What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-15 compared with 2023-02-15 · 323 added, 234 removed, 1125 unchanged (33% of the section changed)

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Consolidated Statements of Comprehensive Income for the years ended December 31, 202 3 , 202 2 and 20 21

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

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Cash Flows for the years ended December 31, 202 3 , 202 2 and 20 21

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

Changes in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments in 2021.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Determination of the Value of Revenue from Non-Financial Sources and of Standalone Selling Prices of Identified Performance Obligations in Dynamic Fixed-Fee License Agreements

As described in Notes 2 and 3 to the consolidated financial statements, dynamic fixed-fee license agreements include fixed, non-refundable royalty payments that fulfill the licensee’s obligations to the Company under a patent license agreement for a specified time period or for the term of the agreement.

Additionally, certain patent license agreements contain revenue from non-financial sources in the form of patents received from the customer.

Total fixed-fee royalty revenue and noncurrent patent royalties were $364.0 million and $53.9 million, respectively, for the year ended December 31, 2022, of which a significant portion relates to dynamic fixed-fee agreements.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition – Determination of Standalone Selling Prices of Identified Performance Obligations in Dynamic Fixed-Fee License Agreements Entered Into During The Year

As described in Notes 2 and 3 to the consolidated financial statements, dynamic fixed-fee license agreements include fixed royalty payments that fulfill the licensee’s obligations to the Company under a patent license agreement for a specified time period or for the term of the agreement.

Total recurring revenues and catch-up revenues were $408.4 million and $141.2 million, respectively, for the year ended December 31, 2023, of which a portion relates to dynamic fixed-fee agreements entered into during the year.

As disclosed by management, the process for determining the value of the standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements requires the exercise of significant judgment when evaluating the valuation methods and assumptions, including the assumed royalty rates, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors.”

Management’s process for determining the value of revenue from non-financial sources requires estimating the fair value of patents received 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).

The development of a number of these inputs and assumptions requires a significant amount of management judgment and is based upon a number of factors, including identification of comparable market transactions, assumed royalty rates, projected sales volumes, economic lives of the patents and other relevant factors.

The principal considerations for our determination that performing procedures relating to the determination of the value of revenue from non-financial sources and of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements is a critical audit matter are (i) the significant judgment by management when determining the value of revenue from non-financial sources and of standalone selling prices;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence obtained relating to management’s significant assumptions related to (a) assumed royalty rates, projected sales volumes and identification of comparable market transactions used to estimate the value of revenue from standalone selling prices and (b) identification of comparable market transactions used to estimate the value of revenue from non-financial sources;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The principal considerations for our determination that performing procedures relating to the determination of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements entered into during the year is a critical audit matter are (i) the significant judgment by management when determining the value of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to assumed royalty rates and projected sales volumes.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of the value of revenue from non-financial sources and of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements.

These procedures also included, among others (i) reading certain new dynamic fixed-fee license agreements entered into during the year;

(ii) testing management’s process for determining the value of revenue from non-financial sources and of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements;

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of standalone selling prices of identified performance obligations in dynamic fixed-fee license agreements.

These procedures also included, among others, for a sample of dynamic fixed-fee license agreements (i) reading agreements entered into during the year;

(ii) testing management’s process for determining the value of standalone selling prices of identified performance obligations;

(iii) evaluating the appropriateness of the valuation methods used;

(iv) evaluating the reasonableness of management’s significant assumptions used in determining the value of revenue from non- financial sources and developing the standalone selling prices related to assumed royalty rates, projected sales volumes and identification of comparable market transactions;

and (v) testing the completeness and accuracy of data used by management in the valuation methods.

Evaluating the reasonableness of management’s significant assumptions related to assumed royalty rates and identification of comparable market transactions involved considering prospective third-party market data and previous license agreements entered into by the Company.

Evaluating the reasonableness of management’s significant assumptions related to projected sales volumes involved considering consistency with historical sales data.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the valuation methods and the significant assumption related to the identification of comparable market transactions used to estimate the value of revenue from non-financial sources.

(iv) testing the completeness and accuracy of data used by management in the valuation methods;

and (v) evaluating the reasonableness of management’s significant assumptions related to assumed royalty rates and projected sales volumes.

Evaluating the reasonableness of management’s significant assumptions related to assumed royalty rates and projected sales volumes involved considering consistency with historical sales data.

Revenue Recognition – Determination of Transaction Price in Certain Arrangements with Variable Consideration

As described in Notes 2 and 3 to the consolidated financial statements, for certain patent license arrangements or other contractual arrangements, the amount of consideration that the Company will receive is uncertain.

In such cases, management estimates and recognizes licensing revenues only when the Company has 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.

Total recurring revenues and catch-up revenues were $408.4 million and $141.2 million, respectively, for the year ended December 31, 2023, of which a portion relates to certain arrangements with variable consideration.

Management analyzes the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if necessary, constrains the amount of estimated revenues in order to mitigate this risk, which may result in recognizing revenues less than amounts management expects the Company is most likely to receive.

As disclosed by management, these estimates may require significant judgment.

The principal considerations for our determination that performing procedures relating to the determination of transaction price in certain arrangements with variable consideration is a critical audit matter are (i) the significant judgment by management when determining the transaction price and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's analysis of the probability that a significant reversal of cumulative revenues recognized will not occur.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of transaction price in arrangements where the amount of consideration that the Company will receive is uncertain.

These procedures also included, among others (i) reading certain arrangements applicable for the current year;

(ii) testing management’s process for determining the transaction price in such arrangements;

(iii) evaluating the appropriateness of management’s analysis used in determining the transaction price;

(iv) testing the completeness and accuracy of the data used by management in the analysis;

and (v) evaluating the reasonableness of management’s significant assumptions and judgments in determining the transaction price.

Evaluating the reasonableness of management’s significant assumptions and judgments involved considering management’s past experience in such arrangements, status of ongoing discussions with the customer, and advice obtained, including obtaining and evaluating the letters of audit inquiry, from in-house and external legal counsel.

/s/ PricewaterhouseCoopers LLP

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Short-term investments 569,280 508,298

Accounts receivable, less allowances of $ 0 and $ 322

53,182 31,113

Accounts receivable 117,292 53,182

Prepaid and other current assets 43,976 89,716

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OTHER NON-CURRENT ASSETS, NET 149,656 95,720

555,430 577,871

Total non-current assets 603,190 555,430

TOTAL ASSETS $ 1,770,814 $ 1,900,105

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CURRENT LIABILITIES:

Current portion of long-term debt $ 578,752 $ —

Accounts payable 7,846 9,997

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INTEREST EXPENSE ( 44,817 ) ( 29,496 ) ( 25,225 )

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

OTHER INCOME (EXPENSE), NET 57,812 ( 3,457 ) 11,575

Income before income taxes 234,610 117,563 57,556

INCOME TAX (PROVISION) BENEFIT ( 25,502 ) ( 15,368 ) 6,648

INCOME TAX PROVISION ( 23,557 ) ( 25,502 ) ( 15,368 )

NET INCOME $ 211,053 $ 92,061 $ 42,188

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Net income $ 211,053 $ 92,061 $ 42,188

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

Unrealized gain (loss) on investments, net of tax 269 ( 345 ) ( 387 )

Comprehensive income $ 211,322 $ 91,716 $ 41,801

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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 )

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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.

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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 )

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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

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Net loss attributable to noncontrolling interest — — — — — — — ( 3,016 ) ( 3,016 )

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

Deconsolidation of Convida — — — — — — — ( 4,352 ) ( 4,352 )

Non-controlling interest contributions — — — — — — — 1,750 1,750

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Repurchase of common stock ( 2,739 ) ( 27 ) — ( 203,354 ) — 1,672 ( 139,493 ) — ( 342,874 )

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

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

BALANCE, DECEMBER 31, 2023 69,507 $ 694 $ 742,981 $ 1,462,070 $ ( 647 ) 43,927 $ ( 1,623,549 ) $ — $ 581,549

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Depreciation and amortization 77,792 78,571 78,193

Non-cash interest expense, net 1,645 6,867 18,093

Non-cash interest income (expense), net ( 18,601 ) 1,645 6,867

Non-cash change in fair value ( 10,130 ) 1,686 ( 7,649 )

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Loss on extinguishment of debt — 11,190 —

Loss on disposal of assets — — 7,539

Impairment of assets 2,500 2,427 13,228

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Deferred charges and other assets 866 ( 13,453 ) ( 9,894 )

Increase (decrease) in liabilities:

(Decrease) Increase in liabilities:

Accounts payable ( 2,513 ) 6,868 ( 1,803 )

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Acquisition of patents — — ( 2,350 )

Proceeds from sale of business — — 910

Long-term investments ( 1,877 ) — 1,363

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Dividends paid ( 39,454 ) ( 42,306 ) ( 43,058 )

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

Net cash (used in) provided by financing activities ( 388,763 ) 18,604 ( 74,470 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 260,200 ) ( 10,063 ) 235,561

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BACKGROUND AND BASIS OF PRESENTATION

InterDigital designs and develops advanced technologies that enable and enhance wireless communications and capabilities.

Since our founding in 1972, our engineers have designed and developed a wide range of innovations that are used in digital cellular and wireless products and networks, including 2G, 3G, 4G, 5G and IEEE 802-related products and networks, as well as video processing, coding and display technology.

We are a leading contributor of innovation to the wireless communications industry, as well as a leading holder of patents in the video industry.

InterDigital, Inc.

("InterDigital") is a global research and development company focused primarily on wireless, video, artificial intelligence ("AI"), and related technologies.

We design and develop foundational technologies that enable connected, immersive experiences in a broad range of communications and entertainment products and services.

We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, IoT devices, cars and other motor vehicles and providers of cloud-based services such as video streaming.

As a leader in wireless technology, our engineers have designed and developed a wide range of innovations that are used in wireless products and networks, from the earliest digital cellular systems to 5G and today's most advanced Wi-Fi technologies.

We are also a leader in video processing and video encoding/decoding technology, with a significant AI research effort that intersects with both wireless and video technologies.

Principles of Consolidation

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

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.

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

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Accrued debt issuance costs — 100 —

Accrued taxes on the repurchase of common stock 3,170 — —

Non-cash acquisition of patents — 30,100 —

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As of December 31, 2023 and 2022, the majority of our marketable securities have been classified as available-for-sale and are carried at fair value, with unrealized gains and losses reported net-of-tax as a separate component of shareholders’ equity.

Substantially all of our investments are investment grade government and corporate debt securities that have maturities of less than two years , and we have both the ability and intent to hold the investments until maturity.

Substantially all of our investments are investment grade government and corporate debt securities that have maturities of less than three years , and we have both the ability and intent to hold the investments until maturity.

Other-than-Temporary Impairments

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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 (expense) income, net" line of our consolidated statements of income.

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

Intangible Assets

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Expenditures for major improvements and betterments are capitalized, while minor repairs and maintenance are charged to expense as incurred.

Upon the retirement or disposition of property, plant and equipment, the related cost and accumulated depreciation or amortization are removed, and a gain or loss is recorded.

Upon the retirement or disposition of property and equipment, the related cost and accumulated depreciation or amortization are removed, and a gain or loss is recorded.

We determine if an arrangement is a lease at inception.

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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 Expenses ” in the consolidated statement of income.

Revenue Recognition

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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.

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 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.

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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

Technology solutions revenue consists primarily of revenue from royalty payments, software licenses, and engineering services.

The nature of these contracts and timing of payments vary.

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 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

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Further, we evaluate the collectability of our accounts receivable and if there is doubt that we will collect the full amount, we will record a reserve specific to that customer’s receivable balance.

Our provision for doubtful accounts was $ 0.0 million and $ 0.3 million as of December 31, 2022 and 2021, respectively.

There was no provision for doubtful accounts as of December 31, 2023 or 2022.

Investments in Other Entities

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The carrying value of our investments in other entities is included within " Other non-current assets, net " on our consolidated balance sheets.

During 2022, 2021 and 2020, we made investments in other entities of $ 0.0 million , $ 1.1 million and $ 0.2 million, respectively.

The carrying value of our investments in other entities as of December 31, 2023 and 2022 was $ 31.9 million and $ 19.6 million, respectively, the majority of which are accounted for under the measurement alternative for equity investments described above.

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Direct costs of obtaining a contract or fulfilling a contract in a transaction that results in the deferral of revenue may be either expensed as incurred or capitalized, depending on certain criteria.

In conjunction with our adoption of ASC 606 effective January 1, 2018, we made a policy election to utilize the practical expedient related to costs of obtaining a contract where an entity may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

We made a policy election to utilize the practical expedient related to costs of obtaining a contract where an entity may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

If the amortization period is greater than one year, we capitalize direct costs incurred for the acquisition or fulfillment of a contract through the date of signing if they are directly related to a particular revenue arrangement and are expected to be recovered.

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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.

There were $ 0.1 million and $ 0.7 million of new direct contract costs in 2023 and 2022, respectively, and no new direct contract costs incurred during 2021.

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

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.

In connection with our offering of the 2027 Notes and 2024 Notes, defined and discussed in detail within Note 10, " 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 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 $ 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.

The Company incurred $ 9.9 million of new debt issuances costs in 2022 in conjunction with the issuance of the 2027 Notes and no new debt issuance costs were incurred in 2023 or 2021.

Deferred financing expense was $ 2.3 million, $ 2.0 million and $ 1.6 million in 2023, 2022 and 2021, respectively.

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.

The balance of unamortized deferred financing costs as of December 31, 2023 and 2022 was $ 7.4 million and $ 9.8 million, respectively.

Research and Innovation Expenses

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

Research and Innovation expenses are included within " Research and portfolio development " expenses in the consolidated statements of income.

Compensation Programs

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For grants that cliff vest, we amortize the associated unrecognized compensation cost on a straight-line basis over their vesting term.

For awards containing performance conditions, we recognize compensation expense ratably over the vesting period when it is probable that the stated performance targets will be achieved and record cumulative adjustments in the period in which estimates change.

In the event of canceled awards, we adjust compensation expense recognized to date as they occur.

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

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.

Tax windfalls and shortfalls related to share-based compensation was windfalls of $ 3.1 million and $ 0.8 million for the years ended 2023 and 2021, respectively, and shortfalls for the year ended 2022 of $ 0.4 million, respectively.

Restructuring

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

If the Treasury shares are retired, the excess of the par value is included with retained earnings.

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.

This excise tax on our share repurchases is recorded as a component of stockholders’ equity, as treasury stock, or retained earnings if retired.

New Accounting Guidance

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.

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.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The amendments in the ASU require disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, with early adoption allowed.

We adopted this guidance as of January 1, 2022 and the adoption did not have a material impact on our consolidated financial statements.

We are currently evaluating the impact of adoption on our financial disclosures.

Accounting Standards Update:

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

The amendments in the ASU enhance income tax disclosures, primarily through standardization, disaggregation of rate reconciliation categories, and income taxes paid by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption allowed.

We are currently evaluating the impact of adoption on our financial disclosures.

Accounting Standards Update:

Simplifying the Accounting for Convertible Instruments

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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, 2023, 2022, and 2021 (in thousands):

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Total recurring revenues 408,392 403,888 351,700

Non-recurring revenues a

Catch-up revenues a

141,196 53,906 73,709

Total revenues $ 549,588 $ 457,794 $ 425,409

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

Catch-up revenues are comprised of past patent royalties and revenues from static fixed-fee agreements.

During the year ended December 31, 2023, we recognized $ 188.9 million of revenue that had been included in deferred revenue as of the beginning of the period.

As of December 31, 2022, we had contract assets of $ 32.9 million and $ 2.5 million included within " Accounts receivable, net " and " Other non-current assets, net " in the consolidated balance sheet, respectively.

As of December 31, 2023, we had contract assets of $ 94.6 million included within " Accounts receivable, net " in the consolidated balance sheet.

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Thereafter 259,439

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

(a) This table includes estimated revenue related to our Samsung arbitration.

In accordance with ASC 606, these estimates are limited to the amount of revenue we expect to recognize only to the extent it is probable that a subsequent change in the estimate would not result in a significant revenue reversal.

GEOGRAPHIC / CUSTOMER CONCENTRATION

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Customer D 11 % 13 % 14 %

Customer E < 10 %

As of December 31, 2023, and 2022, we held $ 324.6 million and $ 365.3 million of our property, equipment and patents, net of accumulated depreciation and amortization, respectively, of which 91 % of the total was within the United States in each of the years presented.

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Restricted cash included within prepaid and other current assets 5,885 9,682

Restricted cash included within other non-current assets — 1,081

Total cash, cash equivalents and restricted cash $ 442,961 $ 703,161

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As of December 31, 2023 and 2022, $ 489.8 million and $ 557.7 million, respectively, of our short-term investments had contractual maturities within one year .

The remaining portions of our short-term investments had contractual maturities within one to two years .

The remaining portions of our short-term investments had contractual maturities within one to three years .

CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

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(b) As of December 31, 2023 and 2022, $ 5.7 million and $ 26.7 million of commercial paper was included within cash and cash equivalents, respectively.

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

government securities was included within cash and cash equivalents, respectively.

(d) As of December 31, 2023and 2022, $ 6.5 million and $ 16.9 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents, respectively.

Fair Value of Debt

Senior Convertible Notes

The principal amount, carrying value and related estimated fair value of the Company's senior convertible debt reported in the consolidated balance sheets as of December 31, 2023 and December 31, 2022 was as follows (in thousands).

The aggregate fair value of the principal amount of the senior convertible long-term debt is a Level 2 fair value measurement.

The aggregate fair value of the principal amount of the senior convertible debt is a Level 2 fair value measurement.

December 31, 2023 December 31, 2022

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Amount Carrying

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

2027 Senior Convertible Notes

$ 460,000 $ 452,830 $ 677,230 $ 460,000 $ 451,062 $ 441,485

2024 Senior Convertible Notes

$ 126,174 $ 125,922 $ 171,130 $ 126,174 $ 125,342 $ 119,941

Technicolor Patent Acquisition Long-term Debt

As more fully disclosed in Note 9, " Obligations ," we recognized long-term debt in conjunction with the Technicolor Patent Acquisition.

As more fully disclosed in Note 10, " Obligations ," we recognized long-term debt in conjunction with the acquisitions of the patent licensing business and research and innovation unit of Technicolor SA (the "Technicolor Patent Acquisition").

The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported in the consolidated balance sheet as of December 31, 2023 and December 31, 2022 was as follows (in thousands).

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

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.

During years ended December 31, 2023 and 2021, we recognized net gains of $ 10.4 million and $ 7.6 million, respectively, and during year ended 2022 we recognized a net loss of $ 1.3 million resulting from observable price changes of our long-term strategic investments, which were included within “ Other income (expense), 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 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 2023, we deconsolidated Convida Wireless as described further in Note 19, " Variable Interest Entities ".

Upon deconsolidation on October 1, 2023, we recorded our investment in Convida at fair value utilizing the income approach.

Our investment in Convida Wireless is accounted for as an equity method investment in accordance with ASC 323 " Investments – Equity Method and Joint Ventures" and included within " Other non-current assets, net " in the consolidated balance sheet.

During 2023, we incurred an impairment of $ 2.5 million on Convida's sale of a portion of its patent portfolio, which was included within “ Research and portfolio development ” expenses in the consolidated statement of income.

We determined the fair value based upon evaluation of market conditions.

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, 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.

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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.

We have determined the estimated fair value of the patents for determining the transaction price for revenue recognition purposes, which was estimated to be $ 19.3 million utilizing the market approach.

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

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).

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).

For the market approach, judgment was applied as to which market transactions were most comparable to the transaction.

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Depreciation expense was $ 4.1 million, $ 4.9 million and $ 5.6 million in 2023, 2022 and 2021, respectively.

PATENTS, GOODWILL AND OTHER INTANGIBLE ASSETS

PATENTS AND GOODWILL

As of December 31, 2023 and 2022, patents consisted of the following (in thousands, except for useful life data):

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Amortization expense related to capitalized patent costs was $ 73.1 million, $ 73.4 million and $ 71.5 million in 2023, 2022 and 2021, respectively.

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

These amounts are recorded within the " Research and portfolio development" expense 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, 2023 is as follows (in thousands):

2024 $ 63,925

2027 $ 44,027

The following table shows the change in the carrying amount of our goodwill balance from December 31, 2021 to December 31, 2023, all of which is allocated to our one reportable segment (in thousands):

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Goodwill balance as of December 31, 2023 $ 22,421

OTHER ASSETS AND LIABILITIES

The amounts included in " Prepaid and other current assets " in the consolidated balance sheet as of December 31, 2023 and 2022 were as follows (in thousands):

Tax receivables $ 19,835 $ 64,117

Prepaid assets 9,353 9,044

Restricted cash 5,885 9,682

Patents held for sale — 4,000

Other current assets 8,903 2,873

Total Prepaid and other current assets $ 43,976 $ 89,716

The amounts included in " Other non-current assets, net " in the consolidated balance sheet as of December 31, 2023 and 2022 were as follows (in thousands):

Tax receivables $ 76,740 $ 29,370

Long-term investments 31,895 19,593

Goodwill 22,421 22,421

Right-of-use assets 15,746 18,034

Other non-current assets 2,854 6,302

Total Other non-current assets, net $ 149,656 $ 95,720

The amounts included in " Other accrued expenses " in the consolidated balance sheet as of December 31, 2023 and 2022 were as follows (in thousands):

Customer deposit $ 76,100 $ —

Accrued legal fees 10,338 12,230

Other accrued expenses 11,604 11,276

Total Other accrued expenses $ 98,042 $ 23,506

The amounts included in " Other long-term liabilities " in the consolidated balance sheet as of December 31, 2023 and 2022 were as follows (in thousands):

Deferred compensation liabilities $ 18,413 $ 14,078

Operating lease liabilities 17,385 19,923

Other long-term liabilities 19,454 19,599

Total Other long-term liabilities $ 55,252 $ 53,600

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

2027 Notes 2024 Notes Total 2024 Notes

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

December 31, 2023 December 31, 2022

3.50 % Senior Convertible Notes due 2027

$ 460,000 $ 460,000

2.00 % Senior Convertible Notes due 2024

126,174 126,174

Deferred financing costs ( 7,422 ) ( 9,770 )

Net carrying amount of the Convertible Notes 578,752 576,404

Current portion of long-term debt ( 578,752 ) —

Long-term net carrying amount of the Convertible Notes $ — $ 576,404

There were no finance leases as of December 31, 2023 or December 31, 2022.

Maturities of principal of the long-term debt obligations of the Company as of December 31, 2023, excluding the long-term debt resulting from the Technicolor Patent Acquisition, are as follows (in thousands):

2024 $ 126,174

2028 and thereafter —

The 3.50 % Senior Convertible Notes due 2027 (the "2027 Notes") are convertible during the calendar quarter ending March 31, 2024 and therefore are classified as " Current portion of long-term debt " as of December 31, 2023 in our consolidated balance sheet.

The current conversion rate of the Notes is 12.9041 shares of our Common Stock per $1,000 principal amount of the 2027 Notes.

Upon the conversion of any 2027 Notes, we will pay cash up to the aggregate principal amount of the 2027 Notes to be converted, and will pay cash, shares of our Common Stock or a combination of cash and shares of its Common Stock for any conversion obligation in excess of the aggregate principal amount being converted, if any, at the Company’s election, as set forth in the Indenture governing the 2027 Notes.

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").

On May 27, 2022 we issued $ 460.0 million in aggregate principal amount of 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.

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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.

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 a weighted average strike price of $ 106.35 per share, subject to adjustment.

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

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The net proceeds from the issuance of the 2024 Notes, after deducting fees and offering expenses, were used for the following:

(i) $ 232.7 million was used to repurchase $ 221.1 million in aggregate principal amount of the 2020 Notes (as defined below) in privately negotiated transactions concurrently with the offering of the 2024 Notes, (ii) $ 19.6 million was used to repurchase shares of common stock at $ 62.53 per share, the closing price of the stock on May 29, 2019;

(i) $ 232.7 million was used to repurchase $ 221.1 million in aggregate principal amount of the 1.50 % Senior Convertible Notes that were due 2020 in privately negotiated transactions concurrently with the offering of the 2024 Notes, (ii) $ 19.6 million was used to repurchase shares of common stock at $ 62.53 per share, the closing price of the stock on May 29, 2019;

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.

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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.

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

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):

The following table presents the amount of interest cost recognized for the years ended December 31, 2023, 2022 and 2021 related to the contractual interest coupon and the amortization of financing costs (in thousands):

For the Year Ended December 31,

2023 2022 2021

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

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

Contractual coupon interest $ 16,100 $ 2,523 $ 18,623 $ 9,526 $ 4,760 $ 14,286 $ 8,000

Accretion of debt discount (a)

— — — — 13,157 669 13,826

Amortization of financing costs 1,768 580 2,348 990 1,018 2,008 1,627

Total $ 17,868 $ 3,103 $ 20,971 $ 10,516 $ 5,778 $ 16,294 $ 9,627

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.

Madison Arrangement

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Under ASC 470, amounts recorded as debt shall be amortized under the interest method.

At each reporting period, we will review the discounted expected future cash flows over the life of the obligation.

At each reporting period, we review the discounted expected future cash flows over the life of the obligation.

The Company made an accounting policy election to utilize the catch-up method when there is a change in the estimated future cash flows, whereby we will adjust the carrying amount of the debt to the present value of the revised estimated future cash flows, discounted at the original effective interest rate, with a corresponding adjustment recognized as interest expense within “ Interest expense ” in the consolidated statements of income.

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This rate represents the discount rate that equates the estimated future cash flows with the fair value of the debt as of the acquisition date, and is used to compute the amount of interest to be recognized each period based on the estimated life of the future revenue streams.

During the years ended December 31, 2022, 2021 and 2020, we recognized $ 3.6 million, $ 2.9 million, and $ 3.1 million, respectively, of interest expense related to this debt which is included within “ Interest expense ” in the consolidated statements of income.

During the year ended December 31, 2023, we recognized a $ 1.6 million net reduction of interest expense within “ Interest expense ” in the consolidated statements of income due to a change in estimate resulting from updated estimated cash outflows owed under the arrangement.

During the years ended December 31, 2022 and 2021, we recognized $ 3.6 million, and $ 2.9 million, respectively, of interest expense related to this debt which is included within “ Interest expense ” in the consolidated statements of income.

Any future payments made to CPPIB Credit, or additional proceeds received from CPPIB Credit, will decrease or increase the long-term debt balance accordingly.

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As of December 31, 2023 and 2022, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and is therefore not reflected within the consolidated financial statements.

Minimum future payments for accounts payable and other purchase commitments, excluding long-term operating leases for office space, as of December 31, 2022 were as follows (in thousands):

Minimum future payments for accounts payable and other purchase commitments, excluding commenced long-term operating leases for office space, as of December 31, 2023 were as follows (in thousands):

2024 $ 11,518

Thereafter 490

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 .

Refer to Note 10, " Obligations ," for details of the Company's long-term debt obligations and the revenue-sharing arrangement with Technicolor resulting from the Technicolor Acquisitions .

Refer to Note 17, " Leases ," for maturities of the Company's operating lease liabilities as of December 31, 2023.

Defined Benefit Plans

In connection with the Technicolor Patent Acquisition and the R&I Acquisition, we assumed certain defined benefit plans which are accounted for in accordance with ASC 715 - Compensation - Retirement Benefits .

In connection with the Technicolor Acquisitions, we assumed certain defined benefit plans which are accounted for in accordance with ASC 715 - Compensation - Retirement Benefits .

These plans include a retirement lump sum indemnity plan and jubilee plan, both of which provide benefit payments to employees based upon years of service and compensation levels.

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 (expense) 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 income (expense), net " in the consolidated statement of income.

As of December 31, 2023 and 2022, the combined accumulated projected benefit obligation related to these plans totaled $ 4.9 million and $ 3.4 million, respectively.

Service cost and interest cost for the combined plans totaled $ 0.3 million, $ 0.4 million and $ 0.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Service cost and interest cost for the combined plans totaled less than $ 0.5 million in each of the years ended December 31, 2023, 2022 and 2021.

The weighted average discount rate and assumed salary increase rate for these plans were 3.3 % and 3.0 %, respectively.

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and 3,355,537.

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

The Company sought, among other relief, injunctive relief to prevent further infringement of the asserted patents or, in the alternative, a determination of the terms of a FRAND license.

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

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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, but essential and infringed but for the finding of invalidity.

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

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.

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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.

On March 7, 2023, the UK High Court issued an order staying all deadlines with respect to the fourth and fifth technical trials.

On March 16, 2023, the UK High Court issued its order regarding judgement in the trial to determine how much Lenovo must pay for a license to the Company’s portfolio of cellular assets, awarding the Company a lump sum of $ 138.7 million for such license through December 31, 2023.

On June 27, 2023, the court issued an order awarding the Company an additional $ 46.2 million, thus increasing the total award to $ 184.9 million, which was paid on July 11, 2023.

The court also found that the Company should pay a portion of Lenovo’s costs and granted both parties permission to appeal on certain grounds.

Both parties filed Appellant’s Notices and the appeals were docketed on July 31, 2023.

On September 19, 2023, the Court of Appeal granted the Company permission to appeal on all its requested grounds.

The appeal is scheduled to be heard on June 10, 2024.

On September 24, 2023, Lenovo filed a new claim in the UK High Court against the Company.

The claim alleges invalidity of two of the Company’s patents relating to 4G/LTE standards:

European Patent (UK) Nos.

2,557,714 and 2,557,715.

Lenovo sought, among other relief, a declaration that the patents at issue are invalid, not essential, and not infringed, revocation of the patents at issue, and a declaration that, upon expiration of the current license in 2023, Lenovo is licensed under terms to be determined by the UK High Court through 2028 or, in the alternative, a determination of the terms of a FRAND license.

On October 19, 2023, Lenovo filed a request for an order that the Company indicate whether it is prepared to give an unconditional undertaking to enter into a global license on terms set by the UK Court, or failing that, a declaration that the Defendants are unwilling licensors;

a hearing was held on December 12, 2023 where Lenovo agreed to stay its application.

On November 22, 2023, the Company filed a jurisdiction challenge;

a hearing on the jurisdiction challenge is to take place around April 24, 2024.

On November 28, 2023, Lenovo filed an application seeking an expedited FRAND trial and an interim license until a FRAND decision is issued in the UK.

A hearing on the interim license was set for after February 26, 2024, and a hearing on Lenovo’s request for an expedited FRAND trial will take place after the interim license and jurisdiction challenge issues are resolved.

District of Delaware Patent Proceedings

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(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;

(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 terms to be set by the UK High Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement;

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

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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.

On June 30, 2023, the parties submitted an update to the Court requesting that the entire case be stayed, and on July 18, 2023, the court ordered that the case be stayed pending resolution of all appeals in the UK proceedings.

District of Delaware Antitrust Proceedings

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The Delaware District Court dismissed the Sherman Act Section 1 claim without prejudice, denied the motion to dismiss the Sherman Act Section 2 claim, and consolidated the Section 2 and breach of contract claims with Company’s Delaware patent proceeding discussed above.

Accordingly, these claims have been stayed pending resolution of all appeals in the UK proceedings.

International Trade Commission and Companion District Court Proceedings

On September 1, 2023, the Company and certain of its subsidiaries filed a complaint in the United States International Trade Commission (the "International Trade Commission") against Lenovo Group Ltd.

and certain of its subsidiaries alleging that Lenovo infringes five of the Company’s U.S.

patents (U.S.

10,250,877, 8,674,859, 9,674,556, 9,173,054, and 8,737,933) by making, using, offering for sale, and/or selling certain electronic devices, including smartphones, computers, tablet computers, and components thereof that infringe certain claims of the asserted patents.

As relief, the Company is seeking:

(a) a limited exclusion order against Lenovo barring from entry into the United States all of Lenovo’s products that infringe the asserted patents;

(b) cease and desist orders prohibiting Lenovo from importing, selling, offering for sale, marketing, advertising, and distributing, infringing products;

and (c) a bond during the 60-day Presidential review period.

On October 5, 2023, the International Trade Commission instituted the requested investigation.

The hearing has been scheduled for June 26 – July 2, 2024.

The Initial Determination is expected to be issued by November 21, 2024, and the Final Determination is expected to be issued by March 21, 2025.

On September 1, 2023, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the Eastern District of North Carolina (the "North Carolina District Court") against Lenovo Group Ltd.

and certain of its subsidiaries alleging that Lenovo infringes five of the Company’s U.S.

patents (U.S.

10,250,877, 8,674,859, 9,674,556, 9,173,054, and 8,737,933) by making, using, offering for sale, and/or selling Lenovo smartphones, computers (including both laptop and desktop), and tablet computers that utilize the Company’s patented technology.

As relief, the Company is seeking:

(a) a finding that Lenovo is liable for infringement of the asserted patents;

(b) an injunction against further infringement;

and (d) costs.

Lenovo filed its answer and counterclaims and motion to dismiss a portion of the complaint on October 10, 2023, which remains pending.

On October 31, 2023, the Company filed its answer to Lenovo’s counterclaims, an amended complaint, as well as a motion to dismiss certain of Lenovo’s counterclaims, which is pending.

China Proceedings

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

That petition is currently pending.

On June 12, 2023, the Beijing IP Court decided not to dismiss or stay the case.

On December 5, 2023, Lenovo filed a request to withdraw the proceedings, and on December 29, 2023, the Beijing IP Court granted Lenovo’s request.

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.

The application was denied on August 7, 2023.

The Company filed an appeal before the SPC on September 4, 2023.

On December 19, 2023, Lenovo filed a request to withdraw the proceedings, and on January 15, 2024, the Beijing IP Court granted Lenovo’s request.

Germany Proceedings

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

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

On September 21, 2023, the parties entered into a patent license agreement regarding the Company’s HEVC portfolio.

On October 4, 2023, the Company filed motions to withdraw the litigations involving European Patent Nos.

3,624,447 and 3,267,684;

the litigations were withdrawn on October 9, 2023.

On September 22, 2023, the Company filed a complaint with the Munich Regional Court against Lenovo and certain of its affiliates, alleging infringement of European Patent No.

2,127,420, relating to cellular 4G/LTE and/or 5G 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.

A hearing regarding European Patent No.

2,127,420 is scheduled for March 21, 2024.

Oppo, OnePlus and realme

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

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.

On March 24, 2023, the parties agreed to stay all technical trials on the basis that European Patent No.

2,485,558 is valid and essential based on the result of Technical Trial A in the Lenovo UK proceedings.

The FRAND trial to determine the royalties to be paid under the license with Oppo is scheduled to commence on March 1, 2024.

India Proceedings

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

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.

The Munich Regional Court held a hearing on March 2, 2023 regarding European Patent No.

2,127,420, and a second hearing was held on November 23, 2023.

On December 21, 2023, the Munich Regional Court issued a decision finding infringement and issuing an injunction against Oppo.

Oppo filed an appeal of this decision on January 22, 2024, which is pending.

On March 10, 2023, the Munich Regional Court entered a stay of the proceedings regarding European Patent No.

On November 30, 2023, the Munich Regional Court entered a stay of proceedings regarding European Patent No.

China Proceedings

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

The Company plans to appeal the decision.

On February 28, 2023, the Company filed an appeal to the decision.

The Supreme People’s Court denied the appeal on September 7, 2023.

An initial evidentiary hearing was held on October 13, 2023.

Spain Proceedings

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

Oppo filed its reply, invalidity counterclaims, and defenses on July 31.

The Company filed its response to Oppo’s counterclaims on December 20, 2023.

The Company reached an agreement with Samsung Electronics Co.

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

On March 31, 2023, the Company filed a request for arbitration with the International Chamber of Commerce.

On July 21, 2023, the International Chamber of Commerce confirmed the full tribunal for the arbitration.

The hearing has been scheduled for Summer of 2024 with an expected resolution in late 2024.

On December 5, 2023, Tesla and certain of its subsidiaries filed a claim in the UK High Court against the Company and Avanci.

The claim alleges invalidity of three of the Company’s patents relating to 5G standards:

European Patent (UK) Nos.

3,718,369, 3,566,413, and 3,455,985.

Tesla sought, among other relief, a declaration that the patents at issue are invalid, not essential, and not infringed, revocation of the patents at issue, a declaration that the terms of the Avanci 5G Connected Vehicle platform license are not FRAND, and a determination of FRAND terms for a license between Tesla and Avanci covering its Avanci’s 5G Connected Vehicle platform .

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 .

We do not currently believe that these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows.

None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of December 31, 2022.

None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of December 31, 2023, except as noted above.

COMPENSATION PLANS AND PROGRAMS

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For time-based grants that cliff vest, we expect to amortize the associated unrecognized compensation cost as of December 31, 2023, on a straight-line basis generally over the remaining vesting period.

Vesting of performance-based RSU awards is subject to attainment of specific goals established by the Compensation Committee of the Board of Directors.

Vesting of performance-based RSU awards is subject to attainment of specific goals established by the Human Capital Committee of the Board of Directors.

Depending upon performance achievement against these goals, the number of shares that vest can be anywhere from 0 to 3 times the target number of shares.

Information with respect to current RSU activity is summarized as follows (in thousands, except per share amounts):

RSUs Weighted

Average Per Share

RSUs Weighted Average Per Share Grant Date Fair Value

Balance at December 31, 2022

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The 2009 Plan allowed, and the 2017 Plan allows, for the granting of incentive and non-qualified stock options, as well as other securities.

The administrator of the Equity Plans, the Compensation Committee of the Board of Directors, determines the number of options to be granted, subject to certain limitations set forth in the 2017 Plan.

Since 2013, both incentive and non-qualified stock options have been granted annually as part of our long-term incentive programs, which have generally vested over three years .

The administrator of the Equity Plans, the Human Capital Committee of the Board of Directors, determines the number of options to be granted, subject to certain limitations set forth in the 2017 Plan.

We grant stock options to a limited number of the employee base annually as part of our long-term incentive programs, which have generally vested over three years .

During the year ended December 31, 2018, performance-based options were granted for the first time.

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Options granted under the Equity Plans are generally exercisable for a period of between 7 to 10 years from the date of grant and may vest on the grant date, another specified date, over a period of time and/or dependent upon the attainment of specified performance goals.

We also have approximately 0.1 million options outstanding under a prior stock plan that do not expire.

We also have less than 0.1 million options outstanding under a prior stock plan that do not expire.

The fair value for option awards is computed using the Black-Scholes pricing model, whose inputs and assumptions are determined as of the date of grant and which require considerable judgment.

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Our 401(k) contribution expense was approximately $ 1.1 million, $ 1.2 million and $ 1.3 million for 2023, 2022 and 2021, respectively.

Additionally, the company contributed $ 0.2 million, $ 3.4 million and $ 0.2 million in 2022, 2021 and 2020, respectively, to other defined contribution plans.

Under InterDigital’s Deferred Compensation Plan (“Deferred Plan”), eligible US employees may make tax-deferred contributions that cannot be made under the 401(k) Plan due to Internal Revenue Service limitations.

We match 50 % of a participant’s contributions up to 6 % of the participants excess compensation pay.

Additionally, the company contributed $ 0.3 million, $ 0.2 million and $ 3.4 million in 2023, 2022 and 2021, respectively, to other defined contribution plans, including InterDigital’s Deferred Compensation Plan (“Deferred Plan”).

Under the Deferred Plan, eligible US employees may make tax-deferred contributions that cannot be made under the 401(k) Plan due to Internal Revenue Service limitations.

We match 50 % of a participant’s contributions up to 6 % of the participant's applicable compensation.

From time to time InterDigital makes discretionary company contributions to the Deferred Plan on behalf of a participant.

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

The company contributed $ 0.1 million and $ 3.0 million to the Deferred Plan in 2023 and 2021, respectively.

No such contributions were made in 2022.

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

Our domestic/foreign pre-tax income consists of the following components for 2023, 2022 and 2021 (in thousands):

For the Year Ended December 31,

2023 2022 2021

Pre-Tax Income by Jurisdiction

Domestic $ 242,780 $ 129,072 $ 77,943

Foreign ( 8,170 ) ( 11,509 ) ( 20,387 )

Total $ 234,610 $ 117,563 $ 57,556

Our income tax provision consists of the following components for 2023, 2022 and 2021 (in thousands):

For the Year Ended December 31,

2023 2022 2021

Federal $ 45,816 $ 657 $ ( 291 )

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State 615 527 792

Foreign ( 9,759 ) — —

Foreign source withholding tax 16,592 34,655 34,905

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Net operating losses $ 112,634 $ 114,975

Tax credit carryforward 27,212 32,692

Debt amortization 24,029 12,659

Deferred revenue, net 48,590 3,457

Capitalized research and development 21,213 9,423

Amortization and depreciation 21,101 19,608

Debt amortization 16,093 24,029

Other employee benefits 8,434 10,542

Capitalized research and development 9,423 —

Stock compensation 4,803 4,774

Deferred revenue, net 3,457 22,875

Share-based compensation

Lease liability 3,339 3,402

Tax credit carryforward 23 27,212

Other — 2,504

Right of use asset ( 3,464 ) ( 3,763 )

Deferred tax asset

238,076 219,955

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Net deferred tax asset 133,246 97,737

Right of use asset ( 2,610 ) ( 3,464 )

Deferred tax liability

( 4,307 ) ( 3,464 )

Net deferred tax asset

$ 128,939 $ 94,273

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, 2023, 2022 and 2021:

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statutory rate 21.0 % 21.0 % 21.0 %

Change in valuation allowance 2.4 % 10.3 % 28.5 %

Non-deductible officers' compensation 1.4 % 1.5 % 8.4 %

Uncertain tax positions 1.5 % 5.5 % ( 2.7 ) %

Other permanent differences 0.8 % 1.2 % 1.9 %

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Non-creditable withholding taxes 0.1 % 0.4 % 4.4 %

Stock compensation 0.3 % ( 1.2 ) % 1.1 %

Amended return benefit (a)

Foreign derived intangible income deduction ( 7.1 ) % ( 5.3 ) % ( 14.7 ) %

Change in valuation allowance (b)

( 2.2 ) % 2.4 % 10.3 %

Share-based compensation

( 1.3 ) % 0.3 % ( 1.2 ) %

Effect of rates different than statutory ( 0.8 ) % ( 0.1 ) % ( 2.2 ) %

Research and development tax credits ( 0.6 ) % ( 1.7 ) % ( 1.3 ) %

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

Uncertain tax positions ( 0.4 ) % 1.5 % 5.5 %

Amended return benefit (a)

— % — % ( 7.7 ) %

Other ( 1.1 ) % ( 0.6 ) % — %

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

(a) In 2020, a net discrete benefit of $ 20.9 million was recorded that primarily relates to the expected amendment of prior year returns to utilize a tax asset generated in the current year.

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

Total tax provision

10.0 % 21.7 % 27.0 %

(a) In 2021, a net discrete benefit of was recorded that primarily related to an amendment of prior year returns to utilize a tax asset generated in the current year.

(b) In 2023, the Company recorded a partial release of the valuation allowance it has in France due to income projected driven by recently signed agreements.

Valuation Allowances and Net Operating Losses

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

At December 31, 2023, we had $ 8.6 million in U.S net operating loss carryforwards, which can be indefinitely carried forward, as well as non-U.S.

net operating loss carryforwards amounting to $ 120.7 million which can be indefinitely carried forward under French statutes.

In addition, we had U.S.

state net operating loss carryforwards of $ 1.5 billion, of which $ 63.0 million can be indefinitely carried forward, while the remaining $ 1.5 billion will expire in varying amounts from 2023 to 2042.

The Company recognizes deferred tax balances related to the undistributed earnings of subsidiaries when it expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of the investments.

On December 31, 2023, the Company does not have distributable earnings in foreign subsidiaries that would be subject to deferred taxes.

Uncertain Income Tax Positions

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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 2023, we reduced the reserve previously established for the amended returns by $ 0.7 million for the benefit available in the current year had it not been included on the amended returns and reduced the reserve previously recorded for foreign withholding taxes by $ 1.1 million due to favorable guidance from the taxing authorities in the United States.

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.

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We also reversed reserves of $ 1.1 million previously established on 2017 research and development and manufacturing deduction credits as a result of the lapsing of stature of limitations for that tax year.

During 2020, we established reserves of $ 1.1 million related to uncertainty arising from our ability to generate the full benefit of the amended returns that utilize the current year tax asset.

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.

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 2023 through 2021 (in thousands):

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Additions 91 1,264 46

Reductions — — —

Tax positions related to prior years:

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Restricted stock units and stock options 106 504 322

Convertible securities — — 5,143

Warrants 7,488 6,444 4,921

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In June 2014, our Board of Directors authorized a $ 300.0 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.

Subsequently our Board of Directors authorized five $ 100.0 million increases to the program, respectively, and an additional $ 333.0 million in December 2022 and an additional $ 235.0 million in December 2023, bringing the total amount of the Share Repurchase Program to approximately $ 1.4 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.

As of December 31, 2023, there was approximately $ 296.3 million remaining under the Share Repurchase Program authorization.

Share Repurchase Program

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2015 1,836 96,410

2014 3,554 152,625

Total 17,340 $ 1,072,685

In 2023, we commenced a modified “Dutch auction” tender offer (the “Tender Offer”), which resulted in the repurchase of 2.7 million shares of our common stock at a price of $ 72.98 per share, for an aggregate cost of $ 199.9 million, excluding fees, expenses and excise tax relating to the Tender Offer.

Cash dividends on outstanding common stock declared in 2023 and 2022 were as follows (in thousands, except per share data):

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$ 1.40 $ 41,949

In September 2017, we announced that our Board of Directors had approved an increase in the Company’s quarterly cash dividend to $ 0.35 per share.

We currently expect to continue to pay dividends comparable to our quarterly $ 0.35 per share cash dividend in the future;

We announced an increase to the quarterly cash dividend from $ 0.35 to $ 0.40 per share, beginning with the dividend paid in fourth quarter 2023.

We currently expect to continue to pay comparable dividends in the future;

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 Canada.

The Company does not currently have any finance leases.

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Balance Sheet Classification December 31, 2023 December 31, 2022

Operating lease receivable - current Prepaid and other current assets $ — $ 51

Operating lease right-of-use assets, net Other non-current assets, net $ 15,746 $ 18,034

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As of December 31, 2023, the weighted average remaining operating lease term was 6.1 years and the weighted average discount rate used to determine the operating lease liabilities was 6.2 %.

As of December 31, 2022, there have been no leases entered into that have not yet commenced.

As of December 31, 2023, we have entered into one lease that has not yet commenced, with commencement expected in first quarter 2024.

The maturities of our operating lease liabilities as of December 31, 2023, excluding short-term leases with terms less than 12 months, were as follows (in thousands):

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Present value of lease liabilities $ 20,264

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):

OTHER INCOME (EXPENSE), NET

The amounts included in " Other income (expense), net " in the consolidated statements of income for the year ended December 31, 2023, 2022 and 2021 were as follows (in thousands):

For the Year Ended December 31,

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Other 11,184 ( 6,719 ) 9,885

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.

Other income (expense), net $ 57,812 $ ( 3,457 ) $ 11,575

Interest and investment income increased to $ 46.6 million for the year ended December 31, 2023 primarily due to increased short-term investments made by the Company and market conditions driving higher yields on our short-term investments, as compared to both the years ended December 31, 2022 and 2021.

Refer to Note 10, " Obligations, " for further information on the $ 11.2 million loss on extinguishment of long-term debt recognized during the year ended December 31, 2022.

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.

The change in Other was primarily due to fair value adjustments of our investments and pension obligation resulting in $ 12.1 million and $ 11.4 million of net gains in 2023 and 2021, respectively, and $ 2.4 million of net losses in 2022.

Additionally, the change in Other was driven by foreign currency translation a net gain arising from euro translation of our foreign subsidiaries of $ 1.0 million in 2023, compared to net losses of $ 3.9 million and $ 3.0 million in 2022 and 2021, respectively.

VARIABLE INTEREST ENTITIES

As further discussed below, we are the primary beneficiary of three variable interest entities.

As of December 31, 2022, the combined book values of the assets and liabilities associated with these variable interest entities included in our consolidated balance sheet were $ 17.5 million and $ 1.8 million, respectively.

Assets included $ 4.4 million of cash and cash equivalents, $ 4.0 million of accounts receivable and prepaid assets, and $ 9.1 million of patents, net.

As further discussed below, we were the primary beneficiary of three variable interest entities, of which two ceased operations in 2021 and one was deconsolidated during 2023.

As of December 31, 2023, there were no combined book values of the assets and liabilities associated with these variable interest entities included in our consolidated balance sheet.

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Convida Wireless was launched in 2013 and most recently renewed in 2021 to combine Sony's consumer electronics expertise with our pioneering IoT expertise to drive IoT communications and connectivity.

Based on the terms of the agreement, the parties will contribute funding and resources for additional research and platform development, which we will perform.

Based on the terms of the agreement, the parties will contribute funding and resources for additional research and platform development, which we performed.

Convida Wireless is a variable interest entity.

Based on our provision of research and platform development services to Convida Wireless, we have determined that we remain the primary beneficiary for accounting purposes and will continue to consolidate Convida Wireless.

For the years ended December 31, 2022, 2021 and 2020, we have allocated approximately $ 1.6 million, $ 10.8 million and $ 5.7 million, respectively, of Convida Wireless' net loss to noncontrolling interests held by other parties.

Based on our provision of research and platform development services to Convida Wireless, we determined that we were the primary beneficiary for accounting purposes and consolidated Convida Wireless through September 30, 2023.

In October 2023, Convida Wireless appointed a President and Chief Licensing Officer who is responsible for directing the operating activities of Convida, including research and platform development services.

Accordingly, we deconsolidated Convida Wireless during fourth quarter 2023.

For the years ended December 31, 2023, 2022 and 2021, we have allocated $ 3.0 million, $ 1.6 million and $ 10.8 million, respectively, of Convida Wireless' net loss to noncontrolling interests held by other parties.

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

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

For the year ended 2021, we allocated approximately $ 2.3 million of Chordant's net loss to noncontrolling interests held by other parties.

Chordant ceased operations in 2021.

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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 " 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):

Tax receivables $ 64,117 $ 57,127

Restricted cash 9,682 5,861

Prepaid assets 9,044 5,479

Patents held for sale 4,000 4,000

Other current assets 2,873 5,078

Total Prepaid and other current assets $ 89,716 $ 77,545

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):

Tax receivables $ 29,370 $ 30,026

Goodwill 22,421 22,421

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

RESTRUCTURING ACTIVITIES

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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 (expense) income, net " in the consolidated statement of income.

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

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

1 unchanged sentence

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

The proceeds from the sale of these patents will contribute to funding Convida's operations.

The proceeds from the sale of these patents contributed to funding Convida's operations.

These assets were evaluated as a separate asset group and reclassified as assets held for sale.

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We determined the fair value based upon evaluation of market conditions.

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 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.

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

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.

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

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.

During 2023, we did no t recognize any restructuring expenses and the Company considers the plan to be complete.

We do not anticipate further restructuring charges.

As of December 31, 2023 and 2022, the Company's restructuring liability was $ 0.1 million and $ 4.5 million and was included in " Other accrued expenses " on our consolidated balance sheet.

The following table presents the change in our restructuring liability during the period (in thousands):

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Balance as of December 31, 2022 4,495

Cash payments ( 4,475 )

Balance as of December 31, 2023 $ 132

The restructuring expenses included in " Restructuring activities " in the consolidated statements of income for the years ending December 31, 2023, 2022, and 2021 were as follows (in thousands):

For the Year Ended December 31,

2023 2022 2021

Asset impairment $ — $ 2,427 $ 13,228

3 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