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Risk Factor Summary
−Removed: We may not be able to successfully integrate the businesses of Xperi Corporation and TiVo Corporation in a cost-effective manner or realize the anticipated benefits from the Mergers.
−Removed: We may not be able to complete the contemplated business separation in a timely manner or at all, and even if such separation occurs, we may not achieve the expected benefits (including the tax treatment) of such transaction.
+Added: We may not be able to complete the planned business separation in a timely manner or at all, and even if such separation occurs, we may not achieve the expected benefits (including the tax treatment) of such transaction.
+Added: We may not be able to manage our disparate business operations efficiently, which may lead to disposition of such business and related assets.
Our business has been, and is expected to continue to be, impacted by the global COVID-19 pandemic.
−Removed: We enter into license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed.
−Removed: The nature of some of our business relationships may restrict our ability to operate freely in the future and could be interpreted in a manner that adversely affects revenues, including from licensing, under those agreements.
+Added: We enter into license agreements that have fixed expiration dates and we may not be able to renew or replace such license agreements on terms favorable to us.
+Added: The nature of some of our business relationships may restrict our ability to operate freely in the future and could be interpreted in a manner that adversely affects revenue, including from licensing, under those agreements.
The success of our patent licensing business is dependent on the quality of our patent assets and our ability to create and implement new technologies or expand our licensable technology through acquisitions.
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The long-term success of our business is dependent on a royalty-based business model, which is inherently risky.
−Removed: It is difficult for us to verify royalty amounts owed to us under our licensing agreements, and we may lose revenue.
−Removed: If we fail to develop and deliver, on a timely basis, innovative technologies and services in response to changes in our markets and industries, our business could decline.
+Added: It is difficult for us to verify royalty amounts owed to us under our licensing agreements.
+Added: We may not be able to develop and deliver, on a timely basis, innovative technologies and services in response to changes in our markets and industries.
We face competitive risks in the provision of entertainment offerings involving the distribution of digital content provided by third party application providers through broadband.
−Removed: Our pursuit of acquisitions and divestures may adversely affect our business or stock price if we cannot successfully execute our strategies and may be impossible to execute due to the lack of acceptable financing or for other reasons.
+Added: Our pursuit of acquisitions and divestures may adversely affect our business or stock price if we cannot successfully execute our strategies.
If we fail to protect and enforce our intellectual property rights, contract rights, our confidential information, or our brand, or if third parties assert that we violate their intellectual property rights, our business may suffer.
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Some of our Semiconductor IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon certain milestones, and we may not receive royalties after that time.
−Removed: If we are unable to maintain a sufficient amount of content released in the DTS audio format, demand for the technologies, products, and services that we offer to consumer electronics product manufacturers may significantly decline, which would adversely impact our business and prospects.
+Added: We may not be able to maintain a sufficient amount of content released in the DTS audio format, which may reduce demand for our technologies, products, and services.
Demand for our HD Radio technology may be insufficient to sustain projected growth.
If we are unable to further penetrate the streaming and downloadable content delivery markets and adapt our technologies for those markets, our royalties and ability to grow our business could be adversely impacted.
−Removed: The success of certain of our solutions depends on the interoperability of our technologies with consumer hardware devices.
−Removed: Our failure to adequately manage our increasingly complex distribution agreements, including licensing, development and engineering services, may cause unexpected delays and loss of revenue in the deployment of advanced television solutions.
+Added: The success of certain of our solutions depends on the interoperability of our technologies with other devices.
+Added: Our failure to adequately manage our increasingly complex distribution agreements, including licensing, development and engineering services, may cause unexpected delays and loss of revenue.
We make significant investments in new products and services that may not achieve technological feasibility or profitability or that may limit our growth.
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Repayment of debt is dependent on cash flow generated by our subsidiaries and their respective subsidiaries.
−Removed: If our goodwill and other intangible assets become impaired, we may be required to record a significant charge to earnings.
−Removed: We have identified material weaknesses in our internal control over financial reporting related to management review of our forecast assumptions underlying our goodwill impairment analysis and acquisition accounting, which could, if not remediated, adversely affect our ability to report our financial and operating results accurately or on a timely basis, and impact overall investor confidence and the value of our common stock.
+Added: An impairment of goodwill and other intangible assets may result in significant charge to earnings.
+Added: We may in the future identify a material weakness in our internal control over financial reporting which could impact overall investor confidence and the value of our common stock.
Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition.
Our effective tax rate depends on our ability to secure the tax benefits of our international corporate structure, on the application of the tax laws of various jurisdictions and on how we operate our business.
−Removed: Our subsidiaries have in the past recorded, and may in the future record, significant valuation allowances on our deferred tax assets, and the recording and release of such allowances may have a material impact on our results of operations.
+Added: Our subsidiaries may record significant valuation allowances on our deferred tax assets, which may have a material impact on our results of operations.
The IRS may assert positions that may negatively impact the tax-free status of distributions intended to qualify for tax-free treatment, and the desired benefits of such distributions may not be achieved.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments.
−Removed: New governmental regulations or new interpretations of existing laws, including legislative initiatives seeking to, or judicial or regulatory decisions that, weaken patent protection or copyright law, could cause legal uncertainties and result in harm to our business.
+Added: New governmental regulations or new interpretations of existing laws may weaken patent protection or copyright law that could cause legal uncertainties and result in harm to our business.
Failure to safeguard the security and privacy of our customers’ confidential data and remain in compliance with laws that govern such data may harm our reputation and brand and expose us to legal action.
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Our activities to advertise, market and sell our services directly to consumers are highly impacted by constantly evolving state and federal laws and regulations.
−Removed: Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products subject to those licenses.
−Removed: Our financial and operating results may vary, which may cause the price of our common stock to decline.
+Added: Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products.
Seasonal trends may cause our quarterly operating results to fluctuate and our inability to forecast these trends may adversely affect the market price of our common stock.
−Removed: We may not pay dividends or pay dividends at a consistent rate, and any decrease in or suspension of the dividend could cause our stock price to decline.
−Removed: Our stock repurchase program could increase the volatility of the price of our common stock, and the program may be suspended or terminated at any time, which may cause the trading price of our common stock to decline.
+Added: We may not pay dividends or pay dividends at a consistent rate.
+Added: Our stock repurchase program could increase the volatility of the price of our common stock and may cause the trading price of our common stock to decline.
Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change of control transaction and depress the market price of our stock.
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Stock transfer restrictions in our certificate of incorporation may act as an anti-takeover device.
−Removed: Our amended and restated certificate of incorporation contains forum selection provisions that could limit the ability of stockholders to bring claims against us and our directors, officers and employees in jurisdictions preferred by stockholders.
−Removed: Risks Relating to Integration of the Combined Company and Planned Separation of the IP and Product Businesses
−Removed: We may not be able to complete the contemplated business separation in a timely manner or at all, and even if such separation occurs, we may not achieve the expected benefits (including the tax treatment) of such transaction.
−Removed: As previously disclosed, we intend to pursue a separation of our product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies.
−Removed: We are currently in the planning stage for such separation and are evaluating the optimal timing of the contemplated business separation.
−Removed: We currently project that the separation will not be completed earlier than the first half of 2022.
−Removed: In the event that our board decides to proceed with any contemplated business separation transaction, we currently anticipate that such contemplated business separation transaction, if undertaken, would be achieved through a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which our stockholders, at such time, would receive shares of capital stock in the resulting spun-off company.
−Removed: Our board may ultimately determine to abandon any contemplated business separation transaction, and such determination could have an adverse impact on the value of our company.
−Removed: Additionally, there are many determinations with respect to undertaking a contemplated business separation that, by their nature, cannot be determined until we fully understand our combined business operations, including definitive determinations with regard to the capital structure of the two businesses and allocation of liabilities among them.
−Removed: As such, there are many factors that could impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, any contemplated business separation, including, among others, global and regional economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, tax considerations, and other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment.
−Removed: Such changes could adversely impact the value of a contemplated business separation transaction to the combined company’s stockholders.
−Removed: Additionally, to the extent our board determines to proceed with any contemplated business separation, the consummation of such transaction is a complex, costly and time-consuming process, and there can be no guarantee that such separation will be completed in accordance with the timeline that we establish or achieve the intended benefits (including the tax treatment).
−Removed: An inability to realize the full extent of the anticipated benefits (including the tax treatment) of any contemplated business separation, as well as any delays encountered in the process, could have an adverse effect upon the revenue, level of expenses and operating results of the product business, the IP licensing business and/or the combined company.
−Removed: We may not be able to successfully integrate and combine the businesses of Xperi Corporation and TiVo Corporation and we may not realize the anticipated benefits from the Mergers.
−Removed: On June 1, 2020, we completed the previously announced Mergers between Xperi Corporation (“Xperi”) and TiVo Corporation (“TiVo”) as contemplated by the Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, as amended on January 31, 2020, by and among us, Xperi, TiVo and other parties thereto.
−Removed: The integration and combination of the separate operations of the combined businesses is a complex and time-consuming process that has required and may continue to require substantial resources and effort.
−Removed: We may face significant challenges in completing the consolidation of our combined operations, integrating technologies, procedures, and policies, as well as addressing the different corporate cultures.
−Removed: If we are not successfully integrated, the anticipated benefits of the Mergers may not be realized fully (or at all) or may take longer to realize than expected.
−Removed: We must successfully combine the businesses of Xperi and TiVo in a manner that permits expected synergies to be realized.
−Removed: In addition, we must achieve the anticipated synergies in a timely manner and without adversely affecting current revenue and investments in future growth.
−Removed: If we are not able to successfully achieve these objectives (including in a manner that does not negatively affect any contemplated business separation), the anticipated benefits of the Mergers may not be realized fully or at all or may take longer to realize than expected.
−Removed: We may face significant challenges in implementing such integration, including without limitation:
−Removed: difficulties integrating product technologies in a manner that creates technical synergies or that yields new or improved product applications in targeted markets;
−Removed: latent impacts resulting from the diversion of management team’s attention from ongoing business concerns as a result of the devotion of management’s attention to the Mergers and performance shortfalls of the respective businesses;
−Removed: ongoing diversion of the attention of management from the operation of the combined company’s business as a result of any contemplated business separation;
−Removed: difficulties in achieving anticipated synergies, business opportunities and growth prospects;
−Removed: the possibility of faulty assumptions underlying expectations regarding the integration process, including with respect to the intended tax efficient transactions;
−Removed: unanticipated issues, costs, and strained resources in integrating information technology, communications programs, financial procedures and operations, and other systems, procedures, and policies;
−Removed: difficulties in managing a larger combined company, addressing differences in business culture and retaining key personnel , and employees;
−Removed: unanticipated changes in applicable laws and regulations;
−Removed: managing tax costs or inefficiencies associated with integrating the operations of the combined company and any contemplated tax efficient separation transaction;
−Removed: failure to maintain relationships with existing customers, including customers who may be unfamiliar with the combined company and may perceive conflict with the combined intellectual property business;
−Removed: failure to accurately forecast and communicate the long-term value or profitability of either business, including as a result of any failure to implement the business strategy;
−Removed: uncertainty that employees may experience about their roles within the combined company and following any contemplated business separation, which may have an additional adverse effect on our ability to attract or retain key management personnel and other key employees;
−Removed: coordinating geographically separate organizations.
−Removed: Some of these factors will be outside of our control and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue which could materially impact our business, financial condition and results of operations.
−Removed: The integration process and other disruptions resulting from the Mergers may also adversely affect our relationships with employees, suppliers, customers, distributors, licensors and others, and difficulties in integrating the separate businesses or regulatory functions could harm the reputation of the combined company.
−Removed: In addition, we may not be able to persuade markets to adopt new products or technologies developed as a result of the integration, which may cause a decline of our revenue.
−Removed: If we are not able to adequately address integration challenges, we may be unable to successfully complete the integration of our operations, effect any contemplated business separation or realize the anticipated benefits of the Mergers.
−Removed: We have incurred and will incur significant costs in connection with the integration of the combined company.
−Removed: We are in the process of integrating a large number of processes, policies, procedures, operations, technologies and systems in connection with the consummation of the Mergers.
−Removed: While we have assumed that a certain level of expenses would be incurred in connection with the Mergers and post-merger activities, there are many factors beyond our control that could affect the total amount of, or the timing of, anticipated expenses with respect to the integration and implementation of the combined businesses, which may exceed the level of expenses that we have anticipated.
−Removed: Our future results will suffer if we do not effectively manage our expanded operations following the Mergers.
−Removed: Our future success depends, in part, upon our ability to manage our expanded business as a result of the Mergers, which may pose substantial challenges for management, including but not limited to, challenges related to the management and monitoring of a greater volume and variety of operations, expanded managerial systems and financial controls and associated increased costs and complexity.
−Removed: We may also face significant challenges in the ongoing training and managing the combined employee base and meeting demand and quality standards required by existing and potential customers.
−Removed: There can be no assurance that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits that we anticipated from the Mergers.
+Added: Our amended and restated certificate of incorporation contains forum selection provisions limiting the ability of stockholders to bring claims against us and our directors and officers in jurisdictions preferred by stockholders.
+Added: Risks Relating to the Planned Separation of the IP and Product Businesses
+Added: We may not be able to complete the planned business separation in a timely manner, and we may not achieve the expected benefits (including the tax treatment) of such transaction.
+Added: As previously disclosed, we are pursuing a separation of our product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies.
+Added: We currently project that the separation will be completed in the second half of 2022.
+Added: We currently anticipate that the business separation transaction will be achieved through a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Internal Revenue Code, in which our stockholders, at such time, would receive shares of capital stock in the resulting spun-off company.
+Added: Our board may ultimately determine to abandon this planned business separation transaction, and such determination could have an adverse impact on the value of our company and stock price.
+Added: Additionally, a successful separation of a large and complex organization such as ours requires comprehensive and careful planning and analysis of various considerations, including the capital structure of the two businesses and allocation of liabilities among them.
+Added: As such, there are many factors that could impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, any planned business separation.
+Added: These factors include, but are not limited to:
+Added: global and regional economic conditions;
+Added: instability in credit markets;
+Added: declining consumer and business confidence;
+Added: fluctuating commodity prices and interest rates;
+Added: volatile exchange rates;
+Added: tax considerations;
+Added: competitive and market conditions in our industry;
+Added: shortage of talent and qualified personnel;
+Added: changes in the regulatory or legal environment.
+Added: These and other factors could adversely impact the value of a planned business separation transaction to our stockholders.
+Added: Additionally, the consummation of such transaction is a complex, costly and time-consuming process, and there can be no guarantee that such separation will be completed in accordance with the timeline that we establish or achieve the intended benefits (including the tax treatment).
+Added: An inability to realize the full extent of the anticipated benefits (including the tax treatment) of the planned business separation, as well as any delays encountered in the process, could have an adverse effect upon the revenue, level of expenses and operating results of the product business and/or the IP licensing business.
We may not be able to rationalize and effectively manage our disparate business operations, which may cause us to dispose of or discontinue product lines, technologies, assets or operations if they do not fit into the strategic vision or meet forecasted results.
−Removed: While we believe that the product and IP licensing businesses of the combined company after the Mergers are complementary and create significant synergy, our future efforts to rationalize the disparate business operations could require our management to refocus on certain business operations while disinvesting in others.
−Removed: We have been integrating the respective product and licensing businesses and operating them as separate business units in order to facilitate a potential separation of these units at a later date.
+Added: Our effort to rationalize the disparate business operations could require our management to refocus on certain business operations while disinvesting in others.
+Added: We have been integrating the respective product and licensing businesses and operating
+Added: them as separate business units in order to facilitate a potential separation of these units at a later date.
Additionally, as business strategy and product markets continue to evolve, we may dispose, discontinue, or divest product lines or business divisions.
−Removed: Disposing or discontinuing existing product lines or business divisions, or separating business units, provides no assurance that operating expenses will be reduced or will not cause us to incur material charges associated with such decision.
+Added: Disposing or discontinuing existing product lines or business divisions, or separating business units, provides no assurance that operating expenses will be reduced or will not cause us to incur material charges associated with such decision s .
Furthermore, the disposition or discontinuance of an existing product line or business division, or separation or spinoff of a business unit, entails various risks, including the risk of not being able to obtain a purchaser, or, if obtained, that the purchase price may not be equal to at least the net asset book value for the product line or business unit, or the value that investors place on it as reflected by our stock price.
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Other risks of such actions include adversely affecting employee morale, managing the expectations of, and maintaining good relations with, customers of disposed or discontinued product lines or business divisions, which could prevent selling other products to them.
−Removed: We may also incur other
−Removed: significant liabilities and costs associated with disposal or discontinuance of product lines or business divisions, or separation of business units, including employee severance costs, relocation expenses, and impairment of lease obligations and long-lived assets.
+Added: We may also incur other significant liabilities and costs associated with disposal or discontinuance of product lines or business divisions, or separation of business units, including employee severance costs, relocation expenses, and impairment of lease obligations and long-lived assets.
The effects of such actions may adversely impact our business operations and financial results.
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Our business and results of operations have been adversely affected by the global COVID-19 pandemic and related events and we expect its impact to continue.
−Removed: Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 pandemic on our businesses, and there is no guarantee that we will be able to address its adverse impacts fully or effectively.
The impact to date has included periods of significant volatility in various markets and industries.
The volatility has had, and we anticipate it will continue to have, an adverse effect on our customers and on our business, financial condition and results of operations, and may result in an impairment of our long-lived assets, including goodwill, increased credit losses and impairments of investments in other companies.
−Removed: In particular, the automotive market, as well as the broad consumer electronics industries, have been and we anticipate will continue to be impacted by the pandemic and/or other events beyond our control, and further volatility could have an additional negative impact on these industries, customers, and our business.
−Removed: For example, we experienced an approximately 15% decline in our royalty revenue in 2020 from our products sold to the automotive market, such as HD Radio, as compared to the prior year, and currently expect automotive royalties will remain below previous levels for at least the near-term.
+Added: In particular, the automotive market, as well as the broad consumer electronics industry, has been and may continue to be impacted by the pandemic and/or other events beyond our control, and further volatility could have an additional negative impact on these industries, customers, and on our business operations, which may lead to reduced royalty revenue.
In addition, the COVID-19 pandemic and, to a lesser extent, U.S.
−Removed: restrictions on trade with certain Chinese customers have and may continue to impact the financial conditions of our customers, who may not be able to satisfy their obligations under our agreements timely or at all.
−Removed: For example, we recorded provisions for credit losses of approximately $2.0 million and $4.3 million in the first and fourth quarters of 2020, respectively, due to the heightened risk of nonpayment on existing accounts receivable as a result of the impaired financial condition and liquidity positions of certain of our customers.
−Removed: In addition, actions by United States federal, state and foreign governments to address the COVID-19 pandemic, including travel bans, stay-at-home orders and school, business and entertainment venue closures, also had a significant adverse effect on the markets in which we conduct our businesses.
−Removed: COVID-19 poses the risk that our workforce, suppliers, and other partners may be prevented from conducting normal business activities for an indefinite period of time, including due to shutdowns or stay-at-home orders that may be requested or mandated by governmental authorities.
+Added: restrictions on trade with certain customers based on China, have impacted and may continue to impact the financial conditions of our customers who may not be able to satisfy their obligations under our agreements timely or at all.
+Added: In addition, actions by United States federal, state and local governments, as well as by foreign governments, to address the COVID-19 pandemic, including travel bans, stay-at-home orders and school, business and entertainment venue closures, also had a significant adverse effect on the markets in which we conduct our businesses.
+Added: COVID-19 poses the risk that our workforce, suppliers, and other partners may be prevented from conducting normal business activities for an extended period of time, including due to shutdowns or stay-at-home orders that may be requested or mandated by governmental authorities.
We also implemented policies to allow our employees to work remotely as a result of the pandemic as we reviewed processes related to workplace safety, including social distancing and sanitation practices recommended by the Centers for Disease Control and Prevention.
−Removed: The impacts of the COVID-19 pandemic could also cause delays in obtaining new customers and executing renewals and could also impact our business as consumer behavior changes in response to the slowed economic conditions.
−Removed: Furthermore, our integration effort following the Mergers may be delayed or interrupted due to the operational challenges and various restrictions and limitations imposed on us as result of the COVID-19 pandemic, which may adversely affect the success of the integration and anticipated benefits of the Mergers.
−Removed: The extent of impacts resulting from the COVID-19 pandemic and other events beyond our control will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the pandemic, actions taken to contain the coronavirus or its impact, the emergence of transmissible or severe strains of coronavirus, the speed at which recently authorized vaccines are administered and the effectiveness of these vaccines in slowing the pandemic, and divergent government orders and actions taken in response to the pandemic, among others.
−Removed: Even after the pandemic has subsided and economic activities gradually reopen and increase, we may continue to experience material and adverse impacts to our business, operating results, and financial condition as a result of the pandemic’s lasting global economic impact, including any recession that has occurred or may occur in the future.
−Removed: The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
−Removed: We do not yet know the full extent of potential delays or impacts on our applicable business, operations or the global economy.
+Added: The impacts of the COVID-19 pandemic could also cause delays in acquiring new customers and executing renewals and could also impact our business as consumer behavior changes in response to the slowed economic conditions.
+Added: The rapid spread of the highly contagious Delta and Omicron variants of COVID-19 have led to periodic spikes in COVID-19 cases, hospitalizations and deaths in various jurisdictions in which we operate.
+Added: Businesses and consumers have been adjusting their plans to comply with renewed and evolving mask and vaccine mandates, travel restrictions, event cancellations and delayed office reopenings.
+Added: Our operations and those of our customers have also been negatively impacted by certain recent trends arising from the COVID-19 pandemic, including labor market constraints, shortage of semiconductor components and manufacturing capacities, and delays in shipments, product development and product launches.
+Added: In addition, the widespread supply chain disruption has and is expected to continue to impede global and regional economic activities, such as consumer spending and product availabilities, which may adversely affect our business operations and financial results.
+Added: Moreover, the COVID-19 pandemic, its related impact, and United States federal, state and foreign government policies enacted to combat the pandemic have contributed to a recent rise of inflation that may increase the cost of our operations and reduce demand for our products and services, which may adversely affect our financial performance.
+Added: The full extent of the future impact of the COVID-19 pandemic on our operational and financial performance is uncertain and will depend on many factors beyond our control, including, without limitation, the timing, extent, trajectory and duration of the pandemic;
+Added: the availability, distribution and effectiveness of vaccines;
+Added: the spread of new variants of COVID-19;
+Added: the continued and renewed imposition of protective public safety measures;
+Added: the continuing global disruption in supply chains in our industries and the impact of the pandemic on the global economy, inflation and demand for consumer products.
+Added: Even after the pandemic has subsided and economic activities gradually increase, we may continue to experience material and adverse impacts to our
+Added: business, operating results, and financial condition as a result of the pandemic’s lasting global economic impact, including any recession that has occurred or may occur in the future in our industries or continuing inflationary impacts.
We enter into license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed.
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If we fail to continue to do business with our current licensees, our business would be materially adversely affected.
−Removed: The nature of some of our business relationships may restrict our ability to operate freely in the future and could be interpreted in a manner that adversely affects revenues, including from licensing, under those agreements .
+Added: The nature of some of our business relationships may restrict our ability to operate freely in the future and could be interpreted in a manner that adversely affects revenue, including from licensing, under those agreements .
From time to time, we have engaged and may engage in the future in discussions with other parties concerning business relationships, which have included and may in the future include exclusivity provisions (such as geographic or product specific limitations), most favored customer limitations, and patent licensing arrangements.
−Removed: While we believe that such business relationships have historically enhanced our ability to finance and develop our business model or otherwise were justified by the terms of the particular relationship, the terms and conditions of such business relationships may place some restrictions on the operation of our business, including where we operate, who we work with, and what kinds of activities we may engage in, in the future.
−Removed: Additionally, some of our license agreements contain "most favored nation" clauses.
−Removed: These clauses typically provide that if we enter into an agreement with another licensee on more favorable terms, we must offer some of those terms to our existing licensees.
+Added: While we believe that such business relationships have historically enhanced our ability to finance and develop our business model or otherwise were justified by the terms of the particular relationship, the terms and conditions of such business relationships may place some restrictions on the operation of our business, including where we operate, who we work with, and what kinds of activities we may engage in.
+Added: Additionally, some of our license agreements contain "most favored nation" clauses, which typically provide that if we enter into an agreement with another licensee on more favorable terms, we must offer some of those terms to our existing licensees.
We have entered into a number of license agreements with terms that differ in some respects from those contained in other agreements.
−Removed: These agreements may obligate us to provide different, more favorable, terms to licensees, which could, if applied, result in lower revenues or otherwise adversely affect our business, financial condition, and results of operations.
+Added: These agreements may obligate us to provide different, more favorable, terms to licensees, which could, if applied, result in lower revenue or otherwise adversely affect our business, financial condition, and results of operations.
While we believe that we have appropriately complied with the most favored nation terms included in our license agreements, these contracts are complex and other parties could reach a different conclusion that, if enforced, could have an adverse effect on our financial condition or results of operations.
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the number of subscribers our Pay-TV customers have or the number of set top-boxes our Pay-TV customers provide to their end-user subscribers;
−Removed: the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundry, manufacturers of consumer and communication electronics, and the automotive and surveillance industry;
−Removed: the willingness and ability of materials and equipment suppliers to produce materials and equipment that support our licensed technology, in a quantity sufficient to enable volume manufacturing;
+Added: the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the automotive and surveillance industry;
+Added: the willingness and ability of suppliers to produce materials and equipment that support our licensed technology in a quantity sufficient to enable volume manufacturing;
the ability of our customers to purchase such materials and equipment on a cost-effective and timely basis;
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A number of our customers may face severe financial difficulties from time to time, which may result in their inability to make payments to us in a timely manner, or at all.
−Removed: These risks may be heightened by operating and cash flow disruptions these companies face as a result of the COVID-19 pandemic.
In addition, we have had a history of, and we may in the future experience, customers that delay or refuse to make payments owed to us under license or settlement agreements.
Our customers may also merge with or may shift the manufacture of licensed products to companies that are not currently licensees of our technology.
−Removed: This could make the collection process complex and difficult, which could adversely impact our business, financial condition, results of operations and cash flows.
+Added: This could make the collection process complex, difficult and costly, which could adversely impact our business, financial condition, results of operations and cash flows.
It is difficult for us to verify royalty amounts owed to us under our licensing agreements, and this may cause us to lose revenue.
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We face competitive risks across all our businesses, including:
−Removed: our audio technologies compete with other providers of audio products and services, with Dolby Laboratories as the primary competitor in high-definition audio processing, which enjoys advantages in selling its digital multi-channel audio technology, having introduced such technology before we did, and having achieved mandatory standard status in product categories that we have not, including terrestrial digital TV broadcasts in the United States;
−Removed: our embedded image processing technologies such as Face Detection and our other products compete with other image processing software vendors such as ArcSoft, Inc.
−Removed: as well as internal design groups of mobile phone and digital camera manufacturers providing similar technologies by employing different approaches;
our Platform Solutions face significant competition from companies that produce and market program guides as well as television schedule information in a variety of formats, including passive and interactive on-screen electronic guide services, online listings, over the top applications and against customers and potential customers who choose to build their own IPG, including both those who do and those who do not elect to license our patents;
our advanced video solutions compete with other CE products and home entertainment services (such as Roku, AppleTV, Amazon FireTV and Chromecast) as well as products and service offerings built by other service providers or their suppliers for consumer spending;
+Added: our audio technologies compete with other providers of audio products and services, with Dolby Laboratories as the primary competitor in high-definition audio processing, which enjoys advantages in selling its digital multi-channel audio technology, having introduced such technology before we did, and having achieved mandatory standard status in product categories that we have not, including terrestrial digital TV broadcasts in the United States;
+Added: our embedded image processing technologies compete with other image processing software vendors such as SmartEye , Seeing Machines and ArcSoft , Inc.
+Added: , as well as internal design groups of automotive, mobile phone , and digital camera manufacturers providing similar technologies by employing different approaches;
our competitive position is affected by the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundry, manufacturers of consumer and communication electronics, and the automotive and surveillance industry.
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Further, many of the consumer hardware and software products that include our technologies also include technologies developed by our competitors.
−Removed: As a result, we must continue to invest significant resources in product development in order to enhance our technologies and our existing products and services and introduce new high-quality technologies, products and services to meet the wide variety of such competitive pressures.
+Added: In order for us to remain competitive in this market, we must continue to invest significant resources in product development in order to enhance our technologies and our existing products and services and introduce new high-quality technologies, products and services to meet the wide variety of such competitive pressures.
Our ability to generate revenue from our business will suffer if we fail to do so successfully.
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We face competitive, technological and business risks in our ongoing provision of entertainments offering involving the distribution of digital content through broadband to consumer televisions with such offerings, including the availability of premium and high-definition content, as well as the speed and quality of the delivery of such content to TiVo devices.
−Removed: For instance, we face increased competition from a growing number of broadband-enabled devices from providers such as Roku, AppleTV, Amazon Prime Video and Chromecast that provide broadband delivered digital content directly to a consumer's television connected to such a device.
+Added: For instance, we face increased competition from a growing number of broadband-enabled devices from providers such as Roku, AppleTV, Amazon FireTV and Chromecast that provide broadband delivered digital content directly to a consumer's television connected to such a device.
Additionally, we face competition from online content providers and other PC software providers who deliver digital content directly to a consumer's personal computer, which in some cases may then be viewed on a consumer's television.
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manage operations in multiple time zones with different cultures and languages.
−Removed: We may not realize the anticipated benefits of the other acquisitions we may complete in the future, and we may not be able to incorporate any acquired services, products or technologies with our existing operations, or integrate personnel from the acquired businesses, in which case our business could be harmed.
+Added: We may not realize the anticipated benefits of the other acquisitions we may complete in the future, and we may not be able to incorporate any acquired services, products or technologies with our existing operations, or integrate personnel, systems, processes and operations from the acquired businesses, in which case our business could be harmed.
Financing for future acquisitions may not be available on favorable terms, or at all.
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the marketing and pricing strategies that we employ and that are employed by our customers and retailers.
−Removed: Demand for HD Radio also may be impacted by declines in the automotive industry which historically has been cyclical and experienced downturns during declining economic conditions, and which is currently experiencing declines as a result of the COVID-19 pandemic and related events.
−Removed: If demand for HD Radio technology does not recover from the decline experienced in 2020 as a result of the COVID-19 pandemic and related events and return to the growth trends experienced in prior years, we may experience sustained reductions in our automotive based royalties and not meet the future growth that is currently projected.
+Added: Demand for HD Radio also may be impacted by declines in the automotive industry which historically has been cyclical and experienced downturns during declining economic conditions.
+Added: In addition, the persistent downturn in the automotive markets resulting from the COVID-19 pandemic and related events reduced demand for our HD Radio technology in 2020.
+Added: While we have experienced a modest recovery in 2021, there is no guarantee that growth trends will return to our pre-pandemic level, and a sustained reduction in our automotive based royalties may cause us to fail to meet our previously projected growth rates.
If we are unable to further penetrate the streaming and downloadable content delivery markets and adapt our technologies for those markets, our royalties and ability to grow our business could be adversely impacted.
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In general, these contracts are long-term and complex and often rely on the timely performance of such television service provider's third-party vendors that are outside TiVo's control.
−Removed: The engineering services and technology we agree to provide and/or develop may be essential to the functionality of the licensed software and delivered product or such software may involve significant customization and modification for each
+Added: The engineering services and technology we agree to provide and/or develop may be essential to the functionality of the licensed software and delivered product or such software may involve significant customization and modification for each customer.
We have experienced in the past, and may in the future experience, delays in delivery with television service providers as well as significant increases in expected costs of development and performance in certain instances.
−Removed: Additional delays could lead to additional costs and adverse accounting treatments forcing us to recognize costs earlier than expected.
+Added: delays could lead to additional costs and adverse accounting treatments forcing us to recognize costs earlier than expected.
If we are unable to deliver the contracted-for technology, including specified customizations and modifications, and services in a timely manner or at all, then we could face penalties in the form of unreimbursed engineering development work, loss of subscriber or minimum financial commitments on the part of our partners or in extreme cases the early termination of such distribution agreements.
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We recognize revenue by measuring progress toward completion based on the ratio of costs incurred, principally labor, to total estimated costs of the project, an input method.
−Removed: If we are unable to properly measure and estimate our progress toward completion in such circumstances, we could incur unexpected additional costs, be required to recognize certain costs earlier than expected, or otherwise be required to delay recognition of revenue unexpectedly.
+Added: If we are unable to measure and estimate our progress properly or accurately toward completion in such circumstances, we could incur unexpected additional costs, be required to recognize certain costs earlier than expected, or otherwise be required to delay recognition of revenue unexpectedly.
A material inability to properly manage, estimate and perform these development and engineering services for our television service provider customers could cause us to incur unexpected losses and reduce or even eliminate any profit from these arrangements, and in such a case our business would be harmed.
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Although we attempt to reduce the risk of losses resulting from these claims through warranty disclaimers and limitation of liability clauses in our agreements, these contractual provisions may not be enforceable in every instance.
−Removed: Any such defects, errors, or unintended performance problems in existing or new products or services, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance,
−Removed: diversion of development resources, injury to our reputation, increased insurance costs and increased service costs, any of which could materially harm our business.
−Removed: Dependence on the cooperation of pay-TV service providers, television broadcasters, hardware manufacturers, data providers and delivery mechanisms could adversely affect our revenue.
+Added: Any such defects, errors, or unintended performance problems in existing or new products or services, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costs and increased service costs, any of which could materially harm our business.
+Added: Dependence on the cooperation of third parties for the provision and delivery of our metadata could adversely affect our revenue.
We rely on third party providers to deliver our metadata to some of the CE devices that include our UXs and IPGs.
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Our inability to renew these existing arrangements on terms that are favorable to us, or enter into alternative arrangements that allow us to effectively transmit our metadata to CE devices, could have a material adverse effect on our CE IPG business and cause our revenue or margins to decline.
−Removed: We are dependent on third parties for metadata and content.
We distribute, as a revenue generating activity, metadata.
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If this third-party partner fails to perform its obligations, we may be unable to find alternative suppliers or deliver our products and services sold through the TiVo website in a timely manner or with the features and functionality customers expect.
−Removed: In addition, our third-party partner may depend on sole suppliers for key components and services in order to manufacture DVRs and non-DVR STBs which run our software, and they may be subject to risks of supply shortages and unexpected cost increases.
+Added: In addition, our third-party partner may depend on sole suppliers for key components and services in order to manufacture DVRs and non-DVR STBs which run our software, and they may be subject to risks of supply shortages and unexpected cost increases, including the recent supply chain disruption resulting from the COVID-19 pandemic.
Additionally, certain features and functionalities of our TiVo service and DVRs depend on third-party components and technologies.
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Any of these outcomes could harm our ability to compete effectively and achieve increased market acceptance and brand recognition.
−Removed: We maintain inventories of TiVo-branded products based on our demand forecast, which may be incorrect and lead excess or insufficient inventory.
+Added: We maintain inventories of TiVo-branded products based on our demand forecast, which may be incorrect and lead to excess or insufficient inventory.
In connection with our sales of TiVo-branded products through the TiVo website, we maintain an inventory of certain DVR and non-DVR products based on our demand forecast.
−Removed: Due to the seasonality in our business and the nature of long-lead time
−Removed: product development and manufacturing cycles, we make demand forecasts for these products well in advance of our peak selling periods.
+Added: Due to the seasonality in our business and the nature of long-lead time product development and manufacturing cycles, we make demand forecasts for these products well in advance of our peak selling periods.
As such, we are subject to risks in managing the inventory needs of our business during the year, including estimating the appropriate quantity and mix of demand across our older and newer DVR and non-DVR products.
Should actual market conditions differ from our estimates, our future results of operations could be materially affected.
−Removed: Excess purchase commitments as a result of changes in our sales forecast may require us to record a loss.
+Added: Our ability to forecast
+Added: demand accurately and maintain appropriate inventory may also be adversely affected by factors that are difficult to predict, such as global supply chain disruptions.
+Added: Excess purchase commitments as a result of unforeseen changes in our sales forecast, pricing terms or cost structures may require us to record a loss that may adversely affect our financial conditions and results of operations.
Qualifying, certifying and supporting our technologies, products and services is time-consuming and expensive.
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Therefore, we face exposure to risks of operating in many foreign countries, including:
−Removed: difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;
+Added: difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements;
unexpected changes in political or regulatory environments;
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Under these laws, companies may be held liable for actions taken by directors, officers, employees, agents, or other partners or representatives.
−Removed: If we or our intermediaries fail to comply with the requirements of the FCPA or similar laws, governmental authorities could seek to impose civil and criminal fines and penalties which could have a material adverse effect on our business, results of operations and financial condition.
+Added: If we or our intermediaries fail to comply with the requirements of the FCPA or similar laws, governmental authorities could commence an investigation or seek to impose civil and criminal fines and penalties which could have a material adverse effect on our business, results of operations and financial condition.
Additionally, our business could be materially adversely affected if foreign markets do not continue to develop, if we do not receive additional orders to supply our technologies, products or services for use by international Pay-TV service providers, CE and STB manufacturers, PPV/VOD providers and others or if regulations governing our international businesses change.
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Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us.
−Removed: The increased trade conflicts between the United States and its major trading partners in recent years, evidenced by trade restrictions such as tariffs, taxes, export controls, economic sanctions, and enhanced policies designed to protect national security, have had and may continue to have adverse impact on our revenue if such policies continue.
−Removed: In particular, our
−Removed: business and sales activities have been impacted due to the increase in trade conflicts between the United States and China.
+Added: The increased trade conflicts between the United States and its major trading partners in recent years, evidenced by trade restrictions such as tariffs, taxes, export controls, economic sanctions, and enhanced policies designed to protect national
+Added: security, have had and may continue to have adverse impact on our revenue if such policies continue.
+Added: In particular, our business and sales activities have been impacted due to the increase in trade conflicts between the United States and China.
Further United States government actions to protect domestic economic and security interests could lead to further restrictions.
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Any such trends could have a material adverse impact on our revenue.
−Removed: Our systems, networks and online business activities are subject to cybersecurity and stability risks, information technology system failures, and security breaches.
−Removed: Despite our provisions for system redundancy and the implementation of security measures within our internal and external information technology and networking systems, our information technology systems may be subject to security breaches, unauthorized access (malicious or accidental), misuse of information by authorized users, data leaks or unintentional exposure of information, failed processes or other bugs, loss of data, damages from computer viruses or malware, natural disasters, terrorism, telecommunication failures or disruption of service.
+Added: Our systems, networks and online business activities and those of third parties that we utilize in our operations are subject to cybersecurity and stability risks, information technology system failures, and security breaches.
+Added: Despite our provisions for system redundancy and the implementation of security measures within our internal and external information technology and networking systems, our information technology systems and those of third parties that we utilize in our operations may be subject to security breaches, unauthorized access (malicious or accidental), misuse of information by authorized users, data leaks or unintentional exposure of information, failed processes or other bugs, loss of data, damages from computer viruses or malware, natural disasters, terrorism, telecommunication failures or disruption of service.
In addition, our online business activities depend on the ability to store and transmit confidential information and licensed intellectual property securely on our systems, third party systems and over private, hybrid and public networks.
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our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of customer information or intellectual property;
−Removed: we could experience unauthorized access, computer viruses, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure or use of our products and services, or cause customer information or other sensitive information to be disclosed to a perpetrator, others or the general public;
−Removed: someone could circumvent our security measures and misappropriate our, our business relations or our customers' proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections;
+Added: we could experience unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure or use of our products and services, or cause customer information or other sensitive information to be disclosed to a perpetrator, others or the general public;
+Added: someone could circumvent our security measures and misappropriate our, our information, or our customers' proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections;
our computer systems could fail and lead to service interruptions or downtime for television or other guidance systems, or websites, which may include e-commerce websites;
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we may need to grow, reconfigure or relocate our data centers in response to changing business needs, which may be costly and lead to unplanned disruptions of service.
+Added: Each of the foregoing risks also applies to the computer systems of third parties that we rely upon in our operations, including our suppliers and vendors, including providers of cloud storage and services.
The occurrence of any of these or similar events could damage our business, hurt our ability to distribute products and services and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity protections and enhancements, and expose us to litigation and other liabilities.
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Our product and service offerings rely on a variety of systems, networks and databases, many of which are maintained by us at our data centers or third-party data centers (e.g., cloud services).
−Removed: We do not have complete redundancy for all of our systems, and we do not maintain real-time back-up of our data, so in the event of significant system disruption, particularly during peak periods, we could experience loss of data processing capabilities, which could prevent us from providing our products and services to our customers for an uncertain amount of time, cause us to lose customers as a result of such breaches, and could harm our operating results through loss of revenue and increased costs to remediate such cybersecurity incidents.
+Added: We do not have complete redundancy for all of our systems, and we do not maintain real-time back-up of our data, so in the event of significant system disruption, particularly during peak periods, we could experience loss of data processing capabilities, which could prevent us from providing our products and services to our customers for an uncertain amount of time, cause us to lose customers as a result of such breaches, and could
+Added: harm our operating results through loss of revenue and increased costs to remediate such cybersecurity incidents.
Notwithstanding our efforts to protect against “down time” for products and services, we do occasionally experience unplanned outages or technical difficulties.
In order to provide products and services, we must protect the security of our systems, networks, databases and software.
+Added: Furthermore, we do not have control over the security protocols of third party cloud service providers, and if such providers experience cyber attacks and information system breaches, it can harm our business operations and undercut our ability to serve our customers, which may adversely affect our financial conditions and results of operations.
To the extent that any disruption or security breach results in inappropriate disclosure of our confidential information, we may incur liability or additional costs to remedy the damages caused by these disruptions or security breaches.
Risks Related to Financial Matters
−Removed: The nature of our business requires the application of complex accounting principles.
−Removed: Significant changes in U.S.
−Removed: generally accepted accounting principles (“GAAP”) could materially affect our financial position and results of operations.
−Removed: From time to time the Financial Accounting Standards Board (the “FASB”) modifies the accounting standards applicable to our financial statements, which could materially affect our financial position or results of operations.
−Removed: For example, in February 2016, the FASB issued an amended accounting standard for leases, Accounting Standards Update No.
−Removed: 2016-02, Leases (“Topic 842”).
−Removed: On January 1, 2019, Xperi and TiVo each adopted Topic 842.
−Removed: As a result of adopting Topic 842, we recognized combined present value of existing minimum lease payments as lease liabilities of $99.5 million and corresponding right-of-use assets of $85.5 million as of January 1, 2019.
We have significant indebtedness which could adversely affect our financial position.
−Removed: As of December 31, 2020, we had $873.8 million of total debt outstanding under our 2020 Term Loan B Facility.
−Removed: Our 2020 Term Loan B Facility is guaranteed by us and our wholly-owned material domestic subsidiaries and is secured by substantially all of our and the subsidiary guarantors' assets.
+Added: As of December 31, 2021, we had $789.8 million of total debt outstanding under our Refinanced Term B Loans.
+Added: Our Refinanced Term B Loans are guaranteed by us and our wholly-owned material domestic subsidiaries and are secured by substantially all of our and the subsidiary guarantors' assets.
Our indebtedness may:
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Any significant increase in our interest expense could negatively impact our results of operations and cash flows and also our ability to pay dividends in the future.
−Removed: Federal Reserve raises its benchmark interest rate, any increases would likely impact the borrowing rate on our outstanding indebtedness and increase our interest expense.
+Added: Federal Reserve raises its benchmark interest rate, as currently anticipated by many banking analysts, any increases would likely impact the borrowing rate on our outstanding indebtedness and increase our interest expense.
We may not be able to generate sufficient cash to service our debt obligations.
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federal and state income tax which could reduce the net cash available for principal and interest payments.
−Removed: We utilize non-GAAP reporting in our quarterly earnings press releases.
−Removed: As part of our quarterly earnings press releases, we publish measures compiled in accordance with GAAP as well as non-GAAP financial measures, along with a reconciliation between the GAAP and non-GAAP financial measures.
−Removed: The reconciling items adjust amounts reported in accordance with GAAP for certain items which are described in detail in each such quarterly earnings press release.
−Removed: We believe that our non-GAAP financial measures are meaningful to investors when analyzing our results of operations as this is how our business is managed.
−Removed: The market price of our stock may fluctuate based on future non-GAAP results if investors base their investment decisions on such non-GAAP financial measures.
−Removed: If we decide to alter or curtail the use of non-GAAP financial measures in our quarterly earnings press releases, the market price of our stock could be adversely affected if investors analyze our performance in a different manner.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could increase our operating costs and affect our ability to operate our business.
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We have in the past identified, and may in the future identify, significant deficiencies in the design and operation of our internal controls, which have been or will in the future need to be remediated.
−Removed: In addition, we have identified material weaknesses in our internal control over financial reporting in connection with the audit of our consolidated financial statement for the fiscal year ended December 31, 2020.
−Removed: See “Risk Factors—We have identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial and operating results accurately or on a timely basis, and impact overall investor confidence and the value of our common stock.” Finally, in the event we make another significant acquisition, such as the merger with TiVo, or a series of smaller acquisitions, we may face significant challenges in implementing the required processes and procedures in the acquired operations.
+Added: For example, we have identified material weaknesses in our internal control over financial reporting relating to the design and operation of controls to review forecast assumptions used in the determination of fair value of intangible assets acquired through business combinations and in the testing of goodwill impairment , and we concluded that our internal controls over financial reporting were not effective as of December 31, 2020.
+Added: While we implemented remediation plans in response to such material weaknesses and concluded that such material weaknesses were remediated as of December 31, 2021, there is no guarantee that in the future we will be able to remediate any identified material weakness timely or at all, or in a cost effective manner.
+Added: See “Item 9A—Controls and Procedures.”
+Added: Finally, in the event we make another significant acquisition, such as the merger with TiVo, or a series of smaller acquisitions, we may face significant challenges in implementing the required processes and procedures in the acquired operations.
This could result in an adverse reaction in the financial markets due to investors' perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements.
−Removed: We have identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely affect our ability to report our financial and operating results accurately or on a timely basis, and impact overall investor confidence and the value of our common stock.
−Removed: In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2020, we identified material weaknesses in our internal control over financial reporting relating to the design and operation of controls to review forecast assumptions used in the determination of fair value of intangible assets acquired through business combinations and in the testing of goodwill impairment.
−Removed: Although the material weaknesses did not result in a material misstatement to our consolidated financial statements as of and for the year ended December 31, 2020, as a result of these material weaknesses , we concluded that internal controls over financial reporting were not effective as of December 31, 2020.
−Removed: With the oversight from our Audit Committee, we are in the process of developing and implementing remediation plans in response to the identified material weaknesses.
−Removed: The specific material weaknesses and our remediation efforts are described in Item 9A of this annual report.
−Removed: There can be no assurance as to when the remediation plan will be fully implemented or whether the remediation efforts will be successful.
−Removed: As we continue to evaluate and work to improve our internal controls, we may take additional measures to address the material weaknesses or modify our remediation plan.
−Removed: Until the remediation plan is fully implemented, we will continue to devote time and attention to these efforts.
−Removed: If the remediation of the material weakness es is not completed in a timely fashion, or at all, or if the plan is inadequate, there will be an increased risk that we may be unable to timely file future periodic reports with the SEC and that future consolidated financial statements could contain errors that will be undetected.
−Removed: The existence of material weakness es in the effectiveness of our internal controls could also affect our ability to obtain financing or could increase the cost of any such financing.
−Removed: The identification of the material weakness es could also cause investors to lose confidence in the reliability of the Company’s financial statements and could result in a decline in the value of our common stock .
If our goodwill and other intangible assets become impaired, we may be required to record a significant charge to earnings.
−Removed: In addition to internal development, we intend to acquire additional businesses, technology and intellectually property through strategic relationships and transactions.
+Added: In addition to internal development, we intend to acquire additional businesses, technology and intellectual property through strategic relationships and transactions.
We believe these strategic relationships and transactions will enhance the competitiveness and size of our current businesses and provide diversification into markets and technologies that complement our current businesses.
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In preparing our financial statements, we estimate the amount of tax to accrue in each tax jurisdiction.
−Removed: Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including from the passage of new tax laws, changes in the mix of our profitability from state to state and from country to country, the amount of payments from the company’s U.S.
+Added: Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including from the passage of new tax laws, changes in the mix of our profitability from state to state and from country to country, the amount of payments from the
+Added: company’s U.S.
entities to related foreign entities, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities and changes in accounting for income taxes.
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In addition, under Sections 382 and 383 of the Internal Revenue Code (the “Code”) and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than fifty-percent (50%) change, by value, in its equity ownership over a three (3)-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
−Removed: We may experience ownership changes in the future as a result of subsequent
−Removed: shifts in our stock ownership, some of which may be outside of our control.
+Added: We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
If an ownership change occurs and our ability to utilize our net operating loss carryforwards is materially limited, it would harm our future operating results by effectively increasing our future tax obligations.
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If we fail to comply with the laws and regulations relating to the collection of sales tax and payment of income taxes in the various states and foreign jurisdictions in which we do business, we could be exposed to unexpected costs, expenses, penalties and fees as a result of our noncompliance in which case our business could be harmed.
−Removed: As our business grows and expands, we have started to do business in an increasing number of states nationally and foreign jurisdictions.
+Added: As our business grows and expands, we have started to do business in an increasing number of states nationally and in new foreign jurisdictions.
By engaging in business activities in these states and foreign jurisdictions, we become subject to their various laws and regulations, including possible requirements to collect sales tax from our sales within those states and foreign jurisdictions and the payment of income taxes on revenue generated from activities in those states and foreign jurisdictions.
−Removed: In addition, TiVo collects and remits sales taxes in numerous states.
The laws and regulations governing the collection of sales tax and payment of income taxes are numerous, complex, and vary among states and foreign jurisdictions.
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There can be no assurance that we will generate profits in future periods enabling us to fully realize our deferred tax assets.
−Removed: As a result of the merger between Xperi Corporation and TiVo, we have applied a valuation allowance on U.S.
−Removed: Federal, and many U.S.
−Removed: state, and foreign deferred tax assets to the extent they are not realizable by utilizing deferred tax liabilities as sources of income.
+Added: We have applied a valuation allowance on U.S.
+Added: federal, and many state, and foreign deferred tax assets to the extent they are not realizable by utilizing deferred tax liabilities as sources of income.
The timing of recording a valuation allowance or the reversal of such valuation allowance is subject to objective factors that cannot be readily predicted in advance.
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The IRS may assert positions that may negatively impact the tax-free status of distributions intended to qualify for tax-free treatment, and the desired benefits of such distributions may not be achieved.
−Removed: In general, a corporation , which we refer to as the distributing corporation, that distributes the stock of another corporation, which we refer to as the controlled corporation, in a transaction that would otherwise qualify for tax-free treatment under Section 355 of the Code may be required to recognize corporate-level gain on the distribution if there is an acquisition of a 50% or greater interest (within the meaning of Section 355(d)(4) of the Code) in either the distributing corporation or the controlled corporation as part of a plan including the distribution.
−Removed: Although there is no current approved plan to separate any parts of the combined company, we currently contemplate that, at some point, likely no earlier than the second half of 2022, we may pursue, subject to any required regulatory approvals, a separation of our product business and IP licensing business in a transaction intended to qualify as tax-free under Section 355 of the Code, resulting in two independent publicly traded companies.
−Removed: This separation, if undertaken, would be achieved through a pro-rata spin-off transaction in which our stockholders, at such time, would receive shares of capital stock in the resulting spun-off company.
+Added: In general, a corporation, which we refer to as the distributing corporation, that distributes the stock of another corporation, which we refer to as the controlled corporation, in a transaction that would otherwise qualify for tax-free treatment under Section 355 of the Internal Revenue Code (“the Code”) may be required to recognize corporate-level gain on the distribution if there is an acquisition of a 50% or greater interest (within the meaning of Section 355(d)(4) of the Code) in either the distributing corporation or the controlled corporation as part of a plan including the distribution.
+Added: We currently plan, subject to any required regulatory approvals, a separation of our product business and IP licensing business in a transaction intended to qualify as tax-free under Section 355 of the Code, resulting in two independent publicly traded companies.
+Added: We anticipate that such separation will be completed in the second half of 2022.
+Added: This separation, if completed, would be achieved through a pro-rata spin-off transaction in which our stockholders, at such time, would receive shares of capital stock in the resulting spun-off company.
It is expected that Xperi and TiVo would be able to minimize any corporate-level gain on such separation transaction in connection with our formation, because there would be no acquisition of a 50% or greater interest in either company.
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Certain steps we take in contemplation of the separation could result in the reduction of certain tax attributes or the payment of cash taxes even if we satisfy the requirements under Section 355(d)(4).
−Removed: Additionally, there are many factors that could impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, any contemplated business separation, including, among others, global economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, tax considerations, and other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment.
−Removed: Such changes could adversely impact the value of a contemplated business separation transaction to our stockholders.
+Added: Additionally, there are many factors that could impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, this planned business separation, including, among others, global economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, tax considerations, and other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses planned for separation, and changes in the regulatory or legal environment.
+Added: Such changes could adversely impact the value of this planned business separation transaction to our stockholders.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments.
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Changes in monetary policy by the Federal Reserve, government fiscal policies, and global economic and market conditions may adversely affect the value of our investment portfolio.
−Removed: We may in the future have a need to sell investments before their maturity dates, which could result in losses on the sale of those investments.
+Added: We may in the future have a need to sell investments before their maturity dates, which could result in losses on the sale of those
The financial market and monetary risks associated with our investment portfolio have and may in the future have a material adverse effect on our financial condition, results of operations or cash flows.
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from Inter Partes Review (IPR) proceeding before the Patent Trial and Appeal Board (PTAB).
−Removed: Such proceedings to date have a high rate of invalidation of patents and patents we have asserted in litigation have been and may continue to be invalidated in such proceedings.
+Added: Historically these types of proceedings have a high rate of invalidation of patents, and patents we have asserted in litigation have been and may continue to be invalidated in such proceedings.
Additionally, there have been and may be bills introduced in the U.S.
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Failure to safeguard data adequately or to destroy data securely could subject us to regulatory investigations or enforcement actions under federal or state data security, unfair practices, or consumer protection laws.
−Removed: The scope and interpretation of these laws could change and the
−Removed: associated burdens and compliance costs could increase in the future.
+Added: The scope and interpretation of these laws could change and the associated burdens and compliance costs could increase in the future.
Two such governmental regulations that have significant implications for our products and services are the General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”).
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However, few courts have interpreted the Lesser Gnu Public License or other open source licenses, and the manner in which these licenses may be interpreted and enforced is therefore subject to some uncertainty.
−Removed: We often take steps to disclose source code for which
−Removed: disclosure is required under an open source license, but it is possible that we have or will make mistakes in doing so, which could negatively impact our brand or our adoption in the community, or could expose us to additional liability.
+Added: We often take steps to disclose source code for which disclosure is required under an open source license, but it is possible that we have or will make mistakes in doing so, which could negatively impact our brand or our adoption in the community, or could expose us to additional liability.
In addition, we rely on multiple software programmers to design our proprietary products and technologies.
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the timing of the introduction by others of competing technologies and the extent to which new technologies replace technologies to which our solutions are targeted;
−Removed: changes in demand for semiconductor chips in the specific end markets in which we concentrate;
+Added: changes in supply and demand for semiconductor chips in the specific end markets in which we concentrate;
changes in demand for camera-enabled devices including cell phones, security systems and personal computers;
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the pace at which our older product sales decline compared to the pace at which our new product revenue grows;
−Removed: meeting the requirements for revenue recognition under generally accepted accounting principles;
changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties;
cyclical fluctuations in semiconductor and consumer electronics markets generally;
−Removed: our ability to execute and complete successfully the contemplated separation transaction;
+Added: supply chain constraints, and attendant effects, including but not limited to increased costs or shipping delays from our suppliers or to our customers;
+Added: adverse labor market conditions, and any impacts on our ability to attract and retain qualified personnel;
+Added: inflation and/or changes in central bank interest rate policies
+Added: our ability to execute and complete successfully the planned separation transaction;
expenses related to and the financial impact of possible acquisitions of other businesses and the integration of such businesses;
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or its allies, civil unrest, pandemics, natural disasters or generally weak and uncertain economic and industry conditions.
−Removed: Due to fluctuations in our operating results, reports from market and security analysts, litigation-related developments, and other factors including general market conditions, the price at which our common stock will trade is likely to continue to be
−Removed: highly volatile.
+Added: Due to fluctuations in our operating results, reports from market and security analysts, litigation-related developments, and other factors including general market conditions, the price at which our common stock will trade is likely to continue to be highly volatile.
In future periods, if our revenue, royalties, cash flows or operating results are below the estimates or expectations of public market analysts and investors, our stock price could decline.
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In June 2020, our Board of Directors authorized a stock repurchase program to repurchase up to $150 million of our outstanding shares of common stock dependent on market conditions, share price and other factors.
+Added: In April 2021 our Board of Directors authorized an additional $100.0 million of stock repurchases under this program.
As of December 31, 2021, the total amount available for repurchase under the plan was $95.0 million.
−Removed: The amount of repurchases under our stock repurchase program will vary.
−Removed: The timing of repurchases is at our discretion and the program may be suspended or discontinued at any time.
+Added: The amount of repurchases under our stock repurchase program will vary depending on various factors.
+Added: The timing of repurchases is at our discretion and the program may be
+Added: suspended or discontinued at any time.
Any suspension or discontinuation could cause the market price of our stock to decline.
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Furthermore, we may engage in mergers, acquisitions, or other activity that could result in us reducing or discontinuing share repurchases for a period of time.
+Added: For example, as we plan for the separation of our Product business and IP Licensing business we may reduce or suspend share repurchases as we plan for the capital needs of two independent businesses .
Finally, the terms of our current or future debt agreements could limit our ability to repurchase shares.
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We incur significant compensation costs associated with our stock-based compensation programs.
−Removed: Failure to obtain stockholder approval of equity compensation plans or changes to the plans could make it harder or more expensive for us to grant stock-based compensation to employees in the
+Added: Failure to obtain stockholder approval of equity compensation plans or changes to the plans could make it harder or more expensive for us to grant stock-based compensation to employees in the future.
As a result, we may find it difficult to attract, retain and motivate employees, and any such difficulty could have a materially adverse impact on our business.
Use of our common stock for future acquisitions may be limited.
−Removed: Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Code will likely be limited for three (3) years following the Mergers.
+Added: Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Internal Revenue Code will likely be limited for three (3) years following the Mergers.
To the extent that we are unable to use our common stock to make future acquisitions, our ability to grow through acquisitions may be limited by the extent to which we are able to raise capital through debt, equity financings or operational growth.
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It is also possible that the transfer restrictions could delay or frustrate the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving us, or impede an attempt to acquire a significant or controlling interest in us, even if such events might be beneficial to us and our stockholders.
−Removed: Our amended and restated certificate of incorporation contains forum limitations for certain disputes between us and our stockholders that could limit the ability of stockholders to bring claims against us and our directors, officers and employees in jurisdictions preferred by stockholders.
−Removed: Our charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative lawsuit brought on our stockholders, (ii) any lawsuit against our current or former directors, officers, employees, stockholders or agents asserting a breach of a duty (including any fiduciary duty) owed by any such current or former director, officer, stockholder, employee or agent to us or our stockholders, (iii) any lawsuit asserting a claim against us or any of our current or former director, officer, employee, stockholder or agent arising out of or relating to any provision of the DGCL, our charter or our bylaws (each, as in effect from time to time), or (iv) any lawsuit asserting a claim against us or any of our current or former director, officer, employee, stockholder or agent governed by the internal affairs doctrine of the State of Delaware.
−Removed: Our charter also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
+Added: Our certificate of incorporation contains forum limitations for certain disputes between us and our stockholders that could limit the ability of stockholders to bring claims against us and our directors, officers and employees in jurisdictions preferred by stockholders.
+Added: Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative lawsuit brought on our stockholders, (ii) any lawsuit against our current or former directors, officers, employees, stockholders or agents asserting a breach of a duty (including any fiduciary duty) owed by any such current or former director, officer, stockholder, employee or agent to us or our stockholders, (iii) any lawsuit asserting a claim against us or any of our current or former director, officer, employee, stockholder or agent arising out of or relating to any provision of the DGCL, our charter or our bylaws (each, as in effect from time to time), or (iv) any lawsuit asserting a claim against us or any of our current or former director, officer, employee, stockholder or agent governed by the internal affairs doctrine of the State of Delaware.
+Added: Our certificate of incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
The foregoing forum provisions may prevent or limit a stockholder’s ability to file a lawsuit in a judicial forum that it prefers for disputes with us or our directors, officers, employees, stockholders or agents, which may discourage such lawsuits, make them more difficult or expensive to pursue, and result in outcomes that are less favorable to such stockholders than outcomes that may have been attainable in other jurisdictions.
−Removed: In addition, notwithstanding the inclusion of the foregoing forum provisions in the charter, courts may find the foregoing forum provisions to be inapplicable or unenforceable in certain cases that the foregoing forum provisions purport to address, including claims brought under the Securities Act.
+Added: In addition, notwithstanding the inclusion of the foregoing forum provisions in the certificate of incorporation, courts may find the foregoing forum provisions to be inapplicable or unenforceable in certain cases that the foregoing forum provisions purport to address, including claims brought under the Securities Act.
If this were to occur in any particular lawsuit, we may incur additional costs associated with resolving such lawsuit in other jurisdictions or resolving lawsuits involving similar claims in multiple jurisdictions, all of which could harm our business, results of operations, and financial condition.
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If we fail to obtain patents in a timely manner or if the patents issued to us do not cover all of the inventions disclosed in our patent applications, others could use portions of our technology and intellectual property without the payment of license fees and royalties.
−Removed: For example, our business may suffer if we are unable to obtain patent protection in a timely manner from the PTO due to processing delays resulting from examiner turnover and a continuing backlog of patent applications.
+Added: For example, our business may suffer if we are unable to obtain patent protection in a timely manner from the US Patent and Trademark Office due to processing delays resulting from examiner turnover and a continuing backlog of patent applications.
We also rely on trade secret laws rather than patent laws to protect other portions of our proprietary technology.
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We cannot be certain that these contracts have not been and will not be breached, that we will be able to timely detect unauthorized use or transfer of our technology and intellectual property, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or be independently discovered by competitors.
−Removed: If we fail to use adequate mechanisms to protect our technology and intellectual property, or if a court fails to enforce our intellectual property rights, our business will suffer.
+Added: If we fail to use adequate mechanisms to protect our technology and intellectual property, or if a court fails to
+Added: enforce our intellectual property rights, our business will suffer.
We cannot be certain that these protection mechanisms can be successfully asserted in the future or will not be invalidated or challenged.
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Even if we have an agreement that provides for a third party to indemnify us against such costs, the indemnifying party may be unable to perform its contractual obligations under the agreement.
−Removed: If we cannot or do not license the allegedly infringed
−Removed: intellectual property on reasonable terms, or need to substitute similar technology from another source, our business, financial position, results of operations and cash flows could suffer.
+Added: If we cannot or do not license the allegedly infringed intellectual property on reasonable terms, or need to substitute similar technology from another source, our business, financial position, results of operations and cash flows could suffer.
If we lose any of our key personnel or are unable to attract, train and retain qualified personnel, we may not be able to execute our business strategy effectively.
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Our success also depends on our ability to attract, train and retain highly skilled managerial, engineering, sales, marketing, legal and finance personnel and on the abilities of new personnel to function effectively, both individually and as a group.
−Removed: Competition for qualified senior employees can be intense.
+Added: Competition for qualified management, technical and other personnel is intense, particularly in the technology industry in which we operate, and we may not be successful in attracting and retaining such personnel.
+Added: If we fail to attract and retain qualified employees, including internationally, our ability to grow our business could be harmed.
+Added: In order to attract and retain personnel in a competitive marketplace, we believe that we must provide a competitive compensation package, including cash and equity-based compensation.
+Added: Some of the companies with which we compete for experienced personnel may be able to offer more attractive terms of employment to potential candidates.
+Added: Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees.
We have also experienced difficulty in hiring and retaining highly skilled engineers with appropriate qualifications to support our growth and expansion.
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Our corporate headquarters are located in the San Francisco Bay Area and we have engineering activities in several locations throughout California, which in the past have experienced severe earthquakes.
−Removed: We do not carry earthquake insurance for any of our facilities except for our office in Calabasas, California.
−Removed: Earthquakes, fires, or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.
+Added: We do not carry earthquake insurance for any of our facilities except for the facility we own in Calabasas, California.
+Added: Earthquakes, wild fires, or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition and prospects.
The provision of certain of our products and services depends on the continuing operation of communications and transmission systems and mechanisms, including satellite, cable, wire, internet and over-the-air.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.