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Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
Acquisitions and Divestitures | NOTE 7 – ACQUISITIONS AND DIVESTITURES Vewd Software Holdings Limited On July 1, 2022, the Company acquired all common stock of Vewd Software Holdings Limited (“Vewd,” and the “Vewd Acquisition”). Vewd is a leading global provider of streaming and hybrid TV solutions. The Vewd Acquisition establishes the Company as a leading independent streaming media platform through its TiVo brand and one of the largest independent providers 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. See Note 9—Debt for additional information on this debt. Purchase Price Allocation The Vewd Acquisition was 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 (fair value amounts 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 purchase price |  |  |  |  |  |  |  | $ | 102,913 |
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 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. 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 following table presents the pro forma operating results as if the acquired operations of Vewd had been included in the Company’s consolidated statements of operations as of January 1, 2021 (unaudited, in thousands):
|  | Year Ended December 31, |
|  | 2022 |
Revenue |  | $ | 508,636 |
Net loss attributable to the Company |  | $ | (769,483 | )
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. AutoSense In-cabin Safety Business and Related Imaging Solutions In December 2023, the Company entered into a definitive agreement with Tobii in connection with the AutoSense Divestiture. The AutoSense Divestiture represented a 100% equity sale transaction of two of the Company’s wholly-owned subsidiaries and was expected to streamline the Company’s business to further focus its business on entertainment-related products and services. All of the assets and liabilities associated with the AutoSense Divestiture were classified as held for sale as of December 31, 2023. The following table summarizes the carrying amounts of assets and liabilities classified as held for sale in connection with the AutoSense Divestiture on the Company’s consolidated balance sheets as of December 31, 2023 (in thousands):
|  | December 31, 2023 |
|  | Current |  |  | Noncurrent |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 12,349 |  |  | $ | — |  |  | $ | 12,349 |
Accounts receivable, net |  |  | 1,323 |  |  |  | — |  |  |  | 1,323 |
Unbilled contracts receivable, net |  |  | 1,209 |  |  |  | 5,320 |  |  |  | 6,529 |
Prepaid expenses and other current assets |  |  | 979 |  |  |  | — |  |  |  | 979 |
Property and equipment, net |  |  | — |  |  |  | 2,391 |  |  |  | 2,391 |
Operating lease right-of-use assets |  |  | — |  |  |  | 3,346 |  |  |  | 3,346 |
Other noncurrent assets |  |  | — |  |  |  | 1,192 |  |  |  | 1,192 |
Total assets held for sale (1) |  | $ | 15,860 |  |  | $ | 12,249 |  |  | $ | 28,109 |
Liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 244 |  |  | $ | — |  |  | $ | 244 |
Accrued liabilities |  |  | 4,821 |  |  |  | — |  |  |  | 4,821 |
Deferred revenue |  |  | 1,126 |  |  |  | — |  |  |  | 1,126 |
Operating lease liabilities, noncurrent |  |  | — |  |  |  | 2,741 |  |  |  | 2,741 |
Other noncurrent liabilities |  |  | — |  |  |  | 7,064 |  |  |  | 7,064 |
Total liabilities held for sale |  | $ | 6,191 |  |  | $ | 9,805 |  |  | $ | 15,996 |
Net assets held for sale |  | $ | 9,669 |  |  | $ | 2,444 |  |  | $ | 12,113 |
(1) Total assets held for sale also included certain fully amortized finite-lived intangible assets with an original cost of $35.2 million. Due to the estimated fair value less cost to sell exceeding the carrying amount of the assets and liabilities presented above, the Company did not recognize an impairment loss related to the assets held for sale in the year ended December 31, 2023. On January 31, 2024, the AutoSense Divestiture was completed for total consideration of $44.3 million, comprised of $10.8 million of cash, a note receivable from Tobii (the “Tobii Note”) of $27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $15.0 million, which was estimated to have a fair value of $5.8 million based on a present value factor as of January 31, 2024. The $10.8 million of cash included in the total consideration represents the cash balance that was transferred to Tobii upon completion of the AutoSense Divestiture to support operations during the transition and was subsequently returned to the Company, and as such, this amount is included in the assets sold as of January 31, 2024 and in the total consideration received. In addition, there may be potential earnout payments (as described under Contingent Consideration below) payable in 2031, contingent upon the future success of the divested AutoSense in-cabin safety business. In connection with the AutoSense Divestiture, the Company also recorded a liability of $7.1 million for potential indemnification of certain pre-closing date matters. As of January 31, 2024, the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):
|  | January 31, 2024 |
|  | Current |  |  | Noncurrent |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 11,025 |  |  | $ | — |  |  | $ | 11,025 |
Accounts receivable, net |  |  | 3,392 |  |  |  | — |  |  |  | 3,392 |
Unbilled contracts receivable, net |  |  | 1,398 |  |  |  | 5,320 |  |  |  | 6,718 |
Prepaid expenses and other current assets |  |  | 812 |  |  |  | — |  |  |  | 812 |
Property and equipment, net |  |  | — |  |  |  | 2,291 |  |  |  | 2,291 |
Operating lease right-of-use assets |  |  | — |  |  |  | 3,272 |  |  |  | 3,272 |
Other noncurrent assets |  |  | — |  |  |  | 2,887 |  |  |  | 2,887 |
Total assets held for sale (1) |  | $ | 16,627 |  |  | $ | 13,770 |  |  | $ | 30,397 |
Liabilities: |  |  |  |  |  |  |  |  |
Accounts payable |  | $ | 248 |  |  | $ | — |  |  | $ | 248 |
Accrued liabilities |  |  | 4,933 |  |  |  | — |  |  |  | 4,933 |
Deferred revenue |  |  | 1,114 |  |  |  | — |  |  |  | 1,114 |
Operating lease liabilities, noncurrent |  |  | — |  |  |  | 2,708 |  |  |  | 2,708 |
Other noncurrent liabilities |  |  | — |  |  |  | 7,064 |  |  |  | 7,064 |
Total liabilities held for sale |  | $ | 6,295 |  |  | $ | 9,772 |  |  | $ | 16,067 |
Net assets held for sale |  | $ | 10,332 |  |  | $ | 3,998 |  |  | $ | 14,330 |
(1) Total assets held for sale also included certain fully amortized finite-lived intangible assets with an original cost of $35.2 million. Upon the completion of the AutoSense Divestiture, the Company recognized a pre-tax gain of $22.9 million. The AutoSense Divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations. Note Receivable from Tobii AB The Tobii Note, with a fixed interest rate of 8% per annum, matures on April 1, 2029 and is payable in three annual installments. Tobii may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, along with accrued interest, without any penalty. In the event of default, an additional interest of 2% per annum may be applied to the outstanding balance of the Tobii Note, and the Company has the right to demand full or partial payment on the outstanding balance with unpaid interest. The Tobii Note is secured by a floating lien and security interest in certain of Tobii’s assets, rights, and properties, and contains customary affirmative and negative covenants including the restrictions on incurring certain indebtedness, and certain change of control and asset sale events, but does not include any financial covenants. The Tobii Note has the following scheduled principal repayments (in thousands):
Date of Principal Payment: |  | Amount |
April 1, 2027 |  | $ | 10,000 |
April 1, 2028 |  |  | 10,000 |
April 1, 2029 |  |  | 7,676 |
Total principal payments |  | $ | 27,676 |
The Company elected to present accrued interest within the carrying amount of note receivable, noncurrent, in the consolidated balance sheets. As of December 31, 2024, the carrying amount of the Tobii Note is as follows (in thousands):
|  | December 31, 2024 |
Outstanding principal amount |  | $ | 27,676 |
Add: interest accrued to date |  |  | 2,026 |
Carrying amount—note receivable, noncurrent |  | $ | 29,702 |
For the year ended December 31, 2024, the Company recognized interest income of $2.0 million. Deferred Consideration The deferred consideration consists of guaranteed future cash payments, which are scheduled to be made by Tobii in four annual payments as follows (in thousands):
Date of Payment: |  | Amount |
February 15, 2028 |  | $ | 3,000 |
February 15, 2029 |  |  | 2,250 |
February 15, 2030 |  |  | 4,500 |
February 15, 2031 |  |  | 5,250 |
Total future payments |  | $ | 15,000 |
At the closing date of the Tobii Note, there was $9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment. For the year ended December 31, 2024, the Company accreted $1.0 million of the discount as interest income. As of December 31, 2024, the net carrying amount of the deferred consideration is as follows (in thousands):
|  | December 31, 2024 |
Total deferred consideration |  | $ | 15,000 |
Less: unamortized discount on deferred consideration |  |  | (8,197 | )
Net carrying amount |  | $ | 6,803 |
Contingent Consideration The earnout represents potential incremental cash consideration, and the payment is contingent upon the achievement of certain targeted shipments, between January 1, 2024 and December 31, 2030, of qualified automotive products featuring the AutoSense in-cabin safety technology and the related imaging solutions. At the closing date of the AutoSense Divestiture, the Company elected to apply the gain contingency guidance under ASC 450—Contingencies, as it could not reasonably estimate shipment amounts. As a result, the Company deferred the recognition of the contingent consideration until it becomes realized or realizable. Perceive Corporation On August 14, 2024, the Company and its subsidiary, Perceive (now known as Xperi Pylon Corporation) (“Seller”), of which the Company owned approximately 76.4% of the equity interests, entered into an Asset Purchase Agreement (the “Agreement”) with Amazon.com Services LLC (“Buyer”) pursuant to which Buyer has agreed to purchase and assume from Seller substantially all the assets and certain liabilities of Seller for $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction to secure the Company’s and Seller’s indemnification obligations (the “Perceive Transaction”). The Perceive Transaction was subsequently completed on October 2, 2024 (the “Closing Date”). The Perceive Transaction did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations. As of October 2, 2024, the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):
|  | October 2, 2024 |
|  | Current |  |  | Noncurrent |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |
Prepaid expenses and other current assets |  | $ | 1,306 |  |  | $ | — |  |  | $ | 1,306 |
Property and equipment, net |  |  | — |  |  |  | 95 |  |  |  | 95 |
Operating lease right-of-use assets |  |  | — |  |  |  | 72 |  |  |  | 72 |
Other noncurrent assets |  |  | — |  |  |  | 4 |  |  |  | 4 |
Total assets held for sale |  | $ | 1,306 |  |  | $ | 171 |  |  | $ | 1,477 |
Liabilities: |  |  |  |  |  |  |  |  |
Accrued liabilities |  |  | 67 |  |  |  | — |  |  |  | 67 |
Operating lease liabilities, noncurrent |  |  | — |  |  |  | 6 |  |  |  | 6 |
Total liabilities held for sale |  | $ | 67 |  |  | $ | 6 |  |  | $ | 73 |
Net assets held for sale |  | $ | 1,239 |  |  | $ | 165 |  |  | $ | 1,404 |
Upon the completion of the Perceive Transaction in 2024, the Company recognized a pre-tax gain of $77.9 million, of which $59.5 million was attributable to the Company. Holdback Consideration The holdback consideration of $12.0 million was estimated to have a fair value of $11.3 million based on a present value factor as of the Closing Date, resulting in a discount of $0.7 million. For the year ended December 31, 2024, the amount of discount accreted as interest income was insignificant. As of December 31, 2024, the net carrying amount of the holdback consideration is as follows (in thousands):
|  | December 31, 2024 |
Holdback consideration |  | $ | 12,000 |
Less: unamortized discount on holdback consideration |  |  | (586 | )
Net carrying amount |  | $ | 11,414 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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