What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 150 added, 117 removed, 516 unchanged (34% of the section changed)

45 unchanged sentences

(in thousands, except per share data)

For the Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Revenues $ 223,493 $ 101,591 $ 487,035 $ 303,964

23 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 109,664 $ 21,293 $ 191,316 $ 124,813

Unrealized (loss) gain on investments, net of tax

Unrealized loss on investments, net of tax

( 90 ) ( 1,839 ) ( 585 ) ( 1,260 )

Comprehensive income $ 109,574 $ 19,454 $ 190,731 $ 123,553

31 unchanged sentences

69,329 $ 693 $ 719,129 $ 1,384,243 $ ( 337 ) 42,255 $ ( 1,484,056 ) $ 5,629 $ 625,301

Net income attributable to InterDigital, Inc.

— — — 21,783 — — — — 21,783

Net loss attributable to noncontrolling interest — — — — — — — ( 490 ) ( 490 )

Net change in unrealized loss on short-term investments — — — — ( 1,839 ) — — — ( 1,839 )

Dividends declared ($ 0.35 per share)

— — 360 ( 9,633 ) — — — — ( 9,273 )

Exercise of common stock options 1 — 12 — — — — — 12

Issuance of common stock, net 42 — ( 1,389 ) — — — — — ( 1,389 )

Share-based compensation — — 8,740 — — — — — 8,740

Repurchase of common stock — — — — — 548 ( 42,489 ) — ( 42,489 )

Balance, June 30, 2023

69,372 $ 693 $ 726,852 $ 1,396,393 $ ( 2,176 ) 42,803 $ ( 1,526,545 ) $ 5,139 $ 600,356

Common Stock Additional

18 unchanged sentences

69,638 $ 696 $ 744,073 $ 1,533,232 $ ( 1,142 ) 44,204 $ ( 1,652,568 ) $ — $ 624,291

Net income attributable to InterDigital, Inc.

— — — 109,664 — — — — 109,664

Net change in unrealized loss on short-term investments — — — — ( 90 ) — — — ( 90 )

Dividends declared ($ 0.40 per share)

— — 443 ( 10,495 ) — — — — ( 10,052 )

Issuance of common stock, net 39 — ( 1,580 ) — — — — — ( 1,580 )

Share-based compensation — — 9,655 — — — — — 9,655

Repurchase of common stock — — — — — 344 ( 35,111 ) — ( 35,111 )

Settlement of the 2024 Notes 324 3 ( 3 ) — — — — — —

Settlement of the 2024 Hedges — — 37,120 — — 324 ( 37,120 ) — —

Balance, June 30, 2024

70,001 $ 699 $ 789,708 $ 1,632,401 $ ( 1,232 ) 44,872 $ ( 1,724,799 ) $ — $ 696,777

The accompanying notes are an integral part of these statements.

3 unchanged sentences

(in thousands)

For the Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

12 unchanged sentences

Deferred charges and other assets ( 41,151 ) ( 51,818 )

Increase (decrease) in liabilities:

(Decrease) Increase in liabilities:

Accounts payable ( 611 ) ( 955 )

Customer deposit

( 63,100 ) 76,100

Accrued compensation and other expenses ( 408 ) ( 5,537 )

16 unchanged sentences

Net cash used in financing activities ( 233,327 ) ( 271,452 )

Net increase (decrease) in cash, cash equivalents and restricted cash

18,229 ( 260,451 )

Net decrease in cash, cash equivalents and restricted cash ( 133,966 ) ( 412,289 )

Cash, cash equivalents and restricted cash, beginning of period 442,961 703,161

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position of InterDigital, Inc.

(individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of March 31, 2024, the results of our operations for the three months ended March 31, 2024 and 2023 and our cash flows for the three months ended March 31, 2024 and 2023.

(individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of June 30, 2024, the results of our operations for the three and six months ended June 30, 2024 and 2023 and our cash flows for the six months ended June 30, 2024 and 2023.

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the detailed schedules, information and notes necessary to state fairly the financial condition, results of operations and cash flows in conformity with United States generally accepted accounting principles (“GAAP”).

11 unchanged sentences

Supplemental Cash Flow Information

The following table presents additional supplemental cash flow information for the three months ended March 31, 2024 and 2023 (in thousands):

For the Three Months Ended March 31,

The following table presents additional supplemental cash flow information for the six months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Supplemental cash flow information:

Interest paid $ 9,311 $ 9,312

Income taxes paid, including foreign withholding taxes 16,920 21,132

3 unchanged sentences

Accrued capitalized patent costs and property and equipment purchases ( 856 ) 729

Unsettled repurchase of common stock — 1,998

New Accounting Guidance

16 unchanged sentences

Disaggregated Revenue

The following table presents the disaggregation of our revenue for the three months ended March 31, 2024 and 2023 (in thousands):

For the Three Months Ended March 31,

The following table presents the disaggregation of our revenue for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

2024 2023 Total Increase/(Decrease)

7 unchanged sentences

Total revenues $ 223,493 $ 101,591 $ 121,902 120 %

Six Months Ended June 30,

2024 2023 Total Increase/(Decrease)

Recurring revenues:

Smartphone $ 147,554 $ 172,506 $ ( 24,952 ) ( 14 ) %

CE, IoT/Auto 43,994 27,518 16,476 60 %

Other 1,258 622 636 102 %

Total recurring revenues 192,806 200,646 ( 7,840 ) ( 4 ) %

Catch-up revenues a

294,229 103,318 190,911 185 %

Total revenues $ 487,035 $ 303,964 $ 183,071 60 %

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

During the three months ended March 31, 2024, we recognized $ 49.9 million of revenue that had been included in deferred revenue as of the beginning of the period.

As of March 31, 2024, we had contract assets of $ 120.4 million included within " Accounts receivable " in the condensed consolidated balance sheet.

During the six months ended June 30, 2024, we recognized $ 84.9 million of revenue that had been included in deferred revenue as of the beginning of the period.

As of June 30, 2024, we had contract assets of $ 201.9 million included within " Accounts receivable " in the condensed consolidated balance sheet.

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

Contracted Revenue

Based on contracts signed and committed as of March 31, 2024, we expect to recognize the following revenue from dynamic fixed-fee royalty payments over the term of such contracts (in thousands):

Based on contracts signed and committed as of June 30, 2024, we expect to recognize the following revenue from dynamic fixed-fee royalty payments over the term of such contracts (in thousands):

Remainder of 2024 $ 169,574

6 unchanged sentences

Cash, cash equivalents and restricted cash currently consists of money market and demand accounts.

The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of March 31, 2024, December 31, 2023 and March 31, 2023 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

March 31, December 31, March 31,

The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of June 30, 2024, December 31, 2023 and June 30, 2023 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):

June 30, December 31, June 30,

2024 2023 2023

6 unchanged sentences

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

Four licensees comprised 85 % and 84 % of our accounts receivable balance, as of March 31, 2024 and December 31, 2023, respectively.

Four licensees comprised 88 % and 84 % of our accounts receivable balance, as of June 30, 2024 and December 31, 2023, respectively.

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

13 unchanged sentences

Our financial assets are generally included within short-term investments on our condensed consolidated balance sheets, unless otherwise indicated.

Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of March 31, 2024 and December 31, 2023 (in thousands):

Fair Value as of March 31, 2024

Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of June 30, 2024 and December 31, 2023 (in thousands):

Fair Value as of June 30, 2024

Level 1 Level 2 Level 3 Total

1 unchanged sentence

$ 303,146 $ — $ — $ 303,146

Commercial paper (b)

— 136,406 — 136,406

government securities (c)

— 251,166 — 251,166

Corporate bonds, asset backed and other securities (d)

Commercial paper — 108,285 — 108,285

government securities — 206,160 — 206,160

Corporate bonds, asset backed and other securities (c)

— 151,985 — 151,985

6 unchanged sentences

— 174,991 — 174,991

government securities (c)

— 256,850 — 256,850

Corporate bonds, asset backed and other securities (d)

government securities — 256,850 — 256,850

Corporate bonds, asset backed and other securities (c)

— 149,693 — 149,693

2 unchanged sentences

(a) Primarily included within cash and cash equivalents.

(b) As of March 31, 2024 and December 31, 2023, $ 5.8 million and $ 5.7 million of commercial paper was included within cash and cash equivalents, respectively.

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

(d) As of March 31, 2024 and December 31, 2023, $ 7.9 million and $ 6.5 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents, respectively.

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

(c) As of June 30, 2024 and December 31, 2023, $ 5.8 million and $ 6.5 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents, respectively.

Non-Recurring Fair Value Measurements

1 unchanged sentence

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

Investment in Other Entities

During second quarter 2024 and 2023, we recognized gains of $ 2.2 million and $ 3.1 million, respectively, resulting from fair value changes of one of our long-term strategic investments, which was included within “ Other income, net ” in the condensed consolidated statement of income.

Fair Value of Long-Term Debt

Convertible Notes

The principal amount, carrying value and related estimated fair value of the Company's Convertible Notes reported as of March 31, 2024 and December 31, 2023 was as follows (in thousands).

The principal amount, carrying value and related estimated fair value of the Company's Convertible Notes reported as of June 30, 2024 and December 31, 2023 was as follows (in thousands).

The aggregate fair value of the principal amount of the Convertible Notes is a Level 2 fair value measurement.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Amount Carrying

4 unchanged sentences

Technicolor Patent Acquisition Long-term Debt

The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported as of March 31, 2024 and December 31, 2023 was as follows (in thousands).

The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported as of June 30, 2024 and December 31, 2023 was as follows (in thousands).

The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Carrying

1 unchanged sentence

OTHER ASSETS AND LIABILITIES

The amounts included in " Prepaid and other current assets " in the condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

The amounts included in " Prepaid and other current assets " in the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024 December 31, 2023

Prepaid assets $ 35,775 $ 9,353

3 unchanged sentences

Total Prepaid and other current assets $ 73,135 $ 43,976

The amounts included in " Other non-current assets, net " in the condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

The amounts included in " Other non-current assets, net " in the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024 December 31, 2023

Tax receivables $ 83,385 $ 76,740

4 unchanged sentences

Total Other non-current assets, net $ 165,916 $ 149,656

The amounts included in " Other accrued expenses " in the condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

Customer deposit $ 76,100 $ 76,100

The amounts included in " Other accrued expenses " in the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024 December 31, 2023

Accrued legal fees $ 15,248 $ 10,338

Customer deposit 13,000 76,100

Other accrued expenses 12,640 11,604

Total Other accrued expenses $ 40,888 $ 98,042

The amounts included in " Other long-term liabilities " in the condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

The amounts included in " Other long-term liabilities " in the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024 December 31, 2023

Deferred compensation liabilities $ 19,245 $ 18,413

7 unchanged sentences

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

From the period January 1, 2024 through June 30, 2024, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

As such, the 2027 are included in " Current portion of long-term debt " in our condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

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

From the period January 1, 2024 through September 30, 2024, the holders of the 2027 Notes have the right, but not the obligation, to convert any portion of the principal amount of the 2027 Notes.

As such, the 2027 Notes are included in " Current portion of long-term debt " in our condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

The 2027 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with any of the Company’s current and any future senior unsecured indebtedness.

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

1 unchanged sentence

Also on May 24 and May 25, 2022, we entered into privately negotiated warrant transactions, whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock.

As of March 31, 2024, the warrants under the 2027 Warrant Transactions had a weighted average strike price of $ 106.31 per share, subject to adjustment.

As of June 30, 2024, the warrants under the 2027 Warrant Transactions had a weighted average strike price of $ 106.31 per share, subject to adjustment.

2024 Notes, and Related Note Hedge and Warrant Transactions

On June 3, 2019, we issued $ 400.0 million in aggregate principal amount of 2024 Notes.

The net proceeds from the issuance of the 2024 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $ 391.6 million.

The 2024 Notes bear interest at a rate of 2.00 % per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2019, and mature on June 1, 2024, unless earlier redeemed, converted or repurchased.

Commencing on March 1, 2024, the 2024 Notes became convertible at any time prior to 5:00 p.m., New York City time, on the second scheduled trading day immediately preceding the maturity date of the 2024 Notes.

The 2024 Notes are convertible into cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock, at an initial conversion rate of 12.3018 shares of our common stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $ 81.29 per share).

The 2024 Notes are senior unsecured obligations of the Company and rank equally in right of payment with any of our current and any future senior unsecured indebtedness.

The 2024 Notes are effectively subordinated to all of our future secured indebtedness, if any, to the extent of the value of the related collateral, and the 2024 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of our subsidiaries.

On May 29 and May 31, 2019, in connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions (collectively, the "2024 Note Hedge Transactions") that cover, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2024 Notes, subject to adjustment, and are exercisable upon any conversion of the 2024 Notes.

On May 29 and May 31, 2019, we also entered into privately negotiated warrant transactions (collectively, the "2024 Warrant Transactions" and, together with the 2024 Note Hedge Transactions, the "2024 Call Spread Transactions"), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock at an initial strike price of approximately $ 109.43 per share, subject to adjustment.

On June 3, 2019, we issued $ 400.0 million in aggregate principal amount of Senior Convertible Notes due in 2024 (the "2024 Notes") that bore interest at a rate of 2.00 % per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2019, and matured on June 1, 2024.

During second quarter 2022, we repurchased $ 273.8 million in aggregate principal amount of the 2024 Notes in privately negotiated transactions concurrently with the offering of the 2027 Notes.

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

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

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

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

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

The following table reflects the carrying value of our Convertible Notes long-term debt as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

We repaid the remaining $ 126.2 million in aggregate principal at maturity on June 1, 2024.

On May 29 and May 31, 2019, in connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions (collectively, the "2024 Note Hedge Transactions") that covered, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock, in the aggregate, at a strike price that corresponded to the conversion price of the 2024 Notes, subject to adjustment, and were exercisable upon any conversion of the 2024 Notes.

At maturity on June 1, 2024, the Company issued 0.3 million shares to settle the 2024 Notes that had been converted by holders.

This issuance was effectively offset by our receipt of 0.3 million shares from the settlement of the 2024 Note Hedge Transactions.

No shares have been issued related to the 2024 Warrant Transactions as of June 30, 2024, and warrants to acquire 1.6 million shares of common stock at an initial strike price of approximately $ 109.43 per share, subject to adjustment, remain outstanding.

The 2024 Warrants settle during the period September 3, 2024 through December 17, 2024.

The following table reflects the carrying value of our Convertible Notes long-term debt as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

3.50 % Senior Convertible Notes due 2027

1 unchanged sentence

2.00 % Senior Convertible Notes due 2024

126,174 126,174

Deferred financing costs ( 6,234 ) ( 7,422 )

2 unchanged sentences

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

The following table presents the amount of interest cost recognized, which is included within " Interest expense" in our condensed consolidated statements of income, for the three months ended March 31, 2024 and 2023 relating to the contractual interest coupon and the amortization of deferred financing costs of the Convertible Notes (in thousands):

For the Three Months Ended March 31,

The following table presents the amount of interest cost recognized, which is included within " Interest expense" in our condensed consolidated statements of income, for the three and six months ended June 30, 2024 and 2023 relating to the contractual interest coupon and the amortization of deferred financing costs of the Convertible Notes (in thousands):

Three Months Ended June 30,

2027 Notes 2024 Notes Total 2027 Notes 2024 Notes Total

2 unchanged sentences

Total $ 4,496 $ 529 $ 5,025 $ 4,461 $ 775 $ 5,236

Six Months Ended June 30,

2027 Notes 2024 Notes Total 2027 Notes 2024 Notes Total

Contractual coupon interest $ 8,050 $ 1,059 $ 9,109 $ 8,050 $ 1,262 $ 9,312

Amortization of deferred financing costs 936 252 1,188 867 286 1,153

Total $ 8,986 $ 1,311 $ 10,297 $ 8,917 $ 1,548 $ 10,465

Technicolor Patent Acquisition Long-Term Debt

On July 30, 2018, we completed our acquisition of the patent licensing business of Technicolor SA ("Technicolor"), a worldwide technology leader in the media and entertainment sector (the "Technicolor Patent Acquisition").

In conjunction with the Technicolor Patent Acquisition, we assumed Technicolor’s rights and obligations under a joint licensing program with Sony relating to digital televisions and standalone computer display monitors, which commenced in 2015 and is referred to as the "Madison Arrangement." An affiliate of CPPIB Credit Investments Inc.

An affiliate of CPPIB Credit Investments Inc.

("CPPIB Credit"), a wholly owned subsidiary of Canada Pension Plan Investment Board, is a third-party investor in the Madison Arrangement.

3 unchanged sentences

This initial fair value measurement was based on the perspective of a market participant and included significant unobservable inputs which are classified as Level 3 inputs within the fair value hierarchy.

The fair value of the long-term debt as of March 31, 2024 and December 31, 2023 is disclosed within Note 3, " Cash, Concentration of Credit Risk and Fair Value of Financial Instruments.

The fair value of the long-term debt as of June 30, 2024 and December 31, 2023 is disclosed within Note 3, " Cash, Concentration of Credit Risk and Fair Value of Financial Instruments.

" Our repayment obligations are contingent upon future royalty revenues generated from the Madison Arrangement and there are no minimum or maximum payments under the arrangement.

4 unchanged sentences

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 three months ended March 31, 2024 and 2023, we recognized $ 0.6 million and $ 0.3 million of interest expense related to this debt.

During the three and six months ended June 30, 2024, we recognized $ 1.0 million and $ 1.6 million, respectively, of interest expense related to this debt, compared to $ 1.0 million and $ 1.3 million during the three and six months ended June 30, 2023, respectively.

This was included within “ Interest Expense ” in the condensed 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.

We made a $ 1.6 million payment to CPPIB Credit during the three months ended March 31, 2024.

We made $ 12.9 million in payments to CPPIB Credit during the six months ended June 30, 2024 and no payments were made during the six months ended June 30, 2023.

Technicolor Contingent Consideration

1 unchanged sentence

Under the revenue-sharing arrangement, Technicolor receives 42.5 % of future cash receipts from new licensing efforts from the Madison Arrangement only, subject to certain conditions and hurdles.

As of March 31, 2024, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and is therefore not reflected within the consolidated financial statements.

As of June 30, 2024, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and is therefore not reflected within the consolidated financial statements.

LITIGATION AND LEGAL PROCEEDINGS

20 unchanged sentences

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.

The appeal was heard on June 10-14, 2024, and the UK Court of Appeal issued its decision on July 12, 2024.

The UK Court of Appeal ruled in favor of InterDigital and awarded the Company an additional amount of $ 55.2 million to a total of approximately $ 240.1 million.

It rejected Lenovo’s appeal in its entirety and confirmed that Lenovo must pay for all of its past sales starting from 2007 through December 31, 2023.

The court also found that Lenovo should pay the Company’s costs for the appeal and reduced the costs that Lenovo was awa rded from the initial decision.

Lenovo sought permission to appeal, and permission to appeal was refused by the UK Court of Appeals on July 12, 2024.

Lenovo has until August 9, 2024 to file a request for an appeal directly with the UK Supreme Court.

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

10 unchanged sentences

on March 21, 2024 the UK High Court denied Lenovo’s request for the interim license.

A hearing on Lenovo’s request for an expedited FRAND trial will be scheduled now that the interim license and jurisdiction challenge issues are resolved.

A hearing on Lenovo’s request for an expedited FRAND trial was held on July 17, 2024.

District of Delaware Patent Proceedings

49 unchanged sentences

On February 23, 2024, Lenovo filed a Motion for Judgment on the Pleadings, alleging three of the asserted patents are invalid.

that motion is pending.

China Proceedings

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

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

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

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

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

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

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 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.

On July 17, 2024, the North Carolina District Court granted Lenovo’s Motion for Judgment on the Pleadings in part, finding two of the asserted patents to be invalid, and denied Lenovo’s motion with respect to a third asserted patent that was challenged by Lenovo.

Germany Proceedings

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

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

The Company 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.

1 unchanged sentence

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

A hearing regarding European Patent No.

2,127,420 was held on April 18, 2024;

judgment is expected on or around May 2, 2024.

On May 2, 2024, the Munich Regional Court issued a judgment finding Lenovo infringes European Patent No.

2,127,420 and that the Company complied with its FRAND obligations while Lenovo did not;

the Court ordered Lenovo to cease and desist selling infringing products.

The Company served Lenovo with an enforcement note of the judgment on May 7, 2024.

Lenovo appealed the judgment on May 2, 2024.

On May 7, 2024, Lenovo requested a stay of the enforcement of the judgment, and on June 25, 2024, the Munich Regional Court rejected Lenovo’s request.

Oppo, OnePlus and realme

16 unchanged sentences

Oppo appealed the judgment on March 13, 2024, and the appeal is pending.

Evidentiary trial proceedings are expected to take place from September 2024 through December 2024.

Germany Proceedings

26 unchanged sentences

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 July 21, 2023, the International Chamber of Commerce confirmed the full tribu nal for the arbitration.

The two-week arbitration hearing was held in July 2024, and we expect a decision by the end of 2024.

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

4 unchanged sentences

On March 8, 2024, the Company filed a jurisdiction challenge;

a hearing on the jurisdiction challenge is scheduled to begin on May 20, 2024.

the jurisdiction challenge was heard on May 24-25 and June 4, 2024, and on July 15, 2024 the UK High Court issued a judgment dismissing Tesla’s FRAND claims against the Company and Avanci, and maintaining Tesla’s patent claims against the Company.

The patent claims against the Company were further stayed by the UK High Court, and a hearing on costs and permission to appeal is scheduled for July 30, 2024.

On July 16, 2024, Tesla sought permission to appeal the decision;

the Company also sought permission to appeal on two limited grounds conditionally, should Tesla’s request for an appeal be granted.

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 March 31, 2024, except as noted above.

In the three months ended March 31, 2024 and 2023, the Company had an estimated effective tax rate of 19.2 % and 14.0 %, respectively.

None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of June 30, 2024 , except as noted above.

In the six months ended June 30, 2024 and 2023, the Company had an estimated effective tax rate of 18.6 % and 14.5 %, respectively.

The change in effective tax rate is due to a decrease in the amount of Foreign Derived Intangible Income deduction benefit available to the Company.

In addition, the Company is subject to an increase in the Global Intangible Low-Tax Income inclusion derived from the increase in French revenue.

The effective tax rate in the period ending March 31, 2023, was impacted by losses in certain jurisdictions where the Company recorded a valuation allowance against the related tax benefit.

Excluding this valuation allowance, our effective tax rate for the three months ended March 31, 2023 would have been 13.8 % respectively.

During both the three months ended March 31, 2024 and 2023, the Company recorded discrete net benefits of $ 1.7 million and $ 1.0 million, respectively, primarily related to share-based compensation.

In addition, the Company is subject to an increase in the Global Intangible Low-Tax Income inclusion derived from the increase in revenue in certain foreign jurisdictions.

The effective tax rate in the six months ended June 30, 2023 was impacted by losses in certain jurisdictions where the Company recorded a valuation allowance against the related tax benefit.

Excluding this valuation allowance, our effective tax rate for the six months ended June 30, 2023 would have been 13.0 %.

During both the six months ended June 30, 2024 and 2023, the Company recorded discrete net benefits of $ 2.4 million and $ 1.2 million, respectively, primarily related to share-based compensation.

The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including timing differences between the recognition of book and tax revenue, the level of pre-tax income or loss, the foreign vs.

domestic classification of the Company’s customers, and any discrete items that may occur.

During the three months ended March 31, 2024 and 2023, the Company paid approximately $ 9.3 million and $ 4.4 million, respectively, in foreign source creditable withholding tax.

During the six months ended June 30, 2024 and 2023, the Company paid approximately $ 13.4 million and $ 6.0 million, respectively, in foreign source creditable withholding tax.

NET INCOME PER SHARE

2 unchanged sentences

The following tables reconcile the numerator and the denominator of the basic and diluted net income per share computation (in thousands, except for per share data):

For the Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income applicable to InterDigital, Inc.

3 unchanged sentences

Dilutive effect of stock options, RSUs, and warrants

832 632 860 612

Dilutive effect of convertible securities

1,871 255 1,906 128

Diluted 27,910 27,655 28,125 28,494

4 unchanged sentences

Dilutive effect of convertible securities

( 0.30 ) — ( 0.53 ) ( 0.02 )

Diluted $ 3.93 $ 0.79 $ 6.80 $ 4.46

1 unchanged sentence

Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):

For the Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Restricted stock units and stock options 4 4 2 212

5 unchanged sentences

As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.

OPERATING INCOME, NET

The amounts included in " Other income, net " in the condensed consolidated statements of income for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

For the Three Months Ended March 31,

OTHER INCOME, NET

The amounts included in " Other income, net " in the condensed consolidated statements of income for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Interest and investment income $ 10,125 $ 10,254 $ 21,903 $ 21,934

1 unchanged sentence

Other income, net $ 11,682 $ 14,387 $ 20,929 $ 27,578

The change in Other income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $ 2.4 million in first quarter 2024, compared to a $ 0.7 million net gain in first quarter 2023 .

The change in Other income, net was primarily due to a foreign currency translation net loss arising from translation of our foreign subsidiaries of $ 0.9 million and $ 3.3 million in the three and six months ended June 30, 2024, respectively, compared to net gains of $ 0.4 million and $ 1.2 million in three and six months ended June 30, 2023, respectively.

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-Q

Item 1. Financial Statements