þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
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OR
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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
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23-1882087
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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200 Bellevue Parkway, Suite 300
Wilmington, Delaware
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19809
(Zip Code)
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(Address of principal executive offices)
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Common Stock (par value $0.01 per share)
(title of class)
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NASDAQ Stock Market LLC
(name of exchange on which registered)
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Large accelerated filer
R
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Item 1.
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BUSINESS.
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•
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Develop and source innovative technologies related to wireless.
We intend to grow or maintain a leading position in advanced mobile technology, the Internet of Things (IoT) and other related technology areas by leveraging our expertise to guide internal research and development capabilities, direct our efforts in partnering with leading inventors and industry players to source new technologies and pursue select acquisitions of technologies, businesses and/or companies.
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•
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Establish and grow our patent-based revenue.
We intend to grow our licensing revenue base by adding licensees, expanding into adjacent technology areas that align with our intellectual property position and leveraging the continued growth of the overall mobile technology market. Those licensing efforts can be self-driven or executed in conjunction with licensing partnerships, trusts and other efforts, and may involve the vigorous defense of our intellectual property through litigation and other means. We also believe that our ongoing research efforts and associated patenting activities enable us to sell patent assets that are not vital to our core licensing programs, as well as to execute patent swaps that can strengthen our overall portfolio.
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•
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Pursue
commercial opportunities for our advanced platforms and solutions.
We intend to pursue the commercialization of technology platforms and solutions that arise from our research efforts. As part of our ongoing research and development efforts, InterDigital often builds out entire functioning platforms in various technology areas. We seek to bring those technologies, as well as other technologies we may develop or acquire, to market through various methods including technology licensing, stand-alone commercial initiatives, joint ventures and partnerships.
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•
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Maintain a collaborative relationship with key industry players and worldwide standards bodies.
We intend to continue contributing to the ongoing process of defining mobile standards and other industry-wide efforts and incorporating our inventions into those technology areas. Those efforts, and the knowledge gained through them,
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•
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If the effective price of products sold by our licensees were to increase as a result of fluctuations in the exchange rate of the relevant currencies, demand for the products could fall, which in turn would reduce our royalty revenues.
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•
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Assets or liabilities of our consolidated subsidiaries may be subject to the effects of currency fluctuations, which may affect our reported earnings. Our exposure to foreign currencies may increase as we expand into new markets.
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•
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Certain of our operating and investing costs, such as foreign patent prosecution, are based in foreign currencies. If these costs are not subject to foreign exchange hedging transactions, strengthening currency values in selected regions could adversely affect our near-term operating expenses, investment costs and cash flows. In addition, continued strengthening of currency values in selected regions over an extended period of time could adversely affect our future operating expenses, investment costs and cash flows.
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•
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If as a result of tax treaty procedures, the U.S. government reaches an agreement with certain foreign governments to whom we have paid foreign taxes, resulting in a partial refund of foreign taxes paid with a related reduction in our foreign tax credits, such agreement could result in foreign currency gain or loss.
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•
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the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC and announcements relating to licensing, technology development, litigation, arbitration and other legal proceedings in which we are involved and intellectual property impacting us or our business;
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•
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announcements concerning strategic transactions, such as commercial initiatives, joint ventures, strategic investments, acquisitions or divestitures;
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•
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financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
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•
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changes in GAAP, including new accounting standards that may materially affect our revenue recognition;
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•
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changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;
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•
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investor perceptions as to the likelihood of achievement of near-term goals;
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•
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changes in market share of significant licensees;
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•
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changes in operating performance and stock market valuations of other wireless communications companies generally; and
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•
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market conditions or trends in our industry or the economy as a whole.
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•
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making it more difficult for us to meet our payment and other obligations under our 1.50% Senior Convertible Notes due 2020 (the "2020 Notes");
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•
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reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;
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•
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limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and
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•
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placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged.
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Item 1B.
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UNRESOLVED STAFF COMMENTS.
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Item 2.
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PROPERTIES.
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Location
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Approximate Square Feet
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Principal Use
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Lease Expiration Date
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Melville, New York
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44,800
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Office and research space
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February 2020
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Wilmington, Delaware
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36,200
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Corporate headquarters
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November 2022
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Conshohocken, Pennsylvania
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30,300
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Office and research space
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September 2026
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Montreal, Quebec
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17,300
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Office and research space
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June 2021
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Rockville, Maryland
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16,700
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Office and research space
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August 2019
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San Diego, California
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11,800
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Office and research space
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April 2018*
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Item 3.
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LEGAL PROCEEDINGS.
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1.
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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 a worldwide portfolio license of only its standards-essential wireless patents, and comply with F/RAND principles when negotiating and entering into such licensing agreements with Chinese Manufacturers.
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2.
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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.
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3.
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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.
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Item 4.
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MINE SAFETY DISCLOSURES.
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Item 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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2017
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High
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Low
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||||
First quarter
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$
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102.30
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$
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83.15
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Second quarter
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93.00
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77.20
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Third quarter
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81.85
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67.55
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Fourth quarter
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78.10
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70.60
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2016
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High
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Low
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||||
First quarter
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$
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55.85
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$
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41.01
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Second quarter
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59.83
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51.97
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Third quarter
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79.92
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52.33
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Fourth quarter
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98.00
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68.10
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2017
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Per Share
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Total
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Cumulative by Fiscal Year
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||||||
First quarter
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$
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0.30
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$
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10,404
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$
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10,404
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Second quarter
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0.30
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10,413
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20,817
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Third quarter
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0.35
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12,149
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32,966
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Fourth quarter
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0.35
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12,156
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45,122
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$
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1.30
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$
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45,122
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||||||
2016
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||||||
First quarter
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$
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0.20
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$
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6,923
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$
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6,923
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Second quarter
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0.20
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6,861
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13,784
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Third quarter
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0.30
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10,285
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24,069
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|||
Fourth quarter
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0.30
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10,290
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34,359
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|||
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$
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1.00
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$
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34,359
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12/12
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12/13
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12/14
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12/15
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12/16
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12/17
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InterDigital, Inc.
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100.00
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72.31
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131.77
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124.05
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234.67
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198.65
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NASDAQ Composite
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100.00
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141.63
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162.09
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173.33
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187.19
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242.29
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NASDAQ Telecommunications
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100.00
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141.28
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145.43
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140.97
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150.94
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184.81
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Period
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Total Number of Shares (or Units) Purchased (1)
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Average Price Paid Per Share (or Unit)
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Total Number of Shares (or Units) Purchases as Part of Publicly Announced Plans or Programs (2)
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Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (3)
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||||||
October 1, 2017 - October 31, 2017
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8,361
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$
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72.00
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8,361
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$
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185,668,028
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November 1, 2017 - November 30, 2017
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99,101
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$
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71.52
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99,101
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$
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178,578,011
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December 1, 2017 - December 31, 2017
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—
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$
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—
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|
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—
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|
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$
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178,578,011
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Total
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107,462
|
|
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$
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71.56
|
|
|
107,462
|
|
|
$
|
178,578,011
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Item 6.
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SELECTED FINANCIAL DATA.
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2017
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2016
|
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2015
|
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2014
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|
2013
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||||||||||
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(in thousands except per share data)
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||||||||||||||||||
Consolidated statements of operations data:
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|||||
Revenues (a)
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$
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532,938
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|
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$
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665,854
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|
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$
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441,435
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$
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415,821
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|
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$
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325,361
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Income from operations
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$
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301,495
|
|
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$
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437,306
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|
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$
|
208,549
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|
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$
|
168,960
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|
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$
|
84,756
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Income tax provision (b)
|
$
|
(121,676
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)
|
|
$
|
(116,791
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)
|
|
$
|
(64,621
|
)
|
|
$
|
(52,108
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)
|
|
$
|
(25,836
|
)
|
Net income applicable to InterDigital, Inc. common shareholders
|
$
|
174,293
|
|
|
$
|
309,001
|
|
|
$
|
119,225
|
|
|
$
|
104,342
|
|
|
$
|
38,165
|
|
Net income per common share — basic
|
$
|
5.04
|
|
|
$
|
8.95
|
|
|
$
|
3.31
|
|
|
$
|
2.65
|
|
|
$
|
0.93
|
|
Net income per common share — diluted
|
$
|
4.87
|
|
|
$
|
8.78
|
|
|
$
|
3.27
|
|
|
$
|
2.62
|
|
|
$
|
0.92
|
|
Weighted average number of common shares outstanding — basic
|
34,605
|
|
|
34,526
|
|
|
36,048
|
|
|
39,420
|
|
|
41,115
|
|
|||||
Weighted average number of common shares outstanding — diluted
|
35,779
|
|
|
35,189
|
|
|
36,463
|
|
|
39,879
|
|
|
41,424
|
|
|||||
Cash dividends declared per common share (c)
|
$
|
1.30
|
|
|
$
|
1.00
|
|
|
$
|
0.80
|
|
|
$
|
0.70
|
|
|
$
|
0.40
|
|
Consolidated balance sheets data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
433,014
|
|
|
$
|
404,074
|
|
|
$
|
510,207
|
|
|
$
|
428,567
|
|
|
$
|
497,714
|
|
Short-term investments
|
724,981
|
|
|
548,687
|
|
|
423,501
|
|
|
275,361
|
|
|
200,737
|
|
|||||
Working capital
|
1,019,353
|
|
|
795,639
|
|
|
610,994
|
|
|
582,688
|
|
|
703,576
|
|
|||||
Total assets
|
1,854,420
|
|
|
1,727,853
|
|
|
1,474,485
|
|
|
1,192,962
|
|
|
1,110,251
|
|
|||||
Total debt
|
285,126
|
|
|
272,021
|
|
|
486,769
|
|
|
216,206
|
|
|
205,881
|
|
|||||
Total InterDigital, Inc. shareholders’ equity
|
855,267
|
|
|
739,709
|
|
|
510,519
|
|
|
468,328
|
|
|
528,650
|
|
|||||
Noncontrolling interest
|
17,881
|
|
|
14,659
|
|
|
11,376
|
|
|
7,349
|
|
|
5,170
|
|
|||||
Total shareholders’ equity
|
$
|
873,148
|
|
|
$
|
754,368
|
|
|
$
|
521,895
|
|
|
$
|
475,677
|
|
|
$
|
533,820
|
|
(a)
|
In 2017, 2016, 2015, 2014 and 2013, our revenues included
$162.9 million
, $309.7 million, $65.8 million, $125.0 million and $127.0 million of past sales, respectively.
|
(b)
|
In 2017, our income tax provision was impacted by the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) as discussed in our results of operations. For more information, refer to Note 10, "
Taxes"
in the Notes to Financial Statements included in Part II, Item 8, of this Form 10-K. In 2016, our income tax provision included the impact of a $23.6 million net tax benefit primarily related to domestic activity production deductions for prior years. In 2014, our income tax provision included the impact of a $4.2 million net tax benefit, primarily attributable to available U.S. federal research and development tax credits for prior years, which was partially offset by an audit settlement.
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(c)
|
In September 2017, we announced that our Board of Directors had approved an increase in the Company’s quarterly cash dividend to $0.35 per share. In September 2016, we announced that our Board of Directors had approved an increase in the Company’s quarterly cash dividend to $0.30 per share. In June 2014, we announced that our Board of Directors had approved a 100% increase in the Company's quarterly cash dividend, to $0.20 per share.
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Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
|
Cash In
|
||
Fixed-fee royalty payments
|
$
|
391,598
|
|
Per-unit royalties
|
47,786
|
|
|
Past patent royalties
|
48,020
|
|
|
Technology solutions
|
21,676
|
|
|
|
$
|
509,080
|
|
2018
|
$
|
307,142
|
|
2019
|
210,128
|
|
|
2020
|
2,618
|
|
|
2021
|
1,760
|
|
|
2022
|
1,245
|
|
|
Thereafter
|
2,133
|
|
|
|
$
|
525,026
|
|
•
|
Our
2017
revenue includes
$162.9 million
of past sales
primarily attributable to the LG agreement, the recognition of a prepayment balance remaining under a patent license agreement that expired in fourth quarter 2017 and our second quarter 2017 settlement agreement with Microsoft Corporation
.
|
•
|
Our
2017
operating expenses include a $1.2 million severance charge related to on-going efforts to optimize our cost structure.
|
•
|
Our
2017
income tax provision includes:
|
•
|
a $42.6 million tax charge primarily due to a re-measurement of deferred tax assets and liabilities as a result of the Tax Reform Act;
|
•
|
a discrete benefit of $12.1 million for excess tax benefits related to our current year adoption of ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” as discussed below in
New Accounting Guidance
; and
|
•
|
discrete benefits of $8.0 million primarily related to the decrease of uncertain tax positions associated with domestic production activities refund claims and interest income on refunds
.
|
|
Change in amount allocated
|
||||||
Allocation to past patent royalties
|
+5%
|
|
-%5
|
||||
Change in Revenue
|
$
|
6,355
|
|
|
$
|
(6,355
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Short-term incentive compensation
|
$
|
13,994
|
|
|
$
|
20,516
|
|
|
$
|
19,098
|
|
Time-based awards (a)
|
6,958
|
|
|
7,847
|
|
|
7,874
|
|
|||
Performance-based awards (a) (b)
|
6,883
|
|
|
12,812
|
|
|
5,340
|
|
|||
Other share-based compensation
|
4,999
|
|
|
1,899
|
|
|
2,090
|
|
|||
Total performance-based and other share-based compensation expense
|
$
|
32,834
|
|
|
$
|
43,074
|
|
|
$
|
34,402
|
|
|
December 31, 2017
|
|
Static Fixed-Fee Agreements
|
Static Prepayment Agreements
|
Elimination of Quarter-Lag Reporting
|
Significant Financing Component
|
Related Tax Effects and Other Balance Sheet Impact
|
|
Total Adjustments
|
|
January 1, 2018
|
||||||||||||||||
Accounts Receivable
|
$
|
216,293
|
|
|
$
|
6,000
|
|
$
|
—
|
|
$
|
10,957
|
|
$
|
—
|
|
$
|
(30,000
|
)
|
|
$
|
(13,043
|
)
|
|
$
|
203,250
|
|
Deferred Tax Assets
|
84,582
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(42,362
|
)
|
|
(42,362
|
)
|
|
42,220
|
|
||||||||
Taxes Payable
|
14,881
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,184
|
)
|
|
(1,184
|
)
|
|
13,697
|
|
||||||||
Deferred Revenue
|
(616,813
|
)
|
|
99,466
|
|
85,146
|
|
—
|
|
3,235
|
|
30,000
|
|
|
217,847
|
|
|
(398,966
|
)
|
||||||||
Retained Earnings
|
(1,249,091
|
)
|
|
(105,466
|
)
|
(85,146
|
)
|
(10,957
|
)
|
(3,235
|
)
|
43,546
|
|
|
(161,258
|
)
|
|
(1,410,349
|
)
|
|
GAAP as of December 31, 2017
|
|
ASC 606
|
||||
2018
|
$
|
307,142
|
|
|
$
|
184,272
|
|
2019
|
210,128
|
|
|
93,237
|
|
||
2020
|
2,618
|
|
|
69,047
|
|
||
2021
|
1,760
|
|
|
45,769
|
|
||
2022
|
1,245
|
|
|
—
|
|
||
Thereafter
|
2,133
|
|
|
—
|
|
||
|
$
|
525,026
|
|
|
$
|
392,325
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Increase /
(Decrease)
|
||||||
Cash and cash equivalents
|
$
|
433,014
|
|
|
$
|
404,074
|
|
|
$
|
28,940
|
|
Short-term investments
|
724,981
|
|
|
548,687
|
|
|
176,294
|
|
|||
Total cash and cash equivalents and short-term investments
|
$
|
1,157,995
|
|
|
$
|
952,761
|
|
|
$
|
205,234
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
Increase / (Decrease)
|
||||||
Cash flows provided by operating activities
|
$
|
315,800
|
|
|
$
|
434,159
|
|
|
$
|
(118,359
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
Increase / (Decrease)
|
||||||
Cash Receipts:
|
|
|
|
|
|
||||||
Fixed-fee royalty payments
|
$
|
391,598
|
|
|
$
|
231,562
|
|
|
$
|
160,036
|
|
Per-unit royalties
|
47,786
|
|
|
162,445
|
|
|
(114,659
|
)
|
|||
Past patent royalties
|
48,020
|
|
|
320,632
|
|
|
(272,612
|
)
|
|||
Technology solutions
|
21,676
|
|
|
5,300
|
|
|
16,376
|
|
|||
Total cash receipts
|
$
|
509,080
|
|
|
$
|
719,939
|
|
|
$
|
(210,859
|
)
|
|
|
|
|
|
|
||||||
Cash Outflows:
|
|
|
|
|
|
||||||
Cash operating expenses (a)
|
(156,328
|
)
|
|
(153,955
|
)
|
|
(2,373
|
)
|
|||
Income taxes paid (b)
|
(66,793
|
)
|
|
(108,635
|
)
|
|
41,842
|
|
|||
Total cash outflows
|
(223,121
|
)
|
|
(262,590
|
)
|
|
39,469
|
|
|||
|
|
|
|
|
|
||||||
Other working capital adjustments (c)
|
29,841
|
|
|
(23,190
|
)
|
|
53,031
|
|
|||
|
|
|
|
|
|
||||||
Cash flows provided by operating activities
|
$
|
315,800
|
|
|
$
|
434,159
|
|
|
$
|
(118,359
|
)
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
Increase / (Decrease)
|
||||||
Current assets
|
$
|
1,395,794
|
|
|
$
|
1,221,119
|
|
|
$
|
174,675
|
|
Less
: current liabilities
|
376,441
|
|
|
425,480
|
|
|
(49,039
|
)
|
|||
Working capital
|
1,019,353
|
|
|
795,639
|
|
|
223,714
|
|
|||
Subtract:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
433,014
|
|
|
404,074
|
|
|
28,940
|
|
|||
Short-term investments
|
724,981
|
|
|
548,687
|
|
|
176,294
|
|
|||
Add:
|
|
|
|
|
|
||||||
Current deferred revenue
|
307,142
|
|
|
360,192
|
|
|
(53,050
|
)
|
|||
Adjusted working capital
|
$
|
168,500
|
|
|
$
|
203,070
|
|
|
$
|
(34,570
|
)
|
Market Price Per Share
|
Shares Issuable Upon Conversion of 2020 Notes
|
Shares Issuable Upon Exercise of Warrants
|
Total Treasury Stock Method Incremental Shares
|
Shares Deliverable to InterDigital upon Settlement of the Hedge Agreements
|
Incremental Shares Issuable
(a)
|
|
(Shares in thousands)
|
||||
$70
|
—
|
—
|
—
|
—
|
—
|
$80
|
432
|
—
|
432
|
(432)
|
—
|
$85
|
664
|
—
|
664
|
(664)
|
—
|
$90
|
871
|
96
|
967
|
(871)
|
96
|
$95
|
1,055
|
322
|
1,377
|
(1,055)
|
322
|
$100
|
1,222
|
525
|
1,747
|
(1,222)
|
525
|
$105
|
1,372
|
709
|
2,081
|
(1,372)
|
709
|
$110
|
1,509
|
876
|
2,385
|
(1,509)
|
876
|
$115
|
1,634
|
1,029
|
2,663
|
(1,634)
|
1,029
|
$120
|
1,748
|
1,169
|
2,917
|
(1,748)
|
1,169
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 year
|
|
1-3 Years
|
|
3-5 Years
|
|
Thereafter
|
||||||||||
2020 Notes
|
$
|
316,000
|
|
|
$
|
—
|
|
|
$
|
316,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contractual interest payments on the 2020 Notes
|
11,850
|
|
|
4,740
|
|
|
7,110
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
20,554
|
|
|
4,403
|
|
|
6,903
|
|
|
4,507
|
|
|
4,741
|
|
|||||
Purchase obligations (a)
|
11,581
|
|
|
11,581
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
359,985
|
|
|
$
|
20,724
|
|
|
$
|
330,013
|
|
|
$
|
4,507
|
|
|
$
|
4,741
|
|
(a)
|
Purchase obligations consist of agreements to purchase goods and services that are legally binding on us, as well as accounts payable. Our consolidated balance sheet at December 31, 2017 includes a
$3.3 million
noncurrent liability for uncertain tax positions. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
|
|
For the Year Ended December 31,
|
|
|
|||||||||||
|
2017
|
|
2016
|
|
(Decrease)/Increase
|
|||||||||
Per-unit royalty revenue
|
$
|
47,840
|
|
|
$
|
168,050
|
|
|
$
|
(120,210
|
)
|
|
(72
|
)%
|
Fixed-fee amortized royalty revenue
|
301,628
|
|
|
177,614
|
|
|
124,014
|
|
|
70
|
%
|
|||
Current patent royalties (a)
|
349,468
|
|
|
345,664
|
|
|
3,804
|
|
|
1
|
%
|
|||
Past patent royalties (b)
|
162,890
|
|
|
309,696
|
|
|
(146,806
|
)
|
|
(47
|
)%
|
|||
Total patent licensing royalties
|
512,358
|
|
|
655,360
|
|
|
(143,002
|
)
|
|
(22
|
)%
|
|||
Current technology solutions revenue (a)
|
20,580
|
|
|
10,494
|
|
|
10,086
|
|
|
96
|
%
|
|||
Total revenue
|
$
|
532,938
|
|
|
$
|
665,854
|
|
|
$
|
(132,916
|
)
|
|
(20
|
)%
|
|
For the Year Ended December 31,
|
|
|
|||||||||||
|
2017
|
|
2016
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
111,157
|
|
|
$
|
113,544
|
|
|
$
|
(2,387
|
)
|
|
(2
|
)%
|
Development
|
70,708
|
|
|
68,733
|
|
|
1,975
|
|
|
3
|
%
|
|||
Selling, general and administrative
|
49,578
|
|
|
46,271
|
|
|
3,307
|
|
|
7
|
%
|
|||
Total operating expenses
|
$
|
231,443
|
|
|
$
|
228,548
|
|
|
$
|
2,895
|
|
|
1
|
%
|
|
Increase/(Decrease)
|
||
Commercial initiatives
|
$
|
12,139
|
|
Depreciation and amortization
|
4,300
|
|
|
Consulting services
|
4,278
|
|
|
Performance-based incentive compensation
|
(13,627
|
)
|
|
Patent maintenance and evaluation
|
(2,373
|
)
|
|
Intellectual property enforcement and non-patent litigation
|
(1,221
|
)
|
|
Other
|
(601
|
)
|
|
Total increase in operating expenses
|
$
|
2,895
|
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
(Decrease)/Increase
|
|||||||||
Interest expense
|
$
|
(17,845
|
)
|
|
$
|
(21,126
|
)
|
|
$
|
3,281
|
|
|
16
|
%
|
Interest and investment income
|
8,488
|
|
|
3,748
|
|
|
4,740
|
|
|
126
|
%
|
|||
Other
|
239
|
|
|
2,343
|
|
|
(2,104
|
)
|
|
(90
|
)%
|
|||
|
$
|
(9,118
|
)
|
|
$
|
(15,035
|
)
|
|
$
|
5,917
|
|
|
39
|
%
|
|
For the Year Ended
December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase/ (Decrease)
|
|||||||||
Per-unit royalty revenue
|
$
|
168,050
|
|
|
$
|
234,836
|
|
|
$
|
(66,786
|
)
|
|
(28
|
)%
|
Fixed-fee amortized royalty revenue
|
177,614
|
|
|
131,837
|
|
|
45,777
|
|
|
35
|
%
|
|||
Current patent royalties (a)
|
345,664
|
|
|
366,673
|
|
|
(21,009
|
)
|
|
(6
|
)%
|
|||
Past patent royalties (b)
|
309,696
|
|
|
65,814
|
|
|
243,882
|
|
|
371
|
%
|
|||
Total patent licensing royalties
|
655,360
|
|
|
432,487
|
|
|
222,873
|
|
|
52
|
%
|
|||
Patent sales
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
%
|
|||
Current technology solutions revenue (a)
|
10,494
|
|
|
6,096
|
|
|
4,398
|
|
|
72
|
%
|
|||
Past technology solutions revenue (b)
|
—
|
|
|
2,852
|
|
|
(2,852
|
)
|
|
(100
|
)%
|
|||
Total revenue
|
$
|
665,854
|
|
|
$
|
441,435
|
|
|
$
|
224,419
|
|
|
51
|
%
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
|||||||||
Patent administration and licensing
|
$
|
113,544
|
|
|
$
|
120,401
|
|
|
$
|
(6,857
|
)
|
|
(6
|
)%
|
Development
|
68,733
|
|
|
72,702
|
|
|
(3,969
|
)
|
|
(5
|
)%
|
|||
Selling, general and administrative
|
46,271
|
|
|
39,783
|
|
|
6,488
|
|
|
16
|
%
|
|||
Total operating expenses
|
$
|
228,548
|
|
|
$
|
232,886
|
|
|
$
|
(4,338
|
)
|
|
(2
|
)%
|
|
(Decrease) / Increase
|
||
Intellectual property enforcement
|
$
|
(16,140
|
)
|
Commercial initiatives
|
(5,717
|
)
|
|
Performance-based incentive compensation
|
9,275
|
|
|
Depreciation and amortization
|
4,806
|
|
|
Other
|
2,646
|
|
|
Personnel-related costs
|
792
|
|
|
Total decrease in operating expenses
|
$
|
(4,338
|
)
|
|
For the Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
(Decrease)/Increase
|
|||||||||
Interest expense
|
$
|
(21,126
|
)
|
|
$
|
(30,417
|
)
|
|
$
|
9,291
|
|
|
31
|
%
|
Other (a)
|
2,343
|
|
|
(975
|
)
|
|
3,318
|
|
|
340
|
%
|
|||
Interest and investment income
|
3,748
|
|
|
3,858
|
|
|
(110
|
)
|
|
(3
|
)%
|
|||
|
$
|
(15,035
|
)
|
|
$
|
(27,534
|
)
|
|
$
|
12,499
|
|
|
45
|
%
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2020
|
|
Thereafter
|
|
Total
|
||||||||||||||
Money market and demand accounts
|
$
|
417,348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
417,348
|
|
Short-term investments
|
$
|
344,953
|
|
|
$
|
327,972
|
|
|
$
|
67,722
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
740,647
|
|
Average Interest rate
|
0.8
|
%
|
|
1.5
|
%
|
|
1.8
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.0
|
%
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
|
PAGE NUMBER
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
SCHEDULES:
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Patent licensing royalties
|
$
|
512,358
|
|
|
$
|
655,360
|
|
|
$
|
432,488
|
|
Technology solutions
|
20,580
|
|
|
10,494
|
|
|
8,947
|
|
|||
Total Revenue
|
532,938
|
|
|
665,854
|
|
|
441,435
|
|
|||
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Patent administration and licensing
|
111,157
|
|
|
113,544
|
|
|
120,401
|
|
|||
Development
|
70,708
|
|
|
68,733
|
|
|
72,702
|
|
|||
Selling, general and administrative
|
49,578
|
|
|
46,271
|
|
|
39,783
|
|
|||
Total Operating Expenses
|
231,443
|
|
|
228,548
|
|
|
232,886
|
|
|||
Income from operations
|
301,495
|
|
|
437,306
|
|
|
208,549
|
|
|||
OTHER EXPENSE (NET)
|
(9,105
|
)
|
|
(15,035
|
)
|
|
(27,534
|
)
|
|||
Income before income taxes
|
292,390
|
|
|
422,271
|
|
|
181,015
|
|
|||
INCOME TAX PROVISION
|
(121,676
|
)
|
|
(116,791
|
)
|
|
(64,621
|
)
|
|||
NET INCOME
|
$
|
170,714
|
|
|
$
|
305,480
|
|
|
$
|
116,394
|
|
Net loss attributable to noncontrolling interest
|
(3,579
|
)
|
|
(3,521
|
)
|
|
(2,831
|
)
|
|||
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.
|
$
|
174,293
|
|
|
$
|
309,001
|
|
|
$
|
119,225
|
|
NET INCOME PER COMMON SHARE — BASIC
|
$
|
5.04
|
|
|
$
|
8.95
|
|
|
$
|
3.31
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
|
34,605
|
|
|
34,526
|
|
|
36,048
|
|
|||
NET INCOME PER COMMON SHARE — DILUTED
|
$
|
4.87
|
|
|
$
|
8.78
|
|
|
$
|
3.27
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
|
35,779
|
|
|
35,189
|
|
|
36,463
|
|
|||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
1.30
|
|
|
$
|
1.00
|
|
|
$
|
0.80
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
$
|
170,714
|
|
|
$
|
305,480
|
|
|
$
|
116,394
|
|
Unrealized loss on investments, net of tax
|
(1,569
|
)
|
|
(336
|
)
|
|
(296
|
)
|
|||
Comprehensive income
|
$
|
169,145
|
|
|
$
|
305,144
|
|
|
$
|
116,098
|
|
Comprehensive loss attributable to noncontrolling interest
|
(3,579
|
)
|
|
(3,521
|
)
|
|
(2,831
|
)
|
|||
Total comprehensive income attributable to InterDigital, Inc.
|
$
|
172,724
|
|
|
$
|
308,665
|
|
|
$
|
118,929
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Retained Earnings
|
|
|
Treasury Stock
|
|
Non-Controlling
Interest
|
|
Total
Shareholders'
Equity
|
|||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE, DECEMBER 31, 2014
|
69,800
|
|
|
$
|
698
|
|
|
$
|
614,162
|
|
|
$
|
757,050
|
|
|
$
|
118
|
|
|
32,880
|
|
|
$
|
(903,700
|
)
|
|
$
|
7,349
|
|
|
$
|
475,677
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
119,225
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119,225
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,358
|
|
|
9,358
|
|
|||||||
Distribution preference
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500
|
)
|
|
(2,500
|
)
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,831
|
)
|
|
(2,831
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(296
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(296
|
)
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
694
|
|
|
(29,242
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,548
|
)
|
|||||||
Exercise of Common Stock options
|
5
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|||||||
Issuance of Common Stock, net
|
325
|
|
|
3
|
|
|
(9,849
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,846
|
)
|
|||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
2,457
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,457
|
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
15,139
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,139
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,836
|
|
|
(96,410
|
)
|
|
—
|
|
|
(96,410
|
)
|
|||||||
Equity Component of Debt, net of tax
|
—
|
|
|
—
|
|
|
38,567
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,567
|
|
|||||||
Convertible note hedge transactions, net of tax
|
—
|
|
|
—
|
|
|
(38,594
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,594
|
)
|
|||||||
Warrant transactions
|
—
|
|
|
—
|
|
|
42,881
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,881
|
|
|||||||
Deferred financing costs allocated to equity
|
—
|
|
|
—
|
|
|
(2,430
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,430
|
)
|
|||||||
BALANCE, DECEMBER 31, 2015
|
70,130
|
|
|
$
|
701
|
|
|
$
|
663,073
|
|
|
$
|
847,033
|
|
|
$
|
(178
|
)
|
|
34,716
|
|
|
$
|
(1,000,110
|
)
|
|
$
|
11,376
|
|
|
$
|
521,895
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
309,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
309,001
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,804
|
|
|
6,804
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,521
|
)
|
|
(3,521
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(336
|
)
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
907
|
|
|
(35,268
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34,361
|
)
|
|||||||
Exercise of Common Stock options and warrants
|
51
|
|
|
1
|
|
|
485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
486
|
|
|||||||
Issuance of Common Stock, net
|
137
|
|
|
1
|
|
|
(3,381
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,380
|
)
|
|||||||
Tax benefit from exercise of stock options
|
—
|
|
|
—
|
|
|
625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
625
|
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
21,840
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,840
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,304
|
|
|
(64,685
|
)
|
|
—
|
|
|
(64,685
|
)
|
|||||||
BALANCE, DECEMBER 31, 2016
|
70,318
|
|
|
$
|
703
|
|
|
$
|
683,549
|
|
|
$
|
1,120,766
|
|
|
$
|
(514
|
)
|
|
36,020
|
|
|
$
|
(1,064,795
|
)
|
|
$
|
14,659
|
|
|
$
|
754,368
|
|
Net income attributable to InterDigital, Inc.
|
—
|
|
|
—
|
|
|
—
|
|
|
174,293
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
174,293
|
|
|||||||
Proceeds from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,801
|
|
|
6,801
|
|
|||||||
Net (loss) income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,579
|
)
|
|
(3,579
|
)
|
|||||||
Net change in unrealized gain on short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,569
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,569
|
)
|
|||||||
Dividends Declared
|
—
|
|
|
—
|
|
|
846
|
|
|
(45,968
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,122
|
)
|
|||||||
Exercise of Common Stock options and warrants
|
9
|
|
|
1
|
|
|
381
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
382
|
|
|||||||
Issuance of Common Stock, net
|
422
|
|
|
3
|
|
|
(22,798
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,795
|
)
|
|||||||
Amortization of unearned compensation
|
—
|
|
|
—
|
|
|
18,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,062
|
|
|||||||
Repurchase of Common Stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|
(7,693
|
)
|
|
—
|
|
|
(7,693
|
)
|
|||||||
BALANCE, DECEMBER 31, 2017
|
70,749
|
|
|
$
|
707
|
|
|
$
|
680,040
|
|
|
$
|
1,249,091
|
|
|
$
|
(2,083
|
)
|
|
36,127
|
|
|
$
|
(1,072,488
|
)
|
|
$
|
17,881
|
|
|
$
|
873,148
|
|
|
FOR THE YEAR ENDED DECEMBER 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
170,714
|
|
|
$
|
305,480
|
|
|
$
|
116,394
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
57,053
|
|
|
52,753
|
|
|
47,793
|
|
|||
Amortization of deferred financing fees and accretion of debt discount
|
13,105
|
|
|
15,252
|
|
|
20,869
|
|
|||
Deferred revenue recognized
|
(394,747
|
)
|
|
(321,313
|
)
|
|
(163,354
|
)
|
|||
Increase in deferred revenue
|
357,855
|
|
|
527,034
|
|
|
113,962
|
|
|||
Deferred income taxes
|
64,950
|
|
|
13,261
|
|
|
(34,770
|
)
|
|||
Share-based compensation
|
18,062
|
|
|
21,840
|
|
|
15,139
|
|
|||
Gain on disposal of assets
|
—
|
|
|
(3,351
|
)
|
|
—
|
|
|||
Other
|
(2
|
)
|
|
(32
|
)
|
|
436
|
|
|||
Decrease (Increase) in assets:
|
|
|
|
|
|
||||||
Receivables
|
12,171
|
|
|
(169,927
|
)
|
|
(2,166
|
)
|
|||
Deferred charges and other assets
|
19,426
|
|
|
(15,222
|
)
|
|
8,489
|
|
|||
(Decrease) Increase in liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
(3,789
|
)
|
|
(5,564
|
)
|
|
2,503
|
|
|||
Accrued compensation and other expenses
|
(3,218
|
)
|
|
5,155
|
|
|
(2,448
|
)
|
|||
Accrued taxes payable and other tax contingencies
|
4,220
|
|
|
8,793
|
|
|
1,501
|
|
|||
Net cash provided by operating activities
|
315,800
|
|
|
434,159
|
|
|
124,348
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of short-term investments
|
(930,016
|
)
|
|
(560,075
|
)
|
|
(643,087
|
)
|
|||
Sales of short-term investments
|
751,308
|
|
|
434,510
|
|
|
495,201
|
|
|||
Purchases of property and equipment
|
(2,071
|
)
|
|
(5,882
|
)
|
|
(3,700
|
)
|
|||
Capitalized patent costs
|
(34,933
|
)
|
|
(32,658
|
)
|
|
(29,766
|
)
|
|||
Acquisition of patents
|
—
|
|
|
(4,900
|
)
|
|
(20,000
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(48,000
|
)
|
|
—
|
|
|||
Long-term investments
|
(4,585
|
)
|
|
(2,000
|
)
|
|
(12,623
|
)
|
|||
Net cash used in investing activities
|
(220,297
|
)
|
|
(219,005
|
)
|
|
(213,975
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from exercise of stock options
|
382
|
|
|
485
|
|
|
46
|
|
|||
Proceeds from issuance of senior convertible notes
|
—
|
|
|
—
|
|
|
316,000
|
|
|||
Payments on long-term debt
|
—
|
|
|
(230,000
|
)
|
|
—
|
|
|||
Proceeds from other financing activities
|
—
|
|
|
—
|
|
|
(59,376
|
)
|
|||
Purchase of convertible bond hedge
|
—
|
|
|
—
|
|
|
4,500
|
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
—
|
|
|
42,881
|
|
|||
Payments of debt issuance costs
|
—
|
|
|
—
|
|
|
(9,403
|
)
|
|||
Proceeds from non-controlling interests
|
6,801
|
|
|
6,804
|
|
|
9,358
|
|
|||
Dividends paid
|
(43,255
|
)
|
|
(31,135
|
)
|
|
(28,937
|
)
|
|||
Shares withheld for taxes
|
(22,798
|
)
|
|
(3,381
|
)
|
|
(9,849
|
)
|
|||
Tax benefit from share-based compensation
|
—
|
|
|
625
|
|
|
2,457
|
|
|||
Repurchase of common stock
|
(7,693
|
)
|
|
(64,685
|
)
|
|
(96,410
|
)
|
|||
Net cash (used in) provided by financing activities
|
(66,563
|
)
|
|
(321,287
|
)
|
|
171,267
|
|
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
28,940
|
|
|
(106,133
|
)
|
|
81,640
|
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
404,074
|
|
|
510,207
|
|
|
428,567
|
|
|||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
433,014
|
|
|
$
|
404,074
|
|
|
$
|
510,207
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Interest paid
|
4,740
|
|
|
7,615
|
|
|
7,988
|
|
|||
Income taxes paid, including foreign withholding taxes
|
66,793
|
|
|
108,635
|
|
|
85,780
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|||
Dividend payable
|
12,156
|
|
|
10,290
|
|
|
7,068
|
|
|||
Non-cash acquisition of patents
|
32,500
|
|
|
7,900
|
|
|
24,123
|
|
|||
Accrued capitalized patent costs and acquisition of patents
|
1
|
|
|
(146
|
)
|
|
18,155
|
|
1.
|
BACKGROUND
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Money market and demand accounts
|
$
|
417,348
|
|
|
$
|
404,074
|
|
Commercial paper
|
15,666
|
|
|
—
|
|
||
|
$
|
433,014
|
|
|
$
|
404,074
|
|
|
December 31, 2017
|
||||||||||||||
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
66,132
|
|
|
—
|
|
|
—
|
|
|
66,132
|
|
||||
U.S. government securities
|
513,645
|
|
|
—
|
|
|
(2,613
|
)
|
|
511,032
|
|
||||
Corporate bonds, asset backed and other securities
|
164,075
|
|
|
35
|
|
|
(627
|
)
|
|
163,483
|
|
||||
Total available-for-sale securities
|
$
|
743,852
|
|
|
$
|
35
|
|
|
$
|
(3,240
|
)
|
|
$
|
740,647
|
|
Reported in:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
15,666
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
724,981
|
|
|||||||
Total marketable securities
|
|
|
|
|
|
|
$
|
740,647
|
|
|
December 31, 2016
|
||||||||||||||
|
Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
113,490
|
|
|
—
|
|
|
—
|
|
|
113,490
|
|
||||
U.S. government securities
|
224,583
|
|
|
9
|
|
|
(262
|
)
|
|
224,330
|
|
||||
Corporate bonds, asset backed and other securities
|
211,406
|
|
|
28
|
|
|
(567
|
)
|
|
210,867
|
|
||||
Total available-for-sale securities
|
$
|
549,479
|
|
|
$
|
37
|
|
|
$
|
(829
|
)
|
|
$
|
548,687
|
|
Reported in:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
—
|
|
||||||
Short-term investments
|
|
|
|
|
|
|
548,687
|
|
|||||||
Total marketable securities
|
|
|
|
|
|
|
$
|
548,687
|
|
|
Fair Value as of December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
417,348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
417,348
|
|
Commercial paper (b)
|
—
|
|
|
66,132
|
|
|
—
|
|
|
66,132
|
|
||||
U.S. government securities
|
—
|
|
|
511,032
|
|
|
—
|
|
|
511,032
|
|
||||
Corporate bonds, asset backed and other securities
|
—
|
|
|
163,483
|
|
|
—
|
|
|
163,483
|
|
||||
|
$
|
417,348
|
|
|
$
|
740,647
|
|
|
$
|
—
|
|
|
$
|
1,157,995
|
|
(a)
|
Included within cash and cash equivalents.
|
(b)
|
Includes
$15.7 million
of commercial paper that is included within cash and cash equivalents.
|
|
Fair Value as of December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market and demand accounts (a)
|
$
|
404,074
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
404,074
|
|
Commercial paper
|
—
|
|
|
113,490
|
|
|
—
|
|
|
113,490
|
|
||||
U.S. government securities
|
—
|
|
|
224,330
|
|
|
—
|
|
|
224,330
|
|
||||
Corporate bonds and asset backed securities
|
—
|
|
|
210,867
|
|
|
—
|
|
|
210,867
|
|
||||
|
$
|
404,074
|
|
|
$
|
548,687
|
|
|
$
|
—
|
|
|
$
|
952,761
|
|
(a)
|
Included within cash and cash equivalents.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Principal
Amount
|
|
Carrying
Value
|
|
Fair
Value
|
|
Principal
Amount
|
|
Carrying
Value |
|
Fair
Value
|
||||||||||||
Total Long-Term Debt
|
$
|
316,000
|
|
|
$
|
285,126
|
|
|
$
|
377,029
|
|
|
$
|
316,000
|
|
|
$
|
272,021
|
|
|
$
|
428,575
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Weighted average estimated useful life (years)
|
10.0
|
|
|
9.9
|
|
||
Gross patents
|
$
|
660,886
|
|
|
$
|
593,309
|
|
Accumulated amortization
|
(335,478
|
)
|
|
(282,541
|
)
|
||
Patents, net
|
$
|
325,408
|
|
|
$
|
310,768
|
|
2018
|
$
|
53,547
|
|
2019
|
50,672
|
|
|
2020
|
45,871
|
|
|
2021
|
41,272
|
|
|
2022
|
38,654
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Average Life
(Years)
|
|
Gross Assets
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Assets
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Trade Names
|
9
|
|
$
|
600
|
|
|
$
|
(67
|
)
|
|
$
|
533
|
|
|
$
|
600
|
|
|
$
|
—
|
|
|
$
|
600
|
|
Customer Relationships
|
10
|
|
1,700
|
|
|
(170
|
)
|
|
1,530
|
|
|
1,700
|
|
|
—
|
|
|
1,700
|
|
||||||
|
|
|
$
|
2,300
|
|
|
$
|
(237
|
)
|
|
$
|
2,063
|
|
(a)
|
$
|
2,300
|
|
|
$
|
—
|
|
|
$
|
2,300
|
|
2018
|
$
|
237
|
|
2019
|
237
|
|
|
2020
|
237
|
|
|
2021
|
237
|
|
|
2022
|
237
|
|
|
Thereafter
|
878
|
|
|
|
$
|
2,063
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Prepaid and other current assets
|
|
|
|
|
|
||
Deferred commission expense
|
$
|
59
|
|
|
$
|
187
|
|
Other non-current assets
|
|
|
|
|
|
||
Deferred commission expense
|
48
|
|
|
181
|
|
||
Long-term debt (including current portion of long-term debt)
|
|
|
|
||||
Deferred financing costs
|
3,011
|
|
|
4,401
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
||||||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income applicable to common shareholders
|
$
|
174,293
|
|
|
$
|
174,293
|
|
|
$
|
309,001
|
|
|
$
|
309,001
|
|
|
$
|
119,225
|
|
|
$
|
119,225
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted-average shares outstanding: Basic
|
34,605
|
|
|
34,605
|
|
|
34,526
|
|
|
34,526
|
|
|
36,048
|
|
|
36,048
|
|
||||||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
1,174
|
|
|
|
|
663
|
|
|
|
|
415
|
|
|||||||||
Weighted-average shares outstanding: Diluted
|
|
|
35,779
|
|
|
|
|
35,189
|
|
|
|
|
36,463
|
|
|||||||||
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income: Basic
|
$
|
5.04
|
|
|
5.04
|
|
|
$
|
8.95
|
|
|
8.95
|
|
|
$
|
3.31
|
|
|
3.31
|
|
|||
Dilutive effect of stock options, RSUs and convertible securities
|
|
|
(0.17
|
)
|
|
|
|
(0.17
|
)
|
|
|
|
(0.04
|
)
|
|||||||||
Net income: Diluted
|
|
|
$
|
4.87
|
|
|
|
|
$
|
8.78
|
|
|
|
|
$
|
3.27
|
|
|
|
For the Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Restricted stock units and stock options
|
|
19
|
|
|
110
|
|
|
211
|
|
Convertible securities
|
|
—
|
|
|
4,366
|
|
|
7,656
|
|
Warrants
|
|
—
|
|
|
6,534
|
|
|
7,656
|
|
Total
|
|
19
|
|
|
11,010
|
|
|
15,523
|
|
|
December 31, 2017
|
|
Static Fixed-Fee Agreements
|
Static Prepayments
|
Elimination of Quarter-Lag Reporting
|
Significant Financing Component
|
Related Tax Effects and Other Balance Sheet Impact
|
|
Total Adjustments
|
|
January 1, 2018
|
||||||||||||||||
Accounts Receivable
|
$
|
216,293
|
|
|
$
|
6,000
|
|
$
|
—
|
|
$
|
10,957
|
|
$
|
—
|
|
$
|
(30,000
|
)
|
|
$
|
(13,043
|
)
|
|
$
|
203,250
|
|
Deferred Tax Assets
|
84,582
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(42,362
|
)
|
|
(42,362
|
)
|
|
42,220
|
|
||||||||
Taxes Payable
|
14,881
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,184
|
)
|
|
(1,184
|
)
|
|
13,697
|
|
||||||||
Deferred Revenue
|
(616,813
|
)
|
|
99,466
|
|
85,146
|
|
—
|
|
3,235
|
|
30,000
|
|
|
217,847
|
|
|
(398,966
|
)
|
||||||||
Retained Earnings
|
(1,249,091
|
)
|
|
(105,466
|
)
|
(85,146
|
)
|
(10,957
|
)
|
(3,235
|
)
|
43,546
|
|
|
(161,258
|
)
|
|
(1,410,349
|
)
|
|
GAAP as of December 31, 2017
|
|
ASC 606
|
||||
2018
|
$
|
307,142
|
|
|
$
|
184,272
|
|
2019
|
210,128
|
|
|
93,237
|
|
||
2020
|
2,618
|
|
|
69,047
|
|
||
2021
|
1,760
|
|
|
45,769
|
|
||
2022
|
1,245
|
|
|
—
|
|
||
Thereafter
|
2,133
|
|
|
—
|
|
||
|
$
|
525,026
|
|
|
$
|
392,325
|
|
3.
|
SIGNIFICANT AGREEMENTS
|
|
2017
|
|
2016
|
|
2015
|
|||
Apple (a)
|
21
|
%
|
|
25
|
%
|
|
—
|
%
|
Huawei (b)
|
14
|
%
|
|
23
|
%
|
|
—
|
%
|
Samsung
|
13
|
%
|
|
10
|
%
|
|
16
|
%
|
Blackberry (c)
|
13
|
%
|
|
< 10%
|
|
|
< 10%
|
|
Pegatron
|
< 10%
|
|
|
20
|
%
|
|
31
|
%
|
Sony (d)
|
< 10%
|
|
|
< 10%
|
|
|
14
|
%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Computer equipment and software
|
$
|
20,003
|
|
|
$
|
18,480
|
|
Engineering and test equipment
|
4,034
|
|
|
3,767
|
|
||
Building and improvements
|
3,624
|
|
|
3,576
|
|
||
Leasehold improvements
|
9,711
|
|
|
9,692
|
|
||
Furniture and fixtures
|
1,279
|
|
|
1,247
|
|
||
Property and equipment, gross
|
38,651
|
|
|
36,762
|
|
||
Less: accumulated depreciation
|
(27,978
|
)
|
|
(24,136
|
)
|
||
Property and equipment, net
|
$
|
10,673
|
|
|
$
|
12,626
|
|
6.
|
OBLIGATIONS
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
1.50% Senior Convertible Notes due 2020
|
$
|
316,000
|
|
|
$
|
316,000
|
|
Less:
|
|
|
|
||||
Unamortized interest discount
|
(27,863
|
)
|
|
(39,578
|
)
|
||
Deferred financing costs
|
(3,011
|
)
|
|
(4,401
|
)
|
||
Total debt obligations
|
285,126
|
|
|
272,021
|
|
||
Less: Current portion of long-term debt
|
—
|
|
|
—
|
|
||
Long-term debt obligations
|
$
|
285,126
|
|
|
$
|
272,021
|
|
2018
|
$
|
—
|
|
2019
|
—
|
|
|
2020
|
316,000
|
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
316,000
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Contractual coupon interest
|
|
$
|
4,740
|
|
|
$
|
6,178
|
|
|
$
|
9,568
|
|
Accretion of debt discount
|
|
11,715
|
|
|
13,536
|
|
|
18,384
|
|
|||
Amortization of financing costs
|
|
1,390
|
|
|
1,716
|
|
|
2,485
|
|
|||
Total
|
|
$
|
17,845
|
|
|
$
|
21,430
|
|
|
$
|
30,437
|
|
7.
|
COMMITMENTS
|
2018
|
$
|
4,784
|
|
2019
|
4,499
|
|
|
2020
|
2,918
|
|
|
2021
|
2,377
|
|
|
2022
|
2,131
|
|
|
Thereafter
|
4,741
|
|
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 a worldwide portfolio license of only its standards-essential wireless patents, and comply with F/RAND principles when negotiating and entering into such licensing agreements with Chinese Manufacturers.
|
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.
|
9.
|
COMPENSATION PLANS AND PROGRAMS
|
|
Available for Grant
|
|
Balance at December 31, 2016
|
1,236
|
|
RSUs granted (a)
|
(295
|
)
|
Options granted
|
(25
|
)
|
Options expired and RSUs canceled
|
246
|
|
Balance at June 14, 2017
|
1,162
|
|
Remaining available shares canceled under 2009 Plan
|
(1,162
|
)
|
Shares authorized under 2017 Plan
|
2,400
|
|
RSUs granted (a)
|
(8
|
)
|
Options expired and RSUs canceled
|
11
|
|
Balance at December 31, 2017
|
2,403
|
|
(a)
|
RSUs granted include time-based RSUs, performance-based RSUs and dividend equivalents credited.
|
|
Number of
Unvested
RSUs
|
|
Weighted
Average Per Share
Grant Date
Fair Value
|
|||
Balance at December 31, 2016
|
1,398
|
|
|
$
|
46.65
|
|
Granted*
|
317
|
|
|
58.63
|
|
|
Forfeited*
|
(22
|
)
|
|
63.30
|
|
|
Vested*
|
(688
|
)
|
|
35.14
|
|
|
Balance at December 31, 2017
|
1,005
|
|
|
$
|
57.95
|
|
|
Outstanding Options
|
|
Weighted
Average Exercise Price |
|||
Balance at December 31, 2016
|
515
|
|
|
$
|
37.38
|
|
Granted
|
25
|
|
|
85.85
|
|
|
Canceled
|
—
|
|
|
—
|
|
|
Exercised
|
(9
|
)
|
|
44.20
|
|
|
Balance at December 31, 2017
|
531
|
|
|
$
|
39.55
|
|
10.
|
TAXES
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
3,656
|
|
|
$
|
14,637
|
|
|
$
|
42,181
|
|
State
|
(1
|
)
|
|
(60
|
)
|
|
415
|
|
|||
Foreign source withholding tax
|
47,592
|
|
|
79,932
|
|
|
55,276
|
|
|||
|
51,247
|
|
|
94,509
|
|
|
97,872
|
|
|||
Deferred
|
|
|
|
|
|
|
|
|
|||
Federal
|
21,671
|
|
|
(48,086
|
)
|
|
(89,026
|
)
|
|||
State
|
(1,074
|
)
|
|
(557
|
)
|
|
554
|
|
|||
Foreign source withholding tax
|
49,832
|
|
|
70,925
|
|
|
55,221
|
|
|||
|
70,429
|
|
|
22,282
|
|
|
(33,251
|
)
|
|||
Total
|
$
|
121,676
|
|
|
$
|
116,791
|
|
|
$
|
64,621
|
|
|
2017
|
||||||||||||||
|
Federal
|
|
State
|
|
Foreign
|
|
Total
|
||||||||
Net operating losses
|
$
|
1,804
|
|
|
$
|
122,364
|
|
|
$
|
988
|
|
|
$
|
125,156
|
|
Deferred revenue, net
|
9,058
|
|
|
35
|
|
|
29,189
|
|
|
38,282
|
|
||||
Stock compensation
|
6,643
|
|
|
2,293
|
|
|
—
|
|
|
8,936
|
|
||||
Patent amortization
|
16,052
|
|
|
7
|
|
|
—
|
|
|
16,059
|
|
||||
Depreciation
|
(214
|
)
|
|
(65
|
)
|
|
—
|
|
|
(279
|
)
|
||||
Other-than-temporary impairment
|
379
|
|
|
71
|
|
|
—
|
|
|
450
|
|
||||
Other accrued liabilities
|
268
|
|
|
(26
|
)
|
|
—
|
|
|
242
|
|
||||
Other employee benefits
|
3,449
|
|
|
649
|
|
|
—
|
|
|
4,098
|
|
||||
|
37,439
|
|
|
125,328
|
|
|
30,177
|
|
|
192,944
|
|
||||
Less: valuation allowance
|
(1,773
|
)
|
|
(121,155
|
)
|
|
(988
|
)
|
|
(123,916
|
)
|
||||
Net deferred tax asset
|
$
|
35,666
|
|
|
$
|
4,173
|
|
|
$
|
29,189
|
|
|
$
|
69,028
|
|
|
2016
|
||||||||||||||
|
Federal
|
|
State
|
|
Foreign
|
|
Total
|
||||||||
Net operating losses
|
$
|
—
|
|
|
$
|
89,162
|
|
|
$
|
463
|
|
|
$
|
89,625
|
|
Deferred revenue, net
|
60,320
|
|
|
288
|
|
|
31,686
|
|
|
92,294
|
|
||||
Stock compensation
|
12,648
|
|
|
2,038
|
|
|
—
|
|
|
14,686
|
|
||||
Patent amortization
|
24,145
|
|
|
—
|
|
|
—
|
|
|
24,145
|
|
||||
Depreciation
|
(502
|
)
|
|
(70
|
)
|
|
—
|
|
|
(572
|
)
|
||||
Other accrued liabilities
|
4,483
|
|
|
321
|
|
|
—
|
|
|
4,804
|
|
||||
Other-than-temporary impairment
|
558
|
|
|
61
|
|
|
—
|
|
|
619
|
|
||||
Other employee benefits
|
2,524
|
|
|
275
|
|
|
—
|
|
|
2,799
|
|
||||
|
104,176
|
|
|
92,075
|
|
|
32,149
|
|
|
228,400
|
|
||||
Less: valuation allowance
|
—
|
|
|
(89,352
|
)
|
|
(463
|
)
|
|
(89,815
|
)
|
||||
Net deferred tax asset
|
$
|
104,176
|
|
|
$
|
2,723
|
|
|
$
|
31,686
|
|
|
$
|
138,585
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Tax at U.S. statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State tax provision
|
—
|
%
|
|
(0.1
|
)%
|
|
0.5
|
%
|
Change in federal and state valuation allowance
|
0.5
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Research and development tax credits
|
(0.8
|
)%
|
|
(0.5
|
)%
|
|
(1.2
|
)%
|
Uncertain tax positions
|
(2.4
|
)%
|
|
2.1
|
%
|
|
—
|
%
|
Permanent differences
|
1.0
|
%
|
|
0.6
|
%
|
|
1.2
|
%
|
Domestic production activities deduction
|
(2.0
|
)%
|
|
(9.8
|
)%
|
|
—
|
%
|
Stock compensation
|
(4.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
Rate change (a)
|
14.6
|
%
|
|
—
|
%
|
|
—
|
%
|
Other
|
(0.3
|
)%
|
|
0.3
|
%
|
|
0.2
|
%
|
Total tax provision (b)
|
41.6
|
%
|
|
27.7
|
%
|
|
35.7
|
%
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance as of January 1
|
$
|
10,397
|
|
|
$
|
1,469
|
|
|
$
|
1,361
|
|
Tax positions related to current year:
|
|
|
|
|
|
|
|
|
|||
Additions
|
1,009
|
|
|
3,209
|
|
|
141
|
|
|||
Reductions
|
—
|
|
|
—
|
|
|
—
|
|
|||
Tax positions related to prior years:
|
|
|
|
|
|
||||||
Additions
|
—
|
|
|
6,281
|
|
|
—
|
|
|||
Reductions
|
(1,610
|
)
|
|
—
|
|
|
(33
|
)
|
|||
Settlements
|
(6,544
|
)
|
|
(562
|
)
|
|
—
|
|
|||
Lapses in statues of limitations
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance as of December 31
|
$
|
3,252
|
|
|
$
|
10,397
|
|
|
$
|
1,469
|
|
11.
|
EQUITY TRANSACTIONS
|
2017
|
Per Share
|
|
Total
|
|
Cumulative by Fiscal Year
|
||||||
First quarter
|
$
|
0.30
|
|
|
$
|
10,404
|
|
|
$
|
10,404
|
|
Second quarter
|
0.30
|
|
|
10,413
|
|
|
20,817
|
|
|||
Third quarter
|
0.35
|
|
|
12,149
|
|
|
32,966
|
|
|||
Fourth quarter
|
0.35
|
|
|
12,156
|
|
|
45,122
|
|
|||
|
$
|
1.30
|
|
|
$
|
45,122
|
|
|
|
||
|
|
|
|
|
|
||||||
2016
|
|
|
|
|
|
||||||
First quarter
|
$
|
0.20
|
|
|
$
|
6,923
|
|
|
$
|
6,923
|
|
Second quarter
|
0.20
|
|
|
6,861
|
|
|
13,784
|
|
|||
Third quarter
|
0.30
|
|
|
10,285
|
|
|
24,069
|
|
|||
Fourth quarter
|
0.30
|
|
|
10,290
|
|
|
34,359
|
|
|||
|
$
|
1.00
|
|
|
$
|
34,359
|
|
|
|
12.
|
OTHER (EXPENSE) INCOME
|
|
For the Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Interest expense
|
$
|
(17,845
|
)
|
|
$
|
(21,126
|
)
|
|
$
|
(30,417
|
)
|
Interest and investment income
|
8,488
|
|
|
3,748
|
|
|
3,858
|
|
|||
Other
|
252
|
|
|
2,343
|
|
|
(975
|
)
|
|||
|
$
|
(9,105
|
)
|
|
$
|
(15,035
|
)
|
|
$
|
(27,534
|
)
|
13.
|
SELECTED QUARTERLY RESULTS (UNAUDITED)
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(In thousands, except per share amounts, unaudited)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (a)
|
$
|
94,530
|
|
|
$
|
135,779
|
|
|
$
|
97,325
|
|
|
$
|
205,304
|
|
Net income applicable to InterDigital, Inc.'s common shareholders
|
$
|
33,756
|
|
|
$
|
52,499
|
|
|
$
|
35,536
|
|
|
$
|
52,502
|
|
Net income per common share — basic
|
$
|
0.98
|
|
|
$
|
1.51
|
|
|
$
|
1.02
|
|
|
$
|
1.52
|
|
Net income per common share — diluted
|
$
|
0.93
|
|
|
$
|
1.46
|
|
|
$
|
1.00
|
|
|
$
|
1.48
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues (b)
|
$
|
107,764
|
|
|
$
|
75,915
|
|
|
$
|
208,307
|
|
|
$
|
273,868
|
|
Net income applicable to InterDigital, Inc.'s common shareholders
|
$
|
28,071
|
|
|
$
|
39,994
|
|
|
$
|
104,466
|
|
|
$
|
136,470
|
|
Net income per common share — basic
|
$
|
0.80
|
|
|
$
|
1.16
|
|
|
$
|
3.05
|
|
|
$
|
3.98
|
|
Net income per common share — diluted
|
$
|
0.79
|
|
|
$
|
1.14
|
|
|
$
|
2.99
|
|
|
$
|
3.85
|
|
|
Amount
|
|
Estimated Useful Life (Years)
|
||
Net tangible assets and liabilities:
|
|
|
|
||
Deferred tax assets and liabilities
|
$
|
2,221
|
|
|
|
Net working capital
|
(8,754
|
)
|
|
|
|
|
$
|
(6,533
|
)
|
|
|
Identified intangible assets:
|
|
|
|
||
Patents/existing technology
|
$
|
36,200
|
|
|
9 - 10
|
Trade name
|
600
|
|
|
9
|
|
Customer relationships
|
1,700
|
|
|
10
|
|
Goodwill
|
16,033
|
|
|
N/A
|
|
|
$
|
54,533
|
|
|
|
|
|
|
|
||
Total purchase price
|
$
|
48,000
|
|
|
|
|
Revenue
|
|
Earnings
|
||||
Actual for the year ended December 31, 2016
|
$
|
665,854
|
|
|
$
|
309,001
|
|
Actual for the year ended December 31, 2015
|
$
|
441,435
|
|
|
$
|
119,225
|
|
Supplemental pro forma for the year ended December 31, 2016
|
$
|
672,695
|
|
|
$
|
305,237
|
|
Supplemental pro forma for the year ended December 31, 2015
|
$
|
451,853
|
|
|
$
|
109,834
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
Item 9A.
|
CONTROLS AND PROCEDURES.
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorization of management and directors of the company; and
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the consolidated financial statements.
|
Item 9B.
|
OTHER INFORMATION.
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
Item 11.
|
EXECUTIVE COMPENSATION.
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
|
Balance Beginning
of Period
|
|
Increase/
(Decrease)
|
|
Reversal of
Valuation
Allowance
|
|
Balance End
of Period
|
||||||||
2017 valuation allowance for deferred tax assets
|
$
|
89,815
|
|
|
$
|
34,430
|
|
(a)
|
$
|
(329
|
)
|
|
$
|
123,916
|
|
2016 valuation allowance for deferred tax assets
|
$
|
81,893
|
|
|
$
|
7,922
|
|
(b)
|
$
|
—
|
|
|
$
|
89,815
|
|
2015 valuation allowance for deferred tax assets
|
$
|
71,679
|
|
|
$
|
10,214
|
|
(b)
|
$
|
—
|
|
|
$
|
81,893
|
|
2017 reserve for uncollectible accounts
|
$
|
—
|
|
|
$
|
456
|
|
|
$
|
—
|
|
|
$
|
456
|
|
2016 reserve for uncollectible accounts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2015 reserve for uncollectible accounts
|
$
|
1,654
|
|
|
$
|
(1,654
|
)
|
(c)
|
$
|
—
|
|
|
$
|
—
|
|
(a)
|
The increase was primarily a result of the Tax Cut and Jobs Act signed into law in December of 2017. There was also a release of a state VA during the year that ran through tax expense. The remainder of the increase was necessary to maintain a full, or near full, valuation allowance against our state deferred tax assets and did not result in additional tax expense.
|
(b)
|
The increase was primarily necessary to maintain a full, or near full, valuation allowance against our state deferred tax assets and did not result in additional tax expense.
|
(c)
|
The decrease relates to the reversal of a bad debt reserve as a result of a settlement agreement with a technology solutions customer.
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
*3.1
|
|
|
|
*3.2
|
|
|
|
*4.1
|
|
|
|
*4.2
|
|
|
|
*4.3
|
|
|
|
|
|
Real Estate Leases
|
|
*10.1
|
|
|
|
|
|
Benefit Plans
|
|
†*10.2
|
|
Non-Qualified Stock Option Plan, as amended (Exhibit 10.4 to InterDigital's Annual Report on Form 10-K for the year ended December 31, 1991). (P)
|
|
†*10.3
|
|
|
|
†*10.4
|
|
|
|
†*10.5
|
|
|
|
†*10.6
|
|
|
|
†*10.7
|
|
|
|
†*10.8
|
|
|
|
†*10.9
|
|
|
|
†*10.10
|
|
|
|
†*10.11
|
|
|
|
†*10.12
|
|
|
|
†*10.13
|
|
|
|
†*10.14
|
|
|
|
†*10.15
|
|
|
|
†*10.16
|
|
|
|
†*10.17
|
|
|
|
†10.18
|
|
|
|
†*10.19
|
|
|
|
†*10.20
|
|
|
|
†*10.21
|
|
|
|
†*10.22
|
|
|
|
|
|
Employment-Related Agreements
|
|
†*10.23
|
|
|
|
†*10.24
|
|
|
|
†*10.25
|
|
|
|
†*10.26
|
|
|
|
†*10.27
|
|
|
|
†*10.28
|
|
|
|
†*10.29
|
|
|
|
†*10.30
|
|
|
|
|
|
Other Material Contracts
|
|
*10.31
|
|
|
|
*10.32
|
|
|
|
21
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
32.2
|
|
|
|
101
|
|
The following financial information from InterDigital's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 22, 2018, formatted in eXtensible Business Reporting Language:
(i) Consolidated Balance Sheets at December 31, 2017 and December 31, 2016, (ii) Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015, (iv) Consolidated Statements of Shareholders' Equity for the years ended December 31, 2017, 2016 and 2015, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements. |
*
|
Incorporated by reference to the previous filing indicated.
|
†
|
Management contract or compensatory plan or arrangement.
|
+
|
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.
|
|
|
|
Date: February 22, 2018
|
By:
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
Date: February 22, 2018
|
/s/ S. Douglas Hutcheson
|
|
S. Douglas Hutcheson, Chairman of the Board of Directors
|
|
|
Date: February 22, 2018
|
/s/ Jeffrey K. Belk
|
|
Jeffrey K. Belk, Director
|
|
|
Date: February 22, 2018
|
/s/ Joan H. Gillman
|
|
Joan H. Gillman, Director
|
|
|
Date: February 22, 2018
|
/s/ John A. Kritzmacher
|
|
John A. Kritzmacher, Director
|
|
|
Date: February 22, 2018
|
/s/ John D. Markley, Jr.
|
|
John D. Markley, Jr., Director
|
|
|
Date: February 22, 2018
|
/s/ Kai O. Öistämö
|
|
Kai O. Öistämö, Director
|
|
|
Date: February 22, 2018
|
/s/ Jean F. Rankin
|
|
Jean F. Rankin, Director
|
|
|
Date: February 22, 2018
|
/s/ Philip P. Trahanas
|
|
Philip P. Trahanas, Director
|
|
|
Date: February 22, 2018
|
/s/ William J. Merritt
|
|
William J. Merritt, Director, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Date: February 22, 2018
|
/s/ Richard J. Brezski
|
|
Richard J. Brezski, Chief Financial Officer
|
|
(Principal Financial Officer)
|
Vesting Schedule:
|
The Award vests on %%VEST_DATE_PERIOD1,’Month DD, YYYY’%-%, if at all, subject to Participant continuing to be a Service Provider through such date, provided that the Award may vest earlier pursuant to the Standard Terms and Conditions (the date on which all or a portion of the Award vests, the “Vesting Date”).
|
Pro-rated Vesting:
|
If Participant’s status as a Service Provider is terminated by reason of Participant’s death or Disability, the Award will become cumulatively vested as to a prorated portion. Such pro-rata portion will be determined by multiplying the total number of Restricted Stock Units by the fraction equal to the number of days during the period beginning on the Grant Date and ending on the original Vesting Date (the “Restricted Period”) for which Participant was a Service Provider divided by the total number of days during the Restricted Period.
|
Accelerated Vesting:
|
Upon a Change in Control, 100% of the then-unvested portion of the Award will vest.
|
|
|
|
|
Subsidiary
|
Jurisdiction / State of Incorporation or Organization
|
|
|
DRNC Holdings, Inc.
|
Delaware
|
DST Holdings, Inc.
|
Delaware
|
Hillcrest Laboratories, Inc.
|
Delaware
|
IDAC Holdings, Inc.
|
Delaware
|
IDHL Holdings, Inc.
|
Delaware
|
IDLR Holdings, Inc.
|
Delaware
|
IDPA Holdings, Inc.
|
Delaware
|
IDTP Holdings, Inc.
|
Delaware
|
InterDigital Administrative Solutions, Inc.
|
Pennsylvania
|
InterDigital Asia Limited
|
South Korea
|
InterDigital Belgium, LLC
|
Delaware
|
InterDigital Canada Ltee.
|
Delaware
|
InterDigital Capital, Inc.
|
Delaware
|
InterDigital Communications, Inc.
|
Delaware
|
InterDigital Europe, Ltd.
|
United Kingdom
|
InterDigital Germany GmbH
|
Germany
|
InterDigital Holdings, Inc.
|
Delaware
|
InterDigital International, Inc.
|
Delaware
|
InterDigital Patent Holdings, Inc.
|
Delaware
|
InterDigital Technology Corporation
|
Delaware
|
InterDigital Ventures Management, Inc.
|
Delaware
|
IoT Holdings, Inc.
|
Delaware
|
IPR Licensing, Inc.
|
Delaware
|
Logiciels XcellAir Canada Ltee.
|
Quebec, Canada
|
NexStar Capital, LLC
|
Delaware
|
NexStar Partners GP, L.P.
|
Delaware
|
NexStar Partners, L.P.
|
Delaware
|
NexStar Strategic Investments, LLC
|
Delaware
|
PCMS Holdings, Inc.
|
Delaware
|
Signal Foundation for Wireless Innovation, Inc.
|
Delaware
|
VID SCALE, Inc.
|
Delaware
|
XCellAir, Inc.
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K 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: February 22, 2018
|
/s/ William J. Merritt
|
|
|
William J. Merritt
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Annual Report on Form 10-K 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: February 22, 2018
|
/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: February 22, 2018
|
/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: February 22, 2018
|
/s/ Richard J. Brezski
|
|
|
Richard J. Brezski
|
|
|
Chief Financial Officer
|
|