Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | ||
Sep. 30, 2014 | Oct. 24, 2014 | Oct. 24, 2014 | |
Class A common stock | Class B common stock | ||
Document Information [Line Items] | ' | ' | ' |
Document Type | '10-Q | ' | ' |
Amendment Flag | 'false | ' | ' |
Document Period End Date | 30-Sep-14 | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q3 | ' | ' |
Trading Symbol | 'PCO | ' | ' |
Entity Registrant Name | 'Pendrell Corp | ' | ' |
Entity Central Index Key | '0001359555 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Accelerated Filer | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 213,162,495 | 53,660,000 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $179,572 | $184,567 |
Accounts receivable | 208 | 402 |
Other receivables - net of reserve $2,750 in both periods | 236 | 38 |
Prepaid expenses and other current assets | 797 | 1,722 |
Total current assets | 180,813 | 186,729 |
Property in service - net of accumulated depreciation of $1,107 and $722, respectively | 3,495 | 3,778 |
Other assets | 54 | 75 |
Intangible assets - net of accumulated amortization of $42,644 and $31,272, respectively | 125,493 | 139,687 |
Goodwill | 21,725 | 21,725 |
Total | 331,580 | 351,994 |
Current liabilities: | ' | ' |
Accounts payable | 270 | 166 |
Accrued expenses | 6,219 | 5,671 |
Other liabilities | 6,643 | 2,669 |
Total current liabilities | 13,132 | 8,506 |
Deferred tax liability | 1,488 | 1,488 |
Other non-current liabilities | ' | 5,207 |
Total liabilities | 14,620 | 15,201 |
Commitments and contingencies (Note 7) | ' | ' |
Shareholders' equity and noncontrolling interests: | ' | ' |
Preferred stock, $0.01 par value, 75,000,000 shares authorized, no shares issued or outstanding | ' | ' |
Additional paid-in capital | 1,948,979 | 1,941,818 |
Accumulated deficit | -1,644,231 | -1,619,993 |
Total Pendrell shareholders' equity | 307,418 | 324,488 |
Noncontrolling interests | 9,542 | 12,305 |
Total shareholders' equity and noncontrolling interests | 316,960 | 336,793 |
Total | 331,580 | 351,994 |
Class A common stock | ' | ' |
Shareholders' equity and noncontrolling interests: | ' | ' |
Common stock, value | 2,133 | 2,126 |
Class B common stock | ' | ' |
Shareholders' equity and noncontrolling interests: | ' | ' |
Common stock, value | $537 | $537 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Other receivables, reserve | $2,750 | $2,750 |
Property in service, accumulated depreciation | 1,107 | 722 |
Intangible assets, accumulated amortization | $42,644 | $31,272 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 75,000,000 | 75,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class A common stock | ' | ' |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 270,841,451 | 270,220,116 |
Common stock, shares outstanding | 213,072,559 | 212,451,224 |
Class B common stock | ' | ' |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 84,663,382 | 84,663,382 |
Common stock, shares outstanding | 53,660,000 | 53,660,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue | $618 | $781 | $41,688 | $12,575 |
Operating expenses: | ' | ' | ' | ' |
Cost of revenues | ' | 114 | 13,866 | 7,872 |
Patent administration and related costs | 1,189 | 878 | 4,237 | 2,977 |
Patent litigation | 2,717 | 920 | 6,686 | 3,011 |
General and administrative | 5,394 | 6,933 | 20,228 | 21,738 |
Stock-based compensation | 1,443 | 2,883 | 5,195 | 10,001 |
Amortization of intangible assets | 3,971 | 4,090 | 12,001 | 11,805 |
Total operating expenses | 14,714 | 15,818 | 62,213 | 57,404 |
Operating loss | -14,096 | -15,037 | -20,525 | -44,829 |
Interest income | 24 | 24 | 68 | 104 |
Interest expense | -43 | -63 | -149 | -129 |
Other income (expense) | -2 | 5 | -14 | -40 |
Loss before income taxes | -14,117 | -15,071 | -20,620 | -44,894 |
Income tax expense | 0 | ' | -6,270 | ' |
Net loss | -14,117 | -15,071 | -26,890 | -44,894 |
Net loss attributable to noncontrolling interest | -855 | -843 | -2,763 | -2,478 |
Net loss attributable to Pendrell | ($13,262) | ($14,228) | ($24,127) | ($42,416) |
Basic and diluted loss per share attributable to Pendrell | ($0.05) | ($0.05) | ($0.09) | ($0.16) |
Weighted average shares outstanding used to compute basic and diluted loss per share | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Changes in Shareholders' Equity (Unaudited) (USD $) | Total | Common stock | Common stock | Common stock | Additional paid-in capital | Accumulated deficit | Shareholders' equity | Noncontrolling interests |
In Thousands, except Share data | USD ($) | USD ($) | Class A common stock | Class B common stock | USD ($) | USD ($) | USD ($) | USD ($) |
Beginning Balance at Dec. 31, 2012 | $375,860 | $2,655 | ' | ' | $1,929,526 | ($1,563,999) | $368,182 | $7,678 |
Beginning Balance (in shares) at Dec. 31, 2012 | ' | ' | 211,682,074 | 53,660,000 | ' | ' | ' | ' |
Vesting of Class A common stock issued for Ovidian acquisition | 1,148 | ' | ' | ' | 1,148 | ' | 1,148 | ' |
Issuance of Class A common stock from exercise of stock options | 105 | 1 | ' | ' | 104 | ' | 105 | ' |
Issuance of Class A common stock from exercise of stock options (in shares) | ' | ' | 98,750 | ' | ' | ' | ' | ' |
Class A common stock withheld at vesting to cover statutory tax obligations | -2,660 | -6 | ' | ' | -1,722 | -932 | -2,660 | ' |
Class A common stock withheld at vesting to cover statutory tax obligations (in shares) | ' | ' | -567,728 | ' | ' | ' | ' | ' |
Stock-based compensation and issuance of restricted stock, net of forfeitures | 9,830 | 11 | ' | ' | 9,819 | ' | 9,830 | ' |
Stock-based compensation and issuance of restricted stock, net of forfeitures (in shares) | ' | ' | 1,104,107 | ' | ' | ' | ' | ' |
Noncontrolling interest in Provitro | 7,545 | ' | ' | ' | ' | ' | ' | 7,545 |
Net loss | -44,894 | ' | ' | ' | ' | -42,416 | -42,416 | -2,478 |
Ending Balance at Sep. 30, 2013 | 346,934 | 2,661 | ' | ' | 1,938,875 | -1,607,347 | 334,189 | 12,745 |
Ending Balance (in shares) at Sep. 30, 2013 | ' | ' | 212,317,203 | 53,660,000 | ' | ' | ' | ' |
Beginning Balance at Dec. 31, 2013 | 336,793 | 2,663 | ' | ' | 1,941,818 | -1,619,993 | 324,488 | 12,305 |
Beginning Balance (in shares) at Dec. 31, 2013 | ' | ' | 212,451,224 | 53,660,000 | ' | ' | ' | ' |
Vesting of Class A common stock issued for Ovidian acquisition | 2,229 | ' | ' | ' | 2,229 | ' | 2,229 | ' |
Issuance of Class A common stock from exercise of stock options | 378 | 4 | ' | ' | 374 | ' | 378 | ' |
Issuance of Class A common stock from exercise of stock options (in shares) | ' | ' | 448,771 | ' | ' | ' | ' | ' |
Class A common stock withheld at vesting to cover statutory tax obligations | -471 | -1 | ' | ' | -359 | -111 | -471 | ' |
Class A common stock withheld at vesting to cover statutory tax obligations (in shares) | ' | ' | -129,534 | ' | ' | ' | ' | ' |
Stock-based compensation and issuance of restricted stock, net of forfeitures | 4,921 | 4 | ' | ' | 4,917 | ' | 4,921 | ' |
Stock-based compensation and issuance of restricted stock, net of forfeitures (in shares) | ' | ' | 302,098 | ' | ' | ' | ' | ' |
Net loss | -26,890 | ' | ' | ' | ' | -24,127 | -24,127 | -2,763 |
Ending Balance at Sep. 30, 2014 | $316,960 | $2,670 | ' | ' | $1,948,979 | ($1,644,231) | $307,418 | $9,542 |
Ending Balance (in shares) at Sep. 30, 2014 | ' | ' | 213,072,559 | 53,660,000 | ' | ' | ' | ' |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities: | ' | ' |
Net loss including noncontrolling interests | ($26,890) | ($44,894) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Stock-based compensation | 5,195 | 10,001 |
Amortization of prepaid compensation from Ovidian acquisition | 1,380 | 2,073 |
Amortization of intangible assets | 12,001 | 11,805 |
Depreciation | 396 | 339 |
Unrealized foreign exchange (gains) losses | 1 | -8 |
Non-cash cost of patents monetized | 579 | 252 |
Loss associated with the abandonment and/or disposition of patents | 1,615 | 46 |
Other | 149 | 130 |
Other changes in certain assets and liabilities, net of acquisitions: | ' | ' |
Accounts receivable | 194 | 8,037 |
Prepaid expenses and other current/non-current assets | 748 | 663 |
Accounts payable | 104 | -51 |
Accrued expenses and other current/non-current liabilities | 1,740 | 2,935 |
Net cash used in operating activities | -2,788 | -8,672 |
Investing activities: | ' | ' |
Purchases of property and intangible assets | -114 | -2,294 |
Acquisition of Provitro, net of cash acquired | ' | -9,204 |
Net cash used in investing activities | -114 | -11,498 |
Financing activities: | ' | ' |
Proceeds from exercise of stock options | 378 | 105 |
Payment of statutory taxes for stock awards | -471 | -2,660 |
Payment of accrued obligations for purchase intangible assets | -2,000 | ' |
Net cash used in financing activities | -2,093 | -2,555 |
Net decrease in cash and cash equivalents | -4,995 | -22,725 |
Cash and cash equivalents - beginning of period | 184,567 | 213,753 |
Cash and cash equivalents - end of period | 179,572 | 191,028 |
Supplemental disclosures: | ' | ' |
Income taxes paid | 6,270 | ' |
Income taxes received | ' | 745 |
Supplemental disclosures of non-cash investing and financing activities: | ' | ' |
Accrued obligations for purchases of property and intangible assets | ' | $5,573 |
Nature_of_Business
Nature of Business | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Nature of Business | ' |
1. Nature of Business | |
These condensed consolidated financial statements include the accounts of Pendrell Corporation (“Pendrell”) and its consolidated subsidiaries (collectively referred to as the “Company”). The Company’s strategy, through its consolidated subsidiaries, is to invest in, acquire and develop businesses with unique technologies that are often protected by intellectual property (“IP”) rights, and that present the opportunity to address large, global markets. The Company’s subsidiaries focus on licensing the IP rights they hold to third parties and pursuing relevant product opportunities. The Company regularly evaluates its existing investments to determine whether retention or disposition is appropriate, and frequently investigates new investment and business acquisition opportunities. The Company also advises its clients on various IP strategies and transactions. |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
2. Basis of Presentation | |
Interim Financial Statements—The financial information included in the accompanying condensed consolidated financial statements is unaudited and includes all adjustments, consisting of normal recurring adjustments and accruals, considered necessary for a fair presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and footnote disclosures have been condensed or omitted. The financial information as of December 31, 2013 is derived from the Company’s audited consolidated financial statements and notes included in Item 8 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“2013 Form 10-K”), filed with the Securities and Exchange Commission on March 11, 2014. The financial information included in this quarterly report should be read in conjunction with management’s discussion and analysis of financial condition and results of operations and the consolidated financial statements and notes included in the 2013 Form 10-K. Operating results and cash flows for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014 or any other interim period. | |
Principles of Consolidation—The consolidated financial statements of the Company include the assets and liabilities of its wholly-owned subsidiaries and subsidiaries it controls or in which it has a controlling financial interest. Noncontrolling interests on the consolidated balance sheets include third-party investments in entities that the Company consolidates, but does not wholly own. Noncontrolling interests are classified as part of equity and the Company allocates net income (loss) and other equity transactions to its noncontrolling interests in accordance with their applicable ownership percentages. All intercompany transactions and balances have been eliminated in consolidation. All information in these financial statements is in U.S. dollars. | |
Segment Information—The Company operates in and reports on one segment (IP management). Operating segments are based upon the Company’s internal organization structure, the manner in which its operations are managed, and the criteria used by its Chief Operating Decision Maker. Substantially all of the Company’s revenue is generated by operations located within the United States, and the Company does not have any long-lived assets located in foreign countries. | |
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 and 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 materially from these estimates. | |
On an ongoing basis, the Company evaluates its estimates, including among others, those related to the fair value of acquired intangible assets and goodwill, the useful lives and potential impairment of intangible assets and property and equipment, the value of stock awards for the purpose of determining stock-based compensation expense, accrued liabilities (including bonus accruals), valuation allowances related to the ability to realize deferred tax assets, allowances for doubtful receivables and certain tax liabilities. Estimates are based on historical experience and other factors, including the current economic environment as deemed appropriate under the circumstances. Estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in estimates used to prepare these financial statements will be reflected in the financial statements in future periods. | |
Reclassifications—Certain prior period amounts have been reclassified to conform to current year presentation. Such reclassifications relate to the Company’s presentation of expenses in its condensed consolidated statements of operations, including the presentation of “cost of revenues” and “patent litigation” as separate captions; as such costs were previously included in “patent administration, litigation and related costs.” The reclassifications had no effect on previously reported net loss of the Company or the noncontrolling interest holder. | |
Accounting Policies—There have been no material changes or updates in the Company’s existing accounting policies from the disclosures included in its 2013 Form 10-K. The following is a summary of the key components of the Company’s condensed consolidated statements of operations: | |
Revenue—The Company derives its operating revenue from IP monetization activities, including patent licensing and patent sales, and from IP consulting services, or a combination thereof. Although revenue may occur in different forms, the Company regards its IP monetization activities as integrated and not separate revenue streams. For example, a third party relationship could include consulting and licensing activities, or the acquisition of a patent portfolio could lead to licensing, consulting and patent sales revenue. As a result of the unpredictable nature, form and frequency of its transactions, the Company’s revenue may fluctuate substantially from period to period. | |
Cost of revenue—Cost of revenue consists of certain costs that are variable in nature and are directly attributable to the Company’s revenue generating activities including (i) payments to third parties to whom the Company has an obligation to share revenue, (ii) commissions, and (iii) success fees. Additionally, in periods when patent sales occur, these costs include the net book value and other related costs associated with the sold patents. Depending on the patents being monetized, revenue share payments as a percentage of revenues may vary significantly. | |
Patent administration and related costs—Patent administration and related costs are comprised of (i) patent-related maintenance and prosecution costs incurred to maintain the Company’s patents, (ii) other costs that support its patent monetization efforts, and (iii) costs associated with the abandonment of patents, including the write-off of any remaining net book value. | |
Patent litigation—Patent litigation costs consist of costs and expenses incurred in connection with the Company’s patent-related enforcement and litigation activities. These may include non-contingent or contingent fee obligations to external counsel. | |
General and administrative—General and administrative expenses are primarily comprised of (i) personnel costs, (ii) general legal fees, (iii) professional fees, (iv) acquisition investigation costs, and (v) general office related costs. | |
Stock-based compensation—Stock-based compensation expense includes expense associated with the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock awards issued to employees, directors, consultants and/or advisors based on the estimated fair value on the date of grant and expensed over the requisite service period for awards expected to vest. | |
Amortization of intangible assets—Amortization of intangible assets reflects the expensing of the cost to acquire intangible assets which are capitalized and amortized ratably over their estimated useful lives. Estimating the economic useful lives of the Company’s intangible assets depends on various factors including the remaining statutory life of the underlying assets as well as their expected period of benefit. | |
New Accounting Pronouncements | |
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess an entity’s ability to continue as a going concern every reporting period including interim periods, and to provide related footnote disclosure in certain circumstances. Compliance with this ASU is required for annual periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this ASU in 2014 did not have an impact on the Company’s financial position, results of operations or cash flows. | |
In June 2014, the FASB issued ASU No. 2014-12, Compensation-Stock Compensation (Topic 718)-Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period shall be treated as a performance condition. Compliance with this ASU is required for annual periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this ASU in 2014 did not have a material impact on the Company’s financial position, results of operations or cash flows. | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customers, which supersedes existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize as revenue the amount that an entity expects to be entitled for goods or services at the time the goods or services are transferred to customers. ASU 2014-09 defines a five step process to achieve this core principle that will likely require more judgment and estimates within the revenue recognition process than are required under existing GAAP. Compliance with this ASU is required for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position and results of operations. |
Business_Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2014 | |
Business Combinations [Abstract] | ' |
Business Combinations | ' |
3. Business Combinations | |
On February 21, 2013, the Company acquired a 68.75% interest in Provitro Biosciences LLC (“Provitro”). Accordingly, the activities of Provitro from the acquisition date through September 30, 2013 have been included in the Company’s condensed consolidated statement of operations for the three and nine months ended September 30, 2013. Acquisition-related costs, including advisory, legal, accounting, valuation and other costs associated with the acquisition of Provitro of $0.4 million, are included in general and administrative expenses for the nine months ended September 30, 2013. | |
The Company has yet to generate revenue from the activities of Provitro, but has continued to (i) advance the Provitro™ technology and related laboratory processes, (ii) assess potential markets for timber bamboo, and (iii) engage with third parties regarding the commercialization of the Provitro™ technology. Provitro incurred operating expenses of $0.3 million and $0.9 million during the three months ended September 30, 2014 and 2013, respectively and $2.0 million and $2.3 million during the nine months ended September 30, 2014 and 2013, respectively. These operating expenses are included in general and administrative expenses. The acquisition of Provitro was not material to the Company’s results of operations or cash flows. |
Intangible_Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' |
Intangible Assets | ' |
4. Intangible Assets | |
The Company has used, and may continue to use, different structures and forms of consideration for its acquisitions. Acquisitions may be consummated through the use of cash, equity, seller financing, third party debt, earn-out obligations, revenue sharing, profit sharing or some combination of these types of consideration. Consequently, the acquisition values reflected in the Company’s investing activities may represent lower amounts than would be reflected, for example, in a situation where cash alone was utilized to complete the acquisition. | |
During the nine months ended September 30, 2013, the Company expanded its patent holdings through the acquisition of additional patents covering memory and storage technologies for electronic devices. Although no patents were purchased during the nine months ended September 30, 2014, the Company was issued 23 patents and filed applications for an additional 61 patents. | |
During the nine months ended September 30, 2014 and the three and nine months ended September 30, 2013, the Company sold certain patents and has included the gross proceeds in revenue. Costs associated with the patents sold, including any remaining net book value, are included in cost of revenues. Certain of the patents sold, as well as certain of those licensed, were subject to obligations to pay a substantial portion of the net proceeds to third parties. These costs are also included in cost of revenues. In future periods, these third party payments as a percentage of revenues may vary significantly based on the structure utilized for any given acquisition. | |
During the three and nine months ended September 30, 2014, the Company abandoned certain patents that were not part of existing licensing programs or for which the Company determined that it would no longer allocate resources to their maintenance and enforcement. Losses on the abandonment of patents for the three and nine months ended September 30, 2014 were $0.3 million and $1.6 million, respectively. For the three and nine months ended September 30, 2013, patents with a combined book value of less than $0.1 million were abandoned. Costs associated with the abandonment of patents, including any remaining net book value, are included in patent administration and related costs. | |
As of September 30, 2014, the Company, through its subsidiaries, continues to hold more than 1,500 issued patents worldwide, with additional patent applications pending. |
Accrued_Expenses
Accrued Expenses | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Accrued Expenses | ' | ||||||||
5. Accrued Expenses | |||||||||
The following table summarizes accrued expenses (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accrued payroll and related expenses | $ | 3,283 | $ | 2,242 | |||||
Accrued legal, professional and other expenses | 2,936 | 3,429 | |||||||
$ | 6,219 | $ | 5,671 | ||||||
Other_Liabilities
Other Liabilities | 9 Months Ended |
Sep. 30, 2014 | |
Other Liabilities Disclosure [Abstract] | ' |
Other Liabilities | ' |
6. Other Liabilities | |
From time to time the Company agrees to make contingent and non-contingent future payments in connection with acquisition transactions. The Company recognizes the contingent portion of these future payment obligations as liabilities when they are estimable and it is probable that they will be paid. At September 30, 2014, other current liabilities include an installment payment obligation of $4.0 million due in 2015 related to the 2013 acquisition of the Company’s memory and storage technologies portfolio. Additionally, other current liabilities include approximately $2.0 million of expense related to restricted stock awards. | |
At December 31, 2013, installment payment obligations included in current and non-current liabilities were $2.0 million and $4.0 million, respectively. Additionally, other non-current liabilities include approximately $1.4 million of expense related to restricted stock awards. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
7. Commitments and Contingencies | |
Purchase and Lease Commitments—The Company’s contractual obligations include installment payment obligations arising from the 2013 acquisition of the Company’s memory and storage technologies portfolio of which $4.0 million is due in 2015. Additionally, the Company has contractual obligations under operating lease agreements for its main office in Kirkland, Washington, and offices in California, Texas, Washington, D.C. and Finland. | |
Litigation—In the opinion of management, except for those matters described below and elsewhere in this report, to the extent so described, litigation, contingent liabilities and claims against the Company in the normal course of business are not expected to involve any judgments or settlements that would be material to the Company’s financial condition, results of operations or cash flows. | |
Enforcement Action against Amazon et. al.—On December 18, 2013, the Company’s ContentGuard Holdings, Inc. (“ContentGuard”) subsidiary filed a patent infringement lawsuit against Amazon.com, Inc., Apple Inc., Blackberry Corporation (fka Research in Motion Corporation), Huawei Device USA, Inc. and Motorola Mobility LLC in the Eastern District of Texas, in which ContentGuard alleged that the defendants have infringed and continue to infringe nine of its patents by making, using, selling or offering for sale certain mobile communication and computing devices (the “Amazon Litigation”). On January 17, 2014, ContentGuard filed an amended complaint in the Amazon Litigation adding certain affiliates of the original defendants, along with HTC Corporation, HTC America Inc., Samsung Electronics Co., Ltd., Samsung Electronics America, Inc. and Samsung Telecommunications America, LLC. In August 2014, DirecTV intervened in the case and thereby became an additional defendant, against whom the Company has asserted additional infringement claims. The Company is unable to anticipate the timing or outcome of the Amazon Litigation. | |
Google Actions—On January 31, 2014, Google Inc. (“Google”) filed a declaratory judgment suit in the Northern District of California alleging that Google does not infringe the nine patents asserted in the Amazon Litigation. On February 5, 2014, ContentGuard filed a patent infringement action in the Eastern District of Texas against Google, in which ContentGuard alleges that Google has infringed and continues to infringe the same nine patents. In April 2014, the presiding judge in the Eastern District of Texas, with the endorsement of the presiding judge in the Northern District of California, ruled that all claims by and against Google will be resolved in the Eastern District of Texas, and not in the Northern District of California. The presiding judge also declined to consolidate the Google actions with the Amazon Litigation. The Company is unable to anticipate the timing or outcome of the actions by and against Google. | |
ZTE Enforcement Actions—In early 2012, ContentGuard and its subsidiaries filed lawsuits in United States and German courts, alleging that ZTE Corporation, ZTE (USA) Inc. and ZTE Deutschland GmbH (collectively “ZTE”) infringed and continue to infringe ContentGuard patents by making, using, selling or offering for sale certain mobile communication and computing devices. ZTE subsequently filed with the United States Patent and Trademark Office petitions for inter partes review (“IPR”), challenging the validity of six U.S. patents asserted by ContentGuard against ZTE. In August 2013 and November 2013, the Patent Trial and Appeal Board (“PTAB”), which hears all IPR challenges, terminated the proceedings with respect to two patents, both of which emerged with valid patent claims. In June 2014 and July 2014, following trials in February 2014, the PTAB rejected ZTE’s remaining challenges, confirming the validity of all claims in the four remaining patents. ZTE’s time for appeal expired with no appeals filed. As a result, the decisions of the PTAB are now final. Meanwhile, in response to the claims filed in Germany, in which ContentGuard GmbH alleged infringement of three German patents, ZTE filed a nullity action against two of the patents and an opposition proceeding against the third patent. The infringement and nullity proceedings in Germany, along with all U.S. court actions, were “put to rest” or stayed as the result of a standstill agreement signed by ContentGuard and ZTE in December 2013, while the opposition proceeding in Germany is continuing. The Company is unable to anticipate the timing or outcome of the opposition proceedings. | |
J&J Collection— In November 2012, the Company obtained an arbitration judgment in the U.K. against Jay and Jayendra (Pty), a South African corporation (“J&J Group”) for approximately $4.0 million. J&J Group submitted multiple appeals to the U.K. courts, the last of which was rejected in July 2013. The Company has commenced a collection action in South Africa (where J&J Group is domiciled), but due to the uncertainty of collection, it has not recognized the gain associated with the judgment. The Company is unable to anticipate the timing or outcome of the collection proceedings against J&J Group. |
Stockbased_Compensation
Stock-based Compensation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Stock-based Compensation | ' | ||||||||||||||||
8. Stock-based Compensation | |||||||||||||||||
The Company records stock-based compensation on stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock awards issued to employees, directors, consultants and/or advisors based on the estimated fair value on the date of grant and recognizes compensation cost over the requisite service period for awards expected to vest. | |||||||||||||||||
Stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013 was as follows (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock options | $ | 1,180 | $ | 1,352 | $ | 3,629 | $ | 4,313 | |||||||||
Restricted stock awards (1) | 263 | 1,531 | 1,566 | 5,688 | |||||||||||||
Total stock-based compensation expense | $ | 1,443 | $ | 2,883 | $ | 5,195 | $ | 10,001 | |||||||||
-1 | Stock-based compensation expense for both the three and nine months ended September 30, 2014 and 2013, includes $0.2 million and $0.6 million of expense, respectively, related to 250,000 Class A common stock restricted stock awards that are required to be treated as a liability. As of September 30, 2014 and December 31, 2013, $2.0 million and $1.4 million, respectively, were accrued for such awards. | ||||||||||||||||
Stock Options and Stock Appreciation Rights—The Company’s stock option and SARs activity for the nine months ended September 30, 2014 is summarized as follows: | |||||||||||||||||
Number of shares of | Weighted average | ||||||||||||||||
Class A common | exercise price | ||||||||||||||||
stock underlying | |||||||||||||||||
options and SARs | |||||||||||||||||
Outstanding – December 31, 2013 | 28,496,463 | $ | 2.17 | ||||||||||||||
Granted (1) | 4,344,000 | $ | 1.5 | ||||||||||||||
Exercised | (760,937 | ) | $ | 1.17 | |||||||||||||
Forfeited | (5,087,611 | ) | $ | 2.76 | |||||||||||||
Outstanding – September 30, 2014 | 26,991,915 | $ | 1.98 | ||||||||||||||
Exercisable – September 30, 2014 | 14,342,904 | $ | 1.92 | ||||||||||||||
Vested and expected to vest – September 30, 2014 | 26,426,388 | $ | 1.99 | ||||||||||||||
-1 | The stock options granted during the nine months ended September 30, 2014 have a grant date fair value of $3.5 million and vest at a rate of 25% per year over four years. | ||||||||||||||||
Restricted Stock—The Company’s restricted stock activity for nine months ended September 30, 2014 is summarized as follows: | |||||||||||||||||
Number of shares of | Weighted average | ||||||||||||||||
Class A common | fair value per share | ||||||||||||||||
stock underlying | |||||||||||||||||
restricted stock | |||||||||||||||||
awards | |||||||||||||||||
Unvested – December 31, 2013 | 5,912,116 | $ | 1.62 | ||||||||||||||
Granted | 588,587 | $ | 1.27 | ||||||||||||||
Vested | (1,222,624 | ) | $ | 2.1 | |||||||||||||
Forfeited | (1,238,564 | ) | $ | 1.16 | |||||||||||||
Unvested – September 30, 2014 | 4,039,515 | $ | 1.55 | ||||||||||||||
Restricted stock granted during the nine months ended September 30, 2014 consists of the following: | |||||||||||||||||
Number of shares | Grant date | ||||||||||||||||
of Class A | fair value | ||||||||||||||||
common stock | (in thousands) | ||||||||||||||||
underlying | |||||||||||||||||
restricted stock | |||||||||||||||||
awards granted | |||||||||||||||||
Service-based | 250,000 | $ | 328 | ||||||||||||||
Market-based | 150,000 | 68 | |||||||||||||||
Shares issued as Board of Director compensation | 188,587 | 352 | |||||||||||||||
Total restricted stock granted | 588,587 | $ | 748 | ||||||||||||||
The service-based restricted stock awards vest at a rate of 25% per year over four years. The market-based restricted stock awards fully vest when both of the following have occurred: (i) the average closing price of the Company’s Class A common stock, measured over any period of 60 consecutive calendar days, has reached or exceeded $3.00 per share (the “Price Trigger”), and (ii) the first anniversary of the grant date has occurred. If the Price Trigger is not achieved by the third anniversary of the grant date, then none of the market-based restricted stock awards will vest. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
9. Income Taxes | |
The Company anticipates it will not have a U.S. federal income tax liability for fiscal 2014 and, therefore, has recorded no tax expense for the three months ended September 30, 2014. For the nine months ended September 30, 2014, the Company recorded a tax provision of $6.3 million related to foreign taxes withheld on revenue generated from a license agreement executed during the first quarter with a licensee domiciled in a foreign jurisdiction. In general, foreign taxes withheld may be claimed as a deduction on future U.S. corporate income tax returns, or as a credit against future U.S. federal income tax liabilities, subject to certain limitations. However, due to uncertainty regarding the Company’s ability to utilize the deduction or credit resulting from the foreign withholding, at September 30, 2014, the Company established a full valuation allowance against this deferred tax asset. | |
The Company had no foreign taxes withheld and no U.S. federal income tax liability for fiscal 2013. | |
During the three months ended September 30, 2014, the IRS consented to the Company’s request for reasonable cause relief regarding the availability of an additional $95.7 million of net operating losses (“NOLs”) for future use. The resulting $32.5 million deferred tax asset was previously recorded as an unrecognized tax benefit at December 31, 2013. Due to uncertainty regarding the Company’s ability to utilize the additional NOLs, at September 30, 2014, the Company established a full valuation allowance against this deferred tax asset. | |
Certain Taxes Payable Irrespective of NOLs—Under the Internal Revenue Code and related Treasury Regulations, the Company may “carry forward” its NOLs in certain circumstances to offset current and future income and thus reduce its federal income tax liability, subject to certain restrictions. To the extent that the NOLs do not otherwise become limited, the Company believes that it will be able to carry forward a significant amount of NOLs. However, these NOLs will not impact all taxes to which the Company may be subject. For instance, state or foreign income taxes and/or revenue based taxes may be payable if the Company’s income or revenue is attributed to jurisdictions that impose such taxes; the Company’s NOLs do not entirely offset its income for alternative minimum tax; and Pendrell or one or more of its corporate subsidiaries may incur federal personal holding company tax liability. This is not an exhaustive list, but merely illustrative of the types of taxes to which the Company’s NOLs are not applicable. | |
Personal Holding Company Determination— A personal holding company is a corporation with five or fewer individual shareholders whose ownership exceeds 50% of the corporation’s outstanding shares, measured by share value (“Concentrated Ownership”), and which generates personal holding company income (which includes certain licensing revenue and other types of passive revenues) (“PHCI”) that constitutes 60% or more of its adjusted ordinary gross income. For a corporate subsidiary, Concentrated Ownership is determined by reference to ownership of the parent corporation(s), and if Concentrated Ownership exists, the subsidiary’s income is subject to additional tests to determine whether the income renders the subsidiary a personal holding company. Due to the significant number of shares held by the Company’s largest shareholders, the Company must continually assess share ownership of Pendrell and its consolidated subsidiary ContentGuard to determine whether or not there is Concentrated Ownership of either corporation. In the second quarter of 2014, the Company’s assessment of share ownership for 2012 and 2013 initially led it to conclude that ContentGuard was a personal holding company during such years. In the third quarter of 2014, the Company determined that ContentGuard was not a personal holding company in 2012 or 2013 and therefore the Company does not anticipate any resulting personal holding company tax liability for current or prior years. If either Pendrell or ContentGuard is determined to be a personal holding company in the future, generates net PHCI, does not have losses from the immediately preceding year to offset the PHCI, and does not distribute to its shareholders a proportionate dividend in the full amount of the PHCI, then the undistributed net PHCI will be taxed (at 20% under current law). | |
Tax Benefits Preservation Plan—Effective January 29, 2010, the Board of Directors adopted the Tax Benefits Preservation Plan to help the Company preserve its ability to utilize fully its NOLs, to help preserve potential future NOLs, and to thereby reduce potential future federal income tax obligations. If the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code, the Company’s ability to use the NOLs could be significantly limited. | |
The Tax Benefits Preservation Plan is intended to act as a deterrent to any person or group acquiring, without the approval of the Company’s Board of Directors, beneficial ownership of 4.9% or more of the Company’s securities, defined to include: (i) shares of its Class A common stock and Class B common stock, (ii) shares of its preferred stock, (iii) warrants, rights, or options to purchase its securities, and (iv) any interest that would be treated as “stock” of the Company for purposes of Section 382 or pursuant to Treasury Regulation § 1.382-2T(f)(18). Specifically, if a shareholder acquires more than 4.9% of Pendrell’s outstanding capital stock without an exemption from our Board of Directors, all other shareholders receive rights to acquire additional shares at a significant discount to market price, thereby diluting the value of the capital stock acquired by the acquiring shareholder. | |
Holders of 4.9% or more of the Company’s securities outstanding as of the close of business on January 29, 2010 will not trigger the Tax Benefits Preservation Plan so long as they do not (i) acquire additional securities constituting one-half of one percent (0.5%) or more of the Company’s securities outstanding as of the date of the Tax Benefits Preservation Plan (as adjusted to reflect any stock splits, subdivisions and the like), or (ii) fall under 4.9% ownership of the Company’s securities and then re-acquire securities that increase their ownership to 4.9% or more of the Company’s securities. The Board of Directors may exempt certain persons whose acquisition of securities is determined by the Board of Directors not to jeopardize the Company’s tax benefits or to otherwise be in the best interest of the Company and its shareholders. The Board of Directors may also exempt certain transactions. |
Loss_per_Share
Loss per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Loss per Share | ' | ||||||||||||||||
10. Loss per Share | |||||||||||||||||
Basic loss per share is calculated based on the weighted average number of Class A common stock and Class B common stock (the “Common Shares”) outstanding during the period. Diluted loss per share is calculated by dividing the loss allocable to common shareholders by the weighted average Common Shares outstanding plus potential dilutive Common Shares. Prior to the satisfaction of vesting conditions, unvested restricted stock awards are considered contingently issuable and are excluded from weighted average Common Shares outstanding used for computation of basic loss per share. | |||||||||||||||||
Potential dilutive Common Shares consist of the incremental Class A common stock issuable upon the exercise of outstanding stock options (both vested and non-vested), stock appreciation rights, and unvested restricted stock awards and units, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of the Company’s Class A common shares for the period) because their inclusion is anti-dilutive. | |||||||||||||||||
The following table sets forth the computation of basic and diluted loss per share (in thousands, except share and per share data): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net loss attributable to Pendrell | $ | (13,262 | ) | $ | (14,228 | ) | $ | (24,127 | ) | $ | (42,416 | ) | |||||
Weighted average common shares outstanding | 266,520,052 | 265,809,024 | 266,200,724 | 265,553,351 | |||||||||||||
Less: weighted average unvested restricted stock awards | (1,892,190 | ) | (2,719,253 | ) | (2,030,777 | ) | (3,872,755 | ) | |||||||||
Shares used for computation of basic loss per share | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 | |||||||||||||
Add back: weighted average unvested restricted stock awards and units | — | — | — | — | |||||||||||||
Add back: dilutive stock options and stock appreciation rights | — | — | — | — | |||||||||||||
Shares used for computation of diluted loss per share(1) | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 | |||||||||||||
Basic and diluted loss per share attributable to Pendrell | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.16 | ) | |||||
-1 | Stock options, stock appreciation rights, restricted stock awards and units totaling 31,031,430 for the three and nine months ended September 30, 2014, and 34,009,178 for the three and nine months ended September 30, 2013, were excluded from the calculation of diluted loss per share as their inclusion was anti-dilutive. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Interim Financial Statements | ' |
Interim Financial Statements—The financial information included in the accompanying condensed consolidated financial statements is unaudited and includes all adjustments, consisting of normal recurring adjustments and accruals, considered necessary for a fair presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and footnote disclosures have been condensed or omitted. The financial information as of December 31, 2013 is derived from the Company’s audited consolidated financial statements and notes included in Item 8 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (“2013 Form 10-K”), filed with the Securities and Exchange Commission on March 11, 2014. The financial information included in this quarterly report should be read in conjunction with management’s discussion and analysis of financial condition and results of operations and the consolidated financial statements and notes included in the 2013 Form 10-K. Operating results and cash flows for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2014 or any other interim period. | |
Principles of Consolidation | ' |
Principles of Consolidation—The consolidated financial statements of the Company include the assets and liabilities of its wholly-owned subsidiaries and subsidiaries it controls or in which it has a controlling financial interest. Noncontrolling interests on the consolidated balance sheets include third-party investments in entities that the Company consolidates, but does not wholly own. Noncontrolling interests are classified as part of equity and the Company allocates net income (loss) and other equity transactions to its noncontrolling interests in accordance with their applicable ownership percentages. All intercompany transactions and balances have been eliminated in consolidation. All information in these financial statements is in U.S. dollars. | |
Segment Information | ' |
Segment Information—The Company operates in and reports on one segment (IP management). Operating segments are based upon the Company’s internal organization structure, the manner in which its operations are managed, and the criteria used by its Chief Operating Decision Maker. Substantially all of the Company’s revenue is generated by operations located within the United States, and the Company does not have any long-lived assets located in foreign countries. | |
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 and 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 materially from these estimates. | |
On an ongoing basis, the Company evaluates its estimates, including among others, those related to the fair value of acquired intangible assets and goodwill, the useful lives and potential impairment of intangible assets and property and equipment, the value of stock awards for the purpose of determining stock-based compensation expense, accrued liabilities (including bonus accruals), valuation allowances related to the ability to realize deferred tax assets, allowances for doubtful receivables and certain tax liabilities. Estimates are based on historical experience and other factors, including the current economic environment as deemed appropriate under the circumstances. Estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in estimates used to prepare these financial statements will be reflected in the financial statements in future periods. | |
Reclassifications | ' |
Reclassifications—Certain prior period amounts have been reclassified to conform to current year presentation. Such reclassifications relate to the Company’s presentation of expenses in its condensed consolidated statements of operations, including the presentation of “cost of revenues” and “patent litigation” as separate captions; as such costs were previously included in “patent administration, litigation and related costs.” The reclassifications had no effect on previously reported net loss of the Company or the noncontrolling interest holder. | |
Accounting Policies | ' |
Accounting Policies—There have been no material changes or updates in the Company’s existing accounting policies from the disclosures included in its 2013 Form 10-K. The following is a summary of the key components of the Company’s condensed consolidated statements of operations: | |
Revenue | ' |
Revenue—The Company derives its operating revenue from IP monetization activities, including patent licensing and patent sales, and from IP consulting services, or a combination thereof. Although revenue may occur in different forms, the Company regards its IP monetization activities as integrated and not separate revenue streams. For example, a third party relationship could include consulting and licensing activities, or the acquisition of a patent portfolio could lead to licensing, consulting and patent sales revenue. As a result of the unpredictable nature, form and frequency of its transactions, the Company’s revenue may fluctuate substantially from period to period. | |
Cost of revenue | ' |
Cost of revenue—Cost of revenue consists of certain costs that are variable in nature and are directly attributable to the Company’s revenue generating activities including (i) payments to third parties to whom the Company has an obligation to share revenue, (ii) commissions, and (iii) success fees. Additionally, in periods when patent sales occur, these costs include the net book value and other related costs associated with the sold patents. Depending on the patents being monetized, revenue share payments as a percentage of revenues may vary significantly. | |
Patent administration and related costs | ' |
Patent administration and related costs—Patent administration and related costs are comprised of (i) patent-related maintenance and prosecution costs incurred to maintain the Company’s patents, (ii) other costs that support its patent monetization efforts, and (iii) costs associated with the abandonment of patents, including the write-off of any remaining net book value. | |
Patent litigation | ' |
Patent litigation—Patent litigation costs consist of costs and expenses incurred in connection with the Company’s patent-related enforcement and litigation activities. These may include non-contingent or contingent fee obligations to external counsel. | |
General and administrative | ' |
General and administrative—General and administrative expenses are primarily comprised of (i) personnel costs, (ii) general legal fees, (iii) professional fees, (iv) acquisition investigation costs, and (v) general office related costs. | |
Stock-based compensation | ' |
Stock-based compensation—Stock-based compensation expense includes expense associated with the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock awards issued to employees, directors, consultants and/or advisors based on the estimated fair value on the date of grant and expensed over the requisite service period for awards expected to vest. | |
Amortization of intangible assets | ' |
Amortization of intangible assets—Amortization of intangible assets reflects the expensing of the cost to acquire intangible assets which are capitalized and amortized ratably over their estimated useful lives. Estimating the economic useful lives of the Company’s intangible assets depends on various factors including the remaining statutory life of the underlying assets as well as their expected period of benefit. | |
New Accounting Pronouncements | ' |
New Accounting Pronouncements | |
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to assess an entity’s ability to continue as a going concern every reporting period including interim periods, and to provide related footnote disclosure in certain circumstances. Compliance with this ASU is required for annual periods beginning after December 15, 2016. Early adoption is permitted. The adoption of this ASU in 2014 did not have an impact on the Company’s financial position, results of operations or cash flows. | |
In June 2014, the FASB issued ASU No. 2014-12, Compensation-Stock Compensation (Topic 718)-Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period shall be treated as a performance condition. Compliance with this ASU is required for annual periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this ASU in 2014 did not have a material impact on the Company’s financial position, results of operations or cash flows. | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customers, which supersedes existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize as revenue the amount that an entity expects to be entitled for goods or services at the time the goods or services are transferred to customers. ASU 2014-09 defines a five step process to achieve this core principle that will likely require more judgment and estimates within the revenue recognition process than are required under existing GAAP. Compliance with this ASU is required for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position and results of operations. |
Accrued_Expenses_Tables
Accrued Expenses (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Summary of Accrued Expenses | ' | ||||||||
The following table summarizes accrued expenses (in thousands): | |||||||||
September 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accrued payroll and related expenses | $ | 3,283 | $ | 2,242 | |||||
Accrued legal, professional and other expenses | 2,936 | 3,429 | |||||||
$ | 6,219 | $ | 5,671 | ||||||
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations | ' | ||||||||||||||||
Stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013 was as follows (in thousands): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock options | $ | 1,180 | $ | 1,352 | $ | 3,629 | $ | 4,313 | |||||||||
Restricted stock awards (1) | 263 | 1,531 | 1,566 | 5,688 | |||||||||||||
Total stock-based compensation expense | $ | 1,443 | $ | 2,883 | $ | 5,195 | $ | 10,001 | |||||||||
-1 | Stock-based compensation expense for both the three and nine months ended September 30, 2014 and 2013, includes $0.2 million and $0.6 million of expense, respectively, related to 250,000 Class A common stock restricted stock awards that are required to be treated as a liability. As of September 30, 2014 and December 31, 2013, $2.0 million and $1.4 million, respectively, were accrued for such awards. | ||||||||||||||||
Stock Option and SARs Activity | ' | ||||||||||||||||
The Company’s stock option and SARs activity for the nine months ended September 30, 2014 is summarized as follows: | |||||||||||||||||
Number of shares of | Weighted average | ||||||||||||||||
Class A common | exercise price | ||||||||||||||||
stock underlying | |||||||||||||||||
options and SARs | |||||||||||||||||
Outstanding – December 31, 2013 | 28,496,463 | $ | 2.17 | ||||||||||||||
Granted (1) | 4,344,000 | $ | 1.5 | ||||||||||||||
Exercised | (760,937 | ) | $ | 1.17 | |||||||||||||
Forfeited | (5,087,611 | ) | $ | 2.76 | |||||||||||||
Outstanding – September 30, 2014 | 26,991,915 | $ | 1.98 | ||||||||||||||
Exercisable – September 30, 2014 | 14,342,904 | $ | 1.92 | ||||||||||||||
Vested and expected to vest – September 30, 2014 | 26,426,388 | $ | 1.99 | ||||||||||||||
-1 | The stock options granted during the nine months ended September 30, 2014 have a grant date fair value of $3.5 million and vest at a rate of 25% per year over four years. | ||||||||||||||||
Restricted Stock Activity | ' | ||||||||||||||||
The Company’s restricted stock activity for nine months ended September 30, 2014 is summarized as follows: | |||||||||||||||||
Number of shares of | Weighted average | ||||||||||||||||
Class A common | fair value per share | ||||||||||||||||
stock underlying | |||||||||||||||||
restricted stock | |||||||||||||||||
awards | |||||||||||||||||
Unvested – December 31, 2013 | 5,912,116 | $ | 1.62 | ||||||||||||||
Granted | 588,587 | $ | 1.27 | ||||||||||||||
Vested | (1,222,624 | ) | $ | 2.1 | |||||||||||||
Forfeited | (1,238,564 | ) | $ | 1.16 | |||||||||||||
Unvested – September 30, 2014 | 4,039,515 | $ | 1.55 | ||||||||||||||
Restricted Stock Granted | ' | ||||||||||||||||
Restricted stock granted during the nine months ended September 30, 2014 consists of the following: | |||||||||||||||||
Number of shares | Grant date | ||||||||||||||||
of Class A | fair value | ||||||||||||||||
common stock | (in thousands) | ||||||||||||||||
underlying | |||||||||||||||||
restricted stock | |||||||||||||||||
awards granted | |||||||||||||||||
Service-based | 250,000 | $ | 328 | ||||||||||||||
Market-based | 150,000 | 68 | |||||||||||||||
Shares issued as Board of Director compensation | 188,587 | 352 | |||||||||||||||
Total restricted stock granted | 588,587 | $ | 748 | ||||||||||||||
Loss_per_Share_Tables
Loss per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Computation of Basic and Diluted Loss Per Share | ' | ||||||||||||||||
The following table sets forth the computation of basic and diluted loss per share (in thousands, except share and per share data): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net loss attributable to Pendrell | $ | (13,262 | ) | $ | (14,228 | ) | $ | (24,127 | ) | $ | (42,416 | ) | |||||
Weighted average common shares outstanding | 266,520,052 | 265,809,024 | 266,200,724 | 265,553,351 | |||||||||||||
Less: weighted average unvested restricted stock awards | (1,892,190 | ) | (2,719,253 | ) | (2,030,777 | ) | (3,872,755 | ) | |||||||||
Shares used for computation of basic loss per share | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 | |||||||||||||
Add back: weighted average unvested restricted stock awards and units | — | — | — | — | |||||||||||||
Add back: dilutive stock options and stock appreciation rights | — | — | — | — | |||||||||||||
Shares used for computation of diluted loss per share(1) | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 | |||||||||||||
Basic and diluted loss per share attributable to Pendrell | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.16 | ) | |||||
-1 | Stock options, stock appreciation rights, restricted stock awards and units totaling 31,031,430 for the three and nine months ended September 30, 2014, and 34,009,178 for the three and nine months ended September 30, 2013, were excluded from the calculation of diluted loss per share as their inclusion was anti-dilutive. |
Basis_of_Presentation_Addition
Basis of Presentation - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2014 | |
Segment | |
Accounting Policies [Abstract] | ' |
Number of operating and reporting segments | 1 |
Business_Combinations_Addition
Business Combinations - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Feb. 21, 2013 | |
Business Acquisition [Line Items] | ' | ' | ' | ' | ' |
General and administrative expenses | $5,394,000 | $6,933,000 | $20,228,000 | $21,738,000 | ' |
Provitro Biosciences LLC | ' | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' | ' |
Percentage of business acquisition interest | ' | ' | ' | ' | 68.75% |
Acquisition-related costs | ' | ' | ' | 400,000 | ' |
General and administrative expenses | $300,000 | $900,000 | $2,000,000 | $2,300,000 | ' |
Intangible_Assets_Additional_I
Intangible Assets - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | |
Patent | Patent | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Number of patents purchased | ' | 0 | ' |
Number of patents issued | 23 | 23 | ' |
Applications filed for additional patents | ' | 61 | ' |
Losses on abandonment of certain patents | $300,000 | $1,615,000 | $46,000 |
Abandoned assets combined book value | ' | ' | $100,000 |
Minimum | ' | ' | ' |
Acquired Finite-Lived Intangible Assets [Line Items] | ' | ' | ' |
Number of issued patents held | 1,500 | 1,500 | ' |
Summary_of_Accrued_Expenses_De
Summary of Accrued Expenses (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Payables and Accruals [Abstract] | ' | ' |
Accrued payroll and related expenses | $3,283 | $2,242 |
Accrued legal, professional and other expenses | 2,936 | 3,429 |
Accrued expenses | $6,219 | $5,671 |
Other_Liabilities_Additional_I
Other Liabilities - Additional Information (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Other current liabilities | ' | ' |
Other Liabilities [Line Items] | ' | ' |
Payment obligations | ' | $2 |
Other non-current liabilities | ' | ' |
Other Liabilities [Line Items] | ' | ' |
Payment obligations | ' | 4 |
Restricted stock awards liability | ' | ' |
Other Liabilities [Line Items] | ' | ' |
Expense related to restricted stock awards included in other current liabilities | 2 | ' |
Expense related to restricted stock awards included in other non-current liabilities | ' | 1.4 |
Restricted stock awards liability | Other non-current liabilities | ' | ' |
Other Liabilities [Line Items] | ' | ' |
Expense related to restricted stock awards included in other non-current liabilities | ' | 1.4 |
Due in 2015 | ' | ' |
Other Liabilities [Line Items] | ' | ' |
Purchase commitment contractual obligations due in 2015 | $4 | ' |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | Sep. 30, 2014 | Jan. 31, 2014 | Sep. 30, 2014 | Nov. 30, 2012 | Dec. 18, 2013 |
In Millions, unless otherwise specified | Due in 2015 | Google Actions | ZTE Enforcement Actions | J&J Arbitration | Enforcement Action Against Amazon |
Patent | Patent | Patent | |||
Gain And Loss Contingencies [Line Items] | ' | ' | ' | ' | ' |
Purchase commitment contractual obligations due in 2015 | $4 | ' | ' | ' | ' |
Number of alleged patents infringed | ' | 9 | 3 | ' | 9 |
Number of patents asserted | ' | ' | 6 | ' | ' |
Number of patents terminated | ' | ' | 2 | ' | ' |
Number of patents remaining | ' | ' | 4 | ' | ' |
Number of patents against nullity action filed | ' | ' | 2 | ' | ' |
Amount obtained from arbitration judgment | ' | ' | ' | $4 | ' |
StockBased_Compensation_Expens
Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' | ||||
Stock-based compensation | $1,443 | $2,883 | $5,195 | $10,001 | ||||
Stock options | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' | ||||
Stock-based compensation | 1,180 | 1,352 | 3,629 | 4,313 | ||||
Restricted stock awards | ' | ' | ' | ' | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' | ||||
Stock-based compensation | $263 | [1] | $1,531 | [1] | $1,566 | [1] | $5,688 | [1] |
[1] | Stock-based compensation expense for both the three and nine months ended September 30, 2014 and 2013, includes $0.2 million and $0.6 million of expense, respectively, related to 250,000 Class A common stock restricted stock awards that are required to be treated as a liability. As of September 30, 2014 and December 31, 2013, $2.0 million and $1.4 million, respectively, were accrued for such awards. |
StockBased_Compensation_Expens1
Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations (Parenthetical) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' | ' |
Stock-based compensation | $1,443,000 | $2,883,000 | $5,195,000 | $10,001,000 | ' |
Restricted stock awards liability | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' | ' |
Stock-based compensation | 200,000 | 200,000 | 600,000 | 600,000 | ' |
Restricted stock awards accounted for liability awards | 250,000 | ' | 250,000 | ' | ' |
Accrued stock-based compensation, current | 2,000,000 | ' | 2,000,000 | ' | ' |
Accrued stock-based compensation, non-current | ' | ' | ' | ' | $1,400,000 |
Stock_Option_and_SARs_Activity
Stock Option and SARs Activity (Detail) (Stock Options and Stock Appreciation Rights, USD $) | 9 Months Ended | |
Sep. 30, 2014 | ||
Stock Options and Stock Appreciation Rights | ' | |
Number of shares of Class A common stock underlying options and SARs | ' | |
Outstanding at beginning of period | 28,496,463 | |
Granted | 4,344,000 | [1] |
Exercised | -760,937 | |
Forfeited | -5,087,611 | |
Outstanding at end of period | 26,991,915 | |
Exercisable at end of period | 14,342,904 | |
Vested and expected to vest at end of period | 26,426,388 | |
Weighted average exercise price | ' | |
Outstanding at beginning of period | $2.17 | |
Granted | $1.50 | [1] |
Exercised | $1.17 | |
Forfeited | $2.76 | |
Outstanding at end of period | $1.98 | |
Exercisable at end of period | $1.92 | |
Vested and expected to vest at end of period | $1.99 | |
[1] | The stock options granted during the nine months ended September 30, 2014 have a grant date fair value of $3.5 million and vest at a rate of 25% per year over four years. |
Stock_Option_and_SARs_Activity1
Stock Option and SARs Activity (Parenthetical) (Detail) (Stock options, USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Stock options | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock options grant date fair value | $3.50 |
Stock options vesting percentage | 25.00% |
Stock options award vesting period | '4 years |
Restricted_Stock_Activity_Deta
Restricted Stock Activity (Detail) (Restricted Stock And Units Equity And Liability Awards, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Restricted Stock And Units Equity And Liability Awards | ' |
Number of shares of Class A common stock underlying restricted stock awards | ' |
Unvested Beginning Balance | 5,912,116 |
Granted | 588,587 |
Vested | -1,222,624 |
Forfeited | -1,238,564 |
Unvested Ending Balance | 4,039,515 |
Weighted average fair value per share | ' |
Unvested Beginning Balance | $1.62 |
Granted | $1.27 |
Vested | $2.10 |
Forfeited | $1.16 |
Unvested Ending Balance | $1.55 |
Restricted_Stock_Granted_Detai
Restricted Stock Granted (Detail) (Restricted stock awards, USD $) | 9 Months Ended |
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted, Fair value of grants | $748 |
Service-based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted, Fair value of grants | 328 |
Market-based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted, Fair value of grants | 68 |
Shares issued as Board of Director compensation | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted, Fair value of grants | $352 |
Class A common stock | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted | 588,587 |
Class A common stock | Service-based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted | 250,000 |
Class A common stock | Market-based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted | 150,000 |
Class A common stock | Shares issued as Board of Director compensation | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock awards granted | 188,587 |
Stockbased_Compensation_Additi
Stock-based Compensation - Additional Information (Detail) (Restricted stock awards, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Stock award, period consecutive trading days | '60 days |
Service- based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Restricted stock award vesting percentage | 25.00% |
Service-based restricted stock awards vesting period | '4 years |
Market-based | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Average closing price | 3 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Shareholder | Shareholder | ||
Income Taxes [Line Items] | ' | ' | ' |
Income tax provision | $0 | $6,270,000 | ' |
Foreign taxes withheld | ' | ' | 0 |
U.S. federal income tax liability | ' | ' | 0 |
Unrecognized tax benefits due to reduction in net operating loss | ' | ' | 32,500,000 |
Net operating and capital losses | 32,500,000 | 32,500,000 | ' |
Availability of additional net operating losses for future use | 95,700,000 | 95,700,000 | ' |
Deferred tax assets valuation allowance | $32,500,000 | $32,500,000 | ' |
Personal holding company determination, number of shareholders limit | 5 | 5 | ' |
Personal holding company determination, aggregate ownership percentage | ' | 50.00% | ' |
Personal holding company tax rate on net personal holding company income | ' | 20.00% | ' |
Tax Benefits Preservation Plan | ' | 'Holders of 4.9% or more of the Companybs securities outstanding as of the close of business on January 29, 2010 will not trigger the Tax Benefits Preservation Plan so long as they do not (i) acquire additional securities constituting one-half of one percent (0.5%) or more of the Companybs securities outstanding as of the date of the Tax Benefits Preservation Plan (as adjusted to reflect any stock splits, subdivisions and the like), or (ii) fall under 4.9% ownership of the Companybs securities and then re-acquire securities that increase their ownership to 4.9% or more of the Companybs securities. The Board of Directors may exempt certain persons whose acquisition of securities is determined by the Board of Directors not to jeopardize the Companybs tax benefits or to otherwise be in the best interest of the Company and its shareholders. The Board of Directors may also exempt certain transactions. | ' |
Additional percentage of beneficial interest acquired to trigger tax benefit preservation plan | ' | 0.50% | ' |
Minimum | ' | ' | ' |
Income Taxes [Line Items] | ' | ' | ' |
Percentage of adjusted ordinary gross income pertaining to individual shareholders | ' | 60.00% | ' |
Tax Benefits Preservation Plan trigger, ownership percentage | ' | 4.90% | ' |
Computation_of_Basic_and_Dilut
Computation of Basic and Diluted Loss Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | ||||
Earnings Per Share [Abstract] | ' | ' | ' | ' | ||||
Net loss attributable to Pendrell | ($13,262) | ($14,228) | ($24,127) | ($42,416) | ||||
Weighted average common shares outstanding | 266,520,052 | 265,809,024 | 266,200,724 | 265,553,351 | ||||
Less: weighted average unvested restricted stock awards | -1,892,190 | -2,719,253 | -2,030,777 | -3,872,755 | ||||
Shares used for computation of basic loss per share | 264,627,862 | 263,089,771 | 264,169,947 | 261,680,596 | ||||
Add back: weighted average unvested restricted stock awards and units | ' | ' | ' | ' | ||||
Add back: dilutive stock options and stock appreciation rights | ' | ' | ' | ' | ||||
Shares used for computation of diluted loss per share | 264,627,862 | [1] | 263,089,771 | [1] | 264,169,947 | [1] | 261,680,596 | [1] |
Basic and diluted loss per share attributable to Pendrell | ($0.05) | ($0.05) | ($0.09) | ($0.16) | ||||
[1] | Stock options, stock appreciation rights, restricted stock awards and units totaling 31,031,430 for the three and nine months ended September 30, 2014, and 34,009,178 for the three and nine months ended September 30, 2013, were excluded from the calculation of diluted loss per share as their inclusion was anti-dilutive. |
Computation_of_Basic_and_Dilut1
Computation of Basic and Diluted Loss Per Share (Parenthetical) (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Securities excluded from calculation of diluted loss per share | 31,031,430 | 34,009,178 | 31,031,430 | 34,009,178 |