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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 June 30, 2023
OR
☐ 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)
Pennsylvania82-4936666
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareIDCCNasdaq 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 share26,407,096
Title of ClassOutstanding at August 1, 2023


INDEX
  
 PAGES
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.



PART I — FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
JUNE 30, 2023DECEMBER 31, 2022
ASSETS  
CURRENT ASSETS:  
Cash and cash equivalents$277,599 $693,479 
Short-term investments563,124 508,298 
Accounts receivable236,794 53,182 
Prepaid and other current assets114,630 89,716 
Total current assets1,192,147 1,344,675 
PROPERTY AND EQUIPMENT, NET11,683 11,338 
PATENTS, NET336,990 353,999 
DEFERRED TAX ASSETS94,278 94,373 
OTHER NON-CURRENT ASSETS, NET125,081 95,720 
Total non-current assets568,032 555,430 
TOTAL ASSETS$1,760,179 $1,900,105 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
CURRENT LIABILITIES:  
Current portion of long-term debt$125,628 $— 
Accounts payable8,313 9,997 
Accrued compensation and related expenses22,315 38,400 
Deferred revenue172,650 189,059 
Dividends payable9,273 10,384 
Other accrued expenses108,325 23,506 
Total current liabilities446,504 271,346 
LONG-TERM DEBT483,917 607,066 
LONG-TERM DEFERRED REVENUE172,582 237,580 
OTHER LONG-TERM LIABILITIES56,820 53,600 
TOTAL LIABILITIES1,159,823 1,169,592 
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, 69,372 and 71,923 shares issued and 26,569 and 29,668 shares outstanding
693 719 
Additional paid-in capital726,852 717,102 
Retained earnings1,396,393 1,492,046 
Accumulated other comprehensive loss(2,176)(916)
2,121,762 2,208,951 
Treasury stock, 42,803 and 42,255 shares of common stock held at cost
1,526,545 1,484,056 
Total InterDigital, Inc. shareholders’ equity595,217 724,895 
Noncontrolling interest5,139 5,618 
Total equity600,356 730,513 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,760,179 $1,900,105 
The accompanying notes are an integral part of these statements.
3
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
For the Three Months Ended June 30,For the Six Months Ended June 30,
2023202220232022
REVENUES$101,591 $124,657 $303,964 $225,975 
Research and portfolio development49,878 45,177 99,307 89,354 
Licensing16,644 17,326 38,012 32,856 
General and administrative11,693 9,516 24,008 20,400 
Restructuring activities— 2,738 — 3,280 
Total Operating expenses78,215 74,757 161,327 145,890 
Income from operations23,376 49,900 142,637 80,085 
INTEREST EXPENSE(12,141)(6,272)(24,228)(11,787)
OTHER INCOME (EXPENSE), NET14,387 (15,016)27,578 (16,021)
Income before income taxes25,622 28,612 145,987 52,277 
INCOME TAX PROVISION(4,329)(8,028)(21,174)(13,989)
NET INCOME$21,293 $20,584 $124,813 $38,288 
Net loss attributable to noncontrolling interest(490)(485)(2,229)(775)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.$21,783 $21,069 $127,042 $39,063 
NET INCOME PER COMMON SHARE — BASIC$0.81 $0.69 $4.58 $1.28 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC26,768 30,413 27,754 30,557 
NET INCOME PER COMMON SHARE — DILUTED$0.79 $0.69 $4.46 $1.26 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED27,655 30,710 28,494 30,992 

The accompanying notes are an integral part of these statements.
4
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2023202220232022
Net income$21,293 $20,584 $124,813 $38,288 
Unrealized loss on investments, net of tax(1,839)(57)(1,260)(367)
Comprehensive income$19,454 $20,527 $123,553 $37,921 
Comprehensive loss attributable to noncontrolling interest(490)(485)(2,229)(775)
Total comprehensive income attributable to InterDigital, Inc.$19,944 $21,012 $125,782 $38,696 
The accompanying notes are an integral part of these statements.

5
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share data)
(unaudited)
Common StockAdditional
 Paid-In Capital		Retained EarningsAccumulated
Other
Comprehensive
 Loss		Treasury StockNon-Controlling
Interest		Total
Shareholders'
Equity
 SharesAmount SharesAmount
BALANCE, DECEMBER 31, 2021
71,720 $717 $713,599 $1,441,105 $(571)41,031 $(1,409,611)$7,678 $752,917 
Net income attributable to InterDigital, Inc.— — — 17,994 — — — — 17,994 
Net loss attributable to noncontrolling interest— — — — — — — (290)(290)
Noncontrolling interest distribution— — — — — — — (1,928)(1,928)
Noncontrolling interest contributions— — — — — — — 1,500 1,500 
Net change in unrealized loss on short-term investments— — — — (310)— — — (310)
Dividends declared ($0.35 per share)
— — 158 (10,961)— — — — (10,803)
Exercise of common stock options24 — 1,226 — — — — — 1,226 
Issuance of common stock, net139 1 (5,027)— — — — — (5,026)
Amortization of unearned compensation— — 5,386 — — — — — 5,386 
BALANCE, MARCH 31, 2022
71,883 $718 $715,342 $1,448,138 $(881)41,031 $(1,409,611)$6,960 $760,666 
Net income attributable to InterDigital, Inc.— — — 21,069 — — — — 21,069 
Net loss attributable to noncontrolling interest— — — — — — — (485)(485)
Net change in unrealized loss on short-term investments— — — — (57)— — — (57)
Dividends declared ($0.35 per share)
— — 153 (10,533)— — — — (10,380)
Issuance of common stock, net29 1 (708)— — — — — (707)
Amortization of unearned compensation— — 3,977 — — — — — 3,977 
Repurchase of common stock— — — — — 1,224 (74,445)— (74,445)
Net convertible note hedge transactions, net of tax— — (54,257)— — — — — (54,257)
Net warrant transactions— — 39,863 — — — — — 39,863 
BALANCE, JUNE 30, 2022
71,912 $719 $704,370 $1,458,674 $(938)42,255 $(1,484,056)$6,475 $685,244 
6

Common StockAdditional
 Paid-In Capital		Retained EarningsAccumulated
Other
Comprehensive
 Loss		Treasury StockNon-Controlling
Interest		Total
Shareholders'
Equity
 SharesAmount SharesAmount
BALANCE, DECEMBER 31, 202271,923 $719 $717,102 $1,492,046 $(916)42,255 $(1,484,056)$5,618 $730,513 
Net income attributable to InterDigital, Inc.— — — 105,259 — — — — 105,259 
Net loss attributable to noncontrolling interest— — — — — — — (1,739)(1,739)
Noncontrolling interest contributions— — — — — — — 1,750 1,750 
Net change in unrealized loss on short-term investments— — — — 579 — — — 579 
Dividends declared ($0.35 per share)
— — 259 (9,708)— — — — (9,449)
Exercise of common stock options13 — 687 — — — — — 687 
Issuance of common stock, net132 1 (6,709)— — — — — (6,708)
Amortization of unearned compensation— — 7,790 — — — — — 7,790 
Repurchase of common stock(2,739)(27)— (203,354)— — — — (203,381)
BALANCE, MARCH 31, 2023
69,329 $693 $719,129 $1,384,243 $(337)42,255 $(1,484,056)$5,629 $625,301 
Net income attributable to InterDigital, Inc.— — — 21,783 — — — — 21,783 
Net loss attributable to noncontrolling interest— — — — — — — (490)(490)
Net change in unrealized loss on short-term investments— — — — (1,839)— — — (1,839)
Dividends declared ($0.35 per share)
— — 360 (9,633)— — — — (9,273)
Exercise of common stock options1 — 12 — — — — — 12 
Issuance of common stock, net42 — (1,389)— — — — — (1,389)
Amortization of unearned compensation— — 8,740 — — — — — 8,740 
Repurchase of common stock— — — — — 548 (42,489)— (42,489)
BALANCE, JUNE 30, 2023
69,372 $693 $726,852 $1,396,393 $(2,176)42,803 $(1,526,545)$5,139 $600,356 
The accompanying notes are an integral part of these statements.
7

INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Six Months Ended June 30,
 20232022
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$124,813 $38,288 
Adjustments to reconcile net income to net cash used in operating activities: 
Depreciation and amortization39,171 40,436 
Non-cash interest (income) expense, net(6,330)3,058 
Non-cash change in fair-value(3,258)(1,404)
Change in deferred revenue(81,407)(127,700)
Loss on extinguishment of debt— 11,190 
Deferred income taxes430 9,850 
Share-based compensation16,530 9,363 
Impairment of assets2,500 2,427 
Other81 — 
(Increase) decrease in assets:
Receivables(183,612)(17,688)
Deferred charges and other assets(51,818)1,434 
(Decrease) increase in liabilities:
Accounts payable(955)5,701 
Accrued compensation and other expenses70,563 (26,695)
Net cash used in operating activities(73,292)(51,740)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of short-term investments(531,556)(1,929)
Sales of short-term investments485,528 166,729 
Purchases of property and equipment(2,603)(762)
Capitalized patent costs(18,914)(21,323)
Net cash (used in) provided by investing activities(67,545)142,715 
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from issuance of convertible senior notes— 460,000 
Purchase of convertible bond hedge— (80,500)
Proceeds from issuance of warrants— 43,700 
Payments on long-term debt— (282,499)
Proceeds from hedge unwind— 11,851 
Payment for warrant unwind— (3,837)
Payments of debt issuance costs(100)(8,726)
Repurchase of common stock(245,870)(74,445)
Net proceeds from exercise of stock options699 1,226 
Non-controlling interest contribution1,750 1,500 
Taxes withheld upon restricted stock unit vestings(8,098)(5,733)
Dividends paid(19,833)(21,544)
Net cash (used in) provided by financing activities(271,452)40,993 
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(412,289)131,968 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD703,161 713,224 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$290,872 $845,192 
Refer to Note 1, "Basis of Presentation," for additional supplemental cash flow information. Additionally, refer to Note 6, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments" for a reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets.
The accompanying notes are an integral part of these statements.
8
INTERDIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(unaudited)
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited, condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position of InterDigital, Inc. (individually and/or collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our,” unless otherwise indicated) as of June 30, 2023, the results of our operations for the three and six months ended June 30, 2023 and 2022 and our cash flows for the six months ended June 30, 2023 and 2022. The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the detailed schedules, information and notes necessary to state fairly the financial condition, results of operations and cash flows in conformity with United States generally accepted accounting principles (“GAAP”). The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP for year-end financial statements. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (our “2022 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on February 15, 2023. Definitions of capitalized terms not defined herein appear within our 2022 Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. We have one reportable segment.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Change in Accounting Policies
There have been no material changes or updates to our existing accounting policies from the disclosures included in our 2022 Form 10-K, except as indicated below in "New Accounting Guidance".
Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
During 2022, the Company made reclassifications between the operating expenses lines on the consolidated income statement in order to more clearly reflect the Company’s investments to create and protect the value of our innovations. The Company grouped research and portfolio related costs within the line "Research and portfolio development", previously referred to as "Development", which resulted in reclassifying certain portfolio related costs out of the "Licensing" line, previously referred to as "Patent administration and licensing", and into "Research and portfolio development." The impact of this reclassification was $28.1 million and $54.7 million for the three and six months ended June 30, 2022, respectively. Additionally, the previous "Selling, general, and administrative" line is now referred to as "General and administrative".
During 2022, we updated our disaggregated revenue disclosures to provide information to enable investors to better understand the composition of revenue from contracts with customers. As a result, variable patent royalty revenue and fixed-fee royalty revenue was combined and disaggregated into the Smartphone and CE, IoT/Auto groupings. Additionally, the Other category includes current technology solutions revenues and catch-up revenues is comprised of past patent royalties and revenues from static agreements. We believe this better reflects both our current revenue sources and our growth opportunities across these vertical markets.

9
Supplemental Cash Flow Information
The following table presents additional supplemental cash flow information for the six months ended June 30, 2023 and 2022 (in thousands):
Six months ended June 30,
SUPPLEMENTAL CASH FLOW INFORMATION:20232022
Interest paid$9,312 $3,938 
Income taxes paid, including foreign withholding taxes21,132 4,363 
Non-cash investing and financing activities:
Dividend payable9,273 10,380 
Accrued debt issuance costs— 1,233 
Right-of-use assets obtained in exchange of operating lease liabilities93 417 
Non-cash acquisition of patents— 30,100 
Non-cash distribution of patents— 1,928 
Accrued capitalized patent costs and property and equipment purchases729 3,634 
Unsettled repurchase of common stock1,998 — 
New Accounting Guidance
No new accounting pronouncement issued or effective during first half of 2023 has or is expected to have a material impact on our condensed consolidated interim financial statements.
10
2. REVENUE
Disaggregated Revenue
The following table presents the disaggregation of our revenue for the three and six months ended June 30, 2023 and 2022 (in thousands):
Three months ended June 30,
 20232022 Total Increase/(Decrease)
Recurring revenues:
Smartphone$85,075 $87,484 $(2,409)(3)%
CE, IoT/Auto13,432 11,945 1,487 12 %
Other566 672 (106)(16)%
Total recurring revenues99,073 100,101 (1,028)(1)%
Catch-up revenues a
2,518 24,556 (22,038)(90)%
Total revenues$101,591 $124,657 $(23,066)(19)%
Six months ended June 30,
 20232022 Total Increase/(Decrease)
Recurring revenues:
Smartphone$172,506 $175,182 $(2,676)(2)%
CE, IoT/Auto27,518 23,135 4,383 19 %
Other622 911 (289)(32)%
Total recurring revenues200,646 199,228 1,418 1 %
Catch-up revenues a
103,318 26,747 76,571 286 %
Total revenues$303,964 $225,975 $77,989 35 %
(a)    Catch-up revenues are comprised of past patent royalties and revenues from static agreements.
During the six months ended June 30, 2023, we recognized $102.4 million of revenue that had been included in deferred revenue as of the beginning of the period. As of June 30, 2023, we had contract assets of $35.1 million and $39.1 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively. As of December 31, 2022, we had contract assets of $32.9 million and $2.5 million included within "Accounts receivable" and "Other non-current assets, net" in the condensed consolidated balance sheet, respectively.
Contracted Revenue
Based on contracts signed and committed as of June 30, 2023, we expect to recognize the following revenue from dynamic fixed-fee royalty payments over the term of such contracts (in thousands):
Revenue (a)
Remainder of 2023$178,651 
2024297,037 
2025284,283 
2026215,618 
2027213,257 
2028 and Thereafter472,696 
Total Revenue$1,661,542 
(a)    This table includes our estimated revenue related to Samsung and Lenovo.  In accordance with ASC 606, these estimates are limited to the amount of revenue we expect to recognize only to the extent it is probable that a subsequent change in the estimate would not result in a significant revenue reversal.
11
3. INCOME TAXES
In the six months ended June 30, 2023 and 2022, the Company had an estimated annual effective tax rate of 14.5% and 26.8%, respectively. The change in effective tax rate is due to an increase in the amount of Foreign Derived Intangible Income deduction benefit available to the Company due to higher taxable income inclusive of timing differences between the recognition of book and tax revenue. Additionally, the effective tax rate in both periods was impacted by losses in certain jurisdictions where the Company presently has recorded a valuation allowance against the related tax benefit. Excluding this valuation allowance, our effective tax rate for the six months ended June 30, 2023 and 2022 would have been 13.0% and 23.2%, respectively. During the six months ended June 30, 2023 the Company recorded a discrete net benefit of $1.2 million primarily related to share-based compensation. The prior period included a net discrete tax expense of $2.3 million related to the extinguishment of long-term debt recognized during second quarter of 2022.
The effective tax rate reported in any given year will continue to be influenced by a variety of factors, including timing differences between the recognition of book and tax revenue, the level of pre-tax income or loss, the foreign vs. domestic classification of the Company’s customers, and any discrete items that may occur.
During the six months ended June 30, 2023 and 2022, the Company paid approximately $6.0 million and $3.5 million, respectively, in foreign source creditable withholding tax.
4. NET INCOME PER SHARE
Basic Earnings Per Share ("EPS") is calculated by dividing net income or loss available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if options or other securities with features that could result in the issuance of common stock were exercised or converted to common stock or resulting from the unvested outstanding restricted stock units ("RSUs"). The following tables reconcile the numerator and the denominator of the basic and diluted net income per share computation (in thousands, except for per share data):
Three months ended June 30,Six months ended June 30,
2023202220232022
Net income applicable to InterDigital, Inc.$21,783 $21,069 $127,042 $39,063 
Weighted-average shares outstanding:
Basic26,768 30,413 27,754 30,557 
Dilutive effect of stock options, RSUs, convertible securities and warrants887 297 740 435 
Diluted27,655 30,710 28,494 30,992 
Earnings per share:
Basic$0.81 $0.69 $4.58 $1.28 
Dilutive effect of stock options, RSUs, convertible securities and warrants(0.02)— (0.12)(0.02)
Diluted$0.79 $0.69 $4.46 $1.26 
Shares of common stock issuable upon the exercise or conversion of certain securities have been excluded from our computation of EPS because the strike price or conversion rate, as applicable, of such securities was greater than the average market price of our common stock and, as a result, the effect of such exercise or conversion would have been anti-dilutive. Set forth below are the securities and the weighted average number of shares of common stock underlying such securities that were excluded from our computation of EPS for the periods presented (in thousands):
Three months ended June 30,Six months ended June 30,
2023202220232022
Restricted stock units and stock options4 529 212 471 
Warrants7,488 5,880 7,488 5,400 
Total7,492 6,409 7,700 5,871 
12
Convertible Notes and Warrants
Refer to Note 7, "Obligations," for information about the Company's convertible notes and warrants and related conversion and strike prices. During periods in which the average market price of the Company's common stock is above the applicable conversion price of the Company's convertible notes, or above the strike price of the Company's outstanding warrants, the impact of conversion or exercise, as applicable, would be dilutive and such dilutive effect is reflected in diluted EPS. As a result, in periods where the average market price of the Company's common stock is above the conversion price or strike price, as applicable, under the if-converted method, the Company calculates the number of shares issuable under the terms of the convertible notes and the warrants based on the average market price of the stock during the period, and includes that number in the total diluted shares outstanding for the period.
5. LITIGATION AND LEGAL PROCEEDINGS
ARBITRATIONS AND COURT PROCEEDINGS
Lenovo
UK Proceedings
On August 27, 2019, the Company and certain of its subsidiaries filed a claim in the UK High Court against Lenovo Group Limited and certain of its subsidiaries. The claim, as amended, alleges infringement of five of the Company's patents relating to 3G and/or 4G/LTE standards: European Patent (UK) Nos. 2,363,008; 2,421,318; 2,485,558; 2,557,714; and 3,355,537. The Company sought, among other relief, injunctive relief to prevent further infringement of the asserted patents or, in the alternative, a determination of the terms of a FRAND license.
On July 29, 2021, the UK High Court issued its decision regarding the first technical trial finding European Patent (UK) No. 2,485,558 valid, infringed, and essential to Release 8 of LTE. Lenovo appealed this decision, and on January 19, 2023, the UK Court of Appeal upheld the UK High Court’s findings that Lenovo is infringing on InterDigital’s valid and essential patent. On January 6, 2022, the UK High Court issued its decision regarding the second technical trial finding European Patent (UK) No. 3,355,537 invalid, but essential and infringed but for the finding of invalidity. The Company appealed this decision as legally erroneous, and on February 9, 2023, the UK Court of Appeal allowed the appeal, finding that Lenovo is infringing on InterDigital’s valid and essential patent. On January 31, 2023, the UK High Court issued its decision regarding the third technical trial finding European Patent (UK) No. 2,421,318 valid, essential, and infringed. On March 7, 2023, the UK High Court issued an order staying all deadlines with respect to the fourth and fifth technical trials. On March 16, 2023, the UK High Court issued its order regarding judgement in the trial to determine how much Lenovo must pay for a license to the Company's portfolio of cellular assets, awarding the Company a lump sum of $138.7 million for such license through December 31, 2023. A form of order hearing took place in May 2023 regarding the license terms, interest, costs, and permission to appeal. On June 27, 2023, the court issued an order awarding the Company an additional $46.2 million, thus increasing the total award to $184.9 million, which was paid on July 11, 2023. The court also found that the Company should pay a portion of Lenovo’s costs and granted both parties permission to appeal on certain grounds. The judge has not yet determined the amount of Lenovo’s costs the Company must pay.
District of Delaware Patent Proceedings
On August 28, 2019, the Company and certain of its subsidiaries filed a complaint in the United States District Court for the District of Delaware (the "Delaware District Court") against Lenovo Holding Company, Inc. and certain of its subsidiaries alleging that Lenovo infringes eight of the Company's U.S. patents-U.S. Patent Nos. 8,085,665; 8,199,726; 8,427,954; 8,619,747; 8,675,612; 8,797,873; 9,203,580; and 9,456,449-by making, using, offering for sale, and/or selling Lenovo wireless devices with 3G and/or 4G LTE capabilities. As relief, InterDigital is seeking: (a) a declaration that the Company is not in breach of its relevant FRAND commitments with respect to Lenovo; (b) to the extent Lenovo does not agree to negotiate a worldwide patent license, does not agree to enter into binding international arbitration to set the terms of a FRAND license, and does not agree to be bound by the terms to be set by the UK High Court in the separately filed UK proceedings described above, an injunction prohibiting Lenovo from continued infringement; (c) damages, including enhanced damages for willful infringement and supplemental damages; and (d) attorneys’ fees and costs.
On September 16, 2020, the Delaware District Court entered a schedule for the case, setting a patent jury trial. On March 8, 2021, the Delaware District Court held a claim construction hearing, and the court issued its order on May 10, 2021, construing various disputed terms. On March 24, 2021, the Delaware District Court consolidated the antitrust proceeding discussed below with this patent proceeding. Trial for the consolidated proceedings was rescheduled from March 6, 2023 to July 10, 2023, and once again to December 4, 2023. On April 25, 2022, the parties filed a stipulation to stay only the claims relating to U.S. Patent No. 8,199,726. The stipulation was granted. On January 13, 2023, Lenovo filed a motion to sever and stay the Company’s patent infringement claims, requesting that its Sherman Act and breach of FRAND claims proceed to trial. On June 30, 2023, the parties submitted an update to the Court requesting that the case be stayed, and on July 18, 2023 the court ordered that the case be stayed pending all appeals in the UK proceedings.
13
District of Delaware Antitrust Proceedings
On April 9, 2020, Lenovo (United States) Inc. and Motorola Mobility LLC filed a complaint in the Delaware District Court against the Company and certain of its subsidiaries. The complaint alleges that the Company defendants have violated Sections 1 and 2 of the Sherman Act in connection with, among other things, their licensing of 3G and 4G standards essential patents ("SEPs"). The complaint further alleges that the Company defendants have violated their commitment to the ETSI with respect to the licensing of 3G and 4G SEPs on FRAND terms and conditions. The complaint seeks, among other things (i) rulings that the Company defendants have violated Sections 1 and 2 of the Sherman Act and are liable for breach of their ETSI FRAND commitments, (ii) a judgment that the plaintiffs are entitled to a license with respect to the Company's 3G and 4G SEPs on FRAND terms and conditions, and (iii) injunctions against any demand for allegedly excessive royalties or enforcement of the Company defendants' 3G and 4G U.S. SEPs against the plaintiffs or their customers via patent infringement proceedings.
On June 22, 2020, the Company filed a motion to dismiss Lenovo's Sherman Act claims with prejudice, and to dismiss Lenovo's breach of contract claim with leave to re-file as a counterclaim in the Company's legal proceeding against Lenovo in the Delaware District Court discussed above.
On March 24, 2021, the Delaware District Court ruled on the Company’s motion to dismiss. The Delaware District Court dismissed the Sherman Act Section 1 claim without prejudice, denied the motion to dismiss the Sherman Act Section 2 claim, and consolidated the Section 2 and breach of contract claims with Company’s Delaware patent proceeding discussed above. Accordingly, these claims have stayed pending all appeals in the UK proceedings.
China Proceedings
On April 10, 2020, Lenovo (Beijing) Ltd. and certain of its affiliates filed a complaint against the Company and certain of its subsidiaries in the Beijing Intellectual Property Court (the “Beijing IP Court”) seeking a determination of the FRAND royalty rates payable for the Company's Chinese 3G, 4G and 5G SEPs. On February 20, 2021, the Company filed an application challenging the jurisdiction of the Beijing IP Court to take up Lenovo’s complaint. On November 15, 2021, the Beijing IP Court denied the jurisdictional challenge, and the Company filed an appeal with the Supreme People’s Court of the People’s Republic of China (the “SPC”) on December 14, 2021. That appeal was denied by the SPC on September 5, 2022, and the case was sent back to the Beijing IP Court. On November 9, 2022, the Company filed a petition to stay the case. On June 12, 2023, the Beijing IP Court decided not to dismiss or stay the case at this time.
On November 26, 2021, the Company was informed that Lenovo had purportedly filed an additional complaint against the Company in the Wuhan Intermediate People’s Court (the “Wuhan Court”) seeking a determination of a global FRAND royalty rate for the period from 2024 to 2029 for the Company’s 3G, 4G, and 5G SEPs. On April 16, 2022, the Company filed an application challenging, among other things, process of service and the jurisdiction of the Wuhan Court. The application remains pending.
Germany Proceedings
On March 25, 2022, March 28, 2022, and April 6, 2022, the Company and certain of its subsidiaries filed patent infringement claims in the Munich and Mannheim Regional Courts against Lenovo and certain of its affiliates, alleging infringement of European Patent Nos. 2,449,782; 2,452,498; 3,624,447 and 3,267,684 relating to HEVC standards. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Mannheim Regional Court held a hearing on April 21, 2023 regarding European Patent No. 3,267,684. The Mannheim Regional Court held a hearing regarding European Patent No. 3,624,447 on May 2, 2023. On May 17, 2023, based on the parties’ agreement, the court ordered a pause in the proceedings regarding European Patent No. 3,624,447. The Munich Regional Court has scheduled hearings regarding European Patent Nos. 2,449,782 and 2,452,498 for September 14, 2023 and June 20, 2024, respectively.
Oppo, OnePlus and realme
UK Proceedings
On December 20, 2021, the Company filed a patent infringement claim in the UK High Court against Guangdong Oppo Mobile Telecommunications Corp., Ltd. (“Oppo”) and certain of its affiliates, OnePlus Technology (Shenzhen) Co., Ltd. (“OnePlus”) and certain of its affiliates, and realme Mobile Telecommunications (Shenzhen) Co., Ltd. (“realme”) and certain of its affiliates, alleging infringement of European Patent (UK) Nos. 2,127,420; 2,421,318; 2,485,558; and 3,355,537 relating to cellular 3G, 4G/LTE or 5G standards. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.
On January 19, 2022, Oppo filed a jurisdictional challenge with the UK High Court which the parties have agreed to adjourn pending the outcome of Oppo’s jurisdiction challenge before the UK Supreme Court in a case involving Nokia. On December 8, 2022, the Company received confirmation that Oppo had dropped its jurisdictional challenge with the UK High Court.
14
On March 24, 2023, the parties agreed to stay all technical trials on the basis that European Patent No. 2,485,558 is valid and essential based on the result of Technical Trial A in the Lenovo UK proceedings. The willingness trial is expected to commence on October 23, 2023. The rate determination trial is scheduled to commence on February 26, 2024.
India Proceedings
On December 20, 2021 and December 22, 2021, the Company and certain of its subsidiaries filed patent infringement claims in the Delhi High Court in New Delhi, India against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme Mobile Telecommunication (India) Private Limited, alleging infringement of Indian Patent Nos. 262910, 295912, 313036, 320182, 319673, 242248, 299448, and 308108 relating to cellular 3G, 4G/LTE, and/or 5G, and HEVC standards. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.
Germany Proceedings
On December 20, 2021, a subsidiary of the Company filed three patent infringement claims, two in the Munich Regional Court and one in the Mannheim Regional Court, against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates, alleging infringement of European Patent Nos. 2,485,558; 2,127,420; and 2,421,318 relating to cellular 3G, 4G/LTE and/or 5G standards. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents. The Munich Regional Court held a hearing on December 14, 2022 regarding European Patent No. 2,421,318, with a second hearing scheduled for October 18, 2023. The Munich Regional Court held a hearing on March 2, 2023 regarding European Patent No. 2,127,420, with a second hearing scheduled for September 15, 2023. The Munich Regional Court has also scheduled a hearing for September 19, 2023 on European Patent No. 2,485,558.
China Proceedings
On January 19, 2022, the Company was informed that Oppo had purportedly filed a complaint against the Company in the Guangzhou Intellectual Property Court (the “Guangzhou IP Court”) seeking a determination of a global FRAND royalty rate for the Company’s 3G, 4G, 5G, 802.11 and HEVC SEPs. On May 20, 2022, the Company filed an application challenging, among other things, process of service and the jurisdiction of the Guangzhou IP Court. On January 12, 2023, the Guangzhou IP Court denied the application. On February 28, 2023, the Company filed an appeal to the decision, which is still pending.
Spain Proceedings
On March 1, 2022, a subsidiary of the Company filed patent infringement claims in the Barcelona Commercial Courts against Oppo and certain of its affiliates, OnePlus and certain of its affiliates, and realme and certain of its affiliates. The Company filed its amended complaint on April 25, 2022, alleging infringement of European Patent Nos. 3,355,537; 2,485,558; 2,421,318; and 2,557,715 relating to cellular 3G, 4G/LTE and/or 5G standards. The Company is seeking, among other relief, injunctive relief to prevent further infringement of the asserted patents.
Samsung
The Company reached an agreement with Samsung Electronics Co. Ltd. (“Samsung”) to enter into binding arbitration to determine the final terms of a renewed patent license agreement to certain of the Company’s patents, which will be effective from January 1, 2023. The Company and Samsung have also agreed not to initiate certain claims against the other during the arbitration. On March 31, 2023, the Company filed a request for arbitration with the International Chamber of Commerce.
On July 21, 2023, the International Chamber of Commerce confirmed the full tribunal for the arbitration, and the first case management conference is scheduled for August 3, 2023.
OTHER
We are party to certain other disputes and legal actions in the ordinary course of business, including arbitrations and legal proceedings with licensees regarding the terms of their agreements and the negotiation thereof. We do not currently believe that these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows. None of the preceding matters have met the requirements for accrual or disclosure of a potential range as of June 30, 2023, except as noted above.
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6. CASH, CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash currently consists of money market and demand accounts. The following table provides a reconciliation of total cash, cash equivalents and restricted cash as of June 30, 2023, December 31, 2022 and June 30, 2022 to the captions within the condensed consolidated balance sheets and condensed consolidated statements of cash flows (in thousands):
 June 30, 2023December 31, 2022June 30, 2022
Cash and cash equivalents$277,599 $693,479 $833,533 
Restricted cash included within prepaid and other current assets13,273 9,682 10,578 
Restricted cash included within other non-current assets— — 1,081 
Total cash, cash equivalents and restricted cash$290,872 $703,161 $845,192 
Concentration of Credit Risk and Fair Value of Financial Instruments
Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash equivalents, short-term investments, and accounts receivable. We place our cash equivalents and short-term investments only in highly rated financial instruments, such as United States government instruments.
Our accounts receivable and contract assets are derived principally from patent license and technology solutions agreements. Four licensees comprised 94% and 76% of our net accounts receivable balance as of June 30, 2023 and December 31, 2022, respectively. We perform ongoing credit evaluations of our licensees, who generally include large, multinational, wireless telecommunications equipment manufacturers. We believe that the book values of our financial instruments approximate their fair values.
Fair Value Measurements
We use various valuation techniques and assumptions when measuring the fair value of our assets and liabilities. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. This guidance established a hierarchy that prioritizes fair value measurements based on the types of input used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:
Level 1 Inputs — Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.
Level 2 Inputs — Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data, including market interest rate curves, referenced credit spreads and pre-payment rates.
Level 3 Inputs — Level 3 includes financial instruments for which fair value is derived from valuation techniques including pricing models and discounted cash flow models in which one or more significant inputs are unobservable, including the Company’s own assumptions. The pricing models incorporate transaction details such as contractual terms, maturity and, in certain instances, timing and amount of future cash flows, as well as assumptions related to liquidity and credit valuation adjustments of marketplace participants.
Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. We use quoted market prices for similar assets to estimate the fair value of our Level 2 investments.
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Recurring Fair Value Measurements
Our financial assets are generally included within short-term investments on our condensed consolidated balance sheets, unless otherwise indicated. Our financial assets and liabilities that are accounted for at fair value on a recurring basis are presented in the tables below as of June 30, 2023 and December 31, 2022 (in thousands):
 Fair Value as of June 30, 2023
 Level 1Level 2Level 3Total
Assets:    
Money market and demand accounts (a)
$260,578 $— $— $260,578 
Commercial paper (b)
— 209,796 — 209,796 
U.S. government securities(c)
— 233,435 — 233,435 
Corporate bonds, asset backed and other securities (d)
— 148,189 — 148,189 
  Total$260,578 $591,420 $— $851,998 
 Fair Value as of December 31, 2022
 Level 1Level 2Level 3Total
Assets:    
Money market and demand accounts (a)
$643,825 $— $— $643,825 
Commercial paper (b)
— 209,956 — 209,956 
U.S. government securities(c)
— 243,840 — 243,840 
Corporate bonds, asset backed and other securities (d)
— 113,838 — 113,838 
  Total$643,825 $567,634 $— $1,211,459 
______________________________
(a)Primarily included within cash and cash equivalents.
(b)As of June 30, 2023 and December 31, 2022, $1.6 million and $26.7 million of commercial paper was included within cash and cash equivalents, respectively.
(c)As of June 30, 2023 and December 31, 2022, $17.2 million and $15.7 million of U.S. government securities was included within cash and cash equivalents, respectively.
(d)As of June 30, 2023 and December 31, 2022, $9.5 million and $16.9 million of corporate bonds, asset backed and other securities was included within cash and cash equivalents, respectively.
Non-Recurring Fair Value Measurements
Patents
During first quarter 2023, we incurred a one-time impairment of $2.5 million on our patents held for sale. We determined the fair value based upon evaluation of market conditions.
During fourth quarter 2021, we renewed our multi-year, worldwide, non-exclusive patent license agreement with Sony Corporation of America ("Sony"). A portion of the consideration for the agreement was in the form of patents, which we received in March 2022. We have determined the fair value of the patents for determining the transaction price for revenue recognition purposes, which was estimated to be $30.1 million utilizing the income and market approaches. The value is amortized as a non-cash expense over the patents' estimated useful lives.
Investment in Other Entities
During second quarter 2023, we recognized a $3.1 million gain resulting from fair value changes of one of our long-term strategic investments, which was included within “Other income (expense), net” in the condensed consolidated statement of income.
During second quarter 2022, we recognized a $1.6 million gain resulting from observable price changes of our long-term strategic investments, which were included within “Other income (expense), net” in the condensed consolidated statement of income.
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Fair Value of Long-Term Debt
Convertible Notes
The principal amount, carrying value and related estimated fair value of the Company's Convertible Notes reported as of June 30, 2023 and December 31, 2022 was as follows (in thousands). The aggregate fair value of the principal amount of the Convertible Notes is a Level 2 fair value measurement.
June 30, 2023December 31, 2022
Principal
Amount		Carrying
Value		Fair
Value		Principal
Amount		Carrying
Value		Fair
Value
2027 Senior Convertible Long-Term Debt$460,000 $451,929 $619,252 $460,000 $451,062 $441,485 
2024 Senior Convertible Long-Term Debt$126,174 $125,628 $154,096 $126,174 $125,342 $119,941 
Technicolor Patent Acquisition Long-term Debt
The carrying value and related estimated fair value of the Technicolor Patent Acquisition long-term debt reported as of June 30, 2023 and December 31, 2022 was as follows (in thousands). The aggregate fair value of the Technicolor Patent Acquisition long-term debt is a Level 3 fair value measurement.
June 30, 2023December 31, 2022
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Technicolor Patent Acquisition Long-Term Debt$31,988 $29,291 $30,662 $28,048 
7. OBLIGATIONS
2027 Notes, and Related Note Hedge and Warrant Transactions
On May 27, 2022, we issued $460.0 million in aggregate principal amount of 3.50% Senior Convertible Notes due 2027 (the "2027 Notes"). The net proceeds from the issuance of the 2027 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $450.0 million. The 2027 Notes bear interest at a rate of 3.50% per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2022, and mature on June 1, 2027, unless earlier redeemed, converted or repurchased.
The 2027 Notes will be convertible into cash up to the aggregate principal amount of the notes to be converted and in respect of the remainder, if any, of the Company’s obligation in excess of the aggregate principal amount of the notes being converted, pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, at an initial conversion rate of 12.9041 shares of Common Stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $77.49 per share).
The 2027 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with any of the Company’s current and any future senior unsecured indebtedness, including its 2.00% Senior Convertible Notes due 2024 (the “2024 Notes” and together with the 2027 Notes, the "Convertible Notes"). The 2027 Notes are effectively subordinated to all of the Company’s future secured indebtedness to the extent of the value of the related collateral, and the 2027 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of the Company’s subsidiaries.
On May 24 and May 25, 2022, in connection with the offering of the 2027 Notes, we entered into convertible note hedge transactions that cover, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2027 Notes, subject to adjustment, and are exercisable upon any conversion of the 2027 Notes. Also on May 24 and May 25, 2022, we entered into privately negotiated warrant transactions, whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 5.9 million shares of common stock at an initial strike price of $106.37 per share, subject to adjustment.
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2024 Notes, and Related Note Hedge and Warrant Transactions
On June 3, 2019, we issued $400.0 million in aggregate principal amount of 2024 Notes. The net proceeds from the issuance of the 2024 Notes, after deducting the initial purchasers' transaction fees and offering expenses, were approximately $391.6 million. The 2024 Notes bear interest at a rate of 2.00% per year, payable in cash on June 1 and December 1 of each year, commencing on December 1, 2019, and mature on June 1, 2024, unless earlier redeemed, converted or repurchased.
The 2024 Notes are convertible into cash and shares of our common stock, with a specified dollar amount of $1,000 per $1,000 principal amount of 2024 Notes and any remaining amounts in shares of our common stock, at an initial conversion rate of 12.3018 shares of our common stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $81.29 per share).
The 2024 Notes are senior unsecured obligations of the Company and rank equally in right of payment with any of our current and any future senior unsecured indebtedness. The 2024 Notes are effectively subordinated to all of our future secured indebtedness to the extent of the value of the related collateral, and the 2024 Notes are structurally subordinated to indebtedness and other liabilities, including trade payables, of our subsidiaries.
On May 29 and May 31, 2019, in connection with the offering of the 2024 Notes, we entered into convertible note hedge transactions (collectively, the "2024 Note Hedge Transactions") that cover, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock, in the aggregate, at a strike price that initially corresponds to the initial conversion price of the 2024 Notes, subject to adjustment, and are exercisable upon any conversion of the 2024 Notes. On May 29 and May 31, 2019, we also entered into privately negotiated warrant transactions (collectively, the "2024 Warrant Transactions" and, together with the 2024 Note Hedge Transactions, the "2024 Call Spread Transactions"), whereby we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 4.9 million shares of common stock at an initial strike price of approximately $109.43 per share, subject to adjustment.
During second quarter 2022, the Company repurchased $273.8 million in aggregate principal amount of the 2024 Notes in privately negotiated transactions concurrently with the offering of the 2027 Notes. $126.2 million in aggregate principal amount of the 2024 Notes remained outstanding as of June 30, 2023. Additionally, in connection with the partial repurchase of the 2024 Notes, the Company entered into partial unwind agreements that amend the terms of the 2024 Note Hedge Transactions to reduce the number of options corresponding to the principal amount of the repurchased 2024 Notes. The unwind agreements also reduced the number of warrants exercisable under the 2024 Warrant Transactions. Approximately 1.6 million shares of common stock in the aggregate were covered under each of the 2024 Note Hedge Transactions and the 2024 Warrant Transactions as of June 30, 2023. As of June 30, 2023, the warrants under the 2024 Warrant Transactions had a strike price of approximately $109.43 per share, as adjusted.
The following table reflects the carrying value of our Convertible Notes long-term debt as of June 30, 2023 and December 31, 2022 (in thousands):
June 30, 2023December 31, 2022
3.50% Senior Convertible Notes due 2027
$460,000 $460,000 
2.00% Senior Convertible Notes due 2024
126,174 126,174 
Less: Deferred financing costs(8,617)(9,770)
Net carrying amount of the Convertible Notes577,557 576,404 
Less: Current portion of long-term debt(125,628)— 
Long-term net carrying amount of the Convertible Notes$451,929 $576,404 
The following table presents the amount of interest cost recognized, which is included within "Interest expense" in our condensed consolidated statements of income, for the three and six months ended June 30, 2023 and 2022 relating to the contractual interest coupon and the amortization of deferred financing costs of the Convertible Notes (in thousands):
Three months ended June 30,
20232022
2027 Notes2024 NotesTotal2027 Notes2024 NotesTotal
Contractual coupon interest$4,025 $631 $4,656 $1,476 $1,498 $2,974 
Amortization of deferred financing costs436 144 580 142 318 460 
Total$4,461 $775 $5,236 $1,618 $1,816 $3,434 
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Six months ended June 30,
20232022
2027 Notes2024 NotesTotal2027 Notes2024 NotesTotal
Contractual coupon interest$8,050 $1,262 $9,312 $1,476 $3,498 $4,974 
Amortization of deferred financing costs867 286 1,153 142 742 884 
Total$8,917 $1,548 $10,465 $1,618 $4,240 $5,858 
Technicolor Patent Acquisition Long-Term Debt
On July 30, 2018, we completed our acquisition of the patent licensing business of Technicolor SA ("Technicolor"), a worldwide technology leader in the media and entertainment sector (the "Technicolor Patent Acquisition"). In conjunction with the Technicolor Patent Acquisition, we assumed Technicolor’s rights and obligations under a joint licensing program with Sony relating to digital televisions and standalone computer display monitors, which commenced in 2015 and is referred to as the "Madison Arrangement." An affiliate of CPPIB Credit Investments Inc. ("CPPIB Credit"), a wholly owned subsidiary of Canada Pension Plan Investment Board, is a third-party investor in the Madison Arrangement. CPPIB Credit has made certain payments to Technicolor and Sony and has agreed to contribute cash to fund certain capital reserve obligations under the arrangement in exchange for a percentage of future revenues, specifically through September 11, 2030 in regard to the Technicolor patents.
Upon our assumption of Technicolor’s rights and obligations under the Madison Arrangement, our relationship with CPPIB Credit meets the criteria in ASC 470-10-25 - Sales of Future Revenues or Various Other Measures of Income ("ASC 470"), which relates to cash received from an investor in exchange for a specified percentage or amount of revenue or other measure of income of a particular product line, business segment, trademark, patent, or contractual right for a defined period. Under this guidance, we recognized the fair value of our contingent obligation to CPPIB Credit, as of the acquisition date, as long-term debt in our condensed consolidated balance sheet. This initial fair value measurement was based on the perspective of a market participant and included significant unobservable inputs which are classified as Level 3 inputs within the fair value hierarchy. The fair value of the long-term debt as of June 30, 2023 and December 31, 2022 is disclosed within Note 6, "Cash, Concentration of Credit Risk and Fair Value of Financial Instruments." Our repayment obligations are contingent upon future royalty revenues generated from the Madison Arrangement and there are no minimum or maximum payments under the arrangement.
Under ASC 470, amounts recorded as debt are amortized under the interest method. At each reporting period, we will review the discounted expected future cash flows over the life of the obligation. The Company made an accounting policy election to utilize the catch-up method when there is a change in the estimated future cash flows, whereby we will adjust the carrying amount of the debt to the present value of the revised estimated future cash flows, discounted at the original effective interest rate, with a corresponding adjustment recognized as interest expense within “Interest Expense” in the condensed consolidated statements of income. The effective interest rate as of the acquisition date was approximately 14.5%. This rate represents the discount rate that equates the estimated future cash flows with the fair value of the debt as of the acquisition date and is used to compute the amount of interest to be recognized each period based on the estimated life of the future revenue streams. During the three and six months ended June 30, 2023, we recognized $1.0 million and $1.3 million, respectively, of interest expense related to this debt, compared to $1.0 million and $1.9 million during the three and six months ended June 30, 2022, respectively. This was included within “Interest Expense” in the condensed consolidated statements of income. Any future payments made to CPPIB Credit, or additional proceeds received from CPPIB Credit, will decrease or increase the long-term debt balance accordingly.
Technicolor Contingent Consideration
As part of the Technicolor Patent Acquisition, we entered into a revenue-sharing arrangement with Technicolor that created a contingent consideration liability. Under the revenue-sharing arrangement, Technicolor receives 42.5% of future cash receipts from new licensing efforts from the Madison Arrangement only, subject to certain conditions and hurdles. As of June 30, 2023, the contingent consideration liability from the revenue-sharing arrangement was deemed not probable and is therefore not reflected within the consolidated financial statements.
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8. VARIABLE INTEREST ENTITIES
As further discussed below, we are the primary beneficiary of one variable interest entity. As of June 30, 2023, the book value of the assets and liabilities associated with this variable interest entity included in our condensed consolidated balance sheet were $12.9 million and $0.6 million, respectively. Assets included $4.0 million of cash and cash equivalents, $0.1 million of prepaid and other current assets, and $8.8 million of patents, net. As of December 31, 2022, the book value of the assets and liabilities associated with this variable interest entity included in our condensed consolidated balance sheet were $17.5 million and $1.8 million, respectively. Assets included $4.4 million of cash and cash equivalents, $4.0 million of accounts receivable and prepaid and other current assets, and $9.1 million of patents, net.
Convida Wireless
Convida Wireless was launched in 2013 and most recently renewed in 2021 to combine Sony's consumer electronics expertise with our pioneering IoT expertise to drive IoT communications and connectivity. Based on the terms of the agreement, the parties will contribute funding and resources for additional research and platform development, which we will perform.
Convida Wireless is a variable interest entity. Based on our provision of research and platform development services to Convida Wireless, we have determined that we remain the primary beneficiary for accounting purposes and will continue to consolidate Convida Wireless. For the three and six months ended June 30, 2023, we allocated approximately $0.5 million and $2.2 million, respectively, of Convida Wireless's net loss to noncontrolling interests held by other parties and for the three and six months ended June 30, 2022, we allocated approximately $0.5 million and $0.8 million, respectively.
9. OTHER INCOME (EXPENSE), NET
The amounts included in "Other income (expense), net" in the condensed consolidated statements of income for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):
Three months ended June 30,Six months ended June 30,
2023202220232022
Interest and investment income$10,254 $297 $21,934 $506 
Loss on extinguishment of long-term debt— (11,190)— (11,190)
Other4,133 (4,123)5,644 (5,337)
Other income (expense), net$14,387 $(15,016)$27,578 $(16,021)
The changes in Other income (expense), net for the three and six months ended June 30, 2023 and 2022 were $29.4 million and $43.6 million, respectively. The changes between both the three and six months ended June 30, 2023 and 2022 were primarily due to the $11.2 million loss on extinguishment of the 2024 Notes in second quarter 2022, as described further in Note 7, "Obligations", and an increase in interest and investment income primarily due to increased short-term investments made by the Company and market conditions driving higher yields on our short-term investments.
The changes in Other was primarily due to foreign currency translation arising from euro translation of our foreign subsidiaries and fair value adjustments of our investments.
10.    OTHER ASSETS AND LIABILITIES
The amounts included in "Prepaid and other current assets" in the consolidated balance sheet as of June 30, 2023 and December 31, 2022 were as follows (in thousands):
June 30, 2023December 31, 2022
Tax receivables$79,801 $64,117 
Restricted cash13,273 9,682 
Prepaid assets10,386 9,044 
Patents held for sale— 4,000 
Other current assets11,170 2,873 
Total Prepaid and other current assets$114,630 $89,716 
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The amounts included in "Other non-current assets, net" in the consolidated balance sheet as of June 30, 2023 and December 31, 2022 were as follows (in thousands):
June 30, 2023December 31, 2022
Contract asset$39,147 $2,544 
Tax receivables24,320 29,370 
Goodwill22,421 22,421 
Long-term investments19,579 19,593 
Right-of-use assets16,914 18,034 
Other non-current assets2,700 3,758 
Total Other non-current assets, net$125,081 $95,720 
The amounts included in "Other accrued expenses" in the consolidated balance sheet as of June 30, 2023 and December 31, 2022 were as follows (in thousands):
June 30, 2023December 31, 2022
Customer deposit$76,100 $— 
Accrued legal fees22,248 12,230 
Other accrued expenses9,977 11,276 
Total Other accrued expenses$108,325 $23,506 
The amounts included in "Other long-term liabilities" in the consolidated balance sheet as of June 30, 2023 and December 31, 2022 were as follows (in thousands):
June 30, 2023December 31, 2022
Operating lease liabilities$18,792 $19,923 
Deferred compensation liabilities17,352 14,078 
Other long-term liabilities20,676 19,599 
Total Other long-term liabilities$56,820 $53,600 
11.    RESTRUCTURING ACTIVITIES
During second quarter 2021, the Company undertook certain actions in order to increase focus on core technologies and markets.
On June 10, 2021, the Company announced that, as a result of a strategic review of its research and innovation priorities, it commenced the process of a collective economic layoff in which it proposed a reduction in force of its research and innovation unit. All notices of termination have been issued to the impacted employees.
During 2021, Chordant ceased operations. The Company implemented a reduction in workforce action in second quarter 2021.
Additionally, in June 2021, a non-controlled subsidiary that we consolidate for financial statement purposes approved a plan to sell certain patents. The proceeds from the sale of these patents contributed to funding the non-controlled subsidiary's operations.
In October 2021, we expanded our restructuring efforts to include general and administrative functions largely centered in the U.S., which resulted in a further reduction in force as well as cuts to our non-labor expenses. These employees were provided notification of termination during fourth quarter 2021.
The Company does not anticipate further restructuring costs at this time, however these charges are estimated based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts incurred for such activities may differ from amounts initially estimated.
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As of June 30, 2023 and December 31, 2022, the Company's restructuring liability was $1.2 million and $4.5 million, respectively, and is included in "Other accrued expenses" on our condensed consolidated balance sheet. The following table presents the change in our restructuring liability during the period (in thousands):
Balance as of December 31, 2022$4,495 
Cash payments(1,487)
Other52 
Balance as of March 31, 20233,060 
Cash payments(1,903)
Other2 
Balance as of June 30, 2023$1,159 
The restructuring expenses included in "Restructuring activities" in the condensed consolidated statements of income for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):
Three months ended June 30,Six months ended June 30,
202320222023