Segment And Geographic Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment And Geographic Information

SEGMENT AND GEOGRAPHIC INFORMATION

In connection with the acquisition of DTS, the Company re-evaluated its reportable segments. The Company concluded that it has two reportable segments: (1) Product Licensing and (2) Semiconductor and IP Licensing. There are certain corporate overhead costs that are not allocated to these reportable segments because these operating amounts are not considered in evaluating the operating performance of the Company’s business segments.

The Chief Executive Officer is also the Chief Operating Decision Maker (“CODM”) as defined by the authoritative guidance on segment reporting. Each segment has its own executive manager.

The Product Licensing segment, including the Company's DTS and FotoNation subsidiaries, licenses its technologies and intellectual property related to audio, digital radio and imaging solutions under the brands DTS, HD Radio and FotoNation. The Product Licensing solutions typically include the delivery of software or hardware based solutions, combined with various other intellectual property, including know how, patents, trademarks, and copyrights. Product Licensing represents revenue derived primarily from the consumer electronics market and related applications servicing the home, automotive and mobile segments.

The Semiconductor and IP Licensing segment develops and licenses semiconductor technologies and IP to manufacturers, foundries, subcontract assemblers and others.  The segment includes revenue generated from the technology and IP portfolios of Tessera, Inc., Ziptronix and Invensas. Tessera, Inc. pioneered chip-scale packaging solutions. Ziptronix pioneered low-temperature wafer bonding solutions.  Invensas develops 3D semiconductor packaging and interconnect solutions for applications such as smartphones, tablets, laptops, PCs, and data centers. The Company expands its technology and IP offerings in this segment through a combination of internal R&D and acquisitions.  The Company also provides engineering services to customers in the form of technology demonstrations and technology transfers to assist their evaluation and adoption of the Company's technologies.

The Company does not identify or allocate assets by reportable segment, nor does the CODM evaluate reportable segments using discrete asset information. Reportable segments do not record inter-segment revenue and accordingly there are none to report. The Company does not allocate other income and expense to reportable segments. Although the CODM uses operating income to evaluate reportable segments, operating costs included in one segment may benefit other segments.

The following table sets forth the Company’s segment revenue, operating expenses and operating income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):

	March 31, 2017			March 31, 2016
Revenue:
Semiconductor and IP licensing segment	$	39,554		$	50,133
Product licensing segment	27,701			9,844
Total revenue	67,255			59,977
Operating expenses:
Semiconductor and IP licensing segment	22,763			19,477
Product licensing segment	43,182			3,251
Unallocated operating expenses (1)	41,205			11,094
Total operating expenses	107,150			33,822
Operating income (loss):
Semiconductor and IP licensing segment	16,791			30,656
Product licensing segment	(15,481		)	6,593
Unallocated operating expenses (1)	(41,205		)	(11,094		)
Total operating income (loss)	(39,895		)	26,155

(1) Unallocated operating expenses consist primarily of general and administrative expenses, such as administration, human resources, finance, information technology, corporation development and procurement. These expenses are not allocated because it is not practical to do so.

A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods. The table below lists the geographic revenue for the periods indicated (in thousands):

	Three Months Ended,
	March 31, 2017				March 31, 2016
U.S.	$	33,405	50	%	$	28,661	48	%
Korea	6,887		10		13,821		23
Taiwan	7,991		12		7,199		12
Japan	13,891		21		3,677		6
Other	5,081		7		6,619		11
	$	67,255	100	%	$	59,977	100	%

For the three months ended March 31, 2017 and 2016, there were two and four customers, respectively, in each period that each accounted for 10% or more of total revenue.