Ownership Interests in and Advances to Partner Companies

The following summarizes the carrying value of the Company’s ownership interests in and advances to partner companies.



	December 31, 2014		December 31, 2013
	(In thousands)
Fair value	$	—	$	20,057
Equity Method:
Partner companies	134,861		108,872
Private equity funds	1,128		1,766
	135,989		110,638
Cost Method:
Partner companies	6,774		13,480
Private equity funds	2,364		2,418
	9,138		15,898
Advances to partner companies	9,065		1,986
	$	154,192	$	148,579
Loan participations receivable	$	3,855	$	8,135

The Company’s share of the earnings or losses of partner companies, as well as any adjustments resulting from prior period finalizations of equity income or loss, are reflected in Equity income (loss) on the Consolidated Statements of Operations. For the year ended December 31, 2014, adjustments at a partner company primarily related to revenue recognition amounted to $1.7 million, of which $1.4 million related to 2013 and $0.3 million related to 2012. Management evaluated the quantitative and qualitative impact of the corrections on previously reported periods as well as on the year ended December 31, 2014. Based on this evaluation, management concluded that these adjustments were not material to the Company’s Consolidated Financial Statements.

The Company recognized impairment charges of $11.2 million and $5.0 million related to PixelOptics, Inc., formerly an equity method partner company, for the years ended December 31, 2013 and 2012, respectively, which are reflected in Equity income (loss) in the Consolidated Statements of Operations. The impairments were based on PixelOptics' inability to raise additional capital to continue its operations. On November 4, 2013, PixelOptics filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The adjusted carrying value of PixelOptics is $0 and the Company believes it will not recover any of its capital.

The Company recognized an impairment charge of $1.8 million for the year ended December 31, 2013 related to its interest in the management company of Penn Mezzanine which is reflected in Equity income (loss) in the Consolidated Statements of Operations. The Company has determined that it will not be making any further new capital deployments in connection with Penn Mezzanine lending activities.

For the years ended December 31, 2014, 2013 and 2012, the Company received cash proceeds of $4.7 million, $1.3 million and $2.5 million, respectively, from the repayment of loan participations receivable initiated by Penn Mezzanine. For the years ended December 31, 2014 and 2013, the Company received cash proceeds of $1.3 million and $0.8 million, respectively, from the sale of equity interests initiated by Penn Mezzanine. The Company recognized impairment charges of $0.3 million and $2.5 million related to its Penn Mezzanine debt and equity participations for the years ended December 31, 2013 and 2012, respectively, which are reflected in Other income (loss), net in the Consolidated Statements of Operations.

The Company recognized impairment charges of $0.1 million, $0.3 million and $0.4 million related to its interest in a legacy private equity fund for the years ended December 31, 2014, 2013 and 2012, respectively, which are reflected in Other income (loss), net in the Consolidated Statement of Operations.

In April 2014, the Company sold its ownership interests in Sotera Wireless, Inc., formerly a cost method partner company. The Company received $4.2 million in cash proceeds in connection with the transaction and recognized a gain of $1.5 million, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014.

In February 2014, Crescendo Bioscience, Inc., formerly a cost method partner company, was acquired by Myriad Genetics, Inc. The Company received $38.4 million in cash proceeds in connection with the transaction, excluding $2.9 million, net of claims paid through December 31, 2014, which will be held in escrow until approximately May 2015. The Company recognized a gain of $27.4 million on the transaction, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014.

In February 2014, NuPathe, formerly a fair value method partner company, was acquired by Teva Pharmaceutical Industries Ltd. for $3.65 per share in cash. In addition to the upfront cash payment, NuPathe shareholders received rights to receive additional cash payments of up to $3.15 per share if specified milestones are achieved over time. The Company received initial net cash proceeds of $23.1 million as a result of the transaction. Depending on the achievement of certain milestones, the Company may receive up to an additional $24.2 million. The Company recognized a gain of $3.0 million, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014. For the years ended December 31, 2013 and 2012, the Company recognized an unrealized loss of $0.9 million and an unrealized gain of $11.0 million, respectively, on the mark-to-market of its holdings in NuPathe, which are included in Other income (loss), net in the Consolidated Statements of Operations.

In January 2014, Alverix, Inc., formerly an equity method partner company, was acquired by Becton, Dickinson and Company. The Company received cash proceeds of $15.7 million, excluding $1.7 million which will be held in escrow until approximately July 2015. The Company recognized a gain of $15.7 million on the transaction, which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2014.

In the second quarter of 2014, the Company’s primary ownership interest in Bridgevine, Inc. decreased from 22.7% to 17.3%. As a result, the Company recognized an unrealized loss of $0.1 million which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2014.

In December 2013, ThingWorx, Inc., formerly an equity method partner company, was acquired by PTC, Inc. The Company received cash proceeds of $36.4 million, excluding $4.1 million which will be held in escrow until December 2015. Depending on the achievement of certain milestones, the Company may receive up to an additional $6.5 million in connection with the transaction. The Company recognized a gain of $32.7 million on the transaction which is recorded in Equity income (loss) in the Consolidated Statement of Operations for the year ended December 31, 2013.

The following unaudited summarized balance sheets for PixelOptics at June 30, 2013 and December 31, 2012 and the results of operations for the six months ended June 30, 2013 and 2012, have been compiled from the financial statements of PixelOptics. The results of PixelOptics are reported on a one quarter lag basis.



	As of June 30,			As of December 31,
	2013			2012
	(In thousands)
Balance Sheets:
Current assets	$	285		$	323
Non-current assets	4,588			5,259
Total assets	$	4,873		$	5,582
Current liabilities	$	56,721		$	34,184
Non-current liabilities	1,818			10,228
Shareholders’ equity	(53,666		)	(38,830		)
Total liabilities and shareholders’ equity	$	4,873		$	5,582



	Six Months Ended June 30,			Year Ended December 31,
	2013			2012
	(In thousands)
Results of Operations:
Revenue	$	800		$	1,092
Operating loss	$	(12,219	)	$	(32,225	)
Net loss	$	(14,838	)	$	(35,472	)

The following summarized balance sheets for NuPathe at September 30, 2013 and December 31, 2012 and the results of operations for the nine months ended September 30, 2013 and the year ended December 31, 2012, have been compiled from the financial statements of NuPathe.



	As of September 30,		As of December 31,
	2013		2012
	(In thousands)
Balance Sheets:
Current assets	$	11,281	$	23,020
Non-current assets	10,140		7,587
Total assets	$	21,421	$	30,607
Current liabilities	$	8,411	$	3,173
Non-current liabilities	5,802		24,421
Shareholders’ equity	7,208		3,013
Total liabilities and shareholders’ equity	$	21,421	$	30,607



	Nine Months Ended September 30,			Year Ended December 31,
	2013			2012
	(In thousands)
Results of Operations:
Revenue	$	—		$	—
Operating loss	$	(17,238	)	$	(21,033	)
Net loss	$	(30,417	)	$	(37,784	)

The following summarized financial information for partner companies and funds accounted for under the equity method at December 31, 2014 and 2013 and for each of the three years ended December 31, 2014, 2013 and 2012 has been compiled from the financial statements of our respective partner companies and funds and reflects certain historical adjustments. Results of operations of the partner companies and funds are excluded for periods prior to their acquisition and subsequent to their disposition. The financial information below does not include information pertaining to PixelOptics or NuPathe.



	As of December 31,
	2014		2013
	(In thousands)
Balance Sheets:
Current assets	$	312,621	$	221,001
Non-current assets	90,469		90,042
Total assets	$	403,090	$	311,043
Current liabilities	$	163,016	$	153,398
Non-current liabilities	80,050		75,324
Shareholders’ equity	160,024		82,321
Total liabilities and shareholders’ equity	$	403,090	$	311,043

As of December 31, 2014, the Company’s carrying value in equity method partner companies, in the aggregate, exceeded the Company’s share of the net assets of such companies by approximately $94.0 million. Of this excess, $70.7 million was allocated to goodwill and $23.3 million was allocated to intangible assets.



	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Results of Operations:
Revenue	$	320,702		$	273,764		$	191,928
Gross profit	$	102,803		$	123,234		$	90,876
Net loss	$	(108,458	)	$	(63,452	)	$	(79,662	)