains customary events of default, upon the occurrence of which, after any applicable grace period, the lenders will have the ability to accelerate all outstanding loans thereunder. The Credit Agreement contains customary representations and warranties and affirmative and negative covenants that, among other things, restrict the ability of the Company to create or incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, transfer or sell assets and make restricted payments. The Company was in compliance with all requirements during the three months ended March 31, 2018. All lenders of the Term B Loan Facility participated in the Amendment and the changes in terms were not considered substantial. Accordingly, the repricing event was accounted for as a debt modification. In connection with the repricing, the Company incurred and expensed $1.1 million in third party costs, which were recorded in selling, general and administrative expense in the Condensed Consolidated Statement of Operations, in the first quarter of 2018. In addition, the Company elected to continue to defer the unamortized debt issuance costs related to the partial pay-down of the debt as the prepayment was factored into the terms agreed to on the debt. At March 31, 2018, $494 million was outstanding with an interest rate, including the amortization of debt issuance costs, of 5.1%. Interest is payable monthly. There were also $13.7 million of unamortized debt issuance costs recorded as a reduction of the long-term portion of the debt. Interest expense was $6.3 million and $6.5 million for the three months ended March 31, 2018 and 2017, respectively. Amortized debt issuance costs, which were included in the interest expense, amounted to $0.7 million and $0.6 million for the three months ended March 31, 2018 and 2017, respectively. Other than the voluntary prepayment of $100 million in January 2018, there were no other debt principal payments in the first quarter of 2018 as the prepayment exceeded the minimum principal payment requirements. During the three months ended March 31, 2017, there was a debt principal payment of $1.5 million. As of March 31, 2018, future minimum principal payments for long-term debt are summarized as follows (in thousands):
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Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | NET LOSS PER SHARE The Company has a share-based compensation plan under which employees may be granted share-based awards including shares of restricted stock and restricted stock units ("RSUs"). Non-forfeitable dividends are paid on unvested shares of restricted stock. No dividends are accrued or paid on unvested RSUs. As such, shares of restricted stock are considered participating securities under the two-class method of calculating earnings per share. The two-class method of calculating earnings per share did not have a material impact on the Company’s loss per share calculation for the three months ended March 31, 2018 and 2017. The following table sets forth the computation of basic and diluted shares (in thousands):
Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards that are subject to repurchase. Diluted net income (loss) per share is computed using the treasury stock method to calculate the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential dilutive common shares include unvested restricted stock awards and units and incremental common shares issuable upon the exercise of stock options, less shares from assumed proceeds. The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period. For the three months ended March 31, 2018 and 2017, there was no difference in the weighted average number of common shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive. A total of 3.1 million shares subject to stock options and restricted stock awards and units were excluded from the computation of diluted net loss per share for the three months ended March 31, 2018 because including them would have been anti-dilutive. For the three months ended March 31, 2017, in the calculation of net loss per share, 0.7 million shares subject to stock options and restricted stock awards and units were excluded from the computation of diluted net income per share as they were anti-dilutive. |
Stockholders' Equity |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | STOCKHOLDERS’ EQUITY Stock Repurchase Programs In August 2007, the Company’s Board of Directors (“the Board”) authorized a plan to repurchase the Company’s outstanding shares of common stock dependent on market conditions, share price and other factors. As of March 31, 2018, the Company has repurchased a total of approximately 11,787,000 shares of common stock, since inception of the plan, at an average price of $27.33 per share for a total cost of $322.1 million. As of December 31, 2017, the Company had repurchased a total of approximately 11,142,000 shares of common stock, since inception of the plan, at an average price of $27.57 per share for a total cost of $307.2 million. The shares repurchased are recorded as treasury stock and are accounted for under the cost method. No expiration date has been specified for this plan. As of March 31, 2018, the total remaining amount available for repurchase was $127.9 million. The Company plans to continue to execute authorized repurchases from time to time under the plan. Stock Option Plans The 2003 Plan As of March 31, 2018, there were approximately 0.1 million shares reserved for future grant under the Company’s 2003 Equity Incentive Plan (the “2003 Plan”). At the 2018 annual stockholders meeting held on April 27, 2018, shareholders approved an amendment to the 2003 Plan reserving an additional 3.9 million shares for future issuance. A summary of the stock option activity is presented below (in thousands, except per share amounts):
Restricted Stock Awards and Units Information with respect to outstanding restricted stock awards and units as of March 31, 2018 is as follows (in thousands, except per share amounts):
Performance Awards and Units Performance awards and units may be granted to employees or consultants based upon, among other things, the contributions, responsibilities and other compensation of the particular employee or consultant. The value and the vesting of such performance awards and units are generally linked to one or more performance goals or other specific performance goals determined by the Company, in each case on a specified date or dates or over any period or periods determined by the Company, and range from zero to 100 percent of the grant. Employee Stock Purchase Plans As of March 31, 2018, there were approximately 265,000 shares reserved for grant under the Company’s 2003 Employee Stock Purchase Plan (the “ESPP”) and the International Employee Stock Purchase Plan (the “International ESPP”), collectively. At the 2018 annual stockholders meeting on April 27, 2018, shareholders approved an amendment to the ESPP adding an additional 1.0 million shares to the share reserve. |
Stock-Based Compensation Expense |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Expense | STOCK-BASED COMPENSATION EXPENSE The effect of recording stock-based compensation expense for the three months ended March 31, 2018 and 2017 is as follows (in thousands):
Stock-based compensation expense categorized by various equity components for the three months ended March 31, 2018 and 2017 is summarized in the table below (in thousands):
There were no options granted in the three months ended March 31, 2018 and 2017. ESPP grants occur in February and August. The following assumptions were used to value the ESPP shares for these grants:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ended March 31, 2018, the Company recorded an income tax benefit of $2.6 million on a pre-tax loss of $35.7 million which resulted in an effective tax rate of 7.4%. The effective tax rate was primarily related to tax benefit from losses and credits generated from operations offset by foreign withholding taxes, certain book-to-tax permanent differences, valuation allowance recorded against the Company’s unutilized tax credits generated in the current year, and shortfalls from stock-based compensation. For the three months ended March 31, 2017, the Company recorded an income tax benefit of $35.3 million on a pre-tax loss of $46.3 million which resulted in an effective tax rate of 76.2%. The effective tax rate was primarily related to losses in foreign operations, as the Company’s tax rates on those operations were generally lower than the U.S. statutory rate. The Company's provision for income taxes is based on its worldwide estimated annualized effective tax rate, except for jurisdictions for which a loss is expected for the year and no benefit can be realized for those losses, and the tax effect of discrete items occurring during the period. The tax for jurisdictions for which a loss is expected and no benefit can be realized for the year is based on actual taxes and tax reserves for the quarter. The income tax benefit for the three months ended March 31, 2018 as compared to the income tax benefit during the same period in the prior year is largely attributable to valuation allowance recorded against the Company’s tax credits and the reduction in year-to-date losses. As of March 31, 2018, unrecognized tax benefits were $33.8 million (which is included in long-term deferred tax and other liabilities on the Condensed Consolidated Balance Sheet), of which $22.2 million would affect the effective tax rate if recognized. As of March 31, 2017, unrecognized tax benefits were $30.1 million (which was included in long-term deferred tax and other liabilities on the Condensed Consolidated Balance Sheet), of which $23.8 million would affect the effective tax rate if recognized. The Company is unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease. It is the Company's policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. For the three months ended March 31, 2018 and March 31, 2017, the Company recognized an insignificant amount of interest and penalties related to unrecognized tax benefits. Accrued interest and penalties were $0.7 million and $0.6 million as of March 31, 2018 and December 31, 2017, respectively. At March 31, 2018, the Company's 2013 through 2017 tax years were open and subject to potential examination in one or more jurisdictions. In addition, in the U.S., any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination. The Company is currently under examination by the Internal Revenue Service for tax year 2014 and cannot estimate the financial outcome of the examination. The Company is not currently under foreign income tax examination. On December 22, 2017, the Tax Cut and Jobs Act (“Tax Act”) was signed into law. The Tax Act introduced a broad range of tax reform measures that significantly change the federal income tax laws. As of December 31, 2017, the Company recorded a provisional tax expense in the Statement of Operations of approximately $5.6 million, comprised of approximately $13.5 million tax expense from recording additional valuation allowance against federal tax credits due to certain provisions of the Tax Act, offset by approximately $7.9 million of tax benefit from the remeasurement of U.S. deferred taxes using the relevant tax rate at which the Company expects them to reverse in the future. The estimated one-time transition tax on post-1986 foreign unremitted earnings is not anticipated to have a material impact to the Company's effective tax rate. As of March 31, 2018, the Company has not recorded any adjustments to the provisional tax expense. The Company continues to monitor supplemental legislation and technical interpretations of the tax law that may cause the final impact from the Tax Act to differ from the provisionally recorded amounts. The Company expects to complete its analysis within the measurement period allowed by Staff Accounting Bulletin (“SAB”) No.118, no later than the fourth quarter of 2018. |
Commitments And Contingencies |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases office and research facilities and office equipment under operating leases which expire at various dates through 2029. Under lease agreements that contain escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term. There were no material changes to our future minimum lease payments during the three months ended March 31, 2018. Rent expense for the three months ended March 31, 2018 and 2017 amounted to $1.8 million and $1.5 million, respectively. Contingencies At each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company is currently unable to predict the final outcome of lawsuits to which it is a party and therefore cannot determine the likelihood of loss nor estimate a range of possible loss. An adverse decision in any of these proceedings could significantly harm the Company’s business and consolidated financial position, results of operations or cash flows. Tessera, Inc. v. Toshiba Corporation, Civil Action No. 5:15-cv-02543-BLF (N.D. Cal.) On May 12, 2015, Tessera, Inc. filed a complaint against Toshiba Corporation (“Toshiba”) in California Superior Court. Tessera, Inc.’s complaint alleges causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief, generally alleging that Toshiba underpaid royalties and failed to cooperate with audits conducted pursuant to the parties’ license agreement. On June 8, 2015, Toshiba removed the action to the U.S. District Court for the Northern District of California. On June 18, 2015, Toshiba filed its answer, affirmative defenses, and counterclaims to Tessera, Inc.’s complaint. Toshiba alleges counterclaims for declaratory judgment and breach of the implied warranty of good faith and fair dealing. The counterclaims seek, among other things, judicial determinations about the interpretation of the parties’ agreement, termination of the agreement, an accounting of the amount of alleged overpayments by Toshiba, restitution, and damages. On July 10, 2015, Tessera, Inc. filed its answer and affirmative defenses to Toshiba’s counterclaims. On March 17, 2016, Tessera, Inc. filed an amended complaint adding a claim for declaratory relief regarding a February 12, 2016 letter sent by Toshiba to Tessera, Inc. purporting to terminate the parties’ license agreement. On March 18, 2016, Toshiba filed its amended answer, affirmative defenses, and counterclaims. On April 4, 2016, Tessera, Inc. filed an answer to Toshiba’s amended counterclaims. An initial summary judgment hearing on contract issues took place on September 22, 2016. On November 7, 2016, the Court entered an order granting Toshiba’s motion regarding the definition of “TCC,” and denying summary judgment on the other issues raised by the parties’ cross-motions. On December 6, 2016, Tessera, Inc. filed a motion pursuant to Federal Rule of Civil Procedure 54(b) seeking authorization to appeal the order and for a stay. On March 6, 2017, the Court granted the Rule 54(b) motion. The Court subsequently vacated the trial date and stayed the remainder of the district court proceedings. On April 4, 2017, Tessera, Inc. filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. The parties completed briefing on November 2, 2017. A hearing for oral argument has not yet been scheduled. Other Litigation Matters The Company and its subsidiaries are involved in litigation matters and claims in the normal course of business. In the past, the Company and its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to protect trade secrets, to determine the validity and scope of the proprietary rights of others and to defend itself or its customers against claims of infringement or invalidity. The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings regarding infringement of its patents, and proceedings to ensure proper and full payment of royalties by licensees under the terms of its license agreements. The existing and any future legal actions may harm the Company’s business. For example, legal actions could cause an existing licensee or strategic partner to cease making royalty or other payments to the Company, or to challenge the validity and enforceability of patents owned by the Company’s subsidiaries or the scope of license agreements with the Company’s subsidiaries, and could significantly damage the Company’s relationship with such licensee or strategic partner and, as a result, prevent the adoption of the Company’s other technologies by such licensee or strategic partner. Litigation could also severely disrupt or shut down the business operations of licensees or strategic partners of the Company’s subsidiaries, which in turn would significantly harm ongoing relations with them and cause the Company to lose royalty revenue. The costs associated with legal proceedings are typically high, relatively unpredictable, and not completely within the Company’s control. These costs may be materially higher than expected, which could adversely affect the Company’s operating results and lead to volatility in the price of its common stock. Whether or not determined in the Company’s favor or ultimately settled, litigation diverts managerial, technical, legal, and financial resources from the Company’s business operations. Furthermore, an adverse decision in any of these legal actions could result in a loss of the Company’s proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company’s licensed technology or otherwise negatively impact the Company’s stock price or its business and consolidated financial position, results of operations or cash flows. |
Segment And Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment And Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION The Company reports its financial results within two reportable segments: (1) Product Licensing and (2) Semiconductor and IP Licensing. There are certain corporate overhead costs that are not allocated to these reportable segments because these operating amounts are not considered in evaluating the operating performance of the Company’s business segments. The Chief Executive Officer is also the Chief Operating Decision Maker (“CODM”) as defined by the authoritative guidance on segment reporting. The Product Licensing segment, including the Company's DTS and FotoNation subsidiaries, licenses its technologies and intellectual property related to audio, digital radio and imaging solutions under the brands DTS, HD Radio and FotoNation. The Product Licensing solutions typically include the delivery of software or hardware-based solutions, combined with various other intellectual property, including know how, patents, trademarks, and copyrights. Product Licensing represents revenue derived primarily from the consumer electronics market and related applications servicing the home, automotive and mobile markets. The Semiconductor and IP Licensing segment develops and licenses semiconductor technologies and IP to manufacturers, foundries, subcontract assemblers and others. The segment includes revenue generated from the technology and IP portfolios of Tessera, Inc., Invensas and Invensas Bonding Technologies, Inc. (formally Ziptronix, Inc.). Tessera, Inc. pioneered chip-scale packaging solutions. Invensas develops advanced semiconductor packaging and 3D interconnect solutions, including wafer bonding solutions, for applications such as smartphones, tablets, laptops, PCs, data centers and automobiles. The Company expands its technology and IP offerings in this segment through a combination of internal R&D and acquisitions. The Company also provides engineering services to customers in the form of technology demonstrations and technology transfers to assist their evaluation and adoption of the Company's technologies. Through the Company’s technology transfer service, the Company provides detailed documentation outlining design guidelines, process specifications, recommended equipment and process parameters as well as hands-on engineering support to assist its licensees in bringing up and qualifying its technologies at their facilities. This service allows licensees to readily leverage the Company’s years of experience and expertise in direct and hybrid bonding. The Company does not identify or allocate assets by reportable segment, nor does the CODM evaluate reportable segments using discrete asset information. Reportable segments do not record inter-segment revenue and accordingly there are none to report. The Company does not allocate other income and expense to reportable segments. Although the CODM uses operating income to evaluate reportable segments, operating costs included in one segment may benefit other segments. The following table sets forth the Company’s segment revenue, operating expenses and operating income (loss) for the three months ended March 31, 2018 and 2017 (in thousands):
(1) Unallocated operating expenses consist primarily of general and administrative expenses, such as administration, human resources, finance, information technology, corporation development and procurement. These expenses are not allocated because these amounts are not considered in evaluating the operating performance of the Company’s business segments. A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods. The table below lists the geographic revenue for the periods indicated (in thousands):
For the three months ended March 31, 2018 and 2017, there were one and two customers, respectively, that each accounted for 10% or more of total revenue. As of March 31, 2018 and December 31, 2017, there were one and three customers that each accounted for 10% or more of total accounts receivable, respectively. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On April 26, 2018, the Board declared a cash dividend of $0.20 per share of common stock, payable on June 14, 2018 for the stockholders of record at the close of business on May 24, 2018. |
Summary Of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The accompanying interim unaudited condensed consolidated financial statements as of March 31, 2018 and 2017, and for the three months then ended, have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) for interim financial information. The amounts as of December 31, 2017 have been derived from the Company’s annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary (consisting of normal recurring adjustments) to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto as of and for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 23, 2018 (the “Form 10-K”). |
Reclassification | Reclassification Certain reclassifications have been made to prior period balances in order to conform to the current period’s presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, "Leases" (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for the Company in the first quarter of 2019, and early adoption is permitted. The Company will adopt the new standard effective January 1, 2019. While the Company continues to evaluate the effect of adopting this guidance on its consolidated financial statements and related disclosures, it is expected the Company's operating leases, as disclosed in Note 13 - "Commitments and Contingencies," will be subject to the new standard. The Company will recognize right-of-use assets and operating lease liabilities on its consolidated balance sheets upon adoption, which will increase total assets and liabilities, respectively. In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. ASU 2016-13 is effective for the Company in the first quarter of the year ending December 31, 2020. The Company is in the process of evaluating the impact of the adoption of this new standard on its consolidated financial statements. Recently Adopted Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory." This ASU requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. For public entities, this ASU is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The Company adopted this standard as of January 1, 2018 on a prospective basis. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment awarded require an entity to apply modification accounting. The standard is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted the standard as of January 1, 2018 on a prospective basis. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of goods or services is transferred to customers at an amount that reflects the consideration the entity expects to be entitled in exchange for the goods or services. Under the prior standard, licensing companies generally reported revenue from per-unit royalty based arrangements one quarter in arrears. Under the new guidance, the Company estimates per-unit royalty-based revenue prior to receiving customer royalty reports. The Company also expects the standard to have a significant impact on the timing of revenue recognition associated with its fixed fee and minimum guarantee arrangements, as a majority of such revenue which had previously been recognized over the license term is expected to be recognized at the inception of the license term. On January 1, 2018, the Company adopted the new standard using the modified retrospective method, under which the Company recorded a $224 million cumulative net of tax adjustment to the opening balance of retained earnings on January 1, 2018. The adjustment was determined by measuring the impact of the new standard on existing contracts that were not completed as of December 31, 2017. Prior period comparative information has not been restated and continues to be reported under Topic 605 in effect for those periods. The Company expects this new standard to have a material impact on its revenue and its consolidated statement of operations and balance sheet on an ongoing basis, with no impact on the timing of customer billings or on cash flows. See “Note 3 - Revenue" for further discussion. |
Revenue Recognition | Practical Expedients The Company expenses sales commissions when incurred because the amortization period generally would have been one year or less. In addition, sales commissions have historically not been a significant expense and are not contemplated to be significant in the future. Sales commissions are recorded in selling, general and administrative expenses in the consolidated statement of operations. Contract Balances Unbilled Contracts Receivable Timing of revenue recognition may differ significantly from the timing of invoicing to customers. Accounts receivable, net, include amounts billed and currently due from customers. Unbilled contracts receivable represent unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date (or cumulative adjustments to retained earnings in the initial period of adopting Topic 606) exceeds the amount billed, and right to payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. Deferred Revenue Deferred revenue includes payments made by licensees for which the corresponding performance obligations have not yet been fully satisfied by the Company and typically occurs when performance obligations are satisfied over time. Revenue Recognition The Company derives its revenue primarily from royalty and license fees for rights to use the Company’s intellectual property and technologies (“IP”). Revenue is recognized upon transfer of control of promised products, services or IP rights to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products, services or licensing of the IP rights. Certain licensees have entered into fixed fee or minimum guarantee arrangements, whereby licensees pay a fixed fee for the right to incorporate the Company's technology in the licensee's products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. In most cases, the customer pays the fixed license fee in specified installments over the license term. For these agreements, the Company recognizes the full fixed fee as revenue at the beginning of the license term, when the licensee has the right to use the IP and begins to benefit from the license. If the contract term of a fixed fee or minimum guarantee arrangement is longer than one year, the Company also considers the scheduled payment arrangements to determine whether a significant financing component exists. In general, if the payment arrangements extend beyond the initial twelve months of the contract, the Company treats a portion of the payments as a significant financing component. When the payments are expected to be received within one year or less, the Company does not adjust the promised amount of consideration for the effects of a financing component. The discount rate used for each arrangement reflects the rate that would be used in a separate financing transaction between the Company and the licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income and expense in the Consolidated Statements of Operations. For certain licensees, royalty revenues are generated based on a licensee's production or shipment of licensed products incorporating the Company’s IP, technologies or software. Licensees with a per-unit arrangement pay a per-unit royalty for each product manufactured or sold, as set forth in its license agreement. Licensees generally report manufacturing or sales information in the quarter subsequent to when the shipment activity takes place. The Company estimates the royalties earned each quarter based on its forecast of manufacturing and sales activity incurred by its licensees in that quarter. Any differences between actual royalties owed by a licensee and the Company’s quarterly estimate are recognized in the following quarter, when the licensee’s royalty report is received. Estimating licensees’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments that could have a material impact on the amount of revenue it reports on a quarterly basis. The Company actively monitors and enforces its IP, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s intellectual property without a license. As a result of these activities, the Company may, from time to time, recognize revenue from payments resulting from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, as part of a settlement of a patent infringement dispute, or legal judgments from a license dispute. These recoveries and settlements may cause revenue to be higher than expected during a particular reporting period and such recoveries may not occur in subsequent periods. The Company recognizes revenue from recoveries when a binding agreement has been executed and the Company concludes collection under that agreement is likely. In some instances, the Company may enter into license agreements that contain multiple performance obligations that include engineering services in addition to a technology or software license. For such arrangements where all components are capable of being distinct and accounted for as separate performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices ordinarily charged to customers, or in some cases by applying a reasonable cost-plus margin. The consideration for engineering services is recognized as the underlying performance obligations are satisfied. Generally, the Company satisfies performance obligations over time and therefore recognizes revenue over time by measuring the progress toward completion of the performance obligation at each reporting period. Revenue is recognized gross of withholding taxes that are remitted directly by the Company's licensees directly to a local tax authority. |
Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impact of Adoption | The most significant impact from adopting Topic 606 was a substantial increase in unbilled contracts receivable, long-term deferred tax liabilities and retained earnings, which was driven primarily by applying the standard on fixed fee and minimum The cumulative effect of the changes made to the Company's condensed consolidated balance sheet for the adoption of Topic 606 was as follows (in thousands):
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Recognized in Period | The following table presents additional revenue and contract disclosures (in thousands):
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Schedule of Remaining Performance Obligations | (in thousands):
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Composition Of Certain Financial Statement Captions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Assets | Other current assets consisted of the following (in thousands):
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Property, Plant and Equipment | Property and equipment, net consisted of the following (in thousands):
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Accrued Liabilities | Accrued liabilities consisted of the following (in thousands):
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Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive loss consisted of the following (in thousands):
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Other Income and Expense, Net | Other income and expense, net, consisted of the following (in thousands):
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Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Marketable Securities | The following is a summary of marketable securities at March 31, 2018 and December 31, 2017 (in thousands):
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Schedule of Gross Unrealized Losses on Investments | The following table summarizes the fair value and gross unrealized losses related to individual available-for-sale securities at March 31, 2018 and December 31, 2017, which have been in a continuous unrealized loss position, aggregated by investment category and length of time (in thousands):
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Estimated Fair Value of Marketable Securities by Contractual Maturity | The estimated fair value of marketable securities by contractual maturity at March 31, 2018 is shown below (in thousands). Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
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Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis | The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of December 31, 2017 (in thousands):
The following footnotes indicate where the noted items were recorded in the Consolidated Balance Sheet at December 31, 2017:
The following is a list of the Company’s assets required to be measured at fair value on a recurring basis and where they were classified within the hierarchy as of March 31, 2018 (in thousands):
The following footnotes indicate where the noted items were recorded in the Condensed Consolidated Balance Sheet at March 31, 2018:
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Goodwill And Identified Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identified Intangible Assets | Identified intangible assets consisted of the following (in thousands):
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Estimated Future Amortization Expense | As of March 31, 2018, the estimated future amortization expense of total (amortizable) intangible assets was as follows (in thousands):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | As of March 31, 2018, future minimum principal payments for long-term debt are summarized as follows (in thousands):
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Net Loss Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Loss Per Share | The following table sets forth the computation of basic and diluted shares (in thousands):
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Stockholders' Equity (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity | A summary of the stock option activity is presented below (in thousands, except per share amounts):
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Summary of Restricted Stock Awards and Units | Information with respect to outstanding restricted stock awards and units as of March 31, 2018 is as follows (in thousands, except per share amounts):
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Stock-Based Compensation Expense (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Recording Stock-Based Compensation Expense | The effect of recording stock-based compensation expense for the three months ended March 31, 2018 and 2017 is as follows (in thousands):
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Stock-Based Compensation Expense Categorized by Equity Components | Stock-based compensation expense categorized by various equity components for the three months ended March 31, 2018 and 2017 is summarized in the table below (in thousands):
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Schedule of Assumptions Used To Value Options Granted | ESPP grants occur in February and August. The following assumptions were used to value the ESPP shares for these grants:
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Segment And Geographic Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table sets forth the Company’s segment revenue, operating expenses and operating income (loss) for the three months ended March 31, 2018 and 2017 (in thousands):
(1) Unallocated operating expenses consist primarily of general and administrative expenses, such as administration, human resources, finance, information technology, corporation development and procurement. These expenses are not allocated because these amounts are not considered in evaluating the operating performance of the Company’s business segments. |
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Schedule of Geographic Revenue Information | The table below lists the geographic revenue for the periods indicated (in thousands):
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The Company And Basis Of Presentation - Narrative (Details) |
3 Months Ended |
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Mar. 31, 2018
semiconductor_chip
customer
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Percentage of smartphones embedded with Company's imaging technology (more than) | 25.00% |
Number of customers with licenses (more than) | customer | 100 |
Number of semiconductor chips | semiconductor_chip | 100,000,000,000 |
Summary Of Significant Accounting Policies - Narrative (Details) $ in Millions |
Dec. 31, 2017
USD ($)
|
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Accounting Standards Update 2014-09 | Retained Earnings | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Cumulative impact of adjustment to retained earnings | $ 224 |
Revenue - Revenue Recognized in Period (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||
Amounts included in deferred revenue at the beginning of the period | $ 353 | $ 236 |
Performance obligations satisfied in previous periods (true ups or settlements) | $ 0 | $ 0 |
Composition Of Certain Financial Statement Captions - Other Current Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Prepaid income taxes | $ 6,609 | $ 6,713 | |
Prepaid expenses | 7,009 | 6,655 | |
Other | 3,746 | 3,581 | |
Other current assets, total | $ 17,364 | $ 14,949 | $ 16,949 |
Composition Of Certain Financial Statement Captions - Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 56,694 | $ 56,020 | |
Less: accumulated depreciation and amortization | (23,271) | (21,578) | |
Property and equipment, net | 33,423 | 34,442 | |
Depreciation and amortization of property and equipment | 1,800 | $ 1,800 | |
Equipment, furniture and other | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 26,735 | 26,029 | |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 18,222 | 18,222 | |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 5,300 | 5,300 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 6,437 | $ 6,469 |
Composition Of Certain Financial Statement Captions - Accrued Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Employee compensation and benefits | $ 21,093 | $ 37,056 | |
Other | 9,692 | 10,913 | |
Accrued liabilities, total | $ 30,785 | $ 48,401 | $ 47,969 |
Composition Of Certain Financial Statement Captions - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Unrealized loss on available-for-sale securities, net of tax | $ (520) | $ (303) |
Accumulated other comprehensive income (loss) | $ (520) | $ (303) |
Composition Of Certain Financial Statement Captions Composition Of Certain Financial Statement Captions - Other Income and Expense, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Interest income from investments | $ 250 | $ 213 |
Other income (losses) | 753 | (167) |
Other income and expense, net | 3,154 | 46 |
Financing | ||
Disaggregation of Revenue [Line Items] | ||
Interest income from significant financing components under Topic 606 | $ 2,151 | $ 0 |
Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Schedule of Investments [Line Items] | ||
Cash, cash equivalents and short-term investments | $ 80.8 | $ 200.7 |
Unrealized loss, net | 0.5 | 0.3 |
Operating Accounts | ||
Schedule of Investments [Line Items] | ||
Cash, cash equivalents and short-term investments | $ 32.8 | $ 97.8 |
Financial Instruments - Estimated Fair Value of Marketable Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Due in one year or less | $ 19,224 | |
Due in one to two years | 19,070 | |
Due in two to three years | 9,654 | |
Total | $ 47,948 | $ 102,845 |
Goodwill And Identified Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill [Roll Forward] | ||
Goodwill | $ 385,574 | $ 385,574 |
Product Licensing Segment | ||
Goodwill [Roll Forward] | ||
Goodwill | 377,900 | 377,900 |
Semiconductor and IP Licensing Segment | ||
Goodwill [Roll Forward] | ||
Goodwill | $ 7,700 | $ 7,700 |
Goodwill And Identified Intangible Assets - Estimated Future Amortization Expense of Intangible Assets, Excluding the In-Process Research and Development (Detail) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2018 (remaining 9 months) | $ 80,775 |
2019 | 98,855 |
2020 | 87,140 |
2021 | 79,478 |
2022 | 31,173 |
Thereafter | 24,998 |
Finite-lived intangible assets, net | $ 402,419 |
Debt Expected Future Principal Payments (Details) $ in Thousands |
Mar. 31, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 (remaining 9 months) | $ 0 |
2019 | 0 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
Thereafter | 494,000 |
Total | $ 494,000 |
Net Loss Per Share - Schedule of Basic and Diluted Net Loss Per Share (Detail) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Denominator: | ||
Weighted average common shares outstanding (in shares) | 49,302 | 49,144 |
Less: Unvested common shares subject to repurchase (in shares) | 0 | (5) |
Total common shares-basic (in shares) | 49,302 | 49,139 |
Effect of dilutive securities: | ||
Stock awards (in shares) | 0 | 0 |
Restricted stock awards and units (in shares) | 0 | 0 |
Total common shares-diluted (in shares) | 49,302 | 49,139 |
Net Loss Per Share - Additional Information (Detail) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Earnings Per Share [Abstract] | ||
Shares of common stock excluded from the computation of net loss per share | 3.1 | 0.7 |
Stockholders' Equity - Summary of Stock Option Activity (Detail) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Number of Shares Subject to Options | ||
Number of Shares, Beginning balance (shares) | 1,172,000 | |
Number of Shares, Options granted (shares) | 0 | 0 |
Number of Shares, Options exercised (shares) | (45,000) | |
Number of Shares, Options cancelled / forfeited / expired (shares) | (35,000) | |
Number of Shares, Ending balance (shares) | 1,092,000 | |
Weighted Average Exercise Price Per Share | ||
Weighted Average Exercise Price Per Share, Beginning balance (usd per share) | $ 24.06 | |
Weighted Average Exercise Price Per Share, Options granted (usd per share) | 0.00 | |
Weighted Average Exercise Price Per Share, Options exercised (usd per share) | 18.23 | |
Weighted Average Exercise Price Per Share, Options cancelled / forfeited / expired (usd per share) | 34.58 | |
Weighted Average Exercise Price Per Share, Ending balance (usd per share) | $ 23.97 |
Stock-Based Compensation Expense - Effect of Recording Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 7,408 | $ 7,081 |
Tax effect on stock-based compensation expense | (1,256) | (2,019) |
Net effect on net income (loss) | 6,152 | 5,062 |
Research, Development and Other Related Costs | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | 3,094 | 2,870 |
Selling, general and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total stock-based compensation expense | $ 4,314 | $ 4,211 |
Stock-Based Compensation Expense - Categorized by Equity Components (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 7,408 | $ 7,081 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 177 | 645 |
Restricted Stock Awards And Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 6,432 | 6,006 |
Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 799 | $ 430 |
Stock-Based Compensation Expense - Schedule of Assumptions Used to Value Options Granted (Detail) - shares |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of Shares, Options granted (shares) | 0 | 0 | ||
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Expected life (in years) | 2 years | 2 years | ||
Risk-free interest rate | 2.20% | 1.20% | ||
Dividend yield | 3.60% | 2.00% | ||
Expected volatility | 39.40% | 28.30% |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Income Tax Contingency [Line Items] | |||
Benefit from income taxes | $ (2,638) | $ (35,279) | |
Loss before taxes | $ (35,655) | $ (46,308) | |
Effective tax rate (percent) | 7.40% | 76.20% | |
Unrecognized tax benefits | $ 33,800 | $ 30,100 | |
Unrecognized tax benefits that would impact the effective income tax rate | 22,200 | $ 23,800 | |
Interest and penalties related to unrecognized tax benefits | $ 700 | $ 600 | |
Provisional tax expense | 5,600 | ||
Remeasurement of U.S. deferred taxes | 13,500 | ||
Federal Tax Credits and Remeasurement | |||
Income Tax Contingency [Line Items] | |||
Remeasurement of U.S. deferred taxes | $ 7,900 |
Commitments And Contingencies - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Rent under operating lease agreement | $ 1.8 | $ 1.5 |
Segment And Geographic Information Schedule of Operating Income (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
USD ($)
segment
|
Mar. 31, 2017
USD ($)
|
|
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 65,532 | $ 67,255 |
Total operating expenses | 98,023 | 107,150 |
Operating loss | (32,491) | (39,895) |
Operating Segments | Product Licensing Segment | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 53,216 | 27,701 |
Total operating expenses | 43,891 | 43,182 |
Operating loss | 9,325 | (15,481) |
Operating Segments | Semiconductor and IP Licensing Segment | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 12,316 | 39,554 |
Total operating expenses | 19,430 | 22,763 |
Operating loss | (7,114) | 16,791 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Total operating expenses | 34,702 | 41,205 |
Operating loss | $ (34,702) | $ (41,205) |
Subsequent Event - Additional Information (Detail) - $ / shares |
3 Months Ended | ||
---|---|---|---|
Apr. 26, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Subsequent Event [Line Items] | |||
Cash dividends declared per share (in dollars per share) | $ 0.20 | $ 0.20 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Cash dividends declared per share (in dollars per share) | $ 0.20 |
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