Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 04, 2013 | |
Entity Information [Line Items] | ' | ' |
Entity Registrant Name | 'ACACIA RESEARCH CORP | ' |
Entity Central Index Key | '0000934549 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 49,926,750 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $118,303 | $221,804 |
Short-term investments | 166,998 | 89,475 |
Accounts receivable | 16,812 | 9,843 |
Deferred Tax Assets, Net | 19,974 | 1,014 |
Prepaid expenses and other current assets | 7,414 | 2,427 |
Total current assets | 329,501 | 324,563 |
Property and equipment, net of accumulated depreciation and amortization | 778 | 339 |
Patents, net of accumulated amortization | 296,272 | 313,529 |
Goodwill | 30,149 | 30,149 |
Other assets | 1,016 | 137 |
Total assets | 657,716 | 668,717 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses / costs | 16,310 | 9,485 |
Accrued patent acquisition related payments, current | 8,750 | 0 |
Royalties and contingent legal fees payable | 8,313 | 12,508 |
Total current liabilities | 33,373 | 21,993 |
Deferred income taxes | 17,748 | 27,831 |
Other liabilities | 1,322 | 415 |
Total liabilities | 52,443 | 50,239 |
Commitments and contingencies (Note 5) | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 49,922,626 and 49,160,844 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively | 50 | 49 |
Treasury stock, at cost, 1,129,408 shares as of September 30, 2013 and December 31, 2012 | -26,731 | -26,731 |
Additional paid-in capital | 653,326 | 644,982 |
Accumulated comprehensive loss | -783 | -1,166 |
Accumulated deficit | -28,733 | -5,632 |
Total Acacia Research Corporation stockholders' equity | 597,129 | 611,502 |
Noncontrolling interests in operating subsidiaries | 8,144 | 6,976 |
Total stockholders' equity | 605,273 | 618,478 |
Total liabilities and stockholders' equity | $657,716 | $668,717 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Stockholders' Equity: | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 49,922,626 | 49,160,844 |
Common stock, shares outstanding | 49,922,626 | 49,160,844 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury Stock, Shares | 1,129,408 | 1,129,408 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues | $15,520 | $34,939 | $115,491 | $184,463 |
Cost of revenues: | ' | ' | ' | ' |
Inventor royalties | 2,353 | 5,032 | 26,444 | 22,199 |
Contingent legal fees | 2,547 | 8,833 | 21,603 | 19,188 |
Litigation and licensing expenses - patents | 10,870 | 5,973 | 30,436 | 14,622 |
Amortization of patents | 12,615 | 10,412 | 36,923 | 20,931 |
Marketing, general and administrative expenses (including non-cash stock compensation expense of $9,386 and $20,812 for the three and nine months ended September 30, 2013, respectively, and $6,285 and $17,375 for the three and nine months ended September 30, 2012, respectively) | 18,235 | 11,914 | 45,270 | 37,548 |
Research, consulting and other expenses - business development | 730 | 1,139 | 2,480 | 4,222 |
Other Cost and Expense, Operating | 3,506 | 0 | 3,506 | 0 |
Total operating costs and expenses | 50,856 | 43,303 | 166,662 | 118,710 |
Operating income (loss) | -35,336 | -8,364 | -51,171 | 65,753 |
Interest income | 554 | 121 | 1,393 | 277 |
Write off of investment | 0 | -45 | 0 | -45 |
Net gain (loss) on investments | -274 | -117 | 577 | -115 |
Total other income (loss) | 280 | -41 | 1,970 | 117 |
Income (loss) before benefit from (provision for) income taxes | -35,056 | -8,405 | -49,201 | 65,870 |
Benefit from (provision for) income taxes | 19,570 | 1,938 | 25,348 | -16,303 |
Net income (loss) including noncontrolling interests in operating subsidiaries | -15,486 | -6,467 | -23,853 | 49,567 |
Net (income) loss attributable to noncontrolling interests in operating subsidiaries | -225 | -152 | 752 | 63 |
Net income (loss) attributable to Acacia Research Corporation | -15,711 | -6,619 | -23,101 | 49,630 |
Net Income (Loss) Available to Common Stockholders, Basic | -15,904 | -6,619 | -23,458 | 47,989 |
Net Income (Loss) Available to Common Stockholders, Diluted | ($15,904) | ($6,619) | ($23,458) | $48,000 |
Net income (loss) per common share attributable to Acacia Research Corporation: | ' | ' | ' | ' |
Basic earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Diluted earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Weighted average number of shares outstanding, basic | 48,330,149 | 48,332,878 | 48,068,038 | 46,886,820 |
Weighted average number of shares outstanding, diluted | 48,530,105 | 48,641,374 | 48,288,937 | 47,239,135 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Non-cash stock compensation | $9,386 | $6,285 | $20,812 | $17,375 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Net income (loss) attributable to Acacia Research Corporation | $15,711 | $6,619 | $23,101 | ($49,630) |
Other comprehensive income (loss): | ' | ' | ' | ' |
Unrealized gain (loss) on short-term investments, net of income tax benefit (expense) of $0 and $0 for the three and nine months ended September 30, 2013, respectively, and $323 and ($9) for the three and nine months ended September 30, 2012, respectively | 149 | -588 | -194 | 2,000 |
Reclassification adjustment for (gains) losses included in net income | -274 | 173 | 577 | 212 |
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | -15,836 | -7,034 | -22,718 | 51,842 |
Comprehensive (Income) Loss, Net of Tax, Attributable to Noncontrolling Interest | 0 | 0 | 0 | 0 |
Comprehensive income (loss) attributable to Acacia Research Corporation | ($15,836) | ($7,034) | ($22,718) | $51,842 |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Loss) (Parentheticals) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax | $0 | $323 | $0 | ($9) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows Statement (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net income (loss) including noncontrolling interests in operating subsidiaries | ($23,853,000) | $49,567,000 |
Adjustments to reconcile net income including noncontrolling interests in operating subsidiaries to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 37,085,000 | 21,034,000 |
Non-cash stock compensation | 20,812,000 | 17,375,000 |
Excess tax benefits from stock-based compensation | -358,000 | 7,554,000 |
Change in valuation allowance | 0 | -10,237,000 |
Other | -22,000 | 490,000 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -6,969,000 | -13,720,000 |
Prepaid expenses and other assets | -5,866,000 | -1,485,000 |
Accounts payable and accrued expenses / costs | 6,874,000 | 10,244,000 |
Royalties and contingent legal fees payable | -4,195,000 | -2,030,000 |
Deferred income tax | -29,043,000 | 6,546,000 |
Net cash provided by operating activities | -4,819,000 | 70,230,000 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -579,000 | -200,000 |
Purchase of available-for-sale investments | -232,809,000 | -305,007,000 |
Maturities and sale of available-for-sale investments | 155,669,000 | 169,016,000 |
Purchase of ADAPTIX, Inc., net of cash acquired | 0 | -150,000,000 |
Patent acquisition costs | -10,416,000 | -64,960,000 |
Net cash used in investing activities | -88,135,000 | -351,151,000 |
Cash flows from financing activities: | ' | ' |
Proceeds from sale of common stock, net of issuance costs | 0 | 218,983,000 |
Distributions to noncontrolling interests in operating subsidiary | 0 | 312,000 |
Payments of Dividends | -12,392,000 | 0 |
Contributions from noncontrolling interests in operating subsidiary | 1,920,000 | 3,840,000 |
Payments for Repurchase of Common Stock | -18,000 | 0 |
Excess tax benefits from stock-based compensation | -358,000 | 7,554,000 |
Proceeds from exercises of stock options | 301,000 | 274,000 |
Net cash provided by financing activities | -10,547,000 | 230,339,000 |
Decrease in cash and cash equivalents | -103,501,000 | -50,582,000 |
Cash and cash equivalents, beginning | 221,804,000 | 314,733,000 |
Cash and cash equivalents, ending | 118,303,000 | 264,151,000 |
Patent acquisition costs included in accrued expenses | $9,750,000 | $8,000,000 |
Description_of_Business_and_Ba
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2013 | |
Description of Business and Basis of Presentation [Abstract] | ' |
Description of Business and Basis of Presentation | ' |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
Description of Business. As used herein, “Acacia” and the “Company” refer to Acacia Research Corporation and/or its wholly and majority-owned and controlled operating subsidiaries. All intellectual property acquisition, development, licensing and enforcement activities are conducted solely by certain of Acacia’s wholly and majority-owned and controlled operating subsidiaries. | |
Acacia’s operating subsidiaries generate revenues and related cash flows from the granting of intellectual property rights for the use of, or pertaining to, patented technologies that such operating subsidiaries own or control. Acacia’s operating subsidiaries assist patent owners with the prosecution and development of their patent portfolios, the protection of their patented technologies from unauthorized use, the generation of revenue from users of their patented technologies and, if necessary, the enforcement against unauthorized users of their patented technologies. Acacia’s operating subsidiaries own or control the rights to multiple patent portfolios, which include U.S. patents and certain foreign counterparts, covering technologies used in a wide variety of industries. | |
In January 2012, a wholly owned operating subsidiary of Acacia acquired ADAPTIX, Inc., a Delaware Corporation (“ADAPTIX”), a pioneer in the development of 4G technologies for wireless systems, for cash consideration of $160 million, as described at Note 7 to these consolidated financial statements. | |
Basis of Presentation. The accompanying consolidated financial statements include the accounts of Acacia and its wholly and majority-owned and controlled subsidiaries. Material intercompany transactions and balances have been eliminated in consolidation. Noncontrolling interests in Acacia’s majority-owned and controlled operating subsidiaries (“noncontrolling interests”) are separately presented as a component of stockholders’ equity in the consolidated statements of financial position for the applicable periods presented. Consolidated net income (loss) is adjusted to include the net (income) loss attributed to noncontrolling interests in the consolidated statements of operations. Refer to the accompanying consolidated financial statements for total noncontrolling interests, net income (loss) attributable to noncontrolling interests and contributions from and distributions to noncontrolling interests, for the applicable periods presented. | |
A wholly owned subsidiary of Acacia is the general partner of the Acacia Intellectual Property Fund, L.P. (the “Acacia IP Fund”), which was formed in August 2010. The Acacia IP Fund is included in the Company’s consolidated financial statements for the periods presented, as Acacia’s wholly owned subsidiary, as the majority owner and general partner, has the ability to control the operations and activities of the Acacia IP Fund. | |
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America in annual financial statements have been omitted or condensed in accordance with quarterly reporting requirements of the Securities and Exchange Commission (“SEC”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2012, as reported by Acacia in its Annual Report on Form 10-K. The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. | |
The consolidated financial statements of Acacia include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of Acacia’s consolidated financial position as of September 30, 2013, and results of its operations and its cash flows for the interim periods presented. The consolidated results of operations for the three and nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||
Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. | ||||||||||||||||
In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. | ||||||||||||||||
Cost of Revenues. Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third parties and the amortization of patent-related acquisition costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. | ||||||||||||||||
Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, costs paid by Acacia’s operating subsidiaries to acquire patents are recoverable from future net revenues. Patent acquisition costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the consolidated statements of operations. Any unamortized patent acquisition costs recovered from net revenues are expensed in the period recovered, and included in amortization expense in the consolidated statements of operations. | ||||||||||||||||
Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Legal fees advanced by contingent law firms that are required to be paid in the event that no license recoveries are obtained are expensed as incurred and included in liabilities in the consolidated balance sheets. | ||||||||||||||||
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, stock-based compensation expense, impairment of marketable securities and intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets and the application of the acquisition method of accounting for business combinations, require its most difficult, subjective or complex judgments. | ||||||||||||||||
Concentrations. Three licensees individually accounted for 34%, 31% and 19% of revenues recognized during the three months ended September 30, 2013, and two licensees accounted for 43% and 17% of revenues recognized during the nine months ended September 30, 2013. Five licensees individually accounted for 30%, 13%, 10%, 10% and 10% of revenues recognized during the three months ended September 30, 2012 and four licensees accounted for 29%, 20%, 11% and 10% of revenues recognized during the nine months ended September 30, 2012. Four licensees individually represented approximately 32%, 27%, 18% and 16% of accounts receivable at September 30, 2013. Three licensees individually represented approximately 34%, 30%, and 25% of accounts receivable at December 31, 2012. For the three and nine months ended September 30, 2013, 54% and 26%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three and nine months ended September 30, 2012, 12% and 45%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense, on a straight-line basis, over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. Stock-based compensation expense is recorded only for those awards expected to vest using an estimated forfeiture rate. | ||||||||||||||||
Fair Value Measurements. U.S. generally accepted accounting principles define fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: | ||||||||||||||||
● | Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; | |||||||||||||||
● | Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and | |||||||||||||||
● | Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. | |||||||||||||||
Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. | ||||||||||||||||
Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. At September 30, 2013 and December 31, 2012, all of Acacia’s short term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest on all securities is included in interest income. | ||||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
September 30, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
Total short-term investments | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
(1) Maturity dates ranging from 2013 to 2014. | ||||||||||||||||
December 31, 2012 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 87,394 | $ | 20 | $ | (411 | ) | $ | 87,003 | |||||||
Equity securities of certain technology companies | 3,254 | — | (782 | ) | 2,472 | |||||||||||
Total short-term investments | $ | 90,648 | $ | 20 | $ | (1,193 | ) | $ | 89,475 | |||||||
Impairment of Marketable Securities. Acacia evaluates its investments in marketable securities for potential impairment, employing a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence. If the cost or carrying value of an investment exceeds its estimated fair value, the Company evaluates, among other factors, general market conditions, credit quality of instrument issuers, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold, or plans or ability to sell. Fair value is estimated based on publicly available market information or other estimates determined by management. Investments are considered to be impaired when a decline in fair value is estimated to be other-than-temporary. Acacia reviews impairments associated with its investments in marketable securities and determines the classification of any impairment as temporary or other-than-temporary. An impairment is deemed other-than-temporary unless (a) Acacia has the ability and intent to hold an investment for a period of time sufficient for recovery of its carrying amount and (b) positive evidence indicating that the investment’s carrying amount is recoverable within a reasonable period of time outweighs any evidence to the contrary. All available evidence, both positive and negative, is considered to determine whether, based on the weight of such evidence, the carrying amount of the investment is recoverable within a reasonable period of time. For investments classified as available-for-sale, unrealized losses that are other-than-temporary are recognized in the consolidated statements of operations. | ||||||||||||||||
Patents. Patents includes the cost of patents or patent rights (hereinafter, collectively “patents”), acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to eight years. | ||||||||||||||||
Goodwill. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for Acacia) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Acacia considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then applies a two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of the reporting unit exceeds its fair value, the Company determines the implied fair value of the reporting unit’s goodwill and if the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded in the consolidated statement of operations. | ||||||||||||||||
Acacia uses the management approach, which designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of Acacia’s reportable segments. Acacia’s intellectual property licensing and enforcement business constitutes its single reportable segment. | ||||||||||||||||
Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. | ||||||||||||||||
The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is made. | ||||||||||||||||
For the nine months ended September 30, 2013, Acacia’s effective tax rate was approximately 52%, mainly comprised of U.S. federal and state incomes taxes, foreign withholding taxes and nondeductible permanent expenses. Acacia’s effective tax rate for the nine months ended September 30, 2012, including the impact of discrete items, was 25%. Discrete items were primarily comprised of the benefit associated with the release of valuation allowance resulting from the acquisition of ADAPTIX, as described below. The tax provisions for the periods presented provides for the utilization (subject to certain limitations, if applicable) of the foreign taxes withheld as a credit against income tax expense calculated for financial statement purposes. | ||||||||||||||||
The deduction related to the exercise and vesting of equity-based incentive awards is available to offset taxable income (loss), if any, on Acacia’s future consolidated tax returns. Accordingly, the noncash tax expense calculated without the benefit (expense) related to the exercise and vesting of equity-based incentive awards totaling $(358,000) and $7,554,000 for the nine months ended September 30, 2013 and 2012, respectively, was reflected in additional paid-in capital, not taxes payable. | ||||||||||||||||
Release of Valuation Allowance. As of December 31, 2011, the Company maintained a full valuation allowance against its net deferred tax assets. The net deferred tax liability resulting from the acquisition of ADAPTIX created an additional source of income to utilize against Acacia’s existing consolidated net deferred tax assets. Under the acquisition method of accounting, the impact on the acquiring company’s deferred tax assets is recorded outside of acquisition accounting. In addition, the Company estimated that certain other deferred tax assets related to foreign tax credits and other state related deferreds, totaling approximately $1,900,000, were more likely than not realizable in future periods. Accordingly, the valuation allowance on the majority of Acacia’s net deferred tax assets was released, resulting in an income tax benefit of approximately $10,237,000, recorded as a credit to income tax expense for the nine months ended September 30, 2012. Refer to Note 7 to these consolidated financial statements. | ||||||||||||||||
Tax expense included foreign withholding taxes withheld by the applicable foreign tax authority on revenue agreements executed with third party licensees domiciled in certain foreign jurisdictions totaling $875,000 and $4,605,000, for the three and nine months months ended September 30, 2013, respectively, and $0 and $11,890,000, for the three and nine months ended September 30, 2012, respectively. | ||||||||||||||||
Revision of Prior Period Earnings (Loss) Per Share - Two-Class Method. In connection with the preparation of the Company’s Quarterly Report on Form 10-Q as of and for the three months ended September 30, 2013, the Company determined that its basic and diluted net income (loss) per share calculations should have been prepared using the “two-class method.” Under the two-class method, securities that participate in dividends are considered “participating securities.” The Company’s unvested restricted shares outstanding are considered “participating securities” because they include non-forfeitable rights to dividends. | ||||||||||||||||
Pursuant to guidance set forth in Staff Accounting Bulletin (“SAB”) No. 99, "Materiality," the Company concluded that the errors were not material to any of its prior period financial statements. Although the errors were immaterial to prior periods, the prior period financial statements presented herein were revised, in accordance with SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." Refer to Note 3 for additional information. |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
EARNINGS (LOSS) PER SHARE | |||||||||||||||||
The Company computes net income attributable to common stockholders using the two-class method required for capital structures that include participating securities. Under the two-class method, securities that participate in non-forfeitable dividends, such as the Company’s outstanding unvested restricted stock, are considered “participating securities.” | |||||||||||||||||
In applying the two-class method, (i) basic net income (loss) per share is computed by dividing net income (less any dividends paid on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period and (ii) diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying the two-class method and the treasury stock method to the assumed exercise or vesting of potentially dilutive common shares. The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options, and restricted stock units for calculations utilizing the two-class method, and also include unvested restricted stock, when utilizing the treasury method. | |||||||||||||||||
The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted income per share: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Basic | |||||||||||||||||
Net income (loss) | $ | (15,711 | ) | $ | (6,619 | ) | $ | (23,101 | ) | $ | 49,630 | ||||||
Undistributed earnings allocated to participating securities | — | — | — | (1,641 | ) | ||||||||||||
Total dividends declared / paid | (6,243 | ) | — | (12,392 | ) | — | |||||||||||
Dividends attributable to common stockholders | 6,050 | — | 12,035 | — | |||||||||||||
Net income (loss) attributable to common stockholders – basic | $ | (15,904 | ) | $ | (6,619 | ) | $ | (23,458 | ) | $ | 47,989 | ||||||
Diluted | |||||||||||||||||
Net income (loss) | $ | (15,711 | ) | $ | (6,619 | ) | $ | (23,101 | ) | $ | 49,630 | ||||||
Undistributed earnings allocated to participating securities | — | — | — | (1,630 | ) | ||||||||||||
Total dividends declared / paid | (6,243 | ) | — | (12,392 | ) | — | |||||||||||
Dividends attributable to common stockholders | 6,050 | — | 12,035 | — | |||||||||||||
Net income (loss) attributable to common stockholders – diluted | $ | (15,904 | ) | $ | (6,619 | ) | $ | (23,458 | ) | $ | 48,000 | ||||||
Denominator: | |||||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic | 48,330,149 | 48,332,878 | 48,068,038 | 46,886,820 | |||||||||||||
Effect of potentially dilutive securities: | |||||||||||||||||
Common stock options and restricted stock units | 199,956 | 308,496 | 220,899 | 352,315 | |||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted | 48,530,105 | 48,641,374 | 48,288,937 | 47,239,135 | |||||||||||||
Basic net income (loss) per common share | $ | (0.33 | ) | $ | (0.14 | ) | $ | (0.49 | ) | $ | 1.02 | ||||||
Diluted net income (loss) per common share | $ | (0.33 | ) | $ | (0.14 | ) | $ | (0.49 | ) | $ | 1.02 | ||||||
Anti-dilutive equity-based incentive awards excluded from the computation of diluted income (loss) per share were immaterial for the applicable periods presented. | |||||||||||||||||
Revision of Prior Period Earnings (Loss) Per Share - Two-Class Method. In connection with the preparation of the Company’s Quarterly Report on Form 10-Q as of and for the three months ended September 30, 2013, the Company determined that its basic and diluted net income (loss) per share calculations should have been prepared using the “two-class method.” Previously, basic earnings (loss) per share was computed based upon the weighted-average number of common shares outstanding, excluding unvested restricted stock, and diluted income (loss) per share was computed based upon the weighted-average number of common shares outstanding, including the dilutive effect of common stock equivalents outstanding during the periods, determined by applying the treasury stock method to the assumed exercise of outstanding employee stock options, and the assumed vesting of outstanding unvested restricted stock and restricted stock units. | |||||||||||||||||
Pursuant to the guidance set forth in SAB No. 99, "Materiality," the Company concluded that the errors were not material to any of its prior period financial statements. Although the errors were immaterial to prior periods, the prior period financial statements presented herein were revised. The impact of the revision to the comparable prior period earnings (loss) per share calculations using the two-class method were as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2012 | 2012 | ||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) attributable to common stockholders – basic and diluted - As Reported | $ | (6,619 | ) | $ | 49,630 | ||||||||||||
Net income (loss) attributable to common stockholders – basic - As Adjusted | $ | (6,619 | ) | $ | 47,989 | ||||||||||||
Net income (loss) attributable to common stockholders – diluted - As Adjusted | $ | (6,619 | ) | $ | 48,000 | ||||||||||||
Denominator: | |||||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic - As Reported | 48,332,878 | 46,886,820 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic - As Adjusted | 48,332,878 | 46,886,820 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted - As Reported | 48,332,878 | 47,795,819 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted - As Adjusted | 48,641,374 | 47,239,135 | |||||||||||||||
Basic net income (loss) per common share - As Reported | $ | (0.14 | ) | $ | 1.06 | ||||||||||||
Basic net income (loss) per common share - As Adjusted | $ | (0.14 | ) | $ | 1.02 | ||||||||||||
Diluted net income (loss) per common share - As Reported | $ | (0.14 | ) | $ | 1.04 | ||||||||||||
Diluted net income (loss) per common share - As Adjusted | $ | (0.14 | ) | $ | 1.02 | ||||||||||||
Goodwill_and_Other_Identifiabl
Goodwill and Other Identifiable Intangible Assets | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Goodwill and Other Identifiable Intangible Assets | ' | |||
GOODWILL AND OTHER IDENTIFIABLE INTANGIBLE ASSETS | ||||
Acacia’s only identifiable intangible assets at September 30, 2013 and December 31, 2012 are patents and patent rights. Patent-related accumulated amortization totaled $103,273,000 and $69,850,000 as of September 30, 2013 and December 31, 2012, respectively. | ||||
Acacia’s patents and patent rights have remaining estimated economic useful lives ranging from one to eight years. The weighted-average remaining estimated economic useful life of Acacia’s patents and patent rights is approximately seven years. The following table presents the scheduled annual aggregate amortization expense as of September 30, 2013 (in thousands): | ||||
Remainder of 2013 | $ | 11,980 | ||
2014 | 47,335 | |||
2015 | 46,219 | |||
2016 | 43,486 | |||
2017 | 42,474 | |||
Thereafter | 104,778 | |||
Total | $ | 296,272 | ||
For the nine months ended September 30, 2013 and 2012, Acacia paid patent and patent rights acquisition costs totaling $10,416,000 and $64,960,000 (excluding the acquisition of ADAPTIX), respectively. The patents and patent rights acquired have estimated economic useful lives of approximately one to ten years. Included in net additions to capitalized patent costs during the nine months ended September 30, 2013 and 2012 are accrued future patent acquisition costs totaling $9,750,000 and $8,000,000, respectively. Accrued future patent acquisition costs are amortized over the estimated economic useful life of the related patents acquired. | ||||
Refer to Note 7 to these consolidated financial statements for additions to patents and goodwill in connection with Acacia’s acquisition of ADAPTIX and the related application of the acquisition method of accounting. | ||||
During the nine months ended September 30, 2013 and 2012, certain operating subsidiaries recovered up-front patent portfolio acquisition costs from applicable net licensing proceeds prior to the scheduled amortization of such up-front patent portfolio acquisition costs, resulting in the acceleration of amortization expense for the applicable patent related assets. Accelerated amortization expense related to the recovery of up-front patent acquisition costs totaled $0 and $593,000, for the three and nine months ended September 30, 2013, respectively, and $152,000 and $534,000, for the three and nine months ended September 30, 2012, respectively. | ||||
During the nine months ended September 30, 2013, pursuant to the terms of the respective inventor agreements, certain Acacia operating subsidiaries elected to terminate their rights to patent portfolios, resulting in the acceleration of amortization expense for the patent-related assets totaling $1,630,000 for the nine months ended September 30, 2013 and $3,023,000 for the nine months ended September 30, 2012. |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
COMMITMENTS AND CONTINGENCIES | |
Patent Enforcement and Other Litigation | |
Acacia is subject to claims, counterclaims and legal actions that arise in the ordinary course of business. Management believes that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on Acacia’s consolidated financial position, results of operations or cash flows. Certain of Acacia’s operating subsidiaries are often required to engage in litigation to enforce their patents and patent rights. In connection with any of Acacia’s operating subsidiaries’ patent enforcement actions, it is possible that a defendant may request and/or a court may rule that an operating subsidiary has violated statutory authority, regulatory authority, federal rules, local court rules, or governing standards relating to the substantive or procedural aspects of such enforcement actions. In such event, a court may issue monetary sanctions against Acacia or its operating subsidiaries or award attorney’s fees and/or expenses to a defendant(s), which could be material. |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2013 | |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity | ' |
STOCKHOLDERS’ EQUITY | |
In February 2012, Acacia raised gross proceeds of $225,000,000 through the sale of 6,122,000 shares of Acacia’s common stock at a price of $36.75 per share in a private placement offering with certain institutional accredited investors. Net proceeds, net of placement agent fees and estimated offering expenses, totaled approximately $218,983,000. The net proceeds will continue to be used to finance future acquisitions of patents, other patent licensing vehicles and companies with patent assets, and for working capital and general corporate purposes. | |
On April 23, 2013, Acacia announced that its Board of Directors approved the adoption of a cash dividend policy that calls for the payment of an expected total annual cash dividend of $0.50 per common share, payable in the amount of $0.125 per share per quarter. Under the policy, the Company has paid two quarterly cash dividends totaling $12,392,000 during the nine months ended September 30, 2013. Future cash dividends are expected to be paid on a quarterly basis and will be at the discretion of the Company’s Board of Directors. |
Acquisitions
Acquisitions | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
Acquisitions | ' | ||||||||||||
ACQUISITION | |||||||||||||
On January 12, 2012 (the “Acquisition Date”), pursuant to the terms and conditions of the Agreement and Plan of Merger dated as of November 22, 2011 (the “Merger Agreement”) among Acacia Research Group LLC (“ARG”), a wholly-owned subsidiary of Acacia, Apollo Patent Corp., a newly-formed, wholly-owned subsidiary of ARG (“Merger Sub”), ADAPTIX, a Delaware corporation, and Baker Communications Fund II (QP), L.P. solely in its capacity as shareholder representative, ARG completed its acquisition of ADAPTIX, which held no material assets other than its portfolio of patents and $10 million in cash, through a merger of Merger Sub with and into ADAPTIX, with ADAPTIX as the surviving corporation (the “Merger”). Upon completion of the Merger, the separate corporate existence of Merger Sub ceased and ADAPTIX became a wholly-owned subsidiary of ARG. | |||||||||||||
ADAPTIX, a pioneer in the development of 4G technologies for wireless systems, is an award-winning technology company long recognized in the industry as one of the first developers of cutting edge 4G wireless systems. With patents filed as early as 2000, ADAPTIX’s research and development efforts have resulted in one of the most significant intellectual property portfolios focused on 4G technologies. With its rapidly growing portfolio of 230 issued and pending patents in 13 countries, ADAPTIX’s innovations extend across a broad range of 4G technologies including OFDMA and MIMO. | |||||||||||||
The Merger was accounted for in accordance with the acquisition method of accounting under FASB ASC Topic 805, “Business Combinations” (“Topic 805”). Topic 805 requires, among other things, that identifiable assets acquired and liabilities assumed be recognized at their fair values as of the Acquisition Date. Under the acquisition method of accounting, the purchase consideration is allocated to the assets acquired, including tangible assets, patents and other identifiable intangible assets and liabilities assumed, based on their estimated fair market values on the date of acquisition. Any excess purchase price after the initial allocation to identifiable net tangible and identifiable intangible assets is assigned to goodwill. Amounts attributable to patents are amortized using the straight-line method over the estimated economic useful life of the underlying patents. | |||||||||||||
The total consideration paid by ARG in connection with the Merger was approximately $160 million in cash. Based on the total purchase consideration and the estimate of the assets acquired and the liabilities assumed by ARG as of the Acquisition Date, the purchase price allocation was as follows ($ amounts in thousands): | |||||||||||||
Amortization Period | Annual Amortization | ||||||||||||
Assets Acquired and Liabilities Assumed: | |||||||||||||
Fair value of net tangible assets acquired | $ | 10,000 | |||||||||||
Intangible assets acquired - patents | 150,000 | 10 years | $ | 15,000 | |||||||||
Goodwill | 30,149 | ||||||||||||
Net deferred income tax liability | (30,149 | ) | |||||||||||
Total | $ | 160,000 | |||||||||||
Amounts attributable to the patents acquired are being amortized using the straight-line method over an estimated weighted average economic useful life of the underlying patents, which is estimated to be approximately 10 years. Goodwill is calculated as the residual after recording the identifiable net assets acquired and associated net deferred tax assets and liabilities. | |||||||||||||
Management is responsible for determining the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed as of the Acquisition Date. Management considered a number of factors, including reference to an analysis under Topic 805 solely for the purpose of allocating the purchase price to the assets acquired and liabilities assumed. The analysis included a discounted cash flow which estimated future net cash flows resulting from the licensing and enforcement of the patent portfolio based on information as of the date of acquisition, considering assumptions and estimates related to potential infringers of the patents, applicable industries, usage of the underlying patented technologies, estimated license fee revenues, contingent legal fee arrangements, other estimated costs, tax implications and other factors. A discount rate consistent with the risks associated with achieving the estimated net cash flows was used to estimate the present value of estimated net cash flows. | |||||||||||||
The Merger was treated for tax purposes as a nontaxable transaction and as such, the historical tax bases of the acquired assets and assumed liabilities, net operating losses, and other tax attributes of ADAPTIX were carried over. As a result, no new tax goodwill was created in connection with the Merger as there was no step-up to fair value of the underlying tax bases of the acquired net assets. Acquisition accounting includes the establishment of a net deferred tax asset or liability resulting from book tax basis differences related to assets acquired and liabilities assumed on the date of acquisition. Acquisition date deferred tax assets primarily relate to certain net operating loss carryforwards of ADAPTIX. Acquisition date deferred tax liabilities relate to specifically identified non-goodwill intangibles acquired. The estimated net deferred tax liability was determined as follows (amounts in thousands, except percent values): | |||||||||||||
Book Basis | Tax Basis | Difference | |||||||||||
Intangible assets acquired - patents | $ | 150,000 | $ | — | $ | (150,000 | ) | ||||||
Estimated acquired deferred tax assets (including net operating loss carryforwards) - ADAPTIX | — | 63,860 | 63,860 | ||||||||||
Net deferred tax liability - pretax | (86,140 | ) | |||||||||||
Estimated tax rate | 35 | % | |||||||||||
Estimated net deferred tax liability | $ | (30,149 | ) | ||||||||||
Proforma adjustments and operating results for ADAPTIX for the period from January 1, 2012 to January 12, 2012, the date of acquisition, were not material. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
SUBSEQUENT EVENTS | |
On October 17, 2013, Acacia announced that its Board of Directors approved a third quarterly cash dividend payable in the amount of $0.125 per share per quarter. The quarterly cash dividend will be paid on November 29, 2013 to shareholders of record at close of business on November 1, 2013. Future cash dividends are expected to be paid on a quarterly basis and will be at the discretion of the Company’s Board of Directors. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2013 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
Recent Accounting Pronouncements | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
New Accounting Pronouncements | |
In July 2013, the FASB issued a new accounting standard addressing when unrecognized tax benefits should be presented as reductions to deferred tax assets for net operating loss carryforwards in the financial statements. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application is permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. | |
In March 2013, the FASB issued a new accounting standard addressing the accounting for the cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. This standard is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The company does not expect the adoption of this standard to have a material impact on our consolidated financial statements and related disclosures. | |
Recently Adopted Accounting Pronouncements - Adopted Effective January 1, 2013. | |
In February 2013, the FASB issued a new accounting standard requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This pronouncement is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. | |
In December 2012, the FASB issued a new accounting standard that will require the Company to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The new guidance is effective for the Company’s interim period ending March 31, 2013. The disclosures required are to be applied retrospectively for all comparative periods presented. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | ' | |||||||||||||||
Revision of Prior Period Earnings (Loss) Per Share - Two-Class Method. In connection with the preparation of the Company’s Quarterly Report on Form 10-Q as of and for the three months ended September 30, 2013, the Company determined that its basic and diluted net income (loss) per share calculations should have been prepared using the “two-class method.” Under the two-class method, securities that participate in dividends are considered “participating securities.” The Company’s unvested restricted shares outstanding are considered “participating securities” because they include non-forfeitable rights to dividends. | ||||||||||||||||
Pursuant to guidance set forth in Staff Accounting Bulletin (“SAB”) No. 99, "Materiality," the Company concluded that the errors were not material to any of its prior period financial statements. Although the errors were immaterial to prior periods, the prior period financial statements presented herein were revised, in accordance with SAB No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." Refer to Note 3 for additional information. | ||||||||||||||||
Revenue Recognition | ' | |||||||||||||||
Revenue Recognition. Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) all obligations have been substantially performed pursuant to the terms of the arrangement, (iii) amounts are fixed or determinable, and (iv) the collectibility of amounts is reasonably assured. | ||||||||||||||||
In general, revenue arrangements provide for the payment of contractually determined fees in consideration for the grant of certain intellectual property rights for patented technologies owned or controlled by Acacia’s operating subsidiaries. These rights typically include some combination of the following: (i) the grant of a non-exclusive, retroactive and future license to manufacture and/or sell products covered by patented technologies owned or controlled by Acacia’s operating subsidiaries, (ii) a covenant-not-to-sue, (iii) the release of the licensee from certain claims, and (iv) the dismissal of any pending litigation. The intellectual property rights granted may be perpetual in nature, extending until the expiration of the related patents, or can be granted for a defined, relatively short period of time, with the licensee possessing the right to renew the agreement at the end of each contractual term for an additional minimum upfront payment. Pursuant to the terms of these agreements, Acacia’s operating subsidiaries have no further obligation with respect to the grant of the non-exclusive retroactive and future licenses, covenants-not-to-sue, releases, and other deliverables, including no express or implied obligation on Acacia’s operating subsidiaries’ part to maintain or upgrade the technology, or provide future support or services. Generally, the agreements provide for the grant of the licenses, covenants-not-to-sue, releases, and other significant deliverables upon execution of the agreement, or upon receipt of the minimum upfront payment for term agreement renewals. As such, the earnings process is complete and revenue is recognized upon the execution of the agreement, when collectibility is reasonably assured, or upon receipt of the minimum upfront fee for term agreement renewals, and when all other revenue recognition criteria have been met. | ||||||||||||||||
Cost of Revenues | ' | |||||||||||||||
Cost of Revenues. Cost of revenues include the costs and expenses incurred in connection with Acacia’s patent licensing and enforcement activities, including inventor royalties paid to original patent owners, contingent legal fees paid to external patent counsel, other patent-related legal expenses paid to external patent counsel, licensing and enforcement related research, consulting and other expenses paid to third parties and the amortization of patent-related acquisition costs. These costs are included under the caption “Cost of revenues” in the accompanying consolidated statements of operations. | ||||||||||||||||
Inventor Royalties and Contingent Legal Expenses | ' | |||||||||||||||
Inventor Royalties and Contingent Legal Expenses. Inventor royalties are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In certain instances, pursuant to the terms of the underlying inventor agreements, costs paid by Acacia’s operating subsidiaries to acquire patents are recoverable from future net revenues. Patent acquisition costs that are recoverable from future net revenues are amortized over the estimated economic useful life of the related patents, or as the prepaid royalties are earned by the inventor, as appropriate, and the related expense is included in amortization expense in the consolidated statements of operations. Any unamortized patent acquisition costs recovered from net revenues are expensed in the period recovered, and included in amortization expense in the consolidated statements of operations. | ||||||||||||||||
Contingent legal fees are expensed in the consolidated statements of operations in the period that the related revenues are recognized. In instances where there are no recoveries from potential infringers, no contingent legal fees are paid; however, Acacia’s operating subsidiaries may be liable for certain out of pocket legal costs incurred pursuant to the underlying legal services agreement. Legal fees advanced by contingent law firms that are required to be paid in the event that no license recoveries are obtained are expensed as incurred and included in liabilities in the consolidated balance sheets. | ||||||||||||||||
Use of Estimates | ' | |||||||||||||||
Use of Estimates. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Acacia believes that, of the significant accounting policies described herein, the accounting policies associated with revenue recognition, stock-based compensation expense, impairment of marketable securities and intangible assets, the determination of the economic useful life of amortizable intangible assets, income taxes and valuation allowances against net deferred tax assets and the application of the acquisition method of accounting for business combinations, require its most difficult, subjective or complex judgments. | ||||||||||||||||
Concentrations | ' | |||||||||||||||
Concentrations. Three licensees individually accounted for 34%, 31% and 19% of revenues recognized during the three months ended September 30, 2013, and two licensees accounted for 43% and 17% of revenues recognized during the nine months ended September 30, 2013. Five licensees individually accounted for 30%, 13%, 10%, 10% and 10% of revenues recognized during the three months ended September 30, 2012 and four licensees accounted for 29%, 20%, 11% and 10% of revenues recognized during the nine months ended September 30, 2012. Four licensees individually represented approximately 32%, 27%, 18% and 16% of accounts receivable at September 30, 2013. Three licensees individually represented approximately 34%, 30%, and 25% of accounts receivable at December 31, 2012. For the three and nine months ended September 30, 2013, 54% and 26%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three and nine months ended September 30, 2012, 12% and 45%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
Stock-Based Compensation. The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense, on a straight-line basis, over the employee’s requisite service period (generally the vesting period of the equity award) which is generally two to four years. The fair value of restricted stock and restricted stock unit awards is determined by the product of the number of shares or units granted and the grant date market price of the underlying common stock. Stock-based compensation expense is recorded only for those awards expected to vest using an estimated forfeiture rate. | ||||||||||||||||
Fair Value Measurements | ' | |||||||||||||||
Fair Value Measurements. U.S. generally accepted accounting principles define fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date, and also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three-level hierarchy of valuation techniques established to measure fair value is defined as follows: | ||||||||||||||||
● | Level 1 - Observable Inputs: Quoted prices in active markets for identical investments; | |||||||||||||||
● | Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and | |||||||||||||||
● | Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments. | |||||||||||||||
Whenever possible, the Company is required to use observable market inputs (Level 1 - quoted market prices) when measuring fair value. | ||||||||||||||||
Investments in and Impairment of Marketable Securities | ' | |||||||||||||||
Investments in Marketable Securities. Investments in securities with original maturities of greater than three months and less than one year and other investments representing amounts that are available for current operations are classified as short-term investments, unless there are indications that such investments may not be readily sold in the short term. The fair values of these investments approximate their carrying values. At September 30, 2013 and December 31, 2012, all of Acacia’s short term investments were classified as available-for-sale, which are reported at fair value on a recurring basis using significant observable inputs (Level 1), with related unrealized gains and losses in the value of such securities recorded as a separate component of comprehensive income (loss) in stockholders’ equity until realized. Realized and unrealized gains and losses are recorded based on the specific identification method. Interest on all securities is included in interest income. | ||||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
September 30, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
Total short-term investments | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
(1) Maturity dates ranging from 2013 to 2014. | ||||||||||||||||
December 31, 2012 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 87,394 | $ | 20 | $ | (411 | ) | $ | 87,003 | |||||||
Equity securities of certain technology companies | 3,254 | — | (782 | ) | 2,472 | |||||||||||
Total short-term investments | $ | 90,648 | $ | 20 | $ | (1,193 | ) | $ | 89,475 | |||||||
Impairment of Marketable Securities. Acacia evaluates its investments in marketable securities for potential impairment, employing a systematic methodology on a quarterly basis that considers available quantitative and qualitative evidence. If the cost or carrying value of an investment exceeds its estimated fair value, the Company evaluates, among other factors, general market conditions, credit quality of instrument issuers, the duration and extent to which the fair value is less than cost, and the Company’s intent and ability to hold, or plans or ability to sell. Fair value is estimated based on publicly available market information or other estimates determined by management. Investments are considered to be impaired when a decline in fair value is estimated to be other-than-temporary. Acacia reviews impairments associated with its investments in marketable securities and determines the classification of any impairment as temporary or other-than-temporary. An impairment is deemed other-than-temporary unless (a) Acacia has the ability and intent to hold an investment for a period of time sufficient for recovery of its carrying amount and (b) positive evidence indicating that the investment’s carrying amount is recoverable within a reasonable period of time outweighs any evidence to the contrary. All available evidence, both positive and negative, is considered to determine whether, based on the weight of such evidence, the carrying amount of the investment is recoverable within a reasonable period of time. For investments classified as available-for-sale, unrealized losses that are other-than-temporary are recognized in the consolidated statements of operations. | ||||||||||||||||
Patents | ' | |||||||||||||||
Patents. Patents includes the cost of patents or patent rights (hereinafter, collectively “patents”), acquired from third-parties or acquired in connection with business combinations. Patent acquisition costs are amortized utilizing the straight-line method over their remaining economic useful lives, ranging from one to eight years. | ||||||||||||||||
Goodwill | ' | |||||||||||||||
Goodwill. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for Acacia) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Acacia considers its market capitalization and the carrying value of its assets and liabilities, including goodwill, when performing its goodwill impairment test. When conducting its annual goodwill impairment assessment, the Company initially performs a qualitative evaluation of whether it is more likely than not that goodwill is impaired. If it is determined by a qualitative evaluation that it is more likely than not that goodwill is impaired, the Company then applies a two-step impairment test. The two-step impairment test first compares the fair value of the Company’s reporting unit to its carrying or book value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of the reporting unit exceeds its fair value, the Company determines the implied fair value of the reporting unit’s goodwill and if the carrying value of the reporting unit’s goodwill exceeds its implied fair value, then an impairment loss equal to the difference is recorded in the consolidated statement of operations. | ||||||||||||||||
Acacia uses the management approach, which designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of Acacia’s reportable segments. Acacia’s intellectual property licensing and enforcement business constitutes its single reportable segment. | ||||||||||||||||
Income Taxes | ' | |||||||||||||||
Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in Acacia’s consolidated financial statements or consolidated tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. | ||||||||||||||||
The provision for income taxes for interim periods is determined using an estimate of Acacia’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter, Acacia updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, a cumulative adjustment is made. | ||||||||||||||||
For the nine months ended September 30, 2013, Acacia’s effective tax rate was approximately 52%, mainly comprised of U.S. federal and state incomes taxes, foreign withholding taxes and nondeductible permanent expenses. Acacia’s effective tax rate for the nine months ended September 30, 2012, including the impact of discrete items, was 25%. Discrete items were primarily comprised of the benefit associated with the release of valuation allowance resulting from the acquisition of ADAPTIX, as described below. The tax provisions for the periods presented provides for the utilization (subject to certain limitations, if applicable) of the foreign taxes withheld as a credit against income tax expense calculated for financial statement purposes. | ||||||||||||||||
The deduction related to the exercise and vesting of equity-based incentive awards is available to offset taxable income (loss), if any, on Acacia’s future consolidated tax returns. Accordingly, the noncash tax expense calculated without the benefit (expense) related to the exercise and vesting of equity-based incentive awards totaling $(358,000) and $7,554,000 for the nine months ended September 30, 2013 and 2012, respectively, was reflected in additional paid-in capital, not taxes payable. | ||||||||||||||||
Release of Valuation Allowance. As of December 31, 2011, the Company maintained a full valuation allowance against its net deferred tax assets. The net deferred tax liability resulting from the acquisition of ADAPTIX created an additional source of income to utilize against Acacia’s existing consolidated net deferred tax assets. Under the acquisition method of accounting, the impact on the acquiring company’s deferred tax assets is recorded outside of acquisition accounting. In addition, the Company estimated that certain other deferred tax assets related to foreign tax credits and other state related deferreds, totaling approximately $1,900,000, were more likely than not realizable in future periods. Accordingly, the valuation allowance on the majority of Acacia’s net deferred tax assets was released, resulting in an income tax benefit of approximately $10,237,000, recorded as a credit to income tax expense for the nine months ended September 30, 2012. Refer to Note 7 to these consolidated financial statements. | ||||||||||||||||
Tax expense included foreign withholding taxes withheld by the applicable foreign tax authority on revenue agreements executed with third party licensees domiciled in certain foreign jurisdictions totaling $875,000 and $4,605,000, for the three and nine months months ended September 30, 2013, respectively, and $0 and $11,890,000, for the three and nine months ended September 30, 2012, respectively. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2013 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' | |||||||||||||||
Concentrations. Three licensees individually accounted for 34%, 31% and 19% of revenues recognized during the three months ended September 30, 2013, and two licensees accounted for 43% and 17% of revenues recognized during the nine months ended September 30, 2013. Five licensees individually accounted for 30%, 13%, 10%, 10% and 10% of revenues recognized during the three months ended September 30, 2012 and four licensees accounted for 29%, 20%, 11% and 10% of revenues recognized during the nine months ended September 30, 2012. Four licensees individually represented approximately 32%, 27%, 18% and 16% of accounts receivable at September 30, 2013. Three licensees individually represented approximately 34%, 30%, and 25% of accounts receivable at December 31, 2012. For the three and nine months ended September 30, 2013, 54% and 26%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. For the three and nine months ended September 30, 2012, 12% and 45%, respectively, of revenues were attributable to licensees domiciled in foreign jurisdictions. | ||||||||||||||||
Marketable Securities | ' | |||||||||||||||
Short-term marketable securities for the periods presented were comprised of the following (in thousands): | ||||||||||||||||
September 30, 2013 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities(1) | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
Total short-term investments | $ | 167,788 | $ | 60 | $ | (850 | ) | $ | 166,998 | |||||||
(1) Maturity dates ranging from 2013 to 2014. | ||||||||||||||||
December 31, 2012 | ||||||||||||||||
Security Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
U.S. government fixed income securities | $ | 87,394 | $ | 20 | $ | (411 | ) | $ | 87,003 | |||||||
Equity securities of certain technology companies | 3,254 | — | (782 | ) | 2,472 | |||||||||||
Total short-term investments | $ | 90,648 | $ | 20 | $ | (1,193 | ) | $ | 89,475 | |||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ||||||||||||||||
The following table presents the weighted-average number of common shares outstanding used in the calculation of basic and diluted income per share: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Numerator: | |||||||||||||||||
Basic | |||||||||||||||||
Net income (loss) | $ | (15,711 | ) | $ | (6,619 | ) | $ | (23,101 | ) | $ | 49,630 | ||||||
Undistributed earnings allocated to participating securities | — | — | — | (1,641 | ) | ||||||||||||
Total dividends declared / paid | (6,243 | ) | — | (12,392 | ) | — | |||||||||||
Dividends attributable to common stockholders | 6,050 | — | 12,035 | — | |||||||||||||
Net income (loss) attributable to common stockholders – basic | $ | (15,904 | ) | $ | (6,619 | ) | $ | (23,458 | ) | $ | 47,989 | ||||||
Diluted | |||||||||||||||||
Net income (loss) | $ | (15,711 | ) | $ | (6,619 | ) | $ | (23,101 | ) | $ | 49,630 | ||||||
Undistributed earnings allocated to participating securities | — | — | — | (1,630 | ) | ||||||||||||
Total dividends declared / paid | (6,243 | ) | — | (12,392 | ) | — | |||||||||||
Dividends attributable to common stockholders | 6,050 | — | 12,035 | — | |||||||||||||
Net income (loss) attributable to common stockholders – diluted | $ | (15,904 | ) | $ | (6,619 | ) | $ | (23,458 | ) | $ | 48,000 | ||||||
Denominator: | |||||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic | 48,330,149 | 48,332,878 | 48,068,038 | 46,886,820 | |||||||||||||
Effect of potentially dilutive securities: | |||||||||||||||||
Common stock options and restricted stock units | 199,956 | 308,496 | 220,899 | 352,315 | |||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted | 48,530,105 | 48,641,374 | 48,288,937 | 47,239,135 | |||||||||||||
Basic net income (loss) per common share | $ | (0.33 | ) | $ | (0.14 | ) | $ | (0.49 | ) | $ | 1.02 | ||||||
Diluted net income (loss) per common share | $ | (0.33 | ) | $ | (0.14 | ) | $ | (0.49 | ) | $ | 1.02 | ||||||
Impact of the Revision to the Comparable Prior Period Earnings (Loss) Per Share Calculations Using the Two-Class Method [Table Text Block] | ' | ||||||||||||||||
The impact of the revision to the comparable prior period earnings (loss) per share calculations using the two-class method were as follows: | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2012 | 2012 | ||||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) attributable to common stockholders – basic and diluted - As Reported | $ | (6,619 | ) | $ | 49,630 | ||||||||||||
Net income (loss) attributable to common stockholders – basic - As Adjusted | $ | (6,619 | ) | $ | 47,989 | ||||||||||||
Net income (loss) attributable to common stockholders – diluted - As Adjusted | $ | (6,619 | ) | $ | 48,000 | ||||||||||||
Denominator: | |||||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic - As Reported | 48,332,878 | 46,886,820 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – basic - As Adjusted | 48,332,878 | 46,886,820 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted - As Reported | 48,332,878 | 47,795,819 | |||||||||||||||
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders – diluted - As Adjusted | 48,641,374 | 47,239,135 | |||||||||||||||
Basic net income (loss) per common share - As Reported | $ | (0.14 | ) | $ | 1.06 | ||||||||||||
Basic net income (loss) per common share - As Adjusted | $ | (0.14 | ) | $ | 1.02 | ||||||||||||
Diluted net income (loss) per common share - As Reported | $ | (0.14 | ) | $ | 1.04 | ||||||||||||
Diluted net income (loss) per common share - As Adjusted | $ | (0.14 | ) | $ | 1.02 | ||||||||||||
Goodwill_and_Other_Identifiabl1
Goodwill and Other Identifiable Intangible Assets (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | ' | |||
The following table presents the scheduled annual aggregate amortization expense as of September 30, 2013 (in thousands): | ||||
Remainder of 2013 | $ | 11,980 | ||
2014 | 47,335 | |||
2015 | 46,219 | |||
2016 | 43,486 | |||
2017 | 42,474 | |||
Thereafter | 104,778 | |||
Total | $ | 296,272 | ||
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
Schedule of Purchase Price Allocation | ' | ||||||||||||
Based on the total purchase consideration and the estimate of the assets acquired and the liabilities assumed by ARG as of the Acquisition Date, the purchase price allocation was as follows ($ amounts in thousands): | |||||||||||||
Amortization Period | Annual Amortization | ||||||||||||
Assets Acquired and Liabilities Assumed: | |||||||||||||
Fair value of net tangible assets acquired | $ | 10,000 | |||||||||||
Intangible assets acquired - patents | 150,000 | 10 years | $ | 15,000 | |||||||||
Goodwill | 30,149 | ||||||||||||
Net deferred income tax liability | (30,149 | ) | |||||||||||
Total | $ | 160,000 | |||||||||||
Deferred Tax Liability, Acquisition | ' | ||||||||||||
Acquisition date deferred tax liabilities relate to specifically identified non-goodwill intangibles acquired. The estimated net deferred tax liability was determined as follows (amounts in thousands, except percent values): | |||||||||||||
Book Basis | Tax Basis | Difference | |||||||||||
Intangible assets acquired - patents | $ | 150,000 | $ | — | $ | (150,000 | ) | ||||||
Estimated acquired deferred tax assets (including net operating loss carryforwards) - ADAPTIX | — | 63,860 | 63,860 | ||||||||||
Net deferred tax liability - pretax | (86,140 | ) | |||||||||||
Estimated tax rate | 35 | % | |||||||||||
Estimated net deferred tax liability | $ | (30,149 | ) |
Description_of_Business_and_Ba1
Description of Business and Basis of Presentation (Details) (ADAPTIX, Inc. [Member], USD $) | 0 Months Ended |
In Thousands, unless otherwise specified | Jan. 12, 2012 |
ADAPTIX, Inc. [Member] | ' |
Business Acquisition [Line Items] | ' |
Cash payments to acquire businesses | $160,000 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | |
Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Vesting period of equity awards | ' | ' | ' | ' | '2 years | ' | '4 years | ' |
Useful life of patents and patent rights | ' | ' | ' | ' | ' | '1 year | ' | '8 years |
Cash Paid For Foreign Income Taxes | $875,000 | $0 | $4,605,000 | $11,890,000 | ' | ' | ' | ' |
Effective tax rate | ' | ' | 52.00% | 25.00% | ' | ' | ' | ' |
Excess tax benefits from stock-based compensation | ' | ' | -358,000 | 7,554,000 | ' | ' | ' | ' |
Business acquisition deferred tax asset | ' | 1,900,000 | ' | 1,900,000 | ' | ' | ' | ' |
Income tax benefit from release of valuation allowance | ' | ' | $0 | $10,237,000 | ' | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies Concentration Risk (Details) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 1 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 2 [Member] | Licensee 3 [Member] | Licensee 3 [Member] | Licensee 3 [Member] | Licensee 3 [Member] | Licensee 3 [Member] | Licensee 4 [Member] | Licensee 4 [Member] | Licensee 4 [Member] | Licensee 5 [Member] | Licensees in foreign jurisdictions [Member] | Licensees in foreign jurisdictions [Member] | Licensees in foreign jurisdictions [Member] | Licensees in foreign jurisdictions [Member] | |
License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | License Revenues [Member] | ||||||||
Concentrations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration Risk, Percentage - Revenues | ' | ' | 34.00% | 30.00% | 43.00% | 29.00% | ' | ' | 31.00% | 13.00% | 17.00% | 20.00% | ' | ' | 19.00% | 10.00% | 11.00% | ' | 10.00% | 10.00% | 10.00% | 54.00% | 12.00% | 26.00% | 45.00% |
Concentration Risk, Percentage - Accounts Receivable | 32.00% | 34.00% | ' | ' | ' | ' | 27.00% | 30.00% | ' | ' | ' | ' | 18.00% | 25.00% | ' | ' | ' | 16.00% | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies Investments in Marketable Securities (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | |
Available-for-sale Securities, Amortized Cost Basis | $167,788 | $90,648 | |
Available-for-sale Securities, Gross Unrealized Gains | 60 | 20 | |
Available-for-sale Securities, Gross Unrealized Losses | -850 | -1,193 | |
Available-for-sale Securities, Fair Value Disclosure | 166,998 | 89,475 | |
US Government Debt Securities [Member] | ' | ' | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | |
Available-for-sale Securities, Amortized Cost Basis | 167,788 | [1] | 87,394 |
Available-for-sale Securities, Gross Unrealized Gains | 60 | [1] | 20 |
Available-for-sale Securities, Gross Unrealized Losses | -850 | [1] | -411 |
Available-for-sale Securities, Fair Value Disclosure | 166,998 | [1] | 87,003 |
Equity Securities [Member] | ' | ' | |
Schedule of Available-for-sale Securities [Line Items] | ' | ' | |
Available-for-sale Securities, Amortized Cost Basis | ' | 3,254 | |
Available-for-sale Securities, Gross Unrealized Gains | ' | 0 | |
Available-for-sale Securities, Gross Unrealized Losses | ' | -782 | |
Available-for-sale Securities, Fair Value Disclosure | ' | $2,472 | |
[1] | (1) Maturity dates ranging from 2013 to 2014. |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net Income (Loss) Attributable to Parent | ($15,711) | ($6,619) | ($23,101) | $49,630 |
Undistributed Earnings, Basic | 0 | 0 | 0 | -1,641 |
Undistributed Earnings, Diluted | 0 | 0 | 0 | -1,630 |
Dividends | 6,243 | 0 | 12,392 | 0 |
Dividends attributable to common stockholders under the two class method | 6,050 | 0 | 12,035 | 0 |
Weighted-average common shares outstanding - basic | 48,330,149 | 48,332,878 | 48,068,038 | 46,886,820 |
Weighted Average Number Diluted Shares Outstanding Adjustment | 199,956 | 308,496 | 220,899 | 352,315 |
Net Income (Loss) Available to Common Stockholders, Basic | -15,904 | -6,619 | -23,458 | 47,989 |
Net Income (Loss) Available to Common Stockholders, Diluted | ($15,904) | ($6,619) | ($23,458) | $48,000 |
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders b basic - As Reported | ' | 48,332,878 | ' | 46,886,820 |
Weighted-average common shares outstanding - diluted | 48,530,105 | 48,641,374 | 48,288,937 | 47,239,135 |
Basic earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Diluted earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Earnings_Per_Share_Details_As_
Earnings Per Share Details As Adjusted (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Net Income (Loss) Attributable to Parent | ($15,711,000) | ($6,619,000) | ($23,101,000) | $49,630,000 |
Net Income (Loss) Available to Common Stockholders, Basic | -15,904,000 | -6,619,000 | -23,458,000 | 47,989,000 |
Net Income (Loss) Available to Common Stockholders, Diluted | -15,904,000 | -6,619,000 | -23,458,000 | 48,000,000 |
Weighted average number of shares outstanding, basic | 48,330,149 | 48,332,878 | 48,068,038 | 46,886,820 |
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders b diluted - As Reported | ' | 48,332,878 | ' | 47,795,819 |
Weighted average number of shares outstanding, diluted | 48,530,105 | 48,641,374 | 48,288,937 | 47,239,135 |
Basic net income (loss) per common share, As Reported | ' | -0.14 | ' | 1.06 |
Basic earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Diluted net income (loss) per common share - As Reported | ' | ($0.14) | ' | $1.04 |
Diluted earnings (loss) per share | ($0.33) | ($0.14) | ($0.49) | $1.02 |
Goodwill_and_Other_Identifiabl2
Goodwill and Other Identifiable Intangible Assets (Details) (USD $) | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | |
Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Patents, accumulated amortization | $103,273,000 | ' | $103,273,000 | ' | $69,850,000 | ' | ' | ' | ' |
Useful life of patents and patent rights | ' | ' | ' | ' | ' | ' | '1 year | ' | '8 years |
Weighted average useful life of patents and patent rights | ' | ' | '7 years | ' | ' | ' | ' | ' | ' |
Patent acquisition costs paid | ' | ' | 10,416,000 | 64,960,000 | ' | ' | ' | ' | ' |
Finite lived intangible asset acquired during the year, useful life | ' | ' | ' | ' | ' | '1 year | ' | '10 years | ' |
Patent acquisition costs included in accrued expenses | ' | ' | 9,750,000 | 8,000,000 | ' | ' | ' | ' | ' |
Accelerated amortization expense - up-front payments | 0 | 152,000 | 593,000 | 534,000 | ' | ' | ' | ' | ' |
Accelerated amortization expense (termination) | ' | ' | $1,630,000 | $3,023,000 | ' | ' | ' | ' | ' |
Goodwill_and_Other_Identifiabl3
Goodwill and Other Identifiable Intangible Assets Future Amortization Expense for Intangible Assets (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Finite-Lived Intangible Assets [Line Items] | ' |
For the remainder of 2013 | $11,980 |
2014 | 47,335 |
2015 | 46,219 |
2016 | 43,486 |
2017 | 42,474 |
Thereafter | 104,778 |
Total expected amortization expense | $296,272 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 0 Months Ended | 9 Months Ended | |||
Nov. 29, 2013 | 30-May-13 | Feb. 21, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Class of Stock [Line Items] | ' | ' | ' | ' | ' |
Gross proceeds from the issuance of common stock | ' | ' | $225,000,000 | ' | ' |
Stock issued during period | ' | ' | 6,122,000 | ' | ' |
Sale of stock, price per share | ' | ' | $36.75 | ' | ' |
Proceeds from sale of common stock, net of issuance costs | ' | ' | ' | 0 | 218,983,000 |
Dividends declared, per share | ' | ' | ' | $0.50 | ' |
Dividends paid, per share | ' | $0.13 | ' | ' | ' |
Dividends paid | ' | ' | ' | $12,392,000 | $0 |
Dividends, payment date | 29-Nov-13 | ' | ' | ' | ' |
Dividends, record date | 1-Nov-13 | ' | ' | ' | ' |
Acquisitions_Details
Acquisitions (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Jan. 12, 2012 |
ADAPTIX, Inc. [Member] | |||
patents | |||
countries | |||
Business Acquisition [Line Items] | ' | ' | ' |
Purchase price allocation, cash and cash equivalents | ' | ' | $10,000,000 |
Number of patents acquired | ' | ' | 230 |
Number of countries which have patents | ' | ' | 13 |
Cash payments to acquire businesses | ' | ' | 160,000,000 |
Intangible assets acquired - patents - amortization period | ' | ' | '10 years |
Intangible assets acquired - patents, book basis | ' | ' | 150,000,000 |
Intangible assets acquired - patents, tax basis | ' | ' | 0 |
Intangible assets acquired - patents - difference | ' | ' | -150,000,000 |
Estimated net operating loss carryforwards - ADAPTIX, book basis | ' | ' | 0 |
Estimated net operating loss carryforwards - ADAPTIX, tax basis | ' | ' | 63,860,000 |
Estimated net operating loss carryforwards - ADAPTIX, difference | ' | ' | 63,860,000 |
Net deferred tax liability - pretax | ' | ' | -86,140,000 |
Estimated tax rate | ' | ' | 35.00% |
Estimated net deferred tax liability | $17,748,000 | $27,831,000 | ($30,149,000) |
Acquisitions_Purchase_Price_Al
Acquisitions Purchase Price Allocation (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Jan. 12, 2012 |
In Thousands, unless otherwise specified | ADAPTIX, Inc. [Member] | ||
Business Acquisition [Line Items] | ' | ' | ' |
Fair value of net tangible assets acquired | ' | ' | $10,000 |
Intangible assets acquired - patents | ' | ' | 150,000 |
Goodwill | 30,149 | 30,149 | 30,149 |
Net deferred income tax liability | ' | ' | -30,149 |
Total purchase price | ' | ' | 160,000 |
Intangible assets acquired - patents - amortization period | ' | ' | '10 years |
Intangible assets acquired - patents - annual amortization | ' | ' | $15,000 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 0 Months Ended | |
Nov. 29, 2013 | Oct. 18, 2013 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ' | ' |
Dividends payable, per share | ' | $0.13 |
Dividends payable, date to be paid | 29-Nov-13 | ' |
Dividends payable, record date | 1-Nov-13 | ' |