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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2016
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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PENNSYLVANIA
(State or Other Jurisdiction of
Incorporation or Organization)
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23-1882087
(I.R.S. Employer
Identification No.)
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Large accelerated filer
R
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Common Stock, par value $0.01 per share
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34,252,083
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Title of Class
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Outstanding at July 29, 2016
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PAGES
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EX-10.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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FOR THE THREE MONTHS ENDED JUNE 30,
|
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FOR THE SIX MONTHS ENDED JUNE 30,
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||||||||||||
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2016
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2015
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2016
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2015
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||||||||
REVENUES:
|
|
|
|
|
|
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||||||||
Patent licensing royalties
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$
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74,900
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|
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$
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116,622
|
|
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$
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181,854
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|
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$
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225,595
|
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Technology solutions
|
1,015
|
|
|
1,929
|
|
|
1,825
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|
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3,334
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||||
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75,915
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|
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118,551
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|
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183,679
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228,929
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||||
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||||||||
OPERATING EXPENSES:
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||||||||
Patent administration and licensing
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28,285
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31,212
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55,452
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|
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62,837
|
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||||
Development
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14,609
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|
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18,326
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|
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34,878
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|
|
36,317
|
|
||||
Selling, general and administrative
|
9,938
|
|
|
10,435
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|
|
21,910
|
|
|
19,953
|
|
||||
|
52,832
|
|
|
59,973
|
|
|
112,240
|
|
|
119,107
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||||
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|
|
|
|
|
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||||||||
Income from operations
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23,083
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|
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58,578
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|
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71,439
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|
|
109,822
|
|
||||
|
|
|
|
|
|
|
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||||||||
OTHER EXPENSE (NET)
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(706
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)
|
|
(7,746
|
)
|
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(7,843
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)
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(12,982
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)
|
||||
Income before income taxes
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22,377
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|
|
50,832
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|
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63,596
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|
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96,840
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||||
INCOME TAX BENEFIT (PROVISION)
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16,652
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|
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(18,877
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)
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2,584
|
|
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(36,553
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)
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||||
NET INCOME
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$
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39,029
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|
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$
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31,955
|
|
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$
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66,180
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|
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$
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60,287
|
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Net loss attributable to noncontrolling interest
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(965
|
)
|
|
(647
|
)
|
|
(1,885
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)
|
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(1,380
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)
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||||
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.
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$
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39,994
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|
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$
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32,602
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|
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$
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68,065
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$
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61,667
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NET INCOME PER COMMON SHARE — BASIC
|
$
|
1.16
|
|
|
$
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0.91
|
|
|
$
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1.96
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|
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$
|
1.69
|
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
|
34,499
|
|
|
36,022
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|
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34,772
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|
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36,486
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|
||||
NET INCOME PER COMMON SHARE — DILUTED
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$
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1.14
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|
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$
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0.89
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|
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$
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1.94
|
|
|
$
|
1.67
|
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
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34,945
|
|
|
36,442
|
|
|
35,161
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|
|
36,883
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|
||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.20
|
|
|
$
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0.20
|
|
|
$
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0.40
|
|
|
$
|
0.40
|
|
|
FOR THE THREE MONTHS ENDED JUNE 30,
|
|
FOR THE SIX MONTHS ENDED JUNE 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
39,029
|
|
|
$
|
31,955
|
|
|
$
|
66,180
|
|
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$
|
60,287
|
|
Unrealized gain on investments, net of tax
|
136
|
|
|
13
|
|
|
388
|
|
|
8
|
|
||||
Other-than-temporary impairment losses related to available for sale securities, net of income taxes of $4, $0, $0, $0
|
8
|
|
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—
|
|
|
—
|
|
|
—
|
|
||||
Comprehensive income
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$
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39,173
|
|
|
$
|
31,968
|
|
|
$
|
66,568
|
|
|
$
|
60,295
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Comprehensive loss attributable to noncontrolling interest
|
(965
|
)
|
|
(647
|
)
|
|
(1,885
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)
|
|
(1,380
|
)
|
||||
Total comprehensive income attributable to InterDigital, Inc.
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$
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40,138
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|
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$
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32,615
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$
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68,453
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|
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$
|
61,675
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|
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FOR THE SIX MONTHS ENDED JUNE 30,
|
||||||
|
2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
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66,180
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|
|
$
|
60,287
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,942
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23,423
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|
||
Amortization of deferred financing costs and accretion of debt discount
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8,959
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|
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9,300
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Deferred revenue recognized
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(69,423
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)
|
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(86,022
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)
|
||
Increase in deferred revenue
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282,170
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|
|
90,776
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|
||
Deferred income taxes
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(41,000
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)
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(14,547
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)
|
||
Tax benefit from share-based compensation
|
(9
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)
|
|
—
|
|
||
Share-based compensation
|
10,580
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|
|
6,299
|
|
||
Gain on disposal of assets
|
3,491
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|
|
—
|
|
||
Other
|
(87
|
)
|
|
631
|
|
||
(Increase) decrease in assets:
|
|
|
|
||||
Receivables
|
(50,313
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)
|
|
(57,015
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)
|
||
Deferred charges and other assets
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(24,958
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)
|
|
(458
|
)
|
||
Increase (decrease) in liabilities:
|
|
|
|
||||
Accounts payable
|
(760
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)
|
|
(1,453
|
)
|
||
Accrued compensation and other expenses
|
(13,272
|
)
|
|
(18,582
|
)
|
||
Accrued taxes payable and other tax contingencies
|
10,167
|
|
|
14,427
|
|
||
Net cash provided by operating activities
|
207,667
|
|
|
27,066
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of short-term investments
|
(140,459
|
)
|
|
(259,468
|
)
|
||
Sales of short-term investments
|
351,865
|
|
|
134,286
|
|
||
Purchases of property and equipment
|
(2,266
|
)
|
|
(1,329
|
)
|
||
Capitalized patent costs
|
(16,368
|
)
|
|
(16,191
|
)
|
||
Acquisition of patents
|
(4,500
|
)
|
|
(20,000
|
)
|
||
Purchases of long-term investments
|
(2,000
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
186,272
|
|
|
(162,702
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from noncontrolling interests
|
—
|
|
|
2,551
|
|
||
Net proceeds from exercise of stock options
|
228
|
|
|
26
|
|
||
Proceeds from other financing activities
|
—
|
|
|
4,500
|
|
||
Payments on long-term debt
|
(230,000
|
)
|
|
—
|
|
||
Proceeds from issuance of senior convertible notes
|
—
|
|
|
316,000
|
|
||
Purchase of convertible bond hedge
|
—
|
|
|
(59,376
|
)
|
||
Proceeds from issuance of warrants
|
—
|
|
|
42,881
|
|
||
Payments of debt issuance costs
|
—
|
|
|
(9,403
|
)
|
||
Dividends paid
|
(13,991
|
)
|
|
(14,665
|
)
|
||
Tax benefit from share-based compensation
|
—
|
|
|
2,163
|
|
||
Repurchase of common stock
|
(58,995
|
)
|
|
(70,572
|
)
|
||
Net cash (used in) provided by financing activities
|
(302,758
|
)
|
|
214,105
|
|
||
NET INCREASE CASH AND CASH EQUIVALENTS
|
91,181
|
|
|
78,469
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
510,207
|
|
|
428,567
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
601,388
|
|
|
$
|
507,036
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
||||
Interest paid
|
5,245
|
|
|
2,875
|
|
||
Income taxes paid, including foreign withholding taxes
|
52,285
|
|
|
36,764
|
|
||
Non-cash investing and financing activities:
|
|
|
|
||||
Dividend payable
|
6,861
|
|
|
7,243
|
|
||
Accrued capitalized patent costs, property and equipment, and acquisition of patents
|
(359
|
)
|
|
421
|
|
|
For the Three Months Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income applicable to InterDigital, Inc.
|
$
|
39,994
|
|
|
$
|
39,994
|
|
|
$
|
32,602
|
|
|
$
|
32,602
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding: Basic
|
34,499
|
|
|
34,499
|
|
|
36,022
|
|
|
36,022
|
|
||||
Dilutive effect of stock options, RSUs, convertible securities and warrants
|
|
|
446
|
|
|
|
|
420
|
|
||||||
Weighted-average shares outstanding: Diluted
|
|
|
34,945
|
|
|
|
|
36,442
|
|
||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Net income: Basic
|
$
|
1.16
|
|
|
$
|
1.16
|
|
|
$
|
0.91
|
|
|
$
|
0.91
|
|
Dilutive effect of stock options, RSUs, convertible securities and warrants
|
|
|
(0.02
|
)
|
|
|
|
(0.02
|
)
|
||||||
Net income: Diluted
|
|
|
$
|
1.14
|
|
|
|
|
$
|
0.89
|
|
|
For the Six Months Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income applicable to InterDigital, Inc.
|
$
|
68,065
|
|
|
$
|
68,065
|
|
|
$
|
61,667
|
|
|
$
|
61,667
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding: Basic
|
34,772
|
|
|
34,772
|
|
|
36,486
|
|
|
36,486
|
|
||||
Dilutive effect of stock options, RSUs, convertible securities and warrants
|
|
|
389
|
|
|
|
|
397
|
|
||||||
Weighted-average shares outstanding: Diluted
|
|
|
35,161
|
|
|
|
|
36,883
|
|
||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
||||||||
Net income: Basic
|
$
|
1.96
|
|
|
$
|
1.96
|
|
|
$
|
1.69
|
|
|
$
|
1.69
|
|
Dilutive effect of stock options, RSUs, convertible securities and warrants
|
|
|
(0.02
|
)
|
|
|
|
(0.02
|
)
|
||||||
Net income: Diluted
|
|
|
$
|
1.94
|
|
|
|
|
$
|
1.67
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Restricted stock units and stock options
|
|
142
|
|
|
94
|
|
|
159
|
|
|
58
|
|
Convertible securities
|
|
4,366
|
|
|
4,366
|
|
|
6,068
|
|
|
6,803
|
|
Warrants
|
|
8,455
|
|
|
8,496
|
|
|
8,502
|
|
|
6,808
|
|
Total
|
|
12,963
|
|
|
12,956
|
|
|
14,729
|
|
|
13,669
|
|
1.
|
Whenever InterDigital engages with a Chinese Manufacturer to license InterDigital’s patent portfolio for 2G, 3G and 4G wireless mobile standards, InterDigital will offer such Chinese Manufacturer the option of taking
|
2.
|
As part of its licensing offer, InterDigital will not require that a Chinese Manufacturer agree to a royalty-free, reciprocal cross-license of such Chinese Manufacturer's similarly categorized standards-essential wireless patents.
|
3.
|
Prior to commencing any action against a Chinese Manufacturer in which InterDigital may seek exclusionary or injunctive relief for the infringement of any of its wireless standards-essential patents, InterDigital will offer such Chinese Manufacturer the option to enter into expedited binding arbitration under fair and reasonable procedures to resolve the royalty rate and other terms of a worldwide license under InterDigital's wireless standards-essential patents. If the Chinese Manufacturer accepts InterDigital's binding arbitration offer or otherwise enters into an agreement with InterDigital on a binding arbitration mechanism, InterDigital will, in accordance with the terms of the arbitration agreement and patent license agreement, refrain from seeking exclusionary or injunctive relief against such company.
|
|
For the Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Balance beginning of period, December 31
|
$
|
510,519
|
|
|
$
|
468,328
|
|
Net income attributable to InterDigital, Inc.
|
68,065
|
|
|
61,667
|
|
||
Unrealized gain on investments, net
|
388
|
|
|
8
|
|
||
Cash dividends declared
|
(13,784
|
)
|
|
(14,475
|
)
|
||
Repurchase of common stock
|
(58,995
|
)
|
|
(70,572
|
)
|
||
Convertible note hedge transactions, net of tax
|
—
|
|
|
(38,594
|
)
|
||
Warrant transactions
|
—
|
|
|
42,881
|
|
||
Equity component of the 2020 Notes, net of tax
|
—
|
|
|
38,567
|
|
||
Deferred financing costs allocated to equity
|
—
|
|
|
(2,430
|
)
|
||
Exercise of common stock options
|
228
|
|
|
26
|
|
||
Taxes withheld upon restricted stock unit vestings
|
(3,325
|
)
|
|
(9,557
|
)
|
||
Tax benefit from share-based compensation
|
(9
|
)
|
|
2,163
|
|
||
Share-based compensation
|
10,580
|
|
|
6,299
|
|
||
Total InterDigital, Inc. shareholders’ equity end of period
|
$
|
513,667
|
|
|
$
|
484,311
|
|
Noncontrolling Interest Balance beginning of period, December 31
|
11,376
|
|
|
7,349
|
|
||
Proceeds from noncontrolling interests
|
—
|
|
|
2,551
|
|
||
Net loss attributable to noncontrolling interest
|
(1,885
|
)
|
|
(1,380
|
)
|
||
Noncontrolling interest
|
9,491
|
|
|
8,520
|
|
||
Total Equity end of period
|
$
|
523,158
|
|
|
$
|
492,831
|
|
2016
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.20
|
|
|
$
|
6,923
|
|
|
$
|
6,923
|
|
Second quarter
|
0.20
|
|
|
6,861
|
|
|
13,784
|
|
|||
|
$
|
0.40
|
|
|
$
|
13,784
|
|
|
|
||
|
|
|
|
|
|
||||||
2015
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.20
|
|
|
$
|
7,232
|
|
|
$
|
7,232
|
|
Second quarter
|
0.20
|
|
|
7,243
|
|
|
14,475
|
|
|||
Third quarter
|
0.20
|
|
|
7,183
|
|
|
21,658
|
|
|||
Fourth quarter
|
0.20
|
|
|
7,068
|
|
|
28,726
|
|
|||
|
$
|
0.80
|
|
|
$
|
28,726
|
|
|
|
|
Fair Value as of June 30, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
570,753
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
570,753
|
|
Commercial paper (b)
|
—
|
|
|
47,021
|
|
|
—
|
|
|
47,021
|
|
||||
U.S. government securities
|
—
|
|
|
138,863
|
|
|
—
|
|
|
138,863
|
|
||||
Corporate bonds, asset backed and other securities
|
—
|
|
|
57,261
|
|
|
—
|
|
|
57,261
|
|
||||
|
$
|
570,753
|
|
|
$
|
243,145
|
|
|
$
|
—
|
|
|
$
|
813,898
|
|
(a)
|
Included within cash and cash equivalents.
|
(b)
|
Includes
$30.6 million
of commercial paper that is included within cash and cash equivalents.
|
|
Fair Value as of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
333,671
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
333,671
|
|
Commercial paper (b)
|
—
|
|
|
377,347
|
|
|
—
|
|
|
377,347
|
|
||||
U.S. government securities
|
—
|
|
|
183,950
|
|
|
—
|
|
|
183,950
|
|
||||
Corporate bonds, asset backed and other securities
|
183
|
|
|
38,557
|
|
|
—
|
|
|
38,740
|
|
||||
|
$
|
333,854
|
|
|
$
|
599,854
|
|
|
$
|
—
|
|
|
$
|
933,708
|
|
(a)
|
Included within cash and cash equivalents.
|
(b)
|
Includes
$176.5 million
of commercial paper that is included within cash and cash equivalents.
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
|
Principal
Amount
|
|
Carrying
Value |
|
Fair
Value
|
||||||||||||
Total Long-Term Debt
|
$
|
316,000
|
|
|
$
|
265,728
|
|
|
$
|
328,839
|
|
|
$
|
546,000
|
|
|
$
|
486,769
|
|
|
$
|
533,203
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
2020
Notes
|
|
2016 Notes
|
|
2020 Notes
|
|
Total
|
||||||||
Principal
|
$
|
316,000
|
|
|
$
|
230,000
|
|
|
$
|
316,000
|
|
|
$
|
546,000
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Unamortized interest discount
|
(45,176
|
)
|
|
(2,500
|
)
|
|
(50,614
|
)
|
|
(53,114
|
)
|
||||
Deferred financing costs
|
(5,096
|
)
|
|
(326
|
)
|
|
(5,791
|
)
|
|
(6,117
|
)
|
||||
Net carrying amount of Notes
|
$
|
265,728
|
|
|
$
|
227,174
|
|
|
$
|
259,595
|
|
|
$
|
486,769
|
|
|
For the Three Months Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
2020 Notes
|
|
2016 Notes
|
|
2020 Notes
|
|
Total
|
||||||||
Contractual coupon interest
|
$
|
1,185
|
|
|
$
|
1,438
|
|
|
$
|
1,053
|
|
|
$
|
2,491
|
|
Accretion of debt discount
|
2,745
|
|
|
2,416
|
|
|
2,569
|
|
|
4,985
|
|
||||
Amortization of deferred financing costs
|
347
|
|
|
326
|
|
|
349
|
|
|
675
|
|
||||
Total
|
$
|
4,277
|
|
|
$
|
4,180
|
|
|
$
|
3,971
|
|
|
$
|
8,151
|
|
|
For the Six Months Ended June 30,
|
||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||
|
2016 Notes
|
|
2020 Notes
|
|
Total
|
|
2016 Notes
|
|
2020 Notes
|
|
Total
|
||||||||||||
Contractual coupon interest
|
$
|
1,437
|
|
|
$
|
2,370
|
|
|
$
|
3,807
|
|
|
$
|
2,875
|
|
|
$
|
1,448
|
|
|
$
|
4,323
|
|
Accretion of debt discount
|
2,500
|
|
|
5,438
|
|
|
7,938
|
|
|
4,750
|
|
|
3,434
|
|
|
8,184
|
|
||||||
Amortization of deferred financing costs
|
326
|
|
|
695
|
|
|
1,021
|
|
|
652
|
|
|
465
|
|
|
1,117
|
|
||||||
Total
|
$
|
4,263
|
|
|
$
|
8,503
|
|
|
$
|
12,766
|
|
|
$
|
8,277
|
|
|
$
|
5,347
|
|
|
$
|
13,624
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Current deferred revenue, including customer advances (a)
|
$
|
309,340
|
|
|
$
|
106,229
|
|
Long-term deferred revenue
|
298,675
|
|
|
289,039
|
|
||
Total deferred revenue
|
$
|
608,015
|
|
|
$
|
395,268
|
|
•
|
a $23.1 million discrete net benefit within our tax provision related to tax refunds expected on amended returns associated with deductions for certain domestic production activities; and
|
•
|
$1.3 million of past sales.
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Increase /
(Decrease)
|
||||||
Cash and cash equivalents
|
$
|
601,388
|
|
|
$
|
510,207
|
|
|
$
|
91,181
|
|
Short-term investments
|
212,510
|
|
|
423,501
|
|
|
(210,991
|
)
|
|||
Total cash and cash equivalents and short-term investments
|
$
|
813,898
|
|
|
$
|
933,708
|
|
|
$
|
(119,810
|
)
|
|
For the Six Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
Increase /
(Decrease)
|
||||||
Net cash provided by operating activities
|
$
|
207,667
|
|
|
$
|
27,066
|
|
|
$
|
180,601
|
|
|
For the Six Months Ended June 30,
|
||||||||||
|
2016
|
|
2015
|
|
Increase / (Decrease)
|
||||||
Cash Receipts:
|
|
|
|
|
|
||||||
Current royalties
a
|
$
|
127,416
|
|
|
$
|
137,851
|
|
|
$
|
(10,435
|
)
|
Fixed-fee royalty payments
b
|
224,237
|
|
|
31,000
|
|
|
193,237
|
|
|||
Prepaid royalties
|
3,356
|
|
|
13,460
|
|
|
(10,104
|
)
|
|||
Technology solutions
|
1,753
|
|
|
3,993
|
|
|
(2,240
|
)
|
|||
Total cash receipts
|
$
|
356,762
|
|
|
$
|
186,304
|
|
|
$
|
170,458
|
|
|
|
|
|
|
|
||||||
Cash Outflows:
|
|
|
|
|
|
||||||
Cash operating expenses
c
|
75,718
|
|
|
89,385
|
|
|
(13,667
|
)
|
|||
Income taxes paid
d
|
52,285
|
|
|
36,764
|
|
|
15,521
|
|
|||
Total cash outflows
|
128,003
|
|
|
126,149
|
|
|
1,854
|
|
|||
|
|
|
|
|
|
||||||
Other working capital adjustments
|
(21,092
|
)
|
|
(33,089
|
)
|
|
11,997
|
|
|||
|
|
|
|
|
|
||||||
Cash flows provided by operating activities
|
$
|
207,667
|
|
|
$
|
27,066
|
|
|
$
|
180,601
|
|
|
June 30, 2016
|
|
December 31, 2015
|
|
Increase / (Decrease)
|
||||||
Current assets
|
$
|
966,481
|
|
|
$
|
1,010,967
|
|
|
$
|
(44,486
|
)
|
Less
: current liabilities
|
371,375
|
|
|
399,973
|
|
|
(28,598
|
)
|
|||
Working capital
|
595,106
|
|
|
610,994
|
|
|
(15,888
|
)
|
|||
Subtract:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
601,388
|
|
|
510,207
|
|
|
91,181
|
|
|||
Short-term investments
|
212,510
|
|
|
423,501
|
|
|
(210,991
|
)
|
|||
Add:
|
|
|
|
|
|
||||||
Current deferred revenue, including customer advances
|
309,340
|
|
|
106,229
|
|
|
203,111
|
|
|||
Adjusted working capital
|
$
|
90,548
|
|
|
$
|
(216,485
|
)
|
|
$
|
307,033
|
|
|
For the Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
|||||||||
Per-unit royalty revenue
|
$
|
44,525
|
|
|
$
|
55,989
|
|
|
$
|
(11,464
|
)
|
|
(20
|
)%
|
Fixed-fee amortized royalty revenue
|
29,098
|
|
|
33,373
|
|
|
(4,275
|
)
|
|
(13
|
)%
|
|||
Current patent royalties
a
|
73,623
|
|
|
89,362
|
|
|
(15,739
|
)
|
|
(18
|
)%
|
|||
Past patent royalties
b
|
1,277
|
|
|
27,260
|
|
|
(25,983
|
)
|
|
(95
|
)%
|
|||
Total patent licensing royalties
|
74,900
|
|
|
116,622
|
|
|
(41,722
|
)
|
|
(36
|
)%
|
|||
Current technology solutions revenue
a
|
1,015
|
|
|
1,845
|
|
|
(830
|
)
|
|
(45
|
)%
|
|||
Past technology solutions revenue
b
|
—
|
|
|
84
|
|
|
(84
|
)
|
|
(100
|
)%
|
|||
Total revenue
|
$
|
75,915
|
|
|
$
|
118,551
|
|
|
$
|
(42,636
|
)
|
|
(36
|
)%
|
|
For the Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase/ (Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
28,285
|
|
|
$
|
31,212
|
|
|
$
|
(2,927
|
)
|
|
(9
|
)%
|
Development
|
14,609
|
|
|
18,326
|
|
|
(3,717
|
)
|
|
(20
|
)%
|
|||
Selling, general and administrative
|
9,938
|
|
|
10,435
|
|
|
(497
|
)
|
|
(5
|
)%
|
|||
Total operating expenses
|
$
|
52,832
|
|
|
$
|
59,973
|
|
|
$
|
(7,141
|
)
|
|
(12
|
)%
|
|
(Decrease)/
Increase
|
||
Intellectual property enforcement and non-patent litigation
|
$
|
(4,497
|
)
|
Consulting services
|
(2,840
|
)
|
|
Commercial initiatives
|
(1,806
|
)
|
|
Personnel-related costs
|
(1,058
|
)
|
|
Performance-based incentive compensation
|
1,648
|
|
|
Depreciation and amortization
|
1,283
|
|
|
Other
|
129
|
|
|
Total decrease in operating expenses
|
$
|
(7,141
|
)
|
|
For the Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
Interest expense
|
$
|
(4,278
|
)
|
|
$
|
(8,151
|
)
|
|
$
|
3,873
|
|
|
(48
|
)%
|
Other
|
3,070
|
|
|
(76
|
)
|
|
3,146
|
|
|
(4,139
|
)%
|
|||
Interest and investment income
|
502
|
|
|
481
|
|
|
21
|
|
|
4
|
%
|
|||
|
$
|
(706
|
)
|
|
$
|
(7,746
|
)
|
|
$
|
7,040
|
|
|
(91
|
)%
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
|||||||||
Per-unit royalty revenue
|
$
|
118,214
|
|
|
$
|
131,572
|
|
|
$
|
(13,358
|
)
|
|
(10
|
)%
|
Fixed-fee amortized royalty revenue
|
58,196
|
|
|
66,746
|
|
|
(8,550
|
)
|
|
(13
|
)%
|
|||
Current patent royalties
a
|
176,410
|
|
|
198,318
|
|
|
(21,908
|
)
|
|
(11
|
)%
|
|||
Past patent royalties
b
|
5,444
|
|
|
27,277
|
|
|
(21,833
|
)
|
|
(80
|
)%
|
|||
Total patent licensing royalties
|
181,854
|
|
|
225,595
|
|
|
(43,741
|
)
|
|
(19
|
)%
|
|||
Current technology solutions revenue
a
|
1,825
|
|
|
3,250
|
|
|
(1,425
|
)
|
|
(44
|
)%
|
|||
Past technology solutions revenue
b
|
—
|
|
|
84
|
|
|
(84
|
)
|
|
(100
|
)%
|
|||
Total revenue
|
$
|
183,679
|
|
|
$
|
228,929
|
|
|
$
|
(45,250
|
)
|
|
(20
|
)%
|
|
For the Six Months Ended June 30,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
Increase/ (Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
55,452
|
|
|
$
|
62,837
|
|
|
$
|
(7,385
|
)
|
|
(12
|
)%
|
Development
|
34,878
|
|
|
36,317
|
|
|
(1,439
|
)
|
|
(4
|
)%
|
|||
Selling, general and administrative
|
21,910
|
|
|
19,953
|
|
|
1,957
|
|
|
10
|
%
|
|||
Total operating expenses
|
$
|
112,240
|
|
|
$
|
119,107
|
|
|
$
|
(6,867
|
)
|
|
(6
|
)%
|
|
(Decrease)/Increase
|
||
Intellectual property enforcement and non-patent litigation
|
$
|
(11,921
|
)
|
Consulting services
|
(3,381
|
)
|
|
Commercial initiatives
|
(2,407
|
)
|
|
Performance-based incentive compensation
|
6,168
|
|
|
Depreciation and amortization
|
2,517
|
|
|
Other
|
1,344
|
|
|
Personnel-related costs
|
813
|
|
|
Total decrease in operating expenses
|
$
|
(6,867
|
)
|
|
For the Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
Interest expense
|
$
|
(12,463
|
)
|
|
$
|
(13,624
|
)
|
|
$
|
1,161
|
|
|
(9
|
)%
|
Other
|
2,957
|
|
|
(264
|
)
|
|
3,221
|
|
|
(1,220
|
)%
|
|||
Interest and investment income
|
1,663
|
|
|
906
|
|
|
757
|
|
|
84
|
%
|
|||
|
$
|
(7,843
|
)
|
|
$
|
(12,982
|
)
|
|
$
|
5,139
|
|
|
(40
|
)%
|
•
|
The potential effects of new accounting standards on our financial position, results of operations or cash flows;
|
•
|
Our expectation that the amortization of fixed-fee royalty payments will reduce our
June 30, 2016
deferred revenue balance over the next twelve months;
|
•
|
Our expectation that we will use deferred tax assets to offset future U.S. federal income taxes;
|
•
|
The timing, outcome and impact of, and plans, expectations and beliefs with respect to, our various litigation, arbitration, regulatory and administrative matters;
|
•
|
Our belief that we have the ability to obtain additional liquidity through debt and equity financings;
|
•
|
Our belief that our available sources of funds will be sufficient to finance our operations, capital requirements, debt obligations, existing stock repurchase program and dividend program for the next twelve months;
|
•
|
Our expectation that we will continue to pay dividends comparable to our quarterly
$0.20
per share cash dividend in the future; and
|
•
|
Our expectation that we will reach a conclusion in third quarter 2016 with respect to the revenue recognition treatment of the payments made by Huawei in second quarter 2016.
|
Period
|
Total Number of Shares (or Units) Purchased (1)
|
|
Average Price Paid Per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2)
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (3)
|
||||||
April 1, 2016 - April 30, 2016
|
104,500
|
|
|
$
|
55.30
|
|
|
104,500
|
|
|
$
|
104,786,205
|
|
May 1, 2016 - May 31, 2016
|
130,000
|
|
|
$
|
55.29
|
|
|
130,000
|
|
|
$
|
97,599,669
|
|
June 1, 2016 - June 30, 2016
|
98,000
|
|
|
$
|
57.42
|
|
|
98,000
|
|
|
$
|
91,970,397
|
|
Total
|
332,500
|
|
|
$
|
55.92
|
|
|
332,500
|
|
|
$
|
91,970,397
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.1
|
|
Compensation Program for Non-Management Directors (as amended June 2016).
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.**
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.**
|
|
|
|
101
|
|
The following financial information from InterDigital, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission on August 2, 2016, formatted in eXtensible Business Reporting Language:
|
|
|
|
|
|
(i) Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2016 and 2015 and (v) Notes to Condensed Consolidated Financial Statements.
|
**
|
|
This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that InterDigital, Inc. specifically incorporates it by reference.
|
|
INTERDIGITAL, INC.
|
|
|
|
|
Date: August 2, 2016
|
/s/ WILLIAM J. MERRITT
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: August 2, 2016
|
/s/ RICHARD J. BREZSKI
|
|
|
Richard J. Brezski
|
|
|
Chief Financial Officer
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.1
|
|
Compensation Program for Non-Management Directors (as amended June 2016).
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350.**
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350.**
|
|
|
|
101
|
|
The following financial information from InterDigital, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission on August 2, 2016, formatted in eXtensible Business Reporting Language:
|
|
|
|
|
|
(i) Condensed Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015, (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015, (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2016 and 2015 and (v) Notes to Condensed Consolidated Financial Statements.
|
**
|
|
This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that InterDigital, Inc. specifically incorporates it by reference.
|
Base Annual Board Retainer:
|
$40,000
|
Chairman of the Board:
|
$50,000
|
Audit Committee Chair:
|
$30,000
|
Compensation Committee Chair:
|
$20,000
|
Investment Committee Chair:
|
$15,000
|
Nominating and Corporate Governance Committee Chair:
|
$15,000
|
Audit Committee Members:
|
$12,000
|
Compensation Committee Members:
|
$10,000
|
Investment Committee Members:
|
$7,500
|
Nominating and Corporate Governance Committee Members:
|
$7,500
|
Initial Election RSU Award:
|
$150,000 of RSUs (vesting in full one year from grant date)
|
Annual RSU Award:
|
$150,000 of RSUs (vesting in full one year from grant date)
|
•
|
All cash payments and RSU grants shall be based on service for a full year; pro rata payments and grants shall be made for service of less than one year. Cash payments shall be made on a quarterly basis.
|
•
|
This program is designed to compensate each non-management director for participating in up to eight (8) Board meetings per year and up to eight (8) meetings per year for each Committee on which the non-management director serves. Additional compensation will be paid to each non-management director for participating in meetings in excess of these thresholds, as follows:
|
◦
|
Each additional Board meeting:
$4,000
|
◦
|
Each additional Committee meeting:
$1,000
|
•
|
In addition, non-management directors will be paid a per diem fee of $1,000 for attendance at or participation in events, conferences or meetings, in their capacity as a director, at the request of InterDigital, Inc. senior management,
provided that
such attendance or participation requires a significant time commitment and would be considered outside of the director’s typical Board and/or Committee duties. Any per diem fee payments will be subject to the approval of the Compensation Committee of the Board of Directors.
|
•
|
Both cash payments and RSUs may be deferred. An election to defer must be made in the calendar year preceding the year in which services are rendered and the compensation is earned (i.e., elections to defer must be made by December 31 of each year for the deferral to apply to the next year’s cash payments and/or RSU award(s)).
|
•
|
Each initial election RSU award shall be granted on the date of the director’s initial election to the Board. Annual RSU awards shall be granted on the date of each Annual Meeting of Shareholders.
|
•
|
The number of RSUs to be granted pursuant to each initial election award and annual award shall be calculated as follows:
|
•
|
The terms of this program shall be periodically reviewed by the Compensation Committee of the Board of Directors.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 2, 2016
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 2, 2016
|
/s/ Richard J. Brezski
|
|
|
Richard J. Brezski
|
|
|
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 2, 2016
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 2, 2016
|
/s/ Richard J. Brezski
|
|
|
Richard J. Brezski
|
|
|
Chief Financial Officer
|
|