What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-15 compared with 2022-02-17 · 287 added, 265 removed, 1072 unchanged (34% of the section changed)

1 unchanged sentence

CONSOLIDATED FINANCIAL STATEMENTS:

Report of Independent Registered Public Ac counting Fi rm (PCAOB ID 238 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets as of December 31, 2022 and 2021

1 unchanged sentence

Consolidated Statements of Comprehensive Income for the years ended December 31, 202 2 , 202 1 and 20 20

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 202 2 , 202 1 a nd 20 20

Consolidated Statements of Cash Flows for the years ended December 31, 202 2 , 202 1 and 20 20

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of InterDigital, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

102 unchanged sentences

2022 2021 2020

Patent licensing royalties $ 420,528 $ 346,630 $ 307,431

Technology solutions 4,881 11,761 10,518

Patent sales — 600 975

Total Revenue 425,409 358,991 318,924

REVENUES $ 457,794 $ 425,409 $ 358,991

OPERATING EXPENSES:

Patent administration and licensing 175,741 170,178 154,940

Development 89,368 84,646 74,860

Selling, general and administrative 61,217 48,999 51,289

Research and portfolio development 185,202 200,484 204,360

Licensing 71,419 64,625 50,464

General and administrative 47,377 61,217 48,999

Restructuring activities 3,280 27,877 —

2 unchanged sentences

INTEREST EXPENSE ( 29,496 ) ( 25,225 ) ( 40,799 )

OTHER INCOME, NET 11,575 16,924 29,062

OTHER (EXPENSE) INCOME, NET ( 3,457 ) 11,575 16,924

Income before income taxes 117,563 57,556 31,293

17 unchanged sentences

Net income $ 92,061 $ 42,188 $ 37,941

Unrealized (loss) gain on investments, net of tax ( 387 ) ( 110 ) 2,397

Unrealized loss on investments, net of tax ( 345 ) ( 387 ) ( 110 )

Comprehensive income $ 91,716 $ 41,801 $ 37,831

8 unchanged sentences

Comprehensive

Income (Loss)

Common Stock Additional

8 unchanged sentences

Net loss attributable to noncontrolling interest — — — — — — — ( 6,860 ) ( 6,860 )

Net change in unrealized gain on short-term investments — — — — 2,397 — — — 2,397

Net change in unrealized loss on short-term investments — — — — ( 110 ) — — — ( 110 )

Dividends declared ($ 1.40 per share)

4 unchanged sentences

Repurchase of common stock — — — — — 6 ( 349 ) — ( 349 )

Equity component of debt, net of tax — — 56,917 — — — — — 56,917

Net convertible note hedge transactions, net of tax — — ( 49,740 ) — — — — — ( 49,740 )

Net warrant transactions — — 43,416 — — — — — 43,416

Deferred financing costs allocated to equity, net of tax — — ( 1,692 ) — — — — — ( 1,692 )

Reacquisition of equity component of debt due to prepayment, net of tax — — ( 10,649 ) — — — — — ( 10,649 )

BALANCE, DECEMBER 31, 2020 71,389 $ 714 $ 738,481 $ 1,413,969 $ ( 184 ) 40,573 $ ( 1,379,611 ) $ 23,197 $ 796,566

Adjustment related to the adoption of ASU 2020-06 — — ( 55,349 ) 15,587 — — — — ( 39,762 )

Net income attributable to InterDigital, Inc.

— — — 55,295 — — — — 55,295

Proceeds from and increases in noncontrolling interests — — — — — — — 5,333 5,333

Net loss attributable to noncontrolling interest — — — — — — — ( 13,107 ) ( 13,107 )

Proceeds from and increases in noncontrolling interests — — — — — — — 100 100

Noncontrolling interest distribution — — — — — — — ( 2,512 ) ( 2,512 )

Net change in unrealized loss on short-term investments — — — — ( 387 ) — — — ( 387 )

6 unchanged sentences

BALANCE, DECEMBER 31, 2021 71,720 $ 717 $ 713,599 $ 1,441,105 $ ( 571 ) 41,031 $ ( 1,409,611 ) $ 7,678 $ 752,917

Adjustment related to the adoption of ASU 2020-06 — — ( 55,349 ) 15,587 — — — — ( 39,762 )

Net income attributable to InterDigital, Inc.

1 unchanged sentence

Net loss attributable to noncontrolling interest — — — — — — — ( 1,632 ) ( 1,632 )

Proceeds from and increases in noncontrolling interests — — — — — — — 100 100

Noncontrolling interest distribution — — — — — — — ( 1,928 ) ( 1,928 )

Non-controlling interest contributions — — — — — — — 1,500 1,500

Net change in unrealized loss on short-term investments — — — — ( 345 ) — — — ( 345 )

5 unchanged sentences

Repurchase of common stock — — — — — 1,224 ( 74,445 ) — ( 74,445 )

Net convertible note hedge transactions, net of tax — — ( 54,257 ) — — — — — ( 54,257 )

Net warrant transactions — — 39,863 — — — — — 39,863

BALANCE, DECEMBER 31, 2022 71,923 $ 719 $ 717,102 $ 1,492,046 $ ( 916 ) 42,255 $ ( 1,484,056 ) $ 5,618 $ 730,513

12 unchanged sentences

Non-cash change in fair value 1,686 ( 7,649 ) ( 5,588 )

Gain on asset acquisition and sale of a business — — ( 22,690 )

Change in deferred revenue 85,403 ( 16,868 ) 24,397

1 unchanged sentence

Share-based compensation 22,127 28,736 10,442

Impairment of long-term investment — — 3,312

Loss on extinguishment of debt 11,190 — —

Loss on disposal of assets — — 7,539

Impairment of patents 13,228 — —

Impairment of assets 2,427 13,228 —

Other — — 412

2 unchanged sentences

Deferred charges and other assets ( 13,453 ) ( 9,894 ) ( 26,256 )

(Decrease) increase in liabilities:

Increase (decrease) in liabilities:

Accounts payable 6,868 ( 1,803 ) ( 2,850 )

9 unchanged sentences

Long-term investments — 1,363 4,285

Net cash provided by (used in) investing activities 179,639 ( 310,046 ) 268,256

Net cash (used in) provided by investing activities ( 314,706 ) 179,639 ( 310,046 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from exercise of stock options 7,950 1,892 2

Proceeds from issuance of senior convertible notes — — 400,000

Payments on long-term debt — ( 94,909 ) ( 221,091 )

Proceeds from issuance of convertible senior notes 460,000 — —

Purchase of convertible bond hedge ( 80,500 ) — —

Payment for warrant unwind — — ( 4,184 )

Prepayment penalty on long-term debt — — ( 10,763 )

Proceeds from hedge unwind — — 9,038

Proceeds from issuance of warrants 43,700 — —

Payments on long-term debt ( 282,499 ) — ( 94,909 )

Proceeds from bond hedge unwind 11,851 — —

Payment for warrant unwind ( 3,837 ) — —

Payments of debt issuance costs ( 9,829 ) — —

Proceeds from noncontrolling interests 100 5,333 15,666

Repurchase of common stock ( 74,445 ) ( 30,000 ) ( 349 )

Net proceeds from exercise of stock options 1,226 7,950 1,892

Non-controlling interest contribution 1,500 100 5,333

Non-controlling interest distribution — ( 2,512 ) —

Dividends paid ( 43,058 ) ( 43,072 ) ( 44,580 )

Taxes withheld upon restricted stock unit vestings ( 6,257 ) ( 6,950 ) ( 1,751 )

Repurchase of common stock ( 30,000 ) ( 349 ) ( 196,269 )

Net cash used in financing activities ( 74,470 ) ( 132,856 ) ( 89,324 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 235,561 ( 279,435 ) 268,365

Dividends paid ( 42,306 ) ( 43,058 ) ( 43,072 )

Net cash provided by (used in) financing activities 18,604 ( 74,470 ) ( 132,856 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 10,063 ) 235,561 ( 279,435 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 713,224 477,663 757,098

21 unchanged sentences

If different assumptions were made or different conditions had existed, our financial results could have been materially different.

InterDigital has analyzed the impact of the ongoing Coronavirus pandemic (“COVID-19”) on its financial statements as of December 31, 2021.

InterDigital has determined that the changes to its significant judgments and estimates as a result of COVID-19 did not have a material impact on its financial statements.

The Company has analyzed the impact of the ongoing Coronavirus pandemic (“COVID-19”) on its financial statements as of December 31, 2022.

The Company has determined that the changes to its significant judgments and estimates as a result of COVID-19 did not have a material impact on its financial statements.

The potential impact of COVID-19 will continue to be analyzed going forward.

Prior Periods' Financial Statement Revision

During 2021, we determined that we had incorrectly classified $ 24.3 million of tax receivables as other current assets, whereas we should have reflected these as other non-current assets within the December 31, 2020 consolidated balance sheet.

Although we concluded that such misclassification did not materially misstate the previously issued financial statements, we have corrected the classification by revising the accompanying 2020 balance sheet and footnotes.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

During 2022, the Company made reclassifications between the operating expenses lines on the consolidated income statement in order to more clearly reflect the Company’s investments to create and protect the value of our innovations.

The Company grouped research and portfolio related costs within the line " Research and portfolio development ", previously referred to as "Development", which resulted in reclassifying certain portfolio related costs out of the " Licensing " line, previously referred to as " Patent administration and licensing ", and into " Research and portfolio development.

" The impact of this reclassification was $ 110.9 million, $ 111.1 million, and $ 119.7 million for the twelve months ended December 31, 2022, 2021, and 2020, respectively.

Additionally, the previous "Selling, general, and administrative" line is now referred to as "General and administrative".

Supplemental Cash Flow Information

7 unchanged sentences

Dividend payable 10,384 10,741 10,786

Increases in noncontrolling interests — — 13,750

Accrued debt issuance costs 100 — —

Non-cash acquisition of patents 30,100 — 33,300

Right-of-use assets obtained in exchange of operating lease liabilities (a)

739 2,524 14,427

Non-cash distribution of patents 1,928 — —

Right-of-use assets obtained in exchange of operating lease liabilities 6,644 739 2,524

Accrued capitalized patent costs and property and equipment 4,026 2,021 ( 436 )

_____________

Effective January 1, 2019, we adopted ASU 2016-02, "Leases (Topic 842)", which outlines a comprehensive change to the lease accounting model.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING GUIDANCE

14 unchanged sentences

If an investment is deemed to have experienced an other-than-temporary decline below its cost basis, we reduce the carrying amount of the investment to its quoted or estimated fair value, as applicable, and establish a new cost basis for the investment.

We charge the impairment to the " Other income, net" line of our consolidated statements of income.

We charge the impairment to the " Other (expense) income, net" line of our consolidated statements of income.

Intangible Assets

8 unchanged sentences

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination.

We review impairment of goodwill annually on the first day of the fourth quarter.

We first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether a quantitative goodwill impairment test is necessary.

If we conclude it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, we need not perform the quantitative assessment.

If based on the qualitative assessment we believe it is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment test is required to be performed.

This assessment requires us to compare the fair value of each reporting unit to its carrying value including allocated goodwill.

We review impairment of goodwill annually on the first day of the fourth quarter or if circumstances indicate a triggering event has occurred.

We first assess qualitative factors to determine whether it is more likely than not that the fair value of our one reporting unit is less than its carrying amount as a basis for determining whether a quantitative goodwill impairment test is necessary.

If we conclude it is more likely than not that the fair value of the reporting unit exceeds its carrying amount, we need not perform the quantitative assessment.

If based on the qualitative assessment we believe it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative assessment test is required to be performed.

This assessment requires us to compare the fair value of our reporting unit to its carrying value including allocated goodwill.

We determine the fair value of our reporting units generally using a combination of the income and market approaches.

1 unchanged sentence

The market approach estimates the fair value of our equity by utilizing the market comparable method which is based on revenue multiples from comparable companies in similar lines of business.

If the carrying value of a reporting unit exceeds the reporting unit’s fair value, a goodwill impairment charge will be recorded for the difference up to the carrying value of goodwill.

If the carrying value of our reporting unit exceeds the reporting unit’s fair value, a goodwill impairment charge will be recorded for the difference up to the carrying value of goodwill.

The carrying value of goodwill was $ 22.4 million as of December 31, 2022 and December 31, 2021, which was included within " Other non-current assets, net " in the consolidated balance sheets.

No impairments were recorded during 2022, 2021 or 2020 as a result of our annual goodwill impairment assessment.

Other Intangible Assets

We capitalize the cost of technology solutions and platforms we acquire or license from third parties when they have a future benefit and the development of these solutions and platforms is substantially complete at the time they are acquired or licensed.

Intangible assets consist of acquired patents, existing technology, and trade names.

Refer to the above Patents section for more information on acquired patents and existing technology.

We make judgments about the recoverability of purchased finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable.

If such facts and circumstances exist, we assess recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts.

Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets.

If the useful life is shorter than originally estimated, we would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

Property and Equipment

22 unchanged sentences

When factors indicate that such assets should be evaluated for possible impairment, we review whether we will be able to realize our long-lived assets by analyzing the projected undiscounted cash flows in measuring whether the asset is recoverable.

In 2022, we recognized a $ 2.4 million impairment, comprised of $ 0.4 million of property and equipment and $ 2.0 million of right of use assets, related to the abandonment of portions of three of our leased properties, which was included within “ Restructuring activities ” in the consolidated statement of income.

In 2021, a non-controlled subsidiary that we consolidate for financial statement purposes approved a plan to sell certain patents, which resulted in the Company recognizing a $ 13.2 million impairment, as discussed further in Note 20, " Restructuring Activities".

In 2020, we recognized a $ 1.1 million impairment, comprised of $ 0.8 million of Property, Plant, and Equipment, and $ 0.3 million of Operating lease right-of-use asset related to the abandonment of one of our leased properties, which was included within “ Operating Expense ” in the consolidated statement of income.

We did not have any long-lived asset impairments in 2019 .

Revenue Recognition

13 unchanged sentences

Contract assets due more than twelve months after the balance sheet date are included within other non-current assets.

For certain patent license agreements or other contractual arrangements, the amount of consideration that we will receive is uncertain.

In such cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance.

Such estimates are only recognized to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur.

We analyze the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if necessary, constrain the amount of estimated revenues recognized in order to mitigate this risk, which may result in recognizing revenues less than amounts we expect we are most likely to receive.

These aforementioned estimates may require significant judgment.

Patent License Agreements

22 unchanged sentences

We typically receive these royalty reports subsequent to the period in which our licensees’ underlying sales occurred.

As a result, we are required to estimate revenues, subject to the constraint on our ability to estimate such amounts and will record a true-up when we receive the actual royalty report from the licensee.

As a result, we are required to estimate revenues and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, considering all relevant information (historical, current and forecasted) that is reasonably available to us.

Estimating licensees’ quarterly royalties prior to receiving the royalty reports requires us to make assumptions and judgments related to forecasted trends and growth rates used to estimate our licensees’ sales, which could have an impact on the amount of revenue we report on a quarterly basis.

As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees.

Technology Solutions

2 unchanged sentences

We recognize revenue from royalty payments and license agreements using the same methods described above under our policy for recognizing revenue from patent license agreements.

We recognize revenue from engineering services using percentage of completion method.

Our business strategy of monetizing our intellectual property includes the sale of select patent assets.

As patent sales executed under this strategy represent a component of our ongoing major or central operations and activities, we will record the related proceeds as revenue.

We will recognize the revenue in accordance with the five-step model, generally upon closing of the patent sale transaction.

We recognize revenue from engineering services using the percentage of completion method.

During 2022, we determined patent sales are no longer a part of the company’s on-going central operations and therefore will no longer be accounted for as revenue.

Accounts Receivable

35 unchanged sentences

We defer recognition of commission expense and amortize these expenses in proportion to our recognition of the related revenue.

Commission expense is included within the " Patent administration and licensing" line of our consolidated statements of income and was immaterial for the years presented.

There were no new direct contract costs incurred during 2021, 2020 or 2019.

Commission expense is included within the " Licensing" line of our consolidated statements of income and was immaterial for the years presented.

There were $ 0.7 million of new direct contract costs in 2022 and no new direct contract costs incurred during 2021 or 2020.

Incremental direct costs incurred related to a debt financing transaction may be capitalized.

In connection with our offering of the 2024 Notes and 2020 Notes, defined and discussed in detail within Note 9, " Obligations" , we incurred directly related costs.

The initial purchasers' transaction fees and related offering expenses were allocated to the liability and equity components of the debt in proportion to the allocation of proceeds and accounted for as debt issuance costs.

The debt issuance costs allocated to the liability component of the debt were capitalized as deferred financing costs and recorded as a direct reduction of the debt.

In connection with our offering of the 2027 Notes, 2024 Notes, and 2020 Notes, defined and discussed in detail within Note 9, " Obligations" , we incurred directly related costs.

The debt issuance costs of the debt were capitalized as deferred financing costs and recorded as a direct reduction of the debt.

These costs are being amortized over the term of the debt using the effective interest method and are included within the " Interest expense" line of our consolidated statements of income.

The costs allocated to the equity component of the debt were recorded as a reduction of the equity component of the debt.

The balance of unamortized deferred financing costs as of December 31, 2022 and 2021 was $ 9.8 million and $ 4.4 million, respectively.

The Company incurred $ 6.4 million of new debt issuance costs during 2019 in conjunction with the issuance of the 2024 Notes, noting no new debt issuance costs were incurred in 2021 or 2020.

The Company incurred $ 9.9 million of new debt issuances costs in 2022 in conjunction with the issuance of the 2027 Notes, $ 6.4 million in 2020 in conjunction with the issuance of the 2024 Notes, and no new debt issuance costs were incurred in 2021.

Deferred financing expense was $ 2.0 million, $ 1.6 million and $ 1.2 million in 2022, 2021 and 2020, respectively.

Research and Development

Research and development expenditures are expensed in the period incurred, except certain software development costs that are capitalized between the point in time that technological feasibility of the software is established and when the product is available for general release to customers.

Research and Portfolio Development

Research and portfolio development expenditures are expensed in the period incurred, except certain software development costs that are capitalized between the point in time that technological feasibility of the software is established and when the product is available for general release to customers.

We did not have any capitalized software costs related to research and development in any period presented.

Research, development and other related costs were approximately $ 89.4 million, $ 84.6 million and $ 74.9 million in 2021, 2020 and 2019, respectively.

Research and portfolio development costs were approximately $ 185.2 million, $ 200.5 million and $ 204.4 million in 2022, 2021 and 2020, respectively.

Compensation Programs

5 unchanged sentences

The estimated value of stock options includes assumptions around expected life, stock volatility and dividends.

The expected life of our stock option awards is based on the simplified method as prescribed by Staff Accounting Bulletin Topic 14.

For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method as prescribed by Staff Accounting Bulletin Topic 14.

The simplified method was used because the Company does not believe it has sufficient historical exercise data to provide a reasonable basis for the expected term of its grants.

In all periods, our policy has been to set the value of RSUs awards equal to the value of our underlying common stock on the date of measurement.

5 unchanged sentences

The inclusion of windfalls and shortfalls in the tax provision could increase our earnings volatility between periods.

Tax windfalls related to share-based compensation for the years ended 2021, 2020 and 2019 were $ 0.8 million, $ 0.2 million and $ 0.2 million, respectively.

Tax windfalls and shortfalls related to share-based compensation was shortfalls of $ 0.4 million for the year ended 2022, and windfalls for the years ended 2021 and 2020 of $ 0.8 million and $ 0.2 million, respectively.

Restructuring

17 unchanged sentences

In the event that the IRS or another taxing jurisdiction levies an assessment in the future, it is possible the assessment could have a material adverse effect on our consolidated financial condition or results of operations.

Treasury Stock

We record the repurchase of our shares of common stock at cost based on the settlement date of the transaction.

These shares are classified as treasury stock, which is a reduction to shareholders’ equity.

Treasury shares are included in authorized and issued shares, but excluded from outstanding shares.

In August 2022, the Inflation Reduction Act was enacted in the United States, which included, among other items, a 1 % excise tax on certain net stock repurchases after December 31, 2022.

Any such excise tax on our stock repurchases will be recorded as a component of stockholders’ equity, as Treasury Stock.

New Accounting Guidance

Accounting Standards Update:

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" ("ASU 2019-12").

The amendments in this ASU are intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options

In May 2021, the FASB issued ASU No.

The amendments in this ASU are intended to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options, including warrants, that remain equity classified after modification or exchange.

ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, with early adoption allowed.

14 unchanged sentences

In addition, the adoption requires the use of the if-converted method of calculating diluted earnings per share rather than the treasury stock method for convertible instruments and requires the inclusion of the potential effect of shares settled in cash or shares in the diluted earnings per share calculation.

Due to the reduction in non-cash interest expense, this adoption increased basic and diluted earnings per share by $ 0.35 and $ 0.34 , respectively, in the year ended December 31, 2021.

During fourth quarter 2021, we determined that in our early adoption of this accounting standard, we incorrectly accounted for the adoption by increasing debt and decreasing retained earnings by $ 50.2 million, which resulted in a $ 10.4 million understatement of deferred taxes, $ 65.8 million understatement of retained earnings and $ 55.4 million overstatement of additional paid-in capital.

We have concluded that this error did not result in our previously issued 2021 interim financial statements being materially misstated.

We will, however, correct the error by prospectively revising our previously issued financial statements as of and for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021 in connection with our 2022 quarterly filings on Form 10-Q.

The accompanying annual financial statements reflect the correct accounting for the adoption of this standard.

Accounting Standards Update:

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options

In May 2021, the FASB issued ASU No.

ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, with early adoption allowed.

We have determined that the adoption will not have a material impact on our consolidated financial statements.

REVENUE RECOGNITION

Disaggregated Revenue

We recently experienced significant growth in licensing our horizontal technologies from our foundational research across new vertical markets.

Accordingly, we have disaggregated revenue between Smartphone and Consumer Electronics ("CE"), IoT/Auto.

We believe this better reflects both our current revenue sources and our growth opportunities across these vertical markets.

The following table presents the disaggregation of our revenue for the year ended December 31, 2022, 2021 and 2020 (in thousands):

1 unchanged sentence

2022 2021 2020

Variable patent royalty revenue $ 32,234 $ 26,587 $ 30,428

Fixed-fee royalty revenue 314,585 298,461 257,221

Current patent royalties a

346,819 325,048 287,649

Non-current patent royalties b

73,709 21,582 19,782

Total patent royalties 420,528 346,630 307,431

Current technology solutions revenue a

Recurring revenues:

Smartphone $ 351,064 $ 315,098 $ 302,097

CE, IoT/Auto 51,717 31,721 22,951

Other 1,107 4,881 11,761

Total recurring revenues 403,888 351,700 336,809

Non-recurring revenues a

53,906 73,709 22,182

Patent sales b

Total revenue $ 425,409 $ 358,991 $ 318,924

Recurring revenues are comprised of current patent royalties, inclusive of Dynamic Fixed-Fee Agreement royalties, and current technology solutions revenue.

Non-recurring revenues are comprised of non-current patent royalties, which includes past patent royalties and royalties from static agreements, as well as patent sales.

Total revenues $ 457,794 $ 425,409 $ 358,991

Non-recurring revenues are comprised of past patent royalties and revenues from static agreements.

During the year ended December 31, 2022, we recognized $ 291.5 million of revenue that had been included in deferred revenue as of the beginning of the period.

2 unchanged sentences

Contracted Revenue

Based on contracts signed and committed Dynamic Fixed-Fee Agreement payments as of December 31, 2021, we expect to recognize the following amounts of revenue over the term of such contracts (in thousands):

Based on Dynamic Fixed-Fee Agreements as of December 31, 2022, we expect to recognize the following amounts of revenue over the term of such contracts (in thousands):

2023 $ 267,053

Thereafter 237,815

(a) This table does not include any revenue that we expect to recognize under our arbitration or resulting patent license agreement with Samsung.

GEOGRAPHIC / CUSTOMER CONCENTRATION

13 unchanged sentences

Europe 10,543 15,762 22,194

Other Asia — — 279

Total revenue $ 457,794 $ 425,409 $ 358,991

During 2022, 2021 and 2020, the following licensees or customers accounted for 10% or more of total revenues:

For the Year Ended December 31,

2022 2021 2020

3 unchanged sentences

Customer D <10% 10 % 15 %

Customer E < 10 % < 10 % 10 %

As of December 31, 2021, and 2020, we held $ 377.0 million and $ 435.0 million of our property, equipment and patents, net of accumulated depreciation and amortization, respectively, of which greater than 90 % of the total was within the United States in each of the years presented.

As of December 31, 2022, and 2021, we held $ 365.3 million and $ 377.0 million of our property, equipment and patents, net of accumulated depreciation and amortization, respectively, of which 93 % of the total was within the United States in each of the years presented.

As of December 31, 2022 and 2021, we held $ 27.2 million and $ 25.9 million of property, equipment and patents, net of accumulated depreciation and amortization, collectively, in Canada and Europe.

4 unchanged sentences

Commercial paper 26,741 7,499

government securities 15,707 —

Corporate bonds, asset backed and other securities 16,888 —

Total cash, cash equivalents and restricted cash $ 703,161 $ 713,224

37 unchanged sentences

Our accounts receivable are derived principally from patent license and technology solutions agreements.

As of December 31, 2021, four licensees comprised 66 %, and as of December 31, 2020 five licensees comprised 53 %, of our accounts receivable balance.

As of December 31, 2022, four licensees comprised 76 %, and as of December 31, 2021 four licensees comprised 66 %, of our accounts receivable balance.

We perform ongoing credit evaluations of our licensees, who generally include large, multinational, wireless telecommunications equipment manufacturers.

20 unchanged sentences

— 209,956 — 209,956

government securities — 51,301 — 51,301

Corporate bonds, asset backed and other securities — 33,091 — 33,091

government securities (c)

— 243,840 — 243,840

Corporate bonds, asset backed and other securities (d)

— 113,838 — 113,838

$ 643,825 $ 567,634 $ — $ 1,211,459

Fair Value as of December 31, 2021

3 unchanged sentences

Commercial paper (b)

— 158,452 — 158,452

government securities — 51,301 — 51,301

4 unchanged sentences

(b) As of December 31, 2022 and 2021, $ 26.7 million and $ 7.5 million of commercial paper was included within cash and cash equivalents, respectively.

Level 3 Fair Value Measurements

Contingent Consideration

During second quarter 2019, we completed the R&I Acquisition.

The transaction met the definition of an asset acquisition and was accounted for using the cost accumulation and allocation model.

As part of this acquisition, Technicolor reduced its rights to the revenue-sharing arrangement that created the initial contingent consideration liability from the Technicolor Patent Acquisition.

We determined that the initial contingent consideration liability from the Technicolor Patent Acquisition was significantly modified in conjunction with the R&I Acquisition, and, as such, the contingent consideration liability will now be accounted for under ASC 450 - Contingencies under the asset acquisition framework when the liability is deemed probable and estimable.

Since the contingent consideration liability arising from the amended revenue-sharing arrangement was not probable and estimable as of the acquisition date, the carrying value of the previous contingent consideration liability was derecognized, which resulted in a $ 20.5 million gain which is included within " Other income, net " in the consolidated statement of income for the year ended December 31, 2019.

Therefore, effective as of the acquisition date of May 31, 2019, the contingent consideration liability was no longer a Level 3 fair value recurring measurement.

As of December 31, 2021 and 2020 , the contingent consideration liability from the amended revenue-sharing arrangement was deemed not probable and estimable and is therefore not reflected within the consolidated financial statements.

government securities was included within cash and cash equivalents.

(d) As of December 31, 2022, $ 16.9 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents.

Fair Value of Long-Term Debt

7 unchanged sentences

2027 Senior Convertible Long-Term Debt $ 460,000 $ 451,062 $ 441,485 $ — $ — $ —

2024 Senior Convertible Long-Term Debt $ 126,174 $ 125,342 $ 119,941 $ 400,000 $ 395,632 $ 437,760

Technicolor Patent Acquisition Long-term Debt

10 unchanged sentences

Any adjustments to the carrying value of those investments are considered non-recurring fair value measurements.

During year ended December 31, 2021 and 2020, we recognized $ 7.6 million and $ 5.6 million, respectively, of gains resulting from observable price changes of our long-term strategic investments, which was included within “ Other income, net ” in the consolidated statement of income.

During the year ended December 31, 2019, we recognized a net loss of $ 2.6 million resulting from the partial impairment of one of our strategic investments partially offset by a gain on sale of a separate strategic investment, which is included within " Other income, net " in the consolidated statement of income.

During year ended December 31, 2022, we recognized a net loss of $ 1.3 million and during year ended 2021 and 2020 we recognized gains of $ 7.6 million, and $ 5.6 million, respectively, resulting from observable price changes of our long-term strategic investments, which were included within “ Other (expense) income, net ” in the consolidated statement of income.

Certain of our investments in other entities may be seeking additional financing in the next twelve months or potential exit strategies.

We will continue to review and monitor our investments in other entities for any indications of an increase in fair value or impairment.

During 2020, we recognized a $ 1.1 million impairment, comprised of $ 0.8 million of Property, Plant, and Equipment, and $ 0.3 million of Operating lease right-of-use asset related to the abandonment of one of our leased properties, which was included within “ Operating Expense ” in the consolidated statement of income.

During 2020, we recognized a $ 1.1 million impairment, comprised of $ 0.8 million of Property and Equipment, and $ 0.3 million of Operating lease right-of-use asset related to the abandonment of one of our leased properties, which was included within “ Operating Expenses ” in the consolidated statement of income.

During 2021, we recognized a $ 13.2 million impairment, resulting from our restructuring activities as described in Note 20, " Restructuring Activities ", which was included within “ Restructuring activities ” expenses in the consolidated statement of income.

The Patents held for sale are recorded at fair value on December 31, 2021 and are included within " Prepaid and other current assets " in the consolidated balance sheet.

Also during 2021, we renewed our multi-year, worldwide, non-exclusive patent license agreement with Sony.

A portion of the future consideration for the agreement was in the form of patents.

We have yet to record these patents on our balance sheet as of December 31, 2021 as they have not yet been transferred.

However, we have determined the estimated fair value of the patents for determining the transaction price for revenue recognition purposes, which was estimated to be $ 30.1 million utilizing the income and market approach.

The value will be amortized as a non-cash expense over the patents' estimated useful lives once transferred.

The Patents held for sale are recorded at fair value on December 31, 2022 and 2021 and are included within " Prepaid and other current assets " in the consolidated balance sheet.

Also during 2021, we renewed our multi-year, worldwide, non-exclusive patent license agreement with Sony and a portion of the future consideration for the agreement was in the form of patents.

These patents transferred during 2022 and we have determined the estimated fair value of the patents for determining the transaction price for revenue recognition purposes, which was estimated to be $ 30.1 million utilizing the income and market approach.

The value will be amortized as a non-cash expense over the patents' estimated useful lives.

During 2020, we entered into a patent license agreement with Huawei and a portion of the future consideration for the agreement was in the form of patents.

1 unchanged sentence

The value is amortized as a non-cash expense over the patents' estimated useful lives.

During 2019 we entered into patent license agreements with ZTE for which a portion of the consideration was patents.

The estimated fair value of the ZTE patents was $ 14.0 million which are being amortized as a non-cash expense over their estimated useful lives.

We estimated the fair value of the patents in the ZTE transaction utilizing the market approach.

As noted above, we estimated the fair value of the patents in these transactions using one of, or a combination of, an analysis of comparable market transactions (the market approach), a discounted cash flow analysis (the income approach) and/or by quantifying the amount of money required to replace the future service capability of the assets (the cost approach).

20 unchanged sentences

Amortization expense related to capitalized patent costs was $ 73.4 million, $ 71.5 million and $ 74.9 million in 2022, 2021 and 2020, respectively.

These amounts are recorded within the " Patent administration and licensing" line of our consolidated statements of income.

These amounts are recorded within the " Licensing" line of our consolidated statements of income.

The estimated aggregate amortization expense for the next five years related to our patents balance as of December 31, 2022 is as follows (in thousands):

2023 $ 71,443

2027 $ 44,027

The following table shows the change in the carrying amount of our goodwill balance from December 31, 2020 to December 31, 2022, all of which is allocated to our one reportable segment (in thousands):

3 unchanged sentences

Long-term debt obligations, excluding the long-term debt resulting from the Technicolor Patent Acquisition, are comprised of the following (in thousands):

2.00 % Senior Convertible Notes due 2024

$ 400,000 $ 400,000

Unamortized interest discount (a)

2027 Notes 2024 Notes Total 2024 Notes

Principal $ 460,000 $ 126,174 $ 586,174 $ 400,000

Deferred financing costs ( 8,938 ) ( 832 ) ( 9,770 ) ( 4,368 )

Total net carrying amount of Senior Convertible Notes $ 395,632 $ 343,821

_____________

Due to the adoption of ASU 2020-06 on January 1, 2021, the unamortized interest discount was reclassified back to the carrying value of the 2024 Notes.

Refer to Note 2, " Summary of Significant Accounting Policies and New Accounting Guidance ", for further information regarding this adoption.

Net carrying amount of the Convertible Notes $ 451,062 $ 125,342 $ 576,404 $ 395,632

There were no finance leases as of December 31, 2022 or December 31, 2021.

Maturities of principal of the long-term debt obligations of the Company as of December 31, 2022, excluding the long-term debt resulting from the Technicolor Patent Acquisition, are as follows (in thousands):

2027 Notes, and Related Note Hedge and Warrant Transactions

On May 27, 2022 we issued $ 460.0 million in aggregate principal amount of 3.50 % Senior Convertible Notes due 2027 (the "2027 Notes").

The net proceeds from the issuance of the 2027 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $ 450.0 million.

The 2027 Notes bear interest at a rate of 3.50 % per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2022, and mature on June 1, 2027, unless earlier redeemed, converted or repurchased.

The 2027 Notes will be convertible into cash up to the aggregate principal amount of the notes to be converted and in respect of the remainder, if any, of the Company’s obligation in excess of the aggregate principal amount of the notes being converted, pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, at an initial conversion rate of 12.9041 shares of Common Stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $ 77.49 per share).

The conversion rate, and thus the conversion price, may be adjusted under certain circumstances, including in connection with conversions made following fundamental changes and under other circumstances as set forth in the indenture governing the 2027 Notes.

Prior to 5:00 p.m., New York City time, on the business day immediately preceding March 1, 2027, the notes will be convertible only under the following circumstances:

(1) on any date during any calendar quarter (and only during such calendar quarter) beginning after September 30, 2022 if the closing sale price of the Common Stock was more than 130 % of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter;

(2) if the Company distributes to all or substantially all holders of the Common Stock any rights, options or warrants (other than in connection with a stockholder rights plan prior to separation of such rights from the shares of the Common Stock) entitling them to purchase, for a period of 45 calendar days or less from the issuance date for such distribution, shares of Common Stock at a price per share less than the average closing sale price for the ten consecutive trading day period ending on, and including, the trading day immediately preceding the declaration date for such distribution;

(3) if the Company distributes to all or substantially all holders of the Common Stock any cash or other assets, debt securities or rights to purchase the Company’s securities (other than pursuant to a rights plan), which distribution has a per share value exceeding 10 % of the closing sale price of the Common Stock on the trading day immediately preceding the declaration date for such distribution;

(4) if the Company engages in certain corporate transactions as described in the indenture governing the 2027 Notes;

(5) if the Company calls the notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date;

(6) during a specified period if a fundamental change (as defined in the indenture governing the 2027 Notes) occurs;

or (7) during the five consecutive business day period following any five consecutive trading day period in which the trading price for the notes for each day during such five trading day period was less than 98 % of the closing sale price of the Common Stock multiplied by the applicable conversion rate on each such trading day.

Commencing on March 1, 2027, the notes will be convertible in multiples of $ 1,000 principal amount, at any time prior to 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date of the notes.

The Company may not redeem the notes prior to June 5, 2025.

The Company may redeem for cash all or any portion of the notes, at the Company’s option, on or after June 5, 2025, if the last reported sale price of the Common Stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on and including the trading day preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest to, but excluding the redemption date.

If a fundamental change (as defined in the indenture governing the 2027 Notes) occurs, holders may require the Company to purchase all or a portion of their Notes for cash at a repurchase price equal to 100 % of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2027 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with any of the Company’s current and any future senior unsecured indebtedness, including its 2.00 % senior convertible notes due 2024 (the “2024 Notes” and together with the 2027 Notes, the "Convertible Notes").

The 2027 Notes are effectively subordinated to all of the Company’s future secured indebtedness to the extent of the value of the related collateral, and the 2027 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of the Company’s subsidiaries.

On May 24 and May 25, 2022, in connection with the offering of the 2027 Notes, we entered into convertible note hedge transactions (collectively, the “2027 Note Hedge Transactions”) that cover, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2027 Notes, subject to adjustment, and are exercisable upon any conversion of the 2027 Notes.

The aggregate cost of the 2027 Note Hedge Transactions was $ 80.5 million.

Also on May 24 and May 25, 2022, we also entered into privately negotiated warrant transactions (collectively, the “2027 Warrant Transactions” and, together with the 2027 Note Hedge Transactions, the “2027 Call Spread Transactions”), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock at an initial strike price of $ 106.37 per share, subject to adjustment.

As consideration for the 2027 Warrant Transactions, we received aggregate proceeds of $ 43.7 million.

The net cost of the 2027 Call Spread Transactions was $ 36.8 million, which was funded out of the net proceeds from the offering of the 2027 Notes.

Accounting Treatment of the 2027 Notes and Related Convertible Note Hedge and Warrant Transactions

The 2027 Call Spread Transactions were classified as equity and the 2027 Notes were classified as long-term debt.

The effective interest rate is approximately 4.02 %.

In connection with the above-noted transactions, the Company incurred approximately $ 9.9 million of directly related costs, which were capitalized as deferred financing costs and as a reduction of long-term debt.

These costs are being amortized as interest expense over the term of the debt using the effective interest method.

2024 Senior Convertible Notes, and Related Note Hedge and Warrant Transactions

19 unchanged sentences

and (iii) $ 24.4 million, in addition to the proceeds from the 2024 Warrant Transactions discussed above, was used to fund the cost of the 2024 Call Spread Transactions.

Accounting Treatment of the 2024 Notes and Related Convertible Note Hedge and Warrant Transactions

The 2024 Call Spread Transactions were classified as equity.

The Company bifurcated the proceeds from the offering of the 2024 Notes between liability and equity components.

On the date of issuance, the liability and equity components were calculated to be approximately $ 328.0 million and $ 72.0 million, respectively.

The initial $ 328.0 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature.

The initial $ 72.0 million ($ 56.9 million net of tax) equity component represents the difference between the fair value of the initial $ 328.0 million in debt and the $ 400.0 million gross proceeds.

The related initial debt discount of $ 72.0 million was being amortized over the life of the 2024 Notes using the effective interest method.

An effective interest rate of 6.25 % was used to calculate the debt discount on the 2024 Notes.

Upon the adoption of ASU 2020-06 on January 1, 2021, we reclassified the unamortized debt discount from equity to Long-term debt.

Refer to Note 2, " Summary of Significant Accounting Policies and New Accounting Guidance " for further information regarding this adoption.

In connection with the above-noted transactions, the Company incurred approximately $ 8.4 million of directly related costs.

The initial purchasers' transaction fees and related offering expenses were allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt and equity issuance costs, respectively.

We allocated $ 6.4 million of debt issuance costs to the liability component, which were capitalized as deferred financing costs.

These costs are being amortized as interest expense over the term of the debt using the effective interest method.

The remaining $ 1.9 million of costs ($ 1.7 million net of tax) allocated to the equity component were recorded as a reduction of equity.

In 2022, the Company repurchased $ 273.8 million in aggregate principal amount of the 2024 Notes in privately negotiated transactions concurrently with the offering of the 2027 Notes.

We specifically negotiated the repurchase of the 2024 Notes with investors who concurrently purchased the 2027 Notes, such that their purchase of the 2027 Notes funded our repurchase of the 2024 Notes.

As a result of the partial repurchase of the 2024 Notes, $ 126.2 million in aggregate principal amount of the 2024 Notes remained outstanding as of December 31, 2022.

Additionally, in connection with the partial repurchase of the 2024 Notes, the Company entered into partial unwind agreements that amend the terms of the 2024 Note Hedge Transactions to reduce the number of options corresponding to the principal amount of the repurchased 2024 Notes.

The unwind agreements also reduce the number of warrants exercisable under the 2024 Warrant Transactions.

As a result of the partial unwind transactions, approximately 1.6 million shares of common stock in the aggregate were covered under each of the 2024 Note Hedge Transactions and the 2024 Warrant Transactions as of December 31, 2022.

As of December 31, 2022, the warrants under the 2024 Warrant Transactions had a strike price of approximately $ 109.43 per share, as adjusted.

Proceeds received from the unwind of the 2024 Note Hedge Transactions were $ 11.9 million, and consideration paid for the unwind of the 2024 Warrant Transactions was $ 3.8 million, resulting in net proceeds received of $ 8.0 million for the combined unwind transactions.

Because the concurrent redemption of the 2024 Notes and a portion of issuance of the 2027 Notes were executed with the same investors, we evaluated the transaction as a debt restructuring, on a creditor by creditor basis.

The accounting conclusion was based on whether the exchange was a contemporaneous exchange of cash between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation by the debtor and if it was determined to have substantially different terms.

All creditors involved in the repurchase transaction also purchased 2027 Notes in approximately the same or greater amount as the 2024 Notes principal repurchased.

Additionally, the repurchase of the 2024 Notes and issuance of the 2027 Notes were deemed to have substantially different terms on the basis that the fair value of the conversion feature increased by more than 10% of the carrying value of the 2024 Notes, and therefore, the repurchase of the 2024 Notes was accounted for as a debt extinguishment.

We recognized a $ 11.2 million loss on extinguishment of debt during 2022 in connection with this repurchase, which is included within "Other (expense) income, net" in the consolidated statement of income.

The loss on extinguishment represents the difference between the fair value of consideration paid to reacquire the 2024 Notes and the carrying amount of the debt, including any unamortized debt issuance costs attributable to the 2024 Notes redeemed.

The remaining unamortized debt issuance costs of $ 1.2 million will continue to be amortized throughout the remaining life of the 2024 Notes.

2020 Senior Convertible Notes, and Related Note Hedge and Warrant Transactions

During second quarter 2019, the Company used $ 232.7 million from the offering of the 2024 Notes to repurchase $ 221.1 million in aggregate principal amount of the 1.50 % Senior Convertible Notes due 2020 (the "2020 Notes") in privately negotiated transactions concurrently with the offering of the 2024 Notes.

As a result of the partial repurchase of the 2020 Notes, $ 94.9 million in aggregate principal amount of the 2020 Notes remained outstanding as of December 31, 2019.

On March 1, 2020, the maturity date of the 2020 Notes, the Company repaid in full the remaining $ 94.9 million of outstanding principal.

We recognized a $ 5.5 million loss on extinguishment of debt during the year ended December 31, 2019 in connection with this repurchase, which was included within " Other income, net " in the consolidated statement of income for the period.

The loss on extinguishment represents the difference between the calculated fair value of the debt immediately prior to its derecognition and the carrying amount of the debt component, including any unamortized debt discount and issuance costs.

The remaining consideration paid for the partial repurchase of the 2020 Notes was allocated to the reacquisition of the equity component, which equaled $ 13.0 million ($ 10.6 million net of tax) and was recorded as a reduction of equity during the year ended December 31, 2019.

The remaining unamortized debt discount and issuance costs of $ 3.3 million was amortized throughout the remaining life of the 2020 Notes, up to maturity on March 1, 2020.

The following table presents the amount of interest cost recognized for the years ended December 31, 2022, 2021 and 2020 related to the contractual interest coupon, accretion of the debt discount and the amortization of financing costs (in thousands):

1 unchanged sentence

2022 2021 2020

2024 Notes 2024 Notes 2020 Notes Total 2024 Notes 2020 Notes Total

2027 Notes 2024 Notes Total 2024 Notes 2024 Notes 2020 Notes Total

Contractual coupon interest $ 9,526 $ 4,760 $ 14,286 $ 8,000 $ 8,000 $ 237 $ 8,237

3 unchanged sentences

Total $ 10,516 $ 5,778 $ 16,294 $ 9,627 $ 22,333 $ 976 $ 23,309

_____________

Due to the adoption of ASU 2020-06 on January 1, 2021, the unamortized interest discount was reclassified back to the carrying value of the 2024 Notes.

Refer to Note 2, " Summary of Significant Accounting Policies and New Accounting Guidance ", for further information regarding this adoption.

Madison Arrangement

7 unchanged sentences

Cost reimbursements for expenses incurred resulting from fulfilling the duties of the licensing agent are recorded as contra expenses.

During the years ended December 31, 2021, 2020, and 2019, gross revenues recorded related to the Madison Arrangement were $ 26.1 million, $ 5.5 million, and $ 13.5 million, respectively, and are reflected within " Patent licensing royalties " in the consolidated statement of income.

Net operating expenses related to the Madison Arrangement during the years ended December 31, 2021, 2020, and 2019 were $ 18.9 million, $ 8.4 million and $ 12.0 million, including $ 11.9 million, $ 2.5 million, and $ 6.3 million related to revenue sharing, respectively, and are reflected primarily within " Patent administration and licensing " expenses in the consolidated statement of income.

During the years ended December 31, 2022, 2021, and 2020, gross revenues recorded related to the Madison Arrangement were $ 14.5 million, $ 26.1 million, and $ 5.5 million, respectively.

Net operating expenses related to the Madison Arrangement during the years ended December 31, 2022, 2021, and 2020 were $ 7.9 million, $ 18.9 million and $ 8.4 million, including $ 5.3 million, $ 11.9 million, and $ 2.5 million related to revenue sharing, respectively, and are reflected primarily within " Licensing " expenses in the consolidated statement of income.

Long-term debt

25 unchanged sentences

2023 $ 12,000

Thereafter $ —

Refer to Note 9, " Obligations ," for details of the Company's long-term debt obligations and the revenue-sharing arrangement with Technicolor resulting from the Technicolor Patent Acquisition and the R&I Acquisition .

4 unchanged sentences

As part of the Company's announced restructuring plan, as discussed below in Note 20, " Restructuring Activities ", the number of employees under the Company's plan was significantly reduced.

The Company revalued the projected benefit obligation and recognized a $ 2.3 million gain on curtailment during 2021, which was included within " Other income, net " in the consolidated statement of income.

The Company revalued the projected benefit obligation and recognized a $ 2.3 million gain on curtailment during 2021, which was included within " Other (expense) income, net " in the consolidated statement of income.

As of December 31, 2022 and 2021, the combined accumulated projected benefit obligation related to these plans totaled $ 3.4 million and $ 4.8 million, respectively.

5 unchanged sentences

LITIGATION AND LEGAL PROCEEDINGS

COURT PROCEEDINGS

UK Proceeding

ARBITRATIONS AND COURT PROCEEDINGS

UK Proceedings

On August 27, 2019, the Company and certain of its subsidiaries filed a claim in the UK High Court against Lenovo Group Limited and certain of its subsidiaries.

The claim, as amended, alleges infringement of five of the Company's patents relating to 3G and/or 4G/LTE standards:

European Patent (U.K.) Nos.

European Patent (UK) Nos.

and 3,355,537.

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

The UK High Court held case management conferences on October 6, 2020 and December 16, 2020, a disclosure hearing on January 19, 2021 and pre-trial review hearings for the first trial on January 28, 2021 and February 8, 2021.

At those hearings, the UK High Court entered a schedule for the technical and non-technical FRAND proceedings.

Two technical trials were scheduled for March 2021 and June 2021, and the non-technical FRAND trial was scheduled for January 2022.

There are three additional technical trials scheduled for the remaining patents following the FRAND trial.

The first and second technical trials were completed, and on July 29, 2021, the UK High Court issued its decision regarding the first technical trial finding European Patent (UK) No.

On July 29, 2021, the UK High Court issued its decision regarding the first technical trial finding European Patent (UK) No.

2,485,558 valid, infringed, and essential to Release 8 of LTE.

Lenovo appealed this decision, and on January 13, 2023, the UK Court of Appeal upheld the UK High Court’s findings that Lenovo is infringing on InterDigital’s valid and essential patent.

On January 6, 2022, the UK High Court issued its decision regarding the second technical trial finding European Patent (UK) No.

3,355,537 invalid.

The Company plans on appealing the second technical trial decision.

The FRAND trial commenced on January 11, 2022 concluded on February 11, 2022.

District of Delaware Patent Proceeding

3,355,537 invalid, but essential and infringed but for the finding of invalidity.

The Company appealed this decision as legally erroneous, and on February 9, 2023, the UK Court of Appeal allowed the appeal, finding that Lenovo is infringing on InterDigital’s valid and essential patent.

On January 31, 2023, the UK High Court issued its decision regarding the third technical trial finding European Patent (UK) No.

2,421,318 valid, essential, and infringed.

The FRAND trial commenced on January 11, 2022 and concluded on February 11, 2022, and we are awaiting the decision.

The fourth technical trial commenced on October 5, 2022 and concluded on October 13, 2022.

The fifth technical trial is currently scheduled for April 22, 2024.

District of Delaware Patent Proceedings

On August 28, 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the "Delaware District Court") against Lenovo Holding Company, Inc.

and certain of its subsidiaries alleging that Lenovo infringes eight of InterDigital's U.S.

and certain of its subsidiaries alleging that Lenovo infringes eight of the Company's U.S.

and 9,456,449—by making, using, offering for sale, and/or selling Lenovo wireless devices with 3G and/or 4G LTE capabilities.

As relief, InterDigital is seeking:

(a) a declaration that InterDigital is not in breach of its relevant FRAND commitments with respect to Lenovo;

(a) a declaration that the Company is not in breach of its relevant FRAND commitments with respect to Lenovo;

(b) to the extent Lenovo does not agree to negotiate a worldwide patent license, does not agree to enter into binding international arbitration to set the terms of a FRAND license, and does not agree to be bound by the FRAND terms to be set by the UK High Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement;

4 unchanged sentences

On March 24, 2021, the Delaware District Court consolidated the antitrust proceeding discussed below with this patent proceeding.

Trial for the consolidated proceedings is scheduled for March 6, 2023.

District of Delaware Antitrust Proceeding

Trial for the consolidated proceedings has been rescheduled from March 6, 2023 to July 10, 2023.

On April 25, 2022, the parties filed a stipulation to stay only the claims relating to U.S.

The stipulation was granted.

On January 13, 2023, Lenovo filed a motion to sever and stay the Company’s patent infringement claims, requesting that its Sherman Act and breach of FRAND claims proceed to trial.

That motion is currently pending.

District of Delaware Antitrust Proceedings

On April 9, 2020, Lenovo (United States) Inc.

5 unchanged sentences

On June 22, 2020, the Company filed a motion to dismiss Lenovo's Sherman Act claims with prejudice, and to dismiss Lenovo's breach of contract claim with leave to re-file as a counterclaim in the Company's legal proceeding against Lenovo in the Delaware District Court discussed above.

Oral argument on the Company's motion to dismiss was held on October 27, 2020.

On March 24, 2021, the Delaware District Court ruled on the Company’s motion to dismiss.

2 unchanged sentences

On April 10, 2020, Lenovo (Beijing) Ltd.

and certain of its affiliates filed a complaint against the Company and certain of its subsidiaries in the Beijing Intellectual Property Court (Beijing IP Court) seeking a determination of the FRAND royalty rates payable for the Company's Chinese 3G, 4G and 5G SEPs.

and certain of its affiliates filed a complaint against the Company and certain of its subsidiaries in the Beijing Intellectual Property Court (the “Beijing IP Court”) seeking a determination of the FRAND royalty rates payable for the Company's Chinese 3G, 4G and 5G SEPs.

On February 20, 2021, the Company filed an application challenging the jurisdiction of the Beijing IP Court to take up Lenovo’s complaint.

On November 15, 2021, the Beijing IP Court denied the jurisdictional challenge, and the Company filed an appeal with the Supreme People’s Court of the People’s Republic of China (SPC) on December 14, 2021.

The appeal remains pending.

On November 26, 2021, the Company was informed that Lenovo had purportedly filed an additional complaint against the Company in the Wuhan Intermediate People’s Court seeking a determination of a global FRAND royalty rate for the period from 2024 to 2029 for the Company’s 3G, 4G, and 5G SEPs.

The Company has not yet been served with this complaint.

That appeal was denied by the SPC on September 5, 2022, and the case was sent back to the Beijing IP Court.

On November 9, 2022, the Company filed a petition to stay the case.

That petition is currently pending.

On November 26, 2021, the Company was informed that Lenovo had purportedly filed an additional complaint against the Company in the Wuhan Intermediate People’s Court (the “Wuhan Court”) seeking a determination of a global FRAND royalty rate for the period from 2024 to 2029 for the Company’s 3G, 4G, and 5G SEPs.

On April 16, 2022, the Company filed an application challenging, among other things, process of service and the jurisdiction of the Wuhan Court.

The application remains pending.

Germany Proceedings

On March 25, 2022, March 28, 2022, and April 6, 2022, the Company and certain of its subsidiaries filed patent infringement claims in the Munich and Mannheim Regional Courts against Lenovo and certain of its affiliates, alleging infringement of European Patent Nos.

3,624,447 and 3,267,684 relating to HEVC standards.

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

The Mannheim Regional Court has scheduled hearings regarding European Patent Nos.

3,267,684 and 3,624,447 for April 21, 2023 and May 2, 2023, respectively.

The Munich Regional Court has scheduled a hearing regarding European Patent No.

2,449,782 for September 14, 2024, and has not yet scheduled the remaining hearing.

Oppo, OnePlus and realme

UK Proceeding

UK Proceedings

On December 20, 2021, the Company filed a patent infringement claim in the UK High Court against Guangdong Oppo Mobile Telecommunications Corp., Ltd.

4 unchanged sentences

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

India Proceeding

On January 19, 2022, Oppo filed a jurisdictional challenge with the UK High Court which the parties have agreed to adjourn pending the outcome of Oppo’s jurisdiction challenge before the UK Supreme Court in a case involving Nokia.

On December 8, 2022, the Company received confirmation that Oppo had dropped its jurisdictional challenge with the UK High Court.

The first technical trial is scheduled to commence on May 8, 2023.

The second and third technical trials are scheduled to commence on June 26, 2023, and July 10, 2023, respectively.

The willingness trial is expected to commence on October 23, 2023.

The FRAND trial is scheduled to commence on February 26, 2024.

The fourth technical trial is currently stayed pending the Company’s appeal of the results of the second technical trial in the Lenovo UK Proceeding.

India Proceedings

On December 20, 2021 and December 22, 2021, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court in New Delhi, India against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme Mobile Telecommunication (India) Private Limited, alleging infringement of Indian Patent Nos.

1 unchanged sentence

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

Germany Proceeding

On December 20, 2021, a subsidiary of the Company filed three patent infringement claims, two in the Munich District Court and one in the Mannheim District Court, against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates, alleging infringement of European Patent (DE) Nos.

Germany Proceedings

On December 20, 2021, a subsidiary of the Company filed three patent infringement claims, two in the Munich Regional Court and one in the Mannheim Regional Court, against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates, alleging infringement of European Patent Nos.

and 2,421,318 relating to cellular 3G, 4G/LTE and/or 5G standards.

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

The first hearing is scheduled for November 17, 2022, before the Munich District Court.

China Proceeding

On January 19, 2022, the Company was informed that Oppo had purportedly filed a complaint against the Company in the Guangzhou Intellectual Property Court seeking a determination of a global FRAND royalty rate for the Company’s 3G, 4G, 5G, 802.11 and HEVC SEPs.

The Company has not yet been served with this complaint.

The Munich Regional Court held a hearing on December 14, 2022 regarding EP318 with a decision expected on March 1, 2023.

The Munich Regional Court has also scheduled hearings for March 2, 2023 on EP420, and March 24, 2023 on EP558.

China Proceedings

On January 19, 2022, the Company was informed that Oppo had purportedly filed a complaint against the Company in the Guangzhou Intellectual Property Court (the “Guangzhou IP Court”) seeking a determination of a global FRAND royalty rate for the Company’s 3G, 4G, 5G, 802.11 and HEVC SEPs.

On May 20, 2022, the Company filed an application challenging, among other things, process of service and the jurisdiction of the Guangzhou IP Court.

On January 12, 2023, the Guangzhou IP Court denied the application.

The Company plans to appeal the decision.

Spain Proceedings

On March 1, 2022, a subsidiary of the Company filed patent infringement claims in the Barcelona Commercial Courts against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates.

The Company filed its amended complaint on April 25, 2022, alleging infringement of European Patent Nos.

and 2,557,715 relating to cellular 3G, 4G/LTE and/or 5G standards.

The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.

The Company reached an agreement with Samsung Electronics Co.

(“Samsung”) to enter into binding arbitration to determine the final terms of a renewed patent license agreement to certain of the Company’s patents, which will be effective from January 1, 2023.

The Company and Samsung have also agreed not to initiate certain claims against the other during the arbitration.

We are party to certain other disputes and legal actions in the ordinary course of business, including arbitrations and legal proceedings with licensees regarding the terms of their agreements and the negotiation thereof.

45 unchanged sentences

Other Equity Grants

We grant equity awards to non-management Board members and may grant equity awards certain consultants.

We grant equity awards to non-management Board members and may grant equity awards to certain consultants.

Stock Options

48 unchanged sentences

The company contributed $ 3.0 million to the Deferred Plan in 2021.

No such contributions were made in 2022.

Our income tax provision (benefit) consists of the following components for 2022, 2021 and 2020 (in thousands):

For the Year Ended December 31,

2022 2021 2020

11 unchanged sentences

Tax credit carryforward 27,212 32,692

Deferred revenue, net 22,875 26,213

Amortization and depreciation 19,810 19,086

Debt amortization 24,029 12,659

Amortization and depreciation 19,608 19,810

Other employee benefits 10,542 10,973

Capitalized research and development 9,423 —

Stock compensation 4,803 4,774

Deferred revenue, net 3,457 22,875

Lease liability 3,402 4,773

5 unchanged sentences

The following is a reconciliation of income taxes at the federal statutory rate with income taxes recorded by the Company for the years ended December 31, 2022, 2021 and 2020:

For the Year Ended December 31,

2022 2021 2020

3 unchanged sentences

Uncertain tax positions 1.5 % 5.5 % ( 2.7 ) %

Non-creditable withholding taxes 4.4 % — % 3.6 %

State tax provision (b)

2.6 % 0.6 % 10.2 %

Other permanent differences 1.2 % 1.9 % ( 1.9 ) %

Other — % 0.1 % ( 0.9 ) %

State tax provision 1.1 % 2.6 % 0.6 %

Non-creditable withholding taxes 0.4 % 4.4 % — %

Stock compensation 0.3 % ( 1.2 ) % 1.1 %

Research and development tax credits ( 1.3 ) % ( 1.6 ) % ( 4.5 ) %

Effect of rates different than statutory ( 2.2 ) % ( 2.0 ) % ( 2.8 ) %

Amended return benefit (a)

— % ( 7.7 ) % ( 65.0 ) %

Effect of rates different than statutory ( 0.1 ) % ( 2.2 ) % ( 2.0 ) %

Research and development tax credits ( 1.7 ) % ( 1.3 ) % ( 1.6 ) %

Foreign derived intangible income deduction ( 5.3 ) % ( 14.7 ) % — %

Other ( 0.6 ) % — % 0.1 %

Total tax provision (benefit) 21.7 % 27.0 % ( 21.2 ) %

1 unchanged sentence

In 2021, when the returns were filed, there was an additional benefit recorded.

(b) In 2019, we determined that we would not be able to utilize our state deferred tax assets for our parent company in Delaware and Pennsylvania, therefore we put a full valuation allowance on these assets.

Valuation Allowances and Net Operating Losses

2 unchanged sentences

therefore we have maintained a near full valuation allowance against our state, French and United Kingdom net operating losses as of December 31, 2022.

All other deferred tax assets are fully benefited.

We also maintain a valuation allowance against certain temporary differences other than the net operating losses in these jurisdictions.

Uncertain Income Tax Positions

1 unchanged sentence

The total amount of unrecognized tax benefits could change within the next twelve months for a number of reasons including audit settlements, tax examination activities and the recognition and measurement considerations under this guidance.

During 2022, we established reserves of $ 1.1 million related to uncertainty arising from our ability to credit foreign withholding taxes in jurisdictions without a tax treaty with the United States.

We also reduced the reserve previously established for the amended returns by $ 1.0 million for the benefit available in the current year had it not been included on the amended returns.

During 2021, after finalizing our amended return position we increased the reserve established in 2020 by $ 12.8 million.

2 unchanged sentences

We also reversed reserves of $ 1.8 million previously established on 2016 research and development and manufacturing deduction credits as a result of the lapsing of the statute of limitations for that tax year.

During 2019, we established a reserve of $ 0.3 million related to an additional deduction related to the issuance cost of convertible debt that is recorded through equity.

The following is a roll forward of our total gross unrecognized tax benefits, which if reversed would impact the effective tax rate, for the fiscal years 2022 through 2020 (in thousands):

7 unchanged sentences

Reductions ( 951 ) ( 4 ) —

Settlements — — —

Lapses in statues of limitations — ( 982 ) ( 1,752 )

3 unchanged sentences

Our federal income tax returns for 2006 to the present, with the exception of 2011 and 2012, are currently open and will not close until the respective statutes of limitations have expired.

The 2014, 2015 and 2018-2020 Federal income tax returns are currently under audit by the IRS.

The statutes of limitations generally expire three years following the filing of the return or in some cases three years following the utilization or expiration of net operating loss carry forwards.

The statute of limitations applicable to our open federal returns will expire at the end of 2025.

The Company is subject to French corporate income tax on certain subsidiaries.

The statute of limitations applicable to our open French returns will expire in 2025.

Excluding the Korea Competent Authority Proceeding and the Finland Competent Authority Proceeding described in the section below, specific tax treaty procedures remain open for certain jurisdictions for 2014 to the present.

39 unchanged sentences

Repurchase of Common Stock

In June 2014, our Board of Directors authorized a $ 300 million share repurchase program (the “2014 Repurchase Program”).

Subsequently our Board of Directors authorized four $ 100 million increases to the program, respectively, bringing the total amount of the 2014 Repurchase Program to $ 700 million.

The Company may repurchase shares under the 2014 Repurchase Program through open market purchases, pre-arranged trading plans or privately negotiated purchases.

The table below sets forth the total number of shares repurchased and the dollar value of shares repurchased under the 2014 Repurchase Program (in thousands).

In June 2014, our Board of Directors authorized a $ 300 million share repurchase program (the “Share Repurchase Program”).

Subsequently our Board of Directors authorized five $ 100 million increases to the program, respectively, and an additional $ 333 million in December 2022, bringing the total amount of the Share Repurchase Program to $ 1.1 billion.

The Company may repurchase shares under the Share Repurchase Program through open market purchases, pre-arranged trading plans or privately negotiated purchases.

The table below sets forth the total number of shares repurchased and the dollar value of shares repurchased under the Share Repurchase Program (in thousands).

As of December 31, 2022, there was approximately $ 400.0 million remaining under the share repurchase authorization.

2014 Repurchase Program

Share Repurchase Program

# of Shares Value

6 unchanged sentences

2015 1,836 96,410

2014 3,554 152,625

Total 12,929 $ 732,981

14 unchanged sentences

however, continued payment of cash dividends and changes in the Company's dividend policy will depend on the Company's earnings, financial condition, capital resources and capital requirements, alternative uses of capital, restrictions imposed by any existing debt, economic conditions and other factors considered relevant by our Board of Directors.

The Company enters into operating leases primarily for real estate to support research and development ("R&D") sites and general office space in North America, with additional locations in Europe and Asia.

The Company does not currently have any finance leases.

29 unchanged sentences

Present value of lease liabilities $ 23,090

OTHER INCOME, NET

The amounts included in " Other income, net " in the consolidated statements of income for the year ended December 31, 2021, 2020 and 2019 were as follows (in thousands):

OTHER (EXPENSE) INCOME, NET

The amounts included in " Other (expense) income, net " in the consolidated statements of income for the year ended December 31, 2022, 2021 and 2020 were as follows (in thousands):

For the Year Ended December 31,

1 unchanged sentence

Interest and investment income $ 14,452 $ 1,690 $ 5,661

Gain on asset acquisition and sale of business — — 22,690

Loss on extinguishment of long-term debt ( 11,190 ) — —

Other ( 6,719 ) 9,885 11,263

Other income, net $ 11,575 $ 16,924 $ 29,062

The decrease in interest and investment income during 2021 and 2020 was primarily due to reduced rates of return on our short-term investments.

Other (expense) income, net $ ( 3,457 ) $ 11,575 $ 16,924

Interest and investment income increased to $ 14.5 million primarily due to market conditions driving higher yields on the Company's short-term investments.

Refer to Note 9, " Obligations, " for further information on the $ 11.2 million loss on extinguishment of long-term debt recognized during the year ended December 31, 2022.

Gain on asset acquisition and sale of business

On May 31, 2019, we completed the acquisition of the Research & Innovation unit of Technicolor SA ("Technicolor"), which we refer to as the R&I Acquisition.

The R&I Acquisition unit met the definition of an asset acquisition and was accounted for using the cost accumulation and allocation model.

The R&I Acquisition resulted in a net gain of approximately $ 14.2 million, inclusive of the $ 20.5 million gain from the derecognition of a contingent consideration liability, all of which is included within “ Other income, net ” in the consolidated statement of income for the year ended December 31, 2019.

On July 19, 2019, we completed the sale of Hillcrest's product business to a subsidiary of CEVA, Inc.

In connection with the sale, we received proceeds of $ 10.0 million and we retained substantially all of the Hillcrest patent assets that we acquired in 2016.

As a result of this transaction, we recorded an $ 8.5 million gain on sale which is included within " Other income, net " in the consolidated statements of income for the year ended December 31, 2019.

Other included a $ 3.0 million foreign currency translation loss in 2021, compared to $ 4.6 million and $ 4.2 million of gains in 2020 and 2019, respectively, arising from euro translation of our foreign subsidiaries.

Additionally, in 2021 we recognized a $ 1.9 million gain on a contract termination and a $ 2.3 million gain on the curtailment of our defined benefit plan, as discussed further in Note 10, " Commitments ".

Lastly, during 2021 and 2020 we recognized $ 7.6 million and $ 5.6 million of gains, respectively, and in 2019 a loss of $ 2.6 million resulting from observable price changes of our long-term strategic investments.

All of these items are included in the " Other " caption in the table above.

The change in Other was primarily due to fair value adjustments of our investments resulting in a $ 3.7 million net loss in 2022, compared to $ 9.1 million and $ 6.9 million net gains in 2021 and 2020, respectively.

Other also includes foreign currency translation losses arising from euro translation of our foreign subsidiaries of $ 3.9 million and $ 3.0 million in 2022 and 2021, respectively, and a $ 4.6 million foreign currency translation gain in 2020.

Additionally, we recognized a $ 1.9 million gain on a contract termination in 2021.

VARIABLE INTEREST ENTITIES

3 unchanged sentences

As of December 31, 2021, the combined book values of the assets and liabilities associated with these variable interest entities included in our consolidated balance sheet were $ 27.1 million and $ 2.5 million, respectively.

Assets included $ 24.5 million of cash and cash equivalents, $ 2.3 million of accounts receivable, and $ 35.2 million of patents, net.

On January 31, 2019, we launched the Company’s Chordant™ business as a standalone company.

Chordant is a variable interest entity and we have determined that we are the primary beneficiary for accounting purposes and consolidate Chordant.

For the years ended December 31, 2021, 2020 and 2019, we have allocated approximately $ 2.3 million, $ 1.1 million, and $ 1.5 million, respectively, of Chordant's net loss to noncontrolling interests held by other parties.

During second quarter 2021, Chordant began the process of ceasing operations.

Assets included $ 5.1 million of cash and cash equivalents, $ 4.0 million of accounts receivable and prepaid assets, and $ 18.0 million of patents, net.

Convida Wireless

6 unchanged sentences

The patents held for sale are recorded at fair value on December 31, 2022 and are included within " Prepaid and other current assets " in the consolidated balance sheet.

On January 31, 2019, we launched the Company’s Chordant™ business as a standalone company.

Chordant is a variable interest entity and we have determined that we are the primary beneficiary for accounting purposes and consolidate Chordant.

For the years ended December 31, 2022, 2021 and 2020, we have allocated approximately $ 0.0 million , $ 2.3 million, and $ 1.1 million, respectively, of Chordant's net loss to noncontrolling interests held by other parties.

Chordant ceased operations in 2021.

Signal Trust for Wireless Innovation

3 unchanged sentences

Based on the terms of the trust agreement, we determined that we were the primary beneficiary for accounting purposes and included the Trust in our consolidated financial statements up to the date of dissolution.

We recorded a $ 2.4 million charge within the " Patent administration and licensing " line of our consolidated statements of income in 2020 associated with the wind down of the Trust.

We recorded a $ 2.4 million charge within the " Licensing " line of our consolidated statements of income in 2020 associated with the wind down of the Trust.

The amounts included in " Prepaid and other current assets " in the consolidated balance sheet as of December 31, 2022 and 2021 were as follows (in thousands):

As Reported As Revised (a)

December 31, 2021 December 31, 2020 December 31, 2020

Tax receivables $ 64,117 $ 57,127

Restricted cash 9,682 5,861

Prepaid assets 9,044 5,479

3 unchanged sentences

The amounts included in " Other non-current assets, net " in the consolidated balance sheet as of December 31, 2022 and 2021 were as follows (in thousands):

As Reported As Revised (a)

December 31, 2021 December 31, 2020 December 31, 2020

Tax receivables $ 29,370 $ 30,026

Goodwill 22,421 22,421

Right-of-use assets 17,851 22,456 22,456

Long-term investments 19,593 21,280

Right-of-use assets 18,034 17,851

Other non-current assets 6,302 10,923

Total Other non-current assets, net $ 95,720 $ 102,501

____________________________

(a) As discussed in Note 1, we revised our prior period presentation of " Prepaid and other current assets " and " Other non-current assets, net ".

This column represents the effect of the revision on the consolidated balance sheet.

RESTRUCTURING ACTIVITIES

During second quarter 2021, the Company began the process of a strategic review and undertook certain actions in order to increase focus on core technologies and markets.

On June 10, 2021, the Company announced that, as a result of a strategic review of its research and innovation priorities, it commenced the process of a collective economic layoff in which it proposed a reduction in force of 66 positions in its research and innovation unit, 60 of whom are based in France.

The Company launched an information-consultation process with respect to the contemplated reorganization with the works council of certain of its French subsidiaries, as required by French law.

On September 28, 2021, the Company finalized an agreement with the representative trade unions of certain of its French subsidiaries to commence the reorganization of the research and innovation unit located in France as part of the reduction in force.

This agreement was validated by the Regional Director of Economy, Employment, Labor and Solidarity on October 25, 2021.

The majority of termination notices were issued in fourth quarter 2021.

All notices of termination have been issued to the impacted employees.

This action resulted in a reduction of employees under the benefit plans , and as a result the Company recognized a $ 2.3 million curtailment gain during 2021.

This curtailment gain was included within " Other income, net " in the consolidated statement of income.

This curtailment gain was included within " Other (expense) income, net " in the consolidated statement of income.

During June 2021, Chordant began the process of ceasing operations.

The Company implemented a reduction in workforce action in second quarter 2021, consisting of 18 employees.

The Company implemented a reduction in workforce action in second quarter 2021.

Additionally, in June 2021, a non-controlled subsidiary that we consolidate for financial statement purposes approved a plan to sell certain patents.

4 unchanged sentences

The patents held for sale are included within " Prepaid and other current assets " in the consolidated balance sheet.

In October 2021, we expanded our restructuring efforts to include general and administrative functions largely centered in the U.S., which will result in a further reduction in force of approximately 8 % of total headcount as well as cuts to our non-labor expenses.

In October 2021, we expanded our restructuring efforts to include general and administrative functions largely centered in the U.S., which resulted in a further reduction in force as well as cuts to our non-labor expenses.

These employees were provided notification of termination during fourth quarter 2021.

As part of the Company’s ongoing evaluation of its flexible work policy and the impact of returning to the office, the Company has evaluated its current office space footprint and its expected needs going forward.

As the result of this evaluation, during 2022, we recognized a $ 2.4 million impairment, comprised of $ 0.4 million of property and equipment and $ 2.0 million of right of use assets, related to the abandonment of portions of three of our leased properties, which was included within “ Restructuring activities ” in the condensed consolidated statement of income.

Restructuring charges are estimated based on information available at the time such charges are recorded.

1 unchanged sentence

The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reduction in force or other restructuring activities.

The restructuring charges associated with the above activities totaling $ 27.9 million in 2021 are presented net of any reimbursement arrangements and include $ 1.7 million of outside services and other associated costs related to non-recurring consultant and legal fees.

We expect additional charges to be recorded in 2022.

The restructuring charges associated with the above activities totaling $ 3.3 million and $ 27.9 million in 2022 and 2021, respectively, are presented net of any reimbursement arrangements and include $ 0.5 million and $ 1.7 million, respectively, of outside services and other associated costs related to non-recurring consultant and legal fees.

The Company does not anticipate further significant restructuring charges, however these charges are estimated based on information available at the time such charges are recorded.

Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts incurred for such activities may differ from amounts initially estimated.

As of December 31, 2022, the Company's restructuring liability was $ 4.5 million and was included in " Other accrued expenses " on our condensed consolidated balance sheet.

As of December 31, 2021, the Company's restructuring liability was $ 18.3 million, of which $ 12.5 million was included in " Other accrued expenses " and $ 5.8 million was included in " Other long-term liabilities " on our condensed consolidated balance sheet.

1 unchanged sentence

Balance as of December 31, 2021 $ 18,281

Accrual 24,286

Cash payments ( 13,761 )

1 unchanged sentence

Balance as of December 31, 2022 $ 4,495

The restructuring expenses included in " Restructuring activities " in the consolidated statements of income for the year December 31, 2021 were as follows (in thousands):

The restructuring expenses included in " Restructuring activities " in the consolidated statements of income for the years ending December 31, 2022 and 2021 were as follows (in thousands):

For the Year Ended December 31,

Patent impairment $ 13,228

Asset impairment $ 2,427 $ 13,228

Severance and other benefits 305 22,616

2 unchanged sentences

Total $ 3,280 $ 27,877

SUBSEQUENT EVENTS

On January 23, 2023, the Company commenced a modified “Dutch auction” tender offer (the “Tender Offer”) to purchase for cash up to $ 200.0 million of its common stock at a price per share not less than $ 60.00 and not greater than $ 69.00 less any applicable withholding taxes and without interest, using available cash on hand.

On February 6, 2023, the Company amended the Tender Offer to increase the price range to a price per share not less than $ 65.25 and not greater than $ 75.00 less any applicable withholding taxes and without interest.

The Tender Offer will expire at 11:59 p.m., New York City time, on February 17, 2023, unless extended or terminated.

If the Tender Offer is fully subscribed, the Company will purchase between 2.7 million shares and 3.1 million shares.

This Annual Report on Form 10-K does not constitute an offer to sell, or a solicitation to purchase, any of our securities.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data