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Share Name | Share Symbol | Market | Type |
---|---|---|---|
InterDigital Inc | NASDAQ:IDCC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.78 | 0.76% | 103.64 | 103.64 | 110.82 | 105.35 | 103.08 | 103.32 | 586,663 | 01:00:00 |
þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Pennsylvania
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23-1882087
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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200 Bellevue Parkway, Suite 300
Wilmington, Delaware
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19809
(Zip Code)
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(Address of principal executive offices)
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Common Stock (par value $0.01 per share)
(title of class)
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NASDAQ Stock Market LLC
(name of exchange on which registered)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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ITEM 4.
MINE SAFETY DISCLOSURES
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|
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|
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Item 1.
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BUSINESS.
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•
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Develop and source innovative technologies related to wireless.
We intend to grow or maintain a leading position in advanced mobile technology, the Internet of Things (IoT) and other related technology areas by leveraging our expertise to guide internal research and development capabilities, direct our efforts in partnering with leading inventors and industry players to source new technologies and pursue select acquisitions of technologies and/or companies.
|
•
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Establish and grow our patent-based revenue.
We intend to grow our licensing revenue base by adding licensees, expanding into adjacent technology areas that align with our intellectual property position and leveraging the continued growth of the overall mobile technology market. Those licensing efforts can be self-driven or executed in conjunction with licensing partnerships, trusts and other efforts, and may involve the vigorous defense of our intellectual property through litigation and other means. We also believe that our ongoing research efforts and associated patenting activities enable us to sell patent assets that are not vital to our core licensing programs, as well as to execute patent swaps that can strengthen our overall portfolio.
|
•
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Pursue
commercial opportunities for our advanced platforms and solutions.
We intend to pursue the commercialization of technology platforms and solutions that arise from our research efforts. As part of our ongoing research and development efforts, InterDigital often builds out entire functioning platforms in various technology areas. We seek to bring those technologies, as well as other technologies we may develop or acquire, to market through various methods including technology licensing, stand-alone commercial initiatives, joint ventures and partnerships.
|
•
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Maintain a collaborative relationship with key industry players and worldwide standards bodies.
We intend to continue contributing to the ongoing process of defining mobile standards and other industry-wide efforts and incorporating our inventions into those technology areas. Those efforts, and the knowledge gained through them, support internal development efforts and also help guide technology and intellectual property sourcing through partners and other external sources.
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•
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If the effective price of products sold by our licensees were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for the products could fall, which in turn would reduce our royalty revenues.
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•
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Assets or liabilities of our consolidated subsidiaries may be subject to the effects of currency fluctuations, which may affect our reported earnings. Our exposure to foreign currencies may increase as we expand into new markets.
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•
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Certain of our operating and investing costs, such as foreign patent prosecution, are based in foreign currencies. If these costs are not subject to foreign exchange hedging transactions, strengthening currency values in selected regions could adversely affect our near-term operating expenses, investment costs and cash flows. In addition, continued strengthening of currency values in selected regions over an extended period of time could adversely affect our future operating expenses, investment costs and cash flows.
|
•
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If as a result of tax treaty procedures, the U.S. government reaches an agreement with certain foreign governments to whom we have paid foreign taxes, resulting in a partial refund of foreign taxes paid with a related reduction in our foreign tax credits, such agreement could result in foreign currency gain or loss.
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•
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the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC and announcements relating to licensing, technology development, litigation, arbitration and other legal proceedings in which we are involved and intellectual property impacting us or our business;
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•
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announcements concerning strategic transactions, such as commercial initiatives, joint ventures, strategic investments, acquisitions or divestitures;
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•
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financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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•
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changes in GAAP, including new accounting standards that may materially affect our revenue recognition;
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•
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changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;
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•
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investor perceptions as to the likelihood of achievement of near-term goals;
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•
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changes in market share of significant licensees;
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•
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changes in operating performance and stock market valuations of other wireless communications companies generally; and
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•
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market conditions or trends in our industry or the economy as a whole.
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•
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making it more difficult for us to meet our payment and other obligations under our 1.50% Senior Convertible Notes due 2020 (the "2020 Notes");
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•
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reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;
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•
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limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and
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•
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placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
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Item 1B.
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UNRESOLVED STAFF COMMENTS.
|
Item 2.
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PROPERTIES.
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Location
|
Approximate Square Feet
|
Principal Use
|
Lease Expiration Date
|
Melville, New York
|
44,800
|
Office and research space
|
February 2020
|
Wilmington, Delaware
|
36,200
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Corporate headquarters
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November 2022
|
Conshohocken, Pennsylvania
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30,300
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Office and research space
|
October 2026
|
Montreal, Quebec
|
17,300
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Office and research space
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June 2021
|
Rockville, Maryland
|
16,700
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Office and research space (Hillcrest Labs)
|
February 2018
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San Diego, California
|
11,800
|
Office and research space
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April 2018
|
Item 3.
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LEGAL PROCEEDINGS.
|
1.
|
Whenever InterDigital engages with a Chinese Manufacturer to license InterDigital’s patent portfolio for 2G, 3G and 4G wireless mobile standards, InterDigital will offer such Chinese Manufacturer the option of taking a worldwide portfolio license of only its standards-essential wireless patents, and comply with F/RAND principles when negotiating and entering into such licensing agreements with Chinese Manufacturers.
|
2.
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As part of its licensing offer, InterDigital will not require that a Chinese Manufacturer agree to a royalty-free, reciprocal cross-license of such Chinese Manufacturer's similarly categorized standards-essential wireless patents.
|
3.
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Prior to commencing any action against a Chinese Manufacturer in which InterDigital may seek exclusionary or injunctive relief for the infringement of any of its wireless standards-essential patents, InterDigital will offer such Chinese Manufacturer the option to enter into expedited binding arbitration under fair and reasonable procedures to resolve the royalty rate and other terms of a worldwide license under InterDigital's wireless standards-essential patents. If the Chinese Manufacturer accepts InterDigital's binding arbitration offer or otherwise enters into an agreement with InterDigital on a binding arbitration mechanism, InterDigital will, in accordance with the terms of the arbitration agreement and patent license agreement, refrain from seeking exclusionary or injunctive relief against such company.
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Item 4.
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MINE SAFETY DISCLOSURES.
|
Item 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
2016
|
High
|
|
Low
|
||||
First quarter
|
$
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55.85
|
|
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$
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41.01
|
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Second quarter
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59.83
|
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51.97
|
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||
Third quarter
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79.92
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|
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52.33
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||
Fourth quarter
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98.00
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68.10
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2015
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High
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Low
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||||
First quarter
|
$
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56.27
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$
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47.76
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Second quarter
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60.69
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|
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49.57
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||
Third quarter
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57.77
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|
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44.28
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||
Fourth quarter
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54.95
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|
46.78
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2016
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Per Share
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Total
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|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.20
|
|
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$
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6,923
|
|
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$
|
6,923
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Second quarter
|
0.20
|
|
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6,861
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|
|
13,784
|
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|||
Third quarter
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0.30
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10,285
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|
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24,069
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|||
Fourth quarter
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0.30
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|
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10,290
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34,359
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|||
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$
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1.00
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$
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34,359
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||
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||||||
2015
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||||||
First quarter
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$
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0.20
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$
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7,232
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$
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7,232
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Second quarter
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0.20
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|
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7,243
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|
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14,475
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|||
Third quarter
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0.20
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|
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7,183
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21,658
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|||
Fourth quarter
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0.20
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|
|
7,068
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|
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28,726
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|||
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$
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0.80
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|
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$
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28,726
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12/11
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12/12
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12/13
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12/14
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12/15
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12/16
|
InterDigital, Inc.
|
100.00
|
98.71
|
71.38
|
130.08
|
122.45
|
231.65
|
NASDAQ Composite
|
100.00
|
116.41
|
165.47
|
188.69
|
200.32
|
216.54
|
NASDAQ Telecommunications
|
100.00
|
102.78
|
143.40
|
149.42
|
144.02
|
153.88
|
Item 6.
|
SELECTED FINANCIAL DATA.
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(in thousands except per share data)
|
||||||||||||||||||
Consolidated statements of operations data:
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|||||
Revenues (a)
|
$
|
665,854
|
|
|
$
|
441,435
|
|
|
$
|
415,821
|
|
|
$
|
325,361
|
|
|
$
|
663,063
|
|
Income from operations (b)
|
$
|
437,306
|
|
|
$
|
208,549
|
|
|
$
|
168,960
|
|
|
$
|
84,756
|
|
|
$
|
419,030
|
|
Income tax provision (c)
|
$
|
(116,791
|
)
|
|
$
|
(64,621
|
)
|
|
$
|
(52,108
|
)
|
|
$
|
(25,836
|
)
|
|
$
|
(136,830
|
)
|
Net income applicable to InterDigital, Inc. common shareholders
|
$
|
309,001
|
|
|
$
|
119,225
|
|
|
$
|
104,342
|
|
|
$
|
38,165
|
|
|
$
|
271,804
|
|
Net income per common share — basic
|
$
|
8.95
|
|
|
$
|
3.31
|
|
|
$
|
2.65
|
|
|
$
|
0.93
|
|
|
$
|
6.31
|
|
Net income per common share — diluted
|
$
|
8.78
|
|
|
$
|
3.27
|
|
|
$
|
2.62
|
|
|
$
|
0.92
|
|
|
$
|
6.26
|
|
Weighted average number of common shares outstanding — basic
|
34,526
|
|
|
36,048
|
|
|
39,420
|
|
|
41,115
|
|
|
43,070
|
|
|||||
Weighted average number of common shares outstanding — diluted
|
35,189
|
|
|
36,463
|
|
|
39,879
|
|
|
41,424
|
|
|
43,396
|
|
|||||
Cash dividends declared per common share (d)
|
$
|
1.00
|
|
|
$
|
0.80
|
|
|
$
|
0.70
|
|
|
$
|
0.40
|
|
|
$
|
1.90
|
|
Consolidated balance sheets data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
404,074
|
|
|
$
|
510,207
|
|
|
$
|
428,567
|
|
|
$
|
497,714
|
|
|
$
|
349,843
|
|
Short-term investments
|
548,687
|
|
|
423,501
|
|
|
275,361
|
|
|
200,737
|
|
|
227,436
|
|
|||||
Working capital
|
795,639
|
|
|
610,994
|
|
|
582,688
|
|
|
703,576
|
|
|
603,134
|
|
|||||
Total assets
|
1,727,853
|
|
|
1,474,485
|
|
|
1,192,962
|
|
|
1,110,251
|
|
|
1,052,374
|
|
|||||
Total debt
|
272,021
|
|
|
486,769
|
|
|
216,206
|
|
|
205,881
|
|
|
196,156
|
|
|||||
Total InterDigital, Inc. shareholders’ equity
|
739,709
|
|
|
510,519
|
|
|
468,328
|
|
|
528,650
|
|
|
518,705
|
|
|||||
Noncontrolling interest
|
14,659
|
|
|
11,376
|
|
|
7,349
|
|
|
5,170
|
|
|
—
|
|
|||||
Total shareholders’ equity
|
$
|
754,368
|
|
|
$
|
521,895
|
|
|
$
|
475,677
|
|
|
$
|
533,820
|
|
|
$
|
518,705
|
|
(a)
|
In 2016, 2015, 2014 and 2013, our revenues included $309.7 million, $65.8 million, $125.0 million and $127.0 million of past sales, respectively. In 2012, our revenues included
$384.0 million
associated with patent sales.
|
(b)
|
Our income from operations in 2016 included $2.3 million of severance charges related to ongoing efforts to optimize our cost structure. We incurred charges of
$1.5 million
and
$12.5 million
in 2013 and 2012, respectively, associated with actions to reposition the company’s operations.
|
(c)
|
In 2016, our income tax provision included the impact of a $23.6 million net tax benefit primarily related to domestic activity production deductions for prior years. In 2014, our income tax provision included the impact of a $4.2 million net tax benefit, primarily attributable to available U.S. federal research and development tax credits for prior years, which was partially offset by an audit settlement. In 2012, our income tax provision included a tax benefit of $6.7 million related to the release of valuation allowances on deferred tax assets, which we now expect to utilize.
|
(d)
|
In September 2016, we announced that our Board of Directors had approved an increase in the Company’s quarterly cash dividend to $0.30 per share. In June 2014, we announced that our Board of Directors had approved a 100% increase in the Company's quarterly cash dividend, to $0.20 per share. On December 5, 2012, we announced that our Board of Directors had declared a special cash dividend of $1.50 per share on InterDigital common stock. The special cash dividend was payable on December 28, 2012 to stockholders of record as of the close of business on December 17, 2012.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
Cash In
|
||
Current royalties
|
$
|
158,899
|
|
Fixed-fee royalty payments
|
231,562
|
|
|
Past per-unit patent royalties
|
66,949
|
|
|
Prepaid royalties
|
3,546
|
|
|
Technology solutions
|
5,300
|
|
|
Past fixed royalty payments
|
253,683
|
|
|
|
$
|
719,939
|
|
2017
|
$
|
285,478
|
|
2018
|
149,937
|
|
|
2019
|
1,392
|
|
|
2020
|
1,392
|
|
|
2021
|
534
|
|
|
Thereafter
|
534
|
|
|
|
$
|
439,267
|
|
•
|
Our
2016
revenue includes:
|
•
|
$309.7 million
of past sales primarily related to the new patent license agreements.
|
•
|
Our
2016
operating expenses include:
|
•
|
$2.3 million severance charge primarily related to ongoing efforts to optimize our cost structure; and
|
•
|
$13.7 million of expense to increase accrual rates for some of our incentive compensation plans.
|
•
|
Our
2016
other expense, net includes:
|
•
|
a $3.4 million gain related to the sale of our King of Prussia facility.
|
•
|
Our
2016
income tax provision includes:
|
•
|
a $23.6 million discrete net benefit related to tax refunds expected on amended returns associated with deductions for certain domestic production activities.
|
|
Change in amount allocated
|
||||||
Allocation to past patent royalties
|
+5%
|
|
-%5
|
||||
Change in Revenue
|
$
|
44,771
|
|
|
$
|
(44,771
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Short-term incentive compensation
|
$
|
20,516
|
|
|
$
|
19,098
|
|
|
$
|
20,404
|
|
Time-based awards (a)
|
7,847
|
|
|
7,874
|
|
|
6,734
|
|
|||
Performance-based awards (a) (b)
|
12,812
|
|
|
5,340
|
|
|
8,947
|
|
|||
Other share-based compensation
|
1,899
|
|
|
2,090
|
|
|
2,814
|
|
|||
Total performance-based and other share-based compensation expense
|
$
|
43,074
|
|
|
$
|
34,402
|
|
|
$
|
38,899
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
Increase /
(Decrease)
|
||||||
Cash and cash equivalents
|
$
|
404,074
|
|
|
$
|
510,207
|
|
|
$
|
(106,133
|
)
|
Short-term investments
|
548,687
|
|
|
423,501
|
|
|
125,186
|
|
|||
Total cash and cash equivalents and short-term investments
|
$
|
952,761
|
|
|
$
|
933,708
|
|
|
$
|
19,053
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
Increase / (Decrease)
|
||||||
Cash flows provided by operating activities
|
$
|
430,778
|
|
|
$
|
114,499
|
|
|
$
|
316,279
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
Increase / (Decrease)
|
||||||
Cash Receipts:
|
|
|
|
|
|
||||||
Fixed-fee royalty payments (a)
|
$
|
485,245
|
|
|
$
|
136,084
|
|
|
$
|
349,161
|
|
Current royalties (b)
|
158,899
|
|
|
223,270
|
|
|
(64,371
|
)
|
|||
Prepaid royalties (c)
|
70,495
|
|
|
38,226
|
|
|
32,269
|
|
|||
Technology solutions
|
5,300
|
|
|
10,445
|
|
|
(5,145
|
)
|
|||
Total cash receipts
|
$
|
719,939
|
|
|
$
|
408,025
|
|
|
$
|
311,914
|
|
|
|
|
|
|
|
||||||
Cash Outflows:
|
|
|
|
|
|
||||||
Cash operating expenses (d)
|
(153,955
|
)
|
|
(169,954
|
)
|
|
15,999
|
|
|||
Income taxes paid (e)
|
(108,635
|
)
|
|
(85,780
|
)
|
|
(22,855
|
)
|
|||
Total cash outflows
|
(262,590
|
)
|
|
(255,734
|
)
|
|
(6,856
|
)
|
|||
|
|
|
|
|
|
||||||
Other working capital adjustments
|
(26,571
|
)
|
|
(37,792
|
)
|
|
11,221
|
|
|||
|
|
|
|
|
|
||||||
Cash flows provided by operating activities
|
$
|
430,778
|
|
|
$
|
114,499
|
|
|
$
|
316,279
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
Increase / (Decrease)
|
||||||
Current assets
|
$
|
1,221,119
|
|
|
$
|
1,010,967
|
|
|
$
|
210,152
|
|
Less
: current liabilities
|
425,480
|
|
|
399,973
|
|
|
25,507
|
|
|||
Working capital
|
795,639
|
|
|
610,994
|
|
|
184,645
|
|
|||
Subtract:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
404,074
|
|
|
510,207
|
|
|
(106,133
|
)
|
|||
Short-term investments
|
548,687
|
|
|
423,501
|
|
|
125,186
|
|
|||
Add:
|
|
|
|
|
|
||||||
Current deferred revenue
|
360,192
|
|
|
106,229
|
|
|
253,963
|
|
|||
Adjusted working capital
|
$
|
203,070
|
|
|
$
|
(216,485
|
)
|
|
$
|
419,555
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 year
|
|
1-3 Years
|
|
3-5 Years
|
|
Thereafter
|
||||||||||
2020 Notes
|
$
|
316,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
316,000
|
|
|
$
|
—
|
|
Contractual interest payments on the 2020 Notes
|
16,590
|
|
|
4,740
|
|
|
9,480
|
|
|
2,370
|
|
|
—
|
|
|||||
Operating lease obligations
|
20,516
|
|
|
4,389
|
|
|
6,473
|
|
|
4,225
|
|
|
5,429
|
|
|||||
Purchase obligations (a)
|
19,081
|
|
|
19,081
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
372,187
|
|
|
$
|
28,210
|
|
|
$
|
15,953
|
|
|
$
|
322,595
|
|
|
$
|
5,429
|
|
(a)
|
Purchase obligations consist of agreements to purchase goods and services that are legally binding on us, as well as accounts payable. Our consolidated balance sheet at December 31, 2016 includes a
$10.4 million
noncurrent liability for uncertain tax positions. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
|
|
For the Year Ended December 31,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
(Decrease)/Increase
|
|||||||||
Per-unit royalty revenue
|
$
|
168,050
|
|
|
$
|
234,836
|
|
|
$
|
(66,786
|
)
|
|
(28
|
)%
|
Fixed-fee amortized royalty revenue
|
177,614
|
|
|
131,837
|
|
|
45,777
|
|
|
35
|
%
|
|||
Current patent royalties (a)
|
345,664
|
|
|
366,673
|
|
|
(21,009
|
)
|
|
(6
|
)%
|
|||
Past patent royalties (b)
|
309,696
|
|
|
65,814
|
|
|
243,882
|
|
|
371
|
%
|
|||
Total patent licensing royalties
|
655,360
|
|
|
432,487
|
|
|
222,873
|
|
|
52
|
%
|
|||
Current technology solutions revenue (a)
|
10,494
|
|
|
6,096
|
|
|
4,398
|
|
|
72
|
%
|
|||
Past technology solutions revenue (b)
|
—
|
|
|
2,852
|
|
|
(2,852
|
)
|
|
(100
|
)%
|
|||
Total revenue
|
$
|
665,854
|
|
|
$
|
441,435
|
|
|
$
|
224,419
|
|
|
51
|
%
|
|
For the Year Ended December 31,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
113,544
|
|
|
$
|
120,401
|
|
|
$
|
(6,857
|
)
|
|
(6
|
)%
|
Development
|
68,733
|
|
|
72,702
|
|
|
(3,969
|
)
|
|
(5
|
)%
|
|||
Selling, general and administrative
|
46,271
|
|
|
39,783
|
|
|
6,488
|
|
|
16
|
%
|
|||
Total operating expenses
|
$
|
228,548
|
|
|
$
|
232,886
|
|
|
$
|
(4,338
|
)
|
|
(2
|
)%
|
|
(Decrease)/
Increase
|
||
Intellectual property enforcement and non-patent litigation
|
$
|
(16,140
|
)
|
Commercial initiatives
|
(5,717
|
)
|
|
Performance-based incentive compensation
|
9,275
|
|
|
Depreciation and amortization
|
4,806
|
|
|
Other
|
2,646
|
|
|
Personnel-related costs
|
792
|
|
|
Total decrease in operating expenses
|
$
|
(4,338
|
)
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
(Decrease)/Increase
|
|||||||||
Interest expense
|
$
|
(21,126
|
)
|
|
$
|
(30,417
|
)
|
|
$
|
9,291
|
|
|
(31
|
)%
|
Interest and investment income
|
3,748
|
|
|
3,858
|
|
|
(110
|
)
|
|
(3
|
)%
|
|||
Other (a)
|
2,343
|
|
|
(975
|
)
|
|
3,318
|
|
|
(340
|
)%
|
|||
|
$
|
(15,035
|
)
|
|
$
|
(27,534
|
)
|
|
$
|
12,499
|
|
|
(45
|
)%
|
|
For the Year Ended
December 31,
|
|
|
|
|
|||||||||
|
2015
|
|
2014
|
|
Increase/ (Decrease)
|
|||||||||
Per-unit royalty revenue
|
$
|
234,836
|
|
|
$
|
157,250
|
|
|
$
|
77,586
|
|
|
49
|
%
|
Fixed-fee amortized royalty revenue
|
131,837
|
|
|
121,903
|
|
|
9,934
|
|
|
8
|
%
|
|||
Current patent royalties (a)
|
366,673
|
|
|
279,153
|
|
|
87,520
|
|
|
31
|
%
|
|||
Past patent royalties (b)
|
65,814
|
|
|
124,236
|
|
|
(58,422
|
)
|
|
(47
|
)%
|
|||
Total patent licensing royalties
|
432,487
|
|
|
403,389
|
|
|
29,098
|
|
|
7
|
%
|
|||
Patent sales
|
—
|
|
|
1,999
|
|
|
(1,999
|
)
|
|
100
|
%
|
|||
Current technology solutions revenue (a)
|
6,096
|
|
|
9,633
|
|
|
(3,537
|
)
|
|
(37
|
)%
|
|||
Past technology solutions revenue (b)
|
2,852
|
|
|
800
|
|
|
2,052
|
|
|
257
|
%
|
|||
Total revenue
|
$
|
441,435
|
|
|
$
|
415,821
|
|
|
$
|
25,614
|
|
|
6
|
%
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2015
|
|
2014
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
120,401
|
|
|
$
|
133,808
|
|
|
$
|
(13,407
|
)
|
|
(10
|
)%
|
Development
|
72,702
|
|
|
75,300
|
|
|
(2,598
|
)
|
|
(3
|
)%
|
|||
Selling, general and administrative
|
39,783
|
|
|
37,753
|
|
|
2,030
|
|
|
5
|
%
|
|||
Total operating expenses
|
$
|
232,886
|
|
|
$
|
246,861
|
|
|
$
|
(13,975
|
)
|
|
(6
|
)%
|
|
Increase/
(Decrease)
|
||
Intellectual property enforcement
|
$
|
(19,572
|
)
|
Performance-based incentive compensation
|
(4,165
|
)
|
|
Consulting services
|
(1,022
|
)
|
|
Cost of patent sales
|
(700
|
)
|
|
Personnel-related costs
|
(634
|
)
|
|
Bad debt expense
|
(392
|
)
|
|
Other
|
(86
|
)
|
|
Depreciation and amortization
|
5,675
|
|
|
Commercial initiatives
|
6,921
|
|
|
Total decrease in operating expenses
|
$
|
(13,975
|
)
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2015
|
|
2014
|
|
(Decrease)/Increase
|
|||||||||
Interest expense
|
$
|
(30,417
|
)
|
|
$
|
(16,084
|
)
|
|
$
|
(14,333
|
)
|
|
89
|
%
|
Other (a)
|
(975
|
)
|
|
(747
|
)
|
|
(228
|
)
|
|
31
|
%
|
|||
Interest and investment income
|
3,858
|
|
|
1,399
|
|
|
2,459
|
|
|
176
|
%
|
|||
|
$
|
(27,534
|
)
|
|
$
|
(15,432
|
)
|
|
$
|
(12,102
|
)
|
|
78
|
%
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
Money market and demand accounts
|
$
|
404,074
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
404,074
|
|
Short-term investments
|
$
|
404,751
|
|
|
$
|
118,511
|
|
|
$
|
25,425
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
548,687
|
|
Average Interest rate
|
0.7
|
%
|
|
1.4
|
%
|
|
1.3
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.8
|
%
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
PAGE NUMBER
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
SCHEDULES:
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Patent licensing royalties
|
$
|
655,360
|
|
|
$
|
432,488
|
|
|
$
|
403,389
|
|
Patent sales
|
—
|
|
|
—
|
|
|
1,999
|
|
|||
Technology solutions
|
10,494
|
|
|
8,947
|
|
|
10,433
|
|
|||
Total Revenue
|
665,854
|
|
|
441,435
|
|
|
415,821
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Patent administration and licensing
|
113,544
|
|
|
120,401
|
|
|
133,808
|
|
|||
Development
|
68,733
|
|
|
72,702
|
|
|
75,300
|
|
|||
Selling, general and administrative
|
46,271
|
|
|
39,783
|
|
|
37,753
|
|
|||
Total Operating Expenses
|
228,548
|
|
|
232,886
|
|
|
246,861
|
|
|||
Income from operations
|
437,306
|
|
|
208,549
|
|
|
168,960
|
|
|||
OTHER EXPENSE (NET)
|
(15,035
|
)
|
|
(27,534
|
)
|
|
(15,432
|
)
|
|||
Income before income taxes
|
422,271
|
|
|
181,015
|
|
|
153,528
|
|
|||
INCOME TAX PROVISION
|
(116,791
|
)
|
|
(64,621
|
)
|
|
(52,108
|
)
|
|||
NET INCOME
|
$
|
305,480
|
|
|
$
|
116,394
|
|
|
$
|
101,420
|
|
Net loss attributable to noncontrolling interest
|
(3,521
|
)
|
|
(2,831
|
)
|
|
(2,922
|
)
|
|||
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.
|
$
|
309,001
|
|
|
$
|
119,225
|
|
|
$
|
104,342
|
|
NET INCOME PER COMMON SHARE — BASIC
|
$
|
8.95
|
|
|
$
|
3.31
|
|
|
$
|
2.65
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
|
34,526
|
|
|
36,048
|
|
|
39,420
|
|
|||
NET INCOME PER COMMON SHARE — DILUTED
|
$
|
8.78
|
|
|
$
|
3.27
|
|
|
$
|
2.62
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
|
35,189
|
|
|
36,463
|
|
|
39,879
|
|
|||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
1.00
|
|
|
$
|
0.80
|
|
|
$
|
0.70
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
$
|
305,480
|
|
|
$
|
116,394
|
|
|
$
|
101,420
|
|
Unrealized (loss) gain investments, net of tax
|
(336
|
)
|
|
(296
|
)
|
|
12
|
|
|||
Other-than-temporary impairment losses related to available for sale securities, net of income taxes of $0, $0, $65
|
—
|
|
|
—
|
|
|
120
|
|
|||
Comprehensive income
|
$
|
305,144
|
|
|
$
|
116,098
|
|
|
$
|
101,552
|
|
Comprehensive loss attributable to noncontrolling interest
|
(3,521
|
)
|
|
(2,831
|
)
|
|
(2,922
|
)
|
|||
Total comprehensive income attributable to InterDigital, Inc.
|
$
|
308,665
|
|
|
$
|
118,929
|
|
|
$
|
104,474
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Retained Earnings
|
|
|
Treasury Stock
|
|
Non-Controlling
Interest
|
|
Total
Shareholders'
Equity
|
|||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE, DECEMBER 31, 2013
|
69,614
|
|
|
$
|
696
|
|
|
$
|
598,325
|
|
|
$
|
680,718
|
|
|
$
|
(14
|
)
|
|
29,326
|
|
|
$
|
(751,075
|
)
|
|
$
|
5,170
|
|
|
$
|
533,820
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
104,342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104,342
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,101
|
|
|
5,101
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,922
|
)
|
|
(2,922
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132
|
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
857
|
|
|
(28,010
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,153
|
)
|
|||||||
Exercise of Common Stock options
|
21
|
|
|
—
|
|
|
402
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
402
|
|
|||||||
Issuance of Common Stock, net
|
165
|
|
|
2
|
|
|
(2,740
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,738
|
)
|
|||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
(1,176
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,176
|
)
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
18,494
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,494
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,554
|
|
|
(152,625
|
)
|
|
—
|
|
|
(152,625
|
)
|
|||||||
BALANCE, DECEMBER 31, 2014
|
69,800
|
|
|
$
|
698
|
|
|
$
|
614,162
|
|
|
$
|
757,050
|
|
|
$
|
118
|
|
|
32,880
|
|
|
$
|
(903,700
|
)
|
|
$
|
7,349
|
|
|
$
|
475,677
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
119,225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,225
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,358
|
|
|
9,358
|
|
|||||||
Distribution preference
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500
|
)
|
|
(2,500
|
)
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,831
|
)
|
|
(2,831
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(296
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(296
|
)
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
694
|
|
|
(29,242
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,548
|
)
|
|||||||
Exercise of Common Stock options
|
5
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|||||||
Issuance of Common Stock, net
|
325
|
|
|
3
|
|
|
(9,849
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,846
|
)
|
|||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
2,457
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,457
|
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
15,139
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,139
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,836
|
|
|
(96,410
|
)
|
|
—
|
|
|
(96,410
|
)
|
|||||||
Equity Component of Debt, net of tax
|
—
|
|
|
—
|
|
|
38,567
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,567
|
|
|||||||
Convertible note hedge transactions, net of tax
|
—
|
|
|
—
|
|
|
(38,594
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,594
|
)
|
|||||||
Warrant transactions
|
—
|
|
|
—
|
|
|
42,881
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,881
|
|
|||||||
Deferred financing costs allocated to equity
|
—
|
|
|
—
|
|
|
(2,430
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,430
|
)
|
|||||||
BALANCE, DECEMBER 31, 2015
|
70,130
|
|
|
$
|
701
|
|
|
$
|
663,073
|
|
|
$
|
847,033
|
|
|
$
|
(178
|
)
|
|
34,716
|
|
|
$
|
(1,000,110
|
)
|
|
$
|
11,376
|
|
|
$
|
521,895
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
309,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,001
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,804
|
|
|
6,804
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,521
|
)
|
|
(3,521
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
907
|
|
|
(35,268
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,361
|
)
|
|||||||
Exercise of Common Stock options and warrants
|
51
|
|
|
1
|
|
|
485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
486
|
|
|||||||
Issuance of Common Stock, net
|
137
|
|
|
1
|
|
|
(3,381
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,380
|
)
|
|||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
625
|
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
21,840
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,840
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,304
|
|
|
(64,685
|
)
|
|
—
|
|
|
(64,685
|
)
|
|||||||
BALANCE, DECEMBER 31, 2016
|
70,318
|
|
|
$
|
703
|
|
|
$
|
683,549
|
|
|
$
|
1,120,766
|
|
|
$
|
(514
|
)
|
|
36,020
|
|
|
$
|
(1,064,795
|
)
|
|
$
|
14,659
|
|
|
$
|
754,368
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
305,480
|
|
|
$
|
116,394
|
|
|
$
|
101,420
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
52,753
|
|
|
47,793
|
|
|
42,246
|
|
|||
Amortization of deferred financing fees and accretion of debt discount
|
15,252
|
|
|
20,869
|
|
|
10,325
|
|
|||
Deferred revenue recognized
|
(321,313
|
)
|
|
(163,354
|
)
|
|
(163,139
|
)
|
|||
Increase in deferred revenue
|
527,034
|
|
|
113,962
|
|
|
272,885
|
|
|||
Deferred income taxes
|
13,261
|
|
|
(34,770
|
)
|
|
(62,979
|
)
|
|||
Tax benefit from share-based compensation
|
—
|
|
|
—
|
|
|
(1,176
|
)
|
|||
Share-based compensation
|
21,840
|
|
|
15,139
|
|
|
18,494
|
|
|||
Impairment of investments
|
182
|
|
|
198
|
|
|
559
|
|
|||
Non-cash cost of patent sales
|
—
|
|
|
—
|
|
|
700
|
|
|||
Gain on disposal of assets
|
(3,351
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(214
|
)
|
|
238
|
|
|
572
|
|
|||
Decrease (Increase) in assets:
|
|
|
|
|
|
||||||
Receivables
|
(169,927
|
)
|
|
(2,166
|
)
|
|
26,128
|
|
|||
Deferred charges and other assets
|
(15,222
|
)
|
|
8,489
|
|
|
6,156
|
|
|||
(Decrease) Increase in liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
(5,564
|
)
|
|
2,503
|
|
|
(10,396
|
)
|
|||
Accrued compensation and other expenses
|
1,774
|
|
|
(12,297
|
)
|
|
5,853
|
|
|||
Accrued taxes payable and other tax contingencies
|
8,793
|
|
|
1,501
|
|
|
(5,635
|
)
|
|||
Net cash provided by operating activities
|
430,778
|
|
|
114,499
|
|
|
242,013
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of short-term investments
|
(560,075
|
)
|
|
(643,087
|
)
|
|
(438,157
|
)
|
|||
Sales of short-term investments
|
434,510
|
|
|
495,201
|
|
|
363,175
|
|
|||
Purchases of property and equipment
|
(5,882
|
)
|
|
(3,700
|
)
|
|
(7,095
|
)
|
|||
Capitalized patent costs
|
(32,658
|
)
|
|
(29,766
|
)
|
|
(31,932
|
)
|
|||
Acquisition of patents
|
(4,900
|
)
|
|
(20,000
|
)
|
|
(26,300
|
)
|
|||
Acquisition of business, net of cash acquired
|
(48,000
|
)
|
|
—
|
|
|
—
|
|
|||
Long-term investments
|
(2,000
|
)
|
|
(12,623
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(219,005
|
)
|
|
(213,975
|
)
|
|
(140,309
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from exercise of stock options
|
485
|
|
|
46
|
|
|
402
|
|
|||
Proceeds from issuance of senior convertible notes
|
—
|
|
|
316,000
|
|
|
—
|
|
|||
Payments on long-term debt
|
(230,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from other financing activities
|
—
|
|
|
4,500
|
|
|
—
|
|
|||
Purchase of convertible bond hedge
|
—
|
|
|
(59,376
|
)
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
42,881
|
|
|
—
|
|
|||
Payments of debt issuance costs
|
—
|
|
|
(9,403
|
)
|
|
—
|
|
|||
Proceeds from non-controlling interests
|
6,804
|
|
|
9,358
|
|
|
5,101
|
|
|||
Dividends paid
|
(31,135
|
)
|
|
(28,937
|
)
|
|
(23,729
|
)
|
|||
Tax benefit from share-based compensation
|
625
|
|
|
2,457
|
|
|
—
|
|
|||
Repurchase of common stock
|
(64,685
|
)
|
|
(96,410
|
)
|
|
(152,625
|
)
|
|||
Net cash (used in) provided by financing activities
|
(317,906
|
)
|
|
181,116
|
|
|
(170,851
|
)
|
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(106,133
|
)
|
|
81,640
|
|
|
(69,147
|
)
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
510,207
|
|
|
428,567
|
|
|
497,714
|
|
|||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
404,074
|
|
|
$
|
510,207
|
|
|
$
|
428,567
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Interest paid
|
7,615
|
|
|
7,988
|
|
|
5,750
|
|
|||
Income taxes paid, including foreign withholding taxes
|
108,635
|
|
|
85,780
|
|
|
114,876
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|||
Dividend payable
|
10,290
|
|
|
7,068
|
|
|
7,456
|
|
|||
Non-cash acquisition of patents
|
7,900
|
|
|
24,123
|
|
|
19,250
|
|
|||
Accrued capitalized patent costs and acquisition of patents
|
(146
|
)
|
|
18,155
|
|
|
20,546
|
|
1.
|
BACKGROUND
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Money market and demand accounts
|
$
|
404,074
|
|
|
$
|
333,671
|
|
Commercial paper
|
—
|
|
|
176,536
|
|
||
|
$
|
404,074
|
|
|
$
|
510,207
|
|
Year
|
|
Gains
|
|
Losses
|
|
Net
|
||||||
2016
|
|
$
|
1
|
|
|
$
|
(210
|
)
|
|
$
|
(209
|
)
|
2015
|
|
$
|
—
|
|
|
$
|
(309
|
)
|
|
$
|
(309
|
)
|
2014
|
|
$
|
48
|
|
|
$
|
(681
|
)
|
|
$
|
(633
|
)
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Commercial paper
|
$
|
113,490
|
|
|
$
|
200,811
|
|
U.S. government agency instruments
|
224,330
|
|
|
183,950
|
|
||
Corporate bonds and asset backed securities
|
210,867
|
|
|
38,740
|
|
||
|
$
|
548,687
|
|
|
$
|
423,501
|
|
|
Fair Value as of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
404,074
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
404,074
|
|
Commercial paper
|
—
|
|
|
113,490
|
|
|
—
|
|
|
113,490
|
|
||||
U.S. government securities
|
—
|
|
|
224,330
|
|
|
—
|
|
|
224,330
|
|
||||
Corporate bonds, asset backed and other securities
|
—
|
|
|
210,867
|
|
|
—
|
|
|
210,867
|
|
||||
|
$
|
404,074
|
|
|
$
|
548,687
|
|
|
$
|
—
|
|
|
$
|
952,761
|
|
(a)
|
Included within cash and cash equivalents.
|
|
Fair Value as of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
333,671
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
333,671
|
|
Commercial paper (b)
|
—
|
|
|
377,347
|
|
|
—
|
|
|
377,347
|
|
||||
U.S. government securities
|
—
|
|
|
183,950
|
|
|
—
|
|
|
183,950
|
|
||||
Corporate bonds and asset backed securities
|
183
|
|
|
38,557
|
|
|
—
|
|
|
38,740
|
|
||||
|
$
|
333,854
|
|
|
$
|
599,854
|
|
|
$
|
—
|
|
|
$
|
933,708
|
|
(a)
|
Included within cash and cash equivalents.
|
(b)
|
Includes
$176.5 million
of commercial paper that is included within cash and cash equivalents.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
|
Principal
Amount
|
|
Carrying
Value |
|
Fair
Value
|
||||||||||||
Total Long-Term Debt
|
$
|
316,000
|
|
|
$
|
272,021
|
|
|
$
|
428,575
|
|
|
$
|
546,000
|
|
|
$
|
486,769
|
|
|
$
|
533,203
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Weighted average estimated useful life (years)
|
9.9
|
|
|
9.9
|
|
||
Gross patents
|
$
|
593,309
|
|
|
$
|
511,503
|
|
Accumulated amortization
|
(282,541
|
)
|
|
(233,924
|
)
|
||
Patents, net
|
$
|
310,768
|
|
|
$
|
277,579
|
|
|
Amount
|
|
||
December 31, 2015
|
$
|
—
|
|
|
Goodwill acquired through the acquisition of Hillcrest Labs
|
16,172
|
|
|
|
December 31, 2016
|
$
|
16,172
|
|
(a)
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Average Life
(Years)
|
|
Gross Assets
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Assets
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Trade Names
|
9
|
|
$
|
600
|
|
|
$
|
—
|
|
|
$
|
600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Customer Relationships
|
10
|
|
1,700
|
|
|
—
|
|
|
1,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
$
|
2,300
|
|
|
$
|
—
|
|
|
$
|
2,300
|
|
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2017
|
$
|
237
|
|
2018
|
237
|
|
|
2019
|
237
|
|
|
2020
|
237
|
|
|
2021
|
237
|
|
|
Thereafter
|
1,115
|
|
|
|
$
|
2,300
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Prepaid and other current assets
|
|
|
|
|
|
||
Deferred commission expense
|
$
|
187
|
|
|
$
|
245
|
|
Other non-current assets
|
|
|
|
|
|
||
Deferred commission expense
|
181
|
|
|
196
|
|
||
Long-term debt (including current portion of long-term debt)
|
|
|
|
||||
Deferred financing costs
|
4,401
|
|
|
6,117
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income applicable to common shareholders
|
$
|
309,001
|
|
|
$
|
309,001
|
|
|
$
|
119,225
|
|
|
$
|
119,225
|
|
|
$
|
104,342
|
|
|
$
|
104,342
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average shares outstanding: Basic
|
34,526
|
|
|
34,526
|
|
|
36,048
|
|
|
36,048
|
|
|
39,420
|
|
|
39,420
|
|
||||||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
663
|
|
|
|
|
415
|
|
|
|
|
459
|
|
|||||||||
Weighted-average shares outstanding: Diluted
|
|
|
35,189
|
|
|
|
|
36,463
|
|
|
|
|
39,879
|
|
|||||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income: Basic
|
$
|
8.95
|
|
|
8.95
|
|
|
$
|
3.31
|
|
|
3.31
|
|
|
$
|
2.65
|
|
|
2.65
|
|
|||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
(0.17
|
)
|
|
|
|
(0.04
|
)
|
|
|
|
(0.03
|
)
|
|||||||||
Net income: Diluted
|
|
|
$
|
8.78
|
|
|
|
|
$
|
3.27
|
|
|
|
|
$
|
2.62
|
|
|
|
For the Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Restricted stock units and stock options
|
|
110
|
|
|
211
|
|
|
75
|
|
Convertible securities
|
|
4,366
|
|
|
7,656
|
|
|
4,130
|
|
Warrants
|
|
6,534
|
|
|
7,656
|
|
|
4,130
|
|
Total
|
|
11,010
|
|
|
15,523
|
|
|
8,335
|
|
3.
|
SIGNIFICANT AGREEMENTS
|
|
2016
|
|
2015
|
|
2014
|
|||
Apple (a)
|
25
|
%
|
|
—
|
%
|
|
—
|
%
|
Huawei (b)
|
23
|
%
|
|
—
|
%
|
|
—
|
%
|
Pegatron
|
20
|
%
|
|
31
|
%
|
|
18
|
%
|
Samsung (c)
|
10
|
%
|
|
16
|
%
|
|
33
|
%
|
Sony (d)
|
< 10%
|
|
|
14
|
%
|
|
< 10%
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Computer equipment and software
|
$
|
18,480
|
|
|
$
|
30,066
|
|
Engineering and test equipment
|
3,767
|
|
|
12,321
|
|
||
Building and improvements
|
3,576
|
|
|
11,356
|
|
||
Leasehold improvements
|
9,692
|
|
|
7,544
|
|
||
Furniture and fixtures
|
1,247
|
|
|
1,513
|
|
||
Land
|
—
|
|
|
695
|
|
||
Property and equipment, gross
|
36,762
|
|
|
63,495
|
|
||
Less: accumulated depreciation
|
(24,136
|
)
|
|
(51,347
|
)
|
||
Property and equipment, net
|
$
|
12,626
|
|
|
$
|
12,148
|
|
6.
|
OBLIGATIONS
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
2.50% Senior Convertible Notes due 2016
|
$
|
—
|
|
|
$
|
230,000
|
|
1.50% Senior Convertible Notes due 2020
|
316,000
|
|
|
316,000
|
|
||
Less:
|
|
|
|
||||
Unamortized interest discount
|
(39,578
|
)
|
|
(53,114
|
)
|
||
Deferred financing costs
|
(4,401
|
)
|
|
(6,117
|
)
|
||
Total debt obligations
|
272,021
|
|
|
486,769
|
|
||
Less: Current portion of long-term debt
|
—
|
|
|
227,174
|
|
||
Long-term debt obligations
|
$
|
272,021
|
|
|
$
|
259,595
|
|
2017
|
$
|
—
|
|
2018
|
—
|
|
|
2019
|
—
|
|
|
2020
|
316,000
|
|
|
2021
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
316,000
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Contractual coupon interest
|
|
$
|
6,178
|
|
|
$
|
9,568
|
|
|
$
|
5,750
|
|
Accretion of debt discount
|
|
13,536
|
|
|
18,384
|
|
|
9,022
|
|
|||
Amortization of financing costs
|
|
1,716
|
|
|
2,485
|
|
|
1,303
|
|
|||
Total
|
|
$
|
21,430
|
|
|
$
|
30,437
|
|
|
$
|
16,075
|
|
7.
|
COMMITMENTS
|
2017
|
$
|
4,389
|
|
2018
|
3,309
|
|
|
2019
|
3,164
|
|
|
2020
|
2,253
|
|
|
2021
|
1,972
|
|
|
Thereafter
|
5,429
|
|
8.
|
LITIGATION AND LEGAL PROCEEDINGS
|
1.
|
Whenever InterDigital engages with a Chinese Manufacturer to license InterDigital’s patent portfolio for 2G, 3G and 4G wireless mobile standards, InterDigital will offer such Chinese Manufacturer the option of taking a worldwide portfolio license of only its standards-essential wireless patents, and comply with F/RAND principles when negotiating and entering into such licensing agreements with Chinese Manufacturers.
|
2.
|
As part of its licensing offer, InterDigital will not require that a Chinese Manufacturer agree to a royalty-free, reciprocal cross-license of such Chinese Manufacturer's similarly categorized standards-essential wireless patents.
|
3.
|
Prior to commencing any action against a Chinese Manufacturer in which InterDigital may seek exclusionary or injunctive relief for the infringement of any of its wireless standards-essential patents, InterDigital will offer such Chinese Manufacturer the option to enter into expedited binding arbitration under fair and reasonable procedures to resolve the royalty rate and other terms of a worldwide license under InterDigital's wireless standards-essential patents. If the Chinese Manufacturer accepts InterDigital's binding arbitration offer or otherwise enters into an agreement with InterDigital on a binding arbitration mechanism, InterDigital will, in accordance with the terms of the arbitration agreement and patent license agreement, refrain from seeking exclusionary or injunctive relief against such company.
|
9.
|
RELATED PARTY TRANSACTIONS
|
10.
|
COMPENSATION PLANS AND PROGRAMS
|
|
Available for Grant
|
|
Balance at December 31, 2015
|
1,403
|
|
RSUs granted (a)
|
(457
|
)
|
Options granted
|
(121
|
)
|
Options expired and RSUs canceled
|
411
|
|
Balance at December 31, 2016
|
1,236
|
|
(a)
|
RSUs granted include time-based RSUs, performance-based RSUs and dividend equivalents.
|
|
Number of
Unvested
RSUs
|
|
Weighted
Average Per Share
Grant Date
Fair Value
|
|||
Balance at December 31, 2015
|
1,491
|
|
|
$
|
40.83
|
|
Granted*
|
457
|
|
|
62.10
|
|
|
Forfeited*
|
(331
|
)
|
|
43.46
|
|
|
Vested*
|
(219
|
)
|
|
44.08
|
|
|
Balance at December 31, 2016
|
1,398
|
|
|
$
|
46.65
|
|
|
Outstanding Options
|
|
Weighted
Average Exercise Price |
|||
Balance at December 31, 2015
|
421
|
|
|
$
|
31.16
|
|
Granted
|
121
|
|
|
54.93
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Exercised
|
(27
|
)
|
|
18.26
|
|
|
Balance at December 31, 2016
|
515
|
|
|
$
|
37.38
|
|
11.
|
TAXES
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
14,637
|
|
|
$
|
42,181
|
|
|
$
|
49,049
|
|
State
|
(60
|
)
|
|
415
|
|
|
2,499
|
|
|||
Foreign source withholding tax
|
79,932
|
|
|
55,276
|
|
|
70,703
|
|
|||
|
94,509
|
|
|
97,872
|
|
|
122,251
|
|
|||
Deferred
|
|
|
|
|
|
|
|
|
|||
Federal
|
(48,086
|
)
|
|
(89,026
|
)
|
|
(121,937
|
)
|
|||
State
|
(557
|
)
|
|
554
|
|
|
(437
|
)
|
|||
Foreign source withholding tax
|
70,925
|
|
|
55,221
|
|
|
52,231
|
|
|||
|
22,282
|
|
|
(33,251
|
)
|
|
(70,143
|
)
|
|||
Total
|
$
|
116,791
|
|
|
$
|
64,621
|
|
|
$
|
52,108
|
|
|
2016
|
||||||||||||||
|
Federal
|
|
State
|
|
Foreign
|
|
Total
|
||||||||
Net operating losses
|
$
|
—
|
|
|
$
|
89,162
|
|
|
$
|
463
|
|
|
$
|
89,625
|
|
Deferred revenue, net
|
60,320
|
|
|
288
|
|
|
31,686
|
|
|
92,294
|
|
||||
Stock compensation
|
12,648
|
|
|
2,038
|
|
|
—
|
|
|
14,686
|
|
||||
Patent amortization
|
24,145
|
|
|
—
|
|
|
—
|
|
|
24,145
|
|
||||
Depreciation
|
(502
|
)
|
|
(70
|
)
|
|
—
|
|
|
(572
|
)
|
||||
Other-than-temporary impairment
|
558
|
|
|
61
|
|
|
—
|
|
|
619
|
|
||||
Other accrued liabilities
|
4,483
|
|
|
321
|
|
|
—
|
|
|
4,804
|
|
||||
Other employee benefits
|
2,524
|
|
|
275
|
|
|
—
|
|
|
2,799
|
|
||||
|
104,176
|
|
|
92,075
|
|
|
32,149
|
|
|
228,400
|
|
||||
Less: valuation allowance
|
—
|
|
|
(89,352
|
)
|
|
(463
|
)
|
|
(89,815
|
)
|
||||
Net deferred tax asset
|
$
|
104,176
|
|
|
$
|
2,723
|
|
|
$
|
31,686
|
|
|
$
|
138,585
|
|
|
2015
|
||||||||||||||
|
Federal
|
|
State
|
|
Foreign
|
|
Total
|
||||||||
Net operating losses
|
$
|
—
|
|
|
$
|
81,965
|
|
|
$
|
140
|
|
|
$
|
82,105
|
|
Deferred revenue, net
|
94,203
|
|
|
8
|
|
|
22,473
|
|
|
116,684
|
|
||||
Stock compensation
|
8,147
|
|
|
1,452
|
|
|
—
|
|
|
9,599
|
|
||||
Patent amortization
|
21,217
|
|
|
—
|
|
|
—
|
|
|
21,217
|
|
||||
Depreciation
|
929
|
|
|
(64
|
)
|
|
—
|
|
|
865
|
|
||||
Other accrued liabilities
|
7,416
|
|
|
509
|
|
|
—
|
|
|
7,925
|
|
||||
Other-than-temporary impairment
|
494
|
|
|
46
|
|
|
—
|
|
|
540
|
|
||||
Other employee benefits
|
1,888
|
|
|
141
|
|
|
—
|
|
|
2,029
|
|
||||
|
134,294
|
|
|
84,057
|
|
|
22,613
|
|
|
240,964
|
|
||||
Less: valuation allowance
|
—
|
|
|
(81,893
|
)
|
|
—
|
|
|
(81,893
|
)
|
||||
Net deferred tax asset
|
$
|
134,294
|
|
|
$
|
2,164
|
|
|
$
|
22,613
|
|
|
$
|
159,071
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Tax at U.S. statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State tax provision
|
(0.1
|
)%
|
|
0.5
|
%
|
|
0.1
|
%
|
Change in federal and state valuation allowance
|
0.1
|
%
|
|
—
|
%
|
|
—
|
%
|
Research and development tax credits
|
(0.5
|
)%
|
|
(1.2
|
)%
|
|
(4.7
|
)%
|
Uncertain tax positions
|
2.1
|
%
|
|
—
|
%
|
|
0.9
|
%
|
Permanent differences
|
0.6
|
%
|
|
1.2
|
%
|
|
1.5
|
%
|
Domestic production activities deduction
|
(9.8
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other
|
0.3
|
%
|
|
0.2
|
%
|
|
1.2
|
%
|
Total tax provision (a)
|
27.7
|
%
|
|
35.7
|
%
|
|
34.0
|
%
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance as of January 1
|
$
|
1,469
|
|
|
$
|
1,361
|
|
|
$
|
—
|
|
Tax positions related to current year:
|
|
|
|
|
|
|
|
|
|||
Additions
|
3,209
|
|
|
141
|
|
|
95
|
|
|||
Reductions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions
|
6,281
|
|
|
—
|
|
|
1,266
|
|
|||
Reductions
|
—
|
|
|
(33
|
)
|
|
—
|
|
|||
Settlements
|
(562
|
)
|
|
—
|
|
|
—
|
|
|||
Lapses in statues of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance as of December 31
|
$
|
10,397
|
|
|
$
|
1,469
|
|
|
$
|
1,361
|
|
12.
|
EQUITY TRANSACTIONS
|
|
2014 Repurchase Program
|
|||||
|
# of Shares
|
|
Value
|
|||
2016
|
1,304
|
|
|
$
|
64,685
|
|
2015
|
1,836
|
|
|
96,410
|
|
|
2014
|
3,554
|
|
|
152,625
|
|
|
Total
|
6,694
|
|
|
$
|
313,720
|
|
2016
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.20
|
|
|
$
|
6,923
|
|
|
$
|
6,923
|
|
Second quarter
|
0.20
|
|
|
6,861
|
|
|
13,784
|
|
|||
Third quarter
|
0.30
|
|
|
10,285
|
|
|
24,069
|
|
|||
Fourth quarter
|
0.30
|
|
|
10,290
|
|
|
34,359
|
|
|||
|
$
|
1.00
|
|
|
$
|
34,359
|
|
|
|
||
|
|
|
|
|
|
||||||
2015
|
|
|
|
|
|
||||||
First quarter
|
$
|
0.20
|
|
|
$
|
7,232
|
|
|
$
|
7,232
|
|
Second quarter
|
0.20
|
|
|
7,243
|
|
|
14,475
|
|
|||
Third quarter
|
0.20
|
|
|
7,183
|
|
|
21,658
|
|
|||
Fourth quarter
|
0.20
|
|
|
7,068
|
|
|
28,726
|
|
|||
|
$
|
0.80
|
|
|
$
|
28,726
|
|
|
|
13.
|
SELECTED QUARTERLY RESULTS (UNAUDITED)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(In thousands, except per share amounts, unaudited)
|
||||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (a)
|
$
|
107,764
|
|
|
$
|
75,915
|
|
|
$
|
208,307
|
|
|
$
|
273,868
|
|
Net income applicable to InterDigital, Inc.'s common shareholders
|
$
|
28,071
|
|
|
$
|
39,994
|
|
|
$
|
104,466
|
|
|
$
|
136,470
|
|
Net income per common share — basic
|
$
|
0.80
|
|
|
$
|
1.16
|
|
|
$
|
3.05
|
|
|
$
|
3.98
|
|
Net income per common share — diluted
|
$
|
0.79
|
|
|
$
|
1.14
|
|
|
$
|
2.99
|
|
|
$
|
3.85
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (b)
|
$
|
110,378
|
|
|
$
|
118,551
|
|
|
$
|
100,408
|
|
|
$
|
112,098
|
|
Net income applicable to InterDigital, Inc.'s common shareholders
|
$
|
29,065
|
|
|
$
|
32,602
|
|
|
$
|
24,520
|
|
|
$
|
33,038
|
|
Net income per common share — basic
|
$
|
0.79
|
|
|
$
|
0.91
|
|
|
$
|
0.68
|
|
|
$
|
0.93
|
|
Net income per common share — diluted
|
$
|
0.78
|
|
|
$
|
0.89
|
|
|
$
|
0.68
|
|
|
$
|
0.92
|
|
|
Amount
|
|
Estimated Useful Life (Years)
|
||
Net tangible assets and liabilities:
|
|
|
|
||
Deferred tax assets and liabilities
|
$
|
2,221
|
|
|
|
Net working capital
|
(8,893
|
)
|
|
|
|
|
$
|
(6,672
|
)
|
|
|
Identified intangible assets:
|
|
|
|
||
Patents/existing technology
|
$
|
36,200
|
|
|
9 - 10
|
Trade name
|
600
|
|
|
9
|
|
Customer relationships
|
1,700
|
|
|
10
|
|
Goodwill
|
16,172
|
|
|
N/A
|
|
|
$
|
54,672
|
|
|
|
|
|
|
|
||
Total purchase price
|
$
|
48,000
|
|
|
|
|
Revenue
|
|
Earnings
|
|
||||
Actual for the year ended December 31, 2016
|
$
|
665,854
|
|
|
$
|
309,001
|
|
|
Actual for the year ended December 31, 2015
|
$
|
441,435
|
|
|
$
|
119,225
|
|
|
Supplemental pro forma for the year ended December 31, 2016
|
$
|
672,695
|
|
|
$
|
305,237
|
|
|
Supplemental pro forma for the year ended December 31, 2015
|
$
|
451,853
|
|
|
$
|
109,834
|
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
Item 9A.
|
CONTROLS AND PROCEDURES.
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorization of management and directors of the company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.
|
Item 9B.
|
OTHER INFORMATION.
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
Item 11.
|
EXECUTIVE COMPENSATION.
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
Balance Beginning
of Period
|
|
Increase/
(Decrease)
|
|
Reversal of
Valuation
Allowance
|
|
Balance End
of Period
|
||||||||
2016 valuation allowance for deferred tax assets
|
$
|
81,893
|
|
|
$
|
7,922
|
|
(a)
|
$
|
—
|
|
|
$
|
89,815
|
|
2015 valuation allowance for deferred tax assets
|
$
|
71,679
|
|
|
$
|
10,214
|
|
(a)
|
$
|
—
|
|
|
$
|
81,893
|
|
2014 valuation allowance for deferred tax assets
|
$
|
70,492
|
|
|
$
|
1,187
|
|
(a)
|
$
|
—
|
|
|
$
|
71,679
|
|
2016 reserve for uncollectible accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2015 reserve for uncollectible accounts
|
$
|
1,654
|
|
|
$
|
(1,654
|
)
|
(b)
|
$
|
—
|
|
|
$
|
—
|
|
2014 reserve for uncollectible accounts
|
$
|
1,750
|
|
|
$
|
(96
|
)
|
|
$
|
—
|
|
|
$
|
1,654
|
|
(a)
|
The increase was primarily necessary to maintain a full, or near full, valuation allowance against our state deferred tax assets and did not result in additional tax expense.
|
(b)
|
The decrease relates to the reversal of a bad debt reserve as a result of a settlement agreement with a technology solutions customer.
|
(b)
|
Exhibit
Number
|
|
Exhibit Description
|
|
*3.1
|
|
Amended and Restated Articles of Incorporation of InterDigital, Inc. ("InterDigital") (Exhibit 3.1 to InterDigital's Current Report on Form 8-K dated June 7, 2011).
|
|
*3.2
|
|
Amended and Restated Bylaws of InterDigital (Exhibit 3.1 to InterDigital's Current Report on Form 8-K dated January 30, 2015).
|
|
*4.1
|
|
Specimen Stock Certificate of InterDigital (Exhibit 4.3 to InterDigital's Quarterly Report on Form 10-Q dated April 28, 2011).
|
|
*4.2
|
|
Indenture, dated March 11, 2015, between InterDigital and the Bank of New York Mellon Trust Company, N.A., as trustee (Exhibit 4.1 to InterDigital's Current Report on Form 8-K dated March 11, 2015).
|
|
*4.3
|
|
Form of 1.50% Senior Convertible Note due 2020 (Exhibit 4.2 to InterDigital's Current Report on Form 8-K dated March 11, 2015).
|
|
|
|
Real Estate Leases
|
|
*10.1
|
|
Lease Agreement effective March 1, 2012 by and between InterDigital and Musref Bellevue Parkway, LP (Exhibit 10.5 to InterDigital's Annual Report on Form 10-K for the year ended December 31, 2012).
|
|
|
|
Benefit Plans
|
|
†*10.2
|
|
Non-Qualified Stock Option Plan, as amended (Exhibit 10.4 to InterDigital's Annual Report on Form 10-K for the year ended December 31, 1991).
|
|
†*10.3
|
|
Amendment to Non-Qualified Stock Option Plan (Exhibit 10.31 to InterDigital's Quarterly Report on Form 10-Q dated August 14, 2000).
|
|
†*10.4
|
|
Amendment to Non-Qualified Stock Option Plan, effective October 24, 2001 (Exhibit 10.6 to InterDigital's Annual Report on Form 10-K for the year ended December 31, 2001).
|
|
†*10.5
|
|
2009 Stock Incentive Plan (Exhibit 99.1 to InterDigital's Registration Statement on Form S-8 filed with the Securities and Exchange Commission (“SEC”) on June 4, 2009 (File No. 333-159743)).
|
|
†*10.6
|
|
Amendment to 2009 Stock Incentive Plan, effective as of June 12, 2013 (Exhibit 10.1 to InterDigital's Quarterly Report on Form 10-Q dated July 26, 2013).
|
|
†*10.7
|
|
2015 Amendment to 2009 Stock Incentive Plan, effective as of June 11, 2015 (Exhibit 10.1 to InterDigital's Quarterly Report on Form 10-Q dated July 30, 2015).
|
|
†*10.8
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Restricted Stock Units (LTCP Time-Based Award) (Exhibit 10.3 to InterDigital's Current Report on Form 8-K dated January 28, 2013).
|
|
†*10.9
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Restricted Stock Units (LTCP Performance-Based Award) (Exhibit 10.4 to InterDigital's Current Report on Form 8-K dated January 28, 2013).
|
|
†*10.10
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Stock Options (LTCP Award) (Exhibit 10.5 to InterDigital's Current Report on Form 8-K dated January 28, 2013).
|
|
†*10.11
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Time-Based Restricted Stock Units (Exhibit 10.3 to InterDigital's Quarterly Report on Form 10-Q dated April 29, 2015).
|
|
†*10.12
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Performance-Based Restricted Stock Units (Exhibit 10.4 to InterDigital's Quarterly Report on Form 10-Q dated April 29, 2015).
|
|
†*10.13
|
|
2009 Stock Incentive Plan, Term Sheet and Standard Terms and Conditions for Stock Options (Exhibit 10.5 to InterDigital's Quarterly Report on Form 10-Q dated April 29, 2015).
|
|
†*10.14
|
|
2009 Stock Incentive Plan, Term Sheet for Restricted Stock Units (Non-Employee Directors) (Exhibit 10.3 to InterDigital's Quarterly Report on Form 10-Q dated July 26, 2013).
|
|
†*10.15
|
|
2009 Stock Incentive Plan, Standard Terms and Conditions for Restricted Stock Units (Non-Employee Directors) (Exhibit 10.4 to InterDigital's Quarterly Report on Form 10-Q dated July 26, 2013).
|
|
†*10.16
|
|
Compensation Program for Non-Management Directors (as amended June 2015) (Exhibit 10.2 to InterDigital's Quarterly Report on Form 10-Q dated July 30, 2015).
|
|
†*10.17
|
|
Compensation Program for Non-Management Directors (as amended June 2016) (Exhibit 10.1 to InterDigital's Quarterly Report on Form 10-Q dated August 2, 2016).
|
|
†*10.18
|
|
Designated Employee Incentive Separation Pay Plan and Summary Plan Description (Exhibit 10.3 to InterDigital's Quarterly Report on Form 10-Q dated October 25, 2012).
|
|
†*10.19
|
|
Deferred Compensation Plan (Exhibit 10.1 to InterDigital's Current Report on Form 8-K dated June 18, 2013).
|
|
|
|
Employment-Related Agreements
|
|
†*10.20
|
|
Indemnity Agreement dated as of March 19, 2003 by and between InterDigital and Howard E. Goldberg (pursuant to Instruction 2 to Item 601 of Regulation S-K, the Indemnity Agreements, which are substantially identical in all material respects, except as to the parties thereto and the dates, between the Company and the following individuals, were not filed: Jeffrey K. Belk, Richard J. Brezski, S. Douglas Hutcheson, John A. Kritzmacher, John D. Markley, Jr., Scott A. McQuilkin, William J. Merritt, James J. Nolan, Kai O. Öistämö, Jean F. Rankin, Robert S. Roath, Lawrence F. Shay and Philip P. Trahanas) (Exhibit 10.47 to InterDigital's Quarterly Report on Form 10-Q dated May 15, 2003).
|
|
†*10.21
|
|
Assignment and Assumption of Indemnity Agreement dated as of July 2, 2007, by and between InterDigital Communications Corporation, InterDigital and Bruce G. Bernstein (pursuant to Instruction 2 to Item 601 of Regulation S-K, the Indemnity Agreements, which are substantially identical in all material respects, except as to the parties thereto, between InterDigital Communications Corporation, InterDigital, Inc. and the following individuals, were not filed: Richard J. Brezski, William J. Merritt, James J. Nolan, Robert S. Roath and Lawrence F. Shay) (Exhibit 10.90 to InterDigital's Quarterly Report on Form 10-Q dated August 9, 2007).
|
|
†*10.22
|
|
Employment Agreement dated March 14, 2013 between InterDigital and William J. Merritt (Exhibit 10.1 to InterDigital's Current Report on Form 8-K dated March 19, 2013).
|
|
†*10.23
|
|
Employment Agreement dated March 14, 2013 between InterDigital and Richard Brezski (Exhibit 10.2 to InterDigital's Current Report on Form 8-K dated March 19, 2013).
|
|
†*10.24
|
|
Employment Agreement dated March 14, 2013 between InterDigital and Scott McQuilkin (Exhibit 10.4 to InterDigital's Current Report on Form 8-K dated March 19, 2013).
|
|
†*10.25
|
|
Employment Agreement dated March 14, 2013 between InterDigital and James Nolan (Exhibit 10.5 to InterDigital's Current Report on Form 8-K dated March 19, 2013).
|
|
†*10.26
|
|
Employment Agreement dated March 14, 2013 between InterDigital and Lawrence F. Shay (Exhibit 10.6 to InterDigital's Current Report on Form 8-K dated March 19, 2013).
|
|
†*10.27
|
|
Employment Agreement dated May 1, 2014 between InterDigital and Byung K. Yi (Exhibit 10.28 to InterDigital's Annual Report on Form 10-K for the year ended December 31, 2015).
|
|
|
|
Other Material Contracts
|
|
*10.28
|
|
Form of Convertible Note Hedge Transaction Confirmation (Exhibit 10.1 to InterDigital's Current Report on Form 8-K dated March 11, 2015).
|
|
*10.29
|
|
Form of Warrant Transaction Confirmation (Exhibit 10.2 to InterDigital's Current Report on Form 8-K dated March 11, 2015).
|
|
21
|
|
Subsidiaries of InterDigital.
|
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.
+
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.
+
|
|
101
|
|
The following financial information from InterDigital's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on February 23, 2017, formatted in eXtensible Business Reporting Language:
(i) Consolidated Balance Sheets at December 31, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014, (iv) Consolidated Statements of Shareholders' Equity for the years ended December 31, 2016, 2015 and 2014, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014, and (vi) Notes to Consolidated Financial Statements. |
*
|
Incorporated by reference to the previous filing indicated.
|
†
|
Management contract or compensatory plan or arrangement.
|
+
|
This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that InterDigital, Inc. specifically incorporates it by reference.
|
|
|
|
Date: February 23, 2017
|
By:
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
Date: February 23, 2017
|
/s/ S. Douglas Hutcheson
|
|
S. Douglas Hutcheson, Chairman of the Board of Directors
|
|
|
Date: February 23, 2017
|
/s/ Jeffrey K. Belk
|
|
Jeffrey K. Belk, Director
|
|
|
Date: February 23, 2017
|
/s/ John A. Kritzmacher
|
|
John A. Kritzmacher, Director
|
|
|
Date: February 23, 2017
|
/s/ John D. Markley, Jr.
|
|
John D. Markley, Jr., Director
|
|
|
Date: February 23, 2017
|
/s/ Kai O. Öistämö
|
|
Kai O. Öistämö, Director
|
|
|
Date: February 23, 2017
|
/s/ Jean F. Rankin
|
|
Jean F. Rankin, Director
|
|
|
Date: February 23, 2017
|
/s/ Robert S. Roath
|
|
Robert S. Roath, Director
|
|
|
Date: February 23, 2017
|
/s/ Philip P. Trahanas
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Philip P. Trahanas, Director
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Date: February 23, 2017
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/s/ William J. Merritt
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William J. Merritt, Director, President and Chief Executive Officer
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(Principal Executive Officer)
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Date: February 23, 2017
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/s/ Richard J. Brezski
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Richard J. Brezski, Chief Financial Officer
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(Principal Financial Officer)
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