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What changed in Adeia Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Adeia Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+271 added−319 removedSource: 10-K (2024-02-23) vs 10-K (2023-03-01)

Top changes in Adeia Inc.'s 2023 10-K

271 paragraphs added · 319 removed · 224 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

25 edited+7 added−5 removed29 unchanged
Biggest changeOur ongoing investment in R&D, which is supported by a strong industry network of partners, enables us to deliver differentiated, cost-effective solutions that enhance the end-user experience in our growing addressable markets. We continue to focus our R&D efforts on IP development and next generation technology solutions, including semiconductor hardware research, machine learning and advanced algorithm development.
Biggest changeWe continue to focus our R&D efforts on IP development and next generation technology solutions, including semiconductor hardware research, machine learning, generative AI and advanced algorithm development. Our R&D projects follow a forward-looking technology roadmap and execute a pragmatic technology strategy to position us with a sustainable competitive advantage for decades to come.
In licensing our patent portfolios, we compete with other patent holders for a share of the licensing fees that comprise the total potential revenue that is supported by a certain service or product. Protecting Our Investment We operate in an industry in which innovation, investment in new ideas and protection of our IP rights are critical for success.
In licensing our patent portfolios, we compete with other patent holders for a share of the licensing fees that comprise the total potential revenue that is supported by a certain service or product. 7 Protecting Our Investment We operate in an industry in which innovation, investment in new ideas and protection of our IP rights are critical for success.
Our media portfolio covers fundamental aspects of the entertainment experience across platforms, including how users search, record, stream, discover, consume, personalize and interact with content. Many of our media solutions have become ubiquitous across the industry and are being incorporated into emerging solutions that span new and adjacent markets.
Our media portfolio covers fundamental aspects of the entertainment experience across platforms, including how users search, save, stream, discover, consume, personalize and interact with content. Many of our media solutions have become ubiquitous across the industry and are being incorporated into emerging solutions that span new and adjacent markets.
We license our patented media innovations for use with traditional linear television, both in North America and internationally, as well as in connection with OTT, direct-to-consumer and social media services that provide access to entertainment inside and outside the home on a broad array of devices.
We license our patented media innovations for use with traditional linear television, both in North America and internationally, as well as in connection with OTT and social media services that provide access to entertainment inside and outside the home on a broad array of devices.
As of December 31, 2022, we had a talent base consisting of approximately 120 full-time employees, with substantially all of our employees located in the U.S. To enable our talent to actively contribute to, and have a positive impact on, our overall business and culture, we develop and maintain a set of programs and initiatives.
As of December 31, 2023, we had a talent base consisting of approximately 130 full-time employees, with substantially all of our employees located in the U.S. To enable our talent to actively contribute to, and have a positive impact on, our overall business and culture, we develop and maintain a set of programs and initiatives.
The last of our currently issued patents are set to expire in 2041. From time to time, we acquire complementary IP portfolios.
The last of our currently issued patents are set to expire in 2042. From time to time, we acquire complementary IP portfolios.
Customers have typically paid us fixed fees for specified periods of time and include some of the leading media companies and services including Google (including YouTube), HBOMax, Peacock, Paramount (including Pluto TV) and several of the leading social media companies. • Consumer Electronics (“CE”) Manufacturers: includes producers of content access points such as smart televisions, streaming media devices, video game consoles, mobile devices, content storage devices and other connected media devices.
Customers have typically paid us fixed fees for specified periods of time and include some of the leading media companies and services including DAZN, Google (including YouTube), Starz and Peacock. • Consumer Electronics (“CE”) Manufacturers: includes producers of content access points such as smart televisions, streaming media devices, video game consoles, mobile devices, content storage devices and other connected media devices.
Customers typically pay us a monthly per-subscriber fee and include many of the leading MVPDs and virtual MVPDs such as Altice USA (including Optimum), AT&T (including DirecTV and AT&T TV), Charter, Comcast (including Sky), Cox, DISH Network (including Sling TV), Google (including YouTube TV), Shaw, Verizon and Vodafone. • OTT Video Service Providers and Social Media Companies: includes subscription video-on-demand (“SVOD”) and advertising-supported streaming service providers that offer online services and devices that enable internet streaming and downloading of movies, television shows, music and other types of media content, as well as content providers, networks and media companies that provide content directly to consumers through a variety of business models and social media companies that allow users to stream and upload user-generated content, often leveraging a variety of computer vision technologies.
Customers typically pay us a monthly per-subscriber fee and include many of the leading MVPDs and virtual MVPDs such as Altice USA (including Optimum), AT&T (including DirecTV and DirecTV Stream), Charter, Comcast (including Sky), Cox, DISH Network (including Sling TV), Google (including YouTube TV), Verizon and Vodafone. • OTT Video Service Providers: includes subscription video-on-demand (“SVOD”) and free advertising-supported streaming service (FAST) providers that offer online services and devices that enable internet streaming and downloading of movies, television shows, music and other types of media content, as well as content providers, networks and media companies that provide content directly to consumers through a variety of business models.
We have a long history of innovation across a diverse set of applications and technologies and have grown an IP portfolio of over 9,750 active media and semiconductor patent assets, which are specifically designed to meet the evolving needs of businesses and consumers.
We have a long history of innovation across a diverse set of applications and technologies and have grown an IP portfolio of approximately 10,950 media and semiconductor patent assets, which are specifically designed to meet the evolving needs of businesses and consumers.
On October 1, 2022, Xperi Hold Co’s product business was separated from Xperi Hold Co through a tax-efficient spin-off transaction (the “Separation”) and became an independent, publicly-traded company named Xperi Inc.
On October 1, 2022, Xperi Hold Co’s product business was separated from Xperi Hold Co through a tax-efficient spin-off transaction (the “Separation”) and became an independent, publicly-traded company named Xperi Inc. The IP licensing business was retained by Xperi Hold Co, which was renamed Adeia Inc.
We protect our innovations and inventions through a variety of means, including applying for patent protection domestically and internationally. As of December 31, 2022, we held approximately 9,750 patent and patent applications worldwide, including approximately 4,400 United States issued patents and 1,300 patent applications, as well as approximately 3,100 foreign issued patents and 900 patent applications.
We protect our innovations and inventions through a variety of means, including applying for patent protection domestically and internationally. As of December 31, 2023, we held approximately 10,950 patent and patent applications worldwide, including approximately 4,800 United States issued patents and 1,600 patent applications, as well as approximately 3,500 foreign issued patents and 1,050 patent applications.
For example, the largest providers of SVOD now have approximately 200 million worldwide subscribers, driven in part by the recent launch of several new services. While these services have significantly lower ARPUs as compared to traditional pay-TV, the scale of the overall OTT video market continues to grow and presents an increasingly important licensing opportunity for our business.
While these services have significantly lower ARPUs as compared to traditional Pay-TV, the scale of the overall OTT video market continues to grow and presents an increasingly important licensing opportunity for our business.
Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio. In any service, device, or piece of equipment that contains IP, the provider or manufacturer may need to obtain licenses from multiple holders of the IP.
In any service, device, or piece of equipment that contains IP, the provider or manufacturer may need to obtain licenses from multiple holders of the IP.
If we are unable to secure license agreements on favorable terms through negotiations, or if licensees do not comply with the terms of their licenses, we might have to file new litigation to enforce our rights. 7 Human Capital Resources The opportunities for our success and growth depend in large part on our ability to attract, develop and retain a talented and engaged workforce.
If we are unable to secure license agreements on favorable terms through negotiations, or if licensees do not comply with the terms of their licenses, we might have to file new litigation to enforce our rights.
We conduct our business primarily by licensing our innovations to leading companies in the broader media and semiconductor industries and companies adopting new technologies that will help drive these industries forward. License arrangements include access to one or more of our foundational IP portfolios and may also include access to some of our industry-leading technologies and proven know-how.
License arrangements include access to one or more of our foundational IP portfolios and may also include access to some of our industry-leading technologies and proven know-how.
Some of these new markets include companies that provide advertising technology, automotive, e-commerce, gaming, and music streaming products and services. Research & Development As demonstrated by our portfolio of industry recognized, widely-deployed, advanced technologies and IP, we have a long track record of innovating in the fields of media and semiconductors.
Research & Development As demonstrated by our portfolio of industry recognized, widely-deployed, advanced technologies and IP, we have a long track record of innovating in the fields of media and semiconductors. We believe that ongoing investment in R&D is required for us to remain competitive in the markets we serve.
While we are at a comparatively earlier stage of licensing the key providers in this market, we are confident that the fundamental innovations from our patent portfolios will be similarly relevant to these new and widely-adopted OTT video services. • Expansion of MVPD licensing internationally: We continue to license MVPDs internationally and have already successfully licensed several leading providers.
While we are at a comparatively earlier stage of licensing the key providers in this market, we are confident that the fundamental innovations from our patent portfolios will be similarly relevant to these new and widely-adopted OTT video services. • Accelerate the Semiconductor licensing business: With the rising cost and complexity of developing cutting-edge semiconductor manufacturing processes, the industry is increasingly looking beyond Moore’s Law towards advanced packaging and 3D integration technologies.
Our R&D projects follow a forward-looking technology roadmap and execute a pragmatic technology strategy to position us with a sustainable competitive advantage for decades to come. Competition Due to the exclusionary nature of patent rights, we do not compete, in a traditional sense, with other patent holders for patent licensing relationships.
Competition Due to the exclusionary nature of patent rights, we do not compete, in a traditional sense, with other patent holders for patent licensing relationships. Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio.
We believe that ongoing investment in R&D is required for us to remain competitive in the markets we serve. Today, we have a collection of world-class talent and strong R&D capabilities.
Today, we have a collection of world-class talent and strong R&D capabilities. Our ongoing investment in R&D, which is supported by a strong industry network of partners, enables us to create original inventions which shape and anticipate future market trends in markets we serve.
Select customers include Panasonic, Roku, Samsung Electronics and TCL. • Semiconductors: includes providers of sensors, radio frequency (“RF”) components, memory and logic devices commonly used in electronic products such as mobile phones, laptops, PCs, game consoles and servers. Our agreements with our semiconductor customers can include fixed fees, per-unit fees, milestone based fees, or a combination of these fees.
Customers have typically paid us fixed fees for specified periods of time and include several of the leading social media companies. 6 • Semiconductors: includes providers of memory, logic, sensors, and radio frequency (“RF”) devices commonly used in electronic products such as mobile phones, laptops, PCs, game consoles and servers.
These agreements are typically for specified periods of time, and our customers include Micron, OmniVision, Samsung, SK hynix, Sony, UMC and Yangtze Memory Technologies. We continue to grow our business with several specific opportunities, including: • Greater penetration in OTT: The OTT market is currently experiencing explosive growth.
We continue to grow our business with several specific opportunities, including: • Greater penetration in OTT: The OTT market is currently experiencing explosive growth. For example, the leading provider of SVOD now has worldwide subscribers in excess of 200 million.
Our Strategy We have adopted a proactive strategy designed to protect and extend our technology and IP. We continue to grow our patent portfolios in size and relevance through ongoing investment in internal innovation, strategic management and targeted acquisitions within our target markets.
We continue to grow our patent portfolios in size and relevance through ongoing investment in internal innovation, strategic management and targeted acquisitions within our target markets. We conduct our business primarily by licensing our innovations to leading companies in the broader media and semiconductor industries and companies adopting new technologies that will help drive these industries forward.
Our technological areas of focus are hybrid bonding (or Direct Bond Interconnect (DBI)), advanced processing nodes, and advanced packaging solutions. Business Separation In February 2022, Xperi Holding Corporation (“Xperi Hold Co”) introduced “Adeia” as the new brand for its IP licensing business.
Specifically, our portfolio enables us to address the semiconductor market demands of higher bandwidth, improved compute performance and cost management in heterogeneous integration. Business Separation In February 2022, Xperi Holding Corporation (“Xperi Hold Co”) introduced “Adeia” as the new brand for its IP licensing business.
We believe that the multi-generational nature of our DBI platforms will be beneficial to the greater semiconductor sector for years to come. IP Portfolio Licensing Markets Our business has a strong foundation of recurring, annual revenue.
We believe that the multi-generational nature of our DBI platforms will be beneficial to the greater semiconductor sector for years to come. Recently, we have also launched a co-optimization effort that builds on our core fundamental semiconductor IP. Co-optimization is a holistic approach whereby the circuit design, process design and system design are optimized simultaneously.
Each of our stockholders of record received four shares of Xperi Inc. common stock for every ten shares of our common stock that it held on the Record Date. Following the Separation, Xperi Inc. became an independent, publicly-traded company, and we retain no ownership interest in Xperi Inc.
Following the Separation, Xperi Inc. became an independent, publicly-traded company, and we retain no ownership interest in Xperi Inc. Xperi Inc.’s historical financial results for periods prior to the Separation are reflected in our consolidated financial statements as discontinued operations for the periods presented.
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Our semiconductor portfolio is comprised of patents and technology know-how that enable the new era in semiconductors, including the internet of things, artificial intelligence chips and smart devices. Specifically, we address the semiconductor market demands of higher bandwidth, improved compute performance and cost management in heterogeneous integration.
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Our semiconductor portfolio is comprised of patents and technology know-how that enable the new era in semiconductors, including the next generation of logic and memory semiconductors that are powering the increasing demand for generative artificial intelligence applications. Our semiconductor portfolio generally covers three fundamental technology areas, hybrid bonding (or Direct Bond Interconnect (DBI)), advanced processing nodes, and advanced packaging solutions.
Removed
The IP licensing business was retained by Xperi Hold Co, which was renamed Adeia Inc. 4 The Separation was achieved through our distribution of 100% of the shares of Xperi Inc.’s common stock to holders of our common stock as of the close of business on September 21, 2022 (the “Record Date”).
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For further details, refer to “Note 9 – Discontinued Operations ”, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 4 Our Strategy We have adopted a proactive strategy designed to protect and extend our technology and IP.
Removed
Licensing unlicensed international MVPD providers presents a significant opportunity for expanding our business. 6 • Accelerate the Semiconductor licensing business: With the rising cost and complexity of developing cutting-edge semiconductor manufacturing processes, the industry is increasingly looking beyond Moore’s Law towards advanced packaging and 3D integration technologies.
Added
We believe that co-optimization is necessary given the limitations of Moore’s Law and that we are uniquely positioned to capitalize on this need given our existing portfolio of semiconductor technologies. IP Portfolio Licensing Markets Our business has a strong foundation of recurring, annual revenue.
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Environmental and Social Impact On October 1, 2022, following completion of our separation of our product business, we adopted an initial ESG statement for the Adeia business, which notes our commitment to sustainability and its impact on the environment and society, as well as ethical and corporate governance considerations.
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Select customers include Panasonic, Roku, Samsung and TCL. • Social Media Companies: includes social media companies that allow users to stream and upload user-generated content, often leveraging a variety of computer vision technologies.
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Given the substantial change in our post-Separation operations and ESG footprint, we have engaged a third-party consulting firm to advise us on ESG matters. We intend to regularly revisit and update our ESG statement to ensure it evolves with changes in industry demands and regulations.
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Our agreements with our semiconductor customers can include fixed fees, per-unit fees, milestone based fees, or a combination of these fees. These agreements are typically for specified periods of time, and our customers include Kioxia, Micron, OmniVision, Samsung, SK hynix, Sony, UMC and Western Digital.
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Some of these new markets include companies that provide advertising technology, automotive, e-commerce, gaming, and music streaming products and services. • Expansion of MVPD licensing internationally: We continue to license MVPDs internationally and have already successfully licensed several leading providers. Licensing unlicensed international MVPD providers presents a significant opportunity for expanding our business.
Added
Human Capital Resources The opportunities for our success and growth depend in large part on our ability to attract, develop and retain a talented and engaged workforce.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

87 edited+11 added−54 removed134 unchanged
Biggest changeRisks Related to the Separation • We may not be able to achieve the expected benefits of the separation. • If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability. • Following the separation and distribution, we rely on Xperi Inc. for certain transition services and following the completion of the transition period, we will need to provide these services internally or obtain them from unaffiliated third parties. • The separation and related transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal distribution requirements. • Following the separation and distribution, we may not enjoy the same benefits of diversity, leverage, and market reputation that we enjoyed as a combined company. • Certain members of our Board of Directors and management may have actual or potential conflicts of interest because of their ownership of our shares and shares of Xperi Inc. • In connection with our separation, we assumed, and indemnified Xperi Inc. for certain liabilities.
Biggest changeRisks Related to the Separation • We may not be able to achieve the expected benefits of the Separation, and we may not enjoy the same benefits of diversity, leverage and market reputation that we previously enjoyed as a combined company. • If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability. • In connection with the Separation, we assumed, and indemnified Xperi Inc. for certain liabilities.
These indemnities may not be sufficient to insure us against the full amount of liabilities for which we will be allocated responsibility, and Xperi Inc. may not be able to satisfy its indemnification obligations in the future.
These indemnities may not be sufficient to insure us against the full amount of liabilities for which we will be allocated responsibility, and Xperi Inc. may not be able to satisfy its indemnification obligations in the future.
In June 2020, our Board of Directors authorized a stock repurchase program to repurchase up to $150 million of our outstanding shares of common stock dependent on market conditions, share price, and other factors. In April 2021 our Board of Directors authorized an additional $100.0 million of stock repurchases under this program.
In June 2020, our Board of Directors authorized a stock repurchase program to repurchase up to $150.0 million of our outstanding shares of common stock dependent on market conditions, share price, and other factors. In April 2021 our Board of Directors authorized an additional $100.0 million of stock repurchases under this program.
Therefore, we face exposure to risks of operating in many foreign countries, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • unexpected changes in political or regulatory environments; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; • exchange controls or other restrictions; • political and economic instability and trade conflict; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries; • difficulties in obtaining approval for significant transactions; and • fluctuations in foreign currency exchange rates.
Therefore, we face exposure to risks of operating in many foreign countries, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • unexpected changes in political or regulatory environments; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; 16 • exchange controls or other restrictions; • political and economic instability and trade conflict; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries; • difficulties in obtaining approval for significant transactions; and • fluctuations in foreign currency exchange rates.
This also may cause our revenue and cash flows to fluctuate on a quarter-to-quarter or year-over-year basis. Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event we will not receive fees thereafter.
This also may cause our revenue and cash flows to fluctuate on a quarter-to-quarter or year-over-year basis. 14 Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event we will not receive fees thereafter.
If we cannot find another source of fees to replace the fees from these license agreements converting to fully paid-up licenses, our results of operations following such conversion would be materially adversely affected. 16 The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky.
If we cannot find another source of fees to replace the fees from these license agreements converting to fully paid-up licenses, our results of operations following such conversion would be materially adversely affected. The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky.
If this were to occur in any particular lawsuit, we may incur additional costs associated with resolving such lawsuit in other jurisdictions or resolving lawsuits involving similar claims in multiple jurisdictions, all of which could harm our business, results of operations, and financial condition. Item 1B. Unresolv ed Staff Comments Not applicable.
If this were to occur in any particular lawsuit, we may incur additional costs associated with resolving such lawsuit in other jurisdictions or resolving lawsuits involving similar claims in multiple jurisdictions, all of which could harm our business, results of operations, and financial condition. 24 Item 1B. Unresolv ed Staff Comments Not applicable.
Damages and requests for injunctive relief asserted in disputes like these could be significant and could be disruptive to our business. Due to the nature of our business, we could continue to be involved in a number of costly litigation, arbitration and administrative proceedings to enforce or defend our IP rights and to defend our licensing practices.
Damages and requests for injunctive relief asserted in disputes like these could be significant and could be disruptive to our business. 13 Due to the nature of our business, we could continue to be involved in a number of costly litigation, arbitration and administrative proceedings to enforce or defend our IP rights and to defend our licensing practices.
This could make the collection process complex, difficult and costly, which could adversely impact our business, financial condition, results of operations and cash flows. It is difficult for us to verify royalty amounts owed to us under our IP license agreements, and this may cause us to lose revenue.
This could make the collection process complex, difficult and costly, which could adversely impact our business, financial condition, results of operations and cash flows. 15 It is difficult for us to verify royalty amounts owed to us under our IP license agreements, and this may cause us to lose revenue.
Accordingly, the possibility that a customer, including a customer that represents a significant portion of our revenue, may reduce or eliminate its use of our technologies, presents a risk to our business. 14 If we fail to protect and enforce our IP rights, contract rights, and our confidential information, our business will suffer.
Accordingly, the possibility that a customer, including a customer that represents a significant portion of our revenue, may reduce or eliminate its use of our technologies, presents a risk to our business. If we fail to protect and enforce our IP rights, contract rights, and our confidential information, our business will suffer.
Factors that could cause our operating results to fluctuate during any period or that could adversely affect our ability to achieve our strategic objectives include those listed in this “Risk Factors” section of this report and the following: • the consequences of the separation transaction; • the timing of, and compliance with the terms and conditions for, payment by third parties to us of fees (including royalties) under IP license agreements; • fluctuations in our royalties caused by the pricing terms of certain of our IP license agreements; • the amount of our revenue; • changes in the level of our operating expenses; • the substantial research and development expenses that we have incurred and will continue to incur in connection with the development of new IP, as well as the uncertainty that such new technologies will generate material revenue for the Company; • our ability to protect or enforce our IP rights or the terms of our agreements; • legal proceedings affecting our patents, patent applications or IP license agreements; • the timing of the introduction of new technologies that replace technologies covered by our IP; • the timing of establishing new IP license agreements and expiration of existing IP license agreements; • changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties; • cyclical fluctuations in semiconductor and consumer electronics markets generally; • supply chain constraints, and attendant effects, including but not limited to increased costs or shipping delays that may impact our customers; • adverse labor market conditions, and any impacts on our ability to attract and retain qualified personnel; • inflation and/or changes in central bank interest rate policies; • expenses related to and the financial impact of possible acquisitions of other businesses and the integration of such businesses; 25 • expenses related to and the financial impact of the disposition of assets, including post-closing indemnification obligations; and • adverse changes in the level of economic activity in the U.S. or other major economies in which we do business as a result of the threat of terrorism, military actions taken by the U.S. or its allies, civil unrest, pandemics, natural disasters or generally weak and uncertain economic and industry conditions.
Factors that could cause our operating results to fluctuate during any period or that could adversely affect our ability to achieve our strategic objectives include those listed in this “Risk Factors” section of this report and the following: • the consequences of the separation transaction; • the timing of, and compliance with the terms and conditions for, payment by third parties to us of fees (including royalties) under IP license agreements; • fluctuations in our royalties caused by the pricing terms of certain of our IP license agreements; • the amount of our revenue; • changes in the level of our operating expenses; • the substantial research and development expenses that we have incurred and will continue to incur in connection with the development of new IP, as well as the uncertainty that such new technologies will generate material revenue for the Company; • our ability to protect or enforce our IP rights or the terms of our agreements; • legal proceedings affecting our patents, patent applications or IP license agreements; • the timing of the introduction of new technologies that replace technologies covered by our IP; • the timing of establishing new IP license agreements and expiration of existing IP license agreements; • changes in generally accepted accounting principles including new accounting standards which may materially affect our revenue recognition and the comparability between revenue recognition and cash flow from customer royalties; • cyclical fluctuations in semiconductor and consumer electronics markets generally; • supply chain constraints, and attendant effects, including but not limited to increased costs or shipping delays that may impact our customers; 22 • adverse labor market conditions, and any impacts on our ability to attract and retain qualified personnel; • inflation and/or changes in central bank interest rate policies; • expenses related to and the financial impact of possible acquisitions of other businesses and the integration of such businesses; • expenses related to and the financial impact of the disposition of assets, including post-closing indemnification obligations; and • adverse changes in the level of economic activity in the U.S. or other major economies in which we do business as a result of the threat of terrorism, military actions taken by the U.S. or its allies, civil unrest, hostilities, global health concerns, outbreaks, pandemics, natural disasters or generally weak and uncertain economic and industry conditions.
Any compromise of our ability to store or transmit such information and data securely or reliably, and any costs associated with preventing or eliminating such problems, could harm our business.
Any compromise of our ability to store or transmit such information and data securely or reliably, and any costs associated with preventing, assessing or eliminating such problems, could harm our business.
The occurrence of any of these or similar events could damage our business, hurt our ability to license IP and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity protections and enhancements, require us to incur significant expenses to address, remediate or resolve such issues and expose us to litigation and other liabilities.
The occurrence of any of these or similar events could damage our business, hurt our ability to license IP and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity monitoring, protections and enhancements, require us to incur significant expenses to evaluate, address, remediate or resolve such issues and expose us to litigation and other liabilities.
The need for a valuation allowance requires an assessment of both positive and negative evidence on a jurisdiction-by-jurisdiction basis when determining whether it is more-likely-than-not that deferred tax assets are recoverable. In making such assessment, significant weight is given to evidence that can be objectively verified.
The need for a valuation allowance requires an assessment of both positive and negative evidence on a jurisdiction-by-jurisdiction basis when determining whether it is more-likely-than-not that deferred tax assets are realizable. In making such assessment, significant weight is given to evidence that can be objectively verified.
Any of these provisions could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock. 26 Decreased effectiveness of stock-based compensation could adversely affect our ability to attract and retain employees.
Any of these provisions could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock. 23 Decreased effectiveness of stock-based compensation could adversely affect our ability to attract and retain employees.
Despite our provisions for system redundancy and the implementation of security measures within our internal and external information technology and networking systems, our information technology systems and those of third parties that we utilize in our operations may be subject to security breaches, unauthorized access (malicious or accidental), misuse of information by authorized users, data leaks or unintentional exposure of information, failed processes or other bugs, loss of data, damages from computer viruses or malware, natural disasters, terrorism, telecommunication failures or disruption of service.
Despite our provisions for system redundancy and the implementation and integration of security and risk management measures within our internal and external information technology and networking systems, our information technology systems and those of third parties that we utilize in our operations may be subject to security breaches, unauthorized access (malicious or accidental), misuse of information by authorized users, data leaks or unintentional exposure of information, failed processes or other bugs, loss of data, damages from computer viruses or malware, natural disasters, terrorism, telecommunication failures or disruption of service.
Although Congress is considering legislation that would repeal or defer this capitalization and amortization requirement, it is not certain that this provision will be repealed or otherwise modified. The new requirement adversely impacts our cash tax liability for 2022, although the negative cash impact is expected to decline annually over the amortization period.
Although Congress is considering legislation that would repeal or defer this capitalization and amortization requirement, it is not certain that this provision will be repealed or otherwise modified. The new requirement adversely impacts our cash tax liability for 2023, although the negative cash impact is expected to decline annually over the amortization period.
Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. 20 Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly.
Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. 18 Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly.
As of December 31, 2022, the total amount available for repurchase under the plan was $77.8 million. The amount of repurchases under our stock repurchase program will vary depending on various factors. The timing of repurchases is at our discretion and the program may be suspended or discontinued at any time.
As of December 31, 2023, the total amount available for repurchase under the plan was $77.8 million. The amount of repurchases under our stock repurchase program will vary depending on various factors. The timing of repurchases is at our discretion and the program may be suspended or discontinued at any time.
Our activities are subject to a number of cybersecurity and stability risks: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of confidential or proprietary information or data, including customer information; • we could experience damage from unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure, or cause confidential or proprietary information to be disclosed to a perpetrator, others or the general public; • hackers could circumvent our security measures and misappropriate our information, or our customers’ proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; or • we could inadvertently disclose confidential or proprietary information. 19 Each of the foregoing risks also applies to the computer systems of third parties that we rely upon in our operations, including providers of cloud storage and services.
Our activities are subject to a number of cybersecurity and stability risks: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of confidential or proprietary information or data, including customer information; • we could experience damage from unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure, or cause confidential or proprietary information to be disclosed to a perpetrator, others or the general public; • hackers could circumvent our integrated risk management processes and security measures and misappropriate our information, or our customers’ proprietary information or content, interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; or • we could inadvertently disclose confidential or proprietary information. 17 Each of the foregoing risks also applies to the computer systems of third parties that we rely upon in our operations, including providers of cloud storage and services.
Use of our common stock for future acquisitions may be limited. Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Internal Revenue Code will likely be limited for three (3) years following the Mergers.
Use of our common stock for future acquisitions may be limited. Our ability to use common stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Code will likely be limited for three (3) years following the Mergers.
Others may also develop technologies that are similar or superior to our technologies, duplicate our technologies or design around our technologies.
Others may also develop new technologies that are similar or superior to our technologies, duplicate our technologies or design around our technologies.
New facts and circumstances, historic profits or losses, and future financial results may require us to reevaluate our valuation allowance positions which could potentially affect our effective tax rate. 23 We continue to monitor the likelihood that we will be able to recover our deferred tax assets, including those for which a valuation allowance is recorded.
New facts and circumstances, historic profits or losses, and future financial results may require us to reevaluate our valuation allowance positions which could potentially affect our effective tax rate. We continue to monitor the likelihood that we will be able to realize our deferred tax assets, including those for which a valuation allowance is recorded.
These types of disputes can be asserted by our customers, prospective customers, or by other third parties as part of negotiations with us or in private actions seeking monetary damages or injunctive relief, or in regulatory actions. Any such disputes, regardless of their merit, could be difficult and costly to defend or settle.
These types of disputes can be asserted by our customers, prospective customers, or by other third parties as part of negotiations with us or in private actions seeking monetary damages or injunctive relief, or in regulatory actions. Any such disputes, regardless of their merit, could be difficult and costly to defend or settle and could adversely impact our revenue.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates - Revenue Recognition." As a result, the effects of these terms may cause our aggregate annual revenue to fluctuate significantly or to grow less rapidly than annual growth in the applicable end market.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates - Revenue Recognition.” As a result, the effects of these terms may cause our aggregate annual revenue to fluctuate significantly or to grow less rapidly than annual growth in the applicable end market.
If we fail to comply with these laws and regulations requiring the collection of sales tax and payment of income taxes in one or more states and foreign jurisdictions where we do business, we could be subject to significant costs, expenses, penalties and fees in which case our business would be harmed.
If we fail to comply with these laws and regulations requiring the payment of income taxes in one or more states and foreign jurisdictions where we do business, we could be subject to significant costs, expenses, penalties and fees in which case our business would be harmed.
If we fail to comply with the laws and regulations relating to the collection of sales tax and payment of income taxes in the various states and foreign jurisdictions in which we do business, we could be exposed to unexpected costs, expenses, penalties and fees as a result of our noncompliance in which case our business could be harmed.
If we fail to comply with the laws and regulations relating to payment of income taxes in the various states and foreign jurisdictions in which we do business, we could be exposed to unexpected costs, expenses, penalties and fees as a result of our noncompliance in which case our business could be harmed.
For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 ("TCJA") eliminates the option to currently deduct research and development expenses and instead requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to IRC Section 174.
For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the option to currently deduct research and development expenses and instead requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and 15 years for research activities performed outside the United States pursuant to IRC Section 174.
Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. Risks Related to Financial Matters We have significant indebtedness which could adversely affect our financial position. As of December 31, 2022, we had $749.3 million of total debt outstanding under our Refinanced Term B Loans.
Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. Risks Related to Financial Matters We have significant indebtedness which could adversely affect our financial position. As of December 31, 2023, we had $601.3 million of total debt outstanding under our Refinanced Term B Loans.
In addition, even if we ultimately succeed in recovering from Xperi Inc. any amounts for which we are held liable in excess of our agreed share, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.
Even if we ultimately succeed in recovering from Xperi Inc. any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.
In connection with our separation we assumed, and indemnified Xperi Inc. for, certain liabilities. If we are required to make payments pursuant to these indemnities, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. In addition, Xperi Inc. will assume, and indemnify us for certain liabilities.
In connection with the Separation we assumed, and indemnified Xperi Inc. for, certain liabilities. If we are required to make payments pursuant to these indemnities, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. In addition, Xperi Inc. assumed, and must indemnify us for certain liabilities.
If we are required to make payments pursuant to these indemnities, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. In addition, Xperi Inc. will assume, and indemnify us for certain liabilities.
If we are required to make payments pursuant to these indemnities, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. In addition, Xperi Inc. assumed, and must indemnify us for certain liabilities.
Risks Relating to Ownership of our Common Stock • Our financial and operating results may vary, which may cause the price of our common stock to decline. • We may not pay dividends or pay dividends at a consistent rate, and any decrease in or suspension of the dividend could cause our stock price to decline. • Our stock repurchase program could increase the volatility of the price of our common stock, and the program may be suspended or terminated at any time, which may cause the trading price of our common stock to decline. • Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change of control transaction and depress the market price of our stock. 10 Risks Related to the Separation We may not be able to achieve the expected benefits of the separation.
Risks Relating to Ownership of our Common Stock • Our financial and operating results may vary, which may cause the price of our common stock to decline. • We may not pay dividends or pay dividends at a consistent rate, and any decrease in or suspension of the dividend could cause our stock price to decline. • Our stock repurchase program could increase the volatility of the price of our common stock, and the program may be suspended or terminated at any time, which may cause the trading price of our common stock to decline. • Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change of control transaction and depress the market price of our stock.
Other patent holders do not have the same rights to the inventions and technologies encompasses by our patent portfolio.
Other patent holders do not have the same rights to the inventions and technologies encompassed by our patent portfolio.
A portion of our revenue is dependent on sales by our customers that are outside our control and that could be negatively affected by a variety of factors, including global, regional and/or country-specific economic conditions and/or public health concerns (e.g., the COVID-19 pandemic), country-specific natural disasters impacting licensee manufacturing and sales, demand and buying patterns of end users, which are often driven by replacement and innovation cycles, the service life of products incorporating our technologies, competition for our customers’ products, supply chain disruptions, and any decline in the sale prices our customers receive for their covered products and services.
A portion of our revenue is dependent on sales by our customers that are outside our control and that could be negatively affected by a variety of factors, including global, regional and/or country-specific economic conditions and/or public health concerns, outbreaks or pandemics, country-specific natural disasters, hostilities, or armed conflicts impacting licensee manufacturing and sales, demand and buying patterns of end users, which are often driven by replacement and innovation cycles, the service life of products incorporating our technologies, competition for our customers’ products, supply chain disruptions, and any decline in the sale prices our customers receive for their covered products and services.
At December 31, 2022, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $7.3 million.
At December 31, 2023, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $5.7 million.
As of December 31, 2022, we had $749.3 million of outstanding indebtedness that was subject to floating interest rates. Changes in economic conditions outside of our control could result in higher interest rates, thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes.
As of December 31, 2023, we had $601.3 million of outstanding indebtedness that is subject to floating interest rates. Changes in economic conditions outside of our control could result in higher interest rates, thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes.
Due to fluctuations in our operating results, reports from market and security analysts, litigation-related developments, and other factors including general market conditions, the price at which our common stock will trade is likely to continue to be highly volatile.
Due to fluctuations in our operating results, reports from market and security analysts, litigation-related developments, and other factors including general market conditions, the price at which our common stock will trade may be volatile.
If we fail to continue to do business with our current customers, our business would be materially adversely affected. Furthermore, a small number of our customers represent a significant percentage of our revenue. For the year ended December 31, 2022, three customers represented 40% of aggregate revenue. Agreements with some of these customers do not require any minimum license fees.
If we fail to continue to do business with our current customers, our business would be materially adversely affected. Furthermore, a small number of our customers represent a significant percentage of our revenue. For the year ended December 31, 2023, four customers represented 45.4% of aggregate revenue. Agreements with some of these customers do not require any minimum license fees.
In particular, our business has been impacted due to the increase in trade conflicts between the United States and China. Further United States government actions to protect domestic economic and security interests could lead to further restrictions.
In particular, our business has been impacted due to increased and ongoing trade conflicts between the United States and China. Further United States government actions to protect domestic economic and security interests could lead to further restrictions or additional or increased conflicts.
As our business grows and expands, we have started to do business in an increasing number of states nationally and in new foreign jurisdictions.
As our business grows and expands, we will continue to do business in an increasing number of states nationally and in new foreign jurisdictions.
Our ability to use net operating losses to offset future taxable income may be subject to limitations. As of December 31, 2022, we had U.S. federal and state net operating losses of approximately $2.9 million and $842.0 million. A portion of the federal and state net operating loss carryforwards will begin to expire, if not utilized, in 2023.
Our ability to use net operating losses to offset future taxable income may be subject to limitations. As of December 31, 2023, we had U.S. federal and state net operating losses of approximately $2.6 million and $884.7 million, respectively. A portion of the state net operating loss carryforwards will begin to expire, if not utilized, in 2024.
From time to time, we enter into semiconductor IP license agreements that automatically convert to fully paid-up licenses upon expiration of a specified term or upon the occurrence of certain events.
We have entered and may continue to enter into semiconductor IP license agreements that automatically convert to fully paid-up licenses upon expiration of a specified term or upon the occurrence of certain events.
Pursuant to the separation and distribution agreement, the employee matters agreement, and the tax matters agreement with Xperi Inc., we agreed to assume, and indemnify Xperi Inc. for certain liabilities for uncapped amounts, which could include, among other items, associated defense costs, settlement amounts and judgments.
Pursuant to the separation and distribution agreement, the employee matters agreement, and the tax matters agreement with Xperi Inc., we agreed to assume, and indemnify Xperi Inc. for certain liabilities for uncapped amounts, which could include, among other items, associated defense costs, settlement amounts and judgments. Payments pursuant to these indemnities could be significant and could negatively impact our business.
In addition, any failure by us to comply with these complex restrictions, or other restrictions that may be imposed in the future, in the United States or internationally, could subject us to fines and penalties, require changes to our business practices and result in reputational harm.
Any such conflicts or trends could have a material adverse impact on our revenue. In addition, any failure by us to comply with these complex restrictions, or other restrictions that may be imposed in the future, in the United States or internationally, could subject us to fines and penalties, require changes to our business practices and result in reputational harm.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2022, we held approximately $114.6 million in cash and cash equivalents and we do not have any short-term investments.
The investment of our cash, cash equivalents and investments in marketable debt and equity securities is subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2023, we held approximately $54.6 million in cash and cash equivalents and $29.0 million in short-term investments.
We enter into IP license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed. We enter into IP license agreements that have fixed expiration dates.
Our failure to do so could significantly harm our business, financial position, results of operations, and cash flows. 12 We enter into IP license agreements that have fixed expiration dates and if, upon expiration or termination, we are unable to renew or replace such license agreements on terms favorable to us, our results of operations could be harmed.
From time to time, we enter into IP license agreements that include pricing or payment terms that may result in quarter-to-quarter or year-over-year fluctuations in our revenue and cash flows.
The structure and timing of our IP license agreements may cause fluctuations in our quarterly or annual financial results. From time to time, we enter into IP license agreements that include pricing or payment terms that may result in quarter-to-quarter or year-over-year fluctuations in our revenue and cash flows.
Under the tax matters agreement that we entered into with Xperi Inc. on October 1, 2022 (the “Tax Matters Agreement”), Xperi Inc. is generally obligated to indemnify us against taxes imposed on us that result from the failure of the distribution to qualify for non-recognition treatment for U.S. federal income tax purposes (including any taxes imposed on us due to the application of Section 355(e) to the distribution), to the extent such failure is attributable to actions, events or transactions relating to Xperi Inc. or its affiliates’ stock, assets or business, or any breach of Xperi Inc.’s representations, covenants or obligations under the Tax Matters Agreement (or certain other agreements it entered into in connection with the separation and distribution) or any breach by Xperi Inc. or its affiliates of representations made in any representation letter provided in connection with the Tax Opinion.
Notwithstanding the Tax Opinion and the IRS Ruling, the IRS could determine that the distribution or a related transaction should nevertheless be treated as a taxable transaction to us if it determines that any of the facts, assumptions, representations or undertakings provided by us are not correct or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the Tax Opinion that are not covered by the IRS Ruling. 11 Under the tax matters agreement that we entered into with Xperi Inc. on October 1, 2022 (the “Tax Matters Agreement”), Xperi Inc. is generally obligated to indemnify us against taxes imposed on us that result from the failure of the distribution to qualify for non-recognition treatment for U.S. federal income tax purposes (including any taxes imposed on us due to the application of Section 355(e) to the distribution), to the extent such failure is attributable to actions, events or transactions relating to Xperi Inc. or its affiliates’ stock, assets or business, or any breach of Xperi Inc.’s representations, covenants or obligations under the Tax Matters Agreement (or certain other agreements it entered into in connection with the separation and distribution) or any breach by Xperi Inc. or its affiliates of representations made in any representation letter provided in connection with the Tax Opinion.
If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability.
Furthermore, we may be more susceptible to market fluctuations and other adverse events. If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax liability.
As a result, our effective tax rate is derived from a combination of applicable tax rates in the various jurisdictions where we operate. In preparing our financial statements, we estimate the amount of tax to accrue in each tax jurisdiction.
We are subject to U.S. federal and state income taxes, as well as taxes in various international jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various jurisdictions where we operate. In preparing our financial statements, we estimate the amount of tax to accrue in each tax jurisdiction.
Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, we may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of the all-stock merger of equals transaction consummated on June 1, 2020 between TiVo Corporation and Xperi Corporation and their respective consolidated subsidiaries (the “Mergers”) or other transactions considered part of a plan with the distribution, there is a 50 percent or greater change of ownership in us or Xperi Inc. 11 Following the Mergers, and in anticipation of the distribution, we sought and received the IRS Ruling, which included a ruling from the IRS regarding the proper manner and methodology for measuring the common ownership of our stock and the stock of TiVo Corporation and Xperi Corporation for purposes of determining whether there has been a 50 percent or greater change of ownership under Section 355(e) of the Code.
Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, we may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of the all-stock merger of equals transaction consummated on June 1, 2020 between TiVo Corporation and Xperi Corporation and their respective consolidated subsidiaries (the “Mergers”) or other transactions considered part of a plan with the distribution, there is a 50 percent or greater change of ownership in us or Xperi Inc.
Our current U.S. issued patents expire at various times through the next two decades. Consequently, we need to develop or acquire successful innovations and obtain patents on those innovations, or acquire new patents from third parties, before our current patents expire. Our failure to do so could significantly harm our business, financial position, results of operations, and cash flows.
Our current U.S. issued patents expire at various times through the next two decades. Consequently, we need to develop or acquire successful innovations and obtain patents on those innovations, or acquire new patents from third parties, before our current patents expire.
Geopolitical factors such as terrorist activities, armed conflict or global health conditions that adversely affect the global economy may adversely affect our operating results and financial condition. 18 We are also subject to risks associated with compliance with applicable anti-corruption laws, including the Foreign Corrupt Practices Act (FCPA), which generally prohibits companies and their employees and intermediaries from making payments to foreign officials for the purpose of obtaining an advantage or benefits, and requires public companies to maintain accurate books and records and a system of internal accounting controls.
We are also subject to risks associated with compliance with applicable anti-corruption laws, including the Foreign Corrupt Practices Act (FCPA), which generally prohibits companies and their employees and intermediaries from making payments to foreign officials for the purpose of obtaining an advantage or benefits, and requires public companies to maintain accurate books and records and a system of internal accounting controls.
The foregoing forum provisions may prevent or limit a stockholder’s ability to file a lawsuit in a judicial forum that it prefers for disputes with us or our directors, officers, employees, stockholders or agents, which may discourage such lawsuits, make them more difficult or expensive to pursue, and result in outcomes that are less favorable to such stockholders than outcomes that may have been attainable in other jurisdictions. 27 In addition, notwithstanding the inclusion of the foregoing forum provisions in the certificate of incorporation, courts may find the foregoing forum provisions to be inapplicable or unenforceable in certain cases that the foregoing forum provisions purport to address, including claims brought under the Securities Act.
The foregoing forum provisions may prevent or limit a stockholder’s ability to file a lawsuit in a judicial forum that it prefers for disputes with us or our directors, officers, employees, stockholders or agents, which may discourage such lawsuits, make them more difficult or expensive to pursue, and result in outcomes that are less favorable to such stockholders than outcomes that may have been attainable in other jurisdictions.
Upon expiration of such agreements, we need to renew or replace these agreements in order to maintain our revenue base.
We enter into IP license agreements that have fixed expiration dates. Upon expiration of such agreements, we need to renew or replace these agreements in order to maintain our revenue base.
However, our future success depends on our ability to establish and maintain licensing relationships with companies in the industries that we currently serve and may enter in the future, including Pay-TV service providers, consumer electronics manufacturers, semiconductor and equipment manufacturers, and the entertainment and electronics businesses. 17 Our pursuit of acquisitions and divestures may adversely affect our business operations or stock price if we cannot successfully execute our strategies.
However, our future success depends on our ability to establish and maintain licensing relationships with companies in the industries that we currently serve and may enter in the future, including Pay-TV service providers, consumer electronics manufacturers, semiconductor and equipment manufacturers, and the entertainment and electronics businesses.
By engaging in business activities in these states and foreign jurisdictions, we become subject to their various laws and regulations, including possible requirements to collect sales tax from our sales within those states and foreign jurisdictions and the payment of income taxes on revenue generated from activities in those states and foreign jurisdictions.
By engaging in business activities in these states and foreign jurisdictions, we become subject to their various laws and regulations, including the payment of income taxes on revenue generated from activities in those states and foreign jurisdictions. 20 The laws and regulations governing the payment of income taxes are numerous, complex, and vary among states and foreign jurisdictions.
Following the separation and distribution, we may not enjoy the same benefits of diversity, leverage, and market reputation that we enjoyed as a combined company.
Risks Related to the Separation We may not be able to achieve the expected benefits of the Separation, and we may not enjoy the same benefits of diversity, leverage and market reputation that we previously enjoyed as a combined company.
We may be required to expend significant capital or other resources to protect against the threat of security breaches, hacker attacks or system malfunctions or to alleviate problems caused by such breaches, attacks or failures.
We also may be exposed to customer claims, or other liability, in connection with any security breach or inadvertent disclosure. We may be required to expend significant capital or other resources to protect against the threat of security breaches, hacker attacks or system malfunctions or to alleviate and remediate problems caused by such breaches, attacks or failures.
We have in the past identified, and may in the future identify, significant deficiencies in the design and operation of our internal controls, which have been or will in the future need to be remediated.
We have in the past identified, and may in the future identify, significant deficiencies in the design and operation of our internal controls, which have been or will in the future need to be remediated. Finally, in the event we make a significant acquisition, we may face significant challenges in implementing the required processes and procedures in the acquired operations.
Moreover, growing trade conflicts and uncertainties may lead to decreased use of foreign-owned technologies in China and other countries, due to efforts by foreign governments and enterprises to find alternative sources of supply, to develop proprietary domestic technologies, and otherwise to reduce reliance on foreign technology sources. Any such trends could have a material adverse impact on our revenue.
Moreover, growing trade conflicts and uncertainties may lead to decreased use of foreign-owned technologies in China and other countries, due to efforts by foreign governments and enterprises to find alternative sources of supply, the development of proprietary domestic technologies, and the reduction of reliance on foreign technology sources.
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements. 22 Further, U.S. federal, U.S. state, and foreign tax jurisdictions may examine our income tax returns, including income tax returns of acquired companies and acquired tax attributes included therein.
Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations and may result in tax obligations in excess of amounts accrued in our financial statements.
We may in the future have a need to sell investments before their maturity dates, which could result in losses on the sale of those investments. The financial market and monetary risks associated with our investment portfolio have had and may in the future have a material adverse effect on our financial condition, results of operations or cash flows.
The financial market and monetary risks associated with our investment portfolio have had and may in the future have a material adverse effect on our financial condition, results of operations or cash flows.
Although we seek to focus our operations in areas where we see the potential for growth and to divest assets where we see more limited opportunities, dispositions we decide to undertake may involve risks, and the anticipated benefits of such actions may not be realized. 9 • Our business and results of operations have been, and are expected to continue to be, impacted by the global COVID-19 pandemic. • The structure and timing of our IP license agreements may cause fluctuations in our quarterly or annual financial results. • Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event, we will not receive fees thereafter. • The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky. • A portion of our revenue and cash flow is dependent upon our customers’ sales and other factors that are beyond our control or are difficult to forecast.
Although we seek to focus our operations in areas where we see the potential for growth and to divest assets where we see more limited opportunities, dispositions we decide to undertake may involve risks, and the anticipated benefits of such actions may not be realized. • The structure and timing of our IP license agreements may cause fluctuations in our quarterly or annual financial results. • Some of our IP license agreements may convert to fully paid-up licenses at the expiration of their terms, or upon the occurrence of certain events, and in such event, we will not receive fees thereafter. • The long-term success of our business is partially dependent on a royalty-based business model, which is inherently risky. • A portion of our revenue and cash flow is dependent upon our customers’ sales and other factors that are beyond our control or are difficult to forecast. 9 Risks Related to Financial Matters • We have significant indebtedness which could adversely affect our financial position. • Our variable rate indebtedness may expose us to interest rate risk, which could cause our debt costs to increase significantly. • We may not be able to generate sufficient cash to service our debt obligations. • Repayment of debt is dependent on cash flow generated by our subsidiaries. • Changes in, or interpretations of, tax rules and regulations, could adversely affect our effective tax rates and negatively affect our business and financial condition. • Our ability to use net operating losses to offset future taxable income may be subject to limitations.
These types of regulations are likely to differ between countries and other political and geographic divisions. Changes to these laws, or the interpretation thereof, could increase our costs, expose us to increased litigation risk, substantial defense costs and other liabilities or require us or our customers to change business practices.
Changes to these laws, or the interpretation thereof, could increase our costs, expose us to increased litigation risk, substantial defense costs and other liabilities or require us or our customers to change business practices. It is difficult to anticipate the impact of current or future laws and regulations on our business.
Any of the following risks and uncertainties may be exacerbated by the impacts of the COVID-19 pandemic and related events. Risk Factor Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results.
Risk Factor Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results.
In addition, we have had a history of, and we may in the future experience, customers that delay or refuse to make payments owed to us under IP license or settlement agreements. Our customers may also merge with or may shift the manufacture of licensed products to companies that are not currently customers of our technology.
In addition, we have had a history of, and we may in the future experience, customers that delay or refuse to make payments owed to us under IP license or settlement agreements, which may result in us filing lawsuits to enforce our rights.
Further, in certain jurisdictions where we may pursue protections of our IP rights, if we are unsuccessful in litigation, we may be liable for the costs of defendants that receive favorable rulings.
Further, in certain jurisdictions where we may pursue protections of our IP rights, if we are unsuccessful in litigation, we may be liable for the costs of defendants that receive favorable rulings. Given the nature of our business, such proceedings could have a material adverse effect on our business, financial condition, and results of operations.
We may be required to reevaluate and modify our licensing practices and strategies in response to such changes and, given the nature of our business, any resulting modifications could have a material adverse effect on our business and financial condition.
We may be required to reevaluate and modify our licensing practices and strategies in response to such changes and, given the nature of our business, any resulting modifications could have a material adverse effect on our business and financial condition. 21 Many laws and regulations are pending and may be adopted by the U.S. federal government, individual states and local jurisdictions and other countries with respect to the internet.
Additionally, distributions from our non-U.S. subsidiaries may be subject to foreign withholding taxes and would be subject to U.S. federal and state income tax which could reduce the net cash available for principal and interest payments. 21 If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could increase our operating costs and affect our ability to operate our business.
Additionally, distributions from our non-U.S. subsidiaries may be subject to foreign withholding taxes and would be subject to U.S. federal and state income tax which could reduce the net cash available for principal and interest payments.
At times, we are engaged in disputes regarding the licensing of our IP rights, including matters related to our license fees and other terms of our licensing arrangements.
In certain jurisdictions we may be unable to protect our technology and IP adequately against unauthorized use, which could adversely affect our business. At times, we are engaged in disputes regarding the licensing of our IP rights, including matters related to our license fees and other terms of our licensing arrangements.
Any significant increase in our interest expense could negatively impact our results of operations and cash flows and also our ability to pay dividends in the future. If the U.S.
Any significant increase in our interest expense could negatively impact our results of operations and cash flows and also our ability to pay dividends in the future. If the U.S. Federal Reserve raises its benchmark interest rate through one or more rate hikes, the increases would likely impact the borrowing rate on our outstanding indebtedness and increase our interest expense.
While we believe our estimates are reasonable, we cannot assure you that the final determination from these examinations will not be materially different from that reflected in our historical income tax provisions and accruals. Any adverse outcome from these examinations may have a material adverse effect on our business and operating results.
In making such assessments, we exercise judgment in estimating our provision for income taxes. While we believe our estimates are reasonable, we cannot assure you that the final determination from these examinations will not be materially different from that reflected in our historical income tax provisions and accruals.
If the separation does not provide the benefits we intend, there could be a disruption of our operations, loss of, or inability to recruit, key personnel needed to operate and grow our business and impairment of our key customer relationships.
Additionally, as a result of the Separation and distribution, we may become more susceptible to market fluctuations and other adverse events than if Xperi Inc. had remained part of our organizational structure. 10 If the Separation does not continue to provide the benefits we intend, there could be a disruption of our operations, loss of, or inability to recruit, key personnel needed to operate and grow our business and impairment of our key customer relationships.
Given the nature of our business, such proceedings could have a material adverse effect on our business, financial condition, and results of operations. 15 Some of our IP license agreements contain “most favored nations” clauses, which may restrict our ability to offer more competitive terms to other customers in the future.
Some of our IP license agreements contain “most favored nations” clauses, which may restrict our ability to offer more competitive terms to other customers in the future.
We may have significant expenses associated with staying apprised of and in compliance with local, state, federal, and international legislation and regulation of our business and in presenting the Company’s positions on proposed laws and regulations. 24 Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us.
Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us.
Payments pursuant to these indemnities could be significant and could negatively impact our business. 13 Third parties could also seek to hold us responsible for any of the liabilities allocated to Xperi Inc., including those related to Xperi Inc.’s business.
Third parties could also seek to hold us responsible for any of the liabilities allocated to Xperi Inc., including those related to Xperi Inc.’s business. Xperi Inc. agreed to indemnify us for such liabilities, but such indemnities may not be sufficient to protect us against the full amount of such liabilities.
For example, our business may suffer if we are unable to obtain patent protection in a timely manner from the US Patent and Trademark Office due to processing delays resulting from examiner turnover and a continuing backlog of patent applications.
For example, our business may suffer if we are unable to obtain patent protection in a timely manner from the US Patent and Trademark Office. If we fail to use adequate mechanisms to protect our technology and IP, or if a court fails to enforce our IP rights, our business will suffer.
If we fail to use adequate mechanisms to protect our technology and IP, or if a court fails to enforce our IP rights, our business will suffer. We cannot be certain that these protection mechanisms can be successfully asserted in the future or will not be invalidated or challenged.
We cannot be certain that these protection mechanisms can be successfully asserted in the future or will not be invalidated or challenged. Further, the laws and enforcement regimes of certain countries may not protect our technology and IP to the same extent as do the laws and enforcement regimes of the U.S.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn July 21, 2021, the Federal Court of Canada held a case management conference in Videotron 2, shortly before which Videotron filed a motion to strike various portions of the statement of claim. On March 22, 2022, the Court issued an order on Videotron’s motion to strike, dismissing the motion in its entirety.
Biggest changeOn May 21, 2021, Adeia Media filed a patent infringement complaint against Videotron in Toronto, Canada, alleging infringement of four patents (“Videotron 2”). On July 21, 2021, the Federal Court of Canada held a case management conference in Videotron 2, shortly before which Videotron filed a motion to strike various portions of the statement of claim.
On October 7, 2022, the Federal Court of Canada issued its confidential decision in the two cases finding in favor of Bell and Telus and their respective IPTV services, Bell Fibe TV and Telus Optik TV. Specifically, the Court found invalid each of the asserted claims of the four remaining patents involved in the case.
On October 7, 2022, the Federal Court of Canada issued its decision in the two cases finding in favor of Bell and Telus and their respective IPTV services, Bell Fibe TV and Telus Optik TV. Specifically, the Court found invalid each of the asserted claims of the four remaining patents involved in the case.
On February 2, 2018, Adeia Media filed a patent infringement complaint against Telus Corporation (and two of its affiliates) (collectively, "Telus") in Toronto, Canada, alleging infringement of the same six patents (“Telus 1”). Bell 1and Telus 1 were heard together for purposes of pre-trial and trial proceedings.
On February 2, 2018, Adeia Media filed a patent infringement complaint against Telus Corporation (and two of its affiliates) (collectively, “Telus”) in Toronto, Canada, alleging infringement of the same six patents (“Telus 1”). Bell 1 and Telus 1 were heard together for purposes of pre-trial and trial proceedings.
Patent Infringement Litigation In the ordinary course of our IP licensing business, we are required to engage in litigation to protect our IP from infringement. While litigation is never our preference, and we prefer to reach mutually agreeable commercial licensing arrangements with third parties, it is sometimes a necessary step to effectively protect our investment in our IP.
Patent Infringement Litigation In the ordinary course of our IP licensing business, we engage in litigation to protect our IP from infringement. While litigation is never our preference, and we prefer to reach mutually agreeable commercial licensing arrangements with third parties, it is sometimes a necessary step to effectively protect our investment in our IP.
Item 3. Legal Proceedings In the normal course of our business, we are involved in legal proceedings. In the past, we have litigated to enforce our patents and other intellectual property rights ("IP"), to enforce the terms of license agreements, to protect trade secrets and to defend ourselves against claims of invalidity.
Item 3. Legal Proceedings In the normal course of our business, we are involved in legal proceedings. In the past, we have litigated to enforce our patents and other intellectual property rights (“IP”), to enforce the terms of license agreements, to protect trade secrets and to defend ourselves against claims of invalidity.
On June 10, 2022, the Federal Court of Canada issued its decision in the case finding in favor of Videotron and its legacy "illico" platform. Specifically, the Court found invalid each of the asserted claims related to the four remaining patents involved in the case.
On June 10, 2022, the Federal Court of Canada issued its decision in the case finding in favor of Videotron and its legacy “illico” platform. Specifically, the Court found invalid each of the asserted claims related to the four remaining patents involved in the case.
On September 12, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada. On January 30, 2023, Adeia Media filed its opening memorandum of fact and law.
On September 12, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada. On January 30, 2023, Adeia Media filed its opening memorandum of fact and law. Videotron filed its memorandum of fact and law on April 17, 2023.
On February 15, 2023, the Court issued an order granting the motion for bifurcation in which the Court bifurcated the liability and injunction phase from the damages quantification phase of the case. Discovery in the case began in November 2022. The Court has yet to set the trial date.
On February 15, 2023, the Court issued an order granting the motion for bifurcation in which the Court bifurcated the liability and injunction phase from the damages quantification phase of the case. Discovery in the case began in November 2022. The trial is scheduled to start on April 28, 2025.
In Canada, the prevailing party in patent litigation is entitled to reimbursement of certain of its costs and expenses. Accordingly, we accrued $2.6 million for expense reimbursement in the third quarter of 2022.
In Canada, the prevailing party in patent litigation is entitled to reimbursement of certain of its costs and expenses. Accordingly, we paid $2.8 million for expense reimbursement in the second quarter of 2023.
Bell and Telus Patent Infringement Litigation On January 19, 2018, Adeia Media filed a patent infringement complaint against Bell Canada (and four of its affiliates) (collectively, "Bell") in Toronto, Canada, alleging infringement of six patents (“Bell 1”).
The trial is scheduled to start on January 13, 2025. 26 Bell and Telus Patent Infringement Litigation On January 19, 2018, Adeia Media filed a patent infringement complaint against Bell Canada (and four of its affiliates) (collectively, “Bell”) in Toronto, Canada, alleging infringement of six patents (“Bell 1”).
On April 1, 2022, Videotron filed an appeal of the Court’s order dismissing Videotron’s motion to strike. On June 30, 2022, the Court of Appeal issued its decision in Videotron's appeal in which it ruled in Adeia Media's favor and dismissed Videotron's appeal. Discovery in the case began in August 2022. The Court has not set the trial date.
On June 30, 2022, the Court of Appeal issued its decision in Videotron’s appeal in which it ruled in Adeia Media’s favor and dismissed Videotron’s appeal. Discovery in the case began in August 2022.
On November 7, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada.
On November 7, 2022, Adeia Media filed a notice of appeal with the Federal Court of Appeal of Canada appealing the decision of the Federal Court of Canada. On June 2, 2023, Adeia Media filed its opening memorandum of fact and law. Bell and Telus filed a combined memorandum of fact and law on August 18, 2023.
Removed
Videotron's memorandum of fact and law is due April 17, 2023. 28 On May 21, 2021, Adeia Media filed a patent infringement complaint against Videotron in Toronto, Canada, alleging infringement of four patents (“Videotron 2”).
Added
On November 28, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. There is no set date for the Federal Court of Appeal of Canada to issue its decision.
Removed
NVIDIA Patent Infringement Litigation On May 8, 2019, Adeia Semiconductor Technologies LLC (formerly known as Invensas Corporation) and Adeia Semiconductor Advanced Technologies, Inc.
Added
On March 22, 2022, the Court issued an order on Videotron’s motion to strike, dismissing the motion in its entirety. On April 1, 2022, Videotron filed an appeal of the Court’s order dismissing Videotron’s motion to strike.
Removed
(formerly known as Tessera Advanced Technologies, Inc.) (together, "Adeia Semiconductor") filed a complaint against NVIDIA Corporation (“NVIDIA”) in the United States District Court for the District of Delaware, alleging infringement of five patents, and requesting, among other things, that NVIDIA be ordered to pay compensatory damages in an amount no less than a reasonable royalty.
Added
On November 29, 2023, the Federal Court of Appeal of Canada held a hearing on the appeal and took the matter under reserve. There is no set date for the Federal Court of Appeal to issue its decision.
Removed
NVIDIA answered the complaint on July 1, 2019, and subsequently moved to transfer the case to the United States District Court for the Northern District of California. The Court denied NVIDIA’s motion to transfer on September 17, 2019. In September 2020, the Patent Trial and Appeal Board (“PTAB”) instituted IPRs of several patents-in-suit.
Added
Shaw Breach of Contract Litigation On October 2, 2023, Adeia Guides Inc., Adeia Media Solutions Inc., and Adeia Media Holdings LLC (collectively, “Adeia Media”) filed a complaint against Shaw Cablesystems G.P. and Shaw Satellite G.P.
Removed
The parties stipulated to an order staying the litigation pending resolution of the IPR proceedings and to dismissal of claims relating to two patents. As a result, there are three patents-in-suit remaining. One patent has no IPRs pending against it and two patents are subject to IPRs. On June 9, 2021, the PTAB held oral arguments in the IPRs.
Added
(together “Shaw”) in the United States District Court for the Southern District of New York, alleging breach of contract by Shaw for failure to pay royalties owed to Adeia Media under the license agreement between the parties.
Removed
On September 1, 2021, the PTAB issued final written decisions in the IPRs in which it found all challenged claims of the two patents invalid. On November 1, 2021, Adeia Semiconductor filed appeals of each of the IPR decisions with the United States Court of Appeals for the Federal Circuit. Adeia Semiconductor filed its opening brief on March 14, 2022.
Added
On January 16, 2024, Shaw submitted a pre-motion letter to the Court requesting leave of the Court to file a motion to dismiss the complaint. On January 19, 2024, Adeia Media submitted a letter to the Court in response to Shaw’s pre-motion letter. The Court has yet to rule on Shaw’s pre-motion letter. The trial date has not been set.
Removed
On June 8, 2022, NVIDIA filed its response brief. On July 22, 2022, Adeia Semiconductor filed its reply brief. The date for oral argument has been set for March 7, 2023. The district court litigation will remain stayed pending the outcome of the IPR appeals. Item 4. Mine Saf ety Disclosures Not applicable. 29 PART II
Added
X Corp. (f.k.a. Twitter) Litigation On August 7, 2023, Adeia Media LLC (“Adeia Media”) filed a complaint against X Corporation (“X Corp.”) in California Superior Court for Santa Clara County alleging breach of contract by X Corp. for failure to pay royalties owed to Adeia Media under the patent license agreement between the parties.
Added
On October 2, 2023, X Corp. filed its answer to the complaint, asserting a general denial of the allegations and causes of action in the complaint and asserting affirmative defenses. The trial date has not been set.
Added
On November 28, 2023, X Corp. filed a complaint for declaratory judgment of patent noninfringement (“DJ Complaint”) in the United States District Court for the Northern District of California against Adeia Inc., Adeia Media LLC and Adeia Guides Inc.
Added
(collectively, “Adeia Media”) alleging that it had terminated the patent license agreement between the companies and seeking a finding that it does not infringe four Adeia Media patents. On January 16, 2024, Adeia Media filed a motion to dismiss the DJ Complaint for lack of subject matter jurisdiction.
Added
The hearing on the motion to dismiss is scheduled for April 9, 2024. Item 4. Mine Saf ety Disclosures Not applicable. 27 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−1 removed3 unchanged
Biggest changeThis graphic comparison is presented pursuant to Item 201 of Regulation S-K. 6/2/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/31/2022 Adeia Inc. $ 100.00 $ 109.25 $ 85.05 $ 154.70 $ 165.28 $ 164.62 $ 139.45 $ 139.97 $ 128.20 $ 106.81 $ 104.66 $ 123.65 Nasdaq Composite $ 100.00 $ 104.69 $ 116.23 $ 134.14 $ 137.87 $ 150.95 $ 150.37 $ 162.83 $ 148.00 $ 114.78 $ 110.07 $ 108.93 Russell 2000 Index $ 100.00 $ 101.63 $ 106.31 $ 139.25 $ 156.57 $ 162.92 $ 155.43 $ 158.32 $ 145.97 $ 120.43 $ 117.38 $ 124.19 S&P 500 $ 100.00 $ 100.63 $ 109.16 $ 121.92 $ 128.96 $ 139.49 $ 139.82 $ 154.70 $ 147.05 $ 122.87 $ 116.39 $ 124.63 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (“Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Biggest changeThis graphic comparison is presented pursuant to Item 201 of Regulation S-K. 6/2/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 6/30/2022 9/30/2022 12/30/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Adeia Inc. $100.00 $109.25 $85.05 $154.70 $161.14 $164.62 $139.45 $139.97 $128.20 $106.81 $104.66 $121.72 $113.76 $141.36 $137.12 $159.08 Nasdaq Composite $100.00 $104.69 $116.23 $134.14 $137.87 $150.95 $150.37 $162.83 $148.00 $114.78 $110.07 $108.93 $127.20 $143.50 $137.58 $156.23 Russell 2000 Index $100.00 $101.63 $106.31 $139.25 $156.57 $162.92 $155.43 $158.32 $145.97 $120.43 $117.38 $124.19 $127.10 $133.18 $125.87 $142.93 S&P 500 $100.00 $100.63 $109.16 $121.92 $128.96 $139.49 $139.82 $154.70 $147.05 $122.87 $116.39 $124.63 $133.38 $144.45 $139.19 $154.82 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (“Exchange Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Item 5. Market for Registrant's Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities On June 2, 2020, Xperi Holding Corporation’s common stock, par value $0.001 per share, commenced trading on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “XPER".
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities On June 2, 2020, Xperi Holding Corporation’s common stock, par value $0.001 per share, commenced trading on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “XPER”.
On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
No expiration has been specified for this Plan. On April 22, 2021, our Board of Directors authorized an additional $100.0 million of purchases under the Plan. The stock repurchases may be made from time to time, through solicited or unsolicited transactions in the open market, in privately negotiated transactions, or pursuant to a Rule 10b5-1 plan.
Following the separation of Xperi Holding Corporation’s Product businesses, and effective at the open of business on October 3, 2022, Adeia Inc.'s shares of common stock began trading on Nasdaq under the new ticker symbol "ADEA". As of February 7, 2023, there were 105,230,113 outstanding shares of common stock held by 369 stockholders of record.
Following the separation of Xperi Holding Corporation’s product business, and effective at the open of business on October 3, 2022, Adeia Inc.’s shares of common stock began trading on Nasdaq under the new ticker symbol “ADEA”. As of February 7, 2024, there were 107,424,894 outstanding shares of common stock held by 355 stockholders of record.
There is no guarantee that such repurchases under the program will enhance the value of our stock.
There is no guarantee that such repurchases under the program will enhance the value of our stock. There were no repurchases during the year ended December 31, 2023.
Stock Repurchases On June 12, 2020, our Board of Directors terminated a prior stock repurchase program and approved a new stock repurchase plan (the “Plan”) providing for the repurchase of up to $150.0 million of our common stock dependent on market conditions, share price and other factors. No expiration has been specified for this Plan.
We anticipate that all quarterly dividends and stock repurchases will be paid out of cash, cash equivalents and short-term investments. Stock Repurchases On June 12, 2020, our Board of Directors approved a new stock repurchase plan (the “Plan”) providing for the repurchase of up to $150.0 million of our common stock dependent on market conditions, share price and other factors.
Repurchases during the year ended December 31, 2022 were made under this program as described below: Total number of shares purchased Average price paid per share Total number of shares purchased as part of our share repurchase program Approximate dollar value of shares that may yet be purchased under our share repurchase program (in thousands, except share price) March 2022 1,029 $ 16.78 1,029 $ 77,772 30 Stock Performance Graph The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 from June 2, 2020 through December 31, 2022.
As of December 31, 2023, the total remaining amount available for repurchase under the Plan was $77.8 million. 28 Stock Performance Graph The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 from June 2, 2020 through December 31, 2023.
Removed
We anticipate that all quarterly dividends and stock repurchases will be paid out of cash, cash equivalents and short-term investments.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. (Reserved) 31 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8. Financial Statements and Supplementary Data 45 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 46
Biggest changeItem 6. (Reserved) 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8. Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 43

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

86 edited+18 added−28 removed36 unchanged
Biggest changeThe increase was due to the recognition of license revenue associated with an IP license agreement with a large semiconductor company, the execution of a long-term license agreement with a leading consumer electronics and OTT service provider, the renewal of long-term license agreements with two leading social media companies and the renewal of a long-term license agreement with a leading consumer electronics company.
Biggest changeThe decrease of $25.2 million was primarily due to the execution of a new, multi-year license agreement with Micron Technology in the first quarter of 2022 and the execution of a long-term license agreement with a leading consumer electronics and OTT service provider in the second quarter of 2022, partially offset by the execution of long-term license agreements with Kioxia and Western Digital, respectively, in the first quarter of 2023, and the execution of the long-term renewal of a license agreement with Samsung in the third quarter of 2023. 2022 compared to 2021 The increase in revenue during the year ended December 31, 2022, as compared to the prior year, was primarily due to the recognition of license revenue associated with an IP license agreement with Micron Technology, the execution of a long-term license agreement with a leading consumer electronics and OTT service provider, the renewal of long-term license agreements with two leading social media companies and the renewal of a long-term license agreement with a leading consumer electronics company.
Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment and recorded, a loss on debt extinguishment of $8.0 million related to the write-off of unamortized debt discount and issuance costs for the portions of the 2020 Term B Loan Facility considered to be extinguished. There were no such costs and expenses in 2022.
Accordingly, we accounted for the refinancing event for these lenders as a debt extinguishment and recorded, a loss on debt extinguishment of $8.0 million related to the write-off of unamortized debt discount and issuance costs for the portions of the 2020 Term B Loan Facility considered to be extinguished. There were no such costs and expenses in 2023 and 2022.
We primarily license our innovations to leading companies in the broader entertainment and semiconductor industries, and those companies developing new technologies that will help drive these industries forward. Licensing arrangements include access to one or more of our foundational patent portfolios and may also include access to some portions of our industry-leading technologies and know-how.
We primarily license our innovations to leading companies in the broader media entertainment and semiconductor industries, and those companies developing new technologies that will help drive these industries forward. Licensing arrangements include access to one or more of our foundational patent portfolios and may also include access to some portions of our industry-leading technologies and know-how.
Our marketable debt securities are classified as available-for-sale (“AFS”) with credit losses recognized as a credit loss expense and non-credit related unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income or loss. We did not hold such investments as of December 31, 2022.
Our marketable debt securities are classified as available-for-sale (“AFS”) with credit losses recognized as a credit loss expense and non-credit related unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income or loss. We did not hold any such investments as of December 31, 2022.
In addition to the cash requirements outlined above, we have returned cash to stockholders through both quarterly dividend payments and repurchases of our common stock under our stock repurchase plan. Quarterly Dividends In 2022 and 2021, we paid quarterly dividends of $0.05 per share in each of the March, June, September and December quarterly periods.
In addition to the cash requirements outlined above, we have returned cash to stockholders through both quarterly dividend payments and repurchases of our common stock under our stock repurchase plan. Quarterly Dividends In 2023, 2022 and 2021, we paid quarterly dividends of $0.05 per share in each of the March, June, September and December quarterly periods.
Consequently, on October 1, 2022, we recognized a guarantee liability of $19.7 million which represents the fair value of our projected payments of such operating expenses during the term of the Cross Business Agreement. Subsequent changes to the fair value of the guarantee are recognized as part of our results of operations.
Consequently, on October 1, 2022, we recognized a guarantee liability of $19.7 million which represents the fair value of our projected payments of such operating expenses during the term of the Cross Business Agreement. Subsequent changes to the carrying value of the guarantee are recognized as part of our results of operations.
Through providing the IP that helps to power smart devices, entertainment experiences and more, we have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities. Headquartered in Silicon Valley and more than 35 years of operating experience, we have approximately 120 employees, with substantially all of our employees located in the U.S.
Through providing the IP that helps to power smart devices, entertainment experiences and more, we have created a unified ecosystem that reaches highly-engaged consumers and uncovered new business opportunities. Headquartered in Silicon Valley with more than 35 years of operating experience, we have approximately 130 employees, with substantially all of our employees located in the U.S.
Our capacity to pay dividends in the future depends on many factors, including our financial condition, results of operations, capital requirements, capital structure, industry practice and other business conditions that the Board of Directors considers relevant. We anticipate that all quarterly dividends will be paid out of cash, cash equivalents and short-term investments.
Our capacity to pay dividends in the future depends on many factors, including our financial condition, results of operations, capital requirements, capital structure, industry practice and other business conditions that the Board of Directors considers relevant. We anticipate that all quarterly dividends will be paid out of cash, cash equivalents and short-term investments in marketable securities.
We believe that this structure reflects our current operational and financial management following the completion of the Separation and provides the best structure for us to focus on growth opportunities. Our Chief Executive Officer has been determined to be the Chief Operating Decision Maker ("CODM") in consideration with the authoritative guidance on segment reporting.
We believe that this structure reflects our current operational and financial management following the completion of the Separation and provides the best structure for us to focus on growth opportunities. Our Chief Executive Officer has been determined to be the Chief Operating Decision Maker (“CODM”) in consideration with the authoritative guidance on segment reporting.
Since the inception of the Plan, and through December 31, 2022, we have repurchased an aggregate of approximately 10.0 million shares of common stock at a total cost of $172.2 million at an average price of $17.24. As of December 31, 2022, the total remaining amount available for repurchase under the Plan was $77.8 million.
Since the inception of the Plan, and through December 31, 2023, we have repurchased an aggregate of approximately 10.0 million shares of common stock at a total cost of $172.2 million at an average price of $17.24. As of December 31, 2023, the total remaining amount available for repurchase under the Plan was $77.8 million.
Each Adeia stockholder of record received four shares of Xperi Inc. common stock for every ten shares of Adeia common stock that it held on the Record Date. Following the Separation, Adeia retains no ownership interest in Xperi Inc., which is now listed under the ticker symbol "XPER" on the New York Stock Exchange.
Each Adeia stockholder of record received four shares of Xperi Inc. common stock for every ten shares of Adeia common stock that it held on the Record Date. Following the Separation, Adeia retains no ownership interest in Xperi Inc., which is now listed under the ticker symbol “XPER” on the New York Stock Exchange.
Further, our operations and those of our customers have also been negatively impacted by certain trends arising out of the COVID-19 pandemic, including labor market constraints, shortages of semiconductor components, decreased manufacturing capacities, and delays in shipments, product development and product launches.
Further, our operations and those of our customers have also been negatively impacted by certain trends arising out of the COVID-19 pandemic and macroeconomic conditions including labor market constraints, shortages of semiconductor components, decreased manufacturing capacities and delays in shipments, product development and product launches.
The Refinanced Term B Loans contain customary covenants, and as of December 31, 2022, we were in full compliance with such covenants. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements.
The Refinanced Term B Loans contain customary covenants, and as of December 31, 2023, we were in full compliance with such covenants. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements.
The Separation was structured as a spin-off, which was achieved through Adeia's distribution of 100 percent of the outstanding shares of Xperi Inc.'s common stock to holders of Adeia's common stock as of the close of business on the record date of September 21, 2022 (the "Record Date").
The Separation was structured as a spin-off, which was achieved through Adeia’s distribution of 100 percent of the outstanding shares of Xperi Inc.’s common stock to holders of Adeia’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”).
This section of this Form 10-K generally discusses 2022, 2021 and 2020 items and year-to-year comparisons of 2022 against 2021 and of 2021 against 2020. Except otherwise indicated, the year-to-year comparisons and results of operations discussed herein present the results of Adeia Inc. after giving effect to the Separation described herein.
This section of this Form 10-K generally discusses 2023, 2022 and 2021 items and year-to-year comparisons of 2023 against 2022 and of 2022 against 2021. Except otherwise indicated, the year-to-year comparisons and results of operations discussed herein present the results of Adeia Inc. after giving effect to the Separation described herein.
We will maintain a full valuation allowance on our foreign deferred tax asset as the expectation of future taxable income is uncertain. Liquidity and Capital Resources The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the years ended December 31, 2022, 2021 and 2020.
We will maintain a full valuation allowance on our foreign deferred tax asset as the expectation of future taxable income is uncertain. 36 Liquidity and Capital Resources The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the years ended December 31, 2023, 2022 and 2021.
Effective at the open of business on October 3, 2022, Adeia's shares of common stock, par value $0.001 per share, began trading on the Nasdaq Global Select Market under the new ticker symbol "ADEA".
Effective at the open of business on October 3, 2022, Adeia’s shares of common stock, par value $0.001 per share, began trading on the Nasdaq Global Select Market under the new ticker symbol “ADEA”.
The increase in operating loss of $313.0 million or 297% during the year ended December 31, 2022, as compared to the prior year, was primarily due to the decrease in revenue and the increase in operating expenses for the year ended December 31, 2022 as compared to the year ended December 31, 2021 as described above.
The increase in operating loss of $313.0 million or 297% during the year ended December 31, 2022, as compared to the prior year, was primarily due to the decrease in revenue and the increase in operating expenses during the year ended December 31, 2022 as compared to the prior year as described above.
Research and Development Research and development expense (“R&D expense”) consists primarily of employee-related costs, stock-based compensation expense, engineering consulting expenses associated with new IP development, as well as costs related to patent applications and examinations, reverse engineering, materials, supplies and an allocation of facilities costs. All R&D expense is expensed as incurred.
Research and Development Research and development expense (“R&D expense”) consists primarily of personnel costs, stock-based compensation, outside engineering consulting expenses associated with new IP development, as well as costs related to patent applications and examinations, reverse engineering, materials, supplies and an allocation of facilities costs. All R&D expense is expensed as incurred.
After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that the positive evidence outweighed the negative evidence primarily due to cumulative income from our IP Licensing business on a continuing operations basis and the expectation of sustained profitability in future periods, and concluded that it was more-likely-than-not that we would realize our federal and certain state deferred tax assets.
After considering both positive and negative evidence to assess the realizability of our net deferred tax assets, we determined that the positive evidence outweighed the negative evidence primarily due to cumulative income from our IP Licensing business on a continuing operations basis and the expectation of sustained profitability in future periods, and concluded that it was more-likely-than-not that we would realize our U.S. federal and certain state deferred tax assets.
As of December 31, 2022, the balance of the guarantee liability is $20.5 million, including a current portion of $2.4 million. The maximum potential amount of future payments subject to guarantee is approximately $7.5 million per annum between 2023 and 2031.
As of December 31, 2023, the balance of the guarantee liability is $18.5 million, including a current portion of $2.4 million. The maximum potential amount of future payments subject to guarantee is approximately $7.5 million per annum between 2023 and 2031.
The remaining separation costs of $13.7 million were incurred after the Separation and are reflected in continuing operations within operating expenses in our Consolidated Statements of Operations. Reportable Segments Upon completion of the Separation, in the fourth quarter of 2022, we changed our organizational structure to operate and report in one segment: IP Licensing.
The remaining separation costs of $16.4 million were incurred after the Separation and are reflected in continuing operations within operating expenses in our Consolidated Statements of Operations. Reportable Segments Upon completion of the Separation, in the fourth quarter of 2022, we changed our organizational structure to operate and report in one segment: IP Licensing.
Cash Flows from Investing Activities Net cash used in investing activities was $2.9 million for the year ended December 31, 2022, primarily related to purchases of short-term investments of $4.5 million, and capital expenditures of $12.6 million, partially offset by maturities and sales of securities of $64.8 million.
Net cash used in investing activities, including discontinued operations, was $2.9 million for the year ended December 31, 2022, primarily related to purchases of short-term investments of $4.5 million, and capital expenditures of $12.6 million, partially offset by maturities and sales of securities of $64.8 million.
Additionally, the operating results from continuing operations for all periods presented and those prior to the Separation, include certain general corporate overhead costs that do not meet the requirements to be presented in discontinued operations, although such costs are not reflective of our on-going operations.
Unless noted otherwise, the discussion of our results of operations pertain to continuing operations. Additionally, the operating results from continuing operations for all periods presented and those prior to the Separation, include certain general corporate overhead costs that do not meet the requirements to be presented in discontinued operations, although such costs are not reflective of our on-going operations.
We did not recognize any loss or gain on extinguishment of debt in 2022.
We did not recognize any loss or gain on extinguishment of debt in 2023 and 2022.
Additionally, we are obligated to pay $73.5 million by April 2023, based on certain leverage ratios and our excess cash flow generated for the year ended December 31, 2022. We are obligated to continue to pay a portion of excess cash flows on an annual basis.
Additionally, we are obligated to pay $29.1 million by April 2024, based on certain leverage ratios and our excess cash flow generated for the year ended December 31, 2023. We are obligated to continue to pay a portion of excess cash flows on an annual basis.
As a result, during the fourth quarter of 2022, we released the valuation allowance on all the federal deferred tax assets and state deferred tax assets, except for California and certain other states where tax attributes can only be utilized against the income of specific legal entities. The release of the valuation allowance resulted in $86.1 million of tax benefit.
As a result, during the fourth quarter of 2022, we released the valuation allowance on all the federal deferred tax assets and state deferred tax assets, except for California and certain other states where tax attributes can only be utilized against the income of specific legal entities.
If we are successful in receiving our South Korean withholding tax refunds of $113.7 million, including interest and foreign exchange gain, then $63.6 million of unrecognized tax benefit would be payable to the U.S. tax authorities.
If we are successful in receiving our South Korean withholding tax refunds of $120.3 million, including interest and foreign exchange gain, then $64.6 million of unrecognized tax benefit would be payable to the U.S. tax authorities.
The cash flows below are presented on a consolidated basis and therefore, also include $120.7 million and $85.6 million of cash and cash equivalents included in current assets of discontinued operations in the Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively.
The cash flows below are presented on a consolidated basis and therefore, also include $120.7 million of cash and cash equivalents included in current assets of discontinued operations as of December 31, 2021.
The income tax benefit of $28.6 million was primarily related to the release of certain valuation allowances of $78.7 million, partially offset by tax on current year income, foreign withholding taxes and, unrealized foreign exchange loss from prior year South Korea refund claims.
The income tax benefit of $28.6 million was primarily related to the release of certain valuation allowances of $78.7 million, partially offset by tax on current year income, foreign withholding taxes and, unrealized foreign exchange loss from prior year South Korea refund claims. The negative tax rate is the result of a tax benefit recorded against pre-tax income.
Other Purchase Obligations Our other purchase obligations primarily consist of non-cancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2022, we had purchase obligations of $0.7 million, including $0.4 million due in 2023 and $0.3 million due in 2024.
Other Purchase Obligations Our other purchase obligations primarily consist of non-cancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2023, we had purchase obligations of $3.4 million, including $1.8 million due in 2024, $1.4 million due in 2025, and $0.2 million due thereafter.
Under the existing loan agreements, we have future minimum principal payments for our debt of $40.5 million in each year from 2023 through 2026, with the remaining principal balance of $546.8 million due in 2028. After the Separation, we own the debt under the Refinanced B Term Loans.
Under the existing loan agreements, we have future minimum principal payments for our debt of $40.5 million in each year from 2024 through 2027, with the remaining principal balance of $439.3 million due in 2028. After the Separation, we own the debt under the Refinanced B Term Loans.
Capital Expenditures Our capital expenditures for property and equipment consist primarily of purchases of computer hardware and software, information systems, and production and test equipment. During the years ended December 31, 2022 and 2021, we spent $12.6 million and $14.0 million on capital expenditures, respectively, and we expect capital expenditures in 2023 to be approximately $5.0 million.
Capital Expenditures Our capital expenditures for property and equipment consist primarily of leasehold improvements, purchases of computer hardware and software, information systems, and production and test equipment. During the years ended December 31, 2023 and 2022, we spent $3.8 million and $12.6 million on capital expenditures, respectively, and we expect capital expenditures in 2024 to be approximately $2.5 million.
In addition, discontinued operations excludes the historical intercompany balances and transactions between the Company and Xperi Inc. that were eliminated in consolidation. In connection with the Separation, we incurred separation costs of $42.3 million from January 1, 2020 to December 31, 2022.
In addition, discontinued operations excludes the historical intercompany balances and transactions between Adeia and Xperi Inc. that were eliminated in consolidation. In connection with the Separation, we incurred separation costs of $45.0 million from January 1, 2020 to December 31, 2023.
Cash flows provided by operations were $183.0 million for the year ended December 31, 2022, primarily due to our net loss of $298.6 million being adjusted for non-cash items of depreciation of $17.1 million, amortization of intangible assets of $143.2 million, stock-based compensation expense of $52.6 million, and an impairment charge of $354.0 million recognized in the third quarter of 2022 and included as part of discontinued operations for the year ended December 31, 2022. 41 Cash flows provided by operations were $234.8 million for the year ended December 31, 2021, primarily due to our net loss of $58.9 million being adjusted for non-cash items of depreciation of $23.8 million, amortization of intangible assets of $203.4 million, stock-based compensation expense of $58.2 million, and a loss on debt extinguishment of $8.0 million.
Cash flows provided by operations, including discontinued operations, were $183.0 million for the year ended December 31, 2022, primarily due to our net loss of $298.6 million being adjusted for non-cash items of depreciation of $17.1 million, amortization of intangible assets of $143.2 million, stock-based compensation expense of $52.6 million, and an impairment charge of $354.0 million recognized in the third quarter of 2022 and included as part of discontinued operations for the year ended December 31, 2022.
As a result of the filed and planned refund claims, we recorded a total of $113.7 million and $118.1 million as a noncurrent income tax receivable at December 31, 2022 and 2021, respectively, $63.6 million and $63.1 million as a noncurrent income tax payable at December 31, 2022 and 2021, respectively, and $42.2 million and $39.9 million as a reduction in deferred tax assets at December 31, 2022 and 2021, respectively.
As a result of the filed and planned refund claims, we recorded a total of $120.3 million and $113.7 million as a noncurrent income tax receivable at December 31, 2023 and 2022, respectively, $64.6 million and $63.6 million as a noncurrent income tax payable at December 31, 2023 and 2022, respectively, and $49.1 million and $42.2 million as a reduction in deferred tax assets at December 31, 2023 and 2022, respectively.
Following the Separation, we are a leading intellectual property ("IP") licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and more than 9,750 patents and patent applications worldwide.
Following the Separation, we are a leading IP licensing platform in the consumer and entertainment space, with a diverse portfolio of media and semiconductor intellectual property and approximately 10,950 patents and patent applications worldwide.
Discontinued Operations Years Ended December 31, 2022 2021 2020 Revenue $ 366,730 $ 486,484 $ 376,101 Operating expenses 784,950 591,700 465,928 Operating loss (418,220 ) (105,216 ) (89,827 ) Interest expense (754 ) — — Other income and expense, net 62 1,870 1,242 Loss before taxes (418,912 ) (103,346 ) (88,585 ) Provision for income taxes 18,066 23,550 7,425 Net loss from discontinued operations, net of tax (436,978 ) (126,896 ) (96,010 ) Less: net loss attributable to noncontrolling interest (2,706 ) (3,456 ) (2,966 ) Net loss attributable to discontinued operations $ (434,272 ) $ (123,440 ) $ (93,044 ) 37 As the Separation occurred on October 1, 2022, the current period net loss from discontinued operations, net of tax includes 9 months of Xperi Inc.'s operations compared to a full year in 2021 and 2020.
Discontinued Operations Years Ended December 31, 2022 2021 Revenue $ 366,730 $ 486,484 Operating expenses 784,950 591,700 Operating loss (418,220 ) (105,216 ) Interest expense (754 ) — Other income and expense, net 62 1,870 Loss before taxes (418,912 ) (103,346 ) Provision for income taxes 18,066 23,550 Net loss from discontinued operations, net of tax (436,978 ) (126,896 ) Less: net loss attributable to noncontrolling interest (2,706 ) (3,456 ) Net loss attributable to discontinued operations $ (434,272 ) $ (123,440 ) As the Separation occurred on October 1, 2022, net loss from discontinued operations, net of tax for the year ended December 31, 2022, includes nine months of Xperi Inc.’s operations compared to a full year in 2021.
Moreover, since the onset of the COVID-19 pandemic, United States federal, state and foreign government policies enacted to combat the pandemic have contributed to a recent rise of inflation that has increased, and may continue to increase, the cost of our operations and have had, and may continue to have, an adverse effect on demand for our customers' products and services and in turn our licensing revenues, which has and may continue to adversely affect our financial performance. 32 Although a significant portion of our revenue is derived from fixed-fee and minimum-guarantee arrangements from large, well-capitalized customers, our per-unit and variable-fee based revenue will continue to be susceptible to the volatility, labor shortages, supply chain disruptions, microchip shortages, and potential market downturns precipitated by the COVID-19 pandemic.
Moreover, United States federal, state and foreign government policies have contributed to a rise of inflation that has increased, and may continue to increase, the cost of our operations and have had, and may continue to have, an adverse effect on demand for our customers’ products and services and in turn our licensing revenues, which has had and may continue to have an adverse effect on our financial performance. 30 Although a significant portion of our revenue is derived from fixed-fee and minimum-guarantee arrangements from large, well-capitalized customers, our per-unit and variable-fee based revenue will continue to be susceptible to global health concerns, outbreaks, pandemics, armed conflict, market volatility, labor shortages, supply chain disruptions, microchip shortages and market downturns.
Other Income and Expense, Net Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Decrease % Change Other income and expense, net $ 2,047 $ 768 $ 3,212 $ 1,279 167 % $ (2,444 ) (76 )% 2022 compared to 2021 The increase in other income and expense, net during the year ended December 31, 2022, as compared to the prior year, was primarily due to an increase in interest income from significant financing components from revenue contracts executed during the year, partially offset by a decrease in realized loss on marketable investments. 2021 compared to 2020 The decrease in other income and expense, net during the year ended December 31, 2021, as compared to the prior year, was primarily due to a decrease in interest income from significant financing components from revenue contracts and a decrease in interest income from our short-term investments.
Other Income and Expense, Net Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Other income and expense, net $6,320 $2,047 $768 $4,273 209% $1,279 167% 2023 compared to 2022 The increase in other income and expense, net during the year ended December 31, 2023, as compared to the prior year, was primarily due to an increase in interest income from significant financing components from certain revenue contracts and an increase in realized gain on our investment in marketable securities. 2022 compared to 2021 The increase in other income and expense, net during the year ended December 31, 2022, as compared to the prior year, was primarily due to an increase in interest income from significant financing components from certain revenue contracts executed during the year, partially offset by a decrease in realized loss on marketable investments.
Revenue is recognized in the period in which the customer’s sales or usage are estimated to have occurred. This may result in an adjustment to revenue when actual sales or usage are subsequently reported by the customer, generally in the month or quarter following sales or usage.
This may result in an adjustment to revenue when actual sales or usage are subsequently reported by the customer, generally in the month or quarter following sales or usage.
We believe that based on current levels of operations and anticipated growth, our cash from operations, together with cash and cash equivalents currently available, will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and thereafter for the foreseeable future.
There is no guarantee that such repurchases under the Plan will enhance the value of our common stock. 38 We believe that based on current levels of operations and anticipated growth, our cash from operations, together with cash and cash equivalents currently available, will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months and thereafter for the foreseeable future.
Provision for (benefit from) Income Taxes Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Decrease % Change Increase % Change Provision for (benefit from) income taxes $ (28,620 ) $ 4,828 $ (15,312 ) $ (33,448 ) (693 )% $ 20,140 (132 )% For the year ended December 31, 2022, we recorded an income tax benefit of $28.6 million on a pretax income from continuing operations of $109.8 million, which resulted in an effective tax rate of (26.1)%.
Provision for (benefit from) Income Taxes Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Decrease % Change Provision for (benefit from) income taxes $12,604 $(28,620) $4,828 $41,224 (144)% $(33,448) (693)% For the year ended December 31, 2023, we recorded an income tax expense of $12.6 million on a pretax income from continuing operations of $80.0 million, which resulted in an effective tax rate of 15.8%.
The decrease was primarily due to increased, unbilled contract receivables, which resulted from multi-year license agreements executed during the year. 33 Results of Operations Revenue We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers.
The decrease was primarily due to an increase in unbilled contracts receivable, which resulted from multi-year and long-term license agreements executed during the year. Results of Operations Revenue We derive the majority of our revenue from the licensing of our intellectual property (“IP”) rights to customers.
Separation costs primarily consist of third-party advisory, consulting, legal and professional service, IT and employee bonus costs directly related to the Separation, as well as other items that are incremental and one-time in nature. Out of these costs, $28.6 million are reflected in our Consolidated Statements of Operations as discontinued operations for all periods presented.
Separation costs primarily consist of third-party advisory, consulting, legal and professional service, IT and employee bonus costs directly related to the Separation, as well as other items that are incremental and one-time in nature. Out of these costs, $28.6 million were incurred prior to the Separation and are included in net loss from discontinued operations, net of tax.
Net cash used in financing activities was $196.2 million for the year ended December 31, 2021 principally due to $84.0 million in repayment of indebtedness, $4.3 million in net debt refinancing costs, $21.0 million in dividends paid, and $100.8 million in repurchases of common stock, partially offset by $13.8 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
Cash Flows from Financing Activities Net cash used in financing activities was $178.3 million for the year ended December 31, 2023 principally due to $148.0 million in repayment of indebtedness, $21.3 million in dividends paid, and $11.3 million in repurchases of common stock for tax withholdings on equity awards, partially offset by $2.4 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
The income tax expense was primarily related to foreign withholding taxes, unrealized foreign exchange loss from prior year South Korea refund claims and state income taxes, partially offset by releases of unrecognized tax benefits.
The income tax expense of $12.6 million was primarily related to tax on current year income, foreign withholding tax and unrealized foreign exchange loss from prior year South Korea refund claims offset by releases of uncertain tax positions.
Amortization Expense Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Decrease % Change Increase % Change Amortization expense $ 97,077 $ 98,090 $ 58,617 $ (1,013 ) (1 )% $ 39,473 67 % 2022 compared to 2021 The decrease in amortization expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to certain intangible assets acquired in prior years, which became fully amortized during the year. 2021 compared to 2020 The increase in amortization expense during the year ended December 31, 2021, as compared to the prior year, was primarily due to amortization of intangible assets recorded in connection with the Mergers in June 2020.
Amortization Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Decrease % Change Decrease % Change Amortization expense $93,735 $97,077 $98,090 $(3,342) (3)% $(1,013) (1)% 2023 compared to 2022 The decrease in amortization expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to certain intangible assets acquired in prior years, which became fully amortized during 2022.
Litigation expense may fluctuate between periods because of planned or ongoing litigation, as described in Part I, Item 3 – Legal Proceedings. 36 Interest Expense Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Increase % Change Interest expense $ (45,335 ) $ (38,973 ) $ (37,873 ) $ (6,362 ) 16 % $ (1,100 ) 3 % 2022 compared to 2021 The increase in interest expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased interest rates on our variable interest rate debt due to the rising interest rate environment. 2021 compared to 2020 The increase in interest expense during the year ended December 31, 2021, as compared to the prior year, was primarily due to higher average debt balance in 2021 as we entered into a new term loan of $1,050 million on June 1, 2020 to refinance our indebtedness, partially offset by a reduction in interest rate as a result of the debt refinancing described below.
Litigation expense may fluctuate between periods because of planned or ongoing litigation, as described in Part I, Item 3 – Legal Proceedings. 34 Interest Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Interest expense $62,574 $45,335 $38,973 $17,239 38% $6,362 16% 2023 compared to 2022 The increase in interest expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to increased interest rates on our variable interest rate debt due to the rising interest rate environment, partially offset by a lower debt balance. 2022 compared to 2021 The increase in interest expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased interest rates on our variable interest rate debt due to the rising interest rate environment.
The following table presents our historical operating results for the periods indicated as a percentage of revenue: Years ended December 31, 2022 2021 2020 Revenue 100 % 100 % 100 % Operating expenses: Research and development 10 10 7 Selling, general and administrative 31 33 27 Amortization expense 22 25 11 Litigation expense 2 1 3 Total operating expenses 65 69 48 Operating income from continuing operations 35 31 52 Interest expense (10 ) (10 ) (7 ) Other income and expense, net — — 1 Loss on debt extinguishment — (2 ) (2 ) Income from continuing operations before income taxes 25 19 44 Provision for (benefit from) income taxes (7 ) 1 (3 ) Net income from continuing operations 32 % 18 % 47 % The following table sets forth our revenue by year (in thousands, except for percentages): Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Decrease % Change Revenue $ 438,933 $ 391,212 $ 515,919 $ 47,721 12 % $ (124,707 ) (24 )% 2022 compared to 2021 The increase in revenue during the year ended December 31, 2022, as compared to the prior year, was primarily due to the recognition of license revenue associated with an IP license agreement with a large semiconductor company, the execution of a long-term license agreement with a leading consumer electronics and OTT service provider, the renewal of long-term license agreements with two leading social media companies and the renewal of a long-term license agreement with a leading consumer electronics company.
The following table presents our historical operating results for the periods indicated as a percentage of revenue: Years ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Operating expenses: Research and development 14 10 10 Selling, general and administrative 25 31 33 Amortization expense 24 22 25 Litigation expense 2 2 1 Total operating expenses 65 65 69 Operating income from continuing operations 35 35 31 Interest expense (16 ) (10 ) (10 ) Other income and expense, net 1 — — Loss on debt extinguishment — — (2 ) Income from continuing operations before income taxes 20 25 19 Provision for (benefit from) income taxes 3 (7 ) 1 Net income from continuing operations 17 % 32 % 18 % The following table sets forth our revenue by year (in thousands, except for percentages): Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Decrease % Change Increase % Change Revenue $388,788 $438,933 $391,212 $(50,145) (11)% $47,721 12% 2023 compared to 2022 The decrease in revenue during the year ended December 31, 2023, as compared to the prior year, was primarily attributable to the execution of a new, multi-year license agreement with Micron Technology in the first quarter of 2022 and the execution of a long-term license agreement with a leading consumer electronics and OTT service provider in the second quarter of 2022, for which a meaningful portion of the total revenue was recognized in the respective quarters, and in part due to a decline in royalty revenue from certain Pay-TV customers.
(formerly known as Xperi Holding Corporation) ("Adeia", "we") completed the previously announced separation ("the Separation") of its product business into an independent, publicly-traded company, Xperi Inc. ("Xperi Inc.").
Business Overview On October 1, 2022, Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia”, “we”) completed the previously announced separation (“the Separation”) of its product business into an independent, publicly-traded company, Xperi Inc. (“Xperi Inc.”).
COVID-19 Impact and Resultant Macroeconomic Conditions The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business. The impact to date has included periods of significant volatility in the markets we serve, in particular the broad consumer electronics market. The pandemic has also caused challenges and delays in acquiring new customers and executing license renewals.
Macroeconomic Conditions The current macroeconomic environment, which has arisen in part from the effects of the COVID-19 pandemic, has had, and may continue to have, an adverse impact on our business. The impact to date has included periods of significant volatility in the markets we serve, in particular the broad consumer electronics market.
The decrease in revenue of $119.8 million or 25% during the year ended December 31, 2022, as compared to the prior year, was primarily driven by a decrease in revenue from the pay-TV and connected car market verticals partially offset by increased revenue from the settlement of a contract dispute with a large mobile imagining customer and increased revenue from the consumer electronics market vertical.
The decrease in revenue of $119.8 million or 25% during the year ended December 31, 2022, as compared to the prior year, was primarily driven by a decrease in revenue from the Pay-TV and connected car market verticals partially offset by increased revenue from the settlement of a contract dispute with a large mobile imagining customer and increased revenue from the consumer electronics market vertical. 35 The increase in operating expenses of $193.3 million or 33% during the year ended December 31, 2022, as compared to the prior year, was primarily driven by a goodwill impairment charge of $354.0 million, an increase in R&D costs primarily due to employees hired in connection with business combinations, an increase in separation and related costs, and an increase in variable compensation.
The negative tax rate is the result of a tax benefit recorded against pre-tax income. 38 For the year ended December 31, 2021, we recorded an income tax provision of $4.8 million on a pretax income from continuing operations of $72.8 million, which resulted in an effective tax rate of 6.6%.
For the year ended December 31, 2022, we recorded an income tax benefit of $28.6 million on a pretax income from continuing operations of $109.8 million, which resulted in an effective tax rate of (26.1)%.
The 2020 Credit Agreement initially provided for a five-year senior secured term B loan facility in an aggregate principal amount of $1,050 million (the “2020 Term B Loan Facility”). In connection with the Amendment, we made a voluntary prepayment of $50.6 million of the term loan outstanding under the 2020 Credit Agreement using cash on hand.
The 2020 Credit Agreement initially provided for a five-year senior secured term B loan facility in an aggregate principal amount of $1,050 million (the “2020 Term B Loan Facility”).
These factors have negatively impacted our financial condition and results of operations, which may result in an impairment of our long-lived assets, including goodwill, and increased credit losses.
The current macroeconomic environment has also caused challenges and delays in acquiring new customers and executing license renewals. These factors have negatively impacted our financial condition and results of operations, which may result in an impairment of our long-lived assets, including goodwill, and increased credit losses.
December 31, (in thousands, except for percentages) 2022 2021 2020 Cash and cash equivalents $ 114,555 $ 201,121 $ 170,188 Short-term investments - 60,534 86,947 Total cash, cash equivalents and short-term investments $ 114,555 $ 261,655 $ 257,135 Percentage of total assets 9 % 11 % 10 % Years Ended December 31, 2022 2021 2020 Net cash from operating activities $ 183,023 $ 234,789 $ 427,603 Net cash used in investing activities $ (2,913 ) $ (6,206 ) $ 17,840 Net cash used in financing activities $ (263,257 ) $ (196,245 ) $ (351,136 ) Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments.
December 31, (in thousands, except for percentages) 2023 2022 2021 Cash and cash equivalents $ 54,560 $ 114,555 $ 201,121 Marketable securities 29,012 — 60,534 Total cash, cash equivalents and marketable securities $ 83,572 $ 114,555 $ 261,655 Years Ended December 31, 2023 2022 2021 Net cash from operating activities $ 152,755 $ 183,023 $ 234,789 Net cash used in investing activities $ (34,488 ) $ (2,913 ) $ (6,206 ) Net cash used in financing activities $ (178,262 ) $ (263,257 ) $ (196,245 ) Our primary sources of liquidity and capital resources are our operating cash flows and our short-term investments in marketable securities.
Such increases were partially offset by the delay in renewals of media related IP licenses that expired in 2022 and were not renewed until early 2023, as well as non-recurring revenue recognized in 2021 related to certain media IP licensing agreements. • Cash provided by operating activities decreased by $51.8 million, or 22%, from $234.8 million to $182.8 million.
Such increases were partially offset by the delay in renewals of media related IP licenses that expired in 2022 and were not renewed until early 2023, as well as non-recurring revenue recognized in 2021 related to certain media IP licensing agreements. Recurring revenues for the years ended December 31, 2022 and 2021 were $363.6 million and $350.6 million, respectively.
Key Metrics In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the year ended December 31, 2022, as compared to the year ended December 31, 2021: • Revenue increased by $47.7 million, or 12%, from $391.2 million to $439.0 million.
Key Metrics In evaluating our financial condition and operating performance, we primarily focus on revenue and cash flows from operations. For the year ended December 31, 2023, as compared to the same period in 2022: • Revenue decreased by $50.1 million, or 11.4%, from $438.9 million in 2022 to $388.8 million in 2023.
Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Decrease % Change Selling, general and administrative $ 135,630 $ 129,214 $ 136,800 $ 6,416 5 % $ (7,586 ) (6 )% 35 2022 compared to 2021 The increase in SGA expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased stock-based compensation associated with the accelerated vesting of outstanding restricted stock awards upon the separation of a former executive in the first quarter of 2022, an increase in variable compensation, and the incurrence of certain separation related costs upon the consummation of the Separation in the fourth quarter of 2022.
The decrease was partially offset by an increase in marketing and advertising expense, professional services costs and personnel costs as a result of increased headcount. 2022 compared to 2021 The increase in SG&A expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to increased stock-based compensation associated with the accelerated vesting of outstanding restricted stock awards upon the separation of a former executive in the first quarter of 2022, an increase in variable compensation, and the incurrence of certain separation related costs upon the consummation of the Separation in the fourth quarter of 2022.
We anticipate interest expense will increase in 2023, when compared to 2022, as a result of the effect of rising interest rates on our existing variable-rate debt, partially offset by a full year of a lower debt balance and amortization of debt discount and issuance costs.
We anticipate interest expense will decrease in 2024, when compared to 2023, as a result of a full year of a lower debt balance and amortization of debt discount and issuance costs.
Refer to “Note 17 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements for additional detail. 40 Income Tax Payable As of December 31, 2022, we had accrued $87.3 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which includes an immaterial amount of accrued interest and penalties.
Income Tax Payable As of December 31, 2023, we had accrued $81.8 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which includes an immaterial amount of accrued interest and penalties.
Cash and cash equivalents totaled $114.6 million at December 31, 2022, a decrease of $86.6 million from $201.1 million at December 31, 2021. 39 The primary objectives of our investment activities are to preserve principal and to maintain liquidity, while at the same time capturing a market rate of return.
The primary objectives of our investment activities are to preserve principal and to maintain liquidity, while at the same time capturing a market rate of return.
Cash Flows from Financing Activities Net cash used in financing activities was $263.3 million for the year ended December 31, 2022 principally due to $40.5 million in repayment of indebtedness, $20.9 million in dividends paid, $33.2 million in repurchases of common stock, and $183.0 net cash impact of the Separation, partially offset by $14.3 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
Net cash used in financing activities, including discontinued operations, was $263.3 million for the year ended December 31, 2022 principally due to $40.5 million in repayment of indebtedness, $20.9 million in dividends paid, $33.2 million in repurchases of common stock, and $183.0 net cash impact of the Separation, partially offset by $14.3 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans. 39 Long-term Debt On June 8, 2021, we amended (the “Amendment”) that certain Credit Agreement dated June 1, 2020 by and among us, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “2020 Credit Agreement”).
Net cash used in investing activities was $6.2 million for the year ended December 31, 2021, primarily related to purchases of short-term investments of $67.3 million, cash used in the MobiTV Acquisition of $17.4 million and capital expenditures of $14.0 million, partially offset by maturities and sales of securities of $92.7 million.
Cash Flows from Investing Activities Net cash used in investing activities was $34.5 million for the year ended December 31, 2023, primarily related to purchases of short-term investments in marketable securities of $42.8 million, and purchases of long-lived assets of $6.3 million, partially offset by maturities of marketable securities of $14.7 million.
Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Increase % Change Research and development $ 44,579 $ 39,608 $ 35,080 $ 4,971 13 % $ 4,528 13 % 2022 compared to 2021 The increase in R&D expense during the year ended December 31, 2022, as compared to the prior year, was primarily driven by higher employee-related costs due to increased headcount. 2021 compared to 2020 The increase in R&D expense during the year ended December 31, 2021, as compared to the prior year, was primarily due to the inclusion of a full year of post-merger TiVo IP Licensing expenses.
Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Research and development $54,264 $44,579 $39,608 $9,685 22% $4,971 13% 2023 compared to 2022 The increase in R&D expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to an increase in patent prosecution costs associated with an increase in patent filings to grow our patent portfolio, professional services costs and personnel costs as a result of increased headcount. 2022 compared to 2021 The increase in R&D expense during the year ended December 31, 2022, as compared to the prior year, was primarily driven by higher employee-related costs due to increased headcount.
This decrease resulted primarily from $183.0 million in net cash decrease resulting from the Separation, $40.5 million in repayment of long-term debt, $33.2 million in repurchases of common stock, $20.9 million in dividends paid, and $12.6 million of capital expenditures, partially offset by $183.0 million of cash generated from operations and $14.3 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
This decrease resulted primarily from $148.0 million in repayment of long-term debt, $11.3 million in repurchases of common stock for tax withholdings on equity awards, $21.3 million in dividends paid, and $6.3 million in purchases of long-lived assets, partially offset by $152.8 million of cash generated from operations and $2.4 million in proceeds from the issuance of common stock under our employee stock grant programs and employee stock purchase plans.
These purchase obligations represent commitments under enforceable and legally binding agreements and do not represent the entire anticipated purchases in the future.
These purchase obligations represent commitments under enforceable and legally binding agreements and do not represent the entire anticipated purchases in the future. Refer to “Note 16 – Commitments and Contingencies ” of the Notes to Consolidated Financial Statements for additional detail.
We commenced repaying quarterly installments under the Refinanced Term B Loans in the third quarter of 2021. 42 At December 31, 2022, $749.3 million was outstanding under the Refinanced Term B Loans with an interest rate, including amortization of debt discount and issuance costs of $19.9 million. Interest is payable monthly.
At December 31, 2023, $601.3 million was outstanding under the Refinanced Term B Loans with an interest rate, including unamortized debt discount and issuance costs of $15.6 million. Interest is payable monthly.
Key Developments The accounting requirements for reporting the Separation of Xperi Inc. as a discontinued operation were met when the Separation was completed on October 1, 2022.
Key Developments The accounting requirements for reporting the Separation of Xperi Inc. as a discontinued operation were met when the Separation was completed on October 1, 2022. Accordingly, the financial results of Xperi Inc. for the years ended December 31, 2022 and 2021 are presented as net loss from discontinued operations, net of tax on the Consolidated Statements of Operations.
The primary judgments include identifying the performance obligations in the contract, estimating variable consideration, estimating quarterly royalties prior to receiving the royalty reports from the licensee, determining standalone selling price and allocating consideration in a contract with multiple performance obligations. We generally recognize royalty revenue from per-unit or per-subscriber licenses based on units shipped or manufactured or number of subscribers.
The primary judgments include identifying the performance obligations in the contract, estimating variable consideration relating to potential future price adjustments as a result of legal contract disputes, estimating quarterly royalties prior to receiving the royalty reports from the licensee, determining standalone selling price and allocating consideration in a contract with multiple performance obligations.
Litigation Expense Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 2022 2021 2020 Increase % Change Decrease % Change Litigation expense $ 8,587 $ 5,272 $ 17,967 $ 3,315 63 % $ (12,695 ) (71 )% 2022 compared to 2021 The increase in litigation expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to a $2.5 million reserve related to the Videotron matter and a $2.6 million reserve related to the Bell and Telus matter.
Litigation Expense Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 2023 2022 2021 Increase % Change Increase % Change Litigation expense $9,333 $8,587 $5,272 $746 9% $3,315 63% 2023 compared to 2022 The increase in litigation expense during the year ended December 31, 2023, as compared to the prior year, was primarily due to increased legal fees during 2023 as a result of increased case activity, partially offset by a $2.5 million expense related to the Videotron matter and $2.6 million expense related to the Bell and Tellus matter that were each recorded in the second half of 2022.
See Part I, Item 3. – Legal Proceedings for additional information regarding these matters. Such increases were partially offset by reduced case activity. 2021 compared to 2020 The decrease in litigation expense during the year ended December 31, 2021, as compared to the prior year, was primarily due to the resolution of prior litigation and reduced case activity.
See Part I, Item 3. – Legal Proceedings for additional information regarding these matters. 2022 compared to 2021 The increase in litigation expense during the year ended December 31, 2022, as compared to the prior year, was primarily due to a $2.5 million expense related to the Videotron matter and a $2.6 million expense related to the Bell and Telus matter.
As of December 31, 2022, fixed lease payment obligations amounted to $7.5 million, with $2.4 million payable within 12 months. Refer to “Note 8 – Leases” of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities. Guarantee Prior to the Separation, we and a subsidiary of Xperi Inc.
Refer to “Note 8 – Leases ” of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities. 37 Guarantee Prior to the Separation, we and a subsidiary of Xperi Inc.
Cash, cash equivalents and short-term investments were $114.6 million at December 31, 2022, a decrease of $147.1 million from $261.7 million at December 31, 2021.
Cash, cash equivalents and marketable securities were $83.6 million at December 31, 2023, a decrease of $31.0 million from $114.6 million at December 31, 2022.
Should there be a change in our ability to recover our deferred tax assets, our provision for income taxes would fluctuate in the period of the change. We account for uncertain tax positions in accordance with authoritative guidance related to income taxes. The calculation of our unrecognized tax benefits involves dealing with uncertainties in the application of complex tax regulations.
We account for uncertain tax positions in accordance with authoritative guidance related to income taxes. The calculation of our unrecognized tax benefits involves dealing with uncertainties in the application of complex tax regulations. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures.
The interest payments may vary with changes in interest rates, as well as due to accelerated payments of the principal amount. Refer to “Note 12 – Debt” of the Notes to Consolidated Financial Statements for additional information on debt obligations and maturities. Leases We have lease arrangements for office and research facilities, data centers and office equipment.
Refer to “Note 11 – Debt ” of the Notes to Consolidated Financial Statements for additional information on debt obligations and maturities. Leases We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2023, fixed lease payment obligations amounted to $9.7 million, with $0.5 million payable within 12 months.
The excess cash flow payment has been classified as current portion of long-term debt in the Consolidated Balance Sheet as of December 31, 2022. Future interest payments associated with the debt, based on current interest rates, total $265.3 million, with $55.6 million payable within 12 months.
Additionally, we are required to make $29.1 million in payments based on the consolidated excess cash flow clause within the debt agreement. The excess cash flow payment has been classified as current portion of long-term debt in the Consolidated Balance Sheet as of December 31, 2023.
If recovery is not likely on a more-likely-than-not basis, we must increase our provision for income taxes by recording a valuation allowance against our deferred tax assets. We considered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
We must assess the likelihood that we will be able to realize our deferred tax assets. If realizability is not likely on a more-likely-than-not basis, we must increase our provision for income taxes by recording a valuation allowance against our deferred tax assets.
Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period. We must assess the likelihood that we will be able to recover our deferred tax assets.
These estimates and judgments are used in the calculation of tax credits, tax benefits and deductions and in the calculation of tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2021, the fair value of our investments classified as available-for-sale securities was $60.5 million. Unrealized losses, net of tax, on these investments were not material as of December 31, 2022 and 2021, respectively. We did not hold any derivatives, derivative commodity instruments or other similar financial instruments in our portfolio as of December 31, 2022.
Biggest changeWe did not hold investments classified as marketable securities as of December 31, 2022. Unrealized losses, net of tax, on these investments were not material as of December 31, 2023. We did not hold any derivatives, derivative commodity instruments or other similar financial instruments in our portfolio as of December 31, 2023.
To achieve these objectives, we maintain our portfolio of cash, cash equivalents and investments in a variety of securities, which are subject to risks including: Interest Rate Risk As of December 31, 2022, we had $749.3 million of outstanding indebtedness that was subject to floating interest rates.
To achieve these objectives, we maintain our portfolio of cash, cash equivalents and investments in a variety of securities, which are subject to risks including: Interest Rate Risk As of December 31, 2023, we had $601.3 million of outstanding indebtedness that was subject to floating interest rates.
During 2022, the impact of foreign exchange rate fluctuations related to translation of our foreign subsidiaries’ financial statements was immaterial to our consolidated financial statements.
During 2023, the impact of foreign exchange rate fluctuations related to translation of our foreign subsidiaries’ financial statements was immaterial to our Consolidated Financial Statements.
At December 31, 2022, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $7.3 million.
At December 31, 2023, a 1% increase in the effective interest rate on our outstanding debt throughout a one-year period would result in an annual increase in our interest expense of approximately $5.7 million.
Bank Liquidity Risk As of December 31, 2022, we have approximately $114.6 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority of which is held with domestic financial institutions.
Bank Liquidity Risk As of December 31, 2023, we have approximately $48.8 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority of which is held with high quality domestic financial institutions.
Our marketable debt securities, consisting primarily of municipal bonds and notes, corporate bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit, are classified as available-for-sale securities. We did not hold investments classified as available-for-sale securities as of December 31, 2022.
Our marketable debt securities, consisting primarily of municipal bonds and notes, corporate bonds and notes, commercial paper, treasury and agency notes and bills and certificates of deposit, are classified as available-for-sale securities. As of December 31, 2023, the fair value of our investments classified as marketable securities was $29.0 million.

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