# EDGAR Filing Document

**Accession Number:** 0001788999
**File Stem:** 0000950170-23-007867
**Filing Date:** 2023-3
**Character Count:** 191404
**Document Hash:** 7fd46b179abd581cd62f6685d2ce1da6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-007867.hdr.sgml**: 20230314

**ACCESSION NUMBER**: 0000950170-23-007867

**CONFORMED SUBMISSION TYPE**: ARS

**PUBLIC DOCUMENT COUNT**: 1

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230314

**DATE AS OF CHANGE**: 20230314

**EFFECTIVENESS DATE**: 20230314

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Xperi Inc.
- **CENTRAL INDEX KEY:** 0001788999
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 834470363
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** ARS
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41486
- **FILM NUMBER:** 23730859

**BUSINESS ADDRESS:**
- **STREET 1:** 2190 GOLD STREET
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95002
- **BUSINESS PHONE:** 4085199100

**MAIL ADDRESS:**
- **STREET 1:** 2190 GOLD STREET
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95002

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Xperi, Inc.
- **DATE OF NAME CHANGE:** 20220608

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TiVo Product HoldCo LLC
- **DATE OF NAME CHANGE:** 20190920

### Attached PDF Documents

**Attachment 1:** `ars-fy2022-10k.pdf`

# **UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
Washington, DC 20549

# **FORM 10-K**

(Mark One)

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

For the fiscal year ended December 31, 2022

OR

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

Commission File Number: 001-41486

# **XPERI INC.**

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
2190 Gold Street, San Jose, California
(Address of Principal Executive Offices)

83-4470363
(I.R.S. Employer
Identification No.)
95002
(Zip Code)

(408) 519-9100
(Registrant's Telephone Number, Including Area Code)

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

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common Stock, par value $0.001 per share | XPER | New York Stock Exchange |

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act. Yes ☐ No ☑

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 (§ 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 ☐
Non-accelerated filer ☑
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. ☐

Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

As of June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter, there was no established public market for the registrant's common stock, par value $0.01 per share. The registrant's common stock began trading on the New York Stock Exchange on October 3, 2022.

The number of shares outstanding of the registrant's common stock as of February 17, 2023 was 42,084,591.

# **DOCUMENTS INCORPORATED BY REFERENCE:**

Portions of the registrant's Proxy Statement for the registrant's 2023 Annual Meeting of Stockholders will be filed with the Commission within 120 days after the close of the registrant's 2022 fiscal year and are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.

# **XPERI INC.**

**ANNUAL REPORT ON FORM 10-K**

**FOR THE YEAR ENDED DECEMBER 31, 2022**

**TABLE OF CONTENTS**

|  | Page |
| --- | --- |
| PART I |  |
| Item 1. Business | 4 |
| Item 1A. Risk Factors | 21 |
| Item 1B. Unresolved Staff Comments | 48 |
| Item 2. Properties | 48 |
| Item 3. Legal Proceedings | 48 |
| Item 4. Mine Safety Disclosures | 48 |
| PART II |  |
| Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 49 |
| Item 6. (Reserved) | 50 |
| Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | 51 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 61 |
| Item 8. Financial Statements and Supplementary Data | 62 |
| Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 62 |
| Item 9A. Controls and Procedures | 62 |
| Item 9B. Other Information | 62 |
| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 62 |
| PART III |  |
| Item 10. Directors, Executive Officers and Corporate Governance | 63 |
| Item 11. Executive Compensation | 63 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 63 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 63 |
| Item 14. Principal Accountant Fees and Services | 63 |
| PART IV |  |
| Item 15. Exhibits and Financial Statement Schedules | 64 |
| Item 16. Form 10-K Summary | 107 |
| Signatures | 108 |

2

### Cautionary Statement Regarding Forward-Looking Statements

*This annual report on Form 10-K (this “Annual Report”) contains forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Annual Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, growth rate, competitiveness, gross margins, levels of research, development and other related costs, expenditures, the outcome or effects of and expenses related to litigation and administrative proceedings, tax expenses, cash flows, our management’s plans and objectives for our current and future operations, the levels of customer spending or research and development activities, the impact of the COVID-19 pandemic and related events, the impact of any acquisitions on our financial condition and results of operations, general economic conditions, and the sufficiency of financial resources to support future operations and capital expenditures.*

*Although forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed below under the heading “Risk Factors” within Part I, Item 1A of this Annual Report and other documents we file from time to time with the Securities and Exchange Commission (the “SEC”), such as our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.*

3

# PART I

## Item 1. Business

### Corporate Information

Our principal executive offices are located at 2190 Gold Street, San Jose, California 95002 USA. Our telephone number is +1 (408) 519-9100. We maintain a corporate website at xperi.com. The reference to our website address does not constitute incorporation by reference of the information contained on this website. Xperi, the Xperi logo, TiVo, the TiVo logo, DTS, the DTS logo, Ergo, FotoNation, DTS HD, DTS Audio Processing, DTS:X Ultra, DTS Virtual:X, DTS Headphone:X, DTS Play Fi, DTS:X, DTS AutoSense, DTS AutoStage, and HD Radio are trademarks or registered trademarks of Xperi Inc. or its affiliated companies in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.

### Overview

On October 1, 2022 (the “Distribution Date”), the spin-off (the “Spin-Off” or the “Separation”) of the product business of Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia” or the “Former Parent”) into Xperi Inc. (“we”, “our”, the “Company” or “Xperi”), a wholly owned subsidiary of Adeia, was completed. The Spin-Off was achieved through our Former Parent’s distribution (the “Distribution”) of 100% of the shares of Xperi’s common stock to holders of our Former Parent’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”). Each Adeia stockholder of record received four shares of Xperi common stock for every ten shares of Adeia common stock held on the Record Date. Following the Distribution, we became an independent, publicly-traded company with our common stock listed under the symbol “XPER” on the New York Stock Exchange (“NYSE”), and our Former Parent retains no ownership interest in Xperi.

In connection with the Spin-Off, we entered into a Separation and Distribution Agreement and several other agreements with our Former Parent to effect the Spin-Off and provide a framework for our relationship with our Former Parent after the Spin-Off. In addition to the Separation and Distribution Agreement, the other principal agreements entered into with our Former Parent include a Tax Matters Agreement, a Transition Services Agreement, an Employee Matters Agreement, a Cross Business License Agreement, and a Data Sharing Agreement. For additional information, see Note - 1 to our consolidated financial statements.

We are a leading consumer and entertainment technology company. We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it in a way that is more intelligent, immersive and personal. Powering smart devices, connected cars, entertainment experiences and more, we have created a unified ecosystem that reaches highly engaged consumers, uncovering significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and media platforms worldwide, driving increased value for partners, customers and consumers. We operate in one reportable business segment and currently group our business into four categories based on the markets served: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 2,100 employees and more than 35 years of operating experience.

### Impact of the COVID-19 Pandemic

Please refer to the “Risk Factors” and Executive Summary section of Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information concerning the continuing effect of the COVID-19 pandemic and related macroeconomic conditions on our business.

### Market Opportunity

Consumer preferences and behavior around media consumption are undergoing a significant transformation, driven by new platforms for content delivery, greater availability of diverse content, and an increase in time spent consuming video content. Video content delivery is rapidly shifting from linear broadcast to over-the-top (“OTT”) platforms, impacting not just how users consume content, but also the ad-supported programming ecosystem. Our technologies sit on the forefront of this transformation, enhancing consumer experiences where consumers spend their time the most - in their homes and in their cars. Our technologies not only enhance user experiences, but also enable partners across the entire ecosystem to participate in the evolving content delivery value chain.

4

- **Shift to OTT and Streaming:** OTT has rapidly become a mainstream content delivery mechanism through a wide variety of providers such as Netflix, Disney+ and YouTube. OTT media now accounts for 38% of weekly video viewing for adults ages 18 and older. Proliferation of OTT has created demand for a new generation of entertainment products that are centered on the OTT viewing experience. Consumers are increasingly looking for solutions that allow them to navigate across the fragmented and complex entertainment landscape of OTT content.
- **OTT Advertising Monetization:** The shift to OTT has not only impacted user needs for entertainment devices, but also disrupted the ad-based programming model that was centered on linear TV programming. While delivering ad-based programming to OTT audiences has presented new challenges, it has also created opportunities for advertisers to deliver customized, highly relevant, and targeted ad content to a critical and growing demographic. There is a new set of industry participants that are looking for ways to monetize the ad-based ecosystem, including consumer electronics manufacturers, OEMs, and others that have historically not participated in the OTT value chain. Thus, we believe there is a significant market opportunity for tools that enable OEMs to monetize their products through recurring revenue streams across the lifecycle of the device rather than just a one-time monetization opportunity at the point-of-sale.
- **Marked Need for An Independent Media Platform:** Close to half of Smart TVs each year are shipped into Western Europe and North America by leading electronics manufacturers who lack the scale required to support the technology, content, and monetization requirements of a streaming media platform. This creates a unique opportunity for an independent media platform that allows Smart TV OEMs to brand the experience, retain customer ownership, and participate in the long-term monetization throughout the typical 5-year lifecycle of TV ownership.
- **Increasing Consumption of Video Content:** Average weekly video viewing has increased 10%, from 40 hours per week in 2015 to 44 hours per week in 2020, driven by a number of factors, including increased availability of content catering to various consumer tastes and preferences, new platforms for consumption such as personal devices (e.g., mobiles and tablets), and disruption from the COVID-19 pandemic. Consumers are increasing their spend on entertainment devices that deliver superior experiences and simplify the consumption of content across multiple platforms and devices. Omdia S.A. estimates revenues from the shipment of these platforms and devices in North America alone (including TVs, Smartphones, Tablets and PCs, Streaming Media Players, connected Blu-Rays players, and Video Game consoles) are expected to surpass $190 billion in 2023 and continue to grow by 3% year-over-year to 2025.
- **Growing Connectivity in Cars and the Future of Semi-Autonomous and Autonomous Vehicles:** As the automobile dashboard interface becomes more integral to the in-car experience, purchasing a car for its infotainment capabilities starts to move up the list of purchase considerations for car buyers. A McKinsey survey reported that 37% of consumers state they are eager to switch to cars with increased connectivity and nearly half of high-end auto consumers express an interest in exploring the digital capabilities of their new cars. Autonomous and semi-autonomous driving technologies have made significant progress over the last several years and passenger cars are increasingly being fitted with autonomous driving features. If autonomous driving technologies become mainstream, the automobile will become a more common place for media consumption. Over time, we believe consumers will place significant importance on the quality of media delivery and will expect the quality of delivery in the car to be comparable to that of their living room.
- **Increasing Use of “Smart” Devices:** Consumers have long relied on smartphones enabled with virtual assistants, talk-to-text, and other intelligent features, and increasingly want other home devices (as well as their automobiles) to be enabled with similar smart capabilities. “Smart” devices have created attractive opportunities to deliver personalized content discovery and highly differentiated experiences in the car, on par with consumers’ home media devices.
- **New Use Cases for Edge AI Computing:** Artificial intelligence and machine learning (“AI/ML”) based technologies are finding new use cases in consumer devices and technologies at a rapid rate. Similar to consumer reliance on smart phones, consumers increasingly expect their smart speakers, virtual assistants, security cameras, and other devices to learn user behavior and adapt to it. However, consumer privacy and data protection are critical features that limit the ability to transfer personal data from the device to the cloud for computing, and such transfers are further limited by challenges such as low bandwidth and unreliable connectivity. AI/ML based technologies need to be built directly into consumer devices to address security and data concerns and deliver the experience users expect. The shift toward edge-based device capabilities is creating a potential opportunity for semiconductor components that are AI/ML capable, have low power requirements, and can be produced at reasonable cost.

5

## Strategy

Our business focuses on creating extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it, in a way that is more intelligent, immersive, and personal:

- **Pay-TV:** We transform the traditional television user experience from linear multichannel video programming distributors (“MVPD”) with cloud-based DVRs into an immersive, intuitive, and hyper-personalized experience. Our iconic user experience, with enhanced imagery and relevant, personalized recommendations, enables consumers to navigate to the entertainment they love in an enjoyable and engaging experience.
- **Consumer Electronics:** Our technologies enable clear, bright visuals and immersive sound, across nearly all platforms people listen, watch and play - at the movies, throughout the home and on the most popular mobile devices and gaming platforms. We continue to develop our machine-learning capabilities through our Perceive subsidiary which delivers datacenter-class accuracy and performance to edge-based devices at ultra-low power, performing tasks such as face recognition and audio/video event detection.
- **Connected Car:** We seek to transform the automotive experience by bringing high-quality multimedia and personalization to the connected car. We immerse drivers in more of their favorite audio content, with crystal-clear, subscription-free digital radio. Our products are designed to give drivers confidence, as vehicles with our AI-powered in-cabin sensing solutions improve the safety, comfort, and security of everyone in the car. With autonomous vehicles pushing consumer expectations higher, we are innovating to create the dashboard of the future, accommodating more types of entertainment, from video to gaming and more.
- **Media Platform:** We are uniquely positioned as an independent media platform that allows Smart TV OEMs to brand the experience, retain customer ownership and generate recurring revenues by participating in monetization throughout the approximate 5 year lifecycle of TV ownership. Our platform creates high viewer engagement with an unbiased, content-first user experience where Hybrid TV and streaming services integrate in a personalized way that makes it easy to find, watch and enjoy content across siloed ecosystems. We endeavor to connect advertisers and entertainment producers to audiences they cannot as easily reach on other platforms. Our unique footprint includes millions of traditional, linear TV households, where we deterministically capture viewership data throughout the home, as well as anyone streaming from our ad-supported content network. By creating an environment where users search less and watch more, we enable content producers to grow their audiences, and consumer brands to increase exposure to their marketing campaigns over time.

6

Pay-TV

# Pay TV

Transforming the traditional television user experience from linear program distribution with digital video recording to a modern content discovery platform that breaks down content silos and boundaries, creating a unified media experience that enables unprecedented end user engagement

## IPTV Solutions

Our most advanced platform, offering a fully-integrated cloud-based solution that powers the TiVo client software which operates on STBs in consumer homes, as well as applications that operate on third party software platforms, such as iOS, Android, and BYOD streaming devices that power tablets, smartphones and streaming devices

## TV as a Service IPTV Program

A Managed IPTV Service that is a customizable, cloud-enabled, end-to-end streaming video solution that enables operators to quickly launch a branded, fully compliant, full-featured pay TV service that leverages devices such as Apple TV, Android TV, and Amazon Fire TV

![img-0.jpeg](img-0.jpeg)

## Electronic Program Guides

Interactive Program Guide (IPG) offering, available in HD, which includes intuitive, easy-to-use TV listings navigation plus integrated VOD and DVR capabilities

## Personalized Content Discovery, Natural Language Voice and Insights

Provides service providers, content owners and applications, CE device manufacturers and application/service developers a way to enable their customers to quickly find, discover and access content across linear broadcast television, VOD, DVR, and OTT sources

## Video Metadata

A comprehensive metadata library covering television, sports, movies, celebrities, books, and video games

## Pay TV Features

Video on demand

Pay Per View

Start over

Aggregation of content

Catch up

Network DVR

7

Our Pay-TV business delivers a range of User Experience (UX) solutions servicing Pay-TV operators on a worldwide basis with products that address the evolving user experience around TV content consumption, creating a truly unified media experience. We integrate virtual channels of internet-delivered video directly into the consumer's primary video consumption platform to provide universal search, discovery, and consumption regardless of where the content originates. Our solutions make it easy for consumers to find, watch, and enjoy content. The following are some of the key solutions we license to operators.

*Electronic Program Guides* Electronic Program Guides is our interactive program guide offering that includes intuitive, easy-to-use TV listings navigation plus integrated video-on-demand (VOD) and digital video recorder (DVR) capabilities.

Our UX Solutions:

- allow service providers to customize certain elements of the interactive program guide for their customers and to upgrade the programming features and services they offer;
- provide content producers with a platform for monetizing their content;
- allow viewers to build their own entertainment bundle to truly personalize their experience with current and future program information; and
- are compatible with service providers' linear, network DVR, Start-Over/Catch-Up subscription management, pay-per-view (PPV) and VOD services.

Our UX Solutions may include advertising and we typically share a portion of the advertising revenue with the service provider. Advertising revenue tied to our UX Solutions is included in the Media Platform category described below.

*IPTV Solutions* The TiVo internet protocol television (IPTV) Service is our most advanced platform, offering a fully integrated, cloud-based solution that powers the TiVo client software which operates on set-top-boxes in consumer homes, as well as applications that operate on third-party software platforms such as iOS and Android that power tablets, smartphones, and bring-your-own-device (BYOD) streaming devices. Our IPTV solution supports multiple services and applications, such as TV programming, broadband OTT video content, digital music, photos and other media experiences. Our latest generation UX, includes a new look and feel, and our latest IPTV platform integrates all of our most advanced technologies and solutions, including advanced cross-platform conversational voice search, personalized recommendations, predictions and insights, rich video metadata, robust data collection and new back-office capabilities.

*TV as a Service IPTV Program* We offer a Managed IPTV Service that is a customizable, cloud-enabled, end-to-end streaming video solution that enables operators to quickly launch a branded, fully compliant, full-featured Pay-TV service that leverages devices such as Apple TV, Android TV, and Amazon Fire TV.

Our Managed IPTV Service enables broadband operators, 5G network providers and cable operators to offer TV-as-a-service without having to invest in video head-end infrastructure or end-user set-top-boxes. Our TV as a Service IPTV solution includes a full cable programming lineup with local channels, DVR, recommendations, Dynamic Ad Insertion and more, all with the same ease as signing up for and using top streaming services.

*Video Metadata* Our metadata products are a critical component of delivering an interactive entertainment experience. We offer one of the industry's most comprehensive metadata libraries, covering television, sports, movies, digital-first, celebrities, books, and video games. Our focus on quality, robustness and consistent international depth has made us a recognized leader in entertainment metadata services worldwide.

Customers typically pay us a monthly or quarterly licensing fee for the rights to use our metadata, receive regular updates, and integrate metadata into their own service.

*Personalized Content Discovery, Natural Language Voice and Insights* Personalized Content Discovery with conversation services provides our customers with a way to enable their customers (the device user) to quickly find, discover and access content across linear broadcast television, VOD, DVR, and OTT sources. The ongoing investment in our Personalized Content Discovery platform enables us to provide some of the most advanced capabilities in media personalization, prediction, and voice search. The advanced algorithms of our technology understand the nature and relationship of content information and the context surrounding a user's behavior to deliver an advanced personalized content discovery experience. Our natural language voice solution, when combined with our advanced search and recommendations technology, enables a conversational

8

interaction between a viewer and their content experience. Engagement behaviors are then analyzed and optimized, thereby providing our customers with the ability to continuously engage and improve the consumer experience, with the ultimate goal of reducing churn.

*Legacy TiVo DVR Subscriptions* We offer a direct-to-consumer retail TiVo subscription in North America. The TiVo Service Platform includes a modular front-end that allows the basic platform to be used by hardware manufacturers to build set-top-boxes that support digital and analog broadcast, cable, internet TV, OTT and VOD services. Consumers purchase TiVo DVRs and companion TiVo Mini whole-home devices for a user experience upgrade to the set-top-box experience provided by a standard cable service.

Customers typically pay us a per-subscriber or per-device fee. Our search and recommendation solutions are widely deployed with many leading Pay-TV service providers including Charter Communications Inc. and Vodafone Group plc.

*UX Business Operations and Technical Support* Our UX Business has technical support and certification operations to support our products:

- we provide training, technical support and integration services to Pay-TV service providers who license our products;
- we operate the internet-based services required for our service offerings including data delivery, search, recommendation, advertising, device management and media recognition;
- we provide broadcast delivery of television programming data and advertising to UXs on TVs and set-top-boxes in major European markets and in Japan, and in North America, we deliver similar programming and advertising data via the internet;
- we support our customers with porting and engineering services to ensure our interactive program guides and DVRs operate properly; and
- we provide customer care for UX and DVR customers to resolve data, advertising, and consumer functional issues.

9

Consumer Electronics

# Consumer Electronics

Innovative audio and media technology for consumer devices that enhance how people consume entertainment in the home and on the go

![img-1.jpeg](img-1.jpeg)

Our Consumer Electronics business provides technology solutions delivered to our customers to enhance their entertainment experience in the home and on-the-go. Below are some of the key solutions we license:

*Home and Mobile Audio Solutions* Our solutions consist of premier audio technology for high-definition entertainment experiences. Our DTS codec is designed to enable recording, delivery and playback of immersive high-definition audio and is incorporated by customers around the world into an array of consumer electronics devices. We provide products and services to

10

## Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The primary objectives of our investment activities are to preserve principal and maintain liquidity while at the same time capturing a market rate of return. To achieve these objectives, we maintain our portfolio of cash and cash equivalents with high quality financial institutions in the countries in which we do business. Our cash and cash equivalents and future investments are subject to risks including:

### *Investment Risk*

We are not currently exposed to market risk because we hold no investments, however we expect to hold such investments in the future. We will be exposed to market risk as it relates to changes in the market value of our investments in addition to the liquidity and credit worthiness of the underlying issuers of our investments. Investments are subject to fluctuations in fair value due to the volatility of the credit markets and prevailing interest rates for such securities.

### *Bank Liquidity Risk*

As of December 31, 2022, we have approximately $160.1 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority held with domestic financial institutions. These cash balances could be lost or become inaccessible if the underlying financial institutions fail or if they are unable to meet the liquidity requirements of their depositors and they are not supported by the government of the jurisdiction where such cash is held. We have not incurred any losses and have had full access to our operating accounts to date. We believe any failures of domestic and international financial institutions could impact our ability to fund our operations in the short term.

### *Exchange Rate Risk*

Our international business is subject to risks, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility when compared to the U.S. dollar. Accordingly, our future results could be materially impacted by changes in these or other factors.

Due to our operations outside the United States, we are subject to the risks of fluctuations in foreign currency exchange rates, particularly related to the euro, Indian rupee and British pound. As a substantial majority of our non-U.S. revenue and expense transactions are denominated in U.S. dollars, fluctuations in foreign currency exchange rates could cause our products and services to become relatively more expensive to customers in a particular country, leading to a reduction in sales or profitability in that country. Some of our subsidiaries operate in their local currency, which mitigates a portion of the exposure related to fluctuations in foreign currency exchange rates.

We have established risk management strategies designed to reduce the impact of volatility of future cash flows caused by changes in the exchange rate for these currencies. These strategies reduce, but do not entirely eliminate, the impact of currency exchange rate movements. We do not use derivative financial instruments for speculative or trading purposes. In the fourth quarter of 2022, we began to hedge our exposure to certain foreign currencies with various financial institutions in an effort to minimize the impact of certain currency exchange rate fluctuations. If a financial counterparty to any of our hedging arrangements experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience financial losses.

For derivative instruments that are designated and qualify as cash flow hedges under ASC No. 815, Derivatives and Hedging (“ASC 815”), the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income or loss and reclassified into earnings in the same financial statement line as the item being hedged, and in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized each period in other income (expense), net. For derivative instruments that are not designated as hedging instruments under ASC 815, gains and losses are recognized each period in other income (expense), net.

As of December 31, 2022, we had outstanding foreign currency derivative contracts with a total notional amount of $59.6 million. If overall foreign currency exchange rates appreciated (depreciated) uniformly by 10% against the U.S. dollar, our foreign currency derivative contracts outstanding as of December 31, 2022 would experience an approximately $6.0 million gain (loss).

61

## **Item 8. Financial Statements and Supplementary Data**

Our consolidated balance sheets as of December 31, 2022 and 2021, and the related consolidated statements of operations, equity, comprehensive loss and cash flows for each of the years in the three-year period ended December 31, 2022 are set forth in this Annual Report at Item 15(a)(1).

## **Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

Not applicable.

### **Item 9A. Controls and Procedures**

Attached as exhibits to this Form 10-K are certifications of Xperi Inc.'s Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This 'Controls and Procedures' section includes information concerning the controls and controls evaluation referred to in the certifications and it should be read in conjunction with the certifications, for a more complete understanding of the topics presented.

### **Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report (the evaluation date). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the evaluation date that our disclosure controls and procedures were effective to provide reasonable assurance that the information relating to Xperi, including our subsidiaries, required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Xperi's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

### **Management's Report on Internal Control over Financial Reporting**

This Annual Report on Form 10-K does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the Company's independent registered public accounting firm due to an exemption established by the rules of the SEC for newly public companies.

### **Changes in Internal Control over Financial Reporting**

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the quarterly period ended December 31, 2022 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

### **Item 9B. Other Information**

Not applicable.

### **Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

62

# PART III

## Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item 10 is hereby incorporated by reference from the information under the captions “Executive Officers,” “Election of Directors” and “Delinquent Section 16(a) Reports” that will be contained in the Proxy Statement for our 2023 Annual Meeting of Stockholders (the “Proxy Statement”).

We have adopted a written Code of Business Conduct and Ethics Policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons serving similar functions. The Code of Business Conduct and Ethics is posted on our website at investor.xperi.com.

## Item 11. Executive Compensation

The information required by this Item 11 is incorporated by reference from the information under the captions “Election of Directors,” “Executive Officers” and “Executive Compensation and Related Information” that will be contained in the Proxy Statement.

## Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item 12 is incorporated by reference from the information under the captions “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” that will be contained in the Proxy Statement.

## Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item 13 is incorporated by reference from the information under the captions “Certain Relationships and Related Transactions” and “Election of Directors” that will be contained in the Proxy Statement.

## Item 14. Principal Accountant Fees and Services

The information required by this Item 14 is incorporated by reference from the information under the caption “Ratification of Independent Registered Public Accounting Firm” that will be contained in the Proxy Statement.

63

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Documents filed as part of this report:

|  | Page Number |
| --- | --- |
| (1) Financial Statements |  |
| Report of Independent Registered Public Accounting Firm | F-1 |
| Consolidated Statements of Operations | F-2 |
| Consolidated Statements of Comprehensive loss | F-3 |
| Consolidated Balance Sheets | F-4 |
| Consolidated Statements of Cash Flows | F-5 |
| Consolidated Statements of Equity | F-6 |
| Notes to Consolidated Financial Statements | F-7 |

(2) *Financial Statement Schedule*

Valuation and Qualifying Accounts

(3) *Exhibits*

The exhibits listed on the Exhibit Index preceding the signature page to this Annual Report are filed as part of this Annual Report.

Auditor Firm Id: 238 Auditor Name: PricewaterhouseCoopers LLP Auditor Location: San Jose, California, USA

64

# Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Xperi Inc.

## *Opinions on the Financial Statements*

We have audited the accompanying consolidated balance sheets of Xperi Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of comprehensive loss, of equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

## *Basis for Opinions*

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP  
San Jose, California  
March 3, 2023

We have served as the Company’s auditor since 2020.

F-1

# **XPERI INC.**  
 **CONSOLIDATED STATEMENTS OF OPERATIONS**  
 (in thousands, except per share amounts)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Revenue | $502,260 | $486,483 | $376,101 |
| Operating expenses: |  |  |  |
| Cost of revenue, excluding depreciation and amortization of intangible assets | 122,946 | 125,626 | 77,788 |
| Research and development | 216,355 | 194,869 | 163,407 |
| Selling, general and administrative | 217,402 | 199,921 | 172,594 |
| Depreciation expense | 20,501 | 22,584 | 16,666 |
| Amortization expense | 62,209 | 105,311 | 98,209 |
| Impairment of long-lived assets | 7,724 | - | - |
| Goodwill impairment | 604,555 | - | - |
| Total operating expenses | 1,251,692 | 648,311 | 528,664 |
| Operating loss | (749,432) | (161,828) | (152,563) |
| Other income, net | 1,815 | 1,590 | 1,535 |
| Loss before taxes | (747,617) | (160,238) | (151,028) |
| Provision for (benefit from) income taxes | 13,589 | 18,840 | (9,735) |
| Net loss | (761,206) | (179,078) | (141,293) |
| Less: Net loss attributable to noncontrolling interest | (3,722) | (3,456) | (2,966) |
| Net loss attributable to the Company | $(757,484) | $(175,622) | $(138,327) |
| Loss per share attributable to the Company: |  |  |  |
| Basic | $(18.02) | $(4.18) | $(3.29) |
| Diluted | $(18.02) | $(4.18) | $(3.29) |
| Weighted average number of shares used in per share calculations- basic | 42,029 | 42,024 | 42,024 |
| Weighted average number of shares used in per share calculations- diluted | 42,029 | 42,024 | 42,024 |

The accompanying notes are an integral part of these consolidated financial statements.

F-2

# **XPERI INC.**  
 **CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**  
 (in thousands)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Net loss | $(761,206) | $(179,078) | $(141,293) |
| Other comprehensive loss, net of tax: |  |  |  |
| Change in foreign currency translation adjustment | (3,349) | (1,987) | 1,311 |
| Unrealized losses on cash flow hedges | (94) | - | - |
| Comprehensive loss | (764,649) | (181,065) | (139,982) |
| Less: Comprehensive loss attributable to noncontrolling interest | (3,722) | (3,456) | (2,966) |
| Comprehensive loss attributable to the Company | $(760,927) | $(177,609) | $(137,016) |

The accompanying notes are an integral part of these consolidated financial statements.

F-3

# **XPERI INC.**  
 **CONSOLIDATED BALANCE SHEETS**  
 (in thousands, except for par value)

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| ASSETS |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $160,127 | $120,695 |
| Accounts receivable, net | 64,712 | 79,494 |
| Unbilled contracts receivable, net | 65,251 | 50,962 |
| Other current assets | 42,174 | 25,985 |
| Total current assets | 332,264 | 277,136 |
| Long-term unbilled contracts receivable | 4,289 | 3,825 |
| Property and equipment, net | 47,827 | 57,477 |
| Operating lease right-of-use assets | 52,901 | 61,758 |
| Intangible assets, net | 264,376 | 270,934 |
| Long-term deferred tax assets | 2,096 | 1,847 |
| Goodwill | - | 536,512 |
| Other long-term assets | 33,158 | 19,223 |
| Total assets | $736,911 | $1,228,712 |
| LIABILITIES AND EQUITY |  |  |
| Current liabilities: |  |  |
| Accounts payable | $14,864 | $7,362 |
| Accrued liabilities | 110,014 | 84,404 |
| Deferred revenue | 25,363 | 28,211 |
| Total current liabilities | 150,241 | 119,977 |
| Long-term deferred tax liabilities | 20,559 | 14,428 |
| Deferred revenue, less current portion | 19,129 | 23,663 |
| Long-term debt, net | 50,000 | - |
| Noncurrent operating lease liabilities | 42,666 | 49,017 |
| Other long-term liabilities | 5,330 | 5,670 |
| Total liabilities | 287,925 | 212,755 |
| Commitments and contingencies (Note 16) |  |  |
| Company stockholders’ equity: |  |  |
| Net Investment by Former Parent | - | 1,025,838 |
| Preferred stock: $0.001 par value; 6,000 shares authorized; no shares issued and outstanding | - | - |
| Common stock: $0.001 par value; 140,000 shares authorized; 42,066 and no shares issued; 42,066 and no shares outstanding, respectively | 42 | - |
| Additional paid-in capital | 1,136,330 | - |
| Accumulated other comprehensive loss | (4,119) | (676) |
| Accumulated deficit | (668,835) | - |
| Total Company stockholders’ equity | 463,418 | 1,025,162 |
| Noncontrolling interest | (14,432) | (9,205) |
| Total equity | 448,986 | 1,015,957 |
| Total liabilities and equity | $736,911 | $1,228,712 |

The accompanying notes are an integral part of these consolidated financial statements.

F-4

# **XPERI INC.**  
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**  
 (in thousands)

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Cash flows from operating activities: |  |  |  |
| Net loss | $(761,206) | $(179,078) | $(141,293) |
| Adjustments to reconcile net loss to net cash from operating activities: |  |  |  |
| Depreciation of property and equipment | 20,501 | 22,584 | 16,666 |
| Amortization of intangible assets | 62,209 | 105,311 | 98,209 |
| Stock-based compensation expense | 45,303 | 33,509 | 19,183 |
| Goodwill impairment | 604,555 | - | - |
| Impairment of long-lived assets | 7,724 | - | - |
| Deferred income tax | (1,602) | 6,913 | (20,116) |
| Provision for credit losses | 700 | (1,016) | 5,973 |
| Other | (676) | (738) | 3,256 |
| Changes in operating assets and liabilities: |  |  |  |
| Accounts receivable | 17,505 | (2,416) | (10,827) |
| Unbilled contracts receivable, net | (12,473) | 15,475 | 3,436 |
| Other assets | (20,439) | 15,296 | (5,170) |
| Accounts payable | 6,633 | (4,018) | (3,111) |
| Accrued and other liabilities | 11,123 | (37,249) | 12,064 |
| Deferred revenue | (8,302) | 1,974 | (2,047) |
| Net cash from operating activities | (28,445) | (23,453) | (23,777) |
| Cash flows from investing activities: |  |  |  |
| Purchases of property and equipment | (14,207) | (8,893) | (6,601) |
| Net cash received (paid) for mergers and acquisitions | (50,473) | (12,401) | 33,143 |
| Proceeds from sales of short-term investments | - | - | 415 |
| Purchases of intangible assets | (166) | (186) | (435) |
| Net cash from investing activities | (64,846) | (21,480) | 26,522 |
| Cash flows from financing activities: |  |  |  |
| Net proceeds from capital contributions by Former Parent | 83,235 | - | - |
| Net transfers from Former Parent | 52,802 | 83,330 | 34,244 |
| Withholding taxes related to net share settlement of restricted awards | (286) | - | - |
| Net cash from financing activities | 135,751 | 83,330 | 34,244 |
| Effect of exchange rate changes on cash and cash equivalents | (3,028) | (3,326) | 1,371 |
| Net increase in cash and cash equivalents | 39,432 | 35,071 | 38,360 |
| Cash and cash equivalents at beginning of period | 120,695 | 85,624 | 47,264 |
| Cash and cash equivalents at end of period | $160,127 | $120,695 | $85,624 |
| Supplemental disclosure of cash flow information: |  |  |  |
| Debt issued in connection with acquisition | $50,000 | $ - | $ - |
| Interest paid | $756 | $ - | $ - |
| Income taxes paid, net of refunds | $13,416 | $11,801 | $8,575 |

The accompanying notes are an integral part of these consolidated financial statements.

F-5

# **XPERI INC.**  
 **CONSOLIDATED STATEMENTS OF EQUITY**  
 (in thousands)

|  | Common Stock |  | Additional Paid-In Capital | Net Investment by Former Parent | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Noncontrolling Interest | Total Equity |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Shares | Amount |  |  |  |  |  |  |
| Balance at December 31, 2019 | - | $ - | $ - | $716,781 | $ - | $ - | $(2,811) | $713,970 |
| Net loss | - | - | - | (138,327) | - | - | (2,966) | (141,293) |
| Other comprehensive income, net of tax | - | - | - | - | 1,311 | - | - | 1,311 |
| Issuance of equity to noncontrolling interest | - | - | - | - | - | - | 19 | 19 |
| Net transfers from Parent | - | - | - | 506,176 | - | - | - | 506,176 |
| Balance at December 31, 2020 | - | $ - | $ - | $1,084,630 | $1,311 | - | $(5,758) | $1,080,183 |
| Net loss | - | - | - | (175,622) | - | - | (3,456) | (179,078) |
| Other comprehensive loss, net of tax | - | - | - | - | (1,987) | - | - | (1,987) |
| Issuance of equity to noncontrolling interest | - | - | - | - | - | - | 9 | 9 |
| Net transfers from Parent | - | - | - | 116,830 | - | - | - | 116,830 |
| Balance at December 31, 2021 | - | $ - | $ - | $1,025,838 | $(676) | - | $(9,205) | $1,015,957 |
| Net loss | - | - | - | (88,649) | - | (668,835) | (3,722) | (761,206) |
| Other comprehensive loss, net of tax | - | - | - | - | (3,443) | - | - | (3,443) |
| Issuance of equity to noncontrolling interest | - | - | 82 | - | - | - | (1,505) | (1,423) |
| Net transfers from Former Parent | - | - | - | 100,915 | - | - | - | 100,915 |
| Issuance of common stock and reclassification of net transfers from Former Parent | 42,024 | 42 | 1,038,062 | (1,038,104) | - | - | - | - |
| Net capital contribution from Former Parent | - | - | 83,235 | - | - | - | - | 83,235 |
| Issuance of restricted stock, net of shares canceled | 42 | - | - | - | - | - | - | - |
| Withholding taxes related to net share settlement of restricted awards | - | - | (286) | - | - | - | - | (286) |
| Stock-based compensation | - | - | 15,541 | - | - | - | - | 15,541 |
| Other | - | - | (304) | - | - | - | - | (304) |
| Balance at December 31, 2022 | 42,066 | $42 | $1,136,330 | $ - | $(4,119) | $(668,835) | $(14,432) | $448,986 |

The accompanying notes are an integral part of these consolidated financial statements.

F-6

# **XPERI INC.**  
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

# **NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION**

# *Xperi Spin-Off*

On December 18, 2019, Xperi Corporation (“Pre-Merger Xperi”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with TiVo Corporation (“Pre-Merger TiVo”) to combine in an all-stock merger of equals transaction (the “Mergers”). Immediately following the consummation of the Mergers on June 1, 2020 (the “Merger Date”), Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”), a Delaware corporation founded in December 2019 under the name “XRAY-TWOLF HoldCo Corporation,” became the parent company of both Pre-Merger Xperi and Pre-Merger TiVo.

Following the Mergers, the Former Parent announced plans to separate into two independent publicly-traded companies (the “Separation”), one comprising its intellectual property (“IP”) licensing business and one comprising its product business (“Xperi Product”). On October 1, 2022, the Former Parent completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all the outstanding common stock of its product-related business (formerly known as Xperi Product, and hereinafter “Xperi Inc.”, “Xperi” or the “Company”) to the stockholders of record of the Former Parent as of the close of business on September 21, 2022, the record date (the “Record Date”) for the Distribution. Each Xperi Holding stockholder of record received four shares of Xperi common stock, $0.001 par value, for every ten shares of Xperi Holding common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date. Cash was paid in lieu of any fractional shares of Xperi common stock. The Former Parent distributed 42,023,632 shares of Xperi common stock in the Distribution, which became effective on October 1, 2022. As a result of the Distribution, Xperi became an independent, publicly-traded company and its common stock is listed under the symbol “XPER” on the New York Stock Exchange (“NYSE”). In connection with the Separation and the Distribution, Xperi Holding was renamed and continues as Adeia Inc. and also changed its stock symbol to “ADEA” on the Nasdaq Global Select Market.

In connection with the Separation, the Company entered into several agreements with its Former Parent, including a separation and distribution agreement that sets forth certain agreements with the Former Parent regarding the principal actions taken to complete the Spin-Off, including the assets and rights transferred, liabilities assumed and related matters. It also sets forth other agreements that govern certain aspects of the Former Parent’s relationship with the Company following the Spin-Off. Other agreements that the Company and its Former Parent entered into that govern aspects of their relationship following the Separation include:

# *Tax Matters Agreement*

The tax matters agreement (“Tax Matters Agreement”) governs the parties’ respective rights, responsibilities and obligations with respect to taxes, including taxes arising in the ordinary course of business, and taxes, if any, incurred as a result of the failure of the Distribution (and certain related transactions) to qualify for tax-free treatment for U.S. federal income tax purposes. The Tax Matters Agreement also sets forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters.

# *Employee Matters Agreement*

The employee matters agreement (“Employee Matters Agreement”) governs each company’s respective compensation and benefit obligations with respect to current and former employees, directors and consultants. The Employee Matters Agreement identifies employees and employee-related liabilities (and attributable assets) allocated (either retained, transferred, and accepted, or assigned and assumed, as applicable) to the Former Parent and Xperi as part of the separation of the Former Parent into two companies, and describes when and how the relevant transfers and assignments occur.

# *Cross Business License Agreement*

The cross-business license agreement (“CBLA”) sets forth the terms under which the Former Parent licenses to Xperi certain patents owned by the Former Parent or its affiliates that are necessary or useful in Xperi’s business. There are no restrictions preventing the Former Parent from establishing operations in entertainment-related products or services or on Xperi from establishing operations in intellectual property licensing activities after the separation.

F-7

### *Transition Services Agreement*

The transition services agreement (“Transition Services Agreement”) sets forth the terms under which Xperi and its subsidiaries will provide to the Former Parent and its subsidiaries various services for a transitional period. The services to be provided include back office functions and assistance with regard to administrative tasks relating to day-to-day activities as needed, including finance, accounting and tax activities, IT services, customer support, facilities services, human resources, and general corporate support, as well as pass-through services provided by certain vendors.

### *Data Sharing Agreement*

The data sharing agreement (“Data Sharing Agreement”) entered into between the Former Parent and Xperi provides a binding framework for the sharing of data between Xperi and its subsidiaries and the Former Parent and its subsidiaries. The Data Sharing Agreement sets forth the rights and obligations of the parties with respect to the retention and care of records, the handling of requests for information and the sharing of data in a legally compliant manner.

### *Description of Business*

Xperi is a leading consumer and entertainment technology company. The Company believes it creates extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it in a way that is more intelligent, immersive and personal. Powering smart devices, connected cars, entertainment experiences and more, the Company has created a unified ecosystem that reaches highly engaged consumers, uncovering significant new business opportunities, now and in the future. The Company’s technologies are integrated into consumer devices and media platforms worldwide, driving increased value for partners, customers and consumers. The Company currently operates in one reportable business segment and groups its business into four categories based on the markets served: Pay-TV, Consumer Electronics, Connected Car and Media Platform.

### *Basis of Presentation*

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”).

During the three months ended September 30, 2022, all of the assets and liabilities of the Xperi Product business had been transferred to a legal entity (the “Transfer”) under the common control of Xperi. Subsequent to this transfer and through December 31, 2022, the Company’s financial statements and accompanying notes are prepared on a consolidated basis and include Xperi and its subsidiaries in which Xperi has a controlling financial interest. All intercompany balances and transactions are eliminated in consolidation. Prior to the Transfer, the financial statements and accompanying notes of the Xperi Product business were prepared on a combined basis and were derived from the consolidated financial statements and accounting records of the Former Parent as the Company was not historically held by a single legal entity. Net investment by Former Parent, which represents the Former Parent’s total net interest in the recorded net assets of the Company prior to the transfer, is presented within equity on a combined basis in lieu of share capital. All intercompany balances and transactions within the combined businesses of the Company have been eliminated.

The Consolidated Balance Sheets of Xperi and its subsidiaries for the pre-Transfer periods include Former Parent’s assets and liabilities that are specifically identifiable or otherwise attributable to the Company. In the fourth quarter of 2018, the Company funded a new subsidiary, Perceive Corporation (“Perceive”), which was created to focus on delivering edge inference solutions. As of December 31, 2022, the Company owned approximately 77.0% of the outstanding equity interest of Perceive. The operating results of Perceive have been included in the Company’s consolidated financial statements since the fourth quarter of 2018.

Prior to the Separation, the Company was dependent on the Former Parent for all of its working capital and financing requirements as the Former Parent used a centralized approach to cash management and financing its operations. Financial transactions relating to the Company were accounted for as equity contributions from the Former Parent on the Consolidated Balance Sheets. Accordingly, none of the Former Parent’s cash and cash equivalents were allocated to the Company for any of the periods presented, unless those balances were directly attributable to the Company. The Company reflects transfers of cash to and from the Former Parent’s cash management system within equity as a component of Net investment by Former Parent on a combined basis and as a component of net capital contribution from Former Parent on a consolidated basis. Other than the debt incurred in connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) discussed in Note 9, the Former Parent’s long-term debt has not been attributed to the Company for any of the periods presented because the Former Parent’s

F-8

borrowings are not the legal obligation of the Company. The cash and cash equivalents, including the Company's capitalization from Former Parent on September 30, 2022 is expected to be sufficient to support its operations, capital expenditures and income tax payments, in addition to any investments and other capital allocation needs for at least the next 12 months from the issuance date of these consolidated financial statements.

Prior to the Separation, the Consolidated Statements of Operations and Comprehensive Loss of the Company reflect allocations of general corporate expenses from the Former Parent, including, but not limited to, executive management, sales and marketing, finance, legal, information technology, employee benefits administration, stock-based compensation, treasury, risk management, procurement and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on a pro rata basis of billing, revenue, headcount or other measures as deemed appropriate. Management of the Company and Former Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, the Company. The allocations may not, however, reflect the expenses the Company would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, such as the chosen organizational structure, whether functions were outsourced or performed by employees and decisions with respect to areas such as facilities, information technology and operating infrastructure.

During the periods prior to the Separation that are presented in the accompanying Consolidated Financial Statements, the Company's income tax expense (benefit) and deferred tax balances were included in the Former Parent's income tax returns. Income tax expense (benefit) and deferred tax balances contained in these Consolidated Financial Statements for periods prior to the Separation are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of the Former Parent may or may not be included in the Consolidated Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Consolidated Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of the Former Parent. The taxes recorded in the Consolidated Statements of Operations for periods prior to the Separation are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from the Former Parent's returns. The income tax expense (benefit) recorded for the three months ended December 31, 2022 is presented as if activity from this period would have been included in the same separate return as the nine months of activity through the date of Separation. Deferred tax balances for the period ended December 31, 2022 are presented for the standalone Company.

The Company's fiscal year ends on December 31. The Company employs a calendar month-end reporting period for its quarterly reporting.

## NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

### *Use of Estimates*

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require management's most significant, challenging, and subjective judgment include the estimation of licensees' quarterly royalties prior to receiving the royalty reports, the determination of stand-alone selling price and the transaction price in an arrangement with multiple performance obligations, the assessment of the recoverability of goodwill, the assessment of useful lives and recoverability of other intangible assets and long-lived assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and purchase accounting resulting from business combinations. Actual results experienced by the Company may differ from management's estimates.

The COVID-19 pandemic and related macroeconomic conditions have had, and may continue to have, an adverse impact on the Company's business. The impact to date has included periods of significant volatility in markets the Company serves, in particular the automotive and broad consumer electronics markets. Additionally, the pandemic has caused some challenges and delays in acquiring new customers and executing license renewals. These factors have contributed to an impairment of our long-lived assets, including goodwill, and may result in increased credit losses and impairments of investments in other companies. The Company's operations and those of its customers have also been negatively impacted by certain trends arising from the COVID-19 pandemic, including labor market constraints, shortage of semiconductor components and manufacturing capacities, and delays in shipments, product development and product launches. Moreover, the COVID-19 pandemic, its related impact, and United States federal, state and foreign government policies enacted to combat the pandemic have contributed to a recent rise of inflation that may increase the cost of the Company's operations and reduce demand for the Company's products and services and those of its customers, which may adversely affect the Company's financial performance. The impact of the

F-9

pandemic on the Company’s overall results of operations remains uncertain for the foreseeable future and will depend on various factors outside the Company’s control.

### *Principles of Consolidation*

Subsequent to the Transfer during the third quarter of 2022 and through December 31, 2022, the Company’s financial statements are prepared on a consolidated basis and include the accounts of the Company and its wholly-owned subsidiaries, as well as an entity in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.

Prior to the Transfer and through the date in the third quarter of 2022 when all subsidiaries of Xperi Product were owned by the parent company of Xperi Product, the accompanying financial statements of the Xperi Product business were prepared on a combined basis and were derived from the consolidated financial statements and accounting records of the Former Parent as the Company was not historically held by a single legal entity. Net investment by Former Parent, which represents the Former Parent’s total net interest in the recorded net assets of the Company prior to the Transfer and through the date when all subsidiaries of Xperi Product were owned by the parent company of Xperi Product, is presented within equity on a combined basis in lieu of share capital. All intercompany balances and transactions within the combined businesses of the Company have been eliminated.

### *Net Investment by Former Parent*

Net investment by Former Parent on the Consolidated Balance Sheets and Consolidated Statements of Equity represents the Former Parent’s historical investment in the Company, the net effect of transactions with and allocations from the Former Parent, and the Company’s accumulated deficit. See “Note 17 - *Related Party Transactions and Net Investment by Former Parent*” for additional information.

### *Net Loss Per Share*

Net loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period. The calculations of basic and diluted loss per share for any of the periods presented prior to the Separation were based on the number of shares outstanding on October 1, 2022, the Separation Date. For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Xperi stock-based awards outstanding prior to the Separation. Dilutive weighted-average common shares outstanding do not include unvested restricted stock awards and units and stock options for the periods presented because the effect of their inclusion would have been anti-dilutive. Refer to “Note 12 - *Net Loss per Share*” for a reconciliation.

### *Revenue Recognition*

Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, which may include various combinations of goods and services which are generally capable of being distinct and accounted for as separate performance obligations. See “Note 4 - *Revenue*” for a detailed discussion on revenue and revenue recognition.

### *Segment Reporting*

Operating segments are defined as components of an enterprise for which separate financial information is available and that is evaluated on a regular basis by the chief operating decision-maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As such, the Company has determined that it has one operating segment, which is also its reportable segment.

### *Cash and Cash Equivalents*

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with various financial institutions.

F-10

### ***Non-Marketable Equity Investments***

Investments in entities over which the Company has the ability to exercise significant influence, but does not hold a controlling interest, are accounted for using the equity method. Under the equity method, the Company records its proportionate share of income or loss in other income and expense, net, in the Consolidated Statements of Operations. Investments in entities over which the Company does not have the ability to exercise significant influence and which do not have readily determinable fair values, are initially recognized at cost and remeasured through earnings when there is an observable transaction involving the same or similar investment of the same issuer, or due to an impairment (referred to as the “measurement alternative”). The fair value of non-marketable equity investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. The Company monitors its non-marketable securities portfolio for potential impairment. When there is evidence that the expected fair value of the investment has declined to below the recorded cost, the impairment loss is recorded in other income (expense), net, in the Consolidated Statements of Operations.

### ***Fair Value of Financial Instruments***

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value due to the short-term nature of these instruments. Long-term debt is carried at amortized cost and measured at fair value on a quarterly basis for disclosure purposes. See “Note 7 - *Fair Value*” for further information.

### ***Derivative Instruments***

In the fourth quarter of 2022, the Company began to use derivative financial instruments to manage foreign currency exchange rate risk. The Company does not enter into derivative transactions for trading purposes. The Company’s derivative financial instruments are recorded on the Consolidated Balance Sheets as assets or liabilities measured at fair value. For derivatives designated as a hedge, and effective as part of a hedge transaction, the effective portion of the gain or loss on the hedging derivative instrument is reported as a component of other comprehensive income (loss) and as a basis adjustment to the underlying hedged item and reclassified to earnings in the period in which the hedged item affects earnings. To the extent derivatives do not qualify or are not designated as hedges, or are ineffective, their changes in fair value are recorded in earnings immediately. See “Note 6 - *Financial Instruments*” for further information.

### ***Concentration of Credit and Other Risks***

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents and accounts receivable. The Company follows a corporate investment policy which sets credit, maturity and concentration limits and regularly monitors the composition, market risk and maturities of these investments. The Company also maintains cash and cash equivalents with various financial institutions. These financial institutions are located in many different geographic regions, and the Company’s policy is designed to limit exposure from any particular institution. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by the Company’s evaluation process, relatively short collection terms and the high level of credit worthiness of its customers. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary but generally requires no collateral.

The Company had no customers representing 10% or more of aggregate trade receivables at December 31, 2022 and December 31, 2021.

There were no individually significant customers with revenue exceeding 10% of total revenue for the years ended December 31, 2022, 2021 and 2020.

### ***Accounts Receivable***

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to cash collection.

Payment terms and conditions vary by contract type, location of customer and the products or services offered, although terms generally require payment from a customer within 30 to 60 days. When the timing of revenue recognition differs from the

F-11

timing of cash collection, an evaluation is performed to determine whether the contract includes a significant financing component.

### *Allowance for Credit Losses*

The allowance for credit losses, which includes the allowance for accounts receivable and unbilled contracts receivable, represents the Company's best estimate of lifetime expected credit losses inherent in those financial assets. The Company's lifetime expected credit losses are determined using relevant information about past events (including historical experience), current conditions, and reasonable and supportable forecasts that affect collectability. The Company monitors its credit exposure through ongoing credit evaluations of its customers' financial condition and limits the amount of credit extended when deemed necessary. In addition, the Company performs routine credit management activities such as timely account reconciliations, dispute resolution, and payment confirmations. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables. See 'Note 4- *Revenue*' for a further discussion of the allowance for credit losses.

### *Inventory*

Inventories consist primarily of TiVo Stream 4K, finished DVRs, non-DVRs and accessories and are stated at the lower of cost or net realizable value on an aggregate basis. Cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. Adjustments to reduce the carrying amount of inventory to the lower of cost or net realizable value are made, if required, for excess or obsolete goods, which includes a review of, among other factors, demand requirements and market conditions.

### *Business Combinations*

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805, 'Business Combinations.' Identifiable assets acquired and liabilities assumed are recorded at their acquisition date fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition related costs are expensed as incurred. Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition date.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. The Company utilizes commonly accepted valuation techniques, such as the income approach and the cost approach, as appropriate, in establishing the fair value of intangible assets. Typically, key assumptions include projections of cash flows that arise from identifiable intangible assets of acquired businesses as well as discount rates based on an analysis of the weighted average cost of capital, adjusted for specific risks associated with the assets. See 'Note 9 - *Business Combinations*' for additional detail.

### *Goodwill and Identified Intangible Assets*

*Goodwill.* Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired under a business combination. Goodwill also includes acquired assembled workforce, which does not qualify as an identifiable intangible asset. The Company reviews impairment of goodwill annually as of the beginning of the fourth quarter, or more frequently if events or circumstances indicate that the goodwill might be impaired. Triggering events for impairment reviews may be indicators such as adverse industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in the Company's market capitalization. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary.

If, based on the qualitative assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the Company proceeds to perform the quantitative goodwill impairment test. The Company first determines the fair value of a reporting unit using the market capitalization approach to determine the fair value of a reporting unit. Under the market capitalization approach, the fair value of a reporting unit is estimated based on the trading price of the Company's stock as of the test date, or trading prices over a short period of time immediately prior to the test date if such prices more reasonably represent the estimated fair value as of the test date, which is further adjusted by a control premium representing the synergies a market participant would achieve when obtaining control of the business. The Company then compares the derived fair value of a reporting unit with its carrying amount. If the carrying value of a reporting unit

F-12

exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

*Identified intangible assets.* Identified finite-lived intangible assets consist of acquired patents, existing technology, customer relationships, trademarks and trade names, non-compete agreements resulting from business combinations, and acquired patents under asset purchase agreements. The Company's identified intangible assets are amortized on a straight-line basis over their estimated useful lives, ranging from 1 to 10 years. The Company makes judgments about the recoverability of finite-lived intangible assets whenever facts and circumstances indicate that the useful life is shorter than originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, the Company assesses recoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If the useful life is shorter than originally estimated, the Company would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.

Identified indefinite-lived intangible assets include TiVo tradenames and trademarks resulting from business combinations. The Company evaluates the carrying value of indefinite-lived intangible assets on an annual basis, and an impairment charge would be recognized to the extent that the carrying amount of such assets exceeds their estimated fair value.

For further discussion of goodwill and identified intangible assets, see 'Note 10 - *Goodwill and Identified Intangible Assets*.'

### *Leases*

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ('ROU') assets, accrued liabilities, and noncurrent operating lease liabilities in the Company's consolidated balance sheets. The ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The Company's lease terms may include options to extend or terminate the lease, and these terms are factored into the valuation of ROU assets and liabilities when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. As a practical expedient, the Company elected, for all office and facility leases, not to separate non-lease components from lease components and instead to account for each separate lease component and its associated non-lease components as a single lease component. For additional information regarding the Company's leases, refer to 'Note 8 - *Leases*.'

### *Impairment of Long-Lived Assets*

The Company reviews long-lived assets, including property and equipment and intangible assets, for possible impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Such events and changes may include: a significant decrease in market value, changes in asset use, negative industry or economic trends, and changes in the Company's business strategy. The Company measures recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets or the asset group are expected to generate. If the carrying value of the assets is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the assets. During the year ended December 31, 2022, the Company recognized impairment charges of $7.7 million on fixed assets and operating lease ROU assets for which the carrying amount exceeded the fair value for certain leased office building. Refer to 'Note 8 - *Leases*' for detailed impairment discussions.

### *Research and Development*

Research and development costs are comprised primarily of employee-related costs, stock-based compensation expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as costs related to information technology, patent applications and examinations, materials, supplies, and an allocation of facilities costs. All research and development costs are expensed as incurred.

### *Stock-based Compensation*

Prior to the Separation, certain Company employees participated in the Former Parent's stock-based compensation programs. Stock-based compensation expense has been attributed to the Company based on the awards and terms previously granted to

F-13

the Company’s direct employees, as well as an allocation of the Former Parent’s corporate and shared functional employee expenses.

Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as expense on a straight-line basis, net of estimated forfeitures, over the requisite service or performance period. Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. If the actual forfeiture rate is materially different from the estimate, stock-based compensation expense could be significantly different from what was recorded in the current period.

The Company uses the closing trading price of its common stock on the date of grant as the fair value of awards of restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) that are based on company-designated performance targets. For PSUs that are based on market conditions, or market-based PSUs, fair value is estimated by using a Monte Carlo simulation on the date of grant. The Company estimates the grant-date fair value of stock options and stock to be issued under the employee stock purchase plan (“ESPP”) using the Black-Scholes pricing model. See “Note 14 - *Stock-based Compensation*” for additional detail.

### *Income Taxes*

Prior to the Separation, the Company’s operations were included in the tax returns filed by the respective Former Parent entities of which the Company’s businesses were a part. Income tax expense and other income tax-related information contained in these Consolidated Financial Statements are presented on a separate return basis as if the Company had filed its own tax returns. The separate return method applies the accounting guidance for income taxes to the Company’s standalone financial statements as if it were a separate taxpayer and a standalone enterprise for the periods presented. The income tax expense (benefit) recorded for the three month period ended December 31, 2022 is presented as if activity from this period would have been included in the same separate return as the nine months of activity through the date of Separation. Current income tax liabilities related to entities which file jointly with the Former Parent are assumed to be immediately settled with the Former Parent and are relieved through the Net Investment by Former Parent and are presented in Net transfers from and to Former Parent in the Consolidated Statements of Cash Flows.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of assets and liabilities and their respective tax bases and operating loss and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable to the years in which those temporary differences are expected to reverse. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized.

From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. Accruals for unrecognized tax benefit liabilities, which represent the difference between a tax position taken or expected to be taken in a tax return and the benefit recognized for financial reporting purposes, are recorded when the Company believes it is not more-likely-than-not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Adjustments to unrecognized tax benefits are recognized when facts and circumstances change, such as the closing of a tax audit, notice of an assessment by a taxing authority or the refinement of an estimate. Income tax benefit includes the effects of adjustments to unrecognized tax benefits, as well as any related interest and penalties.

### *Advertising Costs*

Advertising costs are expensed as incurred and are presented within selling, general and administrative expense in the Consolidated Statements of Operations. Advertising expenses for the years ended December 31, 2022, 2021 and 2020, were $5.5 million, $9.1 million and $11.3 million, respectively.

### *Contingencies*

From time to time, the Company may be involved in legal and administrative proceedings and claims of various types. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. Management reviews these estimates in each accounting period as additional information becomes known and adjusts the loss provision when appropriate. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the consolidated financial statements. If a loss is probable but the amount of loss cannot be reasonably estimated, the Company discloses the loss contingency and an estimate of possible loss or range of

F-14

loss (unless such an estimate cannot be made). The Company does not recognize gain contingencies until they are realized. Legal costs incurred in connection with loss contingencies are expensed as incurred.

### *Property and Equipment*

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the related assets' estimated useful lives:

| Equipment, furniture and other | 1 to 5 years |
| --- | --- |
| Leasehold improvements | Lesser of related lease term or 5 years |
| Building and improvements | Up to 30 years |

Expenditures that materially increase asset life are capitalized, while ordinary maintenance and repairs are expensed as incurred.

### *Foreign Currency Translation and Transactions*

The Company predominantly uses the U.S. dollar as its functional currency. Certain non-U.S. subsidiaries designate a local currency as their functional currency. The translation of assets and liabilities into U.S. dollars for subsidiaries with a functional currency other than the U.S. dollar is performed using exchange rates in effect at the balance sheet date. The translation of revenues and expenses into U.S. dollars for subsidiaries with a functional currency other than the U.S. dollar is performed using the average exchange rate for the respective period. Gains or losses from cumulative translation adjustments, net of tax, are included as a component of accumulated other comprehensive loss in the Consolidated Balance Sheets. The Company records net foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to the functional currency within other income and expense, net.

## **NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS**

### *Recently Adopted Accounting Pronouncements*

In October 2021, the FASB issued ASU 2021-08, 'Accounting for Contract Assets and Contract Liabilities from Contracts with Customers' ('ASU 2021-08'), which amends the guidance in ASC 805 to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers ('Topic 606'). As a result of the amendments, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its preacquisition financial statements. ASU 2021-08 is effective for public business entities for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company elected to early adopt the new standard on January 1, 2022. The adoption did not have an impact on the Company's consolidated financial statements.

## **NOTE 4 - REVENUE**

### **Revenue Recognition**

#### *General*

Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, which may include various combinations of goods and services which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of sales taxes collected from customers which are subsequently remitted to governmental authorities.

Some of the Company's contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative stand-alone selling price basis. The determination of stand-alone selling price considers market conditions, the size and scope of the contract, customer and geographic information, and other factors. When observable prices are not available, stand-alone selling price for separate performance obligations is based on the cost-plus-margin approach, considering overall pricing objectives.

F-15

When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of technology or when a license of technology is the predominant item to which the variable consideration relates, revenue is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied or partially satisfied.

#### *Description of Revenue-Generating Activities*

The Company derives the majority of its revenue from licensing its technology and solutions to customers. These arrangements are summarized as Technology License arrangements and Technology Solutions arrangements. For Technology License arrangements, the customer obtains rights to the technology delivered at the commencement of the agreement. For Technology Solutions arrangements, the customer receives access to a platform, media or data that includes frequent updates, where access to such updates is critical to the functionality of the technology. The timing of when performance obligations are satisfied, as well as the fee arrangements underlying each agreement, determine when revenue is recognized.

#### *Technology License Arrangements*

The Company licenses its audio, digital radio and imaging technology to consumer electronics (“CE”) manufacturers, automotive manufacturers or their supply chain partners.

The Company generally recognizes royalty revenue from licenses based on units shipped or manufactured. Revenue is recognized in the period in which the customer’s sales or production are estimated to have occurred. This may result in an adjustment to revenue when actual sales or production are subsequently reported by the customer, generally in the month or quarter following sales or production. Estimating customers’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.

Certain customers enter into fixed fee or minimum guarantee agreements, whereby customers pay a fixed fee for the right to incorporate the Company’s technology in the customer’s products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the technology and begins to benefit from the license, net of the effect of any significant financing components calculated using customer-specific, risk-adjusted lending rates, with the related interest income being recognized over time on an effective rate basis. For minimum guarantee agreements where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it believes the customer will exceed the minimum and adjusts the revenue based on actual usage once that is reported by the customer.

#### *Technology Solutions Arrangements*

Technology Solutions customers are primarily multi-channel video service providers, CE manufacturers, and end consumers. Technology Solutions revenue is primarily derived from licensing the Company’s Pay-TV solutions, Personalized Content Discovery, enriched Metadata, and viewership data, selling TiVo-enabled devices like the TiVo Stream 4K and advertising.

For Technology Solutions arrangements, the Company provides on-going media or data delivery, hosting and access to its platform, and software updates. For these solutions, the Company generally receives fees on a per-subscriber per-month basis or as a fixed fee, and revenue is recognized during the month in which the solutions are provided to the customer. For most of the Technology Solutions offerings, substantially all functionality is obtained through the Company’s continuous hosting and/or updating of the data and content. In these instances, the Company typically has a single performance obligation related to these ongoing activities in the underlying arrangement. For those arrangements that include multiple performance obligations, the Company allocates the consideration as described above and recognizes revenue for each distinct performance obligation when control of the promised goods or services is transferred to the customer.

The Company also generates revenue from non-recurring engineering (“NRE”) services, advertising, and hardware products, each of which was less than 10% of total revenue for all periods presented.

F-16

### *Practical Expedients and Exemptions*

The Company applies a practical expedient to not perform an evaluation of whether a contract includes a significant financing component when the timing of revenue recognition differs from the timing of cash collection by one year or less.

The Company applies a practical expedient to expense costs to obtain a contract with a customer as incurred as a component of selling, general and administrative expenses when the amortization period would have been one year or less.

The Company applies a practical expedient when disclosing revenue expected to be recognized from unsatisfied performance obligations to exclude contracts with customers with an original duration of one year or less; amounts attributable to variable consideration arising from (i) a sales-based or usage-based royalty of a technology license or (ii) when variable consideration is allocated entirely to a wholly unsatisfied performance obligation; or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation.

### **Revenue Details**

The following information depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors by disaggregating revenue by product category and geographic location.

Revenue disaggregated by product category was as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Pay-TV | $249,457 | $262,929 | $164,865 |
| Consumer Electronics | 128,395 | 99,529 | 111,726 |
| Connected Car | 84,201 | 88,306 | 79,021 |
| Media Platform | 40,207 | 35,719 | 20,489 |
| Total revenue | $502,260 | $486,483 | $376,101 |

A significant portion of the Company's revenue is derived from licensees headquartered outside of the United States, principally in Asia, Europe and the Middle East, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods. The following table presents the Company's revenue disaggregated by geographic area (in thousands):

|  | Years Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  | 2020 |  |
| U.S. | $278,920 | 56% | $249,537 | 51% | $182,492 | 49% |
| Japan | 65,551 | 13 | 70,956 | 15 | 60,349 | 16 |
| China | 30,932 | 6 | 18,027 | 4 | 21,685 | 6 |
| Europe and Middle East | 42,846 | 9 | 56,317 | 12 | 36,352 | 10 |
| South Korea | 27,870 | 5 | 38,801 | 7 | 32,101 | 8 |
| Other | 56,141 | 11 | 52,845 | 11 | 43,122 | 11 |
|  | $502,260 | 100% | $486,483 | 100% | $376,101 | 100% |

### **Contract Balances**

#### *Contract Assets*

Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed. The amount of unbilled contracts receivable may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. Contract assets also include the incremental costs of obtaining a contract with a customer, principally sales commissions when the renewal commission is not commensurate with the initial commission, and deferred engineering costs for significant software customization or modification and set-up services to the extent deemed recoverable.

F-17

Contract assets were recorded in the Consolidated Balance Sheets as follows (in thousands):

|  | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| Unbilled contracts receivable | $65,251 | $50,962 |
| Other current assets | 848 | 724 |
| Long-term unbilled contracts receivable | 4,289 | 3,825 |
| Other long-term assets | 978 | 1,043 |
| Total contract assets | $71,366 | $56,554 |

#### *Contract Liabilities*

Contract liabilities are mainly comprised of deferred revenue related to technology solutions arrangements, multi-period licensing, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time. Deferred revenue also includes amounts received related to professional services to be performed in the future. Deferred revenue arises when cash payments are received, including amounts which are refundable, in advance of performance obligations being completed.

#### **Allowance for Credit Losses**

The allowance for credit losses, which includes the allowance for accounts receivable and unbilled contracts receivable, represents the Company's best estimate of lifetime expected credit losses inherent in those financial assets. The Company's lifetime expected credit losses are determined using relevant information about past events (including historical experience), current conditions, and reasonable and supportable forecasts that affect collectability. The Company monitors its credit exposure through ongoing credit evaluations of its customers' financial condition and limits the amount of credit extended when deemed necessary. In addition, the Company performs routine credit management activities such as timely account reconciliations, dispute resolution, and payment confirmations. The Company may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

The following table presents the activity in the allowance for credit losses for the years ended December 31, 2022, 2021 and 2020 (in thousands):

|  | Years Ended December 31, |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2022 |  | 2021 |  | 2020 |  |
|  | Accounts Receivable | Unbilled Contracts Receivable | Accounts Receivable | Unbilled Contracts Receivable | Accounts Receivable | Unbilled Contracts Receivable |
| Beginning balance | $2,255 | $468 | $6,454 | $1,414 | $566 | $ - |
| Provision for credit losses | 799 | (99) | 714 | 38 | 6,406 | 1,414 |
| Recoveries/charge-off | (1,104) | - | (4,913) | (984) | (518) | - |
| Balance at end of period | $1,950 | $369 | $2,255 | $468 | $6,454 | $1,414 |

The significant increase in provision for credit losses in 2020 was based on assessment of conditions including the COVID-19 pandemic and anticipation of delayed or delinquent payments on existing accounts receivable as a result of the declining financial health and liquidity positions of certain of the Company's customers, as well as U.S. restrictions on trade with certain Chinese customers, and certain late payments and collection-related issues.

#### *Additional Disclosures*

The following table presents additional revenue and contract disclosures (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Revenue recognized in the period from: |  |  |  |
| Amounts included in deferred revenue at the beginning of the period | $19,713 | $23,863 | $720 |
| Amounts included in deferred revenue acquired from the Mergers | $ - | $ - | $19,367 |
| Performance obligations satisfied in previous periods (true ups, licensee reporting adjustments and settlements) (1) | $30,561 (2) | $8,772 | $13,138 |

F-18

(1) True ups represent the differences between the Company's quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in the following period. Licensee reporting adjustments represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company's inquiries or compliance audits. Settlements represent resolutions of litigation during the period for past royalties owed.

(2) Amount includes past royalty revenue from the settlement of a contract dispute with a large mobile imaging customer, and the execution of a long-term license agreement with a leading consumer electronics and over-the-top ("OTT") service provider. The long-term license agreement is effective as of the expiration of the prior agreement. The Company recorded revenue from both the settlement and the license agreement, referred to above, in the second quarter of 2022 and expects to record revenue from the license agreement in future periods.

Remaining revenue under contracts with performance obligations represents the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) under certain of the Company's fixed fee or minimum guarantee arrangements and engineering services contracts. The Company's remaining revenue under contracts with performance obligations was as follows (in thousands):

|  | December 31, 2022 |
| --- | --- |
| Revenue from contracts with performance obligations expected to be satisfied in: |  |
| 2023 | $57,610 |
| 2024 | 28,055 |
| 2025 | 15,910 |
| 2026 | 5,024 |
| 2027 | 1,024 |
| Thereafter | 280 |
| Total | $107,903 |

#### NOTE 5 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

Other current assets consisted of the following (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Prepaid Income Tax | $1,777 | $1,141 |
| Prepaid expenses | 20,001 | 15,283 |
| Inventory | 6,662 | 5,102 |
| Other | 13,734 | 4,459 |
|  | $42,174 | $25,985 |

Property and equipment, net consisted of the following (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Equipment, furniture and other | $78,976 | $64,236 |
| Building and improvements | 18,331 | 18,331 |
| Land | 5,300 | 5,300 |
| Leasehold improvements | 17,038 (1) | 22,064 |
| Property and equipment, gross | 119,645 | 109,931 |
| Less: Accumulated depreciation and amortization | (71,818) (1) | (52,454) |
|  | $47,827 | $57,477 |

(1) Reflects an impairment charge of $2.9 million ($4.8 million in gross cost and $1.9 million in accumulated depreciation). Refer to "Note 8 - Leases" for details.

F-19

Property and equipment, net by geographic area was as follows (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| U.S. | $42,487 | $51,306 |
| Europe | 3,460 | 3,697 |
| Asia and other | 1,880 | 2,474 |
|  | $47,827 | $57,477 |

Accrued liabilities consisted of the following (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Employee compensation and benefits | $53,546 | $33,685 |
| Third-party royalties | 7,620 | 4,428 |
| Accrued expenses | 22,928 | 21,147 |
| Current portion of operating lease liabilities | 17,195 | 14,725 |
| Accrued income tax | 4,926 | 2,055 |
| Other | 3,799 | 8,364 |
|  | $110,014 | $84,404 |

Accumulated other comprehensive loss consisted of the following (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Foreign currency translation adjustment, net of tax | $(4,025) | $(676) |
| Unrealized hedging losses, net of tax | (94) | - |
|  | $(4,119) | $(676) |

## NOTE 6 - FINANCIAL INSTRUMENTS

### Non-marketable Equity Securities

Following the Mergers on June 1, 2020, the Company assumed certain investments in non-marketable equity securities. As of December 31, 2022 and December 31, 2021, other long-term assets included equity securities accounted for under the equity method with a carrying amount of $4.4 million and $4.8 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the years ended December 31, 2022, 2021 and 2020, respectively.

### Derivatives Instruments

In the fourth quarter of 2022, the Company began to use derivative financial instruments to manage foreign currency exchange rate risk. The Company’s derivative financial instruments consist of foreign currency forward contracts, which are used primarily to hedge portions of its anticipated foreign currency exposure. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models and are classified as Level 2 in accordance with the three-level hierarchy of fair value measurements. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters

F-20

such as forward rates, yield curves and credit default swap pricing. For additional information related to the three-level hierarchy of fair value measurements, see “Note 7 - *Fair Value*.”

The notional and fair values of all derivative instruments were as follows (in thousands):

| Derivative instruments in cash flow hedges (foreign exchange contracts) | December 31, 2022 | December 31, 2021 |
| --- | --- | --- |
| Liabilities |  |  |
| Accrued liabilities | $94 | $ - |
| Total fair value | $94 | $ - |
| Total notional value | $52,197 | $ - |
| Undesignated derivative instruments (foreign exchange contracts) |  |  |
| Liabilities |  |  |
| Accrued liabilities | $41 | $ - |
| Total fair value | $41 | $ - |
| Total notional value | $7,402 | $ - |

#### *Cash Flow Hedges*

The Company designates certain foreign currency forward contracts as hedging instruments pursuant to ASC 815, *Derivatives and Hedging* (“ASC 815”). For information on the effective portion of the gain or loss on the derivative, which is reported as a component of accumulated other comprehensive income (loss), refer to “Note 5 -- *Composition of Certain Financial Statement Captions*.” For the year ended December 31, 2022, no amounts were reclassified into statement of operations line items as no underlying hedged item is recognized in earnings. The Company did not enter into derivative contracts in 2021 or 2020.

#### *Undesignated Derivatives*

For derivatives that are not designated as hedge instruments, they are measured and reported at fair value. Changes in the fair value of these undesignated derivatives are reported in other income (expense), net, on the Consolidated Statements of Operations. Realized losses and changes in the estimated fair value of the derivatives were not significant in the year ended December 31, 2022. The Company did not enter into derivative contracts in 2021 or 2020.

### **NOTE 7 - FAIR VALUE**

The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. The Company carries its financial instruments at fair value with the exception of its long-term debt. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

*Level 1* Quoted prices in active markets for identical assets.

*Level 2* Observable market-based inputs or unobservable inputs that are corroborated by market data.

*Level 3* Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

When applying fair value principles in the valuation of assets, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs.

There were no marketable securities required to be measured at fair value on a recurring basis as of December 31, 2022 or December 31, 2021.

F-21

## Financial Instruments Not Recorded at Fair Value

The Company's long-term debt is carried at historical cost and is measured at fair value on a quarterly basis for disclosure purposes. The carrying amounts and estimated fair values are as follows (in thousands):

|  | December 31, 2022 |  | December 31, 2021 |  |
| --- | --- | --- | --- | --- |
|  | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value |
| Senior Unsecured Promissory Note (1) | $50,000 | $48,478 | $ - | $ - |

(1) See 'Note 11 - *Debt*' for additional information.

If reported at fair value in the Consolidated Balance Sheets, the Company's debt would be classified within Level 2 of the fair value hierarchy. The fair value of the debt was estimated based on the quoted market prices for the same or similar issues.

### Non-Recurring Fair Value Measurements

For purchase accounting related fair value measurements, see 'Note 9 - *Business Combinations*.'

For lease impairment related fair value measurements, see 'Note 8 - *Leases*.'

For goodwill impairment related fair value measurements, see 'Note 10 - *Goodwill And Identified Intangible Assets*.'

### NOTE 8 - LEASES

Under Topic 842, a contract is a lease, or contains a lease, if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. To determine whether a contract conveys the right to control the use of an identified asset for a period of time, an entity shall assess whether, throughout the period of use, the entity has both of the following: (a) the right to obtain substantially all of the economic benefits from use of the identified asset; and (b) the right to direct the use of the identified asset.

The Company leases office and research facilities, data centers and office equipment under operating leases which expire through 2029. The Company's leases have remaining lease terms of one year to seven years, some of which may include options to extend the leases for five years or longer, and some of which may include options to terminate the leases within the next 5 years or less. Leases with an initial term of 12 months or less are not recorded on the balance sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not included within the lease liability and right-of-use assets calculation. As a practical expedient, the Company elected, for all data centers, office and facility leases, not to separate non-lease components (e.g., common-area maintenance costs) from lease components (e.g., fixed payments including rent) and instead to account for each separate lease component and its associated non-lease components as a single lease component. As most of the leases do not provide an implicit rate, the Company generally, for purposes of discounting lease payments, uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases for previously exited office space. Certain subleases include variable payments for operating costs. The subleases are generally co-terminus with the head lease, or shorter. Subleases do not include any residual value guarantees or restrictions or covenants imposed by the leases. Income from subleases is recognized as a reduction to selling, general and administrative expenses.

As a result of consolidating its global real estate footprint and a decision to sublease a recently vacated office building, the Company recorded non-cash impairment charges of $4.8 million related to certain operating lease ROU assets and $2.9 million related to leasehold improvements during the year ended December 31, 2022. The Company determined that it may not be able to fully recover the carrying amount of the leased building due to a change in the manner in which the building is being used and a significant decrease in the market price of the asset. The Company estimated the fair value using a discounted cash flows

F-22

approach reflecting internally developed Level 3 assumptions that included, among other things, its expectations of cash flows from projected sublease income, occupancy estimates and its outlook for the local real estate market.

The components of operating lease costs were as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Fixed lease cost (1) | $20,581 | $20,619 | $14,296 |
| Variable lease cost | 5,365 | 5,030 | 2,918 |
| Less: sublease income | (9,498) | (9,724) | (5,423) |
| Total operating lease cost | $16,448 | $15,925 | $11,791 |

(1) Includes short-term leases costs, which were immaterial.

Other information related to leases was as follows (in thousands, except lease term and discount rate):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
| Operating cash flows from operating leases | $20,307 | $20,826 | $14,514 |
| ROU assets obtained in exchange for new lease liabilities: |  |  |  |
| Operating leases | $14,360 | $6,131 | $5,684 |

|  | December 31, 2022 | December 31, 2021 | December 31, 2020 |
| --- | --- | --- | --- |
| Weighted-average remaining lease term (years): |  |  |  |
| Operating leases | 3.69 | 4.48 | 5.20 |
| Weighted-average discount rate: |  |  |  |
| Operating leases | 5.1% | 4.9% | 5.1% |

Future minimum lease payments and related lease liabilities as of December 31, 2022 were as follows (in thousands):

|  | Operating Lease Payments (1) | Sublease Income | Net Operating Lease Payments |
| --- | --- | --- | --- |
| 2023 | $19,897 | $(7,618) | $12,279 |
| 2024 | 18,320 | (7,610) | 10,710 |
| 2025 | 15,810 | (7,386) | 8,424 |
| 2026 | 7,867 | (935) | 6,932 |
| 2027 | 2,711 | - | 2,711 |
| Thereafter | 1,473 | - | 1,473 |
| Total lease payments | 66,078 | (23,549) | 42,529 |
| Less: imputed interest | (6,217) | - | (6,217) |
| Present value of lease liabilities: | $59,861 | $(23,549) | $36,312 |
| Less: current obligations under leases (accrued liabilities) | (17,195) |  |  |
| Noncurrent operating lease liabilities | $42,666 |  |  |

(1) Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance and real estate taxes.

F-23

## NOTE 9 - BUSINESS COMBINATIONS

### *MobiTV*

On May 31, 2021, the Company completed its acquisition of certain assets and assumption of certain liabilities of MobiTV, Inc. (“MobiTV”, and the acquisition, the “MobiTV Acquisition”), a provider of application-based Pay-TV video delivery solutions. The acquisition expanded the Company’s IPTV Managed Service capabilities, which is expected to grow the addressable market for the Company’s IPTV products and further secure the Company’s position as a leading provider of Pay-TV solutions. The net purchase price for the MobiTV Acquisition was $12.4 million in cash.

### **Purchase Price Allocation**

The MobiTV Acquisition has been accounted for as a business combination, using the acquisition method. The following table presents the allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on the fair values at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded to goodwill, all of which is expected to be deductible for tax purposes. The following table sets forth the final purchase price allocation with no measurement period adjustments identified ($ in thousands):

|  | Estimated Useful Life (years) | Estimated Fair Value |
| --- | --- | --- |
| Other current assets |  | $390 |
| Property and equipment |  | 9,223 |
| Operating lease right-of-use assets |  | 1,186 |
| Identifiable intangible assets: Technology | 6 | 3,260 |
| Goodwill |  | 4,059 |
| Other long-term assets |  | 115 |
| Accrued liabilities |  | (5,288) |
| Noncurrent operating lease liabilities |  | (545) |
| Total purchase price |  | $12,400 |

The results of operations and cash flows relating to the business acquired pursuant to the MobiTV Acquisition have been included in the Company’s consolidated financial statements for periods subsequent to May 31, 2021, and the related assets and liabilities were recorded at their estimated fair values in the Company’s Consolidated Balance Sheet as of May 31, 2021.

### **Supplemental Pro Forma Information**

The following unaudited pro forma financial information assumes the MobiTV Acquisition was completed as of January 1, 2020. The unaudited pro forma financial information as presented below is for informational purposes only and is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information. This is not necessarily indicative of the results of operations that would have been achieved if the MobiTV Acquisition had taken place on January 1, 2020, nor is it necessarily indicative of future results. Consequently, actual results could differ materially from the unaudited pro forma financial information presented below. The pro forma operating results are as follows (unaudited, in thousands):

|  | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2021 | 2020 |
| Revenue | $490,343 | $383,262 |
| Net loss attributable to the Company | $(191,125) | $(179,365) |

The unaudited supplemental pro forma information above includes the following pro forma adjustments: removal of certain elements of the historical MobiTV business that were not acquired, elimination of inter-company transactions between MobiTV and the Company, adjustments for transaction related costs, and adjustments to reflect the impact of purchase accounting adjustments. The unaudited supplemental pro forma information above does not include any cost saving synergies from operating efficiencies.

### *Vewd Software Holdings Limited*

On July 1, 2022, the Company acquired 100 percent of the common stock of Vewd Software Holdings Limited (“Vewd,” and the “Vewd Acquisition”). Vewd is a leading global provider of OTT and hybrid TV solutions. The Vewd Acquisition

F-24

establishes the Company as a leading independent streaming media platform through its TiVo brand and the largest independent provider of Smart TV middleware globally. The total consideration was approximately $102.9 million, consisting of approximately $52.9 million of cash and $50.0 million of debt. Refer to “Note 11 - *Debt*” for additional information on this debt.

### Preliminary Purchase Price Allocation

The Vewd Acquisition has been accounted for as a business combination, using the acquisition method. The following table presents the preliminary allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on the fair values at the acquisition date ($ in thousands):

|  | Estimated Useful Life (years) |  | Estimated Fair Value |
| --- | --- | --- | --- |
| Cash and cash equivalents |  |  | $2,684 |
| Accounts receivable |  |  | 3,341 |
| Unbilled contracts receivable |  |  | 2,335 |
| Other current assets |  |  | 1,208 |
| Property and equipment |  |  | 443 |
| Operating lease right-of-use assets |  |  | 2,020 |
| Identifiable intangible assets: |  |  |  |
| Technology | 7 | $28,050 |  |
| Customer relationships - large | 7 | 4,900 |  |
| Customer relationships - small | 4 | 3,500 |  |
| Non-compete agreements | 2 | 870 |  |
| Trade name | 5 | 830 |  |
| Total identifiable intangible assets |  |  | 38,150 |
| Goodwill |  |  | 68,115 |
| Other long-term assets |  |  | 977 |
| Accounts payable |  |  | (869) |
| Accrued liabilities |  |  | (4,777) |
| Deferred revenue |  |  | (920) |
| Long-term deferred tax liabilities |  |  | (8,393) |
| Noncurrent operating lease liabilities |  |  | (1,094) |
| Other long-term liabilities |  |  | (307) |
| Total preliminary purchase price |  |  | $102,913 |

The above preliminary purchase price allocation, including the purchase consideration, was based on preliminary valuations and assumptions and is still subject to change within the measurement period as additional information is received, including potential changes to prepaid income taxes, current and non-current income taxes payable, deferred taxes, and other working capital adjustments. The final purchase price allocation is expected to be completed as soon as practicable, but not later than one year from the date of the acquisition.

#### *Identifiable Intangible Assets*

Identifiable intangible assets primarily consist of technology, customer relationships, non-compete agreements and trade name. In determining the fair value, the Company utilized various forms of the income and cost approaches depending on the asset being valued. The estimation of fair value required significant judgment related to cash flow forecasts, discount rates reflecting the risk inherent in each cash flow stream, competitive trends, market comparables and other factors. Inputs were generally determined using historical data supplemented by current and anticipated market conditions, and growth rates. The technology was valued using the excess earnings method. Significant assumptions used under this method include forecasted revenue and growth, estimated technology obsolescence, contributory asset charges, and the discount rate. The customer relationships were valued using the cost approach, based on estimated customer acquisition costs.

#### *Goodwill*

The excess of the consideration transferred over the fair value of assets acquired and liabilities assumed was recognized as goodwill. The goodwill is generated from operational synergies and cost savings the Company expects to achieve from the

F-25

consolidated operations, as well as the expected benefits from future technologies that do not meet the definition of an identifiable intangible asset and Vewd's knowledgeable and experienced workforce. Approximately $0.4 million of the acquired goodwill is expected to be deductible for tax purposes.

## Vewd Results of Operations

Vewd's results of operations and cash flows have been included in the Company's consolidated financial statements for periods subsequent to July 1, 2022, and Vewd's assets and liabilities were recorded at their estimated fair values in the Company's Consolidated Balance Sheets as of July 1, 2022. For the year ended December 31, 2022, Vewd contributed $8.9 million of revenue and $82.6 million of operating loss, respectively, to the Company's operating results. This operating loss includes a $68.1 million charge for goodwill impairment.

## Transaction and Other Costs

In connection with the Vewd Acquisition, the Company incurred significant one-time expenses such as transaction-related costs, including transaction bonuses, legal expenses and consultant fees, and severance and retention costs. For the year ended December 31, 2022, transaction-related costs and severance and retention costs were $7.4 million and $4.0 million, respectively.

## Supplemental Pro Forma Information

The following unaudited pro forma financial information assumes the Vewd Acquisition was completed as of January 1, 2021. The unaudited pro forma financial information as presented below is for informational purposes only and is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information. This is not necessarily indicative of the results of operations that would have been achieved if the Vewd Acquisition had taken place on January 1, 2021, nor is it necessarily indicative of future results. Consequently, actual results could differ materially from the unaudited pro forma financial information presented below. The pro forma operating results are as follows (unaudited, in thousands):

|  | Years Ended December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Revenue | $508,636 | $498,992 |
| Net loss attributable to the Company | $(769,483) | $(209,690) |

The unaudited supplemental pro forma information above includes the following pro forma adjustments: adjustments for transaction-related costs and severance and retention costs, adjustments for amortization of intangible assets, adjustments for interest and related expenses associated with Vewd's historical debt, elimination of inter-company transactions between Vewd and the Company, and adjustments for the related income tax impact. The unaudited supplemental pro forma information above does not include any cost saving synergies from operating efficiencies.

## NOTE 10 - GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

### Goodwill

The changes to the carrying value of goodwill from January 1, 2021 through December 31, 2022 are reflected below (in thousands):

| December 31, 2020 | $532,453 |
| --- | --- |
| Goodwill acquired through the MobiTV Acquisition | 4,059 |
| December 31, 2021 | 536,512 |
| Goodwill adjustment related to Mergers in prior periods (1) | (72) |
| Goodwill acquired through the Vewd Acquisition (2) | 68,115 |
| Impairment charge, three months ended September 30, 2022 (3) | (354,000) |
| Impairment charge, three months ended December 31, 2022 (4) | (250,555) |
| December 31, 2022 | $ - |

(1) Related to an immaterial measurement period adjustment.

(2) Related to the Vewd Acquisition completed in July 2022. For more information regarding the transaction, see 'Note 9 - *Business Combinations*.'

(3) See discussion below.

F-26

(4) See discussion below.

Goodwill is evaluated for potential impairment annually, as of the beginning of the fourth quarter, and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The process of evaluating goodwill for potential impairment is subjective and requires significant estimates, assumptions and judgments particularly related to the identification of reporting units, the assignment of assets and liabilities to reporting units and estimating the fair value of each reporting unit. The Company concluded it operated in one reporting unit for all periods presented.

During the three months ended September 30, 2022, indicators of potential impairment for the Former Parent's Product reporting unit were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment assessment should be performed as of September 30, 2022. Indicators of potential impairment included a sustained decline in the Former Parent's stock price during the second half of the third quarter of 2022 reflective of rising interest rates and continued decline in macroeconomic conditions. The Company proceeded to perform a fair value analysis of the Product reporting unit using the market capitalization approach. Under this approach, management estimated the fair value of the Product reporting unit as of September 30, 2022 using quoted market prices of Xperi's common stock, over its first ten trading days following the Separation, and a control premium representing the synergies a market participant would achieve upon obtaining control of Xperi. As a result of the fair value analysis, the Company recognized a goodwill impairment charge of $354.0 million during the three months ended September 30, 2022. Leveraging the aforementioned fair value assessment, the Company also completed its annual goodwill impairment test as of October 1, 2022 using the financial information as of September 30, 2022.

During the three months ended December 31, 2022, sufficient indicators of potential impairment were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment test should be performed as of December 31, 2022. Indicators of potential impairment included a significant, sustained decline in the trading price of Xperi's common stock during the fourth quarter of 2022. The Company proceeded to perform a fair value analysis of the Product reporting unit, the Company's only reporting unit, using the market capitalization approach. Under this approach, management estimated the fair value as of December 31, 2022 using quoted market prices of Xperi's common stock as of December 30, 2022, the last trading date of 2022, and a control premium representing the synergies a market participant would achieve upon obtaining control of Xperi. As a result of the fair value analysis, a goodwill impairment charge of $250.6 million was recognized during the three months ended December 31, 2022. As a result of this impairment charge, the Company's goodwill balance was reduced to $0 as of December 31, 2022.

As part of its annual goodwill impairment test, the Company elected to proceed with a quantitative goodwill impairment test as of October 1, 2021 using the financial information as of September 30, 2021. Based on the quantitative assessment, the Company concluded that the fair value of the Product reporting unit exceeded its carrying amount and no goodwill impairment charges were recognized. In addition, there were no significant events or circumstances affecting the valuation of goodwill recorded by the Company subsequent to the annual impairment test through December 31, 2021.

During its annual indefinite-lived intangible assets test, the Company also assessed the recoverability of indefinite-lived intangible assets, and concluded that no impairment existed as of December 31, 2022 as their estimated fair value exceeded their carrying amounts. Although impairment indicators were identified, the Company did not recognize, based on the recoverability test results in the fourth quarter of 2022, impairment charges with respect to definite-lived intangible assets and other long-lived assets other than operating leases discussed in 'Note 8 - *Leases*'.

F-27

## Identified Intangible Assets

Identified intangible assets consisted of the following (in thousands):

|  | Average Life (Years) | December 31, 2022 |  |  | December 31, 2021 |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Gross Assets | Accumulated Amortization | Net | Gross Assets | Accumulated Amortization | Net |
| Finite-lived intangible assets |  |  |  |  |  |  |  |
| Acquired patents / core technology | 3-10 | $22,189 | $(6,175) | $16,014 | $5,258 | $(5,215) | $43 |
| Existing technology / content database | 5-10 | 240,894 | (190,671) | 50,223 | 212,765 | (173,420) | 39,345 |
| Customer contracts and related relationships | 3-9 | 502,188 | (335,981) | 166,207 | 494,026 | (297,867) | 196,159 |
| Trademarks/trade name | 4-10 | 39,613 | (29,733) | 9,880 | 38,783 | (24,796) | 13,987 |
| Non-competition agreements | 1-2 | 3,101 | (2,449) | 652 | 2,231 | (2,231) | - |
| Total finite-lived intangible assets |  | 807,985 | (565,009) | 242,976 | 753,063 | (503,529) | 249,534 |
| Indefinite-lived intangible assets |  |  |  |  |  |  |  |
| TiVo tradename/trademarks | N/A | 21,400 | - | 21,400 | 21,400 | - | 21,400 |
| Total intangible assets |  | $829,385 | $(565,009) | $264,376 | $774,463 | $(503,529) | $270,934 |

As of December 31, 2022, the estimated future amortization expense of finite-lived intangible assets was as follows (in thousands):

| 2023 | $57,775 |
| --- | --- |
| 2024 | 43,374 |
| 2025 | 34,757 |
| 2026 | 31,480 |
| 2027 | 30,637 |
| Thereafter | 44,953 |
|  | $242,976 |

## NOTE 11 - DEBT

In connection with the Vewd Acquisition as disclosed in Note 9, on July 1, 2022, TiVo Product Holdco LLC, which was subsequently renamed Xperi Inc., issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in a principal amount of $50.0 million. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, payable in cash on a quarterly basis. If a certain qualified spin-off transaction occurs, the interest rate will be increased to the greater of (a) 6.00% and (b) the sum of (i) the highest interest rate payable under any credit facility or bonds, debentures, notes or similar instruments where the issuer or any guarantor borrows money or guarantees obligations on a secured basis on or after the date of such spin-off transaction, plus (ii) 2.00%. It was determined that the Spin-Off completed on October 1, 2022 did not trigger any change in the interest rate of the debt. The Promissory Note matures on July 1, 2025. The issuer may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.

The Promissory Note includes certain covenants that restrict the issuer and each guarantor’s ability to, among other things, incur certain indebtedness or engage in any material line of business substantially different from those lines of business conducted by such entities on the closing date of the acquisition. The Promissory Note does not contain any financial covenants.

As of December 31, 2022, $50.0 million in principal balance was outstanding. Interest expense on the Promissory Note was $1.5 million for the year ended December 31, 2022. The Company did not incur any debt in 2021 and 2020.

F-28

As of December 31, 2022, future minimum principal payments for the Promissory Note are summarized as follows (in thousands):

| 2023 | $ | - |
| --- | --- | --- |
| 2024 |  | - |
| 2025 |  | 50,000 |
| 2026 |  | - |
| 2027 |  | - |
| Thereafter |  | - |
| Total | $ | 50,000 |

## NOTE 12 - NET LOSS PER SHARE

On October 1, 2022, 42,023,632 shares of the Company’s common stock, par value $0.001 per share, were distributed to the Former Parent’s stockholders of record as of September 21, 2022. This share amount is utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation and such shares are treated as issued and outstanding for purposes of calculating historical loss per share. For periods prior to the Separation, it is assumed that there are no dilutive equity instruments as there were no Xperi stock-based awards outstanding prior to the Separation.

For periods subsequent to the Separation, actual outstanding shares are used to calculate both basic and diluted weighted-average number of common shares outstanding. Potentially dilutive common shares, such as common shares issuable upon exercise of stock options and vesting of restricted stock awards and units are typically reflected in the computation of diluted net income (loss) per share by application of the treasury stock method. Due to the net losses reported, these potentially dilutive securities were excluded from the computation of diluted net loss per share, since their effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted shares (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Denominator: |  |  |  |
| Weighted average common shares outstanding | 42,029 | 42,024 | 42,024 |
| Total common shares-basic | 42,029 | 42,024 | 42,024 |
| Effect of dilutive securities: |  |  |  |
| Options | - | - | - |
| Restricted stock awards and units | - | - | - |
| Total common shares-diluted | 42,029 | 42,024 | 42,024 |

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the period presented (in thousands):

|  | Year Ended December 31, 2022 |
| --- | --- |
| Options | 146 |
| Restricted stock awards and units | 4,604 |

## NOTE 13 - STOCKHOLDERS’ EQUITY

Prior to the Separation, certain of the Company’s employees participated in equity-based compensation plans sponsored by the Former Parent. The Former Parent’s equity-based compensation plans included incentive compensation plans and an ESPP. All grants made through September 30, 2022 were issued under those plans which are described fully in the Form 10 filed with the SEC on September 14, 2022.

On October 1, 2022, in connection with the Separation, all outstanding Former Parent equity awards were equitably adjusted to reflect the impact of the Separation. The adjustments to each type of award outstanding pursuant to the Former Parent equity incentive plans as of immediately prior to the Separation was determined in accordance with the terms of the Employee Matters Agreement by and between Adeia Inc. and Xperi Inc., dated as of October 1, 2022 (the “EMA”). In connection with this adjustment, each outstanding Former Parent equity award as of the Separation date was converted into either (a) both Adeia and Xperi equity awards, with certain adjustments to the underlying shares and terms of outstanding awards to preserve the

F-29

aggregate intrinsic value of each award immediately after the Separation when compared to the aggregate intrinsic value immediately prior to the Separation, or (b) an equity award of only Adeia common stock or only Xperi common stock, with an adjustment to the number of shares to preserve the value of the award. Following the Separation, the Adeia awards and Xperi awards related to prior grants made by the Former Parent are subject to substantially the same terms and vesting conditions that applied to the original Former Parent awards immediately prior to the Separation.

Following the conversion, it was determined that the equity awards were modified in accordance with the applicable accounting guidance. As a result, the fair values of the equity awards immediately before and after the modification were assessed in order to determine if the modification resulted in any incremental compensation cost related to the awards. Based on the analysis performed, it was determined that the conversion resulted in $8.4 million of incremental stock-based compensation expense to be recognized over the awards' remaining 2.6 year vesting period.

### *Equity Incentive Plans*

In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Equity Incentive Plan (the '2022 EIP').

Under the 2022 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and performance awards (or any combination thereof). A total of 10,100,000 shares were reserved for issuance under the 2022 EIP as of the Separation Date.

The 2022 EIP provides for option grants designated as either incentive stock options or non-statutory options. Options generally are granted with an exercise price not less than the value of the common stock on the grant date and have a term of ten years from the date of grant and vest over a four-year period. The vesting criteria for restricted stock awards and restricted stock units has historically been the passage of time or meeting certain performance-based objectives, and continued employment through the vesting period over four years for time-based awards or three years for performance-based awards.

As a result of the conversion of awards, on October 1, 2022, 4,119,886 restricted stock awards and units and 147,922 stock options were issued under the 2022 EIP. As of December 31, 2022, there were approximately 5.3 million shares reserved for future grant under the 2022 EIP.

F-30

## Stock Options

The following table provides the Company’s stock option activity from the Separation date to December 31, 2022 (in thousands, except per share amounts):

|  | Options Outstanding |  |  |  |
| --- | --- | --- | --- | --- |
|  | Number of Shares Subject to Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value |
| Balance at December 31, 2021 | - | $ - |  |  |
| Converted from Former Parent in connection with the Spin-Off (1) | 148 | $25.52 |  |  |
| Options granted | - | $ - |  |  |
| Options exercised | - | $ - |  |  |
| Options canceled / forfeited / expired | (2) | $29.16 |  |  |
| Balance at December 31, 2022 | 146 | $25.48 | 1.89 | $ - |
| Vested and expected to vest at December 31, 2022 | 146 | $25.48 | 1.89 | $ - |
| Exercisable at December 31, 2022 | 146 | $25.48 | 1.89 | $ - |

(1) Amounts represent Xperi awards, including those held by Adeia employees.

The following table summarizes information about stock options outstanding and exercisable under the 2022 EIP at December 31, 2022:

| Range of Exercise Prices per Share | Options Outstanding |  |  | Options Exercisable |  |
| --- | --- | --- | --- | --- | --- |
|  | Number Outstanding (in thousands) | Weighted Average Remaining Contractual Life (in years) | Weighted Average Exercise Price per Share | Number Exercisable (in thousands) | Weighted Average Exercise Price per Share |
| $17.68 - $21.26 | 50 | 0.71 | $20.87 | 50 | $20.87 |
| $21.64 - $24.68 | 63 | 2.67 | $23.43 | 63 | $23.43 |
| $24.75 - $56.62 | 33 | 2.20 | $36.46 | 33 | $36.46 |
| $17.68 - $56.62 | 146 | 1.89 | $25.48 | 146 | $25.48 |

## Restricted Stock Awards and Units

Information with respect to outstanding Xperi restricted stock awards and units (including both time-based vesting and performance-based vesting) as of December 31, 2022 is as follows (in thousands, except per share amounts):

|  | Restricted Stock and Restricted Stock Units |  |  |  |
| --- | --- | --- | --- | --- |
|  | Number of Shares Subject to Time-based Vesting | Number of Shares Subject to Performance-based Vesting | Total Number of Shares | Weighted Average Grant Date Fair Value Per Share |
| Balance at December 31, 2021 | - | - | - | $ - |
| Converted from Former Parent (1) | 3,245 | 875 | 4,120 | $21.69 |
| Awards and units granted | 568 | 16 | 584 | $10.79 |
| Awards and units vested / earned | (68) | - | (68) | $19.55 |
| Awards and units canceled / forfeited | (32) | - | (32) | $18.99 |
| Balance at December 31, 2022 | 3,713 | 891 | 4,604 | 20.35 |

(1) Amounts represent Xperi awards, including those held by Adeia employees.

F-31

### *Performance-Based Stock Awards and Units*

Performance-Based stock awards and units (“PSUs”) may be granted to employees or consultants based upon, among other things, the contributions, responsibilities and other compensation of the particular employee or consultant. The value and the vesting of such performance awards and units are generally linked to one or more performance goals or certain market conditions determined by the Company, in each case on a specified date or dates or over any period or periods determined by the Company, and may range from zero to 200 percent of the grant. For performance awards subject to a market vesting condition, the fair value per award is fixed at the grant date and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of achievement of the market condition.

### *Employee Stock Purchase Plans*

In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP is implemented through consecutive overlapping 24-month offering periods, each of which is comprised of four six-month purchase periods. The first offering period commenced on December 1, 2022 and will end on November 30, 2024. Each subsequent offering period under the 2022 ESPP will be twenty-four (24) months long and will commence on each December 1 and June 1 during the term of the plan. Participants may contribute up to 100% of their base earnings and commissions through payroll deductions, and the accumulated deductions will be applied to the purchase of shares on each semi-annual purchase date. The purchase price per share will equal 85% of the fair market value per share on the start date of the offering period or, if lower, 85% of the fair market value per share on the semi-annual purchase date.

An eligible employee’s right to buy the Company’s common stock under the 2022 ESPP may not accrue at a rate in excess of $25,000 of the fair market value of such shares per calendar year for each calendar year of an offering period. If the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of the 24-month offering period, then that offering period will automatically terminate and a new 24-month offering period will begin on the next business day. All participants in the terminated offering will be transferred to the new offering period.

As of December 31, 2022, there were 5.0 million shares reserved for grant under the 2022 ESPP.

### **NOTE 14 - STOCK-BASED COMPENSATION**

Prior to the Separation, the stock-based compensation expense was based on the expense for employees specifically identifiable to Xperi. Consequently, the amounts presented are not necessarily indicative of future awards and do not necessarily reflect the costs that the Company would have incurred as an independent company.

The effect of recording stock-based compensation expense for the years ended December 31, 2022, 2021 and 2020 is as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Cost of revenue, excluding depreciation and amortization of intangible assets | $2,906 | $1,972 | $585 |
| Research and development | 21,561 | 17,914 | 11,383 |
| Selling, general and administrative | 20,836 | 13,623 | 7,215 |
| Total stock-based compensation expense | 45,303 | 33,509 | 19,183 |
| Tax effect on stock-based compensation expense | (139) | (225) | (1,377) |
| Net effect on net loss | $45,164 | $33,284 | $17,806 |

Stock-based compensation expense categorized by various equity components for the years ended December 31, 2022, 2021 and 2020 is summarized in the table below (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Restricted stock awards and units | $42,208 | $30,015 | $17,867 |
| Employee stock purchase plan | 2,727 | 3,428 | 1,281 |
| Employee stock options | 368 | 66 | 35 |
| Total stock-based compensation expense | $45,303 | $33,509 | $19,183 |

F-32

In addition, for the years ended December 31, 2022, 2021 and 2020, $6.9 million, $9.2 million and $7.9 million respectively, of stock-based compensation expense was recognized in operating results as part of the corporate and shared functional employees expenses allocation.

As described in Note 13, the Company expects to recognize $8.4 million of incremental stock-based compensation expense in connection with the conversion of the Former Parent’s PSUs over the awards’ remaining 2.6 year vesting period. In the fourth quarter of 2022, we recognized $1.4 million of incremental expense in connection with the conversion of the Former Parent’s PSUs into PSUs with respect to Xperi common stock and Adeia common stock, and $0.4 million of incremental expense in connection with the conversion of the Former Parent’s stock options into stock options with respect to Xperi common stock and Adeia common stock.

The total fair value of the Company’s restricted stock awards and units vested was $1.3 million post-Separation during the year ended December 31, 2022.

No Xperi stock options were exercised during the year ended December 31, 2022.

As of December 31, 2022, after estimated forfeitures, $54.5 million of unrecognized stock-based compensation balance related to Xperi’s unvested restricted stock awards and units was expected to be recognized over an estimated weighted average amortization period of 2.5 years.

As of December 31, 2022, after estimated forfeitures, $48.8 million of unrecognized stock-based compensation balance related to Adeia’s unvested restricted stock awards and units for employees specifically identifiable to Xperi was expected to be recognized over an estimated weighted average amortization period of 2.3 years.

As of December 31, 2021, the unrecognized stock-based compensation balance after estimated forfeitures, under the Former Parent’s equity incentive plans, consisted of $61.6 million related to restricted stock awards and units to be recognized over an estimated weighted average amortization period of 1.8 years.

Stock-based compensation is measured at the grant date based on the estimated fair value of the award and is recognized as expense on a straight-line basis, net of estimated forfeitures, over the requisite service or performance period. Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. Historical data is used to estimate pre-vesting award forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

The Company uses the Black-Scholes option pricing model to determine the estimated fair value of options and ESPP shares. The fair value of each option grant is determined on the date of grant and the expense is recorded on a straight-line basis. The assumptions used in the model include expected life, volatility, risk-free interest rate, and dividend yield. The Company’s determinations of these assumptions are outlined below.

*Expected life* - The expected life assumption is based on analysis of the Company’s historical employee exercise patterns. The expected life of options granted under the ESPP represents the offering period of two years.

*Volatility* - Due to limited historical trading data, volatility is calculated based on a peer group over the most recent period that represents the remaining term of the vesting period as of the valuation date.

*Risk-free interest rate* - The risk-free interest rate assumption is based on the U.S. Treasury rate for issues, commensurate with the expected life of the options granted.

*Dividend yield* - The Company does not expect to pay dividends in the foreseeable future.

F-33

There were no Xperi stock options granted during the year ended December 31, 2022.

The following assumptions were used to value Xperi’s ESPP shares offered post-Separation during the year ended December 31, 2022:

|  | Year Ended December 31, 2022 |
| --- | --- |
| Expected life (in years) | 2.0 |
| Risk-free interest rate | 4.3% |
| Dividend yield | 0.0% |
| Expected volatility | 42.9% |

Prior to the Separation, the valuation assumptions were determined by the Former Parent.

The following assumptions were used to value the Former Parent’s ESPP shares granted to employees specifically identifiable to Xperi in the years ended 2022, 2021 and 2020:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Expected life (in years) | 2.0 | 2.0 | 2.0 |
| Risk-free interest rate | 1.3% | 0.1 - 0.2% | 1.0 - 1.4% |
| Dividend yield | 1.1% | 0.9 - 1.2% | 1.4 - 4.0% |
| Expected volatility | 48.5% | 52.0 - 52.0% | 45.8 - 57.5% |

The Company uses the closing trading price of its common stock on the date of grant as the fair value of awards of RSUs and PSUs that are based on Company-designated performance targets. For PSUs that are based on market conditions, or market-based PSUs, fair value is estimated by using a Monte Carlo simulation on the date of grant. The following assumptions were used to value market-based PSUs granted by the Former Parent in the years ended December 31, 2022, 2021 and 2020:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | April 2022 | March 2021 | July 2020 |
| Expected life (years) | 3.0 | 3.0 | 3.0 |
| Risk-free interest rate | 2.8% | 0.3% | 0.2% |
| Dividend yield | 1.2% | 1.0% | 1.4% |
| Expected volatility | 40.9% | 47.9% | 51.3% |

#### NOTE 15 - INCOME TAXES

The components of total loss before taxes are as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| U.S. | $(667,612) | $(123,201) | $(143,623) |
| Foreign | (80,005) | (37,037) | (7,405) |
| Total loss before taxes from continuing operations | $(747,617) | $(160,238) | $(151,028) |

F-34

The provision for (benefit from) income taxes consisted of the following (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Current: |  |  |  |
| U.S. federal | $ - | $ - | $203 |
| Foreign | 21,252 | 12,531 | 8,865 |
| State and local | 1,723 | (604) | 1,454 |
| Total current | 22,975 | 11,927 | 10,522 |
| Deferred: |  |  |  |
| U.S. federal | (5,431) | 1,215 | (17,811) |
| Foreign | (3,871) | 7,116 | (699) |
| State and local | (84) | (1,418) | (1,747) |
| Total deferred | (9,386) | 6,913 | (20,257) |
| Provision for (benefit from) income taxes | $13,589 | $18,840 | $(9,735) |

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.

Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):

|  | December 31, |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Deferred tax assets |  |  |
| Net operating losses | $19,477 | $29,786 |
| Research credits | 6,791 | 7,446 |
| Foreign tax credits | 2,119 | 3,858 |
| Accrued expenses | 27,987 | 25,407 |
| Basis difference in fixed and intangible assets | 16,290 | 14,276 |
| Deferred revenue | 9,556 | 12,425 |
| Capitalized R&D | 63,601 | 48,807 |
| Lease liability | 13,310 | 14,158 |
| Other tax credits | 1,673 | - |
| Gross deferred tax assets | 160,804 | 156,163 |
| Valuation allowance | (111,779) | (101,529) |
| Net deferred tax assets | 49,025 | 54,634 |
| Deferred tax liabilities |  |  |
| Acquired intangible assets | (45,424) | (47,476) |
| Revenue recognition | (2,292) | (4,845) |
| Right-of-use asset | (10,550) | (13,706) |
| Other | (1,562) | (1,188) |
| Gross deferred tax liabilities | (59,828) | (67,215) |
| Net deferred tax liabilities | $(10,803) | $(12,581) |

The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the recoverability of the Company's net deferred tax assets, the Company determined that it was not more-likely-than-not that it would realize its federal, certain state and certain foreign deferred tax assets. The Company intends to continue maintaining a valuation allowance on its federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release depends on the level of profitability that the Company is able to achieve.

F-35

As of December 31, 2022, the Company had recorded deferred tax assets for the tax effects of the following gross tax loss carryforwards (in thousands):

|  | Carry forward Amount | Years of Expiration |
| --- | --- | --- |
| Federal | $24,121 | 2027 - 2032 |
| State (post-apportionment) | $154,352 | 2023 - 2041 |

As of December 31, 2022, the Company had the following credits available to reduce future income tax expense (in thousands):

|  | Carry forward Amount | Years of Expiration |
| --- | --- | --- |
| Federal research and development credits | $8,644 | 2024 - 2042 |
| State research and development credits | $13,174 | Indefinite |

The deferred tax asset valuation allowance and changes in the deferred tax asset valuation allowance consisted of the following (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Balance at beginning of period | $101,529 | $52,676 | $27,796 |
| Charged (credited) to expenses | 19,321 | 59,249 | 16,177 |
| Charged (credited) to other accounts | (9,071) | (10,396) | 8,703 |
| Balance at end of period | $111,779 | $101,529 | $52,676 |

A reconciliation of the statutory U.S. federal income tax rate to the Company's effective tax rate is as follows:

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| U.S. federal statutory rate | $(157,032) | $(33,650) | $(31,716) |
| State, net of federal benefit | 1,974 | (258) | (1,129) |
| Stock-based compensation | 2,036 | (1,740) | 2,779 |
| Executive compensation limitation | 2,286 | 2,221 | 563 |
| Research tax credit | (5,225) | (2,321) | (1,610) |
| Foreign withholding tax | 8,079 | 11,018 | 7,620 |
| Goodwill impairment | 107,831 | - | - |
| Restructuring and transaction costs | 293 | - | 6,161 |
| Foreign rate differential | 19,337 | 16,407 | 2,082 |
| Foreign tax credit | (977) | (8,928) | (5,441) |
| Change in valuation allowance | 20,491 | 39,063 | 7,158 |
| Foreign income inclusions | 7,656 | - | 642 |
| Unrecognized tax benefits | 6,798 | 1,526 | 1,703 |
| Change in estimates | (1,802) | (4,674) | - |
| Others | 1,844 | 176 | 1,453 |
| Total | $13,589 | $18,840 | $(9,735) |

At December 31, 2022, the Company asserts that it will not permanently reinvest its foreign earnings outside the United States. The Company anticipates that the cash from its foreign earnings may be used domestically to fund operations or used for other business needs. The accumulated undistributed earnings generated by its foreign subsidiaries was approximately $74.0 million. Substantially all of these earnings will not be taxable upon repatriation to the United States since under the Tax Cuts and Jobs Act they will be treated as previously taxed income from the one-time transition tax, Global Intangible Low-Taxed Income or dividends-received deduction. The U.S. state income taxes and foreign withholding taxes related to the distributable cash of the Company's foreign subsidiaries are not expected to be material.

As of December 31, 2022, unrecognized tax benefits were approximately $19.4 million, of which $8.8 million would affect the effective tax rate if recognized. As of December 31, 2021, unrecognized tax benefits were approximately $8.4 million, of which $1.7 million would affect the effective tax rate if recognized. As of December 31, 2020, unrecognized tax benefits were approximately $7.1 million, of which $1.1 million would affect the effective tax rate if recognized.

F-36

The Company is unable to make a reasonable estimate of the timing of the long-term payments or the amount by which the unrecognized tax benefits will increase or decrease over the next 12 months.

The reconciliation of the Company's unrecognized tax benefits for the years ended December 31, 2022, 2021 and 2020 is as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Total unrecognized tax benefits at January 1 | $8,438 | $7,106 | $9,067 |
| Changes due to mergers and transactions | 1,682 | (1,440) | (3,605) |
| Increases for tax positions related to the current year | 8,793 | 1,962 | 958 |
| Increases for tax positions related to prior years | 444 | 1,303 | 745 |
| Decreases for tax positions related to prior years | (3) | (493) | (59) |
| Total unrecognized tax benefits at December 31 | $19,354 | $8,438 | $7,106 |

It is the Company's policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. For the years ended December 31, 2022, 2021 and 2020, the Company recognized an immaterial amount of interest and penalties related to unrecognized tax benefits. Accrued interest and penalties were immaterial for the years ended December 31, 2022 and 2021, respectively.

With few exceptions, the Company's 2018 through 2022 tax years are open and subject to potential examination in one or more jurisdictions at December 31, 2022. In addition, in the United States, any net operating losses or credits that were generated in 2021 or earlier but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to adjustment if the Former Parent were to be audited.

## NOTE 16 - COMMITMENTS AND CONTINGENCIES

### *Purchase and Other Contractual Obligations*

In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements primarily include unconditional purchase obligations to service providers. Total future unconditional purchase obligations as of December 31, 2022 were as follows (in thousands):

| 2023 | $32,697 |
| --- | --- |
| 2024 | 17,631 |
| 2025 | 9,469 |
| 2026 | 8,580 |
| 2027 | 9,201 |
| Thereafter | 25,348 |
| Total | $102,926 |

Additionally, under certain other contractual arrangements, the Company may be obligated to pay up to $1.3 million, a majority of which is expected to be paid in the next two years, if certain milestones are achieved.

### *Inventory Purchase Commitment*

The Company uses contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, the Company enters into agreements with its contract manufacturers that either allow them to procure inventory based on criteria as defined by the Company or that establish the parameters defining the Company's requirements. A significant portion of the Company's purchase commitments arising from these agreements consist of firm, non-cancelable and unconditional purchase commitments. In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company's requirements based on its business needs prior to firm orders being placed. As of December 31, 2022, the Company had total purchase commitments for inventory of $1.3 million.

F-37

## *Indemnifications*

In the normal course of business, the Company provides indemnifications of varying scopes and amounts to certain of its licensees, customers, and business partners against claims made by third parties arising from the use of the Company's products, intellectual property, services or technologies. The Company cannot reasonably estimate the possible range of losses that may be incurred pursuant to its indemnification obligations, if any. Variables affecting any such assessment include, but are not limited to: the scope of the contractual indemnification obligation; the nature of the third party claim asserted; the relative merits of the third party claim; the financial ability of the third party claimant to engage in protracted litigation; the number of parties seeking indemnification; the nature and amount of damages claimed by the party suing the indemnified party; and the willingness of such party to engage in settlement negotiations. The Company has received requests for indemnification, but to date none has been material and no liability has been recorded in the Company's financial statements.

As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company's request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company believes, given the absence of any such payments in the Company's history, and the estimated low probability of such payments in the future, that the estimated fair value of these indemnification agreements is immaterial. In addition, the Company has directors' and officers' liability insurance coverage that is intended to reduce its financial exposure and may enable the Company to recover any payments under the indemnification agreements, should they occur.

## *Contingencies*

The Company and its subsidiaries have been involved in litigation matters and claims in the normal course of business. In the past, the Company or its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to determine infringement or validity of intellectual property rights, and to defend themselves or their customers against claims of infringement or breach of contract. The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings to ensure proper and full payment of royalties by licensees under the terms of their license agreements.

An adverse decision in any legal actions could result in a loss of the Company's proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company's licensed technology or otherwise negatively impact the Company's stock price or its business and consolidated financial results.

## **NOTE 17 - RELATED PARTY TRANSACTIONS AND NET INVESTMENT BY FORMER PARENT**

For periods prior to the Separation, the Consolidated Financial Statements have been prepared on a standalone basis and were derived from the consolidated financial statements and accounting records of the Former Parent. The following disclosure summarizes activity prior to the Separation between the Company and the Former Parent, including affiliates of the Former Parent that were not part of the Separation.

### *Allocation of Corporate expenses*

Prior to Separation, the Consolidated Financial Statements included expenses for certain management and support functions which were provided on a centralized basis within the Former Parent, as described in 'Note 1 - *The Company and Basis of Presentation*.' These management and support functions include, but are not limited to, executive management, sales and marketing, finance, legal, information technology, employee benefits administration, stock-based compensation, treasury, risk management, procurement and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on a pro rata basis of billing, revenue, headcount or other measures of the Company and the Former Parent.

The amount of these allocations from the Former Parent was $47.6 million, which included $3.0 million for depreciation expenses and $44.6 million for selling, general and administrative for the year ended December 31, 2022, $59.7 million, which included $4.6 million for depreciation expense, and $55.1 million for selling, general and administrative expense for the year ended December 31, 2021, and $66.9 million, which included $1.3 million for research and development, $3.3 million for depreciation expense, and $62.3 million for selling, general and administrative expense for the year ended December 31, 2020.

Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented. The allocations may not, however, be indicative of the actual expenses

F-38

that would have been incurred had the Company operated as a standalone public company. Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, such as the chosen organizational structure, whether functions were outsourced or performed by the Company’s employees, and strategic decisions made in areas such as selling, information technology and infrastructure.

#### ***Net Transfers from Former Parent***

A reconciliation of Net transfers from the Former Parent on the Consolidated Statements of Equity to the corresponding amount on the Consolidated Statements of Cash Flows was as follows (in thousands):

|  | Years Ended December 31, |  |  |
| --- | --- | --- | --- |
|  | 2022 | 2021 | 2020 |
| Total net transfers from Former Parent per Consolidated Statements of Equity | $100,915 | $116,830 | $506,176 |
| Stock-based compensation | (45,303) | (33,509) | (19,183) |
| TiVo merger consideration | - | - | (452,768) |
| Net proceeds from capital contributions by Former Parent | 83,235 | - | - |
| Issuance of equity to noncontrolling interest | (1,423) | 9 | 19 |
| Other | (1,387) | - | - |
| Total net transfers from Former Parent per Consolidated Statements of Cash Flows | $136,037 | $83,330 | $34,244 |

#### **NOTE 18 - BENEFIT PLAN**

The Company maintains a 401(k) retirement savings plan that allows voluntary contributions by all eligible U.S. employees upon their hire date. Eligible employees may elect to contribute up to the maximum amount allowed under Internal Revenue Service regulations. The Company can make discretionary contributions under the 401(k) plan. During the years ended December 31, 2022, 2021 and 2020, the Company’s employer 401(k) match expense was approximately $5.4 million, $3.6 million, and $2.9 million, respectively.

F-39

# **Schedule II. Valuation and Qualifying Accounts**

None.

F-40

# EXHIBIT INDEX

| Exhibit Number | Exhibit Description |
| --- | --- |
| 2.1* | Separation and Distribution Agreement by and between Adeia Inc. and Xperi Inc., dated October 1, 2022 (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022). |
| 2.2 | Amendment One to Separation and Distribution Agreement by and between Adeia Inc. and Xperi Inc.. |
| 3.1 | Amended and Restated Certificate of Incorporation of Xperi Inc. (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022). |
| 3.2 | Amended and Restated Bylaws of Xperi Inc., adopted as of October 1, 2022 (Incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022). |
| 4.1 | Description of the Company's capital stock registered under section 12 of the Securities Exchange Act of 1934. |
| 10.1+ | Form of Director and Officer Indemnification Agreement (filed as Exhibit 10.4 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.2 | Form of Senior Unsecured Promissory Note (filed as Exhibit 10.7 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.3+ | Form of Severance Agreement of Xperi Inc. (filed as Exhibit 10.8 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.4+ | Form of Change in Control Agreement of Xperi Inc. (filed as Exhibit 10.9 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.5+ | Employment and Severance Agreement, dated April 28, 2017, by and between the Registrant and Jon Kirchner (filed as Exhibit 10.10 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.6+ | Amendment to Employment and Severance Agreement between Xperi Corporation and Jon Kirchner dated April 28, 2017, effective as of September 29, 2020 (filed as Exhibit 10.11 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.7+ | Form of 2022 Restricted Stock Unit Award Agreement of Xperi Inc. |
| 10.8+ | Form of Stock Option Award Agreement of Xperi Inc. (filed as Exhibit 10.13 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.9+ | Form of 2022 Performance-Based Restricted Stock Unit Award Agreement of Xperi Inc. |
| 10.10+ | Xperi Inc. 2022 Equity Incentive Plan (filed as Exhibit 10.15 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.11+ | Xperi Inc. 2022 Employee Stock Purchase Plan (filed as Exhibit 10.16 to the Company's Registration Statement on Form 10 on August 26, 2022, and incorporated herein by reference) |
| 10.12 | First Amendment to Transition Services Agreement by and between Adeia Inc. and Xperi Inc., dated October 10, 2022. |
| 21.1 | List of subsidiaries |
| 23.1 | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm |
| 24.1 | Power of Attorney (see signature page to this Annual Report on Form 10-K) |
| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
| 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |

105

101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

+ Indicates a management contract or compensatory plan or arrangement.

* The exhibits and schedules to this agreement have been omitted in reliance on Item 601(b)(2) of Regulation S-K promulgated by the SEC, and a copy thereof will be furnished supplementally to the SEC upon its request. Readers are cautioned that the representations and warranties set forth in this agreement are qualified by those schedules, and should not be relied upon as accurate or complete without reference to those schedules

106

# **Item 16. Form 10-K Summary**

None.

107

# SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: March 3, 2023

## Xperi Inc.

By: /s/ Jon E. Kirchner

Jon E. Kirchner

Chief Executive Officer and President

## POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Jon E. Kirchner and Robert Andersen, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his true and lawful attorney-in-fact and agent to act in his name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| Signature | Title | Date |
| --- | --- | --- |
| /s/ Jon E. Kirchner Jon E. Kirchner | Chief Executive Officer, President and Director (Principal Executive Officer) | March 3, 2023 |
| /s/ Robert Andersen Robert Andersen | Chief Financial Officer (Principal Financial and Accounting Officer) | March 3, 2023 |
| /s/ David C. Habiger David C. Habiger | Chairman of the Board of Directors | March 3, 2023 |
| /s/ Darcy Antonellis Darcy Antonellis | Director | March 3, 2023 |
| /s/ Laura J. Durr Laura J. Durr | Director | March 3, 2023 |
| /s/ Christopher Seams Christopher Seams | Director | March 3, 2023 |

108