Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'RNWK | ' |
Entity Registrant Name | 'REALNETWORKS INC | ' |
Entity Central Index Key | '0001046327 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 35,733,174 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $134,879 | $163,198 |
Short-term investments | 83,527 | 108,216 |
Trade accounts receivable, net of allowances for doubtful accounts and sales returns | 26,494 | 30,754 |
Deferred costs, current portion | 1,622 | 825 |
Deferred Tax Assets, Net of Valuation Allowance, Current | 3,942 | 2,869 |
Prepaid expenses and other current assets | 12,152 | 17,002 |
Total current assets | 262,616 | 322,864 |
Equipment, software, and leasehold improvements, at cost: | ' | ' |
Equipment and software | 94,054 | 98,041 |
Leasehold improvements | 3,516 | 22,767 |
Total equipment, software, and leasehold improvements, at cost | 97,570 | 120,808 |
Less accumulated depreciation and amortization | 73,105 | 91,492 |
Net equipment, software, and leasehold improvements | 24,465 | 29,316 |
Restricted cash equivalents and investments | 5,000 | 10,000 |
Equity method investments | 12,656 | 19,204 |
Available for sale securities | 34,485 | 34,334 |
Other assets | 2,844 | 3,153 |
Deferred costs, non-current portion | 1,032 | 531 |
Deferred tax assets, net, non-current portion | 1,576 | 4,911 |
Intangible Assets, Net (Excluding Goodwill) | 14,051 | 3,275 |
Goodwill | 17,518 | 6,309 |
Total assets | 376,243 | 433,897 |
Current liabilities: | ' | ' |
Accounts payable | 20,562 | 19,013 |
Accrued and other liabilities | 58,024 | 57,530 |
Deferred revenue, current portion | 7,604 | 8,675 |
Total current liabilities | 86,190 | 85,218 |
Deferred revenue, non-current portion | 167 | 169 |
Deferred rent | 613 | 2,250 |
Deferred tax liabilities, net, non-current portion | 3,166 | 432 |
Other long-term liabilities | 492 | 3,100 |
Total liabilities | 90,628 | 91,169 |
Commitments and contingencies | ' | ' |
Preferred stock, $0.001 par value, no shares issued and outstanding: | ' | ' |
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 35,198 shares in 2012 and 34,422 shares in 2011 | 36 | 35 |
Additional paid-in capital | 608,595 | 603,770 |
Accumulated other comprehensive loss | -26,959 | -26,540 |
Retained deficit | -296,057 | -234,537 |
Total shareholders' equity | 285,615 | 342,728 |
Total liabilities and shareholders' equity | 376,243 | 433,897 |
Preferred stock, Series A | ' | ' |
Preferred stock, $0.001 par value, no shares issued and outstanding: | ' | ' |
Preferred stock | 0 | 0 |
Preferred stock, Undesignated series | ' | ' |
Preferred stock, $0.001 par value, no shares issued and outstanding: | ' | ' |
Preferred stock | $0 | $0 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Per Share data, unless otherwise specified | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized | 250,000 | 250,000 |
Common stock, issued | 35,679 | 35,324 |
Common stock, outstanding | 35,679 | 35,324 |
Preferred stock, Series A | ' | ' |
Preferred stock, authorized | 200 | 200 |
Preferred stock, Undesignated series | ' | ' |
Preferred stock, authorized | 59,800 | 59,800 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Net revenue | $48,958 | [1] | $59,088 | [1] | $155,601 | [1] | $191,578 | [1] |
Cost of revenue | 18,990 | [2] | 25,244 | [2] | 59,015 | [2] | 78,633 | [2] |
Gross profit | 29,968 | 33,844 | 96,586 | 112,945 | ||||
Sale of patents and other technology assets, net of costs (See Note 1) | 0 | 0 | 0 | 116,353 | ||||
Operating expenses: | ' | ' | ' | ' | ||||
Research and development | 15,707 | 15,321 | 45,951 | 49,167 | ||||
Sales and marketing | 19,427 | 21,972 | 59,830 | 68,462 | ||||
General and administrative | 9,869 | 8,759 | 28,506 | 35,103 | ||||
Restructuring and other charges | 1,877 | 10,724 | 4,075 | 13,872 | ||||
Lease exit and related charges | 0 | 243 | 3,066 | 243 | ||||
Loss Related to Litigation Settlement | 11,525 | 0 | 11,525 | 0 | ||||
Total operating expenses | 58,405 | 57,019 | 152,953 | 166,847 | ||||
Operating income (loss) | -28,437 | -23,175 | -56,367 | 62,451 | ||||
Other income (expenses): | ' | ' | ' | ' | ||||
Interest income, net | 166 | 164 | 992 | 1,033 | ||||
Gain (loss) on sale of equity and other investments, net | 0 | 2,210 | 0 | 5,288 | ||||
Equity in net loss of Rhapsody investment | -2,629 | -1,613 | -6,209 | -4,095 | ||||
Other income (expense), net | -118 | 248 | -146 | 1,674 | ||||
Total other income (expenses), net | -2,581 | 1,009 | -5,363 | 3,900 | ||||
Income (loss) before income taxes | -31,018 | -22,166 | -61,730 | 66,351 | ||||
Income tax benefit (expense) | -357 | -48 | 210 | -24,583 | ||||
Net income (loss) | -31,375 | -22,214 | -61,520 | 41,768 | ||||
Basic net income (loss) per share | ($0.88) | ($0.63) | ($1.73) | $1.20 | ||||
Diluted net income (loss) per share | ($0.88) | ($0.63) | ($1.73) | $1.19 | ||||
Shares used to compute basic net income (loss) per share | 35,670 | 34,998 | 35,490 | 34,747 | ||||
Shares used to compute diluted net income (loss) per share | 35,670 | 34,998 | 35,490 | 35,000 | ||||
Comprehensive income (loss): | ' | ' | ' | ' | ||||
Unrealized investment holding gains (losses), net of tax | -1,043 | 5,407 | -28 | 1,840 | ||||
Foreign currency translation gains (losses) | 1,235 | 506 | -391 | -1,730 | ||||
Total other comprehensive income (loss) | 192 | 5,913 | -419 | 110 | ||||
Net income (loss) | -31,375 | -22,214 | -61,520 | 41,768 | ||||
Comprehensive income (loss) | ($31,183) | ($16,301) | ($61,939) | $41,878 | ||||
[1] | quartersytd SeptemberB 30, 2013B SeptemberB 30, 2012SeptemberB 30, 2013SeptemberB 30, 2012Components of Revenue License Fees10,503B 11,957$33,49441,137Service Revenue38,455B 47,131122,107150,441Net Revenue48,958B 59,088$155,601191,578 | |||||||
[2] | Components of Cost of RevenueSeptemberB 30, 2013B SeptemberB 30, 2012B SeptemberB 30, 2013B SeptemberB 30, 2012License Fees2,062B 3,226B 6,377B 9,143Service Revenue16,928B 22,018B 52,638B 69,490Net Revenue Costs18,990B 25,244B 59,015B 78,633 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Components of net revenue: | ' | ' | ' | ' | ||||
License fees | $10,503 | $11,957 | $33,494 | $41,137 | ||||
Service revenue | 38,455 | 47,131 | 122,107 | 150,441 | ||||
Net revenue | 48,958 | [1] | 59,088 | [1] | 155,601 | [1] | 191,578 | [1] |
Components of cost of revenue: | ' | ' | ' | ' | ||||
License fees | 2,062 | 3,226 | 6,377 | 9,143 | ||||
Service revenue | 16,928 | 22,018 | 52,638 | 69,490 | ||||
Cost of revenue | $18,990 | [2] | $25,244 | [2] | $59,015 | [2] | $78,633 | [2] |
[1] | quartersytd SeptemberB 30, 2013B SeptemberB 30, 2012SeptemberB 30, 2013SeptemberB 30, 2012Components of Revenue License Fees10,503B 11,957$33,49441,137Service Revenue38,455B 47,131122,107150,441Net Revenue48,958B 59,088$155,601191,578 | |||||||
[2] | Components of Cost of RevenueSeptemberB 30, 2013B SeptemberB 30, 2012B SeptemberB 30, 2013B SeptemberB 30, 2012License Fees2,062B 3,226B 6,377B 9,143Service Revenue16,928B 22,018B 52,638B 69,490Net Revenue Costs18,990B 25,244B 59,015B 78,633 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities: | ' | ' |
Net income (loss) | ($61,520) | $41,768 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 15,045 | 12,478 |
Stock-based compensation | 5,671 | 6,419 |
Loss (gain) on equipment, software, and leasehold improvements | 0 | 1,965 |
Equity in net loss of Rhapsody | 6,209 | 4,095 |
Deferred income taxes, net | -1,238 | 22,399 |
Gain on sale of patent and other technology assets, net of costs | 0 | -116,353 |
Gain on sale of equity and other investments, net | 0 | -5,288 |
Realized translation gain | -35 | -1,968 |
Other | 51 | 0 |
Net change in certain operating assets and liabilities: | ' | ' |
Trade accounts receivable | 6,466 | 5,848 |
Prepaid expenses and other assets | 4,772 | -2,956 |
Accounts payable | 26 | 3,683 |
Accrued and other liabilities | -3,750 | -2,840 |
Net cash provided by (used in) operating activities | -28,303 | -30,750 |
Cash flows from investing activities: | ' | ' |
Purchases of equipment, software, and leasehold improvements | -5,798 | -6,478 |
Proceeds from Sale of Intangible Assets | 0 | 116,353 |
Proceeds from sale of equity and other investments | 0 | 7,244 |
Purchases of short-term investments | -85,670 | -76,191 |
Proceeds from sales and maturities of short-term investments | 110,359 | 51,885 |
Decrease (increase) in restricted cash equivalents and investments, net | 5,000 | 103 |
Payment of acquisition costs, net of cash acquired | -22,480 | 0 |
Net cash provided by (used in) investing activities | 1,411 | 92,916 |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of common stock (stock options and stock purchase plan) | 408 | 3,240 |
Tax payments from shares withheld upon vesting of restricted stock | -911 | -964 |
Payment of contingent consideration | -828 | 0 |
Net cash provided by (used in) financing activities | -1,331 | 2,276 |
Effect of exchange rate changes on cash and cash equivalents | -96 | -73 |
Net increase (decrease) in cash and cash equivalents | -28,319 | 64,369 |
Cash and cash equivalents, beginning of period | 163,198 | 106,333 |
Cash and cash equivalents, end of period | 134,879 | 170,702 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash received from income tax refunds | 8,354 | 247 |
Cash paid for income taxes | 2,988 | 2,015 |
Non-cash investing activities: | ' | ' |
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements | $1,096 | $116 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Description of Business and Summary of Significant Accounting Policies | ' | |||||||
Description of Business and Summary of Significant Accounting Policies | ||||||||
Description of Business. RealNetworks, Inc. and subsidiaries is a leading global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. | ||||||||
Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. | ||||||||
In this Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. | ||||||||
Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of RealNetworks and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. | ||||||||
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of the Company’s management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2013. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). | ||||||||
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the 10-K). | ||||||||
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, current economic conditions may require the use of additional estimates, and certain estimates we make are subject to a greater degree of uncertainty as a result of the current economic conditions. | ||||||||
Reportable Segments. In the first quarter of 2013 we reorganized the management of our businesses and as a result, we changed our reportable segments. See Note 18, Segment Information, for details. | ||||||||
Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income (loss), net of any applicable tax, were as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Unrealized gains on investments, net of tax effects of $(716) and $(846) at September 30, 2013 and December 31, 2012, respectively | $ | 26,657 | $ | 26,685 | ||||
Foreign currency translation adjustments | (53,616 | ) | (53,225 | ) | ||||
Accumulated other comprehensive income (loss) | $ | (26,959 | ) | $ | (26,540 | ) | ||
In the quarter and nine months ended September 30, 2012 we liquidated the investment in certain of our foreign entities and recorded net pre-tax gains of $0.4 million and $2.0 million, respectively, in Other income (expense), net, in the consolidated statement of operations upon the reclassification of the same amount of cumulative foreign exchange translation adjustment from accumulated other comprehensive income (loss) on the balance sheet. The reclassification adjustments had no related income tax expense or benefit. | ||||||||
There were no material reclassification adjustments or related tax effects related to foreign exchange translation amounts in the nine months ended September 30, 2013. | ||||||||
In the quarter and nine months ended September 30, 2012 we realized pre-tax gains of $2.2 million and $4.3 million, respectively, in the consolidated statement of operations, within Gain (loss) on sale of equity and other investments, net, related to the sale of a portion of the equity shares we hold in LoEn Entertainment, Inc., with the same amounts reclassified from accumulated other comprehensive income (loss) on the balance sheet. The reclassification adjustment had no related income tax expense or benefit. | ||||||||
There were no reclassification adjustments or related tax effects related to unrealized gains on investments in the nine months ended September 30, 2013. | ||||||||
For the three months ended September 30, 2013 we recorded income tax expense of $0.6 million and for the nine months ended September 30, 2013 we recorded an income tax benefit of $0.1 million related to unrealized gains (losses) on investment securities, and recognized the corresponding amount as an increase or decrease to accumulated other comprehensive income. | ||||||||
2012 Sale of Patents and Other Technology Assets to Intel Corporation. In the second quarter of 2012, we completed the sale of certain patents, patent applications and related rights held by us, and certain of our assets relating to our next generation video codec technologies to Intel Corporation (Intel). The entire $120.0 million of cash proceeds we received, net of certain direct costs incurred, was recorded as a gain on our statement of operations in the quarter ending June 30, 2012, since the patent assets and other technology had a net book value of zero. The gain recognized of $116.4 million in the nine months ended September 30, 2012 was net of related direct costs for the sale transaction totaling $3.6 million incurred in the first and second quarters of 2012. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Changes and Error Corrections [Abstract] | ' |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
There have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2013 to be implemented that are of significance or potential significance to RealNetworks. |
Acquisitions_Acquisitions
Acquisitions Acquisitions | 9 Months Ended |
Sep. 30, 2013 | |
Business Combinations [Abstract] | ' |
Business Combination Disclosure [Text Block] | ' |
Acquisitions | |
In the quarter ended June 30, 2013, we acquired 100% of the voting interests in Slingo, Inc., a social casino games company based in the U.S., for total cash consideration of $15.6 million. The tangible and intangible assets and liabilities recognized are reported within the Games segment. The identifiable intangible assets associated with the acquisition totaled $8.0 million. Of this total, $4.5 million is related to tradenames and trademarks determined to have indefinite useful lives and will be evaluated annually in our fourth quarter for impairment, or more frequently, if circumstances indicate an impairment may exist. The remaining $3.5 million includes developed game technology and existing customer relationships with finite lives, and will be amortized over their useful lives. We recorded a net deferred tax liability of $2.7 million related to the intangible assets acquired. Goodwill totaling $9.8 million was recorded, representing the intangible assets that do not qualify for separate recognition for accounting purposes, primarily related to the assembled workforce and expected synergies in the rapidly growing social casino games market. The goodwill is not deductible for income tax purposes. For the nine months ended September 30, 2013, the amount of revenue and income (loss) before income taxes from this acquired business was not significant. | |
In the quarter ended September 30, 2013, we acquired 100% of the voting interests in Muzicall Limited, a ringback tone company based in London, for total cash consideration of $6.7 million. The tangible and intangible assets and liabilities recognized are reported in the Mobile Entertainment segment. The identifiable intangible assets associated with the acquisition totaled $5.4 million, and include tradenames and trademarks, developed technology, user base and carrier relationships. All identifiable intangible assets from this acquisition have finite lives, and will be amortized over their useful lives. We recorded a net deferred tax asset of $3.4 million related to the assets acquired, and a full valuation allowance. Goodwill totaling $1.3 million was recorded, representing the intangible assets that do not qualify for separate recognition for accounting purposes, primarily related to the assembled workforce and expected synergies in the ringback tone industry. The goodwill is not deductible for income tax purposes. For the nine months ended September 30, 2013, the amount of revenue and income (loss) before income taxes from this acquired business was not significant. This acquisition is intended to accelerate our growth initiatives within the Mobile Entertainment segment. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
Stock-Based Compensation | ||||||||||||||||
Total stock-based compensation expense recognized in our consolidated statements of operations includes amounts related to stock options, restricted stock units, and employee stock purchase plans and was as follows (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Total stock-based compensation expense | $ | 1,613 | $ | 2,354 | $ | 5,671 | $ | 6,419 | ||||||||
The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Risk-free interest rate | 0.96 | % | 0.48 | % | 0.82 | % | 0.51 | % | ||||||||
Expected life (years) | 3.8 | 4.1 | 4 | 4.1 | ||||||||||||
Volatility | 48 | % | 58 | % | 48 | % | 58 | % | ||||||||
The total stock-based compensation amounts for 2013 and 2012 disclosed above are recorded in their respective line items within operating expenses in the consolidated statement of operations. No stock-based compensation was capitalized as part of the cost of an asset as of September 30, 2013 or December 31, 2012. As of September 30, 2013, we had $8.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 3 years. |
Rhapsody_Joint_Venture
Rhapsody Joint Venture | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | |||||||||||||||
Rhapsody Joint Venture | ' | |||||||||||||||
Rhapsody Joint Venture | ||||||||||||||||
RealNetworks initially formed in 2007 a joint venture with MTV Networks, a division of Viacom International Inc. (MTVN), to own and operate a business-to-consumer digital audio music service known as Rhapsody. Prior to March 31, 2010, we held a 51% interest in Rhapsody and MTVN owned the remaining 49%. On March 31, 2010, restructuring transactions involving Rhapsody were completed, and as a result, effective March 31, 2010 RealNetworks owned approximately 47% of Rhapsody. Subsequent to the restructuring transaction, we account for our investment in Rhapsody using the equity method of accounting for investments. | ||||||||||||||||
As of September 30, 2013 we owned approximately 45% of the issued and outstanding stock of Rhapsody. | ||||||||||||||||
RealNetworks continues to provide certain operational transition services to Rhapsody. These transition services are expected to be completed in 2013, and are discussed further in Footnote 19, Related Party Transactions. | ||||||||||||||||
We recorded our share of losses of Rhapsody of $2.6 million and $6.2 million for the quarter and nine months ended September 30, 2013, respectively. Our share of losses of Rhapsody for the quarter and nine months ended September 30, 2012 were $1.6 million and $4.1 million, respectively. | ||||||||||||||||
The carrying value of our Rhapsody investment was $12.7 million as of September 30, 2013. | ||||||||||||||||
Summarized financial information for Rhapsody, which represents 100% of their financial information (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net revenue | $ | 35,190 | $ | 36,389 | $ | 103,831 | $ | 109,368 | ||||||||
Gross profit | 7,800 | 9,266 | 24,412 | 28,757 | ||||||||||||
Net loss | (5,621 | ) | (3,424 | ) | (14,812 | ) | (9,031 | ) |
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Fair Value Measurements | ' | |||||||||||||||
Fair Value Measurements | ||||||||||||||||
We measure certain financial assets at fair value on a recurring basis, including cash equivalents, short-term investments, and equity investments of publicly traded companies. The fair value of these financial assets was determined based on three levels of inputs: | ||||||||||||||||
• | Level 1: Quoted prices in active markets for identical assets or liabilities | |||||||||||||||
• | Level 2: Directly or indirectly observed inputs for the asset or liability, including quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active | |||||||||||||||
• | Level 3: Significant unobservable inputs that reflect our own estimates of assumptions that market participants would use | |||||||||||||||
Items Measured at Fair Value on a Recurring Basis | ||||||||||||||||
The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). | ||||||||||||||||
Fair Value Measurements as of | ||||||||||||||||
30-Sep-13 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 23,038 | $ | 2 | $ | 23,036 | $ | — | ||||||||
Corporate notes and bonds | 72,493 | — | 72,493 | — | ||||||||||||
Short-term investments: | ||||||||||||||||
Corporate notes and bonds | 60,041 | — | 60,041 | — | ||||||||||||
U.S. government agency securities | 23,486 | 22,658 | 828 | — | ||||||||||||
Restricted cash equivalents and investments | 5,000 | — | 5,000 | — | ||||||||||||
Equity investments in publicly traded securities | 34,485 | 34,485 | — | — | ||||||||||||
Total | $ | 218,543 | $ | 57,145 | $ | 161,398 | $ | — | ||||||||
Fair Value Measurements as of | ||||||||||||||||
31-Dec-12 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 10,680 | $ | — | $ | 10,680 | $ | — | ||||||||
Corporate notes and bonds | 81,235 | — | 81,235 | — | ||||||||||||
Short-term investments: | ||||||||||||||||
Corporate notes and bonds | 65,502 | — | 65,502 | — | ||||||||||||
U.S. government agency securities | 42,714 | 42,113 | 601 | — | ||||||||||||
Restricted cash equivalents and investments | 10,000 | — | 10,000 | — | ||||||||||||
Equity investments in publicly traded securities | 34,334 | 34,334 | — | — | ||||||||||||
Total | $ | 244,465 | $ | 76,447 | $ | 168,018 | $ | — | ||||||||
Our equity investments in publicly traded companies consist of J-Stream Inc., a Japanese media services company, and LoEn Entertainment, Inc., a Korean digital music distribution company. These equity investments are accounted for as available for sale. The aggregate cost basis of these securities totaled $8.6 million as of September 30, 2013 and $8.6 million at December 31, 2012. | ||||||||||||||||
Items Measured at Fair Value on a Non-recurring Basis | ||||||||||||||||
Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the nine months ended September 30, 2013 and 2012, we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. |
Cash_Cash_Equivalents_ShortTer
Cash, Cash Equivalents, Short-Term Investments, Restricted Cash Equivalents and Investments | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Cash and Cash Equivalents [Abstract] | ' | |||||||
Cash, Cash Equivalents, Short-Term Investments, Restricted Cash Equivalents and Investments | ' | |||||||
Cash, Cash Equivalents, Short-Term Investments, Restricted Cash Equivalents and Investments | ||||||||
Cash and cash equivalents, short-term investments, and restricted cash equivalents and investments as of September 30, 2013, consisted of the following (in thousands): | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 39,348 | $ | 39,348 | ||||
Money market mutual funds | 23,038 | 23,038 | ||||||
Corporate notes and bonds | 72,494 | 72,493 | ||||||
Total cash and cash equivalents | 134,880 | 134,879 | ||||||
Short-term investments: | ||||||||
Corporate notes and bonds | 60,005 | 60,041 | ||||||
U.S. government agency securities | 23,478 | 23,486 | ||||||
Total short-term investments | 83,483 | 83,527 | ||||||
Total cash, cash equivalents and short-term investments | $ | 218,363 | $ | 218,406 | ||||
Restricted cash equivalents and investments | $ | 5,000 | $ | 5,000 | ||||
Cash and cash equivalents, short-term investments, and restricted cash equivalents and investments as of December 31, 2012 consisted of the following (in thousands): | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 71,283 | $ | 71,283 | ||||
Money market mutual funds | 10,680 | 10,680 | ||||||
Corporate notes and bonds | 81,237 | 81,235 | ||||||
Total cash and cash equivalents | 163,200 | 163,198 | ||||||
Short-term investments: | ||||||||
Corporate notes and bonds | 65,426 | 65,502 | ||||||
U.S. Government agency securities | 42,693 | 42,714 | ||||||
Total short-term investments | 108,119 | 108,216 | ||||||
Total cash, cash equivalents, and short-term investments | $ | 271,319 | $ | 271,414 | ||||
Restricted cash equivalents and investments | $ | 10,000 | $ | 10,000 | ||||
Restricted cash equivalents and investments amounts as of September 30, 2013, and December 31, 2012 relate to cash and investments pledged as collateral against letters of credit in connection with lease agreements. | ||||||||
Realized gains or losses on sales of short-term investment securities for the quarters and nine months ended September 30, 2013 and 2012 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of September 30, 2013 and December 31, 2012 were not significant. | ||||||||
Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of September 30, 2013 (in thousands): | ||||||||
Estimated | ||||||||
Fair Value | ||||||||
Within one year | $ | 57,321 | ||||||
Between one year and five years | 26,206 | |||||||
Total short-term investments | $ | 83,527 | ||||||
Allowance_for_Doubtful_Account
Allowance for Doubtful Accounts Receivable and Sales Returns | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Receivables [Abstract] | ' | |||||||
Allowance for Doubtful Accounts Receivable and Sales Returns | ' | |||||||
Allowance for Doubtful Accounts Receivable and Sales Returns | ||||||||
Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): | ||||||||
Allowance For | ||||||||
Doubtful | Sales | |||||||
Accounts | Returns | |||||||
Receivable | ||||||||
Balances, December 31, 2012 | $ | 1,010 | $ | 653 | ||||
Addition (reduction) to allowance | 210 | (47 | ) | |||||
Amounts written off | (61 | ) | (21 | ) | ||||
Foreign currency translation | 20 | — | ||||||
Balances, September 30, 2013 | $ | 1,179 | $ | 585 | ||||
One customer accounted for 13% of trade accounts receivable and one other customer accounted for 12% of trade accounts receivable, as of September 30, 2013. No one customer accounted for more than 10% of trade accounts receivable as of December 31, 2012. | ||||||||
One customer accounted for approximately 12%, or $6.0 million, and 14% or $21.1 million, of consolidated revenue during the quarter and nine months ended September 30, 2013, respectively. The revenue from this customer is reflected in our RealPlayer Group and Games segments. One other customer accounted for approximately 14%, or $6.8 million, and 11% or $17.3 million, of consolidated revenue during the quarter and nine months ended September 30, 2013, respectively, in our Mobile Entertainment segment. One customer accounted for 11%, or $6.4 million, of revenue during the quarter ended September 30, 2012. No one customer accounted for more than 10% of consolidated revenue during the nine months ended September 30, 2012. |
Other_Intangible_Assets
Other Intangible Assets | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||
Other Intangible Assets | ' | ||||||||||||
Other Intangible Assets | |||||||||||||
Other intangible assets (in thousands): | |||||||||||||
Gross | Accumulated | Net | |||||||||||
Amount | Amortization | ||||||||||||
Amortizing intangible assets: | |||||||||||||
Customer relationships | $ | 34,753 | $ | 30,168 | $ | 4,585 | |||||||
Developed technology | 28,949 | 24,554 | 4,395 | ||||||||||
Patents, trademarks and tradenames | 3,965 | 3,558 | 407 | ||||||||||
Service contracts and other | 5,637 | 5,473 | 164 | ||||||||||
$ | 73,304 | $ | 63,753 | $ | 9,551 | ||||||||
Non-amortizing intangible assets: | |||||||||||||
Trademarks and tradenames | $ | 4,500 | |||||||||||
Total other intangible assets, September 30, 2013 | $ | 14,051 | |||||||||||
For current year increases in other intangible assets, see Note 3, Acquisitions, for details on our acquisitions of Slingo, a social casino games business, in the quarter ended June 30, 2013, and Muzicall, a ringback tone business, in the quarter ended September 30, 2013. |
Goodwill
Goodwill | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Goodwill | ' | |||
Goodwill | ||||
Changes in goodwill (in thousands): | ||||
Balance, December 31, 2012 | $ | 6,309 | ||
Increases due to current year acquisitions | 11,352 | |||
Effects of foreign currency translation | (143 | ) | ||
Balance, September 30, 2013 | $ | 17,518 | ||
Goodwill by segment (in thousands): | ||||
September 30, | ||||
2013 | ||||
RealPlayer Group | $ | 580 | ||
Mobile Entertainment | 2,115 | |||
Games | 14,823 | |||
Total goodwill | $ | 17,518 | ||
For current year increases in goodwill, see Note 3, Acquisitions, for details on our acquisitions of Slingo, a social casino games business, in the quarter ended June 30, 2013, and Muzicall, a ringback tone business, in the quarter ended September 30, 2013. |
Accrued_and_Other_Liabilities
Accrued and Other Liabilities | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued and Other Liabilities | ' | |||||||
Accrued and Other Current Liabilities | ||||||||
Accrued and other current liabilities (in thousands): | ||||||||
30-Sep-13 | 31-Dec-12 | |||||||
Royalties and other fulfillment costs | $ | 16,648 | $ | 19,435 | ||||
Employee compensation, commissions and benefits | 11,821 | 13,368 | ||||||
Accrued legal settlements | 11,525 | — | ||||||
Sales, VAT and other taxes payable | 8,449 | 10,959 | ||||||
Deferred tax liabilities—current | 453 | 3,894 | ||||||
Accrued lease exit and related charges | 591 | 2,463 | ||||||
Other | 8,537 | 7,411 | ||||||
Total accrued and other current liabilities | $ | 58,024 | $ | 57,530 | ||||
Restructuring_Charges
Restructuring Charges | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Restructuring and Related Activities [Abstract] | ' | ||||||||||
Restructuring Charges | ' | ||||||||||
Restructuring Charges | |||||||||||
Restructuring and other charges in 2013 and 2012 consist of costs associated with the ongoing reorganization of our business operations and focus on aligning our operating expenses with our revenue profile. The expense amounts in both years relate primarily to severance costs due to workforce reductions. | |||||||||||
In the third quarter of 2012 we announced we would be eliminating approximately 160 positions worldwide. This action has been concluded as of the end of the second quarter of 2013. In the third quarter of 2013, we incurred restructuring charges as a result of reduced headcount from the termination of certain SaaS contracts. We expect this action to be completed within the first half of 2014. For the quarter and nine months ended September 30, 2013 we recorded $1.1 million and $2.9 million, respectively, of restructuring charges for employee separation costs related to these actions and for other actions taken in 2013. | |||||||||||
In the second and third quarter of 2013 we also incurred restructuring charges related to the relocation of our Seattle headquarters. For the quarter and nine months ended September 30, 2013, we recorded $0.8 million and $1.2 million, respectively, of restructuring charges related to this action, which are classified as Asset Related and Other Costs in the table below. | |||||||||||
Details of restructuring charges for the nine months ended September 30, 2013 and 2012 are in the table below. The amount accrued at September 30, 2013 for employee separation includes costs for those employees who were separated in the quarter ended September 30, 2013 and are expected to be paid out in the quarter ended December 31, 2013. The amount accrued for contract assignment is expected to be paid out by the end of 2013. | |||||||||||
For details on costs associated with the termination of our Seattle headquarters lease see Note 13, Lease exit and related charges. | |||||||||||
Restructuring charges by type of cost (in thousands): | |||||||||||
Employee Separation Costs | Contract Assignment Costs | Asset Related and Other Costs | Total | ||||||||
Costs incurred and charged to expense for the nine months ended September 30, 2013 | $ | 2,891 | — | 1,184 | $ | 4,075 | |||||
Costs incurred and charged to expense for the nine months ended September 30, 2012 | $ | 8,099 | 3,629 | 2,144 | $ | 13,872 | |||||
Changes to the accrued restructuring cost liability (in thousands): | |||||||||||
By Type of Cost | |||||||||||
Employee Separation Costs | Contract Assignment Costs | Total | |||||||||
Accrued liability as of December 31, 2012 | $ | 731 | $ | 1,700 | $ | 2,431 | |||||
Costs incurred and charged to expense for the nine months ended September 30, 2013 | 2,891 | — | 2,891 | ||||||||
Cash payments | (2,806 | ) | — | (2,806 | ) | ||||||
Accrued liability as of September 30, 2013 | $ | 816 | $ | 1,700 | $ | 2,516 | |||||
Lease_Exit_and_Related_Charges
Lease Exit and Related Charges | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ' | |||
Lease Exit and Related Charges | ' | |||
Lease Exit and Related Charges | ||||
As a result of the reduction in use of RealNetworks' office space, primarily in our former corporate headquarters in Seattle, Washington, and certain other locations, losses have been recognized representing rent and contractual operating expenses over the remaining life of the leases, and related write-downs of leasehold improvements to their estimated fair value. | ||||
In the second quarter of 2013, we entered into a new lease in a new location for our Seattle headquarters and concurrently entered into an amendment to our then-current headquarters office lease that provided for an early termination of such lease. | ||||
The new Seattle building lease is for an initial term of 11 years and commenced on August 15, 2013. We have the option to extend the lease for two additional five-year terms, with certain increases in base rent. | ||||
The amendment to our former headquarters office lease provided for an early termination of such lease effective in three stages, with the termination of a majority of the premises on August 31, 2013, and the final stage being complete by December 31, 2013. Prior to the execution of the amendment, the lease had been scheduled to expire in September 2014. In connection with the early termination of the lease, we agreed to pay the landlord termination fees totaling approximately $6.6 million in 2013. In the quarter and nine months ended September 30, 2013, we paid the landlord $3.1 million and $6.3 million, respectively, in termination fees. The initial payment of $3.2 million was expensed and paid within the second quarter of 2013, and is therefore not included in the rollforward below. The second payment of $3.1 million was accrued in the second quarter of 2013 and subsequently paid in the third quarter of 2013, and is included in the rollforward of the accrued loss below. | ||||
Changes to accrued lease exit and related charges (in thousands): | ||||
Accrued loss December 31, 2012 | $ | 4,213 | ||
Additions and adjustments to the lease exit charges accrual, including sublease income estimate revision | 1,331 | |||
Less amounts paid, net of sublease amounts | (4,953 | ) | ||
Accrued loss September 30, 2013 (included in Accrued and other current liabilities) | $ | 591 | ||
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes | |
As of September 30, 2013, there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 10-K. We do not anticipate that our total unrecognized tax benefits will significantly change within the next twelve months. | |
We file numerous consolidated and separate income tax returns in the U.S including federal, state and local, as well as foreign jurisdictions. With few exceptions, we are no longer subject to U.S federal income tax examinations for tax years before 2008 or state, local, or foreign income tax examinations for years before 1993. We are currently under audit by various states and foreign jurisdictions for certain tax years subsequent to 1993. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Earnings Per Share | ' | |||||||||||||||
Earnings (Loss) Per Share | ||||||||||||||||
Basic net income (loss) per share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) by the weighted average number of common and dilutive potential common shares outstanding during the period. Basic and diluted EPS (in thousands, except per share amounts): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income (loss) available to common shareholders | $ | (31,375 | ) | $ | (22,214 | ) | $ | (61,520 | ) | $ | 41,768 | |||||
Weighted average common shares outstanding used to compute basic EPS | 35,670 | 34,998 | 35,490 | 34,747 | ||||||||||||
Dilutive effect of stock based awards | — | — | — | 253 | ||||||||||||
Weighted average common shares outstanding used to compute diluted EPS | 35,670 | 34,998 | 35,490 | 35,000 | ||||||||||||
Basic EPS | $ | (0.88 | ) | $ | (0.63 | ) | $ | (1.73 | ) | $ | 1.2 | |||||
Diluted EPS | $ | (0.88 | ) | $ | (0.63 | ) | $ | (1.73 | ) | $ | 1.19 | |||||
During the quarter and nine months ended September 30, 2013, respectively, 4.6 million and 4.4 million of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. | ||||||||||||||||
During the quarter and nine months ended September 30, 2012, respectively, 4.3 million and 5.3 million of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Commitments and Contingencies | |
Commitments. See Note 13, Lease exit and related charges, for details on office lease commitments. | |
Litigation. In October 2013, we executed settlement agreements relating to certain of our outstanding litigation matters; specifically, the matters brought against us by VoiceAge Corporation and Callertone Innovations, Inc., which are more fully described below. During the fourth quarter of 2013 we paid an aggregate of $11.5 million, representing our total obligation under these settlements. This amount was accrued as of September 30, 2013, and is identified in our Condensed Consolidated Statements of Operations as "Loss on litigation settlements." | |
On July 3, 2012, a lawsuit was filed against us by VoiceAge Corporation in the Supreme Court of the State of New York, wherein VoiceAge asserted that we had breached our payment obligations under the terms of a patent license agreement between us and VoiceAge in respect of distribution of specified codec technology, and sought a material amount of damages. We removed the proceedings to New York federal court, and discovery took place from January 4 to May 15, 2013. In June 2013, VoiceAge submitted a motion for summary judgment, which was denied by the Supreme Court of the State of New York on August 5, 2013. On October 24, 2013, we executed a settlement agreement with VoiceAge to settle and dismiss with prejudice all outstanding claims in the lawsuit. | |
On October 28, 2011 and November 1, 2011, respectively, two lawsuits were filed by Callertone Innovations, LLC in the U.S. District Court for the District of Delaware. The first lawsuit was against T-Mobile USA, Inc. and the second lawsuit was against MetroPCS Wireless, Inc. and MetroPCS Communications, Inc., which we collectively refer to as MetroPCS. The lawsuits alleged that T-Mobile and MetroPCS, respectively, infringed Callertone's patents by providing ringback tone services. We agreed to indemnify each of T-Mobile and MetroPCS against the claims based on an indemnity that was claimed to be owed by us. The respective complaint was served on T-Mobile on January 16, 2012 and on MetroPCS on January 14, 2012. We filed our answers to each complaint on April 9, 2012. In each matter, we disputed the plaintiff's allegations regarding both the validity of its patents and its claims of infringement against T-Mobile and MetroPCS, respectively. A claims construction hearing was held on September 6, 2013. On October 21, 2013, we executed a settlement agreement with Callertone to settle and dismiss with prejudice all outstanding claims in each of the lawsuits. | |
On April 25, 2007, a lawsuit was filed by Greenville Communications, LLC in Greenville, Mississippi against a number of cell phone carriers, including our partners T-Mobile USA, Inc. and Alltel Corporation, alleging that they infringed Greenville's patents by providing ringback tone services. We agreed to indemnify T-Mobile and Alltel against the claims based on an indemnity that was claimed to be owed by us. On August 27, 2007, our motion to transfer this matter to the U.S. District Court for the District of New Jersey was granted. The parties briefed claims construction, but the case was subsequently stayed pending reexamination of the patents at issue. On December 10, 2009, the U.S. Patent and Trademark Office issued notice of its intent to issue reexamination certificates for the patents in the suit. The District Court lifted the stay on the litigation on January 29, 2010 and discovery resumed. On September 28, 2011, the District Court held a claims construction hearing, and on May 10, 2012, the District Court issued a non-infringement judgment that was favorable to us and the other defendants. On December 4, 2012, Greenville appealed the claims construction order and the judgment, and the defendants filed a reply brief on January 28, 2013. On May 17, 2013, the U.S. Court of Appeals for the Federal Circuit affirmed the judgment of non-infringement of the District Court. Greenville has filed a petition for re-hearing with the U.S. Court of Appeals. Due to the uncertainties inherent in this matter, we are unable to estimate the range of possible loss that could result from this litigation. | |
Although the matters described above have been either settled, as in the lawsuits filed by VoiceAge and Callertone, or the appeals process has been nearly exhausted, as in the Greenville matter, we could in the future become subject to legal proceedings, governmental investigations and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks and other intellectual property rights. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources. In addition, given the broad distribution of some of our consumer products, any individual claim related to those products could give rise to liabilities that may be material to us. In the event of a determination adverse to us, we could incur substantial monetary liability, and/or be required to change our business practices. Either of these could have a material adverse effect on our consolidated financial statements. |
Guarantees
Guarantees | 9 Months Ended |
Sep. 30, 2013 | |
Guarantees [Abstract] | ' |
Guarantees | ' |
Guarantees | |
In the ordinary course of business, RealNetworks is subject to potential obligations for standard warranty and indemnification provisions that are contained within many of our customer license and service agreements. Our warranty provisions are consistent with those prevalent in our industry, and we do not have a history of incurring losses on warranties; therefore, we do not maintain accruals for warranty-related obligations. With regard to indemnification provisions, nearly all of our carrier contracts obligate us to indemnify our carrier customers for certain liabilities that may be incurred by them. We have in the past received claims for indemnification from some of our carrier customers. See Note 16, Commitments and Contingencies, for a discussion of current indemnification claims. | |
As discussed in Note 1, Description of Business and Summary of Significant Accounting Policies, we sold certain patents and other technology assets to Intel in the second quarter of 2012. We have specific obligations to indemnify Intel for breaches of the representations and warranties that we made and covenants that we agreed to in the asset purchase agreement executed in connection with the transaction, and for certain potential future intellectual property infringement claims brought by third parties against Intel. The amount of any potential liabilities related to our indemnification obligations to Intel will not be determined until a claim has been made, but we are obligated to indemnify Intel up to the amount of the gross purchase price that we received in the sale. |
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Information | ' | |||||||||||||||
ote 18. Segment Information | ||||||||||||||||
In the first quarter of 2013 we reorganized the management of our businesses and as a result, we now report the following three segments: (1) RealPlayer Group, which includes sales of our RealPlayer media player software and related products, such as the distribution of third party software products, advertising on RealPlayer websites, and sales of RealPlayer Plus software licenses to consumers, sales of intellectual property licenses, and consumer subscriptions such as SuperPass and our recently launched RealPlayer Cloud service; (2) Mobile Entertainment, which includes our SaaS services, systems integration, and professional services to mobile carriers, and sales of technology licenses of our software products such as Helix; and (3) Games, which includes all our games-related businesses, including sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games. | ||||||||||||||||
In addition, we now also allocate certain corporate expenses which are directly attributable to supporting the business to our reportable segments, rather than retaining those expenses in our corporate segment. These corporate expenses include but are not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are retained in aggregate in our corporate segment. All restructuring, lease exit and related charges, and, for 2013, the loss on litigation settlements, are included in the corporate segment. In 2012, the sale of patent and other technology assets, net of costs, was included in the corporate segment. The historical financial information presented has been recast to reflect the new segments and the new corporate expense presentation. | ||||||||||||||||
RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker reviews results. Our Chief Operating Decision Maker is considered to be the CEO Staff (CEOS), which includes the interim Chief Executive Officer, Chief Financial Officer, President, Executive Vice President, General Counsel and certain Senior Vice Presidents. The CEOS reviews financial information presented on both a consolidated basis and on a business segment basis, accompanied by certain disaggregated information about products and services, geographical regions and corporate expenses for purposes of making decisions and assessing financial performance. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. | ||||||||||||||||
Segment results for the quarters and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
RealPlayer Group | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 17,641 | $ | 21,392 | $ | 58,407 | $ | 65,631 | ||||||||
Cost of revenue | 3,264 | 6,735 | 12,984 | 16,026 | ||||||||||||
Gross profit | 14,377 | 14,657 | 45,423 | 49,605 | ||||||||||||
Operating expenses | 14,449 | 13,082 | 44,656 | 41,849 | ||||||||||||
Operating income (loss) | $ | (72 | ) | $ | 1,575 | $ | 767 | $ | 7,756 | |||||||
Mobile Entertainment | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 19,948 | $ | 22,820 | $ | 59,035 | $ | 74,600 | ||||||||
Cost of revenue | 11,972 | 12,740 | 33,974 | 43,093 | ||||||||||||
Gross profit | 7,976 | 10,080 | 25,061 | 31,507 | ||||||||||||
Operating expenses | 9,453 | 11,936 | 26,976 | 40,591 | ||||||||||||
Operating income (loss) | $ | (1,477 | ) | $ | (1,856 | ) | $ | (1,915 | ) | $ | (9,084 | ) | ||||
Games | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 11,369 | $ | 14,876 | $ | 38,159 | $ | 51,347 | ||||||||
Cost of revenue | 3,216 | 4,989 | 10,397 | 17,332 | ||||||||||||
Gross profit | 8,153 | 9,887 | 27,762 | 34,015 | ||||||||||||
Operating expenses | 11,513 | 12,023 | 35,120 | 39,962 | ||||||||||||
Operating income (loss) | $ | (3,360 | ) | $ | (2,136 | ) | $ | (7,358 | ) | $ | (5,947 | ) | ||||
Corporate | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cost of revenue | $ | 538 | $ | 780 | $ | 1,660 | $ | 2,182 | ||||||||
Sale of patents and other technology assets, net of costs | — | — | — | 116,353 | ||||||||||||
Operating expenses | 22,990 | 19,978 | 46,201 | 44,445 | ||||||||||||
Operating income (loss) | $ | (23,528 | ) | $ | (20,758 | ) | $ | (47,861 | ) | $ | 69,726 | |||||
Our customers consist primarily of consumers and corporations located in the U.S., Europe and various foreign countries. Revenue by geographic region (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
United States | $ | 21,039 | $ | 29,101 | $ | 70,525 | $ | 89,529 | ||||||||
Europe | 8,750 | 12,470 | 29,278 | 43,021 | ||||||||||||
Rest of the world | 19,169 | 17,517 | 55,798 | 59,028 | ||||||||||||
Total net revenue | $ | 48,958 | $ | 59,088 | $ | 155,601 | $ | 191,578 | ||||||||
Long-lived assets, consisting of equipment, software, leasehold improvements, other intangible assets, and goodwill by geographic region (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2013 | 2012 | |||||||||||||||
United States | $ | 41,634 | $ | 27,915 | ||||||||||||
Europe | 8,830 | 2,350 | ||||||||||||||
Rest of the world | 5,570 | 8,635 | ||||||||||||||
Total long-lived assets | $ | 56,034 | $ | 38,900 | ||||||||||||
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Related Party Transactions | |
Transactions with Rhapsody. See Note 5, Rhapsody Joint Venture, for details on the 2010 restructuring transaction involving Rhapsody. Subsequent to the restructuring transaction, we are obligated to provide Rhapsody with certain support services. These support services are expected to be completed in 2013. The support services include information technology and limited operational support provided directly to Rhapsody. The amount of these and other support service costs were based on various measures depending on the service provided, including vendor fees, an allocation of fixed costs and time employees spend on providing services to Rhapsody. RealNetworks allocates the cost of providing these support services and records such allocation as a reduction to the related expense in the period for which it was incurred. During the quarter and nine months ended September 30, 2013, we charged Rhapsody $0.2 million and $0.6 million, respectively, for the support services. During the quarter and nine months ended September 30, 2012, we charged Rhapsody $0.2 million and $0.7 million, respectively, for the support services. | |
Transactions with LoEn Entertainment, Inc. In 2008 RealNetworks acquired at market prices common shares of LoEn Entertainment, Inc., whose shares are traded on the Korean Securities Dealers Automated Quotations. As of September 30, 2013 we owned approximately 9% of the outstanding shares of LoEn. Our investment in LoEn is treated as an available for sale investment and is marked-to-market each period with resulting unrealized gains or losses recognized in accumulated other comprehensive income/loss. During the quarter and nine months ended September 30, 2013, we recorded revenue from LoEn of $6.8 million and $17.3 million, respectively. During the quarter and nine months ended September 30, 2012, we recorded revenue from LoEn of $4.0 million and $12.0 million, respectively. Revenue consisted primarily of sales of application service provider services, which include sales of ringback tones, music on demand, video on demand, and intercarrier messaging services. Associated with these transactions, we also recorded accounts receivable of $3.4 million as of September 30, 2013. Accounts payable and cost of revenue amounts associated with LoEn as of and for the periods ended September 30, 2013 and 2012 were nominal. |
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||
Sep. 30, 2013 | Sep. 30, 2012 | ||||||||
Accounting Policies [Abstract] | ' | ' | |||||||
Description of Business | ' | ' | |||||||
Description of Business. RealNetworks, Inc. and subsidiaries is a leading global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. | |||||||||
Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. | |||||||||
In this Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. | |||||||||
Basis of Presentation | ' | ' | |||||||
Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of RealNetworks and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. | |||||||||
The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of the Company’s management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2013. Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). | |||||||||
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the 10-K). | |||||||||
Use of Estimates | ' | ' | |||||||
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, current economic conditions may require the use of additional estimates, and certain estimates we make are subject to a greater degree of uncertainty as a result of the current economic conditions. | |||||||||
Segment Reporting, Policy [Policy Text Block] | ' | ' | |||||||
Reportable Segments. In the first quarter of 2013 we reorganized the management of our businesses and as a result, we changed our reportable segments. See Note 18, Segment Information, for details. | |||||||||
Accumulated Other Comprehensive Income (Loss) | ' | ' | |||||||
Accumulated Other Comprehensive Income (Loss). The components of accumulated other comprehensive income (loss), net of any applicable tax, were as follows (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Unrealized gains on investments, net of tax effects of $(716) and $(846) at September 30, 2013 and December 31, 2012, respectively | $ | 26,657 | $ | 26,685 | |||||
Foreign currency translation adjustments | (53,616 | ) | (53,225 | ) | |||||
Accumulated other comprehensive income (loss) | $ | (26,959 | ) | $ | (26,540 | ) | |||
In the quarter and nine months ended September 30, 2012 we liquidated the investment in certain of our foreign entities and recorded net pre-tax gains of $0.4 million and $2.0 million, respectively, in Other income (expense), net, in the consolidated statement of operations upon the reclassification of the same amount of cumulative foreign exchange translation adjustment from accumulated other comprehensive income (loss) on the balance sheet. The reclassification adjustments had no related income tax expense or benefit. | |||||||||
There were no material reclassification adjustments or related tax effects related to foreign exchange translation amounts in the nine months ended September 30, 2013. | |||||||||
In the quarter and nine months ended September 30, 2012 we realized pre-tax gains of $2.2 million and $4.3 million, respectively, in the consolidated statement of operations, within Gain (loss) on sale of equity and other investments, net, related to the sale of a portion of the equity shares we hold in LoEn Entertainment, Inc., with the same amounts reclassified from accumulated other comprehensive income (loss) on the balance sheet. The reclassification adjustment had no related income tax expense or benefit. | |||||||||
There were no reclassification adjustments or related tax effects related to unrealized gains on investments in the nine months ended September 30, 2013. | |||||||||
For the three months ended September 30, 2013 we recorded income tax expense of $0.6 million and for the nine months ended September 30, 2013 we recorded an income tax benefit of $0.1 million related to unrealized gains (losses) on investment securities, and recognized the corresponding amount as an increase or decrease to accumulated other comprehensive income. | |||||||||
Sale of Patents and Other Technology Assets to Intel Corporation | ' | ' | |||||||
Sale of Patents and Other Technology Assets to Intel Corporation. In the second quarter of 2012, we completed the sale of certain patents, patent applications and related rights held by us, and certain of our assets relating to our next generation video codec technologies to Intel Corporation (Intel). The entire $120.0 million of cash proceeds we received, net of certain direct costs incurred, was recorded as a gain on our statement of operations in the quarter ending June 30, 2012, since the patent assets and other technology had a net book value of zero. The gain recognized of $116.4 million in the nine months ended September 30, 2012 was net of related direct costs for the sale transaction totaling $3.6 million incurred in the first and second quarters of 2012. |
Description_of_Business_and_Su2
Description of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Accounting Policies [Abstract] | ' | |||||||
Components of Accumulated Other Comprehensive Income Loss | ' | |||||||
The components of accumulated other comprehensive income (loss), net of any applicable tax, were as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Unrealized gains on investments, net of tax effects of $(716) and $(846) at September 30, 2013 and December 31, 2012, respectively | $ | 26,657 | $ | 26,685 | ||||
Foreign currency translation adjustments | (53,616 | ) | (53,225 | ) | ||||
Accumulated other comprehensive income (loss) | $ | (26,959 | ) | $ | (26,540 | ) |
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Stock-Based Compensation Expense | ' | |||||||||||||||
Total stock-based compensation expense recognized in our consolidated statements of operations includes amounts related to stock options, restricted stock units, and employee stock purchase plans and was as follows (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Total stock-based compensation expense | $ | 1,613 | $ | 2,354 | $ | 5,671 | $ | 6,419 | ||||||||
Weighted-Average Assumptions Used to Determine Fair Value of Options Granted | ' | |||||||||||||||
The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Expected dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Risk-free interest rate | 0.96 | % | 0.48 | % | 0.82 | % | 0.51 | % | ||||||||
Expected life (years) | 3.8 | 4.1 | 4 | 4.1 | ||||||||||||
Volatility | 48 | % | 58 | % | 48 | % | 58 | % |
Rhapsody_Joint_Venture_Tables
Rhapsody Joint Venture (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | |||||||||||||||
Summarized Financial Operating Information for Rhapsody | ' | |||||||||||||||
Summarized financial information for Rhapsody, which represents 100% of their financial information (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net revenue | $ | 35,190 | $ | 36,389 | $ | 103,831 | $ | 109,368 | ||||||||
Gross profit | 7,800 | 9,266 | 24,412 | 28,757 | ||||||||||||
Net loss | (5,621 | ) | (3,424 | ) | (14,812 | ) | (9,031 | ) |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Financial Assets Measured at Fair Value on a Recurring Basis | ' | |||||||||||||||
The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2013 and December 31, 2012, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). | ||||||||||||||||
Fair Value Measurements as of | ||||||||||||||||
30-Sep-13 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 23,038 | $ | 2 | $ | 23,036 | $ | — | ||||||||
Corporate notes and bonds | 72,493 | — | 72,493 | — | ||||||||||||
Short-term investments: | ||||||||||||||||
Corporate notes and bonds | 60,041 | — | 60,041 | — | ||||||||||||
U.S. government agency securities | 23,486 | 22,658 | 828 | — | ||||||||||||
Restricted cash equivalents and investments | 5,000 | — | 5,000 | — | ||||||||||||
Equity investments in publicly traded securities | 34,485 | 34,485 | — | — | ||||||||||||
Total | $ | 218,543 | $ | 57,145 | $ | 161,398 | $ | — | ||||||||
Fair Value Measurements as of | ||||||||||||||||
31-Dec-12 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 10,680 | $ | — | $ | 10,680 | $ | — | ||||||||
Corporate notes and bonds | 81,235 | — | 81,235 | — | ||||||||||||
Short-term investments: | ||||||||||||||||
Corporate notes and bonds | 65,502 | — | 65,502 | — | ||||||||||||
U.S. government agency securities | 42,714 | 42,113 | 601 | — | ||||||||||||
Restricted cash equivalents and investments | 10,000 | — | 10,000 | — | ||||||||||||
Equity investments in publicly traded securities | 34,334 | 34,334 | — | — | ||||||||||||
Total | $ | 244,465 | $ | 76,447 | $ | 168,018 | $ | — | ||||||||
Cash_Cash_Equivalents_ShortTer1
Cash, Cash Equivalents, Short-Term Investments, Restricted Cash Equivalents and Investments (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Cash and Cash Equivalents [Abstract] | ' | |||||||
Cash Cash Equivalents Short-Term Investments and Restricted Cash Equivalents and Investments | ' | |||||||
Cash and cash equivalents, short-term investments, and restricted cash equivalents and investments as of September 30, 2013, consisted of the following (in thousands): | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 39,348 | $ | 39,348 | ||||
Money market mutual funds | 23,038 | 23,038 | ||||||
Corporate notes and bonds | 72,494 | 72,493 | ||||||
Total cash and cash equivalents | 134,880 | 134,879 | ||||||
Short-term investments: | ||||||||
Corporate notes and bonds | 60,005 | 60,041 | ||||||
U.S. government agency securities | 23,478 | 23,486 | ||||||
Total short-term investments | 83,483 | 83,527 | ||||||
Total cash, cash equivalents and short-term investments | $ | 218,363 | $ | 218,406 | ||||
Restricted cash equivalents and investments | $ | 5,000 | $ | 5,000 | ||||
Cash and cash equivalents, short-term investments, and restricted cash equivalents and investments as of December 31, 2012 consisted of the following (in thousands): | ||||||||
Amortized | Estimated | |||||||
Cost | Fair Value | |||||||
Cash and cash equivalents: | ||||||||
Cash | $ | 71,283 | $ | 71,283 | ||||
Money market mutual funds | 10,680 | 10,680 | ||||||
Corporate notes and bonds | 81,237 | 81,235 | ||||||
Total cash and cash equivalents | 163,200 | 163,198 | ||||||
Short-term investments: | ||||||||
Corporate notes and bonds | 65,426 | 65,502 | ||||||
U.S. Government agency securities | 42,693 | 42,714 | ||||||
Total short-term investments | 108,119 | 108,216 | ||||||
Total cash, cash equivalents, and short-term investments | $ | 271,319 | $ | 271,414 | ||||
Restricted cash equivalents and investments | $ | 10,000 | $ | 10,000 | ||||
Contractual Maturities of Short-Term Investments | ' | |||||||
ontractual maturities of short-term investments as of September 30, 2013 (in thousands): | ||||||||
Estimated | ||||||||
Fair Value | ||||||||
Within one year | $ | 57,321 | ||||||
Between one year and five years | 26,206 | |||||||
Total short-term investments | $ | 83,527 | ||||||
Allowance_for_Doubtful_Account1
Allowance for Doubtful Accounts Receivable and Sales Returns (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Receivables [Abstract] | ' | |||||||
Activity in Allowance for Doubtful Accounts Receivable and Sales Returns | ' | |||||||
Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): | ||||||||
Allowance For | ||||||||
Doubtful | Sales | |||||||
Accounts | Returns | |||||||
Receivable | ||||||||
Balances, December 31, 2012 | $ | 1,010 | $ | 653 | ||||
Addition (reduction) to allowance | 210 | (47 | ) | |||||
Amounts written off | (61 | ) | (21 | ) | ||||
Foreign currency translation | 20 | — | ||||||
Balances, September 30, 2013 | $ | 1,179 | $ | 585 | ||||
Other_Intangible_Assets_Tables
Other Intangible Assets (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||
Other Intangible Assets | ' | ||||||||||||
Other intangible assets (in thousands): | |||||||||||||
Gross | Accumulated | Net | |||||||||||
Amount | Amortization | ||||||||||||
Amortizing intangible assets: | |||||||||||||
Customer relationships | $ | 34,753 | $ | 30,168 | $ | 4,585 | |||||||
Developed technology | 28,949 | 24,554 | 4,395 | ||||||||||
Patents, trademarks and tradenames | 3,965 | 3,558 | 407 | ||||||||||
Service contracts and other | 5,637 | 5,473 | 164 | ||||||||||
$ | 73,304 | $ | 63,753 | $ | 9,551 | ||||||||
Non-amortizing intangible assets: | |||||||||||||
Trademarks and tradenames | $ | 4,500 | |||||||||||
Total other intangible assets, September 30, 2013 | $ | 14,051 | |||||||||||
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Changes in Goodwill | ' | |||
Changes in goodwill (in thousands): | ||||
Balance, December 31, 2012 | $ | 6,309 | ||
Increases due to current year acquisitions | 11,352 | |||
Effects of foreign currency translation | (143 | ) | ||
Balance, September 30, 2013 | $ | 17,518 | ||
Goodwill Assigned by Segments | ' | |||
Goodwill by segment (in thousands): | ||||
September 30, | ||||
2013 | ||||
RealPlayer Group | $ | 580 | ||
Mobile Entertainment | 2,115 | |||
Games | 14,823 | |||
Total goodwill | $ | 17,518 | ||
Accrued_and_Other_Liabilities_
Accrued and Other Liabilities (Tables) | 9 Months Ended | |||||||
Sep. 30, 2013 | ||||||||
Payables and Accruals [Abstract] | ' | |||||||
Accrued and Other Liabilities | ' | |||||||
Accrued and other current liabilities (in thousands): | ||||||||
30-Sep-13 | 31-Dec-12 | |||||||
Royalties and other fulfillment costs | $ | 16,648 | $ | 19,435 | ||||
Employee compensation, commissions and benefits | 11,821 | 13,368 | ||||||
Accrued legal settlements | 11,525 | — | ||||||
Sales, VAT and other taxes payable | 8,449 | 10,959 | ||||||
Deferred tax liabilities—current | 453 | 3,894 | ||||||
Accrued lease exit and related charges | 591 | 2,463 | ||||||
Other | 8,537 | 7,411 | ||||||
Total accrued and other current liabilities | $ | 58,024 | $ | 57,530 | ||||
Restructuring_Charges_Restruct
Restructuring Charges Restructuring Charges (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Restructuring and Related Activities [Abstract] | ' | ||||||||||
Schedule of Restructuring Charges by Type of Cost | ' | ||||||||||
Restructuring charges by type of cost (in thousands): | |||||||||||
Employee Separation Costs | Contract Assignment Costs | Asset Related and Other Costs | Total | ||||||||
Costs incurred and charged to expense for the nine months ended September 30, 2013 | $ | 2,891 | — | 1,184 | $ | 4,075 | |||||
Costs incurred and charged to expense for the nine months ended September 30, 2012 | $ | 8,099 | 3,629 | 2,144 | $ | 13,872 | |||||
Changes to the accrued restructuring cost liability (in thousands): | |||||||||||
By Type of Cost | |||||||||||
Employee Separation Costs | Contract Assignment Costs | Total | |||||||||
Accrued liability as of December 31, 2012 | $ | 731 | $ | 1,700 | $ | 2,431 | |||||
Costs incurred and charged to expense for the nine months ended September 30, 2013 | 2,891 | — | 2,891 | ||||||||
Cash payments | (2,806 | ) | — | (2,806 | ) | ||||||
Accrued liability as of September 30, 2013 | $ | 816 | $ | 1,700 | $ | 2,516 | |||||
Lease_Exit_and_Related_Charges1
Lease Exit and Related Charges (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ' | |||
Changes to Accrued Loss on Excess Office Facilities | ' | |||
Changes to accrued lease exit and related charges (in thousands): | ||||
Accrued loss December 31, 2012 | $ | 4,213 | ||
Additions and adjustments to the lease exit charges accrual, including sublease income estimate revision | 1,331 | |||
Less amounts paid, net of sublease amounts | (4,953 | ) | ||
Accrued loss September 30, 2013 (included in Accrued and other current liabilities) | $ | 591 | ||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | ' | |||||||||||||||
Basic and diluted EPS (in thousands, except per share amounts): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net income (loss) available to common shareholders | $ | (31,375 | ) | $ | (22,214 | ) | $ | (61,520 | ) | $ | 41,768 | |||||
Weighted average common shares outstanding used to compute basic EPS | 35,670 | 34,998 | 35,490 | 34,747 | ||||||||||||
Dilutive effect of stock based awards | — | — | — | 253 | ||||||||||||
Weighted average common shares outstanding used to compute diluted EPS | 35,670 | 34,998 | 35,490 | 35,000 | ||||||||||||
Basic EPS | $ | (0.88 | ) | $ | (0.63 | ) | $ | (1.73 | ) | $ | 1.2 | |||||
Diluted EPS | $ | (0.88 | ) | $ | (0.63 | ) | $ | (1.73 | ) | $ | 1.19 | |||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Results | ' | |||||||||||||||
Segment results for the quarters and nine months ended September 30, 2013 and 2012 (in thousands): | ||||||||||||||||
RealPlayer Group | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 17,641 | $ | 21,392 | $ | 58,407 | $ | 65,631 | ||||||||
Cost of revenue | 3,264 | 6,735 | 12,984 | 16,026 | ||||||||||||
Gross profit | 14,377 | 14,657 | 45,423 | 49,605 | ||||||||||||
Operating expenses | 14,449 | 13,082 | 44,656 | 41,849 | ||||||||||||
Operating income (loss) | $ | (72 | ) | $ | 1,575 | $ | 767 | $ | 7,756 | |||||||
Mobile Entertainment | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 19,948 | $ | 22,820 | $ | 59,035 | $ | 74,600 | ||||||||
Cost of revenue | 11,972 | 12,740 | 33,974 | 43,093 | ||||||||||||
Gross profit | 7,976 | 10,080 | 25,061 | 31,507 | ||||||||||||
Operating expenses | 9,453 | 11,936 | 26,976 | 40,591 | ||||||||||||
Operating income (loss) | $ | (1,477 | ) | $ | (1,856 | ) | $ | (1,915 | ) | $ | (9,084 | ) | ||||
Games | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue | $ | 11,369 | $ | 14,876 | $ | 38,159 | $ | 51,347 | ||||||||
Cost of revenue | 3,216 | 4,989 | 10,397 | 17,332 | ||||||||||||
Gross profit | 8,153 | 9,887 | 27,762 | 34,015 | ||||||||||||
Operating expenses | 11,513 | 12,023 | 35,120 | 39,962 | ||||||||||||
Operating income (loss) | $ | (3,360 | ) | $ | (2,136 | ) | $ | (7,358 | ) | $ | (5,947 | ) | ||||
Corporate | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Cost of revenue | $ | 538 | $ | 780 | $ | 1,660 | $ | 2,182 | ||||||||
Sale of patents and other technology assets, net of costs | — | — | — | 116,353 | ||||||||||||
Operating expenses | 22,990 | 19,978 | 46,201 | 44,445 | ||||||||||||
Operating income (loss) | $ | (23,528 | ) | $ | (20,758 | ) | $ | (47,861 | ) | $ | 69,726 | |||||
Revenue by Geographic Region | ' | |||||||||||||||
Our customers consist primarily of consumers and corporations located in the U.S., Europe and various foreign countries. Revenue by geographic region (in thousands): | ||||||||||||||||
Quarters Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
United States | $ | 21,039 | $ | 29,101 | $ | 70,525 | $ | 89,529 | ||||||||
Europe | 8,750 | 12,470 | 29,278 | 43,021 | ||||||||||||
Rest of the world | 19,169 | 17,517 | 55,798 | 59,028 | ||||||||||||
Total net revenue | $ | 48,958 | $ | 59,088 | $ | 155,601 | $ | 191,578 | ||||||||
Long-Lived Assets by Geographic Region | ' | |||||||||||||||
Long-lived assets, consisting of equipment, software, leasehold improvements, other intangible assets, and goodwill by geographic region (in thousands): | ||||||||||||||||
September 30, | December 31, | |||||||||||||||
2013 | 2012 | |||||||||||||||
United States | $ | 41,634 | $ | 27,915 | ||||||||||||
Europe | 8,830 | 2,350 | ||||||||||||||
Rest of the world | 5,570 | 8,635 | ||||||||||||||
Total long-lived assets | $ | 56,034 | $ | 38,900 | ||||||||||||
Description_of_Business_and_Su3
Description of Business and Summary of Significant Accounting Policies (Components of Accumulated Other Comprehensive Income Loss) (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | ' | ' |
Unrealized gains on investments, net of taxes | $26,657 | $26,685 |
Foreign currency translation adjustments | -53,616 | -53,225 |
Accumulated other comprehensive income (loss) | -26,959 | -26,540 |
Tax affect of available-for-sale securities | ($716) | ($846) |
Description_of_Business_and_Su4
Description of Business and Summary of Significant Accounting Policies (Additional Information) (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Realized Gain/(Loss) on sale of securities | ' | ' | $2,200,000 | ' | $4,300,000 |
Income tax benefit related to unrealized gains on securities | ' | 357,000 | 48,000 | -210,000 | 24,583,000 |
Proceeds from Sale of Productive Assets | 120,000,000 | ' | ' | ' | ' |
Net carrying value of patents and rights sold | ' | ' | 0 | ' | 0 |
Sale of patents and other technology assets, net of costs | ' | 0 | 0 | 0 | 116,353,000 |
Sale of patents and other technology assets, direct costs | ' | ' | ' | ' | 3,600,000 |
Unrealized gain on securities [Member] | ' | ' | ' | ' | ' |
Income tax benefit related to unrealized gains on securities | ' | 600,000 | ' | 100,000 | ' |
Other Income (Expense) [Member] | ' | ' | ' | ' | ' |
Gain on the liquidation of an investment in foreign entity | ' | ' | ($400,000) | ' | ($2,000,000) |
Acquisitions_Details
Acquisitions (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Slingo, Inc | Slingo, Inc | Muzicall Ltd [Member] | Tradenames and Trademarks | Developed Technology, tradenames and trademarks and customer relationships [Member] | Developed Technology and Customer Relationships | |||
Slingo, Inc | Muzicall Ltd [Member] | Slingo, Inc | ||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of voting interests acquired | ' | ' | 100.00% | ' | 100.00% | ' | ' | ' |
Payments to acquire businesses | ' | ' | $15,600,000 | ' | $6,700,000 | ' | ' | ' |
Intangible assets acquired | ' | ' | ' | 8,000,000 | ' | ' | ' | ' |
Indefinite-Lived Intangible Assets (Excluding Goodwill) | ' | ' | ' | ' | ' | 4,500,000 | ' | ' |
Finite-lived intangibles acquired | ' | ' | ' | ' | ' | ' | 5,400,000 | 3,500,000 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets Noncurrent | ' | ' | ' | ' | 3,400,000 | ' | ' | ' |
Deferred tax liability | ' | ' | ' | 2,700,000 | ' | ' | ' | ' |
Goodwill | $17,518,000 | $6,309,000 | ' | $9,800,000 | $1,300,000 | ' | ' | ' |
StockBased_Compensation_Recogn
Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' | ' |
Total stock-based compensation expense | $1,613 | $2,354 | $5,671 | $6,419 |
StockBased_Compensation_Weight
Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' | ' |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 0.96% | 0.48% | 0.82% | 0.51% |
Expected life (years) | '3 years 9 months | '4 years 1 month | '4 years 0 months | '4 years 1 month |
Volatility | 48.00% | 58.00% | 48.00% | 58.00% |
StockBased_Compensation_Additi
Stock-Based Compensation (Additional Information) (Detail) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Total unrecognized compensation cost | $8.10 |
Total unrecognized compensation cost, expected recognition period (in years) | '3 years |
Rhapsody_Joint_Venture_Additio
Rhapsody Joint Venture (Additional Information) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Mar. 31, 2010 | Mar. 31, 2010 | Mar. 31, 2010 |
Rhapsody America LLC | Rhapsody America LLC | Rhapsody America LLC | Rhapsody America LLC | Rhapsody America LLC | Before Capital Restructuring | MTV Networks | ||||||
Rhapsody America LLC | Before Capital Restructuring | |||||||||||
Rhapsody America LLC | ||||||||||||
Schedule of Equity Method Investments [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of ownership interest in Rhapsody | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 51.00% | 49.00% |
Percentage of ownership interest in Rhapsody | ' | ' | ' | ' | ' | 45.00% | ' | 45.00% | ' | 47.00% | ' | ' |
Losses recorded in the operations of Rhapsody | $2,629 | $1,613 | $6,209 | $4,095 | ' | $2,600 | $1,600 | $6,200 | $4,100 | ' | ' | ' |
Carrying value of Rhapsody investment | $12,656 | ' | $12,656 | ' | $19,204 | ' | ' | ' | ' | ' | ' | ' |
Rhapsody_Joint_Venture_Summari
Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) (Rhapsody America LLC, USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Rhapsody America LLC | ' | ' | ' | ' |
Schedule of Equity Method Investments [Line Items] | ' | ' | ' | ' |
Net revenue | $35,190 | $36,389 | $103,831 | $109,368 |
Gross profit | 7,800 | 9,266 | 24,412 | 28,757 |
Net loss | ($5,621) | ($3,424) | ($14,812) | ($9,031) |
Fair_Value_Measurements_Financ
Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | $218,543 | $244,465 |
Cash Equivalents | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 23,038 | 10,680 |
Cash Equivalents | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 72,493 | 81,235 |
Short-term Investments | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 60,041 | 65,502 |
Short-term Investments | U.S. government agency securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 23,486 | 42,714 |
Short-term Investments | Restricted cash equivalents and investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 5,000 | 10,000 |
Available-for-sale Securities | Publicly Traded Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 34,485 | 34,334 |
Level 1 | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 57,145 | 76,447 |
Level 1 | Restricted cash equivalents and investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 1 | Cash Equivalents | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 2 | 0 |
Level 1 | Cash Equivalents | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 1 | Short-term Investments | U.S. government agency securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 22,658 | 42,113 |
Level 1 | Available-for-sale Securities | Publicly Traded Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 34,485 | 34,334 |
Level 2 | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 161,398 | 168,018 |
Level 2 | Restricted cash equivalents and investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 5,000 | 10,000 |
Level 2 | Cash Equivalents | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 23,036 | 10,680 |
Level 2 | Cash Equivalents | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 72,493 | 81,235 |
Level 2 | Short-term Investments | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 60,041 | 65,502 |
Level 2 | Short-term Investments | U.S. government agency securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 828 | 601 |
Level 2 | Available-for-sale Securities | Publicly Traded Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Restricted cash equivalents and investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Cash Equivalents | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Cash Equivalents | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Short-term Investments | U.S. government agency securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | 0 | 0 |
Level 3 | Available-for-sale Securities | Publicly Traded Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Financial assets fair value | $0 | $0 |
Fair_Value_Measurements_Additi
Fair Value Measurements - Additional Information (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Fair Value Disclosures [Abstract] | ' | ' |
Equity investments accounted for as available for sale | $8.60 | $8.60 |
Cash_Cash_Equivalents_ShortTer2
Cash Cash Equivalents Short-Term Investments and Restricted Cash Equivalents and Investments (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Cash and Cash Equivalents | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | $134,880 | $163,200 |
Estimated Fair Value | 134,879 | 163,198 |
Cash and Cash Equivalents | Cash | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 39,348 | 71,283 |
Estimated Fair Value | 39,348 | 71,283 |
Cash and Cash Equivalents | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 23,038 | 10,680 |
Estimated Fair Value | 23,038 | 10,680 |
Cash and Cash Equivalents | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 72,494 | 81,237 |
Estimated Fair Value | 72,493 | 81,235 |
Short-term Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 83,483 | 108,119 |
Estimated Fair Value | 83,527 | 108,216 |
Short-term Investments | Corporate notes and bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 60,005 | 65,426 |
Estimated Fair Value | 60,041 | 65,502 |
Short-term Investments | U.S. government agency securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 23,478 | 42,693 |
Estimated Fair Value | 23,486 | 42,714 |
Cash Cash Equivalents And Short Term Investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 218,363 | 271,319 |
Estimated Fair Value | 218,406 | 271,414 |
Restricted cash equivalents and investments | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 5,000 | 10,000 |
Estimated Fair Value | $5,000 | $10,000 |
Cash_Cash_Equivalents_ShortTer3
Cash, Cash Equivalents, Short-Term Investments, Restricted Cash Equivalents and Investments (Contractual Maturities of Short-Term Investments) (Detail) (Short-term Investments, USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Investments Classified by Contractual Maturity Date [Line Items] | ' | ' |
Estimated Fair Value | $83,527 | $108,216 |
Within one year | ' | ' |
Investments Classified by Contractual Maturity Date [Line Items] | ' | ' |
Estimated Fair Value | 57,321 | ' |
Between one year and five years | ' | ' |
Investments Classified by Contractual Maturity Date [Line Items] | ' | ' |
Estimated Fair Value | $26,206 | ' |
Allowance_for_Doubtful_Account2
Allowance for Doubtful Accounts Receivable and Sales Returns (Activity in Allowance for Doubtful Accounts Receivable and Sales Returns) (Detail) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Allowance for Doubtful Accounts Receivable | ' |
Financing Receivable, Allowance for Credit Losses [Line Items] | ' |
Beginning Balance | $1,010 |
Addition (reduction) to allowance | 210 |
Amounts written off | -61 |
Foreign currency translation | 20 |
Ending Balance | 1,179 |
Allowance for Sales Returns | ' |
Financing Receivable, Allowance for Credit Losses [Line Items] | ' |
Beginning Balance | 653 |
Addition (reduction) to allowance | -47 |
Amounts written off | -21 |
Foreign currency translation | 0 |
Ending Balance | $585 |
Allowance_for_Doubtful_Account3
Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 |
Accounts Receivable | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Number of major customers | 1 | 1 | ' |
Accounts Receivable | Company A | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage by major customer | ' | ' | 13.00% |
Accounts Receivable | Company B | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage by major customer | ' | ' | 12.00% |
Revenue by Segment | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage by major customer | 12.00% | 11.00% | 14.00% |
RealPlayer Group | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Significant customer revenue | 6 | 6.4 | 21.1 |
Mobile Entertainment | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Significant customer revenue | 6.8 | ' | 17.3 |
Mobile Entertainment | Revenue by Segment | ' | ' | ' |
Concentration Risk [Line Items] | ' | ' | ' |
Percentage by major customer | 14.00% | ' | 11.00% |
Other_Intangible_Assets_Detail
Other Intangible Assets (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Finite-Lived Intangible Assets and Indefinite-Lived Assets [Line Items] | ' | ' |
Gross Amount | $73,304 | ' |
Accumulated Amortization | 63,753 | ' |
Net | 9,551 | ' |
Intangible Assets, Net (Excluding Goodwill) | 14,051 | 3,275 |
Customer relationships | ' | ' |
Finite-Lived Intangible Assets and Indefinite-Lived Assets [Line Items] | ' | ' |
Gross Amount | 34,753 | ' |
Accumulated Amortization | 30,168 | ' |
Net | 4,585 | ' |
Developed technology | ' | ' |
Finite-Lived Intangible Assets and Indefinite-Lived Assets [Line Items] | ' | ' |
Gross Amount | 28,949 | ' |
Accumulated Amortization | 24,554 | ' |
Net | 4,395 | ' |
Patents, trademarks and tradenames | ' | ' |
Finite-Lived Intangible Assets and Indefinite-Lived Assets [Line Items] | ' | ' |
Gross Amount | 3,965 | ' |
Accumulated Amortization | 3,558 | ' |
Net | 407 | ' |
Servicing contracts and other | ' | ' |
Finite-Lived Intangible Assets and Indefinite-Lived Assets [Line Items] | ' | ' |
Gross Amount | 5,637 | ' |
Accumulated Amortization | 5,473 | ' |
Net | $164 | ' |
Goodwill_Changes_in_Goodwill_D
Goodwill (Changes in Goodwill) (Detail) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
Goodwill, Acquired During Period | $11,352 |
Beginning Balance | 6,309 |
Effects of foreign currency translation | -143 |
Ending Balance | $17,518 |
Goodwill_Goodwill_by_Segments_
Goodwill (Goodwill by Segments) (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Goodwill [Line Items] | ' | ' |
Goodwill | $17,518 | $6,309 |
RealPlayer Group | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 580 | ' |
Mobile Entertainment | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | 2,115 | ' |
Games | ' | ' |
Goodwill [Line Items] | ' | ' |
Goodwill | $14,823 | ' |
Accrued_and_Other_Liabilities_1
Accrued and Other Liabilities (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Payables and Accruals [Abstract] | ' | ' |
Royalties and other fulfillment costs | $16,648,000 | $19,435,000 |
Employee compensation, commissions and benefits | 11,821,000 | 13,368,000 |
Loss Contingency, Period of Occurrence | 11,525,000 | ' |
Loss Contingency, Settlement Agreement, Consideration | ' | 0 |
Sales, VAT and other taxes payable | 8,449,000 | 10,959,000 |
Deferred tax liabilities-current | 453,000 | 3,894,000 |
Accrued loss on excess office facilities, current portion | 591,000 | 2,463,000 |
Other | 8,537,000 | 7,411,000 |
Total accrued and other liabilities | $58,024,000 | $57,530,000 |
Restructuring_Charges_Restruct1
Restructuring Charges Restructuring Charges (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 |
position | |||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Number of positions eliminated | 160 | ' | ' |
Costs incurred and charged to expense | ' | $4,075 | $13,872 |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Accrued liability beginning balance | ' | 2,431 | ' |
Costs incurred and charged to expense, excluding non-cash charges | ' | 2,891 | ' |
Cash payments | ' | -2,806 | ' |
Accrued liability ending balance | 2,516 | 2,516 | ' |
Employee Separation Costs | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Costs incurred and charged to expense | 1,100 | 2,891 | 8,099 |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Accrued liability beginning balance | ' | 731 | ' |
Costs incurred and charged to expense, excluding non-cash charges | ' | 2,891 | ' |
Cash payments | ' | -2,806 | ' |
Accrued liability ending balance | 816 | 816 | ' |
Contract Assignment Costs | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Costs incurred and charged to expense | 0 | ' | 3,629 |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Accrued liability beginning balance | ' | 1,700 | ' |
Costs incurred and charged to expense, excluding non-cash charges | ' | 0 | ' |
Cash payments | ' | 0 | ' |
Accrued liability ending balance | 1,700 | 1,700 | ' |
Asset Related and Other | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Costs incurred and charged to expense | $800 | $1,184 | $2,144 |
Lease_Exit_and_Related_Charges2
Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Jun. 30, 2013 | Sep. 30, 2013 | |
term | stage | ||
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract] | ' | ' | ' |
Leases term | '11 years | ' | ' |
Number of extensions | 2 | ' | ' |
Extension term | '5 years | ' | ' |
Early termination, number of stages | ' | ' | 3 |
Loss on contract termination | ' | ' | $6,600,000 |
Cash paid for contract termination fees | 3,100,000 | 3,200,000 | 6,300,000 |
Accrued loss December 31, 2011 | ' | ' | 4,213,000 |
Additions and adjustments to the lease exit charges accrual, including sublease income estimate revision | ' | ' | 1,331,000 |
Less amounts paid, net of sublease income | ' | ' | 4,953,000 |
Accrued loss June 30, 2013 (included in Accrued and other current liabilities) | $591,000 | ' | $591,000 |
Earnings_Per_Share_Calculation
Earnings Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net income (loss) available to common shareholders | ($31,375) | ($22,214) | ($61,520) | $41,768 |
Weighted average common shares outstanding used to compute basic EPS | 35,670 | 34,998 | 35,490 | 34,747 |
Dilutive effect of stock based awards | 0 | 0 | 0 | 253 |
Weighted average common shares outstanding used to compute diluted EPS | 35,670 | 34,998 | 35,490 | 35,000 |
Basic EPS | ($0.88) | ($0.63) | ($1.73) | $1.20 |
Diluted EPS | ($0.88) | ($0.63) | ($1.73) | $1.19 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect | 4.6 | 4.3 | 4.4 | 5.3 |
Commitments_and_Contingencies_
Commitments and Contingencies Additional Information (Details) (USD $) | Dec. 31, 2012 | Oct. 31, 2013 |
In Thousands, unless otherwise specified | Subsequent Event [Member] | |
Loss Contingencies [Line Items] | ' | ' |
Loss Contingency, Settlement Agreement, Consideration | $0 | $11,500 |
Segment_Information_Additional
Segment Information (Additional Information) (Detail) | 9 Months Ended |
Sep. 30, 2013 | |
Segment | |
Segment Reporting [Abstract] | ' |
Number of reporting segments | 3 |
Segment_Information_Segment_Re
Segment Information (Segment Results) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ||||
Revenue | $48,958 | [1] | $59,088 | [1] | $155,601 | [1] | $191,578 | [1] |
Cost of revenue | 18,990 | [2] | 25,244 | [2] | 59,015 | [2] | 78,633 | [2] |
Gain on sale of patent and other technology assets, net of costs | 0 | 0 | 0 | 116,353 | ||||
Gross profit | 29,968 | 33,844 | 96,586 | 112,945 | ||||
Operating expenses | 58,405 | 57,019 | 152,953 | 166,847 | ||||
Operating income (loss) | -28,437 | -23,175 | -56,367 | 62,451 | ||||
RealPlayer Group | ' | ' | ' | ' | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ||||
Revenue | 17,641 | 21,392 | 58,407 | 65,631 | ||||
Cost of revenue | 3,264 | 6,735 | 12,984 | 16,026 | ||||
Gross profit | 14,377 | 14,657 | 45,423 | 49,605 | ||||
Operating expenses | 14,449 | 13,082 | 44,656 | 41,849 | ||||
Operating income (loss) | -72 | 1,575 | 767 | 7,756 | ||||
Mobile Entertainment | ' | ' | ' | ' | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ||||
Revenue | 19,948 | 22,820 | 59,035 | 74,600 | ||||
Cost of revenue | 11,972 | 12,740 | 33,974 | 43,093 | ||||
Gross profit | 7,976 | 10,080 | 25,061 | 31,507 | ||||
Operating expenses | 9,453 | 11,936 | 26,976 | 40,591 | ||||
Operating income (loss) | -1,477 | -1,856 | -1,915 | -9,084 | ||||
Games | ' | ' | ' | ' | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ||||
Revenue | 11,369 | 14,876 | 38,159 | 51,347 | ||||
Cost of revenue | 3,216 | 4,989 | 10,397 | 17,332 | ||||
Gross profit | 8,153 | 9,887 | 27,762 | 34,015 | ||||
Operating expenses | 11,513 | 12,023 | 35,120 | 39,962 | ||||
Operating income (loss) | -3,360 | -2,136 | -7,358 | -5,947 | ||||
Corporate | ' | ' | ' | ' | ||||
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ||||
Cost of revenue | 538 | 780 | 1,660 | 2,182 | ||||
Gain on sale of patent and other technology assets, net of costs | 0 | 0 | 0 | 116,353 | ||||
Operating expenses | 22,990 | 19,978 | 46,201 | 44,445 | ||||
Operating income (loss) | ($23,528) | ($20,758) | ($47,861) | $69,726 | ||||
[1] | quartersytd SeptemberB 30, 2013B SeptemberB 30, 2012SeptemberB 30, 2013SeptemberB 30, 2012Components of Revenue License Fees10,503B 11,957$33,49441,137Service Revenue38,455B 47,131122,107150,441Net Revenue48,958B 59,088$155,601191,578 | |||||||
[2] | Components of Cost of RevenueSeptemberB 30, 2013B SeptemberB 30, 2012B SeptemberB 30, 2013B SeptemberB 30, 2012License Fees2,062B 3,226B 6,377B 9,143Service Revenue16,928B 22,018B 52,638B 69,490Net Revenue Costs18,990B 25,244B 59,015B 78,633 |
Segment_Information_Revenue_by
Segment Information (Revenue by Geographic Region) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | ||||
Geographic Reporting Disclosure [Line Items] | ' | ' | ' | ' | ||||
Revenue | $48,958 | [1] | $59,088 | [1] | $155,601 | [1] | $191,578 | [1] |
United States | ' | ' | ' | ' | ||||
Geographic Reporting Disclosure [Line Items] | ' | ' | ' | ' | ||||
Revenue | 21,039 | 29,101 | 70,525 | 89,529 | ||||
Europe | ' | ' | ' | ' | ||||
Geographic Reporting Disclosure [Line Items] | ' | ' | ' | ' | ||||
Revenue | 8,750 | 12,470 | 29,278 | 43,021 | ||||
Rest of World | ' | ' | ' | ' | ||||
Geographic Reporting Disclosure [Line Items] | ' | ' | ' | ' | ||||
Revenue | $19,169 | $17,517 | $55,798 | $59,028 | ||||
[1] | quartersytd SeptemberB 30, 2013B SeptemberB 30, 2012SeptemberB 30, 2013SeptemberB 30, 2012Components of Revenue License Fees10,503B 11,957$33,49441,137Service Revenue38,455B 47,131122,107150,441Net Revenue48,958B 59,088$155,601191,578 |
Segment_Information_LongLived_
Segment Information (Long-Lived Assets by Geographic Region) (Detail) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Long-Lived Assets by Geographical Areas [Line Items] | ' | ' |
Long-lived assets | $56,034 | $38,900 |
United States | ' | ' |
Long-Lived Assets by Geographical Areas [Line Items] | ' | ' |
Long-lived assets | 41,634 | 27,915 |
Europe | ' | ' |
Long-Lived Assets by Geographical Areas [Line Items] | ' | ' |
Long-lived assets | 8,830 | 2,350 |
Rest of World | ' | ' |
Long-Lived Assets by Geographical Areas [Line Items] | ' | ' |
Long-lived assets | $5,570 | $8,635 |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
LoEn Entertainment, Inc | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Revenue from related party | $6.80 | $4 | $17.30 | $12 |
Percentage of acquire outstanding shares of LoEn Entertainment, Inc. | 9.00% | ' | 9.00% | ' |
Accounts receivable recorded | 3.4 | ' | 3.4 | ' |
Rhapsody America LLC | ' | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' | ' |
Revenue from related party | $0.20 | $0.20 | $0.60 | $0.70 |