idcc-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-33579

INTERDIGITAL, INC.

(Exact Name of Registrant as Specified in Its Charter)


Pennsylvania						82-4936666
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

200 Bellevue Parkway, Suite 300, Wilmington, DE 19809-3727

(Address of Principal Executive Offices and Zip Code)

(302) 281-3600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	IDCC	NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, par value $0.01 per share			30,772,057
Title of Class			Outstanding at May 4, 2021

INDEX



			PAGES
Part I — Financial Information:			3
Item 1 Financial Statements (unaudited):			3
Condensed Consolidated Balance Sheets — March 31, 2021 and December 31, 2020			3
Condensed Consolidated Statements of Income — Three Months Ended March 31, 2021 and 2020			4
Condensed Consolidated Statements of Comprehensive Income — Three Months Ended March 31, 2021 and 2020			5
Condensed Consolidated Statements of Shareholders Equity — Three Months Ended March 31, 2021 and 2020			6
Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2021 and 2020			7
Notes to Condensed Consolidated Financial Statements			8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3 Quantitative and Qualitative Disclosures About Market Risk			27
Item 4 Controls and Procedures			27
Part II — Other Information:			28
Item 1 Legal Proceedings			28
Item 1A Risk Factors			28
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 4 Mine Safety Disclosures			28
Item 6 Exhibits			29
SIGNATURES			30

InterDigital® is a registered trademark of InterDigital, Inc. All other trademarks, service marks and/or trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	MARCH 31, 2021		DECEMBER 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	396,156	$	473,474
Short-term investments	488,559		453,173
Accounts receivable	12,502		16,008
Prepaid and other current assets	87,663		84,224
Total current assets	984,880		1,026,879
PROPERTY AND EQUIPMENT, NET	15,626		16,630
PATENTS, NET	407,732		418,343
DEFERRED TAX ASSETS	82,216		80,380
OTHER NON-CURRENT ASSETS, NET	71,420		74,043
Total non-current assets	576,994		589,396
TOTAL ASSETS	$	1,561,874	$	1,616,275
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:

Accounts payable	$	8,592	$	10,979
Accrued compensation and related expenses	21,527		32,413
Deferred revenue	192,422		219,935

Dividends payable	10,766		10,786
Other accrued expenses	19,927		21,649
Total current liabilities	253,234		295,762
LONG-TERM DEBT	419,396		367,992
LONG-TERM DEFERRED REVENUE	112,153		108,069
OTHER LONG-TERM LIABILITIES	44,518		47,886
TOTAL LIABILITIES	829,301		819,709
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.10 par value, 14,399 shares authorized, 0 shares issued and outstanding	—		—
Common Stock, $0.01 par value, 100,000 shares authorized, 71,476 and 71,389 shares issued and 30,812 and 30,816 shares outstanding	714		714
Additional paid-in capital	738,619		738,481
Retained earnings	1,358,380		1,413,969
Accumulated other comprehensive loss	(254)		(184)
	2,097,459		2,152,980
Treasury stock, 40,664 and 40,573 shares of common held at cost	1,385,361		1,379,611
Total InterDigital, Inc. shareholders’ equity	712,098		773,369
Noncontrolling interest	20,475		23,197
Total equity	732,573		796,566
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,561,874	$	1,616,275

The accompanying notes are an integral part of these statements.

Table of Contents

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


	FOR THE THREE MONTHS ENDED MARCH 31,
	2021		2020
REVENUES:
Patent licensing royalties	$	80,173	$	72,998
Technology solutions	2,190		3,212

Total Revenue	82,363		76,210

OPERATING EXPENSES:
Patent administration and licensing	36,574		40,108
Development	22,583		18,818
Selling, general and administrative	11,217		12,603
Total Operating expenses	70,374		71,529
Income from operations	11,989		4,681
INTEREST EXPENSE	(6,990)		(10,545)
OTHER INCOME, NET	724		6,023
Income before income taxes	5,723		159
INCOME TAX PROVISION	(1,765)		(1,820)
NET INCOME (LOSS)	$	3,958	$	(1,661)
Net loss attributable to noncontrolling interest	(1,613)		(1,777)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.	$	5,571	$	116
NET INCOME PER COMMON SHARE — BASIC	$	0.18	$	—
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC	30,836		30,722
NET INCOME PER COMMON SHARE — DILUTED	$	0.18	$	—
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED	31,195		30,920

The accompanying notes are an integral part of these statements.

Table of Contents

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	FOR THE THREE MONTHS ENDED MARCH 31,
	2021		2020
Net income (loss)	$	3,958	$	(1,661)
Unrealized gain (loss) on investments, net of tax	(70)		32
Comprehensive income (loss)	$	3,888	$	(1,629)
Comprehensive loss attributable to noncontrolling interest	(1,613)		(1,777)
Total comprehensive income attributable to InterDigital, Inc.	$	5,501	$	148

The accompanying notes are an integral part of these statements.

Table of Contents

INTERDIGITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands, except per share data)

(unaudited)



	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-Controlling Interest		Total Shareholders' Equity
	Shares	Amount								Shares	Amount
BALANCE, DECEMBER 31, 2019	71,268	$	712	$	727,402	$	1,412,779	$	(74)	40,567	$	(1,379,262)	$	24,724	$	786,281
Net income attributable to InterDigital, Inc.	—	—		—		116		—		—	—		—		116
Net loss attributable to noncontrolling interest	—	—		—		—		—		—	—		(1,777)		(1,777)
Net change in unrealized gain on short-term investments	—	—		—		—		32		—	—		—		32
Dividends declared ($0.35 per share)	—	—		84		(10,847)		—		—	—		—		(10,763)
Exercise of common stock options	27	1		777		—		—		—	—		—		778
Issuance of common stock, net	27	—		(725)		—		—		—	—		—		(725)
Amortization of unearned compensation	—	—		2,003		—		—		—	—		—		2,003
Repurchase of common stock	—	—		—		—		—		6	(349)		—		(349)
BALANCE, MARCH 31, 2020	71,322	$	713	$	729,541	$	1,402,048	$	(42)	40,573	$	(1,379,611)	$	22,947	$	775,596



	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-Controlling Interest		Total Shareholders' Equity
	Shares	Amount								Shares	Amount
BALANCE, DECEMBER 31, 2020	71,389	$	714	$	738,481	$	1,413,969	$	(184)	40,573	$	(1,379,611)	$	23,197	$	796,566
Adjustment to Retained Earnings related to adoption of ASU 2020-06	—	—		—		(50,184)		—		—	—		—		(50,184)
Net income attributable to InterDigital, Inc.	—	—		—		5,571

SEC Form 10-Q filed by InterDigital, Inc.