What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-06 compared with 2024-02-15 · 272 added, 363 removed, 1085 unchanged (37% of the section changed)

14 unchanged sentences

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

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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.

Basis for Opinions

22 unchanged sentences

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.”

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.

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.

Total recurring revenues and catch-up revenues were $408 million and $460 million, respectively, for the year ended December 31, 2024, of which a significant 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 royalties, projected sales volumes, discount rate, identification of comparable market transactions which are not directly observable and other relevant factors.

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

4 unchanged sentences

(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

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

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

Revenue Recognition – Determination of the Amount of Consideration 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.

4 unchanged sentences

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.

The principal considerations for our determination that performing procedures relating to the determination of the amount of consideration in certain arrangements with variable consideration is a critical audit matter are (i) the significant judgment by management when determining the amount of consideration and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management's significant assumptions and judgments in determining the amount of consideration, including the 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 included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of the amount of consideration in certain arrangements with variable consideration.

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;

(ii) testing management’s process for determining the amount of consideration in such arrangements;

(iii) evaluating the appropriateness of management’s analysis used in determining the amount of consideration;

(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.

and (v) evaluating the reasonableness of management’s significant assumptions and judgments in determining the amount of consideration, including the analysis of the probability that a significant reversal of cumulative revenues recognized will not occur.

Evaluating the reasonableness of management’s significant assumptions and judgments in determining the amount of consideration, including the analysis of the probability that a significant reversal of cumulative revenues will not occur, 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

17 unchanged sentences

Other non-current assets, net 149,400 149,656

Total non-current assets 603,190 555,430

Total assets $ 1,835,529 $ 1,770,814

19 unchanged sentences

Accumulated other comprehensive loss ( 458 ) ( 647 )

2,205,098 2,208,951

Treasury stock, 43,927 and 42,255 shares of common held at cost

Treasury stock, 44,895 and 43,927 shares of common stock held at cost

( 1,727,395 ) ( 1,623,549 )

Total InterDigital, Inc.

shareholders’ equity 581,549 724,895

Noncontrolling interest — 5,618

Total equity 581,549 730,513

Total shareholders' equity 857,215 581,549

Total liabilities and shareholders' equity $ 1,835,529 $ 1,770,814

4 unchanged sentences

(in thousands, except per share data)

FOR THE YEAR ENDED DECEMBER 31,

Year Ended December 31,

2024 2023 2022

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(in thousands)

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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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.

1 unchanged sentence

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

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

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

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

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

3 unchanged sentences

Issuance of common stock, net 179 2 ( 6,259 ) — — — — — ( 6,257 )

Amortization of unearned compensation — — 28,736 — — — — — 28,736

Share-based compensation

— — 22,127 — — — — — 22,127

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

2 unchanged sentences

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

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

Net change in unrealized gain on short-term investments

— — — — 269 — — — 269

Dividends declared ($ 1.50 per share)

2 unchanged sentences

Issuance of common stock, net 251 2 ( 12,509 ) — — — — — ( 12,507 )

Amortization of unearned compensation — — 22,127 — — — — — 22,127

Share-based compensation

— — 35,741 — — — — — 35,741

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

1 unchanged sentence

— — — 358,614 — — — — 358,614

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

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

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

Net change in unrealized loss on short-term investments — — — — 269 — — — 269

Net change in unrealized gain on short-term investments

— — — — 189 — — — 189

Dividends declared ($ 1.70 per share)

2 unchanged sentences

Issuance of common stock, net 256 3 ( 19,273 ) — — — — — ( 19,270 )

Amortization of unearned compensation — — 35,741 — — — — — 35,741

Share-based compensation

— — 45,966 — — — — — 45,966

Repurchase of common stock — — — — — 644 ( 66,726 ) — ( 66,726 )

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

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

Settlement of the 2024 Warrants 487 5 ( 23 ) — — — — — ( 18 )

Balance, December 31, 2024 70,577 $ 705 $ 808,540 $ 1,775,823 $ ( 458 ) 44,895 $ ( 1,727,395 ) $ — $ 857,215

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(in thousands)

FOR THE YEAR ENDED DECEMBER 31,

Year Ended December 31,

2024 2023 2022

3 unchanged sentences

Depreciation and amortization 69,913 77,792 78,571

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

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

Non-cash change in investments ( 676 ) ( 10,130 ) 1,686

Change in deferred revenue ( 24,335 ) ( 49,176 ) 85,403

1 unchanged sentence

Share-based compensation 45,966 35,741 22,127

Loss on extinguishment of debt — 11,190 —

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

Other ( 9,368 ) ( 15,686 ) 15,262

2 unchanged sentences

Deferred charges and other assets ( 35,261 ) 866 ( 13,453 )

(Decrease) Increase in liabilities:

Increase (Decrease) in liabilities:

Accounts payable 2,283 ( 2,513 ) 6,868

Customer deposit ( 76,100 ) 76,100 —

Accrued compensation and other expenses 10,719 ( 11,539 ) 1,065

7 unchanged sentences

Long-term investments 15,778 ( 1,877 ) —

Net cash (used in) provided by investing activities ( 85,170 ) ( 314,706 ) 179,639

Net cash provided by (used in) investing activities 109,451 ( 85,170 ) ( 314,706 )

Cash flows from financing activities:

4 unchanged sentences

Proceeds from bond hedge unwind — — 11,851

Payment for warrant unwind — ( 3,837 ) —

Payment for warrant unwind and settlement ( 18 ) — ( 3,837 )

Payments of debt issuance costs — ( 100 ) ( 9,829 )

Repurchase of common stock ( 66,726 ) ( 339,704 ) ( 74,445 )

Taxes paid on the repurchase of common stock ( 3,170 ) — —

Net proceeds from exercise of stock options 32 1,252 1,226

Non-controlling interest contribution — 1,750 1,500

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

Taxes withheld upon restricted stock unit vestings ( 19,270 ) ( 12,507 ) ( 6,257 )

1 unchanged sentence

Net cash (used in) provided by financing activities ( 272,393 ) ( 388,763 ) 18,604

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

Net increase (decrease) in cash, cash equivalents and restricted cash 108,586 ( 260,200 ) ( 10,063 )

Cash, cash equivalents and restricted cash, beginning of period 442,961 703,161 713,224

11 unchanged sentences

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.

We license our innovations worldwide to companies providing such products and services, including makers of wireless communications devices, consumer electronics, internet of things ("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.

We are also a leader in video processing and video encoding/decoding technology used in video-enabled products and services.

Our AI research effort is focused on the intersection of AI with both wireless and video technologies.

Principles of Consolidation

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The following table presents additional supplemental cash flow information for the year ended December 31, 2024, 2023, and 2022 (in thousands):

FOR THE YEAR ENDED DECEMBER 31,

Year Ended December 31,

Supplemental Cash Flow Information:

3 unchanged sentences

Non-cash investing and financing activities:

Settlement of the 2024 Hedge Transactions 37,120 — —

Dividend payable 11,557 10,226 10,384

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These agreements can include, without limitation, performance obligations related to the settlement of past patent infringement liabilities, patent and/or know-how licensing royalties on covered products sold by licensees, access to a portfolio of technology as it exists at a point in time, and access to a portfolio of technology at a point in time along with promises to provide any technology updates to the portfolio during the term.

In accordance with US GAAP, we use a five-step model to achieve the core underlying principle that an entity should recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

In accordance with GAAP, we use a five-step model to achieve the core underlying principle that an entity should recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

These steps include (1) identifying the contract with the customer, (2) identifying the performance obligations, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue as the entity satisfies the performance obligation(s).

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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.

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.

The carrying value of our investments in other entities as of December 31, 2024 and 2023 was $ 19.9 million and $ 31.9 million and, respectively, the majority of which are accounted for under the measurement alternative for equity investments described above.

Collaborative Arrangements

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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 $ 0.1 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.

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Liabilities that fall under ASC 712 are recognized when the liability was determined to be probable of being paid and reasonably estimable.

The current liabilities are recorded within " Other accrued expenses " and long-term liabilities are included in " Other long-term liabilities " in the consolidated balance sheets.

The restructuring expenses are included in " Restructuring activities " in the consolidated statements of income.

Income taxes are accounted for under the asset and liability method.

19 unchanged sentences

Accounting Standards Update:

Improvements to Reportable Segment Disclosures

Induced Conversions of Convertible Debt Instruments

In November 2024, 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.

2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments".

The amendments in the ASU require disclosures for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2024-04 is effective for fiscal years beginning after December 15, 2025, with early adoption allowed.

1 unchanged sentence

Accounting Standards Update:

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No.

2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses".

The amendments in the ASU require disclosures about specific types of expenses included in the expense captions presented on the Consolidated Statements of Income, as well as disclosures about selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption allowed.

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

Accounting Standards Update:

Improvements to Income Tax Disclosures

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Accounting Standards Update:

Simplifying the Accounting for Convertible Instruments

In August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”).

The amendments in this ASU are intended to simplify accounting for convertible debt instruments and convertible preferred stock by removing certain accounting models which separate the embedded conversion features from the host contract.

ASU 2020-06 also amends certain guidance in ASC 260 on the computation of earnings per share for convertible instruments and contracts on an entity’s own equity.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, and early adoption was permitted for fiscal years beginning after December 15, 2020.

The ASU permits the use of either the modified retrospective or fully retrospective methods of transition.

We elected to early adopt this standard on a modified retrospective approach as of January 1, 2021, which resulted in a $ 10.4 million, $ 50.2 million, and $ 15.6 million increase to net deferred tax assets, long-term debt and retained earnings, respectively, and a $ 55.4 million decrease to additional paid-in capital.

This $ 50.2 million increase to long-term debt, net was comprised of $ 51.6 million of unamortized interest discount partially offset by a net increase of $ 1.4 million in unamortized debt issuance costs following the reversal of the initially established equity component of deferred financing costs.

This was due to the standard no longer requiring bifurcation of the embedded conversion feature from the host contract on the 2024 Notes, as defined in Note 9, "Obligations".

This adoption also reduced non-cash interest expense starting in 2021 due to the removal of the accretion of the debt discount on the 2024 Notes.

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

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU No.

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

Improvements to Reportable Segment Disclosures”.

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, 2024, and the adoption did not have a material impact on our consolidated financial statements.

Refer to Note 4, " Segment and Concentration Information ," for new disclosures resulting from the adoption of ASU 2023-07.

REVENUE RECOGNITION

1 unchanged sentence

The following table presents the disaggregation of our revenue for the year ended December 31, 2024, 2023, and 2022 (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

7 unchanged sentences

Total revenues $ 868,516 $ 549,588 $ 457,794

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

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

During the year ended December 31, 2024, we recognized $ 153.4 million of revenue that had been included in deferred revenue as of the beginning of the period.

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

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, 2024 and 2023, we had contract assets of $ 162.8 million and $ 94.6 million included within " Accounts receivable, net " in the consolidated balance sheet, respectively.

Contracted Revenue

2 unchanged sentences

Thereafter 179,697

(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

The Company’s chief operating decision maker assesses company-wide performance and allocates resources based on consolidated financial information.

As such, we have one reportable segment.

(a) This table includes estimated revenue related to our Samsung and Lenovo arbitrations.

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

SEGMENT AND CONCENTRATION INFORMATION

Segment Performance Measures and Expenses

Our chief operating decision maker (“CODM”), who is the Chief Executive Officer, assesses company-wide performance and allocates resources based on consolidated financial information.

Consequently, we view the entire organization as one reportable segment and the strategic purpose of all operating activities is to support that one segment.

The CODM evaluates company-wide performance based on multiple performance measures, including, but not limited to, net income.

Our CODM does not generally evaluate our performance using asset or historical cash flow information.

The table below provides the calculation of net income, which is the performance measure that is most consistent with GAAP, and the significant operating expenses included in this performance measure (in thousands):

Year Ended December 31,

2024 2023 2022

Revenue $ 868,516 $ 549,588 $ 457,794

Departmental expenses (a)

175,636 162,318 153,586

Depreciation and amortization 69,913 77,792 78,571

Litigation 56,171 48,790 44,406

Share-based compensation 45,966 35,741 22,127

Revenue share costs 81,318 3,332 5,308

Restructuring costs — — 3,280

Other non-operating expense (income), net (b)

10,096 ( 12,995 ) 32,953

Income tax provision 70,802 23,557 25,502

Net income $ 358,614 $ 211,053 $ 92,061

(a) Includes personnel-costs, consulting costs, outside services, administrative costs, and other operating expenses.

(b) Includes interest income, interest expense, and other non-operating income and expenses

Customer and Geographic Concentration

During 2024, 2023, and 2022, the majority of our revenue was derived from a limited number of licensees based outside of the United States, primarily in Asia.

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The table below lists the countries of the headquarters of our licensees and customers and the total revenue derived from each country or region for the periods indicated (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

2 unchanged sentences

South Korea 265,953 82,235 90,018

Japan 10,678 21,946 24,689

Taiwan 9,620 9,368 11,621

Europe 7,391 2,319 10,543

Japan 7,223 10,678 21,946

Total revenue $ 868,516 $ 549,588 $ 457,794

During 2024, 2023, and 2022, the following licensees or customers accounted for 10% or more of total revenues:

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

4 unchanged sentences

Customer E < 10 % 11 % 13 %

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.

As of December 31, 2024, and 2023, we held $ 327.2 million and $ 324.6 million of our property, equipment and patents, net of accumulated depreciation and amortization, respectively, of which approximately 89 % of the total was within the United States in each of the years presented.

As of December 31, 2024 and 2023, we held $ 36.6 million and $ 29.3 million of property, equipment and patents, net of accumulated depreciation and amortization, collectively, in Canada and Europe.

4 unchanged sentences

Commercial paper 4,062 5,728

government securities — 15,707

Corporate bonds, asset backed and other securities 11,740 6,526

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

As of December 31, 2023, four licensees comprised 84 %, and as of December 31, 2022 four licensees comprised 76 %, of our accounts receivable balance.

Three licensees comprised 84 % and 75 % of our accounts receivable balance as of December 31, 2024 and 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 included within short-term investments on our 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 December 31, 2023 and December 31, 2022 (in thousands):

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

Fair Value as of December 31, 2024

4 unchanged sentences

— 78,870 — 78,870

government securities (c)

government securities

— 230,561 — 230,561

Corporate bonds, asset backed and other securities (d)

Corporate bonds, asset backed and other securities (c)

— 137,219 — 137,219

7 unchanged sentences

government securities — 256,850 — 256,850

Corporate bonds and asset backed securities — 113,838 — 113,838

Corporate bonds and asset backed securities (c)

— 149,693 — 149,693

$ 430,707 $ 581,534 $ — $ 1,012,241

_______________

(a) Included within cash and cash equivalents.

(b) As of December 31, 2024 and 2023, $ 4.1 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 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.

(c) As of December 31, 2024 and 2023, $ 11.7 million and $ 6.5 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 debt is a Level 2 fair value measurement.

9 unchanged sentences

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).

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, 2024 and 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.

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

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.

Convida Wireless is a variable interest entity.

We determined that we were the primary beneficiary for accounting purposes and consolidated Convida Wireless through September 30, 2023.

As of October 1, 2023, we determined that we no longer met the accounting criteria for consolidation, and accordingly, we deconsolidated Convida Wireless during fourth quarter 2023.

Upon deconsolidation, 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.

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

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

During 2024, we entered into patent license agreements in which a portion of the future consideration was in the form of patents.

We estimated fair value of the patents subject to the agreements to be $ 10.0 million for determining the transaction price for revenue recognition purposes utilizing a combination of the market and cost approaches.

The $ 7.0 million of the patents transferred during 2024 and the remaining $ 3.0 million patents will transfer in early 2025.

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

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) 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.

For the income approach, the inputs and assumptions used to develop these estimates were based on a market participant perspective and included estimates of projected royalties, discount rates, economic lives and income tax rates, among others.

For the cost approach, we utilized the historical cost of assets of similar technologies to determine the estimated replacement cost, including research, development, testing and patent application fees.

PROPERTY AND EQUIPMENT

Property and equipment, net is comprised of the following (in thousands):

As of December 31, 2024 and 2023, property and equipment, net is comprised of the following (in thousands):

Computer equipment and software $ 23,294 $ 15,990

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

Tax receivables $ 19,835 $ 64,117

Prepaid assets $ 38,952 $ 9,353

Restricted cash 24,187 5,885

Patents held for sale — 4,000

Tax receivables 16,691 19,835

Other current assets 4,482 8,903

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Tax receivables $ 88,619 $ 76,740

Long-term investments 31,895 19,593

Goodwill 22,421 22,421

Long-term investments 19,851 31,895

Right-of-use assets 15,218 15,746

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

Customer deposit $ 76,100 $ —

Accrued legal fees $ 9,571 $ 10,338

Customer deposit — 76,100

Other accrued expenses 15,563 11,604

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2.00% Senior Convertible Notes due 2024

126,174 126,174

Deferred financing costs ( 5,261 ) ( 7,422 )

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Maturities of principal of the long-term debt obligations of the Company as of December 31, 2024, excluding the long-term debt resulting from the Technicolor Patent Acquisition, are as follows (in thousands):

2024 $ 126,174

2029 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 3.50 % Senior Convertible Notes due 2027 (the "2027 Notes") are convertible during the period January 1, 2024 through March 31, 2025 and therefore are classified as " Current portion of long-term debt " as of December 31, 2024 and 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.

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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 converted or repurchased.

The 2024 Notes were initially convertible into cash, shares of our common stock or a combination thereof, at our election, at an initial conversion rate of 12.3018 shares of common stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $ 81.29 per share), as adjusted pursuant to the terms of the indenture governing the 2024 Notes (the "Indenture").

The conversion rate of the 2024 Notes, and thus the conversion price, may be adjusted in certain circumstances, including in connection with a conversion of the 2024 Notes made following certain fundamental changes and under other circumstances set forth in the Indenture.

As of December 31, 2020, we made the irrevocable election to settle all conversions of the 2024 Notes through combination settlements of cash and shares of 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 common stock.

Prior to 5:00 p.m., New York City time, on the business day immediately preceding March 1, 2024, the 2024 Notes will be convertible only under certain circumstances as set forth in the Indenture, including on any date during any calendar quarter (and only during such calendar quarter) beginning after September 30, 2019 if the closing sale price of the common stock was more than 130 % of the applicable conversion price (approximately $ 105.68 based on the current conversion price of the 2024 Notes) on each applicable trading day for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter.

Commencing on March 1, 2024, the 2024 Notes will be 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 Company may not redeem the 2024 Notes prior to their maturity date.

If a fundamental change (as defined in the Indenture) occurs, holders may require the Company to purchase all or a portion of their 2024 Notes for cash at a repurchase price equal to 100 % of the principal amount of the 2024 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2024 Notes are our senior unsecured obligations 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 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.

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

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 corresponded to the initial conversion price of the 2024 Notes, subject to adjustment, and were exercisable upon any conversion of the 2024 Notes.

The aggregate cost of the 2024 Note Hedge Transactions was $ 72.0 million.

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 $ 109.43 per share, subject to adjustment.

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 $ 109.43 per share, subject to adjustment.

As consideration for the 2024 Warrant Transactions, we received aggregate proceeds of $ 47.6 million.

The net cost of the 2024 Call Spread Transactions was $ 24.4 million.

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 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.

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

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

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

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

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

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

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

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

As a result of the partial unwind transactions, approximately 3.3 million shares of common stock in the aggregate that were covered under each of the 2024 Note Hedge Transactions and the 2024 Warrant Transactions were unwound.

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

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

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

The remaining unamortized debt issuance costs of $ 1.2 million was amortized throughout the remaining life of the 2024 Notes.

On June 1, 2024, the 2024 Notes matured and we repaid the remaining $ 126.2 million in aggregate principal in cash and issued 0.3 million common shares to settle the remaining obligation.

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

Additionally, the 2024 Warrant Transactions settled, on a net-share basis during September through December 2024 resulting in the issuance of 0.5 million shares.

The following table presents the amount of interest cost recognized for the years ended December 31, 2024, 2023 and 2022 related to the contractual interest coupon and the amortization of financing costs (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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

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

Contractual coupon interest $ 16,100 $ 1,058 $ 17,158 $ 16,100 $ 2,523 $ 18,623 $ 9,526 $ 4,760 $ 14,286

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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 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.

During the years ended December 31, 2024 and 2023, we recognized a $ 0.5 million and $ 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, respectively.

During the year ended December 31, 2022, we recognized $ 3.5 million 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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2025 $ 23,179

Thereafter 490

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 .

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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 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 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.

The combined accumulated projected benefit obligation related to these plans totaled $ 4.9 million as of both December 31, 2024 and 2023.

Service cost and interest cost for the combined plans totaled less than $ 0.5 million in each of the years ended December 31, 2024, 2023, and 2022 and the weighted average discount rate and assumed salary increase rate for these plans were 3.3 % and 3.0 %, respectively .

These plans are not required to be funded and were not funded as of December 31, 2024.

Expected future benefit payments under these plans as of December 31, 2024 were as follows (in thousands):

2027-2031 3,136

LITIGATION AND LEGAL PROCEEDINGS

ARBITRATIONS AND COURT PROCEEDINGS

In fourth quarter 2024, the Company reached an agreement with Lenovo Group Limited and certain of its subsidiaries (“Lenovo”) to enter into binding arbitration to determine the final terms of a new paten t license agreement, which will be effective from January 1, 2024.

On November 6, 2024, the Company filed a request for arbitration with the International Chamber of Commerce.

As part of the agreement to arbitrate, both parties agreed to dismiss all pending litigations between them;

the below proceedings have since been dismissed.

UK Proceedings

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

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

European Patent (UK) Nos.

and 3,355,537.

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

The claim, as amended, alleged infringement of five of the Company ’s patents relating to 3G and/or 4G/LTE standards.

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.

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

Lenovo appealed this decision, and on January 19, 2023, the UK Court of Appeal upheld the UK High Court’s findings that Lenovo is infringing on InterDigital’s valid and essential patent.

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

3,355,537 invalid, 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.

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

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

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.

Between 2021 and 2023, three of the Company’s European Patents were found by UK courts to be valid, essential and infringed by Lenovo.

In March 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 judgment 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.

Both parties appealed certain aspects of the ruling, and in July 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 awarded from the initial decision.

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

Lenovo filed an application to the UK Supreme Court requesting permission to appeal in August 2024, which was withdrawn.

On September 24, 2023, Lenovo filed a new claim in the UK High Court, which alleged invalidity of two of the Company’s patents relating to 4G/LTE standards.

Lenovo sought, among other relief, a declaration that the patents at issue were 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.

In October 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 in December 2023 during which Lenovo agreed to stay its application.

The Company filed a jurisdiction challenge in October 2023, and a hearing on such challenge took place in April 2024, following which, the jurisdiction challenge was denied.

In November 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 held in February 2024;

in March 2024 the UK High Court denied Lenovo’s request for the interim license.

A FRAND trial was set for June-July 2025.

District of Delaware Patent Proceedings

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

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

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

As relief, InterDigital is seeking:

In August 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the "Delaware District Court") against Lenovo alleging that Lenovo infringes eight of the Company’s U.S.

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

As relief, InterDigital sought:

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

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and (d) attorneys’ fees and costs.

On September 16, 2020, the Delaware District Court entered a schedule for the case, setting a patent jury trial.

On March 8, 2021, the Delaware District Court held a claim construction hearing, and the court issued its order on May 10, 2021, construing various disputed terms.

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

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

The stipulation was granted.

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

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.

In June 2023, the parties requested that the entire case be stayed pending resolution of all appeals in the UK proceedings, and this request was granted.

District of Delaware Antitrust Proceedings

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

and Motorola Mobility LLC filed a complaint in the Delaware District Court against the Company and certain of its subsidiaries.

The complaint alleges that the Company defendants have violated Sections 1 and 2 of the Sherman Act in connection with, among other things, their licensing of 3G and 4G standards essential patents ("SEPs").

The complaint further alleges that the Company defendants have violated their commitment to the ETSI with respect to the licensing of 3G and 4G SEPs on FRAND terms and conditions.

The complaint seeks, among other things (i) rulings that the Company defendants have violated Sections 1 and 2 of the Sherman Act and are liable for breach of their ETSI FRAND commitments, (ii) a judgment that the plaintiffs are entitled to a license with respect to the Company’s 3G and 4G SEPs on FRAND terms and conditions, and (iii) injunctions against any demand for allegedly excessive royalties or enforcement of the Company defendants’ 3G and 4G U.S.

In April 2020, Lenovo and Motorola Mobility LLC filed a complaint in the Delaware District Court against the Company and certain of its subsidiaries, alleging that the Company defendants violated Sections 1 and 2 of the Sherman Act in connection with, among other things, their licensing of 3G and 4G standards essential patents ("SEPs").

The complaint further alleged that the Company defendants have violated their commitment to the ETSI with respect to the licensing of 3G and 4G SEPs on FRAND terms and conditions.

The complaint sought, among other things (i) rulings that the Company defendants have violated Sections 1 and 2 of the Sherman Act and are liable for breach of their ETSI FRAND commitments, (ii) a judgment that the plaintiffs are entitled to a license with respect to the Company’s 3G and 4G SEPs on FRAND terms and conditions, and (iii) injunctions against any demand for allegedly excessive royalties or enforcement of the Company defendants’ 3G and 4G U.S.

SEPs against the plaintiffs or their customers via patent infringement proceedings.

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

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

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.

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

In March 2021, 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.

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:

In September 2023, the Company and certain of its subsidiaries filed a complaint in the United States International Trade Commission (the "International Trade Commission") alleging that Lenovo infringes five of the Company’s U.S.

patents 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 sought:

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

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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:

An evidentiary hearing was held in August 2024.

Also in September 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") alleging that Lenovo infringes those same five of the Company’s U.S.

As relief, the Company sought :

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

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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

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.

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.

In September 2023, the Company filed a complaint with the Munich Regional Court against Lenovo and certain of its affiliates, alleging infringement of a European patent relating to cellular 4G/LTE and/or 5G 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.

A hearing regarding European Patent No.

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

In May 2024, the Munich Regional Court issued a judgment finding Lenovo infringed the Company’s European patent 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 in May 2024.

Lenovo appealed the judgment and requested a stay of the enforcement of the judgment, and in June 2024, the Munich Regional Court rejected Lenovo’s request.

OPPO, OnePlus and realme

In fourth quarter 2024, the Company entered into a license agreement with Guangdong OPPO Mobile Telecommunications Corp., Ltd.

(“OPPO”) and certain of its subsidiaries and affiliates.

As part of the license agreement, both parties agreed to dismiss all pending litigations between them;

the below proceedings have since been dismissed.

UK Proceedings

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

(“Oppo”) and certain of its affiliates, OnePlus Technology (Shenzhen) Co., Ltd.

In December 2021, the Company filed a patent infringement claim in the UK High Court against OPPO and certain of its affiliates, OnePlus Technology (Shenzhen) Co., Ltd.

(“ OnePlus ”) and certain of its affiliates, and realme Mobile Telecommunications (Shenzhen) Co., Ltd.

(“realme”) and certain of its affiliates, alleging infringement of European Patent (UK) Nos.

and 3,355,537 relating to cellular 3G, 4G/LTE or 5G standards.

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

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.

(“realme”) and certain of its affiliates, alleging infringement of the Company’s European patents relating to cellular 3G, 4G/LTE or 5G standards.

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

In March 2023, the parties agreed to stay all technical trials.

The FRAND trial to determine the royalties to be paid under the license with OPPO was held in March and April 2024;

a second hearing was held in September 2024 regarding the parties’ submissions relating to the UK Court of Appeal ’s decision in the Lenovo litigation.

India Proceedings

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

262910, 295912, 313036, 320182, 319673, 242248, 299448, and 308108 relating to cellular 3G, 4G/LTE, and/or 5G, and HEVC standards.

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

In December 2021, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court in New Delhi, India against OPPO and certain of its affiliates, OnePlus and certain of its affiliates, and realme Mobile Telecommunication (India) Private Limited, alleging infringement of certain of the Company’s Indian patents relating to cellular 3G, 4G/LTE, and/or 5G, and HEVC standards.

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

In February 2024, the Delhi High Court granted the Company’s application for pro tem security, and OPPO appealed.

Evidentiary trial proceedings began in October 2024 and were expected to take place through December 2024.

Germany Proceedings

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

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

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

The 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.

In December 2021, a subsidiary of the Company filed three patent infringement claims, two in the Munich Regional Court and one in the Mannheim Regional Court, against OPPO and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates, alleging infringement of certain of the Company’s European patents relating to cellular 3G, 4G/LTE and/or 5G standards.

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

The Munich Regional Court held hearings in March and December 2023, and in December 2023, the Munich Regional Court issued a decision finding infringement and issuing an injunction against OPPO.

OPPO appealed this decision.

In March and November 2023, the Munich Regional Court entered stays of the proceedings in respect of specific patents.

China Proceedings

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

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

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

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.

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

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

The Guangzhou IP Court denied the application, and the Company appealed that decision.

The Supreme People’s Court denied the appeal, and an initial evidentiary hearing was held in October 2023.

Spain Proceedings

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

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

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

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

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

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

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

The Company filed an amended complaint in April 2022, alleging infringement of certain of its European patents relating to cellular 3G, 4G/LTE and/or 5G standards.

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

Evidentiary trial proceedings were scheduled to take place in May 2025.

The Company reached an agreement with Samsung Electronics Co.

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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.

The two-week arbitration hearing was held in July 2024 , and closing arguments were held on October 23, 2024.

We expect a decision in early 2025.

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

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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.

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

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 was held on 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.

The appeal hearing was held on December 2-3, 2024.

In February 2025, the Company and certain of its subsidiaries filed claims in various courts in the United States, Germany, Brazil and at the Unified Patent Court (UPC) against The Walt Disney Company, including Disney+, Hulu and ESPN+, alleging infringement of certain of the Company’s video coding, high dynamic range, and implementation patents.

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

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.

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Such amendment was adopted and approved by our shareholders on June 2, 2021.

From June 2009 through June 14, 2017, we granted equity awards pursuant to our 2009 Stock Incentive Plan (the “2009 Plan," and, together with the 2017 Plan, the "Equity Plans"), which was adopted and approved by our shareholders on June 4, 2009, and the material terms of which were re-approved on June 12, 2014.

Upon the adoption of the 2017 Plan, the 2009 Plan was terminated and all shares remaining available for grant under the 2009 Plan were canceled.

Upon the adoption of the 2017 Plan, the 2009 Stock Incentive Plan was terminated and all shares remaining available for grant under the 2009 Plan were canceled and rolled into the 2017 Plan.

The number of shares available for issuance under the 2017 Plan, as amended, is equal to 4.2 million shares plus any shares subject to awards granted under the 2009 Plan that, on or after June 14, 2017, expire or otherwise terminate without having been exercised in full, or that are forfeited to or repurchased by us.

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Any cancellations of unvested RSUs granted under the Equity Plans will increase the number of shares remaining available for grant under the 2017 Plan.

Time-based RSUs vest over periods generally ranging from 1 to 3 years from the date of the grant.

Performance-based RSUs generally have a vesting period between 3 and 5 years.

Milestone performance-based RSUs may vest at any time, upon achievement of the milestone goal, during the performance period, which is typically 5 years.

Time-based RSUs vest over periods generally ranging from one to three years from the date of the grant.

Performance-based RSUs generally have a vesting period between two and five years .

Milestone performance-based RSUs may vest at any time, upon achievement of the milestone goal, during the performance period, which is typically five years .

As of December 31, 2024, we had unrecognized compensation cost related to share-based awards of $ 37.2 million, at current performance accrual rates.

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The number of performance-based options which vest, if at all, is anywhere from 0 to 3 times the target number of options subject to the attainment of performance goals measured either during or at the end of the performance period.

Performance-based options typically have a vesting period between three and five years .

Milestone performance options may vest at any time, upon achievement of the milestone goal, during the performance period, which is typically 5 years.

Performance-based options typically have a vesting period between two and five years .

Milestone performance options may vest at any time, upon achievement of the milestone goal, during the performance period, which is typically five years .

Under the terms of the Equity Plans, the exercise price per share of each option, other than in the event of options granted in connection with a merger or other acquisition, cannot be less than 100 % of the fair market value of a share of common stock on the date of grant.

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.

Options granted under the Equity Plans are generally exercisable for a period of between seven to ten 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 less than 0.1 million options outstanding under a prior stock plan that do not expire.

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The weighted-average grant date fair value per option award granted during the years ended December 31, 2024, 2023 and 2022 was $ 36.00 , $ 24.41 , and $ 20.28 , respectively, based upon the assumptions included in the table below:

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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We match a portion of employee contributions.

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 $ 0.3 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”).

Our contribution expense to our Savings Plan and other defined contributions plans was approximately $ 1.7 million, $ 1.4 million and $ 1.4 million for 2024, 2023 and 2022, respectively.

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.

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

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 domestic/foreign pre-tax income consists of the following components for 2024, 2023 and 2022 (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Our income tax provision consists of the following components for 2024, 2023 and 2022 (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Debt amortization 9,334 16,093

Other employee benefits 8,434 10,542

Share-based compensation

Lease liability 3,339 3,402

Tax credit carryforward 23 27,212

Other 22,797 18,445

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Net deferred tax asset 130,629 133,246

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

( 2,475 ) ( 4,307 )

Deferred tax liability

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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, 2024, 2023 and 2022:

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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

Other permanent differences 0.8 % 1.2 % 1.9 %

Global Intangible Low-Taxed Income

1.2 % 0.3 % 0.5 %

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

State tax provision 0.1 % 0.2 % 1.1 %

Uncertain tax positions 0.1 % ( 0.4 ) % 1.5 %

Non-creditable withholding taxes — % 0.1 % 0.4 %

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

Change in valuation allowance (b)

Other permanent differences ( 0.2 ) % 0.5 % 0.7 %

Research and development tax credits ( 0.4 ) % ( 0.6 ) % ( 1.7 ) %

Change in valuation allowance (a)

( 0.6 ) % ( 2.2 ) % 2.4 %

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( 1.0 ) % ( 1.3 ) % 0.3 %

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

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

Uncertain tax positions ( 0.4 ) % 1.5 % 5.5 %

Amended return benefit (a)

— % — % ( 7.7 ) %

Foreign derived intangible income deduction ( 5.4 ) % ( 7.1 ) % ( 5.3 ) %

Other ( 0.6 ) % ( 1.1 ) % ( 0.6 ) %

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16.5 % 10.0 % 21.7 %

(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.

(a) In 2024 and 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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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 2024, 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.

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.

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

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

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.

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 2024 through 2022 (in thousands):

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Reductions ( 702 ) ( 1,758 ) ( 951 )

Lapses in statues of limitations — — ( 982 )

Balance as of December 31 $ 13,848 $ 14,385 $ 16,052

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

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Basic 25,325 26,860 30,106

Dilutive effect of stock options, RSUs, convertible securities and warrants 1,242 379 489

Dilutive effect of stock options, RSUs, and warrants

1,993 704 379

Dilutive effect of convertible securities

Diluted 29,711 28,102 30,485

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Basic $ 14.16 $ 7.97 $ 3.11

Dilutive effect of stock options, RSUs, convertible securities and warrants ( 0.35 ) ( 0.04 ) ( 0.03 )

Dilutive effect of stock options, RSUs, and warrants

( 0.87 ) ( 0.19 ) ( 0.04 )

Dilutive effect of convertible securities

( 1.22 ) ( 0.16 ) —

Diluted $ 12.07 $ 7.62 $ 3.07

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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 earnings per share for the periods presented (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Total 6,272 7,594 6,948

Convertible Notes and Warrants

Refer to Note 10, " Obligations ," for information about the Company's convertible notes and warrants and related conversion and strike prices.

During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of the Company's outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS.

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.

EQUITY TRANSACTIONS

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2015 1,836 96,410

2014 3,554 152,625

Total 17,984 $ 1,139,411

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$ 1.50 $ 39,296

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;

We increased the quarterly cash dividend by $ 0.05 per share in both 2023 and 2024 to raise the dividend payable from $ 0.35 to $ 0.45 per share.

In February 2025, we announced an additional increase in the quarterly cash dividend by $ 0.15 per share, beginning with the quarterly dividend payable in second quarter 2025.

We currently expect to continue to pay dividends in accordance with our dividend policy;

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.

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The components of lease costs which were included within operating expenses in our consolidated statement of income were as follows (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Variable lease cost 1,376 1,316 1,522

For the years ended December 31, 2023 and 2022, sublease income was insignificant.

For the years ended December 31, 2024, 2023, and 2022, we did not have any sublease income.

Cash paid for amounts included in the measurement of operating lease liabilities for the year ended December 31, 2024 and 2023 was $ 4.1 million and $ 4.4 million, respectively, and was included in net cash provided by operating activities in our consolidated statement of cash flows.

As of December 31, 2024, the weighted average remaining operating lease term was 5.3 years and the weighted average discount rate used to determine the operating lease liabilities was 6.2 %.

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

As of December 31, 2024, there have been no leases entered into that have not yet commenced.

The maturities of our operating lease liabilities as of December 31, 2024, excluding short-term leases with terms less than 12 months, were as follows (in thousands):

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The amounts included in " Other income (expense), net " in the consolidated statements of income for the year ended December 31, 2024, 2023 and 2022 were as follows (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

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Other income (expense), net $ 35,325 $ 57,812 $ ( 3,457 )

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.

Interest and investment income is mostly derived from our short-term investments and changes are primarily due changes in the average amounts held in short-term investments and market conditions.

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 and pension obligation resulting in $ 5.4 million and $ 12.1 million of net gains in 2024 and 2023, 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 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.

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.

Convida Wireless

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 performed.

Convida Wireless is a variable interest entity.

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.

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 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.

Signal Trust for Wireless Innovation

During 2013, we announced the establishment of the Signal Trust for Wireless Innovation (the “Trust”), the goal of which was to monetize a patent portfolio primarily related to 3G and LTE cellular infrastructure.

During fourth quarter 2021, the Trust was fully dissolved and all remaining assets were transferred to us as majority beneficiary.

The Trust was accounted for as a variable interest entity.

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.

Additionally, the change is due to net losses on foreign currency translation arising primarily from euro translation of our foreign subsidiaries of $ 7.9 million and $ 3.9 million in 2024 and 2022, respectively, and a $ 1.0 million foreign currency translation net gain in 2023.

RESTRUCTURING ACTIVITIES

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

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

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

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

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

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

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

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 contributed to funding Convida's operations.

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

Upon the reclassification, the patents to be sold are recorded at fair value, which resulted in the Company recognizing a $ 13.2 million impairment in 2021.

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

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 evaluated its current office space footprint and its expected needs going forward.

During 2021, we announced that, as a result of a strategic review of our research and innovation priorities, we commenced the process of a collective economic layoff in which we proposed a reduction in force of our research and innovation unit.

We expanded our restructuring efforts to include general and administrative functions largely centered in the U.S.

During 2024 and 2023, we did not recognize any restructuring expenses, and the Company considers the plan to be complete.

We do not anticipate further restructuring charges and no there are no remaining restructuring liabilities.

As part of the Company’s 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.

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 consolidated statement of income.

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.

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):

Balance as of December 31, 2021 $ 18,281

Cash payments ( 13,761 )

Other ( 877 )

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, 2024, 2023, and 2022 were as follows (in thousands):

For the Year Ended December 31,

Year Ended December 31,

2024 2023 2022

2 unchanged sentences

Outside services and other associated costs — — 548

Reimbursement arrangements — — ( 9,638 )

Total $ — $ — $ 3,280

1 unchanged sentence

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