Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 21, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | PCO | |
Entity Registrant Name | Pendrell Corp | |
Entity Central Index Key | 1,359,555 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 21,491,373 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 5,366,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 176,307 | $ 162,457 |
Accounts receivable | 15,002 | 87 |
Other receivables | 683 | 1,329 |
Prepaid expenses and other current assets | 351 | 384 |
Total current assets | 192,343 | 164,257 |
Property in service – net of accumulated depreciation of $521 and $512, respectively | 84 | 118 |
Non-current accounts receivable | 16,502 | |
Other assets | 29 | 2,140 |
Intangible assets – net of accumulated amortization of $60,630 and $54,523, respectively | 7,134 | 14,377 |
Total | 216,092 | 180,892 |
Current liabilities: | ||
Accounts payable | 106 | 140 |
Accrued expenses | 5,414 | 4,292 |
Other liabilities | 101 | 119 |
Total current liabilities | 5,621 | 4,551 |
Other non-current liabilities | 8,185 | |
Total liabilities | 13,806 | 4,551 |
Commitments and contingencies (Note 7) | ||
Shareholders’ equity and noncontrolling interest: | ||
Preferred stock, $0.01 par value, 75,000,000 shares authorized, no shares issued or outstanding | ||
Additional paid-in capital | 1,961,288 | 1,958,376 |
Accumulated deficit | (1,758,092) | (1,780,823) |
Total Pendrell shareholders’ equity | 205,884 | 180,234 |
Noncontrolling interest | (3,598) | (3,893) |
Total shareholders’ equity and noncontrolling interest | 202,286 | 176,341 |
Total | 216,092 | 180,892 |
Class A common stock | ||
Shareholders’ equity and noncontrolling interest: | ||
Common stock, value | 2,151 | 2,144 |
Class B common stock | ||
Shareholders’ equity and noncontrolling interest: | ||
Common stock, value | $ 537 | $ 537 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property in service, accumulated depreciation | $ 521 | $ 512 |
Intangible assets, accumulated amortization | $ 60,630 | $ 54,523 |
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 | 27,252,700 | 27,187,911 |
Common stock, shares outstanding | 21,475,812 | 21,410,896 |
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 | 8,466,338 | 8,466,338 |
Common stock, shares outstanding | 5,366,000 | 5,366,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Income Statement [Abstract] | |||||
Revenue | $ 15,465 | $ 58,503 | $ 42,857 | ||
Operating expenses: | |||||
Cost of revenues | 87 | 17,972 | 10,141 | ||
Patent administration and related costs | $ 180 | 441 | 774 | 2,250 | |
Patent litigation | 308 | 7,080 | 3,723 | 12,122 | |
General and administrative | 2,052 | 4,573 | 5,734 | 13,383 | |
Stock-based compensation | 588 | 1,834 | 2,639 | 3,271 | |
Amortization of intangible assets | 2,373 | 3,579 | 7,131 | 10,764 | |
Total operating expenses | 5,501 | 17,594 | 37,973 | 51,931 | |
Operating income (loss) | (5,501) | (2,129) | 20,530 | (9,074) | |
Interest income | 163 | 36 | 457 | 101 | |
Interest expense | (42) | ||||
Gain on contingency | 2,226 | 2,047 | 3,974 | ||
Other expense | (3) | (6) | (8) | (12) | |
Income (loss) before income taxes | (5,341) | 127 | 23,026 | (5,053) | |
Income tax expense | (4,125) | ||||
Net income (loss) | (5,341) | 127 | 23,026 | (9,178) | |
Net income (loss) attributable to noncontrolling interest | (87) | 126 | 295 | (1,062) | |
Net income (loss) attributable to Pendrell | $ (5,254) | $ 1 | $ 22,731 | $ (8,116) | |
Basic income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.85 | $ (0.31) | |
Diluted income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.82 | $ (0.31) | |
Weighted average shares outstanding used to compute basic income (loss) per share | 26,778,453 | 26,575,282 | 26,744,837 | 26,555,618 | |
Weighted average shares outstanding used to compute diluted income (loss) per share | [2] | 26,778,453 | 26,575,282 | 27,691,863 | 26,555,618 |
[1] | Per share amounts for the three months ended September 30, 2015 are less than $0.01. | ||||
[2] | Stock options, stock appreciation rights, restricted stock awards and units totaling 2,347,370 and 1,456,615 for the three and nine months ended September 30, 2016, respectively, and 3,985,664 for both the three and nine months ended September 30, 2015, were excluded from the calculation of diluted income (loss) per share as their inclusion was anti-dilutive. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Basic income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.85 | $ (0.31) | |
Diluted income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.82 | $ (0.31) | |
Maximum | |||||
Basic income (loss) per share attributable to Pendrell | $ 0.01 | ||||
Diluted income (loss) per share attributable to Pendrell | $ 0.01 | ||||
[1] | Per share amounts for the three months ended September 30, 2015 are less than $0.01. |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands | Total | Class A common stock | Class B common stock | Common stock | Common stockClass A common stock | Common stockClass B common stock | Additional paid-in capital | Accumulated deficit | Shareholder's equity | Noncontrolling interest |
Beginning Balance at Dec. 31, 2015 | $ 176,341 | $ 2,681 | $ 1,958,376 | $ (1,780,823) | $ 180,234 | $ (3,893) | ||||
Beginning Balance (in shares) at Dec. 31, 2015 | 21,410,896 | 5,366,000 | 21,410,896 | 5,366,000 | ||||||
Class A common stock withheld at vesting to cover statutory tax obligations | (40) | (40) | (40) | |||||||
Class A common stock withheld at vesting to cover statutory tax obligations (in shares) | (6,352) | |||||||||
Stock-based compensation and issuance of restricted stock, net of forfeitures | 2,959 | 7 | 2,952 | 2,959 | ||||||
Stock-based compensation and issuance of restricted stock, net of forfeitures (in shares) | 71,268 | |||||||||
Net income | 23,026 | 22,731 | 22,731 | 295 | ||||||
Ending Balance at Sep. 30, 2016 | $ 202,286 | $ 2,688 | $ 1,961,288 | $ (1,758,092) | $ 205,884 | $ (3,598) | ||||
Ending Balance (in shares) at Sep. 30, 2016 | 21,475,812 | 5,366,000 | 21,475,812 | 5,366,000 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net income (loss) including noncontrolling interests | $ 23,026 | $ (9,178) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Stock-based compensation | 2,639 | 3,271 |
Amortization of intangibles | 7,131 | 10,764 |
Depreciation | 41 | 326 |
Non-cash cost of patents monetized | 139 | |
Loss associated with the abandonment and/or disposition of patents | 112 | 869 |
Loss on the disposition of property | 981 | |
Other | 5 | 41 |
Other changes in certain assets and liabilities: | ||
Accounts receivable, current and non-current | (29,915) | (42) |
Prepaid expenses and other current/non-current assets | (12) | (1,298) |
Accounts payable | (34) | (7) |
Accrued expenses and other current liabilities | 1,424 | (4,775) |
Non-current liabilities | 8,185 | |
Net cash provided by operating activities | 12,602 | 1,091 |
Investing activities: | ||
Payment received on note receivable | 1,300 | |
Purchases of property and intangible assets | (12) | (2,049) |
Proceeds associated with the disposition of property | 103 | |
Net cash provided by (used in) investing activities | 1,288 | (1,946) |
Financing activities: | ||
Proceeds from exercise of stock options | 219 | |
Payment of statutory taxes for stock awards | (40) | (140) |
Payment of accrued obligations for purchased intangible assets | (4,000) | |
Purchase of noncontrolling interest in Provitro Biosciences LLC | (400) | |
Net cash used in financing activities | (40) | (4,321) |
Net increase (decrease) in cash and cash equivalents | 13,850 | (5,176) |
Cash and cash equivalents - beginning of period | 162,457 | 168,793 |
Cash and cash equivalents - end of period | $ 176,307 | 163,617 |
Supplemental disclosures: | ||
Income taxes paid | 4,125 | |
Supplemental disclosure of non-cash activities: | ||
Note receivable for disposition of property | $ 1,900 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2016 | |
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”). Since 2011, the Company’s strategy, through its consolidated subsidiaries, has been 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. The Company regularly evaluates its existing investments to determine whether retention or disposition is appropriate, and investigates new investment and business acquisition opportunities. From 2011 through 2015, the Company also advised clients on various IP strategies and transactions through its consulting subsidiary Ovidian Group LLC (“Ovidian”). As of December 31, 2015, the Company sold Ovidian for nominal consideration. |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
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, 2015 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, 2015 (“2015 Form 10-K”), filed with the U.S. Securities and Exchange Commission on March 4, 2016. 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 2015 Form 10-K. Capitalized terms used and not otherwise defined in this quarterly report have the meanings given to them in the Company’s 2015 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, 2016 or any other interim period. Capital Structure Change —At the Company’s annual meeting of shareholders on July 7, 2016, the Company’s shareholders approved a reverse split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of Class A common stock and Class B common stock within a range of one share of common stock for every three shares of common stock (1-for-3) to one share of common stock for every ten shares of common stock (1-for-10), with the exact Reverse Stock Split ratio to be set within this range as determined by the Company’s board of directors in its sole discretion. On September 20, 2016, the Company’s board of directors fixed the Reverse Stock Split ratio at 1-for-10. As a result of the Reverse Stock Split, the share counts and per share data reported in the historical financial statements have been adjusted retrospectively as if the Reverse Stock Split had been in effect for all periods presented. Additionally, the exercise prices and the number of shares issuable under the Company’s stock-based compensation plans have been adjusted retrospectively to reflect the Reverse Stock Split. Principles of Consolidation and Basis of Presentation —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), other comprehensive 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 revenue share obligations for the purpose of determining our cost of revenue, 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. Accounting Policies —There have been no material changes or updates in the Company’s existing accounting policies from the disclosures included in its 2015 Form 10-K. New Accounting Pronouncements —In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires companies that are lessees to recognize a right-of-use asset and lease liability for most leases that do not meet the definition of a short-term lease. For income statement purposes, leases will continue to be classified as either operating or financing. Classification will be based on criteria that are largely similar to those applied in current lease accounting. Compliance with this ASU is required for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. The Company believes the future adoption of this ASU will not have a material impact on its financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Throughout the nine months ended September 30, 2016, the FASB has issued a number of ASUs which provide further clarification to ASU No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customers |
Provitro
Provitro | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Provitro | 3. Provitro In February 2013, the Company acquired a 68.75% interest in Provitro, the developer of the Provitro™ proprietary micro-propagation technology designed to facilitate the production on a commercial scale of certain plants, particularly timber bamboo. In February 2015, the Company acquired the minority partner’s interest in Provitro for nominal consideration resulting in 100% ownership of Provitro. From acquisition through the year ended December 31, 2014, the Company attempted to develop a strategy to commercialize the Provitro™ technology, but did not generate revenue from the technology. In January 2015, the Company discontinued its efforts to commercialize the Provitro™ technology and in September 2015, the Company sold Provitro’s facility and related tangible assets for $2.0 million, resulting in a $0.7 million loss in the third quarter of the year ended December 31, 2015. The purchase price will be paid in installments of which $0.1 million was paid immediately, $0.4 million was received in January 2016, $0.9 million was received in August 2016 and $0.6 million is scheduled for payment within twelve months and is included in other current receivables at September 30, 2016. |
Accounts Receivable (Current an
Accounts Receivable (Current and Non-current) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Accounts Receivable (Current and Non-current) | 4. Accounts Receivable (Current and Non-current) Accounts receivable consists primarily of amounts billed to customers under licensing arrangements. Since 2011, the Company has not incurred any material losses on its accounts receivable. Based upon this historical collections experience and currently available information, the Company determined that no allowance for doubtful accounts was required at either September 30, 2016 or December 31, 2015. The Company expects to receive the $15.0 million of current accounts receivable at September 30, 2016 no later than July 2017. The Company expects to receive payment of approximately $15.8 million of its non-current accounts receivable in 2018 and the remainder in 2019. |
Accrued expenses
Accrued expenses | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Accrued expenses | 5. Accrued expenses The following table summarizes accrued expenses (in thousands): September 30, 2016 December 31, 2015 Accrued payroll and related expenses $ 651 $ 1,742 Accrued legal, professional and other expenses 451 2,550 Accrued costs associated with patent monetization 4,312 — $ 5,414 $ 4,292 |
Other non-current liabilities
Other non-current liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Other non-current liabilities | 6. Other non-current liabilities At September 30, 2016, other non-current liabilities, primarily consisting of revenue share obligations, are estimated to be payable as follows (in thousands): Fiscal 2017 $ 280 Fiscal 2018 7,514 Fiscal 2019 391 $ 8,185 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Purchase and Lease Commitments— The Company has operating lease agreements for its offices in Kirkland, Washington and Finland. The Company terminated its lease for office space in Plano, Texas effective June 30, 2016. 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. There have been no material changes to the legal proceedings disclosures included under Part I, Item 3 of the Company’s 2015 Form 10-K other than the following update, with capitalized terms having the meaning given to them in the Form 10-K: ContentGuard Enforcement Actions — ContentGuard continues to challenge the juries’ findings in the Google Litigation and Apple Litigation. Specifically, ContentGuard filed motions for judgments as a matter of law (“JMOL”) in both cases, seeking judicial reversal of the juries’ findings or new trials. On April 18, 2016, the federal district judge presiding over the Apple Litigation denied the JMOL motion in the Apple Litigation. On July 9, 2016, the same judge denied the JMOL motion in the Google Litigation. ContentGuard appealed both rulings to the federal circuit court and filed its opening appeal briefs on June 27, 2016 in the Apple Litigation and October 11, 2016 in the Google Litigation. Briefing in both cases will continue through much of 2016, with decisions likely sometime in 2017. The Company cannot predict the outcome of any post-trial activities in the Google Litigation or Apple Litigation. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased 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, 2016 and 2015 was as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Stock options $ 93 $ 835 $ 951 $ 1,855 Restricted stock awards 495 999 1,688 1,416 Total stock-based compensation expense $ 588 $ 1,834 $ 2,639 $ 3,271 Stock Options— The Company’s stock option activity for the nine months ended September 30, 2016 is summarized as follows: Number of shares of Class A common stock underlying options Weighted average exercise price Outstanding – December 31, 2015 1,731,723 $ 16.21 Forfeited (275,108) $ 17.54 Outstanding – September 30, 2016 1,456,615 $ 15.96 Exercisable – September 30, 2016 948,383 $ 17.15 Vested and expected to vest – September 30, 2016 1,407,453 $ 15.92 Restricted Stock— The Company’s restricted stock activity for nine months ended September 30, 2016 is summarized as follows: Number of shares of Class A common stock underlying restricted stock awards Weighted average fair value per share Unvested – December 31, 2015 1,053,064 $ 8.40 Granted (1) 62,530 $ 5.12 Vested (185,308) $ 10.83 Forfeited (39,531) $ 10.32 Unvested – September 30, 2016 890,755 $ 8.23 (1) Represents shares issued to the Company’s Board of Directors as compensation for service. These awards have a grant date fair value of $0.3 million and vest upon issuance. |
Gain on Contingency
Gain on Contingency | 9 Months Ended |
Sep. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Gain on Contingency | 9. Gain on Contingency During 2012, as part of the Company’s exit from the satellite business, the Company sold its partially completed medium earth orbit satellites, related equipment, and contracts. The Company received the first of three scheduled payments for these assets in March 2015, resulting in the recognition of a $1.7 million gain on contingency. The Company received the second scheduled payment in September 2015, resulting in the recognition of an additional $2.2 million gain on contingency in the third quarter of 2015, or a total of $3.9 million for the nine months ended September 30, 2015. The Company received the final scheduled payment in April 2016, resulting in the recognition of a $2.0 million gain on contingency in the nine months ended September 30, 2016. At December 31, 2015, due to the uncertainty of collecting the third scheduled payment, the Company did not recognize in its 2015 financial statements the gain generated from the April 2016 receipt of the third scheduled payment. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The Company recorded a tax provision of $4.1 million for the nine months ended September 30, 2015 related to foreign taxes withheld on revenue generated from license agreements executed with third party licensees 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. 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, the Company established a full valuation allowance against the related deferred tax asset at September 30, 2015. The Company had no foreign taxes withheld during the nine months ended September 30, 2016 and anticipates that it will not have a U.S. federal income tax liability for fiscal 2016 due to available tax loss carryforwards. |
Income (Loss) per Share
Income (Loss) per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Income (Loss) per Share | 11. Income (Loss) per Share Basic income (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 income (loss) per share is calculated by dividing the income (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 income (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) 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 would have been anti-dilutive. The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except share and per share data): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Net income (loss) attributable to Pendrell $ (5,254 ) $ 1 $ 22,731 $ (8,116 ) Weighted average common shares outstanding 26,838,073 26,757,279 26,817,736 26,686,107 Less: weighted average unvested restricted stock awards (59,620 ) (181,997 ) (72,899 ) (130,489 ) Shares used for computation of basic income (loss) per share 26,778,453 26,575,282 26,744,837 26,555,618 Add back: weighted average unvested restricted stock awards and units — — 947,026 — Shares used for computation of diluted income (loss) per share (1) 26,778,453 26,575,282 27,691,863 26,555,618 Basic income (loss) per share attributable to Pendrell (2) $ (0.20 ) $ — $ 0.85 $ (0.31 ) Diluted income (loss) per share attributable to Pendrell (2) $ (0.20 ) $ — $ 0.82 $ (0.31 ) (1) Stock options, stock appreciation rights, restricted stock awards and units totaling 2,347,370 and 1,456,615 for the three and nine months ended September 30, 2016, respectively, and 3,985,664 for both the three and nine months ended September 30, 2015, were excluded from the calculation of diluted income (loss) per share as their inclusion was anti-dilutive. (2) Per share amount for the three months ended September 30, 2015 is less than $0.01. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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 norma l 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, 2015 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, 2015 (“2015 Form 10-K”), filed with the U.S. Securities and Exchange Commission on March 4, 2016. 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 2015 Form 10-K. Capitalized terms used and not otherwise defined in this quarterly report have the meanings given to them in the Company’s 2015 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, 2016 or any other interim period. |
Capital Structure Change | Capital Structure Change — At the Company’s annual meeting of shareholders on July 7, 2016, the Company’s shareholders approved a reverse split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of Class A common stock and Class B common stock within a range of one share of common stock for every three shares of common stock (1-for-3) to one share of common stock for every ten shares of common stock (1-for-10), with the exact Reverse Stock Split ratio to be set within this range as determined by the Company’s board of directors in its sole discretion. On September 20, 2016, the Company’s board of directors fixed the Reverse Stock Split ratio at 1-for-10. As a result of the Reverse Stock Split, the share counts and per share data reported in the historical financial statements have been adjusted retrospectively as if the Reverse Stock Split had been in effect for all periods presented. Additionally, the exercise prices and the number of shares issuable under the Company’s stock-based compensation plans have been adjusted retrospectively to reflect the Reverse Stock Split. |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation —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 cont rolling 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), other comprehensive 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 revenue share obligations for the purpose of determining our cost of revenue, 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. |
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 2015 Form 10-K. |
New Accounting Pronouncements | New Accounting Pronouncements —In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), which requires companies that are lessees to recognize a right-of-use asset and lease liability for most leases that do not meet the definition of a short-term lease. For income statement purposes, leases will continue to be classified as either operating or financing. Classification will be based on criteria that are largely similar to those applied in current lease accounting. Compliance with this ASU is required for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. The Company believes the future adoption of this ASU will not have a material impact on its financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Throughout the nine months ended September 30, 2016, the FASB has issued a number of ASUs which provide further clarification to ASU No. 2014-09, Revenue (Topic 606): Revenue from Contracts with Customers |
Accrued expenses (Tables)
Accrued expenses (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Summary of Accrued Expenses | The following table summarizes accrued expenses (in thousands): September 30, 2016 December 31, 2015 Accrued payroll and related expenses $ 651 $ 1,742 Accrued legal, professional and other expenses 451 2,550 Accrued costs associated with patent monetization 4,312 — $ 5,414 $ 4,292 |
Other non-current liabilities (
Other non-current liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Payables And Accruals [Abstract] | |
Schedule of Other Non-current Liabilities Primarily Consisting of Revenue Share Obligations | At September 30, 2016, other non-current liabilities, primarily consisting of revenue share obligations, are estimated to be payable as follows (in thousands): Fiscal 2017 $ 280 Fiscal 2018 7,514 Fiscal 2019 391 $ 8,185 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased 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, 2016 and 2015 was as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Stock options $ 93 $ 835 $ 951 $ 1,855 Restricted stock awards 495 999 1,688 1,416 Total stock-based compensation expense $ 588 $ 1,834 $ 2,639 $ 3,271 |
Stock Option Activity | Stock Options— The Company’s stock option activity for the nine months ended September 30, 2016 is summarized as follows: Number of shares of Class A common stock underlying options Weighted average exercise price Outstanding – December 31, 2015 1,731,723 $ 16.21 Forfeited (275,108) $ 17.54 Outstanding – September 30, 2016 1,456,615 $ 15.96 Exercisable – September 30, 2016 948,383 $ 17.15 Vested and expected to vest – September 30, 2016 1,407,453 $ 15.92 |
Restricted Stock Activity | Restricted Stock— The Company’s restricted stock activity for nine months ended September 30, 2016 is summarized as follows: Number of shares of Class A common stock underlying restricted stock awards Weighted average fair value per share Unvested – December 31, 2015 1,053,064 $ 8.40 Granted (1) 62,530 $ 5.12 Vested (185,308) $ 10.83 Forfeited (39,531) $ 10.32 Unvested – September 30, 2016 890,755 $ 8.23 (1) Represents shares issued to the Company’s Board of Directors as compensation for service. These awards have a grant date fair value of $0.3 million and vest upon issuance. |
Income (Loss) per Share (Tables
Income (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Income (Loss) Per Share | The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except share and per share data): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Net income (loss) attributable to Pendrell $ (5,254 ) $ 1 $ 22,731 $ (8,116 ) Weighted average common shares outstanding 26,838,073 26,757,279 26,817,736 26,686,107 Less: weighted average unvested restricted stock awards (59,620 ) (181,997 ) (72,899 ) (130,489 ) Shares used for computation of basic income (loss) per share 26,778,453 26,575,282 26,744,837 26,555,618 Add back: weighted average unvested restricted stock awards and units — — 947,026 — Shares used for computation of diluted income (loss) per share (1) 26,778,453 26,575,282 27,691,863 26,555,618 Basic income (loss) per share attributable to Pendrell (2) $ (0.20 ) $ — $ 0.85 $ (0.31 ) Diluted income (loss) per share attributable to Pendrell (2) $ (0.20 ) $ — $ 0.82 $ (0.31 ) (1) Stock options, stock appreciation rights, restricted stock awards and units totaling 2,347,370 and 1,456,615 for the three and nine months ended September 30, 2016, respectively, and 3,985,664 for both the three and nine months ended September 30, 2015, were excluded from the calculation of diluted income (loss) per share as their inclusion was anti-dilutive. (2) Per share amount for the three months ended September 30, 2015 is less than $0.01. |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) | Sep. 20, 2016 | Jul. 07, 2016 | Sep. 30, 2016Segment |
Significant Accounting Policies [Line Items] | |||
Description of reverse stock split | At the Company’s annual meeting of shareholders on July 7, 2016, the Company’s shareholders approved a reverse split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of Class A common stock and Class B common stock within a range of one share of common stock for every three shares of common stock (1-for-3) to one share of common stock for every ten shares of common stock (1-for-10), with the exact Reverse Stock Split ratio to be set within this range as determined by the Company’s board of directors in its sole discretion. On September 20, 2016, the Company’s board of directors fixed the Reverse Stock Split ratio at 1-for-10. | ||
Number of operating and reporting segments | 1 | ||
Common stock | |||
Significant Accounting Policies [Line Items] | |||
Reverse stock split ratio | 0.10 | ||
Common stock | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Reverse stock split ratio | 0.3333 | ||
Common stock | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Reverse stock split ratio | 0.10 |
Provitro - Additional Informati
Provitro - Additional Information (Detail) - Provitro Biosciences LLC | Feb. 28, 2015 | Feb. 28, 2013 |
Business Acquisition [Line Items] | ||
Percentage of business acquisition interest | 68.75% | |
Ownership percentage | 100.00% |
Provitro - Additional Informa26
Provitro - Additional Information1 (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2016 | Jan. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||||||
Proceeds associated with the disposition of property | $ 103 | ||||||
Other receivables | $ 683 | $ 1,329 | |||||
Provitro Biosciences LLC | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Proceeds associated with the disposition of property | $ 900 | $ 400 | $ 100 | ||||
Provitro Biosciences LLC | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Considerations paid and payable under the sale of assets | $ 2,000 | $ 2,000 | $ 2,000 | ||||
Loss related to tangible assets | $ 700 | ||||||
Other receivables | $ 600 | ||||||
Period over which balance payable under sale of assets | 12 months |
Accounts Receivable (Current 27
Accounts Receivable (Current and Non-current) - Additional Information (Detail) - USD ($) | 10 Months Ended | 12 Months Ended | ||
Jul. 31, 2017 | Dec. 31, 2018 | Sep. 30, 2016 | Dec. 31, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Scenario, Forecast | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Proceeds from collection of accounts receivable | $ 15,000,000 | $ 15,800,000 |
Summary of Accrued Expenses (De
Summary of Accrued Expenses (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Payables And Accruals [Abstract] | ||
Accrued payroll and related expenses | $ 651 | $ 1,742 |
Accrued legal, professional and other expenses | 451 | 2,550 |
Accrued costs associated with patent monetization | 4,312 | |
Accrued expenses | $ 5,414 | $ 4,292 |
Schedule of Other Non-current L
Schedule of Other Non-current Liabilities Primarily Consisting of Revenue Share Obligations (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
Other Commitments [Line Items] | |
Other non-current liabilities | $ 8,185 |
Revenue Share Obligations | |
Other Commitments [Line Items] | |
Fiscal 2,017 | 280 |
Fiscal 2,018 | 7,514 |
Fiscal 2,019 | 391 |
Other non-current liabilities | $ 8,185 |
Stock-Based Compensation Expens
Stock-Based Compensation Expense Included in Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 588 | $ 1,834 | $ 2,639 | $ 3,271 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | 93 | 835 | 951 | 1,855 |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 495 | $ 999 | $ 1,688 | $ 1,416 |
Stock Option Activity (Detail)
Stock Option Activity (Detail) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Number of shares of Class A common stock underlying options | |
Outstanding at beginning of period | shares | 1,731,723 |
Forfeited | shares | (275,108) |
Outstanding at end of period | shares | 1,456,615 |
Exercisable at end of period | shares | 948,383 |
Vested and expected to vest at end of period | shares | 1,407,453 |
Weighted average exercise price | |
Outstanding at beginning of period | $ / shares | $ 16.21 |
Forfeited | $ / shares | 17.54 |
Outstanding at end of period | $ / shares | 15.96 |
Exercisable at end of period | $ / shares | 17.15 |
Vested and expected to vest at end of period | $ / shares | $ 15.92 |
Restricted Stock Activity (Deta
Restricted Stock Activity (Detail) - Restricted stock awards | 9 Months Ended | |
Sep. 30, 2016$ / sharesshares | ||
Number of shares of Class A common stock underlying restricted stock awards | ||
Unvested Beginning Balance | shares | 1,053,064 | |
Granted | shares | 62,530 | [1] |
Vested | shares | (185,308) | |
Forfeited | shares | (39,531) | |
Unvested Ending Balance | shares | 890,755 | |
Weighted average fair value per share | ||
Unvested Beginning Balance | $ / shares | $ 8.40 | |
Granted | $ / shares | 5.12 | [1] |
Vested | $ / shares | 10.83 | |
Forfeited | $ / shares | 10.32 | |
Unvested Ending Balance | $ / shares | $ 8.23 | |
[1] | Represents shares issued to the Company’s Board of Directors as compensation for service. These awards have a grant date fair value of $0.3 million and vest upon issuance. |
Restricted Stock Activity (Pare
Restricted Stock Activity (Parenthetical) (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Restricted stock awards | Board of Directors | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted stock awards grant date fair value | $ 0.3 |
Gain on Contingency - Additiona
Gain on Contingency - Additional Information (Detail) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2015USD ($)Payment | Sep. 30, 2015USD ($)Payment | Sep. 30, 2016USD ($)Payment | Sep. 30, 2015USD ($) | |
Gain Contingencies [Line Items] | ||||
Number of contingent scheduled payments | Payment | 1 | 2 | 3 | |
Gain on contingency | $ 2,226 | $ 2,047 | $ 3,974 | |
First scheduled payments | ||||
Gain Contingencies [Line Items] | ||||
Gain on contingency | $ 1,700 | |||
Second scheduled payments | ||||
Gain Contingencies [Line Items] | ||||
Gain on contingency | $ 2,200 | |||
Final scheduled payment | ||||
Gain Contingencies [Line Items] | ||||
Gain on contingency | $ 2,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||
Foreign income tax provision | $ 0 | $ 4,100,000 |
Computation of Basic and Dilute
Computation of Basic and Diluted Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Earnings Per Share [Abstract] | |||||
Net income (loss) attributable to Pendrell | $ (5,254) | $ 1 | $ 22,731 | $ (8,116) | |
Weighted average common shares outstanding | 26,838,073 | 26,757,279 | 26,817,736 | 26,686,107 | |
Less: weighted average unvested restricted stock awards | (59,620) | (181,997) | (72,899) | (130,489) | |
Shares used for computation of basic income (loss) per share | 26,778,453 | 26,575,282 | 26,744,837 | 26,555,618 | |
Add back: weighted average unvested restricted stock awards and units | 947,026 | ||||
Shares used for computation of diluted income (loss) per share | [1] | 26,778,453 | 26,575,282 | 27,691,863 | 26,555,618 |
Basic income (loss) per share attributable to Pendrell | [2] | $ (0.20) | $ 0.85 | $ (0.31) | |
Diluted income (loss) per share attributable to Pendrell | [2] | $ (0.20) | $ 0.82 | $ (0.31) | |
[1] | Stock options, stock appreciation rights, restricted stock awards and units totaling 2,347,370 and 1,456,615 for the three and nine months ended September 30, 2016, respectively, and 3,985,664 for both the three and nine months ended September 30, 2015, were excluded from the calculation of diluted income (loss) per share as their inclusion was anti-dilutive. | ||||
[2] | Per share amounts for the three months ended September 30, 2015 are less than $0.01. |
Computation of Basic and Dilu37
Computation of Basic and Diluted Income (Loss) Per Share (Parenthetical) (Detail) - $ / shares | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | ||
Earnings Per Share Basic And Diluted [Line Items] | |||||
Securities excluded from calculation of diluted income (loss) per share | 2,347,370 | 3,985,664 | 1,456,615 | 3,985,664 | |
Basic income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.85 | $ (0.31) | |
Diluted income (loss) per share attributable to Pendrell | [1] | $ (0.20) | $ 0.82 | $ (0.31) | |
Maximum | |||||
Earnings Per Share Basic And Diluted [Line Items] | |||||
Basic income (loss) per share attributable to Pendrell | $ 0.01 | ||||
Diluted income (loss) per share attributable to Pendrell | $ 0.01 | ||||
[1] | Per share amounts for the three months ended September 30, 2015 are less than $0.01. |