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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 | 109.00 | 105.35 | 103.08 | 103.32 | 586,663 | 22:30:00 |
☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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☐
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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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82-4936666
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock (par value $0.01 per share)
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IDCC
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NASDAQ Stock Market LLC
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Large accelerated filer
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☑
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
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BUSINESS.
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•
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Continue to invest in advanced research and development related to wireless, video, IoT and AI. We intend to grow or maintain a leading position in advanced wireless technology, IoT, video coding, and other related technology areas by leveraging our expertise to guide internal research and development capabilities, direct our
|
•
|
Grow our patent-based revenue. We intend to grow our licensing revenue base by adding licensees and leveraging the size of the overall mobile technology market, expanding our licensing revenue in the consumer electronics market, and expanding into adjacent and new technology areas that align with our intellectual property position. These licensing efforts can be self-driven or executed in conjunction with licensing partnerships, trusts and other efforts, and may involve the vigorous enforcement and defense of our intellectual property through litigation and other means. We also believe that our ongoing research efforts and associated patenting activities may enable us to sell patent assets that are not vital to our core licensing programs and to execute patent swaps that can strengthen our overall portfolio.
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•
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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 wireless, video and other 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 help guide technology and intellectual property sourcing through partners and other external sources.
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•
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Pursue commercial opportunities for our advanced platforms and solutions. As part of our ongoing research and development efforts, InterDigital often builds out entire functioning platforms in various technology areas. Moreover, we believe that our advanced capabilities in visual technologies will continue to result in solutions that can be implemented in adjacent industries, such as content production, gaming, and other 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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•
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failure of the acquisitions to materially increase the value of our core handset licensing business by not increasing the royalty amount we would otherwise derive on each handset, not accelerating the pace of licensing, or not allowing us to avoid litigation to protect our intellectual property;
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•
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failure to continue to develop and expand our portfolio of video technology patent assets;
|
•
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failure to execute a successful business plan and licensing program related to consumer electronics;
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•
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the risk that we could lose key employees of the Technicolor business;
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•
|
challenges associated with managing a geographically remote business;
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•
|
failure to forecast accurately the long-term value and costs of the Technicolor business or of certain assets acquired in the transactions;
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•
|
liabilities that are not covered by, or exceed the coverage under, the indemnification or other provisions of the acquisition-related agreements; and
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•
|
patent validity, infringement, exhaustion or enforcement issues not uncovered during our diligence process.
|
•
|
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.
|
•
|
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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•
|
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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•
|
announcements concerning strategic transactions, such as commercial initiatives, joint ventures, strategic investments, acquisitions or divestitures;
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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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•
|
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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•
|
investor perceptions as to the likelihood of achievement of near-term goals;
|
•
|
changes in market share of significant licensees;
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•
|
changes in operating performance and stock market valuations of other wireless communications companies generally; and
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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") and our 2.00% Senior Convertible Notes due 2024 (the "2024 Notes" and, together with the 2020 Notes, the "Convertible Notes");
|
•
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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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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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•
|
placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS.
|
Item 2.
|
PROPERTIES.
|
Location
|
Approximate Square Feet
|
Principal Use
|
Lease Expiration Date
|
Melville, New York
|
44,800
|
Office and research space
|
February 2020
|
Wilmington, Delaware
|
36,200
|
Corporate headquarters
|
November 2022
|
Conshohocken, Pennsylvania
|
30,300
|
Office and research space
|
September 2026
|
Montreal, Quebec
|
17,300
|
Office and research space
|
June 2021
|
New York, New York
|
19,400
|
Office and research space
|
May 2030+
|
Palo Alto, California
|
4,900
|
Office and research space
|
June 2027†
|
San Diego, California
|
10,600
|
Office and research space
|
September 2025
|
Rennes, France
|
50,000
|
Office and research space
|
June 2019*
|
Princeton, New Jersey
|
16,900
|
Office space
|
February 2025
|
Item 3.
|
LEGAL PROCEEDINGS.
|
Item 4.
|
MINE SAFETY DISCLOSURES.
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
2019
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.35
|
|
|
$
|
11,180
|
|
|
$
|
11,180
|
|
Second quarter
|
0.35
|
|
|
10,895
|
|
|
22,075
|
|
|||
Third quarter
|
0.35
|
|
|
10,897
|
|
|
32,972
|
|
|||
Fourth quarter
|
0.35
|
|
|
10,746
|
|
|
43,718
|
|
|||
|
$
|
1.40
|
|
|
$
|
43,718
|
|
|
|
||
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
||||||
First quarter
|
$
|
0.35
|
|
|
$
|
12,124
|
|
|
$
|
12,124
|
|
Second quarter
|
0.35
|
|
|
12,192
|
|
|
24,316
|
|
|||
Third quarter
|
0.35
|
|
|
11,996
|
|
|
36,312
|
|
|||
Fourth quarter
|
0.35
|
|
|
11,610
|
|
|
47,922
|
|
|||
|
$
|
1.40
|
|
|
$
|
47,922
|
|
|
|
Period
|
Total Number of Shares (or Units) Purchased (1)
|
|
Average Price Paid Per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchases as Part of Publicly Announced Plans or Programs (2)
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (3)
|
||||||
October 1, 2019 - October 31, 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
96,813,533
|
|
November 1, 2019 - November 30, 2019
|
432,849
|
|
|
$
|
57.74
|
|
|
432,849
|
|
|
$
|
71,813,695
|
|
December 1, 2019 - December 31, 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
71,813,695
|
|
Total
|
432,849
|
|
|
$
|
57.74
|
|
|
432,849
|
|
|
$
|
71,813,695
|
|
Item 6.
|
SELECTED FINANCIAL DATA.
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands except per share data)
|
||||||||||||||||||
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues (a)
|
$
|
318,924
|
|
|
$
|
307,404
|
|
|
$
|
532,938
|
|
|
$
|
665,854
|
|
|
$
|
441,435
|
|
Income from operations
|
$
|
37,835
|
|
|
$
|
62,595
|
|
|
$
|
301,495
|
|
|
$
|
437,306
|
|
|
$
|
208,549
|
|
Income tax benefit (provision) (b)
|
$
|
(10,991
|
)
|
|
$
|
27,417
|
|
|
$
|
(121,676
|
)
|
|
$
|
(116,791
|
)
|
|
$
|
(64,621
|
)
|
Net income applicable to InterDigital, Inc. common shareholders (c)
|
$
|
20,928
|
|
|
$
|
65,031
|
|
|
$
|
176,220
|
|
|
$
|
310,741
|
|
|
$
|
120,803
|
|
Net income per common share — basic (c)
|
$
|
0.66
|
|
|
$
|
1.89
|
|
|
$
|
5.09
|
|
|
$
|
9.00
|
|
|
$
|
3.35
|
|
Net income per common share — diluted (c)
|
$
|
0.66
|
|
|
$
|
1.84
|
|
|
$
|
4.93
|
|
|
$
|
8.83
|
|
|
$
|
3.31
|
|
Weighted average number of common shares outstanding — basic
|
31,546
|
|
|
34,491
|
|
|
34,605
|
|
|
34,526
|
|
|
36,048
|
|
|||||
Weighted average number of common shares outstanding — diluted
|
31,785
|
|
|
35,307
|
|
|
35,779
|
|
|
35,189
|
|
|
36,463
|
|
|||||
Cash dividends declared per common share (d)
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.30
|
|
|
$
|
1.00
|
|
|
$
|
0.80
|
|
Consolidated balance sheets data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash, cash equivalents and restricted cash (e)
|
$
|
757,098
|
|
|
$
|
488,733
|
|
|
$
|
433,014
|
|
|
$
|
404,074
|
|
|
$
|
510,207
|
|
Short-term investments
|
179,204
|
|
|
470,724
|
|
|
724,981
|
|
|
548,687
|
|
|
423,501
|
|
|||||
Working capital
|
710,774
|
|
|
844,855
|
|
|
1,019,353
|
|
|
795,639
|
|
|
610,994
|
|
|||||
Total assets
|
1,612,082
|
|
|
1,626,558
|
|
|
1,854,420
|
|
|
1,727,853
|
|
|
1,474,485
|
|
|||||
Total debt
|
444,758
|
|
|
317,377
|
|
|
285,126
|
|
|
272,021
|
|
|
486,769
|
|
|||||
Total InterDigital, Inc. shareholders’ equity (c)
|
761,557
|
|
|
936,729
|
|
|
863,808
|
|
|
746,323
|
|
|
515,393
|
|
|||||
Noncontrolling interest (c)
|
24,724
|
|
|
1,284
|
|
|
9,340
|
|
|
8,045
|
|
|
6,502
|
|
|||||
Total shareholders’ equity
|
$
|
786,281
|
|
|
$
|
938,013
|
|
|
$
|
873,148
|
|
|
$
|
754,368
|
|
|
$
|
521,895
|
|
(a)
|
In 2019, 2018, 2017, 2016, and 2015, our revenues included $19.8 million, $26.3 million, $162.9 million, $309.7 million, and $65.8 million of non-current patent royalties, respectively.
|
(b)
|
In 2018, our income tax benefit includes an $18.0 million tax benefit due to our income qualifying as foreign derived intangible income ("FDII"), as well as a $14.7 million benefit as a result of anticipated filings of amended tax returns in connection with the Korea Competent Authority Proceeding defined and discussed below. In 2017, our income tax provision was impacted by the U.S. Tax Cuts and Jobs Act (the “TCJA”) as discussed in our results of operations. For more information, refer to Note 14, "Taxes" in the Notes to the Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K. 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.
|
(c)
|
As discussed in Note 1 within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K, "Background and Basis of Presentation," we revised our prior period presentation of noncontrolling interest.
|
(d)
|
In September 2017, we announced that our Board of Directors had approved an increase in the Company’s quarterly cash dividend to $0.35 per share. 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.
|
(e)
|
Includes restricted cash which is included within "Prepaid and other current assets" or "Other non-current assets" in the consolidated balance sheets.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
Cash In
|
||
Patent royalties
|
$
|
288,123
|
|
Technology solutions
|
7,053
|
|
|
|
$
|
295,176
|
|
2020
|
$
|
143,652
|
|
2021
|
76,534
|
|
|
2022
|
47,430
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
267,616
|
|
•
|
the Technicolor Patent Acquisition and the R&I Acquisition, which closed on July 30, 2018 and May 31, 2019, respectively, contributed $32.0 million to our 2019 revenue and $63.0 million to our 2019 operating expenses. The $63.0 million of operating expenses is comprised of $48.3 million of recurring costs, of which $16.6 million relates to patent amortization, $8.4 million relates to one-time transaction-related and integration costs, and $6.3 million relates to revenue sharing from the Madison Arrangement;
|
•
|
the R&I Acquisition resulted in a net gain of approximately $14.2 million, inclusive of a $20.5 million gain from the derecognition of a contingent consideration liability, all of which is included within “Other Income (Expense), Net” within our consolidated statement of income;
|
•
|
in connection with the offering of the 2024 Notes, we repurchased approximately $221.1 million in aggregate principal amount of our 2020 Notes, which resulted in the recognition of a $5.5 million loss on extinguishment of debt that is included in "Other Income (Expense), Net" within our consolidated statement of income;
|
•
|
2019 "Other Income (Expense), Net" also includes an $8.5 million gain on sale of our Hillcrest product business, as well as a net loss of $2.6 million resulting from the partial impairment of one of our strategic investments partially offset by a gain on sale of a separate strategic investment;
|
•
|
our 2019 results include a $5.5 million net charge as contra non-recurring revenue related to a recently restructured licensing arrangement with a long-term customer; and
|
•
|
our 2019 income tax provision includes a $2.2 million tax benefit as a result of filing amended tax returns in connection with the Korea Competent Authority Proceeding, as defined and discussed below.
|
|
Change in amount allocated
|
||||||
Allocation to past patent royalties
|
+5%
|
|
-%5
|
||||
Change in Revenue
|
$
|
1,618
|
|
|
$
|
(1,618
|
)
|
|
Change in estimate
|
||||||
Estimated value of patents acquired in connection with PLAs
|
+5%
|
|
-%5
|
||||
Revenue
|
$
|
1,070
|
|
|
$
|
(1,070
|
)
|
Less: Patent amortization
|
672
|
|
|
(672
|
)
|
||
Pre-tax income
|
$
|
398
|
|
|
$
|
(398
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Short-term incentive compensation
|
$
|
14,129
|
|
|
$
|
13,045
|
|
|
$
|
13,994
|
|
Time-based awards (a)
|
6,327
|
|
|
5,985
|
|
|
6,958
|
|
|||
Performance-based awards (a) (b)
|
299
|
|
|
1,415
|
|
|
6,883
|
|
|||
Other share-based compensation
|
1,307
|
|
|
1,768
|
|
|
4,999
|
|
|||
Total supplemental compensation expense
|
$
|
22,062
|
|
|
$
|
22,213
|
|
|
$
|
32,834
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Increase /
(Decrease)
|
||||||
Cash and cash equivalents
|
$
|
745,491
|
|
|
$
|
475,056
|
|
|
$
|
270,435
|
|
Restricted cash included within prepaid and other current assets
|
10,526
|
|
|
13,677
|
|
|
(3,151
|
)
|
|||
Restricted cash included within other non-current assets
|
1,081
|
|
|
—
|
|
|
1,081
|
|
|||
Short-term investments
|
179,204
|
|
|
470,724
|
|
|
(291,520
|
)
|
|||
Total cash, cash equivalents, restricted cash and short-term investments
|
$
|
936,302
|
|
|
$
|
959,457
|
|
|
$
|
(23,155
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
Increase / (Decrease)
|
||||||
Cash flows provided by operating activities
|
$
|
89,433
|
|
|
$
|
146,792
|
|
|
$
|
(57,359
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
Increase / (Decrease)
|
||||||
Cash Receipts:
|
|
|
|
|
|
||||||
Patent royalties
|
$
|
288,123
|
|
|
$
|
322,835
|
|
|
$
|
(34,712
|
)
|
Technology solutions
|
7,053
|
|
|
2,537
|
|
|
4,516
|
|
|||
Total cash receipts
|
$
|
295,176
|
|
|
$
|
325,372
|
|
|
$
|
(30,196
|
)
|
Cash Outflows:
|
|
|
|
|
|
||||||
Cash operating expenses (a)
|
(195,682
|
)
|
|
(167,728
|
)
|
|
(27,954
|
)
|
|||
Income taxes paid, net of refunds (b)
|
(24,229
|
)
|
|
(16,426
|
)
|
|
(7,803
|
)
|
|||
Total cash outflows
|
(219,911
|
)
|
|
(184,154
|
)
|
|
(35,757
|
)
|
|||
Other working capital adjustments
|
14,168
|
|
|
5,574
|
|
|
8,594
|
|
|||
Cash flows provided by operating activities
|
$
|
89,433
|
|
|
$
|
146,792
|
|
|
$
|
(57,359
|
)
|
2024 Notes
|
|||||
Market Price Per Share
|
Shares Issuable Upon Conversion of the 2024 Notes
|
Shares Issuable Upon Exercise of the 2024 Warrant Transactions
|
Total Treasury Stock Method Incremental Shares
|
Shares Deliverable to InterDigital upon Settlement of the 2024 Note Hedge Transactions
|
Incremental Shares Issuable (a)
|
|
(Shares in thousands)
|
||||
$85
|
215
|
—
|
215
|
(215)
|
—
|
$90
|
476
|
—
|
476
|
(476)
|
—
|
$95
|
710
|
—
|
710
|
(710)
|
—
|
$100
|
921
|
—
|
921
|
(921)
|
—
|
$105
|
1,111
|
—
|
1,111
|
(1,111)
|
—
|
$110
|
1,284
|
25
|
1,309
|
(1,284)
|
25
|
$115
|
1,442
|
238
|
1,680
|
(1,442)
|
238
|
$120
|
1,587
|
433
|
2,020
|
(1,587)
|
433
|
$125
|
1,721
|
613
|
2,334
|
(1,721)
|
613
|
$130
|
1,844
|
779
|
2,623
|
(1,844)
|
779
|
2020 Notes
|
|||||
Market Price Per Share
|
Shares Issuable Upon Conversion of 2020 Notes
|
Shares Issuable Upon Exercise of Warrants
|
Total Treasury Stock Method Incremental Shares
|
Shares Deliverable to InterDigital upon Settlement of the Hedge Agreements
|
Incremental Shares Issuable (a)
|
|
(Shares in thousands)
|
||||
$75
|
78
|
—
|
78
|
(78)
|
—
|
$80
|
157
|
—
|
157
|
(157)
|
—
|
$85
|
227
|
—
|
227
|
(227)
|
—
|
$90
|
289
|
55
|
344
|
(289)
|
55
|
$95
|
344
|
122
|
466
|
(344)
|
122
|
$100
|
394
|
184
|
578
|
(394)
|
184
|
$105
|
440
|
239
|
679
|
(440)
|
239
|
$110
|
481
|
289
|
770
|
(481)
|
289
|
$115
|
518
|
335
|
853
|
(518)
|
335
|
$120
|
553
|
377
|
930
|
(553)
|
377
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 year
|
|
1-3 Years
|
|
3-5 Years
|
|
Thereafter
|
||||||||||
2020 Notes
|
$
|
94,909
|
|
|
$
|
94,909
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contractual interest payments on the 2020 Notes
|
712
|
|
|
712
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
2024 Notes
|
400,000
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|
—
|
|
|||||
Contractual interest payments on the 2024 Notes
|
35,356
|
|
|
8,000
|
|
|
16,000
|
|
|
11,356
|
|
|
—
|
|
|||||
Operating lease obligations
|
36,556
|
|
|
5,535
|
|
|
10,652
|
|
|
9,014
|
|
|
11,355
|
|
|||||
Defined benefit plan obligations (a)
|
3,261
|
|
|
94
|
|
|
416
|
|
|
816
|
|
|
1,935
|
|
|||||
Purchase obligations (b)
|
16,074
|
|
|
16,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
586,868
|
|
|
$
|
125,324
|
|
|
$
|
27,068
|
|
|
$
|
421,186
|
|
|
$
|
13,290
|
|
(a)
|
Refer to Note 5, "Business Combinations and Other Transactions," within the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for details of our defined benefit plan obligations. Estimated future benefit payments included above are through 2029.
|
(b)
|
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 as of December 31, 2019 includes a $4.5 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,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Total Increase/(Decrease)
|
|||||||||
Variable patent royalty revenue
|
$
|
30,428
|
|
|
$
|
36,384
|
|
|
$
|
(5,956
|
)
|
|
(16
|
)%
|
Fixed-fee royalty revenue
|
257,221
|
|
|
239,347
|
|
|
17,874
|
|
|
7
|
%
|
|||
Current patent royalties a
|
287,649
|
|
|
275,731
|
|
|
11,918
|
|
|
4
|
%
|
|||
Non-current patent royalties b
|
19,782
|
|
|
26,329
|
|
|
(6,547
|
)
|
|
(25
|
)%
|
|||
Total patent royalties
|
307,431
|
|
|
302,060
|
|
|
5,371
|
|
|
2
|
%
|
|||
Current technology solutions revenue a
|
10,518
|
|
|
4,594
|
|
|
5,924
|
|
|
129
|
%
|
|||
Patent sales
|
975
|
|
|
750
|
|
|
225
|
|
|
30
|
%
|
|||
Total revenue
|
$
|
318,924
|
|
|
$
|
307,404
|
|
|
$
|
11,520
|
|
|
4
|
%
|
|
For the Year Ended December 31,
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
154,940
|
|
|
$
|
124,081
|
|
|
$
|
30,859
|
|
|
25
|
%
|
Development
|
74,860
|
|
|
69,698
|
|
|
5,162
|
|
|
7
|
%
|
|||
Selling, general and administrative
|
51,289
|
|
|
51,030
|
|
|
259
|
|
|
1
|
%
|
|||
Total operating expenses
|
$
|
281,089
|
|
|
$
|
244,809
|
|
|
$
|
36,280
|
|
|
15
|
%
|
|
Increase/(Decrease)
|
||
Recurring operations of the Technicolor Acquisitions
|
$
|
32,137
|
|
One-time costs related to the Technicolor Acquisitions
|
(9,325
|
)
|
|
Revenue sharing for Madison Arrangement
|
6,260
|
|
|
Intellectual property enforcement and non-patent litigation
|
7,089
|
|
|
Personnel-related costs
|
1,203
|
|
|
Other
|
(1,084
|
)
|
|
Total increase in operating expenses
|
$
|
36,280
|
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Increase / (Decrease)
|
|||||||||
Interest expense
|
$
|
(40,955
|
)
|
|
$
|
(35,956
|
)
|
|
$
|
(4,999
|
)
|
|
(14
|
)%
|
Interest and investment income
|
14,991
|
|
|
14,590
|
|
|
401
|
|
|
3
|
%
|
|||
Gain on asset acquisition and sale of business
|
22,690
|
|
|
—
|
|
|
22,690
|
|
|
—
|
%
|
|||
Loss on extinguishment of long-term debt
|
(5,488
|
)
|
|
—
|
|
|
(5,488
|
)
|
|
—
|
%
|
|||
Other income (expense), net
|
(3,131
|
)
|
|
(9,171
|
)
|
|
6,040
|
|
|
(66
|
)%
|
|||
Total non-operating income (expense)
|
$
|
(11,893
|
)
|
|
$
|
(30,537
|
)
|
|
$
|
18,644
|
|
|
61
|
%
|
|
For the Year Ended December 31,
|
|
|
|
|
|
Components of
Increase/(Decrease)
|
|||||||||||||||||
|
2018
|
|
2017
|
|
Total Increase/(Decrease)
|
|
Due to ASC 606
|
Operational
|
Total
|
|||||||||||||||
Variable patent royalty revenue
|
$
|
36,384
|
|
|
$
|
47,840
|
|
|
$
|
(11,456
|
)
|
|
(24
|
)%
|
|
$
|
(461
|
)
|
$
|
(10,995
|
)
|
$
|
(11,456
|
)
|
Fixed-fee royalty revenue
|
239,347
|
|
|
301,628
|
|
|
(62,281
|
)
|
|
(21
|
)%
|
|
(79,341
|
)
|
17,060
|
|
(62,281
|
)
|
||||||
Current patent royalties a
|
275,731
|
|
|
349,468
|
|
|
(73,737
|
)
|
|
(21
|
)%
|
|
(79,802
|
)
|
6,065
|
|
(73,737
|
)
|
||||||
Non-current patent royalties b
|
26,329
|
|
|
162,890
|
|
|
(136,561
|
)
|
|
(84
|
)%
|
|
10,000
|
|
(146,561
|
)
|
(136,561
|
)
|
||||||
Total patent royalties
|
302,060
|
|
|
512,358
|
|
|
(210,298
|
)
|
|
(41
|
)%
|
|
(69,802
|
)
|
(140,496
|
)
|
(210,298
|
)
|
||||||
Current technology solutions revenue a
|
4,594
|
|
|
20,580
|
|
|
(15,986
|
)
|
|
(78
|
)%
|
|
(4,907
|
)
|
(11,079
|
)
|
(15,986
|
)
|
||||||
Patent sales
|
750
|
|
|
—
|
|
|
750
|
|
|
—
|
%
|
|
—
|
|
750
|
|
750
|
|
||||||
Total revenue
|
$
|
307,404
|
|
|
$
|
532,938
|
|
|
$
|
(225,534
|
)
|
|
(42
|
)%
|
|
$
|
(74,709
|
)
|
$
|
(150,825
|
)
|
$
|
(225,534
|
)
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
124,081
|
|
|
$
|
102,651
|
|
|
$
|
21,430
|
|
|
21
|
%
|
Development
|
69,698
|
|
|
75,724
|
|
|
(6,026
|
)
|
|
(8
|
)%
|
|||
Selling, general and administrative
|
51,030
|
|
|
53,068
|
|
|
(2,038
|
)
|
|
(4
|
)%
|
|||
Total operating expenses
|
$
|
244,809
|
|
|
$
|
231,443
|
|
|
$
|
13,366
|
|
|
6
|
%
|
|
Increase/(Decrease)
|
||
Recurring operations of the Technicolor Patent Acquisition
|
$
|
16,242
|
|
One-time costs related to the Technicolor Patent Acquisition
|
15,804
|
|
|
Intellectual property enforcement and non-patent litigation
|
2,605
|
|
|
Depreciation and amortization
|
2,072
|
|
|
Performance-based incentive compensation
|
(7,921
|
)
|
|
Consulting services
|
(7,127
|
)
|
|
Commercial initiatives
|
(3,738
|
)
|
|
Personnel-related costs
|
(2,912
|
)
|
|
Patent maintenance and evaluation
|
(2,067
|
)
|
|
Other
|
408
|
|
|
Total increase in operating expenses
|
$
|
13,366
|
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Increase / (Decrease)
|
|||||||||
Interest expense
|
$
|
(35,956
|
)
|
|
$
|
(17,845
|
)
|
|
$
|
(18,111
|
)
|
|
(101
|
)%
|
Other income (expense), net
|
(9,171
|
)
|
|
252
|
|
|
(9,423
|
)
|
|
(3,739
|
)%
|
|||
Interest and investment income
|
14,590
|
|
|
8,488
|
|
|
6,102
|
|
|
72
|
%
|
|||
Total non-operating income (expense)
|
$
|
(30,537
|
)
|
|
$
|
(9,105
|
)
|
|
$
|
(21,432
|
)
|
|
(235
|
)%
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
|||||||
Money market and demand accounts
|
$757,098
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$757,098
|
||
Short-term investments
|
$163,108
|
|
$16,096
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$179,204
|
|||
Average Interest rate
|
1.9
|
%
|
|
2.2
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.9
|
%
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
PAGE NUMBER
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
SCHEDULES:
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Patent licensing royalties
|
$
|
307,431
|
|
|
$
|
302,060
|
|
|
$
|
512,358
|
|
Patent sales
|
975
|
|
|
750
|
|
|
—
|
|
|||
Technology solutions
|
10,518
|
|
|
4,594
|
|
|
20,580
|
|
|||
Total Revenue
|
318,924
|
|
|
307,404
|
|
|
532,938
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Patent administration and licensing
|
154,940
|
|
|
124,081
|
|
|
102,651
|
|
|||
Development
|
74,860
|
|
|
69,698
|
|
|
75,724
|
|
|||
Selling, general and administrative
|
51,289
|
|
|
51,030
|
|
|
53,068
|
|
|||
Total Operating Expenses
|
281,089
|
|
|
244,809
|
|
|
231,443
|
|
|||
Income from operations
|
37,835
|
|
|
62,595
|
|
|
301,495
|
|
|||
Interest expense
|
(40,955
|
)
|
|
(35,956
|
)
|
|
(17,845
|
)
|
|||
OTHER INCOME (EXPENSE), NET
|
29,062
|
|
|
5,419
|
|
|
8,740
|
|
|||
Income before income taxes
|
25,942
|
|
|
32,058
|
|
|
292,390
|
|
|||
INCOME TAX BENEFIT (PROVISION)
|
(10,991
|
)
|
|
27,417
|
|
|
(121,676
|
)
|
|||
NET INCOME
|
$
|
14,951
|
|
|
$
|
59,475
|
|
|
$
|
170,714
|
|
Net loss attributable to noncontrolling interest
|
(5,977
|
)
|
|
(5,556
|
)
|
|
(5,506
|
)
|
|||
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.
|
$
|
20,928
|
|
|
$
|
65,031
|
|
|
$
|
176,220
|
|
NET INCOME PER COMMON SHARE — BASIC
|
$
|
0.66
|
|
|
$
|
1.89
|
|
|
$
|
5.09
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
|
31,546
|
|
|
34,491
|
|
|
34,605
|
|
|||
NET INCOME PER COMMON SHARE — DILUTED
|
$
|
0.66
|
|
|
$
|
1.84
|
|
|
$
|
4.93
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
|
31,785
|
|
|
35,307
|
|
|
35,779
|
|
|||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.30
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
14,951
|
|
|
$
|
59,475
|
|
|
$
|
170,714
|
|
Unrealized gain (loss) on investments, net of tax
|
2,397
|
|
|
61
|
|
|
(1,569
|
)
|
|||
Comprehensive income
|
$
|
17,348
|
|
|
$
|
59,536
|
|
|
$
|
169,145
|
|
Comprehensive loss attributable to noncontrolling interest
|
(5,977
|
)
|
|
(5,556
|
)
|
|
(5,506
|
)
|
|||
Total comprehensive income attributable to InterDigital, Inc.
|
$
|
23,325
|
|
|
$
|
65,092
|
|
|
$
|
174,651
|
|
|
|
|
|
|
|
|
|
|
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, 2016
|
70,318
|
|
|
$
|
703
|
|
|
$
|
683,549
|
|
|
$
|
1,127,380
|
|
|
$
|
(514
|
)
|
|
36,020
|
|
|
$
|
(1,064,795
|
)
|
|
$
|
8,045
|
|
|
$
|
754,368
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
176,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176,220
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,801
|
|
|
6,801
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,506
|
)
|
|
(5,506
|
)
|
|||||||
Net change in unrealized gain (loss) on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,569
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,569
|
)
|
|||||||
Dividends Declared ($1.30 per share)
|
—
|
|
|
—
|
|
|
846
|
|
|
(45,968
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,122
|
)
|
|||||||
Exercise of Common Stock options
|
9
|
|
|
1
|
|
|
381
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
382
|
|
|||||||
Issuance of Common Stock, net
|
422
|
|
|
3
|
|
|
(22,798
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,795
|
)
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
18,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,062
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
(7,693
|
)
|
|
—
|
|
|
(7,693
|
)
|
|||||||
BALANCE, DECEMBER 31, 2017
|
70,749
|
|
|
$
|
707
|
|
|
$
|
680,040
|
|
|
$
|
1,257,632
|
|
|
$
|
(2,083
|
)
|
|
36,127
|
|
|
$
|
(1,072,488
|
)
|
|
$
|
9,340
|
|
|
$
|
873,148
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
161,701
|
|
|
(449
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161,252
|
|
|||||||
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
65,031
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,031
|
|
|||||||
Distribution preference
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500
|
)
|
|
(2,500
|
)
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,556
|
)
|
|
(5,556
|
)
|
|||||||
Net change in unrealized gain (loss) on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||||
Dividends Declared ($1.40 per share)
|
—
|
|
|
—
|
|
|
472
|
|
|
(48,394
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,922
|
)
|
|||||||
Exercise of Common Stock options and warrants
|
153
|
|
|
2
|
|
|
6,721
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,723
|
|
|||||||
Issuance of Common Stock, net
|
232
|
|
|
2
|
|
|
(8,810
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,808
|
)
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
7,089
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,089
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,478
|
|
|
(110,505
|
)
|
|
—
|
|
|
(110,505
|
)
|
|||||||
BALANCE, DECEMBER 31, 2018
|
71,134
|
|
|
$
|
711
|
|
|
$
|
685,512
|
|
|
$
|
1,435,970
|
|
|
$
|
(2,471
|
)
|
|
37,605
|
|
|
$
|
(1,182,993
|
)
|
|
$
|
1,284
|
|
|
$
|
938,013
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
20,928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,928
|
|
|||||||
Proceeds from and increases in noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,417
|
|
|
29,417
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,977
|
)
|
|
(5,977
|
)
|
|||||||
Net change in unrealized gain (loss) on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,397
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,397
|
|
|||||||
Dividends Declared ($1.40 per share)
|
—
|
|
|
—
|
|
|
401
|
|
|
(44,119
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(43,718
|
)
|
|||||||
Exercise of common stock options
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|||||||
Issuance of Common Stock, net
|
134
|
|
|
1
|
|
|
(4,368
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,367
|
)
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
7,603
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,603
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,962
|
|
|
(196,269
|
)
|
|
—
|
|
|
(196,269
|
)
|
|||||||
Equity component of debt, net of tax
|
—
|
|
|
—
|
|
|
56,917
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56,917
|
|
|||||||
Net convertible note hedge transactions, net of tax
|
—
|
|
|
—
|
|
|
(49,740
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,740
|
)
|
|||||||
Net warrant transactions
|
—
|
|
|
—
|
|
|
43,416
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,416
|
|
|||||||
Deferred financing costs allocated to equity, net of tax
|
—
|
|
|
—
|
|
|
(1,692
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,692
|
)
|
|||||||
Reacquisition of equity component of debt due to prepayment, net of tax
|
—
|
|
|
—
|
|
|
(10,649
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,649
|
)
|
|||||||
BALANCE, DECEMBER 31, 2019
|
71,268
|
|
|
$
|
712
|
|
|
$
|
727,402
|
|
|
$
|
1,412,779
|
|
|
$
|
(74
|
)
|
|
40,567
|
|
|
$
|
(1,379,262
|
)
|
|
$
|
24,724
|
|
|
$
|
786,281
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
14,951
|
|
|
$
|
59,475
|
|
|
$
|
170,714
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
77,094
|
|
|
66,108
|
|
|
57,053
|
|
|||
Non-cash interest expense, net
|
18,709
|
|
|
13,509
|
|
|
13,105
|
|
|||
Non-cash change in fair value
|
710
|
|
|
3,884
|
|
|
—
|
|
|||
Gain on asset acquisition and sale of business
|
(22,690
|
)
|
|
—
|
|
|
—
|
|
|||
Change in deferred revenue
|
(7,749
|
)
|
|
6,966
|
|
|
(36,892
|
)
|
|||
Deferred income taxes
|
4,123
|
|
|
(45,426
|
)
|
|
64,950
|
|
|||
Share-based compensation
|
7,603
|
|
|
7,089
|
|
|
18,062
|
|
|||
Impairment of long-term investment
|
3,312
|
|
|
200
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
5,488
|
|
|
—
|
|
|
—
|
|
|||
Loss (gain) on disposal of assets
|
119
|
|
|
8,323
|
|
|
—
|
|
|||
Other
|
623
|
|
|
(625
|
)
|
|
(2
|
)
|
|||
(Increase) decrease in assets:
|
|
|
|
|
|
||||||
Receivables
|
6,742
|
|
|
31,615
|
|
|
12,171
|
|
|||
Deferred charges and other assets
|
(27,206
|
)
|
|
(6,065
|
)
|
|
19,426
|
|
|||
Increase (decrease) in liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
(638
|
)
|
|
6,203
|
|
|
(3,789
|
)
|
|||
Accrued compensation and other expenses
|
9,699
|
|
|
254
|
|
|
(3,218
|
)
|
|||
Accrued taxes payable and other tax contingencies
|
(1,457
|
)
|
|
(4,718
|
)
|
|
4,220
|
|
|||
Net cash provided by operating activities
|
89,433
|
|
|
146,792
|
|
|
315,800
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of short-term investments
|
(92,436
|
)
|
|
(142,555
|
)
|
|
(930,016
|
)
|
|||
Sales of short-term investments
|
389,032
|
|
|
399,105
|
|
|
751,308
|
|
|||
Purchases of property and equipment
|
(4,509
|
)
|
|
(2,576
|
)
|
|
(2,071
|
)
|
|||
Capitalized patent costs
|
(33,481
|
)
|
|
(32,069
|
)
|
|
(34,933
|
)
|
|||
Acquisition of patents
|
—
|
|
|
(2,250
|
)
|
|
—
|
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(142,985
|
)
|
|
—
|
|
|||
Proceeds from sale of business
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
Long-term investments
|
(350
|
)
|
|
(6,686
|
)
|
|
(4,585
|
)
|
|||
Net cash provided by (used in) investing activities
|
268,256
|
|
|
69,984
|
|
|
(220,297
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from exercise of stock options
|
2
|
|
|
6,723
|
|
|
382
|
|
|||
Proceeds from issuance of senior convertible notes
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
Payments on long-term debt
|
(221,091
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of convertible bond hedge
|
(72,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payment for warrant unwind
|
(4,184
|
)
|
|
—
|
|
|
—
|
|
|||
Prepayment penalty on long term debt
|
(10,763
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from hedge unwind
|
9,038
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
47,600
|
|
|
—
|
|
|
—
|
|
|||
Payments of debt issuance costs
|
(8,375
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from non-controlling interests
|
15,666
|
|
|
—
|
|
|
6,801
|
|
|||
Dividends paid
|
(44,580
|
)
|
|
(48,468
|
)
|
|
(43,255
|
)
|
|||
Shares withheld for taxes
|
(4,368
|
)
|
|
(8,807
|
)
|
|
(22,798
|
)
|
|||
Repurchase of common stock
|
(196,269
|
)
|
|
(110,505
|
)
|
|
(7,693
|
)
|
|||
Net cash used in financing activities
|
(89,324
|
)
|
|
(161,057
|
)
|
|
(66,563
|
)
|
|||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
268,365
|
|
|
55,719
|
|
|
28,940
|
|
|||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
|
488,733
|
|
|
433,014
|
|
|
404,074
|
|
|||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$
|
757,098
|
|
|
$
|
488,733
|
|
|
$
|
433,014
|
|
1.
|
BACKGROUND AND BASIS OF PRESENTATION
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION:
|
2019
|
|
2018
|
|
2017
|
||||||
Interest paid
|
$
|
7,886
|
|
|
$
|
4,740
|
|
|
$
|
4,740
|
|
Income taxes paid, including foreign withholding taxes
|
24,229
|
|
|
33,904
|
|
|
66,793
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Dividend payable
|
10,746
|
|
|
11,627
|
|
|
12,156
|
|
|||
Increases in noncontrolling interests
|
13,750
|
|
|
—
|
|
|
—
|
|
|||
Non-cash acquisition of patents
|
22,500
|
|
|
—
|
|
|
32,500
|
|
|||
Accrued capitalized patent costs and property and equipment
|
1,619
|
|
|
(2,789
|
)
|
|
1
|
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING GUIDANCE
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Variable patent royalty revenue
|
$
|
30,428
|
|
|
$
|
36,384
|
|
|
$
|
47,840
|
|
Fixed-fee royalty revenue
|
257,221
|
|
|
239,347
|
|
|
301,628
|
|
|||
Current patent royalties a
|
287,649
|
|
|
275,731
|
|
|
349,468
|
|
|||
Non-current patent royalties b
|
19,782
|
|
|
26,329
|
|
|
162,890
|
|
|||
Total patent royalties
|
307,431
|
|
|
302,060
|
|
|
512,358
|
|
|||
Current technology solutions revenue a
|
10,518
|
|
|
4,594
|
|
|
20,580
|
|
|||
Patent sales
|
975
|
|
|
750
|
|
|
—
|
|
|||
Total revenue
|
$
|
318,924
|
|
|
$
|
307,404
|
|
|
$
|
532,938
|
|
b.
|
Non-current patent royalties for the year ended December 31, 2019 and 2018 consist of past patent royalties and royalties from static agreements. For the year ended December 31, 2017, non-current patent royalties consist of past patent royalties.
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||
|
As Reported ASC 606
|
|
As Reported ASC 606
|
|
Adjustment
|
|
ASC 605
|
|
As Reported ASC 605
|
||||||||||
REVENUES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Variable patent royalty revenue
|
$
|
30,428
|
|
|
$
|
36,384
|
|
|
$
|
461
|
|
|
$
|
36,845
|
|
|
$
|
47,840
|
|
Fixed-fee royalty revenue
|
257,221
|
|
|
239,347
|
|
|
79,341
|
|
|
318,688
|
|
|
301,628
|
|
|||||
Current patent royalties
|
287,649
|
|
|
275,731
|
|
|
79,802
|
|
|
355,533
|
|
|
349,468
|
|
|||||
Non-current patent royalties
|
19,782
|
|
|
26,329
|
|
|
(10,000
|
)
|
|
16,329
|
|
|
162,890
|
|
|||||
Total patent royalties
|
307,431
|
|
|
302,060
|
|
|
69,802
|
|
|
371,862
|
|
|
512,358
|
|
|||||
Patent sales
|
975
|
|
|
750
|
|
|
—
|
|
|
750
|
|
|
—
|
|
|||||
Current technology solutions revenue
|
10,518
|
|
|
4,594
|
|
|
4,907
|
|
|
9,501
|
|
|
20,580
|
|
|||||
|
$
|
318,924
|
|
|
$
|
307,404
|
|
|
$
|
74,709
|
|
|
$
|
382,113
|
|
|
$
|
532,938
|
|
OPERATING EXPENSES:
|
281,089
|
|
|
244,809
|
|
|
—
|
|
|
244,809
|
|
|
231,443
|
|
|||||
Income from operations
|
37,835
|
|
|
62,595
|
|
|
74,709
|
|
|
137,304
|
|
|
301,495
|
|
|||||
Interest expense
|
(40,955
|
)
|
|
(35,956
|
)
|
|
16,655
|
|
|
(19,301
|
)
|
|
(17,845
|
)
|
|||||
OTHER INCOME (EXPENSE), NET
|
29,062
|
|
|
5,419
|
|
|
—
|
|
|
5,419
|
|
|
8,740
|
|
|||||
Income before income taxes
|
25,942
|
|
|
32,058
|
|
|
91,364
|
|
|
123,422
|
|
|
292,390
|
|
|||||
INCOME TAX BENEFIT (PROVISION)
|
(10,991
|
)
|
|
27,417
|
|
|
(6,686
|
)
|
|
20,731
|
|
|
(121,676
|
)
|
|||||
NET INCOME
|
$
|
14,951
|
|
|
$
|
59,475
|
|
|
$
|
84,678
|
|
|
$
|
144,153
|
|
|
$
|
170,714
|
|
Net loss attributable to noncontrolling interest
|
(5,977
|
)
|
|
(5,556
|
)
|
|
—
|
|
|
(5,556
|
)
|
|
(5,506
|
)
|
|||||
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.
|
$
|
20,928
|
|
|
$
|
65,031
|
|
|
$
|
84,678
|
|
|
$
|
149,709
|
|
|
$
|
176,220
|
|
NET INCOME PER COMMON SHARE — BASIC
|
$
|
0.66
|
|
|
$
|
1.89
|
|
|
$
|
2.45
|
|
|
$
|
4.34
|
|
|
$
|
5.09
|
|
NET INCOME PER COMMON SHARE — DILUTED
|
$
|
0.66
|
|
|
$
|
1.84
|
|
|
$
|
2.40
|
|
|
$
|
4.24
|
|
|
$
|
4.93
|
|
|
Revenue
|
||
2020
|
$
|
260,813
|
|
2021
|
191,146
|
|
|
2022
|
86,728
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
538,687
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Apple
|
35
|
%
|
|
36
|
%
|
|
21
|
%
|
Samsung
|
25
|
%
|
|
25
|
%
|
|
13
|
%
|
LG
|
10
|
%
|
|
10
|
%
|
|
< 10%
|
|
Blackberry (a)
|
—
|
%
|
|
—
|
%
|
|
13
|
%
|
Huawei (b)
|
—
|
%
|
|
—
|
%
|
|
14
|
%
|
5.
|
BUSINESS COMBINATIONS AND OTHER TRANSACTIONS
|
|
|
As of
July 30, 2018
|
|
|
Cash
|
$
|
158,898
|
|
|
Contingent consideration liability
|
|
18,616
|
|
|
|
$
|
177,514
|
|
`
|
Less: Transaction-related receivable
|
|
(20,200
|
)
|
|
Net fair value of consideration transferred
|
$
|
157,314
|
|
|
|
|
|
|
|
Allocation:
|
|
|
Estimated useful life (Years)
|
|
Net tangible assets and liabilities:
|
|
|
|
|
Restricted cash
|
$
|
15,913
|
|
|
Other current assets
|
|
5,600
|
|
|
Other non-current assets
|
|
3,116
|
|
|
Current liabilities
|
|
(6,219
|
)
|
|
Long-term debt
|
|
(17,717
|
)
|
|
Other long-term liabilities
|
|
(3,767
|
)
|
|
Total net tangible assets and liabilities
|
$
|
(3,074
|
)
|
|
|
|
|
|
|
Identified intangible assets:
|
|
|
|
|
Patents
|
$
|
154,000
|
|
9 - 10
|
Goodwill(1)
|
|
6,388
|
|
|
Total identified intangible assets
|
$
|
160,388
|
|
|
|
|
|
|
|
Total fair value of consideration transferred
|
$
|
157,314
|
|
|
|
For the Year Ended
|
|||||
|
December 31,
|
|||||
|
2018
|
2017
|
||||
|
(Unaudited)
|
|||||
Actual revenue
|
$
|
307,404
|
|
$
|
532,938
|
|
Supplemental pro forma revenue
|
$
|
314,096
|
|
$
|
541,921
|
|
Actual earnings
|
$
|
65,031
|
|
$
|
176,220
|
|
Supplemental pro forma earnings
|
$
|
52,754
|
|
$
|
107,531
|
|
Actual diluted earnings per share
|
$
|
1.84
|
|
$
|
4.93
|
|
Supplemental pro forma diluted earnings per share
|
$
|
1.49
|
|
$
|
3.01
|
|
2020
|
$
|
94
|
|
2021
|
177
|
|
|
2022
|
239
|
|
|
2023
|
568
|
|
|
2024
|
248
|
|
|
2025 - 2029
|
1,935
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Money market and demand accounts
|
$
|
757,098
|
|
|
$
|
488,733
|
|
Commercial paper
|
—
|
|
|
—
|
|
||
|
$
|
757,098
|
|
|
$
|
488,733
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
745,491
|
|
|
$
|
475,056
|
|
Restricted cash included within prepaid and other current assets
|
|
10,526
|
|
|
|
13,677
|
|
Restricted cash included within other non-current assets
|
|
1,081
|
|
|
|
—
|
|
Total cash, cash equivalents and restricted cash
|
$
|
757,098
|
|
|
$
|
488,733
|
|
|
December 31, 2019
|
||||||||||||||
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
$
|
105,453
|
|
|
$
|
249
|
|
|
$
|
—
|
|
|
$
|
105,702
|
|
Corporate bonds, asset backed and other securities
|
73,276
|
|
|
226
|
|
|
—
|
|
|
73,502
|
|
||||
Total available-for-sale securities
|
$
|
178,729
|
|
|
$
|
475
|
|
|
$
|
—
|
|
|
$
|
179,204
|
|
Reported in:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
—
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
179,204
|
|
|||||||
Total marketable securities
|
|
|
|
|
|
|
$
|
179,204
|
|
|
December 31, 2018
|
||||||||||||||
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
14,548
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,548
|
|
U.S. government securities
|
291,157
|
|
|
—
|
|
|
(1,581
|
)
|
|
289,576
|
|
||||
Corporate bonds, asset backed and other securities
|
167,579
|
|
|
5
|
|
|
(984
|
)
|
|
166,600
|
|
||||
Total available-for-sale securities
|
$
|
473,284
|
|
|
$
|
5
|
|
|
$
|
(2,565
|
)
|
|
$
|
470,724
|
|
Reported in:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
—
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
470,724
|
|
|||||||
Total marketable securities
|
|
|
|
|
|
|
$
|
470,724
|
|
|
Fair Value as of December 31, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
757,098
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
757,098
|
|
U.S. government securities
|
—
|
|
|
105,702
|
|
|
—
|
|
|
105,702
|
|
||||
Corporate bonds, asset backed and other securities
|
—
|
|
|
73,502
|
|
|
—
|
|
|
73,502
|
|
||||
|
$
|
757,098
|
|
|
$
|
179,204
|
|
|
$
|
—
|
|
|
$
|
936,302
|
|
|
Fair Value as of December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
488,733
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
488,733
|
|
Commercial paper
|
—
|
|
|
14,548
|
|
|
—
|
|
|
14,548
|
|
||||
U.S. government securities
|
—
|
|
|
289,576
|
|
|
—
|
|
|
289,576
|
|
||||
Corporate bonds and asset backed securities
|
—
|
|
|
166,600
|
|
|
—
|
|
|
166,600
|
|
||||
|
$
|
488,733
|
|
|
$
|
470,724
|
|
|
$
|
—
|
|
|
$
|
959,457
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration resulting from the Technicolor Patent Acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,800
|
|
|
$
|
19,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,800
|
|
|
$
|
19,800
|
|
(a)
|
Included within cash and cash equivalents.
|
Significant Unobservable Input
|
Ranges
|
Weighted Average
|
Risk-adjusted discount rate for revenue
|
13.5% - 14.2%
|
13.9%
|
Credit risk discount rate
|
6.2% - 8.0%
|
7.1%
|
Revenue volatility
|
35.0%
|
35.0%
|
Projected years of earn out
|
2019 - 2030
|
N/A
|
Level 3 Fair Value Measurements
|
Contingent Consideration Liability
|
||
Balance as of December 31, 2018
|
$
|
19,800
|
|
Changes in fair value recognized in the consolidated statements of income
|
|
710
|
|
Derecognition of contingent consideration liability as a Level 3 fair value measurement
|
|
(20,510
|
)
|
Balance as of December 31, 2019
|
$
|
—
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
|
Principal
Amount
|
|
Carrying
Value |
|
Fair
Value
|
||||||||||||
Senior Convertible Long-Term Debt
|
$
|
494,909
|
|
|
$
|
423,657
|
|
|
$
|
492,969
|
|
|
$
|
316,000
|
|
|
$
|
298,951
|
|
|
$
|
331,595
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
Technicolor Patent Acquisition Long-Term Debt
|
$
|
21,101
|
|
|
$
|
23,305
|
|
|
$
|
18,428
|
|
|
$
|
19,100
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Computer equipment and software
|
$
|
11,320
|
|
|
$
|
20,876
|
|
Engineering and test equipment
|
1,333
|
|
|
4,168
|
|
||
Building and improvements
|
3,702
|
|
|
3,711
|
|
||
Leasehold improvements
|
11,315
|
|
|
11,364
|
|
||
Furniture and fixtures
|
1,121
|
|
|
1,549
|
|
||
Property and equipment, gross
|
28,791
|
|
|
41,668
|
|
||
Less: accumulated depreciation
|
(18,574
|
)
|
|
(31,617
|
)
|
||
Property and equipment, net
|
$
|
10,217
|
|
|
$
|
10,051
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Weighted average estimated useful life (years)
|
9.9
|
|
|
10
|
|
||
Gross patents
|
$
|
905,814
|
|
|
$
|
851,846
|
|
Accumulated amortization
|
(469,475
|
)
|
|
(397,279
|
)
|
||
Patents, net
|
$
|
436,339
|
|
|
$
|
454,567
|
|
Goodwill balance as of December 31, 2017
|
|
$
|
16,033
|
|
Technicolor Patent Acquisition
|
|
|
6,388
|
|
Goodwill balance as of December 31, 2018
|
|
$
|
22,421
|
|
Activity
|
|
|
—
|
|
Goodwill balance as of December 31, 2019
|
|
$
|
22,421
|
|
|
|
December 31, 2018
|
||||||||||
|
Average Life
(Years)
|
Gross Assets
|
|
Accumulated Amortization
|
|
Net
|
||||||
Trade Names
|
9
|
$
|
600
|
|
|
$
|
(133
|
)
|
|
$
|
467
|
|
Customer Relationships
|
10
|
1,700
|
|
|
(340
|
)
|
|
1,360
|
|
|||
|
|
$
|
2,300
|
|
|
$
|
(473
|
)
|
|
$
|
1,827
|
|
10.
|
OBLIGATIONS
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
2.00% Senior Convertible Notes due 2024
|
$
|
400,000
|
|
|
$
|
—
|
|
1.50% Senior Convertible Notes due 2020
|
94,909
|
|
|
316,000
|
|
||
Less:
|
|
|
|
||||
Unamortized interest discount
|
(65,393
|
)
|
|
(15,428
|
)
|
||
Deferred financing costs
|
(5,859
|
)
|
|
(1,621
|
)
|
||
Total net carrying amount of Senior Convertible Notes
|
423,657
|
|
|
298,951
|
|
||
Less: Current portion of long-term debt
|
94,170
|
|
|
—
|
|
||
Long-term net carrying amount of Senior Convertible Notes
|
$
|
329,487
|
|
|
$
|
298,951
|
|
2020
|
$
|
94,909
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
400,000
|
|
|
Thereafter
|
—
|
|
|
|
$
|
494,909
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
|
2024 Notes
|
2020 Notes
|
Total
|
|
2020 Notes
|
|
2020 Notes
|
||||||||||
Contractual coupon interest
|
|
$
|
4,600
|
|
$
|
2,824
|
|
$
|
7,424
|
|
|
$
|
4,740
|
|
|
$
|
4,740
|
|
Accretion of debt discount
|
|
7,322
|
|
7,743
|
|
15,065
|
|
|
12,434
|
|
|
11,715
|
|
|||||
Amortization of financing costs
|
|
654
|
|
821
|
|
1,475
|
|
|
1,390
|
|
|
1,390
|
|
|||||
Total
|
|
$
|
12,576
|
|
$
|
11,388
|
|
$
|
23,964
|
|
|
$
|
18,564
|
|
|
$
|
17,845
|
|
11.
|
COMMITMENTS
|
2020
|
$
|
16,664
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
—
|
|
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.
|
13.
|
COMPENSATION PLANS AND PROGRAMS
|
|
Number of
Unvested
RSUs
|
|
Weighted
Average Per Share
Grant Date
Fair Value
|
|||
Balance at December 31, 2018
|
915
|
|
|
$
|
63.70
|
|
Granted*
|
512
|
|
|
66.19
|
|
|
Forfeited
|
(274
|
)
|
|
76.44
|
|
|
Vested
|
(198
|
)
|
|
58.84
|
|
|
Balance at December 31, 2019
|
955
|
|
|
$
|
62.40
|
|
|
For the Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Expected term (in years)
|
4.5
|
|
|
7.7
|
|
|
4.5
|
|
Expected volatility
|
25.8
|
%
|
|
30.1
|
%
|
|
28.5
|
%
|
Risk-free interest rate
|
2.4
|
%
|
|
3.0
|
%
|
|
1.9
|
%
|
Dividend yield
|
2.0
|
%
|
|
1.8
|
%
|
|
1.4
|
%
|
|
Outstanding Options
|
|
Weighted
Average Exercise Price |
|||
Balance at December 31, 2018
|
695
|
|
|
$
|
57.21
|
|
Granted*
|
130
|
|
|
67.61
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Exercised
|
—
|
|
|
8.25
|
|
|
Balance at December 31, 2019
|
825
|
|
|
$
|
58.83
|
|
14.
|
TAXES
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
(11,436
|
)
|
|
$
|
(3,148
|
)
|
|
$
|
3,656
|
|
State
|
207
|
|
|
239
|
|
|
(1
|
)
|
|||
Foreign source withholding tax
|
19,850
|
|
|
25,187
|
|
|
47,592
|
|
|||
|
8,621
|
|
|
22,278
|
|
|
51,247
|
|
|||
Deferred
|
|
|
|
|
|
|
|
|
|||
Federal
|
(21,735
|
)
|
|
(63,030
|
)
|
|
21,671
|
|
|||
State
|
2,457
|
|
|
(1,554
|
)
|
|
(1,074
|
)
|
|||
Foreign source withholding tax
|
21,648
|
|
|
14,889
|
|
|
49,832
|
|
|||
|
2,370
|
|
|
(49,695
|
)
|
|
70,429
|
|
|||
Total
|
$
|
10,991
|
|
|
$
|
(27,417
|
)
|
|
$
|
121,676
|
|
|
2019
|
|
2018
|
||||
|
Total
|
|
Total
|
||||
Net operating losses
|
$
|
131,501
|
|
|
$
|
126,946
|
|
Deferred revenue, net
|
33,131
|
|
|
39,711
|
|
||
Tax credit carryforward
|
11,744
|
|
|
—
|
|
||
Stock compensation
|
3,307
|
|
|
5,037
|
|
||
Patent amortization
|
18,522
|
|
|
18,520
|
|
||
Depreciation
|
443
|
|
|
246
|
|
||
Goodwill
|
(1,933
|
)
|
|
—
|
|
||
Other-than-temporary impairment
|
1,138
|
|
|
490
|
|
||
Other accrued liabilities
|
785
|
|
|
2,981
|
|
||
Other employee benefits
|
7,520
|
|
|
6,405
|
|
||
Right of use asset
|
(4,913
|
)
|
|
—
|
|
||
Lease liability
|
5,760
|
|
|
—
|
|
||
|
207,005
|
|
|
200,336
|
|
||
Less: valuation allowance
|
(133,797
|
)
|
|
(125,158
|
)
|
||
Net deferred tax asset
|
$
|
73,208
|
|
|
$
|
75,178
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Tax at U.S. statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State tax provision (a)
|
10.2
|
%
|
|
(8.9
|
)%
|
|
—
|
%
|
Effects of rates different than statutory
|
(2.8
|
)%
|
|
(1.4
|
)%
|
|
—
|
%
|
Change in valuation allowance
|
23.3
|
%
|
|
8.5
|
%
|
|
0.5
|
%
|
Research and development tax credits
|
(4.5
|
)%
|
|
(4.3
|
)%
|
|
(0.8
|
)%
|
Uncertain tax positions
|
(0.8
|
)%
|
|
3.9
|
%
|
|
(2.4
|
)%
|
Permanent differences
|
2.3
|
%
|
|
4.9
|
%
|
|
1.0
|
%
|
Domestic production activities deduction
|
—
|
%
|
|
—
|
%
|
|
(2.0
|
)%
|
Stock compensation
|
(0.6
|
)%
|
|
(5.0
|
)%
|
|
(4.0
|
)%
|
Rate change (b)
|
—
|
%
|
|
—
|
%
|
|
14.6
|
%
|
Foreign derived intangible income deduction (c)
|
—
|
%
|
|
(56.3
|
)%
|
|
—
|
%
|
Amended return benefit
|
(8.4
|
)%
|
|
(49.4
|
)%
|
|
—
|
%
|
Other
|
2.7
|
%
|
|
1.5
|
%
|
|
(0.3
|
)%
|
Total tax provision (benefit)
|
42.4
|
%
|
|
(85.5
|
)%
|
|
41.6
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance as of January 1
|
$
|
4,352
|
|
|
$
|
3,252
|
|
|
$
|
10,397
|
|
Tax positions related to current year:
|
|
|
|
|
|
|
|||||
Additions
|
402
|
|
|
73
|
|
|
1,009
|
|
|||
Reductions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions
|
34
|
|
|
1,054
|
|
|
—
|
|
|||
Reductions
|
—
|
|
|
(27
|
)
|
|
(1,610
|
)
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(6,544
|
)
|
|||
Lapses in statues of limitations
|
(332
|
)
|
|
—
|
|
|
—
|
|
|||
Balance as of December 31
|
$
|
4,456
|
|
|
$
|
4,352
|
|
|
$
|
3,252
|
|
15.
|
NET INCOME PER SHARE
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income applicable to common shareholders
|
$
|
20,928
|
|
|
$
|
20,928
|
|
|
$
|
65,031
|
|
|
$
|
65,031
|
|
|
$
|
176,220
|
|
|
$
|
176,220
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average shares outstanding: Basic
|
31,546
|
|
|
31,546
|
|
|
34,491
|
|
|
34,491
|
|
|
34,605
|
|
|
34,605
|
|
||||||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
239
|
|
|
|
|
816
|
|
|
|
|
1,174
|
|
|||||||||
Weighted-average shares outstanding: Diluted
|
|
|
31,785
|
|
|
|
|
35,307
|
|
|
|
|
35,779
|
|
|||||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income: Basic
|
$
|
0.66
|
|
|
0.66
|
|
|
$
|
1.89
|
|
|
1.89
|
|
|
$
|
5.09
|
|
|
5.09
|
|
|||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
—
|
|
|
|
|
(0.05
|
)
|
|
|
|
(0.16
|
)
|
|||||||||
Net income: Diluted
|
|
|
$
|
0.66
|
|
|
|
|
$
|
1.84
|
|
|
|
|
$
|
4.93
|
|
|
|
For the Year Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Restricted stock units and stock options
|
|
128
|
|
|
25
|
|
|
19
|
|
Convertible securities
|
|
5,495
|
|
|
—
|
|
|
—
|
|
Warrants
|
|
5,495
|
|
|
4,404
|
|
|
—
|
|
Total
|
|
11,118
|
|
|
4,429
|
|
|
19
|
|
16.
|
EQUITY TRANSACTIONS
|
|
2014 Repurchase Program
|
|||||
|
# of Shares
|
|
Value
|
|||
2019
|
2,962
|
|
|
$
|
196,269
|
|
2018
|
1,478
|
|
|
110,505
|
|
|
2017
|
107
|
|
|
7,693
|
|
|
2016
|
1,304
|
|
|
64,685
|
|
|
2015
|
1,836
|
|
|
96,410
|
|
|
2014
|
3,554
|
|
|
152,625
|
|
|
Total
|
11,241
|
|
|
$
|
628,187
|
|
2019
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.35
|
|
|
$
|
11,180
|
|
|
$
|
11,180
|
|
Second quarter
|
0.35
|
|
|
10,895
|
|
|
22,075
|
|
|||
Third quarter
|
0.35
|
|
|
10,897
|
|
|
32,972
|
|
|||
Fourth quarter
|
0.35
|
|
|
10,746
|
|
|
43,718
|
|
|||
|
$
|
1.40
|
|
|
$
|
43,718
|
|
|
|
||
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
||||||
First quarter
|
$
|
0.35
|
|
|
$
|
12,124
|
|
|
$
|
12,124
|
|
Second quarter
|
0.35
|
|
|
12,192
|
|
|
24,316
|
|
|||
Third quarter
|
0.35
|
|
|
11,996
|
|
|
36,312
|
|
|||
Fourth quarter
|
0.35
|
|
|
11,610
|
|
|
47,922
|
|
|||
|
$
|
1.40
|
|
|
$
|
47,922
|
|
|
|
|
For the Year Ended December 31,
|
||
|
2019
|
||
Operating lease cost
|
$
|
4,776
|
|
Short-term lease cost
|
925
|
|
|
Variable lease cost
|
1,502
|
|
Maturity of Operating Lease Liabilities
|
December 31, 2019
|
||
2020
|
$
|
3,296
|
|
2021
|
5,311
|
|
|
2022
|
5,341
|
|
|
2023
|
4,605
|
|
|
2024
|
4,409
|
|
|
Thereafter
|
11,355
|
|
|
Total lease payments
|
$
|
34,317
|
|
Less: Imputed interest
|
(6,738
|
)
|
|
Present value of lease liabilities
|
$
|
27,579
|
|
Maturity of Operating Leases
|
December 31, 2018
|
||
2019
|
$
|
5,362
|
|
2020
|
3,386
|
|
|
2021
|
2,883
|
|
|
2022
|
2,920
|
|
|
2023
|
2,184
|
|
|
Thereafter
|
5,582
|
|
18.
|
OTHER INCOME (EXPENSE), NET
|
|
For the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest and investment income
|
14,991
|
|
|
14,590
|
|
|
8,488
|
|
|||
Gain on asset acquisition and sale of business
|
22,690
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of long-term debt
|
(5,488
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(3,131
|
)
|
|
(9,171
|
)
|
|
252
|
|
|||
Other income (expense), net
|
$
|
29,062
|
|
|
$
|
5,419
|
|
|
$
|
8,740
|
|
19.
|
SELECTED QUARTERLY RESULTS (UNAUDITED)
|
(a)
|
In 2019, we recognized $19.8 million of non-current patent royalties primarily attributable to the Funai, ZTE Corporation, and Innovius LLC patent license agreements, all of which were signed in fourth quarter 2019.
|
20.
|
VARIABLE INTEREST ENTITIES
|
|
Statements of Income and Statements of Comprehensive Income Impact
|
|
|
Year Ended
|
|
|
December 31,
|
December 31,
|
|
2017
|
2018
|
Net loss attributable to noncontrolling interest - As Reported
|
$3,579
|
$4,393
|
Net loss attributable to noncontrolling interest - As Revised
|
$5,506
|
$5,556
|
|
|
|
Net income attributable to InterDigital, Inc. - As Reported
|
$174,293
|
$63,868
|
Net income attributable to InterDigital, Inc. - As Revised
|
$176,220
|
$65,031
|
|
|
|
Net income per common share, Basic - As Reported
|
$5.04
|
$1.85
|
Net income per common share, Basic - As Revised
|
$5.09
|
$1.89
|
|
|
|
Net income per common share, Diluted - As Reported
|
$4.87
|
$1.81
|
Net income per common share, Diluted - As Revised
|
$4.93
|
$1.84
|
|
|
|
Total comprehensive income attributable to InterDigital, Inc. - As Reported
|
$172,724
|
$63,929
|
Total comprehensive income attributable to InterDigital, Inc. - As Revised
|
$174,651
|
$65,092
|
|
Balance Sheets and Statements of Shareholders' Equity Impact
|
||
|
December 31,
|
December 31,
|
December 31,
|
|
2016
|
2017
|
2018
|
Retained earnings - As Reported
|
$1,120,766
|
$1,249,091
|
$1,426,266
|
Retained earnings - As Revised
|
$1,127,380
|
$1,257,632
|
$1,435,970
|
|
|
|
|
Total InterDigital, Inc. shareholders’ equity - As Reported
|
$739,709
|
$855,267
|
$927,025
|
Total InterDigital, Inc. shareholders’ equity - As Revised
|
$746,323
|
$863,808
|
$936,729
|
|
|
|
|
Noncontrolling interest - As Reported
|
$14,659
|
$17,881
|
$10,988
|
Noncontrolling interest - As Revised
|
$8,045
|
$9,340
|
$1,284
|
|
|
|
|
Total equity - As Reported
|
$754,368
|
$873,148
|
$938,013
|
Total equity - As Revised
|
$754,368
|
$873,148
|
$938,013
|
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
|
||||||||
2019 valuation allowance for deferred tax assets
|
$
|
125,158
|
|
|
$
|
8,639
|
|
(a)
|
$
|
—
|
|
|
$
|
133,797
|
|
2018 valuation allowance for deferred tax assets
|
$
|
123,916
|
|
|
$
|
1,568
|
|
(a)
|
$
|
(326
|
)
|
|
$
|
125,158
|
|
2017 valuation allowance for deferred tax assets
|
$
|
89,815
|
|
|
$
|
34,430
|
|
(b)
|
$
|
(329
|
)
|
|
$
|
123,916
|
|
2019 reserve for uncollectible accounts
|
$
|
693
|
|
|
$
|
(156
|
)
|
(c)
|
$
|
—
|
|
|
$
|
537
|
|
2018 reserve for uncollectible accounts
|
$
|
456
|
|
|
$
|
237
|
|
|
$
|
—
|
|
|
$
|
693
|
|
2017 reserve for uncollectible accounts
|
$
|
—
|
|
|
$
|
456
|
|
|
$
|
—
|
|
|
$
|
456
|
|
(a)
|
The increase was primarily necessary to maintain a full, or near full, valuation allowance against our state deferred tax assets and deferred tax assets for certain subsidiaries in France as well as a non-wholly owned subsidiary in the United States and the United Kingdom.
|
(b)
|
The increase was primarily a result of the Tax Cut and Jobs Act signed into law in December of 2017. There was also a release of a state VA during the year that was recorded through tax expense. The remainder of the increase was necessary to maintain a full, or near full, valuation allowance against our state deferred tax assets and did not result in additional tax expense.
|
(c)
|
The decrease relates to the write-off of a previously recorded reserve during 2019.
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
*3.1
|
|
|
|
*3.2
|
|
|
|
*4.1
|
|
|
|
4.2
|
|
|
|
*4.3
|
|
|
|
*4.4
|
|
|
|
*4.5
|
|
|
*4.6
|
|
|
|
|
|
Real Estate Leases
|
|
*10.1
|
|
|
|
|
|
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). (P)
|
|
†*10.3
|
|
|
|
†*10.4
|
|
|
|
†*10.5
|
|
|
|
†*10.6
|
|
|
|
†*10.7
|
|
|
|
†*10.8
|
|
|
|
†*10.9
|
|
|
|
†*10.10
|
|
|
|
†*10.11
|
|
|
|
†*10.12
|
|
|
|
†*10.13
|
|
|
|
†*10.14
|
|
|
|
†*10.15
|
|
|
|
†*10.16
|
|
|
|
†*10.17
|
|
|
|
†*10.18
|
|
|
|
†*10.19
|
|
|
|
†10.20
|
|
|
|
†*10.21
|
|
|
†*10.22
|
|
|
|
†*10.23
|
|
|
|
†*10.24
|
|
|
|
†*10.25
|
|
|
|
†*10.26
|
|
|
|
†*10.27
|
|
|
|
|
|
Employment-Related Agreements
|
|
†*10.28
|
|
|
|
†*10.29
|
|
|
|
†*10.30
|
|
|
|
†10.31
|
|
|
|
|
|
Other Material Contracts
|
|
*10.32
|
|
|
|
*10.33
|
|
|
|
*10.34
|
|
|
|
*10.35
|
|
|
|
*10.36
|
|
|
|
*10.37
|
|
|
|
21
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101.INS
|
|
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
*
|
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 20, 2020
|
By:
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
Date: February 20, 2020
|
/s/ S. Douglas Hutcheson
|
|
S. Douglas Hutcheson, Chairman of the Board of Directors
|
|
|
Date: February 20, 2020
|
/s/ Joan H. Gillman
|
|
Joan H. Gillman, Director
|
|
|
Date: February 20, 2020
|
/s/ John A. Kritzmacher
|
|
John A. Kritzmacher, Director
|
|
|
Date: February 20, 2020
|
/s/ John D. Markley, Jr.
|
|
John D. Markley, Jr., Director
|
|
|
Date: February 20, 2020
|
/s/ Jean F. Rankin
|
|
Jean F. Rankin, Director
|
|
|
Date: February 20, 2020
|
/s/ Philip P. Trahanas
|
|
Philip P. Trahanas, Director
|
|
|
Date: February 20, 2020
|
/s/ William J. Merritt
|
|
William J. Merritt, Director, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: February 20, 2020
|
/s/ Richard J. Brezski
|
|
Richard J. Brezski, Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
1 Year InterDigital Chart |
1 Month InterDigital Chart |
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