Adeia(ADEA) - 2024 Q4 - Annual Report

Debt and Financial Obligations - The company has $487.1 million of total debt outstanding under its 2024 Term Loan B as of December 31, 2024[78]. - A 1$4.8 million[79]. - The company’s ability to borrow additional funds may be limited due to existing debt service obligations and cash flow constraints[16]. - Legal and contractual restrictions may limit the company's ability to obtain cash from subsidiaries, impacting debt repayment[82]. - As of December 31, 2024, the company had $487.1 million of outstanding indebtedness subject to floating interest rates, with a potential annual increase in interest expense of approximately$4.8 million for a 1% rise in effective interest rates[221]. Revenue and Cash Flow Risks - The company's revenue and cash flow are dependent on customer sales, which are influenced by various external factors, making them difficult to forecast[64]. - The company faces risks related to customers' financial difficulties, which may lead to delayed or missed payments under license agreements[65]. - The long-term success of the company is partially dependent on a royalty-based business model, which is inherently risky due to reliance on customer compliance and market conditions[63]. - The company may experience fluctuations in revenue due to the structure and timing of IP license agreements[61]. - The conversion of some IP license agreements to fully paid-up licenses may adversely affect future revenue if no replacement fees are found[62]. - The company is exposed to international sales risks, which could significantly affect its results of operations and financial condition[71]. Operational and Integration Challenges - The company may face challenges in integrating acquired assets or companies, which could impact its business operations[68]. - The company may face significant challenges in implementing processes and procedures in acquired operations, which could adversely affect market perceptions[84]. - The company anticipates fluctuations in operating results, which could lead to volatility in stock price and affect investor expectations[112]. Tax and Regulatory Considerations - The company has U.S. federal net operating losses of approximately $2.3 million and state net operating losses of approximately$861.2 million as of December 31, 2024[88]. - The Tax Cuts and Jobs Act of 2017 requires the company to capitalize and amortize research and development expenses over five years for U.S. activities and 15 years for international activities, impacting cash tax liability for 2024[87]. - The company may experience increased tax obligations due to changes in tax laws and regulations, affecting its effective tax rate[85]. - Future ownership changes could materially limit the company's ability to utilize net operating loss carryforwards, increasing future tax obligations[89]. - The company may incur significant tax liabilities if the distribution is determined to be taxable, impacting stockholders who received shares of Xperi Inc.[103]. - The company entered into a Tax Matters Agreement with Xperi Inc. on October 1, 2022, obligating Xperi Inc. to indemnify the company against certain tax liabilities[106]. Cash and Investment Position - The company held approximately $78.8 million in cash and cash equivalents and$31.6 million in short-term investments as of December 31, 2024[94]. - The fair value of the company's investments classified as marketable securities was $31.6 million as of December 31, 2024, with unrealized losses being immaterial[222]. - The company held approximately$74.0 million in cash in operating accounts as of December 31, 2024, primarily with high-quality domestic financial institutions[223]. - The company’s investment activities aim to preserve principal and maintain liquidity while capturing a market rate of return[221]. - The company does not hold any derivatives or similar financial instruments as of December 31, 2024[222]. - The company has incurred substantial research and development expenses for new IP, with uncertainty regarding future revenue generation from these technologies[114]. Stockholder and Market Considerations - The company has a stock repurchase program authorized for up to $200 million, with$172.2 million utilized so far, leaving $77.8 million available for future repurchases[115]. - Since July 2020, the company has declared quarterly cash dividends of$0.05 per share, with future dividends subject to Board approval based on various financial factors[114]. - The company’s stock price may decline if dividends are decreased or suspended, affecting investor sentiment[114]. - Transfer restrictions in the company's certificate of incorporation may hinder third-party acquisitions and affect stock marketability[121]. - The company’s certificate of incorporation limits the ability of stockholders to bring claims in preferred jurisdictions, potentially discouraging lawsuits[122]. - The company’s transfer restrictions will expire under specific conditions, including the repeal of Section 382 or the third anniversary of the Mergers[120]. Cybersecurity and Market Risks - The company is subject to cybersecurity risks that could harm its business and affect its ability to license IP and collect revenue[74]. - The company is exposed to exchange rate fluctuations, which could materially impact future results, although the impact from translation of foreign subsidiaries' financial statements was immaterial in 2024[224][225]. - The company may face operational and financial flexibility limitations if unable to use common stock for future acquisitions due to ownership change rules[118].